Investment
Invincible Corporation

Audited Financial Statements
for the 31th Fiscal Period(from July 1, 2018 to December 31, 2018)

INDEX TO FINANCIAL STATEMENTS
Page

Greetings ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 1

Independent Auditor’s Report ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 3

Balance Sheet as December 31, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 4

Statement of Income and Retained Earnings for the six months ended December 31,2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 6

Statement of Changes in Net Assets for the six months ended December 31, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 7

Statement of Cash Flows for the six months ended December 31, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 9

Notes to Financial Statements as of and for the six months ended December 31, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 10

Greetings from Naoto Ichiki, Chairman and Director of Consonant Investment Management Co.,
Ltd. and Naoki Fukuda, Executive Director of Invincible Investment Corporation and President &CEO of Consonant Investment Management Co., Ltd.
We would like to take this opportunity to express our sincere gratitude to all unitholders of Invincible
Investment Corporation (“INV”) for your continued support.
We hereby provide you with a report on INV’s asset management and financial results for the 31st fiscal
period (covering the period from July 1, 2018 to December 31, 2018; the “Reporting Period”).
INV positions hotels and residential properties as its core assets and conducts management activities tomaximize growth potential and stability of the portfolio.
During the Reporting Period, INV conducted a global public offering of new investment units for the fifth
consecutive year to acquire four hotels in Tokyo, Osaka and Sapporo, including two hotels under the Hotel
MyStays “Premier” brand, and acquired the TK interest in two overseas hotels (Westin Grand Cayman
Seven Mile Beach Resort & Spa and Sunshine Suites Resort) as underlying assets, becoming the first
J-REIT to do so. As a result, the number of portfolio properties as of the end of the Reporting Period
reached 132 with a total acquisition price of JPY 448,362 million, of which hotel assets account for
approximately 80% (1). With regard to the hotel sector, the number of inbound visitors reached a newhigh of 31,191,000 (up 8.7% from the previous year) in 2018, steadily increasing towards the government
targets of 40 million in 2020 and 60 million in 2030. In the Reporting Period, although hotel demand
temporarily dropped due to the natural disasters in Western Japan and Hokkaido, INV was able to reach its
hotel revenue target with the expansion of hotel demand mainly from the aforementioned inbound visitors
as well as the positive effect of INV’s portfolio diversification and other factors.
With the Rugby World Cup scheduled in 2019 and Tokyo Olympic and Paralympic Games in 2020, Japan
expects to see a further increase in the number of inbound visitors from the next fiscal period onward as aresult of increasing international recognition of the country. Therefore, continuous growth of the hotel
market and a better supply-demand situation can be expected.
Regarding residential properties, the rent increase program that has been implemented by INV resulted in
an increase in rent per tsubo for both new and renewal contracts, achieving an increase in revenues
compared with the previous year and versus the budget.
As a result of the initiatives and factors mentioned above, operating revenues reached JPY 14,451 million,
operating income JPY 9,514 million, and net income JPY 8,384 million. INV decided on a distribution
per unit of JPY 1,683, an increase of 7.6% year on year (2).
Ever since the commencement of sponsorship from the Fortress Group in 2011, INV has been focusing its
efforts on establishing and strengthening a revenue base in order to improve the profitability of its portfolio
and ensure stable distributions. Particularly during the three public offerings conducted in the past two
years, INV has worked to enhance portfolio quality and increase distributions under the strong support ofthe sponsor, by acquiring prime properties including flagship hotels and residential properties from thesponsor pipeline and such. Such efforts have resulted in a steady increase of distribution per unit, and thefull year distribution per unit for 2018 increased around eightfold compared to that for 2011.
Furthermore, INV established a medium-term plan “Vision 2022” in the Reporting Period and set the targetof raising distribution per unit to JPY 3,700 by 2022 (3). INV will continue to implement its basic policy
to “increase distribution per unit” to achieve such target, and will ensure the implementation of measures tomaximize unitholder value.

Your continued support is highly appreciated.
Naoto Ichiki
Chairman and Director, Consonant Investment Management Co., Ltd.
Naoki Fukuda
Executive Director, Invincible Investment Corporation
President & CEO, Consonant Investment Management Co., Ltd.

(1) For details, please refer to notes on pages 10 and 11.
(2) Comparison with the fiscal period ended December 2017. In order to eliminate the seasonal effects
of hotel variable rent, which is one of the major revenues of INV, in the comparison, the comparison ismade with the same period in the previous year and not with the previous fiscal period (ended June2018).
(3) This is a target based on various assumptions and conditions, and there is no guarantee that INV canachieve this target in 2022 or later.
Distribution per unit for the 31st fiscal period(the fiscal period ended December 2018)

JPY 1,683(Note) The forward-looking statements, forecasts and goals described in this report are based on available information,
assumptions and estimates as of February28, 2019. These assumptions and estimates are unavoidably uncertain, andcould be affected by various risks and factors beyond INV’s control. Thus, no guarantee can be made regarding therealization of such future forecasts and targets, and actual results may vary significantly.

INVINCIBLE INVESTMENT CORPORATIONBALANCE SHEETAs of December 31, 2018
As ofDecember 31,
2018

June 30,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
ASSETS
Current assets:
Cash and bank deposits (Notes 6 and 17) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥Cash and bank deposits in trust (Notes 6 and 17) ∙∙∙∙∙∙
Accounts receivable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Rental receivables ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Prepaid expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Income taxes receivable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Consumption taxes receivable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Allowance for doubtful accounts ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total current assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Non‐current assets:
Property and equipment (Notes 7 and 8):
Tools, furniture and fixtures, at cost ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Buildings in trust, at cost ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Buildings and accompanying
facilities in trust, at cost ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Structures in trust, at cost ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Tools, furniture and fixtures in trust, at cost ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Land in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Subtotal ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Less: Accumulated depreciation ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total property and equipment, net ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Intangible assets:
Leasehold rights in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total intangible assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Investments and other assets:
Investment securities (Note 18 and 22)∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Guarantee deposits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Long‐term prepaid expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Derivatives assets (Note 19) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total investments and other assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total non‐current assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Deferred assets:
Investment corporation bond issuance costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total deferred assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙TOTAL ASSETS ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

8,505,792
6,566,761
6,483
1,826,596
428,536
149,632‐
0(89)
17,483,714¥

3,985,335
7,079,268
583,0122,591,368
539,442
172,912434,3260(86)
15,385,582$

35,903
63,777
5,252
23,345
4,859
1,557
3,912
0
0
138,608

3,192
133,579,099

3,192
144,380,745

28
1,300,727

28,918,145

32,567,092

293,397

225,353
1,395,339
173,298,062
337,419,193(17,196,907)
320,222,285

228,964
1,690,363
203,881,464
382,751,823(20,117,593)
362,634,229

2,062
15,228
1,836,769
3,448,214(181,239)
3,266,975

16,712,637
16,712,637

20,015,700
20,015,700

180,321
180,32117,856,387
1,681,565
426,222
92,561
12,667
20,069,404
357,004,327

54,640,213
1,700,670
708,191
216,555
22,66757,288,298
439,938,228

492,254
15,321
6,380
1,950
204
516,110
3,963,407

24,29524,295374,512,988

38,98538,985455,362,796

351
351
4,102,367¥$4

As ofDecember 31,
2018

June 30,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
LIABILITIESCurrent liabilities:
Accounts payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥
Short‐term loans payable (Note 10) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Current portion of long‐term loans payable(Note 10) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Accounts payable‐other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Accrued expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Income taxes payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Consumption taxes payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Advances received ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Deposits received ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total current liabilities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Non‐current liabilities:
Investment corporation bonds (Note 9) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Long‐term loans payable (Notes 10 and 17) ∙∙∙∙∙∙∙∙∙∙∙∙
Tenant leasehold and security deposits in trust(Note 17) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Tenant leasehold and security deposits (Note 17) ∙∙∙Asset retirement obligations (Note 20) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total non‐current liabilities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙TOTAL LIABILITIES ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙NET ASSETS (Note 11)
Unitholders’ equity:
Unitholders’ capital ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Surplus:Capital surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Allowance for temporary differences
Adjustment (Note 4) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other deduction of capital surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total deduction of capital surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Capital surplus (net)∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Voluntary reserve
Retained earnings ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total unitholders’ equity ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Valuation and translation adjustments:
Deferred gains or losses on hedges ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total valuation and translation adjustments ∙∙∙∙∙∙∙TOTAL NET ASSETS ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙TOTAL LIABILITIES AND NET ASSETS ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

598,870
2,000,000¥

431,891
1,099,000

$

3,890
9,900

46,663,000

54,745,000

493,198

131,783
195,481605
14,902551,506
21,69750,177,846

651,992
200,203605‐
571,668
134,085
57,834,445

5,873
1,803
5
‐
5,150
1,207
521,0312,000,000
138,752,000

4,000,000
170,029,000

36,036
1,531,792

2,026,400

2,009,816

18,106

1,586
31,891
142,811,878
192,989,724

92,525
32,107
176,163,449
233,997,895

833
289
1,587,058
2,108,089

168,798,455

211,092,540

1,901,734

6,264,432

6,264,432

56,436(46,329)(46,329)(417)(1,194,818)(1,241,148)
5,023,283(5,194,798)(5,241,128)
1,023,303(46,799)(47,217)9,218

7,610,548
12,633,832
181,432,288

9,140,372
10,163,675
221,256,215

82,34591,564
1,993,299

90,97590,975
181,523,263
374,512,988

108,684
108,684
221,364,900
455,362,796

979
979
1,994,278
4,102,367¥$

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

5

INVINCIBLE INVESTMENT CORPORATIONSTATEMENT OF INCOME AND RETAINED EARNINGSFor the six months ended December 31, 2018
For the six months ended
December 31,
2018

June 30,2018(in thousands of yen)
Operating revenue
Rental revenue－real estate (Note 13) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Gain on sales of properties (Note 14) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Dividend income∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total operating revenue ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Operating expenses
Property related expenses (Note 13) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Asset management fees ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Directors’ compensation ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Asset custody fees ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Administrative service fees ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Provision of allowance for doubtful accounts ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total operating expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Operating income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Non‐operating income
Interest income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Foreign exchange gains ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Interest on tax refund ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total non‐operating income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Non‐operating expenses
Interest expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Interest expenses on investment corporation bonds
Amortization of investment corporation bond issuancecosts
Loan‐related costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

11,122,481
1,249,645
732,714
13,104,714

13,604,224‐
846,780
14,451,005$

122,560‐
7,628
130,189

4,136,619
275,000
4,800
18,162
39,697
2
197,039
4,671,320
8,433,520

4,450,676
275,000
5,200
18,64552,60786
134,032
4,936,248
9,514,756

40,096
2,477
46
167
473
0
1,207
44,47085,718

78
‐
3,086
1,181
4,347

82
34,46872
906
35,528

0
310
0
8
320

479,456
1,216

555,811
8,490

5,007
76

379

2,625

23

234,197

407,683

3,672

186,997

1,684

Investment unit issuance costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐

Other‐non‐operating expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

64

Total non‐operating expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Ordinary income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Income before income taxes ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Income taxes (Note 15):
Current ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total income taxes ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙Net income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Retained earnings / losses brought forward ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙Unappropriated retained earnings / losses (Note 12)∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥¥

December 31,
2018(in thousands of U.S.
dollars)

36

715,314
7,722,553
7,722,553

3,999
1,165,608
8,384,676
8,384,676

10,50075,53775,537605
605
7,721,948(111,399)
7,610,548

605
605
8,384,071
756,300
9,140,372

5
575,532
6,813
82,345¥$The accompanying notes are an integral part of these financial statements.

6

INVINCIBLE INVESTMENT CORPORATIONSTATEMENT OF CHANGES IN NET ASSETSFor the six months ended December 31, 2018
Unitholdersʹ equity
SurplusCapital surplus
Deduction of capital surplus

Unitholdersʹ
capitalCapital surplus

Allowance fortemporarydifferences
adjustment¥¥

Other deduction ofcapital surplus

Capital surplus (net)

Deduction ofcapital surplus(in thousands of yen)
Balance as of January 1, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥168,798,455

6,264,432(46,329)¥(1,022,263)¥(1,068,593)¥

5,195,838

Changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Distributions from surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other distributions in excess of retained earnings∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(172,554)(172,554)(172,554)

Net income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Changes other than unitholders’equity(net) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐

Balance as of June 30, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥168,798,455‐¥‐

6,264,432¥(46,329)(172,554)¥(1,194,818)(172,554)¥(172,554)(1,241,148)¥

5,023,283

Changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Issuance of new investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

42,294,085

Distributions from surplus∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Acquisition of own investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Cancellation of own investment units∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(3,999,980)(3,999,980)(3,999,980)

Net income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Changes other than unitholders’equity(net) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

42,294,085

Balance as of December 31, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥211,092,540‐¥‐

6,264,432¥(46,329)(3,999,980)¥(5,194,798)

Unitholdersʹ equity
SurplusRetainedearnings(3,999,980)(5,241,128)¥

1,023,303

Valuation and translation adjustments

Own
investment
units

Total surplus(3,999,980)¥

Total unitholdersʹ
equityDeferred gains
or losses onhedgesTotal valuationand translation
adjustments

Total net assets

¥

¥

¥

(in thousands of yen)
Balance as of January 1, 2018∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

7,212,580¥

12,408,419

¥

‐

¥

181,206,874

113,592

113,592

181,320,466

Changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(7,323,980)

Distributions from surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(7,323,980)(7,323,980)(172,554)(172,554)(172,554)

7,721,948

7,721,948

7,721,948

7,721,948

397,968

225,413

Other distributions in excess of retained earnings ∙∙∙∙∙Net income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(7,323,980)

Changes other than unitholders’equity(net) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Balance as of June 30, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

7,610,548¥

12,633,832‐¥‐

225,413¥

181,432,288¥(22,616)(22,616)(22,616)(22,616)

90,975¥90,975(22,616)
202,796¥

181,523,263

Changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Issuance of new investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Distributions from surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(6,854,248)

Acquisition of own investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Cancellation of own investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(3,999,980)

Net income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

42,294,085

42,294,085(6,854,248)(6,854,248)(3,999,980)(3,999,980)(3,999,980)

3,999,980‐‐

8,384,071

8,384,071(6,854,248)

8,384,071

8,384,071

1,529,823(2,470,157)

Changes other than unitholders’equity(net) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Balance as of December 31, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

9,140,372¥

10,163,675‐¥‐

39,823,927¥

221,256,215¥

17,70917,70917,70917,70917,70939,841,636

108,684¥

108,684¥

221,364,900

7

Unitholdersʹ equity
SurplusCapital surplus
Deduction of capital surplus

Unitholdersʹ
capitalCapital surplus

Allowance fortemporarydifferences
adjustment$$

Other deduction ofcapital surplus

Capital surplus (net)

Deduction ofcapital surplus(in thousands of U.S dollars)
Balance as of July 1, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ $1,520,706

56,436(417)$(10,764)$(11,181)$

45,254

Changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Issuance of new investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

381,027

Distributions from surplus∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Acquisition of own investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Cancellation of own investment units∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(36,035)(36,035)(36,035)

Net income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Changes other than unitholders’equity(net) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

381,027

Balance as of December 31, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ $1,901,734‐$‐

56,436$(417)(36,035)$(46,799)

Unitholdersʹ equity
SurplusRetainedearnings(36,035)(47,217)$

9,218

Valuation and translation adjustments
Own
investment
units

Total surplus(36,035)$

Total
unitholdersʹ
equityDeferred gains
or losses onhedgesTotal valuationand translation
adjustments

Total net assets

$

$

$

(in thousands of U.S dollars)
Balance as of July 1, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙$

68,563$

113,818$‐$

1,634,525

819

819

1,635,344

Changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Issuance of new investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Distributions from surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(61,749)

Acquisition of own investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Cancellation of own investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(36,035)

Net income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

381,027

381,027(61,749)(61,749)(36,035)(36,035)(36,035)

36,035‐(61,749)

75,53275,532

13,782(22,253)‐

75,53275,532

Changes other than unitholders’equity(net) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Balance as of December 31, 2018 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙$

82,345$91,564‐$‐

358,774$

1,993,299

$

159

159

159

159

159

358,933

979

$

979

$

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

8

1,994,278

INVINCIBLE INVESTMENT CORPORATIONSTATEMENT OF CASH FLOWSFor the six months ended December 31, 2018
For the six months ended
June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Cash flows from operating activities:
Income before income taxes ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥
Depreciation and amortization ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Investment unit issuance costs∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Amortization of investment corporation bond issuance costs∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Loan‐related costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Interest income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Interest expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Changes in assets and liabilities
Foreign exchange losses (gains) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Increase (decrease) in allowance for doubtful accounts ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Decrease (increase) in rental receivables ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Decrease (increase) in receivable income taxes∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

7,722,553
2,772,510‐
379
234,197(78)
480,672¥

8,384,676
3,039,033
186,997
2,625
407,683(82)
564,302$75,537
27,378
1,684
23
3,672
0
5,083

‐
0
158,132(149,624)(7,261)(3)(764,772)(23,292)(65)
0(6,889)(209)

Decrease (increase) in consumption taxes receivable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

661,287(434,326)(3,912)

Increase (decrease) in accounts payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

39,752(32,970)(297)

Increase (decrease) in consumption taxes payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(32,819)(14,902)(134)

Increase (decrease) in accounts payable‐other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Increase (decrease) in accrued expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Increase (decrease) in advances received ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Increase (decrease) in deposits received ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Decrease in property and equipment, due to sale in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other, net ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Subtotal ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Interest income received ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Interest expenses paid ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Income taxes paid ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

49,627(75,177)(49,246)(47,348)
9,181,866
20,177
20,966,865
78(483,261)(605)(49,755)(2,611)
20,161(75,818)‐
9,283
11,208,966
82(553,985)
(605)

(448)
(23)
181
(683)
‐
83
100,981
0(4,990)(5)

Net cash provided by operating activities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

20,483,077

10,654,458

95,986

Cash flows from investing activities:
Purchases of property and equipment in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Purchases of leasehold rights in trust∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Purchases of investment securities∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Repayments of tenant leasehold and security deposits in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Proceeds from tenant leasehold and security deposits in trust∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Payments of tenant leasehold and security deposits∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Payments of TK investment∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Proceeds from withdrawal of TK investment∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other, net ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(20,847,991)‐(1,927)(320,542)
132,593(30,000)‐‐
47,201(45,485,560)(3,421,194)‐(64,862)
49,032(19,105)(37,534,886)
751,060(12,784)(409,779)(30,821)
‐
(584)
441
(172)
(338,152)
6,766
(115)

Net cash used in investing activities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(21,020,665)(85,738,300)(772,417)

Cash flows from financing activities:
Proceeds from short‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Repayments of short‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Proceeds from long‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Repayments of long‐term loans payable∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Proceeds from issuance of investment corporation bonds∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Payments for loan‐related costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Payments for Acquisition of Own investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Payments of distributions of earnings ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Payments of other distributions in excess of retained earnings∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Proceeds from issuance of investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐(1,068,000)
1,500,000‐
1,977,436(40,494)‐(7,280,040)(172,554)‐

1,099,000(2,000,000)
68,338,000(28,979,000)
1,980,352(804,736)(3,999,980)(6,664,830)‐
42,107,087

9,900(18,018)
615,657(261,072)
17,841(7,249)(36,035)(60,043)‐
379,343

Net cash provided by (used in) financing activities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(5,083,652)

71,075,892

640,323

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 6) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥(5,621,240)
20,693,794
15,072,553(4,007,949)
15,072,553
11,064,604(36,107)
135,788
99,681¥$

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

9

INVINCIBLE INVESTMENT CORPORATIONNOTES TO FINANCIAL STATEMENTS
As of and for the six months ended December 31, 2018

1. Organization
Invincible Investment Corporation (the“Company”), a real estate investment corporation, was incorporated on January 18, 2002, underthe Act on Investment Trusts and Investment Corporations of Japan (the“Investment Trust Act”) with initial capital of ¥200 million.
The Company is externally managed by a registered asset management company, Consonant Investment Management Co., Ltd. (the“Asset Manager”). The Asset Manager is currently owned 100% by Calliope Godo Kaisha (Calliope). The Company was formed toinvest primarily in properties in Japan.
On May 17, 2004, the Company raised ¥3,377,250 thousand through an initial public offering of 9,000 investment units. As a“comprehensive investment REIT focusing on the Tokyo metropolitan area and on residential properties,” the Company was listed on
the Osaka Securities Exchange in May 2004.
On February 7, 2005, the Company completed its second public offering of 10,650 investment units at a price of ¥369,734 per unit inconnection with a public offering in Japan.
On July 31, 2006, the Company completed its third public offering of 25,000 investment units at a price of ¥332,045 per unit in connection
with a public offering in Japan. The Company was listed on the J‐REIT market of the Tokyo Stock Exchange in August 2006 (in order tofocus trading on one securities exchange and reduce administrative tasks and costs accompanying a duplicate listing, the Company
delisted from the Osaka Securities Exchange on October 6, 2007).
Effective on February 1, 2010, the Company executed a five‐to‐one unit split and 215,596 investment units were issued in connection
with the unit split. Effective on the same day, the Company also merged with LCP Investment Corporation (LCP) and allocated 367,200
investment units at a ratio of 4 units (post‐unit split) of the Company per one investment unit of LCP. As a result, investment units issued
and outstanding were 636,695 units as of February 1, 2010.
On July 29, 2011, the Company completed a third party allotment of 711,597 investment units at a price of ¥9,837 per unit.
On December 20, 2013, the Company completed a third party allotment of 224,887 investment units at a price of ¥13,340 per unit.
On July 16, 2014, the Company completed its fourth public offering totaling 1,040,000 new investment units at a price of ¥21,873 per unit.
527,322 of such units were issued in connection with a Domestic Public Offering, and the remaining 512,678 units were issued inconnection with an International Offering pursuant to Rule 144A and Regulation S under the U.S. Securities Act of 1933. On August 13,
2014, the Company issued 55,507 investment units domestically in connection with the exercise of an over‐allotment option. Net
proceeds of approximately ¥23.9 billion were used to repay the Company’s outstanding short term borrowings and in connection withthe acquisition of 18 properties during this fiscal period.
On July 15, 2015, the Company completed its fifth public offering totaling 500,000 new investment units at a price of ¥57,817 per unit.
211,250 of such units were issued in connection with a Domestic Public Offering, and the remaining 288,750 units were issued inconnection with an International Offering pursuant to Rule 144A and Regulation S under the U.S. Securities Act of 1933. On August 12,
2015, the Company issued 25,000 investment units domestically in connection with the exercise of an over‐allotment option. Net
proceeds of approximately ¥29.3 billion were used to repay the Company’s outstanding long term borrowings and in connection withthe acquisition of 14 properties during this fiscal period.
On March 30, 2016, the Company completed its sixth public offering totaling 459,512 new investment units at a price ¥81,217 per unit.
194,144 of such units were issued in connection with a Domestic Public Offering, and the remaining 265,368 units were issued inconnection with an International Offering pursuant Rule 144A and Regulation S under the U.S. Securities Act of 1933. On April 27, 2016,
the Company issued 22,626 investment units domestically in connection with the exercise of an over‐allotment option. Net proceeds ofapproximately ¥37.9 billion were used to repay the Company’s outstanding long term borrowing and in connection with the acquisitionof 6 properties during this fiscal period.
On March 13, 2017, the Company completed its seventh public offering totaling 185,000 new investment units at a price ¥46,897 per unit
in connection with Japanese Primary Offering.

10

On October 12, 2017, the Company completed its eighth public offering totaling 887,959 new investment units at a price ¥44,118 per unit.
515,017 of such units were issued in connection with a Domestic Public Offering, and the remaining 372,942 units were issued inconnection with an International Offering pursuant Rule 144A and Regulation S under the U.S. Securities Act of 1933. On November 1,
2017, the Company issued 44,398 investment units domestically in connection with the exercise of an over‐allotment option. Net
proceeds of approximately ¥39.8 billion were used to repay the Company’s outstanding long term borrowing and in connection with theacquisition of 4 properties and 1 preferred security during this fiscal period.
On August 1, 2018, the Company completed its ninth public offering totaling 909,524 new investment units at a price ¥45,776 per unit.
432,024 of such units were issued in connection with a Domestic Public Offering, and the remaining 477,500 units were issued inconnection with an International Offering pursuant Rule 144A and Regulation S under the U.S. Securities Act of 1933. On August 21,
2018, the Company issued 45,476 investment units domestically in connection with the exercise of an over‐allotment option. Net
proceeds of approximately ¥42.2 billion were used to repay the Company’s outstanding long term borrowing and in connection with theacquisition of 4 properties and 1 TK investment during this fiscal period.

2. Summary of Significant Accounting Policies(a) Basis of Presentation
The Company maintains its accounts and records in conformity with accounting principles and practices generally accepted in Japan(“Japanese GAAP”), including provisions set forth in the Investment Trust Act, the Companies Act of Japan, the Financial Instruments
and Exchange Act of Japan, and other related regulations, which are different in certain respects from the application and disclosure
requirements of International Financial Reporting Standards or accounting principles generally accepted in the United States of America.
The financial statements are prepared based on the Japanese audited financial statements of the Company, which were prepared inaccordance with Japanese GAAP and filed with the Kanto Local Finance Bureau as required by the Financial Instruments and Exchange
Act of Japan. In preparing the accompanying financial statements, certain information in the notes has been added and certain
reclassifications have been made from the financial statements issued domestically for the convenience of the readers outside Japan.
The financial statements are not intended to present the financial position and the results of operations in accordance with accounting
principles and practices generally accepted in countries and jurisdictions other than Japan.
The Company’s fiscal period is a six‐month period, which ends at the end of June and December of each year.

Amounts less than ¥1 thousand and US$1 thousand have been rounded down. As a result, the totals shown in the financial statements
and notes thereto do not necessarily agree with the sum of the individual amounts.
The Company does not prepare consolidated financial statements as it has no subsidiaries.
(b) Cash and Cash Equivalents
Cash and cash equivalents consist of cash, demand deposits, and short‐term investments which are highly liquid and readily convertible
to cash, have a low risk of price fluctuation, and mature within three months from the date of acquisition.
(c) Valuation standard and method for securities
Other securities without fair market value are recorded at cost being determined by the moving average method.
(d) Property and Equipment
Property and equipment are recorded at cost. Depreciation of property and equipment, except for land, is calculated on a straight‐line
basis over the estimated useful lives of the assets as stated below:
For the six months ended
December 31, 2018

Tools, furniture and fixtures∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

4‐8

Buildings in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

5‐67

Buildings and accompanying facilities in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

2‐33

Structures in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

3‐55

Tools, furniture and fixtures in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

2‐19

11

(e) Intangible Assets
Intangible assets are amortized on a straight‐line basis. Amortization of a term leasehold interest for business use is calculated by thestraight‐line method over the lease term.
(f)Long‐term Prepaid Expenses

Long‐term prepaid expenses are amortized on a straight‐line basis.
(g) Investment Unit Issuance Costs
Investment unit issuance costs are recorded as expenses when incurred.
(h) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the straight‐line method over the period through the redemption of thebonds.
(i)

Allowance for Doubtful Accounts

Allowance for doubtful accounts is provided based on past experience for normal receivables and on a valuation of any receivables fromcompanies and individuals with financial difficulties.
(j)

Conversion of assets and liabilities in foreign currency into Japanese yen

Receivables and payables denominated in foreign currencies are translated into yen at the exchange rate in effect at the balance sheet
date, and differences arising from the translation are included in the statements of income.
(k) Impairment of Fixed Assets
An assessment for impairment is carried out on an asset or group of assets, such as fixed assets, intangible assets and investments,
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the asset or group of assets isdeemed to be impaired, an impairment loss is recognized for the difference between the carrying amount and the recoverable value ofthe asset or group of assets using the discounted cash flow model.
(l)

Accounting Treatment of Trust Beneficiary Interests in Real Estate Trusts

For trust beneficiary interests in real estate trusts, which are commonly utilized to obtain ownership in investment properties in Japanand through which the Company holds all of its real estate, all assets and liabilities with respect to assets in trust, as well as all income
generated and expenses incurred with respect to assets in trust, are recorded in the relevant accounts of the balance sheet and statementof income and retained earnings of the Company in proportion to the percentage that such trust beneficiary interest represents. Certain
material accounts with respect to assets and liabilities in trust are presented separately from other accounts in the balance sheets of theCompany.
(m) Income Taxes
Deferred tax assets and liabilities are computed based on the temporary differences between the financial statement and income tax
basis of assets and liabilities using the applicable statutory tax rate.
(n) Consumption Taxes
Consumption taxes withheld and consumption taxes paid are not included in the statement of income and retained earnings.
Consumption taxes paid are generally offset against the balance of consumption taxes withheld. As such, the excess of payments overamounts withheld are included in current assets and the excess of amounts withheld over payments are included in current liabilities as
the case may be.
(o) Taxes on Property and Equipment
Property and equipment are subject to various taxes, such as property taxes and urban planning taxes on an annual basis. An owner of aproperty is registered in the record maintained by the local government in each jurisdiction, and such taxes are imposed on the ownerregistered in the record as of January 1 of each year based on the assessment made by the local government.
Under the above tax rules, a seller of a property at the time of disposal is liable for these taxes on the property from the date of disposal tothe end of the calendar year in which the property is disposed. The seller, however, is reimbursed by the purchaser for these accrued tax
liabilities and the amount of settlement reflects this adjustment. For the purchaser, a portion of such taxes calculated from the acquisition12

date to the end of the calendar year is capitalized as a cost of the property in accordance with Japanese GAAP. In subsequent calendar
years, half of such taxes on property and equipment for each calendar year are charged as operating expenses in each fiscal period.
Tax on property and equipment capitalized as part of the acquisition cost of properties amounted to ¥54,754 (US$493) thousand for thesix months ended December 31, 2018.

3. U.S. Dollar Amounts
The Company maintains its accounting records in Japanese yen. The U.S. dollar amounts included in the accompanying financial
statements and notes thereto represent the arithmetical result of translating Japanese yen into U.S. dollars at the rate of ¥111 = US$1, theeffective rate of exchange prevailing at December 31, 2018. The inclusion of such U.S. dollar amounts associated with the fiscal six
months ended December 31, 2018 is solely for the convenience of readers outside Japan. Such translations should not be construed as
representations that the Japanese yen amounts represent, or have been, or could be converted into, U.S. dollars at that or any other rate.

4. Allowance for temporary differences adjustment
For the six months ended June 30, 2018
On the Balance Sheet, there are the increase and decrease of allowance for temporary differences adjustment.
1. Reason, related assets and amounts(in thousands of yen)
Allowance

Reversal

Related assets,

Reason for

InitialBeginning

set asideetc.

occurrence

amountbalanceduringperiod¥ (46,329)¥ (46,329)‐‐¥ (46,329)¥ (46,329)¥ (46,329)‐‐¥ (46,329)

Leaseholdrights in trust

Endingduringperiodbalance

Reason for reversal

Amortization ofleasehold rights in
trust

Total

‐

2. Method of reversal(1) Leasehold rights in trust
Upon the sale of the relevant properties, the corresponding amount is scheduled to be reversed.

For the six months ended December 31, 2018
On the Balance Sheet, there are the increase and decrease of allowance for temporary differences adjustment.
1. Reason, related assets and amounts(in thousands of yen)
Allowance
Related assets,

Reason for

InitialBeginning

set asideetc.

occurrence

amountbalanceduringperiod¥ (46,329)¥ (46,329)

Leaseholdrights in trust

ReversalEndingduringperiodbalance

Reason for reversal

Amortization ofleasehold rights in
trust

‐

‐

¥ (46,329)‐

13

Total¥ (46,329)¥ (46,329)‐‐¥ (46,329)(in thousands of U.S dollars)
Allowance
Related assets,

Reason for

InitialBeginning

set asideetc.

occurrence

amountbalanceduringperiodLeaseholdrights in trust

ReversalEndingduringperiodReason for reversal

balance

Amortization ofleasehold rights in
trust

Total

$ (417)$ (417)‐‐$ (417)$ (417)$ (417)‐‐$ (417)‐

2. Method of reversal(1) Leasehold rights in trust
Upon the sale of the relevant properties, the corresponding amount is scheduled to be reversed.

5. Status of cancellation of own investment units
As ofJune 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Total number of investment units cancelled ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total amount cancelled ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥‐‐81,341
3,999,980¥‐
36,035$

6. Cash and Cash Equivalents
Cash and cash equivalents shown in the statements of cash flows consist of the following balance sheet items.
As ofJune 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Cash and bank deposits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Cash and bank deposits in trust ∙∙∙∙∙∙∙∙∙∙∙∙

8,505,792
6,566,761¥

3,985,335
7,079,268$

35,903
63,777

Cash and cash equivalents ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥15,702,553¥

11,064,604$

99,681

7. Property and Equipment
The following tables show the summary of movement in property and equipment for the six months ended December 31, 2018.
At costBeginningbalance

Increase

Endingbalance

Decrease

Accumulated
depreciation

Net property andequipment

Depreciation forthe period(in thousands of yen)Tools, furniture and fixtures ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

3,192

¥

‐

¥

‐

Buildings in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Buildings and accompanying facilities
in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Structures in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

133,579,099

10,801,646‐¥

144,380,745

3,192

¥

12,260,835

669¥

1,781,308

225¥

132,119,910

2,522

28,918,145

3,648,947‐

32,567,092

7,258,920

1,021,068

25,308,172

225,353

3,611‐

228,964

92,586

6,087

136,377

Tools, furniture and fixtures in trust ∙∙∙∙∙∙∙∙∙∙

1,395,339

295,023‐

1,690,363

504,581112,2111,185,781

14

Land in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

173,298,062

30,583,402‐

203,881,464‐‐

Leasehold rights in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

17,079,771

3,421,194‐

20,500,965

485,264

118,131

Total ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

354,489,964¥

48,753,824

¥

‐

¥

403,252,788¥

20,602,858¥

203,881,464
20,015,700

3,039,033¥

382,649,930

At costBeginningbalance

Increase

Endingbalance

Decrease

Accumulated
depreciation

Net property andequipment

Depreciation forthe period(in thousands of U.S dollars)
Tools, furniture and fixtures ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙$

28

$

‐

Buildings in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Buildings and accompanying facilities
in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Structures in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

1,203,415

97,312

260,523

32,873

2,030

32

‐

2,062

834

54

1,228

Tools, furniture and fixtures in trust ∙∙∙∙∙∙∙∙∙∙

12,5702,657‐

15,228

4,545

1,010

10,682Land in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

1,561,243

275,526‐

1,836,769‐‐

1,836,769

Leasehold rights in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

153,871

30,821‐

184,693

4,371

1,064

Total ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙$

3,193,684$

439,223

$

‐
‐

$

28

‐

$

‐

$

$

6

$

2

$

22

1,300,727

110,457

16,047

1,190,269

293,397

65,395

9,198

228,001

3,632,908$

185,611$

27,378180,321$3,447,296

Increases in the net book values are mainly due to the acquisition of 4 properties(¥47,747,000thousand) as shown below and capitalized expenditures.
Acquisition cost(in thousands of yen)

Property name

Property No.

Acquisition cost(in thousands of U.S. dollars)

D60

Hotel MyStays Premier Akasaka

20,691,000

186,405

D61

Hotel MyStays Premier Sapporo Park

16,731,000

150,729

D62

Hotel MyStays Ueno East

5,286,000

47,621

D63

Hotel MyStays Midosuji Honmachi

5,039,000

45,39647,747,000

430,153

Total

8.Fair Value of Investment and Rental Properties
The following tables show the net book value and the fair value of the investment and rental properties in the aggregate for the six
months ended June 30, 2018 and December 31, 2018.
Residential
As of / For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Net book value
Balance at the beginning of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

89,949,664

Net increase (decrease) during period ∙∙∙∙∙∙∙∙∙∙
Balance at the end of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(3,380,554)
86,569,109

Fair value ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

100,387,000¥

86,569,109$

779,901(660,828)
85,908,280¥

102,440,000(5,953)773,948$919,315

OfficeAs of / For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Net book value
Balance at the beginning of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

6,474,931

Net increase (decrease) during period ∙∙∙∙∙∙∙∙∙∙
Balance at the end of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(6,474,931)‐

Fair value ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

‐

¥

‐

$

‐

‐
‐
¥

‐

‐
‐
$

‐

Retail facilities
As of / For the six months ended

June 30,

December 31,

December 31,

15

2018

2018

2018
(in thousands of
U.S. dollars)(in thousands of yen)
Net book value
Balance at the beginning of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

4,957,292

Net increase (decrease) during period ∙∙∙∙∙∙∙∙∙∙
Balance at the end of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(44,824)
4,912,468

Fair value ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

6,170,000¥

4,912,468$

44,256(45,728)
4,866,739¥(411)
43,844

6,170,000$

55,585Hotel
As of / For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Net book value
Balance at the beginning of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

226,328,017

Net increase (decrease) during period ∙∙∙∙∙∙∙∙∙∙
Balance at the end of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

19,125,328
245,453,345

Fair value ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

304,985,000¥

245,453,345$

2,211,291

46,421,563
291,874,909¥

418,2122,629,503

354,366,000$

3,192,486

Total
As of / For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Net book value
Balance at the beginning of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

327,709,905

Net increase (decrease) during period ∙∙∙∙∙∙∙∙∙∙
Balance at the end of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

9,225,018
336,934,923

Fair value ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

411,542,000¥

336,934,923$

45,715,006
382,649,930¥

3,035,449
411,8463,447,296

462,580,000$

4,167,387

Notes:
1.Fair value has been determined based on the appraisals or research provided by independent real estate appraisers.
2.For rental revenues and expenses for the six months ended June 30, 2018 and December 31, 2018, please refer to “Note 13: Rent Revenues－Real Estate and Expenses Related toProperty Rental Business“

9.Investment corporation bonds
The following table shows the details of investment corporation bonds for the six months ended December 31, 2018.
For the six months ended December 31, 2018
Beginning

EndingBeginning

EndingInterestbalancebalancebalancebalancerate (%)(in thousands of yen)
1st unsecured investment corporation bond(Issued on May 25, 2018 and due on May 25, 2023)(1)(2)
2nd unsecured investment corporation bond(Issued on May 25, 2018 and due on May 25, 2028) (1)(2)(in thousands of U.S. dollars)

1,000,000

1,000,000

9,009

9,009

1,000,000

1,000,000

9,009

9,009

‐

2,000,000‐

18,0182,000,000

4,000,000

18,01836,036

3rd unsecured investment corporation bond(Issued on October 12, 2018 and due on October 12, 2023)

0.400

0.800

0.550

(1)(3)
Total investment corporation bonds
Notes:(1)

The bonds were issued with pari passu conditions among specified investment corporation bonds.

(2)

The funds are mainly used to acquire properties in trust.

16

(3)

The funds are mainly used to repay existing borrowing.

(4)

Repayment schedule of investment corporation bonds for the next five years after each balance sheet date are as follows:

As of
December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Within 1 year ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

¥

‐

$

‐

1‐2 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐‐

2‐3 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐‐

3‐4 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐‐

4‐5 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

3,000,000

27,027

10. Loans Payable
The following table shows the details of loans payable for the six months ended December 31, 2018.
For the six months ended December 31, 2018

Classific
ation

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance

Increase(in thousands of yen)

Short‐term loans
payableLong‐term loans
payableEndingbalance

Decrease(in thousands of U.S. dollars)

MizuhoBank, Ltd.

667,000‐

667,000

Sumitomo
MitsuiTrust Bank,
Limited

666,000‐

666,000

Sumitomo
Mitsui
Banking
Corporation

667,000‐

MizuhoBank, Ltd.

‐

Sumitomo
Mitsui
Banking
Corporation‐

Averageinterest
rate (%)(1)

Maturity
date

6,009

‐

6,009

‐

0.263

13‐Oct‐18

‐

6,000

‐

6,000

‐

0.263

13‐Oct‐18

667,000

‐

6,009

‐

6,009

‐

0.263

13‐Oct‐18

366,500‐

366,500

‐

3,301

‐

3,301

0.263

02‐Aug‐19‐

366,500‐

366,500

‐

3,301

‐

3,301

0.263

02‐Aug‐19

MUFG
Bank, Ltd.

‐366,000‐

366,000

‐

3,297

‐

3,297

0.263

02‐Aug‐19

Total
Short‐termloanspayable2,000,000

1,099,000

2,000,000

1,099,000

18,0189,900

18,0189,900

MizuhoBank, Ltd.

5,992,000‐

5,992,000‐

53,981‐

53,981‐

0.375

16‐Jul‐18

MUFG
Bank, Ltd.

5,992,000‐

5,992,000‐

53,981‐

53,981‐

0.375

16‐Jul‐18

Sumitomo
Mitsui
Banking
Corporation

5,992,000‐

5,992,000‐

53,981‐

53,981‐

0.375

16‐Jul‐18

ShinseiBank,
Limited.

3,330,000‐

3,330,000‐

30,000‐30,000‐0.375

16‐Jul‐18

Citibank,
N.A., Japan
Branches.

3,000,000‐

3,000,000‐

27,027‐27,027‐0.375

16‐Jul‐18

Sumitomo
MitsuiTrust Bank,
Limited

2,670,000‐

2,670,000‐

24,054‐24,054‐0.375

16‐Jul‐18

Use ofproceeds

Remarks(2)

Unsecured andunguaranteed(2)

Unsecured andunguaranteed(2)

Unsecured andunguaranteed

17

Classification

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Increase

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

MaturitydateResonaBank,
Limited.

1,335,000‐

1,335,000‐

12,027‐

12,027‐0.375

16‐Jul‐18

MUFG
Bank, Ltd.

668,000‐

668,000

‐

6,018

‐

6,018

‐

0.375

16‐Jul‐18

MizuhoBank, Ltd.

5,992,000‐‐

5,992,000

53,981‐‐

53,9810.480

16‐Jul‐19

MUFG
Bank, Ltd.

5,992,000‐‐

5,992,000

53,981‐‐

53,9810.480

16‐Jul‐19

Sumitomo
Mitsui
Banking
Corporation

5,992,000‐‐

5,992,000

53,981‐‐

53,9810.480

16‐Jul‐19

ShinseiBank,
Limited.

3,330,000‐‐

3,330,000

30,000‐‐30,0000.480

16‐Jul‐19

Citibank,
N.A., Japan
Branches.

3,000,000‐‐

3,000,000

27,027‐‐27,0270.480

16‐Jul‐19

Sumitomo
MitsuiTrust Bank,
Limited

2,670,000‐‐

2,670,000

24,054‐‐24,0540.480

16‐Jul‐19

ResonaBank,
Limited.

1,335,000‐‐

1,335,000

12,027‐‐

12,0270.480

16‐Jul‐19

MUFG
Bank, Ltd.

668,000‐‐

668,000

6,018

‐

‐

6,018

0.480

16‐Jul‐19

Long‐term loans
payableMizuhoBank, Ltd.

5,992,000‐‐

5,992,000

53,981‐‐

53,9810.590

16‐Jul‐20

MUFG
Bank, Ltd.

5,992,000‐‐

5,992,000

53,981‐‐

53,9810.590

16‐Jul‐20

Sumitomo
Mitsui
Banking
Corporation

5,992,000‐‐

5,992,000

53,981‐‐

53,9810.590

16‐Jul‐20

ShinseiBank,
Limited.

3,330,000‐‐

3,330,000

30,000‐‐30,0000.590

16‐Jul‐20

Citibank,
N.A., Japan
Branches.

3,000,000‐‐

3,000,000

27,027‐‐27,0270.590

16‐Jul‐20

Sumitomo
MitsuiTrust Bank,
Limited

2,670,000‐‐

2,670,000

24,054‐‐24,0540.590

16‐Jul‐20

ResonaBank,
Limited.

1,335,000‐‐

1,335,000

12,027‐‐

12,0270.590

16‐Jul‐20

MUFG
Bank, Ltd.

668,000‐‐

668,000

6,018

‐

‐

6,018

0.590

16‐Jul‐20

MizuhoBank, Ltd.

3,682,000‐‐

3,682,000

33,171‐‐33,171

0.480

28‐Aug‐19

Sumitomo
MitsuiTrust Bank,
Limited

3,400,000‐‐

3,400,000

30,630‐‐30,6300.343

22‐Jan‐19

Use ofproceeds

Remarks(2)

Unsecured andunguaranteed

18

Classification

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Long‐term loans
payableIncrease

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturitydate

MUFG
Bank, Ltd.

850,000‐‐

850,000

7,657

‐

‐

7,657

0.343

22‐Jan‐19

Sumitomo
MitsuiTrust Bank,
Limited

3,400,000‐‐

3,400,000

30,630‐‐30,6300.600

22‐Jan‐21

MUFG
Bank, Ltd.

850,000‐‐

850,000

7,657

‐

‐

7,657

0.600

22‐Jan‐21

MizuhoBank, Ltd.

465,000‐‐

465,000

4,189

‐

‐

4,189

0.463

30‐Mar‐19

MUFG
Bank, Ltd.

1,125,000‐‐

1,125,000

10,135‐‐

10,1350.463

30‐Mar‐19

Sumitomo
MitsuiTrust Bank,
Limited2,181,000‐‐

2,181,000

19,648‐‐19,6480.463

30‐Mar‐19

ShinseiBank,
Limited.

570,000‐‐

570,000

5,135

‐

‐

5,135

0.463

30‐Mar‐19

ResonaBank,
Limited.

570,000‐‐

570,000

5,135

‐

‐

5,135

0.463

30‐Mar‐19

MUFG
Bank, Ltd.

650,000‐‐

650,000

5,855

‐

‐

5,855

0.463

30‐Mar‐19

Japan Post
Bank Co.,Ltd.

2,000,000‐‐

2,000,000

18,018‐‐18,0180.463

30‐Mar‐19

Developme
nt Bank ofJapan Inc.

1,000,000‐‐

1,000,000

9,009

‐

‐

9,009

0.463

30‐Mar‐19

The Bank ofFukuoka,Ltd.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.463

30‐Mar‐19

The
Shizuoka
Bank, Ltd.

1,270,000‐‐

1,270,000

11,441‐‐

11,4410.463

30‐Mar‐19

The Daishi
Bank, Ltd.

1,000,000‐‐

1,000,000

9,009

‐

‐

9,009

0.463

30‐Mar‐19

The
NomuraTrust andBankingCo., Ltd.

270,000‐‐

270,000

2,432

‐

‐

2,432

0.463

30‐Mar‐19

MizuhoBank, Ltd.

965,000‐‐

965,000

8,693

‐

‐

8,693

0.563

30‐Mar‐20

MUFG
Bank, Ltd.

1,125,000‐‐

1,125,000

10,135‐‐

10,1350.563

30‐Mar‐20

Sumitomo
MitsuiTrust Bank,
Limited

2,180,000‐‐

2,180,000

19,639‐‐19,6390.563

30‐Mar‐20

ShinseiBank,
Limited.

570,000‐‐

570,000

5,135

‐

‐

5,135

0.563

30‐Mar‐20

ResonaBank,
Limited.

570,000‐‐

570,000

5,135

‐

‐

5,135

0.563

30‐Mar‐20

Use ofproceeds

Remarks(2)

Unsecured andunguaranteed

19Classification

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Long‐term loans
payableIncrease

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturitydate

MUFG
Bank, Ltd.
(5)650,000‐‐

650,000

5,855

‐

‐

5,855

0.563

30‐Mar‐20

Japan Post
Bank Co.,Ltd.

2,000,000‐‐

2,000,000

18,018‐‐18,0180.563

30‐Mar‐20

The Bank ofFukuoka,Ltd.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.563

30‐Mar‐20

The
Shizuoka
Bank, Ltd.

270,000‐‐

270,000

2,432

‐

‐

2,432

0.563

30‐Mar‐20

The
KagawaBank, Ltd.

500,000‐‐

500,000

4,504

‐

‐

4,504

0.563

30‐Mar‐20

The
Hyakugo
Bank, Ltd.

1,000,000‐‐

1,000,000

9,009

‐

‐

9,009

0.563

30‐Mar‐20

The
NomuraTrust andBankingCo., Ltd.

270,000‐‐

270,000

2,432

‐

‐

2,432

0.563

30‐Mar‐20

MizuhoBank, Ltd.

1,965,000‐‐

1,965,000

17,702‐‐

17,7020.663

30‐Mar‐21

MUFG
Bank, Ltd.

1,125,000‐‐

1,125,000

10,135‐‐

10,1350.663

30‐Mar‐21

Sumitomo
MitsuiTrust Bank,
Limited

2,180,000‐‐

2,180,000

19,639‐‐19,6390.663

30‐Mar‐21

ShinseiBank,
Limited.

570,000‐‐

570,000

5,135

‐

‐

5,135

0.663

30‐Mar‐21

ResonaBank,
Limited.

570,000‐‐

570,000

5,135

‐

‐

5,135

0.663

30‐Mar‐21

MUFG
Bank, Ltd.

650,000‐‐

650,000

5,855

‐

‐

5,855

0.663

30‐Mar‐21

The Bank ofFukuoka,Ltd.

1,333,000‐‐

1,333,000

12,009‐‐12,0090.663

30‐Mar‐21

The
Shizuoka
Bank, Ltd.

270,000‐‐

270,000

2,432

‐

‐

2,432

0.663

30‐Mar‐21

The
KagawaBank, Ltd.

500,000‐‐

500,000

4,504

‐

‐

4,504

0.663

30‐Mar‐21

The
Hiroshima
Bank, Ltd.

1,000,000‐‐

1,000,000

9,009

‐

‐

9,009

0.663

30‐Mar‐21

The
NomuraTrust andBankingCo., Ltd.

270,000‐‐

270,000

2,432

‐

‐

2,432

0.663

30‐Mar‐21

Citibank,
N.A., Japan
Branches.

1,000,000‐‐

1,000,000

9,009

‐

‐

9,009

0.463

15‐Jun‐19

Citibank,
N.A., Japan
Branches.

1,000,000‐‐

1,000,000

9,009

‐

‐

9,009

0.563

15‐Jun‐20

Use ofproceeds

Remarks(2)

Unsecured andunguaranteed

20

Classification

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Long‐term loans
payableIncrease

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturity
date

Citibank,
N.A., Japan
Branches.

1,000,000‐‐

1,000,000

9,009

‐

‐

9,009

0.663

15‐Jun‐21

Developme
nt Bank ofJapan Inc.

1,000,000‐‐

1,000,000

9,009

‐

‐

9,009

0.463

30‐Jun‐19

AEON
Bank, Ltd.

3,000,000‐‐

3,000,000

27,027‐‐27,0270.663

30‐Jun‐21

The Tokyo
Star Bank,
Limited

700,000‐‐

700,000

6,306

‐

‐

6,306

0.463

20‐Jul‐19

The Tokyo
Star Bank,
Limited

1,600,000‐‐

1,600,000

14,414‐‐

14,4140.563

20‐Jul‐20

The Tokyo
Star Bank,
Limited

1,700,000‐‐

1,700,000

15,315‐‐

15,3150.663

20‐Jul‐21

MizuhoBank, Ltd.

634,000‐‐

634,000

5,711

‐

‐

5,711

0.463

14‐Mar‐20

Developme
nt Bank ofJapan Inc.

1,000,000‐‐

1,000,000

9,009

‐

‐

9,009

0.463

14‐Mar‐20

ResonaBank,
Limited.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.463

14‐Mar‐20

The Bank ofFukuoka,Ltd.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.463

14‐Mar‐20

The
NomuraTrust andBankingCo., Ltd.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.463

14‐Mar‐20

The Towa
Bank, Ltd.

252,000‐‐

252,000

2,270

‐

‐

2,270

0.463

14‐Mar‐20

The
Shizuoka
Bank, Ltd.

200,000‐‐

200,000

1,801

‐

‐

1,801

0.463

14‐Mar‐20

The
Gunma
Bank, Ltd.

165,000‐‐

165,000

1,486

‐

‐

1,486

0.463

14‐Mar‐20

MizuhoBank, Ltd.

1,633,000‐‐

1,633,000

14,711‐‐

14,7110.563

14‐Mar‐21

ResonaBank,
Limited.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.563

14‐Mar‐21

The Bank ofFukuoka,Ltd.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.563

14‐Mar‐21

The
NomuraTrust andBankingCo., Ltd.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.563

14‐Mar‐21

The Towa
Bank, Ltd.

253,000‐‐

253,000

2,279

‐

‐

2,279

0.563

14‐Mar‐21

The
Shizuoka
Bank, Ltd.

200,000‐‐

200,000

1,801

‐

‐

1,801

0.563

14‐Mar‐21

Use ofproceeds

Remarks(2)

Unsecured andunguaranteed

21

Classification

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Long‐term loans
payableIncrease

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturity
date

The
Gunma
Bank, Ltd.

165,000‐‐

165,000

1,486

‐

‐

1,486

0.563

14‐Mar‐21

MizuhoBank, Ltd.

1,733,000‐‐

1,733,000

15,612‐‐

15,6120.663

14‐Mar‐22

ResonaBank,
Limited.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.663

14‐Mar‐22

The Bank ofFukuoka,Ltd.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.663

14‐Mar‐22

The
NomuraTrust andBankingCo., Ltd.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.663

14‐Mar‐22

AEON
Bank, Ltd.

900,000‐‐

900,000

8,108

‐

‐

8,108

0.663

14‐Mar‐22

The Towa
Bank, Ltd.

253,000‐‐

253,000

2,279

‐

‐

2,279

0.663

14‐Mar‐22

The
Shizuoka
Bank, Ltd.

200,000‐‐

200,000

1,801

‐

‐

1,801

0.663

14‐Mar‐22The
Dai‐ichi Life
Insurancecompany,
Limited

500,000‐‐

500,000

4,504

‐

‐

4,504

0.663

14‐Mar‐22

The
Gunma
Bank, Ltd.

165,000‐‐

165,000

1,486

‐

‐

1,486

0.663

14‐Mar‐22

Sumitomo
Mitsui
Banking
Corporation

3,000,000‐‐

3,000,000

27,027‐‐27,0270.513

14‐Sep‐20

MizuhoBank, Ltd.

4,321,000‐‐

4,321,000

38,927‐‐38,9270.613

29‐Nov‐21

The
Dai‐ichi Life
Insurancecompany,
Limited3,000,000‐‐

3,000,000

27,027‐‐27,0270.613

29‐Nov‐21

ShinseiBank,
Limited.

355,000‐‐

355,000

3,198

‐

‐

3,198

0.363

13‐Oct‐20

Citibank,
N.A., Japan
Branches

355,000‐‐

355,000

3,198

‐

‐

3,198

0.363

13‐Oct‐20

ResonaBank,
Limited.

334,000‐‐

334,000

3,009

‐

‐

3,009

0.363

13‐Oct‐20

The Bank ofFukuoka,Ltd.

300,000‐‐

300,000

2,702

‐

‐

2,702

0.363

13‐Oct‐20

AEON
Bank, Ltd.

190,000‐‐

190,000

1,711

‐

‐

1,711

0.363

13‐Oct‐20

The
NomuraTrust andBankingCo., Ltd.

167,000‐‐

167,000

1,504

‐

‐

1,504

0.363

13‐Oct‐20

The
Hiroshima
Bank, Ltd.

167,000‐‐

167,000

1,504

‐

‐

1,504

0.363

13‐Oct‐20

Use ofproceeds

Remarks(2)

Unsecured andunguaranteed

22

Classification

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Long‐term loans
payableIncrease

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturitydate

ShinseiBank,
Limited.

355,000‐‐

355,000

3,198

‐

‐

3,198

0.463

13‐Oct‐21

Citibank,
N.A., Japan
Branches

355,000‐‐

355,000

3,198

‐

‐

3,198

0.463

13‐Oct‐21

ResonaBank,
Limited.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.463

13‐Oct‐21

The Bank ofFukuoka,Ltd.

300,000‐‐

300,000

2,702

‐

‐

2,702

0.463

13‐Oct‐21

AEON
Bank, Ltd.

190,000‐‐

190,000

1,711

‐

‐

1,711

0.463

13‐Oct‐21

The
NomuraTrust andBankingCo., Ltd.

167,000‐‐

167,000

1,504

‐

‐

1,504

0.463

13‐Oct‐21

The
Hiroshima
Bank, Ltd.

167,000‐‐

167,000

1,504

‐

‐

1,504

0.463

13‐Oct‐21

MizuhoBank, Ltd.

500,000‐‐

500,000

4,504

‐

‐

4,504

0.663

13‐Oct‐22

Sumitomo
MitsuiTrust Bank,
Limited

500,000‐‐

500,000

4,504

‐

‐

4,504

0.663

13‐Oct‐22

Sumitomo
Mitsui
Banking
Corporation

500,000‐‐

500,000

4,504

‐

‐

4,504

0.663

13‐Oct‐22

ShinseiBank,
Limited.

355,000‐‐

355,000

3,198

‐

‐

3,198

0.663

13‐Oct‐22

Citibank,
N.A., Japan
Branches

355,000‐‐

355,000

3,198

‐

‐

3,198

0.663

13‐Oct‐22

ResonaBank,
Limited.

333,000‐‐

333,000

3,000

‐

‐

3,000

0.663

13‐Oct‐22

Developme
nt Bank ofJapan Inc.

1,500,000‐‐

1,500,000

13,513‐‐

13,5130.663

13‐Oct‐22

The Bank ofFukuoka,Ltd.

300,000‐‐

300,000

2,702

‐

‐

2,702

0.663

13‐Oct‐22

AEON
Bank, Ltd.

190,000‐‐

190,000

1,711

‐

‐

1,711

0.663

13‐Oct‐22

The
NomuraTrust andBankingCo., Ltd.

166,000‐‐

166,000

1,495

‐

‐

1,495

0.663

13‐Oct‐22

The
Hiroshima
Bank, Ltd.

166,000‐‐

166,000

1,495

‐

‐

1,495

0.663

13‐Oct‐22The
Dai‐ichi Life
Insurancecompany,
Limited

500,000‐‐

500,000

4,504

‐

‐

4,504

0.663

13‐Oct‐22

MizuhoBank, Ltd.

1,250,000‐‐

1,250,000

11,261‐‐

11,261

0.763

13‐Oct‐23

Use ofproceeds

Remarks(2)

Unsecured andunguaranteed

23

Classification

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance

Increase(in thousands of yen)Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturity
date

Sumitomo
MitsuiTrust Bank,
Limited

1,065,000‐‐

1,065,000

9,594

‐

‐

9,594

0.763

13‐Oct‐23

Sumitomo
Mitsui
Banking
Corporation

1,250,000‐‐

1,250,000

11,261‐‐

11,261

0.763

13‐Oct‐23

MizuhoBank, Ltd.

1,250,000‐‐

1,250,000

11,261‐‐

11,261

0.863

11‐Oct‐24

Sumitomo
MitsuiTrust Bank,
Limited

1,060,000‐‐

1,060,000

9,549

‐

‐

9,549

0.863

11‐Oct‐24

Sumitomo
Mitsui
Banking
Corporation

1,250,000‐‐

1,250,000

11,261‐‐

11,261

0.863

11‐Oct‐24

MizuhoBank, Ltd.

1,850,000‐‐

1,850,000

16,666‐‐

16,6660.313

13‐Oct‐19

Sumitomo
Mitsui
Banking
Corporation

1,850,000‐‐

1,850,000

16,666‐‐

16,6660.313

13‐Oct‐19

ShinseiBank,
Limited.

1,000,000‐‐

1,000,000

9,009

‐

‐

9,009

0.750

27‐Oct‐23

MUFG
Bank, Ltd.

500,000‐‐

500,000

4,504

‐

‐

4,504

0.750

27‐Oct‐23

MizuhoBank, Ltd.

‐2,442,000‐

2,442,000‐

22,000‐22,0000.363

17‐jul‐21

Long‐term loans
payableMUFG
Bank, Ltd.

‐2,220,000‐

2,220,000‐

20,000‐20,0000.363

17‐jul‐21

Sumitomo
Mitsui
Banking
Corporation‐

1,998,000‐

1,998,000‐

18,000‐18,0000.363

17‐jul‐21

ShinseiBank,
Limited.

‐1,110,000‐

1,110,000‐

10,000‐10,0000.363

17‐jul‐21

Citibank,
N.A., Japan
Branches‐

1,000,000‐

1,000,000

‐

9,009

‐

9,009

0.363

17‐jul‐21

Sumitomo
MitsuiTrust Bank,
Limited

‐890,000‐

890,000

‐

8,018

‐

8,018

0.363

17‐jul‐21

MizuhoBank, Ltd.

‐2,443,000‐

2,443,000‐

22,009‐22,0090.463

17‐jul‐22

MUFG
Bank, Ltd.

‐2,220,000‐

2,220,000‐

20,000‐20,0000.463

17‐jul‐22

Sumitomo
Mitsui
Banking
Corporation‐

1,997,000‐

1,997,000‐

17,990‐17,9900.463

17‐jul‐22

ShinseiBank,
Limited.

‐1,110,000‐

1,110,000‐

10,000‐10,0000.463

17‐jul‐22

Citibank,
N.A., Japan
Branches‐

1,000,000‐

1,000,000

‐

9,009

‐

9,009

0.463

17‐jul‐22

Use ofproceeds

Remarks(2)

Unsecured andunguaranteed

24Classification

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance

Increase(in thousands of yen)

Long‐term loans
payableEndingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturity
date

Sumitomo
MitsuiTrust Bank,
Limited

‐890,000‐

890,000

‐

8,018

‐

8,018

0.463

17‐Jul‐22

MizuhoBank, Ltd.

‐2,442,000‐

2,442,000‐

22,000‐22,0000.563

14‐Jul‐23

MUFG
Bank, Ltd.

‐2,220,000‐

2,220,000‐

20,000‐20,0000.563

14‐Jul‐23

Sumitomo
Mitsui
Banking
Corporation‐

1,997,000‐

1,997,000‐

17,990‐17,9900.563

14‐Jul‐23

ShinseiBank,
Limited.

‐1,110,000‐

1,110,000‐

10,000‐10,0000.563

14‐Jul‐23

Citibank,
N.A., Japan
Branches‐

1,000,000‐

1,000,000

‐

9,009

‐

9,009

0.563

14‐Jul‐23

Sumitomo
MitsuiTrust Bank,
Limited

‐890,000‐

890,000

‐

8,018

‐

8,018

0.563

14‐Jul‐23

MizuhoBank, Ltd.

‐766,000‐

766,000

‐

6,900

‐

6,900

0.363

02‐Augl‐21

Sumitomo
Mitsui
Banking
Corporation‐

766,000‐

766,000

‐

6,900

‐

6,900

0.363

02‐Augl‐21

MUFG
Bank, Ltd.

‐

467,000‐

467,000

‐

4,207

‐

4,207

0.363

02‐Augl‐21

ShinseiBank,
Limited.

‐150,000‐

150,000

‐

1,351

‐

1,351

0.363

02‐Augl‐21

Citibank,
N.A., Japan
Branches‐

120,000‐

120,000

‐

1,081

‐

1,081

0.363

02‐Augl‐21

The
NomuraTrust andBankingCo., Ltd.

‐

30,000‐30,000

‐

270

‐

270

0.363

02‐Augl‐21

AEON
Bank, Ltd.

‐

60,000‐60,000

‐

540

‐

540

0.363

02‐Augl‐21

MizuhoBank, Ltd.

‐2,521,500‐

2,521,500‐

22,716‐22,716

0.363

26‐Augl‐21

Sumitomo
Mitsui
Banking
Corporation‐

2,521,500‐

2,521,500‐

22,716‐22,716

0.363

26‐Augl‐21

MUFG
Bank, Ltd.

‐2,133,000‐

2,133,000‐

19,216‐

19,216

0.363

26‐Augl‐21

Sumitomo
MitsuiTrust Bank,
Limited‐1,000,000‐

1,000,000

‐

9,009

‐

9,009

0.363

26‐Augl‐21

ShinseiBank,
Limited.

‐684,000‐

684,000

‐

6,162

‐

6,162

0.363

26‐Augl‐21

Citibank,
N.A., Japan
Branches‐

546,000‐

546,000

‐

4,918

‐

4,918

0.363

26‐Augl‐21

Use ofproceeds

Remarks(2)

Unsecured andunguaranteed

25

Classification

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance

Increase(in thousands of yen)

Long‐term loans
payableEndingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturity
date

Developme
nt Bank ofJapan Inc.

‐

500,000‐

500,000

‐

4,504

‐

4,504

0.363

26‐Sep‐21

ResonaBank,
Limited.

‐445,000‐

445,000

‐

4,009

‐

4,009

0.363

26‐Sep‐21

The
NomuraTrust andBankingCo., Ltd.

‐

137,000‐

137,000

‐

1,234

‐

1,234

0.363

26‐Sep‐21

AEON
Bank, Ltd.

‐273,000‐

273,000

‐

2,459

‐

2,459

0.363

26‐Sep‐21

MizuhoBank, Ltd.

‐3,287,000‐

3,287,000‐

29,612‐

29,612

0.463

26‐Sep‐22

Sumitomo
Mitsui
Banking
Corporation‐

3,287,000‐

3,287,000‐

29,612‐

29,612

0.463

26‐Sep‐22

MUFG
Bank, Ltd.

‐2,600,000‐

2,600,000‐

23,423‐23,4230.463

26‐Sep‐22

Sumitomo
MitsuiTrust Bank,
Limited‐1,000,000‐

1,000,000

‐

9,009

‐

9,009

0.463

26‐Sep‐22

ShinseiBank,
Limited.

‐833,000‐

833,000

‐

7,504

‐

7,504

0.463

26‐Sep‐22

Citibank,
N.A., Japan
Branches‐

667,000‐

667,000

‐

6,009

‐

6,009

0.463

26‐Sep‐22

Developme
nt Bank ofJapan Inc.

‐

500,000‐

500,000

‐

4,504

‐

4,504

0.463

26‐Sep‐22

ResonaBank,
Limited.

‐445,000‐

445,000

‐

4,009

‐

4,009

0.463

26‐Sep‐22

The
NomuraTrust andBankingCo., Ltd.

‐

167,000‐

167,000

‐

1,504

‐

1,504

0.463

26‐Sep‐22

AEON
Bank, Ltd.

‐334,000‐

334,000

‐

3,009

‐

3,009

0.463

26‐Sep‐22

MizuhoBank, Ltd.

‐3,287,500‐

3,287,500‐

29,617‐

29,6170.563

26‐Sep‐23

Sumitomo
Mitsui
Banking
Corporation‐

3,287,500‐

3,287,500‐

29,617‐

29,6170.563

26‐Sep‐23

MUFG
Bank, Ltd.

‐2,600,000‐

2,600,000‐

23,423‐23,4230.563

26‐Sep‐23

Sumitomo
MitsuiTrust Bank,
Limited‐1,000,000‐

1,000,000

‐

9,009

‐

9,009

0.563

26‐Sep‐23

ShinseiBank,
Limited.

‐833,000‐

833,000

‐

7,504

‐

7,504

0.563

26‐Sep‐23

Citibank,
N.A., Japan
Branches‐

667,000‐

667,000

‐

6,009

‐

6,009

0.563

26‐Sep‐23

Use ofproceeds

Remarks(2)

Unsecured andunguaranteed

26

Classification

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance

Increase(in thousands of yen)

Long‐term loans
payableEndingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturity
date

Developme
nt Bank ofJapan Inc.

‐

500,000‐

500,000

‐

4,504

‐

4,504

0.563

26‐Sep‐23

ResonaBank,
Limited.

‐445,000‐

445,000

‐

4,009

‐

4,009

0.563

26‐Sep‐23

The
NomuraTrust andBankingCo., Ltd.

‐

166,000‐

166,000

‐

1,495

‐

1,495

0.563

26‐Sep‐23

AEON
Bank, Ltd.

‐

333,000‐

333,000

‐

3,000

‐

3,000

0.563

26‐Sep‐23

Total
Long‐term
loans
payable185,415,000

68,338,000

28,979,000

224,774,000

1,670,405

615,657

261,072

2,024,990‐‐

187,415,000

69,437,000

30,979,000

225,873,000

1,688,423

625,558

279,0902,034,891‐‐

Total loans payable

Use ofproceeds

Remarks(2)

Unsecured andunguara
nteed

‐

‐

Notes:(1)

The average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to three decimal places.

(2)

The funds are mainly used to acquire properties in trust and for repayment of loans payable.

(3)

Long‐term loans payable include current portion.

(4)

Repayment schedule of long‐term loans payable (except for the current portion) for the next five years after each balance sheet date are as follows:

As of
December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
1‐2 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

50,130,000$

451,621

2‐3 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

55,601,000

500,909

3‐4 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

32,895,000

296,351

4‐5 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

27,843,000

250,837

11. Net Assets
The Company issues only non‐par value units in accordance with the Investment Trust Act, and the entire amount of the issue price of
new investment units is allocated to unitholders’ capital within net assets. The Company is required to maintain net assets of at least¥50,000 thousand (US$450 thousand) as required by Article 67‐4 of the Investment Trust Act.
The number of investment units authorized was 10,000,000 units as of June 30, 2018 and December 31, 2018.
The number of investment units issued and outstanding were 4,793,181 as of June 30, 2018 and 5,666,840 as of December 31, 2018
respectively.

12.Appropriation of Retained Earnings
In accordance with the distribution policy in Article 17, Paragraph 1, of the Company’s articles of incorporation which stipulates making
distributions in excess of 90% of distributable profit as defined in Article 67‐15, Paragraph 1 of the Special Taxation Measures Act of Japanfor the fiscal period.
The following table shows the appropriation of retained earnings for the six months ended June 30, 2018 and December 31, 2018.
For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Unappropriated retained earnings ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥7,610,548¥

9,140,372$

82,345Distributions in excess of retained earnings ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

27

Allowance for temporary differences adjustment ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐(85,002)(765)

Deduction from unitholders capital surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐(204,006)(1,837)

Distributions ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(6,854,248)(9,537,291)(85,921)

Of which, distributions of earnings∙∙ ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(6,854,248)(9,248,282)(83,317

Of which, allowance for adjustment of temporary differences ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐(85,002)(765)

Of which, deduction from unitholders capital surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐(204,006)(1,837)Retained earnings / losses carried forward ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥756,300¥(107,910)

$

(972)

The distribution in respect of the six months ended December 31, 2018 of ¥1,683 (US$15.1) per investment unit, amounting to a total
distribution of ¥9,537,291thousand (US$85,921 thousand) was proposed and approved at the Board of Directors meeting on February 21,
2019. These financial statements do not reflect these distributions payable.
Cash distributions per investment unit were ¥1,430and ¥1,683 (US$15.1) for the six months ended June 30, 2018, and December 31, 2018,
respectively.
Notes related to provision and reversal of allowance for temporary differences adjustment is below.
For the six months ended June 30, 2018
Not Applicable.
For the six months ended December 31, 2018
In this table, the Company recorded allowance for temporary differences adjustment below.
(a) Reasons, related assets and allowance(in thousands of yen)
Related assets, etc.

Leasehold rights in trust

Allowance for temporary difference adjustments

Reason for occurrenceOccurrence of amortization of leasehold rights in trust

85,002(in thousands of U.S dollars)

Related assets, etc.

Leasehold rights in trust

Allowance for temporary difference adjustments

Reason for occurrenceOccurrence of amortization of leasehold rights in trust765(b) Method of reversal
Method of reversal

Related assets, etc.

Leasehold rights in trust

Upon sale, the corresponding amount is scheduled to be reversed.

13. Rent Revenues － Real Estate and Expenses Related to Property Rental Business
Rent revenue – real estate and expenses related to property rental business for the six months ended June 30, 2018 and December 31,
2018 consist of the following:
For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Rental revenue – real estate:
Rental revenue and common area charges (*)∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total rental revenue – real estate ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥10,769,777
352,704
11,122,481¥

Expenses related to property rental business:
Facility management fees ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Property related taxes ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Insurance expense ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

665,093
470,692
12,845¥¥

13,258,939
345,284
13,604,224$

667,393547,232
13,817$$

119,449
3,110
122,560

6,012
4,930
124

28

Depreciation ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total expenses related to property rental business ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Operating income from property leasing activities∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥2,772,510
215,476
4,136,619
6,985,862(*)Variable rental revenue of hotels ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥3,789,484¥¥

3,039,033
183,199
4,450,676
9,153,548$$

27,3781,650
40,09682,464¥

4,953,767$

44,628

14. Breakdown of Gain on sales of Properties
For the six months ended June 30, 2018
Harmonie
Ochanomizu
Revenue from sales of properties ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Cost of properties sold ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other sale‐related costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Gain or loss on sales of properties ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥1,606,646
1,346,372
38,843
221,430
Cross Square
NAKANO

Revenue from sales of properties ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Cost of properties sold ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other sale‐related costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Gain or loss on sales of properties ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥1,357,090
1,125,668
23,268208,153

Growth Maison
Ikebukuro(in thousands of yen)¥
1,059,850
743,659
26,625¥289,565
Ohki Aoba
Building(in thousands of yen)¥
728,446
709,604
11,439¥
7,402

Capital Heights
Kagurazaka¥

734,817623,867
20,817
90,132¥

Lexington Plaza
Nishi‐Gotanda¥¥

5,180,003
4,632,693
114,348432,961

For the six months ended December 31, 2018
Not Applicable.

15. Income Taxes
The Company is subject to corporate income taxes in Japan. The Company may deduct from its taxable income the amounts distributed
to its unitholders, provided the requirements are met under the Special Taxation Measures Act of Japan. Under this act, the Company
must meet a number of tax requirements, including a requirement to distribute in excess of 90% of distributable profit for the fiscal
period in order to be able to deduct such amounts. If the Company does not satisfy all of the requirements, the entire taxable income of
the Company will be subject to regular corporate income taxes in Japan.
The Company has a policy of making distributions in excess of 90% of its distributable profit for the fiscal period to qualify for conditions
set forth in the Special Taxation Measures Act of Japan to achieve a deduction of distributions for income tax purpose and it distributes
approximately 100% of distributable profit. Hence, the Company has treated the distributions as a tax allowable deduction as defined in
the Special Taxation Measures Act of Japan.
(a) Reconciliations of the Company’s effective tax rates and statutory tax rates are as follows:
For the six months ended

June 30,
2018

December 31,
2018(Rate)

Statutory tax rates ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Deductible cash distributions ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Increase (decrease) in valuation allowance ∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

31.74 %
(22.95)(8.79)
0.01

31.51 %
(31.84)(0.35)
0.69

Effective tax rates ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

0.01 %

0.01 %(b) Deferred tax assets and liabilities consist of the following:
As ofJune 30,
2018

December 31,
2018(in thousands of yen)

December 31,
2018(in thousands of29

U.S. dollars)
Deferred tax assets:
Enterprise tax payable
Allowance for doubtful accounts ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Buildings and other (merger) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

¥

1,325
28
561,75127
549,474

11
0
4,950

7,200,289
10,122
116,528

1,367,722
7,153,149
10,142
153,295

12,32164,44291
1,381

Subtotal ‐ deferred tax assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Valuation allowance for tax loss carried forward
Valuation allowance for the sum of deductible temporary differences

9,264,262‐‐

9,235,105(7,153,149)(2,037,871)

83,199(64,442)(18,359)

Subtotal ‐ valuation allowance ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(9,225,589)(9,191,020)(82,801)

Total ‐ deferred tax assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

38,67344,084397

Land (merger) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙Net loss carried forward(*) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Asset retirement obligations ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Fixed‐term leasehold ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

¥

1,294

1,374,216$

Deferred tax liabilities:
Asset retirement obligations ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

9,797

9,751

87

Deferred gains or losses on hedges ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

28,87534,333309

38,67344,084397

Total ‐ deferred tax liabilities
Net deferred tax assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

¥

‐

¥

‐

$

‐

(*)The amounts of tax loss carried forward and the deferred tax assets are indicated by carry‐forward period.
For the six month ended December 31, 2018

Within 1 year

1‐2 years

2‐3 years

3‐4 years

4‐5 years

Over 5 years

Total(in thousands of yen)Tax loss carried forward (a)5,164,678

1,317,493‐

349,185

321,791‐

Valuation allowance ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(5,164,678)(1,317,493)‐(349,185)(321,791)‐

7,153,149(7,153,149)

Deferred tax assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

‐

‐

‐

‐

‐

‐

‐

Within 1 year

1‐2 years

2‐3 years

3‐4 years

4‐5 years

Over 5 years

Total(in thousands of U.S. dollars)
Tax loss carried forward (a)46,528

11,869

‐

3,145

2,899

‐

Valuation allowance ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(46,528)(11,869)‐(3,145)(2,899)‐64,442(64,442)

Deferred tax assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

‐

‐

‐

‐

‐

‐

‐

(a)Tax loss carried forward shown in the above table is after multiplying the statutory tax rate.

16. Leases(a) Lease rental revenues
The future minimum rental revenues pursuant to existing rental contracts as of June 30, 2018 and December 31, 2018 scheduled to bereceived are summarized as follows:
As ofJune 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Due within one year ∙∙∙∙∙∙∙∙∙∙∙∙¥
Due over one year ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

8,623,053
58,058,083¥

9,754,753
63,134,893$

87,880568,782

Total ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

66,681,137¥

72,889,647$

656,663(b) Lease rental expenses

30

The future minimum rental expenses pursuant to existing rental contracts as of June 30, 2018 and December 31, 2018 scheduled to be
paid are summarized as follows:
As ofJune 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Due within one year ∙∙∙∙∙∙∙∙∙∙∙∙¥
Due over one year ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

312,959
10,090,556¥

312,959
9,934,076$

2,819
89,496

Total ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

10,403,515¥

10,247,035$

92,315

17. Financial Instruments(a) Qualitative information for financial instruments(i) Policy for financial instrument transactions
The Company raises funds through loans payable , investment corporation bonds, and the issuance of investment units toacquire real estate properties, pay property maintenance expenses and/or repay existing loans payable. Surplus funds aremanaged carefully through investments in financial instruments taking into account liquidity and safety in light of the current
financial market conditions. Derivative instruments are used only for hedging purposes and not for speculation.
(ii) Nature and extent of risks arising from financial instruments and risk management
The funds raised through loans payable and investment corporation bonds are mainly used to acquire real estate properties orproperties in trust and for the repayment of existing loans payable. Liquidity risks relating to loans payable are managed by thefinance department of the Asset Manager by preparing monthly plans for funds, and monitoring the covenants defined in loan
agreements.
(iii) Supplemental information for financial instruments
The fair value of financial instruments is based on quoted market prices if available. When quoted market prices are notavailable, fair value is estimated using valuation techniques which contain various assumptions. If other valuation models orassumptions were used, the estimated value may differ.
(b) Quantitative information for financial instruments
The following table shows the carrying amounts, fair values and valuation differences of financial instruments for which fairvalue is available as of June 30, 2018 and December 31, 2018.
As ofJune 30,
2018
Carrying
amounts

December 31,
2018

Fair value

Carrying
amounts

Difference

December 31,
2018

Fair value

Carrying
amounts

Difference(in thousands of yen)

Fair value

Difference(in thousands of U.S. dollars)

Assets:Current:(1) Cash and bank deposits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥8,505,792(2) Cash and bank deposits in trust. ∙∙∙∙∙

6,566,761

Total assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥15,072,553¥

8,505,792¥

6,566,761¥

15,072,553

‐

¥

‐
¥

‐

3,985,335¥

7,079,268¥

11,064,604

3,985,335¥

7,079,268¥

11,064,604

‐

$

‐
¥

‐

35,903$

63,777$

99,68135,903$‐

63,777$

99,681‐$‐

Liabilities:(3)Short‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

2,000,000

2,000,000(4) Current portion of long‐term loans
payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐

1,099,000

1,099,000

46,663,000(5) Investment corporation bonds ∙∙∙∙∙∙∙∙

2,000,000

46,663,000‐

54,745,000

1,998,500(1,500)4,000,000(6) Long‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

138,752,000

Total liabilities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥189,415,000¥

189,413,500¥(1,500)¥229,873,000¥

229,869,500¥(3,500)$2,070,927$

2,070,896$(31)(7)Derivatives∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥90,975¥90,975¥‐¥

124,029¥

124,029

¥

‐

$

1,117

$

1,117

$

‐

138,752,000‐

170,029,000

‐

9,900

9,900

54,745,000‐

493,198

493,198‐

3,996,500(3,500)36,03636,004(31)

170,029,000‐

1,531,792‐

1,531,792

‐

Notes

(i)The methods and assumptions used to estimate fair value are as follows:31

(1)Cash and bank deposits and(2)Cash and bank deposits in trust(3)Short‐term loans payable
Because of their short maturities, the carrying amounts approximate their fair value.
(4)Current portion of long‐term loans payable(6)Long‐term loans payable
Long‐term loans payable with floating interest rates reflecting changes in market rates within a short term period are stated at their carrying amounts as their carrying
amounts approximate their fair values.
(5)Investment corporation bonds
The fair values of investment corporate bonds are determined based on the present value of contractual cash flows discounted at current market interest rates which would
be applicable to new investment corporate bonds under the same conditions and terms.
(7)Derivatives
Please refer to the “19. Derivatives” below.

(ii) Financial instruments for which fair value is difficult to determine are as follows:
As ofJune 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Tenant leasehold and security deposits in trust ∙∙∙∙∙∙∙∙∙∙∙∙¥

2,026,400¥

2,009,816$

18,106

Investment securities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

17,856,387¥

54,640,213$

492,254

Tenant leasehold and security deposits are not publicly traded, and it is difficult to determine their fair value based on estimated future cash flows because the repayment datesof those deposits are not certain. Therefore, these financial instruments are not included in the above quantitative information.
Fair values of preferred securities and TK interest are not subject to disclosure of fair value as they have no market value and their fair values are extremely difficult to recognize.

(iii) Cash flow schedule of financial assets after the balance sheet dateWithin 1 year

1‐2 years

2‐3 years

3‐4 years

4‐5 years

Over 5 years(in thousands of yen)
As of June 30, 2018:
Cash and bank deposits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥Cash and bank deposits in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

8,505,792
6,566,761

¥

‐
‐

¥

‐
‐

¥

‐
‐

¥

‐
‐

¥

‐
‐

Total ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

15,072,553

¥

‐

¥

‐

¥

‐

¥

‐

¥

‐

As of December 31, 2018:
Cash and bank deposits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥Cash and bank deposits in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

3,985,335
7,079,268

¥

‐
‐

¥

‐
‐

¥

‐
‐

¥

‐
‐

¥

‐
‐

Total ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

11,064,604

¥

‐

¥

‐

¥

‐

¥

‐

¥

‐

Within 1 year

1‐2 years

2‐3 years

3‐4 years

4‐5 years

Over 5 years(in thousands of U.S. dollars)
As of December 31, 2018:
Cash and bank deposits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙$Cash and bank deposits in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

35,903
63,777

$

‐
‐

$

‐
‐

$

‐
‐

$

‐
‐

$

‐
‐

Total ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙$

99,681

$

‐

$

‐

$

‐

$

‐

$

‐

(iv) Cash flow schedule of financial liabilities after the balance sheet dateWithin 1 year

1‐2 years

2‐3 years

3‐4 years

4‐5 years

Over 5 years(in thousands of yen)
As of June 30, 2018:
Short‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Current portion of long‐term loans payable ∙∙∙Investment corporation bonds ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Long‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

2,000,000
46,663,000‐‐

Total ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

48,663,000‐‐‐
51,744,000¥

51,744,000‐‐‐
57,380,000¥

57,380,000‐‐‐
15,638,000¥

15,638,000‐‐
1,000,000
6,865,000¥

7,865,000‐‐
1,000,000
7,125,000¥

8,125,000

As of December 31, 2018:
Short‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

1,099,000

‐

‐

‐

‐

‐

32

Current portion of long‐term loans payable ∙∙∙54,745,000‐

Investment corporation bonds ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

‐

‐

‐

Long‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐

50,130,000

55,601,000

Total ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

55,844,000¥

Within 1 year

50,130,000‐¥

1‐2 years

55,601,000‐¥

2‐3 years‐‐‐

3,000,000

1,000,000

32,895,000

27,843,000

3,560,000

32,895,000¥

3‐4 years

30,843,000¥

4‐5 years

4,560,000

Over 5 years(in thousands of U.S. dollars)
As of December 31, 2018:
Short‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

9,900

‐

‐

‐

Current portion of long‐term loans payable ∙∙∙493,198

‐

‐

‐

‐

‐

Investment corporation bonds ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

‐

‐

‐

‐

27,027

9,009

Long‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐

Total ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙$

503,099451,621$451,621500,909$

500,909‐296,351$

296,351‐

250,837$

277,864

32,072$

41,081

18. Investment securities
As of June 30, 2018
Fair values of preferred securities recorded on the Balance Sheet at ¥17,856,387 thousand are not subject to disclosure of fair value as they
have no market value and their fair values are extremely difficult to recognize.
As of December 31, 2018
Fair values of preferred securities recorded on the Balance Sheet at ¥17,856,387 thousand (US$160,868 thousand) and TK interest
recorded on the Balance Sheet at ¥36,783,826 thousand (US$331,385 thousand) are not subject to disclosure of fair value as they have nomarket value and their fair values are extremely difficult to recognize.

19. Derivatives
Information on derivative transactions undertaken by the Company as of June 30, 2018 and December 31, 2018 is as follows. Derivative
instruments are used for hedging purposes only and are subject to hedge accounting.
As of June 30, 2018:
Contract amount(*1)
Method ofhedge
accounting

Type ofderivativetransactionMainhedged
item

Total

Fair
Value
(*2)

Over 1 year

(in thousands of yen)

Principle
accounting
methodInterest rate
swap
transaction
floating ratereceivable andFixed rate
payableLong‐term
borrowings¥

100,619,000¥

67,390,000¥

90,975(*1) The contract amount is based on the notional principal amount.
(*2) The fair value is provided by the financial institution.

As of December 31, 2018:
Contract amount(*1)
Method ofhedge
accounting

Type ofderivativetransaction

Main hedged
item

Total

Over 1year(in thousands of yen)Contract amount(*1)
Fair
Value
(*2)

Total

Fair
Value
(*2)

Over 1year(in thousands of U.S. dollars)

33

Interest rate
swap
transaction
floating ratereceivable
and Fixed
rate payable
Principle
accounting
methodPrinciple
accounting
methodCurrency
options
Sell –USD Call(Optionpremium)
Currency
options
Buy –USD Put
Optionpremium

Long‐term
borrowings

Futuretransactions
denominatedina foreign
currency¥

71,640,000¥ 34,729,000¥¥

4,444,000¥

1,903,000¥¥(124,943)¥(53,157)¥¥

4,444,000¥

1,903,000¥¥

140,288¥

88,792¥

48,781(87,318)

162,566$

645,405$

312,873$$

40,036$17,144$$(1,125)

$

(478)

$

$

40,036$17,144

$

$

1,263

$

799

$

(*1) The interest rate swap contract amount is based on the notional principal amount.
(*2) Calculation of fair value is based on information provided by financial institutions.

20. Asset Retirement Obligations
The Company has an obligation under a fixed‐term leasehold agreement to restore its leased land, which represents the land where
COMFORT HOTEL MAEBASHI, owned by the Company, is located upon the termination of agreement. The estimated period of useof property is estimated at 43 years based on the lease period per the agreement. The assets retirement obligation for the restoration isrecognized as a liability using discount rate at 1.342%.
Movements of asset retirement obligations for the six month ended June 30, 2018 and December 31, 2018 are as follows.

For the six month ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Balance at the beginning of the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Liabilities incurred due to the acquisition of properties ∙∙∙∙∙∙∙

31,680¥31,891‐

Accretion expense ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

210

Balance at the end of the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥31,891

$

‐

‐

215
¥

32,107

287
1

$

289

21. Segment Information
Segment information for the six months ended June 30, 2018 and December 31, 2018 is as follows:(a) Operating Segment Information
Disclosure is omitted as the Company is comprised of a single reportable segment engaged in the property rental business.
(b) Enterprise‐wide Disclosures(i) Information about Products and Services
Disclosure is not required as revenues from external customers for the single segment are in excess of 90% of total revenues.
(ii) Information about Geographic Areas(1) Revenues from Overseas Customers:
Disclosure is not required as revenues from external customers located in Japan are in excess of 90% of total revenues.
(2)Tangible Fixed Assets:
Disclosure is not required as tangible fixed assets located in Japan are in excess of 90% of total tangible fixed assets.
(c) Information about Major Customers

34

439

(786)

1,464

Information about major clients for the six‐month periods ended June 30, 2018 and December 31, 2018 were as follows:
For the six months ended June 30, 2018
Operating Revenues

Name of client

Related segment(in thousands of yen)

Mystays Hotel Management Co.,Ltd.

¥5,324,738

Real estate investing business

For the six months ended December 31, 2018

Name of client

Operating Revenues

Operating Revenues(in thousands of yen)(in thousands of U.S. dollars)

Mystays Hotel Management Co.,Ltd.

¥7,297,799

Related segment$65,745

Real estate investing business

22. Profit or Loss from Equity Method, etc
For the six months ended June 30, 2018
(in thousands of yen)
Investments in affiliates

17,856,387

Investments, if equity method was adopted

17,845,800

Investment gains (losses), if equity method was adopted

722,127

For the six months ended December 31, 2018
(in thousands of yen)(in thousands of US dollars)

Investments in affiliates

54,640,213

492,254

Investments, if equity method was adopted

54,640,213

492,254846,780

7,628

Investment gains (losses), if equity method was adopted

23. Related‐Party Transactions(a) Parent Company and Major Corporate Unitholders
For the six months ended June 30, 2018
Share capital
Type ofrelated‐party

Interested
party of the
Asset
Manager

Transactions for the period

Votinginterest intheCompany

Relationshipwith theCompany¥ 0.1‐

Seller of real estate
trust beneficiaryrightsAcquisition of real estate trust
beneficiary rights(2)(4)

Investment
managementbusiness¥ 0.1‐

Seller of real estate
trust beneficiaryrightsMinato‐ku,
Tokyo

Investment
managementbusiness¥ 0.1‐

Minato‐ku,
Tokyo

Investment
managementbusiness¥ 0.1‐

Company
nameLocation

Ginga TMK(3)Minato‐ku,
Tokyo

Investment
managementbusiness

HL nvestments
TMK(3)

Minato‐ku,
Tokyo

Monza TMK(3)Suisei TMK(3)Business(in millions ofyen)

Balance at the end of period

Amounts (1)Amounts(1)Balancesheet
account(in thousands ofyen)¥ 5,326,000‐‐

Acquisition of real estate trust
beneficiary rights(2)(4)¥ 2,772,000‐‐

Seller of real estate
trust beneficiaryrightsAcquisition of real estate trust
beneficiary rights(2)(4)¥ 2,723,000‐‐

Seller of real estate
trust beneficiaryrightsAcquisition of real estate trust
beneficiary rights(2)(4)¥ 1,604,000‐‐

Type of transactions(in thousands of
yen)

35

Calvis TMK(3)Minato‐ku,
Tokyo

Investment
managementbusiness¥ 0.1‐

Seller of real estate
trust beneficiaryrightsAcquisition of real estate trust
beneficiary rights(2)(4)¥ 7,325,000‐‐

Naqua Hotel &Resorts
Management
Co., Ltd.(3)Minato‐ku,
Tokyo

Hotel
managementbusiness¥ 10‐

Lease holder andoperator of hotel

Rental Revenues¥ 576,941

Rentalreceivables¥ 221,582

Mystays HotelManagement
Co., Ltd.(3)Minato‐ku,
Tokyo

Hotel
managementbusiness¥ 100‐

Lease holder andoperator of hotel

Rental Revenues¥ 5,324,738

Rentalreceivables¥ 1,387,974

Notes:(1)

Consumption taxes are not included in the transaction amount, but are included in the balance at the end of periods.

(2)

Terms and conditions are decided pursuant to the Asset Managerʹs Regulations on Transactions with Sponsor‐related Persons and the Management Manual regarding
Transactions with Sponsor‐related Persons.

(3)

The seller, Ginga TMK, HL Investments TMK, Monza TMK, Suisei TMK, Calvis TMK, Naqua Hotel & Management Resorts Management Co. Ltd, and Mystays HotelManagement, Co. Ltd has no relationship to be stated, but （i）Ginga TMK, HL Investments TMK, Monza TMK, and Suisei TMK used to receive investment through funds
that are managed by FIG, an affiliate of Calliope; a parent company of the asset manager directly owning 100% of issued shares, (ii) Calvis TMK used to receive investment
through funds that are managed by FIG, a subsidiary of Softbank Group; a parent company of the asset manager directly and indirectly owning 100% of issued shares, (iii)
Naqua Hotel & Management Resorts Management Co. Ltd and Mystays Hotel Management, Co. Ltd receive investment through funds that are managed by FIG, an affiliate
of Calliope; a parent company of the asset manager directly owning 100% of issued shares until March 29, 2018, a subsidiary of Softbank Group; a parent company of the asset
manager directly and indirectly owning 100% of issued shares after March 29, 2018.Accordingly, we treat Ginga TMK, HL Investments TMK, Monza TMK, Suisei TMK,
Calvis TMK, Naqua Hotel & Management Resorts Management Co. Ltd, and Mystays Hotel Management, Co. Ltd as a related party.

(4)

The transaction amount exclude adjusted amount of real property tax and city planning tax, as well as consumption tax and local consumption tax.

For the six months ended December 31, 2018
Share capital
Type ofrelated‐party

Interested
party of the
Asset
Manager

Transactions for the period(inthousandsof U.S.
dollars)

Votinginterest intheCompany

Relationshipwith theCompany

Company
nameLocation

Business

Aki TMK(3)Minato‐ku,
Tokyo

Investment
managementbusiness

¥ 0.1

$0

‐

Seller of real estate
trust beneficiaryrightsRaetiaTMK(3)

Minato‐ku,
Tokyo

Investment
managementbusiness

¥ 0.1

$0

‐

Seller of real estate
trust beneficiaryrightsHL
Investments
2 TMK(3)Minato‐ku,
Tokyo

Investment
managementbusiness

¥ 0.1

$0

‐

Seller of real estate
trust beneficiaryrightsDogo
TMK(3)

Minato‐ku,
Tokyo

Investment
managementbusiness

¥ 0.1

$0

‐

Seller of real estate
trust beneficiaryrightsNaqua Hotel& Resorts
Management
Co., Ltd.(3)Minato‐ku,
Tokyo

Hotel
managementbusiness

¥ 10

$ 90

‐

Lease holder andoperator of hotel

Mystays
HotelManagement
Co., Ltd.(3)Minato‐ku,
Tokyo

Hotel
managementbusiness

¥ 100

$ 900

‐

Lease holder andoperator of hotel(inmillionsof yen)Balance at the end of period
Amounts(1)Amounts (1)Type oftransactions(inthousandsof yen)(inthousandsof U.S.
dollars)

Balancesheet
account¥ 20,691,000$ 186,405¥ 16,731,000(inthousandsof yen)(in thousandsof U.S.
dollars)‐‐‐$ 150,729‐‐‐¥ 5,286,000$ 47,621‐‐‐¥ 5,039,000$ 45,396‐‐‐

RentalRevenues¥ 1,112,683$ 10,024

Rentalreceivables¥141,119$ 1,271

RentalRevenues¥ 7,297,799$ 65,745

Rentalreceivables¥ 2,264,664$ 20,402

Acquisition ofreal estate
trust
beneficiaryrights(2)(4)Acquisition ofreal estate
trust
beneficiaryrights(2)(4)Acquisition ofreal estate
trust
beneficiaryrights(2)(4)Acquisition ofreal estate
trust
beneficiaryrights(2)(4)

Notes:(1)

Consumption taxes are not included in the transaction amount, but are included in the balance at the end of periods.

(2)

Terms and conditions are decided pursuant to the Asset Managerʹs Regulations on Transactions with Sponsor‐related Persons and the Management Manual regarding
Transactions with Sponsor‐related Persons.

(3)

The seller, Aki TMK,Raetia TMK, HL Investments 2 TMK, Dogo TMK, Naqua Hotel & Management Resorts Management Co. Ltd, and Mystays Hotel Management, Co.
Ltd has no relationship to be stated, they receive investment through funds that are managed by FIG, a subsidiary of Softbank Group; a parent company of the asset manager
directly and indirectly owning 100% of issued shares. Accordingly, we treat Aki TMK,Raetia TMK, HL Investments 2 TMK, Dogo TMK, Naqua Hotel & Management
Resorts Management Co. Ltd, and Mystays Hotel Management, Co. Ltd as a related party.

(4)

The transaction amount exclude adjusted amount of real property tax and city planning tax, as well as consumption tax and local consumption tax.
Acquisition of real estate trust beneficiary rights are relating to below
Acquisition cost(in thousands of yen)

Acquisition cost(in thousands of US dollars)

Property No.

Property nameSeller

D60

Hotel MyStays Premier Akasaka
Hotel MyStays
Premier Sapporo Park

Aki TMK

20,691,000

186,405

Raetia TMK

16,731,000

150,729

D61

36

Acquisition cost(in thousands of yen)

Acquisition cost(in thousands of US dollars)

Property No.

Property nameSellerD62

Hotel MyStays Ueno East
Hotel MyStays
Midosuji Honmach

HL Investments 2 TMK

5,286,000

47,621

Dogo TMK

5,039,000

45,39647,747,000

430,153

D63

Total

(b) Affiliates
For the six months ended June 30, 2018
Not Applicable.
For the six months ended December 31, 2018
Share capital
Type ofrelated‐party

Company
nameLocation

Affiliates

Seven Mile
ResortHoldings
Ltd.

Grand
Cayman,CaymanIslands

Business

Investment
manageme
nt businessTransactions for the period(inmillionsof yen)(inthousandsof U.S.
dollars)

Investmen
t ratio

Relationshipwith theCompany¥ 36,783$ 331,385

100.0%

TK investment

Balance at the end of period
Amounts(1)(2)

Amounts (1)(2)Type oftransactions(in millionsof yen)(inthousandsof U.S.
dollars)

Balancesheet
account(in millionsof yen)(in thousandsof U.S.
dollars)¥ 36,783$ 331,385‐‐‐

Investmentin theTK(2)(3)Investment amount in USD is converted to yen using the exchange rate fixed by foreign exchange forward (USD 1=JPY 110.45 (rounded down to two decimal places)).

(1)

INV initially funded USD 339,836 thousand (JPY 37,534 million). However, based on the closing settlement, the Cayman SPC did not need as much capital as anticipated.

(2)

Therefore, INV received a refund of the TK investment in the amount of USD 6.8 million on December 10, 2018 (Cayman Island local time) from the Cayman SPC. Thus, theamounts indicated are those after the partial refund.
(3)

Investment was made based on a TK agreement.

(4)

The TK is a TK with Seven Mile Resort Holdings Ltd. as an operator.

(c) Board of Directors and Major Individual Unitholders
For the six months ended June 30, 2018

Type ofrelated‐party

Directors
and close
relatives

Name

Naoki
FukudaVotinginterest intheCompany

Business / Occupation

Executive officer of theCompany andmanagement director ofConsonant Investment
Management Co., Ltd.

‐

Transactions for the period

Balance at the end of period
Amounts(3)(in thousands of yen)
Payment of the assets management
fee to Consonant Investment
Management Co., Ltd.(1)Payment of institution
management fee to Consonant
Investment Management Co.,
Ltd.(2)

Amounts(3)Balance sheet
account

Type of transactions(in thousands ofyen)¥ 308,849

Accruedexpenses¥ 149,291¥ 600

Accruedexpenses¥ 324

Notes:(1)

Naoki Fukuda serves as a representative of the Asset Manager and the asset management fee is established in the Articles of Incorporation of the Company.

(2)

Naoki Fukuda serves as a representative of Asset Manager and the fee is established in the “Administrative Agency Agreement for Organizational Management” which was(3)Consumption taxes are not included in the transaction amount, but are included in the balance at the end of period.

agreed between the Asset Manager and the Company.

For the six months ended December 31, 2018
Transactions for the period
Type ofrelated‐party

Directors
and close
relatives

Name

Naoki
FukudaBusiness /Occupation

Executive officer of
the Company andmanagement
director ofConsonantInvestment
Management Co.,Ltd.

Votinginterest intheCompany‐

Balance at the end of period

Amounts(3)Type of transactions

Payment of the assets
management fee to Consonant
Investment Management Co.,
Ltd.(1)
Payment of institution
management fee to Consonant
Investment Management Co.,
Ltd.(2)

Amounts(3)(inthousandsof yen)(inthousandsof U.S.
dollars)¥ 279,774$ 2,520¥ 1,100$9(inthousandsof yen)(inthousandsof U.S.
dollars)

Accruedexpenses¥ 148,500$ 1,337

Accruedexpenses

¥ 864

$7

Balance sheet
account

Notes:(1)

Naoki Fukuda serves as a representative of the Asset Manager and the asset management fee is established in the Articles of Incorporation of the Company.

(2)

Naoki Fukuda serves as a representative of Asset Manager and the fee is established in the “Administrative Agency Agreement for Organizational Management” which wasagreed between the Asset Manager and the Company.

37

(3)

Consumption taxes are not included in the transaction amount, but are included in the balance at the end of period.

24. Parent company and/or significant affiliates(a) Information on the parent company
Not Applicable.

(b) Summary of financial statements of the significant affiliates
The significant affiliates in the year ended December 31, 2018 is Kingdom TMK. Summary of financial statements are as follows:
Kingdom TMK
As of / For the six months ended
December 31, 2018

June 30, 2018

(in thousands of yen)
Total specified assets

December 31, 2018
(in thousands of US dollars)

100,422,370

100,856,568

908,617

Total other assets

5,409,900

3,784,525

34,094

Total current liabilities

1,436,173

212,208

1,911

Total non‐current liabilities

66,480,660

66,280,661

597,123

Total net assets

37,915,436

38,148,224

343,677

Operating revenue

1,957,744

2,350,784

21,178

Income before income taxes

1,496,394

1,729,001

15,576

Net income

1,495,336

1,728,124

15,56825. Per Unit Information
The following table shows net asset value per unit as of June 30, 2018 and December 31, 2018 and net income per unit for the six months
then ended. Net income per unit is calculated by dividing the net income attributable to unitholders by the weighted average number ofunits outstanding. The Company has no potentially dilutive units.
As of / For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018

(Yen)
Net asset value per unit ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Net income per unit ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Weighted average number of units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

37,871

¥

1,611

¥

4,793,181(U.S. dollars)
39,063

$

351

1,504

$

13

5,575,457‐

26．Subsequent Events
Not Applicable.

38