Investment
Invincible Corporation

Audited Financial Statements
for the 34th Fiscal Period(from January 1, 2020 to June 30, 2020)

INDEX TO FINANCIAL STATEMENTS
Page

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

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

Balance Sheet as June 30, 2020 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 6

Statement of Income and Retained Earnings for the six months ended June 30, 2020 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 8

Statement of Changes in Net Assets for the six months ended June 30, 2020 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 9

Statement of Cash Flows for the six months ended June 30, 2020 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 11

Notes to Financial Statements as of and for the six months ended June 30, 2020 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 12

Greetings from 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.
Our thoughts and prayers go out to all those who have contracted the COVID-19 virus,
as well as to their families and friends.

We hereby provide you with a report on INV's asset management and financial results
for the 34th fiscal period (from January 1, 2020 to June 30, 2020) (the "Reporting
Period").

During the Reporting Period, we acquired two hotels on January 6, 2020 and sold one
residential property on January 15, 2020 as part of asset recycling initiatives. As a result,
we recorded a gain on sale of approximately JPY 2 billion in the Reporting Period.
However, as the impacts of the spread of COVID-19 became apparent from the second
half of February 2020, the number of both business and leisure trips decreased
dramatically due to requests by domestic and overseas governments for people torefrain from going outside, restrict travel, government issued emergency declarations,and the request for people to refrain from traveling across prefectural boundaries. The
environment surrounding the hotel industry, which is one of two core asset classes of
INV, became extremely harsh. In response to the rapid and substantial decline in hotel
occupancy rates, each hotel made concerted efforts to reduce operating expenses,
including temporary hotel closures, but this was unable to compensate for the decline
in revenues, which forced INV to accept a large-scale rent waiver from its largest
tenant.

As a result, both revenues and profits for the Reporting Period dropped significantly,
with operating revenues of JPY 9,410 million, operating income of JPY 1,496 million,
and net income of JPY 423 million. INV decided on a distribution per unit (DPU) of JPY
69. The Covid-19 pandemic has caused an end to seven consecutive years of DPU
growth.

In the residential property portfolio, another core asset class, NOI continued to exhibit
stable growth in the Reporting Period, supporting INV’s profitability. The existence ofstable profits from the residential assets have alleviated any financial issues such as
payment of interest on interest bearing debt. The relationship with our lenders
continues to be favorable, and in July we refinanced bank loans at reasonable funding
costs in the full amount, totaling over JPY 30 billion.

Our business outlook remains uncertain due to the COVID-19 pandemic. However, we
believe that the hotel's occupancy rate bottomed out in May, and we have begun
initiatives to maximize hotel revenues under the new environment classified as “WithCorona”. We, INV and its Asset Management Company, will make every effort tomanage assets with the aim of achieving a recovery in business performance while
contributing to the best interests of unitholders.

Your continued support is highly appreciated.

Naoki Fukuda
Executive Director, Invincible Investment Corporation
President & CEO, Consonant Investment Management Co., Ltd.

INVINCIBLE INVESTMENT CORPORATIONBALANCE SHEETAs of June 30, 2020
As ofJune 30,2020

December 31,
2019

June 30,
2020(in thousands of
U.S. dollars)(in thousands of yen)
ASSETS
Current assets:
Cash and bank deposits (Notes 6 and 18) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥Cash and bank deposits in trust (Notes 6 and 18) ∙∙∙∙∙∙
Accounts receivable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Rental receivables ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Deposits paid ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Prepaid expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Income taxes receivable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Consumption taxes receivable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total current assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Non‐current assets:
Property and equipment (Notes 7 and 8):
Buildings, at cost ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Buildings and accompanying facilities, at cost ∙∙∙∙∙∙∙∙∙∙∙∙
Structures, at cost ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Tools, furniture and fixtures, at cost ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Construction in progress∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
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 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Construction in progress in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Subtotal ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Less: Accumulated depreciation ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total property and equipment, net ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Intangible assets:
Leasehold rights ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Leasehold rights in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total intangible assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Investments and other assets:
Investment securities (Note 19 and 23)∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Guarantee deposits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Long‐term prepaid expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Derivatives assets (Note 20) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total investments and other assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total non‐current assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Deferred assets:
Investment corporation bond issuance costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total deferred assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙TOTAL ASSETS ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

17,924,733
10,862,669
613,5633,448,548
482,506
718,710
137,528
2,239,471
154
36,427,886¥

10,190,672
6,127,902‐
304,863262,507582,415
129,613
831,675‐
18,429,649$

94,58556,876
‐
2,829
2,436
5,405
1,203
7,719
‐
171,056

19,142,244
5,111,514‐
1,087,303
534,690
159,549,904

19,392,579
5,292,840
1,458
1,160,530
486,479
167,743,709

179,994
49,126
13
10,771
4,515
1,556,930

33,269,242

33,693,125

312,726

234,0122,382,539
245,771,234
3,179
467,085,865(24,868,562)
442,217,302

250,1632,766,458
250,271,308
129,129
481,187,782(28,567,990)
452,619,792

2,321
25,6772,322,919
1,198
4,466,194(265,156)
4,201,037

10,637,811
13,265,876
23,903,688

10,637,811
14,614,328
25,252,140

98,735
135,644234,380

17,856,387
803,721974,554
166,234
22,667
19,823,566
485,944,557

17,856,387
1,362,721
898,626
152,275
22,667
20,292,677
498,164,611

165,735
12,648
8,340
1,413
210
188,348
4,623,766

59,55659,556522,431,999

69,157
69,157
516,663,418

641
641
4,795,465¥$6

As ofJune 30,2020

December 31,
2019

June 30,
2020(in thousands of
U.S. dollars)(in thousands of yen)
LIABILITIESCurrent liabilities:
Accounts payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥
Short‐term loans payable (Notes 10 and 18) ∙∙∙∙∙∙∙∙∙∙∙∙
Current portion of long‐term loans payable(Notes 10 and 18) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Accounts payable‐other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Accrued expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Income taxes payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Advances received ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Deposits received ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total current liabilities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Non‐current liabilities:
Investment corporation bonds (Notes 10 and 18) ∙∙Long‐term loans payable (Notes 10 and 18) ∙∙∙∙∙∙∙∙∙∙∙∙
Tenant leasehold and security deposits in trust(Note 18) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Derivatives liabilities (Note 20) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Asset retirement obligations (Note 21) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total non‐current liabilities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙TOTAL LIABILITIES ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙NET ASSETS (Note 12)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 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

443,004
2,686,000¥

142,330
880,000

$

1,321
8,167

50,130,000

57,380,000

532,578

125,221272,659605
798,980
52,12854,508,599

301,280
269,814605
1,000,217
31,88960,006,137

2,796
2,504
5
9,283
295
556,953

7,000,000
199,358,000

8,200,000
197,008,000

76,1091,828,550

1,765,094

1,749,862

16,24137,00732,539208,192,641
262,701,240

128,466
32,756207,119,086
267,125,223

1,192
304
1,922,397
2,479,350

235,701,512

235,701,512

2,187,688

6,264,432

6,264,432

58,143(6,130)(6,130)(56)(5,524,006)(5,530,137)
734,294(5,524,006)(5,530,137)
734,294(51,271)(51,328)
6,815

23,261,426
23,995,720
259,697,232

13,168,294
13,902,588
249,604,100

122,222129,038
2,316,726

33,52533,525
259,730,758
522,431,999(65,906)(65,906)
249,538,194
516,663,418

(611)
(611)
2,316,114
4,795,465¥$

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

7

INVINCIBLE INVESTMENT CORPORATIONSTATEMENT OF INCOME AND RETAINED EARNINGSFor the six months ended June 30, 2020
For the six months ended
June 30,2020

December 31,
2020

June 30,
2020(in thousands of U.S.
dollars)(in thousands of yen)
Operating revenue
Rental revenue－real estate (Note 13) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Management contract revenue (Note 14) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Gain on sales of properties (Note 15) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Dividend income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total operating revenue ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Operating expenses
Property related expenses (Note 13) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Management contract expenses (Note 14) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Asset management fees ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Directors’ compensation ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Asset custody fees ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Administrative service fees ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total operating expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Operating income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Non‐operating income
Interest income∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Foreign exchange gains ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Interest on tax refund∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Gain on derivatives∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total non‐operating income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Non‐operating expenses
Interest expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Foreign exchange losses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Interest expenses on investment corporation bonds
Amortization of investment corporation bond issuance costs
Loan‐related costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Investment unit issuance costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other‐non‐operating expenses∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total non‐operating expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Ordinary income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Extraordinary income
Subsidy income∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total extraordinary income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Extraordinary losses
Loss on reduction entry of non‐current assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total extraordinary losses∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Income before income taxes ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Income taxes (Note 16):
Current ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total income taxes ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙Net income ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Retained earnings / losses brought forward ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙Unappropriated retained earnings / losses (Note 12)∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

14,545,826
1,397,621
1,970,306
673,498
18,587,253¥

5,838,836
890,4422,046,294
634,651
9,410,225$

54,1938,264
18,992
5,890
87,341

4,673,007
537,542300,000
4,800
25,51857,444
129,956
5,728,269
12,858,984

6,801,584
535,279
300,000
4,800
26,23147,259198,092
7,913,247
1,496,977

63,129
4,968
2,784
44
243
438
1,838
73,447
13,894179
40,710289‐
2,091
43,270114‐
7,712
47,743
1,613
57,183

1
‐
71
443
14
530

687,208‐
15,654
4,256
412,550
143,029

702,917
31,67525,911
5,928
362,534
‐

6,524
294
240
55
3,364
‐

1
1,262,700
11,639,553

670
1,129,639
424,522

6
10,484
3,940‐‐

73,11973,119

678
678

‐
‐
11,639,553

73,11973,119424,522

678
678
3,940

605
605
11,638,948
11,622,477
23,261,426

605
605
423,917
12,744,377
13,168,294

5
5
3,934
118,288
122,222¥$

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

8

INVINCIBLE INVESTMENT CORPORATIONSTATEMENT OF CHANGES IN NET ASSETSFor the six months ended June 30, 2020
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 July 1, 2019 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥211,092,540

6,264,432(131,332)¥(5,398,804)¥(5,530,137)¥

734,294

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

24,483,770

Reserve for temporary difference adjustment ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

125,201

125,201(125,201)‐‐

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

24,608,971

Balance as of December 31, 2019 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥235,701,512‐¥

6,264,432¥

6,264,432

125,201¥(6,130)¥(6,130)(125,201)¥(5,524,006)¥(5,524,006)‐¥(5,530,137)¥(5,530,137)‐¥

734,294¥734,294

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

Balance as of June 30, 2020 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥235,701,512

‐

‐

‐

Unitholdersʹ equity‐

Valuation and translation adjustments

SurplusRetainedearnings‐

Total surplus

Total unitholdersʹ
equityDeferred gains
or losses onhedgesTotal valuationand translation
adjustments

Total net assets¥¥(in thousands of yen)
Balance as of July 1, 2019 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

21,131,966¥

21,866,261¥

232,958,801¥

87,612

87,612233,046,414

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

24,483,770

24,483,770

Reserve for temporary difference adjustment ∙∙∙∙∙∙∙∙∙∙∙∙(125,201)(125,201)‐‐

Distributions from surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(9,384,287)(9,384,287)(9,384,287)(9,384,287)

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

11,638,948

11,638,948

11,638,948

11,638,948

Changes other than unitholders’ equity(net) ∙∙∙∙∙∙∙∙∙∙∙∙
Total changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Balance as of December 31, 2019 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

2,129,459¥

23,261,426

2,129,459¥

23,995,720

26,738,431¥

259,697,232¥(54,086)(54,086)(54,086)(54,086)(54,086)

26,684,344

33,525¥33,525¥

259,730,758

Changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Distributions from surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(10,517,049)(10,517,049)(10,517,049)

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

423,917423,917423,917(10,517,049)
423,917

Changes other than unitholders’ equity(net) ∙∙∙∙∙∙∙∙∙∙∙∙(99,432)

Total changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Balance as of June 30, 2020 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(10,093,131)¥

13,168,294(10,093,131)¥

13,902,588(10,093,131)¥

249,604,100(99,432)(99,432)¥(65,906)(99,432)(99,432)¥(65,906)(10,192,564)¥

249,538,194

9

Unitholdersʹ equity
SurplusCapital surplus
Deduction of capital surplus

Unitholdersʹ
capitalCapital surplus

Allowance fortemporarydifferences
adjustment$

58,143$(56)$

58,143$(56)

Other deduction ofcapital surplus

Capital surplus (net)

Deduction ofcapital surplus(in thousands of U.S dollars)
Balance as of January 1, 2020 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ $2,187,688$(51,271)$(51,271)$(51,328)$(51,328)

$

6,815

$

6,815

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

Balance as of June 30, 2020 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ $‐2,187,688‐‐

Unitholdersʹ equity‐

Valuation and translation adjustments

SurplusRetainedearnings‐

Total
unitholdersʹ
equityTotal surplus

Deferred gains
or losses onhedgesTotal valuationand translation
adjustments

Total net assets$$(in thousands of U.S dollars)
Balance as of January 1, 2020 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙$

215,903$

222,718$

2,410,406

$

311

311

2,410,718

Changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Distributions from surplus ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(97,615)(97,615)(97,615)

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

3,934

3,934

3,934

(97,615)
3,934

Changes other than unitholders’ equity(net) ∙∙∙∙∙∙∙∙∙∙∙∙

(922)

(922)

(922)

Total changes during the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

(922)

(922)

(94,603)

Balance as of June 30, 2020 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(93,680)$

122,222(93,680)$129,038(93,680)$

2,316,726

$

(611)

$

(611)

$

2,316,114

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

10

INVINCIBLE INVESTMENT CORPORATIONSTATEMENT OF CASH FLOWSFor the six months ended June 30, 2020
For the six months ended
June 30,2020

December 31,
2019

June 30,
2020(in thousands of
U.S. dollars)(in thousands of yen)
Cash flows from operating activities:
Income before income taxes ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥
Depreciation and amortization ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Loss on reduction entry of non‐current assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
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) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Loss (gain) on derivatives ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Increase (decrease) in allowance for doubtful accounts ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Decrease (increase) in rental receivables ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Decrease (increase) in deposits paid ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Decrease (increase) in receivable income taxes∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Decrease (increase) in consumption taxes receivable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Increase (decrease) in accounts payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Increase (decrease) in consumption taxes payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
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 in trust due to sale ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other, net ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Subtotal ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Interest income received ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Interest expenses paid ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Income taxes paid ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(32,090)‐(148)(344,338)(110,785)
31,539(2,426,511)(36,363)(2,577,357)(29,060)(92,670)(12,896)(199,247)
2,991,980(148,847)
13,673,054
179(701,225)
(605)

9,864
(47,743)‐2,798,340
219,998
7,942
1,594,835(13,390)(187,039)
163,143(1,411)
546,581(20,238)
2,269,720
726,442
13,661,453
114(729,698)
(605)

91
(443)
‐
25,9732,041
73
14,802(124)(1,736)
1,514
(13)
5,073
(187)
21,066
6,742
126,800
1(6,772)(5)

11,639,553
3,757,778‐
143,0294,256
412,550(179)
702,863¥424,522
3,999,589
73,119‐5,928
362,534(114)
728,828$

3,940
37,122
678
‐
55
3,364
(1)
6,764

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

12,971,404

12,931,264

120,022

Cash flows from investing activities:
Purchases of property and equipment ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Purchases of property and equipment in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Purchases of leasehold rights in trust∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
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 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other, net ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(543,104)(83,576,781)(440,504)(48,255)
67,022‐28,651(458,135)(16,523,212)(1,387,263)(56,966)
42,113(559,000)
43,852(4,252)(153,361)(12,876)(528)
390(5,188)407

Net cash used in investing activities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(84,512,972)(18,898,611)(175,409)

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 of distributions of earnings∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Proceeds from issuance of investment units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

2,686,000‐
61,775,000(37,061,000)
2,971,665(839,086)(9,144,041)
24,340,740

880,000(2,686,000)
19,583,000(14,683,000)
1,184,469(265,553)(10,514,410)‐

8,167(24,930)
181,761(136,281)
10,993(2,464)(97,590)‐

Net cash provided by (used in) financing activities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

44,729,277(6,501,494)(60,344)

Effect of exchange rate change on cash and cash equivalents ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙Net increase (decrease) in cash and cash equivalents ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙Cash and cash equivalents at beginning of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(13)(26,812,304)
55,599,707

13(12,468,828)
28,787,403

0(115,730)
267,193

Cash and cash equivalents at end of period (Note 6) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

28,787,403¥

16,318,574$

151,462

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

11

INVINCIBLE INVESTMENT CORPORATIONNOTES TO FINANCIAL STATEMENTS
As of and for the six months ended June 30, 2020

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.

12

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 withthe acquisition 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 withthe acquisition of 4 properties and 1 TK investment during this fiscal period.
On July 18, 2019, the Company completed its ninth public offering totaling 409,524 new investment units at a price ¥56,939 per unit.
194,524 of such units were issued in connection with a Domestic Public Offering, and the remaining 215,000 units were issued inconnection with an International Offering pursuant Rule 144A and Regulation S under the U.S. Securities Act of 1933. On August 15,
2019, the Company issued 20,476 investment units domestically in connection with the exercise of an over‐allotment option. Net
proceeds of approximately ¥24.4 billion were used to repay the Company’s outstanding long term borrowing and in connection withthe acquisition of 18 properties 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:

13

For the six months ended
June 30, 2020

Buildings ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

16‐50

Buildings and accompanying facilities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

5‐29

Structures ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

20

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

3‐18

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

7‐67

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

2‐33

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

10‐55

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

2‐20(e) Intangible Assets
Amortization of a domestic term leasehold interest for business use is calculated by the straight‐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 over14

amounts 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 acquisition
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 ¥41,528 (US$¥385) thousand for thesix months ended June 30, 2020.

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 there to represent the arithmetical result of translating Japanese yen into U.S. dollars at the rate of ¥107.74 = US$1,
the effective rate of exchange prevailing at June 30, 2020. The inclusion of such U.S. dollar amounts associated with the fiscal six months
ended June 30, 2020 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 December 31, 2019
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

amountbalanceduringduringperiodperiodLeaseholdrights in trust

Amortization

ReversalEndingbalanceofleasehold rights in¥ (131,332)¥ (131,332)‐¥ 125,201¥ (6,130)¥ (131,332)¥ (131,332)‐¥ 125,201¥ (6,130)

trust

Total

Reason for reversal

Sale of leasehold rights intrust

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 June 30, 2020
On the Balance Sheet, there are the increase and decrease of allowance for temporary differences adjustment.

15

1. Reason, related assets and amounts(in thousands of yen)
Allowance
Related assets,

Reason for

InitialBeginning

set asideetc.

occurrence

amountbalanceduringrights in trust

Amortization

EndingduringReason for reversal

balanceperiodperiodLeaseholdReversalofleasehold rights in¥ (131,332)¥ (6,130)‐‐¥ (6,130)¥ (131,332)¥ (6,130)‐‐¥ (6,130)

‐

trust

Total

(in thousands of U.S dollars)
Allowance
Related assets,

Reason for

InitialBeginning

set asideetc.

occurrence

amountbalanceduringrights in trust

Amortization

EndingduringbalanceperiodperiodLeaseholdReversalReason for reversalofleasehold rights in$ (1,218)$ (56)-‐$ (56)$ (1,218)$ (56)-‐$ (56)

‐

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.

5. Advanced depreciation
Advanced depreciation amount for property, plant and equipment acquired by government subsidies, etc are as follows.

As of

December 31,
2019

June 30,
2020

June 30,
2020(in thousands of
U.S. dollars)(in thousands of yen)

Buildings and accompanying¥
facilities in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐¥

73,119$678

6. Cash and Cash Equivalents
Cash and cash equivalents shown in the statements of cash flows consist of the following balance sheet items.
As ofDecember 31,
2019

June 30,
2020

June 30,
2020(in thousands of
U.S. dollars)(in thousands of yen)
Cash and bank deposits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥17,924,733¥

10,190,672$

94,58516

Cash and bank deposits in trust ∙∙∙∙∙∙∙∙∙∙∙∙

10,862,669

Cash and cash equivalents ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥28,787,403

6,127,902¥

56,876

16,318,574$

151,462

7. Property and Equipment
The following tables show the summary of movement in property and equipment for the six months ended June 30, 2020.
At costBeginningbalance

Increase

Endingbalance

Decrease

Accumulated
depreciation

Net property andequipment

Depreciation forthe period(in thousands of yen)
Buildings ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

19,142,244¥

250,335

Buildings and accompanying facilities ∙∙∙∙∙

5,111,514

181,325‐

5,292,840

342,143

151,680

Structures ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

‐

1,458

‐

1,458

19

19

1,439

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

1,087,303

73,226‐

1,160,530

117,632

53,207

1,042,897

Leasehold rights ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

10,637,811‐‐

10,637,811‐‐

10,637,811

Construction in progress ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

534,690

252,466

300,678

486,479‐‐

486,479

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

159,549,904

9,094,737

900,933

167,743,709

17,281,345

2,310,210

150,462,363

33,269,242

550,689

126,806

33,693,125

9,275,639

1,030,617

24,417,485

234,01221,0584,907

250,163102,281

5,694

147,882

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

2,382,539

390,353

6,434

2,766,458

954,147

192,944

1,812,311

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

245,771,234

5,991,846

1,491,772

250,271,308‐‐

250,271,308

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

13,547,271

1,387,263‐

14,934,534

320,205

38,81014,614,328

Construction in progress in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

3,179

129,129

3,179

129,129‐‐

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

491,270,948¥

18,323,892

¥

¥

‐

2,834,711¥¥

19,392,579

506,760,129¥

494,780¥

28,888,196¥¥

216,4033,999,589¥

18,897,798
4,950,697

129,129¥

477,871,933

At costBeginningbalance

Increase

Endingbalance

Decrease

Accumulated
depreciation

Depreciation forthe period

Net property andequipment(in thousands of U.S dollars)
Buildings ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙$

177,670$

Buildings and accompanying facilities ∙∙∙∙∙

47,443

1,682‐

49,126

3,175

1,407

Structures ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

‐

13

‐

13

‐

‐

13

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

10,091679‐

10,771

1,091

493

9,679

Leasehold rights ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

98,735‐‐98,735‐‐98,735Construction in progress ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

4,962

2,343

2,790

4,515

‐

‐

4,515

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

1,480,879

84,4138,362

1,556,930

160,398

21,442

1,396,532

308,791

5,111

1,176

312,726

86,092

9,565

226,633

2,172

195

45

2,321

949

52

1,372

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

22,1133,623

59

25,677

8,856

1,790

16,821

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

2,281,151

55,613

13,8462,322,919‐‐

2,322,919

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

125,740

12,876‐

138,616

2,972

360

135,644

Construction in progress in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

29

1,198

29

1,198

‐

‐

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

4,559,782

$

2,323

170,075$$‐

26,310$$179,994

4,703,546

$

$

4,592

268,128

$

$

2,008

37,122$

175,401
45,950

1,198$

4,435,417

Increases in the net book values are mainly due to the acquisition of 2 properties as shown below and capitalized expenditures.
Acquisition cost(in thousands of yen)

Property name

Property No.

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

D82

Hotel MyStays Premier Narita

10,593,000

D83

Art Hotel Morioka

5,643,000

52,376

16,236,000

150,696

Total

98,3208.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 December 31, 2019 and June 30, 2020.
Residential
As of / For the six months ended

December 31,
2019

June 30,
2020

June 30,2020

17

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

56,921,817

Net increase (decrease) during period ∙∙∙∙∙∙∙∙∙∙
Balance at the end of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(3,368,841)
53,552,976

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

69,671,000

53,552,976¥

497,057$(2,648,900)
50,904,075(24,586)
472,471

65,438,000¥

607,369$

Retail facilities
As of / For the six months ended

December 31,
2019

June 30,
2020

June 30,
2020(in thousands of
U.S. dollars)(in thousands of yen)
Net book value
Balance at the beginning of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

4,825,236

Net increase (decrease) during period ∙∙∙∙∙∙∙∙∙∙
Balance at the end of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(35,280)
4,789,956

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

6,150,000

4,789,956¥

44,458$(51,271)
4,738,684(475)
43,982

6,120,000¥

56,803$Hotel
As of / For the six months ended

December 31,
2019

June 30,
2020

June 30,
2020(in thousands of
U.S. dollars)(in thousands of yen)
Net book value
Balance at the beginning of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

326,555,836

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

80,684,352
407,240,188

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

482,093,260

407,240,188¥

3,779,842$

14,373,376
421,613,565

133,407
3,913,250

470,778,826¥

4,369,582$

Total
As of / For the six months ended

December 31,
2019

June 30,
2020

June 30,
2020(in thousands of
U.S. dollars)(in thousands of yen)
Net book value
Balance at the beginning of period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

388,302,890

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

77,280,230
465,583,121

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

557,914,260

465,583,121¥$

11,673,203
477,256,324

108,346
4,429,704

542,336,826¥

4,321,358$

5,033,755

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 December 31, 2019 and June 30, 2020, 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 June 30, 2020.
For the six months ended June 30, 2020
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)

1,000,000(in thousands of U.S. dollars)
1,000,000

9,281

9,281

0.400

18

2nd unsecured investment corporation bond(Issued on May 25, 2018 and due on May 25, 2028) (1)(2)

1,000,000

1,000,000

9,281

9,281

0.800

2,000,000

2,000,000

18,563

18,5630.550

1,000,000

1,000,000

9,281

9,281

0.480

2,000,000

2,000,000

18,563

18,5630.900‐

1,200,000‐

11,1370.850

7,000,000

8,200,000

64,971

76,109

3rd unsecured investment corporation bond(Issued on October 12, 2018 and due on October 12, 2023)(1)(3)
4th unsecured investment corporation bond(Issued on October 28, 2019 and due on October 28, 2024)(1)(4)
5th unsecured investment corporation bond(Issued on October 28, 2019 and due on October 26, 2029)(1)(4)
6th unsecured investment corporation bond(Issued on March 13, 2020 and due on March 13, 2030)(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.

(3)

The funds are mainly used to repay existing borrowing.

(4)

The funds are mainly used for capital expenditures(5)

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

As ofWithin 1 year ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
1‐2 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

June 30,
2020

June 30,
2020(in thousands of yen)(in thousands of
U.S. dollars)
‐
‐

$

‐
‐

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

1,000,000

9,281

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

2,000,000

18,5634‐5 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

1,000,000

9,281

19

10. Loans Payable
The following table shows the details of loans payable for the six months ended June 30, 2020.
For the six months ended June 30, 2020

Classificati
onName oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance

Increase(in thousands of yen)

Short‐termloanspayableLong‐term
loans
payableEndingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturitydate

MizuhoBank, Ltd.

671,000‐

671,000

‐

6,227

‐

6,227

‐

0.280

18‐Jul‐20(3)

MUFG
Bank, Ltd.

671,500‐

671,500

‐

6,232

‐

6,232

‐

0.280

18‐Jul‐20(3)Sumitomo
Mitsui
Banking
Corporation

671,500‐

671,500

‐

6,232

‐

6,232

‐

0.280

18‐Jul‐20(3)Sumitomo
MitsuiTrust Bank,
Limited

672,000‐

672,000

‐

6,237

‐

6,237

‐

0.280

18‐Jul‐20(3)Sumitomo
MitsuiTrust Bank,
Limited

‐880,000‐

880,000

‐

8,167

‐

8,167

0.261

06‐Jan‐21

Total
short‐termloanspayable2,686,000

880,000

2,686,000

880,000

24,9308,167

24,9308,167MizuhoBank, Ltd.

5,992,000‐‐

5,992,000

55,615‐‐55,6150.590

16‐Jul‐20

MUFG
Bank, Ltd.

5,992,000‐‐

5,992,000

55,615‐‐55,6150.590

16‐Jul‐20

Sumitomo
Mitsui
Banking
Corporation

5,992,000‐‐

5,992,000

55,615‐‐55,6150.590

16‐Jul‐20

ShinseiBank,
Limited.

3,330,000‐‐

3,330,000

30,907‐‐30,9070.590

16‐Jul‐20

Citibank,
N.A., Tokyo
Branch3,000,000‐‐

3,000,000

27,844‐‐

27,8440.590

16‐Jul‐20

Sumitomo
MitsuiTrust Bank,
Limited

2,670,000‐‐

2,670,000

24,781‐‐

24,7810.590

16‐Jul‐20

ResonaBank,
Limited.

1,335,000‐‐

1,335,000

12,390‐‐12,3900.590

16‐Jul‐20

MUFG
Bank, Ltd.

668,000‐‐

668,000

6,200

‐

‐

6,200

0.590

16‐Jul‐20

Sumitomo
MitsuiTrust Bank,
Limited

3,400,000‐‐

3,400,000

31,557‐‐31,5570.600

22‐Jan‐21

MUFG
Bank, Ltd.

850,000‐‐

850,000

7,889

‐

‐

7,889

0.600

22‐Jan‐21

MizuhoBank, Ltd.

965,000‐

965,000

‐

8,956

‐

8,956

‐

0.569

30‐Mar‐20

MUFG
Bank, Ltd.

1,125,000‐

1,125,000‐

10,441‐

10,441‐0.569

30‐Mar‐20

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed(2)

Unsecured
andunguaranteed20Classificati
onName 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

Sumitomo
MitsuiTrust Bank,
Limited

2,180,000‐

2,180,000‐

20,233‐

20,233‐0.569

30‐Mar‐20

ShinseiBank,
Limited.

570,000‐

570,000

‐

5,290

‐

5,290

‐

0.569

30‐Mar‐20

ResonaBank,
Limited.

570,000‐

570,000

‐

5,290

‐

5,290

‐

0.569

30‐Mar‐20

MUFG
Bank, Ltd.

650,000‐

650,000

‐

6,033

‐

6,033

‐

0.569

30‐Mar‐20

Japan Post
Bank Co.,Ltd.

2,000,000‐

2,000,000‐

18,563‐

18,563‐0.569

30‐Mar‐20

The Bank ofFukuoka,Ltd.

333,000‐

333,000

‐

3,090

‐

3,090

‐

0.569

30‐Mar‐20

The
Shizuoka
Bank, Ltd.

270,000‐

270,000

‐

2,506

‐

2,506

‐

0.569

30‐Mar‐20

The
KagawaBank, Ltd.

500,000‐

500,000

‐

4,640

‐

4,640

‐

0.569

30‐Mar‐20

The
Hyakugo
Bank, Ltd.

1,000,000‐

1,000,000

‐

9,281

‐

9,281

‐

0.569

30‐Mar‐20

The
NomuraTrust andBankingCo., Ltd.

270,000‐

270,000

‐

2,506

‐

2,506

‐

0.569

30‐Mar‐20

MizuhoBank, Ltd.

1,965,000‐‐

1,965,000

18,238‐‐18,2380.661

30‐Mar‐21

MUFG
Bank, Ltd.

1,125,000‐‐

1,125,000

10,441‐‐

10,4410.661

30‐Mar‐21

Sumitomo
MitsuiTrust Bank,
Limited

2,180,000‐‐

2,180,000

20,233‐‐

20,2330.661

30‐Mar‐21

ShinseiBank,
Limited.

570,000‐‐

570,000

5,290

‐

‐

5,290

0.661

30‐Mar‐21

ResonaBank,
Limited.

570,000‐‐

570,000

5,290

‐

‐

5,290

0.661

30‐Mar‐21

MUFG
Bank, Ltd.

650,000‐‐

650,000

6,033

‐

‐

6,033

0.661

30‐Mar‐21

The Bank ofFukuoka,Ltd.

1,333,000‐‐

1,333,000

12,372‐‐

12,3720.661

30‐Mar‐21

The
Shizuoka
Bank, Ltd.

270,000‐‐

270,000

2,506

‐

‐

2,506

0.661

30‐Mar‐21

The
KagawaBank, Ltd.

500,000‐‐

500,000

4,640

‐

‐

4,640

0.661

30‐Mar‐21

The
Hiroshima
Bank, Ltd.

1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.661

30‐Mar‐21

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed

21

Classificati
onName 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
NomuraTrust andBankingCo., Ltd.

270,000‐‐

270,000

2,506

‐

‐

2,506

0.661

30‐Mar‐21

Citibank,
N.A., Tokyo
Branch1,000,000‐

1,000,000

‐

9,281

‐

9,281

‐

0.541

15‐Jun‐20

Citibank,
N.A., Tokyo
Branch1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.661

15‐Jun‐21

AEON
Bank, Ltd.

3,000,000‐‐

3,000,000

27,844‐‐

27,8440.661

30‐Jun‐21

The Tokyo
Star Bank,
Limited

600,000‐‐

600,000

5,568

‐

‐

5,568

0.561

20‐Jul‐20

The Towa
Bank, Ltd.

1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.561

20‐Jul‐20

The Tokyo
Star Bank,
Limited

1,700,000‐‐

1,700,000

15,778‐‐15,7780.661

20‐Jul‐21

MizuhoBank, Ltd.

634,000‐

634,000

‐

5,884

‐

5,884

‐

0.469

14‐Mar‐20

Developme
nt Bank ofJapan Inc.

1,000,000‐

1,000,000

‐

9,281

‐

9,281

‐

0.469

14‐Mar‐20

ResonaBank,
Limited.

333,000‐

333,000

‐

3,090

‐

3,090

‐

0.469

14‐Mar‐20

The Bank ofFukuoka,Ltd.

333,000‐

333,000

‐

3,090

‐

3,090

‐

0.469

14‐Mar‐20

The
NomuraTrust andBankingCo., Ltd.

333,000‐

333,000

‐

3,090

‐

3,090

‐

0.469

14‐Mar‐20

The Towa
Bank, Ltd.

252,000‐

252,000

‐

2,338

‐

2,338

‐

0.469

14‐Mar‐20

The
Shizuoka
Bank, Ltd.

200,000‐

200,000

‐

1,856

‐

1,856

‐

0.469

14‐Mar‐20

The Gunma
Bank, Ltd.

165,000‐

165,000

‐

1,531

‐

1,531

‐

0.469

14‐Mar‐20

MizuhoBank, Ltd.

1,633,000‐‐

1,633,000

15,156‐‐15,1560.561

14‐Mar‐21

ResonaBank,
Limited.

333,000‐‐

333,000

3,090

‐

‐

3,090

0.561

14‐Mar‐21

The Bank ofFukuoka,Ltd.

333,000‐‐

333,000

3,090

‐

‐

3,090

0.561

14‐Mar‐21

The
NomuraTrust andBankingCo., Ltd.

333,000‐‐

333,000

3,090

‐

‐

3,090

0.561

14‐Mar‐21

The Towa
Bank, Ltd.

253,000‐‐

253,000

2,348

‐

‐

2,348

0.561

14‐Mar‐21

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed

22Classificati
onName 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
Shizuoka
Bank, Ltd.

200,000‐‐

200,000

1,856

‐

‐

1,856

0.561

14‐Mar‐21

The Gunma
Bank, Ltd.

165,000‐‐

165,000

1,531

‐

‐

1,531

0.561

14‐Mar‐21

MizuhoBank, Ltd.

1,733,000‐‐

1,733,000

16,085‐‐16,0850.661

14‐Mar‐22

ResonaBank,
Limited.

333,000‐‐

333,000

3,090

‐

‐

3,090

0.661

14‐Mar‐22

The Bank ofFukuoka,Ltd.

333,000‐‐

333,000

3,090

‐

‐

3,090

0.661

14‐Mar‐22

The
NomuraTrust andBankingCo., Ltd.

333,000‐‐

333,000

3,090

‐

‐

3,090

0.661

14‐Mar‐22

AEON
Bank, Ltd.

900,000‐‐

900,000

8,353

‐

‐

8,353

0.661

14‐Mar‐22

The Towa
Bank, Ltd.

253,000‐‐

253,000

2,348

‐

‐

2,348

0.661

14‐Mar‐22

The
Shizuoka
Bank, Ltd.

200,000‐‐

200,000

1,856

‐

‐

1,856

0.661

14‐Mar‐22

The Dai‐ichi
Life
Insurancecompany,
Limited

500,000‐‐

500,000

4,640

‐

‐

4,640

0.661

14‐Mar‐22

The Gunma
Bank, Ltd.

165,000‐‐

165,000

1,531

‐

‐

1,531

0.661

14‐Mar‐22

Sumitomo
Mitsui
Banking
Corporation

3,000,000‐‐

3,000,000

27,844‐‐

27,8440.511

14‐Sep‐20

MizuhoBank, Ltd.

4,321,000‐‐

4,321,000

40,105‐‐

40,1050.611

29‐Nov‐21

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

3,000,000

27,844‐‐

27,8440.611

29‐Nov‐21

ShinseiBank,
Limited.

355,000‐‐

355,000

3,294

‐

‐

3,294

0.361

13‐Oct‐20

Citibank,
N.A., Tokyo
Branch

355,000‐‐

355,000

3,294

‐

‐

3,294

0.361

13‐Oct‐20

ResonaBank,
Limited.

334,000‐‐

334,000

3,100

‐

‐

3,100

0.361

13‐Oct‐20

The Bank ofFukuoka,Ltd.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.361

13‐Oct‐20

AEON
Bank, Ltd.

190,000‐‐

190,000

1,763

‐

‐

1,763

0.361

13‐Oct‐20

The
NomuraTrust andBankingCo., Ltd.

167,000‐‐

167,000

1,550

‐

‐

1,550

0.361

13‐Oct‐20

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed

23

Classificati
onName 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
Hiroshima
Bank, Ltd.

167,000‐‐

167,000

1,550

‐

‐

1,550

0.361

13‐Oct‐20

ShinseiBank,
Limited.

355,000‐‐

355,000

3,294

‐

‐

3,294

0.461

13‐Oct‐21

Citibank,
N.A., Tokyo
Branch

355,000‐‐

355,000

3,294

‐

‐

3,294

0.461

13‐Oct‐21

ResonaBank,
Limited.

333,000‐‐

333,000

3,090

‐

‐

3,090

0.461

13‐Oct‐21

The Bank ofFukuoka,Ltd.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.461

13‐Oct‐21

AEON
Bank, Ltd.

190,000‐‐

190,000

1,763

‐

‐

1,763

0.461

13‐Oct‐21

The
NomuraTrust andBankingCo., Ltd.

167,000‐‐

167,000

1,550

‐

‐

1,550

0.461

13‐Oct‐21

The
Hiroshima
Bank, Ltd.

167,000‐‐

167,000

1,550

‐

‐

1,550

0.461

13‐Oct‐21

MizuhoBank, Ltd.

500,000‐‐

500,000

4,640

‐

‐

4,640

0.661

13‐Oct‐22

Sumitomo
MitsuiTrust Bank,
Limited

500,000‐‐

500,000

4,640

‐

‐

4,640

0.661

13‐Oct‐22

Sumitomo
Mitsui
Banking
Corporation

500,000‐‐

500,000

4,640

‐

‐

4,640

0.661

13‐Oct‐22

ShinseiBank,
Limited.

355,000‐‐

355,000

3,294

‐

‐

3,294

0.661

13‐Oct‐22

Citibank,
N.A., Tokyo
Branch

355,000‐‐

355,000

3,294

‐

‐

3,294

0.661

13‐Oct‐22

ResonaBank,
Limited.

333,000‐‐

333,000

3,090

‐

‐

3,090

0.661

13‐Oct‐22

Developme
nt Bank ofJapan Inc.

1,500,000‐‐

1,500,000

13,922‐‐

13,922

0.661

13‐Oct‐22

The Bank ofFukuoka,Ltd.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.661

13‐Oct‐22

AEON
Bank, Ltd.

190,000‐‐

190,000

1,763

‐

‐

1,763

0.661

13‐Oct‐22

The
NomuraTrust andBankingCo., Ltd.

166,000‐‐

166,000

1,540

‐

‐

1,540

0.661

13‐Oct‐22

The
Hiroshima
Bank, Ltd.

166,000‐‐

166,000

1,540

‐

‐

1,540

0.661

13‐Oct‐22

The Dai‐ichi
Life
Insurancecompany,
Limited

500,000‐‐

500,000

4,640

‐

‐

4,640

0.661

13‐Oct‐22

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed

24Classificati
onName 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

MizuhoBank, Ltd.

1,250,000‐‐

1,250,000

11,602‐‐

11,6020.761

13‐Oct‐23

Sumitomo
MitsuiTrust Bank,
Limited

1,065,000‐‐

1,065,000

9,884

‐

‐

9,884

0.761

13‐Oct‐23

Sumitomo
Mitsui
Banking
Corporation

1,250,000‐‐

1,250,000

11,602‐‐

11,6020.761

13‐Oct‐23

MizuhoBank, Ltd.

1,250,000‐‐

1,250,000

11,602‐‐

11,602

0.861

11‐Oct‐24

Sumitomo
MitsuiTrust Bank,
Limited

1,060,000‐‐

1,060,000

9,838

‐

‐

9,838

0.861

11‐Oct‐24

Sumitomo
Mitsui
Banking
Corporation

1,250,000‐‐

1,250,000

11,602‐‐

11,602

0.861

11‐Oct‐24

ShinseiBank,
Limited.

1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.750

27‐Jun‐23

MUFG
Bank, Ltd.

500,000‐‐

500,000

4,640

‐

‐

4,640

0.750

27‐Jun‐23

MizuhoBank, Ltd.

2,442,000‐‐

2,442,000

22,665‐‐22,6650.361

17‐Jul‐21

MUFG
Bank, Ltd.

2,220,000‐‐

2,220,000

20,605‐‐20,6050.361

17‐Jul‐21

Sumitomo
Mitsui
Banking
Corporation

1,998,000‐‐

1,998,000

18,544‐‐

18,5440.361

17‐Jul‐21

ShinseiBank,
Limited.

1,110,000‐‐

1,110,000

10,302‐‐

10,3020.361

17‐Jul‐21

Citibank,
N.A., Tokyo
Branch1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.361

17‐Jul‐21

Sumitomo
MitsuiTrust Bank,
Limited

890,000‐‐

890,000

8,260

‐

‐

8,260

0.361

17‐Jul‐21

MizuhoBank, Ltd.

2,443,000‐‐

2,443,000

22,674‐‐

22,6740.461

17‐Jul‐22

MUFG
Bank, Ltd.

2,220,000‐‐

2,220,000

20,605‐‐20,6050.461

17‐Jul‐22

Sumitomo
Mitsui
Banking
Corporation

1,997,000‐‐

1,997,000

18,535‐‐

18,5350.461

17‐Jul‐22

ShinseiBank,
Limited.

1,110,000‐‐

1,110,000

10,302‐‐

10,3020.461

17‐Jul‐22

Citibank,
N.A., Tokyo
Branch1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.461

17‐Jul‐22

Sumitomo
MitsuiTrust Bank,
Limited

890,000‐‐

890,000

8,260

‐

‐

8,260

0.461

17‐Jul‐22

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed

25Classificati
onName 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

MizuhoBank, Ltd.

2,442,000‐‐

2,442,000

22,665‐‐22,6650.561

14‐Jul‐23

MUFG
Bank, Ltd.

2,220,000‐‐

2,220,000

20,605‐‐20,6050.561

14‐Jul‐23

Sumitomo
Mitsui
Banking
Corporation

1,997,000‐‐

1,997,000

18,535‐‐

18,5350.561

14‐Jul‐23

ShinseiBank,
Limited.

1,110,000‐‐

1,110,000

10,302‐‐

10,3020.561

14‐Jul‐23

Citibank,
N.A., Tokyo
Branch1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.561

14‐Jul‐23

Sumitomo
MitsuiTrust Bank,
Limited

890,000‐‐

890,000

8,260

‐

‐

8,260

0.561

14‐Jul‐23

MizuhoBank, Ltd.

766,000‐‐

766,000

7,109

‐

‐

7,109

0.361

02‐Aug‐21

Sumitomo
Mitsui
Banking
Corporation

766,000‐‐

766,000

7,109

‐

‐

7,109

0.361

02‐Aug‐21

MUFG
Bank, Ltd.

467,000‐‐

467,000

4,334

‐

‐

4,334

0.361

02‐Aug‐21

ShinseiBank,
Limited.

150,000‐‐

150,000

1,392

‐

‐

1,392

0.361

02‐Aug‐21

Citibank,
N.A., Tokyo
Branch120,000‐‐

120,000

1,113

‐

‐

1,113

0.361

02‐Aug‐21

The
NomuraTrust andBankingCo., Ltd.

30,000‐‐30,000

278

‐

‐

278

0.361

02‐Aug‐21

AEON
Bank, Ltd.

60,000‐‐60,000

556

‐

‐

556

0.361

02‐Aug‐21

MizuhoBank, Ltd.

2,521,500‐‐

2,521,500

23,403‐‐

23,4030.361

26‐Sep‐21

Sumitomo
Mitsui
Banking
Corporation

2,521,500‐‐

2,521,500

23,403‐‐

23,4030.361

26‐Sep‐21

MUFG
Bank, Ltd.

2,133,000‐‐

2,133,000

19,797‐‐

19,7970.361

26‐Sep‐21

Sumitomo
MitsuiTrust Bank,
Limited1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.361

26‐Sep‐21

ShinseiBank,
Limited.

684,000‐‐

684,000

6,348

‐

‐

6,348

0.361

26‐Sep‐21

Citibank,
N.A., Tokyo
Branch546,000‐‐

546,000

5,067

‐

‐

5,067

0.361

26‐Sep‐21

Developme
nt Bank ofJapan Inc.

500,000‐‐

500,000

4,640

‐

‐

4,640

0.361

26‐Sep‐21

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed

26

Classificati
onName 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)

MaturitydateResonaBank,
Limited.

445,000‐‐

445,000

4,130

‐

‐

4,130

0.361

26‐Sep‐21

The
NomuraTrust andBankingCo., Ltd.

137,000‐‐

137,000

1,271

‐

‐

1,271

0.361

26‐Sep‐21

AEON
Bank, Ltd.

273,000‐‐

273,000

2,533

‐

‐

2,533

0.361

26‐Sep‐21

MizuhoBank, Ltd.

3,287,000‐‐

3,287,000

30,508‐‐30,5080.461

26‐Sep‐22

Sumitomo
Mitsui
Banking
Corporation

3,287,000‐‐

3,287,000

30,508‐‐30,5080.461

26‐Sep‐22

MUFG
Bank, Ltd.

2,600,000‐‐

2,600,000

24,132‐‐

24,132

0.461

26‐Sep‐22

Sumitomo
MitsuiTrust Bank,
Limited1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.461

26‐Sep‐22

ShinseiBank,
Limited.

833,000‐‐

833,000

7,731

‐

‐

7,731

0.461

26‐Sep‐22

Citibank,
N.A., Tokyo
Branch

667,000‐‐

667,000

6,190

‐

‐

6,190

0.461

26‐Sep‐22

Developme
nt Bank ofJapan Inc.

500,000‐‐

500,000

4,640

‐

‐

4,640

0.461

26‐Sep‐22

ResonaBank,
Limited.

445,000‐‐

445,000

4,130

‐

‐

4,130

0.461

26‐Sep‐22

The
NomuraTrust andBankingCo., Ltd.

167,000‐‐

167,000

1,550

‐

‐

1,550

0.461

26‐Sep‐22

AEON
Bank, Ltd.

334,000‐‐

334,000

3,100

‐

‐

3,100

0.461

26‐Sep‐22

MizuhoBank, Ltd.

3,287,500‐‐

3,287,500

30,513‐‐30,5130.561

26‐Sep‐23

Sumitomo
Mitsui
Banking
Corporation

3,287,500‐‐

3,287,500

30,513‐‐30,5130.561

26‐Sep‐23

MUFG
Bank, Ltd.

2,600,000‐‐

2,600,000

24,132‐‐

24,132

0.561

26‐Sep‐23

Sumitomo
MitsuiTrust Bank,
Limited1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.561

26‐Sep‐23

ShinseiBank,
Limited.

833,000‐‐

833,000

7,731

‐

‐

7,731

0.561

26‐Sep‐23

Citibank,
N.A., Tokyo
Branch

667,000‐‐

667,000

6,190

‐

‐

6,190

0.561

26‐Sep‐23

Developme
nt Bank ofJapan Inc.

500,000‐‐

500,000

4,640

‐

‐

4,640

0.561

26‐Sep‐23

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed27

Classificati
onName 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)

MaturitydateResonaBank,
Limited.

445,000‐‐

445,000

4,130

‐

‐

4,130

0.561

26‐Sep‐23

The
NomuraTrust andBankingCo., Ltd.

166,000‐‐

166,000

1,540

‐

‐

1,540

0.561

26‐Sep‐23

AEON
Bank, Ltd.

333,000‐‐

333,000

3,090

‐

‐

3,090

0.561

26‐Sep‐23

MUFG
Bank, Ltd.

850,000‐‐

850,000

7,889

‐

‐

7,889

0.373

22‐Jan‐22

Sumitomo
MitsuiTrust Bank,
Limited

3,400,000‐‐

3,400,000

31,557‐‐31,5570.373

22‐Jan‐22

MizuhoBank, Ltd.

386,000‐‐

386,000

3,582

‐

‐

3,582

0.361

29‐Mar‐22

MUFG
Bank, Ltd.

1,275,000‐‐

1,275,000

11,834‐‐

11,8340.361

29‐Mar‐22

Sumitomo
MitsuiTrust Bank,
Limited2,100,000‐‐

2,100,000

19,491‐‐

19,4910.361

29‐Mar‐22

ShinseiBank,
Limited.

500,000‐‐

500,000

4,640

‐

‐

4,640

0.361

29‐Mar‐22

ResonaBank,
Limited.

500,000‐‐

500,000

4,640

‐

‐

4,640

0.361

29‐Mar‐22

Developme
nt Bank ofJapan Inc.

1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.361

29‐Mar‐22

The Bank ofFukuoka,Ltd.

333,000‐‐

333,000

3,090

‐

‐

3,090

0.361

29‐Mar‐22

The
Shizuoka
Bank, Ltd.

1,270,000‐‐

1,270,000

11,787‐‐

11,7870.361

29‐Mar‐22

The
NomuraTrust andBankingCo., Ltd.

270,000‐‐

270,000

2,506

‐

‐

2,506

0.361

29‐Mar‐22

The Senshu
Ikeda Bank,
Ltd.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.361

29‐Mar‐22

AozoraBank, Ltd.

1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.594

29‐Mar‐24

THE
NISHI‐NI
PPON
CITY
BANK,
LTD.

1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.594

29‐Mar‐24

The Tochigi
Bank, Ltd.

500,000‐‐

500,000

4,640

‐

‐

4,640

0.594

29‐Mar‐24

Kiraboshi
Bank, Ltd.

1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.861

29‐Mar‐29

Citibank,
N.A., Tokyo
Branch1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.340

17‐Jun‐22

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed28

Classificati
onName 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

Developme
nt Bank ofJapan Inc.

1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.334

17‐Jun‐22

MizuhoBank, Ltd.

571,400‐‐

571,400

5,303

‐

‐

5,303

0.400

16‐Jan‐23

MUFG
Bank, Ltd.

1,464,800‐‐

1,464,800

13,595‐‐

13,5950.400

16‐Jan‐23

Sumitomo
Mitsui
Banking
Corporation

1,331,200‐‐

1,331,200

12,355‐‐

12,3550.400

16‐Jan‐23

Sumitomo
MitsuiTrust Bank,
Limited628,600‐‐

628,600

5,834

‐

‐

5,834

0.400

16‐Jan‐23

Citibank,
N.A., Tokyo
Branch1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.400

16‐Jan‐23

ShinseiBank,
Limited.

200,000‐‐

200,000

1,856

‐

‐

1,856

0.400

16‐Jan‐23

ResonaBank,
Limited.

600,000‐‐

600,000

5,568

‐

‐

5,568

0.400

16‐Jan‐23

MizuhoBank, Ltd.

571,400‐‐

571,400

5,303

‐

‐

5,303

0.499

16‐Jan‐24

MUFG
Bank, Ltd.

1,464,800‐‐

1,464,800

13,595‐‐

13,5950.499

16‐Jan‐24

Sumitomo
Mitsui
Banking
Corporation

1,331,200‐‐

1,331,200

12,355‐‐

12,3550.499

16‐Jan‐24

Sumitomo
MitsuiTrust Bank,
Limited628,600‐‐

628,600

5,834

‐

‐

5,834

0.499

16‐Jan‐24

Citibank,
N.A., Tokyo
Branch1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.499

16‐Jan‐24

ShinseiBank,
Limited.

200,000‐‐

200,000

1,856

‐

‐

1,856

0.499

16‐Jan‐24

ResonaBank,
Limited.

600,000‐‐

600,000

5,568

‐

‐

5,568

0.499

16‐Jan‐24

MizuhoBank, Ltd.

1,171,400‐‐

1,171,400

10,872‐‐

10,8720.563

16‐Jul‐24

MUFG
Bank, Ltd.

1,464,800‐‐

1,464,800

13,595‐‐

13,5950.563

16‐Jul‐24

Sumitomo
Mitsui
Banking
Corporation

1,331,200‐‐

1,331,200

12,355‐‐

12,3550.563

16‐Jul‐24

Sumitomo
MitsuiTrust Bank,
Limited628,600‐‐

628,600

5,834

‐

‐

5,834

0.563

16‐Jul‐24

Citibank,
N.A., Tokyo
Branch1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.563

16‐Jul‐24

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed

29Classificati
onName 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.

200,000‐‐

200,000

1,856

‐

‐

1,856

0.563

16‐Jul‐24

MizuhoBank, Ltd.

2,171,400‐‐

2,171,400

20,154‐‐

20,1540.611

16‐Jan‐25

MUFG
Bank, Ltd.

1,464,800‐‐

1,464,800

13,595‐‐

13,5950.611

16‐Jan‐25

Sumitomo
Mitsui
Banking
Corporation

1,331,200‐‐

1,331,200

12,355‐‐

12,3550.611

16‐Jan‐25

Sumitomo
MitsuiTrust Bank,
Limited628,600‐‐

628,600

5,834

‐

‐

5,834

0.611

16‐Jan‐25

ShinseiBank,
Limited.

200,000‐‐

200,000

1,856

‐

‐

1,856

0.611

16‐Jan‐25

MizuhoBank, Ltd.

2,170,400‐‐

2,170,400

20,144‐‐

20,1440.761

16‐Jul‐25

MUFG
Bank, Ltd.

1,464,800‐‐

1,464,800

13,595‐‐

13,5950.761

16‐Jul‐25

Sumitomo
Mitsui
Banking
Corporation

1,331,200‐‐

1,331,200

12,355‐‐

12,3550.761

16‐Jul‐25

Sumitomo
MitsuiTrust Bank,
Limited628,600‐‐

628,600

5,834

‐

‐

5,834

0.761

16‐Jul‐25

ShinseiBank,
Limited.

200,000‐‐

200,000

1,856

‐

‐

1,856

0.761

16‐Jul‐25

MizuhoBank, Ltd.

1,085,000‐‐

1,085,000

10,070‐‐10,0700.413

16‐Jan‐23

MUFG
Bank, Ltd.

987,000‐‐

987,000

9,160

‐

‐

9,160

0.413

16‐Jan‐23

Sumitomo
Mitsui
Banking
Corporation

987,000‐‐

987,000

9,160

‐

‐

9,160

0.413

16‐Jan‐23

Sumitomo
MitsuiTrust Bank,
Limited

684,000‐‐

684,000

6,348

‐

‐

6,348

0.413

16‐Jan‐23

Citibank,
N.A., Tokyo
Branch

500,000‐‐

500,000

4,640

‐

‐

4,640

0.413

16‐Jan‐23

Developme
nt Bank ofJapan Inc.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.413

16‐Jan‐23

AEON
Bank, Ltd.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.413

16‐Jan‐23

The
NomuraTrust andBankingCo., Ltd.

100,000‐‐

100,000

928

‐

‐

928

0.413

16‐Jan‐23

MizuhoBank, Ltd.

712,000‐‐

712,000

6,608

‐

‐

6,608

0.525

16‐Jan‐24

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed30Classificati
onName 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.

986,000‐‐

986,000

9,151

‐

‐

9,151

0.525

16‐Jan‐24

Sumitomo
Mitsui
Banking
Corporation

986,000‐‐

986,000

9,151

‐

‐

9,151

0.525

16‐Jan‐24

Sumitomo
MitsuiTrust Bank,
Limited

684,000‐‐

684,000

6,348

‐

‐

6,348

0.525

16‐Jan‐24

Citibank,
N.A., Tokyo
Branch

500,000‐‐

500,000

4,640

‐

‐

4,640

0.525

16‐Jan‐24

Developme
nt Bank ofJapan Inc.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.525

16‐Jan‐24

AEON
Bank, Ltd.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.525

16‐Jan‐24

The
NomuraTrust andBankingCo., Ltd.

100,000‐‐

100,000

928

‐

‐

928

0.525

16‐Jan‐24

AozoraBank, Ltd.

375,000‐‐

375,000

3,480

‐

‐

3,480

0.525

16‐Jan‐24

MizuhoBank, Ltd.

712,000‐‐

712,000

6,608

‐

‐

6,608

0.580

16‐Jul‐24

MUFG
Bank, Ltd.

986,000‐‐

986,000

9,151

‐

‐

9,151

0.580

16‐Jul‐24

Sumitomo
Mitsui
Banking
Corporation

986,000‐‐

986,000

9,151

‐

‐

9,151

0.580

16‐Jul‐24

Sumitomo
MitsuiTrust Bank,
Limited

684,000‐‐

684,000

6,348

‐

‐

6,348

0.580

16‐Jul‐24

Citibank,
N.A., Tokyo
Branch

500,000‐‐

500,000

4,640

‐

‐

4,640

0.580

16‐Jul‐24

Developme
nt Bank ofJapan Inc.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.580

16‐Jul‐24

AEON
Bank, Ltd.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.580

16‐Jul‐24

The
NomuraTrust andBankingCo., Ltd.

100,000‐‐

100,000

928

‐

‐

928

0.580

16‐Jul‐24

AozoraBank, Ltd.

375,000‐‐

375,000

3,480

‐

‐

3,480

0.580

16‐Jul‐24

MizuhoBank, Ltd.

1,212,000‐‐

1,212,000

11,249‐‐11,2490.611

16‐Jan‐25

MUFG
Bank, Ltd.

986,000‐‐

986,000

9,151

‐

‐

9,151

0.611

16‐Jan‐25

Sumitomo
Mitsui
Banking
Corporation

986,000‐‐

986,000

9,151

‐

‐

9,151

0.611

16‐Jan‐25

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed31Classificati
onName 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

684,000‐‐

684,000

6,348

‐

‐

6,348

0.611

16‐Jan‐25

Developme
nt Bank ofJapan Inc.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.611

16‐Jan‐25

AEON
Bank, Ltd.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.611

16‐Jan‐25

The
NomuraTrust andBankingCo., Ltd.

100,000‐‐

100,000

928

‐

‐

928

0.611

16‐Jan‐25

AozoraBank, Ltd.

375,000‐‐

375,000

3,480

‐

‐

3,480

0.611

16‐Jan‐25

MizuhoBank, Ltd.

1,211,000‐‐

1,211,000

11,240‐‐

11,2400.761

16‐Jul‐25

MUFG
Bank, Ltd.

986,000‐‐

986,000

9,151

‐

‐

9,151

0.761

16‐Jul‐25

Sumitomo
Mitsui
Banking
Corporation

986,000‐‐

986,000

9,151

‐

‐

9,151

0.761

16‐Jul‐25

Sumitomo
MitsuiTrust Bank,
Limited

684,000‐‐

684,000

6,348

‐

‐

6,348

0.761

16‐Jul‐25

Developme
nt Bank ofJapan Inc.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.761

16‐Jul‐25

AEON
Bank, Ltd.

300,000‐‐

300,000

2,784

‐

‐

2,784

0.761

16‐Jul‐25

The
NomuraTrust andBankingCo., Ltd.

100,000‐‐

100,000

928

‐

‐

928

0.761

16‐Jul‐25

AozoraBank, Ltd.

375,000‐‐

375,000

3,480

‐

‐

3,480

0.761

16‐Jul‐25

The Tokyo
Star Bank,
Limited

700,000‐‐

700,000

6,497

‐

‐

6,497

0.761

16‐Jul‐25

MizuhoBank, Ltd.

2,882,000‐‐

2,882,000

26,749‐‐26,7490.462

16‐Jan‐24

The Daisan
Bank, Ltd.

800,000‐‐

800,000

7,425

‐

‐

7,425

0.462

16‐Jan‐24

The Daisan
Bank, Ltd.

1,700,000‐‐

1,700,000

15,778‐‐15,7780.486

15‐Apr‐24

The Daisan
Bank, Ltd.

1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.611

15‐Apr‐25

THE
NISHI‐NI
PPON
CITY
BANK,
LTD.

1,000,000‐‐

1,000,000

9,281

‐

‐

9,281

0.761

15‐Oct‐25

Sumitomo
MitsuiTrust Bank,
Limited

‐1,550,000‐

1,550,000‐

14,386‐

14,3860.417

06‐Jan‐23

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed32Classificati
onName 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(5)‐4,550,000

1,500,000

3,050,000‐

42,231

13,92228,3080.643

06‐Jan‐25

MomijiBank,Ltd.
(5)‐1,000,000‐

1,000,000

‐

9,281

‐

9,281

0.643

06‐Jan‐25

The Kiyo
Bank, Ltd.
(5)‐500,000‐

500,000

‐

4,640

‐

4,640

0.643

06‐Jan‐25

MizuhoBank, Ltd.

‐634,000‐

634,000

‐

5,884

‐

5,884

0.487

16‐Mar‐25

ResonaBank,
Limited.

‐300,000‐

300,000

‐

2,784

‐

2,784

0.487

16‐Mar‐25

Developme
nt Bank ofJapan Inc.

‐

1,000,000‐

1,000,000

‐

9,281

‐

9,281

0.487

16‐Mar‐25

The Bank ofFukuoka,Ltd.

‐333,000‐

333,000

‐

3,090

‐

3,090

0.487

16‐Mar‐25

The
NomuraTrust andBankingCo., Ltd.

‐

333,000‐

333,000

‐

3,090

‐

3,090

0.487

16‐Mar‐25

The
Shizuoka
Bank, Ltd.

‐

200,000‐

200,000

‐

1,856

‐

1,856

0.487

16‐Mar‐25

The
Yamaguchi
Bank, Ltd.

‐

450,000‐

450,000

‐

4,176

‐

4,176

0.487

16‐Mar‐25

MUFG
Bank, Ltd.

‐

850,000‐

850,000

‐

7,889

‐

7,889

0.361

16‐Mar‐23

Sumitomo
MitsuiTrust Bank,
Limited

‐1,090,000‐

1,090,000‐

10,116‐

10,1160.361

16‐Mar‐23

The Bank ofFukuoka,Ltd.

‐333,000‐

333,000

‐

3,090

‐

3,090

0.361

16‐Mar‐23

MizuhoBank, Ltd.

‐582,000‐

582,000

‐

5,401

‐

5,401

0.561

16‐Mar‐25

MUFG
Bank, Ltd.

‐628,000‐

628,000

‐

5,828

‐

5,828

0.561

16‐Mar‐25

Sumitomo
MitsuiTrust Bank,
Limited

‐1,090,000‐

1,090,000‐

10,116‐

10,1160.561

16‐Mar‐25

ShinseiBank,
Limited.

‐570,000‐

570,000

‐

5,290

‐

5,290

0.561

16‐Mar‐25

ResonaBank,
Limited.

‐500,000‐

500,000

‐

4,640

‐

4,640

0.561

16‐Mar‐25

The
NomuraTrust andBankingCo., Ltd.

‐

270,000‐

270,000

‐

2,506

‐

2,506

0.561

16‐Mar‐25

AozoraBank, Ltd.

‐

1,000,000‐

1,000,000

‐

9,281

‐

9,281

0.561

16‐Mar‐25

Use ofproceeds

Remarks(2)

Unsecured
andunguaranteed33

Classificati
onName 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

The
Shizuoka
Bank, Ltd.

‐

270,000‐

270,000

‐

2,506

‐

2,506

0.561

16‐Mar‐25

The
KagawaBank, Ltd.

‐

500,000‐

500,000

‐

4,640

‐

4,640

0.561

16‐Mar‐25

The
Yamaguchi
Bank, Ltd.

‐

550,000‐

550,000

‐

5,104

‐

5,104

0.561

16‐Mar‐25

The Chukyo
Bank, Ltd.

‐

1,000,000‐

1,000,000

‐

9,281

‐

9,281

0.561

16‐Mar‐25

Citibank,
N.A., Tokyo
Branch‐1,000,000‐

1,000,000

‐

9,281

‐

9,281

0.311

17‐Jun‐22

Total
long‐term
loans
payable249,488,000

21,083,000

16,183,000

254,388,000

2,315,648

195,684

150,204

2,361,128

252,174,000

21,963,000

18,869,000

255,268,000

2,340,579

203,851

175,134

2,369,296‐‐

Total loans payable

Use ofproceeds

Remarks(2)

Unsecured
andunguarante
ed

‐

‐

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)

Due to the receipt of consumption taxes refunds The principal was repaid on May 29, 2020.

(4)

Long‐term loans payable include current portion.

(5)

Sumitomo Mitsui Trust Bank, Limited transferred credits of 1,000,000 thousand yen to Momiji Bank,Ltd. and 500,000 thousand yen to The Kiyo Bank, Ltd.

(6)

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 ofJune 30,
2020

53,602,000

June 30,
2020(in thousands of
U.S. dollars)
497,512$2‐3 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

44,207,000

410,311

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

44,964,000

417,338

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

40,798,000

378,670(in thousands of yen)
1‐2 years∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥

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$464 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 December 31, 2019 and June 30, 2020.
The number of investment units issued and outstanding were 6,096,840 units as of December 31, 2019 and June 30, 2020 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 December 31, 2019 and June 30, 2020.
For the six months ended

December 31,

June 30,

June 30,

34

2019

2020

2020
(in thousands of
U.S. dollars)(in thousands of yen)
Unappropriated retained earnings ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥23,261,426

Distributions ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(10,517,049)

Retained earnings / losses carried forward ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥12,744,377¥

13,168,294$

122,222(420,681)¥

12,747,612(3,904)$

118,318

The distribution in respect of the six months ended June 30, 2020 of ¥69 (US$0.6) per investment unit, amounting to a total distribution of¥420,681thousand (US$3,904 thousand) was proposed and approved at the Board of Directors meeting on August 25, 2020. These
financial statements do not reflect these distributions payable.
Cash distributions per investment unit were ¥1,725 and ¥69 (US$0.6) for the six months ended December 31, 2019, and June 30, 2020,
respectively.
Notes related to provision and reversal of allowance for temporary differences adjustment is below.
For the six months ended December 31, 2019
Not Applicable
For the six months ended June 30, 2020
Not Applicable

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 December 31, 2019 and June 30,
2020 consist of the following:
For the six months ended

December 31,
2019

June 30,
2020

June 30,
2020(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 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥14,306,734
239,092
14,545,826¥

Expenses related to property rental business:
Facility management fees ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Property related taxes ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Insurance expense ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Depreciation ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total expenses related to property rental business ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Operating income from property leasing activities∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥539,778
631,040
17,6393,345,473
139,076
4,673,007
9,872,819¥(*)Variable rental revenue of hotels ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥5,317,963

5,604,840
233,996
5,838,836

$

$

¥
¥

2,452,700
598,839
19,721
3,578,589
151,732
6,801,584(962,747)$$

22,7645,558
183
33,215
1,408
63,129(8,935)¥

1,246,746$

11,571¥52,021
2,171
54,193$

14. Management Contract Revenue
For the six months ended

December 31,
2019

June 30,
2020

June 30,
2020(in thousands of
U.S. dollars)(in thousands of yen)Management contract revenue:
Hotel management revenue∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Hotel management expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Management contract revenue ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥3,927,961
2,530,339
1,397,621¥¥

2,912,073
2,021,630
890,442$$

27,02818,763
8,264

Management contract expenses:

35

Management fee ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Insurance expense ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Depreciation ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Total management contract expenses ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Operating income from management contract ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥12,276111,278
412,305
1,680
537,542860,079¥

4,096
109,853
420,999329
535,279
355,162

¥
¥

$

$
$

38
1,019
3,907
3
4,968
3,296

15. Breakdown of Gain on sales of Properties
For the six months ended December 31, 2019
Winbell Kagurazaka
Revenue from sales of properties ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Cost of properties sold ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other sale‐related costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Gain or loss on sales of properties ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥(in thousands of yen)
5,135,530
2,992,380
172,843
1,970,306

For the six months ended June 30, 2020
City House Tokyo Shinbashi(in thousands of yen)
Revenue from sales of properties ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥Cost of properties sold ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other sale‐related costs ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Gain or loss on sales of properties ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥4,474,757
2,269,720
158,741
2,046,294(in thousands of
U.S. dollars)$
41,532
21,066
1,473$
18,992

16. 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

December 31,
2019

June 30,
2020(Rate)
Statutory tax rates ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Deductible cash distributions ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Increase (decrease) in valuation allowance ∙∙∙∙∙∙∙∙∙∙∙
Deductible dividends received ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Other ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

31.51 %
(28.47)(3.03)‐
0.00

31.46 %
(8.87)(16.98)(5.61)
0.15

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

0.01 %

0.14 %(b) Deferred tax assets and liabilities consist of the following:
As of

December 31,
2019

June 30,
2020

June 30,2020

36

(in thousands of
U.S. dollars)(in thousands of yen)
Deferred tax assets:
Enterprise tax payable
Buildings and other (merger) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Land (merger) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙Net loss carried forward(*1) ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

821
375,803¥

Asset retirement obligations ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Fixed‐term leasehold ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Adjustment of acquisition price (Overseas properties)
Deposits received

731
301,485

¥

6
2,798

$

695,171
522,444
10,23788,526472,363
9,301

693,693
522,444
10,305
100,736
469,321
4,762

6,438
4,849
95
934
4,356
44

2,174,669(522,444)

2,103,480(522,444)

19,523(4,849)Subtotal ‐ deferred tax assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Valuation allowance for tax loss carried forward
Valuation allowance for the sum of deductible temporary differences(1,652,225)(1,581,036)(14,674)

Subtotal ‐ valuation allowance ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙(2,174,669)(2,103,480)(19,523)

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

‐

‐

‐

(*1)The amounts of tax loss carried forward and the deferred tax assets are indicated by carry‐forward period.
For the six months ended December 31, 2019

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)‐Valuation allowance ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐‐

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

‐

‐

‐

320,467‐‐

522,444(201,976)(320,467)‐‐(522,444)

‐

‐

‐

‐

‐

201,976(a)Tax loss carried forward shown in the above table is after multiplying the statutory tax rate.
For the six months ended June 30, 2020

Within 1 year

1‐2 years

2‐3 years

3‐4 years

4‐5 years

Over 5 years

Total(in thousands of yen)
‐
‐

‐

‐

522,444‐522,444(522,444)‐‐(522,444)

‐

‐

‐

‐

‐

‐

Tax loss carried forward (a)‐‐Valuation allowance ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐

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)Valuation allowance ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Deferred tax assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

‐
‐
‐

4,849
(4,849)

‐
‐
‐

‐

‐
‐
‐

‐
‐
‐

4,849
(4,849)‐‐‐‐(a) Tax loss carried forward shown in the above table is after multiplying the statutory tax rate.

17. Leases(a) Lease rental revenues
The future minimum rental revenues pursuant to existing rental contracts as of December 31 , 2019 and June 30, 2020 scheduled to bereceived are summarized as follows:
As of

December 31,
2019

June 30,
2020(in thousands of yen)

June 30,
2020(in thousands of
U.S. dollars)37

Due within one year ∙∙∙∙∙∙∙∙∙∙∙∙¥
Due over one year ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

12,306,447
76,858,696¥

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

89,165,143¥(*1)13,074,353(*1)121,350$

76,516,655
89,591,008

710,197
831,548$(*1) The effect of ʺNote 27 Subsequent Events (Conclusion of Memorandum of Understanding with Major Tenant for Amendment of Term Building Lease and Management
Service Agreement)ʺ below is not included.

(b) Lease rental expenses
The future minimum rental expenses pursuant to existing rental contracts as of December 31 , 2019 and June 30, 2020 scheduled to be
paid are summarized as follows:
As of

December 31,
2019

June 30,
2020

June 30,
2020

Due within one year ∙∙∙∙∙∙∙∙∙∙∙∙¥
Due over one year ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

268,487
7,690,291¥

315,287
8,822,415(in thousands of
U.S. dollars)
2,926$
81,886

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

7,958,778¥

9,137,702$(in thousands of yen)

84,812

18. 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 December 31, 2019 and June 30, 2020.
As ofDecember 31,
2019
Carrying
amounts

June 30,
2020

Fair value

Carrying
amounts

Difference

June 30,
2020

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 ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥17,924,733(2) Cash and bank deposits in trust. ∙∙∙∙∙

10,862,669

Total assets ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥28,787,403¥

17,924,733¥

10,862,669¥

28,787,403

‐

¥

‐
¥

‐

10,190,672¥

6,127,902¥

16,318,574

10,190,672¥

6,127,902¥

16,318,574

‐

$

‐
¥

‐

94,585$56,876$

151,462

94,585$‐$‐56,876$

151,462‐

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

2,686,000

2,686,000‐

880,000

880,000

‐

8,167

8,167

‐

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

50,130,000

50,130,000‐

57,380,000

57,380,000‐

532,578

532,578‐38

(5) Investment corporation bonds ∙∙∙∙∙∙∙∙

7,000,000

6,957,300(42,700)

8,200,000

7,351,740(848,260)

76,10968,235(6) Long‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

199,358,000

199,358,000‐

197,008,000

197,008,000‐

1,828,550

1,828,550(7,873)

Total liabilities ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥259,174,000¥

259,131,300¥(42,700)¥

263,468,000¥

262,619,740¥(848,260)$

2,445,405$

2,437,532$(7,873)(7) Derivatives∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥129,227¥

129,227¥‐¥

23,808¥23,808

¥

‐

$

220

$

220

$

‐

‐

Notes

(i)The methods and assumptions used to estimate fair value are as follows:(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 “20. Derivatives” below.

(ii) Financial instruments for which fair value is difficult to determine are as follows:
As of

December 31,
2019

June 30,
2020

June 30,
2020(in thousands of
U.S. dollars)(in thousands of yen)
Tenant leasehold and security deposits in trust ∙∙∙∙∙∙∙∙∙∙∙∙¥

1,765,094¥

1,749,862$

16,241

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

17,856,387¥

17,856,387$

165,735

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 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 December 31, 2019
Cash and bank deposits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥Cash and bank deposits in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

17,924,733
10,862,669

¥

‐
‐

¥

‐
‐

¥

‐
‐

¥

‐
‐

¥

‐
‐

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

28,787,403

¥

‐

¥

‐

¥

‐

¥

‐

¥

‐

As of June 30, 2020:
Cash and bank deposits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙¥Cash and bank deposits in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

10,190,672
6,127,902

¥

‐
‐

¥

‐
‐

¥

‐
‐

¥

‐
‐

¥

‐
‐

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

16,318,574

¥

‐

¥

‐

¥

‐

¥

‐

¥

‐

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 June 30, 2020:
Cash and bank deposits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙$Cash and bank deposits in trust ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

94,58556,876

$

‐
‐

$

‐
‐

$

‐
‐

$

‐
‐

$

‐
‐

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

151,462

$

‐

$

‐

$

‐

$

‐

$

‐

(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 December 31, 2019:39

Short‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Current portion of long‐term loans payable ∙∙∙Investment corporation bonds ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Long‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

2,686,000
50,130,000‐‐

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

52,816,000‐‐‐
55,601,000¥

55,601,000‐‐‐
47,079,000¥

47,079,000‐‐
3,000,000
38,582,000¥‐‐
1,000,000
32,920,000

41,582,000¥

33,920,000‐‐
3,000,000
25,176,000¥

28,176,000

As of June 30, 2020:
Short‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

880,000

‐

‐

‐

‐

Current portion of long‐term loans payable ∙∙∙57,380,000

‐

‐

‐

‐

‐

Investment corporation bonds ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Long‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙‐‐‐
53,602,000

1,000,000
44,207,000

2,000,000
44,964,000

1,000,000
40,798,000

4,200,000
13,437,000

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

58,260,000¥

53,602,000

Within 1 year¥

1‐2 years

45,207,000¥

2‐3 years

46,964,000¥

3‐4 years

41,798,000‐¥

4‐5 years

17,637,000

Over 5 years(in thousands of U.S. dollars)
As of June 30, 2020:
Short‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Current portion of long‐term loans payable ∙∙∙Investment corporation bonds ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙
Long‐term loans payable ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

8,167
532,578‐‐

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

540,746‐‐‐497,512$497,512‐‐9,281
410,311$

419,593‐‐
18,563417,338
$

‐
‐
9,281
378,670

435,901$

387,952‐‐
38,982
124,716$

163,699

19. Investment securities
As of December 31, 2019
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 June 30, 2020
Fair values of preferred securities recorded on the Balance Sheet at ¥17,856,387 thousand (US$165,735 thousand) are not subject todisclosure of fair value as they have no market value and their fair values are extremely difficult to recognize.

20. Derivatives
Information on derivative transactions undertaken by the Company as of J December 31, 2019 and June 30, 2020 is as follows.
(a) Transactions for which hedge accounting is not applied
As of December 31, 2019:
Not Applicable
As of June 30, 2020:
Contract amount
Category

Type ofderivativetransaction

Fair
Value
(*1)

Over 1
year

Total

Valuation
gains orlossesTransacti
ons otherthanmarkettransacti
ons

Currency
options
Buy –USD Put
Optionpremium¥

3,271,290¥ 1,890,460¥(79,014)¥¥

3,271,290¥ 1,890,460¥

109,770¥(46,376)

70,605¥ (48,852)¥

138,567

Valuation
gains orlosses(in thousands of U.S. dollars)(in thousands of yen)
Currency
options
Sell –USD Call(Optionpremium)

Fair
Value
(*1)

Over 1
year

Total

¥

¥

30,162

28,797$30,362$

17,546

$

(733)

$

(430)

$

30,362$

17,546

$

1,018

$

655

$

(453)

$

279

$

1,286

$

267

40

(*1) Calculation of fair value is based on information provided by financial institutions.

(b) Transactions for which hedge accounting is applied
As of December 31, 2019:
Contract amount(*1)
Method ofhedge
accounting

Type ofderivativetransaction

Main hedged
item

Fair
Value
(*2)

Over 1year

Total(in thousands of yen)Interest rate
swap
transaction
floating ratereceivable
and Fixed
rate payable

Principle
accounting
methodCurrency
options
Sell –USD Call(Optionpremium)
Currency
options
Buy –USD Put
Optionpremium

Long‐term
borrowings

Futuretransactions
denominatedina foreign
currency¥

95,112,000¥ 66,133,000¥

3,836,140¥

622,160¥(95,963)¥(13,687)¥

3,836,140¥

622,160¥

191,665¥

38,743¥64,609¥(24,788)¥

89,405(*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.

As of June 30, 2020:
Contract amount(*1)
Method ofhedge
accounting

Type ofderivativetransaction

Principle
accounting
methodInterest rate
swap
transaction
floating ratereceivable
and Fixed
rate payable

Main hedged
item

Fair
Value
(*2)

Over 1year

Total(in thousands of U.S. dollars)(in thousands of yen)

Long‐term
borrowings¥

98,362,000¥ 65,133,000

Fair
Value
(*2)

Over 1
year

Total

¥

(65,906)$

912,957$

604,538$(*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.

21. 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 months ended December 31, 2019 and June 30, 2020 are as follows.

For the six months ended

December 31,
2019

June 30,
2020(in thousands of yen)

June 30,
2020(in thousands of

41

(611)

U.S. dollars)
Balance at the beginning of the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥32,321

Liabilities incurred due to the acquisition of properties ∙∙∙∙∙∙∙

32,539¥‐‐Accretion expense ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

218

Balance at the end of the period ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥32,539$‐217
32,756

¥

302
2

$

304

22. Segment Information
Segment information for the six months ended , December 31, 2019 and June 30, 2020 are 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:
For the six months ended December 31, 2019(in thousands of yen)
Japan

Grand Cayman
17,189,631

Total

1,397,621

18,587,253

For the six months ended June 30, 2020
(in thousands of yen)
Japan

Grand Cayman
8,519,782

Total
890,442

9,410,225(in thousands of U.S. dollars)
Japan

Grand Cayman
79,077

Total
8,264

87,341(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
Information about major clients for the six‐month periods ended, December 31, 2020 and June 30, 2020 were as follows:
For the six months ended December 31, 2019

Name of client

Operating Revenues(in thousands of yen)

Related segment

Mystays Hotel Management Co.,Ltd.

¥8,084,924

Real estate investing business

Undisclosed (1)¥1,970,306

Real estate investing business42

For the six months ended June 30, 2020

Name of client

Operating Revenues

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

Related segment

Mystays Hotel Management Co.,Ltd.

¥2,205,610$20,471

Real estate investing business

Undisclosed (1)¥2,046,294$18,992

Real estate investing business

Notes(1) The name of the client (an affiliate of a foreign real estate fund) is not disclosed, as the client’s consent has not been obtained for disclosure. The client is
not included in the group entities of the company and the Asset Manager.

23. Profit or Loss from Equity Method, etc
For the six months ended December 31, 2020
(in thousands of yen)
Investments in affiliates

17,856,387

Investments, if equity method was adopted

17,856,387

Investment gains (losses), if equity method was adopted

673,498

For the six months ended June 30, 2020
(in thousands of yen)(in thousands of US dollars)

Investments in affiliates

17,856,387

165,735

Investments, if equity method was adopted

17,856,387

165,735

558,924

5,187

Investment gains (losses), if equity method was adopted

24. Related‐Party Transactions(a)Parent Company and Major Corporate Unitholders

For the six months ended December 31, 2019
SharecapitalType ofrelated‐party

Interested
party of the
Asset
ManagerCompany
nameLocation

Business(inmillionsof yen)Voting interestin the Company

Shirahama
TMK(3)

Minato‐ku,
Tokyo

Investment
managementbusiness¥0.1‐

TouyakoGK(3)Minato‐ku,
Tokyo

Investment
managementbusiness¥0.1‐

CalvisTMK(3)

Minato‐ku,
Tokyo

Investment
managementbusiness¥0.1‐

Relations
hip withtheCompanySeller ofreal estate
trust
beneficiaryinterests
Seller ofreal estate
trust
beneficiaryinterests
Seller ofreal estate
trust
beneficiaryinterests

Transactions for the period

Type oftransactions
Acquisition ofreal estate
trust
beneficiaryinterests(2)(4)Acquisition ofreal estate
trust
beneficiaryinterests(2)(4)Acquisition ofreal estate
trust
beneficiaryinterests(2)(4)

Balance at the end of period

Amounts(1)(inthousandsof yen)Balancesheet
account¥22,322,000‐‐¥15,543,000‐‐¥11,492,000‐‐

Amounts(1)(in thousands of
yen)

43

SharecapitalType ofrelated‐party

Interested
party of the
Asset
ManagerCompany
nameLocation

Business(inmillionsof yen)Voting interestin the Company

Relations
hip withtheCompanyTransactions for the period

Type oftransactions

Balance at the end of period

Amounts(1)(inthousandsof yen)Balancesheet
account¥9,731,000‐‐¥9,405,000‐‐¥8,629,000‐‐¥5,524,000‐‐

Amounts(1)(in thousands ofyen)

Seller ofreal estate
trust
beneficiaryinterests
Seller ofreal estate
trust
beneficiaryinterests
Seller ofreal estate
trust
beneficiaryinterests
Seller ofreal estate
trust
beneficiaryinterests

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

‐

Lease
holder andoperator of
hotel

RentalRevenues¥1,133,572

Rentalreceivables¥195,942‐

Lease
holder andoperator of
hotel

RentalRevenues¥8,084,924

Rentalreceivables¥2,664,336

Yaeyama
Resort Hotel
TMK(3)

Minato‐ku,
Tokyo

Investment
managementbusiness¥0.1‐

Saturnia
TMK(3)

Minato‐ku,
Tokyo

Investment
managementbusiness¥0.1‐

Kawaguchiko
TMK(3)

Minato‐ku,
Tokyo

Investment
managementbusiness

¥0.1

‐

HL
Investments
2 TMK(3)Minato‐ku,
Tokyo

Investment
managementbusiness¥0.1‐

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

Hotel
managementbusiness¥ 10

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

Hotel
managementbusiness¥ 100

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, Shirahama TMK, Touyako GK, Calvis TMK, Yaeyama Resort Hotel TMK, Saturnia TMK, Kawaguchiko TMK, HL Investments 2 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 aremanaged 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 ,Shirahama TMK, Touyako GK, Calvis TMK, Yaeyama Resort Hotel TMK, Saturnia TMK, Kawaguchiko TMK, HL Investments 2 TMK, Naqua Hotel & Management Resorts
Management Co. Ltd, and Mystays Hotel Management as a related party.

(4)

The transaction amount is stated based on the transaction price under the purchase and sale agreement of trust beneficiary interests, and does not include the expenses in thetransaction, property tax, city planning tax, and consumption taxes.

Acquisition of real estate trust beneficiary interests are relating to below
Property No.

Property name

D64

Acquisition cost(in thousands of yen)SellerHotel MyStays Sapporo Aspen

Touyako GK

15,543,000

D65

Art Hotel Ishigakijima

Yaeyama Resort Hotel TMK

9,731,000

D66

Hotel MyStays Fuji Onsen Resort

Saturnia TMK

9,405,000

D67

Hotel Sonia Otaru

Shirahama TMK

5,930,000

D68

Hotel MyStays Kanazawa Castle

Calvis TMK

5,682,000

D69

Art Hotel Niigata Station

HL Investments 2 TMK

5,524,000

D70

Hotel MyStays Nagoya Nishiki

Shirahama TMK

5,197,000

D71

Hotel Nord Otaru

Shirahama TMK

4,296,000

D72

Hotel MyStays Kagoshima Tenmonkan

Kawaguchiko TMK

3,445,000

D73

Art Hotel Asahikawa

Shirahama TMK

3,197,000

D74

Hotel MyStays Matsuyama

Calvis TMK

3,098,000

D75

Hotel MyStays Sapporo Susukino

Kawaguchiko TMK

3,059,000

D76

Hotel MyStays Sapporo Nakajima Park

Shirahama TMK

2,118,000

D77

Hotel MyStays Sapporo Nakajima Park
Annex

Shirahama TMK

D78

Flexstay Inn Sakuragicho

Calvis TMK

1,425,000

D79

MyCUBE by MYSTAYS Asakusa Kuramae

Calvis TMK

1,287,000

D80

Hotel MyStays Kagoshima Tenmonkan
Annex

Kawaguchiko TMK

D81Hotel MyStays Nayoro

Kawaguchiko TMK

1,584,000

Total

1,168,000
957,000
82,646,000

For the six months ended June 30, 202044

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

Adria
TMK(3)

Minato‐ku,
Tokyo

Investment
managementbusiness

¥0.1

$0

‐

Seller of real estate
trust beneficiaryinterests

Heijo
TMK(3)

Minato‐ku,
Tokyo

Investment
managementbusiness

¥0.1

$0

‐

Seller of real estate
trust beneficiaryinterests

Minato‐ku,
Tokyo

Hotel
managementbusiness

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

(in
millionsof yen)Hotelmanagementbusiness

¥10

$92

¥760

‐

$7,054‐

Balance at the end of period

Amounts (1)Leaseholder andoperator of hotel

Leaseholder andoperator of hotel

Amounts(1)(inthousandsof yen)(inthousandsof U.S.
dollars)¥10,593,000$98,320¥5,643,000

Rentalrevenues

Type oftransactions

Balancesheet
account(inthousandsof yen)(in thousandsof U.S.
dollars)‐‐‐$52,376‐‐‐¥112,358$1,042

Rentalreceivables¥40,124$372

Property
management
costs andmanagement
fees (2)¥273,674$2,540‐‐‐Rentalrevenues¥2,205,610$20,471

Rentalreceivables¥93,116$864

Property
management
costs andmanagement
fees (2)¥985,476$9,146

Accounts
payable‐other¥93,109$864

Acquisition ofreal estate
trust
beneficiaryinterests (2)(4)Acquisition ofreal estate
trust
beneficiaryinterests (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.
The seller, Adria TMK, Heijo TMK, Naqua Hotel & Management Resorts Management Co. Ltd, and Mystays Hotel Management, Co. Ltd has no relationship to be stated,(3)

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 , Adria TMK, Heijo TMK , Naqua Hotel & Management Resorts Management Co. Ltd, and Mystays Hotel Management as a related
party.
The transaction amount is stated based on the transaction price under the purchase and sale agreement of trust beneficiary interests, and does not include the expenses in the(4)transaction, property tax, city planning tax, and consumption taxes.
Acquisition of real estate trust beneficiary interests are relating to below
Property name

Property No.

SellerAcquisition cost(in thousands of yen)
10,593,000

Acquisition cost(in thousands of US dollars)
98,320

D82

Hotel MyStays Premier Narita

Adria TMK

D83

Art Hotel Morioka

Heijo TMK

5,643,000

52,376

Total

16,236,000

150,696(b) Affiliates
For the six months ended December 31, 2019
Not Applicable
For the six months ended June 30, 2020
Not Applicable(c) Board of Directors and Major Individual Unitholders
For the six months ended December 31, 2020

Type ofrelated‐party

Directors
and close
relatives

Name

Naoki
FukudaBusiness / Occupation

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

Votinginterest intheCompany‐

Transactions for the period

Balance at the end of period
Amounts(3)Type of transactions(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)

Balance sheet
account

Amounts(3)(in thousands ofyen)¥323,669

Accruedexpenses¥181,945¥1,100Accruedexpenses¥880

Notes:45

(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.

(3)

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

For the six months ended June 30, 2020
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)¥315,018$2,923

¥600

$5

(in
thousandsof yen)(inthousandsof U.S.
dollars)

Accruedexpenses¥165,238$1,533

Accruedexpenses¥330$3

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.

(3)

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

25. 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 June 30, 2020 is Kingdom TMK. Summary of financial statements are as follows:
Kingdom TMK
December 31, 2019

As of / For the six months ended
June 30, 2020

(in thousands of yen)
Total specified assets

June 30, 2020
(in thousands of US dollars)

100,450,855

100,194,569

929,966

Total other assets

3,753,104

3,724,184

34,566

Total current liabilities

128,71279,072

733

Total non‐current liabilities

66,280,661

66,278,918

615,174

Total net assets

37,794,586

37,560,763

348,624

Operating revenue

2,010,770

1,748,867

16,232

Income before income taxes

1,375,369

1,141,544

10,595

Net income

1,374,486

1,140,663

10,587

26. Per Unit Information
The following table shows net asset value per unit as of December 31, 2020 and June 30, 2020 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

December 31,
2019

June 30,
2020

June 30,
2020

46

(Yen)(U.S. dollars)

Net asset value per unit ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥42,601¥40,929$379

Net income per unit ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥

1,910

¥

70

$

0

Weighted average number of units ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙

6,093,427

6,096,840‐

27．Subsequent Events (Conclusion of Memorandum of Understanding to Amend the Fixed‐term Building Lease andProperty Management Agreement with Major Tenant)Under the impact of the spread of the new coronavirus infection, the Company decided at its board of director’s meeting held on
September 10, 2020 to enter into a Memorandum of Understanding (the “MOU”) to amend each fixed‐term building lease and property
management agreement(ʺMLPM Agreementsʺ) pertaining to the rent conditions for the period from July 1, 2020 to September 30, 2020
for 73 domestic hotels owned by the Company with main tenant, MyStays Hotel Management Co., Ltd. (“MHM”) and its affiliates (theʺMHM Groupʺ), who operate the hotels, in order to avoid the inability of MHM Group to make payments and to maintain hotel
operations by MHM Group.
Based on the MOU, the Company decided to amend the MLPM Agreement (the ʺOriginal LeasingTerms and Conditionsʺ) as a tentative
measure for the period from July 1, 2020 to September 30,2020 as follows.
Items subject to

Calculated based on the Original

Tentative Measures

ChangeLeasing Terms and Conditions（July 1, 2020 to September 30, 2020）

Fixed rent (Total rent for 3

JPY 3,783 million

JPY 800 million

months for 73 properties)(Approx. 21% of the amount under theOriginal Leasing Terms and Conditions)(hereinafter referred to as the “total fixed rent”)

Variable rent

Calculated on a 3‐month basis for each hotel.

Calculated by summing up the rent of all 73
properties for three months.

The amount obtained by deducting (i)the total amount of expenses, management

The amount obtained by deducting (i)the above
total fixed rent (the total rent for 3 months for 73
properties) from (ii)the aggregate of the amountservices fees, and fixed rents of the hotel

for three months for 73 properties, which

property from (ii) the total monthly sales ofamount is obtained by deducting thethe hotel property (if the calculation results

management services fees for the hotel for eachare negative, the amount shall be JPY 0).

month from the monthly GOP (operating grossprofit calculated by subtracting expenses fromtotal monthly sales) for each hotel for the samemonth (provided that, for any month wheresuch amount is negative, the amount for themonth shall be JPY 0) (if the calculation results
are negative, the amount shall be JPY 0).
(hereinafter referred to as the “total variablerent”)

Payment method of rent

Paid on the hotel‐by‐hotel basis.

Paid on a total basis of 73 hotel properties.

The due date is the 11th of the month which

On November 11, 2020, the sum of the total fixed

is two months from the month in which therent and the total variable rent shall be paid.

last day of the calculation period falls (for the
fixed rent, every month, and for the variable
rent, every three months).

As a result of this MOU, the fixed rent to be recorded in operating revenue is expected to decrease by 2,983 million yen in the fiscal
period ending December 2020. However, as the variable rent recorded in operating revenue is determined by the GOP for the period
from July 1, 2020 to September 30, 2020, the amount of impact cannot be estimated as of today47

28．Additional Information (Impact related to the Spread of new coronavirus)
In applying impairment accounting for fixed assets, the Company estimates the impact of the new coronavirus, assuming that the
impact of the spread of the new coronavirus will be gradually controlled and the business environment will recover after the next fiscal
period. Since it is difficult to predict with certainty when the spread of the new coronavirus will be eliminated and the extent of the
impact, any change in the spread of the new coronavirus could have an impact on the Companyʹs financial position and results ofoperations after the next fiscal period.

29．Unapplied Accounting Standard
・ “Accounting Standard for Revenue Recognition” (Corporate Accounting Standards No. 29 issued by Accounting Standards Boardof Japan (“ASBJ”) on March 31, 2020)
・“Implementation Guidance on Accounting Standard for Revenue Recognition” (Implementation Guidance of Corporate AccountingStandards No. 30 issued by ASBJ on March 31, 2020)(1) Overview
The International Accounting Standard Board (“IASB”) and the Financial Accounting Standards Board (“FASB”) have jointly developed
the comprehensive accounting standard for revenue recognition, and have published “Revenue from Contracts with Customers”(International Financial Reporting Standards (“IFRS”) 15 issued by IASB and Topic 606 issued by FASB) in May 2014. As IFRS 15 iseffective for annual periods beginning on or after January 1, 2018 and Topic 606 is effective for annual periods beginning after December
15, 2017, ASBJ has developed and published the comprehensive accounting standard and implementation guidance for revenue
recognition accordingly.
As the basic policy of ASBJ for the development of accounting standard for revenue recognition, the accounting standard in Japan havebeen established while adopting the basic principal of IFRS 15 from the point of view of the comparability between the financial
statements based on IFRS or U.S. GAAP and Japanese GAAP as a benefit for the consistency with IFRS 15. In addition, in the case that
there is an item that the actual practice conducted in Japan is considered, the alternate treatments are added within the scope not to failthe comparability.
(2) Scheduled date of the application
Company will adopt the accounting standard, etc. from the beginning of the period ending December 31, 2021.
(3) Impact of the application of the respective accounting standard, etc.
Company is currently evaluating the effect on its financial statements by applying the “Accounting Standard for Revenue
Recognition”,etc.

・“Accounting Standard for Fair Value Measurement” (Corporate Accounting Standards No. 30 issued by ASBJ on July 4, 2019)・“Accounting Standard for Financial Instruments” (Corporate Accounting Standards No. 10 issued by ASBJ on July 4, 2019)
・“Implementation Guidance on Accounting Standard for Fair Value Measurement” (Implementation Guidance of Corporate
Accounting Standards No. 31 issued by ASBJ on July 4, 2019)
・“Implementation Guidance on Disclosure about Fair Value of Financial Instruments” (Implementation Guidance of Corporate
Accounting Standards No. 19 issued by ASBJ on March 31, 2020)(1) Overview
IASB and FASB have established detailed guidance for fair value measurement (IFRS 13 “Fair Value Measurement” by IFRS and Topic
820 “Fair Value Measurement” by FASB). In order to improve the comparability between the international accounting standard andJapanese accounting standard, ASBJ has mainly considered guidance and disclosure on fair value of financial instruments andpublished the accounting standard and implementation guidance for fair value measurement accordingly.
As the basic policy of ASBJ for the development of accounting standard for fair value measurement, ASBJ basically adopted all
provisions of IFRS 13 by using a unified calculation method, from the point of view of improving the comparability between the48

financial statements based on IFRS or U.S. GAAP and Japanese GAAP. Moreover, in consideration of the actual practice conducted inJapan, other treatments for individual items are established within the scope not to fail the comparability.
(2) Scheduled date of the application
Company will adopt the accounting standard, etc. from the beginning of the period ending December 31, 2021.
(3) Impact of the application of the respective accounting standard, etc.
Company is currently evaluating the effect on its financial statements by applying the “Accounting Standard for Fair Value
Measurement”, etc.

・ “Accounting Standard for Disclosure of Accounting Estimates” (Corporate Accounting Standards No. 31 issued by ASBJ on March
31,2020)(1) Overview
With regard to “sources of estimation uncertainty” which are required to be disclosed under Paragraph 125 of International AccountingStandard (“IAS”) 1 “Presentation of Financial Statements” (“IAS 1”) issued in 2003 by IASB, ASBJ was requested to examine disclosuresof such information under Japanese GAAP as useful information for users of financial statements. Accordingly, ASBJ has developed andpublished the accounting standard for disclosures of accounting estimates (the “Accounting Standard”).
The basic policy of ASBJ for the development of the Accounting Standard was to provide general principles (disclosure objectives)
instead of expanding required information in the notes, and an entity shall determine specific disclosures in accordance with its
disclosure objectives. The development of this standard is based on Paragraph 125 of IAS 1.
(2) Scheduled date of the application
Company will adopt the accounting standard from the end of the period ending June 30, 2021.
・ “Accounting Standard for Accounting Policy Disclosures, Accounting Changes, and Error Corrections” (Corporate AccountingStandards No. 24 issued by ASBJ on March 31, 2020)(1) Overview
Following the recommendation to examine enhancements to note information concerning “application of principles of accounting
policies and procedures where provisions of related accounting standards are not available,” necessary amendments were made and theaccounting standard for accounting policy disclosures, accounting changes, and error corrections was published by ASBJ.
When enhancing note information concerning “application of principles of accounting policies and procedures where provisions ofrelated accounting standards are not available,” in order to ensure consistency with past actual practice in case the provisions of related
accounting standards are clear, the provisions in the Notes on Corporate Accounting Principles (Note 1‐2) have been followed.
(2) Scheduled date of the application
Company will adopt the accounting standard from the end of the period ending June 30, 2021

49