Aoyama Sogo Accounting Firm

Innovation Speed Quality

Vol.093/ 30/ 2022

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C h a i r m a n ’ sDuration: 2 minutes
Open until: April 29, 2022

C o l u m n“Ammonia power generation” as a
new renewable energy
I really did not think President Putin would start such an
unreasonable war. It may be hard to even call it a war,
more like an invasion. It is very unfortunate to see smallchildren bearing the consequences. With several failed
negotiations and no clear resolution in sight, I wish that apeaceful solution will be reached as soon as possible.
With economic fears arising from this war, energy prices
have surged. Our company manages nearly 1,500 SPCs,
among them 20% are related to renewable energy. Most
are solar power generation; however, we have been
receiving more inquiries on wind and biomass investments.
Among the types of renewables, “Ammonia powergeneration” is gaining attention.

The process works like this. Heat from the exhaust of largegas turbines is used to break down liquid ammonia into
nitrogen and hydrogen. The extracted hydrogen is then
combusted to power the turbine which generates
electricity and simultaneously creates heat which is again
used to dissolve liquid ammonia.
With new technology at such ammonia power plants, NOx(Nitrogen Oxides) emissions will be reduced significantly
and no longer be a concern. Ocean shipping willR e n e w a b l e

Hydrogen gas turbine (Mitsubishi Heavy Industries)

be easier and perhaps convenient for a largely coal-reliantAsian market to switch to this new renewable energy.
Among the companies conducting tests are Mitsubishi
Heavy Industries, IHI, Kawasaki Heavy Industries, NipponYusen, Tokyo Electric Power and Chubu Electric Power.
When investing in this new energy, compliance under theFinancial Instruments and Exchange Act and effective
structures should be considered. We will accommodate
such inquiries regarding potential investments in Japan.
In the real estate fund industry, funds are focusing on
achieving RE100 (renewable energy 100%) as adifferentiator when accounting for consumed energy intheir real estate businesses. As news of this new potential
energy illustrates, the breadth and viewpoints of ESG
investments are expanding.
(Kazuhiro Matsuzawa, Chairman)

E n e r g y

Ministry announces newly certified“Eco-First Companies”
On February 25, 2022, Japan’s Ministry of the Environment
announced the list of newly certified Eco-First companies
that have met the Eco-First Program requirements forcompanies that promise a progressive initiative forenvironmental conservation.

Outline of Eco-First Program:① The company promises the Minister of theEnvironment of their environmental conservationinitiative for global warming, waste, recycling, andother efforts.
② The company is certified by the Minister of theEnvironment that they are progressive, unique, anddemonstrate leadership in environmental activities intheir respective industry. The mission of this programis to acknowledge and promote each company’senvironmental initiative in their respective industry.
(continues p.3)

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Aoyama Sogo Accounting Firm

Innovation Speed Quality

Vol.093/ 30/ 2022

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The program opened for applications and 6 companies met
the certification requirements.
The following are the new certifications.
※by certification date・Sanyo Homes (Feb 10, 2022)
・Alibaba Group (Feb 17, 2022)
・Like Group (Feb 17, 2022)
・Softbank (Feb 22, 2022)
・Tokyo Construction Co., Ltd. (Feb 22, 2022)
・Nippon Road (Feb 22, 2022)
The new additions bring the total to 56 Eco-First certifiedcompanies.

J a p a n

R e a lEach company promises a list of detailed items andschedule regarding their goal of zero GHG emissions (2050
carbon neutrality), environmental education, and wastereduction.
The program is noteworthy in that it is available forapplication for all domestic companies regardless ofindustry or size. For many firms, membership in RE100
may be difficult due to stringent requirements. This
program certification however is more readily available forsmaller operators. For funds being managed by smaller
teams, this may be an additional certification worth
looking into.

(Hirokazu Ando, ASA Reporting Professional K.K.)

E s t a t ebusiness hotels. Hotels in general are considered to havemore volatility than other assets, and are high-risk, highreturn.
It might be more accurate to call hotel investments, a“business investment” considering such factors.
Since a different set of knowledge is necessary in making
hotel investments, it seems that funds assign personnel
specifically with hotel expertise.

Miyako Hakata Hotel was acquired by Blackstone

Hotel Investments
It seems that many foreign investors are active in the hotel
market recently. With Blackstone purchasing Miyakohotels, Fortress with Kanpo-no-yado hotels, and GIC withPrince hotels.
Hotels as an asset type are characterized as typical“operational assets” in that they require substantial
management in generating revenue. Unlike office andresidential properties that generate rental income(considered non-operational assets), hotels run on room
sales and thus the operator’s quality of management andcontract terms with the investor are crucial. Also, thetypical stay for a guest is shorter compared to other asset
types.

I recall the time in 2002, Bali was struck with a terroristbombing and the hotel market fell momentarily. Therewas one particular fund that bravely took on investments
amidst this uncertain market. When asked, an involved
party said, “We previously couldn’t purchase hotels in Bali
because of its popularity, and the opportunity presenteditself”. In just several months after, the market hadrecovered.
It’s often said that when major events (those that don’t
rely on economic fundamentals) create a downturn in themarket, it is “buy” for hotels. If financing is not secured,investors use full equity or low leverage. In the case of ourcurrent Covid situation, it’s my impression that investors
view it as a special situation where hotel demand has
temporarily halted and not necessarily shrinking.

(Shigeru Hirai, Client Relations Group)With such factors at play, returns on hotel investments aregreatly impacted by the economy. Particularly with highend city hotels, the impact is felt more than practical
Copyright(c)2021 Aoyama Sogo Accounting Firm Co., Ltd. All rights reserved.

Aoyama Sogo Accounting Firm

Innovation Speed QualityVol.09

3/ 30/ 2022

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R e a lDuration: 2 minutes
Open until: April 29, 2022

E s t a t e

Tokyu Group’s Smart City
Involvement
Before the term “Smart City” became common in Japan,
Tokyu Group has been developing forward-thinking
complexes such as Futako-Tamagawa Rise (located 15min.
from Shibuya). The complex consists of an outdoor
shopping mall, office, and residential towers. It’s wide-open
in design and has LEED ND and NC Gold certifications. It ishome to Rakuten, one of the biggest IT companies in Japan.
Though not regarded as a smart city, it still boasts many of
the common features in design and principles.
In its most recent endeavor, Tokyu Land Corporation has
developed Takeshiba Port City, located close to other major
business districts. The complex is an integral part ofTokyo’s plan outlined in Society 5.0, which aims tocollaborate with tech firms to build an ecosystem ofinnovation and sustainable and safe living for citizens.
Japan like other nations deals with numerous issues
including aging and declining population and greater
concentration of people in metropolitan areas. There is agreat need for smart medical care as well as
technological collaboration to compete globally.

Properties

Takeshiba Port City

Smart cities will certainly be at the forefront of Japan’s pushto keep up with the world.
Below are some of the noteworthy features of two of Tokyu
Group’s prominent complexes:(Yuichi Totani, Client Relations Group)

TAKESHIBA PORT CITYFUTAKO-TAMAGAWA RISE

Office tower (40 floors, 2underground)

Office (30 floors)

Residential (18 floors)

Residential (42 floors, 28 floors)
Shopping mallDeveloper

Tokyu Land Corporation

Green related

DBJ Green Building 5 stars

Major tenants
Features

Tokyu Mall Development

Issuance of green bonds and loans

LEED ND /NC - Gold certifications (firstin Japan)
JHEP (Japan Habitat and Evaluation
Program) AAA certification

Softbank, Wework Japan

RakutenBoth have open and airy design, featuring upper-level natural landscaping.
Both have high grade offices with great amenities for workers.
Softbank plans to work with Port City as a testbed for robotics and mobility.

Copyright(c)2021 Aoyama Sogo Accounting Firm Co., Ltd. All rights reserved.

Aoyama Sogo Accounting Firm

Innovation Speed Quality

Vol.09J a p a nTa x

3/ 30/ 2022

U p d a t e

Changes to the Electronic
Preservation System for accounting
records

As our economy becomes more digitized, there is greaterneed for accounting processes to be more efficient as well.
The 2021 tax reform (effective January 1, 2022) included
changes to the provisions for electronic preservation
system for a company’s books and documents. Notably,
there were some changes to the procedures in retainingaccounting documents in electronic format.
Changes include:• Electronic preservation system for books
Prior approval from the head of tax office is no longer
required, addition of certification for best preservation
practices.
• Scanned documents
Prior approval from the head of tax office is no longer
required, Time stamp requirement, Easement of searchrequirements, Stoppage of appropriate administration
requirement• Electronic transactions
Requirement for saving electronic data
So, three months have passed since the new law tookeffect. How has your progress been in preparing for theelectronic preservation system?
For electronic transactions, there is a grace period of 2years (until December 31, 2023). If approved under
special circumstances, saving printed documents will beallowed as an alternative. However, beginning January 1,2024, there will be specific requirements for saving
electronic data, so companies should begin their processessoon.
Regarding the preservation of electronic data, beginning
October 1, 2023, the qualified invoice system will takeeffect. The related agency is considering electronic
invoices at the moment, so it may be wise to eventually
implement software that is compatible with therequirements under the electronic preservation system aswell as create internal processes for properly retaining
documents.
For questions about the electronic preservation system or
qualified invoice method, please feel free to reach out tous for guidance.
(Keiko Ikeda, Tax Consulting Group)

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