Financial Statements(9th Fiscal Period: From February 1, 2016 to July 31, 2016)(8th Fiscal Period: From August 1, 2015 to January 31, 2016)
Independent Auditor’s Report
Balance Sheets
Statements of Income and Retained Earnings
Statements of Changes in Net Assets
Statements of Cash Flows
Notes to Financial Statements

KENEDIX RESIDENTIAL INVESTMENT CORPORATION

Balance Sheets
As of July 31, 2016 and January 31, 2016
Ninth Fiscal Period
as of July 31, 2016

Eighth Fiscal Period
as of January 31, 2016

(in thousands of yen)
ASSETS
Current assets
Cash and deposits (Notes 6 and 8)
Cash and deposits in trust (Notes 6 and 8)
Operating accounts receivable
Prepaid expenses
Deferred tax assets (Note 10)
Consumption taxes receivable
Other (Note 8)
Total current assets
Noncurrent assets
Property, plant and equipment (Notes 12 and 17)
Land
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Total property, plant and equipment, net
Investments and other assets
Investment securities (Note 16)
Lease and guarantee deposits
Long-term prepaid expenses
Total investments and other assets
Total noncurrent assets
Deferred assets
Deferred organization costs¥5,146,011
3,587,036
45,5296,174
1443,7582,300
8,830,826¥4,448,589
3,618,286
25,0223,344
2,215
8,097,456

1,798,041
63,289,609(4,482,346)
58,807,263
397,122(74,438)
322,684
1,243,853(142,746)
1,101,107
151,976(7,850)144,126
88,038,597
150,211,821

1,798,041
63,158,109(3,668,727)
59,489,382
393,840(61,776)
332,064
1,241,311(114,953)
1,126,358
125,547(4,331)
121,216
88,038,598
150,905,659

62,397
10,950756,459
829,807
151,041,628

132,897
10,951
787,229
931,077
151,836,736

3,053

8,297

Investment unit issuance costs

72,819122,139

Total deferred assets

75,873

130,436¥159,948,328¥160,064,628

Total assets－2－

Ninth Fiscal Period
as of July 31, 2016

Eighth Fiscal Period
as of January 31, 2016

(in thousands of yen)
LIABILITIESCurrent liabilities
Operating accounts payable
Current portion of long-term loans payable (Notes 8 and 9)
Accounts payable-otherAccrued expenses
Income taxes payable¥336,650
8,500,000
188,167
20,220692

Accrued consumption taxes
Advances received
Deposits received
Total current liabilities
Noncurrent liabilities
Long-term loans payable (Notes 8 and 9)
Tenant leasehold and security deposits in trust

14,55387,312706,262
52,106
9,818,652

698,354
55,597
13,460,043

66,300,000
1,422,073

62,800,000
1,415,066

Other
Total noncurrent liabilities
Total liabilities¥408,685
12,000,000
189,156
20,334605

42,355-67,764,428

64,215,066

77,583,081

77,675,109

80,132,379

80,132,379

2,275,223

2,258,172

2,275,223
82,407,602

2,258,172
82,390,551(42,355)(1,032)NET ASSETS
Unitholders' equity
Unitholders' capital
Surplus
Unappropriated retained earnings
Total surplus
Total unitholders' equity
Valuation and translation adjustments
Deferred gains or losses on hedges (Notes 8 and 9)(42,355)(1,032)

Total net assets (Note 3)

Total valuation and translation adjustments

82,365,247

82,389,519

Total liabilities and net assets¥159,948,328¥160,064,628

See accompanying notes to the financial statements.

－3－

KENEDIX RESIDENTIAL INVESTMENT CORPORATIONStatements of Income and Retained Earnings
For the period from February 1, 2016 to July 31, 2016 and the period from August 1, 2015 to January 31, 2016
Ninth Fiscal Period
from February 1, 2016
to July 31, 2016

Eighth Fiscal Period
from August 1, 2015
to January 31, 2016

(in thousands of yen)
Operating revenues
Rent revenue-real estate (Note 4)
Other lease business revenue (Note 4)
Gain on sales of real estate property (Note 4)
Dividends income
Total operating revenues
Operating expenses
Expenses related to rent business (Note 4)
Asset management fees
Asset custody fees
Administrative service fees
Directors' compensation
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Dividends and redemption-prescription
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Derivatives-related expenses
Borrowing expenses
Amortization of deferred organization costs
Amortization of investment unit issuance costs
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes (Note 10)
Current
Deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings¥4,872,868
456,142
4,790
5,333,801¥4,796,385
411,7529,284
9,212
5,226,633

2,032,807
355,306
11,00337,5744,500
168,880
2,610,072
2,723,729

1,936,375
355,327
10,93337,7384,500
164,677
2,509,550
2,717,083

252
801
1
1,055

255
1,246
16
1,517

373,683
1,644
101,784
5,243
49,318531,674
2,193,110
2,193,110

370,333
3,391
104,645
5,301
49,861
533,5312,185,069
2,185,069

899
(14)
885
2,192,224
82,998¥2,275,223

606
195
801
2,184,268
73,904¥2,258,172

See accompanying notes to the financial statements.

－4－

KENEDIX RESIDENTIAL INVESTMENT CORPORATIONStatements of Changes in Net Assets
For the period from February 1, 2016 to July 31, 2016 and the period from August 1, 2015 to January 31, 2016
Valuation andtranslation
adjustments

Unitholders' equity
Surplus

Unitholders'
capitalUnappropriatedretainedearnings

Total
unitholders'equityTotal
surplusDeferred gains
or losses onhedgesTotal net assets(in thousands of yen)
Balance as of July 31, 2015¥

80,132,379 \

2,254,663 \

2,254,663 \

82,387,042 \(3,279) \ 82,383,763

Changes of items during the period
Dividends from surplus-(2,180,759)(2,180,759)(2,180,759)-(2,180,759)

Net income
Net changes of items other thanunitholders' equity-

2,184,268

2,184,268

2,184,268-

2,184,268

-

-

-

-

2,247

2,247

-

3,509

3,509

3,509

2,247

5,756

2,258,172 \2,258,172 \82,390,551 \Total changes of items during the period
Balance as of January 31, 2016

(Note 5)\80,132,379 \(1,032) \ 82,389,519

Changes of items during the period
Dividends from surplus-(2,175,173)(2,175,173)(2,175,173)-(2,175,173)

Net income
Net changes of items other thanunitholders' equity-

2,192,224

2,192,224

2,192,224-

2,192,224

-

-

-

-

(41,323)(41,323)-

17,051

17,051

17,051(41,323)(24,271)

2,275,223 \

2,275,223 \82,407,602 \Total changes of items during the period
Balance as of July 31, 2016

(Note 5)\80,132,379 \See accompanying notes to the financial statements.

－5－(42,355) \ 82,365,247

KENEDIX RESIDENTIAL INVESTMENT CORPORATIONStatements of Cash Flows
For the period from February 1, 2016 to July 31, 2016 and the period from August 1, 2015 to January 31, 2016
Ninth Fiscal Period
from February 1, 2016
to July 31, 2016

Eighth Fiscal Period
from August 1, 2015
to January 31, 2016

(in thousands of yen)
Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
Amortization of deferred organization costs
Amortization of investment unit issuance costs
Interest income
Interest expenses
Derivatives-related expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Decrease in property and equipment in trust due to sale
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Purchase of property, plant and equipment in trust
Proceeds from investment securities
Repayments of tenant leasehold and security deposits in trust
Proceeds from tenant leasehold and security deposits in trust
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Decrease in short-term loans payable
Proceeds from long-term loans payable
Decrease in long-term loans payable
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period (Note 6)¥2,193,110
857,592
5,243
49,318(252)
373,683
1,644(20,507)(43,758)(2,831)(78,310)(879)(72,758)
7,908
30,76925,275
3,325,248
252(373,797)(1,509)2,950,194¥2,185,069
852,368
5,301
49,861(255)
370,333
3,391(6,500)35,168657
86,839(2,751)87,312(9,440)(118,319)
4,637,002(383)
8,175,653
255(364,495)(42,141)
7,769,272(157,480)
42,535(141,073)
148,081(107,937)(7,502,839)(192,927)
150,732(7,545,034)

3,500,000(3,500,000)(2,176,084)(2,176,084)
666,173
8,066,875¥8,733,047(3,200,000)
10,000,000(5,500,000)(2,182,308)(882,308)(658,070)
8,724,945¥8,066,875

See accompanying notes to the financial statements.

－6－

KENEDIX RESIDENTIAL INVESTMENT CORPORATION

Notes to Financial Statements
For the period from February 1, 2016 to July 31, 2016 and the period from August 1, 2015 to January 31, 2016

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Residential Investment Corporation (“the Investment Corporation”) was established on November 15, 2011 under the Act on Investment
Trusts and Investment Corporations of Japan (“the Investment Trust Act”). On April 26, 2012, the Investment Corporation was listed on the Real
Estate Investment Trust Market of the Tokyo Stock Exchange (Securities Code: 3278).The Investment Corporation additionally issued 67,900
investment units on February 4, 2015 through most recent public offerings, and 2,067 investment units on March 4, 2015 by way of a third-party
allotment. As the result, as of July 31, 2016, the end of the ninth fiscal period, the number of investment units issued and outstanding totaled
349,089 units.
The Investment Corporation is externally managed by Kenedix Real Estate Fund Management, Inc. (“the Asset Management Company”) , a
company that was formed with personnel from Kenedix, Inc. and adheres to the core philosophies of Kenedix, Inc., that is, to provide management
services from the perspective of real estate investors as an independent real estate management company. As the asset manager, the AssetManagement Company shall provide investment and management services based on the three core strategies of the Investment Corporation:“Consistent External Growth by Making Use of Good Judgment,” “Efficient Profit Management” and “Challenge to New Business Opportunities.”
During the eighth fiscal period, the Investment Corporation acquired 5 properties (total acquisition price of ¥6,901 million) and sold 3 properties
with a total disposition price of ¥4,673 million. During the ninth fiscal period, the Investment Corporation acquired and sold no properties. As theresult, the Investment Corporation has a portfolio comprised of 105 properties (total acquisition price of ¥148,184 million) as of July 31, 2016, theend of the ninth fiscal period.
The occupancy rates of the overall portfolio excluding land with leasehold interest were 96.0% and 95.9% as of the end of the eighth and ninth
fiscal period, respectively. Furthermore, the occupancy rates of the overall portfolio including land with leasehold interest were 96.0% and 95.9%
as of the end of the eighth and ninth fiscal period.
During the eighth fiscal period, the Investment Corporation made new borrowings of ¥1,300 million upon acquiring properties. During the eighthand ninth fiscal period, the Investment Corporation made borrowings of ¥8,700 million and ¥3,500 million for the repayment of debt matured. As aresult, balance of borrowings as of the end of the eighth and ninth fiscal period stood at ¥74,800 million.
Basis of Presentation
The Investment Corporation maintains its accounting records and prepares its financial statements in accordance with accounting principles
generally accepted in Japan (Japanese GAAP), including provisions set forth in the Investment Trust Act, the Companies Act of Japan, theFinancial Instruments and Exchange Act of Japan and related regulations, which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Investment Corporation, which wereprepared in accordance with Japanese GAAP and were presented in the Securities Report of the Investment Corporation filed with the Kanto Local
Finance Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications have been made to the financial
statements issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition, the notes tofinancial statements include certain information that might not be required under Japanese GAAP but is presented herein as additional information.
The Investment Corporation fiscal period is a six-month period which ends at the end of January or July. The Investment Corporation does notprepare consolidated financial statements because it has no subsidiaries.

－7－2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) Securities
Other securities without market value are stated using the moving average cost method. Equity investments in an anonymous association
are stated, the amount equivalent to the corresponding equity interests including net amount of gain or loss from the anonymous association.
(B) Property and Equipment (including trust assets)
Property and equipment are stated at cost. Depreciation of property and equipment is calculated on a straight-line basis over the estimateduseful lives of the assets ranging as stated below:

Buildings

From February 1, 2016
to July 31, 2016
3-65 years

From August 1, 2015
to January 31, 2016
3-65 years

Structures

3-45 years

3-45 years

Machinery and equipment

8-30 years

8-30 years

Tools, furniture and fixtures

10-30 years

10-30 years(C) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line method.
(D) Deferred Organization Costs
Deferred organization costs are amortized over a period of 5 years under the straight-line method.
(E) Unit Issuance Costs
Unit issuance costs are amortized over a period of 3 years under the straight-line method.
(F) Accounting Treatment of Trust Beneficiary Interests in Real Estate
For trust beneficiary interests in real estate, which are commonly utilized in the ownership of commercial properties in Japan, all relevant
assets and liabilities in trust are recorded on the balance sheet and the statement of income and retained earnings.
(G) Revenue Recognition
Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues including
parking space rental revenues and other miscellaneous revenues. Rental revenues are generally recognized on an accrual basis over the lifeof each lease.
(H) Taxes on Property and Equipment
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties on a calendar
year basis. These taxes are generally charged to operating expenses for the period, for the portion of such taxes corresponding to said period.
Under Japanese tax regulations, the seller of the property is liable for these taxes on the property from the date of disposal to the end of thecalendar year in which the property is disposed. The seller, however, is reimbursed by the purchaser for these accrued property-related tax
liabilities.
When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes related to the period
following the purchase date of each property through the end of the calendar year. The amounts of those allocated portions of theproperty-related taxes are capitalized as part of the acquisition costs of the related properties. Capitalized property-related taxes amounted to¥4,237 thousand as of January 31, 2016. There were no capitalized property-related taxes as of July 31, 2016.

－8－

(I)

Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax bases of assets
and liabilities using the statutory tax rates.

(J) Consumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. Non-deductible consumption taxes
applicable to the acquisition of assets are included in the cost of acquisition for each asset.
(K) Derivative Financial Instruments
The Investment Corporation enters into derivative transactions to hedge risks prescribed in its Articles of Incorporation based on its risk
management policies. The Investment Corporation hedges interest rate volatility risk of its interest payments on its borrowings by utilizing
interest rate cap transactions and interest rate swap transactions as hedging instruments.
As for the method of assessment of the effectiveness of the hedge in the period from the inception of the hedge to the time of judgment of its
effectiveness, the cumulative changes in cash flow of the hedged items and hedging instruments are compared and a judgment is madebased on changed amount, etc. However, an assessment of the effectiveness of hedging activities is omitted in the case of interest rate
swaps that meet the requirements for special treatment.
(L) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid, readily
convertible to cash and with insignificant risk of market value fluctuation, with maturities of three months or less from the date of purchase.
(M) Presentation of Amounts
Amounts are truncated in the Japanese financial statements prepared in accordance with Japanese GAAP and filed with regulatory
authorities in Japan. Concerning the accompanying financial statements, amounts of the ninth fiscal period and eighth fiscal period arerounded down and rounded off, respectively. Totals shown in the accompanying financial statements do not necessarily agree with the sumsof the individual amounts.

－9－3. NET ASSETSThe Investment Corporation issues only non-par value units in accordance with the Investment Trust Act. The entire amount of the issue price of
new units is designated as stated capital. The Investment Corporation is required to maintain net assets of at least ¥50 million as required by theInvestment Trust Act.

4. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATEDEXPENSES AND GAIN ON SALES OF REAL ESTATE PROPERTY
Rental and other operating revenues and property-related expenses for the periods from February 1, 2016 to July 31 2016 and from August 1,
2015 to January 31 2016 consist of the following:
From February 1, 2016
to July 31, 2016

From August 1, 2015
to January 31, 2016

(in thousands of yen)

Rental and other operating revenues:
Rental revenues¥4,561,414¥4,492,515

Rental revenues from limited proprietary rights of land

43,75043,750Common area charges

267,704

260,120

4,872,868

4,796,385

Parking space rental revenues

176,780

177,492

Miscellaneous

279,361

234,260

Subtotal

456,142

411,752¥5,329,011¥5,208,137¥369,393¥350,097

Subtotal
Others:Total rental and other operating revenues
Property-related expenses:
Property management fees and facility management fees
Utilities

90,264

97,312

Taxes

314,741

255,545

Repairs and maintenance

210,659

203,470

7,823

7,963

Insurance
Trust fees

39,85039,331

Depreciation

857,592

852,368

OthersTotal property-related expenses

142,482

130,289¥2,032,807¥1,936,375

Gain on sales of real estate property:
From February 1, 2016 to July 31, 2016
Not applicable
From August 1, 2015 to January 31, 2016
KDX Yoyogi Residence
Revenue from sale of real estate property¥1,340,000

Cost of real estate property

1,328,749

Other sales expenses

7,946

Gain on sales of real estate property¥3,305

KDX Residence Tenjin-higashi I
Revenue from sale of real estate property¥381,000Cost of real estate property

377,077

Other sales expenses

2,482

Gain on sales of real estate property¥1,441－10－

KDX Residence Shirokane III
Revenue from sale of real estate property¥2,952,000

Cost of real estate property

2,931,176

Other sales expenses

16,285Gain on sales of real estate property¥4,5395. UNITHOLDERS’ EQUITY
Total number of authorized investment units and total number of investment units issued and outstanding are as follows:

Total number of authorized investment units

From February 1, 2016
to July 31, 2016
5,000,000

From August 1, 2015
to January 31, 2016
5,000,000

349,089

349,089

Total number of investment units issued and outstanding

6. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following as of July 31, 2016 and January 31, 2016:
As of July 31, 2016

As of January 31, 2016

(in thousands of yen)

Cash and deposits¥5,146,011¥4,448,589

Cash and deposits in trust

3,587,036

3,618,286

Cash and cash equivalents¥8,733,047¥8,066,875

7. LEASES
The Investment Corporation, as lessor, has entered into leases whereby fixed monthly rents are due in advance with a lease term of generally
two years for residential properties. The future minimum rental revenues under existing non-cancelable operating leases as of July 31, 2016 andJanuary 31, 2016 are as follows:
As of July 31, 2016

As of January 31, 2016

(in thousands of yen)Due in 1 year

¥547,894¥640,615

Due after 1 year

4,320,801

4,540,139

Total¥4,868,696¥5,180,754－11－

8. FINANCIAL INSTRUMENTS(A). Overview(1) Policy for financial instruments
The Investment Corporation procures funds for asset acquisitions, repairs, payment of distributions, repayment of loans, etc. through loans fromfinancial institutions, issuance of investment units and other means. With regard to the procurement of interest-bearing debts, the Investment
Corporation ensures that it can effectively combine stable long-term funds with flexible short-term funds. Management of surplus funds isundertaken through various bank deposits focusing on safety, liquidity and effectiveness. The Investment Corporation uses derivatives for the
purpose of hedging its exposure to changes in interest rates and other risks and does not enter into derivative transactions for speculative or
trading purposes.
(2) Types of financial instruments and related risk
Bank deposits are for managing the Investment Corporation’s surplus funds and are exposed to credit risk such as the bankruptcy of financial
institutions at which funds are deposited. Investment securities represent equity investments in an anonymous association and are exposed tocredit risk of the issuer and interest rate fluctuation risk.
Borrowings, which are made primarily for the purpose of procuring funds for the acquisition of real estate and trust beneficiary interests in realestate and have a repayment date of a maximum of 9 years and 9 months as of July 31, 2016, the end of the ninth fiscal period, are exposed toliquidity risk where alternative funds may not be procured by the repayment date. Also, borrowings with floating interest rates are exposed tointerest rate fluctuation risk. Derivatives are used for the purpose of hedging interest rate fluctuation risk for a certain portion of the borrowings.
(3) Risk management for financial instruments
a. Credit risk
While bank deposits are exposed to credit risk such as the bankruptcy of financial institutions at which funds are deposited, such risk is monitored
by deposits in non-interest bearing ordinary savings accounts or with financial institutions with credit ratings above a certain level. Investment
securities represent equity investments in an anonymous association and are exposed to credit risk of the issuer and interest rate fluctuation risk.
To manage this credit risk, the Investment Corporation regularly evaluates the results of operations and the financial condition of the issuer, etc. In
utilizing derivatives, the Investment Corporation aims to mitigate counterparty risk such as by transacting with financial institutions with favorable
ratings.
b.

Market risk

While borrowings with floating rates are exposed to interest rate volatility risk, such risk is monitored by adjusting the rate of the balance ofborrowings with floating rates against the total borrowings according to the financial environment, interest rate forecasts by continuous monitoring,etc. and by using derivatives, etc. While investment securities, which are equity investments in an anonymous association, are exposed to credit
risk of the issuer and property value fluctuation risk, the Investment Corporation periodically reviews the value of the property and financial
condition of the issuer with regard to these investment securities. A risk management policy is established with regard to the execution andmanagement of derivatives, and such transactions are entered into based on this policy.
c.

Liquidity risk

Though borrowings are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment due dates and by
diversifying financial institutions. Liquidity risk is also managed by such means as regularly checking the balance of cash reserves.
(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fairvalue is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors
could result in a different fair value.

－12－

(B). Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet and estimated fair value are shown in the following table.
As of July 31, 2016
Carrying amount

Estimated fair value

Difference(in thousands of yen)

(1) Cash and deposits¥5,146,011¥5,146,011(2) Cash and deposits in trust

3,587,036

3,587,036-

8,733,047

8,733,047-

Subtotal(1) Short-term loans payable

¥

-

-

-

-

(2) Current portion of long-term loans payable

8,500,000

8,467,366(32,633)(3) Long-term loans payable

66,300,000

67,075,351

775,351

74,800,000

75,542,717

742,717¥(42,355)¥(42,355)

Subtotal
Derivative transactions¥-

As of January 31, 2016
Carrying amount

Estimated fair value

Difference(in thousands of yen)

(1) Cash and deposits(2) Cash and deposits in trust
Subtotal¥4,448,589
3,618,286¥4,448,589
3,618,286

8,066,875

8,066,875

-

-

-

-

12,000,000
62,800,000

11,995,817
63,113,900(4,183)313,900

74,800,000

75,109,717

309,717

¥612

¥612

(1) Short-term loans payable(2) Current portion of long-term loans payable(3) Long-term loans payable
Subtotal
Derivative transactions

¥

¥

-

-

Note 1: Methods to determine the estimated fair value of financial instruments and matters related to derivative transactions
Assets(1) Cash and deposits and (2) Cash and deposits in trust
Since these items are settled in a short period of time, their carrying amount approximates fair value.
Liabilities(1)Short-term loans payable
Since these items are settled in a short period of time with floating interest rates, their carrying amount approximates fair value.
(2)Current portion of long-term loans payable and (3) Long-term loans payable
Among these items, the fair value of loans payable with fixed interest rates is calculated based on the present value, which is the total amount ofprincipal and interest discounted by the estimated interest rate to be applied in the event that the Investment Corporation conducts new borrowingsof the same type. As for the fair value of loans payable with floating interest rates, it is based on the carrying amount since market interest rates
are reflected in the short term and the fair value is believed to approximate the carrying amount as the credit standing of the Investment
Corporation has not changed significantly since the loans were made. (However, the fair value of long-term loans payable subject to the special
treatment for interest-rate swaps is based on the present value of the total of principal and interest, accounted for together with the applicableinterest-rate swaps, discounted by the estimated interest rate to be applied in the event that the Investment Corporation conducts new borrowingsof the same type.)－13－

Derivative transactions
Please refer to Note 9 “DERIVATIVE TRANSACTIONS”.
Note 2: Financial instruments whose fair values are recognized to be extremely difficult to grasp(in thousands of yen)Classification

As of July 31, 2016

As of January 31, 2016
62,397

Investment securities *132,897*Fair values of investment securities are not subject to disclosure of fair value as they have no market value and their fair values are recognized to
be extremely difficult to grasp.
Loss on valuation of investment securities of ¥27,964 thousand was recognized in the fiscal period ended July 31, 2016.
Note 3: Redemption schedule for financial assets with maturities
As of July 31, 2016
Due in 1 year or
less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after 5 years¥¥(in thousands of yen)

Cash anddeposits
Cash anddeposits in trust
Total¥5,146,011¥

3,587,036¥--¥8,733,047

As of January 31, 2016
Due in 1 year or
less

-

¥

-

-

Due after 1 year
through 2 years

¥

¥

-

-

Due after 2 years
through 3 years

-

¥

-

-

Due after 3 years
through 4 years

-

¥

-

-

¥

-

Due after 4 years
through 5 years

Due after 5 years¥¥(in thousands of yen)

Cash anddeposits
Cash anddeposits in trust
Total¥4,448,589¥

3,618,286

-

¥

-

-

¥8,066,875

¥

¥

-

-

¥

-

-

¥

-

-

¥

-

-

¥

-

Note 4: Redemption schedule for loans payable
As of July 31, 2016
Due in 1 year or
less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after 5 years(in thousands of yen)

Short-term loans
payableLong-term loans
payable
Total

¥

-

¥

-

8,500,000

11,000,000

8,500,000¥ 11,000,000

As of January 31, 2016
Due in 1 year or
less

Due after 1 year
through 2 years

¥

¥

-

¥

-

11,000,000¥-

1,500,000

11,000,000

Due after 2 years
through 3 years¥¥

5,950,000

1,500,000

Due after 3 years
through 4 years¥¥

5,950,000

Due after 4 years
through 5 years

36,850,000¥

36,850,000

Due after 5 years(in thousands of yen)

Short-term loans
payableLong-term loans
payable
Total

¥

¥

-

¥

-

12,000,000

11,000,000

12,000,000¥ 11,000,000

¥

-

¥

-

11,000,000¥

11,000,000

－14－

¥

-

1,500,000¥

1,500,000¥

3,600,000¥

3,600,000

35,700,000¥

35,700,000

9. DERIVATIVE TRANSACTIONS
The contract amount and the fair value of interest-rate swap transactions as of July 31, 2016 are shown in the following table.
(1)

Transactions not subject to hedge accounting
Not applicable(2)

Transactions subject to hedge accounting

Hedge
accounting
methodType of derivativetransactions

Hedged items

Contract amount(in thousands of yen)
Maturing after 1
year

Fair value(in thousands of yen)Calculation method for
applicable fair value

Interest rate swap
Based on the amounttransaction:
Long-term¥3,500,000¥3,500,000¥(42,355) provided by counterparty
Receive/floatingloans payablefinancial institutions
and pay/fixedSpecialInterest rate swap
treatment for transaction:
Long-term¥65,800,000¥57,300,000*
interest-rate
Receive/floatingloans payableswaps
and pay/fixed
Total¥69,300,000¥60,800,000¥(42,355)*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair
Accounting
method, inprinciple

value is included in the fair value of the hedged long-term loans payable.
The contract amount and the fair value of interest-rate cap transactions and interest-rate swap transactions as of January 31, 2016 are shown in
the following table.
(1)

Transactions not subject to hedge accounting
Not applicable(2)

Transactions subject to hedge accounting

Hedge
accounting
methodAccounting
method, inprinciple
Specialtreatment forinterest-rate
swaps

Type of derivativetransactions

Hedged items

Interest-rate cap
transaction:

Long-termloans payable

Contract amount(in thousands of yen)
Maturing after 1
year¥3,500,000¥-

Fair value(in thousands of yen)Calculation method for
applicable fair value¥612

Based on the amountprovided by counterparty
financial institutions

Interest rate swap
transaction:
Long-term¥65,800,000¥57,300,000*
Receive/floatingloans payable
and pay/fixed
Total¥69,300,000¥57,300,000¥612*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fairvalue is included in the fair value of the hedged long-term loans payable.

－15－10. INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 32%. However, the Investment
Corporation may deduct from its taxable income amounts distributed to its unitholders, provided the requirements under the Special Taxation
Measures Law of Japan are met, including a requirement that it currently distributes in excess of 90% of its net income for the fiscal period in order
to be able to deduct such amounts. If the Investment Corporation does not satisfy all of the requirements, the entire taxable income of theInvestment Corporation will be subject to regular corporate income taxes. Since the Investment Corporation distributed in excess of 90% of its
distributable income in the form of cash distributions totaling ¥2,220 million and ¥2,175 million for the periods ended July 31, 2016 and January 31,
2016, respectively, the distributions were treated as deductible distributions for purposes of corporate income taxes. The effective tax rates on theInvestment Corporation’s income were 0.04% for the periods ended July 31, 2016 and January 31, 2016. The following table summarizes thesignificant differences between the statutory tax rate and the effective tax rate:

Statutory tax rate

32.31%

From August 1,2015
to January 31,2016
32.31%

Deductible cash distributions

From February 1,2016
to July 31,2016(32.71)(32.13)

Others0.44(0.14)

Effective tax rate

0.04%

0.04%

The significant components of deferred tax assets and liabilities as of July 31, 2016 and January 31, 2016 are as follows:
As of July 31, 2016

As of January 31, 2016

(in thousands of yen)

Deferred tax assets:
Enterprise tax payable¥ 14

Deferred gains or losses on hedges

13,380Loss on valuation of investment securities

¥

334

8,876

-

Subtotal deferred tax assets

22,270334

Valuation allowance(22,256)

334

Total deferred tax assets¥

14

11. RELATED-PARTY TRANSACTIONS
1．Parent Company, major corporate unitholders and other
Ninth Fiscal Period (February 1, 2016 to July 31, 2016) and Eighth Fiscal Period (August 1, 2015 to January 31, 2016): Not applicable
2．Affiliated companies and other
Ninth Fiscal Period (February 1, 2016 to July 31, 2016) and Eighth Fiscal Period (August 1, 2015 to January 31, 2016): Not applicable
3．Fellow subsidiary companies and other
Ninth Fiscal Period (February 1, 2016 to July 31, 2016) and Eighth Fiscal Period (August 1, 2015 to January 31, 2016): Not applicable
4．Directors, major individual unitholders and other
Ninth Fiscal Period (February 1, 2016 to July 31, 2016) and Eighth Fiscal Period (August 1, 2015 to January 31, 2016): Not applicable

－16－

¥

-

12. INVESTMENT AND RENTAL PROPERTIESThe Investment Corporation owns real estate for rental purposes in the Tokyo Metropolitan Area and other regional areas for the purpose ofgenerating rental revenues.
The book value and fair value concerning the above real estate for rental purposes are as follows.
Ninth Fiscal Period
from February 1, 2016
to July 31, 2016

Eighth Fiscal Period
from August 1, 2015
to January 31, 2016

(in thousands of yen)Book value
Balance at the beginning of period
Changes during the period
Balance at the end of period
Fair value at the end of period¥150,905,659(693,837)¥148,872,550
2,033,109

150,211,821¥170,203,000

150,905,659¥169,702,000

Note 1: Book value excludes accumulated depreciation from acquisition costs.
Note 2: Among changes in the amount of real estate for rental purposes that occurred during the ninth fiscal period, the principal decreases weredepreciation ¥857,592 thousand and during the eighth fiscal period, principal increases were the acquisition of real estate trust beneficiaryinterests in 5 properties totaling ¥7,355,020 thousand and the principal decreases were the disposition of real estate trust beneficiaryinterests in 3 properties (¥4,637,002 thousand) and depreciation ¥852,368 thousand.
Note 3: The fair value is the appraisal value or the survey value determined by outside appraisers. In addition, the fair value of KDX Toyohira Sanjo
Residence and KDX Residence Kamisugi, which will be sold on November 1, 2016, is based on the sales prices (¥585,000 thousand and¥716,000 thousand, respectively) under the trust beneficiary interest sales contracts entered into on July 26, 2016.
Income and loss in the fiscal periods ended July 31, 2016 and January 31, 2016 for real estate for rental purposes is listed in Note 4 ”
BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES AND GAIN ON SALES OF REALESTATE PROPERTY”.

13. SEGMENT INFORMATION
Segment information for the period ended from February 1, 2016 to July 31, 2016 and from August 1, 2015 to January 31, 2016 is as follows:(A) Segment information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportable segment
subject to disclosure.
(B) Related information(1) Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating revenue
on the statement of income and retained earnings.
(2) Information about each geographic area(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on the statement of income
and retained earnings.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property,
plant and equipment on the balance sheet.
(3) Information about each major customer
Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenue on the statement ofincome and retained earnings.

－17－14. PER UNIT INFORMATION
From February 1, 2016

From August 1, 2015

to July 31, 2016

to January 31, 2016

Net asset value per unit

¥ 235,943¥ 236,013

Net income per unit

¥6,279¥6,257Weighted average number of units (units)

349,089

349,089

The weighted average number of units outstanding of 349,089 were used for the computation of the amount of net income per unit as of July 31,
2016 and January 31, 2016.
Net income per unit after adjusting for residual units is not included because there were no residual investment units.
The basis for calculating net income per unit is as follows:
From February 1, 2016

From August 1, 2015

to July 31, 2016

to January 31, 2016

Net income (in thousands of yen)

¥2,192,224

Net income not available to ordinary unitholders (in thousands of yen)
Net income available to ordinary unitholders (in thousands of yen)
Weighted average number of units during the period (units)¥2,184,268--¥2,192,224¥2,184,268

349,089

349,089

15. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable

16. SECURITIES PORTFOLIO
Securities portfolio consists of the following as of July 31, 2016:(1)

Stock Not applicable(2)

Securities other than shares(in thousands of yen)

Type

Name

Silent Partnership

Equity interests in TK property fund with

Equity Interests

G.K. Bohemian as operator (Note 1)

Face value
total

Total

Book value

Accruedinterest

Prepaid

Assessed

accrued

value

Gain
(Loss) on Remarks

interest （Note 2） valuation-

62,397--62,397--62,397--62,397-Note 1: TK property fund sold “KDX Residence Urayasu” and “KDX Residence Noborito” on March 1, 2016, and “KDX Residence Sumiyoshi” onMarch 15, 2016. As a result, TK property fund owned real estate beneficiary interests in trust in “KDX Residence Azabu Sendaizaka,” “KDX
Residence Nishi-azabu,” “KDX Residence Bunkyo Yushima,” “KDX Residence Waseda Tsurumaki,” “KDX Residence Kamishakujii” as ofJuly 31, 2016, the end of the ninth fiscal period. Furthermore, the Investment Corporation acquired real estate beneficiary interests in trust
for the five abovementioned properties on August 1, 2016.
Note 2: The assessed value is stated at the book value. Loss on valuation of investment securities of ¥27,964 thousand was recognized in thefiscal period ended July 31, 2016.
Securities portfolio consists of the following as of January 31, 2016:(1)

Stock Not applicable(2)

Securities other than shares(in thousands of yen)

Type

Name

Silent Partnership

Equity interests in TK property fund with

Equity Interests

G.K. Bohemian as operator (Note 1)

Total

Face value
totalBook value

Accruedinterest

Prepaid

Assessed

accrued

value

Gain
(Loss) on Remarks

interest （Note 2） valuation-

132,897--

132,897--

132,897--

132,897-

Note 1: TK property fund owns the real estate beneficiary interests in trust for “KDX Residence Azabu Sendaizaka,” “KDX Residence Nishi-azabu,”“KDX Residence Bunkyo Yushima,” “KDX Residence Waseda Tsurumaki,” “KDX Residence Kamishakujii,” “KDX Residence Sumiyoshi,”“KDX Residence Urayasu,” “KDX Residence Noborito.”
Note 2: The assessed value is stated at the book value.

－18－17. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following as of July 31, 2016:
Type of asset

Balance atthe beginningof period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of
periodDepreciation
Accumulated
depreciation

Depreciation
for theperiodNetbalance at
end of theperiodRemarks(in thousands of yen)
Land

Property,plant andequipment¥1,798,041

¥

-

¥

-

¥1,798,041

¥

-

¥

-

¥1,798,041

Sub total

1,798,041--

1,798,041--

1,798,041

Buildings in trust

63,158,109

131,500-

63,289,609

4,482,346

813,61958,807,263

Structures in trust

393,840

3,282-

397,122

74,43812,661

322,684

Machinery andequipment in trust

1,241,311

2,542

-

1,243,853

142,746

27,793

1,101,107

Tools, furnitureand fixtures in
trust

125,547

26,429-151,976

7,850

3,518

144,126

Land in trust

88,038,598--

88,038,597--

88,038,597

Sub total

152,957,405

163,755-

153,121,160

4,707,380

857,592

148,413,779¥154,755,446¥163,755-¥154,919,202¥4,707,380¥857,592¥150,211,821

Total

¥

Note 1: The amount of increase during the period is primarily attributable to capital expenditures.
Property, plant and equipment consist of the following as of January 31, 2016:

Type of asset

Balance atthe beginningof period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of
periodDepreciation
Accumulated
depreciation

Depreciation
for theperiodNetbalance at
end of theperiodRemarks(in thousands of yen)
Land

Property,plant andequipment¥1,798,041

¥

-

¥

-

¥1,798,041

¥

-

¥

-

¥1,798,041

Sub total

1,798,041--

1,798,041--

1,798,041

Buildings in trust

61,497,744

3,047,181

1,386,816

63,158,109

3,668,727

809,247

59,489,382

Structures in trust

384,396

20,283

10,839393,840

61,776

12,521

332,064

Machinery andequipment in trust

1,234,055

39,97032,714

1,241,311

114,953

27,943

1,126,358

Tools, furnitureand fixtures intrust

53,37073,066889

125,547

4,331

2,657

121,216

86,993,350

4,342,374

3,297,126

88,038,598--

88,038,598

Land in trust
Sub total
Total

150,162,915

7,522,874

4,728,384

152,957,405

3,849,787

852,368

149,107,618¥151,960,956¥7,522,874¥ 4,728,384¥154,755,446¥3,849,787¥852,368¥150,905,659

Notes 1
and 2

Notes 1
and 2

Note 1: The amount of increase during the period is primarily attributable to the acquisition of the real estate properties and capital expenditures.
Note 2: The amount of decrease during the period is primarily attributable to the sales of the real estate property.

－19－18. SHORT-TERM DEBT AND LONG-TERM DEBT
Short-term debt and long-term debt consists of the following as of July 31, 2016
Classification
LenderBalance atthebeginning of
periodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
periodAverageinterest rate
（Note 2）
（Note 3）

Payment due
date（Note 6）1.045%

April 30,
2016

Use

Remarks(Note 5)

Unsecured/
Unguaranteed(Note 5)

Unsecured/
Unguaranteed(in thousands of yen)

Current
portion of
long-term
loans
payableLong-term
loans
payableSumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Aozora Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Resona Bank, Ltd.
Mizuho Trust &Banking Co., Ltd
Mizuho Bank, Ltd.
Sub total
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Aozora Bank, Ltd.
Resona Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust &Banking Co., Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Aozora Bank, Ltd.
Resona Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust &Banking Co., Ltd
Mizuho Bank, Ltd.
Development Bank ofJapan Inc.
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.
Sumitomo Mitsui
Banking Corporation

2,500,000-

2,500,000-

1,000,000-

1,000,000-

3,000,000--

3,000,000

2,000,000--

2,000,000

1,000,000--

1,000,000

1,000,000--

1,000,000

500,000--

500,000

500,000--

500,000

500,000
12,000,000-

3,500,000

500,000
8,500,000

4,000,000--

4,000,000

2,500,000--

2,500,000

1,500,000
1,000,000--

1,500,000
1,000,000

1,000,000--

1,000,000

500,000--

500,000

500,000--

500,000

3,250,000--

3,250,000

2,000,000--

2,000,000

1,000,000
500,000--

1,000,000
500,000

500,000--

500,000

500,000--

500,000

0.787%

August 31,
2016

0.910%

August 31,
2017

1.052%

August 31,
2018

250,000--

250,000

3,000,000--

3,000,000

1.088%（Note 4）

August 31,
2018

1,000,000--

1,000,000

1.109%

January 31,
2021

1,000,000--

1,000,000

1.221%

Aozora Bank, Ltd.

1,350,000--

1,350,000

1.183%

Sumitomo Mitsui
Banking Corporation

2,000,000--

2,000,000

1.267%

Aozora Bank, Ltd.

1,500,000--

1,500,000

1.267%The Bank ofTokyo-Mitsubishi UFJ,Ltd.

1,000,000--

1,000,000

1.267%

April 30,
2022

Resona Bank, Ltd.

1,000,000--

1,000,000

1.267%

April 30,2022

1,100,000--

1,100,000

1,100,000--

1,100,000

600,000
350,000
300,000--

600,000
350,000
300,000

0.916%

August 7,
2021

300,000--

300,000

Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi
UFJ ,Ltd.
Mizuho Bank, Ltd.
Aozora Bank, Ltd.
Resona Bank, Ltd.
The Mizuho Trust andBanking Co., Limited－20－

July 31,2021
March 31,2021
April 30,
2022
April 30,
2022

Classification
LenderBalance atthebeginning of
periodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
periodAverageinterest rate
（Note 2）
（Note 3）

Payment due
date（Note 6）

0.996%(Note 4)

August 7,2021

1.254%

August 7,
2023

Use

Remarks(Note 5)

Unsecured/
Unguaranteed(in thousands of yen)
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi
UFJ ,Ltd.
Mizuho Bank, Ltd.
Resona Bank, Ltd.
The Mizuho Trust andBanking Co., LimitedAozora Bank, Ltd.
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi
UFJ ,Ltd.

1,000,000--

1,000,000

400,000--

400,000

400,000--

400,000

300,000
200,000--

300,000
200,000

200,000--

200,000

150,000--

150,000

500,000--

500,000

1.320%(Note 4)600,000--

600,000

0.945%

600,000--

600,000

0.945%

Aozora Bank, Ltd.

500,000--

500,000

0.945%

Mizuho Bank, Ltd.

950,000--

950,000

1.083%

2,000,000--

2,000,000

0.804%

1,500,000--

1,500,000

0.689%

November 30,
2019

1,200,000--

1,200,000

0.875%

January 31,
2022

1,200,000--

1,200,000

1.105%

January 31,
2024

Aozora Bank, Ltd.

2,000,000--

2,000,000

0.875%

Resona Bank, Ltd.

1,500,000--

1,500,000

0.987%

2,000,000--

2,000,000

1.100%

1,000,000--

1,000,000

1.265%

Aozora Bank, Ltd.

300,000--

300,000

0.678%

Resona Bank, Ltd.

1,100,000--

1,100,000

0.923%

700,000--

700,000

0.923%

950,000--

950,000

1.047%

1,700,000--

1,700,000

1.169%

950,000--

950,000

1.169%

2,000,000--

2,000,000

1.345%

1,000,000--

1,000,000

1.193%(Note 4)300,000--

300,000

0.624%

October 27,
2020

1,000,000--

1,000,000

1.156%

April 27,2025-

1,000,000-

1,000,000

0.819%

April 28,2025-

2,500,000-

2,500,000

0.903%

April 30,2026

62,800,000¥74,800,000

3,500,000¥3,500,000¥3,500,000

66,300,000¥74,800,000

Sumitomo Mitsui
Banking Corporation
Mitsubishi UFJ Trustand Banking
Corporation
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.
Long-term
loans
payableThe Bank ofTokyo-Mitsubishi UFJ,
Ltd.
Sumitomo Mitsui
Banking Corporation

The Mizuho Trust andBanking Co., Limited
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
Development Bank ofJapan Inc.
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.
Sumitomo Mitsui
Banking Corporation
Sub total
Total

－21－

August 7,
2023
August 31,
2021
August 31,
2021
August 31,
2021
November 30,
2022
November 30,
2020

April 30,
2022
April 30,
2023
April 30,
2024
April 30,
2025
August 31,
2020
August 31,
2022
August 31,
2022
August 31,
2023
August 31,
2024
August 31,
2024
August 31,
2025
August 31,
2024

Note 1: Annual repayments of long-term loans payable (except for current portion of long-term loans payable) scheduled for the next five years
after the balance sheet date are as follows:
Due after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

through 2 years

through 3 years

through 4 years

through 5 years(in thousands of yen)
Long-term loans payable¥11,000,000¥11,000,000¥1,500,000¥5,950,000

Note 2: All debts except for the following Note 4 are borrowing at a floating rate.
Note 3: Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, withregard to borrowings for which interest rate swap transactions and interest rate cap transactions were implemented in order to hedge theinterest rate volatility risk, the weighted average interest rates taking into consideration the effects of the interest rate swaps and interest
rate caps are indicated.
Note 4: Borrowings is applied at a fixed rate.
Note 5: All debts were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate (additional expenses areincluded) and repayment of debts.
Note 6: All the repayment methods of debt financing are lump-sum repayments on the due date.

Short-term debt and long-term debt consists of the following as of January 31, 2016:
Classification
LenderBalance atthebeginning of
periodIncreaseduring theperiodDecreaseduring theperiodAverageinterest rate
（Note 3）（Note 4）

Balance atthe end of
periodPayment due
date（Note 7）Use

Remarks

August 31,
2015
August 31,
2015(Note 6)

Unsecured/
Unguaranteed(Note 6)

Unsecured/
Unguaranteed(Note 6)

Unsecured/
Unguaranteed(in thousands of yen)
Short-termloanspayableCurrent
portion of
long-term
loans
payableLong-term
loans
payableAozora Bank, Ltd.

¥1,600,000

Resona Bank, Ltd.
Sub total
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Aozora Bank, Ltd.
Resona Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust &Banking Co., Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Aozora Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Resona Bank, Ltd.
Mizuho Trust &Banking Co., Ltd
Mizuho Bank, Ltd.
Sub total
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Aozora Bank, Ltd.
Resona Bank, Ltd.

¥-

¥1,600,000

1,600,000-

3,200,000¥-

0.480%

1,600,000-

0.480%-

3,200,000-

1,750,000-

1,750,000-

1,500,000-

1,500,000-

500,000
500,000-

500,000
500,000-

500,000-

500,000-

500,000-

500,000-

250,000-

250,000-

2,500,000--

2,500,000

1,000,000--

1,000,000

3,000,000--

3,000,000

2,000,000--

2,000,000

1,000,000--

1,000,000

1,000,000--

1,000,000

500,000--

500,000

500,000--

500,000

500,000
17,500,000-

5,500,000

500,000
12,000,000

4,000,000--

4,000,000

2,500,000--

2,500,000

1,500,000
1,000,000--

1,500,000
1,000,000－22－0.580%

August 31,
2015

1.042%

April 30,
2016

0.787%

August 31,
2016(Note 2)0.910%

August 31,
2017Classification
LenderBalance atthebeginning of
periodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
periodAverageinterest rate
（Note 3）（Note 4）

Payment due
date（Note 7）0.910%

August 31,
2017

1.052%

August 31,
2018

Use

Remarks(Note 6)

Unsecured/
Unguaranteed(in thousands of yen)
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust &Banking Co., Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Aozora Bank, Ltd.
Resona Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust &Banking Co., Ltd
Mizuho Bank, Ltd.
Development Bank ofJapan Inc.
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.
Sumitomo Mitsui
Banking Corporation

Long-term
loans
payable1,000,000--

1,000,000

500,000--

500,000

500,000--

500,000

3,250,000--

3,250,000

2,000,000--

2,000,000

1,000,000
500,000--

1,000,000
500,000

500,000--

500,000

500,000--

500,000

250,000--

250,000

3,000,000--

3,000,000

1.088%（Note 5）

August 31,
2018

1,000,000--

1,000,000

1.109%

January 31,
2021

1,000,000--

1,000,000

1.221%

Aozora Bank, Ltd.

1,350,000--

1,350,000

1.183%

Sumitomo Mitsui
Banking Corporation

2,000,000--

2,000,000

1.267%

Aozora Bank, Ltd.

1,500,000--

1,500,000

1.267%The Bank ofTokyo-Mitsubishi UFJ,Ltd.

1,000,000--

1,000,000

1.267%

April 30,
2022

Resona Bank, Ltd.

1,000,000--

1,000,000

1.267%

April 30,2022

1,100,000--

1,100,000

1,100,000--

1,100,000

600,000
350,000
300,000--

600,000
350,000
300,000

300,000--

300,000

1,000,000--

1,000,000

400,000--

400,000

400,000--

400,000

300,000
200,000--

300,000
200,000

200,000--

200,000

150,000--

150,000

500,000--

500,000

1.320%(Note 5)600,000--

600,000

0.945%

600,000--

600,000

0.945%

Aozora Bank, Ltd.

500,000--

500,000

0.945%

Mizuho Bank, Ltd.

950,000--

950,000

1.083%

2,000,000--

2,000,000

0.804%

1,500,000--

1,500,000

0.689%

Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi
UFJ ,Ltd.
Mizuho Bank, Ltd.
Aozora Bank, Ltd.
Resona Bank, Ltd.
The Mizuho Trust andBanking Co., Limited
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi
UFJ ,Ltd.
Mizuho Bank, Ltd.
Resona Bank, Ltd.
The Mizuho Trust andBanking Co., LimitedAozora Bank, Ltd.
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi
UFJ ,Ltd.

Sumitomo Mitsui
Banking Corporation
Mitsubishi UFJ Trustand Banking
Corporation－23－

July 31,2021
March 31,2021
April 30,
2022
April 30,2022

0.916%

August 7,2021

0.996%(Note 5)

August 7,2021

1.254%

August 7,
2023

August 7,
2023
August 31,
2021
August 31,
2021
August 31,
2021
November 30,
2022
November 30,
2020
November 30,
2019Classification
LenderBalance atthebeginning of
periodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
periodAverageinterest rate
（Note 3）（Note 4）

Payment due
date（Note 7）Use

Remarks(Note 6)

Unsecured/
Unguaranteed(in thousands of yen)
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,Ltd.

1,200,000--

1,200,000

0.875%

January 31,
2022

1,200,000--

1,200,000

1.105%

January 31,
2024

Aozora Bank, Ltd.

2,000,000--

2,000,000

0.875%

Resona Bank, Ltd.

1,500,000--

1,500,000

0.987%

2,000,000--

2,000,000

1.100%

1,000,000--

1,000,000

1.265%

Aozora Bank, Ltd.

-

300,000-

300,000

0.678%

Resona Bank, Ltd.

-

1,100,000-

1,100,000

0.923%-

700,000-

700,000

0.923%-

950,000-

950,000

1.047%-

1,700,000-

1,700,000

1.169%-

950,000-

950,000

1.169%-

2,000,000-

2,000,000

1.345%-

1,000,000-

1,000,000

1.193%(Note 5)-300,000-

300,000

0.624%

October 27,
2020-

1,000,000-

1,000,000

1.156%

April 27,2025

52,800,000¥73,500,000

10,000,000¥10,000,000¥8,700,000

62,800,000¥74,800,000

The Bank ofTokyo-Mitsubishi UFJ,
Ltd.
Sumitomo Mitsui
Banking Corporation

Long-term
loans
payableThe Mizuho Trust andBanking Co., Limited
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
Development Bank ofJapan Inc.
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
The Bank ofTokyo-Mitsubishi UFJ,Ltd.
Sub total

Total

April 30,
2022
April 30,
2023
April 30,
2024
April 30,
2025
August 31,
2020
August 31,
2022
August 31,
2022
August 31,
2023
August 31,
2024
August 31,
2024
August 31,
2025
August 31,
2024

Note 1: Annual repayments of long-term loans payable (except for current portion of long-term loans payable) scheduled for the next five years
after the balance sheet date are as follows:
Due after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

through 2 years

through 3 years

through 4 years

through 5 years(in thousands of yen)
Long-term loans payable¥11,000,000¥11,000,000¥1,500,000¥3,600,000

Note 2: Borrowings listed in the current portion of long-term payable were listed in long-term payable in the previous fiscal period.
Note 3: All debts except for the following Note 5 are borrowing at a floating rate.
Note 4: Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, withregard to borrowings for which interest rate swap transactions and interest rate cap transactions were implemented in order to hedge theinterest rate volatility risk, the weighted average interest rates taking into consideration the effects of the interest rate swaps and interest
rate caps are indicated.
Note 5: Borrowings is applied at a fixed rate.
Note 6: All debts were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate (additional expenses areincluded) and repayment of debts.
Note 7: All the repayment methods of debt financing are lump-sum repayments on the due date.

－24－

19. DISTRIBUTIONSNinth Fiscal Period(From February 1, 2016 to July 31, 2016)

Eighth Fiscal Period(From August 1, 2015 to January 31, 2016)

I. Retained earnings at the end of period¥2,275,223,755¥2,258,172,370

II. Total distributions¥2,220,206,040¥2,175,173,559

Distributions per unit

¥6,360¥6,231¥55,017,715¥82,998,811

In accordance with the policy described in Article 38-1 of
its Articles of Incorporation, the Investment Corporation
determines that the amount of distribution shall exceed
the amount equivalent to 90% of its distributable profit as
stipulated in Article 67-15 of the Special Taxation
Measures Law, and shall not exceed its accounting
profits as the maximum amount. Following this policy, theInvestment Corporation has decided that it shall
distribute ¥2,220,206,040, which is the amount of¥2,192,224,944 in net income and ¥27,981,096 fromretained earnings brought forward, as the distribution of
earnings.
Procedures for the distribution of amounts exceeding
distributable income are outlined in Article 38-2 of theInvestment Corporation’s Articles of Incorporation. In the
ninth fiscal period, the Investment Corporation has
decided not to distribute cash in excess of distributableprofit.

In accordance with the policy described in Article 38-1 of
its Articles of Incorporation, the Investment Corporation
determines that the amount of distribution shall exceed
the amount equivalent to 90% of its distributable profit as
stipulated in Article 67-15 of the Special Taxation
Measures Law, and shall not exceed its accounting
profits as the maximum amount. Following this policy,
internal reserves as of the end of the seventh fiscal
period and the ¥9,284,400 in gain on sale of real estate
property, reported as unappropriated retained earnings
will be allocated to internal reserves, and of theremaining amount, the Investment Corporation has
decided that it shall distribute ¥2,175,173,559 which is
the maximum integral multiple of 349,089 units issued
and outstanding as the distribution of earnings.
Procedures for the distribution of amounts exceeding
distributable income are outlined in Article 38-2 of theInvestment Corporation’s Articles of Incorporation. In theeighth fiscal period, the Investment Corporation has
decided not to distribute cash in excess of distributableprofit.

III. Retained earnings brought forward to
the next period

Method of calculating distribution amount－25－