Financial Statements(13th Fiscal Period: From February 1, 2018 to July 31, 2018)
Independent Auditor’s Report
Balance Sheet
Statement of Income and Retained Earnings
Statement of Changes in Net Assets
Statement of Cash Flows
Notes to Financial Statements

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION

Balance Sheet
As of July 31, 2018
13th Fiscal Period
as of July 31, 2018

12th Fiscal Period
as of January 31, 2018

(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
Consumption taxes receivable
Other
Total current assets
Noncurrent assets
Property, plant and equipment (Notes 13 and 18)
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
Intangible assets
Leasehold right in trust (Notes 13 and 18)
Other
Total intangible assets
Investments and other assets
Investment securities (Notes 8 and 17)
Lease and guarantee deposits
Long-term prepaid expenses
Other (Notes 8 and 9)
Total investments and other assets
Total noncurrent assets
Deferred assets
Investment corporation bond issuance costs¥10,029,598
8,749,823
29,18810,855
11,033
18,830,499

1,798,041
84,656,776(7,901,681)
76,755,095
722,432(133,503)
588,929
1,360,078(256,856)
1,103,222
400,899(39,156)
361,742
111,474,267¥6,551,666
3,928,017
24,913
3,557
9,464
1,893
10,519,513

192,081,298

1,798,041
68,843,600(6,927,784)
61,915,815
502,925(114,924)
388,001
1,317,786(226,840)
1,090,946
338,646(29,220)
309,425
99,538,715
165,040,946

1,067,058
7,115
1,074,174-

512,263
39,097916,981
81,989221,707
10,397915,782
80,7431,228,631
166,269,577

1,550,331
194,705,805

Investment unit issuance costs

22,583-

Total deferred assets

22,58324,883¥213,558,887¥176,813,974

Total assets－2－

24,461421

13th Fiscal Period
as of July 31, 2018

12th Fiscal Period
as of January 31, 2018

(in thousands of yen)
LIABILITIESCurrent liabilities
Operating accounts payable¥609,170¥473,021

Short-term loans payable (Notes 8 and 20)

2,630,000

2,630,000

Current portion of long-term loans payable (Notes 8, 9 and 20)
Accounts payable-otherAccrued expenses
Income taxes payable

13,500,000
284,251
26,489605

11,000,000
239,241
26,142604

Accrued consumption taxes

63,856-

Advances received
Deposits received

958,81254,159779,137
53,143

Other
Total current liabilities
Noncurrent liabilities

13-

18,127,358

15,201,290

Investment corporation bonds (Notes 8 and 19)

3,000,000

3,000,000

Long-term loans payable (Notes 8, 9 and 20)
Tenant leasehold and security deposits in trust

87,000,000
2,330,206

74,500,000
1,462,549

Tenant lump sum deposits in trust

4,205,076

-

Other

150,601-

96,685,885

78,962,549

114,813,244

94,163,839

Unitholders' equity
Unitholders' capital
Surplus80,132,379

80,132,379

Capital surplus

13,187,100-

Unappropriated retained earnings

5,428,676

2,437,011

18,615,776
98,748,155

2,437,011
82,569,390(2,512)80,743

Total noncurrent liabilities
Total liabilities
NET ASSETS

Total surplus
Total unitholders' equity
Valuation and translation adjustments
Deferred gains or losses on hedges (Notes 8 and 9)(2,512)80,743

Total net assets (Note 3)

Total valuation and translation adjustments

98,745,643

82,650,134

Total liabilities and net assets¥213,558,887¥176,813,974

See accompanying notes to the financial statements.

－3－

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATIONStatement of Income and Retained Earnings
For the period from February 1, 2018 to July 31, 2018
13th Fiscal Period
from February 1, 2018
to July 31, 2018

12th Fiscal Period
from August 1, 2017
to January 31, 2018

(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
Merger expenses
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
Interest expenses on investment corporation bonds
Borrowing expenses
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on negative goodwill
Total extraordinary income¥6,152,086
503,250
436,817
5,164

Income before income taxes
Income taxes (Note 10)
Current
Deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings

7,097,319¥5,235,620
435,685
10,132
5,681,438

2,554,551
413,158
11,583
41,2017,500
395,984
233,938
3,657,918
3,439,400

2,107,064
377,361
11,36539,0234,500
67,446
184,719
2,791,481
2,889,956

15
293
56
364

12
350
363

441,829
7,593
145,787
1,878
421
108
597,619
2,842,146

410,074
7,806
97,811
1,878
19,618537,188
2,353,130

2,574,896
2,574,896
5,417,042

2,353,130

605
605
5,416,437
12,239¥5,428,676

604
9
614
2,352,516
84,495¥2,437,011

See accompanying notes to the financial statements.

－4－

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATIONStatement of Changes in Net Assets
For the period from February 1, 2018 to July 31, 2018
Valuation andtranslation
adjustments

Unitholders' equity
Surplus
Unitholders'
capitalUnappropriatedretainedearnings

CapitalsurplusTotal
unitholders'equityTotal
surplusDeferred gains
or losseson hedges

Total net assets(in thousands of yen)
Balance as of July 31,
2017¥ 80,132,379 \- \2,400,002 \2,400,002 \

82,532,381

\

-

-

(2,315,507)(2,315,507)(2,315,507)-(2,315,507)--

2,352,516

2,352,516

2,352,516-

2,352,516

-

-

-

-

-

54,116

54,116--37,00837,00837,00854,116

91,125- ¥2,437,011 ¥2,437,011 ¥

82,569,390

26,626\82,559,008

Changes of items
during the period
Dividends fromsurplus
Net income
Net changes of
items other thanunitholders' equity
Total changes of items
during the period
Balance as of January
31, 2018 (Note 5)¥ 80,132,379 ¥¥

80,743¥82,650,134

Changes of items
during the period
Increase by merger-

13,187,100-

13,187,100

13,187,100-

13,187,100

Dividends fromsurplus--(2,424,772)(2,424,772)(2,424,772)-(2,424,772)--

5,416,437

5,416,437

5,416,437-

5,416,437

-

-

-

-

-

(83,255)(83,255)-

13,187,100

2,991,665

16,178,765

16,178,765(83,255)

16,095,509

13,187,100 ¥5,428,676 ¥ 18,615,776 ¥Net income
Net changes of
items other thanunitholders' equity
Total changes of items
during the period
Balance as of July
31, 2018 (Note 5)¥

80,132,379 ¥

98,748,155

See accompanying notes to the financial statements.

－5－¥(2,152)¥

98,745,643

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATIONStatement of Cash Flows
For the period from February 1, 2018 to July 31, 2018
13th Fiscal Period
from February 1, 2018
to July 31, 2018

12th Fiscal Period
from August 1, 2017
to January 31, 2018

(in thousands of yen)
Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
Gain on negative goodwill
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Interest income
Interest 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 net property, plant and equipment held in trust due to sale
Other, net¥5,417,042
1,144,883(2,574,896)
1,878
421
(15)
449,423(3,782)
9,464(713)(28,792)(102,769)
62,16015,122(1,198)953,749
18,303¥2,353,130
921,858
1,878
19,618(12)
417,880(92)(9,464)
1,274
68,56937,833(6,135)
12,172(151,528)
3,018

Subtotal

5,360,283

3,670,003

Interest income received
Interest expenses paid
Income taxes (paid) refund

15(459,405)(6,005)12(415,950)(2,693)

Net cash provided by (used in) operating activities

4,894,888

3,251,371(1,053,115)(7,762)(111,529)
12,232(134,277)
161,089(44,212)625,414(9,828,503)(133,725)
3,240(142,165)
131,628-(552,161)(9,969,526)

2,630,000(3,630,000)
4,500,000(3,500,000)(2,709,508)

1,630,000
18,700,000(11,000,000)(2,317,102)(2,709,508)

7,012,897

Net cash provided by (used in) investing activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets
Purchase of investment securities
Proceeds from investment securities
Repayments of tenant leasehold and security deposits in trust
Proceeds from tenant leasehold and security deposits in trust
Repayments of tenant lump sum deposits in trust
Proceeds from tenant lump sum deposits in trust
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents

1,633,218

294,741

Cash and cash equivalents at the beginning of period

10,479,684

10,184,942

Increase in cash and cash equivalents resulting from merger

6,666,519-

Cash and cash equivalents at the end of period (Note 6)¥18,779,421¥10,479,684

See accompanying notes to the financial statements.

－6－

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION

Notes to Financial Statements
For the period from February 1, 2018 to July 31, 2018

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Residential Next Investment Corporation (Note) (“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 listedon the Real Estate Investment Trust Market of the Tokyo Stock Exchange (Securities Code: 3278). Subsequently, the Investment Corporation
raised funds through three public offerings and other means including global offerings and third-party allotments. The Investment Corporation
implemented a 2-for-1 split of its investment units held by unitholders set forth or recorded in the final unitholder registry on February 28, 2018 with
March 1, 2018 as the effective date. And also on March 1, 2018, the Investment Corporation conducted an absorption-type merger (“the Merger”)
whereby the Investment Corporation was the surviving corporation and Japan Senior Living Investment Corporation (“JSL”) was the dissolving
corporation. As the result, as of July 31, 2018, the end of the 13th fiscal period, the number of investment units issued and outstanding totaled
782,928 units.
(Note) The Investment Corporation also changed its corporate name from Kenedix Residential Investment Corporation to Kenedix Residential
Next Investment Corporation on March 1, 2018.
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 flexible and speedy real estate investment and management services based on thestrategies of theInvestment Corporation: “Flexible pursuit for appropriate investment and profit opportunities with comprehension of the real estate market trends”
and “Speedy execution based on expeditious information collection and judgement.”
During the 12th fiscal period, the Investment Corporation acquired 2 properties (total acquisition price of ¥9,100 million). During the 13th fiscal
period, the Investment Corporation succeeded 14 properties through the Merger with total acquisition price of ¥28,998 million based on theappraisal value as of March 1, 2018. The Investment Corporation acquired 1 property (acquisition price of ¥737 million) and sold 1 property(disposition price of ¥1,420 million) other than the Merger. As the result, the Investment Corporation has a portfolio comprised of 129 properties(total acquisition price of ¥192,889 million) as of July 31, 2018, the end of the 13th fiscal period.
The occupancy rates of the overall portfolio including land with leasehold interest were 97.0% and 97.6% as of the end of the 12th and 13th
fiscal period, respectively. Furthermore, the average occupancy rates of the properties for residential facilities and for healthcare facilities were
97.0% and 100.0% as of the end of 13th fiscal period.
During the 12th and 13th fiscal period, the Investment Corporation made borrowings of ¥11,000 million and ¥7,130 million for the repayment ofdebt matured. During the 12th fiscal period, the Investment Corporation made new borrowings of ¥9,330 million upon acquiring properties. During
the 13th fiscal period, the Investment Corporation succeeded ¥15,000 million borrowings from JSL on March 1, 2018 by the Merger. As a result,balance of borrowings as of the end of the 12th and 13th fiscal period stood at ¥88,130 million and ¥103,130 million, respectively.
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, 2018
to July 31, 2018
2-67 years

From August 1, 2017
to January 31, 2018
2-67 years

Structures

3-52 years

3-52 years

Machinery and equipment

8-34 years

8-34 years

Tools, furniture and fixtures

6-30 years

6-30 years(C) Intangible Assets
Intangible assets are amortized by the straight-line method.
(D) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by 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) Investment Corporation Bond Issuance Costs
Investment corporation bond issuance costs are amortized over a maturity period under the straight-line method.
(G) 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.
(H) 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.
(I)

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 generally reimbursed by the purchaser for these accrued
property-related tax liabilities.

－8－

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¥6,024 thousand and ¥1,215 thousand as of January 31, 2018 and July 31, 2018, respectively.
(J) 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.
(K) 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.
(L) 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 swap and other derivative 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 and other derivatives that meet the requirements for special treatment.
(M) 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.
(N) Presentation of Amounts
Amounts of less than one thousand yen are truncated in the Japanese financial statements prepared in accordance with Japanese GAAP
and filed with regulatory authorities in Japan. Unless otherwise noted, amounts are rounded down and ratios are rounded off in theaccompanying financial statements. Totals shown in the accompanying financial statements do not necessarily agree with the sums of theindividual 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, 2018 to July 31, 2018 and from August 1,
2017 to January 31, 2018 consist of the following:
From February 1, 2018
From August 1, 2017
to July 31, 2018
to January 31, 2018
(in thousands of yen)
Rental and other operating revenues:
Rental revenues¥5,800,000¥4,895,387

43,75043,749Rental revenues from limited proprietary rights of landCommon area charges

308,336

296,482

6,152,086

5,235,620

Parking space rental revenues

182,436

181,133

Miscellaneous

320,814254,551

Subtotal
Others:Subtotal
Total rental and other operating revenues

503,250435,685¥6,655,337¥5,671,305¥402,111¥362,432

Property-related expenses:
Property management fees and facility management fees
Utilities

89,714

88,669Taxes

413,717323,667

Repairs and maintenance

290,404

228,410

Insurance

10,386

8,399

Trust fees

48,95842,467

Depreciation

1,144,236

921,858

Others155,022

131,157¥2,554,551¥2,107,064

Total property-related expenses
Gain on sales of real estate property:
From February 1, 2018 to July 31, 2018

(in thousands of yen)
KDX Shimmachi Residence
Revenue from sale of real estate property¥1,420,000

Cost of real estate property

953,749

Other sales expenses

29,433Gain on sales of real estate property¥436,817

From August 1, 2017 to January 31, 2018
Not applicable－10－5. 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, 2018
to July 31, 2018
10,000,000

From August 1, 2017
to January 31, 2018
5,000,000

782,928

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, 2018 and January 31, 2018:
As of July 31, 2018

As of January 31, 2018

(in thousands of yen)
Cash and deposits¥10,029,598¥6,551,666

Cash and deposits in trust

8,749,823

3,928,017

Cash and cash equivalents¥18,779,421¥10,479,684

Important contents of the non-cash transaction
From February 1, 2018 to July 31, 2018
The summary of assets and liabilities succeeded from Japan Senior Living Investment Corporation by merger in the 13th fiscal period is asfollows. The increase amount of capital surplus is ¥13,187,100 thousand as a result of merger.
(in thousands of yen)
Current assets¥6,674,104

Non-current assets

29,237,279

Total assets

35,911,384

Current liabilities

5,108,546

Non-current liabilities

15,040,841

Total liabilities¥20,149,388

From August 1, 2017 to January 31, 2018
Not applicable

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, 2018 andJanuary 31, 2018 are as follows:
As of July 31, 2018

As of January 31, 2018

(in thousands of yen)Due in 1 year

¥1,942,856¥251,883

Due after 1 year

12,086,289

4,092,472

Total¥14,029,145¥4,344,355－11－

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 corporation bonds, issuance of investment units and other means. With regard to the procurement ofinterest-bearing debts, the Investment Corporation ensures that it can effectively combine stable long-term funds with flexible short-term funds.
Management of surplus funds is undertaken 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 derivativetransactions 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, risk of fluctuation of value of its property and interest rate fluctuation risk.
Borrowings and investment corporation bonds are made primarily for the purpose of procuring funds for the acquisition of real estate and trust
beneficiary interests in real estate and have a repayment date of a maximum of 10 years and 1 month as of July 31, 2018, the end of the 13th
fiscal period, are exposed to liquidity risk where alternative funds may not be procured by the repayment date. Also, borrowings with floatinginterest rates are exposed to interest 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, 2018
Carrying amount

Estimated fair value

Difference(in thousands of yen)

(1) Cash and deposits¥10,029,598
8,749,823¥10,029,598
8,749,823

18,779,421

18,779,421-(1) Short-term loans payable

2,630,000

2,630,000-(2) Current portion of long-term loans payable

13,500,000

13,463,182(36,817)(3) Investment corporation bonds

3,000,000
87,000,000

2,978,000
87,203,230(22,000)
203,230

106,130,000

106,274,413(¥2,512)(¥2,512)(2) Cash and deposits in trust
Subtotal(4) Long-term loans payable
Subtotal
Derivative transactions*¥-

144,413¥-* Figures indicate net amount of derivative assets/liabilities derived from derivative transactions, with minus representing net liabilities.
As of January 31, 2018
Carrying amount

Estimated fair value

Difference(in thousands of yen)

(1) Cash and deposits¥6,551,666¥6,551,666(2) Cash and deposits in trust

3,928,017

3,928,017-

10,479,684

10,479,684-(1) Short-term loans payable

2,630,000

2,630,000-(2) Current portion of long-term loans payable

11,000,000

10,999,491(508)

Subtotal¥-(3) Investment corporation bonds

3,000,000

2,970,800(29,200)(4) Long-term loans payable

74,500,000

74,587,162

87,162

91,130,000

91,187,454

57,454¥80,743¥80,743

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 (4) 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.)(3) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices.

－13－

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

As of July 31, 2018

Investment securities *As of January 31, 2018

512,263

221,707*Fair values of investment securities are not subject to disclosure of fair value as they have no market value and their fair values are extremely
difficult to recognize.
Loss on valuation of investment securities of ¥21,981 thousand was recognized in the fiscal period ended July 31, 2018.
Note 3: Redemption schedule for financial assets with maturities
As of July 31, 2018

Due in 1 year or
less

Cash anddeposits
Cash anddeposits in trust
Total

Due after 1 year
through 2 years¥10,029,598¥

8,749,823

Cash anddeposits
Cash anddeposits in trust
Total

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after 5 years

¥

¥

¥

¥

(in thousands of yen)

-

-

-

¥18,779,421

As of January 31, 2018
Due in 1 year or
less

Due after 2 years
through 3 years¥-

Due after 1 year
through 2 years¥6,551,666¥

3,928,017

¥

¥

-

-

¥

-

-

¥

-

-

¥

-

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)

-

-

-

¥10,479,684

-

-

-

¥

-

-

¥

-

-

¥

-

-

¥

-

Note 4: Redemption schedule for loans payable and investment corporation bonds
As of July 31, 2018

Short-term loans
payableInvestment
corporation bonds
Long-term loans
payableTotal

Due in 1 year or
less

Due after 1 year
through 2 years¥¥

2,630,000(in thousands of yen)

-

¥

-

¥

-

Due after 4 years
through 5 years¥-

Due after 5 years
¥

-

-

-

1,000,000-

2,000,000

13,500,000

7,500,000

8,950,000

19,650,000

7,250,000

43,650,000¥ 16,130,000¥

Due after 3 years
through 4 years-

As of January 31, 2018
Due in 1 year or
lessShort-term loans
payableInvestment
corporation bonds
Long-term loans
payableTotal

Due after 2 years
through 3 years

2,630,000¥

7,500,000

Due after 1 year
through 2 years¥¥

8,950,000

Due after 2 years
through 3 years¥

20,650,000

Due after 3 years
through 4 years(in thousands of yen)

-

¥

-

¥

-

¥

7,250,000

Due after 4 years
through 5 years¥-¥

45,650,000

Due after 5 years
¥

-

-

-

-

1,000,000-

2,000,000

11,000,000

3,000,000

3,600,000

10,000,000

10,250,000

47,650,000¥ 13,630,000¥

3,000,000¥

3,600,000－14－¥

11,000,000¥

10,250,000¥

49,650,000

9. DERIVATIVE TRANSACTIONS
The contract amount and the fair value of interest-rate swap transactions as of July 31, 2018 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
Total
year

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

Interest rate swap
Based on the amounttransaction:
Long-term¥43,000,000¥43,000,000(¥2,512) provided by counterparty
Receive/floatingloans payablefinancial institutions
and pay/fixedSpecialInterest rate swap
treatment for transaction:
Long-term¥46,300,000¥38,300,000*
Receive/floatinginterest-rateloans payableswaps
and pay/fixed
Total¥89,300,000¥81,300,000(¥2,512)*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 swap transactions as of January 31, 2018 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
Total
year

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

Interest rate swap
Based on the amounttransaction:
Long-term¥22,500,000¥22,500,000¥80,743 provided by counterparty
Receive/floatingloans payablefinancial institutions
and pay/fixedSpecialInterest rate swap
treatment for transaction:
Long-term
46,300,000
38,300,000*
Receive/floatinginterest-rateloans payableswaps
and pay/fixed
Total¥68,800,000¥60,800,000¥80,743*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.

－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 ¥3,152 million and ¥2,424 million for the periods ended July 31, 2018 and January 31,
2018, respectively, the distributions were treated as deductible distributions for purposes of corporate income taxes. The effective tax rates on theInvestment Corporation’s income were 0.01% and 0.03% for the periods ended July 31, 2018 and January 31, 2018, respectively. The following
table summarizes the significant differences between the statutory tax rate and the effective tax rate:
From February 1, 2018
to July 31, 201831.74%

From August 1, 2017
to January 31, 201831.74%

Deductible cash distributions(16.44)(31.74)Gain on negative goodwill(15.09)-Others(0.20)

0.03

Effective tax rate

0.01%

0.03%

Statutory tax rate

The significant components of deferred tax assets and liabilities as of July 31, 2018 and January 31, 2018 are as follows:
As of July 31, 2018

As of January 31, 2018

(in thousands of yen)

Deferred tax assets:
Valuation difference on assets acquired by merger¥ 762,851

Deferred gains or losses on hedges
Loss on valuation of investment securities¥-

26,694

-

6,926

-

Subtotal deferred tax assets

796,472-

Valuation allowance(796,472)-

Total deferred tax assets

¥

-

¥

-

Net deferred tax assets

¥

-

¥

-

11. RELATED-PARTY TRANSACTIONS
1．Parent Company, major corporate unitholders and other13th Fiscal Period (February 1, 2018 to July 31, 2018) and 12th Fiscal Period (August 1, 2017 to January 31, 2018): Not applicable
2．Affiliated companies and other13th Fiscal Period (February 1, 2018 to July 31, 2018) and 12th Fiscal Period (August 1, 2017 to January 31, 2018): Not applicable
3．Fellow subsidiary companies and other13th Fiscal Period (February 1, 2018 to July 31, 2018) and 12th Fiscal Period (August 1, 2017 to January 31, 2018): Not applicable
4．Directors, major individual unitholders and other13th Fiscal Period (February 1, 2018 to July 31, 2018) and 12th Fiscal Period (August 1, 2017 to January 31, 2018): Not applicable－16－12. BUSINESS COMBINATION
12th Fiscal Period (August 1, 2017 to January 31, 2018)
Not applicable
13th Fiscal Period (February 1, 2018 to July 31, 2018)
Business Combination through Acquisition
1. Overview of Business Combination(1)Name and Business Description of Acquiree
Name of acquiree: Japan Senior Living Investment Corporation (“JSL”)

Business description: Real estate investment trust(2)Main Reasons for Business Combination
The Investment Corporation and JSL believe that, as a result of the Merger, they will achieve the benefits of (i) an increase in liquidity resulting
from greater asset scale and market capitalization that will enable them to capture more growth opportunities, (ii) greater earnings stability
stemming from asset type diversification and enhanced ability to pursue external growth and (iii) improvement in asset management efficiency
together with enhanced financial health, and further believe that the potential to reap these benefits constitutes the major significance of the
Merger. The Investment Corporation has therefore entered into the merger agreement on November 10, 2017.
(3)Date of Business Combination
March 1, 2018(4)Legal Framework of Business Combination
An absorption-type merger with the Investment Corporation as the surviving corporation and JSL as the dissolving corporation(5)Name of the Investment Corporation after Business Combination
Kenedix Residential Next Investment Corporation(The Investment Corporation changed its name from Kenedix Residential Investment Corporation to Kenedix Residential Next Investment
Corporation on March 1, 2018)(6)Main Reasons for Determining Acquiring Company
It was determined that the Investment Corporation is the acquiring company based on the accounting standards for business combinations
and other regulations with comprehensively taking various factors into consideration, such as the size of total assets, net income and otherindexes, the ratio of unitholders’ voting rights, the members of board of directors and other managerial factors.
2. Operating Period of Acquiree Included in the Statement of Income and Retained Earnings
From March 1, 2018 to July 31, 2018
3. Acquisition Cost of Acquiree and the Breakdown
Acquisition costMarket value of the Investment Corporation’s investment units allotted on the date of business combination¥13,187,100 thousand
Principal Direct Cost for Acquisition
Merger fees

¥292,085 thousand

4. Exchange Ratio, Method of Calculation and Number of Investment Units Allotted as for the Acquisition(1)Exchange Ratio of Investment Units
1 unit of the Investment Corporation was allotted 1 unit of JSL through the Merger. The Investment Corporation implemented a 2-for-1
investment unit split with February 28, 2018 as the record date before the Merger.
(2)Method of Calculation
The Investment Corporation appointed SMBC Nikko Securities Inc. as a financial advisor (“FA”), while JSL appointed Nomura Securities Co., Ltd.
They requested the FAs to perform a financial analysis of the merger ratio. Each FA calculated the merger ratio based on the valuation methodof investment unit market value, discount dividends model, and other valuation, respectively. After careful discussions and negotiations as wellas comprehensive considerations of various factors, including the merger ratio performed by the FAs, the Investment Corporation and JSL
determined that the above mentioned merger ratio was appropriate.
(3)Number of Investment Units Allotted
84,750 units－17－

5. Treatment of Acquisition Cost
(1) Breakdown of Assets Acquired and Liabilities Assumed on the Date of Business Combination(In thousand yen)
Current assets¥6,674,104

Noncurrent assets

29,237,279

Total assets

35,911,384

Current liabilities

5,108,546

Noncurrent liabilities

15,040,841

Total liabilities¥20,149,388(2)Amount and Reason for Negative Goodwill
Amount of Negative Goodwill: ¥2,574,896 thousand

Reason : The Investment Corporation recognized the difference as Negative Goodwill, by the amount that JSL fair value of net assets on thedate of business combination exceeded the acquisition cost.
Accounting Treatment : All of the amount was recognized as extraordinary gain in 13th fiscal period.
6. Estimated Impact on the Statement of Income and Retained Earnings for the 13th fiscal period
Calculation Method of Estimated Impact and Assumption:
Japanese GAAP requires the acquiring company to estimate the impact on the statement of income and retained earnings as if the businesscombination were completed at the beginning of the 13th fiscal period.
Impact on the Statement of Income and Retained Earnings in the 13th Fiscal Period:
Operating revenues¥162,634 thousand

Ordinary income¥37,588 thousand

Net income¥37,419 thousand

13. 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.
13th Fiscal Period
from February 1, 2018
to July 31, 2018

12th Fiscal Period
from August 1, 2017
to January 31, 2018

(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¥165,040,946
28,107,411¥156,161,704
8,879,241

193,148,357¥223,857,000

165,040,946¥192,137,000

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 13th fiscal period, the principal increases were
the acquisition of trust beneficiary interests in real estate in 14 properties totaling ¥28,998,000 thousand by merger with Japan Senior
Living Investment Corporation and the acquisition of real estate trust beneficiary interests in 1 property totaling ¥770,418 thousand, and theprincipal decrease was the sales of real estate trust beneficiary interests in 1 property totaling ¥953,749 thousand and depreciation of¥1,144,236 thousand, and the 12th fiscal period, the principal increases were the acquisition of trust beneficiary interests in real estate in 2
properties totaling ¥9,514,796 thousand and the principal decrease was depreciation amounting of ¥921,858 thousand.
Note 3: The fair value is the appraisal value or the survey value determined by outside appraisers.
Income and loss in the fiscal periods ended July 31, 2018 and January 31, 2018 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”.

－18－14. SEGMENT AND RELATED INFORMATION
Segment and related information for the period ended from February 1, 2018 to July 31, 2018 and from August 1, 2017 to January 31, 2018 is asfollows:(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.

15. PER UNIT INFORMATION

Net asset value per unit

From February 1, 2018

From August 1, 2017

to July 31, 2018

to January 31, 2018

¥126,123¥118,379

Net income per unit

¥7,036¥3,369Weighted average number of units (units)769,818

698,178

The weighted average numbers of units outstanding of 769,818 and 698,178 were used for the computation of the amount of net income perunit as of July 31, 2018 and January 31, 2018, respectively.
A 2-for-1 split of investment units was implemented with February 28, 2018 as the record date and March 1, 2018 as the effective date. Net
assets value per unit and net income per unit are calculated based on the assumption that the split of investment unit was implemented at the
beginning of the fiscal period ended January 2018.
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:

Net income (in thousands of yen)
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)－19－

From February 1, 2018

From August 1, 2017

to July 31, 2018

to January 31, 2018

¥5,416,437¥2,352,516--¥5,416,437¥2,352,516

769,818

698,17816. SIGNIFICANT SUBSEQUENT EVENTSIssuance of New Investment Units
On July 13, 2018 and July 24, 2018, the Board of Directors of the Investment Corporation resolved to issue new investment units as the funds
for acquiring specified assets and other use. Payments for the issuance of new investment units through public offering and through third-party
allotment have been completed on August 1, 2018 and August 29, 2018, respectively.
As a result of the issuance of new investment units, the Investment Corporation has total unitholders’ capital of ¥93,226,228,903 with 869,133
investment units outstanding as of August 29, 2018.
(Issuance of New Investment Units through Public Offering)Issuance of new investment units: 82,100 units

Issue price (Offer price): ¥157,047 per unit

Aggregate issue price (Total offer price): ¥12,893,558,700

Issue amount (Paid-in value): ¥151,892 per unit

Total issue amount (Aggregate paid-in value): ¥12,470,333,200

Payment date

: August 1, 2018

(Issuance of New Investment Units through Third-Party Allotment)
Issuance of new investment units: 4,105 units

Issue amount (Paid-in value): ¥151,892 per unit

Total issue amount (Aggregate paid-in value): ¥623,516,660

Payment date

: August 29, 2018

Allottee: SMBC Nikko Securities Inc.

17. SECURITIES PORTFOLIO
Securities portfolio consists of the following as of July 31, 2018:(1)

Stock Not applicable(2)

Securities other than shares(in thousands of yen)Book value

Equity interests in TK property fund with G.K.
Tropic I as operator (Note 2)-

78,767--78,767-

Equity interests in TK property fund with G.K.
Tropic II as operator (Note 3)-

122,142--

122,142-

Equity interests in TK property fund with G.K.
KSLF8 as operator (Note 4)-

198,346--

198,346-

Equity interests in TK property fund with G.K.
Tropic III as operator (Note 5)-

113,006--

113,006--

512,263--512,263-

Name

Accruedinterest

Assessed Gain (Loss)value
onRemarks（Note 1） valuation

Face value
total

Type
Subordinated Silent
Partnership Equity
Interests
Subordinated Silent
Partnership Equity
Interests
Silent Partnership
Equity Interests
Subordinated Silent
Partnership Equity
Interests
Total

Prepaid
accruedinterest

Note 1: The assessed value is stated at the book value. Loss on valuation of investment securities of ¥10,831 thousand and ¥11,150 thousand
was recognized in the fiscal period ended July 31, 2018 regarding equity interests in TK property fund with G.K. Tropic I as operator andequity interests in TK property fund with G.K. Tropic II as operator, respectively.
Note 2: TK property fund owned trust beneficiary interests in real estate for “KDX Residence Shukugawa Hills” as of July 31,2018, the end of the
13th fiscal period. Furthermore, the Investment Corporation acquired real estate beneficiary interests in trust for the abovementioned
properties on August 2, 2018.
Note 3: TK property fund owned trust beneficiary interests in real estate for “KDX Residence Asagaya,” “KDX Residence Hiyoshi” and “Serenite
Kobe Motomachi” as of July 31,2018, the end of the 13th fiscal period. Furthermore, the Investment Corporation acquired real estate
beneficiary interests in trust for the three abovementioned properties on August 2, 2018.
Note 4: Equity interests in TK property fund with G.K. KSLF8 as operator were succeeded from JSL by the Merger.
TK property fund owned trust beneficiary interests in real estate for “Canadian Hill,” “Anesis Hyogo,”“Orage Suma,” “Rococo-riha” and“Anesis Teradacho” as of July 31,2018, the end of the 13th fiscal period. Furthermore, the Investment Corporation acquired real estate
beneficiary interests in trust for the five abovementioned properties on August 2, 2018.

－20－

Note 5: TK property fund owns trust beneficiary interests in real estate for “Arute Ishiyagawa” and “Serabi Ebisu.”
Securities portfolio consists of the following as of January 31, 2018:(1)

Stock Not applicable(2)

Securities other than shares(in thousands of yen)Book value

Equity interests in TK property fund with G.K.
Tropic I as operator (Note 1)-

88,339--88,339-Equity interests in TK property fund with G.K.
Tropic II as operator (Note 2)-

133,368--

133,368--

221,707--

221,707-

Name

Accruedinterest

Assessed Gain (Loss)value
onRemarks（Note 3） valuation

Face value
total

Type
Subordinated Silent
Partnership Equity
Interests
Subordinated Silent
Partnership Equity
Interests
Total

Prepaid
accruedinterest

Note 1: TK property fund owns trust beneficiary interests in real estate for “KDX Residence Shukugawa Hills.”
Note 2: TK property fund owns trust beneficiary interests in real estate for “KDX Residence Asagaya,” “KDX Residence Hiyoshi” and “Serenite
Kobe Motomachi.”Note 3: The assessed value is stated at the book value.

18. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASEETS
Property, plant and equipment consist of the following as of July 31, 2018:
Type of asset

Property,plant andequipment

Intangible
assetsLand
Sub total
Buildings in trust
Structures in trust
Machinery andequipment in trust
Tools, furnitureand fixtures intrust
Land in trust
Sub total
Total
Leasehold right in
trust
Other
Total

Balance atthe beginningof period¥1,798,041
1,798,041
68,843,600
502,925

Increaseduring theperiodDecreaseduring theperiod¥¥16,408,296
222,790

Depreciation
Depreciation
Accumulated
for thedepreciation
period(in thousands of yen)
¥1,798,041¥¥
1,798,041
84,656,776
7,901,681
1,084,310
722,432
133,503
19,963

Balance atthe end of
period595,119
3,283

Net
balance at
end of theperiod¥1,798,041
1,798,041
76,755,095
588,929

1,317,786

42,291-

1,360,078

256,856

30,015

1,103,222

338,646

62,359106

400,899

39,156

9,946

361,742

99,538,715
170,541,674
172,339,715

12,402,600
29,138,338
29,138,338

467,048
1,065,558
1,065,558

111,474,267
198,614,454
200,412,495

8,331,197
8,331,197

1,144,236
1,144,236

111,474,267
190,283,257
192,081,298-

1,067,058-

1,067,058--

1,067,058-

7,762¥1,074,821

-

7,762
¥1,074,821

646
646

7,115
¥1,074,174

¥

¥

¥

646
646

¥

Remarks

Note 1

Note 1

Note 1: The amount of increase during the period is primarily attributable to merger, the acquisition of the real estate property and capital
expenditures.
Note 2: The amount of decrease during the period is primarily attributable to the sales of the real estate property.
Property, plant and equipment consist of the following as of January 31, 2018:
Type of asset

Property,plant andequipment

Land
Sub total
Buildings in trust
Structures in trust
Machinery andequipment in trust
Tools, furnitureand fixtures intrust
Land in trust
Sub total
Total

Balance atthe beginningof period¥1,798,041
1,798,041
65,654,206
444,009

Increaseduring theperiodDecreaseduring theperiod¥¥3,189,393
58,915-

Depreciation
Depreciation
Accumulated
for thedepreciation
period(in thousands of yen)
¥1,798,041¥¥
1,798,041
68,843,600
6,927,784
869,449
502,925
114,924
14,477

Balance atthe end of
periodNetbalance at
end of theperiod¥1,798,041
1,798,041
61,915,815
388,001

1,259,827

57,959-1,317,786

226,840

28,953

1,090,946

263,829

74,816-338,646

29,2208,978309,425

93,118,700
160,740,573¥162,538,615

6,420,015
9,801,100¥9,801,100-

99,538,715
170,541,674¥172,339,715

7,298,769¥7,298,769

921,858¥921,858

99,538,715
163,242,904¥165,040,946¥

Remarks

Note 1

Note 1

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

－21－19. INVESTMENT CORPORATION BONDS
Outstanding Investment corporation bonds as of July 31, 2018 are as follows.
Balance at
Decrease
Balance at
Date of
Seriesthe beginningduring thethe end ofissue
of period
periodperiod(in thousands of yen)First series of unsecured
August 30,
investment corporation
1,000,000
1,000,000
2016
bonds (Note 1)
Second series ofAugust 30,
unsecured investment
1,000,000
1,000,000
corporation bonds
2016(Note 1)
Third series of unsecured
August 30,
investment corporation
1,000,000
1,000,000
2016
bonds (Note 1)
Total

3,000,000-

Interest
rate

0.200%
0.540%
0.800%

Repayment date

Use

Remarks(Note2)

Unsecured

August 30,
2021
August 28,
2026
August 30,
2028

3,000,000

Note 1: Ranking pari passu among the specified investment corporation bonds.
Note 2: Investment corporation bonds were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate andrepayment of debts.
Note 3: Annual repayments of investment corporation bonds scheduled for the next five years after the balance sheet date are as follows.
Due in 1 year
or less
Investment
corporation bonds

Due after 1 year
through 2 years-

Due after 2 years
through 3 years

Due after 3 years
through 4 years(in thousands of yen)--

Outstanding Investment corporation bonds as of January 31, 2018 are as follows.
Balance at
Decrease
Balance at
Date of
Seriesthe beginningduring thethe end ofissue
of period
periodperiod(in thousands of yen)First series of unsecured
August 30,
investment corporation
1,000,000
1,000,000
2016
bonds (Note 1)
Second series ofAugust 30,
unsecured investment
1,000,000
1,000,000
corporation bonds
2016(Note 1)
Third series of unsecured
August 30,
investment corporation
1,000,000
1,000,000
2016
bonds (Note 1)
Total

3,000,000-

Due after 4 years
through 5 years

1,000,000

Interest
rate
0.200%
0.540%
0.800%-

Repayment date

Use

Remarks(Note2)

Unsecured

August 30,
2021
August 28,
2026
August 30,
2028

3,000,000

Note 1: Ranking pari passu among the specified investment corporation bonds.
Note 2: Investment corporation bonds were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate andrepayment of debts.
Note 3: Annual repayments of investment corporation bonds scheduled for the next five years after the balance sheet date are as follows.
Due in 1 year
or less
Investment
corporation bonds

Due after 1 year
through 2 years-

Due after 2 years
through 3 years

Due after 3 years
through 4 years(in thousands of yen)
-

-

－22－

1,000,000

Due after 4 years
through 5 years-20. SHORT-TERM DEBT AND LONG-TERM DEBT
Short-term debt and long-term debt consist of the following as of July 31, 2018
Classification

LenderShort-termloanspayableCurrent
portion of
long-term
loans
payableLong-term
loans
payableSumitomo Mitsui
Banking Corporation
Shinsei Bank, Limited(Note 8)
Sumitomo Mitsui
Banking Corporation(Note 8)
Sumitomo Mitsui
Banking Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
Mizuho Bank, Ltd.
Sub total
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd
Aozora Bank, Ltd.
Resona Bank, Limited
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust &Banking Co., Ltd.
Mizuho Bank, Ltd.
Development Bank ofJapan Inc.
Shinsei Bank, Limited(Note 8)
Sumitomo Mitsui
Banking Corporation(Note 8)MUFG Bank, Ltd(Note 8)Mizuho Bank, Ltd.
(Note 8)
Nippon Life Insurance
Company (Note 8)
Sumitomo Mitsui
Banking Corporation(Note 2)
MUFG Bank, Ltd(Note 2)
Sumitomo Mitsui
Banking Corporation
Shinsei Bank, Limited
Sub total
MUFG Bank, Ltd
Sumitomo Mitsui
Banking Corporation
Aozora Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
Aozora Bank, Ltd.
MUFG Bank, Ltd
Resona Bank, Limited
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd
Mizuho Bank, Ltd.
Aozora Bank, Ltd.
Resona Bank, Limited
Mizuho Trust &Banking Co., Ltd.
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd
Mizuho Bank, Ltd.
Resona Bank, Limited

Balance atthebeginning of
periodBalance atthe end of
periodDecreaseduring theperiodIncreaseduring theperiod(in thousands of yen)

Averageinterest rate
(Note 3)(Note 4)

Payment due date
(Note 7)1,000,000-

1,000,000-

0.455%

July 31, 2018-

500,000

500,000-

0.354%

July 30, 2018-

500,000

500,000-

0.354%

July 30, 2018

830,000-

830,000-

0.455%

July 31, 2018

800,000-

800,000-

0.455%

July 31, 2018-

1,830,000-

1,830,000

0.404%

July 31, 2019

2,630,000

800,000
3,630,000

3,630,000

800,000
2,630,000

0.404%

July 31, 2019

3,250,000--

3,250,000

2,000,000
1,000,000
500,000--

2,000,000
1,000,000
500,000

1.052%

August 31, 2018

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--

1,000,000

1,000,000--

500,000

500,000--

500,000

500,000--

500,000

500,000-

1,000,000--

500,000--

0.435%

July 30, 2018

1,000,000

0.480%

February 28, 2019-

500,000

0.480%

February 28, 2019

500,000-

500,000

0.354%

July 31, 201912,500,000
1,000,000

500,000
4,500,000-

3,500,000-

500,000
13,500,000
1,000,000

0.354%

July 31, 2019

1.109%

January 31, 2021

1,000,000--

1,000,000

1.221%

July 31, 2021

1,350,000--

1,350,000

1.183%March 31, 2021

2,000,000--

2,000,000

1.267%

April 30, 2022

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

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

1.267%
1.267%
1.267%

April 30, 2022
April 30, 2022
April 30, 2022

1,100,000--

1,100,000

1,100,000
600,000
350,000
300,000--

1,100,000
600,000
350,000
300,000

300,000--

300,000

1,000,000--

1,000,000

400,000--

400,000

400,000
300,000
200,000--

400,000
300,000
200,000－23－

0.916%

August 7, 2021

0.996%(Note 5)

August 7, 2021

1.254%

August 7, 2023

Use

Remarks(Note 6)

Unsecured/
Unguaranteed(Note 6)

Unsecured/
Unguaranteed(Note 6)

Unsecured/
UnguaranteedClassification
LenderMizuho Trust &Banking Co., Ltd.
Aozora Bank, Ltd.
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd
Aozora Bank, Ltd.

Long-term
loans
payableBalance atthebeginning of
periodBalance atthe end of
periodDecreaseduring theperiodIncreaseduring theperiod(in thousands of yen)

200,000--

200,000

150,000--

150,000

500,000--

500,000

Averageinterest rate
(Note 3)(Note 4)

Payment due date
(Note 7)1.254%

August 7, 2023

1.320%(Note 5)

August 7, 2023

600,000--

600,000

0.945%

August 31, 2021

600,000
500,000--

600,000
500,000

0.945%
0.945%

Mizuho Bank, Ltd.

950,000--

950,000

1.083%

Sumitomo Mitsui
Banking Corporation

2,000,000--

2,000,000

0.804%MUFG Bank, Ltd

1,500,000--

1,500,000

0.689%

August 31, 2021
August 31, 2021
November 30,
2022
November 30,
2020
November 30,
2019

1,200,000--

1,200,000

0.875%

January 31, 2022

1,200,000
2,000,000
1,500,000
2,000,000--

1,200,000
2,000,000
1,500,000
2,000,000

1.105%
0.875%
0.987%
1.100%

January 31, 2024
April 30, 2022
April 30, 2023
April 30, 2024

1,000,000--

1,000,000

1.265%

April 30, 2025-

1,750,000-

1,750,000-

1,750,000-

1,750,000-

1,000,000-

1,000,000-

500,000-

500,000

0.729%

July 29, 2020-

500,000-

500,000-

500,000-

500,000-

1,100,000-

1,100,000-

1,100,000-

1,100,000-

1,000,000-

1,000,000-

300,000-

300,000-

1,000,000-

1,000,000

300,000
1,100,000--

700,000-

950,000

Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd
Aozora Bank, Ltd.
Resona Bank, Limited
MUFG Bank, Ltd
Sumitomo Mitsui
Banking Corporation
Shinsei Bank, Limited(Note 8)
Sumitomo Mitsui
Banking Corporation(Note 8)MUFG Bank, Ltd(Note 8)Mizuho Bank, Ltd.
(Note 8)Resona Bank, Limited(Note 8)Mizuho Trust &Banking Co., Ltd.
(Note 8)
Shinsei Bank, Limited(Note 8)
Sumitomo Mitsui
Banking Corporation(Note 8)MUFG Bank, Ltd(Note 8)Mizuho Bank, Ltd.
(Note 8)
Sompo Japan
Nipponkoa Insurance
Inc. (Note 8)
Aozora Bank, Ltd.
Resona Bank, Limited
Mizuho Trust &Banking Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited
MUFG Bank, Ltd
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
Development Bank ofJapan Inc.
MUFG Bank, Ltd
MUFG Bank, Ltd
MUFG Bank, Ltd
Sumitomo Mitsui
Banking Corporation

1.115%

July 29, 2022

300,000
1,100,000

0.678%
0.923%

August 31, 2020
August 31, 2022-

700,000

0.923%

August 31, 2022--

950,000

1.047%

August 31, 2023

1,700,000
950,000--

1,700,000
950,000

1.169%
1.169%

August 31, 2024
August 31, 2024

2,000,000--

2,000,000

1.345%

August 31, 2025

1,000,000--

1,000,000

300,000
1,000,000
1,000,000--

300,000
1,000,000
1,000,000

1.193%(Note 5)0.624%
1.156%
0.819%--

2,500,000

0.903%--

1,000,000

2,500,000

Mizuho Bank, Ltd.

1,500,000--

1,500,000

Aozora Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited

1,000,000--

1,000,000

0.660%(Note 5)0.816%(Note 5)0.713%

1,000,000--

1,000,000

0.797%MUFG Bank, Ltd

1,000,000－24－

August 31, 2024
October 27, 2020
April 27, 2025
April 28, 2025
April 30, 2026
July 31, 2025
August 31, 2026
August 31, 2024
August 31, 2025

Use

Remarks(Note 6)

Unsecured/
UnguaranteedClassification
Lender500,000(in thousands of yen)--

500,000

MUFG Bank, Ltd

2,000,000--

2,000,000

500,000--

500,000

3,000,000--

3,000,000

Mizuho Bank, Ltd.

Total

Balance atthe end of
periodDecreaseduring theperiodIncreaseduring theperiodResona Bank, Limited
Mizuho Trust &Banking Co., Ltd.
Sumitomo Mitsui
Banking Corporation
Development Bank ofJapan Inc.
Resona Bank, Limited
Sumitomo Mitsui Trust
Bank, Limited
Shinsei Bank, Limited
Mizuho Trust &Banking Co., Ltd.
Development Bank ofJapan Inc.

Long-term
loans
payableBalance atthebeginning of
periodThe Bank of Fukuoka,
Ltd.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd
Aozora Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd
Mizuho Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
Sumitomo Mitsui
Banking Corporation
Resona Bank, Limited
Sumitomo Mitsui Trust
Bank, Limited
Sumitomo Mitsui
Banking Corporation
Shinsei Bank, Limited
MUFG Bank, Ltd
Mizuho Bank, Ltd.
Nippon Life Insurance
Company
Sub total

1,000,000--

1,000,000

1,000,000--

1,000,000

Averageinterest rate
(Note 3)(Note 4)

Payment due date
(Note 7)0.797%
0.670%(Note 5)0.751%(Note 5)

August 31, 2025

0.906%

August 31, 2026

0.773%(Note 5)0.900%

Use

Remarks(Note 6)

Unsecured/
Unguaranteed

August 31, 2025
August 31, 2025

October 31, 2025
August 22, 2027

1,000,000--

1,000,000

0.900%

August 22, 2027

1,000,000--

1,000,000

August 22, 2027

1,200,000--

1,200,000

1,000,000--

1,000,000

500,000--

500,000

500,000--

500,000

0.900%
0.928%(Note 5)0.928%(Note 5)0.928%(Note 5)0.928%(Note 5)1,500,000--

1,500,000

0.501%

February 28, 2023

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

1,500,000
1,500,000

0.501%
0.582%

February 28, 2023
February 29, 2024

1,000,000--

1,000,000

0.582%

February 29, 2024

1,000,000
500,000--

1,000,000
500,000

February 29, 2024
August 31, 2024

500,000--

500,000

0.582%
0.624%
0.661%(Note 5)1,500,000--

1,500,000

0.665%

February 28, 2025

1,000,000--

1,000,000

0.749%

February 28, 2026

1,000,000--

1,000,000

0.749%

February 28, 2026-

1,000,000-

1,000,000

0.409%

July 31, 2021-

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

1,000,000
500,000
500,000

July 31, 2021
July 31, 2021
July 31, 2021-

500,000-

500,000

73,000,000¥88,130,000

14,000,000¥22,130,000¥7,130,000

87,000,000¥103,130,000

0.409%
0.409%
0.409%
0.900%(Note 5)

August 22, 2027
August 22, 2027
August 22, 2027
August 22, 2027

August 31, 2024

January 30, 2027

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
through 2 years

Long-term loans payable¥7,500,000

Due after 2 years
through 3 years

Due after 3 years
through 4 years(in thousands of yen)
¥8,950,000¥19,650,000

Due after 4 years
through 5 years

Due after 5 years¥7,250,000¥43,650,000

Note 2: Borrowings listed in the current portion of long-term loans payable were listed in long-term loans 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 other derivative 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 otherderivatives 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.
Note 8: Borrowings succeeded from JSL due to the Merger on March 1, 2018.

－25－

Short-term debt and long-term debt consist of the following as of January 31, 2018
Classification

LenderShort-termloanspayableCurrent
portion of
long-term
loans
payableLong-term
loans
payableSumitomo Mitsui
Banking Corporation
Sumitomo Mitsui
Banking Corporation
Mizuho Bank, Ltd.
Sub total
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd(Note 8)
Aozora Bank, Ltd.
Resona Bank, Limited
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust &Banking Co., Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd(Note 8)
Aozora Bank, Ltd.
Resona Bank, Limited
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust &Banking Co., Ltd
Mizuho Bank, Ltd.
Development Bank ofJapan Inc.
Sub total
MUFG Bank, Ltd(Note 8)
Sumitomo Mitsui
Banking Corporation
Aozora Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
Aozora Bank, Ltd.
MUFG Bank, Ltd(Note 8)Resona Bank, Limited
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd(Note 8)Mizuho Bank, Ltd.
Aozora Bank, Ltd.
Resona Bank, Limited
Mizuho Trust andBanking Co., Limited
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd(Note 8)Mizuho Bank, Ltd.
Resona Bank, Limited
Mizuho Trust andBanking Co., LimitedAozora Bank, Ltd.
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd(Note 8)
Aozora Bank, Ltd.
Mizuho Bank, Ltd.

Balance atthebeginning of
periodDecreaseduring theperiodIncreaseduring theperiodBalance atthe end of
periodAverageinterest rate
(Note 3)(Note 4)

Payment due
date(Note 7)(in thousands of yen)

1,000,000--

1,000,000

0.438%

July 31, 2018-

830,000-

830,000

0.438%

July 31, 2018

1,000,000

800,000
1,630,000-

800,000
2,630,000

0.438%

July 31, 2018

4,000,000-

4,000,000-

2,500,000-

2,500,000-

1,500,000
1,000,000-

1,500,000
1,000,000-

0.910%

August 31, 2017

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

250,000--

250,000

3,000,000--

3,000,000

22,000,000-

11,000,000

11,000,000

1,000,000--

1,000,000

1.052%

August 31, 2018
(Note 2)

1.088%(Note 5)

August 31, 2018
(Note 2)

1.109%

January 31, 2021

1,000,000--

1,000,000

1.221%

July 31, 2021

1,350,000--

1,350,000

1.183%March 31, 2021

2,000,000--

2,000,000

1.267%

April 30, 2022

1,500,000--

1,500,000

1.267%

April 30, 2022

1,000,000--

1,000,000

1.267%

April 30, 2022

1,000,000--

1,000,000

1.267%

April 30, 2022

1,100,000--

1,100,000

0.916%

August 7, 2021

1,100,000--

1,100,000

600,000
350,000
300,000--

600,000
350,000
300,000

300,000--

300,000
0.996%(Note 5)

August 7, 2021

1.254%

August 7, 2023

1.254%

August 7, 2023

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)

August 7, 2023

600,000--

600,000

0.945%

August 31, 2021

600,000--

600,000

0.945%

August 31, 2021

500,000
950,000--

500,000
950,000

0.945%
1.083%

August 31, 2021
November 30, 2022

－26－

Use

Remarks(Note 6)

Unsecured/
Unguaranteed(Note 6)

Unsecured/
Unguaranteed(Note 6)

Unsecured/
UnguaranteedClassification
LenderLong-term
loans
payableSumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd(Note 9)Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd(Note 8)
Aozora Bank, Ltd.
Resona Bank, Limited
MUFG Bank, Ltd(Note 8)
Sumitomo Mitsui
Banking Corporation
Aozora Bank, Ltd.
Resona Bank, Limited
Mizuho Trust andBanking Co., Limited
Sumitomo Mitsui Trust
Bank, Limited
MUFG Bank, Ltd(Note 8)Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
Development Bank ofJapan Inc.
MUFG Bank, Ltd(Note 8)MUFG Bank, Ltd(Note 8)MUFG Bank, Ltd(Note 8)
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd(Note 8)

Balance atthebeginning of
periodDecreaseduring theperiodIncreaseduring theperiodBalance atthe end of
periodAverageinterest rate
(Note 3)(Note 4)(in thousands of yen)

Payment due
date(Note 7)2,000,000--

2,000,000

0.804%

November 30, 2020

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

2,000,000
1,500,000--

2,000,000
1,500,000

0.875%
0.987%

April 30, 2022
April 30, 2023

2,000,000--

2,000,000

1.100%

April 30, 2024

1,000,000--

1,000,000

1.265%

April 30, 2025

300,000
1,100,000--

300,000
1,100,000

0.678%
0.923%

August 31, 2020
August 31, 2022

700,000--

700,000

0.923%

August 31, 2022

950,000--

950,000

1.047%

August 31, 2023

1,700,000--

1,700,000

1.169%

August 31, 2024

950,000--

950,000

1.169%

August 31, 2024

2,000,000--

2,000,000

1.345%

August 31, 2025

1,000,000--

1,000,000

1.193%(Note 5)

August 31, 2024

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

1,000,000--

1,000,000

Mizuho Bank, Ltd.

1,500,000--

1,500,000

Aozora Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Resona Bank, Limited
MUFG Bank, Ltd(Note 8)Mizuho Trust andBanking Co., Limited
Sumitomo Mitsui
Banking Corporation
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd(Note 8)Resona Bank, Limited
Sumitomo Mitsui Trust
Bank, Limited
Shinsei Bank, Limited
Mizuho Trust andBanking Co., Limited
Development Bank ofJapan Inc.

1,000,000--

1,000,000

Mizuho Bank, Ltd.
The Bank of Fukuoka,
Ltd.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd（Note 8）
Aozora Bank, Ltd.

0.660%(Note 5)0.816%(Note 5)0.713%

July 31, 2025
August 31, 2026
August 31, 2024

1,000,000--

1,000,000

0.797%

August 31, 2025

500,000--

500,000

August 31, 2025

2,000,000--

2,000,000

500,000--

500,000

0.797%
0.670%(Note 5)0.751%(Note 5)3,000,000--

3,000,000

0.906%

August 31, 2026

1,000,000--

1,000,000

0.773%(Note 5)October 31, 2025-

1,000,000-

1,000,000

0.464%

February 28, 2019-

500,000-

500,000

0.464%

February 28, 2019-

1,000,000-

1,000,000

0.900%-

1,000,000-

1,000,000

0.900%

August 22, 2027
August 22, 2027-

1,000,000-

1,000,000-

1,200,000-

1,200,000

August 22, 2027
August 22, 2027-

1,000,000-

1,000,000-

500,000-

500,000-

500,000-

500,000

0.900%
0.928%(Note 5)0.928%(Note 5)0.928%(Note 5)0.928%(Note 5)-1,500,000-

1,500,000

0.501%

February 28, 2023-

1,500,000-

1,500,000

0.501%

February 28, 2023-

1,500,000-

1,500,000

0.582%

February 29, 2024

－27－

August 31, 2025
August 31, 2025

August 22, 2027
August 22, 2027
August 22, 2027

Use

Remarks(Note 6)

Unsecured/
UnguaranteedClassification
LenderLong-term
loans
payableTotal

Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd(Note 8)Mizuho Bank, Ltd.
Mizuho Trust andBanking Co., Limited
Sumitomo Mitsui
Banking Corporation
Resona Bank, Limited
Sumitomo Mitsui Trust
Bank, Limited
Sub total

Balance atthebeginning of
periodBalance atthe end of
periodAverageinterest rate
(Note 3)(Note 4)

Payment due
date(Note 7)-1,000,000

0.582%

February 29,2024

Decreaseduring theperiodIncreaseduring theperiod(in thousands of yen)-

1,000,000-

1,000,000-

1,000,000

0.582%

February 29, 2024-

500,000-

500,000

August 31, 2024-

500,000-

500,000

0.624%
0.661%(Note 5)-1,500,000-

1,500,000

0.665%

February 28, 2025-

1,000,000-

1,000,000

0.749%

February 28, 2026

0.749%

February 28, 2026-

1,000,000-

1,000,000

55,800,000¥78,800,000

18,700,000¥20,330,000¥11,000,000

74,500,000¥88,130,000

August 31, 2024

Use

Remarks(Note 6)

Unsecured/
Unguaranteed

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
through 2 years

Long-term loans payable¥3,000,000

Due after 2 years
through 3 years

Due after 3 years
through 4 years(in thousands of yen)
¥3,600,000¥10,000,000

Due after 4 years
through 5 years

Due after 5 years¥10,250,000¥47,650,000

Note 2: Borrowings listed in the current portion of long-term loans payable were listed in long-term loans 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 other derivative 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 otherderivatives 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.
Note 8: The Bank of Tokyo-Mitsubishi UFJ, Ltd. changed its corporate name to MUFG Bank, Ltd. on April 1, 2018.
Note 9: MUFG Bank, Ltd. succeeded to the status of lender from Mitsubishi UFJ Trust and Banking Corporation due to the absorption-typedemerger of Mitsubishi UFJ Trust and Banking Corporation (the splitting company) and MUFG Bank, Ltd. (the successor company) on
April 16, 2018.

－28－

21. DISTRIBUTIONS
13th Fiscal Period(From February 1, 2018 to July 31, 2018)

12th Fiscal Period(From August 1, 2017 to January 31, 2018)

I. Retained earnings at the end of period¥5,428,676,864¥2,437,011,775

II. Total distributions¥3,152,068,128¥2,424,772,194¥4,026¥6,946¥2,000,000,000¥-¥276,608,736¥12,239,581

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 ¥3,152,068,128, which is the amount deducting
a part of gain on negative goodwill, a part of gain on saleof real estate property and other adjustments from net
income, 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
13th 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, theInvestment Corporation has decided that it shall distribute¥2,424,772,194, which is the amount of ¥2,352,516,261
in net income and ¥72,255,933 from retained 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
12th fiscal period, the Investment Corporation has
decided not to distribute cash in excess of distributableprofit.

Distributions per unit
III. Voluntary reserve
Provision of reserve for temporary
difference adjustments (Note 1)
IV. Retained earnings brought forward to
the next period

Method of calculating distribution amount

Note 1: Reserve for temporary difference adjustments
13th Fiscal Period (February 1, 2018 to July 31, 2018)
The Investment Corporation has reserved ¥2,000,000,000 as reserve for temporary difference adjustments from gain on negative goodwill in
the 13th fiscal period. At least 1% of the initial amount in equal installments over 50 years (100 fiscal periods) will be reversed every fiscal
period applied to distribution starting from the 14th fiscal period.
12th Fiscal Period (August 1, 2017 to January 31, 2018)
Not applicable－29－