Financial Statements(12th Fiscal Period: From August 1, 2017 to January 31, 2018)(11th Fiscal Period: From February 1, 2017 to July 31, 2017)
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 NEXT INVESTMENT CORPORATION

Balance Sheets
As of January 31, 2018 and July 31, 201712th Fiscal Period
as of January 31, 2018

11th Fiscal Period
as of July 31, 2017

(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
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
Other (Notes 8 and 9)
Total investments and other assets
Total noncurrent assets
Deferred assets
Investment corporation bond issuance costs
Investment unit issuance costs
Total deferred assets
Total assets－2－¥6,551,666
3,928,017
24,913
3,557
9,464
1,893
10,519,513¥6,405,982
3,778,959
24,8214,831
9503
10,215,108

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

1,798,041
65,654,206(6,058,335)
59,595,871
444,009(100,446)
343,563
1,259,827(197,886)
1,061,940
263,829(20,241)
243,587
93,118,700
156,161,704

221,707
10,397915,782
80,7431,228,631
166,269,577

91,57910,397764,254
26,626
892,858
157,054,563

24,461

26,340421

20,03924,883

46,380¥176,813,974¥167,316,051

12th Fiscal Period
as of January 31, 2018

11th Fiscal Period
as of July 31, 2017

(in thousands of yen)
LIABILITIESCurrent liabilities
Operating accounts payable¥473,021¥431,854

Short-term loans payable (Notes 8, 9 and 19)

2,630,000

1,000,000

Current portion of long-term loans payable (Notes 8, 9 and 19)
Accounts payable-otherAccrued expenses
Income taxes payable

11,000,000
239,241
26,142604

11,000,000
203,876
24,212799

Accrued consumption taxes
Advances received
Deposits received
Total current liabilities
Noncurrent liabilities

-

6,135

779,137
53,143
15,201,290

766,964
50,111
13,483,955

Investment corporation bonds (Notes 8 and 18)

3,000,000

3,000,000

Long-term loans payable (Notes 8, 9 and 19)
Tenant leasehold and security deposits in trust
Total noncurrent liabilities

74,500,000
1,462,549
78,962,549

66,800,000
1,473,087
71,273,087

94,163,839

84,757,042

80,132,379

80,132,379

2,437,011

2,400,002

2,437,011
82,569,390

2,400,002
82,532,381

80,743

26,626

Total liabilities
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)80,743

26,626

Total net assets (Note 3)

Total valuation and translation adjustments

82,650,134

82,559,008

Total liabilities and net assets¥176,813,974¥167,316,051

See accompanying notes to the financial statements.

－3－

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATIONStatements of Income and Retained Earnings
For the period from August 1, 2017 to January 31, 2018 and the period from February 1, 2017 to July 31, 201712th Fiscal Period
from August 1, 2017
to January 31, 2018

11th Fiscal Period
from February 1, 2017
to July 31, 2017
(in thousands of yen)

Operating revenues
Rent revenue-real estate (Note 4)
Other lease business revenue (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
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
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¥5,235,620
435,685
10,132
5,681,438¥5,102,400
472,418
5,574,819

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

2,124,246
371,229
11,36338,143
4,500
192,1212,741,604
2,833,215

12
350
363

12
824
836

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

385,660
7,629
96,801
1,878
25,790517,760
2,316,291
2,316,291

604
9
614
2,352,516
84,495¥2,437,011

801
51
853
2,315,438
84,564¥2,400,002

See accompanying notes to the financial statements.

－4－

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATIONStatements of Changes in Net Assets
For the period from August 1, 2017 to January 31, 2018 and the period from February 1, 2017 to July 31, 2017
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 January 31, 2017¥80,132,379 \

2,365,163 \2,365,163 \

82,497,542 \

54,619 \ 82,552,161

Changes of items during the period
Dividends from surplus-(2,280,598)(2,280,598)(2,280,598)-(2,280,598)

Net income
Net changes of items other thanunitholders' equity-

2,315,438

2,315,438

2,315,438-

2,315,438

-

-

-

-

(27,992)(27,992)-

34,83934,83934,839(27,992)

6,847

2,400,002 \2,400,002 \

82,532,381 \Total changes of items during the period
Balance as of July 31, 2017

(Note 5)\80,132,379 \

26,626 \ 82,559,008

Changes of items during the period
Dividends from surplus-(2,315,507)(2,315,507)(2,315,507)-(2,315,507)

Net income
Net changes of items other thanunitholders' equity-

2,352,516

2,352,516

2,352,516-

2,352,516

-

-

-

-

54,116

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

91,1252,437,011 \2,437,011 \

82,569,390 \Total changes of items during the period
Balance as of January 31, 2018

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

－5－80,743 \ 82,650,134

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATIONStatements of Cash Flows
For the period from August 1, 2017 to January 31, 2018 and the period from February 1, 2017 to July 31, 201712th Fiscal Period
from August 1, 2017
to January 31, 2018

11th Fiscal Period
from February 1, 2017
to July 31, 2017

(in thousands of yen)
Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
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
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes (paid) refund
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Purchase of property, plant and equipment in trust
Purchase of investment securities
Proceeds from investment securities
Proceeds from collection of lease and guarantee deposits
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
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
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period (Note 6)¥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
3,670,003
12(415,950)(2,693)3,251,371¥2,316,291
884,713
1,878
25,790(12)
393,289(31)(1,475)(55,535)
11,489(13,392)
12,985
99,837(13,325)
3,662,503
12(393,545)(1,696)
3,267,273(9,828,503)(133,725)
3,240(142,165)
131,628(9,969,526)(155,506)(90,000)
164(147,418)
153,736(239,024)

1,630,000
18,700,000(11,000,000)(2,317,102)
7,012,897
294,741
10,184,942¥10,479,684

1,000,000(1,000,000)(2,282,658)(2,282,658)
745,5909,439,351¥10,184,942

See accompanying notes to the financial statements.

－6－

KENEDIX RESIDENTIAL NEXT INVESTMENT CORPORATION

Notes to Financial Statements
For the period from August 1, 2017 to January 31, 2018 and the period from February 1, 2017 to July 31, 2017

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).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 athird-party allotment. As the result, as of January 31, 2018, the end of the 12th fiscal period, the number of investment units issued andoutstanding totaled 349,089 units.
(Note) On March 1, 2018 as the effective date, the Investment Corporation conducted an absorption-type merger (“the Merger”) whereby theInvestment Corporation was the surviving corporation and Japan Senior Living Investment Corporation (“JSL”) was the dissolving corporation. 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 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 11th fiscal period, the Investment Corporation acquired and sold no properties. During the 12th fiscal period, the Investment
Corporation acquired 2 properties (total acquisition price of ¥9,100 million). As the result, the Investment Corporation has a portfolio comprised of
115 properties (total acquisition price of ¥164,169 million) as of January 31, 2018, the end of the 12th fiscal period.
The occupancy rates of the overall portfolio excluding land with leasehold interest were 96.8% and 97.0% as of the end of the 11th and 12th
fiscal period, respectively. Furthermore, the occupancy rates of the overall portfolio including land with leasehold interest were 96.9% and 97.0%
as of the end of the 11th and 12th fiscal period.
During the 11th and 12th fiscal period, the Investment Corporation made borrowings of ¥1,000 million and ¥11,000 million for the repayment ofdebt matured. During the 12th fiscal period, the Investment Corporation made new borrowings of ¥9,330 million upon acquiring properties. As aresult, balance of borrowings as of the end of the 11th and 12th fiscal period stood at ¥78,800 million and ¥88,130 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 August 1, 2017
to January 31, 2018
2-67 years

From February 1, 2017
to July 31, 2017
2-67 years

Structures

3-52 years

3-48 years

Machinery and equipment

8-34 years

8-30 years

Tools, furniture and fixtures

6-30 years

6-30 years(C) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line method.
(D) Unit Issuance Costs
Unit issuance costs are amortized over a period of 3 years under the straight-line method.
(E) Investment Corporation Bond Issuance Costs
Investment corporation bond issuance costs are amortized over a maturity period 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 generally 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¥6,024 thousand as of January 31, 2018. There were no capitalized property-related taxes as of July 31, 2017.

－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 andinterest 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.
(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 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 August 1, 2017 to January 31, 2018 and from February 1,
2017 to July 31, 2017 consist of the following:
From August 1, 2017
to January 31, 2018

From February 1, 2017
to July 31, 2017

(in thousands of yen)
Rental and other operating revenues:
Rental revenues¥4,895,387¥4,769,190

Rental revenues from limited proprietary rights of land

43,74943,750Common area charges

296,482

289,460

5,235,620

5,102,400

Parking space rental revenues

181,133

173,218

Miscellaneous

254,551

299,200

Subtotal

435,685

472,418¥5,671,305¥5,574,819

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

¥362,432¥386,322

Utilities

88,66985,370Taxes

323,667

324,067

Repairs and maintenance

228,410

234,429

Insurance

8,399

7,984

Trust fees

42,467

41,900Depreciation

921,858884,713

Others131,157

159,458¥2,107,064¥2,124,246

Total property-related expenses
Gain on sales of real estate property:
From August 1, 2017 to January 31, 2018
Not applicable
From February 1, 2017 to July 31, 2017
Not applicable

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
Total number of investment units issued and outstanding－10－

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

From February 1, 2017
to July 31, 2017
5,000,000

349,089

349,089

6. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following as of January 31, 2018 and July 31, 2017:
As of January 31, 2018

As of July 31, 2017

(in thousands of yen)
Cash and deposits¥6,551,666¥6,405,982

Cash and deposits in trust

3,928,017

3,778,959

Cash and cash equivalents¥10,479,684¥10,184,942

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 January 31, 2018
and July 31, 2017 are as follows:
As of January 31, 2018

As of July 31, 2017

(in thousands of yen)Due in 1 year

¥251,883¥328,364

Due after 1 year

4,092,472

4,266,213

Total¥4,344,355¥4,594,578－11－

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 7 month as of January 31, 2018, the end of the 12th
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 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-

Subtotal¥-

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)(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¥-

As of July 31, 2017
Carrying amount

Estimated fair value

Difference(in thousands of yen)

(1) Cash and deposits(2) Cash and deposits in trust
Subtotal¥6,405,982
3,778,959¥6,405,982
3,778,959

10,184,942

10,184,942¥-(1) Short-term loans payable

1,000,000

1,000,000-(2) Current portion of long-term loans payable

11,000,000

10,956,857(43,142)(3) Investment corporation bonds

3,000,000
66,800,000

2,967,700
66,913,944(32,300)
113,944

81,800,000

81,838,502

38,502¥26,626¥26,626(4) 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 (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 January 31, 2018

Investment securities *As of July 31, 2017221,707

91,579*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.

Note 3: Redemption schedule for financial assets with maturities
As of January 31, 2018
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¥6,551,666¥

3,928,017

-

¥

-

-

¥10,479,684

¥

¥

-

-

¥

-

-

¥

-

-

¥

-

-

¥

-

As of July 31, 2017
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¥6,405,982¥

3,778,959

-

¥

-

-

¥10,184,942

¥

¥

-

-

¥

-

-

¥

-

-

¥

-

-

¥

-

Note 4: Redemption schedule for loans payable and investment corporation bonds
As of January 31, 2018
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
payableInvestment
corporation bonds
Long-term loans
payableTotal¥

2,630,000

¥

-

¥

-

¥

-

¥

-

¥

-

-

-

-

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

Due in 1 year or
less

Due after 1 year
through 2 years¥

3,600,000¥

11,000,000¥

10,250,000¥

49,650,000

As of July 31, 2017
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
payableInvestment
corporation bonds
Long-term loans
payableTotal¥

1,000,000

¥

-

¥

-

¥

-

¥

-

¥

-

-

-

-

-

1,000,000

2,000,000

11,000,000

11,000,000

1,500,000

5,950,000

15,150,000

33,200,000¥ 12,000,000¥ 11,000,000¥

1,500,000－14－¥

5,950,000¥

16,150,000¥

35,200,000

9. DERIVATIVE TRANSACTIONS
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*
interest-rate
Receive/floatingloans 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.
The contract amount and the fair value of interest-rate swap transactions as of July 31, 2017 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¥9,000,000¥9,000,000¥26,626 provided by counterparty
Receive/floatingloans payablefinancial institutions
and pay/fixedSpecialInterest rate swap
treatment for transaction:
Long-term¥57,300,000¥46,300,000*
interest-rate
Receive/floatingloans payableswaps
and pay/fixed
Total¥66,300,000¥55,300,000¥26,626*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 ¥2,424 million and ¥2,315 million for the periods ended January 31, 2018 and July 31,
2017, respectively, the distributions were treated as deductible distributions for purposes of corporate income taxes. The effective tax rates on theInvestment Corporation’s income were 0.03% and 0.04% for the periods ended January 31, 2018 and July 31, 2017, respectively. The following
table summarizes the significant differences between the statutory tax rate and the effective tax rate:

Statutory tax rate
Deductible cash distributions

From August 1, 2017
to January 31, 201831.74%

From February 1, 2017
to July 31, 201731.74%(31.74)(31.73)

Others0.03

0.03

Effective tax rate

0.03%

0.04%

The significant components of deferred tax assets and liabilities as of January 31, 2018 and July 31, 2017 are as follows:
As of January 31, 2018

As of July 31, 2017

(in thousands of yen)

Deferred tax assets:
Enterprise tax payable-

Subtotal deferred tax assets-

Total deferred tax assets-

11. RELATED-PARTY TRANSACTIONS
1．Parent Company, major corporate unitholders and other12th Fiscal Period (August 1, 2017 to January 31, 2018) and 11th Fiscal Period (February 1, 2017 to July 31, 2017): Not applicable
2．Affiliated companies and other12th Fiscal Period (August 1, 2017 to January 31, 2018) and 11th Fiscal Period (February 1, 2017 to July 31, 2017): Not applicable
3．Fellow subsidiary companies and other12th Fiscal Period (August 1, 2017 to January 31, 2018) and 11th Fiscal Period (February 1, 2017 to July 31, 2017): Not applicable
4．Directors, major individual unitholders and other12th Fiscal Period (August 1, 2017 to January 31, 2018) and 11th Fiscal Period (February 1, 2017 to July 31, 2017): Not applicable

－16－

¥

9

¥

9

9

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

11th Fiscal Period
from February 1, 2017
to July 31, 2017

(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¥156,161,704
8,879,241¥156,805,298(643,593)

165,040,946¥192,137,000

156,161,704¥182,410,000

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 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 wasdepreciation amounting of ¥921,858 thousand, and the 11th fiscal period, the principal decrease was depreciation amounting of ¥884,713
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 January 31, 2018 and July 31, 2017 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 August 1, 2017 to January 31, 2018 and from February 1, 2017 to July 31, 2017 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

Net asset value per unit

From August 1, 2017

From February 1, 2017

to January 31, 2018

to July 31, 2017

¥118,379¥118,249

Net income per unit

¥3,369¥3,316Weighted average number of units (units)

698,178

698,178

The weighted average number of units outstanding of 698,178 were used for the computation of the amount of net income per unit as ofJanuary 31, 2018 and July 31, 2017.
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 July 2017.
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)

From August 1, 2017

From February 1, 2017

to January 31, 2018

to July 31, 2017

¥2,352,516

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)¥2,315,438--¥2,352,516¥2,315,438

698,178

698,178

15. SIGNIFICANT SUBSEQUENT EVENTS
1. Merger (with Japan Senior Living Investment Corporation)
On March 1, 2018 as the effective date, Kenedix Residential Investment Corporation (“KDR”) conducted an absorption-type merger (“theMerger”) whereby KDR was the surviving corporation and Japan Senior Living Investment Corporation (“JSL”) was the dissolving corporation.
KDR also changed its corporate name from Kenedix Residential Investment Corporation to Kenedix Residential Next Investment Corporation
on March 1, 2018.
(1) Purpose of the Merger
KDR 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 withenhanced financial health, and further believe that the potential to reap these benefits constitutes the major significance of the Merger.
(2) Method of the Merger
The Merger was an absorption-type merger with KDR as the surviving corporation and JSL was dissolved.
(3) Merger Ratio
1 unit of KDR was allotted 1 unit of JSL through the Merger. KDR implemented a 2-for-1 investment unit split with February 28, 2018 as therecord date before the Merger. As a result, the total number of investment units issued and outstanding was 782,928 units as of March 1,
2018.
(4) Cash Payment upon the Merger
KDR intends to pay JSL unitholders (the unitholders stated or recorded in the final unitholders register on the day prior to the effective date of
the Merger (excluding the JSL unitholders who demanded the purchase of their investment units pursuant to the provisions of Article 149-3 ofthe Investment Trust Act, hereinafter referred to as the “Unitholders Subject to Allocation”)), in lieu of the cash distributions pertaining to JSL’s
fiscal period from September 1, 2017 to February 28, 2018, a merger grant of ¥3,365 per unit corresponding to the cash distributions based on
JSL’s distributable income for that same period (an amount (rounded down to the nearest yen) which is the quotient resulting from dividing theamount of JSL’s distributable income on the date prior to the effective date of the Merger by the number of issued JSL investment units on thatdate, reduced by the number of investment units held by unitholders other than the Unitholders Subject to Allocation).

－18－

(5) Unitholder’s Capital
Unitholder’s capital and capital surplus of KDR that increased due to the Merger are as follows.
Unitholder’s capital : ¥0
Capital surplus : Amount to be increased is calculated by deduct the increase amount in unitholders’ capital above from an amount to bechanged in unitholders’ equity prescribed in the Article 22, Paragraph 1 of the Regulation for the Accounting of the Investment Corporation(Cabinet Office Ordinance No. 47 effective in 2006).
(6) Performance of JSL in the Latest Fiscal Period Ended February 28, 2018(from September 1, 2017 to February 28, 2018)
Business purpose Management of assets in accordance with the Investment Trust Act by investing mainly in specified assets
Operating Revenues¥988 million

Net income¥285 million

Total assets¥35,605 million

Total liabilities¥19,788 million

Net assets¥15,816 million

2. Investment Unit Split
KDR implemented a 2-for-1 split of investment units with March 1, 2018 as the effective date.
(1) Purpose of the Investment Unit Split
The Merger is carried out through an absorption-type merger having KDR as the surviving corporation, and the merger ratio, before
considering the Investment Unit Split, would be KDR 1: JSL 0.5. However, with this merger ratio, 0.5 units of KDR would be allotted to every
unit of JSL, which would mean that a number of JSL investment unitholders would receive less than one KDR unit. For this reason, in order toenable JSL unitholders to continue holding KDR units even after the Merger, it was decided that the KDR investment units will be split 2-for-1
for the purpose of issuing 1 KDR unit or more to all JSL unitholders.
(2) Method of the Investment Unit Split
KDR 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.
(3) Increase in Number of Investment Units through the Split
Total number of KDR’s investment units issued and outstanding before the Investment Unit Split:

349,089 units

Number of investment units increased through the Investment Unit Split:

349,089 units

Total number of KDR’s investment units issued and outstanding after the Investment Unit Split:

698,178 units

The total number of KDR’s investment units issued and outstanding was 782,928 units after the Merger as of March 1, 2018, since 1 unit of
KDR was allotted to 1 unit of JSL.
For figures of per unit information under assumption by which the split of investment units was implemented at the beginning of the fiscal
period ended July 2017, please refer to “Notes to Per Unit Information.”－19－16. SECURITIES PORTFOLIO
Securities portfolio consists of the following as of January 31, 2018:(1)

Stock Not applicable(2)

Securities other than shares(in thousands of yen)Type
SubordinatedSilent Partnership
Equity Interests
SubordinatedSilent Partnership
Equity Interests

Name

Face value
total

Equity interests in TK property fund with
G.K. Tropic I as operator (Note 1)
Equity interests in TK property fund with
G.K. Tropic II as operator (Note 2)

Total

Book value

Accruedinterest

Prepaid

Assessed

accrued

value

Gain
(Loss) on Remarks

interest （Note 3） valuation-

88,339--88,339--133,368--

133,368--

221,707--

221,707-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.
Securities portfolio consists of the following as of July 31, 2017:(1)

Stock Not applicable(2)

Securities other than shares(in thousands of yen)Type
SubordinatedSilent Partnership
Equity Interests

Name

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

Total

Face value
totalBook value

Accruedinterest

Prepaid

Assessed

accrued

value

Gain
(Loss) on Remarks

interest （Note 2） valuation-

91,579--91,579--91,579--91,579-Note 1: TK property fund owns trust beneficiary interests in real estate for “KDX Residence Shukugawa Hills.”
Note 2: The assessed value is stated at the book value.

－20－17. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following as of January 31, 2018:
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

65,654,206

3,189,393-

68,843,600

6,927,784

869,449

61,915,815

Structures in trust

444,009

58,915-502,925

114,924

14,477

388,001

Machinery andequipment in trust

1,259,827

57,959-1,317,786

226,840

28,953

1,090,946

Tools, furnitureand fixtures intrust

263,829

74,816-338,646

29,2208,978309,425

Land in trust

93,118,700

6,420,015-

99,538,715--

99,538,715

Sub total
Total

160,740,573

9,801,100¥162,538,615¥9,801,100¥-

170,541,674

7,298,769

921,858

163,242,904-¥172,339,715¥7,298,769¥921,858¥165,040,946

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.
Property, plant and equipment consist of the following as of July 31, 2017:

Type of asset

Balance atthe beginningof period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of
periodDepreciation
Accumulated
depreciation

Depreciation
for theperiodNetbalance at
end of theperiod(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

65,456,096

198,109-65,654,206

6,058,335

836,01059,595,871

Structures in trust

439,236

4,773-

444,009

100,446

13,911

343,563

Machinery andequipment in trust

1,253,773

6,053

-

1,259,827

197,886

28,014

1,061,940

Tools, furnitureand fixtures intrust

231,646

32,183-

263,829

20,241

6,776

243,587

Land in trust

93,118,700--

93,118,700--

93,118,700

Sub total

160,499,454

241,119-

160,740,573

6,376,910

884,713

154,363,663¥162,297,495¥241,119-¥162,538,615¥6,376,910¥884,713¥156,161,704

Total

¥

Note 1: The amount of increase during the period is primarily attributable to capital expenditures.

－21－

Remarks

18. INVESTMENT CORPORATION BONDS
Outstanding Investment corporation bonds as of January 31, 2018 are as follows.
Date of

Seriesissue

Balance at

Decrease

the beginningduring theof period

periodBalance at theInterest rate

end of period

Repayment date

Use

Remarks(Note2)

Unsecured(in thousands of yen)First series of unsecured
investment corporation
bonds (Note 1)
Second series of
unsecured investment
corporation bonds(Note 1)
Third series of unsecured
investment corporation
bonds (Note 1)
Total

August 30,
2016
August 30,
2016
August 30,
2016

1,000,000-

1,000,000

0.200%

1,000,000-

1,000,000

0.540%

1,000,000-

1,000,000

0.800%

3,000,000-

3,000,000

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

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

Due after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

or less

through 2 years

through 3 years

through 4 years

through 5 years(in thousands of yen)

Investment-

corporation bonds-

1,000,000--

Outstanding Investment corporation bonds as of July 31, 2017 are as follows.
Date of

Seriesissue

Balance at

Decrease

the beginningduring theof period

Balance at theInterest rate

end of period

periodRepayment date

Use

Remarks(Note2)

Unsecured(in thousands of yen)First series of unsecured
investment corporation
bonds (Note 1)
Second series of
unsecured investment
corporation bonds(Note 1)
Third series of unsecured
investment corporation
bonds (Note 1)
Total

August 30,
2016
August 30,
2016
August 30,
2016

1,000,000-

1,000,000

0.200%

1,000,000-

1,000,000

0.540%

1,000,000-

1,000,000

0.800%

3,000,000-

3,000,000

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

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

Due after 1 year

or less

through 2 years

Due after 2 years

Due after 3 years

Due after 4 years

through 3 years

through 4 years

through 5 years(in thousands of yen)

Investment
corporation bonds

-

-

-

－22－

-

1,000,000

19. SHORT-TERM DEBT AND LONG-TERM DEBT
Short-term debt and long-term debt consist of the following as of January 31, 2018
Classification
LenderBalance atthebeginning of
periodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
periodAverageinterest rate
（Note 3）（Note 4）

Payment due
date（Note 7）Use

Remarks

July 31,
2018
July 31,
2018
July 31,2018(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
payableSumitomo Mitsui
Banking Corporation
Sumitomo Mitsui
Banking Corporation
Mizuho Bank, Ltd.

1,000,000--

1,000,000

0.438%-

830,000-

830,000

0.438%
0.438%-

800,000-

800,000

1,000,000

1,630,000-

2,630,000

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

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-

Aozora Bank, Ltd.

1,350,000

Sumitomo Mitsui
Banking Corporation

Sub total
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
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
The Bank ofTokyo-Mitsubishi UFJ,
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
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）
Sumitomo Mitsui
Banking Corporation

0.910%

August 31,
2017

1.052%

August 31,
2018（Note 2）

1.088%（Note 5）

August 31,
2018（Note 2）

1,000,000

1.109%

January 31,
2021-

1,000,000

1.221%--

1,350,000

1.183%

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.（Note 8）

1,000,000--

1,000,000

1.267%

April 30,
2022

Resona Bank, Limited

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

Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）
Mizuho Bank, Ltd.
Aozora Bank, Ltd.
Resona Bank, Limited
The Mizuho Trust andBanking Co., Limited
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）
Mizuho Bank, Ltd.
Resona Bank, Limited－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

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

Payment due
date（Note 7）1.254%

August 7,
2023

Use

Remarks(Note 6)

Unsecured/
Unguaranteed(in thousands of yen)
The Mizuho Trust andBanking Co., LimitedAozora Bank, Ltd.
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）

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%

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, Limited

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, Limited

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

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

0.660%(Note 5)

July 31,2025

Mizuho Bank, Ltd.

1,500,000--

1,500,000

0.816%(Note 5)

Aozora Bank, Ltd.

1,000,000--

1,000,000

0.713%

Sumitomo Mitsui Trust
Bank, Limited

1,000,000--

1,000,000

0.797%

Resona Bank, Limited

500,000--

500,000

0.797%

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

Sumitomo Mitsui
Banking Corporation
Mitsubishi UFJ Trustand Banking
Corporation（Note 9）
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）

The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）
Sumitomo Mitsui
Banking Corporation
Long-term
loans
payableThe Mizuho Trust andBanking Co., Limited
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
Development Bank ofJapan Inc.
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）－24－

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

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)
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）
The Mizuho Trust andBanking Co., Limited
Sumitomo Mitsui
Banking Corporation
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）

2,000,000--

2,000,000

0.670%(Note 5)

August 31,
2025

500,000--

500,000

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

3,000,000

0.906%

1,000,000--

1,000,000

0.773%(Note 5)-1,000,000-

1,000,000

0.464%

August 31,
2025
August 31,
2026
October 31,
2025
February 28,
2019-

500,000-

500,000

0.464%

Resona Bank, Limited-

1,000,000-

1,000,000

0.900%

Sumitomo Mitsui Trust
Bank, Limited-

1,000,000-

1,000,000

0.900%

Shinsei Bank, Limited-

1,000,000-

1,000,000

0.900%-

1,200,000-

1,200,000-

1,000,000-

1,000,000-

500,000-

500,000-

500,000-

500,000-

1,500,000-

1,500,000

0.501%-

1,500,000-

1,500,000

0.501%-

1,500,000-

1,500,000

0.582%-

1,000,000-

1,000,000

0.582%-

1,000,000-

1,000,000

0.582%-

500,000-

500,000

0.624%-

500,000-

500,000

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

1,500,000

0.665%-

1,000,000-

1,000,000

0.749%-

1,000,000-

1,000,000

0.749%

55,800,000¥78,800,000

18,700,000¥20,330,000¥11,000,000

74,500,000¥88,130,000

The Mizuho Trust andBanking Co., Limited
Development Bank ofJapan Inc.
Long-term
loans
payableMizuho Bank, Ltd.
The Bank of Fukuoka,
Ltd.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）
Aozora Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 8）
Mizuho Bank, Ltd.
The Mizuho Trust andBanking Co., Limited
Sumitomo Mitsui
Banking Corporation
Resona Bank, Limited
Sumitomo Mitsui Trust
Bank, Limited
Sub total

Total

0.928%(Note 5)0.928%(Note 5)0.928%(Note 5)0.928%(Note 5)February 28,
2019
August 22,
2027
August 22,
2027
August 22,
2027
August 22,
2027
August 22,
2027
August 22,
2027
August 22,
2027
February 28,
2023
February 28,
2023
February 29,
2024
February 29,
2024
February 29,2024
August 31,
2024
August 31,
2024
February 28,
2025
February 28,
2026
February 28,
2026

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

Due after 5 years(in thousands of yen)
Long-term loans payable¥3,000,000¥3,600,000¥10,000,000¥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.

－25－

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 the status of the lender to Mitsubishi UFJ Trust and Banking Corporation on April 16, 2018.
Short-term debt and long-term debt consist of the following as of July 31, 2017Classification
LenderBalance atthebeginning of
periodIncreaseduring theperiodDecreaseduring theperiodAverageinterest rate
（Note 2）
（Note 3）

Balance atthe end of
periodPayment due
date（Note 6）Use

Remarks

July 31,
2017
July 31,2018(Note 5)

Unsecured/
Unguaranteed

0.910%

August 31,
2017(Note 5)

Unsecured/
Unguaranteed

1.052%

August 31,
2018(Note 5)

Unsecured/
Unguaranteed(in thousands of yen)
Short-termloanspayableCurrent
portion of
long-term
loans
payableLong-term
loans
payableSumitomo Mitsui
Banking Corporation
Sumitomo Mitsui
Banking Corporation
Sub total
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
Aozora Bank, Ltd.
Resona Bank, Limited
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust &Banking Co., Ltd.
Mizuho Bank, Ltd.
Sub total
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
Aozora Bank, Ltd.
Resona Bank, Limited
Sumitomo Mitsui Trust
Bank, Limited
Mizuho Trust &Banking Co., Ltd
Mizuho Bank, Ltd.
Development Bank ofJapan Inc.
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
Sumitomo Mitsui
Banking Corporation

1,000,000-

1,000,000-

0.430%-

1,000,000-

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

4,000,000--

4,000,000

2,500,000--

2,500,000

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

1,500,000
1,000,000

1,000,000--

1,000,000

500,000--

500,000

500,000
11,000,000--

500,000
11,000,000

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 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.（Note 7）

1,000,000--

1,000,000

1.267%

April 30,
2022

Resona Bank, Limited

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

1,000,000--

1,000,000

0.996%(Note 4)400,000--

400,000

1.254%

Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
Mizuho Bank, Ltd.
Aozora Bank, Ltd.
Resona Bank, Limited
The Mizuho Trust andBanking Co., Limited
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation－26－

0.430%

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

August 7,
2021
August 7,
2023

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

Payment due
date（Note 6）1.254%

August 7,
2023

Use

Remarks(Note 5)

Unsecured/
Unguaranteed(in thousands of yen)
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
Mizuho Bank, Ltd.
Resona Bank, Limited
The Mizuho Trust andBanking Co., LimitedAozora Bank, Ltd.
Development Bank ofJapan Inc.
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）

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, Limited

1,500,000--

1,500,000

0.987%

2,000,000--

2,000,000

1.100%

Sumitomo Mitsui
Banking Corporation
Mitsubishi UFJ Trustand Banking
Corporation（Note 8）
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）Long-term
loans
payableThe Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
Sumitomo Mitsui
Banking Corporation

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

1,000,000--

1,000,000

1.265%

Aozora Bank, Ltd.

300,000--

300,000

0.678%

Resona Bank, Limited

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

1,000,000--

1,000,000

0.660%(Note 4)

July 31,2025

1,500,000-

1,500,000

0.816%(Note 4)

August 31,
2026

The Mizuho Trust andBanking Co., Limited
Sumitomo Mitsui Trust
Bank, Limited
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation
Development Bank ofJapan Inc.
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
Sumitomo Mitsui
Banking Corporation
The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
Mizuho Bank, Ltd.

-

－27－

August 31,
2024
August 31,
2024
August 31,
2025
August 31,
2024

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

Payment due
date（Note 6）Use

Remarks(Note 5)

Unsecured/
Unguaranteed(in thousands of yen)

Long-term
loans
payableAugust 31,
2024
August 31,
2025
August 31,
2025

Aozora Bank, Ltd.

1,000,000--

1,000,000

0.713%

Sumitomo Mitsui Trust
Bank, Limited

1,000,000--

1,000,000

0.797%

Resona Bank, Limited

500,000--

500,000

0.797%

2,000,000--

2,000,000

0.670%(Note 4)

August 31,
2025

500,000--

500,000

0.751%(Note 4)3,000,000--

3,000,000

0.906%

1,000,000--

1,000,000

0.773%(Note 4)

August 31,
2025
August 31,
2026
October 31,
2025

66,800,000¥78,800,000¥1,000,000¥1,000,000

66,800,000¥78,800,000

The Bank ofTokyo-Mitsubishi UFJ,
Ltd.（Note 7）
The Mizuho Trust andBanking Co., Limited
Sumitomo Mitsui
Banking Corporation
Development Bank ofJapan Inc.
Sub total

Total

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

Due after 5 years(in thousands of yen)
Long-term loans payable¥11,000,000¥1,500,000¥5,950,000¥15,150,000¥33,200,000

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 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 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.
Note 7: The Bank of Tokyo-Mitsubishi UFJ, Ltd. changed its corporate name to MUFG Bank, Ltd. on April 1, 2018.
Note 8: Mitsubishi UFJ Trust and Banking Corporation transferred the status of the lender to MUFG Bank, Ltd. on April 16, 2018.

－28－

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

11th Fiscal Period(From February 1, 2017 to July 31, 2017)

I. Retained earnings at the end of period¥2,437,011,775¥2,400,002,851

II. Total distributions¥2,424,772,194¥2,315,507,337

Distributions per unit

¥6,946¥6,633¥12,239,581¥84,495,514

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 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
12th 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¥2,315,507,337, which is the amount of ¥2,315,438,130
in net income and ¥69,207 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
11th 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－29－