(REIT) Financial Report for the Fiscal Period Ended August 2018
REIT Securities Issuer:

XYMAX REIT Investment Corporation

Securities Code:

3488

Representative:

Nobuhito Inatsuki, Executive Director

October 17, 2018
Listing: Tokyo Stock Exchange
https://xymaxreit.co.jp/en/in
URL:
dex.html

Asset Management Company: XYMAX REAL ESTATE INVESTMENT ADVISORS Corporation
Representative:
Nobuhito Inatsuki, Representative Director and President
Contact:
Rie Yamaguchi, Manager of Business Administration Division
TEL: +81‐3‐5544‐6860
Scheduled date for submission of securities report:
Scheduled date for commencement of distribution payment:

November 29, 2018
November 16, 2018

Supplementary materials for financial results:
Financial results briefing session:

Yes
Yes (for institutional investors and analysts)

1.

(Amounts are rounded down to the nearest million yen)
Status of Management and Assets for the Fiscal Period Ended August 2018 (from September 14, 2017 to August 31, 2018)(1) Results of Operations(% figures are the rate of period‐on‐period increase (decrease))
Operating revenue
Operating income
million yen% million yen%
Fiscal period
ended Aug. 2018

‐

1,374

Net income per unit

Fiscal period
ended Aug. 2018
(Note 1)
(Note 2)
(Note 3)(Note 4)897‐

Ordinary income
million yen
%
584

%

583

‐

‐

Ratio ofordinary income tooperating revenue

Ratio ofordinary income tototal assets

Return on equity

Net income
million yen

yen

%

%

%

4,606

2.6

1.6

42.5

At XYMAX REIT Investment Corporation (hereinafter, “XYMAX REIT”), the accounting period for the fiscal period ended August 2018 is aperiod of 352 days from September 14, 2017 to August 31, 2018, but the number of days of the actual asset management period was a periodof 197 days from February 16, 2018.
Net income per unit is calculated by dividing net income by the daily weighted average number of investment units (126,587 units). In
addition, net income per unit when calculated based on the daily weighted average number of investment units with the date ofcommencement of actual management (February 16, 2018) deemed as the beginning of the fiscal period (221,695 units) is 2,630 yen.
Return on equity and ratio of ordinary income to total assets are calculated using the average of equity and average of total assets as ofFebruary 16, 2018, which is the actual asset management commencement date, and as of the end of the fiscal period.
Percentage figures for operating revenue, operating income, ordinary income and net income are the rate of period‐on‐period increase(decrease) but are not applicable for the fiscal period ended August 2018, because it is the first fiscal period.

(2) Distribution
Distribution
per unit(excluding
distribution
in excess ofearnings)
yen

Total
distribution(excluding
distribution
in excess ofearnings)
million yen

2,610

583

Fiscal period
ended Aug. 2018
(Note 1)
(Note 2)Distribution
in excess ofearnings
per unit

Total
distribution
in excess ofearnings

Payout ratio

Ratio ofdistribution to
net assetsyenmillion yen

%

%

0

0

100.0

2.6

Due to issuance of new investment units, payout ratio is calculated by the following formula, rounded to one decimal place:
Payout ratio = Total distribution (excluding distribution in excess of earnings) ÷ Net income × 100
Ratio of distribution to net assets is calculated by the following formula:
Distribution per unit (excluding distribution in excess of earnigs) / [(Net assets per unit at beginning of period + Net assets per unit at end of
period) ÷ 2] × 100(3) Financial Position

Fiscal period
ended Aug. 2018

Total assets
million yen

Net assets
million yen

37,15023,168Equity ratio%

Net assets per unit
yen

62.4

103,710

(4) Cash Flows

Fiscal period
ended Aug. 20182.

Net cashprovided by (used in)operating activities
million yen

Net cashprovided by (used in)investing activities
million yen

Net cashprovided by (used in)financing activities
million yen

Cash andcash equivalents
at end of period
million yen

448

32,299)34,752

2,901

Operating Forecasts for the Fiscal Period Ending February 2019 (from September 1, 2018 to February 28, 2019) andFiscal Period Ending August 2019 (from March 1, 2019 to August 31, 2019)(% figures are the rate of period‐on‐period increase (decrease))

Operating revenue Operating income

Ordinary income

Net income

Distribution
per unit(excluding
distribution
in excess ofearnings)

Distribution
in excess ofearnings
per unit

mn yen% mn yen% mn yen% mn yen%yen
yenFiscal period
1,270
(7.6)
827
(7.8)
776
32.8
775
33.1
3,473
0
ending Feb. 2019
Fiscal period
1,289
1.4
702
(15.1)
657(15.4)
656(15.4)
2,937
0
ending Aug. 2019
(Reference) Forecast net income per unit
(Forecast net income ÷ Forecast total number of investment units issued and outstanding at end of period)
Fiscal period ending February 2019: 3,473 yen
Fiscal period ending August 2019: 2,937 yen(Note)

Distribution per unit is calculated based on the total number of investment units issued and outstanding as of the date of this document of
223,400 units.

* Other(1) Changes in Accounting Policies, Accounting Estimates, and Retrospective Restatements
i. Changes in accounting policies accompanying amendments to accounting standards, etc.:
ii. Changes in accounting policies other than i.:iii. Changes in accounting estimates:
iv. Retrospective restatements:

None
None
None
None

(2) Total number of investment units issued and outstandingi. Total number of investment units issued and outstanding (including treasury investment units) at end of period
Fiscal period ended Aug. 2018
223,400 units
ii. Number of treasury investment units at end of period
Fiscal period ended Aug. 2018
0 units(Note)For the number of investment units serving as the basis for calculation of net income per unit, please see “Notes on Per Unit
Information” on page 20.

* Presentation of Status of Implementation of Audit Procedures
At the time of disclosure of this financial report, the audit procedures for financial statements pursuant to the Financial
Instruments and Exchange Act have not been completed.
* Explanation of Appropriate Use of Operating Forecasts, and Other Matters of Special Note
The operating forecasts and other forward‐looking statements contained in this document are based on information
currently available to and certain assumptions deemed reasonable by XYMAX REIT. Accordingly, the actual results ofoperations, etc. may differ materially due to various factors. In addition, the forecasts are not a guarantee of the amount of
distribution. For the assumptions underlying the operating forecasts, matters of note in the use of the operating forecasts,
etc., please see “Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending February 2019 (fromSeptember 1, 2018 to February 28, 2019) and Fiscal Period Ending August 2019 (from March 1, 2019 to August 31, 2019)”
on page 5. Accordingly, the actual operating revenue, operating income, ordinary income, net income, distribution per unit
and distribution in excess of profit per unit may vary due to changes in the circumstances.

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
Table of Contents
1. Related Parties of the Investment Corporation ................................................................................................................................. 2
2. Management Policy and Management Status .................................................................................................................................... 2(1) Management Policy ....................................................................................................................................................................... 2(2) Management Status ....................................................................................................................................................................... 2(3) Investment Risks ........................................................................................................................................................................... 6
3. Financial Statements ........................................................................................................................................................................... 7(1) Balance Sheet ................................................................................................................................................................................. 7(2) Statement of Income ..................................................................................................................................................................... 9(3) Statement of Unitholders’ Equity ............................................................................................................................................... 10(4) Statement of Cash Distribution .................................................................................................................................................. 10(5) Statement of Cash Flows ............................................................................................................................................................. 11(6) Notes on the Going Concern Assumption .................................................................................................................................. 12(7) Notes on Matters Concerning Significant Accounting Policies ................................................................................................. 12(8) Notes to the Financial Statements .............................................................................................................................................. 13(9) Changes in Total Number of Investment Units Issued and Outstanding ................................................................................. 20
4. Changes in Directors ......................................................................................................................................................................... 20(1) Directors of the Investment Corporation ................................................................................................................................... 20(2) Directors of the Asset Management Company .......................................................................................................................... 20
5. Reference Information ...................................................................................................................................................................... 21(1) Investment Status ........................................................................................................................................................................ 21(2) Investment Assets ....................................................................................................................................................................... 22‐1‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018

1. Related Parties of the Investment Corporation
Disclosure is omitted, because there have not been significant changes to the “Structure of the Investment Corporation” inthe securities registration statement (submitted on January 11, 2018, as amended).

2. Management Policy and Management Status(1) Management Policy
Disclosure is omitted, because there have not been significant changes to “Investment Policy,” “Investment Targets” and“Distribution Policy” in the securities registration statement (submitted on January 11, 2018, as amended).
(2) Management Status(Overview of the Fiscal Period under Review)
I. Brief History of the Investment Corporation
XYMAX REIT was incorporated under the Act on Investment Trusts and Investment Corporations (Act No. 198 of1951, as amended) (hereinafter, the “Investment Trusts Act”) with XYMAX REAL ESTATE INVESTMENT ADVISORS
Corporation (hereinafter, the “Asset Management Company”) as the organizer and investments in capital of 300
million yen (3,000 units) on September 14, 2017, and completed the registration with the Kanto Local Finance
Bureau on October 31, 2017 (Registration No. 131 with the Director‐General of the Kanto Local Finance Bureau).
Later, XYMAX REIT implemented an issuance of new investment units through public offering (209,905 units) with
February 14, 2018 as the payment due date, and listed on the Real Estate Investment Trust Securities Market ofTokyo Stock Exchange, Inc. (hereinafter, “Tokyo Stock Exchange”) on February 15, 2018 (securities code: 3488). In
addition, an issuance of new investment units through third‐party allotment (10,495 units) was implemented on
March 20, 2018.
These resulted in total number of investment units issued and outstanding of 223,400 units as of the last day of the
fiscal period.
XYMAX REIT utilizes the real estate management (Note 1) strengths of the XYMAX Group (Note 2) to conduct
appropriate portfolio management and thereby maximize the value of real estate with the aim of maximizing
unitholder value.
(Note 1) “Real estate management” collectively refers to property management, comprehensive building
maintenance services, and combined property management and comprehensive building maintenanceservices (including cases where contracted with such services in subleasing cases). The same shallapply hereinafter.
(Note 2) “XYMAX Group” refers to the corporate group comprising XYMAX Corporation and its consolidated
subsidiaries and affiliates accounted for using the equity method. The same shall apply hereinafter.
II.

Management Environment
In the fiscal period ended August 2018, the Japanese economy continued to show an expanding trend with real GDP
growth rate increasing by annual rate of 3.0% for the April to June 2018 period despite that for the January to
March 2018 period falling by 0.9%, which was a first negative growth in nine quarters. With robust capital
investment by companies and ongoing favorable employment situation, the Japanese economy is expected toremain solid. Overseas economies also enjoy favorable environment such as the growing economic activities by the
U.S. On the other hand, however, trends of long‐term interest rates under the Bank of Japan’s monetary policy andimpact of trade frictions on economies are considered as risk factors.
Under such domestic economic circumstances, the following movements were seen in the markets of office, retailand hotel in which XYMAX REIT mainly invests.
In the office market, demand for office space expansion is strong against the backdrop of companies’ aggressive
hiring, etc., and vacancies are often absorbed by the existing tenant of the building before they even appear in theleasing market. According to “Office Market Report Tokyo Q2 2018” (Note) announced by XYMAX REAL ESTATE
INSTITUTE Corporation, “Increase and Decrease in Vacant Space” showed the Decrease in Vacant Space exceeding
Increase for the fourteenth consecutive quarter since 1Q 2015, and “Contract Rent DI” marked the thirteenth
consecutive quarter of above‐zero DI since 2Q 2015, suggesting robust rent and occupancy rate.
In the retail market, while sales of some items such as apparel sold by the retailers (tenants) decreased year‐on‐
year, the overall sales increased slightly year‐on‐year as sales of items such as food remained solid.
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XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
In the hotel market, whereas the total number of overnight guests in Japan between January and June this year
decreased slightly year‐on‐year to 237.22 million, the total number of international overnight guests during thesame period increased by 10.7% year‐on‐year to 43.23 million. The number of inbound tourists between January
and August this year exceeded 21.3 million in total (Source: Japan National Tourism Organization, partially
including estimates), and thus accommodation demand is likely to remain solid centering on the needs of foreign
visitors to Japan.
In the real estate transaction market, investment appetite of listed REITs, private REITs, overseas investors anddomestic business corporations including real estate companies is strong, continuing to intensify acquisitioncompetition and keeping transaction prices high.
(Note)For more details of the research findings, please refer to the website of XYMAX Real Estate Institute Corporation(https://soken.xymax.co.jp/)

III. Management Status
The 12 properties in the portfolio as of the last day of the fiscal period were acquired for 33,040 million yen in total
on February 16, 2018. Accordingly, the actual asset management period during the fiscal period was 197 days.
Furthermore, as of the last day of the fiscal period, the 12 properties in the portfolio had a total leasable area of
72,701.04m2, total leased area of 71,959.01m2 and occupancy rate of 99.0%.
IV. Financing Status(Equity Financing)In the fiscal period, 21,224 million yen was procured from capital increase through public offering with February
14, 2018 as the payment due date and 1,061 million yen was procured from capital increase through third‐party
allotment with March 20, 2018 as the payment due date. As a result, as of the last day of the fiscal period,
unitholders’ capital was 22,585 million yen.
(Debt Financing)In the fiscal period, through a loan syndicate with Mizuho Bank, Ltd. as the arranger, funds totaling 13,320 million
yen were borrowed from Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, The Bank of Tokyo‐Mitsubishi
UFJ, Ltd. (now, MUFG Bank, Ltd.), The Nishi‐Nippon City Bank, Ltd., The Bank of Fukuoka, Ltd., Resona Bank,
Limited, The Hiroshima Bank, Ltd., The Hokkaido Bank, Ltd., Shinsei Bank, Limited, Aozora Bank, Ltd., The Chiba
Bank, Ltd., The Higo Bank, Ltd. and Fukoku Mutual Life Insurance Company on February 16, 2018. On the other
hand, prepayment of 1,060 million yen was made using the proceeds from the above‐mentioned third‐party
allotment.
As a result, as of the last day of the fiscal period, the balance of loans outstanding was 12,260 million yen.
V.

Overview of Business Performance
Business performance in the fiscal period resulted in operating revenue of 1,374 million yen, operating income of
897 million yen, ordinary income of 584 million yen and net income of 583 million yen.
Concerning distribution for the fiscal period, pursuant to the distribution policy provided in XYMAX REIT’s Articles
of Incorporation, the decision was made to distribute unappropriated retained earnings in the amount of
583,074,000 yen, which is the largest integral multiple of the total number of investment units issued andoutstanding (223,400 units) by application of special provisions for taxation on investment corporations (Article
67‐15 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended)). This resulted in
distribution per unit of 2,610 yen.

(Outlook for the Next Fiscal Period)
I. General Management Outlook(A) External Growth Strategy
Capture wide range of real estate disposition needs through real estate management customer base
XYMAX REIT captures real estate disposition needs from the customer base of the XYMAX Group based on asponsor support agreement with sponsor XYMAX Corporation with the aim to lead such needs to property
acquisition opportunities for XYMAX REIT.

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XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
(B) Internal Growth Strategy
Utilization of the real estate management insight and know‐how and network of the XYMAX GroupThrough the sponsor support agreement with XYMAX Group, XYMAX REIT is provided with various real estate
management insight, know‐how, databases, management systems, private fund management experience, etc. On
this basis, XYMAX REIT can and will perform stable and efficient management.
(C) Financial Strategy
Financial management with emphasis on stability and soundness, and LTV ratio control
XYMAX REIT shall execute a financial strategy that places emphasis on stability and soundness and secure agility infund procurement, taking into consideration the securing of stable revenue over the medium to long term, steady
growth in size of assets under management and stability of management.
II.

Significant Subsequent Events
Not applicable.

III. Operating Forecasts
XYMAX REIT’s operating forecasts for the fiscal period ending February 2019 (from September 1, 2018 to February
28, 2019) and fiscal period ending August 2019 (from March 1, 2019 to August 31, 2019) are as follows:
Distribution
Distribution
per unit
in excess of(excluding
OperatingOperating
Ordinary
Net income
profitdistribution
revenueincomeincomeper unit
in excess of
profit)million yen
million yen
million yen
million yen
yenyen
Fiscal period
1,270
827
776
775
3,473
0
ending Feb. 2019
Fiscal period
1,289
702
657
656
2,937
0
ending Aug. 2019
Furthermore, for the assumptions underlying the operating forecasts, please refer to “Assumptions Underlying the
Operating Forecasts for the Fiscal Period Ending February 2019 (from September 1, 2018 to February 28, 2019)
and Fiscal Period Ending August 2019 (from March 1, 2019 to August 31, 2019)” presented later in this document.
(Note)

The forecast figures above are the current forecast figures calculated under certain assumptions. Accordingly, the actual operating
revenue, operating income, ordinary income, net income, distribution per unit and distribution in excess of earnings per unit mayvary due to changes in the circumstances. In addition, the forecasts are not a guarantee of the amount of distribution.

‐4‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending February 2019 (from September 1, 2018 to
February 28, 2019) and Fiscal Period Ending August 2019 (from March 1, 2019 to August 31, 2019)
Item
Accounting
periodAssets undermanagement

Operatingrevenue

Assumption
 Fiscal period ending February 2019 (2nd fiscal period)(from September 1, 2018 to February 28, 2019) (181 days)
 Fiscal period ending August 2019 (3rd fiscal period)(from March 1, 2019 to August 31, 2019) (184 days) The assumption is that the real estate trust beneficiary rights held by XYMAX REIT as of today (totalof 12 properties) (hereinafter, the “current portfolio assets”) will continue to be held and there will beno acquisition of new properties other than the current portfolio assets through to the end of the
fiscal period ending August 2019 (3rd fiscal period).
 Change may arise due to acquisition of new properties other than the current portfolio assets,
disposition of the current portfolio assets, etc.
 Operating revenue from leasing is calculated on the basis of various factors, such as the content oflease agreements entered into for the current portfolio assets and past tenant and market trends, andby taking into account various factors, such as the assumed occupancy rate and rent fluctuation
projections based on tenant move‐in/move‐out and rent level projections.
 Variable rent is calculated on the basis of mainly the forecast operating figures submitted by theoperator and based on the method of calculation provided in the lease agreement.
[Hotel Vista Sendai]
Fixed rent:Monthly amount of 20.0 million yen
Variable rent: (i) From contract commencement to August 2018: None(ii) From September 2018 to February 2019: Monthly amount of 4.7 million yen(iii)From March 2019: The monthly variable rent shall be the amount equal to the total
variable rent received by the lessee from the sublessee (hereinafter, “variable rent
from subtenant” (Note)) in the past 12 months, including said month, divided by 12(Note)

Operatingexpenses“Variable rent from subtenant” refers to the amount calculated by multiplying gross sales from the hotel
operations of the sublessee by a certain percentage. Actual effective percentage is not disclosed, because
consent for disclosure has not been obtained from the sublessee.

Fiscal period
Fiscal period
ending Aug. 2019
ending Feb. 2019
(3rd fiscal period)(2nd fiscal period)
Variable rent
28 million yen
30 million yen
The assumption is that there will be no delinquent or unpaid rent by tenants and no gain (loss) on
sales of real estate properties.
Of operating expenses, the main components are as follows (rounded down to the nearest specified
unit; the same shall apply hereinafter):
Fiscal period
Fiscal period
ending Aug. 2019
ending Feb. 2019
(3rd fiscal period)(2nd fiscal period)
322 million yen
465 million yen
Expenses related to rent business [Total]
80 million yen
81 million yen
Management fee
35 million yen
35 million yen
Repair expenses
134 million yen
Property taxes
0 million yen
119 million yen
123 million yen
Depreciation
120 million yen
121 million yen
Other than expenses related to rent business [Total]
79 million yen
76 million yen
Asset management fee
Expenses related to rent business, which are the main operating expenses, are calculated on the basisof historical data at XYMAX REIT (historical data disclosed by the previous owner, etc. in the case of
periods for which there is no historical data at XYMAX REIT) and by taking into consideration factors
causing fluctuation in expenses.
Depreciation is calculated using the straight‐line method inclusive of incidental expenses, etc.
In general, fixed property tax, city planning tax, etc. are calculated on a pro rata basis and reimbursed
at the time of acquisition with the current owner upon transactions of real estate, etc. At XYMAX REIT,
the amount equivalent to the reimbursement is included in the cost of acquisition and thus not
expensed in the period of acquisition. In addition, the due date for assessment and determination of
the fiscal 2019 fixed property tax, city planning tax, etc. is after April 2019 and the tax amountcorresponding to the accounting period up to the fiscal period ending February 2019 (2nd fiscal
period) is thus not expensed. Therefore, in the case of the current portfolio assets, there is noexpensing in the fiscal period ending February 2019 (2nd fiscal period). In addition, fixed property
tax, city planning tax, etc. to be expensed in the fiscal period ending August 2019 (3rd fiscal period) is
expected to be 134 million yen.
Repair expenses are the amount necessary in each fiscal period as assumed on a property‐by‐property basis by the Asset Management Company. However, repair expenses possibly increasing inamount or additionally arising from unforeseeable factors, the amount generally tending to varymaterially from fiscal year to fiscal year and not being an amount that arises periodically, etc. may
result in repair expenses for each fiscal period differing materially from the forecast amount.
‐5‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018

Non‐operating
expenses

Interest‐bearing
liabilities

Investment units

Distribution
per unit(excluding
distribution
in excess ofearnings)
Distribution
in excess of profit
per unit For the fiscal period ending February 2019 (2nd fiscal period), interest expenses and other borrowing
related expenses are assumed to be 50 million yen.
 For the fiscal period ending August 2019 (3rd fiscal period), interest expenses and other borrowing
related expenses are assumed to be 45 million yen.
 The assumption is that total interest‐bearing liabilities will be 11,680 million yen at the end of the
fiscal period ending February 2019 (2nd fiscal period) and 11,680 million yen at the end of the fiscal
period ending August 2019 (3rd fiscal period).
 There are interest‐bearing liabilities of 12,260 million yen as of the last day of the fiscal period ended
August 2018 (1st fiscal period), but with refund of consumption taxes corresponding to the fiscal
period ended August 2018 (1st fiscal period) scheduled to take place during the fiscal period ending
February 2019 (2nd fiscal period), the assumption is that the concerned refund, etc. will be used as
the source of funds to repay a portion of the loans (580 million yen) during the fiscal period ending
February 2019 (2nd fiscal period).
 LTV ratio is expected to be 31.9% at the end of the fiscal period ending February 2019 (2nd fiscal
period) and 32.0% at the end of the fiscal period ending August 2019 (3rd fiscal period). In addition,
the following formula is used in the calculation of LTV ratio.
LTV ratio = Total interest‐bearing liabilities ÷ Total assets × 100
 The assumption is the total number of investment units issued and outstanding as of today of 223,400
units and that there will be no change in the number of investment units due to issuance of new
investment units, etc. through to the end of the fiscal period ending August 2019 (3rd fiscal period).
 Distribution per unit (excluding distribution in excess of earnings) and distribution in excess ofearnings per unit are calculated on the basis of the forecast total number of investment units issued
and outstanding at the end of the fiscal period ending February 2019 (2nd fiscal period) and fiscal
period ending August 2019 (3rd fiscal period) of 223,400 units.
 Distribution per unit (excluding distribution in excess of earnings) is calculated based on theassumption that distribution will be in accordance with the cash distribution policy provided in
XYMAX REIT’s Articles of Incorporation.
 Distribution per unit (excluding distribution in excess of earnings) may vary due to various factors,
such as fluctuation in rent revenue accompanying change in assets under management, change intenants, etc. or incurrence of unexpected repairs.
 No cash distribution in excess of earnings (distribution in excess of earnings per unit) is scheduled tobe made at this point in time.

 The assumption is that there will be no revision of laws and regulations, tax systems, accounting
Otherstandards, listing regulations provided by Tokyo Stock Exchange, rules provided by The Investment
Trusts Association, Japan, etc. that will impact the forecast figures above.
 The assumption is that there will be no unforeseen material change in general economic trends, realestate market conditions, etc.

(3) Investment Risks
Disclosure is omitted, because there is no significant change from “Investment Risks” in the securities registration
statement (submitted on January 11, 2018, as amended).

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XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018

3. Financial Statements(1) Balance Sheet(Unit: thousand yen)
1st fiscal period(As of Aug. 31, 2018)
AssetsCurrent assets
Cash and bank deposits
Cash and bank deposits in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Deferred tax assets
Other
Total current assets
Non‐current assets
Property, plant and equipment
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures 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
Investments and other assets
Long‐term prepaid expenses
Lease and guarantee deposits
Other
Total investments and other assets
Total non‐current assets
Total assets

943,567
1,958,065
19,92832,703572,37028
2,077
3,528,741

108,551(15,114)93,436
8,881,351(107,658)
8,773,693
45,459(824)
44,635
4,047
(233)
3,814
24,606,271
33,521,850
43,50422,60033,507
99,611
33,621,462
37,150,203‐7‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018

(Unit: thousand yen)
1st fiscal period(As of Aug. 31, 2018)
Liabilities
Current liabilities
Operating accounts payable
Short‐term loans payable
Accounts payable ‐ other
Income taxes payable
Advances received
Other
Total current liabilities
Non‐current liabilities
Long‐term loans payable
Tenant leasehold and security deposits in trust
Total non‐current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets‐8‐

201,1312,916,000
106,382
1,687
181,4422,540
3,409,184
9,344,000
1,228,116
10,572,116
13,981,301

22,585,746
583,155
583,155
23,168,901*1 23,168,901
37,150,203

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018(2) Statement of Income(Unit: thousand yen)
1st fiscal period
From: Sept. 14, 2017
To: Aug. 31, 2018
Operating revenue
Lease business revenue
Other lease business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Other operating expenses
Total operating expenses
Operating income
Non‐operating income
Interest income
Total non‐operating income
Non‐operating expenses
Interest expenses
Borrowing related expenses
Investment unit issuance expenses
Deferred organization expenses
Business commencement expenses
Total non‐operating expenses
Ordinary income
Income before income taxes
Income taxes ‐ current
Income taxes ‐ deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)*1 1,268,583*1 106,260
1,374,843*1 352,220
85,797882
12,0404,800
21,588477,330
897,51216
16
32,979102,607
93,42372,045
11,654
312,710584,818584,818
1,690
(28)
1,662
583,155‐
583,155‐9‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018(3) Statement of Unitholders’ Equity
1st fiscal period (from September 14, 2017 to August 31, 2018)(Unit: thousand yen)

Unitholders’ equity
Surplus
Unitholders’ capital

Unappropriatedretained earnings(undisposed loss)‐‐

Balance as of
September 14, 2017
Changes of items
during period
Issuance of new
investment units‐

22,585,746

*1

‐

‐

22,585,746

22,585,746

583,155

583,155

583,155

22,585,746

583,155

583,155

23,168,901

23,168,901

22,585,746

583,155

583,155

23,168,901

23,168,901(4) Statement of Cash Distribution
Classification

1st fiscal period
From: Sept. 14, 2017
To: Aug. 31, 2018583,155,819 yen
583,074,000 yen[2,610 yen]
81,819 yen

I.
II.

Unappropriated retained earnings
Amount of distribution[Amount of distribution per unit]
III. Retained earnings carried forward
Method of calculation ofamount of distribution

Total
net assets

583,155

Net income
Total changes
during period
Balance as ofAugust 31, 2018

Total
unitholders’ equity

Total
surplusPursuant to the cash distribution policy
stipulated in Article 35, Paragraph 1 of
XYMAX REIT’s Articles of Incorporation,amount of distribution must be equal orless than the amount of profit andexceed 90% of XYMAX REIT’s
distributable profit that is defined by
Article 67‐15 of the Act on Special
Measures Concerning Taxation. Basedon this policy, XYMAX REIT has decided
to distribute 583,074,000 yen, which is
the maximum value of the integral
multiple of the total number of units
issued and outstanding (223,400 units),
not exceeding unappropriated retained
earnings.
XYMAX
REIT
does
not
make
distribution in excess of earnings
defined by Article 35, Paragraph 2 of
XYMAX REIT’s Articles of Incorporation.

‐ 10 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018(5) Statement of Cash Flows(Unit: thousand yen)
1st fiscal period
From: Sept. 14, 2017
To: Aug. 31, 2018
Cash flows from operating activities
Income before income taxes
Depreciation
Investment unit issuance expenses
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 advances received
Decrease (increase) in long‐term prepaid expenses
Other584,818
123,830
93,423(16)
32,979(19,928)(572,370)(32,703)61,608106,382
181,442(43,504)(34,774)

Subtotal

481,187

Interest income received
Interest expenses paid
Income taxes paid

16
(32,815)(2)

Net cash provided by (used in) operating activities

448,384

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Repayments of tenant leasehold and security deposits in trust
Proceeds from tenant leasehold and security deposits in trust
Payments for lease and guarantee deposits
Net cash provided by (used in) investing activities(108,288)(33,397,869)(7,120)1,236,803(22,600)(32,299,074)

Cash flows from financing activities
Increase in short‐term loans payable
Decrease in short‐term loans payable
Proceeds from long‐term loans payable
Proceeds from issuance of investment units

3,976,000(1,060,000)
9,344,000
22,492,322

Net cash provided by (used in) financing activities

34,752,322

Net increase (decrease) in cash and cash equivalents

2,901,632

Cash and cash equivalents at beginning of period‐

Cash and cash equivalents at end of period*1 2,901,632‐ 11 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1.

Method of depreciation (1) Property, plant and equipment (including trust assets)of non‐current assets
The straight‐line method is adopted.
Furthermore, the useful life of core property, plant and equipment is as follows:
Buildings
3–63 years
Structures
13–51 years
Tools, furniture and fixtures
2–13 years(2) Long‐term prepaid expenses
The straight‐line method is adopted.

2.

Accounting fordeferred assets(1) Deferred organization expenses
The entire amount is expensed as incurred.
(2) Business commencement expenses
The entire amount is expensed as incurred.
(3) Investment unit issuance expenses
The entire amount is expensed as incurred.

3.

Standards forrevenue and expense
recognition

Accounting for fixed property tax, etc.
For fixed property tax, city planning tax, depreciable property tax, etc. on real estate or

4.

Method ofhedge accounting(1) Hedge accounting approach
Special accounting is adopted for interest rate swaps that meet the requirements
for special treatment.
(2) Hedging instruments and hedged items
Hedging instruments: Interest rate swap transaction
Hedged items:
Interest on loans(3) Hedging policy
XYMAX REIT conducts derivative transactions for the purpose of hedging the risks
provided in its Articles of Incorporation based on its risk management policy.
(4) Method of assessing the effectiveness of hedging
The assessment of the effectiveness is omitted for interest rate swaps that meet therequirements for special treatment.

5.

Scope of funds in the
The funds (cash and cash equivalents) in the statement of cash flows comprise cash onstatement of cash flows hand and cash in trust, demand deposits and bank deposits in trust, and short‐term
investments with a maturity of 3 months or less from the date of acquisition that arereadily convertible to cash and that are subject to a low risk of changes in value.

trust beneficiary rights that have real estate as trust assets held, the accounting is that,of the tax amount assessed and determined, the amount corresponding to the fiscal
period is expensed as expenses related to rent business.
Furthermore, the amount equivalent to fixed property tax, etc. in the initial fiscal year
borne by XYMAX REIT upon acquisition of real estate or trust beneficiary rights thathave real estate as trust assets is not recognized as expenses but included in the cost of
acquisition of the concerned real estate, etc. In the fiscal period, the amount equivalent
to fixed property tax, etc. included in the cost of acquisition of real estate, etc. was 233
million yen.

‐ 12 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
6.

Other significant(1) Accounting for trust beneficiary rights that have real estate, etc. as trust assets
matters serving as theConcerning trust beneficiary rights that have real estate, etc. as trust assets held, allbasis for preparation of
accounts of assets and liabilities within trust assets and all accounts of revenue andexpenses from the trust assets are recognized in the relevant account item of thethe financialbalance sheet and the statement of income.
statements
Furthermore, the following material items of the trust assets recognized in therelevant account item are separately listed on the balance sheet.
(i) Cash and bank deposits in trust(ii) Buildings in trust; Structures in trust; Tools, furniture and fixtures in trust;Land in trust(iii) Tenant leasehold and security deposits in trust(2) Accounting for consumption tax, etc.
The accounting for consumption tax and local consumption tax is that the taxes are
excluded from transaction amounts. Furthermore, non‐deductible consumption tax,
etc. on acquisition of assets is included in the cost of acquisition of each asset.
(8) Notes to the Financial Statements[Notes to the Balance Sheet]*1. Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts and Investment
Corporations
1st fiscal period(As of Aug. 31, 2018)
50,000 thousand yen[Notes to the Statement of Income]*1. Breakdown of operating income (loss) from real estate leasing(Unit: thousand yen)
1st fiscal period
From: Sept. 14, 2017
To: Aug. 31, 2018
A. Operating revenue from real estate leasing
Lease business revenue
Rent revenue
Common area maintenance revenue

1,100,548
168,035

Other lease business revenue
Utility reimbursement
Parking revenue
Other rental revenue

69,75928,147
8,353

Total operating revenue from real estate leasing
B. Operating expenses from real estate leasing
Expenses related to rent business
Maintenance fee
Utility expenses
Repair expenses
Insurance premium
Depreciation
Other expenses related to rent business

1,268,583

106,260
1,374,843

89,05971,06535,8504,034
123,830
28,379352,220

Total operating expenses from real estate leasing

352,220

C. Operating income (loss) from real estate leasing [A‐B]

1,022,622‐ 13 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
[Notes to the Statement of Unitholders’ Equity]*1. Total number of investment units authorized and total number of investment units issued and outstanding
1st fiscal period
From: Sept. 14, 2017
To: Aug. 31, 2018
Total number of investment units authorized

5,000,000 units

Total number of investment units issued and outstanding

223,400 units[Notes to the Statement of Cash Flows]*1. Reconciliation of cash and cash equivalents at end of period to the amount of balance sheet items(Unit: thousand yen)
1st fiscal period
From: Sept. 14, 2017
To: Aug. 31, 2018
Cash and bank deposits
Cash and bank deposits in trust

943,567
1,958,065

Cash and cash equivalents

2,901,632[Notes on Lease Transactions]Not applicable.
[Notes on Financial Instruments]
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
XYMAX REIT shall procure funds for acquisition of assets, repayment of liabilities, etc. through issuance ofinvestment units, borrowing from financial institutions, issuance of investment corporation bonds, etc. Dueconsideration shall be given to the balance between agility in fund procurement and financial stability when
procuring funds.
Surplus funds may be invested in securities and monetary claims, but shall be invested as bank deposits as a rulein consideration of security.
Derivative transactions may be utilized only if for the purpose of hedging the risk of fluctuation in interest rates,
etc., but no speculative transactions shall be conducted.
(2) Description of financial instruments and associated risks, and risk management system
Deposits are those for investing XYMAX REIT’s surplus funds and are exposed to credit risk, such as failure of thedepository financial institutions, but the credit risk is limited by limiting the deposit period to short term andtransacting with depository financial institutions that have high credit rating.
Loans are those for mainly the purpose of acquisition of real estate, etc., repayment of liabilities, etc. and are
exposed to the liquidity risk of not being able to procure substitute funds upon maturity, but the liquidity risk is
mitigated through diversification of fund procurement means and sources, staggering of maturities and securingliquidity on hand and the liquidity risk is also managed by preparing monthly fund management plans and othermeans. In addition, loans with floating interest rates are exposed to the risk of rise in interest rates payable, but
the impact of the rise in market interest rates on XYMAX REIT’s operations is limited by keeping the ratio ofinterest‐bearing liabilities to total assets at a low level and maintaining a balance between the ratio of loans withfloating interest rates and the ratio of loans with fixed interest rates.
Derivative transactions are utilized for the purpose of hedging the risk of fluctuation in interest rates payable on
certain loans. For the hedge accounting approach, hedged items, contract amount, etc., please refer to “2. Mattersconcerning fair value, etc. of financial instruments.”
Tenant leasehold and security deposits are deposits from tenants and are exposed to liquidity risk from tenants
vacating, but the risk is limited by retaining an amount in the range that will not hinder the return of deposits asa rule.

‐ 14 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
The fair value of financial instruments is values based on market price, but may otherwise include values basedon reasonable calculation when no market price is available. Variable factors are taken into account in thecalculation of the concerned values. Accordingly, the concerned values may vary when different assumptions are
adopted. In addition, the contract amount, etc. of derivative transactions in “2. Matters concerning fair value, etc.
of financial instruments” do not itself represent the market risk involved in the derivative transactions.
2.

Matters concerning fair value, etc. of financial instruments

The following are the carrying amount and fair value as of August 31, 2018, and the amount of difference between
these. Financial instruments for which estimation of fair value is recognized to be extremely difficult are not includedin the following table. (Please refer to Note 2 below.)
Carrying amount(thousand yen)

Fair value(thousand yen)Amount of difference(thousand yen)

943,567
1,958,065

943,567
1,958,065‐‐

2,901,632

2,901,632‐

2,916,000
9,344,000

2,916,000
9,399,880‐
55,88012,260,000

12,315,880

55,880‐‐‐(1) Cash and bank deposits(2) Cash and bank deposits in trust
Total assets(1) Short‐term loans payable(2) Long‐term loans payable
Total liabilities
Derivative transactions(Note 1) Method of calculation of the fair value of financial instruments and matters concerning derivative transactions
Assets(1) Cash and bank deposits; (2) Cash and bank deposits in trust
Because these are settled in a short period of time, the fair value is approximately the same as the book value andthus stated at that book value.
Liabilities(1) Short‐term loans payable
Because these are settled in a short period of time and have floating interest rates, the fair value is approximately thesame as the book value and thus stated at that book value.
(2) Long‐term loans payable
Of long‐term loans payable, because those with floating interest rates reflect market interest rates in a short period oftime, the fair value is thought to resemble the book value and thus stated at that book value. However, in the case oflong‐term loans payable with floating interest rates that qualify for special treatment for interest rate swaps (pleaserefer to “Notes on Derivative Transactions” presented later in this document) and long‐term loans payable with fixedinterest rates, the fair value is calculated based on the present value of their future cash flows discounted by the time
to maturity and rate adjusted for credit risks.
Derivative transactions
Please refer to “Notes on Derivative Transactions” below(Note 2) Financial instruments for which estimation of fair value is recognized to be extremely difficult
1st fiscal period(As of Aug. 31, 2018)
Tenant leasehold and security deposits in trust

1,228,116 thousand yen* Tenant leasehold and security deposits in trust are not subject to disclosure of fair value, because there being no market price and, even if thelease contract period has been set, there being the possibility of contract cancellation before expiration or contract extension or renewal
make calculating the actual deposit period impossible and reasonable projection of future cash flows is thus recognized to be extremely
difficult.

(Note 3) Amount of redemption of monetary claims scheduled to be due after the end of the fiscal period (August 31, 2018)(Unit: thousand yen)
Due within
1 yearDue after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years

943,567

‐

‐

‐

‐

‐

Cash and bank deposits in trust

1,958,065

‐

‐

‐

‐

‐

Total

2,901,632

‐

‐

‐

‐

‐

Cash and bank deposits‐ 15 ‐

Due after
5 years

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018

(Note 4) Amount of repayment of loans scheduled to be due after the end of the fiscal period (August 31, 2018)(Unit: thousand yen)
Due within
1 yearDue after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years

Short‐term loans payable

2,916,000

‐

‐

‐

‐

‐

Long‐term loans payable‐

2,336,000

2,336,000

2,336,000

2,336,000‐

2,916,000

2,336,000

2,336,000

2,336,000

2,336,000

‐

Total

Due after
5 years[Notes on Securities]
Not applicable.
［Notes on Derivative Transactions］
1. Derivative transactions to which hedge accounting is not applied
Not applicable.
2. Derivative transactions to which hedge accounting is applied
1st fiscal period (as of August 31, 2018)
The following is the contract amount or the amount equivalent to the principal provided in the contract, etc. at theend of the fiscal period for each hedge accounting approach.
(Unit: thousand yen)
Hedge accounting
approach

Type, etc. of
derivative transactionMainhedgeditem

Special treatmentforinterest rate swaps

Interest rate swap
transaction(receive floating; pay fixed)

Long‐term
loans
payableContract amount, etc. (Note 1)(Note 1)

Contract amount, etc. is based on notional principal.

(Note 2)

Fair value is calculated based on the price quoted by financial institutions.

[Notes on Retirement Benefits]
Not applicable.

‐ 16 ‐Of which,due after 1 year
2,336,000

2,336,000

Fair value(Note 2)

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
[Notes on Tax‐Effect Accounting]
1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities(Unit: thousand yen)
1st fiscal period
As of Aug. 31, 2018
Deferred tax assets
Non‐deductible accrued enterprise tax

28

Total

28

Deferred tax assets, net
2.

28

Breakdown of major components that caused any significant differences between the statutory tax rate and theeffective income tax rate after application of tax‐effect accounting(Unit: %)1st fiscal period
As of Aug. 31, 2018
Statutory tax rate
[Adjustments]
Deductible distribution payable
Other

31.74
(31.65)0.19
0.28

Effective income tax rate after application of tax‐effect accounting[Notes on Share of Income of Entities Accounted for Using Equity Method, Etc.]
Not applicable.
[Notes on Related‐Party Transactions]
1. Parent company, major corporate unitholder, etc.
1st fiscal period (from September 14, 2017 to August 31, 2018)

Attribute

Name ofcompany, etc.

Parentcompany

XYMAX
Corporation(Note 3)

Location

Minato‐ku,
Tokyo

Capital stock
Percentage of Description of relationshipTransaction
orDescription of voting rights,
amountinvestments
business
etc.
Description ofConcurrent(thousandin capitalorheld by (in)holding of Description of transaction
yen)(thousandoccupation XYMAX REIT positions, etc. relationship(Note 2)(%)yen)
by directors

2,612,865

Generalreal estateservices‐

100.0

Parentcompany

Acceptance ofcapital(Incorporation throughprivateplacement)

300,000

Account item

Balanceat end ofperiod(thousandyen)(Note 2)‐‐

(Note 1) The above discloses a related‐party transaction which includes a material transaction, among related‐party
transactions subject to disclosure.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period
includes consumption tax, etc.
(Note 3) XYMAX Corporation fell under the category of parent company with 100.0% voting rights held in XYMAX REIT at thetime of the transaction, but an issuance of new investment units through public offering resulted in the voting rights
becoming 5.59% and thus no longer falls under the category of parent company as of the last day of the fiscal period.
Accordingly, percentage of voting rights, etc. held in XYMAX REIT and transaction amount are the percentage andamount for the period when it was a parent company, while balance at end of period is the balance at the point intime when it no longer falls under the category of parent company.
2. Affiliated company, etc.
1st fiscal period (from September 14, 2017 to August 31, 2018)
Not applicable.

‐ 17 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
3. Fellow subsidiary, etc.
1st fiscal period (from September 14, 2017 to August 31, 2018)
Capital stockor
Attribute

Name ofcompany, etc.

investments
Locationin capital(thousandyen)

Percentage of Description of relationshipbusiness

etc.

Concurrent

Description oforheld by (in)holding of

Description of transaction

occupation

XYMAX REIT positions, etc. relationship(%)
by directors

XYMAX
Subsidiary REAL ESTATEof parent

INVESTMENT

company

ADVISORS

Minato‐ku,
TokyoConcurrent

Real estate
200,000

investment‐

management

Corporation

Outsourcing

holding ofof asset

positionsmanagement

by directors

services

Balance

Transaction

Description of voting rights,

at end ofamount(thousandAccount itemyen)

period(thousandyen)(Note 2)

(Note 2)

Organizer
fee

50,000‐‐(Note 3)(Note 1) The above discloses a related‐party transaction which includes a material transaction, among related‐party
transactions subject to disclosure.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period
includes consumption tax, etc.
(Note 3) As stated in Note 3 of “1. Parent company, major corporate unitholder, etc.,” XYMAX Corporation no longer falls under
the category of parent company of XYMAX REIT. Consequently, XYMAX REAL ESTATE INVESTMENT ADVISORS
Corporation, too, no longer falls under the category of fellow subsidiary, etc. Accordingly, transaction amount
pertaining to organizer fee is the amount for the period when it was a fellow subsidiary, etc.
(Note 4) The amount of organizer fee is based on the terms and conditions provided in XYMAX REIT’s Articles of Incorporation.
4. Director, major individual unitholder, etc.
1st fiscal period (from September 14, 2017 to August 31, 2018)
Percentage of Description of relationship

Capital stockor
Attribute

Name ofcompany, etc.

Location

investments

businessetc.

in capitalorheld by (in)(thousandoccupationyen)

Balance

Transaction

Description of voting rights,
Concurrent

Description ofholding of

Description of transaction

XYMAX REIT positions, etc. relationship(%)
by directors

at end ofamount(thousandAccount itemyen)

period(thousandyen)(Note 2)

(Note 2)

Executive
Director of

Organizer

XYMAX REIT,

Executive Director ofand

XYMAX REIT, andRepresentative

Director

Nobuhito
Inatsuki‐‐

Director andPresident of
XYMAX
REAL ESTATE

fee

50,000‐‐(Note 3)

Representative Director andPresident of‐

XYMAX REAL ESTATEAsset

INVESTMENT ADVISORS

management

Corporation

fee

INVESTMENT(Note 3)ADVISORS

Accounts
250,997

payable ‐92,661other(Note 4)

Corporation(Note 1) The above discloses a related‐party transaction which includes a material transaction, among related‐party
transactions subject to disclosure.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period
includes consumption tax, etc.
(Note 3) The amount of organizer fee and asset management fee is for transactions conducted by Nobuhito Inatsuki as
representative of XYMAX REAL ESTATE INVESTMENT ADVISORS Corporation, and transaction amount is based on
the terms and conditions provided in XYMAX REIT’s Articles of Incorporation.
(Note 4) Asset management fee includes the portion of the fee for property acquisition included in the book value of individual
real estate (165,200 thousand yen).
(Note 5) Transaction terms and conditions are decided based on the actual market situation.

‐ 18 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
[Notes on Asset Retirement Obligations]Not applicable.
[Notes on Segment Information, Etc.]
1. Segment information
Segment information is omitted, because XYMAX REIT has a single segment, which is the real estate leasing business.
2. Related information
1st fiscal period (from September 14, 2017 to August 31, 2018)(1) Information by product and service
Information by product and service is omitted, because operating revenue to external customers for a single
products and services category is in excess of 90% of operating revenue on the statement of income.
(2) Information by geographic area(i) Operating revenue
Information by geographic area of operating revenue is omitted, because operating revenue to externalcustomers in Japan is in excess of 90% of operating revenue on the statement of income.
(ii) Property, plant and equipment
Information by geographic area of property, plant and equipment is omitted, because the amount ofproperty, plant and equipment located in Japan is in excess of 90% of the amount of property, plant andequipment on the balance sheet.
(3) Information by major customer(Unit: thousand yen)
Name of customer

Operating revenue

New Urban Life Holdings Inc.

Not disclosed (Note)XYMAX Corporation(Note)

Related segment
Real estate leasing business

154,778

Real estate leasing businessNot disclosed due to unavoidable circumstances in that consent for disclosure has not been obtained from the lessee.

[Notes on Investment and Rental Properties]XYMAX REIT owns office, retail, hotel, residential and other properties for the purpose of earning revenue fromleasing. The carrying amount, amount of increase (decrease) during period and fair value of these investment andrental properties are as follows:(Unit: thousand yen)
1st fiscal period
From: Sept. 14, 2017
To: Aug. 31, 2018
Carrying amount

33,521,850

Balance at beginning of period‐

Amount of increase (decrease) during period

33,521,850

Balance at end of period

33,521,850

Fair value at end of period

41,824,000(Note 1)

Carrying amount is the amount of cost of acquisition, less accumulated depreciation.

(Note 2)Of the amount of increase (decrease) during period, the amount of increase is mainly attributable to acquisition of real estate
trust beneficiary rights of 12 properties (33,603,535 thousand yen), while the amount of decrease is mainly attributable todepreciation (123,830 thousand yen).

(Note 3)

Fair value at end of period is the appraisal value by an outside real estate appraiser. The date of value is August 31, 2018.

The income (loss) concerning investment and rental properties is presented in “Notes to the Statement of Income.”‐ 19 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
[Notes on Per Unit Information]
1st fiscal period
From: Sept. 14, 2017
To: Aug. 31, 2018
Net assets per unit

103,710 yen

Net income per unit

4,606 yen
(2,630 yen)

(Note 1)

Net income per unit is calculated by dividing net income by the period’s daily weighted average number of investment units(126,587 units). And 2,630yen is calculated using daily weighted average number of investment units of 221,695 units assuming
February 16,2018 as the 1st day of the period.

(Note 2)

In addition, diluted net income per unit is not stated, because there are no diluted investment units.
The basis for calculation of net income per unit is as follows:

1st fiscal period
From: Sept. 14, 2017
To: Aug. 31, 2018
Net income (thousand yen)

583,155

Amount not attributable to common unitholders (thousand yen)‐

Net income attributable to common investment units (thousand yen)

583,155

Average number of investment units during period (units)

126,587[Notes on Significant Subsequent Events]
Not applicable.
(9) Changes in Total Number of Investment Units Issued and Outstanding
Changes in unitholders’ capital and the total number of investment units issued and outstanding from the incorporationof XYMAX REIT to the last day of the fiscal period under review (August 31, 2018) are as follows:

Date

Sept. 14, 2017
Feb. 14, 2018
Mar. 20, 2018

Description

Total number of investment units
issued and outstanding(units)Increase
Balance(Decrease)

Unitholders’ capital(thousand yen)
Increase(Decrease)

Remarks

Balance

Incorporation throughprivate placement
Capital increase throughpublic offering

3,000

3,000

300,000

300,000(Note 1)

209,905

212,905

21,224,544

21,524,544(Note 2)

Third‐party allotment

10,495

223,400

1,061,201

22,585,746(Note 3)(Note 1)
(Note 2)XYMAX REIT was incorporated with issuance of investment units at an issue price of 100,000 yen per unit.
New investment units were issued through public offering at an issue price of 105,000 yen (paid‐in amount of 101,115 yen) per unit

(Note 3)for the purpose of procuring funds for acquisition of new properties.
New investment units were issued with SMBC Nikko Securities Inc. as allottee at a paid‐in amount of 101,115 yen per unit.

4. Changes in Directors(1) Directors of the Investment Corporation
There were no changes in directors in the fiscal period.
(2) Directors of the Asset Management Company
There were no changes in directors in the fiscal period.

‐ 20 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018

5. Reference Information(1) Investment Status

Type of asset

Geographic area
(Note 1)

Use

(Note 1)

Total amount held(million yen)
(Note 2)

As a percentage of
total assets(%) (Note 3)

Tokyo central 5 wards

14,376

38.7

Tokyo 23 wards

1,162

3.1

Tokyo economic area

2,627

7.1

RetailTokyo economic area

8,112

21.8

Hotel

Cabinet order designated cities

4,431

11.9

Other

Cabinet order designated cities

OfficeReal estatein trust

1st fiscal period
As of Aug. 31, 2018

2,810

7.6

Total real estate in trust

33,521

90.2

Deposits and other assets

3,628

9.8

Total assets

37,150100.0“Tokyo central 5 wards” refers to Tokyo’s Chiyoda Ward, Chuo Ward, Minato Ward, Shinjuku Ward and Shibuya Ward.
“Tokyo economic area” refers to Tokyo excluding the Tokyo central 8 wards (refers to Tokyo’s Chiyoda Ward, Chuo Ward, Minato
Ward, Shinjuku Ward, Shibuya Ward, Toshima Ward, Taito Ward and Shinagawa Ward), Kanagawa Prefecture, Chiba Prefecture andSaitama Prefecture.

(Note 2)

“Total amount held” is based on the balance sheet (in the case of real estate in trust, the depreciated book value) as of August 31,
2018, rounded down to the nearest million yen. Furthermore, the total amount held for real estate in trust with hotel as the use
includes the book value of movables incidental to hotels.

(Note 3)“As a percentage of total assets” is rounded to one decimal place.

1st fiscal period
As of Aug. 31, 2018
Amount(million yen)
(Note 1)

As a percentage of
total assets(%) (Note 2)

Total liabilities

13,981

37.6

Total net assets

23,168

62.4

Total assets

37,150100.0(Note 1)

The total liabilities, total net assets and total assets amounts are based on the carrying amount as of August 31, 2018, rounded down
to the nearest million yen.

(Note 2)

“As a percentage of total assets” is rounded to one decimal place.

‐ 21 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018

RetailOfficeClassification(2) Investment Assets
I. Itemization of Real Estate and Other Assets in the Portfolio
The assets held by XYMAX REIT (real estate or trust beneficiary rights that have real estate as trust assets;hereinafter, may be collectively referred to as the “portfolio assets”) as of August 31, 2018 are as follows:Book value
at end ofperiod(million yen)Appraisal value(million yen)
(Note 4)

7.6

2,527

3,080

4,250

12.9

4,303

5,350

Feb. 16,
2018

5,020

15.2

5,076

6,340

Minato‐ku,
TokyoFeb. 16,
2018

880

2.7

895

1,140

XYMAX
Higashi‐Azabu Building

Minato‐ku,
TokyoFeb. 16,
2018

1,550

4.7

1,573

2,090

OF‐06

XYMAX
Higashi‐Ueno Building

Taito‐ku,TokyoFeb. 16,
2018

1,150

3.5

1,162

1,590

OF‐07

XYMAX
Hachioji Building

Hachioji‐shi,TokyoFeb. 16,
2018

2,600

7.9

2,627

3,510

Subtotal/Average‐‐

17,95054.3

18,166

23,100RT‐01

Muza Kawasaki

Kawasaki‐shi,Kanagawa

Feb. 16,
2018

4,100

12.4

4,126

5,200

RT‐02

Life Kawasaki Miyuki Store

Kawasaki‐shi,Kanagawa

Feb. 16,
2018

790

2.4

800

974

RT‐03

Vita Seiseki‐Sakuragaoka

Tama‐shi,Tokyo

Feb. 16,
2018

3,100

9.4

3,185

3,870

‐

‐

7,990

24.2

8,112

10,044‐

Asset nameLocation

Acquisition
date

OF‐01

XYMAX
Nishi‐Shimbashi Building

Minato‐ku,
TokyoFeb. 16,
2018

2,500

OF‐02

XYMAX
Iwamotocho Building

Chiyoda‐ku,
TokyoFeb. 16,
2018

OF‐03

XYMAX
Shinjuku‐Gyoen Building

Shinjuku‐ku,
Tokyo

OF‐04

XYMAX
Kamiyacho Building

OF‐05

Subtotal/Average(Note 1)

Ownership
statusTrustbeneficiaryrightsTrustbeneficiaryrightsTrustbeneficiaryrightsTrustbeneficiaryrightsTrustbeneficiaryrightsTrustbeneficiaryrightsTrustbeneficiaryrights‐TrustbeneficiaryrightsTrustbeneficiaryrightsTrustbeneficiaryrightsSendai‐shi,MiyagiFeb. 16,
2018

4,400

13.3

4,431

5,550

‐

‐

4,400

13.3

4,431

5,550

‐

Fukuoka‐shi,
FukuokaFeb. 16,
2018

2,700

8.2

2,810

3,130

Trust
beneficiaryrightsSubtotal/Average

‐

‐

2,700

8.2

2,810

3,130

‐

Total/Average‐‐

33,040100.033,521

41,824‐

Hotel Vista Sendai

Subtotal/Average
OT‐01

Share ofportfolio(%)(Note 3)Trust
beneficiaryrights andmovablesincidental tohotels

Hotel

HT‐01

Other

Acquisition
price(million yen)
(Note 2)

Asset no.
(Note 1)

Renaissance 21 Chihaya“Asset no.” is the code and number assigned to the portfolio assets of XYMAX REIT property by property according to each type of use. The
code “OF” represents office properties, “RT” represents retail properties, “HT” represents hotel properties and “OT” represents otherproperties.

(Note 2)“Acquisition price” is the amount (the amount of the sale and purchase price of real estate, etc. stated in the trust beneficiary right sale andpurchase contract for each portfolio asset) not including the various expenses required for the acquisition of the portfolio assets (brokerage
fees, property taxes, etc.), rounded down to the nearest million yen. The sale and purchase price does not include consumption tax and local
consumption tax.

(Note 3)

“Share of portfolio” is the acquisition price of the portfolio asset expressed as a percentage of the total acquisition price of the portfolio assets,rounded to one decimal place.

(Note 4)

Appraisal of each property is entrusted to Japan Real Estate Institute, The Tanizawa Sōgō Appraisal Co., Ltd. and Daiwa Real Estate Appraisal
Co., Ltd. “Appraisal value” is the appraisal value stated in each real estate appraisal report with August 31, 2018 as the date of value.

‐ 22 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
II.

Status of Leasing

Leased area(m2)
(Note 5)

Leasable area(m2)
(Note 6)

Occupancy
rate(%)(Note 7)105

1,897.75

1,897.75

100.0

149

192

4,152.30

4,152.30

100.0

6

173

225

4,792.13

4,792.13

100.0

Apr. 30,
1991

7

39

51

1,148.87

1,205.29

95.3

XYMAX
Higashi‐Azabu Building

Nov. 30,
1991

5

61

85

2,016.00

2,016.00

100.0

OF‐06

XYMAX
Higashi‐Ueno Building

Apr. 9,
1999

8

45

61

1,735.34

1,735.34

100.0

OF‐07

XYMAX
Hachioji Building

Jan. 26,
1999

25

139

172

5,457.37

5,556.03

98.2

RT‐01

Muza Kawasaki

Jan. 7,
2004

17

172

224

3,703.87

3,703.87

100.0

RT‐02

Life Kawasaki Miyuki Store

Jan. 13,
1997

1

Undisclosed(Note 8)

Undisclosed(Note 8)2,677.54

2,677.54

100.0

RT‐03

Vita Seiseki‐Sakuragaoka

Sept 17,
1999

1

Undisclosed(Note 8)

Undisclosed(Note 8)27,610.61

27,610.61

100.0

HT‐01

Hotel Vista Sendai

Mar. 14,
2016

1

129

50

7,066.25

7,066.25

100.0

OT‐01

Renaissance 21 Chihaya

Oct. 19,
2006

139

112

19

9,700.98

10,287.93

94.3

‐

232

1,374

1,228

71,959.01

72,701.04

99.0

Construction Number oftenants
date(Note 1)
(Note 2)

Operating revenue Security deposit /from leasing
Guarantee(million yen)(million yen)
(Note 3)(Note 4)

Asset no.

Asset name

OF‐01

XYMAX
Nishi‐Shimbashi Building

Aug. 22,
2000

8

84

OF‐02

XYMAX
Iwamotocho Building

Mar. 22,
2001

14

OF‐03

XYMAX
Shinjuku‐Gyoen Building

Feb. 28,
2001

OF‐04

XYMAX
Kamiyacho Building

OF‐05

Total/Average(Note 1)
(Note 2)

“Construction date” is the date of new construction of the main building stated in the real estate registry.
“Number of tenants” is the total of the number of tenants (the number of end‐tenants if a pass‐through type master lease contract has been

(Note 3)concluded) pertaining to the real estate in trust based on each lease contract concluded for each real estate in trust as of August 31, 2018.
“Operating revenue from leasing” is the total amount of rent revenue, common area maintenance revenue, parking revenue and otherrevenue (including other lease business revenue) generated from portfolio real estate during the fiscal period, rounded down to the nearest
specified unit.

(Note 4)

“Security deposit / Guarantee” is each property’s total amount of security deposit and guarantee specified in all lease contracts pertaining to
the real estate in trust concluded for each real estate in trust as of August 31, 2018, rounded down to the nearest specified unit.

(Note 5)

“Leased area” is the total leased area based on the lease contract and the building drawing, etc. attached to the lease contract for each realestate in trust as of August 31, 2018.

(Note 6)

“Leasable area” is the total leased area based on the lease contract and the building drawing, etc. attached to the lease contract for each realestate in trust as of August 31, 2018 and the area based on the building drawing, etc. of vacant spaces.

(Note 7)(Note 8)

“Occupancy rate” is the ratio of leased area to leasable area for each real estate in trust as of August 31, 2018, rounded to one decimal place.
Not disclosed due to unavoidable circumstances in that consent for disclosure has not been obtained from the lessee.

‐ 23 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
III. Summary of Real Estate Appraisal Reports

Classification

Value based on income approach
Asset no.

Asset nameAppraiser(Note)

Appraisalvalue(million yen)Valuebased onCapitalization
directrate
capitalization(%)
methodOffice(million yen)

Retail(million yen)

XYMAX
Nishi‐Shimbashi Building

Tanizawa Sōgō
Appraisal

3,080

3,180

3.7

3,030

3.8

3.9

OF‐02

XYMAX
Iwamotocho Building

Japan Real Estate

5,350

5,460

3.7

5,230

3.5

3.9

OF‐03

XYMAX
Shinjuku‐Gyoen Building

Japan Real Estate

6,340

6,460

3.7

6,210

3.5

3.9

OF‐04

XYMAX
Kamiyacho Building

Tanizawa Sōgō
Appraisal

1,140

1,200

3.8

1,110

3.9

4.0

OF‐05

XYMAX
Higashi‐Azabu Building

Daiwa Real EstateAppraisal.

2,090

2,160

3.9

2,060

3.7

4.1

OF‐06

XYMAX
Higashi‐Ueno Building

Daiwa Real EstateAppraisal.

1,590

1,640

4.0

1,570

3.8

4.2

OF‐07

XYMAX
Hachioji Building

Japan Real Estate

3,510

3,550

4.9

3,460

4.7

5.1

23,10023,650‐22,670

‐

‐

RT‐01

Muza Kawasaki

Tanizawa Sōgō
Appraisal

5,200

5,280

4.1

5,170

4.2

4.3

RT‐02

Life Kawasaki Miyuki Store

Daiwa Real EstateAppraisal.

974

988

4.2

968

4.0

4.4

RT‐03

Vita Seiseki‐Sakuragaoka

Tanizawa Sōgō
Appraisal

3,870

3,790

5.0

3,900

5.1

5.2

10,044

10,058‐10,038

‐

‐

5,550

5,660

4.6

5,500

4.7

4.8

5,550

5,660

‐

5,500

‐

‐

3,130

3,210

5.0

3,090

5.1

5.2

Subtotal/Average

3,130

3,210

‐

3,090

‐

‐

Total/Average

41,82442,578‐41,298‐‐Subtotal/Average

Hotel

HT‐01

Hotel Vista Sendai

Tanizawa Sōgō
Appraisal

Subtotal/Average

その他
Other

Terminal
capitalization
rate
(%)

Discount
rate
(%)

OF‐01

Subtotal/Average(Note)

Value
based onDCF
methodOT‐01

Renaissance 21 Chihaya

Tanizawa Sōgō
Appraisal“Appraiser” is the name of the appraiser shortened as follows:
Japan Real Estate: Japan Real Estate InstituteTanizawa Sōgō Appraisal: The Tanizawa Sōgō Appraisal Co., Ltd.
Daiwa Real Estate Appraisal: Daiwa Real Estate Appraisal Co., Ltd.

‐ 24 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018
IV. Summary of Engineering Reports and Seismic Risk Evaluation Reports
Engineering report

Seismic risk evaluation report

Asset no.

Asset name

Inspection
company(Note 1)

Inspection
date

Short‐term
repair cost(thousand yen)
(Note 2)
(Note 3)

OF‐01

XYMAX
Nishi‐Shimbashi Building

Sompo Risk
Management Inc.

Nov. 30,
2017

0

Tokio Marine &4,503 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

6.1

OF‐02

XYMAX
Iwamotocho Building

Tokio Marine &Nichido Risk
Consulting Co., Ltd.

Nov. 30,
2017

0

Tokio Marine &12,297 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

5.2

OF‐03

XYMAX
Shinjuku‐Gyoen Building

Tokio Marine &Nichido Risk
Consulting Co., Ltd.

Nov. 30,
2017

0

Tokio Marine &10,665 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

4.5

OF‐04

XYMAX
Kamiyacho Building

Earth‐Appraisal
Co., Ltd.

Nov. 30,
2017

0

Tokio Marine &7,737 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

3.8

OF‐05

XYMAX
Higashi‐Azabu Building

Earth‐Appraisal
Co., Ltd.

Nov. 30,
2017

0

Tokio Marine &4,282 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

3.4

OF‐06

XYMAX
Higashi‐Ueno Building

Earth‐Appraisal
Co., Ltd.

Nov. 30,
2017

0

Tokio Marine &2,820 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

5.1

OF‐07

XYMAX
Hachioji Building

Sompo Risk
Management Inc.

Nov. 30,
2017

0

Tokio Marine &13,742 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

3.9

RT‐01

Muza Kawasaki

Earth‐Appraisal
Co., Ltd.

Nov. 30,
2017

0

Tokio Marine &13,357 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

1.2

RT‐02

Life Kawasaki Miyuki Store

Daiwa Real EstateAppraisal Co., Ltd.

Nov. 30,
2017

0

Tokio Marine &3,662 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

7.0

RT‐03

Vita Seiseki‐Sakuragaoka

Daiwa Real EstateAppraisal Co., Ltd.

Nov. 30,
2017

0

Tokio Marine &150,664 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

2.1

HT‐01

Hotel Vista Sendai

Daiwa Real EstateAppraisal Co., Ltd.

Nov. 30,
2017

0

Tokio Marine &8,071 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

1.7

OT‐01

Renaissance 21 Chihaya

Tokio Marine &Nichido Risk
Consulting Co., Ltd.

Nov. 30,
2017

0

Tokio Marine &13,916 Nichido Risk
Nov. 2017
Consulting Co., Ltd.

1.7

0245,716

2.1

Total

Long‐term
repair cost(thousand yen)
(Note 2)
(Note 4)Inspection
company(Note 1)

Inspection PML value
date
(%)

Entire portfolio (Note 5)(Note 1)
(Note 2)Company names in “Inspection company” are the names when the inspection was performed.
“Short‐term repair cost” and “Long‐term repair cost” are indicated based on the engineering report.

(Note 3)

“Short‐term repair cost” refers to the cost for repair or upgrading that has priority over daily maintenance and indicates the total amount of
estimates of repair costs deemed necessary within one year from the date of the engineering report.

(Note 4)

“Long‐term repair cost” refers to the cost for repair or upgrading to maintain functions and safe operations against the deterioration with age
and indicates the total amount of repair/upgrading costs deemed necessary within 12 years from the date of the engineering report, which isthe annual average calculated by the Asset Management Company, rounded to the nearest thousand yen. For Muza Kawasaki and Vita Seiseki‐
Sakuragaoka, amounts corresponding to the ownership ratios (6.9% and 49.6% respectively, rounded down to one decimal place) are(Note 5)indicated.
“Entire portfolio” is a PML value for a group of the 12 portfolio assets, obtained in the same manner as for each property based on the seismic
risk evaluation (portfolio) report dated November 2017 prepared by Tokio Marine & Nichido Risk Consulting Co., Ltd.

‐ 25 ‐

XYMAX REIT Investment Corporation (3488) Financial Report for the Fiscal Period Ended August 2018

V. Capital Expenditures(A) Schedule of Capital Expenditures
Of capital expenditures associated with renovation work, etc. in the 2nd fiscal period currently planned for assets
held by XYMAX REIT as of August 31, 2018, the following are the major estimated amounts. The estimatedconstruction costs below include the portion separately booked as expenses in accounting.
Estimated construction costs(thousand yen)
Name ofreal estate, etc.

Total
amountAmount ofpayment
duringperiodTotalamountalreadypaid

From: January 2019
To: January 201917,350‐‐Replacement of air‐conditioning system on the
1st to 3rd floors

From: December 2018
To: January 201915,805‐‐Work concerning parking B(residential building)From: January 2019
To: January 201938,465‐‐

Location

PurposeScheduled period

XYMAX
Higashi‐Azabu
Building

Minato‐ku,TokyoReplacement of PAC/totalheat exchanger on the 8th
and 9th floors

XYMAX
Higashi‐Ueno
Building

Taito‐ku,Tokyo

Vita Seiseki‐
Sakuragaoka

Tama‐shi,Tokyo(B) Capital Expenditures during the Fiscal Period
The construction work, etc. falling under the category of capital expenditures conducted in the fiscal period for
assets held by XYMAX REIT as of August 31, 2018 amounted to 48,995 thousand yen. Combined with repair
expenses booked as expenses in the fiscal period (35,850 thousand yen), construction work, etc. totaling 84,846
thousand yen was conducted. There are no construction work, etc. that fall under the category of significant capital
expenditure conducted in the fiscal period for assets held by XYMAX REIT.

‐ 26 ‐