Asset Management Report for the 31st Period(Semi-Annual Report for the 31st Period)
From July 1, 2021 to December 31, 2021

I. Greetings
To Our Unitholders
We would like to express our sincere gratitude for your continued support of Japan Excellent, Inc. (JEI) and Japan Excellent
Asset Management Co., Ltd.
We hereby report the financial results of JEI for the 31st period (from July 1, 2021, to December 31, 2021).
During the 31st period, in August, we decided to sell Kowa Shirokanedai Building, an old property, to our sponsor Nippon
Steel Kowa Real Estate and announced a policy to stabilize future distribution by utilizing the gain on sale. We thenacquired Sapporo Otemachi Building (70% equity interest) located in central Sapporo City to increase revenue.
On the leasing front, the period-end occupancy rate of the entire portfolio resulted at 93.1% as the leasing market was
slower than expected due to the impact of the COVID-19 pandemic while departures of large tenants were seen.
Furthermore, for rent revision, we realized upward rent revision of +4.6% for 4.2% of the area subject to rent revision
while making flexible responses by comprehensively taking tenants’ business conditions into account.
On the financial front, we strived to enhance asset efficiency through acquisition of Sapporo Otemachi Building entirely
with funds on hand. In addition, we realized lower interest rates by changing to floating rates, extension of remaining
period of debt, and diversification of repayment dates through refinancing of long-term loans by means of green syndicatedloans, a first of such by an office J-REIT.
As a result, in the 31st period, JEI recorded operating revenue of 10,666 million yen, operating income of 4,485 million
yen, and net income of 3,846 million yen, while distribution per unit decreased by 95 yen from the previous period to 2,843
yen.
In addition, after entering the current period (the 32nd period), we have decided on the following three additional measures,
taking into account the impact of the stagnation of the leasing market due to the spread of the Omicron variant: (1)acquisition of ARK Hills FRONT TOWER (49% equity interest in anonymous association), (2) sale of Shintomicho
Building, an old property, to a third party, and (3) implementation of JEI’s first buyback of investment units in view of thecurrent level of the investment unit price. The decision was made with an aim to enhance unitholder value over the medium
to long term while further increasing revenue and strengthening the financial base for stable distribution.
Furthermore, for ESG, we made progress in various initiatives including establishment of a medium- to long-term target
for CO2 emissions reduction (46% reduction of CO2 emission intensity by FY2030 compared with FY2013) and reductionof CO2 emissions through a shift in electricity source at seven properties. In addition, in the 32nd period, we announced
the recognition, policy, promotion system, etc. concerning climate change for each of the four items ("governance","strategy", "risk management", "indicators and targets") recommended by the Task Force on Climate-Related Financial
Disclosures (TCFD) based on the TCFD recommendations, with regard to climate change responses.

About Future Asset Management
In the real estate transaction market, while transaction prices are expected to remain steady for the time being backed byfactors such as vigorous appetite for investment by market participants, JEI will continue to set the sponsor pipeline as themain source of property acquisition and advance talks with the sponsor. At the same time, JEI intends to earnestly workon acquisition from third parties as well.
In the office building leasing market, while there are trends of office consolidation and such mainly among large companies
and an outlook of an increase in supply of new office floors in central Tokyo from 2023 onwards, there is a further
revitalization of economic activity in general, the emergence of moves to review office functions with an eye to the postCOVID society and such. These factors are assumed to bring conflicting effects on each other, and it is expected that thevacancy rate will remain range-bound for the time being and newly concluded rents will soften due to owners' priority
stance for occupancy.
Under such circumstances, JEI believes that, as indicated by the increasing number of relocation aimed at improving thelocation and building grade, large buildings with superior location and performance owned by JEI will easily fit into thenew office strategy, and thus attract demand as core offices.
As to the policy on leasing activities for the time being, JEI will place upmost priority on “early refilling of vacated floors”
and “prevention of departure” of existing tenants. Especially with the vacated floors, JEI will work to achieve early refillingof vacated floors by cooperating with sponsors, setting flexible conditions taking into account the level of difficulty byproperty and other efforts.
As for rent renewal, while shifting to a basic stance of prioritizing prevention of tenant departures, JEI will also flexibly
attempt upward rent revision on the upturn in the situation.
In terms of finance, JEI will strive to conduct stable and sound financial management based on its basic policy of continuing
to reduce financing costs, fixing the interest rates of loans, extending borrowing periods, and diversifying maturity dates.
Furthermore, from the standpoint of maintaining and strengthening financing base through diversification of fundprocurement means, JEI will work on environmentally conscious or new methods of funding including sustainability
finance.
With regard to ESG, JEI intends to strive to further evolve and deepen its initiatives by taking on challenges in new areas,such as carbon neutrality and expansion of information disclosure in line with TCFD recommendations, in addition toprevious efforts in order to further accelerate our initiatives.
Finally, as always, JEI remains committed to strict adherence to the Financial Instruments and Exchange Act and otherlaws and regulations, and in addition to promoting compliance, we also disclose information on the status of our operations
to our unitholders in an accurate and easy-to-understand manner.
We kindly ask for your continued understanding and support.
Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

1II. Asset Management Report
1. Outline of Asset Management Operation(1) Operating Results and Financial Position of the Investment Corporation
Fiscal period(Millions of yen)
Operating revenue(Millions of yen)
(Rental revenues)(Millions of yen)
Operating expenses(Property operating expenses) (Millions of yen)
(Millions of yen)
Operating income(Millions of yen)
Ordinary income(Millions of yen)
Net income(Millions of yen)
Total assets(%)(Period-on-period change)(Millions of yen)
Net assets(%)(Period-on-period change)(Millions of yen)
Unitholders’ capital (Note 1)
Total outstanding investment(units)units(yen)
Net assets per unit(yen)
Net income per unit (Note 2)(Millions of yen)
Total distribution(yen)Distribution per unit(yen)(Profit distribution per unit)(Distribution in excess of(yen)earnings per unit)(Note 3)(%)
Return on assets (Note 4)(%)(Annualized rate)(%)
Return on equity (Note 5)(%)(Annualized rate)(%)
Capital ratio (Note 6)(%)(Period-on-period change)(%)
Payout ratio (Note 7)
Number of investment(properties)
properties(tenants)
Number of tenants (Note 8)(m2)
Total leasable area (Note 9, 10)(%)
Occupancy rate
(Millions of yen)
Depreciation(Millions of yen)
Capital expenditure
Net operating income (NOI)(Millions of yen)
(Note 11)
Funds from operation (FFO) per(yen)unit (Note 12)(times)FFO multiples (Note 13)
Debt service coverage ratio(times)(DSCR) (Note 14)(Millions of yen)Interest-bearing debt(%)
Loan-to-value (Note 15)(days)
Number of days in operation

27th Period
29th Period
31st Period
28th Period
30th Period
July 1, 2019,
July 1, 2020,
July 1, 2021,
January 1, 2020,
January 1, 2021,
to December 31,
to December 31,
to December 31,
to June 30, 2020
to June 30, 2021
2019
2020
2021
10,89012,717

11,043

10,567

10,666(10,890)(11,013)(10,729)(10,567)(10,666)

7,978

6,426

6,119

5,977

6,180

(5,906)(5,697)(5,487)(5,355)(5,563)

2,912

6,290

4,924

4,590

4,485

2,247

5,631

4,291

3,976

3,846

2,246

5,631

4,290

3,975

3,846

288,790

293,532

294,004

293,970

293,960

(0.9)

(1.6)

(0.2)

(-0.0)(-0.0)

142,377

152,133

152,418

152,335

152,206(-1.0)

(6.9)

(0.2)

(-0.1)(-0.1)

139,972

147,907

147,907

147,907

147,9071,305,700

1,353,000

1,353,000

1,353,000

1,353,000

109,042

112,441

112,652

112,590

112,495

1,720

4,179

3,171

2,938

2,842

3,810

4,004

4,059

3,975

3,846

2,918

2,960

3,000

2,938

2,843

(1,841)(2,960)(3,000)(2,938)(2,843)(1,077)

(－)

(－)

(－)

(－)

0.8

1.9

1.5

1.4

1.3

(1.6)

(3.9)

(2.9)

(2.7)

(2.6)

1.6

3.8

2.8

2.6

2.5

(3.1)

(7.7)

(5.6)

(5.3)

(5.0)

49.3

51.8

51.8

51.8

51.8

(-1.0)

(2.5)

(0.0)

(-0.0)(-0.0)

107.0

71.1

94.6

100.0

100.0

33

35

34

35

36

200

193

191

187

587

345,940

332,702331,112336,375

341,070

99.6

99.6

98.0

96.4

93.1

1,929

1,946

1,824

1,847

1,891

1,726

806

1,127

1,547

1,305

6,913

7,263

7,066

7,059

6,994

4,367

4,341

4,287

4,303

4,240

20.3

14.4

15.0

18.3

15.8

9.4

17.0

13.9

13.2

13.2

129,600

125,600

125,600

125,600

125,600

44.9

42.8

42.7

42.7

42.7

184

182

184

181

184

(Note 1) Unitholders’ capital does not account for the changes in unitholders’ capital due to the implementation of distribution in excessof earnings related to the allowance for temporary difference adjustments, etc.
(Note 2) Net income per unit is calculated by dividing the net income by the weighted-average number of units outstanding during thesix months period.
(Note 3) Distribution in excess of earnings per unit in the 27th period is from reserve for temporary difference adjustments.
(Note 4) Return on assets = Ordinary income / [(Period beginning total assets) + (Period end total assets) / 2] × 100

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)2

(Note 5) Return on equity = Net income / [(Period beginning net assets) + (Period end net assets)/ 2] × 100(Note 6) Capital ratio = Period end net assets / Period end total assets × 100(Note 7) Payout ratio = (Distribution per unit (not including distribution in excess of earnings per unit) / Net income per unit) × 100(Figures are rounded to the first decimal place.)
As new investment units were issued in the 28th period, the formula below was used to calculate the amount.
Payout ratio ＝ (Total distributions (not including distribution in excess of earnings / Net income) × 100
In addition, when accounting for reversal of allowance for temporary difference adjustments with the following formula, thepayout ratio is 94.8%.
(Total distributions (not including distribution in excess of earnings) / (Net income － Reversal of allowance for temporary
difference adjustments)) × 100(Note 8) Number of tenants indicates the number of end tenants in each property as of the end of each period in principle, starting fromthe 31st period. When a tenant has multiple tenancies in the same property, it is counted as one tenant, and when in multiple
properties, it is counted as multiple tenants. However, ① for the residential portion of Shiba 2-Chome Building and
HAMARIKYU INTERCITY, the number of tenants is counted as one, considering the master lease company as the tenant,since the importance of each end tenant is low, and ② for the properties in which real estate is co-owned or trust beneficiaryrights are quasi-co-owned, and in which the percentage of JEI's ownership or quasi-co-ownership is low (AKASAKA
INTERCITY AIR, GRAND FRONT OSAKA (Umekita Plaza, South Building) and GRAND FRONT OSAKA (North
Building)), the number of tenants indicates the number of the master lease companies considering the master lease company
as a tenant, since the importance of each tenant is low. In addition, the number of tenants for ③ Osaka Kogin Building (landwith leasehold interest) is counted as one based on the lease agreement for the leased land.
(Note 9) For properties with joint ownership (including quasi co-ownership of trust beneficiary interest), a figure obtained bymultiplying the leasable area of the entire property by the ownership ratio (As for AKASAKA INTERCITY AIR, GRANDFRONT OSAKA (Umekita Plaza/South Building), and GRAND FRONT OSAKA (North Building), a figure obtained bymultiplying the ratio of co-ownership interests held by the trustee by the ratio of quasi co-ownership of trust beneficiaryinterest held by JEI.) is indicated as JEI’s leasable area. The same applies hereinafter.
(Note 10) Spaces are rounded to the nearest specified unit. The same applies hereinafter.
(Note 11) NOI = Rental revenues – Property operating expenses + Depreciation(Note 12) FFO per unit = (Net income + Depreciation – Gain on sale of real estate + Loss on sale of real estate + Impairment loss) /Total number of outstanding investment units (the figure is rounded down to the whole number).
(Note 13) FFO multiples = Period end investment unit price / Annualized FFO per unit
(Note 14) DSCR = (Net income before interest and taxes + Depreciation (*)) / (Interest expenses + Interest expense on investment
corporation bonds)* Includes depreciation except for property operating expenses.
(Note 15) Loan-to-value = Period end interest-bearing debt / Period end total assets × 100

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

3

(2) Asset Management Development
Japan Excellent, Inc. (JEI) was founded on February 20, 2006, under the Law Concerning Investment Trusts andInvestment Corporations of Japan (Law No. 198 of 1951, as amended; hereinafter referred to as the “Investment
Trust Law”). On March 15, 2006, it completed the corporate registration to the Kanto Finance Bureau (registration
number 52, issued by the Head of the Kanto Local Finance Bureau) and listed on the Real Estate Investment Trust
Section of the Tokyo Stock Exchange (Securities Code: 8987) on June 27, 2006.
Since the listing, JEI has continued investment management primarily in office buildings with the aim of maintaining
sound corporate growth and stable revenues from the medium- to long-term perspectives. On December 31, 2021,
JEI settled its 31st period.
1) Business conditions and results
In the 31st period (ended December 2021), although the world economy moved towards recovery reflecting thesteady progress of COVID-19 vaccination in major countries in Europe and the U.S., additional measures toboost the economy, etc., infections by a more contagious COVID-19 variant have been spreading again, andthus the situation requires careful attention to the restrictions on economic activities to prevent infection.
In the U.S., interest rates have been rising sharply due to the expectation that the pace of interest rate hikes by
the U.S. Federal Reserve Board (FRB) will speed up because of concerns about inflation against the backdropof the recent improvement in economic indicators, the rise in the consumer price index and such.
In Japan, the impact of COVID-19 has been a concern with possible resurgence of infections due to new variantsin the future, and the outlook remains uncertain. However, the GDP growth rate for July to September stood at
1.2% year on year, indicating a recovery trend. Concerning the domestic finance market, although it hasremained calm as the Bank of Japan has maintained the ongoing monetary easing stance, careful attention
should continue to be paid to future changes.
In the real estate transaction market, the acquisition appetite of investors within and outside of Japan has
remained strong as the favorable fund procurement environment has continued backed by policies for monetaryeasing, differences in interest rates in Japan and abroad being maintained and such. Under such circumstances,
JEI acquired Sapporo Otemachi Building (acquisition price: 4.06 billion yen) in December 2021.
In the office building leasing market, there have been moves to decrease the floor space reflecting the needs formore efficiency and consolidation in view of promoting telework and reducing fixed cost under the COVID-19
pandemic.
On the other hand, there have been more contracts due to floor expansion within the same building, relocation
for larger space, improvements in building grade, etc. The vacancy rate in the five central wards of Tokyo
published by Miki Shoji Co., Ltd. showed a slower pace of increase compared with the first half of 2021, andthe vacancy rate as of the end of December 2021 stood at 6.3%, only up 0.1 points from the end of June 2021.
The average unit rent has shifted downward since August 2020, and that for December 2021 dropped by 2.7%
compared with that for June 2021. Under such circumstance, the occupancy rate (Note 1) at the end of the period
under review was 93.1%, down 3.3 points from the end of the previous period, because of the impact of stalledleasing activities due to the declaration of a state of emergency, etc.
The total number of properties owned and managed by JEI at the end of the period under review was 36 with a
total acquisition price of 286.6 billion yen and total leasable area of 341,069.62 m2 (103,173.56 tsubos).
2) Fund procurement highlights
JEI will work on stable and sound financial operations over the medium to long term with a basic policy of
procuring funds for the long term at fixed interest rates.
In the 31st period, JEI acquired Sapporo Otemachi Building for 4.06 billion yen in December 2021 as part of
expansion of the asset size. The acquisition was made entirely using cash on hand in order to improve asset
efficiency. Furthermore, from November to the end of December 2021, JEI refinanced long-term loans of 9.51
billion yen in total that had matured with long-term loans (3.76 billion yen for borrowing period of 4 years and5.75 billion yen for borrowing period of 8 years) through a syndication with green loans, the first of such for
an office REIT, after newly establishing a green finance framework.
As a result, as of the end of the 31st period, the average remaining period of interest-bearing debt (Note 2) was
4.4 years (unchanged from the end of the previous period), the period-end average interest-bearing debt interest
rate (Note 3) was 0.73% (down 0.01 points from the end of the previous period), and the loan-to-value ratio of
total assets (total assets-based LTV) (Note 4) was 42.7% (unchanged from the end of the previous period).
Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)4In addition, JEI continues to have commitment lines of 14.0 billion yen with a credit limit to reduce refinancing
risk and enhance stability for fund procurement, etc.
The ratings granted to JEI by the following rating agencies are shown below:(Ratings as of December 31, 2021)
Individual debt issue rating
Issuer rating (outlook)
Credit rating agency(Note 5)
Japan Credit Rating Agency, Ltd.
Long-term issuer rating
AA(JCR)
AA- (Stable)
Issuer rating
Moody’s Japan―
A3 (Stable)
3) Sustainability initiatives
JEI has worked to reduce the environmental burden and to cooperate/collaborate with stakeholders to achieve asustainable society through corporate social responsibility, while recognizing the importance of consideration
for the environment, society and governance (ESG) in the real estate investment management business.
With regard to CO2 emission intensity, in October 2021, JEI set a new target to reduce emission intensity by
46% by fiscal 2030 compared with fiscal 2013. To meet the target, JEI has promoted a shift to LED lighting,air-conditioning equipment with excellent energy-saving performance, and carbon-free energy sources
including “RE100” compatible electricity and other electricity derived from renewable energy at properties it
owns. In order to reduce our environmental impact, JEI has set targets to reduce energy consumption and water
consumption intensities by 1% per year compared with the previous period, and over the medium to long term,
to reduce average consumption and emission intensities by 5% or more when comparing the rates between fiscal
2015 and fiscal 2019 with the rates between fiscal 2020 and fiscal 2024. Furthermore, JEI has continuously
promoted the acquisition of Green Building Certification and the number of certified properties now stands at
23, accounting for 84.7% of leasable area (as of December 31, 2021; excluding land with leasehold interest).
Such initiatives for sustainability by JEI earned high recognition, specifically a seventh consecutive “Green Star”
rating (Note 7) in the Global Real Estate Sustainability Benchmark (GRESB) (Note 6) Real Estate Assessment
conducted in 2021, as well as a second consecutive “5 Star,” the highest rating in “GRESB Rating” (Note 8).
Furthermore, JEI has been a constituent of the MSCI Japan ESG Select Leaders Index (Note 9) since May 2021.
In addition, JEI’s asset management company Japan Excellent Asset Management Co., Ltd. (hereinafter,“JEAM”) compiled the policy, initiatives and such of JEI and JEAM for each of the four items ("governance","strategy", "risk management", "indicators and targets") recommended by the Task Force on Climate-Related
Financial Disclosures (TCFD) (Note 10) based on the TCFD recommendations for which it expressed support
in June 2021, and disclosed them on JEI’s website in February 2022.
4) Financial results and distribution highlights
As a result of the management above, for the period under review, JEI posted 10,666 million yen in operating
revenue, 4,485 million yen in operating income, 3,846 million yen in ordinary income, and 3,846 million yen in
net income.
Concerning distributions in the period under review, JEI determined to distribute the entirety of unappropriatedretained earnings (except for the portion of less than one yen per unit) to deduct the amount of profit distribution
from its taxable income by applying the special provisions of the tax system on investment corporations (Section
67-15 of the Special Taxation Measures Law). As a result, distribution per unit was 2,843 yen.
(Note 1) Occupancy rate is a percentage of total leased area to total leasable area of each real estate or real estate intrust.
(Note 2) Average remaining period of interest-bearing debt is calculated by applying a weighted average of theremaining period until the repayment date or redemption date of borrowings and investment corporation bonds
at the end of the period to the balance of each interest-bearing debt, for all interest-bearing debt.
(Note 3) Period-end average interest-bearing debt interest rate is calculated by applying a weighted average of interestat the end of the period under review to the balance of each interest-bearing debt, for all interest-bearing debt.
(Note 4) Loan-to-value ratio of total assets ＝ (Period end interest-bearing debt / Period end total assets) ×100
(Note 5) The rating is for 7th series unsecured investment corporation bonds, 8th series unsecured investment
corporation bonds, 9th series unsecured investment corporation bonds, 10th series unsecured investment
corporation bonds, 11th series unsecured investment corporation bonds, 12th series unsecured investment
corporation bonds, 13th series unsecured investment corporation bonds, 14th series unsecured investment
corporation bonds, 15th series unsecured investment corporation bonds and 16th series unsecured investment
corporation bonds.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)5

(Note 6) A benchmark established by a European pension fund group that measures ESG considerations of real estatecompanies and management institutions which is used by major European, American, and Asian institutional
investors for decision-making on investments.
(Note 7) “Green Star” is given when a high evaluation with a score exceeding 50% is made in the two evaluation axes(“Management Policy” and “Implementation & Measurement).
(Note 8) “GRESB Rating” is a rating of the overall score according to the global ranking, and “5 Star” is a rating given
to the top 20% of participants, “4 Star” to the following 20% and so forth.
(Note 9) The MSCI Japan ESG Select Leaders Index is an index consisting of companies that have high Environmental,
Social and Governance performance selected from among the constituents of the MSCI Japan IMI Top 700
Index. The Index has been selected as one of the ESG indices for passive investment by the Government
Pension Investment Fund (GPIF).
(Note 10) The TCFD (Task Force on Climate-related Financial Disclosures) is an international initiative established in2015 by the Financial Stability Board (FSB) at the request of the G20 to discuss climate-related issues to beaddressed by the financial sector.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

6

(3) Capital Increase
The outline of the changes in the total number of outstanding investment units and unitholders’ capital for the mostrecent five years up to the end of the period under review are as follows:
Unitholders’ capital
Capital transaction (units)
Remarks(Millions of yen) (Note 1)
Paid-up Date
Capital transaction
ChangeBalance
ChangeBalanceJanuary 21, 2020
February 13, 2020

Public offering
Third-party
allotment

43,0001,348,700

7,213

147,186(Note 2)4,300

1,353,000

721

147,907(Note 3)(Note 1) Does not account for the changes in unitholders’ capital due to the implementation of distribution in excess of earnings related
to the allowance for temporary difference adjustments.
(Note 2) New investment units were issued at an issue price of 173,355 yen per unit (purchase price of 167,754 yen per unit) througha public offering in order to repay debts procured to acquire properties and partially fund property acquisitions.
(Note 3) New investment units were issued at a purchase price of 167,754 yen per unit through third-party allotment in order to partiallyfund future acquisitions of specified assets or partially fund repayment of loans.
(Note 4) At JEI, there exist no investment units held by JEI (investment units without voting rights provided in Article 308-2 of the
Corporate Law which will be applied mutatis mutandis pursuant to Article 94 of the Investment Trust Law) or cross-heldinvestment units (investment units without voting rights provided in Article 160 of the Investment Trust Enforcement
Ordinance) as of the end of 31st period.

[Market price of the investment securities]
The period-on-period fluctuations in the highest and lowest (closing) prices of JEI’s investment units listed on theReal Estate Investment Trust Section of the Tokyo Stock Exchange during each period is as follows:
Fiscal period
27th period
28th period
29th period
30th period
31st period(closing date) (December 2019) (June 2020) (December 2020) (June 2021) (December 2021)
Investment
unit market Highest (yen)189,600
200,600
127,900
163,300
158,400
price
Lowest (yen)159,600
75,400110,600
120,000
132,800(Note)The highest and lowest prices of investment units refer to the closing prices on the Real Estate Investment Trust Section of
the Tokyo Stock Exchange.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

7

(4) Distributions Paid
Concerning distributions in the period under review, JEI determined to distribute the entirety of unappropriatedretained earnings (except for the portion of less than one yen per unit) to deduct the amount of profit distribution
from its taxable income by applying the special provisions of the tax system on investment corporations (Section
67-15 of the Special Taxation Measures Law). As a result, distribution per unit was 2, 843 yen.
Fiscal period
Accounting period
Unappropriated retained
earnings at end of period(Thousands of yen)
Retained income(Thousands of yen)
Total cash distribution
amount (Thousands of yen)
(Cash distributions per unit)(yen)
Of which, total profit
distributions(Thousands of yen)
(Profit distribution per unit)(yen)
Of which, total refund ofinvestment equity(Refund of investment
equity per unit)
Of total refund of investment
equity, total distribution
amount from reserve fortemporary difference
adjustments(Of refund of investment
equity per unit, distribution
amount per unit from reserve
for temporary difference
adjustments)
Of total refund of investment
equity, total distribution
amount from distribution
reducing unitholders’ capitalfor tax purpose(Of refund of investment
equity per unit, distribution
amount per unit from
distribution reducing
unitholders’ capital for tax
purpose)27th period

28th period

29th period

30th period

31st period

July 1, 2019, to January 1, 2020, to July 1, 2020, to January 1, 2021, to July 1, 2021, toDecember 31, 2019 June 30, 2020 December 31, 2020 June 30, 2021 December 31, 2021
2,246,223

5,631,594

4,291,443

3,975,882

3,846,920

469

220,475

232,443768

341

3,810,032

4,004,880

4,059,000

3,975,114

3,846,579(2,918)(2,960)(3,000)(2,938)(2,843)

2,403,793

4,004,880

4,059,000

3,975,114

3,846,579(1,841)(2,960)(3,000)(2,938)(2,843)

1,406,238

－

－

－

－

(1,077)

(－)

(－)

(－)

(－)

1,406,238

－

－

－

－

(1,077)

(－)

(－)

(－)

(－)

－

－

－

－

－

(－)

(－)

(－)

(－)

(－)

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

8

(5) Policy and Issues on Future Investment Management
1) Outlook for business environment
In the real estate transaction market, although transaction prices are expected to remain high for the time being
backed by factors such as vigorous appetite for investment by market participants, we believe that there is a need toclosely monitor the impacts of COVID-19 and changes in the environment brought about by changes in economic
conditions, etc.
In the office building leasing market, while there are movements by tenants to reduce costs, streamline andconsolidate, an increase in supply of new office floors from 2023 onwards and such, it is thought that a further
revitalization of economic activity in general, the emergence of moves to review office functions with an eye topost-COVID society and such will bring conflicting effects on each other. As such, the vacancy rate is expected toremain range-bound for the time being and newly concluded rents are expected to soften due to owners' priority
stance for occupancy.
However, since the outlook is uncertain with concerns over the impact of resurgence of infections due to new variants,
future trends should be closely monitored.
2) Policy and issues on future investment management
A. External growth
JEI will work to acquire competitive properties by means of well-balanced investments based on size and area while
gradually shifting its focus from asset replacement to expansion of asset size for external growth. JEI will continue
to have the asset management company newly cultivate and refine property information sources in an effort topromptly gain access to market information on disposition of properties and thereby keep seizing the right business
opportunities while maintaining a focus on cooperation with sponsor companies. At the same time, in order toimprove its portfolio over the medium to long term, JEI will consider disposition of properties that are old or are
likely to lose competitiveness in the future, assuming replacement.
B. Internal growth
JEI will continue to make efforts to capture the needs of existing tenants in a timely manner by further strengthening
finely-tuned relationships.
As to properties with vacancies at present or with expected vacancies, JEI will focus on filling those vacancies at an
early stage by collaborating with the sponsor, setting flexible terms and conditions taking into account the difficulties,
etc. for each property, etc. As for rent revision, although JEI will respond in a flexible manner to prioritize preventionof tenant move-outs, JEI is to review such stance in an agile manner once the environment turns for the better.
Over the medium to long term, JEI aims to enhance earnings of the entire portfolio and improve its ESG evaluation
by making additional strategic investments to maintain asset value and improve property competitiveness whileconsidering initiatives on sustainability and BCP measures.
Concerning the requests from tenants in light of the impact of COVID-19, JEI will discuss support individuallywhile continuing to carefully listen and hold discussions.
C. Financial strategy
JEI will consistently work on stable and sound financial operations by continuing to procure funds based on thebasic policy to fix interest rates of loans, extend borrowing periods, and diversify maturity dates while continuing
to reduce interest rates. In addition, JEI will work on new procurement methods such as green bonds andsustainability finance from the perspective of maintaining and strengthening its procurement base throughdiversification of fund procurement means.
JEI will set the upper limit of total assets-based LTV at 60% and manage it at around 35% to 50%. Furthermore, JEI
will conduct financial operations that emphasize stability by reducing refinancing risks through diversification of
maturity dates of interest-bearing debt.
D. Sustainability initiatives
JEI will work to reduce the environmental burden and to cooperate/collaborate with stakeholders to achieve asustainable society, deeming such as its corporate social responsibility.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

9(6) Subsequent Events
Buyback of own investment units
JEI resolved the buyback of its investment units at the meeting of the Board of Directors held on February 17,
2022, based on Article 80-2 of the Investment Trust Law applied by replacing the term and phrase pursuant to theprovisions of Article 80-5, Paragraph 2 of the Investment Trust Law.
JEI plans to cancel all the investment units bought back in the fiscal period ending June 30, 2022 (32nd period).
(i) Reason for buyback of own investment units
After comprehensively taking into account the level of JEI’s investment unit price, financial status, the market
environment, etc., JEI has judged that enhancing capital efficiency and conducting return to unitholders
through buyback and cancellation of its investment units will lead to improvement of unitholder value overthe medium to long term.
(ii) Details of buyback of own investment units
Total number of own
investment units to be bought
18,000 units (maximum)back
Total amount of buyback price

2,000 million yen (maximum)

Buyback period

From February 18, 2022, to April 13, 2022

Buyback method

Market purchase on the Tokyo Stock Exchange based on adiscretionary transaction contract for buyback of own
investment units with a securities company.

(Reference Material)
1. Conclusion of an anonymous association equity interest purchase agreement
JEI decided to conclude an anonymous association equity interest purchase agreement on February 18, 2022, as
follows.
< Overview of the Asset to Be Acquired>
Equity interest in an anonymous association that will
Property to be acquired
manage a trust beneficiary right in real estate, etc.
Equity interests in anonymous association Akasaka 2Name of property
chome Godo Kaisha (Note 1)
Real estate (trust asset)

ARK Hills Front Tower

Location of real estate (trust asset)

2-23-1 Akasaka, Minato-ku, Tokyo

Planned acquisition price (Note 2)

5,230 million yen (49% equity interest in anonymous
association)

Scheduled acquisition date

May 11, 2022

Seller

Nippon Steel Kowa Real Estate Co., Ltd.

(Note 1) Equity interests in anonymous association under the anonymous association agreement with Akasaka
2-chome Godo Kaisha as the business operator.
(Note 2) Planned acquisition price is the acquisition price, excluding acquisition-related expenses andconsumption taxes.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)10

2. Transfer of Asset (Shintomicho Building)
JEI concluded a transaction agreement for trust beneficiary interest on February 17, 2022, as follows.
<Overview of the Asset to Be Transferred>
Asset to be transferred

Trust beneficiary interest in real estate

Name of property

Shintomicho Building

Location

3-10-9 Irifune, Chuo-ku, Tokyo

Planned transfer price (Note)① 1,240,000,000 yen(quasi co-ownership
40%)

Date of conclusion of agreement
Planned transfer date
Transferee② 1,860,000,000 yen(quasi co-ownership
60%)

February 17, 2022
July 22, 2022

January 26, 2023

Hulic Co., Ltd.

(Note) Planned transfer price is the transfer value of trust beneficiary interest, excluding transfer-related
expenses, property taxes, city planning taxes settled and consumption taxes.

3. Borrowing of Funds
JEI concluded a loan agreement on January 26, 2022, as described below to allot funds to the repayment of an
existing borrowing.
< Overview of Borrowing>
Sompo Japan Insurance Inc.
LenderTokio Marine & Nichido Fire Insurance Co., Ltd.
Loan amount

3,000,000,000 yen

Interest rate

0.28000%

Drawdown date

January 31, 2022

Principal repayment date

January 31, 2027

Principal repayment method

To be repaid in full on the principal repayment date

Collateral

Unsecured / Non-guaranteed

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)11

2. Outline of the Investment Corporation(1) Investment Units
Fiscal period
Total number of units
authorized
Total number of units
issued and outstanding

27th
As of December 31,
2019

28th
As of June 30,
2020

29th
As of December 31,
2020

30th
As of June 30,
2021

31st
As of December 31,
2021

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

1,305,700 units

1,353,000 units

1,353,000 units

1,353,000 units

1,353,000 units

139,972
million yen
6,046
individuals

147,907
million yen
6,746
individuals

147,907
million yen
6,914
individuals

147,907
million yen
6,797
individuals

147,907
million yen
6,978
individuals

Unitholders’ capital (Note)
Number of unitholders(Note) Does not account for the changes in unitholders’ capital due to the implementation of distribution in excess of earnings related
to the allowance for temporary difference adjustments.

(2) Unitholders
Major unitholders as of December 31, 2021, are as follows:
Number ofunits held
(Units)Ratio of number ofunits held tooutstanding
investment units(%)

1-8-12 Harumi, Chuo-ku, Tokyo

330,485

24.43

2-11-3 Hamamatsu-cho, Minato-ku, Tokyo

228,871

16.92

1-8-1 Akasaka, Minato-ku, Tokyo

71,5605.29

1-8-12 Harumi, Chuo-ku, Tokyo

49,9843.69

2-2-2 Otemachi, Chiyoda-ku, Tokyo

40,702

3.01

Mitsubishi UFJ Morgan Stanley
Securities Co., Ltd

1-9-2 Otemachi, Chiyoda-ku, Tokyo

36,232

2.68

STATE STREET BANK WEST
CLIENT - TREATY 505234

1776 HERITAGE DRIVE, NORTHQUINCY, MA 02171,U.S.A.

20,938

1.55

The Dai-ichi Life Insurance
Company, Limited

1-13-1 Yuraku-cho, Chiyoda-ku, Tokyo

20,6601.53

SSBTC CLIENT OMNIBUS
ACCOUNTONE LINCOLN STREET, BOSTON MA
USA 02111

19,328

1.43

JP MORGAN CHASE BANK
38578125 BANK STREET, CANARY WHARF,LONDON, E14 5JP, UNITED KINGDOM

16,512

1.22

Total

835,272

61.73

Name

Custody Bank of Japan, Ltd.
(Trust Account)
The Master Trust Bank of Japan,
Ltd. (Trust Account)
Nippon Steel Kowa Real EstateCo., Ltd.
Custody Bank of Japan, Ltd.
(Securities Investment Trust
Account)
The Nomura Trust and Banking
Co., Ltd.
(Investment trust account)

Address

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

12

(3) Officers
1) Directors and accounting auditor
NameMajor additional post

Executive
Director

Shuichiro Kayama

President, Japan Excellent Asset Management
Co., Ltd.

Supervisory
Director

Shunichi Maekawa

Part-time Lecturer, Faculty of Modern
Management, Sugiyama Jogakuen University

Eiji Takagi

Eiji Takagi Certified Public Accounting OfficeOsamu Hirakawa

Advisor, Anderson, Mori & Tomotsune

Ernst & Young
ShinNihon LLC

–

Post

Supervisory
Director
Supervisory
Director
Accounting
AuditorCompensation or fee forthe six months ended
December 31, 2021
(Thousands of yen)

–

5,520

12,200(Note 2)

(Note 1) There are no investment units of JEI held by either the Executive Director or the Supervisory Directors. Although
Supervisory Directors may have additional posts in companies other than those listed above, there are no conflictsof interest between those companies, including those listed above, and JEI.
(Note 2) The total amount of compensation or fee shown above is an estimated amount and includes the amount paid ascompensation for auditing during the 31st period (11,000 thousand yen) and the fee for the English financial
statements audit.

2) Policy on dismissal and discontinuation of re-election of accounting auditor
The board of directors of JEI shall deliberate dismissal of accounting auditor in accordance with the provisions set
out in the Investment Trust Law, and deliberate discontinuation of re-election based on circumstances in all respects.
3) Matters concerning compensation agreement between directors, etc. and Investment Corporation
Not applicable.

(4) Matters Concerning Directors and Officers Liability Insurance Agreement
JEI has concluded the directors and officers liability insurance agreement as follows:
Scope of the insured

Executive Director andSupervisory Directors

Overview of the directors and officers liability insurance agreement(Overview of insured event covered by the insurance)
Compensation payment, dispute costs, etc. incurred by the insured as aresult of a damage compensation claim arising from an act performed by
the insured based on his or her position will be covered.
(Burden ratio of insurance premium)The entire amount is borne by JEI.
(Measures to ensure the appropriateness of the execution of duties of
directors and officers)
Damages and losses incurred by the insured for an act which was
performed acknowledging that such is a criminal act or violation of laws
and regulations will not be covered by the insurance.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

13

(5) Asset Management Company, Asset Custodian, and Administrative Agents
JEI’s asset management company, asset custodian, and administrative agents as of December 31, 2021, are as
follows:
Classification

Name

Asset management company

Japan Excellent Asset Management Co., Ltd.

Asset custodian

Mizuho Trust & Banking Co., Ltd.

Administrative agent(Transfer agent and other administrative work foraccounting and institution operation)

Mizuho Trust & Banking Co., Ltd.

Administrative agent(Investment corporation bonds)

Mizuho Bank, Ltd.

3. Investment Portfolio of the Investment Corporation(1) Investment Portfolio by Area
30th Period(As of June 30, 2021)

31st Period(As of December 31, 2021)

Total
acquisition
price(Millions of yen)
(Note 2)

Investment
ratio inportfolio
(%)

Total
acquisition
price(Millions of yen)
(Note 2)

Investment
ratio inportfolio(%)

Area I

10,936

3.7

10,904

3.7

Area II

5,428

1.8

5,369

1.8

Area IV

1,625

0.6

1,619

0.6

Area I

131,01244.6

130,640

44.4

Area II

10,757

3.7

10,737

3.7

Area III

84,292

28.7

84,04028.6

Area IV

21,061

7.2

25,298

8.6

Total

265,11390.2

268,61091.4

Deposits in bank and other assets

28,8569.8

25,349

8.6

Total assets

293,970

100.0

293,960

100.0Classification

Use

Real estate
property
Officebuilding
Trust beneficiaryinterest in realestateArea(Note 1)

(Note 1) Areas are classified as follows:
Area I: Six central wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku, Shinagawa and Shibuya)
Area II: Central Osaka (Umeda, Dojima, Nakanoshima, Yodoyabashi, Honmachi, etc.), Central Nagoya (Meieki, Fushimi,
Sakae, etc.), and Central Fukuoka (Tenjin, Hakata-ekimae, etc.).
* Central Osaka refers to the areas within about a 10-minute walk of Osaka Station (JR), Osaka-Umeda Station(Hankyu Railway, Hanshin Electric Railway), Umeda Station (Osaka Metro), Yodoyabashi Station (Osaka
Metro), or Honmachi Station (Osaka Metro), respectively. Central Nagoya refers to the areas within about a 10minute walk of Nagoya Station (JR, Nagoya City Subway, and Nagoya Railroad), Fushimi Station (Nagoya City
Subway), or Sakae Station (Nagoya City Subway and Nagoya Railroad), respectively. Central Fukuoka refers to
the areas within about a 10- minute walk of Hakata Station (JR and Fukuoka City Subway), Tenjin Station(Fukuoka City Subway), and Nishitetsu Fukuoka Station (Nishi-Nippon Railroad), respectively. They are,however, not always in line with administrative districts.
Area III: Tokyo other than Area I, and its vicinity (Kanagawa, Saitama, and Chiba)
Area IV: Areas in Osaka, Nagoya and Fukuoka other than Area II, and other government designated cities.
The same applies hereinafter.
(Note 2) Total acquisition price is based on the amounts accounted for in the balance sheets as of the settlement date (amounts of realestate property and trust beneficiary interest in real estate are based on the book value after depreciations).

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

14

(2) Major Properties
The principal properties (top ten properties in net book value) owned by JEI as of December 31, 2021, are as
follows.
Ratio of rental
Occupancy
Leasable area Leased area
revenue to total
Book
value
Name
rate
Major use
(Millions of yen) (m ) (Note 1)(m ) (Note 2)
rental revenues(%) (Note 3)(%)
OfficeAKASAKA INTERCITY
26,54011,021.03
10,539.80
95.6
5.9
building
Nisseki Yokohama
Office22,29640,440.72
40,440.72
100.0
11.3
Buildingbuilding
OfficeOmori Bellport D
20,55425,801.66
25,801.66
100.0
8.6
building
Kowa Kawasaki
Office19,04624,944.17
24,279.42
97.3
5.9
Nishiguchi Buildingbuilding
HAMARIKYU
Office16,902
19,718.11
18,786.01
95.3
6.9
INTERCITY
building
Musashikosugi Tower
Office12,241
25,043.93
16,174.54
64.6
7.0
Place
building
OfficeMansard Daikanyama
11,1515,420.80
3,940.58
72.7
2.1
building
Kowa Nishi-Shimbashi
Office10,904
8,949.04
8,949.04
100.0(Note 4)
Buildingbuilding
Kowa Kawasaki
Office10,68918,612.72
18,612.72
100.0(Note 4)
Higashiguchi Buildingbuilding
OfficeBizcore Jimbocho
10,017
5,261.75
3,812.22
72.5(Note 4)
building
2

Total

160,345

185,213.93

2

171,336.71

92.5

－

－

(Note 1) Leasable area refers to area available for lease of which ownership is attributable to JEI as of December 31, 2021. For
properties with joint ownership, the value is obtained by multiplying the total leasable area of the shared property by thepercentage of the interest owned by JEI, regarding the figure as JEI’s leasable area.
(Note 2) Leased area refers to area with lease contracts or master lease agreements that guarantee a certain amount of fixed rent payment
concluded with end tenants as of December 31, 2021. For properties with joint ownership, the value is obtained by multiplying
the total leased area of the property by the percentage of the co-ownership interest owned by JEI, regarding the figure as JEI’sleased area. For properties which are used for profit by the master lease company, leased area refers to the portion used, andthe figures indicate area which can be reasonably calculated based on the lease agreement on the master leasing. The leased
area of end tenants who terminated their lease arrangement but have not yet moved out as of the end of period is included in
the leased area. This also applies to any figure which is calculated based on “leased area” in this document.
(Note 3) Occupancy rate is a percentage of total leased area to total leasable area as of December 31, 2021.
(Note 4) The values for Kowa Nishi-Shimbashi Building and Kowa Kawasaki Higashiguchi Building are not disclosed as consent fordisclosure of rent from the end tenants has not been obtained; and that for Bizcore Jimbocho is not disclosed as consent fordisclosure of rent from the owner of other exclusively owned space conducting centralized management has not been obtained.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

15

(3) Portfolio Ownership Breakdown
Real estate properties and their forms of ownership as of December 31, 2021, are as follows:
Property
No.

Property nameLocation (Residential address)

Ⅰ-1

Omori Bellport D

6-26-3 Minami-Oi, Shinagawa-ku, Tokyo

Ⅰ-2

Shiba 2-Chome Building

2-6-1 Shiba, Minato-ku, Tokyo

Ⅰ-3

JEI Hamamatsucho Building

2-2-12 Hamamatsu-cho, Minato-ku, Tokyo

Ⅰ-8

AKASAKA INTERCITY

1-11-44 Akasaka, Minato-ku, Tokyo

Ⅰ-9

Kowa Shirokanedai Building

3-19-1 Shirokanedai, Minato-ku, Tokyo

I-10

Daiba Garden City Building

2-3-5 Daiba, Minato-ku, Tokyo

Ⅰ-12

HAMARIKYU INTERCITY

1-9-1 and 15 Kaigan, Minato-ku, Tokyo

Ⅰ-13

Shintomicho Building

3-10-9 Irifune, Chuo-ku, Tokyo

Ⅰ-14

Kowa Nishi-Shimbashi Building

2-1-1 Nishi-Shimbashi, Minato-ku, Tokyo

Ⅰ-15

Mansard Daikanyama

10-1 Sarugakucho, Shibuya-ku, Tokyo

I-16

AKASAKA INTERCITY AIR

1-8-1Akasaka, Minato-ku, Tokyo

I-17

Bizcore Akasaka-mitsuke

3-1-2 Akasaka, Minato-ku, Tokyo

I-18
Ⅱ-1
Ⅱ-3

Bizcore Jimbocho
NHK Nagoya Housou-Center
Building
Osaka Kogin Building(Land with Leasehold Interest)

3-9-2 Kanda-ogawamachi, Chiyoda-ku,
Tokyo
Area I
1-13-3 Higashi-Sakura, Higashi-ku,
Nagoya-shi, Aichi

Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estateAppraisal value
at end of period Net book value(Millions of yen) (Millions of yen)
(Note)
25,90020,55414,000

8,979

9,450

8,037

31,40026,540

5,070

4,734

10,1009,335

27,20016,902

2,090

1,737

14,10010,90414,000

11,151

8,080

6,485

6,800

6,163

10,30010,017

178,490

141,545

Real estate

6,220

5,369

4-1-1 Koraibashi, Chuo-ku, Osaka-shi, Osaka

Trust beneficiaryinterest in real estate

2,570

1,865

Trust beneficiaryinterest in real estate

5,050

4,874

Trust beneficiaryinterest in real estate

Ⅱ-4

GRAND FRONT OSAKA(Umekita Plaza·South Building)

4-1 Ohbuka-cho, Kita-ku, Osaka City, Osaka(Umekita Plaza)
4-20 Ohbuka-cho, Kita-ku, Osaka City, Osaka(South Building)

Ⅱ-5

GRAND FRONT OSAKA(North Building)

3-1 Ohbuka-cho, Kita-ku, Osaka City, Osaka

Ⅲ-1

Musashikosugi Tower Place

Ⅲ-2

Kowa Kawasaki Higashiguchi
Building

Area II
1-403 Kosugi-machi, Nakahara-ku,
Kawasaki-shi, Kanagawa
1-53 Nisshin-cho Kawasaki-ku,
Kawasaki-shi, Kanagawa

Ⅲ-3

JEI Hongo Building

2-38-16 Hongo, Bunkyo-ku, Tokyo

Ⅲ-5

Kawasaki Nisshincho Building

7-1 Nisshin-cho, Kawasaki-ku, Kawasaki-shi,
Kanagawa

Ⅲ-7

JEI Ryogoku Building

3-25-5 Ryogoku, Sumida-ku, Tokyo

Ⅲ-9

Kowa Kawasaki Nishiguchi Building

66-2 Horikawa-cho, Saiwai-ku, Kawasaki-shi,
Kanagawa

Ⅲ-10

Pacific Square Sengoku

2-29-24 Hon-Komagome, Bunkyo-ku, Tokyo

Ⅲ-11

Core City Tachikawa

2-37-7 Akebono-cho, Tachikawa-shi, Tokyo
1-1-8 Sakuragi-cho, Naka-ku, Yokohama-shi,
Kanagawa
4-59 Bentendori, Naka-ku, Yokohama-shi,
Kanagawa
Area III
2-2-48 Kata-machi, Tsushima-ku, Osaka-shi,Osaka
14-4 Hacchobori, Naka-ku, Hiroshima-shi,
Hiroshima
1-1-2 Kitananajonishi, Kita-ku, Sapporo-shi,
Hokkaido

Ⅲ-12

Nisseki Yokohama Building

Ⅲ-13

Yokohama Bentendori Dai-ichi
Seimei Building

Ⅳ-2

JEI Kyobashi Building

Ⅳ-3

JEI Hiroshima Hacchobori Building

Ⅳ-4

SE Sapporo Building

Ⅳ-5

Aoba-dori Plaza

3-2-1 Chuo, Aoba-ku, Sendai-shi, Miyagi

Ⅳ-6

Daiwa Minami-morimachi Building

2-6, 2-chome Kita Tenjinbashi, Kita-ku,
Osaka-shi, Osaka

Ⅳ-7

JEI Naha Building

2-8-1 Kumoji, Naha-shi, Okinawa

IV-9

Hiroshima Dai-ichi Seimei OS
Building
Senshin Building

IV-10

Sapporo Otemachi Building

1-2-21 Matoba-cho Minami-ku,
Hiroshima-shi, Hiroshima
1-6-27 Chuo, Aoba-ku, Sendai-shi, Miyagi
4-5-1 Minami Ichijo Nishi, Chuo-ku,
Sapporo-shi, Hokkaido
Area IV
Total

IV-8

Form of ownership

Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Real estate
Trust beneficiaryinterest in real estate

3,850

3,997

17,690

16,107

21,40012,241

10,60010,689

4,630

4,937

4,720

4,161

2,670

2,363

16,40019,046

1,490

1,608

9,680

6,008

32,40022,296704

687

104,694

84,040

3,990

2,726

4,070

2,637

9,190

5,110

4,560

2,226

5,170

4,182

2,080

1,533

3,430

2,807

1,680

1,619

4,368

4,074

38,538339,412

26,917
268,610

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

16

(Note) Appraisal value at end of period indicates the appraisal value described in the real estate appraisal report prepared by real estateappraisers belonging to Japan Real Estate Institute, Chuo Real Estate Appraisal Co., Ltd., Japan Valuers Co., Ltd., Daiwa Real
Estate Appraisal Co., Ltd. and The Tanizawa Sogo Appraisal Co., Ltd. as of December 31, 2021, pursuant to the articles ofincorporation of JEI and the regulations stipulated by the Investment Trusts Association, Japan. For properties with joint
ownership in the current portfolio, the value is obtained by multiplying the total value of the shared real estate by the percentageof the interest owned by JEI or the trustee.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

17

Property
No.

Property name30th Period
31st Period
January 1, 2021, to June 30, 2021
July 1, 2021, to December 31, 2021
Ratio of rental
Ratio of rental
Total number of Occupancy Rental revenue revenue to Total number of Occupancy Rental revenue revenue to
rate
rate
tenants
tenants
total rental
total rental(Interim)(Interim)(At end of period) (At end of period) (Millions of yen)
(At end of period) (At end of period) (Millions of yen)revenues
revenues(Note 1)
(Note 1)
(%)
(%)
(%)
(%)

I-1

Omori Bellport D

1

100.0

914

8.7

Ⅰ-2

Shiba 2-Chome Building

2

99.2

373

3.5

Ⅰ-3

1

100.0

244

13

100.0

1

I-17

JEI Hamamatsucho
Building
AKASAKA
INTERCITY
Kowa Shirokanedai
Building
Daiba Garden City
Building
HAMARIKYUINTERCITY
Shintomicho Building
Kowa Nishi-Shimbashi
Building
Mansard Daikanyama
AKASAKA
INTERCITY AIR
Bizcore Akasaka-mitsuke

I-18

Bizcore Jimbocho

Ⅰ-8
Ⅰ-9
I-10
Ⅰ-12
Ⅰ-13
Ⅰ-14
Ⅰ-15
I-16

Ⅱ-1
Ⅱ-3
Ⅱ-4
Ⅱ-5

Ⅲ-1
Ⅲ-2
Ⅲ-3
Ⅲ-5
Ⅲ-7
Ⅲ-9
Ⅲ-10
Ⅲ-11
Ⅲ-12
Ⅲ-13
Ⅳ-2
Ⅳ-3
Ⅳ-4
Ⅳ-5
Ⅳ-6
Ⅳ-7
IV-8
IV-9
IV-10

23
2
(Note 1)

100.0

920

8.6

100.0

373

3.5

2.3

4

100.0

244

2.3

633

6.0

12

95.6

629

5.9

92.0

169

1.6

15

94.7

174

1.6

1

82.6

341

3.2

2

82.6

325

3.1

1

98.6

773

7.3

95.3

739

6.9

11

100.0

74

0.7

7
(Note 1)
11

100.0

76

0.7

1

100.0

(Note 2)

(Note 2)5100.0(Note 2)

(Note 2)

7

72.7

253

2.4

72.7

228

2.1

1

100.0

(Note 2)

(Note 2)99.8

(Note 2)

(Note 2)

1

100.0

153

1.5

7
1
(Note 1)
8

100.0

153

1.4

1

100.0

(Note 2)

(Note 2)572.5

(Note 2)

(Note 2)

Area I
NHK Nagoya HousouCenter Building
Osaka Kogin Building(Land with Leasehold
Interest)
GRAND FRONTOSAKA (Umekita Plaza·South Building)
GRAND FRONTOSAKA(North Building)Area II
Musashikosugi Tower
Place
Kowa Kawasaki
Higashiguchi Building
JEI Hongo Building
Kawasaki Nisshincho
Building
JEI Ryogoku Building
Kowa Kawasaki
Nishiguchi Building
Pacific Square Sengoku

42

96.3

-

-

102

94.3

-

-

33

94.8

373

3.5

35

93.0

349

3.3

1

100.0

89

0.8

1
(Note 1)

100.0

89

0.8

2

98.4

(Note 2)

(Note 2)2(Note 1)

97.6

(Note 2)

(Note 2)597.2

(Note 2)

(Note 2)

5(Note 1)

98.2

(Note 2)

(Note 2)

41

96.4

-

-

43

95.6

-

-

39

100.0

797

7.5

37

64.6

747

7.0

1

100.0

(Note 2)

(Note 2)1100.0(Note 2)

(Note 2)

1

73.8

(Note 2)

(Note 2)486.9

(Note 2)

(Note 2)

1

58.3

137

1.3

14

67.3

131

1.2

1

100.0

112

1.1

18

100.0

110

1.0

1

100.0

642

6.1

22

97.3

630

5.9

1

100.0

61

0.6

10

100.0

61

0.6

Core City Tachikawa
Nisseki Yokohama
Building
Yokohama BentendoriDai-ichi Seimei Building
Area III

1

97.8

320

3.0

24

98.4

312

2.9

1

100.0

1,202

11.4

45

100.0

1,203

11.3

1

100.0

41

0.4

13

100.0

41

0.4

48

96.0

-

-

188

90.4

-

-

JEI Kyobashi Building
JEI Hiroshima
Hacchobori Building
SE Sapporo Building

1

100.0

185

1.8

21

100.0

189

1.8

1

98.4

153

1.5

43

98.4

158

1.5

1

99.3

419

4.0

43

100.0

422

4.0

Aoba-dori Plaza
Daiwa Minamimorimachi Building
JEI Naha Building
Hiroshima Dai-ichi
Seimei OS Building
Senshin Building
Sapporo Otemachi
Building
Area IV

49

96.0

187

1.8

48

77.0

169

1.6

1

100.0

194

1.8

10

100.0

194

1.8

1

89.4

77

0.7

18

100.0

82

0.8

1

95.2

141

1.3

28

96.3

141

1.3

1

94.3

51

0.5

16

92.0

50

0.5

-

-

-

-

27

98.5

21

0.2

56

97.6

-

-

254

96.5

-

-

Total

187

96.4

10,567

100.0

587

93.1

10,666100.0

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)18

(Note 1) Total number of tenants indicates the number of end tenants in principle, starting from the 31st period. When a tenant has
multiple tenancies in the same property, it is counted as one tenant, and when in multiple properties, it is counted as multiple
tenants. However, ① for the residential portion of Shiba 2-Chome Building and HAMARIKYU INTERCITY, the total
number of tenants is counted as one, considering the master lease company as the tenant, since the importance of each end
tenant is low, and ② for the properties in which real estate is co-owned or trust beneficiary rights are quasi-co-owned, and inwhich the percentage of JEI's ownership or quasi-co-ownership is low (AKASAKA INTERCITY AIR, GRAND FRONTOSAKA (Umekita Plaza, South Building) and GRAND FRONT OSAKA (North Building)), the total number of tenants
indicates the number of the master lease companies considering the master lease company as a tenant, since the importanceof each tenant is low. In addition, the total number of tenants for ③ Osaka Kogin Building (land with leasehold interest) is
counted as one based on the lease agreement for the leased land. The total number of tenants for the 30th period indicates thetotal number of tenants in each property as of the end of each period. For properties for which master lease agreements havebeen concluded, the number of tenants is counted as one per property. When a tenant has multiple tenancies in the same
property, it is counted as one tenant, and when in multiple properties, it is counted as multiple tenants. As for Osaka Kogin
Building (Land with Leasehold Interest), total number of tenants is counted as one based on the lease agreement for the leased
land.
(Note 2) Rental revenue (interim) and ratio of rental revenue to total rental revenues for Kowa Nishi-Shimbashi Building, Kowa
Kawasaki Higashiguchi Building, and JEI Hongo Building are not disclosed as consent for disclosure of rent from the end
tenants has not been obtained; those for AKASAKA INTERCITY AIR, GRAND FRONT OSAKA (Umekita Plaza·South
Building), and GRAND FRONT OSAKA (North Building) are not disclosed as consent for disclosure of rent from the coowners has not been obtained; and those for Bizcore Jimbocho are not disclosed as consent for disclosure of rent from theowner of other exclusively owned space conducting centralized management has not been obtained.

(4) Securities Portfolio
None(5) Renewable Power Generation Facility
None(6) Right to Operate Public FacilityNone(7) Other Assets
1) Contract amount and fair value of specified transactions and foreign exchange forwards transactions
Fair value
Contract amount (Thousands of yen) (Note 1)(Thousandsof yen)Classification
Type(Note 2)

Over one year

Over-the-countertransaction

Interest rate swap
transactions
Floating interest ratereceivable
Fixed interest rate
payable40,390,000–

34,640,000(Note 1) Contract amount of swap transactions is calculated based on notional principal.
(Note 2) Fair value is omitted for presentation as over-the-counter transactions meet requirements for special accounting under the
Accounting Standard for Financial Instruments.

2) Shares
Name (Note 1)

KMO Corporation

Number ofshares
833 shares

Acquisition price(Thousands of yen) (Note 4)

Assessed value(Thousands of yen) (Note 5)

Unit price

Unit price50

Amount42,06950

Amount42,069Valuation
gains/losses－

Remarks－(Note 1) With the acquisition of GRAND FRONT OSAKA (North Building) (part of trust beneficiary interest in real estate), JEI
purchased 833 common shares of KMO Corporation, an entity that conducts facility management and business development
for Knowledge Capital (Note 2), and acquired the restitution rights of funds (Note 3) of Knowledge Capital’s funds. Moreover,said common shares may not be transferred separately from quasi co-ownership of the trust beneficiary interest in GRANDFRONT OSAKA (North Building).
(Note 2) Knowledge Capital, a center for industry-academia collaboration, is one of the main uses of GRAND FRONT OSAKA (North
Building).
(Note 3) The details of the restitution rights of Knowledge Capital’s funds are recorded below under “3) Securities other than shares”(Note 4) Acquisition price includes the costs of acquisition.
(Note 5) The assessed value of these unlisted shares is stated as the book value.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)193) Securities other than shares
Asset type (Note 1)

QuantityBook value (Thousands of yen)
Unit priceAmountAssessed value(Thousands of yen) (Note 2)
Unit priceAmountValuation
gains/losses

Remarks

Restitution rights of
－
－
－
－
1
2,659
2,659
funds
(Note 1) With the acquisition of GRAND FRONT OSAKA (North Building) (part of trust beneficiary interest in real estate), JEI
acquired the restitution rights of funds of Knowledge Capital’s funds. Moreover, said restitution rights may not be transferred
separately from quasi co-ownership of the trust beneficiary interest in GRAND FRONT OSAKA (North Building).
(Note 2) The assessed value of the restitution rights of funds states the book value.

4) Other Assets
Book value (Thousands of yen)
Asset type (Note 1)

Quantity
Unit priceAmountAssessed value(Thousands of yen) (Note 2)
Unit priceAmountValuation
gains/losses

Remarks

Restitution rights of
1
－
454
－
454
－
－
funds
(Note 1) With the acquisition of GRAND FRONT OSAKA (Umekita Plaza·South Building) and GRAND FRONT OSAKA (North
Building), JEI acquired restitution rights of funds concerning GRAND FRONT OSAKA TMO General Incorporated
Association, which runs businesses related to the revitalization of the area centering on GRAND FRONT OSAKA, theimprovement of the environment and the formation of communities.
(Note 2) The assessed value of the restitution rights of funds states the book value.

(8) Status of JEI’s Properties by Country and Region
None for JEI’s properties in countries or regions other than Japan.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)20

4. Capital Expenditures for Owned Properties(1) Scheduled Capital Expenditures
The following table shows major items of scheduled capital expenditures for repairs and maintenance planned for theproperties owned by JEI as of the end of the 31st period (ended December 31, 2021). The values below include
portions to be expensed for accounting purposes.
Property nameLocation

JEI Ryogoku Building

Sumida-ku,
Tokyo

Kowa Shirokanedai
Building

Minato-ku,
TokyoKowa Nishi-Shimbashi
Building

Minato-ku,
TokyoKowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

NHK Nagoya HousouCenter Building

Nagoya-shi, Aichi

JEI Hiroshima
Hacchobori Building

Hiroshima-shi,
Hiroshima

Omori Bellport D

Omori Bellport D

SE Sapporo Building

Shinagawa-ku,
Tokyo
Shinagawa-ku,
Tokyo
Sapporo-shi,
Hokkaido

PurposeSchedule term

Estimated construction costs(Millions of yen)
Payment for the six Total of
Totalmonths ended
advance
December 31, 2021 payment

Renovation of airFrom July 2021
conditioning systems
To March 2022
(Phase 2)
Renovation of airFrom March 2022
conditioning systems
To May 2022
(Phase 2)Update of hot andcold water generator

From March 2022
To May 2022

Renovation of seals
From January 2022
around exterior walls
To June 2022
(Phase 2)
Conversion to LED
From August 2021
lighting in office
To February 2022
sections (Phase 2)
Renovation of airFrom January 2022
conditioning systems
To June 2022
(Phase 3)
Update of heat source
From August 2021
equipment
To March 2022
(Phase 3)
Update of automatic
From Octoberair-conditioning
2021
control equipment
To January 2022
(Phase 3)
Renovation of multilevel parking lot

199

－

－

119

－

－

71

－

－

67

－

－

62

－

－

－

－

61
59

46

From May 2022
To June 2022

37

－

－

JEI Hiroshima
Hacchobori Building

Hiroshima-shi,
Hiroshima

Update of airFrom January 2022
conditioning drainage
To June 2022
pipes

32

－

－

NHK Nagoya HousouCenter Building

Nagoya-shi, Aichi

Update of elevators

From June 2021
To March 2022

31

－

－

Yokohama-shi,
Kanagawa

Update of elevators

From January 2022
To June 2022

18

－

－

Yokohama-shi,
Kanagawa

Update of outdoor-air From January 2022
processing units
To June 2022

10

－

－

Yokohama-shi,
Kanagawa

Conversion to LED
lighting in common
spaces8－－

Yokohama BentendoriDai-ichi Seimei
Building
Yokohama BentendoriDai-ichi Seimei
Building
Yokohama BentendoriDai-ichi Seimei
Building

From January 2022
To June 2022

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

21

(2) Capital Expenditures for the Six Months Ended December 31, 2021
The following table shows constructions conducted by JEI during the period ended December 31, 2021, and expensed
as capital expenditures. Capital expenditures for the period ended December 31, 2021, were 1,305 million yen and,
when combined with repairs and maintenance costs of 160 million yen classified as expenses in the period underreview, the amount of constructions completed totaled 1,465 million yen.
Property nameAmount Paid
(Millions of yen)

PurposeTerm

Renovation of air-conditioning
systems (Phase 1)

From October 2021
To December 2021

114

Kowa Kawasaki
Kawasaki-shi,
Higashiguchi Building Kanagawa

Update of gondola equipment

From October 2021
To December 2021

84

JEI Hiroshima
Hacchobori Building

Renovation of air-conditioning From September 2021
systems (Phase 2)
To November 2021

68

Update of emergency generator

From August 2021
To December 2021

65

Kowa Kawasaki
Kawasaki-shi,
Higashiguchi Building Kanagawa

Renovation of seals aroundexterior walls (Phase 1)

From July 2021
To December 2021

57

SE Sapporo Building

Sapporo-shi,
Hokkaido

Update of extra-high voltage
substation (Phase 1)

From July 2020
To December 2021

55

Nisseki Yokohama
Building

Yokohama-shi,
Kanagawa

Repair of rooftop, exterior
walls, etc. (Phase 1)

From February 2021
To August 2021

45

Kawasaki Nisshincho
Building

Kawasaki-shi,
Kanagawa

Renovation of seals aroundexterior walls (Phase 1)

From August 2021
To December 2021

41

SE Sapporo Building

Sapporo-shi,
Hokkaido

Renovation of multi-levelparking lot

From November 2021
To December 2021

37

From October 2021
To December 2021

35

From October 2021
To December 2021

34

Kowa Shirokanedai
Building

JEI Ryogoku Building

Location
Minato-ku,
Tokyo

Hiroshima-shi,
Hiroshima
Sumida-ku,
Tokyo

Update of lighting in
exclusively-owned sections andupdate of guide lights (Phase 1)
Renovation of exterior wall
(north side)

Kowa Kawasaki
Kawasaki-shi,
Higashiguchi Building Kanagawa
JEI Naha Building

Naha-shi,
Okinawa

Shiba 2-Chome
Building

Minato-ku,TokyoRenovation of exterior wall

From February 2021
To July 2021

31

JEI Naha Building

Naha-shi,
Okinawa

Renewal of elevators

From October 2021
To December 2021

29

Update of substation (Phase 2)

From November 2021
To December 2021

16

Yokohama Bentendori
Yokohama-shi,
Dai-ichi Seimei
Kanagawa
Building

Other constructions

587

Total

1,305

(3) Reserved Funds for Long-Term Repairs and Maintenance Plans
Based on the long-term repairs and maintenance plans developed for each property, JEI has set aside the following
cash reserves, derived from depreciation and other excess cash flows, in order to fund large-scale repairs, maintenanceand other construction.
(Unit: Millions of yen)Item

27th Period
28th Period
29th Period
30th Period
31st Period
July 1, 2019, to January 1, 2020, to July 1, 2020, to January 1, 2021, to July 1, 2021, toDecember 31, 2019 June 30, 2020 December 31, 2020 June 30, 2021 December 31, 2021

Reserved funds at
beginning of period

284

300

473

250

380

Increase

899

1,553

260

963

1,217

Decrease

884

1,380

484

834

1,299

Reserved funds at theend of period

300

473

250

380

298

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)22

5. Expenses and Liabilities(1) Expenses Associated with Asset Management(Unit: Thousands of yen)Account

30th Period
January 1, 2021, to June 30, 2021

31st Period
July 1, 2021, to December 31, 2021

(a) Asset management fees

454,816457,209(b) Custodian fees

21,88021,877(c) Administrative service fees

40,42740,331(d) Compensation for directors

5,580

5,520

(e) Accounting auditor fees

11,00011,000(f) Other

87,78881,568621,492

617,507Total(2) Borrowings
Borrowings by each financing source as of the end of the 31st period (ended December 31, 2021) are as follows:
Classification
LenderDrawdown
date

Balance at
beginning of
period(Thousands of yen)Mizuho Bank, Ltd.
MUFG Bank, Ltd.
November 29,
Sumitomo Mitsui Banking
2016
Corporation
Sumitomo Mitsui Trust Bank Limited
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
December 29,
2014
Mizuho Trust & Banking Co., Ltd.
Resona Bank, Ltd.
Sompo Japan Insurance Inc.
January 31,
Long-term Tokio Marine & Nichido Fire2017
loans due Insurance Co., Ltd.
within one
July
31,
year
Development Bank of Japan Inc.
2014
Mizuho Bank, Ltd.
Sompo Japan Insurance Inc.
Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.
Resona Bank, Ltd.
Subtotal

September 30,
2020
November 30,
2017

December 29,
2014

Average
Balance at interest rate
Repayment
Maturity date method
end of period(%)(Thousands of yen)

520,000
540,000－－

1,080,000－

1,620,000
1,950,000
2,000,000
1,200,000
600,000
2,000,000

－
－
－
－
－
2,000,000

1,000,000

1,000,000

2,000,000

Use

Remarks(Note 1)

0.41204

November 29,
2021

0.81875(Note 2)

December 30,
2021

0.35000(Note 2)January 31,2022

2,000,000

1.15417(Note 2)－2,000,000

0.28208

June 30,
2022
September 30,
2022－

500,000－

500,000－－－－
14,510,000

1,950,000
2,000,000
1,200,000
600,000
13,750,000

0.35000(Note 2)

November 30,
2022

0.93625(Note 2)

December 30,
2022

Lumpsum

Repayment Unsecuredof existingand nonborrowing guaranteed

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

23

Classification

LenderDrawdown
date

Balance at
beginning of
period(Thousands of yen)

September 30,
2020

Average
Balance at interest rate
Repayment
Maturity date method
end of period(%)(Thousands of yen)

2,000,000－

500,000－

500,000－

1,950,000－

2,000,000－

1,200,000－

600,000－

2,000,000

2,000,000

3,000,000

3,000,000

Mizuho Bank, Ltd.

420,000

420,000

MUFG Bank, Ltd.

250,000

250,000

Sumitomo Mitsui Banking
Corporation

140,000

140,000

1,560,000

1,560,000

1,500,000

1,500,000

Resona Bank, Ltd.

500,000

500,000

Aozora Bank, Ltd.

750,000

750,000

The Bank of Fukuoka, Ltd.

150,000

150,000

MUFG Bank, Ltd.
Long-term Sumitomo Mitsui Banking
loans
Corporation

1,000,000

1,000,000

3,500,000

3,500,000

500,000

500,000

500,000

500,000

3,500,000

3,500,000

Mizuho Bank, Ltd.

870,000

870,000

MUFG Bank, Ltd.

590,000

590,000

350,000

350,000

1,560,000

1,560,000

Resona Bank, Ltd.

1,000,000

1,000,000

Aozora Bank, Ltd.

750,000

750,000

150,000

150,000

1,000,000

1,000,000

Mizuho Bank, Ltd.

3,700,000

3,700,000

MUFG Bank, Ltd.

1,000,000

1,000,000

400,000

400,000

1,000,000

1,000,000

1,000,000

1,000,000

The Bank of Fukuoka, Ltd.

700,000

700,000

Resona Bank, Ltd.

200,000

200,000

Mizuho Bank, Ltd.
Sompo Japan Insurance Inc.
Tokio Marine & Nichido Fire
Insurance Co., Ltd.

November 30,
2017

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.

December 29,
2014

Resona Bank, Ltd.
Development Bank of Japan Inc.
The Dai-ichi Life Insurance
Company Limited

Mizuho Trust & Banking Co., Ltd.
The Norinchukin Bank

Resona Bank, Ltd.

June 30,
2015
June 29,2018

November 30,
2015

November 30,
2017

Aozora Bank, Ltd.
Development Bank of Japan Inc.

Sumitomo Mitsui Banking
Corporation
Mizuho Trust & Banking Co., Ltd.

November 30,
2015

The Bank of Fukuoka, Ltd.
Nippon Life Insurance Company

Sumitomo Mitsui Banking
Corporation
The Norinchukin Bank
Shinkin Central Bank

December 12,
2019

June 29,
2018

Use

Remarks(Note 1)0.28208

September 30,
2022

0.35000 November 30,
2022(Note 2)0.93625(Note 2)

December 30,
2022

1.20250(Note 2)0.46000(Note 2)June 30,2023

0.84375(Note 2)
November 30,
2023

Lumpsum

0.64801(Note 2)0.68431(Note 2)

Repayment Unsecuredof existingand nonborrowing guaranteed

May 31,2024

0.96275 November 30,
2024(Note 2)0.42000(Note 2)

December 12,
2024

0.67400(Note 2)June 30,
2025

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

24Classification

LenderDrawdown
date

Average
Balance atBalance at interest rate
Repayment
beginning of
Maturity date method
end of period(%)
period(Thousands of yen)(Thousands of yen)
(Note 1)

Mizuho Bank, Ltd.

850,000

850,000

MUFG Bank, Ltd.

850,000

850,000

600,000

600,000

1,450,000

1,450,000－

520,000－

540,000－

1,080,000－

1,620,000

2,200,000

2,200,000

1,750,000

1,750,000

1,100,000

1,100,000

The Norinchukin Bank

850,000

850,000

Aozora Bank, Ltd.

500,000

500,000

Mizuho Bank, Ltd.

850,000

850,000

MUFG Bank, Ltd.

850,000

850,000

600,000

600,000

1,450,000

1,450,000

1,300,000

1,300,000

1,300,000

1,300,000

1,000,000

1,000,000

700,000

700,000

Development Bank of Japan Inc.

2,000,000

2,000,000

Mizuho Bank, Ltd.

1,175,000

1,175,000

1,175,000

1,175,000

1,000,000

1,000,000

Mizuho Trust & Banking Co., Ltd.

1,087,500

1,087,500

The Norinchukin Bank

1,162,500

1,162,500

The Dai-ichi Life Insurance
Company Limited

1,000,000

1,000,000

2,000,000

2,000,000

Mizuho Bank, Ltd.

－

1,950,000

MUFG Bank, Ltd.

－2,000,000－

1,200,000－

600,000

2,000,000

2,000,000

Subtotal

73,090,000

73,850,000

Total

87,600,000

87,600,000

Mizuho Trust & Banking Co., Ltd.

November 1,
2018

The Norinchukin Bank
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank
LimitedNovember 29,
2021

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

Mizuho Trust & Banking Co., Ltd.

September 29,
2017

March 8,2019

The Norinchukin Bank
Long-term Development Bank of Japan Inc.
loans

September 29,
2017

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

June 29,
2018

MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

Development Bank of Japan Inc.

Mizuho Trust & Banking Co., Ltd.

January 31,
2020

June 30,
2021

December 30,
2021

Resona Bank, Ltd.
The Dai-ichi Life Insurance
Company Limited

June 30,2021

0.70600(Note 2)

November 1,
2025

0.38727

November 29,
2025

Use

Remarks

0.83441(Note 2)
March 31,2026

0.57100(Note 2)
Repayment
0.83071 September 30, Lumpof existing2026
sum(Note 2)borrowing
0.79100(Note 2)

December 30,
2026

0.68778(Note 2)

July 31, 2028

0.71200(Note 2)

Unsecuredand nonguaranteed

January 31,2029

0.77000(Note 2)
0.55801(Note 2)

December 30,
2029

0.48727

December 30,
2029

0.65000(Note 2)June 28, 2030

(Note 1) Average interest rate is calculated by applying a weighted average to the loan balance during the period. Borrowings hedged
by interest rate swaps to avoid interest rate fluctuation risk are calculated by applying a weighted average rate in considerationof the effect of the interest rate swaps.
(Note 2) Loans are fixed-rate loans (including loans with fixed-rate interest using interest rate swaps).

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

25

(3) Investment Corporation Bonds
The outstanding investment corporation bonds issued by JEI as of December 31, 2021, are as follows:
Classification
Issuancedate

Unsecured investment corporation bonds

Issue(Thousands of yen)

Balance at end ofInterest rate
period(%)

Maturity date(Thousands of yen)

Repayment
methodUse

7th series unsecured
investment corporation bonds

March 10,2014

8,000,000

8,000,000

1.13000

March 11,2024

(Note 1)

8th series unsecured
investment corporation bonds

September 9,2015

5,000,000

5,000,000

1.03000

September 9,2025(Note 2)

9th series unsecured
investment corporation bonds

October 27,
2016

2,000,000

2,000,000

0.45000

October 27,
2026(Note 3)10th series unsecured
investment corporation bonds

December 20,
2016

2,000,000

2,000,000

0.39000

December 20,
2023

11th series unsecured
investment corporation bonds

April 25,2017

7,000,000

7,000,000

0.65000

April 23,2027

2,000,000

2,000,000

0.24000

April 20,2023

2,000,000

2,000,000

0.95000

April 20,2033

1,000,000

1,000,000

1.07000

September 9,2039

29,000,000

29,000,000

August 10,
2018

4,000,000

4,000,000

0.63000

August 10,
2028

October 29,
2020

5,000,000

5,000,000

0.75000

October 29,
2035

Sub Total

9,000,000

9,000,000

Total

38,000,000

38,000,000

Remarks

Lump-sum (Note 2) (Note 4)

12th series unsecured
investment corporation bonds
13th series unsecured
investment corporation bonds
15th series unsecured
investment corporation bonds

April 20,2018

September 10,
2019

Sub Total

Green bonds

Balance at
beginning of
period14th series unsecured
investment corporation bonds
16th series unsecured
investment corporation bonds(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 3)(Note 2)Lump-sum (Note 2) (Note 4)

The funds were used for redeeming existing investment corporation bonds and repaying existing borrowings.
The funds were used for repaying existing borrowings.
The funds were used for redeeming existing investment corporation bonds.
The bonds are with special pari passu conditions among specified investment corporation bonds.

(4) Short-Term Investment Corporation Bonds
None(5) Subscription Rights for New Investment Units
None

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)26

6. Condition of Investment Transactions(1) Transactions of Property, Asset-Backed Securities, Etc. and Infrastructure Assets, Etc.,
and Infrastructure-Related Assets(Millions of yen)Type of asset

Property nameAcquisition
Acquisition
Acquisition
Price
Transfer date
date
(Note)

Transfer
Transfer
price

Net book
value

Gain (loss)
on transfer

Sapporo Otemachi
Trust beneficiary
Building (quasi co- December 1,
4,069
－
－
－
－
interest in real estate ownership interest
2021
70.0%)
Total
－
4,069
－
－
－
－
(Note) The acquisition price indicates the amount excluding related expenses (brokerage fee, taxes, etc.) required for theacquisition, and is the purchase amount of real estate stated in the trust beneficiary interest purchase agreement.

(2) Transactions of Other Assets
None(3) Appraisal and Research for Specified Asset Value, Etc.
1) Real estate, etc.
Acquisition
Name of property
or transfer

Type ofasset

Acquisition/transfer date

Acquisition/
Appraisaltransfer pricevalue(Millions of yen)
(Millions of yen)
(Note)

Appraiser

Appraisal
date

Sapporo Otemachi
Trust
Building (quasi co- beneficiary
December 1,
Japan RealNovember 1,
Acquisition
4,069
4,235 Estate Instituteownership interest
interest in
2021
2021
70.0%)
real estate(Note) The acquisition/transfer price is the purchase price of the property stated in the trust beneficiary interest purchaseagreement (excluding the amount equivalent to consumption taxes, etc.).

2) OthersNone(4) Transactions with Interested Parties
1) Transactions
None2) Amounts of fees paid and other expenses(Unit: Thousands of yen)
Breakdown of transactions with interested parties
Classification

Total amount paid (A)B/APaid to

Property management
costs and fees

Total

Amount paid (B)The Dai-ichi Building Co., Ltd.

505,392

35.4％

Nippon Steel Kowa Real EstateCo., Ltd.

504,646

35.4％

Sohgo Housing Co., Ltd.

106,089

7.4％

Akasaka Intercity Management
Co., Ltd.

20,9081.5％–

1,137,037

79.7％

1, 425,948

1, 425,948(Note 1) Figures indicate fees paid to interested parties of the asset management company with whom JEI had direct transactions during
the six months ended December 31, 2021.
(Note 2) Other than the Total amount paid indicated above, the following payments were made for maintenance and repair work, etc.
which were ordered to interested parties during the period.
Kowa Real Estate Facilities Co., Ltd.
409,382 thousand yen
The Dai-ichi Building Co., Ltd.
23,499 thousand yen
Nippon Steel Kowa Real Estate Co., Ltd.
15,095 thousand yen

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)27

(5) Transactions with Asset Management Company Concerning the Additional Businessesof the Asset Management Company
The Asset Management Company (Japan Excellent Asset Management Co., Ltd.) does not conduct any additional
business falling under the categories of the type I financial instruments business, type II financial instruments
business, building lots and buildings transaction business, or real estate specified joint enterprise, and had no
applicable transactions.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)28

7. Accounting(1) Assets, Liabilities, Principal, and Profit and Loss
For assets, liabilities, principal, and profit and loss, please refer to the attached Balance Sheets, Statements ofIncome and Retained Earnings, Statements of Changes in Net Assets, Notes to Financial Statements andDistribution Information.

(2) Change in Depreciation Calculation Method
No changes were made during the period.

(3) Change in Asset and Infrastructure Assets, Etc. Valuation Method
No changes were made during the period

8. Others(1) Notice1) General unitholders’ meeting
The tenth general unitholders’ meeting of JEI was held on September 30, 2021. The following table summarizes
the major matters approved at the unitholders’ meeting.
AgendaSummary
The Articles of Incorporation was amended as follows:・ Establishment of new provisions setting forth that the provision concerning “Deemed
Votes in Favor” prescribed in Article 93, Paragraph 1 of the Investment Trust Law and
Article 13, Paragraph 1 of the current Articles of Incorporation shall not be applied toimportant agendas that have significant impact on the interests of unitholders and thePartial amendment to the
Articles of Incorporation

governance structure of JEI, for which submission of opposing agendas is difficult by
nature, for the purpose of more directly and accurately reflecting the intentions of theunitholders.
・Implementation of required amendments to maintain consistency with relevant laws
and regulations with the revisions to the application of the Accounting Standard for
Fair Value Measurement and the Accounting Standards for Financial Instruments.
・ Replacement of Japanese calendar with Gregorian calendar to indicate the calendar
year except for indication of decree number; simplification of the Articles ofIncorporation by deleting articles and clauses established at incorporation which havebecome redundant; and other necessary changes.

Election of one executive
director
Election of one substituteexecutive director

Shuichiro Kayama was elected as an executive director. The term of his office is two
years from November 1, 2021.
Hiroshi Tabei was elected as a substitute executive director.

Election of three supervisory

Shunichi Maekawa, Eiji Takagi, and Osamu Hirakawa were elected as supervisory

directors

directors. The term of their office is two years from November 1, 2021.

2) Board of directors’ meeting
There were no applicable items during the period.

(2) Disclosure of Investment Trust Beneficiary Certificates Incorporated by JEIThere were no applicable items during the period.

(3) Disclosure of Juridical Persons Owning Overseas Real Estate and Status of the Owned
Real Estate
There were no applicable items during the period.

(4) Other
Unless otherwise stated, monetary amounts have been rounded down and percentage figures have been rounded
off to the nearest indicated unit in this Report.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)

29

Financial Statements
Japan Excellent, Inc.
For the six-month periods ended
December 31, 2021 and June 30, 2021
with Independent Auditor’s Report

30

31

32

33

Japan Excellent, Inc.
Balance Sheets
As of December 31, 2021 and June 30, 2021

As ofDecember 31, 2021

As ofJune 30, 2021

(Thousands of yen)
AssetsCurrent assets:
Cash and cash equivalents including trust accounts(Note 5)
Rental receivables
Consumption taxes refundable
Prepaid expenses and other current assets
Total current assets

22,553,580
310,297－274,282
23,138,159

26,017,997
294,323
88,018336,986
26,737,327

Property and equipment (Note 8) :Buildings and building improvements
Machinery and equipment
Furniture and fixtures
Land
Construction in progress
Buildings and building improvements for trust accounts
Machinery and equipment for trust accounts
Furniture and fixtures for trust accounts
Land for trust accounts
Construction in progress for trust accounts
Less: accumulated depreciation
Net property and equipment

7,775,453
6,253
59,934
10,609,617
1,396
118,571,048
1,175,883
299,524
159,396,690
14,087(38,466,049)
259,443,838

7,749,590
6,253
59,934
10,609,617
1,396
116,993,567
1,101,196
293,163
155,755,010
13,360(36,575,302)
256,007,787

Intangible assets:
Leasehold rights
Leasehold rights for trust accounts
Software
Other intangible assets for trust accounts
Total intangible assets

1,721,607
7,382,016
5,133
63,514
9,172,272

1,721,607
7,382,016
6,233
2,550
9,112,408

Investments and other assets:
Investment securities
Deferred tax assets
Security deposits
Long-term prepaid expenses
Other assets
Total investments and other assets

44,7292
19,029860,678
1,140,629
2,065,069

44,72926
19,029824,794
1,070,376
1,958,956

141,235
141,235
293,960,575

154,092
154,092
293,970,571

Deferred assets:
Investment corporation bond issuance costs
Total deferred assets
Total assets

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)34

As ofDecember 31, 2021

As ofJune 30, 2021

(Thousands of yen)
Liabilities
Current liabilities:
Accounts payable – tradeLong-term debt due within one year
(Notes 6 and 9)
Accounts payable – otherAccrued expenses
Accrued corporation taxes
Accrued consumption taxes
Advances received
Other current liabilities
Total current liabilities
Long-term liabilities:
Investment corporation bonds (Notes 6 and 10)
Long-term debt (Notes 6 and 9)
Security deposits from tenants
Security deposits from tenants for trust accounts
Total long-term liabilities
Total liabilities
Net assets (Note 11)
Unitholders’ equity:
Unitholders’ capital
Surplus
Voluntary reserve
Reserve for advanced depreciation of non-current
assetsRetained earnings
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets

1,592,910

1,618,995

13,750,000
461,921155,047
638
301,987
40,673－
16,303,178

14,510,000
474,398
151,765
1,119－
74,9407,268
16,838,488

38,000,000
73,850,000
1,185,270

38,000,000
73,090,000
1,199,012

12,415,766
125,451,036
141,754,215

12,507,748
124,796,760
141,635,249

147,907,649

147,907,649

451,790451,790

3,846,920
4,298,711
152,206,360
152,206,360
293,960,575

3,975,882
4,427,673
152,335,322
152,335,322
293,970,571

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
35

Japan Excellent, Inc.
Statements of Income and Retained Earnings
For the periods from July 1, 2021 to December 31, 2021
and from January 1, 2021 to June 30, 2021

For the period
from July 1, 2021 to
December 31, 2021

For the period
from January 1, 2021 toJune 30, 2021

(Thousands of yen)
Revenues (Note 14) :Rental business revenues
Other
Total revenues
Operating expenses (Note 14) :Property operating expenses
Asset management fees
Custodian fees
Administrative service fees
Compensation for directors
Other
Total operating expenses
Operating income
Other income:Interest income
Other
Other expenses:
Interest expense
Loan arrangement fees
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
Other
Ordinary income
Income before income taxes
Income taxes (Note 13) :Current
Deferred
Net income
Retained earnings at beginning of period
Retained earnings at end of period

9,883,583
782,710
10,666,294

9,845,709
722,082
10,567,792

5,563,185
457,20921,87740,331
5,520
92,5686,180,693
4,485,600

5,355,733
454,816
21,88040,427
5,580
98,788
5,977,226
4,590,565

159
650

181
402

318,005
156,455
151,969
12,856286
3,846,838
3,846,838

327,031
118,123
149,430
12,856
6,951
3,976,756
3,976,756

662
23
3,846,152
768
3,846,920

1,147
(26)
3,975,635
247
3,975,882

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
36

Japan Excellent, Inc.
Statements of Changes in Net Assets
For the periods from July 1, 2021 to December 31, 2021
and from January 1, 2021 to June 30, 2021
For the period from July 1, 2021 to December 31, 2021
Net assets
Unitholders’ equity
SurplusNumber ofunits in issue

Voluntary
reserve
Reserve foradvanceddepreciation of
non-current
assetsUnitholders’capitalRetainedearnings

Total surplus

Totalunitholders’equityTotal net
assets(Thousands of yen)
Balance as of June 30,
2021
Changes during
the fiscal period:
Distributions fromretained earnings
Net income
Total changes during the
fiscal period
Balance as of December
31, 2021

1,353,000

147,907,649

451,790

3,975,882

4,427,673

152,335,322

152,335,322

－

－

－

(3,975,114)(3,975,114)(3,975,114)(3,975,114)

－

－

－

3,846,152

3,846,152

3,846,152

3,846,152－－－(128,961)(128,961)(128,961)(128,961)

1,353,000

147,907,649

451,790

3,846,920

4,298,711

152,206,360

152,206,360

For the period from January 1, 2021 to June 30, 2021
Net assets
Unitholders’ equity
SurplusNumber ofunits in issue

Unitholders’capitalVoluntary
reserve
Reserve foradvanceddepreciation of
non-current
assetsRetainedearnings

Total surplus

Totalunitholders’equityTotal net
assets(Thousands of yen)
Balance as of December
31, 2020
Changes during
the fiscal period:

1,353,000

147,907,649

219,594

4,291,443

4,511,037

152,418,687

152,418,687

Provision ofreserve for
reduction entry－－

232,196(232,196)－－－

Distributions fromretained earnings

－

－

－

(4,059,000)(4,059,000)(4,059,000)(4,059,000)

－

－

－

3,975,635

3,975,635

3,975,635

3,975,635－－

232,196(315,561)(83,364)(83,364)(83,364)

1,353,000

147,907,649

451,790

3,975,882

4,427,673

152,335,322

152,335,322

Net income
Total changes during the
fiscal period
Balance as of June 30,
2021

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
37

Japan Excellent, Inc.
Statements of Cash Flows
For the periods from July 1, 2021 to December 31, 2021
and from January 1, 2021 to June 30, 2021
For the period
from July 1, 2021 to
December 31, 2021

For the period
from January 1, 2021 toJune 30, 2021

(Thousands of yen)
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of investment corporation bond issuance costs
Interest income
Interest expense
Decrease (increase) in rental receivables
Decrease (increase) in consumption taxes refundable
Decrease (increase) in prepaid expense
Increase (decrease) in accounts payable – trade
Increase (decrease) in accounts payable – other
Increase (decrease) in unpaid consumption taxes
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Other, net
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchases of property and equipment
Purchases of property and equipment for trust accounts
Proceeds from security deposits from tenants
Payments for security deposits to tenants
Proceeds from security deposits in trust accounts from tenants
Payments for security deposits in trust accounts to tenants
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from long-term debt
Repayment for long-term debt
Distributions to unitholders
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 5)

3,846,838
1,892,278
12,856(159)
469,975(15,973)
88,018
63,108
129,623(11,189)
301,987(34,266)(35,883)(78,323)
6,628,891
159(466,693)(1,119)6,161,237

3,976,756
1,848,574
12,856(181)
476,462
31,441(88,018)(124,165)(193,389)(950)(119,228)(97,827)(1,265)(145,266)
5,575,798
181(479,810)(584)
5,095,584(23,152)(5,522,084)
42,401(56,143)
532,575(624,557)(5,650,961)(85,519)(11,264,469)
12,585(14,458)
769,843(458,489)(11,040,506)

9,510,000(9,510,000)(3,974,693)(3,974,693)(3,464,417)
26,017,997
22,553,580

4,000,000(4,000,000)(4,059,480)(4,059,480)(10,004,401)
36,022,399
26,017,997

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
38

Japan Excellent, Inc.
Notes to Financial Statements
For the periods from July 1, 2021 to December 31, 2021
and from January 1, 2021 to June 30, 2021

1.

Organization

Japan Excellent, Inc. (hereinafter, “JEI”), established on February 20, 2006 under the Law
Concerning Investment Trusts and Investment Corporations of Japan (the “Investment TrustLaw”), is a real estate investment corporation which primarily invests in office buildings.
JEI is externally managed by a licensed asset management company, Japan Excellent AssetManagement (“JEAM”). JEAM was originally owned 45% by NIPPON STEEL KOWA REALESTATE CO., LTD., 20% by The Dai-ichi Life Insurance Company, Limited, 15% by Sekisui
House, Co., LTD., and 20% by other corporations. Due to the transfer of ownership by Sekisui
House, Co., LTD., on May 12, 2014, ownership interests of 9% and 6% were each acquired by
NIPPON STEEL KOWA REAL ESTATE CO., LTD., and The Dai-ichi Life Insurance
Company, Limited, respectively.
JEI was listed on the Tokyo Stock Exchange on June 27, 2006.
As of December 31, 2021, JEI held 36 properties with 341,069.62 square meters of total
leasable space and had leases with 587 tenants excluding residential tenants.

2.

Basis of Presentation

JEI maintains its accounting records and prepares its financial statements in accordance withaccounting principles generally accepted in Japan (“Japanese GAAP”), including provisions set
forth in the Investment Trust Law, the Corporation Law of Japan, the Financial Instruments andExchange Law of Japan and related regulations, which are different in certain respects as to theapplication and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the financial statements of JEI,
which were prepared in accordance with Japanese GAAP and presented in the securities reportof JEI filed with the Kanto Local Finance Bureau. In preparing the accompanying financial
statements, certain reclassifications and modifications have been made for the convenience ofreaders outside Japan. In addition, the notes to the financial statements include information thatmight not be required under Japanese GAAP but is presented here in as additional information.
The amounts have been rounded down to the nearest thousand yen in the accompanying
financial statements in accordance with the financial statements originally prepared in Japaneseand filed with the regulatory authorities in Japan.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
39

3.

Summary of Significant Accounting Policies

Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks and short-term
investments which are highly liquid, readily convertible into cash with an insignificant risk ofprice fluctuation and with an original maturity of three months or less.
Investment securities
Available-for-sale securities without market value are stated at cost determined by the moving
average method.
Property and equipment including trust accounts
Depreciation is computed by the straight-line method over the estimated useful lives of therespective assets as follows:
Buildings and building improvements
Machinery and equipment
Furniture and fixtures

2 – 60 years
6 – 16 years
3 – 15 years

Intangible assets
Depreciation is computed by the straight-line method over the estimated useful lives of therespective assets as follows:
Software5 years

Deferred assets
Investment corporation bond issuance costs are amortized using the straight-line method over
the amortization periods.
Revenue recognition
The content of main performance obligations related to revenue arising from contracts withcustomers of t he Company and the normal timing for satisfying such performance obligations(the normal timing for recognizing revenue) are as follows:・Sale of real estate, etc.
Sales of real estate properties The Company recognizes revenue from the sale of real estate
properties when the purchaser, as the customer, obtains control of the real estate property byfulfilling the delivery obligations stipulated in the contract for the sale of real estate property.
・Utilities income
Utilities income The Company recognizes utilities income based on the supply of electricity,water, etc. to the lessee as the customer, in accordance with the terms of the real estate lease
contract and related agreements. Of utilities income, in the case that the Company determines
it is an agent for utilities income, the utilities income is recognized as income at the net
amount received as charges for electricity, gas, etc. supplied by other parties, less the amount
paid to such other parties
Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)40

3. Summary of Significant Accounting Policies (continued)
Income taxes
Income taxes are accounted for on the basis of taxable income for financial statement purposes.
The asset and liability method is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying amounts andthe tax bases of assets and liabilities.
Consumption taxes
Consumption taxes received and paid are not included in the accompanying statements ofincome and retained earnings. Consumption tax related to properties, which has not been
deducted, is included in the cost of the properties.
Property-related taxes
Principally, property-related taxes including property taxes, urban planning taxes anddepreciable property taxes are imposed on a calendar-year basis and are expensed as property
and other taxes (refer to Note 14).
JEI capitalizes the property-related taxes allocated to the sellers of properties to JEI at the timeof acquisition of such properties including trust accounts.
The capitalized amount for the period from July 1, 2021 to December 31, 2021 was ¥1,962
thousand.
The capitalized amount for the period from January 1, 2021 to June 30, 2021 was ¥16,585
thousand.

Derivatives and hedge accounting
JEI utilizes interest-rate swap agreements as derivative financial instruments solely for the
purpose of hedging its exposure against fluctuation risk in interest rates. JEI has therefore
entered into certain interest-rate swap contracts in order to hedge the risk of variable rates for
its long-term debt obligations.
Each corresponding interest-rate swap is not required to be re-measured to fair value, because
it meets the criteria for the special hedge accounting treatment under Japanese GAAP, which
JEI applies to each interest-rate swap agreement.
Under this special hedge accounting treatment, the differentials paid or received under the swap
agreements are recognized and included in interest expense of the hedged loans, and theinterest-rate swaps are not required to be measured at fair value separately. For interest-rate
swaps that meet the specific criteria for the special accounting treatment, assessments of hedge
effectiveness are not performed.
Properties in trust accounts
All assets and liabilities held in trust, for which real estate in possession of JEI was entrusted,
and all earnings and expenses resulting from such trust, are properly reflected in theaccompanying balance sheets and statements of income and retained earnings, respectively.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)41

4. Changes in Accounting Policies(1) Application of Accounting Standard for Revenue Recognition
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 31, 2020) ,etc. from the beginning of the fiscal period ended
December 31, 2021, and recognized revenue at the amount expected to be received in
exchange for the promised goods or services when control of the goods or services istransferred to the customer. The effect of this change on the financial statements isimmaterial.
In accordance with the transitional treatment outlined in Paragraph 89-3 of AccountingStandard for Revenue Recognition, the note related to the Revenue Recognition for theprevious fiscal period is not presented(2) Application of Accounting Standard for Fair Value Measurement
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ
Statement No. 30, July 4, 2019) from the beginning of the fiscal period ended December
31, 2021, and in accordance with the transitional treatments outlined in Paragraph 19 of
Accounting Standard for Fair Value Measurement and Paragraph 44-2 of AccountingStandard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the new
accounting policies outlined by Accounting Standard for Fair Value Measurement will beapplied prospectively.
The effect of this change on the financial statements is immaterial.
5.

Cash and Cash Equivalents

Cash and cash equivalents including trust accounts in the accompanying balance sheets andcash and cash equivalents in the accompanying statements of cash flows at December 31, 2021
and June 30, 2021 consisted of the following:

Cash and cash deposits
Cash and deposits in trust
Cash and cash equivalents including trust accounts

As of
As of
December 31, 2021
June 30, 2021
(Thousands of yen)
7,457,720
9,677,336
15,095,859
16,340,661
22,553,580
26,017,997

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)42

6.

Financial Instruments

For the periods from July 1, 2021 to December 31, 2021 from January 1, 2021 to June30, 2021
Overview(1) Policy for Financial Instruments
JEI borrows from banks, issues investment corporation bonds and issues investment units
to procure funds required to grow its assets under management and to repay liabilities,
based on the financial policy set forth by JEAM and the JEI’s Annual Funding Procurement
Plan. When procuring funds by means of interest-bearing debt, matters such as seeking
longer durations and maturities, securing fixed interest rates over the entire term of the
instrument in order to benefit from the recent favorable financial environment with low
interest rates, and diversifying maturity dates are taken into consideration to achieve a morestable financial situation and avoid the risk of future interest rate hikes. Surplus funds may
be invested in deposits and safe, liquid financial assets and investment securities, but are,in principle, placed in fixed-rate term deposits. Derivative transactions are used solely forthe purpose of hedging against the risk of fluctuations in interest rates of borrowings andinvestment corporation bonds.
(2) Types of Financial Instruments, Related Risks and Risk Management System(a) Market Risks (Interest rate fluctuation risk)
Borrowings and investment corporation bonds are primarily used to acquire properties
or to refinance existing borrowings or bonds. Some of such debt were floating rate
instruments and thus were exposed to the risk of interest rate fluctuations. Based oninterest rate forecasts developed through constant financial market monitoring
activities, JEI has concentrated on hedging against the risk of interest rate fluctuations
principally using interest-rate swaps, through which a floating interest rate is swapped
for a fixed interest rate, which finally led to 90.8% of existing borrowings being
covered by a fixed interest rate swap for the entire maturity as of December 31, 2021.
To reduce credit risk, derivative transactions (interest-rate swaps) are entered into
exclusively with counterparties that are financial institutions with high credit ratings.
For hedging accounting methods, hedging instruments, hedged items, hedging
policies and methods for evaluation of the effectiveness of hedging activities, see“Derivatives and hedge accounting” under Summary of Significant Accounting
Policies.
(b) Liquidity Risk (Risk of being unable to procure funds required for repayments)
Borrowings and investment corporation bonds are exposed to liquidity risk. This risk
is reduced through diversification of maturity dates and funding sources, andarrangement of commitment line agreements (as described in Note 9, “Short-Term
Loans and Long-Term Debt,” there is no balance outstanding under the facility
agreements as of December 31, 2021). Liquidity risk is also mitigated through theconstant management of liquidity on hand.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)43

6.

Financial Instruments (continued)(3) Supplementary Explanation of the Fair Value of Financial Instruments
Since various assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in a different fair value.
In addition, the contract value of derivative transactions, which is presented in Note16.
“Derivative Transactions” is not an exact representation of market risk attributable toderivative transactions.

Fair value of financial instruments
The following are carrying values and fair values as of December 31, 2021 and June 30, 2021
of financial instruments and the differences between them.
Since “Cash and cash deposits”, “Cash and deposits in trust”, and “Short-term loans” are cash
and due to be settled in a short period, and their fair values approximate their book values, thenotes are omitted
As of December 31, 2021
As of June 30, 2021
Fair value
Fair value
Carrying value
Difference
Carrying value(Note A)
(Note A)
(Thousands of yen)
(1) Investment corporation bonds
due within one year (Note C)(2) Long-term debt
due within one year (Note C)(3) Investment corporation bonds(Note C)
(4) Long-term debt (Note C)
Total liabilities(5) Derivative transactions *Difference

－

－

－

－

－

－

13,750,000

13,803,225

53,225

14,510,000

14,554,118

44,11838,000,000
73,850,000
125,600,000

38,215,545
74,622,233
126,641,003

215,545772,233
1,041,003

38,000,000
73,090,000
125,600,000

38,160,172
74,230,931
126,945,222

160,172
1,140,931
1,345,222

－

－

－

－

－

－

*The value of assets and liabilities arising from derivative transactions is shown at net value.
(Note A)
Methods for calculating the fair value of financial instruments and matters related toderivatives transactions(1) Investment corporation bonds due within one year and (3) Investment corporation bonds
The fair value of investment corporation bonds issued by JEI is based on quoted market
prices.
(2) Long-term debt due within one year and (4) Long-term debt
Where floating rates apply, book value is generally considered appropriate as fair value.
The fair value of such liabilities is considered to approximate book value, since floating
rates reflect market interest rates within a short period of time.
If the loan is part of long-term debt, in the case of floating-rate debt hedged by an interestrate swap, the fair value is calculated in a similar manner using the total principal andinterest amount, treated in combination with the interest-rate swap, given that the interestrate swap is subject to the special treatment of interest-rate swaps under Japanese GAAP.
The fair value of long-term fixed-rate debt and long-term fixed-rate debt due within one
year are calculated by applying a reasonably assumed interest rate as a discount rate, which
was determined to be applicable for the borrowings under similar conditions.
(5) Derivative transactions
Please refer to Note 16, “Derivative Transactions.”
Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)44

6.

Financial Instruments (continued)(Note B)
Investment securities,Security deposits from tenants and Security deposits from tenants for trust
accounts are omitted because they lack significance.
(Note C)The scheduled redemption amounts of borrowings, investment corporation bonds and otherinterest-bearing debt after the balance sheet date

1 year or less
Investment corporation bonds
due within one year
Long-term debt
due within one year
Investment corporation bonds
Long-term debt
Total

4 to 5 years

Over 5 years

－

－

－

－

－

－

13,750,000－－
13,750,000－
4,000,000
15,770,000
19,770,000－
8,000,000
9,770,000
17,770,000－
5,000,000
15,510,000
20,510,000－
2,000,000
14,450,000
16,450,000－
19,000,000
18,350,000
37,350,000

1 year or less
Investment corporation bonds
due within one year
Long-term debt
due within one year
Investment corporation bonds
Long-term debt
Total

As of December 31, 2021
2 to 3 years
3 to 4 years(Thousands of yen)

1 to 2 years

As of June 30, 2021
2 to 3 years
3 to 4 years(Thousands of yen)

1 to 2 years

4 to 5 years

Over 5 years

－

－

－

－

－

－

14,510,000－－
14,510,000－
2,000,000
13,750,000
15,750,000－
10,000,000
14,270,000
24,270,000－－
14,270,000
14,270,000－
5,000,000
13,900,000
18,900,000－
21,000,000
16,900,000
37,900,000

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)45

7.

Investment and Rental Property

For the periods from July 1, 2021 to December 31, 2021 from January 1, 2021 to June30, 2021
JEI owns rental office buildings and other properties in Tokyo and other regions for the purposeof generating rental income. The following is the carrying value and fair value as of December
31, 2021 and June 30, 2021 for such real estate for lease.
Carrying value
As of
Change during period
As ofJuly 1, 2021(*2)
December 31, 2021
(Thousands of yen)
265,113,962
3,497,015
268,610,977
Carrying value
As of
Change during period
As ofJanuary 1, 2021(*1)
June 30, 2021
(Thousands of yen)
255,463,830
9,650,132
265,113,962

Fair value
As ofDecember 31, 2021
340,752,000

Fair value
As ofJune 30, 2021
329,552,000

A) Carrying value represents the acquisition cost less accumulated depreciation.
B) Details of change during period:(*1) The increase of ¥9,650,132 thousand during the period is mainly due to an increase of¥10,051,592 thousand related to the acquisition of BIZCORE Jimbocho, and a decreaseof ¥1,847,474 thousand for depreciation costs.
(*2) The increase of ¥3,497,014 thousand during the period is mainly due to an increase of¥4,077,449 thousand related to the acquisition of Sapporo Otemachi Building, and adecrease of ¥1,891,178 thousand for depreciation costs.

C) Fair value
Fair value as of December 31, 2021 is Kowa Shirokanedai Building’s transfer price,
Shintomicho Building’s transfer price and for other properties,appraisal value provided bythird-party real estate appraisers.
Fair value as of June 30, 2021 is Kowa Shirokanedai Building’s transfer price and for otherproperties,appraisal value provided by third-party real estate appraisers.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
46

8.

Property and Equipment

Property and equipment at December 31, 2021 and June 30, 2021 consisted of the following:
As of December 31, 2021
Acquisition
cost

Accumulated
depreciation

As of June 30, 2021

Net
book value

Acquisition
cost

Accumulated
depreciation

Netbook value(Thousands of yen)
Buildings and building
improvements
Machinery and equipment
Furniture and fixtures
Land
Construction in progress
Buildings and building
improvements for trust
accounts
Machinery and equipment
for trust accounts
Furniture and fixtures
for trust accounts
Land for trust accounts
Construction in progress
for trust accounts
Total

7,775,453
6,253
59,934
10,609,617
1,396(2,242,031)(4,765)(33,857)－－

5,533,421
1,488
26,077
10,609,617
1,396

7,749,590
6,253
59,934
10,609,617
1,396(2,124,502)(4,495)(29,708)－－

5,625,087
1,757
30,226
10,609,617
1,396

118,571,048(35,387,454)

83,183,593

116,993,567(33,670,916)

83,322,650

1,175,883(601,377)

574,505

1,101,196(561,488)

539,708

299,524
159,396,690(196,563)－

102,960
159,396,690

293,163
155,755,010(184,191)－

108,971
155,755,010

14,087
297,909,888－(38,466,049)

14,087259,443,838

13,360292,583,089－(36,575,302)

13,360
256,007,787

9. Short-Term Loans and Long-Term Debt
Short-term loans and long-term debt as of December 31, 2021 and June 30, 2021 consisted of
the following:
As of December 31, 2021
Weighted-averageAmountinterest rate (*1)
(Thousands of yen)

As of June 30, 2021
Weighted-averageAmountinterest rate (*1)
(Thousands of yen)

Long-term debt due within one year:

Unsecured loans from banks due on November 29, 2021－

0.41204%

3,760,000

0.42738%

Unsecured loans from banks due on December 30, 2021
Unsecured loans from insurance companies due on
January 31, 2022－

0.81875% (*2)

5,750,000

0.81875% (*2)

3,000,000

0.35000% (*2)

3,000,000

0.35000% (*2)

Unsecured loans from a bank due on June 30, 2022

2,000,000

1.15417% (*2)

2,000,000

1.15417% (*2)

Unsecured loans from a bank due on September 30, 2022
Unsecured loans from insurance companies due on
November 30, 2022

2,000,000

0.28208%－

1,000,000

0.35000% (*2)－

Unsecured loans from banks due on December 30, 2022

5,750,000

0.93625% (*2)－

Subtotal

13,750,000

14,510,000

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
47

9.

Short-Term Loans and Long-Term Debt (continued)

Long-term debt:

Unsecured loans from a bank due on September 30, 2022
Unsecured loans from insurance companies due on
November 30, 2022－

2,000,000

0.28176%－

1,000,000

0.35000% (*2)

Unsecured loans from banks due on December 30, 2022－

5,750,000

0.93625% (*2)

Unsecured loans from a bank due on June 30, 2023
Unsecured loans from an insurance company due on
June 30, 2023

2,000,000

1.20250% (*2)

2,000,000

1.20250% (*2)

3,000,000

0.46000% (*2)

3,000,000

0.46000% (*2)

Unsecured loans from banks due on November 30, 2023

5,270,000

0.84375% (*2)

5,270,000

0.84375% (*2)

Unsecured loans from banks due on November 30, 2023

5,500,000

0.64801% (*2)

5,500,000

0.64801% (*2)

Unsecured loans from a bank due on May 31, 2024

3,500,000

0.68431% (*2)

3,500,000

0.68431% (*2)

Unsecured loans from banks due on November 30, 2024
Unsecured loans from an insurance company due on
December 12, 2024

5,270,000

0.96275% (*2)

5,270,000

0.96275% (*2)

1,000,000

0.42000% (*2)

1,000,000

0.42000% (*2)

Unsecured loans from banks due on June 30, 2025

8,000,000

0.67400% (*2)

8,000,000

0.67400% (*2)

Unsecured loans from banks due on November 1, 2025

3,750,000

0.70600% (*2)

3,750,000

0.70600% (*2)

Unsecured loans from banks due on November 29, 2025

3,760,000

0.38727%

Unsecured loans from banks due on March 31, 2026

6,400,000

0.83441% (*2)

6,400,000

0.83441% (*2)

Unsecured loans from banks due on March 31, 2026

3,750,000

0.57100% (*2)

3,750,000

0.57100% (*2)

Unsecured loans from a bank due on September 30, 2026

1,300,000

0.83071% (*2)

1,300,000

0.83071% (*2)

Unsecured loans from banks due on December 30, 2026

3,000,000

0.79100% (*2)

3,000,000

0.79100% (*2)

Unsecured loans from a bank due on July 31, 2028

2,000,000

0.68778% (*2)

2,000,000

0.68778% (*2)

Unsecured loans from banks due on January 31, 2029
Unsecured loans from an insurance company due on
January 31, 2029

5,600,000

0.71200% (*2)

5,600,000

0.71200% (*2)

1,000,000

0.77000% (*2)

1,000,000

0.77000% (*2)

Unsecured loans from a bank due on December 30, 2029

2,000,000

0.55801% (*2)

2,000,000

0.55801% (*2)

Unsecured loans from banks due on December 30, 2029
Unsecured loans from an insurance company due on
June 28, 2030

5,750,000

0.48727%2,000,000

0.65000% (*2)

Subtotal
Total

－

－
2,000,000

73,850,000

73,090,000

87,600,000

87,600,000

0.65000% (*2)(*1)The weighted-average interest rate is weighted-average figures during the period. As for the borrowings hedged by interestrate swaps for the purpose of mitigating interest rate fluctuation risk, the fixed interest rates after entering into the interest rate
swap transactions are used to calculate the weighted-average interest rate.
(*2) These are fixed-rate debt (incl. fixed-rate debt through each interest-rate swap agreement).

The scheduled repayment amounts of long-term debt as of December 31, 2021 are as follows:
Long-term debt

1 year or less
1 to 2 years(Thousands of yen)
13,750,000
15,770,000

2 to 3 years
9,770,000

3 to 4 years
15,510,000

4 to 5 years
14,450,000

Over 5 years
18,350,000

JEI has commitment lines of ¥14,000,000 thousand with three financial institutions to mitigate
refinancing risk and enhance financial stability. As of December 31, 2021, these commitment
lines have never been utilized.
Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)48

10. Investment Corporation Bonds
Details of total investment corporation bonds outstanding as of December 31, 2021 and June30, 2021 are summarized as follows:
As of December 31, 2021
Weighted-averageinterest rate
Amount(Thousands of yen)Unsecured bond #7
due on March 11, 2024
Unsecured bond #8
due on September 9, 2025
Unsecured bond #9
due on October 27, 2026
Unsecured bond #10
due on December 20, 2023
Unsecured bond #11
due on April 23, 2027
Unsecured bond #12
due on April 20, 2023
Unsecured bond #13
due on April 20, 2033
Unsecured bond #14
due on August 10, 2028
Unsecured bond #15
due on September 9, 2039
Unsecured bond #16
due on October 29, 2035
Total

As of June 30, 2021
Weighted-averageinterest rate
Amount(Thousands of yen)

8,000,000

1.13000%

8,000,000

1.13000%

5,000,000

1.03000%

5,000,000

1.03000%

2,000,000

0.45000%

2,000,000

0.45000%

2,000,000

0.39000%

2,000,000

0.39000%

7,000,000

0.65000%

7,000,000

0.65000%

2,000,000

0.24000%

2,000,000

0.24000%

2,000,000

0.95000%

2,000,000

0.95000%

4,000,000

0.63000%

4,000,000

0.63000%

1,000,000

1.07000%

1,000,000

1.07000%

5,000,000

0.75000%

5,000,000

0.75000%

38,000,000

38,000,000

The scheduled redemption amounts of investment corporation bonds as of December 31, 2021
are as follows:
1 year or less
Investment corporation bonds

11.

－

1 to 2 years
4,000,000

2 to 3 years
3 to 4 years(Thousands of yen)
8,000,000
5,000,000

4 to 5 years
2,000,000

Over 5 years
19,000,000

Net Assets

In accordance with the Investment Trust Law, JEI issues only non-par value investment units
and maintains net assets of at least ¥50,000 thousand.
12.

Per Unit Information

Net assets per unit as of December 31, 2021 and June 30, 2021 were calculated based on thenumber of units outstanding as of each date, (1,353,000 units) and (1,353,000 units),
respectively.
Net income per unit for the periods from July 1, 2021 to December 31, 2021 and January 1,
2021 to June 30, 2021 was calculated based on the weighted-average number of units
outstanding during the corresponding periods, (1,353,000 units) and (1,353,000 units),
respectively.
Accordingly, net assets per unit were ¥112,495 as of December 31, 2021 and ¥112,590 as ofJune 30,2021. Net income per unit was ¥2,842 for the period from July 1, 2021 to December
31, 2021 and ¥2,938 for the period from January 1, 2021 to June 30, 2021.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
49

13.

Income Taxes

JEI is subject to income taxes in Japan.
JEI’s policy is to make dividend distributions in excess of 90% of distributable income for eachfiscal period in order to meet the condition set forth in the Special Taxation Measures Law ofJapan concerning the deductibility of cash dividends paid for income tax purposes.
Details of significant components of deferred tax assets and liabilities as of December 31,
2021 and June 30, 2021 are summarized as follows:
As of
December 31,2021

As ofJune 30,2021(Thousands of yen)
Deferred tax assets:
Accrued enterprise taxes
Total deferred tax assets
Net deferred tax assets

2
2
2

26
26
26

A reconciliation of the differences between the statutory tax rate and the effective tax rate forthe periods from July 1, 2021 to December 31, 2021 and January 1, 2021 to June 30, 2021 is asfollows:

Statutory tax rate
Reconciliation:
Deductible distributions paid
Other
Effective tax rate

For the period
from July 1, 2021
to December 31,
2021
31.46%For the period
from January 1,
2021 to June 30,2021
31.46%(31.46%)
0.02%
0.02%

(31.45%)
0.02%
0.03%

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
50

14.

Breakdown of Revenues and Expenses
For the period
from July 1, 2021 to
December 31, 2021

For the period
from January 1, 2021
to June 30, 2021

(Thousands of yen)
Revenues:
Rental business revenues
Rental revenues
Common area revenues
Other rental revenues
Subtotal
Other
Utilities revenues
Other revenues
Subtotal
Total rental revenues
Property operating expenses:
Property management costs and fees
Utilities expenses
Property and other taxes
Insurance
Repairs and maintenance
Depreciation
Other
Total property operating expenses
Profit8,282,650
1,330,321
270,611
9,883,583

8,248,679
1,331,991
265,038
9,845,709

652,213130,496782,710
10,666,294

582,002140,080
722,082
10,567,792

1,553,766
867,102940,823
21,364160,180
1,891,178
128,769
5,563,185
5,103,108

1,504,097
759,875
934,741
20,903
158,083
1,847,474
130,558
5,355,733
5,212,058（Change in presentation method）
To make financial statement presentation clearer and more in line with the actual situation,
the Investment Corporation has decided to include "Management association expenses","Consumables expenses", and "Brokerage fees", which were previously included in "Other"to "Property management costs and fees".
As a result, 110,783 thousands yen included in "Other" in the previous fiscal period has
been reclassified as "Property management costs and fees".

15．Leases
JEI leases properties on which rental revenues are earned. At December 31, 2021 and June 30,
2021 , future lease revenues under non-cancelable operating leases are summarized as follows:
As of
December 31,2021

As ofJune 30, 2021

(Thousands of yen)
Due within one year
Due after one year
Total

2,200,461
3,181,003
5,381,465

1,959,773
3,462,341
5,422,115

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
51

16. Derivative Transactions
Derivative Transactions as of December 31, 2021
(1) Transactions to which hedge accounting is not applied:
Not applicable.
(2) Transactions to which hedge accounting is applied:
The following are the contract values or values corresponding to the principal amount as
stipulated by contracts as of December 31, 2021 for each hedge accounting method applied.

Hedge
accounting
methodType of derivativetransaction

Hedgeditem

Specialtreatment ofinterest-rate
swapsInterest-rate swap
Receive floating,pay fixed

Longterm
debt

Contract amount
Fair value
More than
one year(Thousands of yen)

40,390,000

34,640,000

Method ofcalculating
the fair value** Since the above interest-rate swap meets the criteria for the special hedge accounting treatment underJapanese GAAP and therefore qualifies for hedge accounting, the swap is not revalued at fair value on theaccompanying balance sheets, as described in the summary of significant accounting policies.
In addition, since the swap and the long-term debt hedged by the swap are accounted for as a unit, the fairvalue of the swap is disclosed as part of the fair value of the hedged long-term debt in the fair value disclosurein Note 6, “Financial Instruments.”

Derivative Transactions as of June 30, 2021
(1) Transactions to which hedge accounting is not applied:
Not applicable.
(2) Transactions to which hedge accounting is applied:
The following are the contract values or values corresponding to the principal amount as
stipulated by contracts as of June 30, 2021 for each hedge accounting method applied.

Hedge
accounting
methodType of derivativetransaction

Hedgeditem

Specialtreatment ofinterest-rate
swapsInterest-rate swap
Receive floating,pay fixed

Longterm
debt

Contract amount
Fair value
More than
one year(Thousands of yen)

46,140,000

40,390,000

Method ofcalculating
the fair value** Since the above interest-rate swap meets the criteria for the special hedge accounting treatment underJapanese GAAP and therefore qualifies for hedge accounting, the swap is not revalued at fair value on theaccompanying balance sheets, as described in the summary of significant accounting policies.
In addition, since the swap and the long-term debt hedged by the swap are accounted for as a unit, the fairvalue of the swap is disclosed as part of the fair value of the hedged long-term debt in the fair value disclosurein Note 5, “Financial Instruments.”

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
52

17.

Related Party Transactions

For the period from July 1, 2021 to December 31, 2021
(1) Parent Company and Major Corporate Unitholders
Not applicable.
(2) Subsidiaries and Affiliated Companies
Not applicable.
(3) Sister Companies
Not applicable.
(4) Directors and Major Individual Unitholders
Name

AmountDescription of transaction

Account

Balance at the endof period(Thousands of yen)Accounts
payable383,000

Account

Balance at the end of
period(Thousands of yen)Accounts
payable384,298(Thousands of yen)
Shuichiro
KayamaPayment of asset
management fees to JEAM

457,209

For the period from January 1, 2021 to June 30, 2021
(1) Parent Company and Major Corporate Unitholders
Not applicable.
(2) Subsidiaries and Affiliated Companies
Not applicable.
(3) Sister Companies
Not applicable.
(4) Directors and Major Individual Unitholders
Name

Description of transaction

Amount(Thousands of yen)

Shuichiro
KayamaPayment of asset
management fees to JEAM

454,816

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
53

18.

Segment Information

For the periods from July 1, 2021 to December 31, 2021 from January 1, 2021 to June30, 2021
Since JEI has been engaged in the real-estate leasing business as a single segment, segment
information has been omitted.
Information about products and services
Since revenues from external customers for a single segment of similar products and services
accounted for more than 90% of total operating revenues, information about products andservices has been omitted.
Information about geographic area
(1) Revenues
Since 100% of the total operating revenues were generated from external customers within
Japan, geographical breakdown of revenues has been omitted.
(2) Property and equipment
Since 100% of total property and equipment on the balance sheet are located within Japan,
geographical breakdown of such property and equipment has been omitted.
Information about major clients
Since no single external client represents 10% or more of JEI’s total operating revenues,
information about major clients has been omitted.
19.

Distribution Information

In accordance with Section 33.1.2 of the bylaws set forth by JEI for distributions of cash
dividends, the amount of dividends payable, which is limited by the amount of retained earnings
at end of period, shall be in excess of 90% of its distributable income for the fiscal period as set
forth in Section 67.15 of the Special Taxation Measures Law.
Consequently, JEI set income available for distributions of dividends at ¥3,846,579,000, whichis the maximum integral multiple of the 1,353,000 units issued, but not exceeding¥3,846,920,332 which is the amount of retained earnings at December 31, 2021.
No cash distribution exceeding the income amount set forth in Section 33.1.4 of the bylaws of
JEI shall be made.
On February 17, 2022, the Board of Directors approved a resolution to make a cash distributionof ¥2,843 per unit aggregating to ¥3,846,579,000 to unitholders of record as of December 31,
2021.

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
54

20.

Revenue Recognition(1) Breakdown of revenue from contracts with customers
For the period from July 1, 2021 to December 31, 2021
Revenue from contracts with
Revenue from external customers
customers *(Thousands of yen)
Sales of real estate properties *2－－
Utilities income
652,213652,213
Other－
10,014,080
Total
652,213
10,666,294* Rent revenues subject to Accounting Standard for Lease Transactions (ASBJ Statement No. 13) areexcluded from “Revenue from contracts with customers” as such revenues are not subject to AccountingStandard for Revenue Recognition. Revenue from contracts with customers mainly represents revenues
from the sale of real estate and utilities.

(2) Information that provides a basis for understanding revenue from contracts with customers
For the period from July 1, 2021 to December 31, 2021
As described in the Summary of Significant Accounting Policies.
(3) Information about the relationship between the fulfillment of performance obligations undercontracts with customers and cash flows arising from those contracts, and the amount andtiming of revenue expected to be recognized in subsequent periods from contracts withcustomers that existed at the end of the current period
For the period from July 1, 2021 to December 31, 2021
(a) Balance of contract assets and contract liabilities

Claims arising from contracts with customers（At beginning of period）
Claims arising from contracts with customers（At end of period）
Contract assets（At beginning of period）
Contract assets（At end of period）
Contract liabilities（At beginning of period）
Contract liabilities（At end of period）

July 1, 2021 to
December 31, 2021
(Thousands of yen)
219,470
233,782－－－－(b) Transaction price allocated to remaining performance obligations
As of December 31, 2021, the total transaction price allocated to the remaining
performance obligations for the sale of real estate is 5,400,000 thousand yen for the realestate for which a sale contract was executed on August 18, 2021. JEI expects torecognize revenue for such remaining performance obligations upon delivery of such
real estate properties, which is expected to occur on June 29, 2022. In accordance with
Paragraph 19 of the Guidance on Accounting Standard for Revenue Recognition, JEI
recognizes utility revenues at the amount it has the right to charge, because JEI has theright to receive from the customer the amount of consideration that directly corresponds
to the value to the customer, the lessee, of the portion of the performance completed by
the end of the fiscal year. Accordingly, JEI has applied the provisions of paragraph 8022(2) of the Accounting Standard for Revenue Recognition and has not included in thenotes the transaction price allocated to the remaining performance obligations.
Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)
55

21.

Significant Subsequent Event

For the six months ended 31 December 2021
Decision on acquisition of own investment units
At the board meeting held on 17 February 2022, JEI resolved the matters regarding
acquisition of its own
investment units based on the provisions of Article 80-2 of the Investment Trusts Act,
which are applied inreplacement pursuant to the provisions of Article 80-5, paragraph 2 of the Investment
Trusts Act. Furthermore, JEI plans to retire the entirety of own investment units it will haveacquired by the end of the six-month period ending June 2022.
(1) Reasons behind acquisition of own investment units
Having considered the level of investment unit price, status of cash on hand, financial
status, the market
environment and other factors in a comprehensive manner, JEI has determined that
increasing capital efficiency and return of profits to unitholders through acquisition andretirement of own investment units should lead to enhanced unitholder value over the
medium to long term.
(2) Details of acquisition of own investment units
Total number of investment units that may be acquired

18,000 units (upper limit)

Total acquisition price

2,000 thousand yen (upper limit)

company Acquisition period

18 February 2022 to 13 April 2022

Acquisition method

Market purchase at the Tokyo Stock
Exchange based on a discretionarytransaction contract concluded with asecurities company

Asset Management Report for the 31st Period (Semi-Annual Report for the 31st Period)56