Asset Management Report for the 32nd Period(Semi-Annual Report for the 32nd Period)
From January 1, 2022, to June 30, 2022

Asset Management Report for the 32nd Period (Semi-Annual Report for the 32nd Period)

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 32nd period (from January 1, 2022, to June 30, 2022).
In the 32nd period, we decided in February to later sell Shintomicho Building, an old property, and decided that the gainon sale from this and also Kowa Shirokanedai Building, the sale of which was completed in June, will be utilized for future
distribution stability to aim for stable management of distributions over the medium to long term. On the other hand, in
May, we acquired ARK Hills Front Tower (49% equity interest in anonymous association) from our core sponsor, Nippon
Steel Kowa Real Estate Co., Ltd., as a replacement property for these two sold properties, and obtained a first right ofrefusal to the property with the prospect of additional acquisition in the future.
On the leasing front, the period-end occupancy rate of the entire portfolio was 90.8% as a result of mainly (1) a slow start
to leasing activities due to the impact of the Omicron variant after the turn of the year and (2) a lag in the period of
accounting for contracts with large tenants, among other factors. Furthermore, rent revisions went well according to plan
while conducting strategic rent revision negotiations for prevention of tenant departures and such.
On the financial front, we strived to enhance asset efficiency through acquisition of equity interest in an anonymous
association entirely with funds on hand, buyback and cancellation of own investment units, and other means. In addition,
we realized extension of borrowing periods and reduction of interest rates through refinancing of long-term loans.
As a result, in the 32nd period, JEI recorded operating revenue of 11,065 million yen, operating income of 4,711 million
yen, net income of 4,101 million yen, and distribution per unit of 2,800 yen as initially planned (down 43 yen from theprevious period).
In addition, after entering the current period (the 33rd period), we acquired Bizcore Shibuya as the third acquisition fromthe Bizcore series of medium-sized, high-grade office buildings developed by Nippon Steel Kowa Real Estate.
For ESG, we made progress in various initiatives, including reduction of CO2 emissions through a shift in electricity
sources at another 19 properties and additional acquisition of environmental certification for properties in our portfolio. In
terms of addressing climate change, we announced the recognition, policy, promotion system, etc. concerning climatechange for each of the four items (“governance,” “strategy,” “risk management,” and “metrics and targets”) recommended
by the Task Force on Climate-related Financial Disclosures (TCFD) based on the TCFD recommendations.

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 sponsors. At the same time, JEI intends to earnestly workon acquisition from third parties as well.
In the office building leasing market, while trending toward inquiries and contracts for even large floor space, which had
been sluggish thus far, gradually increasing due to the emergence of moves to review office functions with an eye topost-COVID and such, there continuing to be moves to consolidate and such among mainly large companies and anincrease in supply of new office floors in central Tokyo from 2023 onwards lead to the forecast that the vacancy rate
remaining range-bound for the time being and newly concluded rents still softening due to owners’ priority stance foroccupancy will continue.
Under such circumstances, JEI believes that, as indicated by the increasing number of relocations aimed at improving thelocation and building grade, large buildings with superior location, performance, etc. 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 the sponsors, setting flexible conditions taking into account the level of difficulty byproperty and other efforts.
As for rent renewal/revision, JEI will maintain the basic stance of prioritizing prevention of tenant departures.
In terms of finance, JEI will strive to conduct stable and sound financial management based on its basic policy of continuing
to reduce financing interest rates, 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.
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 32nd Period (Semi-Annual Report for the 32nd Period)

1II. Asset Management Report
1. Outline of Asset Management Operation(1) Operating Results and Financial Position of the Investment Corporation
28th Period

Fiscal period
Operating revenue

29th Period

30th Period

31st Period

32nd Period

January 1, 2020, to July 1, 2020, to January 1, 2021, to July 1, 2021, to January 1, 2022, toJune 30, 2020 December 31, 2020 June 30, 2021 December 31, 2021 June 30, 2022
(Millions of yen)

12,717

11,043

10,567

10,666

11,065(Rental revenues)(Millions of yen)

(11,013)(10,729)(10,567)(10,666)(10,267)

Operating expenses(Millions of yen)

6,426

6,119

5,977

6,180

6,353

(Property operating expenses) (Millions of yen)

(5,697)(5,487)(5,355)(5,563)(5,699)Operating income(Millions of yen)

6,290

4,924

4,590

4,485

4,711

Ordinary income(Millions of yen)

5,631

4,291

3,976

3,846

4,102

Net income(Millions of yen)

5,631

4,290

3,975

3,846

4,101

Total assets(Millions of yen)

293,532

294,004

293,970

293,960

291,430

(1.6)

(0.2)

(-0.0)(-0.0)(-0.9)

152,133

152,418

152,335

152,206

150,461

(6.9)

(0.2)

(-0.1)(-0.1)(-1.1)(Period-on-period change)
Net assets(Period-on-period change)(%)(Millions of yen)(%)

Unitholders’ capital, net (Note 1) (Millions of yen)

147,907

147,907

147,907

147,907

145,907

Total outstanding investment units(units)1,353,000

1,353,000

1,353,000

1,353,000

1,337,598

Net assets per unit

(yen)

112,441

112,652

112,590

112,495

112,486

Net income per unit (Note 2)

(yen)

4,179

3,171

2,938

2,842

3,052

(Millions of yen)

4,004

4,059

3,975

3,846

3,745

(yen)

2,960

3,000

2,938

2,843

2,800

(Profit distribution per unit)(yen)(2,960)(3,000)(2,938)(2,843)(2,800)(Distribution in excess ofearnings per unit)

(yen)

(－)

(－)

(－)

(－)

(－)

Total distribution
Distribution per unit

Return on assets (Note 3)

(%)

1.9

1.5

1.4

1.3

1.4

(%)

(3.9)

(2.9)

(2.7)

(2.6)

(2.8)

(%)

3.8

2.8

2.6

2.5

2.7

(Annualized rate)

(%)

(7.7)

(5.6)

(5.3)

(5.0)

(5.5)

Capital ratio (Note 5)

(%)

51.8

51.8

51.8

51.8

51.6

(%)

(2.5)

(0.0)

(-0.0)(-0.0)(-0.1)(Annualized rate)
Return on equity (Note 4)(Period-on-period change)
Payout ratio (Note 6)

(%)

71.1

94.6

100.0

100.0

91.3

Number of investment properties(properties)

35

34

35

36

35

Number of tenants (Note 7)(tenants)

193

191

187

587

585

Total leasable area (Note 8, 9)(m2)

332,702331,112336,375

341,070

335,534

Occupancy rate

(%)

99.6

98.0

96.4

93.1

90.8

Depreciation(Millions of yen)

1,946

1,824

1,847

1,891

1,937

Capital expenditure(Millions of yen)

806

1,127

1,547

1,305

1,298

Net operating income (NOI)(Note 10)

(Millions of yen)

7,263

7,066

7,059

6,994

6,504

Funds from operation (FFO)
per unit (Note 11)

(yen)

4,341

4,287

4,303

4,240

3,918

FFO multiples (Note 12)(times)

14.4

15.0

18.3

15.8

15.5

Debt service coverage ratio(DSCR) (Note 13)(times)

17.0

13.9

13.2

13.2

14.4

Interest-bearing debt

(Millions of yen)

125,600

125,600

125,600

125,600

125,600

Loan-to-value (Note 14)

(%)

42.8

42.7

42.7

42.7

43.1

Number of days in operation(days)

182

184

181

184

181

2

(Note 1) The amount of unitholders’ capital after subtracting any deduction from unitholders’ capital is shown. This does not accountfor any deduction from unitholders’ capital that is due to the implementation of distribution in excess of earnings related tothe allowance for temporary difference adjustments.
(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) Return on assets = Ordinary income / [(Period beginning total assets) + (Period end total assets) / 2] × 100(Note 4) Return on equity = Net income / [(Period beginning net assets) + (Period end net assets)/ 2] × 100(Note 5) Capital ratio = Period end net assets / Period end total assets × 100(Note 6) 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.)
For the 28th period and the 32nd period, as new investment units were issued in the former and buyback and cancellation of
own investment units took place in the latter, the formula below was used to calculate the payout ratio.
Payout ratio ＝ (Total distributions (not including distribution in excess of earnings / Net income) × 100
For the 28th period, when accounting for reversal of allowance for temporary difference adjustments with the following
formula, the payout ratio is 94.8%.
(Total distributions (not including distribution in excess of earnings) / (Net income － Reversal of allowance for temporary
difference adjustments)) × 100(Note 7) 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, for properties in which the residential portion or the percentage of theinterest owned by JEI is relatively low, the number of tenants indicates the number of master lease companies for the property,
considering a master lease company as a tenant. In addition, for land with leasehold interest, the number of tenants is counted
as one based on the lease agreement for the leased land.
(Note 8) For properties with joint ownership (including quasi co-ownership of trust beneficiary interest; the same applies hereinafter),the figure is obtained by taking the leasable area of the entire property and factoring in the percentage of the interest owned
by JEI, regarding the figure as JEI’s leasable area. The same applies hereinafter.
(Note 9) Spaces are rounded to the nearest specified unit. The same applies hereinafter.
(Note 10) NOI = Rental revenues – Property operating expenses + Depreciation(Note 11) 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 12) FFO multiples = Period end investment unit price / Annualized FFO per unit
(Note 13) DSCR = (Net income before interest and taxes + Depreciation (*)) / (Interest expenses + Interest expense on investment
corporation bonds)* Includes depreciation except for property operating expenses.
(Note 14) Loan-to-value = Period end interest-bearing debt / Period end total assets × 100

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 June 30, 2022, JEI
settled its 32nd period.
1) Business conditions and results
In the period under review (32nd period ended June 30, 2022), the world economy had been in a state in which
economic and social activities were heading toward normalization, but then factors such as the rise in energy
and raw material prices arising from the situation in Ukraine rapidly fueled inflation concerns that prompted
major Western countries to make financial policy changes, turning into a state that called for close monitoringof such impact.
In the U.S., with the pace of interest rate hikes by the U.S. Federal Reserve Board (FRB) speeding up becauseof rapidly growing inflation concerns from the rise in the consumer price index and such, interest rates arebound to keep rising sharply, triggering concerns about a future recession.
In Japan, with the resurgence of COVID-19 infections due to variants, the rise in raw material prices arisingfrom the situation in Ukraine and other factors, concerns about the impact on economic activities ahead makethe outlook uncertain. Concerning the domestic finance market, although it has remained generally calm as the
Bank of Japan has maintained the ongoing monetary easing stance, ultra-long-term interest rates are on the riseand so careful attention should be paid to future changes.
In the real estate transaction market, the acquisition appetite of investors within and outside of Japan is strong
due to the favorable fund procurement environment continuing on the back of the Bank of Japan maintaining
policies for monetary easing, differences in interest rates in Japan and abroad being maintained or widening,
progress in depreciation of the yen in foreign exchange and such, making the acquisition environment still
remaining severe with there being intense competition over prime properties on the market and such. Under
such circumstances, JEI acquired equity interest in an anonymous association with ARK Hills Front Tower as
the underlying asset (49%; acquisition price: 5,230 million yen) from a sponsor in May 2022.
In the office building leasing market, since 2020, market conditions have been worsening due to the strong
effects of upward pressures on vacancy rates and downward pressures on rent from the floor space reductions,consolidations and such for expanding telework, reducing fixed costs, increasing efficiency and other purposesin the COVID-19 pandemic. Recently, office demand is gradually returning with an eye to post-COVID-19, but
rent levels have yet to bottom out.
In addition, the vacancy rate in the five central wards of Tokyo continued to fluctuate up and down from the
6.3% at the end of December 2021 and stood at 6.4% at the end of June 2022 (published by Miki Shoji Co.,
Ltd.).
Under such circumstances, JEI additionally had the departure of a large tenant in their corporate group’s
consolidation moves accompanying relocation of the head office and refilling of vacated floors was delayedamid the severe leasing environment. As a result of these and other factors, the occupancy rate (Note 1) at theend of the period under review was 90.8%, down 2.3 points from the end of the previous period. The total
number of properties owned and managed by JEI at the end of the period under review was 35 with a totalacquisition price of 281.9 billion yen and total leasable area of 335,534.27 m2 (101,499.12 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 period under review, JEI conducted a buyback and cancellation of own investment units by utilizing
funds on hand of 2.0 billion yen with a view to enhancing capital efficiency and unitholder value from a
medium- to long-term perspective. In addition, JEI refinanced long-term loans that had matured with long-termloans (3.0 billion yen for borrowing period of 5 years in January and 2.0 billion yen for borrowing period of 9
years in June).

4As a result, as of the end of the period under review, the average remaining period of interest-bearing debt
(Note 2) was 4.1 years (shortened by 0.3 years from the end of the previous period), the period-end averageinterest-bearing debt interest rate (Note 3) was 0.72% (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 43.1% (up 0.4 points from theend of the previous period) due to the cancellation of own investment units.
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 June 30, 2022)
Credit rating agency
Japan Credit Rating Agency, Ltd. (JCR)
Moody’s Japan

Issuer rating (outlook)
Long-term issuer rating
AA- (Stable)
Issuer rating
A3 (Stable)

Individual debt issue rating(Note 5)AA―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, JEI has set a 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 toreduce 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 reduceaverage 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 24,
accounting for 87.7% of leasable area (as of June 30, 2022; 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),
and 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,” and “metrics 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 11,065 million yen in operating
revenue, 4,711 million yen in operating income, 4,102 million yen in ordinary income, and 4,101 million yen in
net income.
Concerning distributions in the period under review, by applying the special provisions of the tax system on
investment corporations (Section 67-15 of the Special Taxation Measures Law), JEI conducted a reserve for
reduction entry under the special provisions of the tax system in the case of the replacement of specified assets(Section 65-7 of the Special Taxation Measures Law) with the purpose of stabilizing distribution levels.
As a result, distribution per unit was 2,800 yen as JEI decided to distribute the entire amount (except for the
portion of less than one yen per unit) of unappropriated retained earnings after subtracting 356 million yen forreserve for reduction entry.

5

(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.
(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 Investable
Market Index (IMI). The Index has been selected as one of the ESG indices for passive investment by theGovernment 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.

6

(3) Capital Increase
The outline of the changes in the total number of outstanding investment units and unitholders’ capital, net, for themost recent five years up to the end of the period under review are as follows:
Unitholders’ capital, net
Capital transaction (units)
Remarks(Millions of yen) (Note 1)
Paid-up Date
Capital transaction
ChangeBalance
ChangeBalanceJanuary 21, 2020
February 13, 2020
April 28, 2022

Public offering
Third-party
allotment
Cancellation

43,0001,348,700

7,213

147,186(Note 2)4,300

1,353,000

721

147,907(Note 3)

-15,402

1,337,598-1,999145,907(Note 4)(Note 1) The amount of unitholders’ capital after subtracting any deduction from unitholders’ capital is shown. This does not accountfor any deduction from unitholders’ capital that is due to the implementation of distribution in excess of earnings related tothe 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) Buyback of own investment units through market purchase on the Tokyo Stock Exchange based on a discretionary transaction
contract with a securities company took place from February 18, 2022, to April 13, 2022. All 15,402 own investment units
from the buyback were cancelled on April 28, 2022, based on the resolution passed at the board of directors’ meeting of JEI
held on April 18, 2022.
(Note 5) 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 the period under review.

[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
28th period
29th period
30th period
31st period
32nd period(June 2020) (December 2020) (June 2021) (December 2021) (June 2022)(closing date)
Investment
unit market Highest (yen)200,600
127,900
163,300
158,400
136,600
price
Lowest (yen)75,400110,600
120,000
132,800
121,600(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.

7(4) Distributions Paid
Concerning distributions in the period under review, JEI decided to distribute the entire amount (except for the
portion of less than one yen per unit) of unappropriated retained earnings after subtracting 356,744,782 yen forprovision of reserve for reduction entry 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 2,800 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)28th period

29th period

30th period

31st period

32nd period

January 1, 2020, to July 1, 2020, to January 1, 2021, to July 1, 2021, to January 1, 2022, toJune 30, 2020 December 31, 2020 June 30, 2021 December 31, 2021 June 30, 2022
5,631,594

4,291,443

3,975,882

3,846,920

4,102,019

220,475

232,443768

341

356,744

4,004,880

4,059,000

3,975,114

3,846,579

3,745,274(2,960)(3,000)(2,938)(2,843)(2,800)4,004,880

4,059,000

3,975,114

3,846,579

3,745,274(2,960)(3,000)(2,938)(2,843)(2,800)

－

－

－

－

－

(－)

(－)

(－)

(－)

(－)

－

－

－

－

－

(－)

(－)

(－)

(－)

(－)

－

－

－

－

－

(－)

(－)

(－)

(－)

(－)

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, JEI believes that there is a needto closely monitor the changes in the environment brought about by changes in economic conditions and such.
In the office building leasing market ahead, while recently starting to gain momentum with moves to increase thepercentage of workers coming into the office and moves to review office functions emerging and such, the leasing
environment needs to keep being closely monitored as the situation in Ukraine and other factors raising future
uncertainties in business performance for companies, the resurgence of COVID-19 infections and other factors areraising concerns that could cause the positive moves on the corporate side to dampen. The supply of new officefloors in 2023 is expected to be less than previously projected due to postponements in the schedule of completionof construction and such, but considering that full-fledged recovery in office demand for such will become slightly
delayed and such, the vacancy rate is expected to remain range-bound and newly concluded rents are expected tosoften due to building owners’ priority stance for occupancy.
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 withthe aim of expanding asset size over the medium to long term. JEI will continue to have the asset managementcompany newly cultivate and refine property information sources in an effort to promptly 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 to improve 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 sponsors, setting flexible terms and conditions taking into account thedifficulties, etc. for each property, etc. As for rent revision, although JEI will respond in a flexible manner toprioritize prevention of 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 while
conducting sustainability initiatives, BCP measures and such.
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 and diversify maturity dates while continuing to reduce interest
rates. In addition, JEI will work on new procurement methods such as green bonds and sustainability finance fromthe perspective of maintaining and strengthening its procurement base through diversification of fund procurementmeans.
JEI will set the upper limit of total assets-based LTV at 60% and manage it at around 35% to 50%.
D. Sustainability initiatives
JEI will continue to work to reduce the environmental burden and to cooperate/collaborate with stakeholders toachieve a sustainable society, deeming such as its corporate social responsibility.

9(6) Subsequent Events
Not applicable.
(Reference Material)
1. Acquisition of Asset (Bizcore Shibuya)
JEI concluded a transaction agreement for trust beneficiary interest in real estate on July 27, 2022, as described
below. The handover to JEI took place on August 1, 2022.
<Overview of Acquisition Asset>
Acquisition asset

Trust beneficiary interest in real estate

Name of property

Bizcore Shibuya

Location

1-3-15 Shibuya, Shibuya-ku, Tokyo

Acquisition price (Note)

6,640 million yen

Date of execution of agreement

July 27, 2022

Handover dateAugust 1, 2022

Seller

Nippon Steel Kowa Real Estate Co., Ltd.

(Note) Acquisition price does not include acquisition-related consumption tax and local consumption tax or fees required for the acquisition.

2. Borrowing of Funds
JEI concluded a commitment loan agreement on July 27, 2022, as described below to allot funds to part of thefunds for the acquisition of the acquisition asset described in 1. above and the related expenses and such.
<Overview of Borrowing>
LenderMizuho Bank, Ltd.

Loan amount

3,000 million yen

Interest rate

Base interest rate (JBA one-month Yen-TIBOR) + 0.20%

Drawdown dateAugust 1, 2022

Principal repayment dateJune 30, 2023

Principal repayment method

To be repaid in full on the principal repayment date

Collateral

Unsecured / Non-guaranteed102. Outline of the Investment Corporation(1) Investment Units
Fiscal period
Total number of units
authorized
Total number of units
issued and outstanding
Unitholders’ capital, net(Note)
Number of unitholders

28th
As of June 30,
2020

29th
As of December 31,
2020

30th
As of June 30,
2021

31st
As of December 31,
2021

32nd
As of June 30,
2022

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

1,353,000 units

1,353,000 units

1,353,000 units

1,353,000 units

1,337,598 units

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

145,907
million yen
7,556
individuals(Note) The amount of unitholders’ capital after subtracting any deduction from unitholders’ capital is shown. This does not account forany deduction from unitholders’ capital that is due to the implementation of distribution in excess of earnings related to theallowance for temporary difference adjustments.

(2) Unitholders
Major unitholders as of June 30, 2022, are as follows:
Number ofunits held
(Units)Ratio of number ofunits held tooutstanding
investment units(%)

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

385,22028.80

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

222,367

16.62

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

71,5605.35

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

60,941

4.56

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

20,660

1.54

STATE STREET BANK WEST
CLIENT - TREATY 505234

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

20,287

1.52

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

16,893

1.26

SSBTC CLIENT OMNIBUS
ACCOUNTONE LINCOLN STREET, BOSTON MA
USA 02111

16,017

1.20

The Shinkumi Federation Bank

1-9-5 Kyobashi, Chuo-ku, Tokyo

14,4091.08

JP MORGAN CHASE BANK
38577125 BANK STREET, CANARY WHARF,LONDON, E14 5JP, UNITED KINGDOM

12,748

0.95

Total

841,102

62.88

Name
Custody Bank of Japan, Ltd.
(Trust Account)
The Master Trust Bank of Japan,
Ltd. (Trust Account)
Nippon Steel Kowa Real EstateCo., Ltd.
The Nomura Trust and Banking
Co., Ltd.
(Investment trust account)
The Dai-ichi Life Insurance
Company, Limited

Address11

(3) Officers
1) Directors and accounting auditor
Compensation or fee forthe six months ended
June 30, 2022
(Thousands of yen)

Name

Major additional post

Executive
Director

Shuichiro Kayama

President, Japan Excellent Asset Management
Co., Ltd.

Supervisory
Director

Shunichi Maekawa

Professor Emeritus, Meikai University

1,800Supervisory
Director

Eiji Takagi

Eiji Takagi Certified Public Accounting Office

1,800Supervisory
Director

Osamu Hirakawa

Adviser, Foreign Law Joint Venture, Anderson
Mori & Tomotsune

1,800

Accounting
AuditorErnst & Young
ShinNihon LLC

–

Post

–

15,301(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 period under review (11,000 thousand yen), the fee for the English financial
statements audit and third-party assurance engagements.

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.

12(5) Asset Management Company, Asset Custodian, and Administrative Agents
JEI’s asset management company, asset custodian, and administrative agents as of June 30, 2022, 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
31st Period(As of December 31, 2021)

32nd Period(As of June 30, 2022)

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

Investment
ratio inportfolio
(%)

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

Investment
ratio inportfolio(%)

Area I

10,904

3.7

10,886

3.7

Area II

5,369

1.8

5,388

1.8

Area IV

1,619

0.6

1,613

0.6

Area I

130,64044.4

125,533

43.1

Area II

10,7373.7

10,752

3.7

Area III

84,04028.6

83,757

28.7

Area IV

25,298

8.6

25,262

8.7

268,61091.4

263,194

90.3

－

－

5,241

1.8

Deposits in bank and other assets

25,3498.6

22,994

7.9

Total assets

293,960

100.0

291,430100.0Classification

Use

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

Total
Equity interest in anonymous association (Note 3)(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).
(Note 3) Equity interest in an anonymous association with Akasaka 2-chome Godo Kaisha as the business operator.

13

(2) Major Properties
The principal properties (top ten properties in net book value) owned by JEI as of June 30, 2022, 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
26,53011,021.03
9,650.77
87.6
5.4
building
Nisseki Yokohama
Office22,09040,440.72
39,801.49
98.4
11.7
Buildingbuilding
OfficeOmori Bellport D
20,57925,801.66
24,209.50
93.8
8.7
building
Kowa Kawasaki
Office18,90324,944.17
13,095.84
52.5
4.6
Nishiguchi Buildingbuilding
HAMARIKYU
Office16,764
19,718.11
18,863.44
95.7
7.0
INTERCITY
building
Musashikosugi Tower
Office12,22624,986.15
20,318.41
81.3
5.2
Place
building
OfficeMansard Daikanyama
11,1165,420.80
4,228.51
78.0
2.2
building
Kowa Nishi-Shimbashi
Office10,886
8,949.04
8,949.04
100.0(Note 4)
Buildingbuilding
Kowa Kawasaki
Office10,697
18,612.72
18,612.72
100.0(Note 4)
Higashiguchi Buildingbuilding
OfficeBizcore Jimbocho
9,989
5,261.75
3,812.22
72.5(Note 4)
building
2

Total

159,785

185,156.15

2161,541.94

87.2

－

－

(Note 1) Leasable area refers to area available for lease of which ownership is attributable to JEI as of June 30, 2022. For properties
with joint ownership (including quasi co-ownership of trust beneficiary interest), the figure is obtained by taking the leasablearea of the entire property and factoring in the percentage of the interest owned by JEI, regarding the figure as JEI’s leasablearea.
(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 June 30, 2022. For properties with joint ownership, the figure is obtained by taking the leased
area of the entire property and factoring in the percentage of the interest owned by JEI, regarding the figure as JEI’s leased
area. For properties which are used for profit by the master lease company, leased area refers to the portion used, and thefigures indicate area which can be reasonably calculated based on the lease agreement on the master leasing. The leased areaof end tenants who terminated their lease arrangement but have not yet moved out as of the end of period is included in theleased 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 June 30, 2022.
(Note 4) Not disclosed, as consent for disclosure has not been obtained.

14

(3) Portfolio Ownership Breakdown
Real estate properties and their forms of ownership as of June 30, 2022, 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-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

8,957

9,450

8,001

31,00026,53010,1009,249

28,00016,764

2,130

1,725

14,60010,886

14,00011,116

8,160

6,466

6,800

6,151

Real estate

6,230

5,388

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

Trust beneficiaryinterest in real estate

2,650

1,865

Trust beneficiaryinterest in real estate

5,050

4,897

Trust beneficiaryinterest in real estate

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

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

14,100

9,989

Ⅱ-5

Ⅲ-13

20,579136,419

GRAND FRONT OSAKA(Umekita Plaza·South Building)

Yokohama Bentendori Dai-ichi
Seimei Building

26,20010,300Ⅱ-4

Nisseki Yokohama Building

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)

174,840

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

Ⅲ-12

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

3,820

3,989

17,75016,14021,70012,226

10,60010,697

4,620

4,906

4,720

4,138

2,710

2,542

16,00018,903

1,510

1,598

9,920

5,970

33,10022,090

719

682

105,599

83,757

4,010

2,715

4,100

2,686

9,770

5,097

4,660

2,228

5,330

4,164

2,100

1,516

3,480

2,788

1,690

1,613

4,515

4,065

39,655
337,844

26,876
263,19415

(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 June 30, 2022, pursuant to the articles ofincorporation of JEI and the regulations stipulated by the Investment Trusts Association, Japan. For properties with joint
ownership (including quasi co-ownership of trust beneficiary interest), the figure is obtained by taking the value of the entire
shared real estate and factoring in the percentage of the interest owned by JEI.

16

Property
No.

Property name

I-1

Omori Bellport D

Ⅰ-2

Shiba 2-Chome Building

I-17

JEI Hamamatsucho
Building
AKASAKA
INTERCITY
Kowa Shirokanedai
Building (Note 3)
Daiba Garden City
Building
HAMARIKYUINTERCITY
Shintomicho Building
Kowa Nishi-Shimbashi
Building
Mansard Daikanyama
AKASAKA
INTERCITY AIR
Bizcore Akasaka-mitsuke

I-18

Bizcore Jimbocho

Ⅰ-3
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

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

31st Period
32nd Period
July 1, 2021, to December 31, 2021
January 1, 2022, to June 30, 2022
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)
(%)
(%)
(%)
(%)
23
2
(Note 1)

100.0

920

8.6

100.0

373

3.5

22
2
(Note 1)

93.8

889

8.7

99.2

374

3.7

4

100.0

244

2.3

4

100.0

244

2.4

12

95.6

629

5.9

12

87.6

559

5.4

15

94.7

174

1.6

-

-

162

1.6

2

82.6

325

3.1

2

82.6

319

3.1

95.7

714

7.0

100.0

74

0.7

7
(Note 1)
11

95.3

739

6.9

100.0

76

0.7

8
(Note 1)
11

5

100.0

(Note 2)

(Note 2)5100.0(Note 2)

(Note 2)7
1(Note 1)
8

72.7

228

2.1

78.0

221

2.2

99.8

(Note 2)

(Note 2)95.8

(Note 2)

(Note 2)

100.0

153

1.4

7
1
(Note 1)
7

88.9

148

1.5

5

72.5

(Note 2)

(Note 2)572.5

(Note 2)

(Note 2)

102

94.3

-

-

86

92.1

-

-

35

93.0

349

3.3

39

99.1

355

3.5

1
(Note 1)

100.0

89

0.8

1
(Note 1)

100.0

92

0.9

2
(Note 1)

97.6

(Note 2)

(Note 2)2(Note 1)

90.4

(Note 2)

(Note 2)

5(Note 1)

98.2

(Note 2)

(Note 2)

5(Note 1)

98.6

(Note 2)

(Note 2)

43

95.6

-

-

47

98.1

-

-

37

64.6

747

7.0

45

81.3

533

5.2

1

100.0

(Note 2)

(Note 2)1100.0(Note 2)

(Note 2)486.9

(Note 2)

(Note 2)5100.0(Note 2)

(Note 2)

14

67.3

131

1.2

18

76.9

143

1.4

18

100.0

110

1.0

18

100.0

115

1.1

22

97.3

630

5.9

21

52.5

475

4.6

10

100.0

61

0.6

10

100.0

61

0.6

24

98.4

312

2.9

24

98.4

321

3.1

45

100.0

1,203

11.3

44

98.4

1,202

11.7

13

100.0

41

0.4

13

100.0

41

0.4

188

90.4

-

-

199

86.1

-

-

JEI Kyobashi Building
JEI Hiroshima
Hacchobori Building
SE Sapporo Building

21

100.0

189

1.8

22

100.0

180

1.8

43

98.4

158

1.5

41

85.6

154

1.5

43

100.0

422

4.0

43

100.0

428

4.2

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

48

77.0

169

1.6

49

94.4

157

1.5

10

100.0

194

1.8

10

100.0

195

1.9

18

100.0

82

0.8

18

100.0

85

0.8

28

96.3

141

1.3

27

97.2

143

1.4

16

92.0

50

0.5

16

96.2

50

0.5

27

98.5

21

0.2

27

98.5

131

1.3

254

96.5

-

-

253

97.1

-

-

Total

587

93.1

10,666

100.0

585

90.8

10,267100.0

17

(Note 1) Total number of tenants indicates the number of end tenants in principle. 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, for properties
in which the residential portion or the percentage of the interest owned by JEI is relatively low, the number of tenants indicatesthe number of master lease companies for the property, considering a master lease company as a tenant. In addition, for landwith leasehold interest, the number of tenants is counted as one based on the lease agreement for the leased land.
(Note 2) Not disclosed, as consent for disclosure has not been obtained.
(Note 3) JEI completed transfer of Kowa Shirokanedai Building on June 29, 2022.

(4) Securities Portfolio
The securities owned by JEI in its portfolio as of June 30, 2022, are as follows:Book value
Name

Asset type

Equity interest inanonymous association
with Akasaka 2-chome
Godo Kaisha as
business operator
Total

Equityinterest inanonymous
association

Quantity

Assessed value (Note 1)

Valuation
gains/losses
Amount(Thousands(Thousandsof yen)of yen)Remarks

Unit priceAmount(Thousandsof yen)Unit price－－

5,241,564－

5,241,564－(Note 2)－－5,241,564－

5,241,564－－(Note 1) The assessed value states the book value.
(Note 2) The asset under management is trust beneficiary interest in ARK Hills Front Tower.

(5) Renewable Power Generation Facility
None(6) Right to Operate Public Facility
None

18

(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)
Classification
Type(Thousands of yen)
(Note 2)
Over one year
Interest rate swap
transactions
Over-the-counter
Floating interest rate－
40,390,000
34,640,000
transaction
receivable
Fixed interest rate
payable(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 ofsharesAcquisition price(Thousands of yen) (Note 4)

Assessed value(Thousands of yen) (Note 5)

Unit price

Unit price833 shares

50

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.

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
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
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.

19

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 32nd period (ended June 30, 2022). The values below include portions
to be expensed for accounting purposes.
Property nameLocation

PurposeSchedule term

Estimated construction costs(Millions of yen)
Payment for the Total of
Total six months ended advanceJune 30, 2022
payment

Kowa Nishi-Shimbashi
Building

Minato-ku,
TokyoUpdate of hot and cold
water generator

From December 2022
To December 2022

63

-

-

JEI Hiroshima
Hacchobori Building

Hiroshima-shi,
Hiroshima

Renovation of airconditioning systems(Phase 4)

From September 2022
To November 2022

62

-

-

Kowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

Update of emergency
elevators

From May 2022
To September 2022

61

-

-

Nisseki Yokohama
Building

Yokohama-shi,
Kanagawa

Repair of exterior walls
and such (Phase 2)

From October 2022
To December 2022

58

-

-

Kowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

Renovation of seals
around exterior walls(Phase 3)

From July 2022
To October 2022

56

-

-

JEI Naha Building

Naha-shi,
Okinawa

Renovation of
restrooms (Phase 1)

From July 2022
To October 2022

50

-

-

Shiba 2-Chome Building

Minato-ku,
TokyoUpdate of central
monitoring equipment

From September 2022
To December 2022

41

-

-

Kawasaki Nisshincho
Building

Kawasaki-shi,
Kanagawa

Renovation of seals
around exterior walls(Phase 2)

From July 2022
To November 2022

40

-

-

NHK Nagoya HousouCenter Building

Nagoya-shi,
Aichi

Repair of heat storage
water tank

From February 2022
To October 2022

36

-

-

Nisseki Yokohama
Building

Yokohama-shi,
Kanagawa

Update of atrium
blinds (Phase 1)

From September 2022
To December 2022

36

-

-

Daiwa Minamimorimachi Building

Osaka-shi,
Osaka

Update of elevators

From May 2022
To December 2022

33

-

-

Kowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

Update of lighting in
exclusively-owned
sections (Phase 3)

From July 2022
To December 2022

33

-

-

Shiba 2-Chome Building

Minato-ku,
Tokyo

Waterproofing ofrooftop

From September 2022
To December 2022

31

-

-

Sapporo Otemachi
Building

Sapporo-shi,
Hokkaido

Replacement of
mechanical parking lot
parts

From November 2022
To December 2022

30

-

-

JEI Naha Building

Naha-shi,
Okinawa

Replacement of
mechanical parking lot
parts

From December 2022
To December 2022

20

-

-

Conversion to LED
lighting in common
spacesFrom October 2022
To December 2022

9

-

-

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

20

(2) Capital Expenditures for the Six Months Ended June 30, 2022
The following table shows constructions conducted by JEI during the period ended June 30, 2022, and expensed ascapital expenditures. Capital expenditures for the period ended June 30, 2022, were 1,298 million yen and, whencombined with repairs and maintenance costs of 126 million yen classified as expenses in the period under review,
the amount of constructions completed totaled 1,424 million yen.
Property nameLocation

PurposeAmount Paid
(Millions of yen)Term

JEI Ryogoku Building

Sumida-ku,
TokyoRenovation of air-conditioning systems(Phase 2)

From July 2021
To March 2022

207

Kowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

Renovation of seals around exterior walls(Phase 2)

From January 2022
To June 2022

77

JEI Hiroshima
Hacchobori Building

Hiroshima-shi,
Hiroshima

Renovation of air-conditioning systems(Phase 3)

From April 2022
To June 2022

70

NHK Nagoya HousouCenter Building

Nagoya-shi,
Aichi

Conversion to LED lighting in officesections (Phase 2)

From February 2022
To February 2022

62

Omori Bellport D

Shinagawa-ku,
Tokyo

Update of heat source equipment (Phase 3)

From June 2021
To March 2022

59

Omori Bellport D

Shinagawa-ku,
Tokyo

Update of automatic air-conditioning control
equipment (Phase 3)

From October 2021
To February 2022

46

SE Sapporo Building

Sapporo-shi,
Hokkaido

Renovation of multi-level parking lot

From May 2022
To June 2022

38

Kowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

Update of lighting in exclusively-owned
sections (Phase 2)

From April 2022
To June 2022

34

NHK Nagoya HousouCenter Building

Nagoya-shi,
Aichi

Update of elevators

From July 2021
To March 2022

31

Other constructions

670

Total

1,298

(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
Reserved funds at
beginning of period

28th Period
29th Period
30th Period
31st Period
32nd Period
January 1, 2020, to July 1, 2020, to January 1, 2021, to July 1, 2021, to January 1, 2022, toJune 30, 2020 December 31, 2020 June 30, 2021 December 31, 2021 June 30, 2022
300

473

250

380

298

Increase

1,553

260

963

1,217

1,123

Decrease

1,380

484

834

1,299

866

473

250

380

298

555

Reserved funds at theend of period21

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

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

32nd Period
January 1, 2022, to June 30, 2022(a) Asset management fees

457,209467,085(b) Custodian fees

21,877

21,877(c) Administrative service fees

40,33140,360(d) Compensation for directors

5,520

5,400

(e) Accounting auditor fees

11,00011,000(f) Other

81,568108,215

617,507653,938

Total(2) Borrowings
Borrowings by each financing source as of the end of the 32nd period (ended June 30, 2022) are as follows:
Classification

Lender

Sompo Japan Insurance Inc.
Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Development Bank of Japan Inc.
Mizuho Bank, Ltd.
Sompo Japan Insurance Inc.
Long-term Tokio Marine & Nichido Fireloans due Insurance Co., Ltd.
within one
Mizuho Bank, Ltd.
year
MUFG Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.

Drawdown
date

January 31,
2017
July 31,2014
September 30,
2020
November 30,
2017

December 29,
2014

Resona Bank, Ltd.
Development Bank of Japan Inc.
The Dai-ichi Life Insurance
Company Limited
SubtotalJune 30,
2015
June 29,2018

Averageinterest rate(%)
(Thousands of yen) (Thousands of yen)
(Note 1)
Balance at
beginning of
periodBalance at
end ofperiod2,000,000－

1,000,000－

2,000,000－

2,000,000

2,000,000

500,000

500,000

500,000

500,000

1,950,000

1,950,000

2,000,000

2,000,000

1,200,000

1,200,000

600,000

600,000－

2,000,000－

3,000,000

13,750,000

13,750,000

0.35000(Note 2)

Maturity
date

Repayment
methodUse

Remarks

January 31,
2022

1.15417(Note 2)June 30,
2022
September 30,
0.278092022

0.35000 November 30,(Note 2)2022
Lumpsum

0.93625(Note 2)

December 30,
2022

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

Repayment Unsecuredof existingand nonborrowing guaranteed22

Classification

Averageinterest rate(%)
(Thousands of yen) (Thousands of yen)
(Note 1)Maturitydate

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

Balance at
beginning of
periodBalance at
end ofperiod2,000,000－

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.

1,000,000

1,000,000

Sumitomo Mitsui Banking
Corporation

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

1,000,000

1,000,000

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.

850,000

850,000

850,000

850,000

600,000

600,000

1,450,000

1,450,000

520,000

520,000

540,000

540,000

1,080,000

1,080,000

1,620,000

1,620,000

LenderDevelopment Bank of Japan Inc.
The Dai-ichi Life Insurance
Company Limited

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

Resona Bank, Ltd.

Drawdown
dateJune 30,
2015
June 29,2018

November 30,
2015

November 30,
2017

Aozora Bank, Ltd.
Development Bank of Japan Inc.

Sumitomo Mitsui Banking
Corporation
Long-term Mizuho Trust & Banking Co., Ltd.
loans
Resona Bank, Ltd.

November 30,
2015

Aozora Bank, Ltd.
The Bank of Fukuoka, Ltd.
Nippon Life Insurance Company

December 12,
2019

Sumitomo Mitsui Banking
Corporation
The Norinchukin Bank

June 29,2018

Shinkin Central BankMUFG Bank, Ltd.
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

Repayment
methodUse

Remarks

0.84375(Note 2)
November 30,
2023

0.64801(Note 2)0.68431(Note 2)

May 31,2024

0.96275 November 30,
Repayment Unsecured
Lump(Note 2)2024
of existingand nonsum
borrowing guaranteed

0.42000(Note 2)

December 12,
2024

0.67400(Note 2)June 30,2025

0.70600(Note 2)

November 1,
2025

0.39407

November 29,
2025

Asset Management Report for the 32nd Period (Semi-Annual Report for the 32nd Period)

23

Classification

Averageinterest rate(%)
(Thousands of yen) (Thousands of yen)
(Note 1)
Balance at
beginning of
periodBalance at
end ofperiodMizuho Bank, Ltd.

2,200,000

2,200,000

MUFG Bank, Ltd.

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

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－

2,000,000－

1,000,000

Development Bank of Japan Inc.

2,000,000

2,000,000

Mizuho Bank, Ltd.

1,175,000

1,175,000

MUFG Bank, Ltd.

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

1,950,000

1,950,000

2,000,000

2,000,000

1,200,000

1,200,000

600,000

600,000

2,000,000

2,000,000－

2,000,000

Subtotal

73,850,000

73,850,000

Total

87,600,000

87,600,000

LenderSumitomo Mitsui Banking
Corporation

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

Drawdown
date

September 29,
2017

March 8,2019

The Norinchukin Bank
Development Bank of Japan Inc.

September 29,
2017

Mizuho Bank, Ltd.
MUFG Bank, Ltd.

June 29,2018

Sumitomo Mitsui Banking
Corporation
Sompo Japan Insurance Inc.
Long-term Tokio Marine & Nichido Fire
loans
Insurance Co., Ltd.

Sumitomo Mitsui Banking
Corporation

Development Bank of Japan Inc.

January 31,
2022

January 31,
2020

June 30,
2021

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

December 30,
2021

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

June 30,2021
June 30,
2022

Maturity
date

Repayment
methodUse

Remarks

0.83441(Note 2)

March 31,2026

0.57100(Note 2)0.83071 September 30,(Note 2)2026

0.79100(Note 2)

December 30,
2026

0.28000(Note 2)January 31,
2027

0.68778(Note 2)

July 31,2028

0.71200(Note 2)0.77000(Note 2)
0.55801(Note 2)

Lumpsum

Repayment Unsecuredof existingand nonborrowing guaranteed

January 31,
2029

December 30,
2029

0.49235

December 30,
2029

0.65000(Note 2)
1.08125(Note 2)June 28,2030
June 30,2031(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 32nd Period (Semi-Annual Report for the 32nd Period)

24

(3) Investment Corporation Bonds
The outstanding investment corporation bonds issued by JEI as of June 30, 2022, are as follows:
Classification

Unsecured investment corporation bonds

Issue

Issuance
date(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

4,000,000

4,000,000

0.63000

August 10,2028

0.75000

October 29,
2035

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)

August 10,
2018
October 29,
2020

5,000,000

5,000,000

Sub Total

9,000,000

9,000,000

Total

38,000,000

38,000,000

Remarks

Lump-sum (Note 2) (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 32nd Period (Semi-Annual Report for the 32nd Period)25

6. Condition of Investment Transactions(1) Transactions of Property, Asset-Backed Securities, Etc. and Infrastructure Assets, Etc.,
and Infrastructure-Related Assets(Millions of yen)
Name ofreal estate property
or asset-backed
securities, etc.

Type of asset

Acquisition

Transfer

Acquisitiondate

Acquisition
price

May 11,
2022

5,230

－

－

－

－

Trust beneficiary
Kowa Shirokanedai
interest in real estate Building－－

June 29,
2022

5,400

4,600

797

Total

－

5,230

－

5,400

4,600

797

Equity interest inanonymous
association

Equity interest inanonymous
association with
Akasaka 2-chome
Godo Kaisha as
business operator(Note 1)

Transferdate

Transfer
price

Net book
value

Gain (loss)
on transfer(Note 1)

(Note 2)

(Note 3)(Note 1) The acquisition/transfer price indicates the amount excluding related expenses (brokerage fee, taxes, etc.) required for theacquisition/transfer of the real estate property or asset-backed securities, etc., and is the purchase amount of the real estate
property or asset-backed securities, etc. stated in the purchase agreement.
(Note 2) Net book value at the time of transfer is indicated.
(Note 3) Gain (loss) on transfer indicates the amount obtained by deducting net book value and other transfer expenses from transfer
price.

(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/transfer price(Millions of yen)
(Note)

Appraisal
value

Appraiser(Millions of yen)Appraisal
date

Trust
Kowa Shirokanedai beneficiary
June 29,
Japan Real
August 1,
Transfer
5,400
5,010
Building
interest in2022
Estate Institute2021
real estate(Note) The acquisition/transfer price is the purchase price amount of the property stated in the purchase agreement (excluding
the amount equivalent to consumption taxes, etc.).

2) Equity interest in anonymous association
Acquisitionor transfer

Name

Acquisition

Equity interest in anonymous association with
Akasaka 2-chome Godo Kaisha as business operator

Acquisition/transfer date

Acquisition/transfer price(Millions of yen)
(Note 1)

May 11,
2022

Appraisal value of
specified asset(Millions of yen)

5,230

5,309

(Note 1) The acquisition/transfer price is the purchase price amount as stated in the purchase agreement.
(Note 2) With respect to transactions that require a price appraisal of specified assets pursuant to Article 201, Paragraph 2 of theInvestment Trust Law, price appraisals are conducted by Ernst & Young ShinNihon LLC in accordance with theProfessional Practice Guidelines 4400 “Practical Guidelines on the Agreed-Upon Procedure” and the Professional Practice
Guidelines 4460 “Practical Guidelines for Agreed-Upon Procedures for the Investigation of Values, etc., of Specified
Assets of Investment Trusts and Investment Corporations” issued by the Japanese Institute of Certified Public Accountants,
and JEI is notified of the results of such price appraisals.

3) Others
None

Asset Management Report for the 32nd Period (Semi-Annual Report for the 32nd Period)

26

(4) Transactions with Interested Parties
1) Transactions
Acquisition price or disposal amountClassification
Total amount

Acquisition price

Disposal amount

5,230 million yen

5,400 million yen

Breakdown for transactions with interested parties
Nippon Steel Kowa Real Estate Co., Ltd.
(Note)

5,230 million yen(100.0%)5,400 million yen(100.0%)Total
5,230 million yen(100.0%)5,400 million yen(100.0%)Interested parties refers to the interested parties of the asset management company, which has concluded an asset managementagreement with JEI as prescribed in Article 123 of the Investment Trust Enforcement Order and Section 26, Paragraph 1, Item
27 of the Regulations for Management Reports Concerning Investment Trusts and Investment Corporations of the Investment
Trusts Association, Japan.

2) 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)Nippon Steel Kowa Real EstateCo., Ltd.

488,804

34.9%

The Dai-ichi Building Co., Ltd.

481,944

34.4%

Sohgo Housing Co., Ltd.

107,179

7.6%

Akasaka Intercity Management
Co., Ltd.

22,028

1.6%–

1,099,955

78.5%

1,401,909

1,401,909(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 June 30, 2022.
(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.
286,080 thousand yen
The Dai-ichi Building Co., Ltd.
14,953 thousand yen
Nippon Steel Kowa Real Estate Co., Ltd.
11,447 thousand yen
Nihon Sekkei, Inc.
500 thousand yen(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 32nd Period (Semi-Annual Report for the 32nd Period)27

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
There were no applicable items during the period.
2) Board of directors’ meeting
Of the major contracts entered or amended, etc. by the board of directors’ meeting during the period, the following
table summarizes the major items.
Date of approval
by board

Matters approved

Summary
The board of directors made a comprehensive resolution on investment

February 17, 2022

Entrustment ofcorporation bonds to be issued in the period from February 17, 2022, toFebruary 16, 2023. The board of directors approved the respective candidate

general administrative
duties concerning

general administrator for “administrative duties concerning offering ofinvestment corporation bonds” and “administrative duties concerninginvestment
corporation bonds

acceptance of claims for exercise of rights and other inquiries from creditorsof the investment corporation, and other administrative duties concerninginvestment corporation bonds during the period,” and assigned decisions on
all other necessary matters to the Executive Director.

(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 32nd Period (Semi-Annual Report for the 32nd Period)28

Financial Statements
Japan Excellent, Inc.
For the six-month periods ended
June 30, 2022 and December 31, 2021
with Independent Auditor’s Report29

Japan Excellent, Inc.
Balance Sheets
As of June 30, 2022 and December 31, 2021

As ofJune 30, 2022

As ofDecember 31, 2021

(Thousands of yen)
AssetsCurrent assets:
Cash and cash equivalents including trust accounts(Note 4)
Rental receivables
Prepaid expenses and other current assets
Total current assets

20,203,741
310,786
333,753
20,848,281

22,553,580
310,297274,282
23,138,159

Property and equipment (Note 7) :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

7,890,044
6,253
60,452
10,609,617
5,560
118,264,650
1,233,150
306,734
155,514,243
51,656(39,912,836)
254,029,527

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

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
4,033
61,0859,168,743

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

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

5,286,294
6
19,029834,138
1,116,334
7,255,803

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

128,378
128,378
291,430,734

141,235
141,235
293,960,575

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

The accompanying notes are an integral part of these financial statements.
30

As ofJune 30, 2022
Liabilities
Current liabilities:
Accounts payable – trade
Investment corporation bonds due within one year
(Notes 5 and 9)
Long-term debt due within one year
(Notes 5 and 8)
Accounts payable – otherAccrued expenses
Accrued corporation taxes
Accrued consumption taxes
Advances received
Total current liabilities
Long-term liabilities:
Investment corporation bonds (Notes 5 and 9)
Long-term debt (Notes 5 and 8)
Security deposits from tenants
Security deposits from tenants for trust accounts
Total long-term liabilities
Total liabilities
Net assets (Note 10)
Unitholders’ equity:
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’ capital, net
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

As ofDecember 31, 2021

(Thousands of yen)

1,127,498

1,592,910

2,000,000－

13,750,000
471,107
152,137714
321,024
59,892
17,882,374

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

36,000,000
73,850,000
1,233,667
12,003,193
123,086,860
140,969,234

38,000,000
73,850,000
1,185,270
12,415,766
125,451,036
141,754,215

147,907,649(1,999,960)
145,907,689

147,907,649－
147,907,649

451,790451,790

4,102,019
4,553,810
150,461,499
150,461,499
291,430,734

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

The accompanying notes are an integral part of these financial statements.
31

Japan Excellent, Inc.
Statements of Income and Retained Earnings
For the periods from January 1, 2022 to June 30, 2022
and from July 1, 2021 to December 31, 2021

For the period
from January 1, 2022 toJune 30, 2022

Revenues (Note 13) :Rental business revenues
Other
Gain on sales of real estate properties (Note 14)
Total revenues
Operating expenses (Note 13) :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 12) :Current
Deferred
Net income
Retained earnings at beginning of period
Retained earnings at end of period

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

(Thousands of yen)
9,566,772
700,680
797,682
11,065,136

9,883,583
782,710－
10,666,294

5,699,906
467,085
21,87740,3605,400
119,215
6,353,845
4,711,290

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

119
384

159
650

302,452
137,555
149,430
12,856
7,092
4,102,406
4,102,406

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

732(3)
4,101,677
341
4,102,019

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

The accompanying notes are an integral part of these financial statements.
32

Japan Excellent, Inc.
Statements of Changes in Net Assets
For the periods from January 1, 2022 to June 30, 2022
and from July 1, 2021 to December 31, 2021
For the period from January 1, 2022 to June 30,2022
Net assets
Unitholders’ equity
Surplus
Voluntary
reserve
Reserve for
Deduction
advancedfromdepreciation
Number of Unitholders’ unitholders’ Unitholders’ of non-current
Retained
units in issue
capitalcapitalcapital, net
assetsearnings
Total surplus(Thousands of yen)
Balance as ofDecember 31, 2021
Changes during
the fiscal period:

Totalunitholders’equityTotal net
assets1,353,000

147,907,649－

147,907,649

451,790

3,846,920

4,298,711－

152,206,360

152,206,360

－

－

－

－

－

(3,846,579)(3,846,579)－(3,846,579)(3,846,579)

－

－

－

－

－

4,101,677

4,101,677－

4,101,677

4,101,677

－

－

－

－

－

－

－

(1,999,960)(1,999,960)(1,999,960)(15,402)－(1,999,960)(1,999,960)

－

－

－

1,999,960－－(15,402)－(1,999,960)(1,999,960)－

255,098

255,098－(1,744,861)(1,744,861)

1,337,598

147,907,649(1,999,960)

145,907,689

451,790

4,102,019

4,553,810－

150,461,499

150,461,499

Distributions fromretained earnings
Net income
Acquisition oftreasury investment
units
Cancellation oftreasury investment
units
Total changes during
the fiscal period
Balance as of June30, 2022

Tresury
investment
units

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

The accompanying notes are an integral part of these financial statements.
33

Japan Excellent, Inc.
Statements of Cash Flows
For the periods from January 1, 2022 to June 30, 2022
and from July 1, 2021 to December 31, 2021
For the period
from January 1, 2022 toJune 30, 2022
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
Decrease in property and equipment for trust accounts due to sale
Decrease in property and intangible assets for trust accounts due
to saleOther, net
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchases of investment securities
Purchases of property and equipment
Purchases of property and equipment for trust accounts
Purchases of intangible assets 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
Payments for acquisition of treasury investment units
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 4)

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

(Thousands of yen)
4,102,406
1,938,149
12,856(119)451,882(489)－(55,235)(69,921)
16,047
19,037
19,21826,5394,820,295

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)－309－

18,68911,299,667
119(454,792)(638)
10,844,356(78,323)
6,628,891
159(466,693)(1,119)6,161,237(5,239,163)(122,579)(1,560,737)(61,394)
72,600(24,204)
645,479(1,058,052)(7,348,050)－(23,152)(5,522,084)－
42,401(56,143)
532,575(624,557)(5,650,961)

5,000,000(5,000,000)(1,999,960)(3,846,183)(5,846,144)(2,349,838)
22,553,580
20,203,741

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

The accompanying notes are an integral part of these financial statements.
34

Japan Excellent, Inc.
Notes to Financial Statements
For the periods from January 1, 2022 to June 30, 2022
and from July 1, 2021 to December 31, 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 June 30, 2022, JEI held 35 properties with 335,534.27 square meters of total leasable
space and had leases with 585 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.

35

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. For ownership interests in an anonymous association, JEI adopts the methodof factoring in the net amount of anonymous association income (loss) in proportion to its
ownership interests.
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 the Company and the normal timing for satisfying such performance obligations(the normal timing for recognizing revenue) are as follows:・Sale of real estate, etc.
Sale 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.

36

3. Summary of Significant Accounting Policies (continued)
・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 amountreceived as charges for electricity, gas, etc. supplied by other parties, less the amount paid tosuch other parties.
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 13).
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 January 1, 2022 to June 30, 2022 was ¥0.
The capitalized amount for the period from July 1, 2021 to December 31, 2021 was ¥1,962
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.

37

3. Summary of Significant Accounting Policies (continued)
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.
4.

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 June 30, 2022 andDecember 31, 2021 consisted of the following:

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

5.

As of
As of
June 30, 2022
December 31, 2021
(Thousands of yen)
9,139,249
7,457,720
11,064,492
15,095,859
20,203,741
22,553,580

Financial Instruments

For the periods from January 1, 2022 to June 30, 2022 and from July 1, 2021 to
December 31, 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.

38

5.

Financial Instruments (continued)(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 June 30, 2022. 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 8, “Short-Term
Loans and Long-Term Debt,” and there is no balance outstanding under the facility
agreements as of June 30, 2022). Liquidity risk is also mitigated through the constantmanagement of liquidity on hand.
(c) Credit Risk
Investment securities represent ownership interests in an anonymous association andexposed to credit risk of the issuer. JEI regularly evaluates the financial condition of
the issuer, etc.
(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.

39

5.

Financial Instruments (continued)

Fair value of financial instruments
The following are carrying values and fair values as of June 30, 2022 and December 31, 2021
of financial instruments and the differences between them. Please note that the following table
does not include ownership interests in an anonymous association (Note B).
In addition, 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 bookvalues, the notes are omitted.
As of June 30, 2022
Fair value
Carrying value(Note A)
(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 *As of December 31, 2021
Fair value
Difference
Carrying value
Difference(Note A)
(Thousands of yen)

2,000,000

1,999,286

(714)

－

－

－

13,750,000

13,791,969

41,96913,750,000

13,803,225

53,22536,000,000
73,850,000
125,600,000

35,841,035
74,111,144
125,743,434(158,965)
261,144
143,434

38,000,000
73,850,000
125,600,000

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

215,545772,233
1,041,003

－

－

－

－

－

－

*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.”

40

5.

Financial Instruments (continued)(Note B)Of investment securities, for ownership interests in an anonymous association, the fair value iscalculated by applying the treatment stipulated in Paragraph 27 of the Implementation
Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31 issued
on July 4,2019). No notes are provided on matters prescribed in Paragraph 4 (1) of the
Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ
Guidance No. 19 issued on March 31, 2020).
The balance sheet amount for ownership interests in an anonymous association to which thistreatment is applied is ¥5,241,564 thousand as of June 30,2022. Investment securities, otherthan ownership interests in an anonymous association are omitted because they lacksignificance.
(Note C)
Security deposits from tenants and Security deposits from tenants for trust accounts are omitted
because they lack significance.
(Note D)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

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
17,660,000
22,660,000－
9,000,000
7,300,000
16,300,000－
12,000,000
20,350,000
32,350,000

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 June 30, 2022
2 to 3 years
3 to 4 years(Thousands of yen)

1 to 2 years

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

1 to 2 years

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

41

6.

Investment and Rental Property

For the periods from January 1, 2022 to June 30, 2022 and from July 1, 2021 to
December 31, 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 June 30,
2022 and December 31, 2021 for such real estate for lease.
Carrying value
As ofJanuary 1, 2022

Change during period(*2)

Fair value
As ofJune 30, 2022

As ofJune 30, 2022

(Thousands of yen)
268,610,977

As ofJuly 1, 2021
265,113,962(5,416,739)

263,194,237

Carrying value
Change during period
(*1)

As of
December 31, 2021

338,814,000

Fair value(Thousands of yen)
3,497,014

268,610,977

As of
December 31, 2021
340,752,000

A) Carrying value represents the acquisition cost less accumulated depreciation.
B) Details of change during period:(*1) 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.
(*2) The decrease of ¥5,416,739 thousand during the period is mainly due to a decrease of¥4,600,935 thousand related to the disposal of Kowa Shirokanedai Building and adecrease of ¥1,937,049 thousand for depreciation costs.

C) Fair value
Fair value as of June 30, 2022 is Shintomicho Building’s transfer price and for otherproperties, the appraisal value provided by third-party real estate appraisers.
Fair value as of December 31, 2021 is Kowa Shirokanedai Building’s transfer price,
Shintomicho Building’s transfer price and for other properties, the appraisal value provided
by third-party real estate appraisers.

42

7.

Property and Equipment

Property and equipment at June 30, 2022 and December 31, 2021 consisted of the following:
As of June 30, 2022
Acquisition
cost

Accumulated
depreciation

As of December 31, 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

8.

7,890,044
6,253
60,452
10,609,617
5,560(2,361,514)(5,034)(37,861)－－5,528,530
1,218
22,591
10,609,617
5,560

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

118,264,650(36,656,911)

81,607,738

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

83,183,593

1,233,150(644,539)

588,610

1,175,883(601,377)

574,505

306,734
155,514,243(206,975)－

99,759155,514,243

299,524
159,396,690(196,563)－

102,960
159,396,690

51,656
293,942,363－(39,912,836)

51,656254,029,527

14,087
297,909,888－(38,466,049)

14,087259,443,838

Short-Term Loans and Long-Term Debt

Short-term loans and long-term debt as of June 30, 2022 and December 31, 2021 consisted of
the following:
As of June 30, 2022
Weighted-averageinterest rate (*1)

Amount(Thousands of yen)

As of December 31, 2021
Weighted-averageinterest rate (*1)

Amount(Thousands of yen)

Long-term debt due within one year:
Unsecured loans from insurance companies due on
January 31, 2022－

0.35000% (*2)

3,000,000

0.35000% (*2)

Unsecured loans from a bank due on June 30, 2022－

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

0.27809%2,000,000

0.28208%

1,000,000

0.35000% (*2)

1,000,000

0.35000% (*2)

Unsecured loans from banks due on December 30, 2022

5,750,000

0.93625% (*2)

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)－

3,000,000

0.46000% (*2)－

Subtotal

13,750,000

13,750,000

43

8.

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

Long-term debt:
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)－

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

0.39407%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
Unsecured loans from insurance companies due on
January 31, 2027

3,000,000

0.79100% (*2)

3,000,000

0.79100% (*2)

3,000,000

0.28000% (*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

0.49235%

5,750,000

0.48727%2,000,000

0.65000% (*2)

2,000,000

0.65000% (*2)

Unsecured loans from a bank due on June 30, 2031

2,000,000

1.08125% (*2)－

Subtotal
Total

73,850,000

73,850,000

87,600,000

87,600,000(*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 June 30, 2022 are as follows:
Long-term debt

1 year or less
1 to 2 years(Thousands of yen)
13,750,000
14,270,000

2 to 3 years
14,270,000

3 to 4 years
17,660,000

4 to 5 years
7,300,000

Over 5 years
20,350,000

JEI has commitment lines of ¥14,000,000 thousand with three financial institutions to mitigate
refinancing risk and enhance financial stability. As of June 30, 2022, these commitment lines
have never been utilized.

44

9.

Investment Corporation Bonds

Details of total investment corporation bonds outstanding as of June 30, 2022 and December
31, 2021 are summarized as follows:
As of June 30, 2022
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 December 31, 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 June 30, 2022 are as
follows:
1 year or less
Investment corporation bonds

10.

2,000,000

1 to 2 years
10,000,000

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

4 to 5 years
9,000,000

Over 5 years
12,000,000

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.
Information on the cancellation of treasury investment units during the six-month period ended
June 30, 2022 and December 31, 2021 is as follows:
Six-month period
endedJune 30,2022
Total number of treasury investment units
cancelled (Number of units)
Total cancellation amount (Thousands of yen)Six-month period
ended
December 31,2021

15,402－

1,999,960

－

45

11.

Per Unit Information

Net assets per unit as of June 30, 2022 and December 31,2021 were calculated based on thenumber of units outstanding as of each date, (1,337,598 units) and (1,353,000 units),
respectively.
Net income per unit for the periods from January 1, 2022 to June 30, 2022 and July 1, 2021 to
December 31, 2021 was calculated based on the weighted-average number of units outstanding
during the corresponding periods, (1,343,871 units) and (1,353,000 units), respectively.
Accordingly, net assets per unit were ¥112,486 as of June 30, 2022 and ¥112,495 as ofDecember 31, 2021. Net income per unit was ¥3,052 for the period from January 1, 2022 toJune 30, 2022 and ¥2,842 for the period from July 1, 2021 to December 31, 2021.
12.

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 June 30, 2022 andDecember 31, 2021 are summarized as follows:
As ofJune 30,2022

As ofDecember 31,2021(Thousands of yen)
Deferred tax assets:
Accrued enterprise taxes
Total deferred tax assets
Net deferred tax assets

6
6
6

2
2
2

A reconciliation of the differences between the statutory tax rate and the effective tax rate forthe periods from January 1, 2022 to June 30, 2022 and July 1, 2021 to December 31, 2021 is asfollows:

Statutory tax rate
Reconciliation:
Deductible distributions paid
Provision of reserve for reduction entry
Other
Effective tax rate

For the period
from January 1,
2022 to June 30,2022
31.46%For the period
from July 1, 2021
to December 31,
2021
31.46%(28.72%)(2.74%)
0.02%
0.02%

(31.46%)
－
0.02%
0.02%

46

13.

Breakdown of Revenues and Expenses
For the period
from January 1, 2022
to June 30, 2022

For the period
from July 1, 2021 to
December 31, 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
Profit14.

8,031,228
1,261,873
273,671
9,566,772

8,282,650
1,330,321
270,611
9,883,583

575,877
124,803700,680
10,267,453

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

1,566,340
935,493980,795
21,478126,108
1,937,049
132,640
5,699,906
4,567,546

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

Breakdown of Gain or Loss on Sales of Real Estate Properties
For the period
from January 1, 2022
to June 30, 2022

Kowa Shirokanedai Building
Proceeds from sale of real estate
Cost of sales of real estate
Other related sale expenses
Gain on sale of real estate

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

(Thousands of yen)
5,400,000
4,600,935
1,382
797,682－－－－

15．Leases
JEI leases properties on which rental revenues are earned. At June 30, 2022 and December 31,
2021, future lease revenues under non-cancelable operating leases are summarized as follows:
As ofJune 30, 2022

As ofDecember 31, 2021

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

1,908,779
3,164,842
5,073,622

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

47

16. Derivative Transactions
Derivative Transactions as of June 30, 2022
(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, 2022 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 5, “Financial Instruments.”

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 5, “Financial Instruments.”

48

17.

Related Party Transactions

For the period from January 1, 2022 to June 30, 2022
(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
payable395,996

Account

Balance at the end of
period(Thousands of yen)Accounts
payable383,000(Thousands of yen)
Shuichiro
KayamaPayment of asset
management fees to JEAM

467,085

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

Description of transaction

Amount(Thousands of yen)

Shuichiro
KayamaPayment of asset
management fees to JEAM

457,20949

18.

Segment Information

For the periods from January 1, 2022 to June 30, 2022 and from July 1, 2021 to
December 31, 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.
JEI determined to distribute the whole amount obtained by deducting the provision of reserve
for reduction entry due to the transfer of real estate properties in accordance with Section 65.7of the Special Taxation Measures Law from unappropriated surplus.
Consequently, JEI set income available for distributions of dividends at ¥3,745,274,400, whichis the maximum integral multiple of the 1,337,598 units issued, but not exceeding¥4,102,019,182, which is the amount of retained earnings at June 30, 2022.
No cash distribution exceeding the income amount set forth in Section 33.1.4 of the bylaws of
JEI shall be made.
On August 18, 2022, the Board of Directors approved a resolution to make a cash distributionof ¥2,800 per unit aggregating to ¥ 3,745,274,400 to unitholders of record as of June 30, 2022.

50

20.

Revenue Recognition(1) Breakdown of revenue from contracts with customers
For the period from January 1, 2022 to June 30, 2022
Revenue from contracts with
Revenue from external customers
customers *(Thousands of yen)
Sales of real estate properties
5,400,000
797,682
Utilities income
575,877
575,877
Other－
9,691,575
Total
5,975,877
11,065,136* 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.

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－－
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 January 1, 2022 to June 30, 2022 and 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 January 1, 2022 to June 30, 2022(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）

January 1, 2022 toJune 30, 2022
(Thousands of yen)
233,782
224,317
－
－
－
－

51

20.

Revenue Recognition (continued)(b) Transaction price allocated to remaining performance obligations
As of June 30, 2022, the total transaction price allocated to the remaining performanceobligations for the sale of real estate is 3,100,000 thousand yen for the real estate forwhich a sale contract was executed on February 17, 2022. JEI expects to recognize
revenue for such remaining performance obligations upon delivery of such real estate
properties, which is expected to occur on July 22, 2022 and January 26, 2023. 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 the right to receive from the customer the amount of consideration that
directly corresponds to the value to the customer, the lessee, of the portion of theperformance completed by the end of the fiscal period. Accordingly, JEI has applied theprovisions of paragraph 80-22(2) of the Accounting Standard for Revenue Recognitionand has not included in the notes the transaction price allocated to the remaining
performance obligations.
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 to recognize
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 19of the Guidance on Accounting Standard for Revenue Recognition, JEI recognizes utility
revenues at the amount it has the right to charge, because JEI has the right to receive fromthe customer the amount of consideration that directly corresponds to the value to thecustomer, the lessee, of the portion of the performance completed by the end of the fiscal
period. Accordingly, JEI has applied the provisions of paragraph 80-22(2) of the
Accounting Standard for Revenue Recognition and has not included in the notes thetransaction price allocated to the remaining performance obligations.
21.

Significant Subsequent Event

Not applicable.

52

53

54

55