Asset Management Report for the 28th Period(Semi-Annual Report for the 28th Period)
From January 1, 2020, to June 30, 2020

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 28th period (from January 1, 2020, to June 30, 2020).
During the 28th period, we transferred part of JEI Nishi-Honmachi Building and Kowa Kawasaki Nishiguchi Building as
the final phase of asset replacement which we worked on under the aim of improving portfolio quality, and as for JEI
Nishi-Honmachi Building, all of our ownership interest has been transferred as of the beginning of the 29th period.
Meanwhile, we newly acquired ownership interest in GRAND FRONT OSAKA, a landmark situated in front of Osaka
Station/Umeda Station, from Nippon Steel Kowa Real Estate Co., Ltd., the sponsor.
On the leasing front, our efforts to attract new tenants with a view to increase the rent level as well as to conclude upward
rent revisions with existing tenants, all the while maintaining extremely high occupancy rates in the upper 99% range, haveresulted in record-high rental revenues.
Furthermore, on the financial front, JEI conducted a public offering for the first time in three and a half years and was able
to procure a total of 7.9 billion yen (including overallotment). In addition to lowering LTV significantly by combining
property acquisition and transfer, we also realized the extension of borrowing periods, reduction of financial costs, anddiversification of repayment dates by refinancing borrowings. Moreover, we worked to improve our financial stability byaccumulating 5 billion yen of liquidity on hand in preparation for an uncertain future.
As a result, in the 28th period, JEI recorded operating revenue of 12,717 million yen, operating income of 6,290 million
yen, and net income of 5,631 million yen, and distribution per unit increased by 42 yen from the previous period to reach
2,960 yen.

About Future Asset Management
Although transaction prices in the real estate market have remained high backed by a strong appetite for investment bymarket participants and other factors, JEI believes that it is necessary to pay close attention to economic trends due to theimpact of the COVID-19 crisis.
In the office building leasing market, we also think there is a need to monitor closely matters that could have an impact on
future office demand, such as trends in corporate performance and changes in tenant needs due to the spread of telework,
among other factors.
Under such an environment, JEI intends to acquire competitive properties by means of well-balanced investments basedon size and target area while shifting its focus from asset replacement to expansion of asset size for external growth. JEI
will continue enhancing further interaction and collaboration with sponsor companies and have the asset managementcompany newly cultivate and refine property information sources in an effort to gain access to information on dispositionof properties in a prompt manner and thereby continue seizing the right business opportunities.
Furthermore, by making the most of JEI’s features, including the characteristics of its portfolio centered on properties nearstations, large buildings, and ESG-conscious properties; a wide customer base; office development functions; andcooperation with the sponsor group companies that have a large number of property management experience, we willdevelop management that is one step ahead in regard to understanding tenant needs, and by doing so, JEI will continue toprovide “offices of choice.” In terms of finance, JEI will strive to conduct stable financial management based on its basic
policy of continuing to reduce financing costs, fixing the interest rates of loans, extending borrowing periods, anddiversifying maturity dates.
In regard to ESG, we will further accelerate our initiatives and aim to collaborate in concert with our unitholders and wide
range of stakeholders to resolve social issues.
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.

Shuichiro Kayama
Executive Director, Japan Excellent, Inc.
President, Japan Excellent Asset Management Co., Ltd.

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

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

25th Period
27th Period
24th Period
26th Period
28th Period
July 1, 2018,
July 1, 2019,
January 1, 2018,
January 1, 2019,
January 1, 2020,
to December 31,
to December 31,
to June 30, 2018
to June 30, 2019
to June 30, 2020
2018
2019
10,535

10,657

10,668

10,89012,717(10,535)(10,657)(10,668)(10,890)(11,013)

6,509

6,373

6,349

7,978

6,426

(5,754)(5,780)(5,747)(5,906)(5,697)

4,025

4,284

4,318

2,912

6,290

3,340

3,597

3,691

2,247

5,631

3,339

3,596

3,690

2,246

5,631

285,008

285,400

286,172

288,790

293,532

(1.0)

(0.1)

(0.3)

(0.9)

(1.6)

143,786

143,727

143,822

142,377

152,133(-0.1)(-0.0)(0.1)(-1.0)(6.9)

139,972

139,972

139,972

139,972

147,9071,305,700

1,305,700

1,305,700

1,305,700

1,353,000

110,122

110,076

110,149

109,042

112,441

2,557

2,754

2,826

1,720

4,179

3,655

3,595

3,691

3,810

4,004

2,800

2,754

2,827

2,918

2,960

(2,800)(2,754)(2,827)(1,841)(2,960)

(－)

(－)

(－)

(1,077)

(－)

1.2

1.3

1.3

0.8

1.9

(2.4)

(2.5)

(2.6)

(1.6)

(3.9)

2.3

2.5

2.6

1.6

3.8

(4.7)

(5.0)

(5.2)

(3.1)

(7.7)
51.8

50.5

50.4

50.3

49.3

(-0.6)(-0.1)(-0.1)(-1.0)

(2.5)

109.5

100.0

100.0

107.0

71.1

30

31

31

33

35

202

204

204

200

193

341,247

343,830

343,830

345,940

332,702

99.6

99.6

99.4

99.6

99.6

1,926

1,920

1,935

1,929

1,946

867

809

1,285

1,726

806

6,707

6,797

6,856

6,913

7,263

4,159

4,225

4,309

4,367

4,341

17.0

17.7

18.2

20.3

14.4

11.1

11.7

12.5

9.4

17.0

126,500

126,600

126,600

129,600

125,600

44.4

44.4

44.2

44.9

42.8

181

184

181

184

182

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

Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)2

(Note 5) Return on equity = Net income / [(Period beginning net assets) + (Period end net assets)/ 2] × 100(Note 6) Capital ratio = Period end net assets / Period end total assets × 100(Note 7) Payout ratio = (Distribution per unit (not including distribution in excess of earnings per unit) / Net income per unit) × 100(Figures are rounded to the first decimal place.)
As new investment units were issued in the 28th period, the formula below was used to calculate the amount.
Payout ratio ＝ (Total distributions (not including distribution in excess of earnings / Net income) × 100
In addition, when accounting for reversal of allowance for temporary difference adjustments with the following formula, thepayout ratio is 94.8%.
(Total distributions (not including distribution in excess of earnings) / (Net income － Reversal of allowance for temporary
difference adjustments)) × 100(Note 8) For properties with joint ownership (including quasi co-ownership of trust beneficiary interest), a figure obtained bymultiplying the leasable area of the entire property by the ownership ratio is indicated as JEI’s leasable area. The same shallapply 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)(Note 14) Loan-to-value = Period end interest-bearing debt / Period end total assets × 100

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

3

(2) Asset Management Development
Japan Excellent, Inc. (JEI) was founded on February 20, 2006, under the Law Concerning Investment Trusts andInvestment Corporations of Japan (Law No. 198 of 1951, as amended; hereinafter referred to as the “Investment
Trust Law”). On March 15, 2006, it completed the corporate registration to the Kanto Finance Bureau (registration
number 52, issued by the Head of the Kanto Local Finance Bureau) and listed on the Real Estate Investment Trust
Section of the Tokyo Stock Exchange (Securities Code: 8987) on June 27, 2006. Since the listing, JEI has continued
investment management primarily in office buildings with the aim of maintaining sound corporate growth and stablerevenues from the medium- to long-term perspectives. On June 30, 2020, JEI settled its twenty-eighth period.
1) Business conditions and results
In the 28th period (ended June 2020), the world economy experienced a downturn as economic activity was
suppressed due to measures such as lockdowns aimed at preventing the spread of the novel coronavirus(COVID-19). On the other hand, as various countries around the world implement fiscal policies to support
their economies and economic activity resumes, economic indicators are showing signs of improvement,
although concerns about a second wave of infections are rising.
In the U.S., the Federal Reserve Board continues its posture of monetary easing as 10-year government bonds
have fallen significantly, while long-term interest rates have reached a historically low level.
In Japan, the Bank of Japan is keeping a close eye on the impact that the deterioration of the real economy could
have on the stability of the financial system and maintains its stance on monetary easing, in addition to keeping
the yield on 10-year Japanese Government Bonds hovering around zero.
In the real estate transaction market, with no signs of change to the environment for fund procurement, market
participation by overseas investors, private funds, private REITs, and general companies, etc., continues, andtransaction yields are at a low level as transaction prices remain high.
In the office building leasing market, according to Miki Shoji Co., Ltd. the vacancy rate in the five central wardsof Tokyo remained low at the 1% level as of the end of June 2020, and average rents increased for the seventyeighth consecutive month. Under these circumstances, we were able to achieve a period-end occupancy rate
(Note 1) of 99.6% and an increase in rent revenue of 98 million yen for existing properties (excluding properties
acquired in the 27th and 28th periods) by capturing demand for floor expansions within same buildings andrelocation for expansion and better location, etc., while also strengthening efforts for upward rent revisions tosuit the value of properties for existing tenants upon contract renewal.
The total number of properties owned and managed by JEI at the end of the current period was 35 with a totalacquisition price of 273.3 billion yen and total leasable area of 332,701.82 m2 (100,642.30 tsubos).
2) Fund procurement highlights
JEI will work on stable and sound financial operations with a basic policy of procuring funds for the long term
at fixed interest rates.
During the 28th period, JEI conducted a public offering in January, procuring approximately 7.9 billion yen infunds for the acquisition of GRAND FRONT OSAKA, etc., and refinanced 8.6 billion yen of maturingborrowings to extend the average borrowing period from 6.8 years to 8.9 years. In addition, in April, we prepaid
4 billion yen in short-term loans using funds obtained from the public offering and sales of properties.
As a result, as of the end of the 28th period, the average remaining period of interest-bearing debt (Note 2) was
4.5 years (extended by 0.3 years from the end of the previous period), the period-end average interest-bearing
debt interest rate (Note 3) was 0.75% (down 0.02% from the end of the previous period), and the loan-to-value
ratio of total assets (total assets-based LTV) (Note 4) was 42.8% (down 2.1% from the end of the previous
period).
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.

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

4The ratings granted to JEI by the following rating agencies are shown below:(Ratings as of June 30, 2020)
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.
For instance, in order to reduce our environmental impact, JEI has set targets to reduce energy consumption andCO2 emission intensities by 1% per year compared with the previous period, and over the medium to long term,
we aim to reduce average energy consumption and emission intensities by 5% when comparing the rates between
fiscal 2015 and fiscal 2019 against the rates between fiscal 2020 and fiscal 2024, and JEI is working to upgrade
its properties by adopting LED lighting and air-conditioning equipment with excellent energy-saving
performance. Furthermore, JEI has continuously promoted the acquisition of DBJ Green Building Certificationand the number of certified properties stands at 19, or 77.6% of the entire portfolio (as of June 30, 2020; basedon leasable area excluding land with leasehold interest).
Such initiatives for sustainability by JEI earned high recognition including a fifth consecutive “Green Star”
rating (Note 7) in the Global Real Estate Sustainability Benchmark (GRESB) (Note 6) Real Estate Assessment
conducted in 2019, as well as a fourth consecutive “4 Star” or higher in “GRESB Rating” (Note 8), a rating ofoverall score according to global ranking.
Furthermore, JEI’s asset management company, Japan Excellent Asset Management Co., Ltd. endorsed the basic
tenets of the Principles for Responsible Investment (PRI), which aims to enhance the long-term investment
performance of beneficiaries and better fulfill its fiduciary responsibilities by integrating ESG factors into
investment decision-making processes, signed onto the PRI in June 2020, and became a signatory institution in
July 2020.
4) Financial results and distribution highlights
For the period under review, JEI posted 12,717 million yen in operating revenue, 6,290 million yen in operating
income, 5,631 million yen in ordinary income, and 5,631 million yen in net income
Concerning distributions in the period under review, JEI applied the special provisions of the tax system on
investment corporations (Section 67-15 of the Special Taxation Measures Law) for the reversal of allowancefor temporary difference adjustment (as stipulated by Article 2 Paragraph 2 Item 30 of the Ordinance on
Accountings of Investment Corporations) and with the purpose of stabilizing distribution levels, JEI conducteda reserve for reduction entry under the special provisions of the tax system in the case of the replacement ofspecified assets.
As a result, distribution per unit was 2,960 yen as JEI decided to distribute the entire amount of the period-end
unappropriated retained earnings ,excluding fraction portions of less than one yen per unit, to the extent that theamount does not exceed the period-end unappropriated retained earnings after subtracting 1,406 million yen for
the reversal of allowance for temporary difference adjustment and 219 million yen for reserve for reduction
entry.
(Note 1) Occupancy rate is a percentage of total leased area to total leasable area of each real estate or real estate in trust.
(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 current period 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 and 15th series unsecured investment corporation bonds.

Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)5

(Note 6) A benchmark established by a European pension fund group that measures ESG considerations of real estatecompanies and management institutions which is used by major European, American, and Asian institutional
investors for decision-making on investments.
(Note 7) “Green Star” is given when a high evaluation with a score exceeding 50% is made in the two evaluation axes(“Management Policy” and “Implementation & Measurement).
(Note 8) “GRESB Rating” is a rating of the overall score according to the global ranking, and “5 Star” is given to the
top 20% of participants, “4 Star” to the following 20% and so forth.

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

6

(3) Capital Increase
The outline of the changes in the total number of outstanding investment units and unitholders’ capital until the endof the period under review are as follows:
Unitholders’ capital
Capital transaction (units)
Remarks(Millions of yen) (Note 1)
Paid-up Date
Capital transaction
ChangeBalance
ChangeBalance
Private placement
February 20, 2006
400
400
200
200
(Note 2)for incorporation
June 26, 2006
Public offering
128,000
128,400
64,23064,430(Note 3)
Third-party
July 21, 2006
6,400
134,800
3,211
67,641(Note 4)
allotment
July 11, 2007
Public offering
19,000
153,800
18,702
86,344(Note 5)
Third-party
August 8, 2007
750
154,550738
87,083(Note 6)
allotment
January 31, 2011
Public offering
31,000185,550
13,608100,691(Note 7)
Third-party
February 28, 2011
3,100
188,650
1,360
102,052(Note 8)allotment
January 30, 2013
Public offering
33,000221,650
14,408116,460(Note 9)
Third-party
February 27, 2013
3,300
224,950
1,440
117,901(Note 10)allotment
Split of investment
January 1, 2014
899,800
1,124,750–
117,901(Note 11)
unit
January 27, 2014
Public offering
80,0001,204,750
9,135
127,036(Note 12)
Third-party
February 26, 2014
8,000
1,212,750
913
127,950(Note 13)
allotment
July 13, 2015
Public offering(Note 14)47,0001,259,750
5,894
133,845
Third-party
August 12, 2015
(Note 15)4,700
1,264,450
589
134,434
allotment
July 11, 2016
Public offering(Note 16)
37,5001,301,950
5,034
139,469
Third-party
August 10, 2016
(Note 17)3,750
1,305,700
503
139,972
allotment
January 21, 2020
Public offering(Note 18)
43,0001,348,700
7,213
147,186
Third-party
February 13, 2020
(Note 19)4,300
1,353,000
721
147,907
allotment(Note 1) Does not account for the changes in unitholders’ capital due to the implementation of distribution in excess of earnings related
to the allowance for temporary difference adjustments.
(Note 2) JEI was incorporated through private placement at a price of 500,000 yen per unit.
(Note 3) New investment units were issued at an issue price of 520,000 yen per unit (purchase price of 501,800 yen per unit) througha public offering in order to fund acquisition of new properties which were acquired at the time of the listing.
(Note 4) New investment units were issued at a purchase price of 501,800 yen per unit through third-party allotment in order to partiallyfund new property acquisitions.
(Note 5) New investment units were issued at an issue price of 1,019,200 yen per unit (purchase price of 984,360 yen per unit) througha public offering in order to partially repay debts procured to acquire properties.
(Note 6) New investment units were issued at a purchase price of 984,360 yen per unit through third-party allotment in order to partially
repay debts procured to acquire properties.
(Note 7) New investment units were issued at an issue price of 454,930 yen per unit (purchase price of 438,984 yen per unit) througha public offering in order to repay short-term loans procured to acquire properties and to fund acquisition of a new property.
which was acquired.
(Note 8) New investment units were issued at a purchase price of 438,984 yen per unit through third-party allotment in order to repay
short-term loans procured to acquire new properties and to fund acquisition of a new property.
(Note 9) New investment units were issued at an issue price of 451,425 yen per unit (purchase price of 436,609 yen per unit) througha public offering in order to fund acquisition of new properties.
(Note 10) New investment units were issued at a purchase price of 436,609 yen per unit through third-party allotment in order to fundacquisition of properties.
(Note 11) With December 31, 2013, as the record date, JEI implemented a 5-for-1 split of its investment units held by Unitholders statedor recorded on that date’s final unitholder registry with January 1, 2014, as the effective date.
(Note 12) New investment units were issued at an issue price of 118,072 yen per unit (purchase price of 114,196 yen per unit) througha public offering in order to fund acquisition of new properties.
(Note 13) New investment units were issued at a purchase price of 114,196 yen per unit through third-party allotment in order to partiallyfund future acquisitions of specified assets or repayment of loans and redemption of investment corporation bonds.
(Note 14) New investment units were issued at an issue price of 129,675 yen per unit (purchase price of 125,419 yen per unit) througha public offering in order to partially repay debts procured to acquire properties.

Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)7

(Note 15) New investment units were issued at a purchase price of 125,419 yen per unit through third-party allotment in order to partiallyfund future acquisitions of specified assets or partially fund repayment of loans.
(Note 16) New investment units were issued at an issue price of 138,742 yen per unit (purchase price of 134,259 yen per unit) througha public offering in order to partially repay debts procured to acquire properties.
(Note 17) New investment units were issued at a purchase price of 134,259 yen per unit through third-party allotment in order to partiallyfund future acquisitions of specified assets or partially fund repayment of loans.
(Note 18) 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 19) 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 20) 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 28th period.

[Market price of the investment securities]
The period-on-period fluctuations in the highest and lowest (closing) prices of JEI’s investment units listed on theReal Estate Investment Trust Section of the Tokyo Stock Exchange during each period is as follows:
Fiscal period
24th period
25th period
26th period
27th period
28th period(June 2018) (December 2018) (June 2019) (December 2019) (June 2020)(closing date)
Investment
unit market Highest (yen)147,400
156,200
164,500
189,600
200,600
price
Lowest (yen)131,400
141,000
147,600
159,600
75,400(Note)The highest and lowest prices of investment units refer to the closing prices on the Real Estate Investment Trust Section of
the Tokyo Stock Exchange.

Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)8

(4) Distributions Paid
Considering distributions in the period under review, JEI applied the special provisions of the tax system on
investment corporations (Section 67-15 of the Special Taxation Measures Law), and determined that it would
distribute the entire amount of the period-end unappropriated retained earnings, excluding fraction portions of lessthan one yen per unit, to the extent that the amount does not exceed the period-end unappropriated retained earnings
after subtracting 1,406,238,900 yen for the reversal of allowance for temporary difference adjustment and219,594,343 yen for reserve for reduction entry, which resulted in a distribution per unit of 2,960 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)24th period

25th period

26th period

27th period

28th period

January 1, 2018, to July 1, 2018, to January 1, 2019, to July 1, 2019, to January 1, 2020, toJune 30, 2018 December 31, 2018 June 30, 2019 December 31, 2019 June 30, 2020
3,339,461

3,596,244

3,691,310

2,246,223

5,631,594

－

346

97

469

220,475

3,655,960

3,595,897

3,691,213

3,810,032

4,004,880(2,800)(2,754)(2,827)(2,918)(2,960)3,655,960

3,595,897

3,691,213

2,403,793

4,004,880(2,800)(2,754)(2,827)(1,841)(2,960)－－－1,406,238

－

(－)

(－)

(－)

(1,077)

(－)

－

－

－

1,406,238

－

(－)

(－)

(－)

(1,077)

(－)

－

－

－

－

－

(－)

(－)

(－)

(－)

(－)

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

9(5) Policy and Issues on Future Investment Management
1) Outlook for investment environment
In the real estate market, although real estate transaction prices are expected to remain high backed by factors suchas a favorable fund procurement environment and a vigorous appetite for investment by market participants, we
believe that there is a need to monitor closely the impacts of COVID-19, the dispute between the U.S. and China,
and the U.S. presidential election, etc.
In the office building leasing market, demand is expected to remain firm, although we will need to pay close attention
to trends in corporate earnings and changes in tenant needs, etc., due to the impact of COVID-19.
2) Policy and issues on future investment management
A. External growth
JEI intends to acquire competitive properties by means of well-balanced investments based on size and area while
gradually shifting its focus from asset replacement to expansion of asset size for external growth. JEI will continueenhancing further interaction and collaboration with sponsor companies and have the asset management company
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.
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. In addition to promoting such initiatives and setting new rents based on market trends,
JEI aims to enhance earnings of the entire portfolio and improve its ESG evaluation by continuously making
additional strategic investments that consider energy conservation and BCP measures in order to maintain asset
value and improve property competitiveness over the medium to long term. Although we believe that the impact of
the spread of COVID-19 is unlikely to have an immediate and significant impact on revenue, we will continue tomonitor the situation closely.
C. Financial strategy
JEI will consistently work on stable and sound financial operations by procuring funds with a basic policy to fix
interest rates of loans, extend borrowing periods, and diversify maturity dates while continuing to reduce interest
rates. In addition, JEI will consider new types of procurement such as green bonds from the perspective of
maintaining and strengthening its financial base through diversification of fund procurement means while carefully
monitoring the environment of the financial market.
JEI will set the upper limit of total assets-based LTV at 60% and manage it at around 35% to 50%. Furthermore, JEI
will conduct financial operations that emphasize stability by reducing refinancing risks through diversification of
maturity dates of interest-bearing debt.
D. Sustainability initiatives
JEI will work to reduce the environmental burden and to cooperate/collaborate with stakeholders to achieve asustainable society through corporate social responsibility.
In addition, we will develop a Sustainability Finance Framework that will take our ESG initiatives one step further
by adding social aspects to our environmentally friendly green bond framework, and we plan to refinance our debt
with a sustainability loan in September 2020.

(6) Subsequent Events
Not applicable.
(Reference Material)
Borrowing of Funds (Sustainability Loan)JEI concluded a loan agreement on August 20, 2020, as described below.
<Overview of Borrowing>
LenderMizuho Bank, Ltd.
Loan amount
2,000,000,000 yen
Base interest rate (Japanese Bankers Association (JBA)
Interest rate
one-month Yen-TIBOR) + 0.20000%
Drawdown date
September 30, 2020
Principal repayment date
September 30, 2022
Principal repayment method
To be repaid in full on the principal repayment date
Collateral
Unsecured / Non-guaranteed
Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)10

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

25th
27th
24th
26th
28th
As of December 31,
As of December 31,
As of June 30, 2018
As of June 30, 2019
As of June 30, 2020
2018
2019
10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

10,000,000 units

1,305,700 units

1,305,700 units

1,305,700 units

1,305,700 units

1,353,000 units

139,972
139,972
139,972
139,972
147,907
million yen
million yen
million yen
million yen
million yen
7,189
6,741
6,393
6,046
6,746
Number of unitholders
individuals
individuals
individuals
individuals
individuals(Note) Does not account for the changes in unitholders’ capital due to the implementation of distribution in excess of earnings related
to the allowance for temporary difference adjustments.
Unitholders’ capital(2) Unitholders
Major unitholders as of June 30, 2020, are as follows:
Number ofunits held
(Units)Ratio of number ofunits held tooutstanding
investment units(%)

1-8-11 Harumi, Chuo-ku, Tokyo

368,218

27.21

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

220,50916.30

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

71,5605.29

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

62,612

4.63

Harumi Triton Square Tower Z,
1-8-12 Harumi, Chuo-ku, Tokyo

52,254

3.86

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

20,660

1.53

STATE STREET BANK WEST
CLIENT - TREATY 505234

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

18,242

1.35

Mitsubishi UFJ Morgan Stanley
Securities Co., Ltd.

2-5-2 Marunouchi, Chiyoda-ku, Tokyo

16,4301.21

Nomura Securities Co., Ltd.

1-9-1 Nihonbashi, Chuo-ku, Tokyo

12,8740.95

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

12,471

0.92

Total

855,830

63.25

Name

Japan Trustee Services Bank, Ltd.
(Trust Account) (Note)
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)
Trust & Custody Services Bank,
Ltd. (Securities Investment Trust
Account) (Note)
The Dai-ichi Life Insurance
Company, Limited(Note)

Address

Effective July 27, 2020, Trust & Custody Services Bank, Ltd. and JTC Holdings, Ltd. merged with Japan Trustee Services
Bank, Ltd. in an absorption-type merger with the latter company as the surviving entity, and as of the same day, Japan Trustee
Services Bank, Ltd. changed its name to Custody Bank of Japan, Ltd.

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

11

(3) Officers
1) Directors and accounting auditor
Compensation or fee forthe six months ended
June 30, 2020
(Thousands of yen)

Post

Name

Executive
Director

Hidehiko Ogawa(Note 2)––

Executive
Director

Shuichiro Kayama(Note 3)President, Japan Excellent Asset Management Co.,
Ltd.

–

Supervisory
Director

Osamu Hirakawa

Advisor, Anderson, Mori & Tomotsune

Shunichi Maekawa

Professor, Sugiyama Jogakuen University, Schoolof Modern Management

Eiji Takagi

Eiji Takagi Certified Public Accounting Office

Ernst & Young
ShinNihon LLC–

Supervisory
Director
Supervisory
Director
Accounting
Auditor

Major additional post

5,580

14,700(Note 4)(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 conflicts of interest between thosecompanies, including those listed above, and JEI.
(Note 2) Hidehiko Ogawa retired as Executive Director on May 31, 2020.
(Note 3) Shuichiro Kayama was elected as Executive Director at the ninth general unitholders’ meeting held on May 29, 2020, andassumed office on June 1, 2020.
(Note 4) The total amount of compensation or fee shown above is an estimated amount and includes the amount paid as compensation
for auditing during the 28th period (11,000 thousand yen), the fee for the English financial statements audit, and the preparationof a comfort letter upon the issuance of new investment units in January 2020.

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.

(4) Asset Management Company, Asset Custodian, and Administrative Agents
JEI’s asset management company, asset custodian, and administrative agents as of June 30, 2020, 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 for accounting Mizuho Trust & Banking Co., Ltd.
and institution operation)
Administrative agent(Investment corporation bonds)

Mizuho Bank, Ltd.

Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)12

3. Investment Portfolio of the Investment Corporation(1) Investment Portfolio by Area
27th Period(As of December 31, 2019)28th Period(As of June 30, 2020)

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

Investment
ratio inportfolio
(%)

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

Investment
ratio inportfolio(%)

Area I

10,997

3.8

10,966

3.7

Area II

5,603

1.9

5,532

1.9

Area IV

1,628

0.6

1,633

0.6

Area I104,923

36.3

104,631

35.6

Area II

8,495

2.9

11,8184.0

Area III

92,05631.9

84,14028.7

Area IV

21,3007.4

21,158

7.2

OthersTrust beneficiary(commercial
interest in real
Area I
facilities,
estateresidence, etc.)

17,4376.0

17,305

5.9

Total

262,44390.9

257,186

87.6

Deposits in bank and other assets

26,3479.1

36,346

12.4

Total assets

288,790

100.0

293,532

100.0Classification

Use

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

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

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

13

(2) Major Properties
The principal properties (top ten properties in net book value) owned by JEI as of June 30, 2020, 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
26,75811,021.03
11,021.03
100.0
5.2
building
Nisseki Yokohama
Office22,90940,440.72
40,440.72
100.0
10.7
Buildingbuilding
OfficeOmori Bellport D
20,77925,801.66
25,801.66
100.0
8.4
building
Kowa Kawasaki
Office19,272
24,944.17
24,944.17
100.0
8.4
Nishiguchi Buildingbuilding
2

2

HAMARIKYUINTERCITY

17,305

19,718.11

19,456.12

98.7

Other
(commercial
6.9
facilities,
residence, etc.)

Musashikosugi Tower
Place

12,43425,043.93

25,043.93

100.0

7.3

Mansard Daikanyama

11,2455,420.80

5,264.90

97.1

3.2

10,966

8,949.04

8,949.04

100.0(Note 4)

9,832

18,612.72

18,612.72

100.0(Note 4)

9,584

12,122.85

12,122.85

100.0

3.0

Officebuilding
Officebuilding
Officebuilding
Officebuilding
Officebuilding

161,088

192,075.03

191,657.14

99.8

－

－

Kowa Nishi-Shimbashi
Building
Kowa Kawasaki
Higashiguchi Building
Daiba Garden City
Building
Total(Note 1) Leasable area refers to area available for lease of which ownership is attributable to JEI as of June 30, 2020. For properties
with joint ownership, the value is obtained by multiplying the total leasable area of the shared property by the percentage ofthe interest owned by JEI, regarding the figure as JEI’s leasable area.
(Note 2) Leased area refers to area with lease contracts or master lease agreements that guarantee a certain amount of fixed rent payment
concluded with end tenants as of June 30, 2020. For properties with joint ownership, the value is obtained by multiplying thetotal leased area of the property by the percentage of the co-ownership interest owned by JEI, regarding the figure as JEI’sleased area. For properties which are used for profit by the master lease company, leased area refers to the portion used, andthe figures indicate area which can be reasonably calculated based on the lease agreement on the master leasing. The leased
area of end tenants who terminated their lease arrangement but have not yet moved out as of the end of period is included in
the leased area. This also applies to any figure which is calculated based on “leased area” in this document.
(Note 3) Occupancy rate is a percentage of total leased area to total leasable area as of June 30, 2020.
(Note 4) The values of Kowa Nishi-Shimbashi Building and Kowa Kawasaki Higashiguchi Building are not disclosed as consent on
disclosure from the end tenants have not been obtained.

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

14

(3) Portfolio Ownership Breakdown
Real estate properties and their forms of ownership as of June 30, 2020, are as follows:
Property
No.

Property nameLocation (Residential address)

Ⅰ-1

Omori Bellport D

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

Ⅰ-2

Shiba 2-Chome Building

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

Ⅰ-3

JEI Hamamatsucho Building

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

Ⅰ-8

AKASAKA INTERCITY

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

Ⅰ-9

Kowa Shirokanedai Building

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

I-10

Daiba Garden City Building

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

Ⅰ-12

HAMARIKYU INTERCITY

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

Ⅰ-13

Shintomicho Building

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

Ⅰ-14

Kowa Nishi-Shimbashi Building

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

Ⅰ-15

Mansard Daikanyama

10-1 Sarugakucho, Shibuya-ku, Tokyo

I-16

AKASAKA INTERCITY AIR

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

I-17

Bizcore Akasaka-mitsuke

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

NHK Nagoya Housou-Center
Building

Area I
1-13-3 Higashi-Sakura, Higashi-ku,
Nagoya-shi, Aichi

Ⅱ-1

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
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

Ⅱ-2

JEI Nishi-Honmachi Building

1-3-15 Awaza, Nishi-ku, Osaka-shi, Osaka

Ⅱ-3

Osaka Kogin Building (Land with
Leasehold Interest)

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

Ⅱ-4

GRAND FRONT OSAKA (Umekita
Plaza·South Building)

4-1 Ohbuka-cho, Kita-ku, Osaka City, Osaka(Umekita Plaza)
4-20 Ohbuka-cho, Kita-ku, Osaka City, Osaka(South Building)Trust beneficiaryinterest in real estate

Ⅱ-5

GRAND FRONT OSAKA (North
Building)

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

Trust beneficiaryinterest in real estate

Ⅲ-1

Musashikosugi Tower Place

Ⅲ-2

Kowa Kawasaki Higashiguchi
Building

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

Ⅲ-3

JEI Hongo Building

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

Ⅲ-5

Kawasaki Nisshincho Building

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

Ⅲ-7

JEI RYOGOKU BUILDING

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

Ⅲ-9

Kowa Kawasaki Nishiguchi Building

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

Ⅲ-10

Pacific Square Sengoku

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

Ⅲ-11

Core City Tachikawa

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

Ⅲ-12

Nisseki Yokohama Building

Ⅲ-13

Yokohama Bentendori Dai-ichi
Seimei Building

Ⅳ-2

JEI Kyobashi Building

Ⅳ-3

JEI Hiroshima Hacchobori Building

Ⅳ-4

SE Sapporo Building

Ⅳ-5

Aoba-dori Plaza

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

Ⅳ-6

Daiwa Minami-morimachi Building

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

Ⅳ-7

JEI Naha Building

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

Hiroshima Dai-ichi Seimei OS
Building
Senshin Building

1-2-21 Matoba-cho Minami-ku,
Hiroshima-shi, Hiroshima
1-6-27 Chuo, Aoba-ku, Sendai-shi, Miyagi
Area IV
Total

IV-8
IV-9

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 estateAppraisal value
at end of period Net book value(Millions of yen) (Millions of yen)
(Note)
25,90020,77913,500

9,017

9,030

8,109

30,10026,758

5,400

4,665

10,2009,584

25,90017,305

2,200

1,727

13,30010,966

13,900

11,245

7,770

6,540

6,610

6,203

163,810

132,903

6,170

5,532

864

1,038

2,470

1,865

5,070

4,895

4,140

4,019

18,714

17,35021,30012,434

10,200

9,832

4,750

4,960

4,730

4,168

2,650

2,191

16,40019,272

1,580

1,612

9,400

6,090

30,40022,909672

667

102,082

84,140

4,400

2,819

3,850

2,543

8,950

5,097

4,460

2,200

5,200

4,189

1,940

1,459

3,290

2,847

1,670
33,760318,366

1,633
22,792
257,186

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

15

(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, 2020, pursuant to the articles ofincorporation of JEI and the regulations stipulated by the Investment Trusts Association, Japan. For properties with joint
ownership in the current portfolio, the value is obtained by multiplying the total value of the shared real estate by the percentageof the interest owned by JEI or the trustee.

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

16

27th Period
28th Period
July 1, 2019, to December 31, 2019
January 1, 2020, to June 30, 2020
Ratio of rental
Ratio of rental
Property name
Property
Total number of Occupancy Rental revenue revenue to Total number of Occupancy Rental revenue revenue to
No.
rate
rate
tenants
tenants
total rental
total rental(Interim)(Interim)(At end of period) (At end of period) (Millions of yen)
(At end of period) (At end of period) (Millions of yen)revenues
revenues(Note 1)
(Note 1)
(%)
(%)
(%)
(%)
I-1
Omori Bellport D
1
100.0
948
8.7
1
100.0
925
8.4
Ⅰ-2
Shiba 2-Chome Building
2
99.2
373
3.4
2
99.2
373
3.4
JEI Hamamatsucho
Ⅰ-3
1
100.0
232
2.1
1
100.0
244
2.2
Building
AKASAKA
Ⅰ-8
14
100.0
614
5.6
13
100.0
571
5.2
INTERCITY
Kowa Shirokanedai
Ⅰ-9
1
100.0
191
1.8
1
100.0
183
1.7
Building
Daiba Garden City
I-10
1
100.0
334
3.1
1
100.0
333
3.0
Building
HAMARIKYU
Ⅰ-12
1
98.8
727
6.7
1
98.7
762
6.9
INTERCITY
Ⅰ-13
Shintomicho Building
11
100.0
73
0.7
11
100.0
73
0.7
Kowa Nishi-Shimbashi
Ⅰ-14
1
100.0
(Note 2)
(Note 2)1100.0(Note 2)
(Note 2)
Building
Ⅰ-15
Mansard Daikanyama
10
97.4
299
2.8
10
97.1
351
3.2
AKASAKA
I-16
1
100.0
(Note 2)
(Note 2)1100.0(Note 2)
(Note 2)
INTERCITY AIR
I-17
Bizcore Akasaka-mitsuke
1
88.9
48
0.4
1
100.0
145
1.3
Area I
45
99.3
44
99.6
NHK Nagoya HousouⅡ-1
37
100.0
387
3.6
36
100.0
382
3.5
Center Building
JEI Nishi-Honmachi
Ⅱ-2
1
100.0
243
2.2
1
97.2
129
1.2
Building
Osaka Kogin Building
Ⅱ-3(Land with Leasehold
1
100.0
89
0.8
1
100.0
89
0.8
Interest)
GRAND FRONTOSAKA (Umekita Plaza
Ⅱ-4
2
99.4
(Note 2)
(Note 2)
·South Building)
GRAND FRONT
Ⅱ-5
OSAKA
5
98.8
(Note 2)
(Note 2)(North Building)Area II
39
100.0
45
99.5
Musashikosugi Tower
Ⅲ-1
40
100.0
822
7.6
38
100.0
803
7.3
Place
Kowa Kawasaki
Ⅲ-2
1
100.0
(Note 2)
(Note 2)1100.0(Note 2)
(Note 2)
Higashiguchi Building
Ⅲ-3 JEI Hongo Building
1100.0(Note 2)
(Note 2)1100.0(Note 2)
(Note 2)
Kawasaki Nisshincho
Ⅲ-5
1
100.0
222
2.0
1
100.0
226
2.1
Building
Ⅲ-7 JEI Ryogoku Building
1
100.0
114
1.1
1
100.0
114
1.0
Kowa Kawasaki
Ⅲ-9
1
100.0
984
9.0
1
100.0
924
8.4
Nishiguchi Building
Ⅲ-10 Pacific Square Sengoku
1
100.0
54
0.5
1
100.0
60
0.5
Ⅲ-11 Core City Tachikawa
1
100.0
316
2.9
1
100.0
322
2.9
Nisseki Yokohama
Ⅲ-12
1
100.0
1,175
10.8
1
100.0
1,173
10.7
Building
Yokohama Bentendori
Ⅲ-13
1
100.0
41
0.4
1
100.0
41
0.4
Dai-ichi Seimei Building
Area III
49
100.0
47
100.0
Ⅳ-2

JEI Kyobashi Building

1

96.8

182

1.7

1

100.0

175

1.6

Ⅳ-3

JEI Hiroshima
Hacchobori Building

1

96.0

156

1.4

1

96.0

148

1.3

Ⅳ-4

SE Sapporo Building

1

100.0

417

3.8

1

100.0

410

3.7

Ⅳ-5

Aoba-dori Plaza

51

99.4

195

1.8

50

98.8

192

1.7

Ⅳ-6

Daiwa Minamimorimachi Building

10

100.0

199

1.8

1

100.0

196

1.8

Ⅳ-7

JEI Naha Building

1

100.0

84

0.8

1

100.0

86

0.8

IV-8

Hiroshima Dai-ichi
Seimei OS Building

1

100.0

143

1.3

1

95.9

138

1.3

IV-9

Senshin Building

17

0.2

1

91.0

48

0.4

1

98.4

Area IV

67

98.9

-

-

57

98.4

-

-

Total

200

99.6

10,890

100.0

193

99.6

11,013100.0(Note 1) Total number of tenants indicates the total number of tenants in each property as of the end of each period. For properties forwhich master lease agreements have been concluded, the number of tenants is counted as one per property. When a tenant has
multiple tenancies in the same property, it is counted as one tenant, and when in multiple properties, it is counted as multiple
tenants. As for Osaka Kogin Building (Land with Leasehold Interest), total number of tenants is counted as one based on thelease agreement for the leased land.

Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)17

(Note 2) Rental revenue (interim) and ratio of rental revenue to total rental revenues for Kowa Nishi-Shimbashi Building, Kowa
Kawasaki Higashiguchi Building, and JEI Hongo Building are not disclosed as consent on disclosure of rent from the end
tenants has not been obtained; and those for AKASAKA INTERCITY AIR, GRAND FRONT OSAKA (Umekita Plaza·South
Building), and GRAND FRONT OSAKA (North Building) are not disclosed as consent on disclosure of rents from the coowners has not been obtained.

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

Over one year

Over-the-countertransaction

Interest rate swap
transactions
Floating interest ratereceivable
Fixed interest rate
payable46,140,000–

46,140,000(Note 1) Contract amount of swap transactions is calculated based on notional principal.
(Note 2) Fair value is omitted for presentation as over-the-counter transactions meet requirements for special accounting under the
Accounting Standard for Financial Instruments.

2) Shares
Name (Note 1)

KMO

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), 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 rightto demand restitution (Note 3) of Knowledge Capital’s funds. Moreover, the above common shares and restitution rights may
not be transferred separately from ownership in GRAND FRONT 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 typeBook value (Thousands of yen)

Quantity

Unit price
Restitution rights offunds(Note)－

1

Amount2,659

Assessed value(Thousands of yen) (Note)
Unit priceAmount－2,659

Valuation
gains/losses－

Remarks－

The assessed value is stated as the book value.

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

Quantity
Unit price

Restitution rights of
funds

1

－

Amount454

Assessed value(Thousands of yen) (Note 2)
Unit priceAmount－454

Valuation
gains/losses－

Remarks－

Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)18

(Note 1) With the acquisition of GRAND FRONT OSAKA (Umekita Plaza·South Building), JEI acquired restitution rights for funds
concerning GRAND FRONT OSAKA TMO General Incorporated Association, which runs businesses related to therevitalization of the area centering on GRAND FRONT OSAKA, the improvement of the environment and the formation ofcommunities. Moreover, the above restitution rights may not be transferred separately from ownership in GRAND FRONTOSAKA (Umekita Plaza·South Building).
(Note 2) The assessed value is stated as the book value.

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

Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)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 28th period (ended June 30, 2020). 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, 2020 payment

Kowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

Renovation of airconditioning systems(Phase 3)

From January 2020
To December 2020

445

－

－

Kowa Kawasaki
Higashiguchi Building

Kawasaki-shi,
Kanagawa

Renovation of
restrooms (Phase 2)

From July 2020
To December 2020

155

－

－

Sapporo-shi,

Maintenance of room
101 for rent

From September 2020
To November 2020

57

－

－

Kanagawa

Sealing and cleaning of From September 2020
west facing wall
To December 2020

56

－

－

Omori Bellport D

Shinagawa-ku,
Tokyo

Newly construct OA
floor

From September 2020
To October 2020

38

－

－

SE Sapporo Building

Sapporo-shi,
Hokkaido

Renovation of multilevel parking lot

From November 2020
To December 2020

37

－

－

Sumida-ku,

Update of emergency
generator

From September 2020
To December 2020

27

－

－

20

－

－

7

－

－

SE Sapporo Building
Kowa Kawasaki
Higashiguchi Building

JEI RYOGOKUBUILDING

Hokkaido
Kawasaki-shi,Tokyo

JEI Naha Building

Naha-shi,
Okinawa

Yokohama BentendoriDai-ichi Seimei
Building

Yokohama-shi,
Kanagawa

Update of power
From December 2020
receiving and
To December 2020
transforming equipment
Update of powerreceiving andFrom November 2020
transforming equipment To November 2020
(Phase 1)

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

20

(2) Capital Expenditures for the Six Months Ended June 30, 2020
The following table shows constructions conducted by JEI during the period ended June 30, 2020, and expensed ascapital expenditures. Capital expenditures for the period ended June 30, 2020, were 806 million yen and, whencombined with repairs and maintenance costs of 214 million yen classified as expenses in the period under review,
the amount of constructions completed totaled 1,021 million yen.
Property nameKowa Kawasaki
Nishiguchi Building

Location

PurposeKawasaki-shi,
Kanagawa

Amount Paid
(Millions of yen)

Scheduled term

Renovation of air-conditioning
systems (Phase 3-2)
Update of heat source
Omori Bellport D
Shinagawa-ku, Tokyo equipment of heat supply
facility (Phase 1)
Update of automatic fire alarm
SE Sapporo Building Sapporo-shi, Hokkaido
systemUpdate of heat source
equipment, update of special
Omori Bellport D
Shinagawa-ku, Tokyo power receiving andtransforming equipment(Phase 1)
Kowa Kawasaki
Kawasaki-shi,
Renovation of restrooms
Higashiguchi Building Kanagawa(Phase 1)
Update of lighting in common
Nisseki Yokohama
Yokohama-shi,
spaces on standard floors
Building
Kanagawa(conversion to LED)
Yokohama Bentendori
Application of waterproof
Yokohama-shi,
Dai-ichi Seimei
coating material on exterior
Kanagawa
Building
walls

From December 2019
To June 2020

204

From August 2019
To March 2020

68

From April 2019
To March 202057

From August 2019
To March 2020

46

From February 2020
To June 2020

46

From January 2020
To June 2020

35

From May 2020
To June 2020

9

Other constructions

–

338

Total

806

(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

24th Period
25th Period
26th Period
27th Period
28th Period
January 1, 2018, to July 1, 2018, to January 1, 2019, to July 1, 2019, to January 1, 2020, toJune 30, 2018 December 31, 2018 June 30, 2019 December 31, 2019 June 30, 2020

Reserved funds at
beginning of period

289

258

290

284

300

Increase

636

469

411

899

1,553

Decrease

667

437

417

884

1,380

Reserved funds at theend of period

258

290

284

300

473

Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)21

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

27th Period
July 1, 2019, to December 31, 201928th Period
January 1, 2020, to June 30, 2020(a) Asset management fees

390,335

530,406(b) Custodian fees

21,332

21,515(c) Administrative service fees

38,71540,720(d) Compensation for directors

6,220

5,580

(e) Accounting auditor fees

11,00011,000(f) Other

76,044120,239543,647

729,461

Total(2) Borrowings
Borrowings by each financing source as of the end of the 28th period (ended June 30, 2020) are as follows:
Classification
LenderDrawdown
date

Balance at
beginning of
period(Thousands of yen)

Short-term
Mizuho Bank, Ltd.
loans

－

0.26983

March 8, 2020

October 1,
2019

4,000,000－

0.27254

October 1,
2020(Note 1)－5,000,000

0.26949

March 9, 2021

9,000,000

5,000,000

2,000,000－

500,000－

1,000,000－

600,000－

500,000－

January 31,
2012

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
June 28, 2013

MUFG Bank, Ltd.
The Dai-ichi Life Insurance Company
Long-term Limited
loans dueMizuho Bank, Ltd.
within one
year
The Norinchukin Bank
December 27,
2013
MUFG Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.

1,000,000－

675,000－

1,162,500－

675,000－

487,500

Remarks

Redemptionof investment
corporation
bonds
Lumpsum

Unsecured
Acquisition and nonof real estate guaranteed
Repaymentof existing
borrowing

1.60000(Note 2)

1.36400(Note 2)

1.31261(Note 2)January 31,
2020
Lumpsum

Repayment Unsecuredof existingand nonborrowing guaranteed

1.00000(Note 2)－

Mizuho Bank, Ltd.

September 28,
2018

2,000,000

Development Bank of Japan Inc.

June 28, 2013－

2,000,000

The Dai-ichi Life Insurance Company
July 31, 2014
Limited－2,000,000

10,600,000

6,000,000

Subtotal

Use(Note 1)5,000,000

Sub Total

Mizuho Trust & Banking Co., Ltd.

(Thousands of yen)March 8, 2019

March 9, 2020

Development Bank of Japan Inc.

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

2,000,000 0.26841

September 30,
2020

1.60750(Note 2)0.98834(Note 2)June 30, 2021

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

22Classification

LenderDrawdown
date

Balance at
beginning of
period(Thousands of yen)

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

Development Bank of Japan Inc.

June 28, 2013

2,000,000－

The Dai-ichi Life Insurance
Company Limited

July 31, 2014

2,000,000－

Mizuho Bank, Ltd.

520,000

520,000

MUFG Bank, Ltd.

540,000

540,000

1,080,000

1,080,000

Sumitomo Mitsui Trust Bank Limited

1,620,000

1,620,000

Mizuho Bank, Ltd.

1,950,000

1,950,000

MUFG Bank, Ltd.

2,000,000

2,000,000

1,200,000

1,200,000

Sumitomo Mitsui Banking
Corporation

Mizuho Trust & Banking Co., Ltd.

November 29,
2016

December 29,
2014

Resona Bank, Ltd.

600,000

600,000

2,000,000

2,000,000

1,000,000

1,000,000

2,000,000

2,000,000

500,000

500,000

500,000

500,000

Mizuho Bank, Ltd.

1,950,000

1,950,000

MUFG Bank, Ltd.

2,000,000

2,000,000

1,200,000

1,200,000

600,000

600,000

2,000,000

2,000,000

Sompo Japan Insurance Inc. (Note 4)
Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Development Bank of Japan Inc.
Sompo Japan Insurance Inc. (Note 4)
Tokio Marine & Nichido Fire
Insurance Co., Ltd.

Mizuho Trust & Banking Co., Ltd.

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

December 29,
2014

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

June 30, 2015

3,000,000

3,000,000

Mizuho Bank, Ltd.

420,000

420,000

MUFG Bank, Ltd.

250,000

250,000

Sumitomo Mitsui Banking
Corporation

140,000

140,000

1,560,000

1,560,000

1,500,000

1,500,000

Resona Bank, Ltd.

500,000

500,000

Aozora Bank, Ltd.

750,000

750,000

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

June 29, 2018

November 30,
2015

The Bank of Fukuoka, Ltd.

150,000

150,000

1,000,000

1,000,000

3,500,000

3,500,000

500,000

500,000

500,000

500,000

3,500,000

3,500,000

Mizuho Bank, Ltd.

870,000

870,000

MUFG Bank, Ltd.

590,000

590,000

350,000

350,000

1,560,000

1,560,000

Resona Bank, Ltd.

1,000,000

1,000,000

Aozora Bank, Ltd.

750,000

750,000

The Bank of Fukuoka, Ltd.

150,000

150,000

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

November 30,
2017

Aozora Bank, Ltd.
Development Bank of Japan Inc.

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

November 30,
2015

Use

Remarks(Note 1)1.60750(Note 2)0.98834(Note 2)June 30,2021

0.41965

November 29,
2021

0.81875(Note 2)

December 30
2021

0.35000(Note 2)January 31,
2022

1.15417(Note 2)June 30,2022

0.35000 November 30,(Note 2)2022

0.93625(Note 2)

December 30,
2022

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

Lumpsum

Repayment Unsecuredof existingand nonborrowing guaranteed

0.84375 November 30,(Note 2)2023

0.64801 November 30,(Note 2)2023

0.68431(Note 2)

May 31,2024

0.96275 November 30,(Note 2)2024

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

23

Classification

Lender

Nippon Life Insurance Company

Drawdown
date

December 12,
2019

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

Sumitomo Mitsui Banking
Corporation
The Norinchukin Bank

June 29, 2018

Shinkin Central Bank

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

The Norinchukin Bank

1,450,000

1,450,000

Mizuho Bank, Ltd.

2,200,000

2,200,000

MUFG Bank, Ltd.

1,750,000

1,750,000

1,100,000

1,100,000

850,000

850,000

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

Sumitomo Mitsui Banking
Corporation

November 1,
2018

September 29,
2017

The Norinchukin Bank
Long-term
loans
Aozora Bank, Ltd.

500,000

500,000

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

Development Bank of Japan Inc.

－

2,000,000

Mizuho Bank, Ltd.

－

1,175,000－

1,175,000－

1,000,000

Mizuho Trust & Banking Co., Ltd.

－

1,087,500

The Norinchukin Bank－

1,162,500

The Dai-ichi Life Insurance
Company Limited－

1,000,000

Subtotal

77,000,000

81,600,000

Total

96,600,000

92,600,000

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
March 8, 2019
Mizuho Trust & Banking Co., Ltd.
The Norinchukin Bank
Development Bank of Japan Inc.

September 29,
2017

Mizuho Bank, Ltd.
MUFG Bank, Ltd.

June 29, 2018

Sumitomo Mitsui Banking
Corporation

MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

January 31,
2020

0.42000(Note 2)

December 12,
2024

0.67400(Note 2)June 30, 2025

0.70600(Note 2)

November 1,
2025

Use

Remarks

Repaymentof existing
borrowing

Unsecuredand nonguaranteed

0.83441(Note 2)
March 31,2026

Lumpsum

0.57100(Note 2)0.83071 September 30,(Note 2)2026
0.79100(Note 2)

December 30,
2026

0.68778(Note 2)

July 31, 2028

0.71200(Note 2)January 31,2029

0.77000(Note 2)

(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).
(Note 3) The entire amount was prepaid in full as of April 30, 2020.
(Note 4) Sompo Japan Nipponkoa Insurance Inc. changed its name to Sompo Japan Insurance Inc. as of April 1, 2020

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

24

(3) Investment Corporation Bonds
The outstanding investment corporation bonds issued by JEI as of June 30, 2020, are as follows:
Classification
Issuancedate

Unsecured investment corporation bonds

Issue(Thousands of yen)

Balance at end ofInterest rate
period(%)

Maturity date(Thousands of yen)

Repayment
methodUse

Remarks

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
October 27, 2016
investment corporation bonds

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(Note 2)29,000,000

29,000,000

4,000,000

4,000,000

0.63000

August 10,2028

Lump-sum (Note 2) (Note 4)

Sub Total

4,000,000

4,000,000

Total

33,000,000

33,000,000

Lump-sum (Note 2) (Note 4)

12th series unsecured
investment corporation bonds

April 20, 2018

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

September 10,
2019

Sub Total

Green
bonds

Balance at
beginning of
period14th series unsecured
investment corporation bonds(Note 1)
(Note 2)
(Note 3)(Note 4)

August 10, 2018

(Note 3)

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 28th Period (Semi-Annual Report for the 28th Period)25

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

Type of asset(Millions of yen)Transfer
Transfer
Net book Gain (loss)
price
value
on transfer(Note 1)
(Note 2)
(Note 3)Acquisition
Acquisition
Acquisition
priceTransfer date
date
(Note 1)

Property name

GRAND FRONTOSAKA (Umekita
Plaza·South
Trust beneficiary
Building)
interest in real estate(equivalent of
2.45% coownership)
GRAND FRONTOSAKA (North
Trust beneficiary
Building)
interest in real estate (equivalent of
2.45% coownership)
JEI Nishi-honmachi
Trust beneficiary
Building (quasi cointerest in real estate ownership interest
80.0%)
Kowa Kawasaki
Trust beneficiary
Nishiguchi Building
interest in real estate (quasi co-ownershipinterest 30.0%)
Total

February 3,
2020

4,868

－

－

－

－

February 3,
2020

3,982

－

－

－

－

－

－ March 27, 2020

7,208

5,560

1,645

－

－ June 26, 2020

7,560

7,499

58

14,76813,059

1,704

－

－

8,851

(Note 1) The acquisition/transfer price indicates the amount excluding related expenses (brokerage fee, taxes, etc.) required for the acquisition/transfer, andis the purchase amount of real estate stated in the trust beneficiary interest 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
Purchase
Asset type

SharesRestitution rights of
funds
Total

Number ofsharesSale
Amount(Thousands of yen)

(Note)

Number ofsharesPeriod-end balance
Amount(Thousands of yen)

Number ofsharesAmount(Thousands of yen)

(Note)

833 shares

41,650－－833 shares

41,650

－

2,695

－

－

－

2,695

833 shares

44,345－－833 shares

44,345(Note) Purchase and period-end balance amount indicate the amount stated in the purchase agreement.

Asset Management Report for the 28th period (Semi-Annual Report for the 28th Period)

26

(3) Appraisal and Research for Specified Asset Value, Etc.
1) Real estate, etc.
Acquisition
Name of property
or transfer

Type ofasset

Acquisition/transfer date

Acquisition/
Appraisaltransfer pricevalue(Millions of yen)
(Millions of yen)
(Note 1)

GRAND FRONT
OSAKA
Trust
(Umekita Plaza·beneficiary
Acquisition South Building)
February 3, 2020
interest in(equivalent ofreal estate
2.45% coownership)
GRAND FRONTOSAKA (North
Trust
Building)
beneficiary
Acquisition
February 3, 2020
(equivalent ofinterest in
2.45% coreal estate
ownership)
JEI Nishi-honmachi
Trust
Building (quasi co- beneficiaryTransfer
March 27, 2020ownership interest
interest in
80.0%)
real estate
Kowa Kawasaki
Trust
Nishiguchi Building beneficiaryTransfer
June 26, 2020
(quasi co-ownership interest ininterest 30.0%)
real estateAppraiser

Appraisal
date

4,868

5,050

Japan Valuers November 1,
Co., Ltd.
2019

3,982

4,140

Japan Valuers November 1,
Co., Ltd.
2019

7,208

Daiwa Real
4,688
Estate Appraisal(Note 2)
Co., Ltd.

October 1,
2019

7,560

7,560
(Note 3)October 1,
2019Japan Valuers
Co., Ltd.

(Note 1) The acquisition/transfer price is the purchase price of the property stated in the purchase agreement (excluding the amount equivalent to
consumption taxes, etc.).
(Note 2) Appraisal value for JEI Nishi-honmachi Building indicates the amount obtained by multiplying the appraisal value for the entire property by 80.0%,
which is the quasi co-ownership trust beneficiary interest subject to transfer.
(Note 3) Appraisal value for Kowa Kawasaki Nishiguchi Building indicates the amount equivalent to the 30.0% quasi co-ownership trust beneficiary interest
subject to transfer and is based on the appraisal value for the 35.0% quasi co-ownership interest of the property.

2) Securities
Acquisitionor transfer

Transaction
date

Type

Acquisition

February 3,
2020

SharesAcquisition

February 3, Restitution rights of
2020
funds

Quantity(shares)Name(Millions of yen)Appraisal value of
specified assets(Millions of yen)Transaction
price

KMO Corporation

833

41

41

Knowledge Capital

-

2

2

(Note 1) Transaction price is the purchase price amount as stated in the purchase agreement.
(Note 2) With respect to transactions that require a price appraisal of securities for specified assets pursuant to Article 201 Paragraph 2 of the Investment
Trust Law, price appraisals are conducted by Ernst & Young ShinNihon LLC in accordance with the Professional 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 JapaneseInstitute of Certified Public Accountants, and JEI is notified of the results of such price appraisals.

3) Transaction of Other Assets
Acquisitionor transfer

Transaction
date

Type

Acquisition

February 3,
2020

Restitution rights offunds(Millions of yen)Appraisal value of
specified assets(Millions of yen)00Transaction
price

Name

GRAND FRONT OSAKA TMO
General Incorporated Association(Note 1) Transaction price is the purchase price amount as stated in the purchase agreement.
(Note 2) With respect to transactions that require a price appraisal of restitution rights of funds for specified assets pursuant to Article 201 Paragraph 2 ofthe Investment Trust Law, price appraisals are conducted by Ernst & Young ShinNihon LLC in accordance with the Professional 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.

Asset Management Report for the 28th period (Semi-Annual Report for the 28th Period)274) Interest rate swap transactions
For transactions conducted by JEI, JEI entrusts the investigation of transactions to Ernst & Young ShinNihon
LLC for transactions that require investigation of the value of specified assets, etc., in accordance with Article
201 of the Investment Trust Law.
During the period under review, between January 1, 2020, to June 30, 2020, there was one interest rate swap
transaction that was subject to such investigation, and we have received an agreed-upon procedural
implementation report from Ernst & Young ShinNihon LLC. In addition, regarding the interest rate swap
transactions, JEI entrusted investigations into the name, quantity, contract value, transaction periods, and otherdetails pertaining to the over-the-counter derivative transactions.
Furthermore, this investigation is not part of the financial statement audits and does not ensure the reasonablenessof prices or internal management systems.

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

Disposal amount

8,895 million yen

14,768 million yen

Nippon Steel Kowa Real Estate Co., Ltd.

8,895 million yen (100.0%)- million yen (-%)

Total

8,895 million yen (100.0%)- million yen (-%)

Breakdown for transactions with interested parties(Note)

Interested parties refers to the interested parties of the asset management company, which has concluded an asset management agreement 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

1,455,588

1,455,588

Amount paid (B)Nippon Steel Kowa Real EstateCo., Ltd.

568,762

39.1%

The Dai-ichi Building Co., Ltd.

483,322

33.2%

Akasaka Intercity Management
Co., Ltd.

23,965

1.6%–

1,076,050

73.9%(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, 2020.
(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.
Nippon Steel Kowa Real Estate Co., Ltd.
10,096 thousand yen
Kowa Real Estate Facilities Co., Ltd.
137,798 thousand yen
The Dai-ichi Building Co., Ltd.
7,385 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 28th period (Semi-Annual Report for the 28th Period)28

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

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

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

Asset Management Report for the 28th period (Semi-Annual Report for the 28th Period)29

8. Others(1) Notice1) General unitholders’ meeting
The ninth general unitholders’ meeting of JEI was held on May 29, 2020. The following table summarizes the
major matters approved at the unitholders’ meeting.
AgendaSummary

Election of one executive
director

Shuichiro Kayama was elected as an executive director. The term of his office is from
June 1, 2020, to October 31, 2021.

Election of one substituteexecutive director

Hiroshi Tabei was elected as a substitute executive director.

2) Board of directors’ meeting
Of the major contracts entered or amended by the board of directors’ meeting during the 28th period, the following
table summarizes the major items.
Date of approval
by board

Matters approved

Summary

January 15, 2020

Conclusion of purchaseagreement for new
investment units (generaladministrative outsourcing
agreement for the offeringof investment units)

With the issuance of new investment units, purchase agreements for
new investment units were concluded with Mizuho Securities Co.,
Ltd., Nomura Securities Co., Ltd., Mitsubishi UFJ Morgan Stanley
Securities Co., Ltd., SMBC Nikko Securities Inc. and Mito
Securities Co., Ltd., and general operations related to the public
offering of investment units were outsourced.

(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 28th period (Semi-Annual Report for the 28th Period)

30

Financial Statements
Japan Excellent, Inc.
For the six-month periods ended
June 30, 2020 and December 31, 2019with Independent Auditor’s Report

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

31

32

33

34

Japan Excellent, Inc.
Balance Sheets
As of June 30, 2020 and December 31, 2019

As ofJune 30, 2020

As ofDecember 31, 2019

(Thousands of yen)
AssetsCurrent assets:
Cash and cash equivalents including trust accounts(Notes 4 and 5)
Rental receivables
Prepaid expenses and other current assets
Total current assets

33,815,385
328,891
189,597
34,333,873

23,884,427
380,012236,429
24,500,869

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

7,657,446
6,253
52,93010,609,617
1,396
112,803,395
951,662
291,508
148,707,325
106,322(33,107,509)
248,080,348

7,641,213
6,253
49,835
10,607,317－
118,078,827
1,024,281
301,435
149,590,759
115,459(34,079,697)
253,335,685

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
8,433
2,737
9,114,794

1,721,607
7,382,016
9,533
3,969
9,117,127

Investments and other assets:
Investment securities (Note 5)
Deferred tax assets
Security deposits
Long-term prepaid expenses
Other assets
Total investments and other assets

44,729－18,181
919,312877,329
1,859,553－
50
15,181820,887
845,077
1,681,196

144,225
144,225
293,532,796

155,922
155,922288,790,801

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

Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)35

As ofJune 30, 2020

As ofDecember 31, 2019

(Thousands of yen)
Liabilities
Current liabilities:
Accounts payable – trade
Short-term loans (Notes 5 and 8)
Long-term debt due within one year
(Notes 5 and 8)
Accounts payable – otherAccrued expenses
Accrued corporation taxes
Accrued consumption taxes
Advances received
Other current liabilities
Total current liabilities
Long-term liabilities:
Investment corporation bonds (Notes 5 and 9)
Long-term debt (Notes 5 and 8)
Security deposits from tenants (Note 5)
Security deposits from tenants for trust accounts (Note 5)
Total long-term liabilities
Total liabilities
Net assets (Note 10)
Unitholders’ equity:
Unitholders’ capital
Deduction from unitholders’ capital
Allowance for temporary difference adjustment(Note 11)
Total deduction from unitholders’ capital
Unitholders’ capital, net
Surplus
Voluntary reserve
Reserve for advanced depreciation of non-current assets
Retained earnings
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets

1,220,492
5,000,000

2,321,419
9,000,000

6,000,000
554,959
146,620586
533,554
170,345
14,14813,640,707

10,600,000
405,506
153,400
1,514
77,233200,3315
22,759,411

33,000,000
81,600,000
1,197,748

33,000,000
77,000,000
1,174,194

11,961,335
127,759,084
141,399,791

12,480,048
123,654,242
146,413,653

147,907,649

139,972,885(1,406,238)(1,406,238)
146,501,410－－
139,972,885－
5,631,594
5,631,594
152,133,005
152,133,005
293,532,796

158,0392,246,223
2,404,262
142,377,147
142,377,147
288,790,801

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

36

Japan Excellent, Inc.
Statements of Income and Retained Earnings
For the periods from January 1, 2020 to June 30, 2020and from July 1, 2019 to December 31, 2019

For the period
from January 1, 2020 toJune 30, 2020

For the period
from July 1, 2019
to December 31, 2019

(Thousands of yen)
Revenues (Note 14) :Rental business revenues
Other
Gain on sales of real estate properties (Note 15)
Total revenues
Operating expenses (Note 14) :Property operating expenses
Loss on sales of real estate properties (Note 15)
Impairment loss (Note 16)
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
New investment unit issuance costs
Interest expense on investment corporation bonds
Amortization of investment corporation bond issuance costs
Other
Ordinary income
Income before income taxes
Income taxes (Note 13) :Current
Deferred
Net income
Retained earnings at beginning of period
Retained earnings at end of period

10,250,100
763,414
1,704,073
12,717,589

9,984,107
906,756－
10,890,864

5,697,217－－
530,406
21,51540,7205,580
131,239
6,426,679
6,290,909

5,906,910
120,673
1,407,147
390,335
21,332
38,7156,220
87,044
7,978,378
2,912,485

118
457

122
594

342,909148,204
25,351
131,174
11,696367
5,631,780
5,631,780

367,351
134,676－
130,647
11,55021,3602,247,617
2,247,617

605
50
5,631,125
469
5,631,594

1,533
(42)
2,246,12697
2,246,223

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

37

Japan Excellent, Inc.
Statements of Changes in Net Assets
For the periods from January 1, 2020 to June 30, 2020and from July 1, 2019 to December 31, 2019
For the period from January 1, 2020 to June 30, 2020
Net assets
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ capital
Number ofunits in issue

Unitholders’capitalAllowance fortemporary difference
adjustment

Total deduction
from unitholders’capitalUnitholders’capital, net(Thousands of yen)
Balance as ofDecember 31, 2019
Changes during
the fiscal period:
Issuance of new units
Provision of reserve for reduction
entryDistributions fromretained earnings
Dividend in excess ofearnings using reserve fortemporary difference adjustments
Net income
Total changes during the fiscal
periodBalance as ofJune 30, 2020

1,305,700

139,972,885－－

139,972,885

47,3007,934,764－－

7,934,764

－
－

－

－

－

－

－
－

－

－

－

－

－
－
－
－

－
－

(1,406,238)－(1,406,238)－(1,406,238)－

47,3007,934,764(1,406,238)(1,406,238)

6,528,525

1,353,000

147,907,649(1,406,238)(1,406,238)

146,501,410

For the period from January 1, 2020 to June 30, 2020
Net assets
Unitholders’ equity
Surplus
Voluntary
reserve
Reserve foradvanceddepreciation of
non-current
assetsBalance as ofDecember 31, 2019
Changes during
the fiscal period:
Issuance of
new units
Reversal ofreserve for
reduction entry
Distributions fromretained earnings
Dividend in excess of earnings
using reserve for temporary
difference adjustments
Net income
Total changes during the fiscal
periodBalance as ofJune 30, 2020

Retainedearnings

Total surplus(Thousands of yen)

Total unitholders’equityTotal net
assets158,0392,246,223

2,404,262

142,377,147

142,377,147

－

－

－

7,934,764

7,934,764(158,039)

158,039

－

－

－

－

(2,403,793)(2,403,793)(2,403,793)(2,403,793)－－－
5,631,125－
5,631,125(1,406,238)
5,631,125(1,406,238)
5,631,125(158,039)

3,385,371

3,227,331

9,755,857

9,755,857－

5,631,594

5,631,594

152,133,005

152,133,005

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

38

For the period from July 1, 2019 to December 31, 2019
Net assets
Unitholders’ equity
Surplus
Voluntary reserve

Balance as ofJune 30, 2019
Changes during
the fiscal period:
Distributions fromretained earnings
Net income
Total changes during the fiscal
periodBalance as ofDecember 31, 2019

Reserve for advanced
depreciation of noncurrent assets
Retained earnings(Thousands of yen)

Total surplus

Totalunitholders’equityTotal net
assets3,691,310

3,849,350

143,822,235

143,822,235－(3,691,213)(3,691,213)(3,691,213)(3,691,213)－－

2,246,126

2,246,126

2,246,126

2,246,126－－－(1,445,087)(1,445,087)(1,445,087)(1,445,087)

1,305,700

139,972,885

158,0392,246,223

2,404,262

142,377,147

142,377,147

Number ofunits in issue

Unitholders’capital1,305,700

139,972,885

158,039－－－

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

39

Japan Excellent, Inc.
Statements of Cash Flows
For the periods from January 1, 2020 to June 30, 2020and from July 1, 2019 to December 31, 2019
For the period
from January 1, 2020 toJune 30, 2020

For the period
from July 1, 2019
to December 31, 2019

(Thousands of yen)
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of investment corporation bond issuance costs
Impairment loss
New unit issuance costs
Interest income
Interest expense
Decrease (increase) in rental receivables
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
Payments for lease and guarantee deposits
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
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term loans
Repayment for short-term loans
Proceeds from long-term debt
Repayment for long-term debt
Proceeds from issuance of investment units
Proceeds from issuance of investment corporation bonds
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)

5,631,780
1,947,843
11,696－25,351(118)
474,084
51,12026,166(112,593)
149,503456,321(29,986)(98,425)
13,058,874

2,247,617
1,930,311
11,5501,407,147－(122)
497,999(17,050)
2,716
113,902(35,959)(143,919)
114,642
81,121
1,830,607

1,101

189

(7,575)
21,585,144
118(480,864)(1,514)
21,102,883(30,931)8,009,820
122(494,068)(761)
7,515,112(44,729)(16,757)(10,711,613)(3,000)34,358(10,804)
303,617(822,329)(454)(11,271,713)－(1,641,801)(7,387,277)－
48,212(3,364)756,307(341,503)－(8,569,427)

5,000,000(9,000,000)
8,600,000(8,600,000)
7,909,412－(3,809,625)
99,7879,930,957
23,884,427
33,815,385

4,000,000(2,000,000)
1,000,000(1,000,000)－
982,400(3,691,491)(709,091)(1,763,406)
25,647,834
23,884,427

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

40

Japan Excellent, Inc.
Notes to Financial Statements
For the periods from January 1, 2020 to June 30, 2020and from July 1, 2019 to December 31, 20191.

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, 2020, JEI held
35 properties with 332,701.82 square meters of total leasable space and had leases with 193
tenants excluding residential tenants.

2.

Basis of Presentation

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

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

41

3.

Summary of Significant Accounting Policies

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

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

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

Deferred assets
Investment corporation bond issuance costs are amortized using the straight-line method over
the amortization periods.
New investment unit issuance costs are charged to income as incurred.
Income taxes
Income taxes are accounted for on the basis of taxable income for financial statement purposes.
The asset and liability method is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying amounts andthe tax bases of assets and liabilities.
Consumption taxes
Consumption taxes received and paid are not included in the accompanying statements ofincome and retained earnings. Consumption tax related to properties, which has not been
deducted, is included in the cost of the properties.
Property-related taxes
Principally, property-related taxes including property taxes, urban planning taxes anddepreciable property taxes are imposed on a calendar-year basis and are expensed as property
and other taxes (refer to Note 14).
Asset Management Report for the 28th Period (Semi-Annual Report for the 28th Period)

42

3.

Summary of Significant Accounting Policies (continued)

JEI capitalizes the property-related taxes allocated to the sellers of properties to JEI at the timeof acquisition of such properties including trust accounts. The capitalized amount for the period
from July 1, 2019 to December 31, 2019 was ¥6,668 thousand. The capitalized amount for theperiod from January 1, 2020 to June 30, 2020 was ¥61,820 thousand.
Revenue recognition
Rental revenues are generally recognized on an accrual basis over the life of each lease.
Derivatives and hedge accounting
JEI utilizes interest-rate swap agreements as derivative financial instruments solely for the
purpose of hedging its exposure against fluctuation risk in interest rates. JEI has therefore
entered into certain interest-rate swap contracts in order to hedge the risk of variable rates for
its long-term debt obligations.
Each corresponding interest-rate swap is not required to be re-measured to fair value, because
it meets the criteria for the special hedge accounting treatment under Japanese GAAP, which
JEI applies to each interest-rate swap agreement.
Under this special hedge accounting treatment, the differentials paid or received under the swap
agreements are recognized and included in interest expense of the hedged loans, and theinterest-rate swaps are not required to be measured at fair value separately. For interest-rate
swaps that meet the specific criteria for the special accounting treatment, assessments of hedge
effectiveness are not performed.
Properties in trust accounts
All assets and liabilities held in trust, for which real estate in possession of JEI was entrusted,
and all earnings and expenses resulting from such trust, are properly reflected in theaccompanying balance sheets and statements of income and retained earnings, respectively.

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, 2020 and
December 31, 2019 consisted of the following:

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

As of
As of
June 30, 2020
December 31, 2019
(Thousands of yen)
17,620,815
7,165,726
16,194,569
16,718,701
33,815,385
23,884,427

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5.

Financial Instruments

For the periods from January 1, 2020 to June 30, 2020 from July 1, 2019 to December
31, 2019
Overview(1) Policy for Financial Instruments
JEI borrows from banks, issues investment corporation bonds and issues investment units
to procure funds required to grow its assets under management and to repay liabilities,
based on the financial policy set forth by JEAM and the JEI’s Annual Funding Procurement
Plan. When procuring funds by means of interest-bearing debt, matters such as seeking
longer durations and maturities, securing fixed interest rates over the entire term of the
instrument in order to benefit from the recent favorable financial environment with low
interest rates, and diversifying maturity dates are taken into consideration to achieve a morestable financial situation and avoid the risk of future interest rate hikes. Surplus funds may
be invested in deposits and safe, liquid financial assets and investment securities, but are,in principle, placed in fixed-rate term deposits. Derivative transactions are used solely forthe purpose of hedging against the risk of fluctuations in interest rates of borrowings andinvestment corporation bonds.
(2) Types of Financial Instruments, Related Risks and Risk Management System(a) Market Risks (Interest rate fluctuation risk)
Borrowings and investment corporation bonds are primarily used to acquire properties
or to refinance existing borrowings or bonds. Some of such debt were floating rate
instruments and thus were exposed to the risk of interest rate fluctuations. Based oninterest rate forecasts developed through constant financial market monitoring
activities, JEI has concentrated on hedging against the risk of interest rate fluctuations
principally using interest-rate swaps, through which a floating interest rate is swapped
for a fixed interest rate, which finally led to 91.4% of existing borrowings being
covered by a fixed interest rate swap for the entire maturity as of June 30, 2020. 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,” there is no balance outstanding under the facility
agreements as of June 30, 2020). Liquidity risk is also mitigated through theconstant management of liquidity on hand.

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5.

Financial Instruments (continued)(3) Supplementary Explanation of the Estimated Fair Value of Financial Instruments
The fair value of financial instruments is based on their quoted market price, if available.
When there is no quoted market price available, fair value is reasonably estimated. Sincevarious assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in a different fair value.
Fair value of financial instruments
The following are carrying values and fair values as of June 30, 2020 and December 31, 2019of financial instruments and the differences between them. When fair value is extremely
difficult to ascertain, it is excluded from the following table (Note B).

Carryingvalue(1) Cash and cash deposits(2) Cash and deposits in trust
Total assets(3) Short-term loans (Note C)(4) Investment corporation bonds
due within one year (Note C)(5) Long-term debt
due within one year (Note C)(6) Investment corporation bonds(Note C)
(7) Long-term debt (Note C)
Total liabilities(8) Derivative transactions *As of June 30, 2020
Fair value
Difference(Note A)

17,620,815
16,194,569
33,815,385
5,000,000

17,620,815
16,194,569
33,815,385
5,000,000－

As of December 31, 2019
Carrying
Fair value
Difference
value(Note A)

(Thousands of yen)
7,165,726－
16,718,701－－
23,884,427

7,165,726
16,718,701
23,884,427

－
－
－

－

9,000,000

9,000,000

－

－

－

－

－

－

6,000,000

6,042,447

42,447

10,600,000

10,637,781

37,78133,000,000
81,600,000
125,600,000

33,075,225
82,901,849
127,019,521

75,2251,301,849
1,419,521

33,000,000
77,000,000
129,600,000

33,281,107
78,227,367
131,146,256

281,107
1,227,367
1,546,256

－

－

－

－

－

－

* 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
Assets(1) Cash and cash deposits and(2) Cash and deposits in trust
Carrying value approximates fair value because of the short maturities of these instruments.

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5.

Financial Instruments (continued)

Liabilities(3) Short-term loans
Carrying value approximates fair value because of the short maturities of these instruments.
(5) Long-term debt due within one year and(7) 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.
(4) Investment corporation bonds due within one year and(6) Investment corporation bonds
The fair value of investment corporation bonds issued by JEI is based on quoted market
prices.
(8) Derivative transactions
Please refer to Note 18, “Derivative Transactions.”(Note B)・Financial instruments for which fair value is deemed extremely difficult to determine
The fair values of investment securities,security deposits from tenants and security deposits
from tenants for trust accounts are as follows:① Investment securities*② Security deposits from tenants**③ Security deposits from tenants for trust accounts**

*

As of
As of
June 30, 2020
December 31, 2019
(Thousands of yen)
44,729－1,197,748
1,174,194
11,961,335
12,480,048

Investment securities are not subject to fair value disclosure, since such financial instruments have no market
price and measuring their fair value is considered extremely difficult.

** Security deposits from tenants and security deposits for trust accounts from tenants inleased properties are not subject to fair value disclosure, since such deposits have nomarket price. Furthermore, due to their characteristics, it is extremely difficult to estimate
the fair value of security deposits in advance because of the uncertainty of the timing
when the tenant vacates. As a result, it is therefore impossible to rationally estimate theexact cash flow from such security deposits.

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5.

Financial Instruments (continued)

・The scheduled redemption amounts of financial assets after the balance sheet dateCash and cash deposits
Cash and deposits in trust
Total

Cash and cash deposits
Cash and deposits in trust
Total

1 year or less

1 to 2 years

17,620,815
16,194,569
33,815,385－－－

1 year or less

1 to 2 years

7,165,726
16,718,701
23,884,427－－－

As of June 30, 2020
2 to 3 years
3 to 4 years(Thousands of yen)
－
－
－
－
－
－
As of December 31, 2019
2 to 3 years
3 to 4 years(Thousands of yen)－－－

4 to 5 years

Over 5 years

－
－
－

－
－
－

4 to 5 years

Over 5 years

－
－
－

－
－
－

－
－
－

(Note C)The scheduled redemption amounts of borrowings, investment corporation bonds and otherinterest-bearing debt after the balance sheet date

Short-term loans
Investment corporation bonds
due within one year
Long-term debt
due within one year
Investment corporation bonds
Long-term debt
Total

Short-term loans
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, 2020
2 to 3 years
3 to 4 years(Thousands of yen)－－

1 year or less

1 to 2 years

5,000,000

－

－

－

－

6,000,000－－
11,000,000－－
14,510,000
14,510,000－
2,000,000
11,750,000
13,750,000

1 year or less

1 to 2 years

9,000,000

－

－

－

－

10,600,000－－
19,600,000－－
13,510,000
13,510,000－－
11,750,000
11,750,000

4 to 5 years

Over 5 years

－

－

－

－

－

－
10,000,000
14,270,000
24,270,000－－
14,270,000
14,270,000－
21,000,000
26,800,000
47,800,000

4 to 5 years

Over 5 years

－

－

－

－

－

－
4,000,000
15,770,000
19,770,000－
8,000,000
9,770,000
17,770,000－
21,000,000
26,200,000
47,200,000

As of December 31, 2019
2 to 3 years
3 to 4 years(Thousands of yen)－－

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6.

Investment and Rental Property

For the periods from January 1, 2020 to June 30, 2020 from July 1, 2019 to December
31, 2019
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,
2020 and December 31, 2019 for such real estate for lease.
Carrying value
As of
Change during period
As ofJanuary 1, 2020(*1)
June 30, 2020
(Thousands of yen)
262,443,280(5,256,569)
257,186,710
Carrying value
As of
Change during period
As ofJuly 1, 2019(*2)
December 31, 2019
(Thousands of yen)
258,028,172
4,415,107
262,443,280

Fair value
As ofJune 30, 2020
318,853,500

Fair value
As ofDecember 31, 2019
322,764,988

A) Carrying value represents the acquisition cost less accumulated depreciation.
B) Details of change during period:(*1)The decrease of ¥5,256,569 thousand during the period is mainly due to an increase of¥4,901,720 thousand related to the acquisition of GRAND FRONT OSAKA (Umekita
Plaza・ South Building), an increase of ¥4,027,111 thousand related to the acquisitionof GRAND FRONT OSAKA (North Building), and a decrease of ¥7,499,453 thousand
related to the part disposal of Kowa Kawasaki Nishiguchi Building, a decrease of¥5,560,522 thousand related to the part disposal of JEI Nishi-Honmachi Building and adecrease of ¥1,946,743 thousand for depreciation costs.
(*2) The increase of ¥4,415,107 thousand during the period is mainly due to an increase of¥6,233,065 thousand related to the acquisition of BIZCORE Akasakamitsuke, anincrease of ¥1,631,012 thousand related to the acquisition of Senshin Building, and adecrease of ¥1,481,825 thousand related to the part disposal of Kowa Kawasaki
Nishiguchi Building, a decrease of ¥348,972 thousand related to the part disposal of JEI
Nishi-Honmachi Building, a decrease of ¥1,407,147 thousand related to the impairmentof Kowa Kawasaki Nishiguchi, and a decrease of ¥1,929,198 thousand for depreciation
costs.

C) Fair value
Fair value as of June 30, 2020 and December 31, 2019 is appraisal value provided by thirdparty real estate appraisers.

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7.

Property and Equipment

Property and equipment at June 30, 2020 and December 31, 2019 consisted of the following:

As of June 30, 2020
Acquisition
cost

Accumulated
depreciation

As of December 31, 2019

Netbook value

Acquisition
cost

Accumulated
depreciation

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

7,657,446
6,253
52,93010,609,617
1,396(1,890,646)(3,943)(21,761)－－

5,766,799
2,309
31,16910,609,617
1,396

7,641,213
6,253
49,835
10,607,317－(1,774,682)(3,662)(18,274)－－

5,866,531
2,591
31,56010,607,317－

112,803,395(30,535,340)

82,268,055

118,078,827(31,611,230)

86,467,596

951,662(497,773)

453,889

1,024,281(511,390)

512,890

291,508
148,707,325(158,044)－

133,463
148,707,325

301,435
149,590,759(160,456)－

140,978
149,590,759

106,322
281,187,858－(33,107,509)

106,322
248,080,348

115,459
287,415,383－(34,079,697)

115,459
253,335,685

8. Short-Term Loans and Long-Term Debt
Short-term loans and long-term debt as of June 30, 2020 and December 31, 2019 consisted of
the following:
As of June 30, 2020
Weighted-averageAmountinterest rate (*1)
Short-term loans:(Thousands of yen)

As of December 31, 2019
Weighted-averageAmountinterest rate (*1)
(Thousands of yen)Unsecured loans from a bank due on March 8, 2020－

0.26983%

5,000,000

0.27193%

Unsecured loans from a bank due on October 1, 2020－

0.27254%4,000,000

0.27377%

Unsecured loans from a bank due on March 9, 2021

5,000,000

0.26949%－

Subtotal

5,000,000

9,000,000

Long-term debt due within one year:

Unsecured loans from a bank due on January 31, 2020－

1.60000% (*2)

2,000,000

1.60000% (*2)

Unsecured loans from banks due on January 31, 2020
Unsecured loans from an insurance company due on
January 31, 2020－

1.36400% (*2)

2,600,000

1.36400% (*2)－

1.31261% (*2)

1,000,000

1.31261% (*2)

Unsecured loans from banks due on January 31, 2020－

1.00000% (*2)

3,000,000

1.00000% (*2)

2,000,000

0.27193%

Unsecured loans from a bank due on September 30, 2020

2,000,000

0.26841%

Unsecured loans from a bank due on June 30, 2021
Unsecured loans from an insurance company due on
June 30, 2021

2,000,000

1.60750% (*2)－

2,000,000

0.98834% (*2)－

Subtotal

6,000,000

10,600,000

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8.

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

Long-term debt:

Unsecured loans from a bank due on June 30, 2021
Unsecured loans from an insurance company due on
June 30, 2021－

1.60750% (*2)

2,000,000

1.60750% (*2)－

0.98834% (*2)

2,000,000

0.98834% (*2)

Unsecured loans from banks due on November 29, 2021

3,760,000

0.41965%

3,760,000

0.41787%

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

5,750,000

0.81875% (*2)

5,750,000

0.81875% (*2)

3,000,000

0.35000% (*2)

3,000,000

0.35000% (*2)

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

2,000,000

1.15417% (*2)

2,000,000

1.15417% (*2)

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)

2,000,000

1.20250% (*2)

3,000,000

0.46000% (*2)

3,000,000

0.46000% (*2)

Unsecured loans from banks due on November 30, 2023

5,270,000

0.84375% (*2)

5,270,000

0.84375% (*2)

Unsecured loans from banks due on November 30, 2023

5,500,000

0.64801% (*2)

5,500,000

0.64801% (*2)

Unsecured loans from a bank due on May 31, 2024

3,500,000

0.68431% (*2)

3,500,000

0.68431% (*2)

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

5,270,000

0.96275% (*2)

5,270,000

0.96275% (*2)

1,000,000

0.42000% (*2)

1,000,000

0.42000% (*2)

Unsecured loans from banks due on June 30, 2025

8,000,000

0.67400% (*2)

8,000,000

0.67400% (*2)

Unsecured loans from banks due on November 1, 2025

3,750,000

0.70600% (*2)

3,750,000

0.70600% (*2)

Unsecured loans from banks due on March 31, 2026

6,400,000

0.83441% (*2)

6,400,000

0.83441% (*2)

Unsecured loans from banks due on March 31, 2026

3,750,000

0.57100% (*2)

3,750,000

0.57100% (*2)

Unsecured loans from a bank due on September 30, 2026

1,300,000

0.83071% (*2)

1,300,000

0.83071% (*2)

Unsecured loans from banks due on December 30, 2026

3,000,000

0.79100% (*2)

3,000,000

0.79100% (*2)

Unsecured loans from a bank due on July 31, 2028

2,000,000

0.68778% (*2)－

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)－

1,000,000

0.77000% (*2)－

Subtotal
Total

81,600,000

77,000,000

92,600,000

96,600,000(*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, 2020 are as follows:
Long-term debt

1 year or less

1 to 2 years

6,000,000

14,510,000

2 to 3 years
3 to 4 years(Thousands of yen)
11,750,000
14,270,000

4 to 5 years

Over 5 years

14,270,000

26,800,000

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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, 2020, these commitment lines
have never been utilized.
9.

Investment Corporation Bonds

Details of total investment corporation bonds outstanding as of June 30, 2020 and December
31, 2019 are summarized as follows:

As of June 30, 2020
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
Total

As of December 31, 2019
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%

33,000,000

33,000,000

The scheduled redemption amounts of investment corporation bonds as of June 30, 2020 are as
follows:

Investment corporation bonds

10.

1 year or less

1 to 2 years－－

2 to 3 years
3 to 4 years(Thousands of yen)
2,000,000
10,000,000

4 to 5 years

Over 5 years－

21,000,000

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.

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11．Allowance for Temporary Difference Adjustment(1) Reason for recording reserve, related assets, initial difference and reserve amount(Thousands of yen)
Reason forrecordingreserve

Initialdifference

Balance
as ofJanuary
1,2020

Buildings andbuilding
improvements
Impairment
for trust accounts loss
Land for trust
accounts

1,406,238－

Related assets

Reserve

1,406,238

Balance
as of June
30,2020

Reasonforreversal－ 1,406,238－

Reversal(2) Method of reversal
Impairment loss
Upon sale, the corresponding amount is scheduled to be reversed.

12.

Per Unit Information

Net assets per unit as of June 30, 2020 and December 31, 2019 were calculated based on thenumber of units outstanding as of each date, (1,353,000 units) and (1,305,700 units),
respectively.
Net income per unit for the periods from January 1, 2020 to June 30, 2020 and July 1, 2019 to
December 31, 2019 was calculated based on the weighted-average number of units outstanding
during the corresponding periods, (1,347,258 units) and (1,305,700 units), respectively.
Accordingly, net assets per unit were ¥112,441 as of June 30, 2020 and ¥109,042 as ofDecember 31, 2019. Net income per unit was ¥4,179 for the period from January 1, 2020 toJune 30, 2020 and ¥1,720 for the period from July 1, 2019 to December 31, 2019.

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13.

Income Taxes

JEI is subject to income taxes in Japan.
JEI’s policy is to make dividend distributions in excess of 90% of distributable income for eachfiscal period in order to meet the condition set forth in the Special Taxation Measures Law ofJapan concerning the deductibility of cash dividends paid for income tax purposes.
Details of significant components of deferred tax assets and liabilities as of June 30, 2020 and
December 31, 2019 are summarized as follows:
As of June 30,
As of December 31,
2020
2019
(Thousands of yen)
Deferred tax assets:
Accrued enterprise taxes
Impairment loss
Subtotal deferred tax assets
Valuation reserve
Total deferred tax assets
Net deferred tax assets-

50
442,688442,738(442,688)
50
50

A reconciliation of the differences between the statutory tax rate and the effective tax rate forthe periods from January 1, 2020 to June 30, 2020 and July 1, 2019 to December 31, 2019 is asfollows:

Statutory tax rate
Reconciliation:
Deductible distributions paid
Increase(decrease) in valuation reserve
Reversal of reserve for reduction entry
Other
Effective tax rate

For the period
For the period
from January 1, 2020
from July 1, 2019
to June 30, 2020
to December 31, 201931.46%
31.51%(22.37%)(7.86%)(1.23%)
0.01%
0.01%

(53.41%)19.73%
2.22%
0.02%
0.07%

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14.

Breakdown of Revenues and Expenses
For the period
from January 1, 2020
to June 30, 2020

For the period
from July 1, 2019
to December 31, 2019

(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
Profit

8,712,571
1,266,554
270,975
10,250,100

8,442,609
1,267,889
273,608
9,984,107

642,291
121,123
763,414
11,013,515

793,195
113,561
906,756
10,890,864

1,455,588
864,406
963,729
22,556
214,894
1,946,743
229,299
5,697,217
5,316,297

1,458,956
1,013,977
944,725
20,796
311,820
1,929,198
227,435
5,906,910
4,983,953

15. Breakdown of Gain or Loss on Sales of Real Estate Properties
For the period
For the period
from January 1, 2020
from July 1, 2019
to June 30, 2020
to December 31, 2019
(Thousands of yen)
JEI Nishi-Honmachi Building
Proceeds from sale of real estate
Cost of sales of real estate
Other related sale expenses
Gain on sale of real estate

7,208,000
5,560,522
2,250
1,645,227

450,500
348,972140
101,386

For the period
For the period
from January 1, 2020
from July 1, 2019
to June 30, 2020
to December 31, 2019
(Thousands of yen)
Kowa KawasakiNishiguchi Building
Proceeds from sale of real estate
Cost of sales of real estate
Other related sale expenses
Gain / Loss on sale of real estate

7,560,857
7,499,453
2,557
58,846

1,260,143
1,481,825
378(222,060)

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16．Impairment Loss
For the period from January 1, 2020 to June 30, 2020
Not applicable.
For the period from July 1, 2019 to December 31, 2019
JEI recorded impairment loss on the following asset group.
Property nameLocation

Kowa Kawasaki
Nishiguchi

Kawasaki-shi,
Kanagawa

TypeLand for trust accounts(Thousands of yen)
Impairment
loss
885,863

Buildings and building
521,284
improvement for trust accounts
In calculating impairment loss, each property is considered as one asset group.
As a result, for one fixed asset group scheduled to be sold, the book value was reduced to therecoverable value in the fiscal period ended December 31, 2019, and the difference amounting
to ¥1,407,147,000 was recognized as an impairment loss under operating expenses.
The nature of the impairment loss arising from the sale is considered to be an operating
expense, and the corresponding account category is classified as operating expenses inaccordance with Article 48, Paragraph 2 of “Regulation on Accountings of Investment
Corporations.”
The recoverable value of this asset group is measured by the net selling price.
The net selling price is calculated by deducting the estimated sales related expenses from theactual sale price.

17．Leases
JEI leases properties on which rental revenues are earned. At June 30, 2020 and December 31,
2019, future lease revenues under non-cancelable operating leases are summarized as follows:

Due within one year
Due after one year
Total

As of June 30,
As of December 31,
2020
2019
(Thousands of yen)
1,922,735
1,680,109
3,717,302
3,294,640
5,640,038
4,974,750

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18. Derivative Transactions
Derivative Transactions as of June 30, 2020
(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, 2020 for each hedge accounting method applied.
Hedge
accounting
methodSpecialtreatment ofinterest-rate
swaps

Type of derivativetransaction

Interest-rate swap
Receive floating,pay fixed

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

Hedgeditem

Long-term
debt

46,140,000

46,140,000

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, 2019(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, 2019 for each hedge accounting method applied.
Hedge
accounting
methodSpecialtreatment ofinterest-rate
swaps

Type of derivativetransaction

Interest-rate swap
Receive floating,pay fixed

Hedgeditem

Long-term
debt

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

46,140,000

40,540,000

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.”

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19.

Related Party Transactions

For the period from January 1, 2020 to June 30, 2020
(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

Hidehiko
Ogawa

Payment of asset management
fees to JEAM

Amount(Thousands of yen)
530,406

Account
Accounts
payableBalance at the end of period(Thousands of yen)
465,200

For the period from July 1, 2019 to December 31, 2019(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

Hidehiko
Ogawa

Payment of asset management
fees to JEAM

Amount(Thousands of yen)390,335

Account
Accounts
payableBalance at the end of period(Thousands of yen)
310,434

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20.

Segment Information

For the periods from January 1, 2020 to June 30, 2020 from July 1, 2019 to December
31, 2019
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.

21.

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 reversal of Allowancefor temporary difference adjustment and provision of reserve for reduction entry due to thetransfer of real estate properties in accordance with Section 65.7 of the Special Taxation
Measures Law from unappropriated surplus.
Consequently, JEI set income available for distributions of dividends at ¥4,004,880,000, whichis the maximum integral multiple of the 1,353,000 units issued, but not exceeding¥4,005,761,441, which is the amount of retained earnings at June 30, 2020.
No cash distribution exceeding the income amount set forth in Section 33.1.4 of the bylaws of
JEI shall be made.
On August 20, 2020, the Board of Directors approved a resolution to make a cash distributionof ¥2,960 per unit aggregating to ¥4,004,880,000 to unitholders of record as of June 30, 2020.

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22.

Accounting Standards Issued But Not Yet Applied

As of June 30, 2020, JEI has not yet applied the following accounting standards and theirimplementation guidance.
(1) Accounting Standard for Revenue Recognition and its Implementation Guidance“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan(“ASBJ”) Statement No.29, March 31, 2020)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ
Guidance No. 30, March 31, 2020)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19, March 31, 2020)(a) Overview
Conducting a joint project to clarify the comprehensive principles for recognizing
revenues, the International Accounting Standards Board (“IASB”) and the Financial
Accounting Standards Board (“FASB”) in the U.S. issued “Revenue from Contracts with
Customers” (IFRS 15 by IASB and Topic 606 by FASB) in May 2014. IFRS 15 became
effective from fiscal periods beginning on or after January 1, 2018 and Topic 606 became
effective from fiscal periods beginning after December 15, 2017. Under thesecircumstances, ASBJ also developed a comprehensive accounting standard for revenue
recognition and issued a new standard together with its implementation guidance.
As a basic policy for the development of the new standard, ASBJ determined to adopt
the core principles of IFRS 15 in order to enhance comparability of financial statements,
which is one of the benefits of consistency with IFRS 15. In addition, for any item to beconsidered arising from business practices in Japan, alternative treatments shall be added
to the extent that comparability is not impaired.
(b) Scheduled date of application
JEI will apply the aforementioned standard and guidance from the beginning of the
fiscal period ending December 31, 2021.
(c) Effect of application of the new accounting standard
The effect of application of the aforementioned standard on JEI’s financial statements
is currently under evaluation.

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(2) Accounting Standard for Fair Value Measurement and its Implementation Guidance“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ
Guidance No. 31, July 4, 2019)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19, March 31, 2020)(a) Overview
Developing accounting standards for fair value measurement, IASB and FASB issued
new common fair value measurement in May 2011 (IFRS 13 by IASB and update to
Topic 820 by FASB). IFRS 13 became effective from fiscal periods beginning on or afterJanuary 1, 2013 and Topic 820 became effective from fiscal periods beginning after
December 15, 2011. Under these circumstances, ASBJ also developed an accounting
standard for fair value measurement and issued a new standard together with its
implementation guidance.
As a basic policy for the development of the new standard, ASBJ determined togenerally adopt all the principles of IFRS 13 in order to enhance comparability offinancial statements among domestic and overseas companies, by applying the consistentmeasurement methods. However, for any item to be considered arising from businesspractices in Japan, other treatment for the item shall be determined to the extent thatcomparability is not impaired.
(b) Scheduled date of application
JEI will apply the aforementioned standard and guidance from the beginning of the
fiscal period ending December 31, 2021.
(c) Effect of application of the new accounting standard
The effect of application of the aforementioned standard on JEI’s financial statements
is currently under evaluation.
23.

Significant Subsequent Event

Not applicable.
24.

Additional Information

Not applicable.

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25.

Information on Allowance for Temporary Difference Adjustment

For the period from January 1, 2020 to June 30, 2020
(1) Reason for reversal, related assets and amounts

Related assets

Buildings and building improvements for trust accounts
Land for trust accounts(Thousands of yen)
Provision ofallowance
Reason offorreversal
temporarydifference
adjustment
Sales(1,406,238)(2) Method of reversal
Impairment loss
Upon sale, the corresponding amount is scheduled to be reversed.
For the period from July 1, 2019 to December 31, 2019(1) Reason for recording reserve assets and amounts

Related assets

Buildings and building improvements for trust accounts
Land for trust accounts(Thousands of yen)
Provision ofallowance
Reason offorrecordingtemporaryreservedifference
adjustment
Impairment
loss

1,406,238(2) Method of reversal
Impairment loss
Upon sale, the corresponding amount is scheduled to be reversed.

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