This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.

Summary of REIT Financial Report for the 6th Fiscal Period
July 19, 2019
REIT Issuer:
Ooedo Onsen Reit Investment Corporation
Securities Code: 3472
Representative: Fuminori Imanishi, Executive Director
Asset Manager:
Representative:
Inquiries to:

Stock Exchange Listing: TSE
URL: https://oom-reit.com

Ooedo Onsen Asset Management Co. Ltd.
Fuminori Imanishi, Chief Executive Officer
Shinya Ito, General Manager, Planning and Coordination Department+81-3-6262-5200

Scheduled date of submission of periodic securities report (yuka shoken hokokusho):Scheduled date of start of distribution payments:

August 26, 2019
August 15, 2019

Preparing supplementary explanatory materials on financial results:
Holding of brief session on financial results:

Yes
Yes (for institutional investors and analysts)[Amounts are rounded down to the nearest million yen, except for per unit figures]
1. Status of Management and Assets for the 6th Fiscal Period
5th Fiscal Period: Fiscal period ended November 2018 (from June 1, 2018 to November 30, 2018)
6th Fiscal Period: Fiscal period ended May 2019 (from December 1, 2018 to May 31, 2019)(1) Management Status
Fiscalperiod5th
6th

Operatingrevenuemillion yen
1,450
1,434

FiscalperiodProfitper unit

%
0.5
(1.0)

Operatingprofitmillion yen
714
699

%
(2.7)
(2.2)

Ratio of profit tounitholders’ equity
yen
2,454
2.377

5th
6th

%
2.7
2.6

[% figures show the period-on-period increase (decrease)]
Ordinary
Profitprofitmillion yen% million yen
%
578
1.3
577
1.3
560
(3.1)
559
(3.1)
Ratio of ordinary profit tototal assets
%
1.5
1.4

Ratio of ordinary profit tooperating revenue
%
39.9
39.1

(2) Distribution Status
Fiscal period

Distribution
per unit

Total
distribution(excludingexcess cash
distribution)(excludingexcess cash
distribution)

Excess cash
distribution
per unit

Total excess
cash
distribution

Distribution
per unit

Total
distribution(includingexcess cash
distribution)(includingexcess cash
distribution)

Distribution
Ratio of
Payoutdistribution to
net assets
ratio

yen
yen
million yen
yenmillion yen
million yen
%
%
5th
2,454
577
12
2
2,466
580
100.0
2.7
6th
2,378
559
12
2
2,390
562
100.0
2.6
(Note 1) The entire amount of total excess cash distribution is equivalent to the increase amount of allowance for temporary
difference adjustments.
(Note 2) Distribution payout ratio is rounded down to the first decimal place.

(3) Financial Position
FiscalperiodTotal assets

Net assets

million yen
39,10638,782

million yen
21,224
21,204

Net cashprovided by (used in)operating activities
million yen
1,728
884

Net cashprovided by (used in)investing activities
million yen
(287)
(186)

5th
6th

Unitholders’ equity to total
assets%54.3
54.7

Net assets
per unityen
90,18590,097(4) Cash Flow Status
Fiscalperiod
5th
6th

-1-

Net cashprovided by (used in)financing activities
million yen(1,389)(917)

Cash andcash equivalents
at end of period
million yen
895
675

2. Management Status Forecasts for the 7th Fiscal Period and the 8th Fiscal Period
7th Fiscal Period: Fiscal period ending November 2019 (from June 1, 2019 to November 30, 2019)
8th Fiscal Period: Fiscal period ending May 2020 (from December 1, 2019 to May 31, 2020)

FiscalperiodOperatingrevenue

Operatingprofit[% figures show the period-on-period increase (decrease)]
Distribution
Distribution
Excess cash
per unit
per unit
distribution
Profit(including(excluding excess
excess cash
per unit
cash distribution)

Ordinary
profitdistribution)

millionmillionmillionmillion
%
%
%
%
yen
yen
yen
yen
yen
7th
1,433 (0.1)
691 (1.1)
558 (0.4)557 (0.4)
2,368
8th
1,436
0.2
682 (1.3)
548 (1.8)
547 (1.8)
2,325(Reference) Estimated Profit per unit for the 7th Fiscal Period: 2,368 yen; 8th Fiscal Period: 2,325 yen

yen

yen

12
12

2,380
2,337

* Other(1) Changes in Accounting Policies, Changes in Accounting Estimates and Retrospective Restatement(i) Changes in accounting policies accompanying amendments to accounting standards, etc.:
None(ii) Changes in accounting policies other than (i):None(iii) Changes in accounting estimates:None(iv) Retrospective restatement:
None(2) Total Number of Investment Units Issued and Outstanding(i) Total number of investment units issued and outstanding(including own investment units) at end of period:(ii) Number of own investment units at end of period:

6th

235,347 units

5th

235,347 units

6th

0 units

5th

0 units* Presentation of the status of implementation of audit procedures
At the time of disclosure of this financial report (kessan tanshin), the audit procedures pursuant to the Financial Instruments andExchange Act have not been completed.
* Explanation of the appropriate use of the management status forecasts, and other matters of special note
The management status outlook and other forward-looking statements contained in this document are based on information thatare currently available and certain assumptions that are deemed reasonable by the Investment Corporation. Accordingly, the actual
management status, etc. may differ materially due to various factors. In addition, the forecast is not a guarantee of the amount ofcash distribution. For the assumptions for the management status forecasts, please refer to “Assumptions Underlying Forecasts of
the Financial Results for the Fiscal Periods Ending November 2019 and May 2020” on page 8.

-2-

1. Management Status
2.1. Management Status(1) Overview of the Fiscal Period under Review
a. Brief History of the Investment Corporation
Ooedo Onsen Reit Investment Corporation (the “Investment Corporation”) was established on March 29,
2016 (capital: 200 million yen, issued investment units: 2,000 units) under the Act on Investment Trusts andInvestment Corporations (the “Investment Trust Act”). Registration with the Kanto Local Finance Bureau
was completed on May 13, 2016 (registration number 119, filed with the Director of the Kanto Local Finance
Bureau).
Subsequently, pursuant to the basic policy calling for “key investments in onsen and spa-related facilities
under the Ooedo business model (Note 1) that can achieve stable revenues and sustained growth” and“growth strategy taking maximum advantage of support from the Ooedo-Onsen Monogatari Group (Note 2)”,the sponsor, the Investment Corporation issued new investment units via public offering (174,200 units) with
August 30, 2016 as the payment date and listed on the Real Estate Investment Trust Securities Market ofTokyo Stock Exchange, Inc. (“Tokyo Stock Exchange”) (Securities Code: 3472) on August 31, 2016.
Furthermore, the Investment Corporation acquired 9 onsen and spa-related facilities (Note 3) (totalacquisition price (Note 4): 26,844 million yen) on September 1, 2016. At the beginning of the 4th fiscal
period, the Investment Corporation issued new investment units via public offering (56,330 units) andadditionally acquired 5 onsen and spa-related facilities (total acquisition price: 9,861 million yen) on
December 4, 2017. As a result, the total number of facilities owned by the Investment Corporation as of theend of the fiscal period under review increased to 14 facilities (total acquisition price: 36,705 million yen.
The total number of investment units issued and outstanding of the Investment Corporation as of the end of
the fiscal period under review stands at 235,347 units.
(Note 1) “Ooedo business model” is business expertise introduced in facilities operated by the Ooedo-Onsen MonogatariGroup capable of maintaining high profitability and stable occupancy, which are possessed by the Ooedo-Onsen
Monogatari Group and believed to be highly competitive.
(Note2 ) “Ooedo-Onsen Monogatari Group” is comprised of the Investment Corporation’s sponsors, namely Ooedo-Onsen
Monogatari Hotels & Resorts Co, Ltd. and Ooedo-Onsen Monogatari Co., Ltd. (hereinafter “Ooedo-Onsen
Monogatari” and may be referred to as “Sponsors” collectively with Ooedo-Onsen Monogatari Hotels & Resorts
Co., Ltd.) and their consolidated subsidiaries (meaning subsidiaries provided for in Article 8, Paragraph 3 of theRegulation on the Terminology, Forms, and Preparation Methods of Financial Statements (Ordinance of the
Ministry of Finance No. 59 of 1963, as amended), including the Asset Manager). The same applies hereinafter.
(Note 3) “Onsen and spa-related facilities” refers to facilities which provide as a primary function onsen or hot baths, andinclude baths (public bathing facilities which employ onsen or other similar facilities; the same hereinafter), ryokan(lodging of which main structure and facilities are Japanese style), hotels (lodging of which main structure andfacilities are Western style), resort facilities (facilities to provide opportunities for sports or recreational activities
during leisure time), amusement parks, or other leisure facilities (including multi-use facilities that contain theforegoing) that include hot baths as part of their core facilities. Onsen and spa-related facilities also refers tofacilities as a whole, including not only buildings with onsen or hot baths, but also the buildings and sites that are
adjacent to such buildings or operated as one facility. The same applies hereinafter.
(Note 4) “Acquisition price” indicates the purchase prices of properties stated in the sale and purchase agreements (notincluding expenses, such as consumption tax, local consumption tax, or sale and purchase fees), rounded down to
the nearest million yen.

b. Investment Environment and Management PerformanceWith regard to the Japanese economy during the fiscal period under review, the gross domestic product(GDP) in the January-March quarter of 2019 was up 2.2% on a real (seasonally adjusted) annualized basis(the second preliminary estimates) excluding the effects of price fluctuations, up 0.6% from the previous
quarter (October to December of last year). However, some consider that this is largely due to foreign
demand, which boosted the growth rate in the calculation as a result of a drop in imports, and that the actual
situation is not as good as it looks. Accordingly, private consumption, on which the Investment Corporation
relies, was down 0.1% quarter on quarter and should continue to be watched carefully. In addition, thefinancial outlook remains uncertain because there are growing concerns regarding the future of the US-China
trade friction, such as imposing punitive duties on China and the de facto ban on exports of US products to amajor Chinese communications equipment company.
As for the status of onsen use, the Onsen Use Survey by the Nature Conservation Bureau of the Ministryof the Environment shows that the number of accommodation facilities and the total number of annual guestsof accommodation facilities remained stable from fiscal 2013 to fiscal 2017, suggesting that demand for
onsen is stable over the medium to long terms.
In this environment, the occupancy rate (Note 1) of the 14 onsen and spa-related facilities the Investment
Corporation owns as of the end of fiscal period under review (total acquisition price: 36,705 million yen)remained at 100.0% as of the end of the fiscal period under review under a master lease agreement. In
addition, although the guestroom occupancy rate (Note 2) of the 14 onsen and spa-related facilities owned-3-

varies depending on the facilities, it was 86.7%, up from the same period of the previous year, and remained
at a consistently high level for the fiscal period under review. All of ADR (Note 3), RevPAR (Note 4) andsales of the 14 properties also exceeded the results for the same period last year.
The Investment Corporation believes that behind the above are the operational capability of the OoedoOnsen Monogatari Group, the tenant, and the relatively stable demand for onsen, while consumption trends
tend to change in the short term, as can be inferred from the aforementioned Onsen Use Survey by the Nature
Conservation Bureau of the Ministry of the Environment.
Looking at tenant performance in the fiscal period under review, sales of all 14 properties owned remained
generally stable, but there were some differences from the initial assumption of the Investment Corporation interms of profits, including the cost of sales and expenses at the individual facilities.
In addition, there were remarkable improvements in the RevPAR of the largest property, Ooedo-Onsen
Monogatari Reoma Resort, and Ito Hotel New Okabe and Ooedo-Onsen Monogatari Kinosaki. However,Kinugawa Kanko Hotel struggled to attract group customers, and Ooedo-Onsen Monogatari Kounkaku
struggled due to relatively declining visits to the entire area, for which the Investment Corporation willcontinue to consider improvement plans for attracting customers, etc. with its tenant, the Ooedo-Onsen
Monogatari Group.
As a result of the above, variable rent as a whole was almost flat, down 1.0% from the previous period.
The Investment Corporation will continue communicating with tenants while paying attention to thecompetitive environment and the market trends surrounding each facility, as well as the sales and operation
policies of the tenants, while monitoring the situation of each facility based on their performance.
The appraisal value as of the end of the fiscal period totaled 40,392 million yen. Compared with theappraisal value as of the end of the previous period (the end of November 2018), the appraisal value
decreased for the Ooedo-Onsen Monogatari Reoma Resort, which has decided to reduce fixed rent from June
1, 2019. However, there were increases in the appraisal values of Kinugawa Kanko Hotel, Ooedo-Onsen
Monogatari Kinosaki, and Ooedo-Onsen Monogatari Nagasaki Hotel Seifu, which have decided to raise their
fixed rents. Consequently, the total appraisal value of the 14 owned properties rose 310 million yen. With
regard to the unrealized gain/loss (Note 5) of the entire portfolio at the end of the fiscal period under review,
the unrealized gain was 4,013 million yen, partly due to a decrease in the book value, reflecting thedepreciation of the 14 properties.
Moreover, the Investment Corporation did not acquire any new facilities during the fiscal period underreview. However, it developed plans for repairs and capital expenditure that take into account the status andfeatures of the owned properties and implemented the necessary repairs and capital expenditure throughcollaboration with the Ooedo-Onsen Monogatari Group, the operator and tenant, under the sponsor support
agreement. (Repair expenses are basically borne by tenants based on the lease agreements.)(Note 1) Occupancy rate refers to the ratio of leased area to leasable area.
(Note 2) Guestroom occupancy rate is calculated using the following formula.
Guestroom occupancy rate = number of guestrooms sold during relevant period / number of rooms available for saleduring relevant period ×100 (%)(Note 3) Average daily rate (ADR) is calculated for a given time period by dividing total room revenue by the number of
total rooms sold(Note 4) Revenue per available room (RevPAR) is calculated for a given time period by dividing total room revenue by the
number of total rooms available for sale.
(Note 5) Unrealized gain/loss is calculated using the following formula.
Unrealized gain/loss = Total appraisal value of owned assets as of the end of the fiscal period under review – Totalbalance sheet amount (including equipment attached to buildings, structures, machinery and equipment, tools,
furniture and fixtures as well as leasehold right)

c. Overview of Capital Procurement
In the fiscal period under review, for use as part of the repayment source for long-term borrowings of
7,053 million yen and 450 million yen (Note) on the repayment date, May 31, 2019, the Investment
Corporation raised 6,676 million yen in long-term borrowings from a syndicate, with Sumitomo Mitsui
Banking Corporation as the arranger, and 350 million yen in short-term borrowings from Sumitomo Mitsui
Banking Corporation, respectively. In addition, the Investment Corporation made scheduled repayments of 93
million yen on both January 31 and April 30, 2019, using cash on hand. As a result, the total amount ofinterest-bearing debt stood at 15,754 million yen and the ratio of interest-bearing liabilities to total assets(LTV) at 40.6% as of the end of the fiscal period under review.
(Note )For details, please refer to “Notice Concerning Borrowing of Funds” released on September 1, 2016 and May 28,
2018.”-4-

d. Overview of Financial Performance and Distributions
As a result of the operations described above, business performance in the fiscal period under review
generated operating revenue of 1,434 million yen, operating profit of 699 million yen, ordinary profit of 560
million yen and profit of 559 million yen.
Concerning cash distribution for the fiscal period under review, pursuant to the cash distribution policies
provided in the Investment Corporation’s articles of incorporation, the amount of distribution was to be inexcess of an amount equivalent to 90% of the Investment Corporation’s earnings available for distribution as
defined in Article 67-15, Paragraph 1 of the Act on Special Measures Concerning Taxation (Act No. 26 of
1957, as amended; the “Special Measures Concerning Taxation Act”). Accordingly, the Investment
Corporation decided to distribute 2,378 yen per unit (excluding excess cash distribution).
Furthermore, in accordance with the policy for “distribution of cash in excess of profit” as stated in theInvestment Corporation’s articles of incorporation, the Investment Corporation made a distribution for the
2,824,164 yen in allowance for temporary difference adjustments (as defined in Article 2, Paragraph 2, item
30 of the Ordinance on Accountings of Investment Corporations (Cabinet Office Ordinance No. 47 of 2006,
as amended; the “Investment Corporations Accountings Ordinance”) for the purpose of reflecting the effecton distributions of the difference between accounting and tax treatment of earnings in association with therecording of interest expenses of asset retirement obligation and recording of depreciation of building bookvalue corresponding to asset retirement obligation (as defined in Article 2, Paragraph 2, item 30 (b) of theInvestment Corporations Accountings Ordinance). This resulted in excess distribution per unit of 12 yen.
As a result, distribution per unit for the fiscal period under review was 2,390 yen (of which, excess
distribution per unit was 12 yen).
(2) Outlook for the Next Fiscal Perioda. Management Environment in the Next Fiscal Period
Looking at the Japanese economy from the next fiscal period onward, attention should continue to be paid
to the effects of the international economic and financial situations, such as the future of the US-China trade
friction and the trends of US interest rates.
As for domestic demand, it is necessary to pay attention to the impact of the consumption tax hike that isscheduled for October 2019 and the trend of inbound demand, which is expected to keep rising.
In this environment, the Investment Corporation’s investment target, leisure facilities (Note 1), including
onsen and spa-related facilities, the key investment targets of the Investment Corporation, are based on“intangible goods consumption” (Note 2) and “experience-based consumption” (Note 3), and there are also
moves to give consideration to work-life balance and workstyle reform. Against this backdrop, there issignificant room for the leisure time of Japanese to increase. The Investment Corporation therefore believes
that demand for leisure facilities will rise going forward.
The Investment Corporation also believes that the number of foreign tourists will rise with the progress ofgovernment policies for the tourism nation, and that the weight of “experience-based consumption” byinbound tourists will increase further.
Under these circumstances, the Investment Corporation believes that the performance of tenants in its
owned facilities will remain relatively stable overall, although there will be differences in performance among
the facilities.
(Note 1) “Leisure facilities” refers to facilities that provide consumers with leisure activities and fulfilling time whichpeople nowadays require, such as “enjoyment,” “communication,” “comfort and relaxation” and “health andintellectual satisfaction.”(Note 2) “Intangible goods consumption” refers to consumption activities for providing a “series of experiences” which is acombination of individual events.
(Note 3) “Experience-based consumption” refers to consumption activities for the purpose of having experiences.

b. Future Management Policy and Challenges to Address(a) External Growth Strategy
i. Utilization of Sponsor Pipeline
Looking at the supply aspect of onsen and spa-related facilities, there are many ryokans and hotels that
decide to discontinue their business due to persistent issues such as a lack of successors and declining
competitiveness caused by aging facilities. In addition, to meet the capital needs for investment to improve
facilities and enhance competitiveness and for funds to open new facilities, a large number of facilities are put
up for sale, and information on numerous properties continues to be brought to the Investment Corporationand the Ooedo-Onsen Monogatari Group.
In the period of one year from April 2018 to March 2019, the Ooedo-Onsen Monogatari Group acquired
three facilities: Ooedo-Onsen Monogatari Hotel Kisoji (Kiso-gun, Nagano Prefecture) in April 2018,
TAOYA Shima (Toba City, Mie Prefecture) in October 2018, and Ooedo-Onsen Monogatari Amakusa Hotel
Kameya (Kamiamakusa City, Kumamoto Prefecture) in March 2019 (Note 1). The Investment Corporation-5-

believes that the Group will continue to make acquisitions (Note 2). In accordance with the sponsor support
agreement concluded with the Sponsors on November 1, 2017, the Investment Corporation is granted
preferential negotiating rights for the acquisition of onsen and spa-related facilities owned or developed by
the Ooedo-Onsen Monogatari Group, and will also be preferentially provided with third-party property sales
information acquired by the Ooedo-Onsen Monogatari Group. The Investment Corporation intends tocontinuously acquire mainly onsen and spa-related facilities with the Ooedo business model owned andoperated by the Ooedo-Onsen Monogatari Group by making maximum use of the abovementioned support.
(Note 1) As of the date of this document, it is preparing to reopen after renovation.
(Note 2) It is not guaranteed that the Investment Corporation will be able to acquire these properties in the future.

ii. Utilization of Network Unique to the Asset Manager and Acquisition of Properties Other than
Properties Contributed by Sponsor
The Investment Corporation regards a wide range of leisure facilities that provide consumers with fun andproductive leisure time, represented by onsen and spa-related facilities, as its investment targets within thescope set forth in its Articles of Incorporation (Note 1). Using the asset management company’s own network,
sales information on leisure facilities is obtained in significant volume, including hotels located in urban areas,accommodation aimed at increasing inbound demand, and new facilities to be developed and built. The
number of facilities under consideration for investment is increasing year after year, partially as a result of an
approach to potential sellers. In addition, there are increasing cases in which a bridge structure, etc. is used tosecure preferential negotiating rights (Note 2).
Through these measures, the Investment Corporation will complement the current portfolio balance
centered on sponsor-contributed properties and will continue to consider making investments to achieve
external growth through new acquisitions that can further enhance the diversification of investment areas andtenants and diversity in leisure facilities.
(Note 1) The investment targets set forth in the Articles of Incorporation of the Investment Corporation are ryokans, hotels,bathing facilities, resort facilities, amusement parks and other leisure facilities, as well as their complex facilities.
(Note 2) It is not guaranteed that the Investment Corporation will be able to acquire these properties in the future.

(b) Internal Growth Strategy
i. Rent Structure Emphasizing Stability
The Investment Corporation adopts a rent system that comprises primary rent (fixed rent combined with
GOP (Note 1)-linked variable rent) with the addition of secondary rent (amount equivalent to real estaterelated costs of each facility) in the long-term lease agreements concluded with the Ooedo-Onsen MonogatariGroup companies that are the tenants of the owned assets (Note 2). This along with having tenants pay repair
expenses in principle allows the Investment Corporation to secure stability of cash flow over the long term
while pursuing benefits from the upside of a GOP-linked rent income when facilities are generating favorable
operating results.
The Investment Corporation decided with Ooedo-Onsen Monogatari Hotels & Resorts or Reoma Unity
Co., Ltd. (hereinafter individually or collectively referred to as the “Lessee”) on January 31, 2019 to revise
the fixed rent (Note 3) set forth in the fixed-term building lease agreement with precedent condition andbuilding management service outsourcing agreement (including subsequent changes and hereinafter
individually or collectively referred to as the “Original Agreement”) entered into with the Lessee (hereinafter
the “Revision”) with respect to Ooedo-Onsen Monogatari Reoma Resort, Ooedo-Onsen Monogatari Nagasaki
Hotel Seifu, Kinugawa Kanko Hotel and Ooedo-Onsen Monogatari Kinosaki (the “Four Properties”) keeping
total fixed rent amount of Four Properties, and to partially change the method of calculating the variable rent
(Note 4) set forth in the Original Agreement with respect to two properties of Ooedo-Onsen Monogatari
Reoma Resort and Kinugawa Kanko Hotel among the Four Properties (hereinafter the “Change”), with June 1,
2019 as the effective date.
As a result, with respect to Ooedo-Onsen Monogatari Reoma Resort, the fixed rent was reduced from June
1, 2019 when the fixation period (from June 1, 2017 to May 31, 2019) of the variable rent portion ended,because the burden of renewal expenses for game machines and other equipment owned by the Lessee in thetheme park was heavy for the Lessee. Consequently, the Lessee’s rent burden was reduced, and its future rent
income became more stable. Going forward, the Investment Corporation will discuss measures with theLessee to increase the value that will contribute to the competitiveness of the facility.
With respect to three properties whose ratio of rent to GOP is lower than the portfolio average (OoedoOnsen Monogatari Nagasaki Hotel Seifu, Kinugawa Kanko Hotel, and Ooedo-Onsen Monogatari Kinosaki),
their fixed rents were increased from June 1, 2019, but the Investment Corporation believes that the rent
burden ratio will remain within an appropriate range.
The Investment Corporation believes that the Revision and the Change have equalized the rent burden
ratio of each facility owned, and the reduction in the ratio of the rent of Ooedo-Onsen Monogatari Reoma-6-

Resort to the total rent income has advanced the diversification of the portfolio and improved the stability of
future cash flows.
The Investment Corporation will continue to make efforts to increase the long-term unitholder value, as
well as stabilizing cash distribution by actively working to strengthen competitiveness from a medium- tolong-term perspective.
(Note 1) “GOP” refers to gross operating profit, which is the amount remaining after deducting expenses arising directlyfrom managing each facility, such as labor expenses and general and administrative expenses, from each facility’ssales. The same applies hereinafter.
(Note 2) The rent system has been adopted in the lease agreements for the currently owned assets. However, this does notguarantee the same rent system will be adopted in the lease agreements for the facilities that the Investment
Corporation acquires in the future.
(Note 3) “Fixed rent” refers to the monthly amount provided for in each facility’s lease agreement. The same applies
hereinafter.
(Note 4) “Variable rent” refers to the amount obtained by multiplying each facility’s modified GOP for the most recent 1year period (for the 6 months starting from December of each year, this means the 1-year period from March of thatyear to February of the following year; for the 6 months starting from June of each year, this means the 1-year
period from September of the previous year to August of that year) (these 1-year periods are referred to as“modified GOP Calculation Periods”) regarding each facility by the specific rate provided for in each leaseagreement (yearly; the monthly amount is 1/12th thereof). The same applies hereinafter. For Ooedo-Onsen
Monogatari Reoma Resort, it will be 31 million yen until May 2019 and the amount obtained by the above
calculation method for June 2019 onward.

ii. Strategic CAPEX (Note 1) Contributing to the Increase in Income and Enhancement ofCompetitiveness through the Expansion of Capacity
The Investment Corporation will proactively implement CAPEX for the extension and reconstruction of
owned properties with high occupancy and value-increasing potential (Note 2) in order to increase thenumber of guestrooms. Through this measure, it aims to increase the potential income that the operator of theowned properties should acquire, as well as the rental income through the effective use of non-operatingbuildings and unused land on the premises.
In addition, the Investment Corporation will strive to raise variable rents by increasing tenant income
through collaboration with the Ooedo-Onsen Monogatari Group, which has the expertise to improve added
value in onsen and spa-related facilities, by actively engaging, from the position of the facility owner, invarious measures to improve operations such as the expansion and renovation of open-air baths, the extensionof buffet hall floors, and the improvement of customer flow lines in buffet halls, which will help enhance thecompetitiveness of facilities, as well as other measures such as events to attract guests.
(Note 1) CAPEX (Capital Expenditure) does not refer to repair expenses for maintenance of real estate but refers to
expenditure for enhancing value and competitiveness of real estate and its facilities.
(Note 2) “Value-increasing potential” refers to the capability for potential enhancement of asset value that investments, etc.
can bring.

(c) Financial Strategy
The Investment Corporation will implement a flexible financial strategy while placing emphasis on
maintaining its conservative financial position.
Although the Investment Corporation has set the upper limit of LTV at 60% in principle, it plans tomaintain a conservative level of around 40% with normal operations for the time being, while paying
attention to capital reserves. As to debt financing, the Investment Corporation aims to maintain andstrengthen its favorable relationship with existing lenders as well as diversify financing sources to secure thenecessary funds associated with the expansion of asset scale. The Investment Corporation also aims to reduce
financing costs by lowering the risk premium in step with progress in the expansion of the scale of theportfolio and the diversification of risk. In addition, the Investment Corporation is taking steps todiversify/level repayment dates of interest-bearing debt to reduce refinancing risk.
(3) Significant Subsequent Events
Not applicable-7-

Assumptions Underlying Forecasts of the Financial Results
for the Fiscal Periods Ending November 2019 and May 2020
Item

Assumption

Calculation
period・ Fiscal period ending November 2019
(7th fiscal period: from June 1, 2019, to November 30, 2019) (183 days)
・ Fiscal period ending May 2020
(8th fiscal period: from December 1, 2019, to May 31, 2020) (183 days)
・ It is assumed that there will be no change (acquisition or disposition of assets) to the 14
properties, which the Investment Corporation owns as of the date of this document, throughto the end of the fiscal period ending May 2020.
・ The managed assets may change due to acquisition of assets other than the owned
properties above, the disposition of assets under management, etc.
・ Lease operations revenue from the owned assets is calculated based on the lease agreements
effective as of the date of this document. It is calculated in light of rent revisions to be madein the future, taking into consideration market trends and other factors. It assumes that there
is no delinquency or non-payment of rent by the tenant.
・ Rent is calculated based on the following assumptions:ManagedAssetsOperatingrevenue[Ooedo-Onsen Monogatari Reoma Resort]
Fixed rent: 52,456,896 yen monthly
Variable rent: 5,181,730 yen monthly; and will be calculated using the following calculation
method from June 2019(1) Modified GOP (Note 1) for the most recent one-year period × 5.0%
(yearly; the monthly amount is 1/12th thereof)(2) Only if 58.7% of the modified GOP exceeds one year’s fixed rent, variable rent will
apply.
With regard to Ooedo-Onsen Monogatari Reoma Resort, a fixed-term land leaseagreement has been executed with the tenant, and the Investment Corporation receives aseparate monthly land rent of 86,000 yen based on the fixed-term land lease agreement.
[Ooedo-Onsen Monogatari Ise-shima]
Fixed rent: 18,009,399 yen monthly
Variable rent: 962,993 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 4.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 77.0% of the modified GOP exceeds one year’s fixed rent, variable rent will
apply.
[Ito Hotel New Okabe]
Fixed rent: 12,296,799 yen monthly
Variable rent: 1,471,251 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 5.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 52.0% of the modified GOP exceeds one year’s fixed rent, variable rent will
apply.

-8-

Operating
revenue[Ooedo-Onsen Monogatari Atami]
Fixed rent: 15,619,380 yen monthly
Variable rent: 939,716 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 4.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 74.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Toi Marine Hotel]
Fixed rent: 9,098,235 yen monthly
Variable rent: 1,016,579 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 7.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 72.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Awara]
Fixed rent: 10,963,033 yen monthly
Variable rent: 608,360 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 3.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 62.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Kamoshika-so]
Fixed rent: 5,953,916 yen monthly
Variable rent: 655,836 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 6.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 62.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Ikaho]
Fixed rent: 6,126,558 yen monthly
Variable rent: 708,097 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 7.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 67.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Kimitsu-no-mori]Fixed rent: 4,098,412 yen monthly
Variable rent: 436,860 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 5.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 52.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Nagasaki Hotel Seifu]
Fixed rent: 12,496,532 yen monthly
Variable rent: 498,384 yen monthly from June 2018; and will be revised every six
months and calculated as follows:(1)
Modified GOP for the most recent one-year period × 2.2% (yearly; the monthly
amount is 1/12th thereof)
-9-

(2)

Only if 44.7% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.

[Ooedo-Onsen Monogatari Kounkaku]
Fixed rent: 7,017,209 yen monthly
Variable rent: 755,005 yen monthly from June 2018; and will be revised every six
months and calculated as follows:(1)
Modified GOP for the most recent one-year period × 4.5% (yearly; the monthly
amount is 1/12th thereof)(2)
Only if 45.3% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Kinugawa Kanko Hotel]
Fixed rent: 29,069,741 yen monthly
Variable rent: 1,188,094 yen monthly from June 2018; and will be revised every six
months and calculated as follows:(1)
Modified GOP for the most recent one-year period × 2.4% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 56.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Kinosaki]
Fixed rent: 13,147,999 yen monthly
Variable rent: 650,945 yen monthly from June 2018; and will be revised every six
months and calculated as follows:(1)
Modified GOP for the most recent one-year period × 2.4% (yearly; the monthly
amount is 1/12th thereof)(2)
Only if 47.7% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Higashiyama Grand Hotel]
Fixed rent: 8,631,767 yen monthly
Variable rent: 940,567 yen monthly from June 2018; and will be revised every six
months and calculated as follows:(1)
Modified GOP for the most recent one-year period × 4.5% (yearly; the monthly
amount is 1/12th thereof)(2)
Only if 45.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
Fiscal Period Ending November 2019 (7th fiscal period)(Millions of yen)
Property name
Ooedo-Onsen Monogatari
Reoma Resort
Ooedo-Onsen MonogatariIse-shima

Primary rent (Note 2)
Fixed
Variablerent
rent(Note 3)(Note 4)315
29
(Note 6)

Ito Hotel New Okabe
Ooedo-Onsen Monogatari
Atami
Ooedo-Onsen Monogatari
Toi Marine Hotel- 10 -

Secondary
rent(Note 5)

Total
(Note 7)

32

377

108

7

3

118

73

9

8

91

93

8

3

105

54

6

1

62

Ooedo-Onsen Monogatari
Awara
Ooedo-Onsen Monogatari
Kamoshika-so
Ooedo-Onsen Monogatari
Ikaho
Ooedo-Onsen Monogatari
Kimitsu-no-moriOoedo-Onsen Monogatari
Nagasaki Hotel Seifu
Ooedo-Onsen Monogatari
Kounkaku

65

3

8

77

35

4

6

46

36

5

4

45

24

2

5

32

74

4

4

83

42

-

2

45

Kinugawa Kanko Hotel

174

7

5

187

Ooedo-Onsen Monogatari
KinosakiOoedo-Onsen Monogatari
Higashiyama Grand Hotel

78

5

6

90

51

5

10

67

Total (Note 7)

1,230

98

104

1,433

Fiscal Period Ending May 2020 (8th fiscal period)(Millions of yen)Primary rent (Note 2)

Secondary
rent(Note 5)

Total
(Note 7)

30

33

379

108

7

4

120

Ito Hotel New Okabe

73

9

8

91

Ooedo-Onsen Monogatari
Atami
Ooedo-Onsen Monogatari
Toi Marine Hotel
Ooedo-Onsen Monogatari
Awara
Ooedo-Onsen Monogatari
Kamoshika-so
Ooedo-Onsen Monogatari
Ikaho
Ooedo-Onsen Monogatari
Kimitsu-no-moriOoedo-Onsen Monogatari
Nagasaki Hotel Seifu
Ooedo-Onsen Monogatari
Kounkaku

93

7

3

105

54

6

1

62

65

3

8

77

35

4

6

46

36

4

4

45

24

2

5

32

74

3

4

83

42

-

2

45

Kinugawa Kanko Hotel
Ooedo-Onsen Monogatari
KinosakiOoedo-Onsen Monogatari
Higashiyama Grand Hotel

174

7

5

187

78

5

6

90

51

5

10

67

Total (Note 7)

1,230

99

106

1,436

Property name
Ooedo-Onsen Monogatari
Reoma Resort
Ooedo-Onsen MonogatariIse-shima

Fixed
rent
(Note 3)315
(Note 6)

Variablerent(Note 4)(Note 1) “GOP” refers to gross operating profit, which is the amount remaining after deducting expenses
arising directly from managing each facility, such as labor expenses and general andadministrative expenses, from each facility’s sales. “Modified GOP” is the amount remaining
after deducting real estate-related expenses for the property to be borne by the tenant- 11 -

(including, but not limited to, taxes and public charges, non-life insurance premiums and land
and house rent, but excluding an amount equivalent to Secondary rent (defined below in Note5)) from the GOP of each facility for the Modified GOP Calculation Period (defined below in
Note 4). The same applies hereinafter.
(Note 2) “Primary rent” refers to the sum of the fixed rent and the variable rent. The same applies
hereinafter.
(Note 3) “Fixed rent” refers to the monthly amount provided for in each facility’s lease agreement. The
same applies hereinafter.
(Note 4) “Variable rent” refers to the amount obtained by multiplying each facility’s modified GOP for
the most recent 1-year period (for the 6 months starting from December of each year, thismeans the 1-year period from March of that year to February of the following year; for the 6months starting from June of each year, this means the 1-year period from September of theprevious year to August of that year) (these 1-year periods are referred to as “modified GOP
Calculation Periods”) regarding each facility by the specific rate provided for in each leaseagreement (yearly; the monthly amount is 1/12th thereof). The same applies hereinafter.
(Note 5) “Secondary rent” refers to an amount equivalent to the total amount of taxes, public charges,
nonlife insurance premiums, and other expenses (real estate management expenses) to be borneby the Investment Corporation for each facility owned by the Investment Corporation. The
same applies hereinafter.
(Note 6) Land rent based on the fixed-term land lease agreement is included in the fixed rent.
(Note 7) Rents of properties are rounded down to the nearest million yen. Therefore, the total of each
property’s rent, the total of fixed rents, the total of variable rents and the total of secondary
rents may not add up to the figure indicated in the Total column.

OperatingexpensesNon-operating
expenses
Borrowings

Outstanding
Investment
Units

Distribution
per unit(Excludingexcess cash
distribution)

・ Of the expenses related to leasing activities, which are a major component of operating
expenses, the expenses related to leasing activities other than the depreciation arecalculated based on past actual figures and by reflecting factors that cause expenses tofluctuate.
・ Taxes and public charges is assumed to be 91 million yen for the fiscal period ending
November 2019, and 92 million yen for the fiscal period ending May 2020.
・ Building repair expenses are not expected to arise, as these expenses will, in principle,
be borne by the tenant based on the lease agreement effective as of the date of thisdocument.
・ Depreciation, which is calculated using the straight-line method inclusive of incidental
expenses and additional capital expenditure in the future, is assumed to be 435 million
yen for the fiscal period ending November 2019, and 440 million yen for the fiscal
period ending May 2020.
・ The total amount of interest expenses and other borrowing-related expenses is expected
to be 132 million yen for the fiscal period ending November 2019, and 133 million yen
for the fiscal period ending May 2020.
・ The balance of loans outstanding as of May 31, 2019 is 15,754 million yen.
・ In the fiscal period ending November 2019 and the fiscal period ending May 2020, it isassumed that the scheduled repayment of 186 million yen will be made separately.
・ In the fiscal period ending November 2019, it is premised on the partial repayment of 10
million yen out of 350 million yen in short-term loans, as promised separately.
・ In the fiscal period ending May 2020, short-term loans (340 million yen) and the current
portion of long-term loans (3,568 million yen) will be due for repayment on May 29,2020 under the assumption that the same amounts are refinanced.
・ The assumed number of investment units issued and outstanding as of the date of thisdocument is 235,347, and it is assumed that the number of investment units will notchange due to any additional issuance of new investment units or another reason before
May 31, 2020.
・ Distribution per unit is calculated based on the expected number of investment units
issued and outstanding as of the end of the fiscal periods ending November 2019 and
May 2020 (235,347 units).
・ Distribution per unit (excluding excess cash distribution) is calculated based on thepolicy for cash distributions provided for in the Investment Corporation’s articles ofincorporation.
・ Distribution per unit (excluding excess cash distribution) may change due to various
factors, including changes of portfolio, changes in rent revenue due to a relocation oftenant, etc., the occurrence of unexpected capital expenditures, and other reasons.
- 12 -

Excess cash
distribution
per unit

Other・ Recording of allowance for temporary difference adjustments of 2,824,164 yen is
expected concerning the difference in accounts for tax and accounting purposes
associated with recording of asset retirement obligation.
・ Regarding conducting excess cash distribution, the Investment Corporation will have abasic policy of conducting excess cash distribution of which amount will be equivalent
to the increased amount of allowance for temporary difference adjustments. Pursuant to
the policy, it is assumed that 12 yen of excess distribution per unit will be conducted ineach of the fiscal periods ending November 2019 and ending May 2020.
・ It is assumed that revisions that affect the above forecast figures will not be made to laws
or ordinances, tax systems, accounting standards, listing regulations, or rules or the likeset by The Investment Trusts Association, Japan.
・ It is assumed that unforeseen material changes in general economic trends, in real estatemarket conditions, or in any other factors will not occur.

2.3. Investment Risks
Disclosure is omitted because there are no significant changes from “Investment Risks” set out in the mostrecent periodic securities report (yuka shoken hokokusho) (submitted on February 26, 2019).

- 13 -

2. Financial Statements
2.1. Balance Sheets(Thousands of yen)
As of November 30, 2018
AssetsCurrent assets
Cash and deposits
Prepaid expenses
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Total property, plant and equipment
Intangible assets
Leasehold interests in land
SoftwareTotal intangible assets
Investments and other assets
Deferred tax assets
Long-term prepaid expenses
Lease and guarantee deposits
Total investments and other assets
Total non-current assets
Total assets- 14 -

As of May 31, 20192,220,373
127,758
6,332
2,354,464

2,001,208
136,232
66,7272,204,168

25,982,750(1,498,792)
24,483,958
1,259
(138)
1,120
600
(26)
573
2,620
(268)
2,352
11,988,130
36,476,134

26,145,944(1,926,166)
24,219,777
10,979(508)
10,470
600
(44)
555
2,620
(487)
2,133
11,988,130
36,221,067

157,802
4,556
162,358

157,802
3,754
161,556

17
103,787
10,089113,895
36,752,388
39,106,853

12
185,296
10,089195,399
36,578,023
38,782,191

(Thousands of yen)
As of November 30, 2018
Liabilities
Current liabilities
Operating accounts payable
Short-term borrowings
Current portion of long-term borrowings
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Leasehold and guarantee deposits
received
Asset retirement obligations
Total non-current liabilities
Total liabilities
Net assets
Unitholders' equity
Unitholders' capital
Deduction from unitholders' capital
Allowance for temporary
difference adjustments
Total deduction from unitholders'
capitalUnitholders' capital, net
Surplus
Unappropriated retained earnings(undisposed loss)
Total surplus
Total unitholders' equity
Total net assets
Total liabilities and net assets- 15 -

As of May 31, 201973,130－7,380,750
90,481
10,546972
82,313
258,696
6,438
7,903,329

17,426350,000
3,941,750
87,838
7,508
866
15,234259,137
66,854
4,746,616

8,610,500

11,463,000

1,230,724

1,230,724

137,354
9,978,579
17,881,908

137,754
12,831,479
17,578,095

20,653,023

20,653,023(5,819)(5,819)(8,643)

20,647,203

20,644,379

577,741

559,716

577,741
21,224,944
21,224,944
39,106,853

559,716
21,204,095
21,204,095
38,782,191(8,643)

2.2. Statements of Income(Thousands of yen)
Fiscal period ended
November 30, 2018
Operating revenue
Leasing business revenue
Total operating revenue
Operating expenses
Expenses related to leasing business
Asset management fee
Asset custody fee
Administrative service fees
Remuneration for directors(and other officers)
Other operating expenses
Total operating expenses
Operating profit
Non-operating income
Interest income
Interest on tax refund
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Subsidy income
Total extraordinary income
Extraordinary losses
Loss on tax purpose reduction entry of noncurrent assets
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitRetained earnings brought forward
Unappropriated retained earnings(undisposed loss)- 16 -

Fiscal period ended
May 31, 2019

1,450,211
1,450,211

1,434,986
1,434,986

541,878
129,310
1,778
16,917548,074
126,075
1,751
17,233

3,600

3,600

42,209735,695
714,516

39,245735,980
699,005

10
871
882

10
－
10

64,35372,451－
136,805
578,593

62,35275,774500
138,626
560,389－－

11,250
11,250－

11,250－578,593973(0)
972
577,620
120

11,250560,389867
5
873
559,516
199

577,741

559,716

2.3. Statements of Unitholders’ Equity
5th Fiscal Period (from June 1, 2018 to November 30, 2018)(Thousands of yen)
Unitholders' equity
Unitholders' capital

Surplus

Deduction fromunitholders' capital

Total
Unappropriatedretained
unitholders'
Unitholders'
Total
AllowanceTotal
equityearnings
capitalsurplusfor
deduction(undisposed
temporary
from
loss)
difference unitholders'adjustments
capitalUnitholders'
capitalBalance at beginning ofcurrent period
Changes of items during
period20,653,023(2,995)(2,995) 20,650,027

Dividends of surplus

570,366 21,220,394 21,220,394(570,245) (570,245)

Excess cash distribution
from allowance fortemporary difference
adjustments(2,824)(2,824)(2,824)

ProfitTotal changes of items
during period
Balance at end ofcurrent period

570,366

Total net
assets(570,245)(570,245)(2,824)(2,824)

577,620577,620577,620577,620

7,374

4,550

4,550

-

(2,824)(2,824)(2,824)

7,374

20,653,023(5,819)(5,819) 20,647,203

577,741

577,741 21,224,944 21,224,944

6th Fiscal Period (from December 1, 2018 to May 31, 2019)(Thousands of yen)
Unitholders' equity
Unitholders' capital

Surplus

Deduction fromunitholders' capital

Unitholders'
capitalBalance at beginning ofcurrent period
Changes of items during
period20,653,023

UnappropriatedTotal
unitholders'retained
Unitholders'
Total
AllowanceTotal
equityearnings
capitalsurplusfor
deduction(undisposed
temporary
from
loss)
difference unitholders'adjustments
capital(5,819)(5,819) 20,647,203

Dividends of surplus
Excess cash distribution
from allowance fortemporary difference
adjustments(2,824)(2,824)

20,653,023

577,741 21,224,944 21,224,944(577,541) (577,541) (577,541)(577,541)(2,824)(2,824)(2,824)

ProfitTotal changes of items
during period
Balance at end ofcurrent period

577,741

Total net
assets559,516

559,516

559,516

559,516(20,848)(20,848)(2,824)(2,824)(2,824)(18,024)(18,024)(8,643)(8,643) 20,644,379

559,716

559,716 21,204,095 21,204,095- 17 -

2.4. Statements of Cash Distributions
(Yen)
Item

5th Fiscal Period(from June 1, 2018
to November 30, 2018)

6th Fiscal Period(from December 1, 2018
to May 31, 2019)

I. Unappropriated retained earnings
II. Addition of excess distribution
Of which, allowance for temporary
difference adjustments
III. Distribution amount[Distribution amount per unit]
Of which,
Distribution amount from earnings[Of which, excess cash distribution per unit]
Of which,
Allowance for temporary difference
adjustments

577,741,085
2,824,164
2,824,164

559,716,337
2,824,164
2,824,164580,365,702[2,466]562,479,330[2,390]577,541,538

559,655,166[2,454][2,378]2,824,164

2,824,164[Of which, excess cash distribution per unit
(pertaining to allowance for temporary
difference adjustments)]
IV. Retained earnings carried forward

[12]

[12]

Method of calculating distribution amount

199,547

61,171As described above, distribution per unit
for the fiscal period under review is 2,466
yen.
Concerning cash distribution (excludingexcess cash distribution), in order to ensurethat the maximum amount of cash
distribution of earnings would be included
in deductible expenses based on applicationof special provisions for taxation on
investment corporations (Article 67-15,
Paragraph 1 of the Special Measures
Concerning Taxation Act), the Investment
Corporation decided to distribute almost theentire amount of the earnings provided in
Article 136, Paragraph 1 of the Act on
Investment
TrustsandInvestment
Corporations, excluding the portion where
cash distribution per investment unit would
be less than JPY1. As a result, theInvestment Corporation declared a cash
distribution per investment unit (excludingexcess cash distribution) of 2,454 yen.
In addition, pursuant to the policy for“distribution of money in excess of profits”
as stated in its articles of incorporation, theInvestment Corporation decided to make a
distribution for the 2,824,164 yen inallowance for temporary difference
adjustments for the purpose of reflecting theeffect on distributions of the difference inaccounts for tax and accounting purposes inassociation with expenses related to asset
retirement obligations (as defined in Article
2, Paragraph 2, item 30 (b) of theInvestment Corporations Accountings
Ordinance). This resulted in distribution ofallowance for temporary difference
adjustments of 12 yen per investment unit.

As described above, distribution per unit
for the fiscal period under review is 2,390
yen.
Concerning cash distribution (excludingexcess cash distribution), in order to ensurethat the maximum amount of cash
distribution of earnings would be included
in deductible expenses based on applicationof special provisions for taxation on
investment corporations (Article 67-15,
Paragraph 1 of the Special Measures
Concerning Taxation Act), the Investment
Corporation decided to distribute almost theentire amount of the earnings provided in
Article 136, Paragraph 1 of the Act on
Investment
TrustsandInvestment
Corporations, excluding the portion where
cash distribution per investment unit would
be less than JPY1. As a result, theInvestment Corporation declared a cash
distribution per investment unit (excludingexcess cash distribution) of 2,378 yen.
In addition, pursuant to the policy for“distribution of money in excess of profits”
as stated in its articles of incorporation, theInvestment Corporation decided to make a
distribution for the 2,824,164 yen inallowance for temporary difference
adjustments for the purpose of reflecting theeffect on distributions of the difference inaccounts for tax and accounting purposes inassociation with expenses related to asset
retirement obligations (as defined in Article
2, Paragraph 2, item 30 (b) of theInvestment Corporations Accountings
Ordinance). This resulted in distribution ofallowance for temporary difference
adjustments of 12 yen per investment unit.

- 18 -

2.5. Statements of Cash Flows(Thousands of yen)

Cash flows from operating activities
Profit before income taxes
Depreciation
Borrowing related expenses
Interest income
Interest expenses
Subsidy income
Loss on tax purpose reduction entry of non-current
assetsIncrease (decrease) in operating accounts payable
Decrease (increase) in consumption taxes refund
receivable
Increase (decrease) in accrued consumption taxes
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid expenses
Increase (decrease) in accounts payable - other
Increase (decrease) in advances received
Other, net
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Subsidies received
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term borrowings
Proceeds from long-term borrowings
Repayments of short-term borrowings
Repayments of long-term borrowings
Distributions paid
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- 19 -

Fiscal period ended
November 30, 2018

Fiscal period ended
May 31, 2019578,593422,799
72,451(10)
64,353－560,389
428,782
75,774(10)
62,352(11,250)－

11,25041,005(41,847)

547,941－

82,313(15,873)
1,125
3,388
(2,981)399
1,795,505
10(65,863)(955)
1,728,695(67,079)
3,361(68,975)(2,643)441
422
950,96610(65,389)(973)
884,614(287,828)－(287,828)(198,020)
11,250(186,770)－－(580,000)(236,500)(573,069)(1,389,569)
51,297
843,851
895,148

350,000
6,576,106－(7,262,750)(580,365)(917,009)(219,165)
895,148
675,983