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 4th Fiscal Period
July 19, 2018
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 24, 2018
August 15, 2018

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 4th Fiscal Period
4th Fiscal Period: Fiscal period ended May 2018 (from December 1, 2017 to May 31, 2018)(1) Management Status
Fiscalperiod4th
3rd

Operatingrevenuemillion yen
1,442
1,032

FiscalperiodProfitper unit[% figures show the period-on-period increase (decrease)]
Ordinary
Profitprofit% million yen% million yen
%
41.5
571
35.7
570
35.7
(5.3)
421
(5.6)
420
(5.6)

Ratio of profit tounitholders’ equity
yen
2,427
2,384

4th
3rd

(2)

%
39.7
1.1

Operatingprofitmillion yen
734
519

%
3.1
2.6

Ratio of ordinary profit tototal assets
%
1.7
1.4

Ratio of ordinary profit tooperating revenue
%
39.6
40.8

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
%
%
4th
2,423
570
12
2
2,435
573
99.9
2.7
3rd
2,385
420
7
1
2,392
421
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. Distribution payout ratio for the fiscal period ended May
2018 is calculated using the following formula since issuance of new investment units was conducted during the period.
Distribution payout ratio = Total distribution amount (excluding excess cash distribution) / Profit × 100(3) Financial Position
Fiscalperiodmillion yen
39,87529,208million yen
21,22016,171

Unitholders’ equity to total
assets%53.2
55.4

Net cashprovided by (used in)operating activities
million yen
531
689

Net cashprovided by (used in)investing activities
million yen(10,273)(153)

Net cashprovided by (used in)financing activities
million yen
9,567
(557)

Total assets

4th
3rd

Net assets

Net assets
per unityen
90,166
91,777(4) Cash Flow Status
Fiscalperiod
4th
3rd

-1-

Cash andcash equivalents
at end of period
million yen
843
1,018

2. Management Status Forecasts for the 5th Fiscal Period and the 6th Fiscal Period
5th Fiscal Period: Fiscal period ending November 2018 (from June 1, 2018 to November 30, 2018)
6th Fiscal Period: Fiscal period ending May 2019 (from December 1, 2018 to May 31, 2019)

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
5th
1,448
0.4
711 (3.2)
571
0.0
570
0.0
2,423
6th
1,441 (0.5)
702 (1.2)
565 (1.1)
564 (1.1)
2,398(Reference) Estimated Profit per unit for the 5th Fiscal Period: 2,423 yen; 6th Fiscal Period: 2,397 yen

yen

yen

12
12

2,435
2,410

* 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:

4th

235,347 units

3rd

176,200 units

4th

0 units

3rd

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 2018 and May 2019” on page 8.

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1. Affiliated Juridical Persons of the Investment Corporation
Disclosure is omitted because there is no significant change from “Structure of the Investment Corporation” inthe most recent periodic securities report (yuka shoken hokokusho) (submitted on February 27, 2018).
2. Management Policy and Management Status
2.1. Management Policy
Disclosure is omitted because there are no significant changes from the “Investment Policy,” “Investment
Targets” and “Distribution Policy” in the most recent periodic securities report (yuka shoken hokokusho)(submitted on February 27, 2018).
2.2. 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 wascompleted 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 “growthstrategy taking maximum advantage of support from the Ooedo-Onsen Monogatari Group (Note 2)”, thesponsor, 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) (total acquisition
price (Note 4): 26,844 million yen) on September 1, 2016.
In the fiscal period under review, the Investment Corporation issued new investment units via public offering(56,330 units) and additionally 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 asof the end 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 endof the fiscal period under review stands at 235,347 units).
(Note 1) “Ooedo onsen model” is business expertise introduced in facilities operated by the Ooedo-Onsen Monogatari Groupcapable of maintaining high profitability and stable occupancy, which are possessed by the Ooedo-Onsen MonogatariGroup and believed to be highly competitive.
(Note2 ) “Ooedo-Onsen Monogatari Group” is comprised of the Investment Corporation’s sponsors, Ooedo-Onsen MonogatariGroup Co., Ltd. (the “Sponsor Group Parent Company”) and Ooedo-Onsen Monogatari Co., Ltd. (“Ooedo-Onsen
Monogatari” and may be referred to as “Sponsors” collectively with the Sponsor Group Parent Company); and its
consolidated subsidiaries (meaning subsidiaries provided for in Article 8, Paragraph 3 of the Regulation 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 to facilities
as a whole, including not only buildings with onsen or hot baths, but also the buildings and sites that are adjacent tosuch 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 thenearest million yen.

b. Investment Environment and Management Performance
The Japanese economy during the fiscal period under review showed negative growth in the annualized
quarterly real GDP growth rate (the second preliminary estimates) for the first time in nine quarters, changing
from a 1.0% increase for October to December 2017 to a 0.6% decrease for January to March 2018, andhousehold consumption for January to March 2018 also decreased due to the rise in the price of fresh foods
and the impact of a cold wave and heavy snow. While a pickup in personal consumption has been seen in April
2018 onward due to recovery of weather and improvement in the price of fresh foods, close attention on it
together with the trend of the future labor environment is still necessary.
Under such environment, the occupancy rate (Note 1) of the 14 onsen and spa-related facilities theInvestment Corporation owns as of the end of fiscal period under review (total acquisition price: 36,705 million-3-yen) was 100.0% as of the end of the fiscal period under review under a master lease agreement. In addition,
the guestroom occupancy rate (Note 2) for the 14 onsen and spa-related facilities owned decreased slightly
from the previous fiscal period but remained high at 85.3% on average for the fiscal period under review. ADR(Note 3) for the 14 properties owned exceeded the actual results of the same period of the previous year,
resulting in cumulative totals of RevPAR (Note 4) mostly maintaining the actual results of the same period of
the previous year and generating stable operation results. The Investment Corporation believes that, in addition
to the operational capability of Ooedo-Onsen Monogatari Group, the tenant, the fact that demand for onsen is
secured in a relatively stable manner while short-term consumption trends are changing, as estimated from thepast data showing a continuous increase in the total number of annual guests of accommodation facilities
throughout a fiscal year amid a continuing mild decline in the number of accommodation facilities from fiscal
2013 to fiscal 2015 in the Onsen Use Survey by the Nature Conservation Bureau of the Ministry of theEnvironment, are against the backdrop of the above trends.
The total appraisal value as of the end of the fiscal period under review decreased by 30 million yen fromthat for the 9 facilities acquired and owned as of the end of the previous period (November 30, 2017). However,as to unrealized gain/loss (Note 5) of the entire portfolio as of the end of the fiscal period under review,
unrealized gain of 3,112 million yen was recorded as a result of decline of book value for the 9 properties due
to depreciation and the addition of unrealized gain for the 5 properties acquired in the fiscal period underreview.
In addition, the Investment Corporation drew up plans for repairs and capital expenditures that take into
account the status, features, etc. of the owned properties and implemented necessary repairs and capital
expenditures, under trust-based collaboration with the Ooedo-Onsen Monogatari Group (Note 6), the operatorcum-tenant. (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 sale during
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 totalrooms 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 – Total balance
sheet amount (including equipment attached to buildings, structures, machinery and equipment, tools, furniture andfixtures as well as leasehold right)(Note 6) The Investment Corporation has leased properties it owns as of September 1, 2016 pursuant to the lease agreement
concluded with Ooedo-Onsen Monogatari Co., Ltd. on July 29, 2016. However, the Sponsor Group Parent Company
has succeeded the contractual status following the absorption-type split between Ooedo-Onsen Monogatari Co., Ltd.
and the Sponsor Group Parent Company effective as of November 1, 2017. Furthermore, the Investment Corporationand the Asset Manager concluded a sponsor support agreement with the Sponsors on November 1, 2017. The former
sponsor support agreement (as amended, the “former sponsor support agreement”) concluded on July 29, 2017
between Ooedo-Onsen Monogatari Co., Ltd., the Investment Corporation and the Asset Manager was invalidated
upon conclusion of the sponsor support agreement from that time on. In the sponsor support agreement, Ooedo-Onsen
Monogatari Co., Ltd. and the Sponsor Group Parent Company undertake the same obligations as those of sponsors
specified in the former sponsor support agreement as sponsors, and thus there is no substantive changes to the termsof the former sponsor support agreement due to the renewal of the agreement.

c. Overview of Capital Procurement
In the fiscal period under review, the Investment Corporation procured 4,667 million yen from the issuanceof new investment units via primary offering on December 1, 2017 and 5,650 million yen from the borrowing
on December 4, 2017 and allocated both amounts to part of funds for the acquisition of 5 new properties
including “Ooedo Onsen Monogatari Nagasaki Hotel Seifu” and related expenses. Furthermore, 233 million
yen was procured from the issuance of new investment units via third-party allotment on December 26, 2017and allocated to part of funds for early repayment of 230 million yen of existing borrowings as of January 31,
2018.
In addition, 450 million yen was procured from new borrowings as of May 31, 2018 and allocated to part offunds for repayment of 500 million yen of existing borrowings.
The Investment Corporation conducted scheduled repayment of 93 million yen on both January 31 and April
30, 2018 using cash on hand. As a result, the total amount of interest-bearing debt stood at 16,807 million yen
and the ratio of interest-bearing liabilities to total assets (LTV) at 42.2% as of the end of the fiscal period underreview.

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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 1,442 million yen, operating profit of 734 million yen, ordinary profit of 571
million yen and profit of 570 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 2,423 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 30of 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 effect on
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 2,435 yen (of which, excess
distribution per unit was 12 yen).
(2) Outlook for the Next Fiscal Perioda. Management Environment in the Next Fiscal Period
As to the Japanese economy in the next fiscal period onward, a pickup in personal investment is expected
due to continuously strong inbound demand, but attention should be paid to both the trend of import prices aswell as the future of the monetary easing policy of the Bank of Japan. With the increase in trade friction
between both the U.S. and China as well as the U.S. and Europe attributable to the protectionist trade policyof the U.S., an eye should be kept on the world economy.
In the hotel sector, under the private lodging law enforced in June 2018, the number of companies entering
the private lodging business is on the rise, calling for attention to the impact on the existing lodging facility
industry. However, supply of guestrooms continues to increase with the rising demand for accommodationfrom the increased number of inbound tourists serving as the main factor.
Under such circumstances, demand for onsen, which is deeply rooted in Japanese culture, has not only beenstable over the long term but also been expected to expand backed by an increase in inbound tourists in linewith the progress in the tourism-oriented country policy promoted by the government as well as by thepresence of a large senior-age group arising from the aging of society, as well as their children’s generation
which tends to have multiple family members, and is believed to remain stable. For these reasons, businessresults of the facilities owned by the Investment Corporation are expected to remain stable in general.
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, the number of inquiries for potential deal
information to the Ooedo-Onsen Monogatari Group is expected to increase continuously as more ryokans
decide to cease operation and the desire to sell hotels is increasing for various reasons such as a lack ofsuccessors and declining competitiveness due to aging properties.
In the period of 1 year from April 2017 to May 2018, the Ooedo-Onsen Monogatari Group acquired “OoedoOnsen Monogatari Gero Shinkan” (Gero City, Gifu Prefecture) in April 2017, “Ooedo-Onsen Monogatari
Nanki Kushimoto (Note 1)” (Higashimurogun, Wakayama Prefecture) in June 2017 and “Ooedo-Onsen
Monogatari Hotel Kisoji” (Kisogun, Nagano Prefecture) in April 2018. The Investment Corporation believes
active acquisition will continue to take place in the future. (Note 2).
Furthermore, in accordance with the sponsor support agreement (Note 3) concluded with the Ooedo-Onsen
Monogatari Group on November 1, 2017, the Investment Corporation is granted with preferential negotiatingrights for acquisition of onsen and spa-related facilities owned or developed by the Ooedo-Onsen MonogatariGroup and will also be preferentially provided with third-party property sales information acquired by the
Ooedo-Onsen Monogatari Group. The Investment Corporation intends to continuously acquire mainly onsen
and spa-related facilities with the Ooedo business model owned and operated by the Ooedo-Onsen MonogatariGroup by utilizing the abovementioned support.
(Note 1) The Ooedo-Onsen Monogatari Group acquired shares of Kushimoto Onsen Hotel Co., Ltd., which owns the facility.
(Note 2) It is not guaranteed the Investment Corporation will be able to acquire these properties in the future.

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(Note 3) The sponsor support agreement concluded as of July 29, 2016 was concluded again on November 1, 2017 in line withthe reorganization of companies in Ooedo-Onsen Monogatari Group, the sponsor (please refer to “Notice Concerning
Changes in Parent Company and Specified Associated Corporation at the Asset Manager” announced by theInvestment Corporation as of October 2, 2017).

ii. Synchronization with Revitalization Process of the Ooedo-Onsen Monogatari GroupThe Ooedo-Onsen Monogatari Group has expanded revitalization businesses since 2007 in which the OoedoOnsen Monogatari Group acquires onsen and spa-related facilities in various locations across the nation andthen introduces the Ooedo onsen model. The Investment Corporation intends to expand asset size bycontinuously acquiring properties that have achieved high profitability and stable operations through therevitalization process (Note).
On the other hand, the Investment Corporation believes that the Ooedo-Onsen Monogatari Group will beable to acquire new properties subject to revitalization by utilizing sales proceeds gained through sales ofproperties that have achieved high profitability and stable operations to the Investment Corporation, and thus
be able to expand its business platform as an operator of onsen and spa-related facilities.
In order to realize such a win-win relationship between the Investment Corporation and the Ooedo-Onsen
Monogatari Group, the Investment Corporation is provided with information on properties subject torevitalization as early as when the Ooedo-Onsen Monogatari Group starts discussions, and exchanges views
with the Investment Corporation’s own investment criteria while taking into account conflict of interest. At
the same time, the Ooedo-Onsen Monogatari Group also works to select properties with an eye to selling themto the Investment Corporation. Furthermore, in renewal plans and such to take place after acquisition ofproperties subject to revitalization, the Ooedo-Onsen Monogatari Group also implements, reflecting opinionsof the Investment Corporation, various measures to enable long-term operations such as seismic retrofitting
and securement of legal compliance, assuming sales to the Investment Corporation.
(Note)

Revitalization processes are roughly divided into three phases; a phase to discuss acquisition of properties subject torevitalization, a renewal phase after acquisition of properties subject to revitalization and a phase to aim for stable
operation after opening renewed facilities.

iii. Utilization of Network Unique to the Asset Manager and Acquisition of Properties Other than
Properties Contributed by Sponsor
With regard to facilities for utilizing leisure time (“leisure facilities” (Note 1) hereafter) which provide
affluent leisure to consumers, the Investment Corporation will also invest in facilities operated by parties otherthan the Ooedo-Onsen Monogatari Group and owned or operated by various third parties, and, in considering
the diversification and balance of its portfolio, proactively conduct acquisition of said facilities by utilizing a
network unique to the Asset Manager while maintaining facilities owned or developed by the Ooedo-Onsen
Monogatari Group as its prime investment targets. Selective investment will be conducted by obtaining
information on urban locations in major cities, locations with a large market scale and many potential users,and commercial real estate undergoing operation in which stable operation and future prospects are expected
to be approachable from the perspective of “intangible goods consumption (experience-based consumption)”(Note 2), which has gained attention in recent years, including “onsen/spa.” Furthermore, such information on
investment targets is brought to the Asset Manager in large quantities and the number of projects underconsideration is increasing partially due to approaching potential sellers by means of the company’s unique
network.
The investment target of the Investment Corporation stipulated in the articles of incorporation are ryokans,
hotels, bathing facilities, resort facilities, amusement parks and other leisure facilities as well as mixed-use
facilities of these, all of which can be called leisure facilities. The Investment Corporation believes that it can
expand the scale of portfolio and diversify risks by conducting acquisition activities in a wide range of area
while focusing on investments in onsen and spa-related facilities a facility including onsen and spa, as one of
the main use of the facility.
(Note 1) Leisure facilities refer to facilities that provide leisure activities and fulfilling time which people nowadays require
such as “enjoyment,” “communication,” “comfort and relaxation” and “health and intellectual satisfaction” toconsumers.
(Note 2) “Intangible goods consumption” or “experience-based consumption” refers to consumption activities for providing a“series of experience” which is a combination of individual events.

(b) Internal Growth Strategy
i. Rent Structure Emphasizing Stability
The Investment Corporation adopts a rent system which is comprised of primary rent (fixed rent combinedwith GOP-linked variable rent) with an addition of secondary rent (amount equivalent to real estate real estate
related costs of respective facility) in the long-term lease agreements concluded with the Ooedo-Onsen
Monogatari Group companies which are the tenants of the owned assets (Note). This along with having tenants
bear repair expenses in principle allow the Investment Corporation to secure stability of cash flow over the-6-

long term while pursuing benefits from the upside of a GOP-linked rent income when facilities are generating
favorable operating results.
(Note)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.

ii. Strategic CAPEX (Note 1) Contributing to the Increase in Income and Enhancement ofCompetitiveness through the Expansion of Capacity
The Investment Corporation proactively implements strategic CAPEX such as increasing the number ofguestrooms through extension and reconstruction for existing properties with value-increasing potential (Note2) and aims to increase rent income by increasing potential earnings that the operator of owned assets aresupposed to receive as well as through the effective use of non-operating buildings and unused land within thefacility.
In addition, the Investment Corporation will also proactively implement value enhancement work such as
the expansion of open-air baths contributing to the enhancement of competitiveness, renovation of buffet halls
and improvement of customer flow lines as well as cooperation in various events for attracting customers, bycollaborating with the Ooedo-Onsen Monogatari Group which possesses know-how on adding value to onsen
and spa-related facilities.
(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 implements flexible financial strategies while emphasizing establishment of aconservative financial base. Although the Investment Corporation has set the upper limit of LTV at 60% inprinciple, it plans to maintain a conservative level of around 40% amid normal operation for the time being.
As to debt financing, the Investment Corporation aims to maintain and enhance the favorable relationship withexisting lenders as well as diversify financing sources to secure necessary funds associated with the expansionof asset scale. The Investment Corporation also aims to expand the scale of portfolio and diversify risks aswell as reduce financing costs by strengthening credibility. In addition, the Investment Corporation works todiversify/level repayment dates of interest-bearing debt to reduce refinancing risks.
(3) Significant Subsequent Events
Not applicable-7-

Assumptions Underlying Forecasts of the Financial Results
for the Fiscal Periods Ending November 2018 and May 2019
Item

Assumption

Calculation
period・ Fiscal period ending November 2018
(5th fiscal period: from June 1, 2018, to November 30, 2018) (183 days)
・ Fiscal period ending May 2019
(6th fiscal period: from December 1, 2018, to May 31, 2019) (182 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,
through to the end of the fiscal period ending May 2019.
・ The managed assets may actually 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 leaseagreements effective as of the date of this document, taking into consideration market
trends and other factors. It is assumed that no rent payments will be behind or declined bytenants.
・ Rent is calculated based on the following assumptions:Managed Assets

Operatingrevenue[Ooedo-Onsen Monogatari Reoma Resort]
Fixed rent: 62,456,896 yen monthly
Variable rent: 5,181,730 yen monthly; and will be calculated using the following
calculation method after June 2019(1) Modified GOP (Note 1) for the most recent one-year period × 5.0% (yearly; themonthly amount is 1/12th thereof)(2) Only if 64.0% 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
a separate monthly land rent of 89,100 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.

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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: 9,788,199 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: 22,478,074 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 47.5% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Kinosaki]
Fixed rent: 12,447,999 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 2018 (5th 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)375
31
(Note 6)

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

Secondary
rent(Note 5)

Total
(Note 7)

34

441

108

7

3

119

73

8

9

91

93

7

4

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
Kinugawa Kanko Hotel
Ooedo-Onsen Monogatari
KinosakiOoedo-Onsen Monogatari
Higashiyama Grand Hotel
Total (Note 7)

65

3

9

78

35

4

6

46

36

4

4

45

24

2

5

32

58

2

6

68

42

4

5

51

134

7

8

150

74

3

6

84

51

5

10

68

1,230

101

116

1,448

Fiscal Period Ending May 2019 (6th fiscal period)(Millions of yen)Primary rent (Note 2)

Secondary
rent(Note 5)

Total
(Note 7)

31

33

439

108

7

3

119

73

8

8

91

93

7

3

105

54

6

1

62

65

4

8

78

35

4

6

46

36

4

4

45

24

3

5

32

58

3

4

66

42

5

2

50

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

134

8

5

148

74

4

6

85

51

5

10

67

Total (Note 7)

1,230

105

104

1,440

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

Fixed
rent
(Note 3)375
(Note 6)

Variablerent(Note 4)

Ito Hotel New Okabe
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- 11 -

(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 (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 Note 5)) 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 for Ooedo-Onsen Monogatari Nagasaki Hotel Seifu, Ooedo-Onsen Monogatari
Kounkaku, Kinugawa Kanko Hotel, Ooedo-Onsen Monogatari Kinosaki and Ooedo-Onsen
Monogatari Higashiyama Grand Hotel in the 5th fiscal period is the fixed amount provided ineach facility’s lease agreement. Variable rent in the 6th fiscal period onwards is the amountobtained by multiplying each facility’s modified GOP for the most recent 1-year 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, thismeans the 1-year period from September of the previous year to August of that year) (these 1year periods are referred to as “modified GOP Calculation Periods”) regarding each facility by
the specific rate provided for in each lease agreement (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 June2019 onward. The same applies hereinafter. For Ooedo-Onsen Monogatari Reoma Resort, it willbe 31 million yen until May 2019 and the amount obtained by the above calculation method forJune 2019 onward.
(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

・ 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.
・ As to taxes and public charges, 91 million yen is recorded as expenses for each fiscal
period of the fiscal periods ending November 2018 and May 2019.
・ Building repair expenses are not expected to arise, as these expenses will, in principle, beborne by the tenant based on the lease agreement effective as of the date of this document.
・ Depreciation, which is calculated using the straight-line method inclusive of incidental
expenses and additional capital expenditure in the future, is assumed to be 422 million
yen for the fiscal period ending November 2018, and 428 million yen for the fiscal period
ending May 2019.
・ The total amount of interest expenses and other borrowing-related expenses is expected
to be 139 million yen for the fiscal period ending November 2018, and 136 million yen
for the fiscal period ending May 2019.
・ The balance of loans outstanding as of May 31, 2018 is 16,807 million yen.
・ In the fiscal period ending November 2018, it is assumed that scheduled repayment of 236
million yen will be conducted separately.
・ It is assumed that 580 million yen will be repaid using the expected refund of consumption
tax for property acquisition on November 30, 2018 as refund of consumption tax is
expected to be conducted in the fiscal period ending November 2018.
・ In the fiscal period ending May 2019, it is assumed that scheduled repayment of 186
million yen will be conducted separately.
・ In the fiscal period ending May 2019, the current portion of long-term loans (400 million
yen and 6,676 million yen) will be due for repayment on May 31, 2019 but refinancing of
the same amount is assumed.

- 12 -

Outstanding
Investment Units

Distribution perunit(Excludingexcess cash
distribution)
Excess cash
distribution per
unit

Other

・ 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, 2019.
・ 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 2018 and May
2019 (235,347 units).
・ Distribution per unit (excluding excess cash distribution) is calculated based on the policy
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.
・ Recording of allowance for temporary difference adjustments of 2,824,164 yen is
expected concerning the difference in accounts for tax and accounting purposes associatedwith 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 thepolicy, it is assumed that 12 yen of excess distribution per unit will be conducted in eachof the fiscal periods ending November 2018 and ending May 2019.
・ 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 27, 2018).

- 13 -

3. Financial Statements
3.1. Balance Sheets(Thousands of yen)
As of November 30, 2017

As of May 31, 2018

1,949,727
116,674
13
3,625
2,070,040

2,169,076
148,184
547,941
16
4,777
2,869,997

18,263,856(662,458)
17,601,397
1,259
(51)
1,207
255
(17)
237
9,263,321
26,866,164

25,777,902(1,077,075)
24,700,827
1,259
(95)
1,163
600
(8)
591
1,005
(49)
956
11,988,130
36,691,669

157,802
6,161
163,963

157,802
5,359
163,161

98,491
10,000108,491
27,138,619
29,208,659

141,063
10,089151,153
37,005,984
39,875,981

AssetsCurrent assets
Cash and deposits
Prepaid expenses
Consumption taxes receivable
Deferred tax assets
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 right
SoftwareTotal intangible assets
Investments and other assets
Long-term prepaid expenses
Lease and guarantee deposits
Total investments and other assets
Total non-current assets
Total assets- 14 -

(Thousands of yen)
As of November 30, 2017

As of May 31, 2018

63,196
723,000
197,098
7,508
870
20,086
185,105
3,731
1,200,597

55,254580,000
7,499,250
145,330
12,056954
261,678
4,882
8,559,406

10,901,250
868,270
67,397
11,836,917
13,037,515

8,728,500
1,230,724
136,955
10,096,180
18,655,586

15,752,576

20,653,023(1,762)(1,762)
15,750,814(2,995)(2,995)20,650,027

420,330

570,366

420,330
16,171,144
16,171,144
29,208,659

570,366
21,220,394
21,220,394
39,875,981

Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Tenant leasehold and security deposits
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' capital
Unitholders' capital, net
Surplus
Unappropriated retained earnings(undisposed loss)
Total surplus
Total unitholders' equity
Total net assets
Total liabilities and net assets- 15 -

3.2. Statements of Income(Thousands of yen)

Operating revenue
Lease business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors' compensations
Other operating expenses
Total operating expenses
Operating profit
Non-operating income
Interest income
Total non-operating income
Non-operating expenses
Interest expenses
Investment unit issuance expenses
Borrowing related expenses
Other
Total non-operating expenses
Ordinary profit
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
November 30, 2017

Fiscal period ended
May 31, 2018

1,032,755
1,032,755

1,442,676
1,442,676

355,550
110,490
1,315
12,3973,600
30,309513,663
519,092

522,992
125,606
1,715
14,9333,600
39,522
708,370
734,305

10
10

9
9

45,04453,011
98,056
421,047
421,047872
2
874
420,172157
420,330

64,81822,45673,3142,500
163,090571,225571,225955(3)
951
570,27393
570,366

3.3. Statements of Unitholders’ Equity
3rd Fiscal Period (from June 1, 2017 to November 30, 2017)(Thousands of yen)
Unitholders' equity
Unitholders' capital

Surplus

Deduction fromunitholders' capital

UnappropriatedTotal
retained
unitholders'
Unitholders'
Total
AllowanceTotal
equityearnings
capitalsurplusfor
deduction(undisposed
temporary
from
loss)
difference unitholders'adjustments
capitalUnitholders'
capitalBalance at beginning ofcurrent period
Changes of items during
period15,752,576(528)(528) 15,752,047

Dividends of surplus
Excess cash distribution
from allowance fortemporary difference
adjustments(1,233)(1,233)445,238(445,081) (445,081) (445,081)(445,081)(1,233)(1,233)

420,172

420,172

420,172(24,908) (24,908)(26,142)(26,142)

420,172

Total changes of items
during period
Balance at end ofcurrent period

15,752,576(1,233)(1,762)(1,233)445,238 16,197,286 16,197,286(1,233)

Profit(1,233)(1,762) 15,750,814

Total net
assets420,330

420,330 16,171,144 16,171,144

4th Fiscal Period (from December 1, 2017 to May 31, 2018)(Thousands of yen)
Unitholders' equity
Unitholders' capital

Surplus

Deduction fromunitholders' capital

Unitholders'
capitalBalance at beginning ofcurrent period
Changes of items during
periodIssuance of new
investment units

15,752,576

UnappropriatedTotal
retained
unitholders'
Unitholders'
Total
AllowanceTotal
equityearnings
capitalsurplusfor
deduction(undisposed
temporary
from
loss)
difference unitholders'adjustments
capital(1,762)(1,762) 15,750,814

4,900,447

420,330 16,171,144 16,171,144

4,900,447

4,900,447 4,900,447(420,237) (420,237)

Dividends of surplus
Excess cash distribution
from allowance fortemporary difference
adjustments(1,233)(1,233)(1,233)

ProfitTotal changes of items
during period
Balance at end ofcurrent period

420,330

4,900,447
20,653,023(1,233)(2,995)

Total net
assets(420,237) (420,237)(1,233)(1,233)570,273

570,273

570,273

570,273

4,899,213

150,036

150,036(2,995) 20,650,027

570,366

570,366 21,220,394 21,220,394(1,233)- 17 -

5,049,250 5,049,250

3.4. Statements of Cash Distributions

Item

(Yen)
4th Fiscal Period(from December 1, 2017
to May 31, 2018)

3rd Fiscal Period(from June 1, 2017
to November 30, 2017)

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

420,330,089
1,233,400

570,366,299
2,824,164

1,233,400

2,824,164

421,470,400[2,392]573,069,945[2,435]420,237,000

570,245,781[2,385][2,423]

1,233,400

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

[7]

[12]

Method of calculating distribution amount

93,089120,518

As described above, distribution per unit
for the fiscal period under review is 2,392
yen.
Concerning cash distribution (excludingexcess cash distribution), in order to ensurethat the maximum amount of cash
distribution of earnings would be included indeductible expenses based on application of
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 the entire amount of theearnings provided in Article 136, Paragraph
1 of the Act on Investment Trusts andInvestment Corporations, excluding the
portion where cash distribution perinvestment unit would be less than JPY1. As
a result, the Investment Corporation declareda cash distribution per investment unit
(excluding excess cash distribution) of 2,385
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 1,233,400 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 the Investment
Corporations Accountings Ordinance). This
resulted in distribution of allowance fortemporary difference adjustments of 7 yen
per investment unit.

As described above, distribution per unit
for the fiscal period under review is 2,435
yen.
Concerning cash distribution (excludingexcess cash distribution), in order to ensurethat the maximum amount of cash
distribution of earnings would be included indeductible expenses based on application of
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 the entire amount of theearnings provided in Article 136, Paragraph
1 of the Act on Investment Trusts andInvestment Corporations, excluding the
portion where cash distribution perinvestment unit would be less than JPY1. As
a result, the Investment Corporation declareda cash distribution per investment unit
(excluding excess cash distribution) of 2,423
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 the Investment
Corporations Accountings Ordinance). This
resulted in distribution of allowance fortemporary difference adjustments of 12 yen
per investment unit.

- 18 -

3.5. Statements of Cash Flows(Thousands of yen)
Fiscal period ended
November 30, 2017
Cash flows from operating activities
Profit before income taxes
Depreciation
Investment unit issuance expenses
Borrowing related expenses
Interest income
Interest expenses
Increase (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 income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from tenant leasehold and security deposits
Payments for restricted bank deposits
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase in short-term loans payable
Proceeds from long-term loans payable
Decrease in short-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment units
Dividends 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
May 31, 2018

421,047
268,383
53,011(10)
45,044
1,946(40,986)(14,137)
986
1,055
148
736,48910(45,748)(917)
689,833

571,225
415,504
22,45673,314(9)64,818(1,103)(547,941)(20,086)
512(74,910)
11,53776,573307
592,1979(60,271)(872)
531,064(153,024)(153,024)(10,241,190)
362,454(394,454)(10,273,190)(111,500)(446,314)(557,814)(21,005)
1,039,962
1,018,957

810,000
5,217,000(230,000)(686,500)
4,877,990(421,470)
9,567,020(175,105)
1,018,957
843,851