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 8th Fiscal Period
July 21, 2020
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/en/

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 25, 2020
August 14, 2020

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 8th Fiscal Period
7th Fiscal Period: Fiscal period ended November 2019 (from June 1, 2019 to November 30, 2019)
8th Fiscal Period: Fiscal period ended May 2020 (from December 1, 2019 to May 31, 2020)(1) Management Status
Fiscalperiod7th
8th

Operatingrevenuemillion yen
1,440
1,433

FiscalperiodProfitper unit

%
0.4
(0.5)

Operatingprofitmillion yen
696
678

Ratio of profit tounitholders’ equity
yen
2,403
2,316

7th
8th

[% figures show the period-on-period increase (decrease)]
Ordinary
Profitprofit% million yen% million yen
%
(0.3)
566
1.1
565
1.1
(2.6)
546
(3.6)
545
(3.6)

%
2.7
2.6

Ratio of ordinary profit tototal assets
%
1.5
1.4

Ratio of ordinary profit tooperating revenue
%
39.3
38.1

(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
%
%
7th
2,403
565
12
2
2,415
568
100.0
2.7
8th
2,316
545
12
2
2,328
547
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
Fiscalperiodmillion yen
38,64038,327

million yen
21,207
21,183Unitholders’ equity to total
assets
%54.9
55.3

Net cashprovided by (used in)operating activities
million yen
1,131
960

Net cashprovided by (used in)investing activities
million yen
(144)
(170)

Net cashprovided by (used in)financing activities
million yen
(758)
(807)

Total assets

7th
8th

Net assets

Net assets
per unityen
90,11090,011(4) Cash Flow Status
Fiscalperiod
7th
8th

-1-

Cash andcash equivalents
at end of period
million yen
903885

2. Management Status Forecasts for the 9th Fiscal Period and the 10th Fiscal Period
9th Fiscal Period: Fiscal period ending November 2020 (from June 1, 2020 to November 30, 2020)
10th Fiscal Period: Fiscal period ending May 2021 (from December 1, 2020 to May 31, 2021)

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
9th
1,335 (6.9)
578 (14.8)
448 (17.9)
447 (17.9)
1,903
10th
1,343
0.6
581
0.5
454
1.3
453
1.3
1,926
(Reference) Estimated Profit per unit for the 9th Fiscal Period: 1,902 yen; 10th Fiscal Period: 1,926 yen

yen

yen

12
12

1,915
1,938

* 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:

8th

235,347 units

7th

235,347 units

8th

0 units

7th

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 20 and May 2021” 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 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 of Tokyo
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 (Note4): 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) 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 as of 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 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 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, 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 the Regulationon 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 PerformanceWith regard to the Japanese economy during the fiscal period under review, the gross domestic product(GDP) in the January to March quarter of 2020 was down 2.2% on a real (seasonally adjusted) annualized basis(the secondary preliminary estimates) excluding the effects of price fluctuations, and down 0.6% from theprevious quarter (October to December of last year), to record negative growth in two consecutive quarters.
The amount of decline was reduced from the previous quarter in which economic growth had fallen due to a
consumption tax hike. The outbreak of novel coronavirus infectious disease (COVID-19), however, lead torestrictions on economic activities, supply shortages due to the suspension of factory operations in China, andother setbacks, which resulted in a decrease in demand in wide-ranging sectors such as consumer spending andexports. Consequently, a decrease in the reactionary fall from the consumption tax hike failed to turn theeconomy into positive growth.
The declaration of a state of emergency issued in early April 2020 was subsequently extended to cover all
prefectures, then gradually lifted in mid-May, after Golden Week, and completely lifted by late May. However,a sharp fall in consumption in April and May due to restrictions on outings and business interruptions, theimpact of the COVID-19 pandemic on supply chains, and other adverse effects are expected to result in thecontinued aggravation of domestic economic conditions in the April to June quarter which will be announced.
In this environment, the total occupancy rate (Note 1) of the 14 onsen and spa-related facilities theInvestment Corporation owned as of the end of the fiscal period under review (total acquisition price: 36,705
million yen) remained relatively stable until the end of February 2020 thanks to the high operation capacity of-3-the tenant, the Ooedo-Onsen Monogatari Group. However, the occupancy rate for the fiscal period under review
decreased to 55.9%, a significant fall from the results in the same period of the previous year due to the spreadof COVID-19 since March 2020. This was because of a decline in consumer sentiment after the declaration ofa state of emergency and some facilities that temporarily closed at the request of the government. As a result,
ADR (Note 2), RevPAR (Note 3) and sales of the 14 properties declined 10.0%, 42.0% and 41.5% from thesame period last year, respectively.
Meanwhile, leasing business revenue for the fiscal period under review remained stable, supported by fixed
rents that had a high composition ratio. Variable rents are calculated based on the annual results of the tenant,the Ooedo-Onsen Monogatari Group, until February of this year, which were not significantly affected by
COVID-19.
The appraisal value as of the end of the fiscal period under review totaled 40,249 million yen. Comparedwith the appraisal value as of the end of the previous period (the end of November 2019), the total appraisal
value of the 14 owned properties was reduced by 143 million yen in response to a decrease in the occupancyrate, an expected fall in cash flow for the time being due to business interruption, and other effects of COVID19 despite a stable cap rate. With regard to the unrealized gain/loss (Note 4) of the entire portfolio at the end of
the fiscal period under review, the unrealized gain increased to 4,393 million yen, due to a decrease in the bookvalue, reflecting the depreciation of the 14 properties.
Moreover, the Investment Corporation did not acquire any new facilities during the fiscal period underreview. However, it developed plans for capital expenditure that took into account the status and features of theowned properties to manage the implementation of necessary repairs by tenants and implement the necessary
capital expenditure for maintaining functions. (Repair expenses are basically borne by the tenants based on thelease agreements.)
In addition, the Investment Corporation conducts activities for obtaining deal information to acquire newproperties in the future on the premise of acquiring them widely from the market, in addition to properties
managed by the Ooedo-Onsen Monogatari Group.
(Note 1) Occupancy rate refers to the ratio of leased area to leasable area.
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 2) Average daily rate (ADR) is calculated for a given time period by dividing total room revenue by the number of totalrooms sold(Note 3) 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 4) 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, the Investment Corporation procured 3,566 million yen through long-termborrowing from a syndicate with Sumitomo Mitsui Banking Corporation (SMBC) as the arranger, and 290
million yen through a long-term borrowing from SMBC, in order to allocate the funds to repayment of a partof 3,850 million yen, a long-term borrowing, and 350 million yen (Note), a short-term borrowing, whichmatured on May 29, 2020. In addition, the Investment Corporation made scheduled repayments of 93 million
yen on both January 31 and April 30, 2020, using cash on hand. As a result, the total amount of interest-bearing
debt stood at 15,319 million yen and the ratio of interest-bearing liabilities to total assets (LTV) at 40.0% as ofthe end of the fiscal period under review.
(Note) Refer to the press release, “Notice Concerning Borrowing of Funds,” dated May 26, 2020, for details.

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 1,433 million yen, operating profit of 678 million yen, ordinary profit of 546
million yen and profit of 545 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 2,316 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 makes a distribution for the
2,824,164 yen in allowance for temporary difference adjustments (as defined in Article 2, Paragraph 2, item 30-4-

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 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 results in excess distribution per unit of 12 yen.
As a result, distribution per unit for the fiscal period under review was determined as 2,328 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, significant negative growth isexpected in response to the impact of COVID-19. For service consumption that involves the risk of infection,
optimistic views of full-fledged recovery or additional consumption as a rebound cannot be expected until aneffective vaccine is developed or a potent virus medication is put to practical use. The process of ebb and flow
is expected to continue for some time as people seek new lifestyles.
In this environment, the trends of the “intangible goods consumption” (Note 2), or more precisely, what iscalled “experience-based consumption” (Note 3), on which the Investment Corporation’s investment target ofleisure facilities (Note 1) are based, must be carefully assessed. The trends are considerably affected bycompanies’ responses to the need for hygiene, safety, and other measures, and efforts of individual industries,
business types, and business operators must be monitored, including the effects of policy assistance such as the"special fixed benefit" and the Go To campaign.
Under these circumstances, the performance of tenants in the facilities owned by the Investment Corporation
is facing severe conditions in the short term due to business interruption, declining consumer confidence ofdomestic customers, and constraints on activities. In the ongoing situation, however, they have been taking
measures to prevent infection and are improving their operation to promote proper hygiene. Therefore, theInvestment Corporation believes that leisure facilities being its investment targets may be able to recover andregain customers faster than other types of tourism targeting foreign and long-distance visitors thanks topotential reactionary demand for their accessible services as an extension of daily life, which has accumulated
in the prolonged period of staying at home. The Investment Corporation also believes that if the practical useof effective vaccines and virus medications becomes more feasible, in addition to the introduction of preventive
measures against infectious diseases, its business performance will be expected to recover thanks to a rise in
consumer confidence for domestic customers.
(Note 1) “Leisure facilities” refers to facilities that provide consumers with leisure activities and fulfilling time which people
nowadays require, such as “enjoyment,” “communication,” “comfort and relaxation” and “health and intellectual
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
As a REIT focused on leisure facilities, the Investment Corporation will aim to build a portfolio focused on
facilities that are supported by consumers by providing them with productive leisure time, taking note ofexperience-based consumption demand that is expected to increase both in Japan and overseas, while working
to ensure stability as a feature, and placing onsen and spa-related facilities as key investment targets. In addition,
the Investment Corporation will place the highest priority on taking all possible measures to protect itself
against income and financial risks posed by COVID-19 for the time being and prepare to create flexible growthstrategies when the external environment improves.
(a) External Growth Strategy
i. Utilization of Sponsor Pipeline
Looking at the supply aspect of onsen and spa-related facilities, many ryokans and hotels are expected todecide to discontinue their business due to persistent issues, such as a lack of successors and declining
competitiveness caused by aging facilities. In addition, a large number of facilities are expected to be put onsale in response to the rapid aggravation of business performance as a result of COVID-19 and for the purposeof procuring funds for capital expenditure for business survival. Information on properties brought to theInvestment Corporation and the Ooedo-Onsen Monogatari Group is likely to continue increasing.
In the period from June 2019 to May 2020, the Ooedo-Onsen Monogatari Group acquired one facility:
Ooedo-Onsen Monogatari Amakusa Hotel Kameya (Kamiamakusa City, Kumamoto Prefecture) in August
2019. The Investment Corporation plans to open Saikaibashi Corazon Hotel (Sasebo City, Nagasaki Prefecture)-5-and Ooedo-Onsen Monogatari Shiomi-so (Murakami City, Niigata Prefecture) in July 2020 after the renewal,
and believes that the Group will continue its acquisitions (Note).
In accordance with the sponsor support agreement concluded with the Sponsors on November 1, 2017, theInvestment 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 to continuously acquire mainly onsen and spa-related facilities with the Ooedo businessmodel owned and operated by the Ooedo-Onsen Monogatari Group by making maximum use of theabovementioned support.
(Note) There is no guarantee that the Investment Corporation will be able to acquire these properties.

ii. Utilization of Network Unique to the Asset Manager and Acquisition of Properties Other than
Properties Contributed by Sponsor
The Investment Corporation believes that the supply of leisure facilities set forth in its Articles ofIncorporation (Note 1) remains insufficient to meet notably expanding and diversifying needs in the leisuremarket in recent years. In addition, new facility types to accommodate novel measures to prevent infectious
diseases and new lifestyles will be required due to the impact of the COVID-19 pandemic. The investment
Corporation predicts that this trend will increase in the medium to long run without structural changes in theuse of leisure, flow to time consumption, and global movement of people despite a temporary fall in consumer
confidence.
In this environment, an increasing amount of sales information on leisure facilities has been acquired using
the asset manager’s own network. The Investment Corporation will implement activities to acquire a variety ofleisure facilities in urban settings such as ordinance-designated cities and core cities, new development projects
and recently built properties, and facilities to meet demand for inbound tourism while assessing new trends andchanges in the lodging and leisure industries, in view of coexistence with COVID-19. In addition, theInvestment Corporation will continue to secure preferential negotiating rights by, for instance, using a bridge
structure (Note 2).
Through these measures, the Investment Corporation will aim to build a portfolio specializing in full-fledged
leisure facilities involving growth and risk diversification.
(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) There is no guarantee that the Investment Corporation will be able to acquire these properties.

(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 estate-related
costs of each facility) in the long-term lease agreements concluded with the Ooedo-Onsen Monogatari Group
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 pursuingbenefits from the upside of a GOP-linked rent income when facilities are generating favorable operating results.
It will continue to make every effort to secure rent income and ensure stability through monitoring of tenants’business performance.
(Note 1) “GOP” refers to gross operating profit, which is the amount remaining after deducting expenses arising directly frommanaging each facility, such as labor expenses and general and administrative expenses, from each facility’s sales.
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.

ii. Strategic CAPEX (Note 1) Contributing to the Increase in Income and Enhancement ofCompetitiveness through the Expansion of Capacity
The Investment Corporation will strategically implement CAPEX such as for the extension andreconstruction of owned properties with high occupancy and value-increasing potential (Note 2) in order toincrease the number of guestrooms. Through this measure, it aims to secure the potential income of the operatorof the owned properties, as well as to increase the rental income through the effective use of non-operatingbuildings and unused land on the premises in the medium to long term.
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, in various
measures to help enhance the competitiveness of facilities, as well as events and other measures to attract guests.
-6-

(Note 1) CAPEX (Capital Expenditure) does not refer to repair expenses for maintenance of real estate but refers to expenditure
for enhancing value and extending lifetime 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.
With regard to equity financing, the Investment Corporation will consider implementing it flexibly, taking
into account the enhancement of the value of investment units in the medium to long term and the dilution of
distribution per unit.
Although the Investment Corporation has set the upper limit of LTV at 60% in principle, it plans to control
LTV to maintain a conservative level of around 40% for the time being, while paying attention to capitalreserves.
As to debt financing, the Investment Corporation strives to realize stable financing associated with the
expansion of asset scale while maintaining its favorable relationship with existing lenders. The Investment
Corporation also aims to reduce financing costs by lowering the risk premium through the expansion of thescale of the portfolio and the diversification of risks in terms of tenants and locations. In addition, theInvestment Corporation seeks to acquire a high rating, diversify financing sources, prolong the average
repayment date of debt and introduce fixed interest rates.
(3) Significant Subsequent Events
Not applicable-7-

Assumptions Underlying Forecasts of the Financial Results
for the Fiscal Periods Ending November 2020 and May 2021
Item

Assumption

Calculation
period・ Fiscal period ending November 2020
(9th fiscal period: from June 1, 2020, to November 30, 2020) (183 days)
・ Fiscal period ending May 2021
(10th fiscal period: from December 1, 2020, to May 31, 2021) (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, throughto the end of the fiscal period ending May 2021.
・ 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 made in
the future, taking into consideration market trends and other factors. It assumes that there is nodelinquency or non-payment of rent by the tenant.
・ The periods constituting the basis for calculating variable rents are determined by multiplying
the modified GOP for the period between September 2019 and August 2020 in the fiscal period
ending November 2020 (9th period) and the modified GOP for the period between March 2020and February 2021 in the fiscal period ending May 2021 (10th period) by the premium ratethat is specified in each lease agreement. This assumes that the restrictions on activities since
March and the temporary shutdown of facilities between April and June as a result of COVID19 will cause a decrease in the modified GOP that becomes the basis of calculating variable
rents, resulting in no variable rents for all properties in both the fiscal period ending November
2020 (9th period) and the fiscal period ending in May 2021 (10th period).
Fixed rents are assumed to be paid in full based on the provisions of lease agreements thatare effective as of the date of this document.
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 lease agreement
has been executed with the tenant, and the Investment Corporation receives a separate
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-

[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 andcalculated 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 andcalculated 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 andcalculated 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 andcalculated 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 2020 (9th fiscal period)(Millions of yen)
Property name

Ooedo-Onsen Monogatari
Reoma Resort
Ooedo-Onsen MonogatariIse-shima
Ito Hotel New Okabe
Ooedo-Onsen Monogatari
Atami
Ooedo-Onsen Monogatari
Toi Marine Hotel

Primary rent
(Note 2)
Fixed
Variablerent
rent(Note 3)(Note 4)

Secondary
rent(Note 5)Other
revenue

Total(Note 8)315
(Note 6)

-

33

-

348

108

-

3

-

111

73

-

8

-

82

93

-

3

-

97

54

-

1

-

56

- 10 -

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 8)

65

-

8

-

74

35

-

5

-

41

36

-

4

-

40

24

-

5

-

29

74

-

4

-

79

42

-

2

-

45

174

-

5

-

179

78

-

6

-

85

51

-

10

0
(Note 7)

62

1,230

-

104

0

1,335

Fiscal Period Ending May 2021 (10th fiscal period)(Millions of yen)
Property name

Ooedo-Onsen Monogatari
Reoma Resort
Ooedo-Onsen MonogatariIse-shima
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
Kinugawa Kanko Hotel
Ooedo-Onsen Monogatari
KinosakiOoedo-Onsen Monogatari
Higashiyama Grand Hotel
Total (Note 8)

Primary rent
(Note 2)
Fixed
Variablerent
rent(Note 3)(Note 4)

Secondary
rent(Note 5)Other
revenue

Total(Note 8)315
(Note 6)

-

33

-

348

108

-

3

-

111

73

-

8

-

82

93

-

4

-

97

54

-

1

-

56

65

-

9

-

74

35

-

6

-

41

36

-

4

-

40

24

-

5

-

29

74

-

6

-

81

42

-

4

-

46

174

-

8

-

182

78

-

6

-

85

51

-

10

0
(Note 7)

62

1,230

-

112

0

1,343

- 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 and administrative 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 publiccharges, non-life insurance premiums and land and house rent, but excluding an amount equivalent toSecondary 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” refers to the amount obtained by multiplying each facility’s modified GOP for themost recent 1-year period (for the 6 months starting from December of each year, this means the 1year period from March of that year 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 thatyear) (these 1-year periods are referred to as “modified GOP Calculation Periods”) regarding eachfacility by the specific rate provided for in each lease agreement (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 borne by theInvestment 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) Land rent based on the fixed-term land lease agreement is presented.
(Note 8) 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

・ 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 are calculated
based on past actual figures and by reflecting factors that cause expenses to fluctuate.
・ Taxes and public charges is assumed to be 98 million yen for the fiscal period ending
November 2020, and 98 million yen for the fiscal period ending May 2021.
・ 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 444 million yen for
the fiscal period ending November 2020, and 449 million yen for the fiscal period ending May
2021.
・ The total amount of interest expenses and other borrowing-related expenses is expected to be
129 million yen for the fiscal period ending November 2020, and 126 million yen for the fiscal
period ending May 2021.
・ The balance of loans outstanding as of May 31, 2020 is 15,319 million yen.
・ In the fiscal period ending November 2020 and the fiscal period ending May 2021, it isassumed that the scheduled repayment of 186 million yen will be made separately.
・ In the fiscal period ending November 2020, 40 million yen is assumed to be repaid as part ofthe current portion of long-term loans (290 million yen) pursuant to a separate schedule. The
current portion of long-term loans (2,122 million yen) will be due for repayment on November
30, 2020, under the assumption that the same amount will be refinanced.
・ In the fiscal period ending May 2021, the current portions of long-term loans (250 million yen
and 3,491 million yen) will be due for repayment on May 31, 2021, under the assumption thatthe same amounts will be 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 not change
due to any additional issuance of new investment units or another reason before May 31, 2021.
・ 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 2020 and May 2021
(235,347 units).
・ Distribution per unit (excluding excess cash distribution) is calculated based on the policy forcash distributions provided for in the Investment Corporation’s articles of incorporation.
・ 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 of tenant, etc., the- 12 -

(Excludingexcess cash
distribution)
Excess cash
distribution
per unit

Otheroccurrence of unexpected capital expenditures, and other reasons.

・ Recording of allowance for temporary difference adjustments of 2,824,164 yen is expectedconcerning the difference in accounts for tax and accounting purposes associated withrecording of asset retirement obligation.
・ Regarding conducting excess cash distribution, the Investment Corporation will have a basic
policy of conducting excess cash distribution of which amount will be equivalent to theincreased 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 in each of the fiscal
periods ending November 2020 and ending May 2021.
・ It is assumed that revisions that affect the above forecast figures will not be made to laws orordinances, tax systems, accounting standards, listing regulations, or rules or the like set by
The Investment Trusts Association, Japan.
・ It is assumed that unforeseen material changes in general economic trends, in real estate market
conditions, or in any other factors will not occur.

- 13 -

2. Financial Statements
2.1. Balance Sheets(Thousands of yen)
As of November 30, 2019
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, 2020

2,228,615
126,984
6,942
2,362,543

2,210,622
138,1546,251
2,355,028

26,324,003(2,358,917)
23,965,085
10,979(877)
10,101
600
(61)
538
3,498
(758)
2,740
11,988,187
35,966,652

26,493,480(2,796,416)
23,697,064
10,979(1,247)
9,731
600
(79)
520
3,498
(1,050)2,448
11,988,187
35,697,951

157,802
2,951
160,754

157,802
2,149
159,951

16
140,673
10,089150,780
36,278,186
38,640,729

15
104,578
10,089114,684
35,972,587
38,327,616

(Thousands of yen)
As of November 30, 2019
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, 2020

92,949340,000
6,026,630
90,011
10,694
950
42,933261,849
7,048
6,873,067

50,5566,240,110
89,251
8,329
936
39,513
261,314
5,795
6,695,808

9,191,620

9,078,890

1,230,706

1,230,706

138,156
10,560,482
17,433,549

138,288
10,447,884
17,143,692

20,653,023

20,653,023(11,467)(14,292)(11,467)(14,292)

20,641,555

20,638,731

565,624545,192

565,624
21,207,179
21,207,179
38,640,729

545,192
21,183,923
21,183,923
38,327,616

2.2. Statements of Income(Thousands of yen)
Fiscal period ended
November 30, 2019
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
Reversal of distributions payable
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Other
Total non-operating expenses
Ordinary profit
Extraordinary losses
Loss on retirement of non-current 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, 2020

1,440,167
1,440,167

1,433,658
1,433,658

555,661
125,812
1,738
17,060566,328
125,121
1,731
17,161

3,600

3,600

39,393
743,266
696,901

41,276755,219
678,438

10
10

10
563
573

64,25765,642500
130,400
566,51163,464
69,268132,732
546,279

566,511952(4)
948
565,56261

233
233
546,045937
0
938
545,10785

565,624545,192

2.3. Statements of Unitholders’ Equity
7th Fiscal Period (from June 1, 2019 to November 30, 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

Total
Unappropriatedretained
unitholders'
Unitholders'
Total
AllowanceTotal
equityearnings
capitalsurplusfor
deduction(undisposed
temporary
from
loss)
difference unitholders'adjustments
capital(8,643)(8,643) 20,644,379

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

559,716 21,204,095 21,204,095(559,655) (559,655) (559,655)(559,655)(2,824)(2,824)(2,824)

ProfitTotal changes of items
during period
Balance at end ofcurrent period

559,716

Total net
assets565,562565,562565,562565,562

5,907

3,083

3,083

－

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

5,907

20,653,023(11,467)(11,467) 20,641,555

565,624565,624 21,207,179 21,207,179

8th Fiscal Period (from December 1, 2019 to May 31, 2020)(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(11,467)(11,467) 20,641,555

Dividends of surplus

565,624 21,207,179 21,207,179(565,538) (565,538)

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

565,624

Total net
assets(565,538)(565,538)(2,824)(2,824)545,107545,107545,107545,107(23,255)(23,255)－(2,824)(2,824)(2,824)(20,431)(20,431)

20,653,023(14,292)(14,292) 20,638,731

545,192

545,192 21,183,923 21,183,923- 17 -

2.4. Statements of Cash Distributions

Item

(Yen)
8th Fiscal Period(from December 1, 2019
to May 31, 2020)

7th Fiscal Period(from June 1, 2019
to November 30, 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

565,624,140
2,824,164
2,824,164

545,192,520
2,824,164
2,824,164

568,363,005[2,415]565,538,841

547,887,816[2,328]545,063,652[2,403]2,824,164[2,316]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 amount85,299128,868

As described above, distribution per unit
for the fiscal period under review is 2,415
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 2,403
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.

As described above, distribution per unit
for the fiscal period under review is 2,328
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 2,316
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 -

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
Loss on retirement of non-current assets
Increase (decrease) in operating accounts payable
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
Refund of leasehold and guarantee deposits received
Net cash provided by (used in) investing activities
Cash flows from financing activities
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, 2019

Fiscal period ended
May 31, 2020

566,511434,21165,642(10)
64,257
41,203
27,698(12,896)
1,125
2,173
2,711
379
1,193,008
10(61,071)(867)
1,131,078

546,045
439,01269,268(10)
63,464233(41,203)(3,419)(45,468)
36,785
(759)
(534)
(429)
1,062,985
10(65,829)(952)
996,214(144,673)(18)(144,691)(170,933)(170,933)(10,000)(186,500)(562,479)(758,979)
227,407675,983
903,390

3,820,340(340,000)(3,755,250)(568,363)(843,273)(17,992)
903,390885,397