August 5, 2019
For Translation Purpose Only
To All Concerned Parties

REIT Securities Issuer
3-8-11 Kudan Minami, Chiyoda-ku, Tokyo
Sakura Sogo REIT Investment Corporation
Representative: Makoto Muranaka,
Executive Director:(Securities Code 3473)
Asset Management Company:
Sakura Real Estate Funds Management, Inc.
Representative: Makoto Muranaka,
Representative Director andPresident
Mayumi Kobiki,
Contact:
Chief Financial Officer
Tel:+81-3-6272-6608

Notice Concerning Convocation of General Meeting of Unitholders
Regarding the Approval of Merger Agreement, etc.
Sakura Sogo REIT Investment Corporation (hereinafter the “Investment Corporation”) announces that theBoard of Directors resolved at its meeting held today to submit agenda at the Third General Meeting ofUnitholders scheduled on August 30, 2019 (hereinafter the “General Meeting of Unitholders“) concerning
the approval of the merger agreement with MIRAI Corporation and termination of the asset managementagreement between the Investment Corporation with its asset management company on the condition
that the merger becomes effective.
The agenda items explained below shall take effect with approval by the General Meeting of Unitholders.
Further, the Investment Corporation also announces that the Board of Directors resolved at its meeting
held today to oppose an agenda item concerning the proposal from a unitholder (partial amendment of the
Articles of Incorporation) submitted by Lion Partners Godo Kaisha (hereinafter “Lion Partners”), a minority
unitholder of the Investment Corporation.
1.

Approval of Merger Agreement with MIRAI Corporation
As announced in “Notice Concerning Execution of Merger Agreement by and between MIRAICorporation and Sakura Sogo REIT Investment Corporation” released on August 5, 2019, theInvestment Corporation agreed to implement an absorption-type merger with MIRAI Corporation as
the surviving corporation and the Investment Corporation as the absorbed corporation (hereinafter
the “Merger”) with the effective date being November 1, 2019, and have entered into a merger
agreement (the “Merger Agreement”).
All unitholders are requested to support the purpose of the Merger Agreement and grant theirapproval.
In addition, for the implementation of the Merger, at a general meeting of unitholders held by Lion
Partners, a minority unitholder of the Investment Corporation, on the same date prior to the General
Meeting of Unitholders, all unitholders are requested to oppose the agenda items to be proposed by
Lion Partners and to vote in favor of the agenda items to be proposed by the sponsor of theInvestment Corporation as counter proposals against such proposals by Lion Partners.
(For the details of the agenda item concerning approval of the Merger Agreement with MIRAICorporation, please see the attached “Notice of Convocation of the Third General Meeting ofUnitholders”. In addition, for the outline of the agenda items to be proposed by Lion Partners and thesponsor of the Investment Corporation, please refer to “Announcement Regarding the Determination
to Allow Convocation of an Extraordinary Unitholders’ Meeting” dated June 28, 2019 and“Announcement Regarding the Request by Sponsor to Add Proposal to Convocation Notice forUnitholders’ Meeting” dated July 4, 2019.)
2.

Termination of Asset Management Agreement
Upon the Merger, the Investment Corporation decided to terminate the asset management agreementwith its asset management company on the effective date of the Merger on condition that the Merger
becomes effective. Therefore, the Investment Corporation requests that such termination be approved.
(For the details of the agenda item concerning the termination of the asset management agreement,
please see the attached “Notice of Convocation of the Third General Meeting of Unitholders”.)

3.

Proposal from Unitholder and Opinion of the Board of Directors of the Investment Corporation
An agenda item concerning partial amendment of the Articles of Incorporation is submitted to theGeneral Meeting of Unitholders as a unitholder proposal by Lion Partners, a minority unitholder of theInvestment Corporation. The Board of Directors of the Investment Corporation resolved at its meeting
held today to oppose such agenda item.
(For the details of the agenda item concerning partial amendment of the Articles of Incorporation (aunitholder proposal) and the reason of the dissenting opinion of the Board of Directors of theInvestment Corporation, please see the attached “Notice of Convocation of the Third General
Meeting of Unitholders”.)

4.

Schedule of General Meeting of Unitholders
August 5, 2019

Approval at the meeting of Investment Corporation’s board of
directors to submit the agenda to the Third General Meeting ofUnitholders

August 15, 2019 (scheduled)

Sending of “Notice of Convocation of the Third General Meeting ofUnitholders"August 30, 2019 (scheduled to be started at 3:00 p.m.)
The Third General Meeting of Unitholders* Apart from the General Meeting of Unitholders, a general meeting of unitholders, which will be
convened by Lion Partners, a minority unitholder of the Investment Corporation, is scheduled beheld at 10:00 a.m., on the same date and the place as the General Meeting of Unitholders (at Belle
Salle Onarimon Tower). The commencement time of the General Meeting of Unitholders maychange to after 3:00 p.m., depending on the progress of such meeting. In case the start time of
the General Meeting of Unitholders will be changed, the Investment Corporation will promptly post
notice of such change on its website.
Sakura Sogo REIT Investment Corporation website address: http://sakurasogoreit.com/en/<Attachment>
Notice of Convocation of the Third General Meeting of Unitholders

(Translation Purpose Only)
August 15, 2019
Makoto Muranaka,
Corporate Officer
SAKURA SOGO REIT
3-8-11 Kudan-Minami,
Chiyoda-ku, Tokyo
To our Unitholders,Convocation Notice of the 3rd General Meeting of Unitholders
You are cordially invited to attend the 3rd General Meeting of Unitholders of SAKURA SOGO REIT
(the “Investment Corporation”), to be held as outlined below.
If you are unable to attend the meeting, please exercise your voting rights using the Voting Rights
Exercise Form enclosed herewith after reading the attached Reference Document for the General
Unitholders Meeting and return the Voting Rights Exercise Form so that it reaches us by 6:00 p.m. on
Thursday, August 29, 2019.
Please note that the Investment Corporation stipulates a provision concerning “Deemed Agreement”
in Article 17, paragraphs 1 and 2 of the Articles of Incorporation in accordance with Article 93,
paragraph 1 of the Act on Investment Trusts and Investment Corporations as described below. Thismeans that if a unitholder does not attend the General Meeting of Unitholders and does not exercise
his/her voting rights using the Voting Rights Exercise Form, the unitholder is deemed to be in favorof any proposal submitted to the General Meeting of Unitholders.
(Excerpts from the Articles of Incorporation of the Investment Corporation)
Article 17 (Deemed Agreement)
1.In the event that a Unitholder neither attends a General Meeting of Unitholders nor exercises
his/her voting rights, said Unitholder shall be deemed to have agreed to the proposals submitted tosaid General Meeting of Unitholders (in a case where multiple proposals are submitted, and there
are proposals that conflict with each other, excluding all such proposals).
2.The number of voting rights of the Unitholders who are deemed to have agreed to proposals
pursuant to the provisions of the preceding Paragraph shall be included in the number of voting
rights of the Unitholders in attendance.
To unitholders in the United States:
This exchange offer or business combination is made for the securities of a foreign company. The offer
is subject to disclosure requirements of a foreign country that are different from those of the UnitedStates. Financial statements included in the document, if any, have been prepared in accordance withforeign accounting standards that may not be comparable to the financial statements of United Statescompanies.
It may be difficult for you to enforce your rights and any claim you may have arising under the federal
securities laws, since the issuer is located in a foreign country, and some or all of its officers may beresidents of a foreign country. You may not be able to sue a foreign company or its officers in a foreign
court for violations of the U.S. securities laws. It may be difficult to compel a foreign company and its
affiliates to subject themselves to a U.S. court’s judgment.
You should be aware that the issuer may purchase securities otherwise than under the exchange offer,such as in open market or privately negotiated purchases.

1. Date and Time: Friday, August 30, 2019 at 3:00 p.m. (Scheduled) (Note)(Note) Apart from this General Meeting of Unitholders, a general meeting of unitholders, which will be convened by Lion Partners,
a minority unitholder of the Investment Corporation, is scheduled be held at 10:00 a.m., on the same date and the place as
this General Meeting of Unitholders. The commencement time of this General Meeting of Unitholders may change tosometime after 3:00 p.m., depending on the progress of such meeting. In case the start time of this General Meeting ofUnitholders will be changed, the Investment Corporation will promptly post notice of such change on its website.

2. Venue:

Bellesalle Onarimon Tower
The third floor, 1-1-1 Shibakoen,
Minato-ku, Tokyo(Please refer to the map at the end.)
3. Purpose of the General Meeting of Unitholders:Matters to be resolved:(Proposed by the Investment Corporation)
Proposal 1: Approval of Merger Agreement with MIRAI Corporation(Proposed by the Investment Corporation)
Proposal 2: Termination of Asset Management Agreement(Proposed by a minority unitholder)
Proposal 3: Partial Amendment of the Articles of Incorporation- For those attending, please present the enclosed Voting Rights Exercise Form at the reception desk upon your arrival.
- You may exercise your voting rights by proxy. Your proxy must be one (1) individual selected from among unitholders who havevoting rights. Your proxy is requested to present a document evidencing his/her status as proxy together with the Voting Rights
Exercise Form at the reception desk.
- If any amendment is made to the Reference Document for the General Unitholders Meeting, such amendment will be posted on theInvestment Corporation’s web site (http://www.sakurasogoreit.com/).

REFERENCE DOCUMENT FOR
THE GENERAL UNITHOLDERS MEETING
Proposals and References
Proposal 1 (Proposed by the Investment Corporation): Approval of Merger Agreement with MIRAICorporation
1.

Purpose of absorption-type Merger(1) Propose of Merger
Pursuant to the Memorandum of Understanding regarding the merger (hereinafter the “MOU”)
on July 19, 2019, Sakura Sogo REIT Investment Corporation (hereinafter “SAKURA”) andMIRAI Corporation (hereinafter “MIRAI”) resolved at the respective board of directors meetings
to implement an absorption-type merger, with MIRAI as the surviving corporation and SAKURA
as the absorbed corporation (hereinafter the “Merger”) with the effective date being November 1,
2019, and have entered into a merger agreement (hereinafter the “Merger Agreement”) on August
5, 2019. MIRAI and SAKURA, through asset management companies of each (Mitsui Bussan &IDERA Partners Co., Ltd. (hereinafter “MIP”) and Sakura Real Estate Funds Management, Inc.
(hereinafter “SREFM”)) have been discussing in good faith measures to maximize unitholder
value for both MIRAI and SAKURA. As a result of such discussions, MIRAI and SAKURA
entered into the MOU having concluded that the Merger will have various synergetic effects.
After the execution of the MOU, MIRAI and SAKURA continued discussions regarding themerger ratio, impact on the performance forecast and the growth strategy after the Merger, anddetermined that the Merger is the best measure to maximize unitholder value for both MIRAI andSAKURA as stated in “(3) Significance and Effect of Merger” below. Therefore, MIRAI andSAKURA entered into the Merger Agreement.
(2) Background of Merger
(i)

MIRAI
MIRAI has achieved the targets announced in June 2017 under mid-term management plan
“Repower 2020” 1.5 years earlier than the original target and newly established the expanded
mid-term management plan, “Repower 2020-ER” in December 2018, for the period ending at theend of 2020. MIRAI has steadily carried out the measures that can be implemented by a single
investment corporation, such as making progress in risk diversification of the portfolio,
enhancement of financial base and replacing the assets, in order to materialize the various
quantitative targets such as the level of distribution per unit and the reduction of the risk premium
formulated in such mid-term management plan, “Repower 2020-ER”. MIRAI has also exploredthe opportunity to realize a merger between J-REITs through communicating with multiple asset
management companies, in line with the strategic management option internally set from the IPO
in December 2016. During the process by SAKURA seeking for a partnership including a merger
with third party, MIRAI received a request for proposal through Mitsui & Co. Asset Management
Holdings Ltd, a shareholder of MIP. As a result, MIRAI has commenced its serious
consideration, and entered into the merger agreement with SAKURA as a strategic option toachieve the “Repower 2020-ER” earlier than the target.
(ii) SAKURASAKURA has revaluated the growth strategies including the possibility of the future merger
recognizing that SAKURA has not realized the external growth in line with the initial plan after
IPO in September 2016. SAKURA received a request on May 10, 2019 from Lion Partners Godo
Kaisha, a minority unitholder controlled by Star Asia Group holding approximately 3.6% of theoutstanding units of SAKURA, to convene a unitholders’ meeting. The agenda items for therequested unitholders’ meeting are replacing the executive director of SAKURA and its asset
management company with a person related to Star Asia Group and the asset managementcompany of Star Asia Investment Corporation (hereinafter “Star Asia REIT”), as a first stage
toward the merger between SAKURA and Star Asia REIT. The proposal of Star Asia Group is toreplace SAKURA’s management with Star Asia Group through such a general meeting ofunitholders which requires a lower approval threshold than applicable for a normal merger
approval without proposing any merger terms or other key information, including the merger
ratio, at such time, and, determine all economic terms, such as calculation of merger ratio
virtually by Star Asia Group, the related party to the counterparty of the merger, Star Asia REIT,
after such management change. This proposal therefore entails risk of damage to SAKURA’s
unitholder value when determination merger ratio and creating serious conflict of interest withinStar Asia Group resulting from managing two listed J-REITs having same investment target andpolicy and having material difference in ownership ratio of Star Asia Group. Based on suchserious concern, SAKURA and SREFM retained an independent financial advisor and maderequests for proposal to around 20 candidates, including multiple investment corporations anddomestic and foreign funds other than Star Asia Group, for an alliance or other measures
including a merger while examining SAKURA’s standalone growth strategies.
(iii) Discussion and Entrance into Merger
SAKURA selected three proposals as final candidates from multiple proposals. These were assed
based on their potential to contribute to maximizing unitholders’ value considering the situationthat external growth is not easy by the overheated real estate market conditions, their feasibility,

synergistic effects, and consideration provided to investors. In assessing each proposal,
SAKURA, with the assistance of its financial adviser, consistently focused on which proposal
would contribute to maximize the unitholders’ value, and conducted calm and fair comparative
considerations. With regard to such considerations, SAKURA discussed with each suchcandidate under the thought that unitholder value will be maximized by negotiating the economic
terms of the merger or other transactions on an arms-length, equal footing basis and present suchproposal to unitholders for approval at the general meeting of unitholders including the final
economic terms as determined through such negotiation. From the beginning of July 2019,
SAKURA chose the merger with MIRAI as the most attractive proposal, and both investment
corporations have since specifically discussed the feasibility of the merger, and determined toenter into the MOU and continued discussions including the merger ratio, and have entered into
the Merger Agreement. Both investment corporations believe that the Merger will contribute tomaximize the unitholder value of both as described in “(3) Significance and Effect of the
Merger” below, particularly in comparison with the proposal by Star Asia Group.
(3) Significance and Effect of Merger(i)Major Synergies of Merger
MIRAI and SAKURA confirm that both parties aim to realize the following synergies throughintegration of the real estate portfolio of MIRAI and SAKURA and the sponsor support after the
Merger. MIRAI and SAKURA recognize the rationale and benefits for the Merger as stated in“(2) Background of Merger”, and believe that the synergetic effect of the Merger will lead tomedium to long term growth.
<Major Synergetic Effect of Merger>•

Improvement of the management cost efficiency•

Enhancement of the profitability and the distribution per unit•

Increase in aggregate market capitalization and liquidity of units•

Improvement in diversification of assets and tenants•

Improvement in the growth prospect and reduction of the cost of capital(ii) Significance of Merger
MIRAI and SAKURA believe that the Merger has the following significance.
A.

Provision of viable option to improve unitholder value for both MIRAI and SAKURA
unitholders
MIRAI and SAKURA believe that the Merger will provide SAKURA unitholders with theopportunity to make a choice by presenting a tangible option compared to the proposalmade by Star Asia Group and will provide unitholders with enhanced growth
opportunities. The Merger realizes improvement in profitability and raises the level of the
distribution per unit (“DPU”), and MIRAI after the Merger aims for continuous growth
based on the investment policy of MIRAI.
B.

Pursuit of growth opportunities that take into account the unitholders’ interests throughstrong sponsorship support by Mitsui & Co. Group and IDERA Capital, and wellexperienced management

MIRAI and SAKURA have confirmed and agreed that MIP will act as the asset
manager of the investment corporation after the Merger, and that SRFEM and theGalileo Group, sponsor of SREFM will withdraw from the asset management of theinvestment corporation after the Merger. The sponsors of the investment corporation
after the Merger will be Mitsui & Co. Asset Management Holdings, which is a whollyowned subsidiary of Mitsui & Co., LTD. (established in July 1947, listed on Tokyo
Stock Exchange 1st section, business results for the fiscal year ended March 31, 2019:consolidated revenue 6,957.5 billion yen, net income 414.2 billion yen, consolidated
total assets 11,945.7 billion yen) and IDERA Capital Management Ltd. MIP and thesponsors after the Merger aim to improve the unitholder value over the medium tolong term through a strong financial base and governance system that gives
consideration to provide maximization of unitholders’ interests.
C.

Creation of a high-quality, diversified REIT focusing on office buildings in the Tokyo area

The portfolio of the investment corporation after the Merger consist of 47.3% ofTokyo area offices (Note), benefiting from stability and growth potential focusing onTokyo area office which is stable in supply and demand and is expected to deliver
high profitability in the future. In addition, due to the progress in portfolio
diversification, it is expected to reduce the risk of property concentration and improvestability by diversifying asset types and tenants, with the top three property ratio(acquisition price basis) of 26.9% and the top 10 tenant contract ratio (rent basis) of
35.2 %.
(Note) Because MIRAI as an acquisition corporation will acquire SAKURA assets at market value by purchase method,
the asset size after the Merger (based on the acquisition price) and ratio is calculated with the following formula.
It also applies to the asset size after the Merger (based on the acquisition price) and ratio hereinafter.
Total acquisition price of assets held by MIRAI as of the end of July 2019 + Total appraisal value held by
SAKURA as of the end of the fiscal period ended December 2018 + Appraisal value of properties acquired by
SAKURA for the fiscal period ended June 2019

D.

Improvement of market presence by expanding asset size and improving liquidity throughthe Merger
The asset size of the investment corporation after the Merger is expected to be 204.0
billion yen in total consisting of 47 assets. MIRAI and SAKURA believe that, rising abovea small and medium-sized diversified J-REIT listed in and after 2016, its market presencein the REIT market improves. Its liquidity improves due to an increase in its market
capitalization, it can be expected to be listed into global indices and to expand demand
from institutional investors in the future, as well as the effect of declining in capital costs
and to further improve in its future growth outlook.

(iii) Effect of Merger

MIRAI and SAKURA expect that the Merger has the following four effects. The Merger
represents SAKURA’s judgment that it will be the best way to maximize unitholder value
among several proposals. MIRAI and SAKURA believe the Merger is a tangible solution to
all the issues in relation to the management of SAKURA raised by Lion Partners Godo
Kaisha (hereinafter "Lion Partners") in the Star Asia Group’s proposal. Because the Merger
resolves all the issues raised by Lion Partners, the reason for Lion Partners’ proposal tomerge with Star Asia Investment Corporation is only for their own interest of Star Asia
Group. MIRAI and SAKURA believe that Lion Partners’ proposal has lost its significance tothe unitholders of SAKURA. MIRAI and SAKURA believe that the Merger can realize theimprovement of unitholder value, which exceed the improvement, if any, through the merger
with Star Asia Investment Corporation.
A.

Growth of the Distribution Per Unit (DPU)MIRAI’s DPU after the Merger will be 1,600 yen for the Fiscal Period Ending April 2020
(or equivalent to 2,672 yen for one SAKURA unit before the Merger) and 1,640, for the
Fiscal Period Ending October 2020 (or equivalent to 2,738 yen for one SAKURA unit
before the Merger). This is a significant increase of +1.9% and +4.5%, respectively, toforecast DPU of 1,570 yen for the Fiscal Period Ending April 2020 of MIRAI before theMerger and +10.1%, and +12.8%, respectively, to forecast DPU of 2,427 yen for the Fiscal
Period Ending December 2019 of SAKURA before the Merger. Star Asia Group sets theshort-term target of approximately 100 yen increase (+4.1%) from 2,427 yen DPU of
SAKURA for the Fiscal Period Ending December 2019, and the increase of forecast DPU
for the Fiscal Period Ending April 2020 and the Fiscal Period Ending October 2020 after
the Merger exceed the Star Asia Group’s proposal. Regarding the details of theperformance forecast after the Merger, please refer to “Notice Concerning the Forecast ofOperating Results and Distributions Subsequent to the Merger of MIRAI Corporation and
Sakura Sogo REIT Investment Corporation for the Fiscal Periods Ending April 30, 2020
and October 31, 2020” announced by both MIRAI and SAKURA today.
B.

Expansion of Asset Size
As stated in “(ii) Significance of Merger”, the asset size after the Merger will exceed 200
billion yen and it greatly exceeds the assuming asset size of 163.2 billion yen (Note1) incase of the merger with Star Asia. As the market capitalization also reaches a level that is
anticipated to facilitate incorporation to global REIT indices. Taking into considerationthat MIRAI already has an A+ issuer credit rating before the Merger together, the Merger
is much superior in respect to expected expansion in demand from institutional investors.
MIRAI has increased its asset size from 100.7 billion yen as at its listing in December
2016 to 145.0 billion yen as of the end of the Fiscal Period ended April 2019, and theinvestment corporation after the Merger will aim new medium-term target of 300 billion
yen with further external growth.
(Note 1) Calculated by the following formula:
Total acquisition price of assets held by Star Asia Investment Corporation as of the end of the fiscal period ended
January 2019 (Note 2) + Total appraisal value of assets held by SAKURA as of the end of the fiscal period ended
December 2018 + Appraisal value of properties acquired by SAKURA for the fiscal period ended June 2019
(Note 2) The acquisition prices of Star Asia Investment Corporation do not include the acquisition prices of other assets
under management (mezzanine loan investment and equity in silent partnership (Tokumei Kumiai shusshi)) andAmusement Media Gakuin Shinkan (acquisition price: 1,020 million yen), which was acquired on February 1,
2019.

C.

Cost Efficiency
Though SAKURA before the Merger was not necessarily operated with low financial cost,
as shown in the average interest rate of 0.83%, the average interest rate after the Merger is
expected to decline to 0.59%. MIRAI’s average interest rate of 0.53% and averageborrowing period of 7.2 years is respectively lower and longer than Star Asia Investment
Corporation’s average interest rate of 0.63% and average borrowing period of 4.0 years.
MIRAI will seek to further strengthen its financial base with promoting cost reduction atrefinancing and lengthen the average loan maturity backed by the credit of Mitsui & Co.
Group. In addition, regarding Japan Credit Rating Agency, Ltd. (JCR) issuer rating of A+(positive) which the MIRAI before the Merger is assigned, it aims to obtain AA- rating in
the next JCR review scheduled around January 2020, which could further lower the debt
cost. Investor classes are also expected to be expanded and the equity cost will be lower bybeing included in the J-REIT investment target of Bank of Japan if certain conditions are
satisfied. In Star Asia Group’s proposal it plans to reduce the management cost including
reduction of asset management fees, however, the Merger expects to deliver savings inmanagement expenses, reduction in the cost of capital from both debt and equity sidewhich will increase the unit price. MIRAI and SAKURA believe that these benefits will
maximize unitholders value and realize more value than the cost reductions proposed byStar Asia.
MIRAI and SAKURA will manage portfolio based on the efficient MIRAI’s management
policy after the Merger and reduce the asset management cost by utilizing the support by
Mitsui & Co. Group and IDERA Capital and the unique knowhow of MIP, as its asset
manager.
D.

Governance System for maximizing Unitholder’s Interest
As stated in “(ii) Significance of Merger”, the investment corporation after the Merger will
be managed by MIP based on the disciplined governance standard of Mitsui & Co. Group.
MIP has working based on “REIT oriented business operation policy”, such as disclosing
the actual amount of the asset management fee per each item and will work to realize theimprovement of mid- to long-term unitholder value under the management system whichemphasizes on maximizing unitholders’ interest, and the governance system withconscious on clarification of cost bearing.

2.

Overview of the Merger Agreement
As set forth in Attachment 1

3.

Summary of matters set forth in Article 193, Paragraph 1, Item (1) trough Item (3) of the Ordinancefor Enforcement of the Act on Investment Trust and Investment Corporations.

(1) Appropriateness of the Merger consideration(i)

Appropriateness of total amount, calculation method, and allotment of merger consideration to
be delivered upon the Merger.
A.

Matters relating to merger ratio and allotmenta. Allotment of new investment units
MIRAI shall issue new investment units in the number of investment units in SAKURA
held by the unitholders set forth or recorded in SAKURA’s latest unitholder registry on the
day immediately preceding the Effective Date (excluding MIRAI, SAKURA, andunitholders of SAKURA that have demanded purchase of their investment units pursuant
to Article 149-3, of the Investment Trust Act (excluding unitholders that have withdrawn

such demand for purchase)(“Unitholders Subject to Allocation”) multiplied by 1.67, andshall deliver to Unitholders to be Allocated 1.67 MIRAI investment units per each of theirinvestment units of SAKURA. If the number of investment units of MIRAI that shall bedelivered to the Unitholders Subject to Allocation includes a fraction of less than one unit,
these fractional units will be sold through a market transaction in accordance with statutory
provisions, and the proceeds from the sale will be delivered to the unitholders who areallocated fractions, in proportion to the size of their fractional units to be allocated inaccordance with provisions of law.
Ratio of Allotment

MIRAI(surviving corporation)
1

SAKURA(absorbed corporation)
1.67

b. Delivery of compensation for the Merger
In addition to the above investment units, instead of cash distributions to the unitholders of
SAKURA for SAKURA’s final fiscal period ending on the day before the Effective Date,
MIRAI will, within a reasonable period after the effective date of the Merger, make apayment on the Merger to Unitholders Subject to Allocation in an amount equivalent to the
cash distributions for the above mentioned fiscal period (the payment will be the amount of
distributable profit of SAKURA as of the day immediately prior to the effective date of the
Merger divided by the number of investment units that is obtained by deducting (a) the
number of investment units held by the unitholders other than the Unitholders Subject to
Allocation of SAKURA from (b) the total number of investment units issued andoutstanding of SAKURA, as of the day immediately prior to the effective date of the
Merger (such calculated amount being rounded down to the nearest whole yen)).
B.

Basis and Background of calculation
For the purpose of calculating the merger ratio to be adopted in the Merger, in view of
ensuring fairness, MIRAI and SAKURA respectively appointed each financial advisor for
the Merger and requested each financial advisor to perform a financial analysis of themerger ratio. MIRAI appointed Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
(“Mitsubishi UFJ Morgan Stanley Securities”), and SAKURA appointed SMBC Nikko
Securities Inc. (“SMBC Nikko Securities”).
Mitsubishi UFJ Morgan Stanley Securities performed its analysis of the merger ratio foreach of MIRAI and SAKURA, comprehensively taking into consideration the analysis
results based on (i) historical unit price analysis as a method of analysis based on theinvestment unit price formed in the securities market, as investment units of MIRAI andSAKURA are listed on the TSE, (ii) comparable trading multiple analysis as a method ofanalysis based on the investment unit value of other listed investment corporations
conducting business similar to that of MIRAI and SAKURA, (iii) DCF Analysis as a
primary method of analysis of investment unit value based on the mid-to-long term futurebusiness activities of MIRAI and SAKURA, and (iv) the net asset value approach as amethod of static analysis of investment unit value, which reflects the market value of assets
held by MIRAI and SAKURA. A summary of the analysis performed by Mitsubishi UFJ
Morgan Stanley Securities is as follows.
Financial Analysis Approach
Historical Unit Price Analysis
Comparable Trading Multiple Analysis
DCF Analysis
Net Asset Value Approach

MIRAI
1
1
1
1

SAKURA
1.63 – 1.89
1.52 – 1.89
1.54 – 1.75
2.05

Concerning the historical unit price analysis, taking into account the recent market trading
trends of the investment units of MIRAI and SAKURA, the financial analysis date was set
on August 2, 2019 and the merger ratio was analyzed based on the closing prices for onemonth, three-month, and six-month periods up to the financial analysis date (Note).
In the future profit plan of MIRAI and SAKURA which Mitsubishi UFJ Morgan Stanley
Securities referred to as the basis for the DCF Analysis, there is no fiscal period in which a
considerable increase or decrease in profits is expected.
(Note) In analyzing the above merger ratio, Mitsubishi UFJ Morgan Stanley Securities has relied on the information
provided by MIRAI and SAKURA and publicly available information assuming that all such materials andinformation are accurate and complete, without independent verification of the accuracy or completeness of
those materials and information. In addition, Mitsubishi UFJ Morgan Stanley Securities did not make any
independent valuation, appraisal, or assessment of the assets or liabilities (including off-balance-sheet assets andliabilities and any other contingent liabilities) of MIRAI and SAKURA, nor has Mitsubishi UFJ Morgan Stanley
Securities requested any such appraisal or assessment from a third-party institution. Further, Mitsubishi UFJ
Morgan Stanley Securities has assumed that the financial projections provided by MIRAI and SAKURA havebeen prepared in a reasonable manner to reflect the best currently available estimates and judgments by the
management of each of MIRAI and SAKURA. The analysis of the above merger ratio by Mitsubishi UFJ
Morgan Stanley Securities was based on the above information that was available as of August 2, 2019.
Mitsubishi UFJ Morgan Stanley Securities has prepared its analysis solely for the board of directors of MIRAI
for the purpose of deliberating the Merger and the analysis may not be definitively relied upon or used for any
other purpose or by any other third party. In addition, Mitsubishi UFJ Morgan Stanley Securities will not provide
any opinion or recommendation on voting by any of the unitholders of MIRAI or SAKURA with respect to theMerger or any other proposed transaction.

SMBC Nikko Securities has determined to adopt four individual valuation methods tocalculate the merger ratio based on its own analyses on financial and business information
about MIRAI and SAKURA and terms and conditions of this merger. SMBC Nikko
Securities conducted the historical unit price analysis given the fact that market price of theunits of MIRAI and SAKURA are available as they are both listed on the Tokyo Stock
Exchange. SMBC Nikko Securities also conducted comparable trading multiple analysis
since it is feasible to analogically assess the unitholders’ value given that there are multiple
comparable REITs to each of MIRAI and SAKURA. SMBC Nikko Securities ran thedividend discount model analysis (“DDM”) to factor in the projected dividends to bepayable in the future. SMBC Nikko Securities also ran the adjusted net asset value analysis
reflecting the fair value of the property assets owned by MIRAI and SAKURA on the bookvalue of their respective net asset.
The table below summarizes ranges of the merger ratio per each analysis which represents
how many of MIRAI’s units are assigned to every SAKURA’s unit. For the historical unit
price analysis, SMBC Nikko Securities used the simple arithmetic average of the closing
prices for 1 month, 3 months and 6 months ending on the valuation reference as of August
2, 2019 (Note).
It is noted that there are no such periods when either MIRAI or SAKURA records
significant movement in their respective profit during the projection period for DDM.
Valuation Methodology
MIRAI
SAKURA
Historical Unit Price Analysis
11.71 - 1.78
Comparable Trading Multiple Analysis
11.31 - 2.02
Dividend Discount Model Analysis
11.24 - 2.58
Adjusted Net Asset Value Analysis
1
2.06(Note)SMBC Nikko Securities did not conduct either assessment on or revaluation of the assets and liabilities of
MIRAI and SAKURA by itself. SMBC Nikko Securities also did not either perform due diligence on them byretaining certified accountants or other professionals or obtain any opinion on their values from the independent
third party. SMBC Nikko Securities referred publicly available information of SAKURA, MIRAI and other
REITs such as financials, market data, analyst reports and indicators of financial conditions, economics andmarkets in conducing analysis of the merger ratio. SMBC Nikko Securities stood on the premise that there wasno such undisclosed information that it could significantly affect the calculation of the merger ratio in conducting
its analyses. SMBC Nikko Securities also stood on the premise that information and materials referred for the
purpose of its analyses were accurate and perfect, and in particular, business plan and business performanceprospect as part of such information and materials were reasonably established based on the best forecast andconsideration at that time, and therefore, SMBC Nikko Securities did not undertake its own investigation andverification on accuracy, appropriateness and feasibility of the information and materials in conducting its
analyses.

After comprehensively taking into account the financial results, status of assets andliabilities, future prospects of the business, synergies to be created by the Merger and theresults of the financial analysis conducted by Mitsubishi UFJ Morgan Stanley Securities
and SMBC Nikko Securities, the financial advisors for MIRAI and SAKURA, anddiscussing and negotiating meticulously, MIRAI and SAKURA executed the Merger
Agreement, as they determined the above mentioned merger ratio to be appropriate.
Considering that the investment unit price of SAKURA has risen significantly in responseto requests for convocation of the general unitholders meeting by Lion Partners, the Star
Asia Group's proposal for the merger with Star Asia Investment Corporation, and theannouncement of the MOU on the Merger with MIRAI, the comparison of investment unit
price has been carefully discussed and examined. As stated above in "1. Purpose ofabsorption-type Merger, (3) Significance and Effects of Merger," SAKURA unitholders
are expected to receive distributions per unit after the Merger by more than 10% comparedto that before the merger. In addition to such factors, considering the synergies expected
over the medium to long term through the expansion of asset size, strong sponsorship andsupport system and other merits of the Merger, MIRAI and SAKURA have determinedthat the above merger ratio is appropriate after negotiating in good faith and an arms-length
basis. The theoretical investment unit price of ¥94,856 (Note 1) for SAKURA taking into
account the above merger ratio is at a premium of 3.8%, 5.6%, and 9.0% (Note 2),
respectively on the average closing prices of investment units for one, three, and six
months, respectively prior to July 4, 2019, when it was announced that SAKURA wasconsidering a merger with MIRAI. In addition, the implied value for SAKURA units
exceeds the highest trading price on any single day from May 10, 2019, the day Star Asia
Group announced its proposal, up to 3 July 2019. For the details of the theoreticalinvestment unit price for SAKURA taking into account the above merger ratio and thetransition of the actual unit price, please refer to “page 8 of Supplementary Material”
announced today.
(Note 1) This figure is calculated by the closing price of the investment units of MIRAI on August 2, 2019 multiplied by
the merger ratio.
(Note 2) Figures are calculated using simple averages of closing prices for the period from June 4, 2019 to July 3, 2019,from April 4, 2019 to July 3, 2019, and from January 4, 2019 to July 3, 2019, respectively.

The following are measures that SAKURA and MIRAI have implemented to securefairness when entering into the Merger Agreement:
a. Measures to Secure Fairness in the Course of Considering Pros and Cons of Merger andMerger Ratio
In the course of their consideration of the Merger, MIRAI and SAKURA has reported on atimely manner as to the status of the considerations to their respective Board of Directors,
with each board being composed of the respective investment corporation’s executive
director and its two supervisory directors, whose independence from the asset managementcompanies is secured pursuant to the Act on Investment Trusts and Investment
Corporations, and the respective Board of Directors has deliberated and resolved at theirrespective meeting with regard to material matters. Further, Makoto Muranaka, theexecutive director of SAKURA, does not have any special interests in MIRAI and its
related parties. However, in respect of ensuring fairness, he did not participate in thediscussion and resolution of such Board of Directors, because the agenda to approve theMerger with MIRAI is contradicting the proposal by Star Asia Group which proposes his
dismissal.
Furthermore, MIRAI has appointed SHIBATA, SUZUKI & NAKADA and SAKURA has
appointed Nagashima Ohno & Tsunematsu, as each legal advisor for the Merger, andMIRAI and SAKURA have respectively received advice on matters including theprocedures for the Merger, the method and procedures for making decisions.
b. Measures to Secure Fairness in Calculation of Merger Ratio
As described in items (1) through (3) above, MIRAI and SAKURA requested theirrespective financial advisors to conduct a financial analysis regarding the merger ratio. In
determining the appropriate merger ratio, MIRAI and SAKURA considered various factors
including the financial analyses conducted by their respective financial advisors.
In order to ensure the fairness of the Merger, MIRAI has retained Mitsubishi UFJ Morgan
Stanley Securities, which is an independent third-party financial advisor, for its
unitholders, and obtained a report of merger ratio analysis, in which analyses of allotmentof units in the Merger were conducted from a financial viewpoint under certain
assumptions. Given the above, the board of directors of MIRAI has determined thatmeasures for ensuring the fairness of the Merger were adequately implemented.
In order to ensure the fairness of the Merger, SAKURA has retained SMBC Nikko
Securities, which is an independent third-party financial advisor, for its unitholders, andobtained a report of merger ratio analysis, in which analyses of allotment of units in the
Merger were conducted from a financial viewpoint under certain assumptions. Given theabove, the board of directors of SAKURA has determined that measures for ensuring thefairness of the Merger were adequately implemented. Further, Makoto Muranaka, theexecutive director of SAKURA, does not have any special interests in MIRAI and its
related parties. However, in respect of ensuring fairness, he did not participate in the
judgment of such Board of Directors, because the agenda to approve the Merger withMIRAI is contradicting the proposal by Star Asia Group which proposes his dismissal.
It should be noted that neither of MIRAI nor SAKURA obtained a fairness opinion fromthe relevant financial advisor to the effect that the merger ratio is financially suitable foreach unitholder of each investment corporation.
C.

Relationship with Financial Advisors
Neither Mitsubishi UFJ Morgan Stanley Securities nor SMBC Nikko Securities falls under
the definition of an “Affiliated Party” of MIRAI or SAKURA as set forth in Article 67,
Paragraph 4 of the Ordinance Regarding Calculation of the Investment Corporation(Cabinet Ordinance No. 47 of 2006, as amended) and has no significant interest to note inconnection with the Merger.

(ii) Reasons behind choosing Cash as Part of the Merger Consideration
Instead of cash distributions to the unitholders of SAKURA for SAKURA’s final fiscal period
ending on the day before the effective date, MIRAI will, within a reasonable period after theeffective date of the Merger, make a payment on the Merger to Unitholders Subject to Allocationin an amount equivalent to the cash distributions for the above mentioned fiscal period (thepayment will be the amount of distributable profit of SAKURA as of the day immediately prior
to the effective date of the Merger divided by the number of investment units that is obtained bydeducting (a) the number of investment units held by the unitholders other than the Unitholders
Subject to Allocation from (b) the total number of investment units of SAKURA issued andoutstanding as of the day immediately prior to the effective date of the Merger (such calculated
amount being rounded down to the nearest whole yen).
For distributing the result of asset management of SAKURA for final fiscal period ending on the
day before the effective date to Unitholders of SAKURA, the above cash is paid as the Merger
Consideration instead of cash distribution.
(iii) Matters Relating to Total Unitholders’ Capital of MIRAI
I. Total unitholders’ capital: 0 yen
II. Capital Surplus: The amount of change in unitholder capital as specified in Article 22,
Paragraph 1 of the Ordinance for Enforcement of the Ordinance on Accountings of Investment
Corporations, less the amount specified in the preceding item.

(2) Matters to consider regarding the Merger Consideration(i)

Provisions of the Articles of Incorporation of the surviving corporation (MIRAI)As set forth in Attachment 2.

(ii) Matters regarding the realization of investment units distributed as merger consideration
I. Market to trade the investment units
Tokyo Stock Exchange Real Estate Investment Trust Market
II. Persons carrying out brokerage, intermediation or agency service for the trade of theinvestment unis
Traders or securities companies that are members of the market mentioned in I.
(iii) Market price of the units to be distributed as merger consideration
The monthly highs and lows for the prices or MIRAI’s investment units (closing prices) are as
follows. MIRAI implemented a four-for-one investment unit split with April 30, 2019 as record
date and May 1, 2019 as effective date. Since April 24, 2019, the investment units of MIRAI has
been trading at the ex-right price after the investment unit split. The square mark (▢) indicatesthe ex-rights share price after the investment unit split.
Month
Highest(yen)
Lowest(yen)

February
2019

March
2019

191,800

201,600

185,200

189,300(3) Matters relating to accounting documents etc.
(i)

April
2019
199,600▢48,950
196,600▢48,200

May
2019

June
2019

July
2019

50,80052,20058,30048,50048,35052,400

Matters regarding surviving corporation (MIRAI)A.

Accounting documents, asset management reports, and cash distribution statements for
MIRAI’s latest Fiscal Period
As set forth in Attachment 3.

B.

Disposal of material assets, assumption of material obligations, and other events having amaterial impact on the investment corporation’s financial condition occurring after the last
day of MIRAI’s latest Fiscal Period.

a. Split of Investment Units
MIRAI implemented a four-for-one investment unit split (“hereinafter the Split”) with
April 30, 2019 as record date and May 1, 2019 as effective date.

Purpose of the Split
MIRAI implemented the Split for the purpose of making an environment which enables
investors to invest more easily by reducing the investment unit price, which would
ultimately broaden MIRAI’s investor base and increase the liquidity of the investment
units.
Method of the Split
MIRAI implemented a four-for-one split of the investment units of MIRAI held byunitholders stated or recorded on the registry of unitholders as of the record date of April
30, 2019.
Number of Investment Units Increased thorough the Split
Number of investment units issued and outstanding before the Split:
395,410 units
Number of investment units increased thorough the Split:
1,186,230 units
Number of investment units issued and outstanding after the Split:
1,581,640 units
Number of investment units authorized after the Split:
20,000,000units
b. Disposition of AssetMIRAI entered into the sale and purchase agreement regarding the following real estate
trust beneficiary on June 21, 2019 and disposed and will dispose such asset after April 30,
2019.
Property nameLocationContract date
Anticipate
DispositionPrice(millionyen)(Note 1)
Disposition Dateand Anticipated
Disposition Date
(Note 2)
Buyer
Impact on profit

MIUMIU Kobe
18-1, Akashicho, Chuo-ku, Kobe, Hyogo
June 21, 20198,500 in total(i)2,465(quasi-co-ownership
29%)(ii) 2,805(quasi-co-ownership
33%)(iii)3,230(quasi-co-ownership
38%)

June 28, 2019

November 29, 2019

June 30, 2020

Green Map GK (Limited Liability Company)
Operating revenue
Operating revenue
Operating revenue

and loss

for the Fiscal Periods
Ending October 31,
2019 will be
included thedisposition gain of
360 million yen.

for the Fiscal Periods
Ending April 30,
2020 will be
included thedisposition gain of
415 million yen.

for the Fiscal Periods
Ending October 31,
2020 will be
included thedisposition gain of
481 million yen.

(Note 1) “Anticipate Disposition Price” shows the sale and purchase value of the asset to be disposed that is stated in thesale and purchase agreement entered with the buyer. The sale and purchase value does not include national or
local consumption tax or expenses necessary for the disposition, and it is rounded down to the nearest million
yen.
(Note 2) “Disposition Date and Anticipated Disposition Date” is the date stated on the sale and purchase agreement asscheduled date of disposition. Disposition is divided in three separate transactions. Under certain circumstancessuch as commencement of legal proceeding for MIRAI’s bankruptcy, the second and third scheduled date ofdisposition will be changed to the date determined by the buyer as being reasonable.

c. The General Meeting of Unitholders

MIRAI approved the amendment of the Articles of Incorporation that included (i) theinvestment target was limited to the Japanese asset and exclude the overseas asset and (ii)the change of the date expression from Japanese calendar style to Western calendar style,and the appointment of an executive director, two supervisory directors (reappointment)
and a substitute executive director at the 4th general meeting of unitholders held on July24, 2019.
d. Execution of the Merger Agreement
MIRAI entered into the Merger Agreement on August 5, 2019, with MIRAI as thesurviving corporation and SAKURA as the absorbed corporation with November 1, 2019as effective date.
(ii) Matters regarding to absorbed corporation (SAKURA)
Disposal of material assets, assumption of material obligations, and other events having amaterial impact on the investment corporation’s financial condition occurring after the last day of
SAKURA’s latest Fiscal Period.
a. Acquisition of Asset
SAKURA entered into the sale and purchase agreement regarding the following real estate
trust beneficiary on May 24, 2019 and acquired such asset on June 3, 2019.
Property name
The Portal Akihabara
2-10-9 Higashi Kanda, Chiyoda-ward,
LocationTokyo
Contract date
May 24, 2019
Acquisition Price (million yen)(Note)
1,500

Acquisition dateSellerJune 3, 2019
Sun Frontier Fudosan Co., Ltd.

(Note) “Acquisition Price” indicates the purchase price for the trust beneficiary rights described in the purchase and saleagreement. It is exclusive of acquisition related expenses and consumption tax.

b. Borrowing
SAKURA undertook a long-term borrowing as follows, in order to allocate to the part ofacquisition costs and related costs for the asset stated in “a. Acquisition of Asset” on June
3, 2019.
LenderBorrowing amountInterest rate (Note 1)
Fixed/ Floating
Date of borrowing
Repayment date
Method of borrowing
Method of repayment
Security

A syndicate of lenders arranged by Sumitomo Mitsui
Banking Corporation as an arranger (Note 2)
1.6 billion yen
0.76853% (Note 3)
Fixed
June 3, 2019
May 31, 2022
Borrowing based on a loan agreement to be concluded withthe banks shown in the column of lenders to the left
Bullet repayment at maturity
Unsecured and unguaranteed(Note 1) Loan fees and other charges to be paid to the lenders are not included in the “Interest rate”.
(Note 2) The syndicate of lenders consists of Sumitomo Mitsui Banking Corporation, THE NISHI-NIPPON CITY BANK,
LTD., Shinsei Bank, Limited and Aozora Bank, Ltd.
(Note 3) The first interest payment will be due on August 31, 2019, and subsequent interest payments will be due at theend of every 3-months and on the principal repayment date. If a payment date is not a business day, payment
will be made on the next business day; provided, however, that if such payment date falls in the next month,
payment will be made on the immediately preceding business day.

c. Request by a Minority Unitholder to Convene an Unitholders’ Meeting
SAKURA received a request from Lion Partners, a minority unitholder of SAKURA, toconvene an extraordinary unitholders’ meeting whose agenda include dismissal of thecurrent executive director on May 10, 2019. Lion Partners filed a petition for allowance toconvene an extraordinary unitholders’ meeting with the Director-General of the Kanto
Local Finance Bureau (hereinafter “KLFB”) on May 16, 2019, and SAKURA received thewritten affirming judgement by KLFB on June 28, 2019.
The written judgement by KLFB is as follows.
Allow convocation of unitholders’ meeting of SAKURA for the purpose of agenda items
below to be held by September 30, 2019.

• Dismissal of the current executive director• Appointment of Mr. Sugihara as a new executive director• Terminate the agreement with the current asset manager• Enter into a new asset management agreement with Star Asia investment
Management, Co., Ltd.
Based on the judgement, Lion Partners made public notice on June 29, 2019, that the
SAKURA’s unitholders’ meeting will be held by Lion Partners on August 30, 2019.
In addition, GALAXY JREIT PTY LIMITED, a minority unitholder of SAKURA,
requested to the current executive director of SAKURA and Lion Partners on July 4, 2019,to add outline of summary and reasons for proposals below in the convocation notice ofunitholders’ meeting to be convened by Lion Partners.
• Appointment of Mr. Hagino as a new executive officer• Enter into a new asset management agreement with Mitsui Bussan & IDERA
Partners Co., Ltd
d. Execution of the Merger Agreement
SAKURA entered into the Merger Agreement with MIRAI as the surviving corporationand SAKURA as the absorbed corporation with the effective date being November 1,
2019, dated August 5, 2019.
Proposal 2 (Proposed by the Investment Corporation): Termination of Asset Management Agreement
In conjunction with the Merger, on the effective date of the Merger, the Investment Corporation willterminate any asset management service agreements it has currently entered into with its AssetManagement Company subject to the Merger’s coming into force, and unitholders will be requested
to approve the termination of such agreement.
MIRAI has entered into an asset management agreement with MIP and it is planned that after the
Merger MIP will continue to act as the asset manager of MIRAI, surviving corporation.
This Proposal is subject to approval of Proposal No. 1 “Approval of Merger Agreement with MIRAICorporation” as set forth in the original draft and effectiveness of the Merger.
Proposal 3 (Proposed by a minority unitholder): Partial Amendment of the Article of Incorporation
Proposal No. 3 was submitted by Lion Partners, a minority unitholder of SAKURA. The followings
are posted from the “Unitholder Proposal” submitted by a proposal unitholder, excluding “Opinion of
the Board of Directors of SAKURA” and “Reason for Opposite”.

1.

Outline of Summary and Reasons for Proposals(1) Add the following provisions after Article 9, Paragraph 3 of the current article of incorporation of
SAKURA
4.Notwithstanding paragraphs 1. through 3. above, with respect to the convocation by the Investment
Corporation of unitholders’ meeting the agenda item of which includes matters that might havematerial effect on the operation of the Investment Corporation, such as merger with anotherinvestment corporation, election of executive director, dissolution, entrance into the asset
management agreement with an asset management company other than the current asset
management company, of Investment Corporation (hereinafter referred to as “Agenda for Approvalof Merger Agreement with Third Party, etc.”), when unitholders of Investment Corporation has
obtained permission (hereinafter referred to as “Permission of Convocation”) to convene
unitholders’ meeting (hereinafter referred to as “Unitholders’ Meeting convened by Unitholders”)
pursuant to Article 297, Paragraph 4 of the Companies Act, as applied mutatis mutandis pursuant
to Article 90, Paragraph 3 of the Investment Trust and Investment Corporation Act the agenda itemof which is contradicting or competing in substance with the Agenda for Approval of Merger
Agreement with Third Party, etc. (for the avoidance of doubt, agenda for the approval of dismissalof executive director and appointment of new executive director as well as the termination of asset
management agreement with current asset management company and execution of asset
management agreement with new asset management company are included in contradicting orcompeting in substance with the Agenda for Approval of Merger Agreement with Third Party, etc.),
Investment Corporation shall not make resolution on Agenda for Approval of Merger Agreementwith Third Party, etc. at the unitholders’ meeting until and unless all the agenda items as permitted
by Permission of Convocation are rejected at the Unitholders’ Meeting convened by Unitholders.
(2) Change “Management Fees Payable to the Asset Management Company”, Exhibit 1 of the current
article of incorporation of SAKURA as follows (The proposed changes are underlined.)(Before)(omitted)
1. Management Fee 1(omitted)
the rate separately agreed upon between the Investment Corporation and the Asset Management
Company (maximum 0.40% (per annum))(omitted)
2. Management Fee 2

(omitted)
Management Fee 2 = NOI (*) × the rate (maximum 3%) separately agreed upon between theInvestment Corporation and the Asset Management Company(omitted)
5. Merger Fee
If the Asset Management Company conducts due diligence and evaluation of the assets etc. held by
the other investment corporation or other businesses in relation to a consolidation-type merger or anabsorption-type merger (including both absorption-type mergers in which the Investment
Corporation becomes a surviving company and that in which it becomes a dissolving company;
hereinafter the same shall apply) (hereinafter collectively referred to as “Merger”) and such Merger
comes into effect, the fee shall be the amount obtained by multiplying the aggregate evaluatedvalue at the time of the effective date of the Merger of the Real Estate-Related Assets andCorporation Holding Overseas Real Estate Related Contributions that are owned by such otherinvestment corporation and will be succeeded to or will be owned by an established company in aconsolidation-type merger or by a surviving company in an absorption-type merger,(omitted)(After)(omitted)
1. Management Fee 1(omitted)
the rate separately agreed upon between the Investment Corporation and the Asset Management
Company (maximum 0.30% (per annum))(omitted)
2. Management Fee 2(omitted)Management Fee 2 = NOI (*) × the rate (maximum 2.3%) separately agreed upon between theInvestment Corporation and the Asset Management Company(omitted)
5. Merger Fee
If the Asset Management Company conducts due diligence and evaluation of the assets etc. held by
the other investment corporation or other businesses in relation to a consolidation-type merger or anabsorption-type merger (however, limited to absorption-type mergers in which the Investment
Corporation becomes a surviving company; hereinafter the same shall apply) (hereinaftercollectively referred to as “Merger”) and such Merger comes into effect, the fee shall be the amountobtained by multiplying the aggregate evaluated value at the time of the effective date of the
Merger of the Real Estate-Related Assets and Corporation Holding Overseas Real Estate Related

Contributions,（omitted）[Reason for Proposal of the Proposer]
The proposer received the affirming judgment to allow to convene a unitholders’ meeting whose
agenda are dismissal of the current executive director, Makoto Muranaka, appointment of a new
executive director, Toru Sugihara, termination of the asset management agreement with SREFM, andentering into an asset management agreement with Star Asia investment Management, Co., Ltd., fromthe director of KLFB on June 28, 2019 and will hold the first unitholders’ meeting for such purposeson August 30, 2019.
On the other hand, though SAKURA strongly refused to convene a unitholders’ meeting by SAKURA
during the trial procedure in KLFB regarding such judgement, as soon as such judgement was made,SAKURA announced the convocation of the second unitholders’ meeting on August 30, 2019, withstatement that “SAKURA plans to convene its own unitholders’ meeting to allow the unitholders theopportunity to vote on other proposals that will protect the unitholders’ interest from the abusive andhostile takeover approach, and to vote on the implementation of measures related to the revised
business strategy which will be announced soon” on the press release “Announcement Regarding theDetermination to Allow Convocation of an Extraordinary Unitholders’ Meeting” dated June 28, 2019.
At the time of submitting of the proposer’s proposal, the purpose of its agenda for the second
unitholders’ meeting is not clear to the proposer, however, the proposer assumes to be more likelythat the agenda item includes matters that might have material effect on the operation of theInvestment Corporation, such as merger with another investment corporation, election of executive
director, dissolution, entrance into the asset management agreement with an asset managementcompany other than the current asset management company, of Investment Corporation (hereinafterreferred to as “Agenda for Approval of Merger Agreement with Third Party, etc.”), from suchstatements on the press release.
If such assumption is correct, the current executive director and current asset management company
of SAKURA to be examined its eligibility at the first unitholders’ meeting based on the determination,
can fleetingly merge with companies other than Star Asia Investment Corporation, contract an asset
management agreement with companies other than Star Asia investment Management, Co., Ltd. andcooperate with sponsors other than Star Asia Group, exclusively for make the profit of SAKURA or
its sponsor, before the dismissal or the approval of termination of the asset management agreement ofthem.
Furthermore, although the first unitholders’ meeting definitely will be held based on the judgement,
unitholders is confused in their decision process due to holding the second unitholders’ meeting on
the same day of the first unitholders’ meeting where the proposals of agenda are substantiallyconflicting or competing with the first unitholders’ meeting. If SAKURA will take advantage theconfusion and put quickly and approve such agenda at the second unitholders’ meeting, there is a riskof unrecoverable damage to SAKURA’s unitholders.
The proposer proposes to add the new Article 9, Paragraph 4 in order to keep normal decision processof its unitholders and protect the unitholders interest, prescribing that Agenda for Approval of Merger
Agreement with Third Party, etc. must not be discussed and resolved at a unitholders’ meeting unlessthe eligibility of the current executive director and the current asset management company areaffirmed at the first unitholders’ meeting, which has been already confirmed to be hold based on thejudgement,
In addition, the proposer will resolve the dismissal of the current executive director, Makoto
Muranaka, appointment of a new executive director, Toru Sugihara, termination of the asset
management agreement with SREFM, and entering into an asset management agreement with Star
Asia investment Management, Co., Ltd. at the first unitholders’ meeting. Regarding entering into an
asset management agreement with Star Asia investment Management, Co., Ltd., because of the top
priority with unitholders interest, Star Asia investment Management, Co., Ltd. will get management
fee from SAKURA, reducing the rate of the Management Fee 1 and the Management Fee 2 frommaximum rate in the current article of incorporation of SAKURA and the Merger Fee shall not giveto Star Asia investment Management, Co., Ltd., excluding the absorption-type mergers in which
SAKURA becomes a surviving company. Therefore, the proposer proposes the amendment of“Management Fees Payable to the Asset Management Company”, Exhibit 1 of the current article ofincorporation of SAKURA in order to reflect such policy to the article of incorporation of SAKURA.
[Opinion of the Board of Directors of SAKURA]
The Board of Directors of SAKURA opposes to this proposal.
[Reason for Opposite]
SAKURA has entered into the merger agreement with MIRAI, and proposal by Lion Partners as tothe partial amendment to the Articles of Incorporation is only intended to prevent such merger.
In addition, Lion Partners’ proposal includes merger and entrance of asset management agreementwith new asset manager as conflicting agenda with the proposal by Lion Partners at the meeting
convened by Lion Partners as a minority unitholder, and also proposes to prevent resolution ofunitholders on such agenda until and unless all the agenda items as permitted to a minority unitholder
are rejected at the unitholders’ meeting convened by such unitholder. However, it is clearly unfair
and inappropriate to deprive the unitholders’ determination rights on such matters as merger andentrance of asset management agreement that are the matters to be determined by the unitholders at
the unitholders’ meeting until and unless all the agenda items as proposed by a minority unitholder
are rejected.
Further, with respect to the reduction of asset management fee, MIRAI, SAKURA, SREFM and MIP

have agreed that no merger fee will be paid to the asset management company of SAKURA upon the
Merger under which SAKURA will be the absorbed corporation.
Therefore, the board of directors unanimously opposes to the proposal for partial amendment to the
Articles of Incorporation by Lion Partners.

Reference Matters
Among the proposals submitted to the general meeting of unitholders, if there is any oppositional
proposal, with respect to any such proposal, the provisions of Article 93, Paragraph 1 of theInvestment Trust Act and the “deemed approval” provisions specified in Article 17 of the Investment
Corporation’s articles of incorporation will not apply. Neither Proposal No. 1 nor Proposal No. 2 set
forth above falls under an oppositional proposal.

EndAttachment 1

Merger Agreement
MIRAI Corporation ("MIRAI") and Sakura Sogo REIT Investment Corporation ("SAKURA") hereby enter
into this merger agreement (this “Agreement”) as follows with respect to the merger between MIRAI andSAKURA (the “Merger”).
Article 1

Merger Method

MIRAI and SAKURA shall conduct an absorption-type merger as provided for in Article 147 of the Act on
Investment Trusts and Investment Corporations (Act No. 198 of 1951, as amended; the “Investment TrustAct”) in which MIRAI is the surviving corporation and SAKURA is the absorbed corporation.
Article 2

Trade Names and Addresses of Merger Parties

The trade names and addresses of the surviving corporation and absorbed corporation are as follows:(1)

Surviving corporation’s trade name and address
Trade name: MIRAI Corporation
Address: 2-1, Nishi-Kanda 3-chome, Chiyoda-ku, Tokyo(2)

Absorbed corporation’s trade name and address
Trade name: Sakura Sogo REIT Investment Corporation
Address: 8-11, Kudan Minami 3-chome, Chiyoda-ku, Tokyo

Article 3.
Method for Calculating Number of Investment Units of MIRAI to Be Delivered ThroughMerger and Matters Concerning Allotment of Them
1. Upon the Merger, MIRAI shall issue new investment units in the number of investment units in SAKURA
held by the unitholders set forth or recorded in SAKURA’s latest unitholder registry on the day
immediately preceding the Effective Date (excluding MIRAI, SAKURA, and unitholders of SAKURA
that have demanded purchase of their investment units pursuant to Article 149-3, of the Investment Trust
Act (excluding unitholders that have withdrawn such demand for purchase)(“Unitholders Subject to
Allocation”) multiplied by 1.67, and shall deliver to Unitholders to be Allocated 1.67 MIRAI investment
units per each of their investment units of SAKURA.
2. In respect of the preceding paragraph, if the number of investment units of MIRAI that shall be delivered
to the Unitholders Subject to Allocation includes a fraction of less than one unit, MIRAI shall handle
such fractions in accordance with the provisions of Article 149-17 of the Investment Trust Act.
Article 4

Matters Concerning Total Amount of Investment of the Surviving Corporation

The total amount of investment and the amount of investment surplus of MIRAI to be increased through the
Merger are as set out below. However, MIRAI and SAKURA may change such amount throughconsultation and agreement in consideration of the financial condition of MIRAI and SAKURA as of the
day before the Effective Date.
(1)

Total Amount of Investment:
0 yen

(2)

Amount of Investment Surplus:
The amount obtained by deducting the amount provided for in the preceding item from theamount of the change in unitholders’ capital as provided for in Article 22, Paragraph 1 of theOrdinance on Accountings of Investment Corporations (Cabinet Office Ordinance No. 47 of
2006; as amended)Article 5

Effective Date

The effective date of the Merger shall be November 1, 2019; provided, however, that MIRAI and SAKURA
may change the Effective Date upon consultation and agreement between MIRAI and SAKURA in theevent of necessity for the procedures of the Merger or for any other reason.
Article 6

General Meeting of Unitholders for Approval of Merger Agreement, etc.

1.

MIRAI shall hold a general meeting of unitholders on September 10, 2019, or the other date separately
agreed by and between MIRAI and SAKURA, and shall request the approval of the approval of thisAgreement pursuant to the provisions set forth in Article 149-7, Paragraph 1 of the Investment Trust
Act and other proposals separately agreed by and between MIRAI and SAKURA.

2.

SAKURA shall hold a general meeting of unitholders on August 30, 2019 or the other date separately
agreed by and between MIRAI and SAKURA, and shall request (i) the approval of this Agreement
pursuant to the provisions set forth in Article 149-2, Paragraph 1 of the Investment Trust Act, (ii) the
termination, as of the Effective Date, of its asset management agreement with the asset managementcompany, with the condition precedent that the Merger becomes effective, and other proposals
separately agreed by and between MIRAI and SAKURA.

Article 7

Post-Merger Related Corporations, etc. of MIRAI

1. MIRAI’s trade name will not change upon Merger, and the trade name will continue to be MIRAICorporation.
2. The asset management company (which is prescribed in Article 2, Paragraph 21 of the Investment Trust
Act; the same shall apply hereinafter), the asset custody company (which is prescribed in Article 2,
Paragraph 22 of the Investment Trust Act; the same shall apply hereinafter), the administrative agent(which is prescribed in Article 2, Paragraph 23 of the Investment Trust Act, and which is entrusted withthe business affairs prescribed in each of the items of Article 117 of the Investment Trust Act; the same
shall apply hereinafter), and the accounting auditor of MIRAI shall not change in the Merger; provided,
however, that this shall not apply if MIRAI and SAKURA separately consult and agree otherwise.
3. Subject to the condition precedent that the Merger becomes effective, SAKURA will terminate, as of theEffective Date, its asset management agreement with its asset management company, asset custodian
agreement with its asset custody company, audit agreement with its accounting auditor, generaladministrative service agreement with its administrative agent and other agreements separately agreed
by and between MIRAI and SAKURA; provided, however, that this shall not apply if MIRAI andSAKURA separately consult and agree otherwise.
Article 8

Cash Distributions

1. From the date of execution of this Agreement to (and excluding) the Effective Date, MIRAI shall not
distribute cash to unitholders or acquire its investment units based on agreements with its unitholders
except for the distribution of cash in the total amount of JPY 2,271 million (JPY 5,745 per unit) for the
fiscal period ended April 30, 2019 to unitholders or registered pledgees of investment units listed orrecorded on MIRAI’s last unitholders’ register as of April 30, 2019.
2. From the date of execution of this Agreement to (and excluding) the Effective Date, SAKURA shall not
distribute cash to unitholders or acquire its investment units based on agreements with its unitholders
except for the distribution of cash in the amount not exceeding the distributable profit for the fiscal
period ended June 30, 2019 to unitholders or registered pledgees of investment units listed or recordedon SAKURA’s last unitholders’ register as of June 30, 2019.
3. Notwithstanding the preceding two paragraphs, if the Effective Date is amended to the date afterNovember 1, 2019, MIRAI and SAKURA shall decide on how to distribute cash based on theconsultation and mutual agreement.
Article 91.

Cash Delivered upon Merger

In addition to the investment units set forth in Article 3, in place of SAKURA’s cash distribution tounitholders of SAKURA for SAKURA’s fiscal period ending on the day before the Effective Date(the “SAKURA’s Final Fiscal Period”), MIRAI will pay cash delivered upon the Merger to theUnitholders to Receive Allotment and registered pledgees of the investment units thereof within areasonable period, after the Effective Date, considering calculation of SAKURA’s revenue for
SAKURA’s Final Fiscal Period, office procedures for the delivery of a payment, etc. The amount ofsuch cash delivered upon the Merger is calculated in accordance with the following formula(truncated to the nearest yen) for every 1 investment unit of SAKURA they own.
Amount of cash delivered upon
the Merger per investment unit=

Amount of SAKURA’s distributable profits
as of the day immediately preceding the Effective Date
Total number of SAKURA’s outstanding investment units asof the day immediately preceding the Effective Date

In addition, “Total number of SAKURA’s outstanding investment units as of the day immediately
preceding the Effective Date” described in the formula above is the number of investment units that is
obtained by deducting (a) the total number of investment units held by the SAKURA unitholders otherthan the Unitholders to Receive Allotment from (b) the number of SAKURA’s investment units issued
and outstanding as of the day immediately preceding the Effective Date.
Article 10

Succession to Corporation Assets

MIRAI will on the Effective Date succeed all of the assets, liabilities, rights, and obligations of SAKURA
as of the Effective Date.
Article 11

Covenants

1.

From (and including) the date of execution of this Agreement to the Effective Date, MIRAI andSAKURA shall conduct their respective businesses, and manage and operate their own assets insubstantially the same manner as before the execution of this Agreement and in the manner of the ordinary
course of business with the due care of a prudent manager, and cause their respective asset managementcompanies, asset custody companies, administrative agents, or account auditors and other third parties to do
the same. With respect to the actions that materially affect their respective assets or rights and obligations(including an issuance of investment units, execution or implementation of agreements regarding
acquisition or sale of properties and etc., but excluding those prescribed in this Agreement), each party shalltake such actions upon obtaining prior consent of the other party (such consent shall not be unreasonably
refused, withheld or delayed); provided, however, that, this shall not apply to the actions expressly set forthin this Agreement and the actions based on agreements which have entered into as of the date of executionof this Agreement.

2.

From (and including) the date of execution of this Agreement to the Effective Date, MIRAI andSAKURA shall take practical measures that are necessary for the succession by MIRAI of the assets,
liabilities and obligations of SAKURA through the Merger, and the parties shall cooperate, and cause theirrespective asset management companies to cooperate, as necessary in order to take such measures, such as
through mutual information exchange.

3.

From (and including) the date of execution of this Agreement to the Effective Date, MIRAI andSAKURA shall be responsible for performance of their obligations with respect to their loans, etc., andshall not engage in actions resulting in breaches of financial covenants and other violation of contracts.

4.

MIRAI and SAKURA shall promptly notify each other of any events that may reasonably expected to havea material impact on their respective business or financial condition or the Merger during the period untilthe Effective Date, including, not but limited to, breaches of the loan agreements, breaches of laws andregulations by MIRAI or SAKURA, and such indications by the regulatory authorities. In such cases,
MIRAI and SAKURA shall consult in good faith on the countermeasures and shall endeavor to resolve theevent to the maximum extent possible.
Article 12

Conditions Precedent to the Effectiveness of the Merger

MIRAI and SAKURA may terminate this Agreement upon written notice to the other party before the Effective
Date, without bearing any responsibility or obligation of payment to the other party (except for the case in which
there is a breach attributable to the party itself who wishes to terminate this Agreement), if any of following
conditions precedent to the effectiveness of the Merger are unfulfilled or if it becomes clear that any of thefollowing conditions precedent to the effectiveness of the Merger will not be fulfilled (unless such unfulfillment
is caused by any breach, defect, issue attributable to such party itself or a relevant person thereof), on the date
immediately before the Effective Date. If MIRAI and SAKURA do not exercise the right to terminate on thedate immediately before the Effective Date, the Merger shall take effect on the Effective Date :(1)

It has been confirmed in a manner and substance reasonably satisfactory to MIRAI and SAKURA
that the filing of a registration statement on Form F-4 is not required for the Merger under the U.S.
securities laws.

(2)

SAKURA and SAKURA’s asset management company have agreed to terminate as of the Effective
Date the asset management agreement executed between SAKURA and such asset managementcompany, with the contents that MIRAI is reasonably satisfied.

(3)

Approval at each of the general meeting of unitholders provided for in Article 7, Paragraph 1 andArticle 7, Paragraph 2 has been obtained, and other procedures pursuant to applicable laws andregulations and obtaining permits and approvals as required to implement the Merger or the matterscontemplated in connection with the Merger have been completed.

(4)With respect to the SAKURA’s loans whose repayment date will expire from and including the dateof execution of this Agreement to the Effective Date, refinance by loans whose repayment dates,interest rates, and other conditions are reasonably satisfactory to MIRAI shall have been completed.

(5)Consent has been obtained from all of the financial institutions that have been providing loans to
MIRAI or SAKURA, regarding the implementation of the Merger and the basic terms and conditions
for the lending on and after the Effective Date (with respect to loan agreements, including themeasures for the prevention of the occurrence of breaches of financial covenants, breaches of othercovenants and acceleration event attributable to surviving corporation after the Merger), and suchconsent has not been withdrawn by any of such financial institutions.

(6)

Approval from the other parties from whom MIRAI and SAKURA should obtain an approval
regarding the implementation of the Merger in compliance with contracts, etc. (except (i) financial
institutions prescribed in the preceding item and (ii) the parties with whom MIRAI and SAKURA
have consulted and agreed that there is little importance to maintain relevant agreement, etc. for
operation of the surviving corporation after the Merger) has been obtained.

(7)

There has been no breach (excluding minor breach) of contractual obligations (including thisAgreement) or any default in monetary obligations (including tax due and payable) (however,excluding minor breach), as to MIRAI and SAKURA. In addition, there has been no occurrence ofacceleration event (including any event that shall fall in an event of default as a result of notice, thepassage of time, or both), suspension of payment, inability to pay debts, or commencement of or filingof petition for bankruptcy, special liquidation, civil rehabilitation, other applicable legal insolvency
procedures, or procedures for private arrangement such as Turnaround ADR as to MIRAI andSAKURA.

(8)

None of MIRAI, MIRAI’s asset management company or SAKURA has received administrative
sanction such as deletion of the registration, suspension of business in whole or in part, or otheradministrative sanction that would cause material hindrance or material adverse effects to implement
the Merger from the regulatory agencies.
(9)

Other than above, there exist no events that are reasonably considered to be a material obstruction or
issue for the realization of the Merger.

Article 13

Amendment to the Merger Conditions; Termination of this Agreement

MIRAI and SAKURA may, upon agreement through consultation in good faith, amend the conditions of the
Merger or other contents of this Agreement or terminate this Agreement, if, during the period from andincluding the date of execution of this Agreement to the day immediately preceding the Effective Date, (i)there is a material change in the assets or management situation of MIRAI or SAKURA; (ii) a situationarises that will materially obstruct the implementation of the Merger; (iii) achievement of the purpose of the
Merger become difficult due to any other event; or (iv) it becomes apparent that an event has arisen thatmight give rise to any of the above situations.
Article 14.

Expenses

Except as otherwise provided in this Agreement, each party to this Agreement shall bear the expenses
incurred by the day before the Effective Date (including the remuneration for certified public accountants,
lawyers, licensed tax accountants, an investigation firm, advisors and other professionals retained for its
own benefit) in connection with the execution and implementation of this Agreement. MIRAI andSAKURA shall record the Expenses to be borne by itself as expenses in the financial statements for the
fiscal period ending on the day immediately before the Effective Date.
Article 15.

Governing Law and Jurisdiction

1. This Agreement shall be governed by, and construed in accordance with, Japanese Law.
2. MIRAI and SAKURA shall agree that the Tokyo District Court shall have exclusive jurisdiction of thefirst instance over all disputes arising in connection with this Agreement.
Article 16.

Consultation in Good Faith

With respect to any matter not described in this Agreement, MIRAI and SAKURA shall resolve such matterthat is necessary in respect of the Merger in accordance with the purpose of this Agreement upon mutual
consultation.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.)IN WITNESS WHEREOF, two (2) counterparts of this Agreement have been prepared, and each of theparties shall affix its name and seal impression thereon, and retain one (1) counterpart each.
August 5, 2019MIRAI: MIRAI Corporation
2-1, Nishi-Kanda 3-chome, Chiyoda-ku, TokyoMIRAI Corporation
Mitsuo Suganuma, Executive Officer
Sakura Sogo REIT Investment Corporation
8-11, Kudan Minami 3-chome, Chiyoda-ku, Tokyo
Sakura Sogo REIT Investment Corporation
Makoto Muranaka, Executive Officer

SAKURA:Attachment 2

Articles of Incorporation

MIRAI Corporation

MIRAI Corporation Articles of Incorporation
Chapter 1 General Provisions
Article 1 Trade Name
The investment corporation shall be called Toshi Hojin MIRAI, and in English, MIRAI. (hereinafter“MIRAI”).
Article 2 Purpose
The purpose of MIRAI is to invest its assets primarily into Real Estate and Other Assets (as definedin the Ordinance for Enforcement of the Act on Investment Trusts and Investment Corporations(hereinafter the “Investment Trust Act Enforcement Ordinance”); same shall apply hereinafter) outof the Specified Assets (as defined in the Act on Investment Trusts and Investment Corporations(hereinafter the “Investment Trust Act”); same shall apply hereinafter) pursuant to the Investment
Trust Act.
Article 3 Location of Head Office
The head office of MIRAI shall be in Chiyoda-ku, Tokyo.
Article 4 Method of Public Notice
MIRAI shall make public notice by publication in the Nihon Keizai Shimbun.

Chapter 2 Investment Units
Article 5 Redemption of Investment Units upon the Request of Unitholders and Acquisition of
Investment Units by MIRAI based on the Agreement with Unitholders
1． MIRAI shall not redeem investment units upon the request of unitholders.
2． MIRAI may acquire its investment units for value by entering agreements with unitholders.
Article 6

Total Number of Investment Units Authorized to be Issued and Offering of Investment Units

1． The total number of investment units of MIRAI authorized to be issued is 20 million units.
2． The issue price of investment units offered in Japan must account for more than 50% of theaggregate issue price of the investment units of MIRAI.
3． MIRAI may, upon obtaining the approval of the board of directors, solicit any persons to subscribe
investment units to be issued by MIRAI to the extent the number of the offered units is within the
total number of investment units authorized to be issued prescribed in Paragraph 1. The amount tobe paid in for one investment unit for subscription (meaning the investment units allotted to persons
who, in response to such offer, applied for subscription to such investment units) shall be the pricewhich is decided by the executive director and approved by the board of directors as a fair price inlight of the assets held by MIRAI (hereinafter the “Investment Assets”).
Article 7 Matters relating to Investment Units HandlingIn addition to those prescribed by laws and regulations or these Articles of Incorporation,
procedures relating to investment units, including registration or recording in the registry ofunitholders of MIRAI and procedures for execution of unitholders’ rights, and the associated fees,
shall be governed by the “Investment Units Handling Rules” prescribed by the board of directors.
Article 8 Minimum Amount of Net Assets to be Regularly Held by MIRAIThe minimum amount of net assets to be regularly held by MIRAI is 50 million yen.

Chapter 3 General Meeting of Unitholders
Article 9 Convocation
1.

Except as otherwise prescribed by laws and regulations, general meetings of unitholders of MIRAI
shall be convened, pursuant to the resolution of the board of directors, by the executive director in
the case where there is only one executive director, or by one executive director, in accordance withthe order prescribed in advance by the board of directors, in the case where there are two or more
executive directors.

2. A general meeting of unitholders of MIRAI shall be convened on or after July 1, 2017 without delay,and subsequently, it shall be convened every other year on or after July 1 without delay. MIRAI
may also convene extraordinary general meetings of unitholders whenever necessary.
3.

To convene the general meeting of unitholders, Executive directors must give public noticeconcerning the date of general meeting of unitholders at least 2 months before the date of thegeneral meeting of unitholders, and notice must be dispatched to each unitholder in writing at least
2 weeks before the date of the general meeting of unitholders. However, such public notice is not
required with respect to a general meeting of unitholders held prior to the date on which 25 months
have elapsed from the date on which the immediately preceding general meeting of unitholders washeld in accordance with the provisions of the first sentence of the preceding paragraph.

Article 10 Chairperson
General meetings of unitholders of MIRAI shall be chaired by the executive director in the casewhere there is only one executive director, or by one executive director, in accordance with theorder prescribed in advance by the board of directors, in the case where there are two or more
executive directors. In the event of any accident involving the executive director undertaking therole of chairperson, such executive director shall be replaced as chairman by one of other executive
director or supervisory directors in accordance with the order prescribed in advance by the board of
directors.

Article 11 Resolutions
1． Except as otherwise prescribed by laws and regulations or these Articles of Incorporation,
resolutions of a general meeting of unitholders shall be made by a majority of the voting rights heldby the unitholders in attendance.
2.

A unitholder may exercise his or her voting rights by selecting as proxy another unitholder having
voting rights in MIRAI.

3.

In the case of the preceding paragraph, a unitholder or his/her proxy shall be required to submit to
MIRAI a document evidencing the authority of its proxy for each general meeting of unitholders.

Article 12 Exercise of Voting Rights in Writing
1． The exercise of voting rights in writing shall be effected by stating the necessary matters in the
documents for the unitholders to exercise their voting rights (hereinafter referred to as the “VotingForm”) and submitting such Voting Form to MIRAI by the time specified by laws and regulations.
2． The number of voting rights exercised in writing pursuant to the preceding paragraph shall be
included in the number of voting rights held by unitholders in attendance at the general meeting ofunitholders.
Article 13 Exercise of Voting Rights by Electromagnetic Method1.

The exercise of voting rights by electromagnetic method shall, pursuant to the provisions of laws
and regulations, be effected by obtaining the consent of MIRAI and by providing the mattersrequired to be stated in the Voting Form to MIRAI by electromagnetic method by the time specified
by laws and regulations.

2.

The number of voting rights exercised by electromagnetic method pursuant to the preceding
paragraph shall be included in the number of voting rights held by unitholders in attendance at thegeneral meeting of unitholders.

Article 14 Deemed Affirmative Vote
1． If a unitholder neither attends a general meeting of unitholders nor exercises his/her voting rights,
such unitholder shall be deemed to have voted affirmatively to the proposal(s) submitted to thegeneral meeting of unitholders (in the cases where more than one proposal have been submitted andthey include conflicting proposals, excluding all of those conflicting proposals).
2． The number of voting rights held by unitholders that are deemed to have voted affirmatively to the
proposal pursuant to the preceding paragraph shall be included in the number of voting rights heldby unitholders in attendance at the general meeting of unitholders.
Article 15 Record Date, Etc.
1． In a case where MIRAI convenes a general meeting of unitholders pursuant to the provisions of thefirst sentence of Article 9, Paragraph 2, MIRAI shall take the unitholders registered or recorded in
the final registry of unitholders on the last day of October 2019 and subsequently on the last day ofOctober every other year to be the unitholders who are entitled to vote at the relevant general
meeting of unitholders. In a case where MIRAI convenes a general meeting of unitholders pursuant
to the provisions of the second sentence of Article 9, Paragraph 2, MIRAI shall determine
unitholders registered or recorded in the final registry of unitholders as of the record date
determined by a resolution of the board of directors and announced in advance in a public notice by
MIRAI in accordance with laws and regulations, to be the unitholders who are entitled to vote at therelevant general meeting of unitholders in principle.
2.

Regarding the proceedings of a general meeting of unitholders, minutes that set forth or record an
overview of the course of the proceedings, the results thereof, and other matters prescribed by laws
and regulations, shall be prepared.

Chapter 4

Executive Directors and Supervisory Directors

Article 16 Number of Executive Directors and Supervisory Directors
The MIRAI shall have at least one executive director and two supervisory directors (provided,
however, that the number of supervisory directors shall be at least the number obtained by adding
one to the number of executive directors).
Article 17 Election and Term of Office of Executive Directors and Supervisory Directors, Etc.
1． Except as otherwise prescribed by laws and regulations, executive directors and supervisory
directors shall be elected by a resolution of a general meeting of unitholders.
2． The term of office of executive directors and supervisory directors shall be a two- year period after
their assumption of office; provided, however, that this shall not preclude the extending or
shortening of the term to the extent permitted by laws and regulations by resolution of a general
meeting of unitholders. In addition, the term of office of an executive director or a supervisory
director who is elected to fill a vacancy or because of an increase in the number of officers shall be
the same as the remaining term of the predecessor or incumbent.
3． The period during which the resolution on the election of substitute directors (directors mean
executive directors and supervisory directors; same shall apply hereinafter) to fill a vacancy willremain in force shall continue until the expiration of the term of office of the directors to be
substituted who were elected at the general meeting of unitholders at which the aforementioned
resolution was adopted (in cases where the directors were not elected at such general meeting ofunitholders, then at the most recent general meeting of unitholders at which the directors were
elected); provided, however, that such period may be shortened by a resolution of the general
meeting of unitholders.
Article 18 Standards for Payment of Remuneration for Executive Directors and Supervisory Directors
Standards for the payment of remuneration to the executive directors and the supervisory directorsof MIRAI and the time of payment thereof shall be as follows:(1)Remuneration for an executive director shall be no more than 500,000 yen per month, in theamount to be determined by the board of directors, and such remuneration shall be paid by
the last day of each month by remittance into the account designated by the relevant
executive director.

(2)

Remuneration for a supervisory director shall be no more than 500,000 yen per month, in theamount to be determined by the board of directors, and such remuneration shall be paid by
the last day of each month by remittance into the account designated by the relevantsupervisory director.

Article 19 Exemption of Liability for Damages of Executive Directors and Supervisory Directors to
MIRAI
If an executive director or a supervisory director performed his or her work duties in good faith andwithout gross negligence, and when MIRAI finds it particularly necessary taking into consideration
the details of the facts that are the source of liability, the status of the execution of the duties of suchdirector, and other circumstances, MIRAI may, to the extent allowed by laws and regulations, byresolution of the board of directors, release such director from liability for damages under Article
115-6, Paragraph 1 of the Investment Trust Act.
Chapter 5

Board of Directors

Article 20 Convocation
1． Except as otherwise prescribed by laws and regulations, meetings of the board of directors shall be
convened by the executive director in the case where there is only one executive director, or by one
executive director in accordance with the order prescribed in advance by the board of directors, inthe case where there are two or more executive directors.
2.

Executive directors or supervisory directors who do not have the authority to convene meetings ofthe board of directors may request convocation of a meeting of the board of directors in accordancewith the provisions of the Investment Trust Act.

3． Convocation notices for a meeting of the board of directors shall be sent to all executive directors
and supervisory directors at least three days prior to the meeting; provided, however, that the
convocation period may be shortened in the case where there is an urgent necessity.
4.

Meetings of the board of directors may be held without the convocation procedures upon theconsent of all of the executive directors and supervisory directors.

Article 21 Chairman
The executive director shall chair the meetings of the board of directors in the case where there is
only one executive director, or one of the executive directors shall chair the meetings of the board of
directors in accordance with the order prescribed in advance by the board of directors in the casewhere there are two or more executive directors. If such executive director to be the chairman isunable to act as such due to absence or accidents, one of the other executive directors shall chair themeeting of the board of directors in accordance with the order prescribed in advance by the board of
directors; provided, however, if all of the executive directors are unable to act as such due toabsence or accidents, one of the supervisory directors shall chair the meeting of the board of
directors in accordance with the order prescribed in advance by the board of directors.
Article 22 Resolution, Etc.
1． Except as otherwise prescribed by laws and regulations or these Articles of Incorporation,
resolutions of the board of directors shall be made by a majority vote at a meeting attended by amajority of the members entitled to participate in the vote.
2． Regarding the proceedings of meetings of the board of directors, minutes that set forth or record an
overview of the course of the proceedings, the results thereof, and other matters prescribed by laws
and regulations, shall be prepared, and the executive directors and the supervisory directors present
at such meeting shall sign their names or affix their names and seals or digital signs to such minutes.
Article 23 Board of Directors’ Rules
In addition to those prescribed by laws and regulations or these Articles of Incorporation, mattersrelating to the board of directors shall be governed by the “Board of Directors’ Rules” prescribed by
the board of directors.

Chapter 6

Accounting Auditor

Article24 Election of Accounting Auditor
Except as otherwise prescribed by laws and regulations, an accounting auditor shall be elected by aresolution of the general meeting of unitholders.
Article 25 Term of Office of Accounting Auditor
1． The term of office of the accounting auditor shall be until the conclusion of the first general meetingof unitholders held after the first Closing Date (as defined in Article 35; same shall apply
hereinafter) after the passage of one year from the accounting auditor’s assumption of office.
2． Unless a resolution deciding otherwise is passed at the general unitholders meeting referred to in thepreceding paragraph, the accounting auditor shall be deemed to have been reelected at that general
meeting of unitholders.
Article 26 Standards for Payment of Remuneration for Accounting Auditor
Remuneration for the accounting auditor (excluding remuneration other than for accounting audit)
shall be the amount to be determined by the board of directors; provided, however, that it shall be no
more than 20 million yen per Closing Date subject to auditing. Such amount shall be paid byremittance into the account designated by the accounting auditor within three months from the date

when the accounting auditor requests such payment after MIRAI receives all of the audit reportrequired on the basis of the Investment Trust Act, other laws and regulations.
Article 27 Exemption of Liability for Damages of Accounting Auditor to Investment Corporation
If the accounting auditor performed its work duties in good faith and without gross negligence, andwhen MIRAI finds it particularly necessary taking into consideration the details of the facts that are
the source of liability, the status of the execution of the duties of the accounting auditor, and othercircumstances, MIRAI may, to the extent allowed by laws and regulations, by resolution of theboard of directors, release the accounting auditor from liability for damages under Article 115-6,
Paragraph 1 of the Investment Trust Act.

Chapter 7

Investment Target and Investment Policy

Article 28 Basic Investment Policy
MIRAI shall manage the Investment Assets primarily as investment in real estate, real estateleasehold rights, surface rights and the trust beneficiary interests of trusts having only these trust
assets in Real Estate and Other Assets and invest them with the aim of securing stable profits in themedium and long term and steady growth of the Investment Assets through continuous investment.
Article 29 Investment Perspective
1． In the case of MIRAI invests in real estate (for the purpose of this paragraph, including Real Estate,etc. (as defined in Article 30, Paragraph 1 (2)) and each real estate backing Real Estate Backed
Securities (as defined in Article 30, Paragraph 1 (3))), MIRAI shall invest in real estate the use ofwhich is offices, retail facilities, hotels or residential properties and other various uses without
limiting the primal use.
2． MIRAI shall engage in investments within Japan.
3． MIRAI shall ensure that the total amount of the Specified Real Estate (this means the Specified
Assets acquired by MIRAI that are real estate, real estate leasehold rights or surface rights, or the
beneficiary interest of a trust having as trust assets real estate ownership, land leasehold rights, or
surface rights) accounts for at least 75% of the total amount of the Specified Assets held by MIRAI.
Article 30 Types, Purpose, and Scope of Assets which are Investment Target
1． In accordance with the basic investment policy prescribed in Article 28, MIRAI shall makeinvestments in the Specified Assets listed below:(1)

Real estate(2)

The assets listed below (hereinafter collectively referred to as “Real Estate Equivalents”; realestate and Real Estate Equivalents are collectively referred to as “Real Estate, etc.”)(i)

Real estate leasehold rights(ii) Surface rights

(iii) Trust beneficiary interests of a trust having as trust assets real estate, real estate leasehold
rights, or surface rights (including blanket trusts in which cash incidental to the real estateis also entrusted)(iv) Trust beneficiary interests of a trust having cash as its initial trust assets the purpose ofwhich is management of trust assets by investing in real estate, real estate leasehold rights,
or surface rights(v) Equity interests in anonymous associations in relation to real estate (equity interests incontracts whereby one party makes investment in the asset management by thecounterparty of (1) real estate or (2) assets of the kind listed in (2) (i) through (iv) and thecounterparty manages the contribution by the first party by primarily investing it in thecited assets and distributes the profits derived from those investments; hereinafter referred
to as the “Equity Interests in Anonymous Associations in Relation to Real Estate”: same
shall apply hereinafter)(vi) Trust beneficiary interests of a trust having cash as its initial trust assets the purpose ofwhich is management of trust assets by investing primarily in the assets listed in (v)(3)

Assets listed below that aim to invest an amount of more than a half of the underlying asset
in the Real Estate, etc. (including the interests which should be indicated in the subject
securities/certificates in instances where securities/certificates indicating the interests are notissued) (hereinafter collectively referred to as the “Real Estate Backed Securities”)(i)Preferred equity securities (as defined in the Act on the Securitization of Assets(hereinafter referred to as the “Asset Securitization Act”))(ii) Beneficiary certificates of investment trusts (as defined in the Investment Trust Act)(iii) Investment securities of investment corporations (as defined in the Investment Trust Act)(iv) Beneficiary certificates of specific purpose trusts (as defined in the Asset Securitization
Act)(v) Equity interests in anonymous associations securities (this means securities indicating
equity interests in anonymous associations as defined in the Financial Instruments andExchange Act (hereinafter referred to as “FIEA”))
2.

In addition to the Specified Assets listed in the preceding paragraph, MIRAI shall also invest in theSpecified Assets listed below.
(1)

Other Specified Assets (including the interests which should be indicated in the subject
securities/certificates in instances where securities/certificates indicating the interests are notissued)(i)

Deposits(ii) Call loans(iii) Government bonds (as defined in the FIEA)(iv) Local government bonds (as defined in the FIEA)(v) Corporate bonds issued by corporations in accordance with special law (as defined in the
FIEA)

(vi) Specified corporate bonds as prescribed in the Asset Securitization Act (as defined in theFIEA)(vii) Corporate bonds (as defined in the FIEA)(viii)Negotiable certificates of deposit(ix) Trust beneficiary certificates for loan trusts (as defined in the FIEA)(x) Commercial paper (as defined in the FIEA)(xi) Monetary claims (as defined in the Order for Enforcement of the Act on Investment Trusts
and Investment Corporations (hereinafter referred to as the “Investment Trust Act
Enforcement Order”)(xii) Share certificates (as defined in the FIEA)(xiii)Trust beneficiary interests of a trust having cash as its initial trust assets the purpose ofwhich is management of the trust assets by investing primarily in the assets listed in (1)through (12)(xiv) Securities (as defined in the Investment Trust Act and excluding securities falling under
any of those defined in the Paragraph 1, Item 2, Item 3 or this article; same shall apply
hereinafter)(2)

Derivative transactions (as defined in the Investment Trust Act Enforcement Order)(3)

Renewable Energy Power Generation Facility (as defined in the Investment Trust Act
Enforcement Order)(4)

Right to Operate Public Facility, etc. (as defined in the Investment Trust Act Enforcement
Order)

3.

In addition to the foregoing, MIRAI may invest in the following rights or interests, etc., theacquisition of which is determined to be necessary or useful in connection with Real Estate, etc. orReal Estate Backed Securities (hereinafter referred to as the “Real Estate Related Assets”).
(1)

Trademark rights, etc. based on the Trademark Act (this means trademarks or the exclusive
or non-exclusive right to use trademarks)(2)

Copyrights, etc., as defined in the Copyright Act(3)

Movables (excluding assets falling under the Renewable Energy Power Generation Facility)(4)

Rights to use the source of a hot spring as prescribed by the Hot Springs Act and facilities,
etc., related to such hot spring(5)

Specified contributions (as defined in the Asset Securitization Act)

(6)

Equity interests in partnerships as defined in the Civil Code (excluding assets falling under
any of those securities)(7)

Damage insurance contracts and rights or profits under damage insurance contracts(8)

Carbon dioxide equivalent quotas or other similar assets or emission rights (including
emission rights for greenhouse gases) based on the Act on Promotion of Global WarmingCountermeasures(9)

Easements(10)

Other rights or interests, the acquisition of which is determined to be necessary or useful inconnection with Real Estate Related Assets

4.

In addition to the foregoing, MIRAI may acquire other rights or interests to be held in conjunction
with the organization management of MIRAI.

5.

If securities that indicate the rights that must be indicated on securities specified in Article 2,
Paragraph 2 of the FIEA are not issued, paragraph 1 through paragraph 4 shall be applied bydeeming the relevant rights as the relevant securities.

Article 31 Restrictions on Investment
1． The monetary claims prescribed in Paragraph 2, Item (1), (xi) of the preceding article and the
securities prescribed in Paragraph 2, Item (1), (xiv) of the preceding article shall not be the subjectof active investments, and in cases where there are surplus funds, investments shall be made in such
assets, taking security and liquidity of investment into consideration, and in other cases, investment
shall be made in such assets taking into consideration relevance with Real Estate Related Assets.
2． In regards to rights relating to the derivative transactions set forth in Paragraph 2, Item (2) of thepreceding article, investment therein shall be limited to investment for the purpose of hedging
against interest rate risk arising from the liabilities of the Investment Corporation and other risks.
Article 32 Purpose and Scope of the Leasing of Portfolio Assets
1.

For the purpose of securing stable profits in the medium-to-long term, with regard to all real estatethat belongs to the Investment Assets (including real estate backing Real Estate Related Assets otherthan real estate which MIRAI acquires), MIRAI, in principle, lease the real estate (including for the
purpose of using as a parking area and for setting up displays, etc.). As a part of the asset
management, MRIAI may lease real estate and sublease such real estate to third parties.

2.

When conducting lease of real estate as per the preceding paragraph or otherwise investing in or
managing Real Estate, etc., MIRAI may receive or deposit security deposits, guaranty deposits andother similar monies; if it receives such monies, the Investment Corporation shall invest suchreceived monies in accordance with the stipulations of MIRAI’s basic investment policy andinvestment perspective, etc.

3.

MIRAI may lease the Investment Assets other than real estate (including real estate backing theReal Estate Related Assets other than real estate which MIRAI acquires) that belongs to theInvestment Assets.

Article 33 Asset Evaluation Rules
1.

The Investment Corporation shall conduct asset evaluation of the Investment Assets carefully andfaithfully for the benefit of unitholders.

2.

When evaluating the Investment Assets, the Investment Corporation shall endeavor to ensure thereliability of the evaluations.

3.

Evaluation as a going concern will be the basic principle in the evaluation of the Investment Assets.

Article 34 Methods, Standards and Reference Dates for Asset Evaluation

1.

The methods for asset evaluation used by MIRAI shall be defined as follows for each type of theInvestment Assets, in accordance with the Investment Trust Act, the Rules for Accounting of
MIRAI and rules stipulated by the Investment Trusts Association, Japan (hereinafter the“Investment Trusts Association”), and other laws and regulations, as well as generally accepted
corporate accounting principles and practices in Japan.
(1)

Real estate, real estate leasehold rights or surface rights (the assets set forth in Article 30,
Paragraph 1, (1) and (2), (i) through (ii))
Asset shall be evaluated at a value obtained by deducting the accumulated depreciation
amount from the acquisition price. Depreciation shall be calculated on a straight-line basis
for buildings and facilities, etc.; provided, however, that if the straight-line basis becomesinappropriate for any legitimate reason, a different method may be used for the calculation of
the depreciation of the facilities, etc., as long as it can reasonably be determined that noproblems will arise from the perspective of the protection of the unitholders.

(2)

Trust beneficiary interests of a trust having as trust assets real estate, real estate leasehold
rights or surface rights (the assets set forth in Article 30, Paragraph 1, (2), (iii))
Accounting shall be conducted pursuant to generally accepted corporate accounting
principles in Japan, and the value of the trust beneficiary interests held by MIRAI shall becalculated based on the amount obtained by subtracting the amount of trust liabilities fromthe aggregate value of trust assets after, in the case where the trust assets are the assets listedin (1) above, evaluating the trust assets by the method stated in (1) above, and, in the casewhere the trust assets are financial assets, evaluating the trust assets in accordance withgenerally accepted accounting principles and practices in Japan.

(3)

Trust beneficiary interests of a trust having cash as its initial trust assets the purpose of which
is management of the trust assets by investing in real estate, real estate leasehold rights or
surface rights (the assets set forth in Article 30, Paragraph 1, (2), (iv))
Accounting shall be conducted pursuant to generally accepted corporate accounting
principles in Japan, and the value of the trust beneficiary interests held by MIRAI shall becalculated based on the amount obtained by subtracting the amount of trust liabilities fromthe aggregate value of trust assets after, in the case where the trust assets are composed of theassets listed in (1) above, evaluating the trust assets by the method stated in (1) above, and,in the case where the trust assets are composed of financial assets, evaluating the trust assets
in accordance with generally accepted accounting principles and practices in Japan.

(4)

Equity Interests in Anonymous Associations in Relation to Real Estate (the assets set forth in
Article 30, Paragraph 1, (2), (v))
The value of the Equity Interests in Anonymous Associations in Relation to Real Estate held
by MIRAI, in principle, shall be calculated based on the amount obtained by subtracting theamount of anonymous association liabilities from the aggregate value of anonymous
association assets after, in the case where the assets of the anonymous associations arecomposed of the assets listed in (1) through (3) above, evaluating the assets of theanonymous associations by the methods respectively stated in (1) through (3) above, and, inthe case where the assets of the anonymous associations are composed of financial assets,
evaluating the assets of the anonymous associations in accordance with generally accepted
accounting principles and practices in Japan.
(5)

Trust beneficiary interests of a trust having cash as its initial trust assets the purpose of whichis to manage the trust assets by investing primarily in the Equity Interests in Anonymous
Associations in Relation to Real Estate (the assets set forth in Article 30, Paragraph 1, (2),(vi))
Accounting shall be conducted pursuant to generally accepted corporate accounting
principles in Japan, and the value of the trust beneficiary interests held by MIRAI shall becalculated based on the amount obtained by subtracting the amount of trust liabilities fromthe aggregate value of trust assets that are equity interests in anonymous associations after
evaluating the equity interests in anonymous associations in accordance with (4) above.

(6)

Securities (the assets set forth in Article 30, Paragraph 1, (3) and Article 30, Paragraph 2, (1)(iii) through (vii), (ix), (x), (xii) or (xiv))
If market prices are available for the securities, the value shall be calculated based on themarket price (i.e., the trading price on a financial instruments exchange, the price publishedby the Japan Securities Dealers Association, etc. or the similar trading prices at whichtransactions are formed on any trading system where securities can be sold and converted
into cash from time to time in accordance with the foregoing prices; same shall apply
hereinafter). If no market price is available, those securities shall be evaluated at a value
reasonably calculated. The market price or reasonably calculated value for the securities
shall be obtained using the same method every period, except in cases where a change inmethod would increase the accuracy of the evaluation. If neither a market price nor areasonably calculated price can be obtained, the securities may be evaluated at theacquisition cost.

(7)

Monetary claims (the assets set forth in Article 30, Paragraph 2, (1), (xi))
The value shall be obtained by deducting any allowance for bad debt from the acquisition
price; provided, however, that if the monetary claims were acquired at a price lower orhigher than their face value and the difference between the acquisition price and their facevalue can be considered to be an interest adjustment, the value shall be obtained bydeducting the allowance for bad debt from the value calculated by the amortized cost
method.

(8)

Trust beneficiary interests of a trust having cash as its initial trust assets the purpose of whichis to manage the trust assets by investing primarily in the assets listed in Article 30,
Paragraph 2, (1), (i) through (xii) (the assets set forth in Article 30, Paragraph 2, (1), (xiii))
Accounting shall be conducted pursuant to generally accepted corporate accounting
principles in Japan, and in the case where the trust assets are composed of the assets listed in(6) or (7) of this paragraph, they shall be evaluated by the relevant method stated therein, andthe amount obtained by subtracting the amount of liabilities from the aggregate of theseresults shall be the value.

(9)Interests in derivative transactions (the assets set forth in Article 30, Paragraph 3, (2))(i)

Claims and obligations from derivative transactions listed on a Financial Instruments
Exchange
Evaluation shall be made by the value calculated based on the final price on the Financial
Instruments Exchange (closing price; if there is no closing price, then the quotation (i.e.,
the lowest ask price or highest bid price published, or middle rate of those prices whenboth of those prices have been published)). If there is no final price on that day then theevaluation shall be made by the value calculated based on the final price on the closest
preceding day.

(ii) Claims and obligations from non-listed derivative transactions for which there is nomarket price on a Financial Instruments Exchange
The value reasonably calculated as an equivalent to a market price. If calculating a fairvalue is found to be extremely difficult, then evaluation shall be made by the acquisition
price.
(iii) For those transactions that are found to be hedging transactions in accordance withgenerally accepted accounting principles and practices in Japan, hedge accounting can beapplied. Further, for those transactions that satisfy the criteria for special treatment forinterest rate swaps in accordance with the accounting principles for financial instruments,
such special treatment can be applied, regardless of whether they fall under (i) or (ii)above.
(10)

OthersIf not provided for above, evaluations shall be made at the value obtained in accordance withthe evaluation rules of the Investment Trusts Association, Japan, or at the value obtained inaccordance with generally accepted accounting principles and practices in Japan.

2.

If asset evaluation methods other than those mentioned in the preceding paragraph are to be used inorder to indicate values in asset management reports, etc., evaluation shall be made in the following
manner.
(1)

Real estate, real estate leasehold rights and surface rights
In principle, the evaluation shall be based on the appraisal by a real estate appraiser.

(2)

Trust beneficiary interests of a trust having as its trust assets real estate, real estate leasehold
rights and surface rights and Equity Interests in Anonymous Associations Relating to Real
EstateEvaluations shall be made by calculating the amount equivalent to the Equity Interests inAnonymous Associations in Relation to Real Estate or the value of the interest in the trust
beneficiary interests based on the amount obtained by subtracting the amount of liabilities
from the aggregate value of assets, after evaluating the assets, in the case where the trust
assets or the assets of anonymous associations are composed of the assets set forth in (1) of
this paragraph, by the method described therein, and in the case where the trust assets or theassets of anonymous associations are composed of financial assets, in accordance withgenerally accepted accounting principles and practices in Japan.

(3)Interests in derivative transactions (cases where special treatment of interest swaps is
employed pursuant to Paragraph 1, (9), (iii))
The value specified in Paragraph 1, (9), (i) or (ii)3.

The reference dates for asset evaluations shall be the respective Closing Dates stipulated in thefollowing article; provided, however, that, for assets listed in Article 30, Paragraph 1, (3) orParagraph 2 that can be evaluated based on their market prices, the reference dates shall be the last
day of each month.

Article 35 Closing Dates
The fiscal period of MIRAI shall be the periods from May 1 to the last day of October of each year
and from November 1 to the last day of April of the following year (hereinafter, the last day of eachfiscal period is referred to as a “Closing Date”).
Article 36 Policy on the Distribution of Funds
1.

Distribution Policy
MIRAI shall, in principle, make distributions pursuant to the following policy, and shall follow therules stipulated by the Investment Trusts Association.
(1)

The distributable amount (hereinafter referred to as the “Distributable Amount”) arising fromthe management of Investment Assets of the Investment Corporation means the amount of
profit calculated on each Closing Date in accordance with the Investment Trust Act andgenerally accepted corporate accounting principles and practices in Japan (meaning the profit
as defined in Article 136, Paragraph 1 of the Investment Trust Act; same shall apply
hereinafter).

(2)

The amount of distributions shall be an amount determined by MIRAI (provided, however,
that, in any case, the amount shall not be greater than the Distributable Amount), which
exceeds the amount equivalent to 90% of the distributable profit of MIRAI (if there is achange in the method of calculation due to the amendment to laws and regulations, then theamount as calculated after such change), as defined in the special taxation measures forinvestment corporations as set forth in Article 67-15, Paragraph 1 of the Act on Special
Measures Concerning Taxation; provided.

(3)

The amount of profit not allocated to distributions and retained and the amount of profit
earned by the Closing Date shall be invested in accordance with the stipulations of MIRAI’s
basic investment policy and investment perspective, etc.

2.

Distributions in Excess of the Amount of Profit
In the case where MIRAI determines it to be appropriate by taking into account trends in theeconomic environment, the real estate market, the leasing market, the situation of assets owned by
MIRAI and the finance, the impact that the Investment Corporation’s asset acquisition andfinancing activities may have on the amount of distribution per unit, or other circumstances, or if it
is possible to mitigate imposition of corporation taxes on MIRAI, MIRAI may make distributions offunds in excess of the Distributable Amount, consisting of the distribution amount specified in (2) of

the preceding paragraph plus an amount determined by MIRAI, which is not greater than theamount stipulated by the Investment Trusts Association. Further, if, in the case described above, theamount of funds distributed does not satisfy the requirements for Special Taxation Measures for
Investment Corporations stipulated in laws and regulations, funds may be distributed in an amountdetermined by the Investment Corporation with the objective of satisfying such requirements.
3.

Method for Distribution of Funds
Distributions of funds shall be in cash and, in principle, shall be made within three months from the
Closing Date to unitholders or to pledgees of investment units registered or recorded in the lastregistry of unitholders as of the Closing Date in accordance with the number of investment units.

4.

Period of Exclusion of Right to Demand Distributions
Once three full years have elapsed from the date of the start of the payment of a distribution, theInvestment Corporation will no longer be obligated to make the payment of such distribution. No
interest shall accrue on unpaid distributions.

Article 37 Maximum Amounts, Etc. of Borrowing and Investment Corporation Bonds Issuance1.

For the purpose of contributing to the steady growth of the Investment Assets, efficient asset
management and stability of asset management, MIRAI may borrow funds (including through thecall market) or issue investment corporation bonds for the purpose of procuring funds required forthe acquisition of assets, for the payment of repair costs and other maintenance and management
expenses or of distributions, for the operation of MIRAI, or for the repayment of MIRAI’s debts(including the refund of security deposits and guaranty deposits, the repayment of borrowing andthe redemption of investment corporation bonds (including short-term investment corporation
bonds; same shall apply hereinafter)); provided, however, that the use or the purpose of funds raised
through the issuance of short-term investment corporation bonds must be within the scopeprescribed in laws and regulations. Furthermore, borrowing can only be made from qualified
institutional investors as prescribed by the FIEA (limited to institutional investors as defined in
Article 67-15 of the Act on Special Measures Concerning Taxation).

2.

In the event of borrowing or issuance of investment corporation bonds, as prescribed in thepreceding paragraph, MIRAI may provide the Investment Assets as collateral.

3.

The maximum amount of borrowing and of issuance of investment corporation bonds shall be twotrillion yen respectively and the total of the one may not exceed one trillion yen.

Article 38 Standards for the Payment of Asset Management Fees to Asset Manager
1.

The calculation method and payment timing for fees payable to the asset manager to which MIRAI
entrusts the management of its Investment Assets (hereinafter referred to as the “Asset Manager”)
shall be as set forth below. MIRAI shall not pay the Asset Manager any fees relating to agency
services or brokerage under the Building Lots and Buildings Transactions Business Act.
(1)

Asset Management Fee Ⅰ
Asset Management Fee I, in each fiscal period, shall be the amount of which shall beobtained by multiplying the amount of the total assets stated in the balance sheet of theprevious fiscal period by a rate separately agreed on by MIRAI and the Asset Manager, notto exceed 0.5% per annum (Daily calculation based on actual days in the period on 365 daysa year basis, rounded down to the nearest yen).
(2)

Asset Management Fee Ⅱ。Asset Management Fee Ⅱ, in each fiscal period, shall be the amount of which shall beobtained by multiplying “the amount of which shall be obtained by dividing UnappropriatedRetained Earnings before Deducting Asset Management Fee Ⅱ of the relevant fiscal period(as defined below) by the number of the investment units outstanding as of the Closing Dateof the fiscal period (hereinafter “DPU before Asset Management Fee Ⅱ”)” by NOI after
Depreciation (as defined below) and a rate separately agreed on by MIRAI and the AssetManager, not to exceed 0.001% (rounded down to the nearest yen). That is, AssetManagement Fee Ⅱ shall be calculated using the following formula.
Asset Management Fee Ⅱ = DPU before Asset Management Fee Ⅱ x NOI after Depreciationx a rate separately agreed on by MIRAI and the Asset Manager, not toexceed 0.001%“Unappropriated Retained Earnings before Deducting Asset Management Fee Ⅱ” means theamount obtained by compensating net income before income taxes for the relevant fiscal
period calculated in compliance with generally accepted accounting principles in Japan(before the deduction of Asset Management Fee Ⅱ and nondeductible consumption taxes
relating Asset Management Fee Ⅱ and after the deduction of gains on negative goodwill)with the amount of loss carried forward in cases where MIRAI incurred such loss in theprevious fiscal period.
“NOI after Depreciation” means the amount of which shall be obtained by deducting
expenses for real estate lease business (excluding loss on disposal of fixed assets andincluding depreciation) from the total amount of real estate lease business revenue in therelevant fiscal period.
If MIRAI acquired its own investment units and holds investment units that are not disposedof or cancelled in the accounting period of the relevant fiscal period, the number ofinvestment units that is obtained by excluding the number of own investment units heldfrom the total number of investment units issued and outstanding at the end of theaccounting period of the relevant fiscal period shall be deemed as the total number ofinvestment units issued and outstanding at the end of the relevant fiscal period in thecalculation of the “DPU before Asset Management Fee II.”If the total number of investment units issued and outstanding increases or decreases in therelevant fiscal period as a result of the grounds specified below taking effect, the amount ofAsset Management Fee II shall be adjusted by the methods specified below for each of therelevant grounds.
(i)

Split or Consolidation of Investment Units(i) If investments units of MIRAI were split at a rate of X units for one unit, theamount of Asset Management Fee II for the relevant business period and eachbusiness period thereafter shall be X times the calculated value of Asset Management
Fee II based on the formula above (rounded down to the nearest yen) and (ii) if
investment units of MIRAI are consolidated at a rate of one unit for Y units, theamount of Asset Management Fee II for the relevant business period and eachbusiness period thereafter shall be one Yth of the calculated value of AssetManagement Fee II based on the formula above (rounded down to the nearest yen).

(ii)

Issuance of new investment units by the exercise of subscription rights to investment
units pertaining to free allotment to unitholders
If new investment units are issued by the exercise of subscription rights to investment
units in the relevant fiscal period, the number of investment units that is obtained by
excluding the number of investment units issued at deemed market price (meaning thenumber of investment units obtained by multiplying the number of investment units
increased due to the issuance of such investment units by the ratio obtained by
dividing the amount to be paid upon the exercise of subscription rights to investment
units per unit by the market price per unit; same shall apply hereinafter) from thenumber of investment units increased shall be deemed to have increased. In this case,the amount of Asset Management Fee II for the relevant business period and eachbusiness period thereafter shall be an amount obtained by multiplying the calculated
value of Asset Management Fee II based on the formula above by the ratio obtainedby dividing the value obtained by deducting the total number of investment units
issued at deemed market price for the relevant fiscal period from the number ofinvestment units issued and outstanding for the fiscal period of the relevant businessperiod by the number of investment units issued and outstanding in the fiscal period
immediately prior to the relevant business period (rounded down to the nearest yen).

(3)

Acquisition Fees
In cases where MIRAI acquired Real Estate Related Assets, MIRAI shall pay the amount to
the Asset Manager, as the acquisition fee, obtained by multiplying the acquisition price(meaning the purchase or sale value of the Real Estate Related Assets in the case of thepurchase or sale, the appraisal value of the relevant Real Estate Related Assets acquired byexchange in the case of exchange, and contributions in the case of contribution, excluding
consumption tax and local consumption tax.) by a rate separately agreed on by MIRAI and
the Asset Manager, not to exceed 1.0% (rounded down to the nearest yen).

(4)Disposition Fees
In cases where MIRAI disposed Real Estate Related Assets, MIRAI shall pay the amount to
the Asset Manager, as the disposition fee, obtained by multiplying the disposition price(meaning the purchase or sale value of the Real Estate Related Assets in the case of thepurchase or sale, and the appraisal value of the relevant Real Estate Related Assets disposedby exchange in the case of exchange, excluding consumption tax and local consumptiontax.) by a rate separately agreed on by MIRAI and the Asset Manager, not to exceed 1.0%
(rounded down to the nearest yen).

(5)

Merger Fees
If the Asset Manager conducts an investigation and assessment of assets held by the otherparty of a consolidation-type merger or an absorption-type merger of MIRAI (including
cases where MIRAI is a surviving corporation or absorbed corporation; same shall apply
hereinafter) (hereinafter collectively referred to as the “Merger”) and other businesses
pertaining to the Merger and if the relevant Merger takes effect, MIRAI shall pay theamount to the Asset Manager, obtained by multiplying the total amount of the appraisal
value of assets which a new corporation of the consolidation-type Merger or a surviving
corporation of the absorption-type Merger assumes or holds Real Estate Related Assets thecounterparty of the merger holds, at the time of merger to be transferred to and to be held by
the new merged entity by a rate separately agreed on by MIRAI and the Asset Manager, notto exceed 1.0% (rounded down to the nearest yen).

(6)

Timing for Payment of FeesMIRAI shall pay the fees prescribed in each of the foregoing items in the following time
periods:(i) Asset Management Fee ⅠMIRAI shall pay Asset Management Fee Ⅰ to the Asset Manager within three months ofeach Closing Date.
(ii) Asset Management FeeⅡMIRAI shall pay Asset Management Fee Ⅱ to the Asset Manager within three months ofeach Closing Date.
(iii) Acquisition FeesMIRAI shall pay Acquisition Fees to the Asset Manager by the last day of the monthfollowing the month in the acquisition date of Real Estate Related Assets.
(iv) Disposition FeesMIRAI shall pay Disposition Fees to the Asset Manager by the last day of the monthfollowing the month in the disposition date of Real Estate Related Assets.
(v) Merger Fees
The investment corporation (a new corporation in the case of a consolidation-typemerger and a surviving corporation in the case of MIRAI shall be an absorbed

corporation in an absorption-type merger) shall pay Merger Fees to the Asset Manager
within three months of following the month in which the merger took effect.
2.

When paying asset management fees to the Asset Manager, MIRAI shall also bear an amountequivalent to all national and local consumption taxes applicable to those fees and MIRAI shall pay
an amount equal to the asset management fees to be paid plus the applicable national and local
consumption taxes by electronic bank transfer (all transfer fees and all national and local
consumption taxes applicable to those transfer fees shall be borne by the Investment Corporation) or
by remittance to a bank account designated by Asset Manager.

Article 39 Attribution of Profit and Loss
The profit and loss arising from the Investment Assets of MIRAI as a result of management by the
Asset Manager shall all be attributable to MIRAI.
Article 40 Payment of Miscellaneous Expenses
1.

MIRAI shall bear taxes on the Investment Assets, miscellaneous expenses incurred by MIRAI’s
general administrator, MIRAI’s asset custodian or the Asset Manager in performing administrative
services entrusted by MIRAI. MIRAI shall also bear interest arrears or damages pertaining toadvances made by such general administrator, the asset custodian or the Asset Manager, uponrequest for payment thereof.

2.

In addition to the preceding paragraph, MIRAI shall in principle bear the following expenses. The
details thereof shall be governed by the provisions of agreements with the general administrator,
asset custodian, or the Asset Manager.
(1)

Expenses related to the issuance of investment units and investment equity subscription
rights, the issuance of investment corporation bonds, listing, and maintenance of listing ofinvestment units (including expenses associated with the preparation, printing, delivery ofcertificates and fees for underwriters);(2)

Expenses for the preparation, printing and submission of securities registration statements,
periodic securities reports and extraordinary reports;(3)

Expenses for the preparation, printing and distribution of prospectuses;(4)

Expenses for the preparation, printing and distribution of financial statements and asset
management reports, etc., as prescribed by laws and regulations (including expenses for
submission to supervising government agencies, etc.);(5)

Expenses for public notice, advertising, IR activities, etc., of MIRAI;(6)

Fees and expenses paid to professionals (including financial advisors, legal counsels, tax
advisors, accounting advisors, real estate appraisers, asset inspections, judicial scriveners,etc.);(7)

Fees, out-of-pocket expenses, insurance premiums, advances, etc., for executive directors
and supervisory directors, fees for accounting auditor and expenses for holding generalunitholders meetings and board of directors’ meetings, etc.;

(8)Expenses for the acquisition and disposal, as well as maintenance and management andoperation of the Investment Assets (including expenses related the registration, inspection
expenses for due diligence, etc., trust fees and trust expenses, brokerage fees, advertisingexpenses, administration service costs, damage insurance premiums, maintenance and repair
expenses, utilities expenses, etc.);(9)

Interest on borrowings and on investment corporation bonds, financing fees, underwriting
fees, and other assorted expenses;(10)

Expenses for obtainment and maintenance of ratings of MIRAI;(11)

Expenses required for the operation of MIRAI; and(12)

Other expenses ancillary or similar to any of the above items that should be borne by
MIRAI.

Article 41 National and Local Consumption Taxes
Except as otherwise prescribed herein, MIRAI shall bear the national and local consumption taxes(hereinafter referred to as the “Consumption Taxes”) levied on the expenses and monies for the
management of the Investment Assets and other expenses and monies payable by MIRAI that are
subject to taxation under consumption tax law (hereinafter collectively referred to as the “Taxable
Items”), and MIRAI shall pay the amount of the Consumption Taxes together with the monies forpayment of the relevant Taxable Items. Unless otherwise specified herein, all amounts stated herein
are amounts excluding the Consumption Taxes.

Chapter 8 Entrustment of Services and Work
Article 42 Entrustment of Asset Management, Asset Custody and Other Services and Work
1.

Pursuant to the Investment Trust Act, MIRAI shall entrust asset management services to an AssetManager and asset custody services to an asset custodian. The Asset Manager that will manage theassets of MIRAI shall be Mitsui Bussan & IDERA Partners Co., Ltd.

2.

MIRAI shall also entrust to third parties related work, other than asset management and asset
custody services that must be entrusted to third parties under the Investment Trust Act.

3.

Among work to be entrusted after the establishment of MIRAI, with respect to work relating toofferings for investment units and investment corporation bonds to be issued as well as allotment ofinvestment equity subscription rights without contribution by MIRAI, work relating to the title
transfer of investment equity subscription rights and investment corporation bonds issued by
MIRAI, work relating to the issuance of investment certificates, investment equity subscription
rights certificates and investment corporation bonds certificates, work relating to the holders ofinvestment equity subscription rights and investment corporation bondholders and work relating toacquisition of investment units by the Investment Corporation (these refer to the assorted work set
forth in the Investment Trust Act Enforcement Ordinance), the board of directors shall determine anagent for the General Administrative Services and execute with such agent a General Administrative
Services agreement on the occasion of each such offering or as otherwise necessary.

Implemented as of November 30, 2015
Revised as of January 22, 2016
Revised as of September 9, 2016
Revised as of July 25, 2017
Revised as of May 1, 2019
Revised as of July 24, 2019

Attachment 3

MIRAI Corporation

6th Fiscal Period (From November 1, 2018 to April 30, 2019)

I.

Asset management report

II.

Balance Sheet

III.

Statement of Income and Retained Earnings

IV.

Statement of Changes in Net Assets

V.

Note

VI.

Cash Distributions Statement

VII.

Cash Flow Statement (Reference)I.

Asset management report

1 Overview of Asset Management Performance(1) Investment Performance of MIRAI Corporation

Fiscal Period(million

Operating revenue

From November 1,

From May 1, 2017

From November 1,

From May 1, 2018

From November 1,

2016

To October 31,

2017

To October 31,

2018

To April 30, 20172017

To April 30, 20182018

To April 30, 2019
4,959

1,115

1,713

2,050

2,295

2,427

1,279

1,662

1,907

2,122

2,531

1,037

1,520

1,698

1,867

2,270

1,036

1,520

1,706

1,922

2,271

108,422

123,015

117,022

131,772

152,493(－)(13.5)(4.9)(12.6)(15.7)

52,63353,29353,536

61,59070,854

(－)

(1.3)

(0.5)

(15.0)(15.0)

51,00064,00057,50064,20074,70051,892

51,892

51,89259,656

69,074(unit)

293,750

293,750

293,750

339,210395,410(yen)

179,179

181,424

182,253

181,570

44,797

957

1,520

1,705

1,922

2,271

(yen)

3,260

5,175

5,807

5,668

5,745

(yen)

2,524

5,175

5,807

5,668

4,501

(yen)

736

－

－

－

1,244

(％)

1.9

1.3

1.4

1.5

1.6

(％)

3.9

2.9

3.2

3.3

3.4

(％)

48.5

43.3

45.7

46.7

46.5

(％)

(40.1)

(5.2)

(2.4)

(1.0)

(0.3)

(％)

71.5

100.0

100.0

100.0

78.3

yen)
(millionyen)(millionyen)(million

Total asset

6th FP

4,417(million

Profit5th FP

3,958

yen)

Ordinary profit

4th FP

3,375(million

Operating profit

3rd FP

2,395

yen)

Operating expenses

2nd FPyen)(Compared with theprevious

period)(％)(Note 3)(million

Net asset

yen)(Compared with theprevious

period)(％)(Note 3)
Outstanding interestbearing debt
Unitholders ’yen)capital(Note 4)
Total

(million(millionyen)numberofoutstanding
investment units
Net assets per unit
(Note 5)(million

Total distributions

yen)

Distributions per unit
Distributionsofearnings
Distributions in excessof earnings per unit
Ratio of ordinary profit
to total assets (Note6)
Return of equity (Note6)
Equity ratio at end of
period (Note 6)(Compared with theprevious period)
Payout ratio (Note 6)(Note 1) The fiscal period of MIRAI shall be the periods for six months from May 1 to the last day of October of each year and from November 1 to the last day of April of thefollowing year.
(Note 2) Figures are rounded down while percentage figures are rounded to the nearest tenth, unless otherwise stated.
(Note 3) “-“ are stated In the case of the increase or the decrease of the Comparison with the previous period is 1,000％ and over.
(Note 4) Unitholder’s capital is not be considered changes of unitholders’ capital from the distributions in excess of earnings related to allowance for temporary difference
adjustments.

(Note 5) MIRAI Corporation implement a four-for-one investment unit split with May 1, 2019 as effective date. Net assets per unit in the above table shows pro forma perunit information which has been adjusted to reflect the unit split as if it had been effective at the beginning of the 6th fiscal period.
(Note 6) Figures are calculated using the following formula.

Ratio of ordinary profit

Ordinary profit / ｛(Total assets at beginning of period + Total assets at end of period) /2｝x 100

to total assets
Return of equity

Profit / ｛(Net assets s at beginning of period + Net assets at end of period) /2｝x 100

Equity ratio at end of

Net assets at end of period / Total assets at end of period x 100

periodPayout ratio

Total distributions (excluding distributions in excess of earnings) / Profit x 100(2) Summary of Operating Results for the Fiscal Period ended April 30, 2019a) Historical background of MIRAI Corporation
MIRAI Corporation (hereinafter “MIRAI”) was established on December 4, 2015 by Mitsui Bussan & IDERA Partners Co., Ltd.
(hereinafter the “Asset Manager”) as the organizer with 150 million yen as investment in capital (750 units) under the Act on
Investment Trusts and Investment Corporations of Japan (Act No.198 of 1951, as amended; hereinafter referred to as the“Investment Trust Act”). MIRAI was listed on the Real Estate Investment Trust Securities Market of the Tokyo Stock Exchange(Securities code: 3476) on December 16, 2016. In the fiscal period ended April 30, 2019, MIRAI issued new investment units by
public offering and through a third-party allotment on November 2018, the total number of outstanding investment unit is395,410 units and the number of the properties is 29 (total acquisition price: 145,072 million yen) as of the end of the fiscal
period ended April 30, 2019.
MIRAI sets assets located in Three Metropolitan Areas with high density of population as main investment targets, constructs
the portfolio around “Core Assets” (Note). Through this approach, MIRAI aims to gain stable cash flow in medium to long term
and achieve sustainable growth of unitholders’ values.
(Note) “Core assets” means assets that account for the core of the portfolio of MIRAI. It specifically refers to assets from which MIRAI expects stable rental revenue,
including ensurement of at least 80% occupancy rate, in principle (including a case where it can be expected), of traditional investment properties such as officebuildings, commercial facilities, hotels, residential facilities and logistics facilities, specifically.

b) Investment Environment and Business Performance
The Japanese economy during the period under review was on a moderate recovery trend due to improvements in employment
and the income environment despite some weakness in export and production. In the office leasing market, concerns about
the possible oversupply of office buildings in the metropolitan Tokyo area are cooling down and robust expansion needs areprojected on the back of strong corporate earnings. As vacancy rates remain at historically low levels, rent levels are on therise. In cities outside Tokyo, where new supplies are limited, there are some areas where demand and supply environments
are much tighter.
For the hotel/commercial facility rental business, the expansion of inbound demand is expected to continue as the number of
inbound tourists per month hit a record high in April 2019, topping 10.98 million (government estimate), in addition to the strong
business demand in the hotel field. In the commercial field, the consumer price index (announced by the Ministry of Internal
Affairs and Communications) has been rising for 28 consecutive months following improvements in the employment
environment and there are recent signs of a pickup including a slight increase in retail sales value published by the Ministry of
Economy, Trade and Industry.
In such environment, MIRAI acquired 5 properties, “Smile Hotel Naha City Resort” (acquisition price 4,000 million yen), “Smile
Hotel Hakataeki-Mae” (acquisition price 3,800 million yen), “Smile Hotel Nagoya-Sakae” (acquisition price 2,950 million yen),“Hotel WBF Yodoyabashi-Minami” (acquisition price 1,750 million yen) and “Rokko Island DC” (acquisition price 8,650
million yen) on November 2018. “Rokko Island DC” is “Industrial Asset” (Note 1) which is the first Growth Asset (New Type
Asset) (Note 2) of MIRAI, and the property acquired by support of Mitsui & Co. Group (Note 3) can secure high profitability.
The number of the properties is 29 (total acquisition price: 145,072 million yen) that have a total leasable area of 266,654.75㎡, and occupancy ratio is 99.6％ as of the end of the fiscal period ended April 30, 2019.
（Note 1）”Industrial Assets” and “Industrial” mean plants/R&D facilities/data centers that are the foundation of a variety of industrial activities. The same applies
hereinafter.
（Note 2） ”Growth assets (new type asset)” are assets by which MIRAI determines that the properties market is expected to expand in the future because acquirers whowill become our competitors are limited, although property investment/performance in the properties market are limited compared to core assets.
（Note 3）”Mitsui & Co. Group” refers to a corporate group composed of Mitsui & Co. LTD. (headquartered in Chiyoda-ku, Tokyo; hereinafter “Mitsui & Co.”) and theconsolidated subsidiaries and equity-method affiliates of Mitsui & Co.

c) Overview of Financial Activities
In the fiscal period ended April 30, 2019, MIRAI financed 8,965 million yen from the issuance of new investment units (53,500

units) by public offering on November 1, 2018 and 452 million yen from the issuance of new investment units (2,700 units)
through a third-party allotment on November 27, 2018. As a result, unitholders’ capital is 69,074 million yen and the number ofoutstanding investment units is 395,410 units.
Furthermore, MIRAI borrowed 10.5 billion yen for long-term loan on November 1, 2018 as funds for acquisition of 5 real estate
trust beneficiaries. As a result, the outstanding amount of loan and investment corporation bonds as of the end of the fiscal
period under review totaled 74,700 million yen; 73,700 million yen for long term loan and 1,000 million yen for investment
corporation bonds.
MIRAI sets commitment line (maximum amount 3,000 million yen) for the purpose securing flexible and stable finance andbuilding more stronger financial base. (amount of unused as of date of this report 3,000 million yen).
d) Overview of Financial Results and Distribution
As a result of the above, operating revenue amounted to 4,959 million yen, operating profit amounted to 2,531 million yen,ordinary profit amounted to 2,270 million yen, and profit amounted to 2,271 million yen for the fiscal period under review.
Concerning cash distribution, pursuant to the cash distribution policies provided in the Articles of Incorporation of MIRAI, theintention is to have distribution of earnings included in deductible expenses by application of Article 67-15 of the Act on Special
Measures Concerning Taxation (Act No. 26 of 1957, as amended; the “Act on Special Measures Concerning Taxation”).
Accordingly, the decision was made to distribute 1,779,740,410 yen, which is the entire amount of the earnings provided in
Article 136, Paragraph 1 of the Act on Investment Trusts and Investment Corporations but excluding the portion where cash
distribution of earnings per unit becomes a fractional amount of less than 1 yen. In addition, the Investment Corporation
determined to make distribution in excess of earnings in an amount that it determines as the amount equivalent to the itemsof deduction from net assets (those provided in Article 2, Paragraph 2, Item 30 (b) of the Ordinance on Accountings ofInvestment Corporations) with due consideration of the impact of the items of deduction from net assets on cash distribution.
Accordingly, in the fiscal period under review, the decision was made to distribute 491,890,040 yen, which is calculated as theamount equivalent to deferred losses on hedges of 491,936,021 yen but excluding the portion where distribution in excess ofearnings per unit becomes a fractional amount of less than 1 yen, as distribution attributable to allowance for temporary
difference adjustment (those provided in Article 2, Paragraph 2, Item 30 of the Ordinance on Accountings of Investment
Corporations). As a result of the above, distribution per unit declared for the fiscal period under review was 5,745 yen.
(3) Status of Issuance of New Investment Units
Changes to Total Number of Investment Units Issued and Outstanding and Total Unitholders ’ Equity, net from theestablishment of MIRAI through April 30, 2019 are as follows:
Total Number ofDate

December 4,2015
December 15,
2016

Event

Outstanding Investment

Unitholders’ Capital (thousandyen) (Note 1)

Units (units)

ChangeNotes

ChangeBalance

Balance750

750

150,000

150,000(Note 2)

293,000

293,750

51,742,335

51,892,335(Note 3)43,300337,050

7,395,250

59,287,585(Note 4)2,160

339,210

368,908

59,656,493(Note 5)53,500392,710

8,965,583

68,622,077(Note 6)2,700

395,410452,468

69,074,546(Note 7)

Incorporation
through private
placement
Capital increase
through public
offering
Capital increase

May 23, 2018

through public
offering
Capital increase

June 12, 2018

through thirdparty allotment

November 1,
2018
November 27,
2018

Capital increase
through public
offering
Capital increase
through thirdparty allotment(Note 1) Fluctuations of total investment arisen from the implementation of distribution in excess of profits related to the allowance for temporary difference adjustments,
are not taken into account.
(Note 2) At the incorporation of MIRAI, investment units were issued with an issue price per unit of 200,000 yen

(Note 3) New investment units were issued through a public offering to finance funds for acquiring new properties with an issue price per unit of 183,000 yen (issue value:
176,595 yen).
(Note 4) New investment units were issued through a public offering to finance funds for acquiring new properties with an issue price per unit of 176,962 yen (issue value:
170,791 yen).
(Note 5) New investment units were issued through a third-party allotment with a public offering to finance funds for acquiring new properties with an issue price per unitof 170,791 yen.
(Note 6) New investment units were issued through a public offering to finance funds for acquiring new properties with an issue price per unit of 173,452 yen (issue value:
167,581 yen).
(Note 7) New investment units were issued through a third-party allotment with a public offering to finance funds for acquiring new properties with an issue price per unitof 167,581 yen.
(Note 8) MIRAI implemented a four-for-one investment unit split with April 30, 2019 as record date and May 1, 2019 as effective date, following which the number ofinvestment units issued has become 1,581,640 units.

[Changes in Investment Unit Price at the Tokyo Stock Exchange]
Highest and Lowest price (closing price) of fiscal period at the real estate investment trust securities market of the Tokyo
Stock Exchange which MIRAI is listed as follows:
2nd FP
From November 1,

Fiscal Period

2016
To April 30, 2017

4th FP

3rd FP

From November 1,

From May 1, 20172017

To October 31, 2017

To April 30, 2018

6th FP

5th FP

From November 1,

From May 1, 20182018

To October 31, 2018

Highest (yen)177,200

177,000

189,300

198,100

Lowest (yen)150,100

150,200

165,900

176,200

To April 30, 2019
201,600□48,950
177,700□48,200(Note 1) MIRAI was listed on the Real Estate Investment Trust Securities Market of the Tokyo Stock Exchange on December 16, 2016.
(Note 2) MIRAI implemented a four-for-one investment unit split with May 1, 2019 as effective date. For the 6th Period, investment securities have been traded at investment
unit prices after the write-off due to the investment unit split on April 24, 2019 and onward, and the mark indicates investment units after the write-off due to theinvestment unit split.

(4) Actual Distribution per Unit
Based on the policy stipulated in Article 36-1 of the regulations of MIRAI, the amount of distribution shall exceed the amountequivalent to 90% of the distributable dividend of MIRAI provided in Article 67-15-1 of the Act on Special Measures Concerning
Taxation. Based on this policy, MIRAI decided to pay out distributions of profits (excluding dividend in excess of profits) in theamount of 1,779,740,410 yen, which are all amounts of profits prescribed in Article 136-1 of the Act on Investment Trusts andInvestment Corporations, excluding fractions less than 1 yen of the distribution per unit.
Moreover, based on the policy on the distribution in excess of profits, as stipulated in Article 36-2 of the regulations of MIRAI,
considering the impact on distribution by a deduction in net assets (an item stipulated in Article 2-2-30-b of regulations
concerning calculation of investment corporation), there will be distribution in excess of profits, the amount determined by
MIRAI, as an amount equivalent to a deduction in net assets. Regarding the period under review, MIRAI decided to distribute
491,890,040 yen to be calculated excluding fractions less than 1 yen of dividend distribution in excess of earnings per unit as
a distribution related to allowance for temporary difference adjustments (an item stipulated in Article 2-2-30 of Regulation on
Accountings of Investment Corporation) as an amount equivalent to 491,936,021 yen of deferred losses on hedges. As a result,distribution for the period under review will be 2,271,630,450 yen.
2nd FP
From November 1,

Fiscal Period

2016
To April 30, 2017

Unappropriated(thousandretained earnings
Retainedearnings

Total

Profitper unit)
Total

Return

of

2018

2018

To April 30, 2019

216,457

119,425

61,782

155

491,949

957,625

1,520,156

1,705,806

1,922,642

2,271,630(3,260)(5,175)(5,807)(5,668)(5,745)

741,425

1,520,156

1,705,806

1,922,642

1,779,740(yen)(2,524)(5,175)(5,807)(5,668)(4,501)(thousand

216,200－－－

491,890(thousand(thousandyen)(Profit distributions

To October 31,

2,271,690(yen)distribution

To April 30, 2018

1,984,191

yen)

Unit)

From November 1, 2017

6th FP
From November 1,

1,825,457(thousand(Distribution per

From May 1, 2017
To October 31, 2017

5th FP
From May 1, 2018

1,736,519

yen)

thousand yen

4th FP

957,882

yen)brought forward

3rd FPcapital

yen)(Return of capital(yen)

per unit)

(736)

(－)

(－)

(－)

(1,244)

216,200－－－

491,890

(736)

(－)

(－)

(－)

(1,244)

－

－

－

－

－

(－)

(－)

(－)

(－)

(－)

Of total return ofcapital,

total

distribution

fromallowance

for(thousandyen)

temporarydifference
adjustment(Of return of capital per
unit, total distribution
per

unit

from

allowance

for

temporarydifference(yen)adjustment)
Of total return ofcapital,

total

distribution throughreduction(thousand

in

yen)

unitholders; capitalfor tax purpose(Of total return ofcapital per unit, total
distribution per unit
through reduction in(yen)unitholders; capital fortax purpose)(5) Future Management Policy and Other Issuesa) Future Environment of Portfolio Management
In the office leasing market, there were concerns about the possible oversupply of Class A buildings in the Tokyo metropolitan
area. However, the securement has been steadily pursued, and vacant rates are low for the second vacancy to be generated
by tenants’ moving out. The concern is expected to be resolved by the expansion of needs of existing tenants. Modest growthis expected for both vacancy rates/rent standards. In particular, the rental environment is expected to remain favorable in areas
where the main properties of MIRAI are located, because new supply is limited following skyrocketing construction costs, andchoices of tenant companies are limited due to favorable occupancy of competing properties located in the surrounding areas.
As for hotels and commercial facilities, since the majority is leased based on a long-term/fixed contract basis, the direct impact
on our rental business by the financial results of tenants is immaterial. However, occupancy rates/average room rates of hotels
are expected to remain unchanged or increase slightly. We are proceeding with the replacement of tenants in industries
affected by e-commerce, therefore the financial results of tenant companies are forecasted to remain strong.
In “Hotel Sunroute Niigata” and “Smile Hotel Naha City Resort”, “Smile Hotel Hakataeki-Mae” and “Smile Hotel NagoyaSakae” acquired on November 1, 2018, A mechanism is in place in which rents fluctuate depending on hotel operations andthere is room to pursue future upsides.
Finance of interest-bearing debt is generally made long-term and fixed, and MIRAI recognized that the effect of changes offinancial environment and interest rates to performance. However, MIRAI will continue healthy financial operations.
b) Future Management Policy and Other Issues
MIRAI has aimed to improve unitholders values with sustainable growth of DPU and strategic portfolio management realized.
Through implementation of concrete measures such as strategic replacement of assets and acquisition of Growth Assets,
MIRAI recovered investment unit price to a certain level and realized the issuance of new investment units on May andNovember 2018. In the future, by entering quantitative targets related to DPU, risk diversification and profitability, considering
defensive measures to prepare for monetary tightening, setting LTV target more conservative and promoting risk diversification,
MIRAI aims to AUM 20 billion yen to improve stability of cash flow.
(6) Significant Events after the Balance Sheet Date
Split of investment units

MIRAI implemented a four-for-one investment unit split with April 30, 2019 as record date and May 1, 2019 as effective
date.
Purpose of the split
MIRAI implemented the split for the purpose of making an environment which enables investors to invest more easily by
reducing the investment unit price, which would ultimately broaden MIRAI’s investor base.
Method of the split
MIRAI implemented a four-for-one split of the investment units of MIRAI held by unitholders stated or recorded on theregistry of unitholders as of the record date of April 30, 2019.
Number of investment units to be increased through the split
Number of investment units issued andoutstanding before the split:
Number of investment units to be
increased through the split:
Number of investment units issued andoutstanding after the split:
Number of investment units authorized
after the split:

395,410 units
1,186,230 units
1,581,640 units
20,000,000 units

Please refer to Per Unit Information for each number per unit in a case that assumes investment units are split at the
beginning of the period under review.

2 Overview of the Investment Corporation(1) Overview of the Unitholders’ Equity

Total

numberinvestment

3rd FP

2nd FP

Fiscal Period(October 31,(April 30, 2017)2017)

5th FP

4th FP(April 30, 2018)(October 31,
2018)

6th FP(April 30, 2019)

of

units

that the Investment
Corporation(unit)

5,000,000

5,000,000

5,000,000

5,000,000

5,000,000(unit)

293,750

293,750

293,750

339,210395,41051,892

51,892

51,89259,656

69,074

18,873

17,053

16,45018,256

20,075isauthorized to issue
Total

numberofinvestment

units

issuedandoutstanding
Unitholders’(millime

capital
Numberyen)ofunitholders(person)(2) Overview of the Unitholders
The major 10 unitholders who Ratio of number of units owned to total number of units issued is high as of April 30, 2019 is
as follows
Number of units owned

Principal unitholders(units)Ratio of number of units
owned to total numberof units issued (％)

The Master Trust Bank of Japan, Ltd. (trust account)

52,572

13.30

Japan Trustee Services Bank, Ltd. (trust account)

42,22910.68

14,7373.73

Mizuho Trust & Banking Co., Ltd.

9,419

2.38

Morgan Stanley MUFG Securities Co., Ltd.

6,181

1.56

5,977

1.51

Mitsui & Co. Asset Management Holdings Ltd.

5,000

1.26

IDERA Capital Management Ltd.

5,000

1.26

The Hachijuni Bank, Ltd.

4,308

1.09

Hiroshi Shimo

3,980

1.01

149,403

37.78

The Nomura Trust and Banking Co., Ltd. (investment trust
account)

Trust & Custody Services Bank, Ltd. (securities investment
trust account)

Total(3) Overview of the Directorsa) The members of the board of directors as of the end of the fiscal period under review is as follows
Total fees paid during
Position

Name

Concurrent post (Note 1)

the ninth fiscal period(thousand yen)

Executive
Director

Michio Suganuma
Takehiko Negishi

Supervisory
Director

Representative Director, President of
Mitsui Bussan & Idera Partners Co., Ltd.
Wanderfalke Law Office
LawyerCEO of Accel Partners, Inc.

Hidetomo Nishii－

Certified Public Accountant
Tax Accountant

3,696

Accounting

Ernst

AuditorShinNihon LLC

&

Young

－

9,300

(Note 1) Executive director or supervisory directors do not own investment units issued by MIRAI under their name or other third parties’ name.
(note 2) Supervisory directors may be appointed as a director of other companies but such companies are not related party to MIRAI.

b) Policy for Determining Dismissal or Refusal of Reappointment of Auditors
The Board of Directors of MIRAI will determine whether to dismiss an auditor in accordance with the provisions of theInvestment Trusts Act and will determine whether to refuse reappointment by comprehensively considering the quality of theauditing, the amount of remuneration for the auditing and various other factors.

(4) Asset manager, Custodian, and General Administrators
The asset manager, custodian and general administrators for MIRAI as of April 30, 2019 are as follows;
Names
Asset manager

Mitsui Bussan & IDERA Partners Co., Ltd.

Custodian

Sumitomo Mitsui Trust Bank, Limited

General administrator (transfer agent)

Sumitomo Mitsui Trust Bank, Limited

General administrator (operation)

Mizuho Trust & Banking Co., Ltd.

General administrator (accounting)

Heiseikaikeisha Tax Corporation

General administrator (investment corporation bonds)

Sumitomo Mitsui Trust Bank, Limited

3 Overview of Investment Assets(1) Status of Investment
MIRAI’s investment assets as of the end of the fiscal period under review is as follows

Type ofAsset Type

Assets

EntrustedReal

5th FP

6th FP

As of October 31, 2018

As of April 30, 2019

Total Amount

Percentage to

Total Amount

Percentage to

Held

Total Assets

Held

Total Assets(million yen)(％)(million yen)(％)

Office80,93661.4

80,923

53.1

Retail

27,74621.1

27,721

18.2

Hotel

19.4

17,004

12.9

29,630Industrial

－

－

8,697

5.7

Total Entrusted Real Estate

125,687

95.4

146,973

96.4

EstateDeposits and Other Assets

6,084

4.6

5,519

3.6

Total Assets

131,772

100.0

152,493

100.0(Note) Total amount held is based on the balance sheet carrying amount as of the end of the fiscal period (book value less depreciation in the case of entrusted real estate).

(2) Major Investment Assets
The table below shows MIRAI’s major investment asset (top 10 of the book value) as of April 30, 2019.
Percentage
Book value
Name of property(millionyen)

Rentable area

Rented area(㎡) (Note 1)(㎡) (Note 2)

Occupancy
ratio (％)
(Note 3)

to total realestaterentalMain Usagerevenues(％)

Kawasaki Tech Center

23,65022,737.07

22,162.89

97.5

18.4

Office20,242

22,205.77

22,205.77

100.0

14.6

OfficeTokyo Front Terrace

10,7289,692.94

9,692.94

100.0

6.6

OfficeShinjuku Eastside Square

9,987

5,774.45

5,478.72

94.9

4.5

OfficeShinagawa Seaside Park
tower

Not
AEON Kasai

9,459

28,338.45

28,338.45

100.0

disclosed

Retail(Note 4)MITerrace

Nagoya-Fushimi

8,980

11,625.38

11,625.38

100.0

5.9

8,697

16,834.36

16,834.36

100.0

disclosed

OfficeNot
Rokko Island DC

Industrial(Note 4)MIUMIU Kobe

6,890

874.03874.03100.0

3.3

RetailMi-Nara

4,954

72,944.41

72,944.41

100.0

10.6

Retail4,031

9,698.44

9,698.44

100.0

2.7

Hotel

107,622200,725.30

199,855.39

99.6

77.5

Smile Hotel Naha City
ResortTotal(Note 1) “Rentable area”, the area that is rentable based on the lease agreement or the building drawing of the building pertaining to each asset. In case of land asset, thearea of the land is listed. However, the number of tenants of incidental areas such as parking lots and warehouses is not included. For Mi-Nara, rentable area isbased on the registered area, the subject in the master lease contract.
(Note 2) “Rented area” indicates the total area of the actual lease for each property. In case of land asset, the area of the land is listed. However, the number of tenantsof incidental areas such as parking lots and warehouses is not included. For Mi-Nara, rentable area is based on the registered area, the subject in the master lease
contract.
(Note 3) “Occupancy ratio” = Rented area / Rentable area; rounded to one decimal place.
(Note 4) Not disclosed due to the absence of tenants’ consents.

(3) Details of Investment in Real Estate and Real Estate Related Assets
The table below shows the Investment Corporation’s entrusted real estate and real estate related assets as of April 30, 2019.
Name of Property

Location

Holding

RentableBook Value

Appraisal(Note 1)

methodArea (㎡)at End ofValue at

(Note 2)

PeriodEnd of(million

Periodyen)(millionyen)(Note 3)

Shinagawa Seaside Park
tower

4-12-4,

Trust

Higashishinagawa,beneficia

Shinagawa-ku, Tokyories

580-16,
Kawasaki Tech Center

Horikawa-cho,

Saiwai-ku, Kawasaki-shi,
Kanagawa

Shinjuku Eastside Square

Hillcoat Higashi-Shinjuku

6-27-30,

Shinjuku,

Shinjuku-ku, Tokyo

MI

Terrace

Nagoya-Building

Shibuyaries

2-2-15,

Kabuki-cho,Shinjuku-ku, Tokyo

Osaka-shi,

1-10-1, Nishiki, Naka-ku,

East

Trust

1-23-18,

Shibuya,

Nishi-Kasai,

MEGA Don Quijote Izumi-

5-6-17, Ibukino, Izumi-shi,

Chuo (Note 4)

Osaka

8,980

9,830

2,845.60

1,752

1,800

874.03

6,890

7,370

1,672.09

3,337

4,090

28,338.45

9,459

9,580

6,891.87

3,080

2,580

8,254.80

2,210

2,290

7,439.36

2,005

2,230

3,283.95

1,272

1,570

2,486.39

1,263

1,580

2,946.55

1,106

1,230

2,144.02

1,031

1,290

2,999.01894

960

4,099.31

1,875

1,840

ries
Trust
beneficia

ries

2-2-41, Omachi, Akita-shi,
Akita

Trust
beneficia
ries

2-3-3, Osaka, Tennoji-ku,
Osaka-shi, Osaka

Trust
beneficia
ries
Trust
beneficia
ries

1-12-6,

Sakuragi-cho,

Trust

Omiya-ku,

Saitama-shi,

beneficia

Saitamaries

396-3, Osaka-cho, GojoSuper Hotelsagaru,Kyoto/Karasumagojo

Shimogyo-ku, Kyoto-shi,

Karasuma-dori,

Kyoto1255-1, Shimogou, Ogori,
Yamaguchi-shi,
Yamaguchi
2-5-11, Fukiage, Ise-shi,Mie11,625.38

Trust
beneficia

Trust

Osaka/Tennoji

Ise City Hotel Annex

1,570

ries

beneficia

Super Hotel

Yamaguchi

1,567

Trust
beneficia

Niigata-shi,

MiyagiShin-

2,551.43

ries

Higashi-Odori,

Sendai/Hirose-dori

hotel

3,970

Trust
beneficia

Chuo-ku,

2-9-23, Aoba, Sendai-shi,

Comfort

4,013

ries

1-11-25,

Super Hotel

Saitama/Omiya

3,169.16

ries

NiigataSuper Hotel

10,893ries
beneficia

Edogawa-ku, Tokyo

Daiwa Roynet Hotel Akita

10,728Trust
beneficia

Hakataeki-

3-9-19,Hotel Sunroute Niigata

9,692.94

Trust
beneficia

Hakata-ku,

Shibuya-ku, Tokyo

AEON Kasai

10,450ries

minami,ku, Kobe-shi, Hyogo

World

9,987

Trust
beneficia

3-7-30,18-1, Akashi-cho, Chuo-

Building

5,774.45

ries

Fukuoka-shi, Fukuoka

MIUMIU Kobe

24,100ries

Shinagawa-ku, Tokyo

Nagoya-shi, Aichi

Orico Hakataeki Minami

23,650

Trust

Osaka

Fushimi

22,737.07

Trust
beneficia

beneficia

Chuo-ku,

Building

21,175Trust
beneficia

Higashishinagawa,2-4-6, Minami Hommachi,

NipponHommachi

20,242ries

2-3-14,
Tokyo Front Terrace

22,205.77

Trust
beneficia
ries
Trust
beneficia
ries
Trust
beneficia

ries
a.

(Hotel)1-2-1,

Kawagishi, Kitakami-shi,
Comfort Hotel Kitakami

Iwate
b. (Retail Store) 1-2-8,
Kawagishi, Kitakami-shi,

Trustbeneficia

2,961.06

844

843

1,921.45642

600

3,079.33

3,862

4,130

9,698.44

4,031

4,330

2,432.72

3,838

3,910

2,909.20

2,984

3,120

1,842.15

1,768

1,960

72,944.41

4,954

5,520

16,834.36

8,697

8,880

146,973

153,692

ries

Iwate
Comfort Hotel Nagano
Hotel Wing International
SelectUeno/Okachimachi

1-12-4,

Minami-chitose,

Nagano-shi, Nagano
2-18-4,

Higashi-ueno,

Taito-ku, Tokyo
2-32-1, Kume, Naha-shi,

ResortOkinawa

Mae
Smile

3-8-18,

Nagoya-Sakae
Hotel WBF YodoyabashiMinami

Mi-NaraHakataeki-mae,

Hakata-ku, Fukuoka-shi,

Trustbeneficia
Trustbeneficia
ries

4-10-5, Sakae, Naka-ku,
Nagoya-shi, Aichi
3-1-6,

Trust
beneficia
ries

Hirano-machi,

Chuo-ku,

Osaka-shi,

Osaka

Trust
beneficia
ries

1-3-1, Nijo Oji Minami,
Nara-shi, Nara
6-2-12,

Rokko Island DC

Trust
beneficia

ries

Fukuoka
Hotel

ries

ries

Smile Hotel Naha City

Smile Hotel Hakataeki-

Trustbeneficia

ries

Koyo-cho-Nishi,

Higashinada-ku,
shi, Hyogo

Total

Trust
beneficia

Kobe-

Trust
beneficia
ries
266,654.7
5(Note 1) “Address” shows the residence indication of the properties.
(Note 2) “Rentable area”, the area that is rentable based on the lease agreement or the building drawing of the building pertaining to each asset. In case of land asset, thearea of the land is listed. However, the number of tenants of incidental areas such as parking lots and warehouses is not included. If asset is a co-ownership or
quasi-coownership, it is calculated based on the proportion of ownership. “Mi-Nara” is total floor area on the register, subject to master lease agreement.
(Note 3) “Appraisal value at End of Period” represents the appraisal value by Daiwa Real Estate Appraisal Co., Ltd., JLL Morii Valuation & Advisory K.K., Japan Real Estate
Institute and Japan Valuers Co., Ltd. based on Article of Incorporation of MIRAI or the Rules for Accounting of MIRAI and rules stipulated by the Investment Trusts
Association, Japan.
(Note 4) “The name of property” was changed from “Daiki Izumi-Chuo” to “MEGA Don Quijote Izumi-Chuo” on February 1, 2019. The same shall apply hereinafter.

The table below shows the leasing status of the real estate and real estate related assets of MIRAI.
5th FP

6th FP

From May 1, 2018 to October 31, 2018

From November 1, 2018 to April 30, 2019

Total
Name of Property

NumberofTenants(Note 1)

ShinagawaSeasidePraktower
Kawasaki

TechCenterShinjuku

Eastside

SquareTokyo Front Terrace
Hillcoat

Higashi-Shinjuku
Nippo

Hommachi

Building
MI Terrace NagoyaFushimi
Orico

Hakataeki

Minami Building
MIUMIU Kobe
Shibuya World East
Building
AEON Kasai

MEGA Don Quijote
Izumi-Chuo
Hotel

Sunroute

Niigata
Daiwa Roynet Hotel
Akita
Super Hotel
Sendai/Hirose-doriSuper Hotel
Osaka/Tennoji
Super Hotel
Saitama/Omiya

Occupa
ncy
Ratio
(％)
(Note 1)
(Note 2)Real
EstateRentalRevenues(millionyen)(Note 3)

Percentage
to Total
Real Estate
RentalRevenues
(％)

Total
Numbe
r of
Tenants(Note
1)

Occupa
ncy
Ratio
(％)
(Note 1)
(Note 2)Real
EstateRentalRevenues(millionyen)(Note 3)

Percentage
to Total
Real Estate
RentalRevenues
(％)

23

100.0

756

17.1

23

100.0

726

14.6

22

94.8

972

22.0

26

97.5

913

18.4

40

100.0

249

5.6

39

94.9

222

4.5

23

100.0

321

7.3

22

100.0

326

6.6

6

100.0

74

1.7

6

100.0

92

1.9

36

92.0

54

1.2

37

97.3

52

1.1

9

100.0

247

5.6

9

100.0

294

5.9

Not

Not

1

100.0

disclosed

disclosed

1

100.0

disclosed

disclosed(Note 4)(Note 4)(Note 4)(Note 4)

1

100.0

162

3.7

1

100.0

162

3.3

8

100.0

87

2.0

8

100.0

76

1.5

Not

Not

Not

Not

1

100.0

disclosed

disclosed

1

100.0

disclosed

disclosed(Note 4)(Note 4)(Note 4)(Note 4)

Not

Not

Not

Not

disclosed

disclosed

disclosed

disclosed(Note 4)(Note 4)(Note 4)(Note 4)

1

100.0

Not

1

100.0

Not

2

100.0

72

1.6

2

100.0

83

1.7

1

100.0

69

1.6

1

100.0

69

1.4

1

100.0

44

1.0

1

100.0

44

0.9

1

100.0

37

0.9

1

100.0

37

0.8

1

100.0

35

0.8

1

100.0

35

0.7

5th FP

6th FP

From May 1, 2018 to October 31, 2018

From November 1, 2018 to April 30, 2019

OccupaTotal
Name of Property

ncy

Number

Ratio

of

(％)

Tenants(Note 1)Super Hotel
Kyoto/Karasumagojo
Comfort Hotel ShinYamaguchi
Ise City Hotel Annex

ComfortHotel

Kitakami
ComfortHotel

NaganoHotel

Wing

International

Select(Note 1)
(Note 2)

Hotel

Naha

City Resort
Smile

Hotel

Hakataeki-Mae
Smile Hotel NagoyaSakae
Hotel

WBF

Yodoyabashi-Minami
Mi-NaraRokko Island DC
Total

Percentag

Total

e to Total

Numb

Rental

Real

er of

Revenues

EstateTenant(million

Rentalsyen)

Revenues(Note(Note 3)(％)

1)

OccupaReal Estatency

RentalPercentage
to Total

Ratio

Revenues

Real Estate(％)(million

Rental(Note 1)yen)

Revenues(Note 2)

(Note 3)

(％)

1

100.0

31

0.7

1

100.0

31

0.6

1

100.0

30

0.7

1

100.0

30

0.6

Not

Not

Not

Not

1

100.0

disclosed

disclosed

1

100.0

disclosed

disclosed(Note 4)(Note 4)(Note 4)(Note 4)

Not

Not

Not

Not

disclosed

disclosed

disclosed

disclosed(Note 4)(Note 4)(Note 4)(Note 4)

Not

Not

Not

Not

disclosed

disclosed

disclosed

disclosed(Note 4)(Note 4)(Note 4)(Note 4)

Not

Not

Not

Not

disclosed

disclosed

disclosed

disclosed

2

100.0

1

100.0

1

100.0

(Note 4)(Note 4)

－

－

－

－

－

－

2

100.0

1

100.0

1

100.0

(Note 4)(Note 4)

－

1

100.0

133

2.7

－

－

1

100.0

87

1.8

－

－

－

1

100.0

62

1.3

Not

Not

－

－

－

－

1

100.0

disclosed

disclosed(Note 4)(Note 4)

1

100.0

549

12.4

1

100.0

524

10.6

Ueno/Okachimachi
Smile

Real
Estate

－

－

－

－

1

100.0

185

99.4

4,417

100.0

193

99.6

Not

Not

disclosed

disclosed(Note 4)(Note 4)

4,959

100.0

(Note 1) Figures are as of the end of each fiscal period.
(Note 2) “Occupancy ratio” = Rented area / Rentable area; rounded to one decimal place.
(Note 3) “Real Estate Lease Revenues” refers to lease revenues of the fiscal period under review of each properties, rounded down to the nearest million yen.
(Note 4) Not disclosed due to the absence of tenants’ consents.

(4) Details of Amount of Money Defined in Specified Transactions Contract Derivatives and Market Value
Details of amount of money defined in specified transactions contract derivatives and market value as April 30, 2019 is asfollows.
Amount described in transaction contract
Category

Transaction(thousand yen) (Note 1)
More than 1 year

Transaction
other thanmarket placetransaction

Market value(thousand yen)
(Note 2)

Interest rate
swap transaction
floating rate

50,000,000

50,000,000(491,936)

receivable/fixed
rate payable(Note 1) The amount described in transaction contract is based on estimated principal amount.
(Note 2) Market value is calculated by the price which was presented by financial institutions.

(5) Detail of Other Assets
The details of trust beneficiary interests which MIRAI owns are described in above (3) and there are no other assets as theend of the fiscal period under review.

(6) Details of Investment Asset in Overseas
There is no real estate investment asset located outside Japan.

4 Capital Expenditure(1) Future Plan for Capital Expenditure
The following table summarizes the major capital expenditure plan associated with renovation scheduled in the fiscal period
ended of October 2019 as of the end of the fiscal period under review for real estate and entrusted real estate held by MIRAI
as of the said date. Estimated construction cost includes the amounts to be expensed for accounting purpose.
Estimated Construction Cost
(Thousand yen)

Name of Property

Purpose(Location)

Planned Period

Total
AmountKawasaki Tech Center

Inspection of emergency(Kawasaki-shi,

power generation facility,

Kanagawa)

etc.

ShinagawaSeasidePraktower(Shinagawa-ku, Tokyo)

Paid

Total

DuringAmountthe Period

Paid

From May
2019 to133,256－－

44,729－－40,000－－30,788－－45,160－－293,935－－

October 2019

Adjustment

of

air

conditioner, etc.

From May
2019 to
October 2019

Mi-NaraRenovation of equipment,(Nara-shi, Nara)etc.

From May
2019 to
October 2019

Hotel Sunroute Niigata

Construction of sprinkler,(Niigata-shi, Niigata)

etc.

From May
2019 to
October 2019

Others

－

－

Total

(2) Capital Expenditure Incurred
The following table summarizes the major construction to real estate and entrusted real estate held as of the end of the fiscal
period under review by MIRAI that resulted in capital expenditures for the current period. Capital expenditures for the current
period amounted to 462,612 thousand yen. The total construction costs amounted to 529,460 thousand yen; including repair
and maintenance of 66,847 thousand yen that was accounted for as an expense in the current period.
Name of Property

Purpose(Location)
Kawasaki Tech Center(Kawasaki-shi, Kanagawa)

Planned Period

9th floor construction to turnit into an office, renewal of air
conditioner, etc.

Hotel Sunroute Niigata

Renewal of air conditioner,

From November(Niigata-shi, Niigata)etc.（Note）

2018 to April 2019

Shibuya World East Building

Renewal(Shibuya-ku, Tokyo)

construction of façade, etc.

Comfort Hotel Nagano

Renewal of air conditioner,(Nagano-shi, Nagano)

etc.

of

elevator,－
Total(Note) As for assets acquired using national subsidies, reduced-value entry applies.

(3) Reserved Amount for Long-Term Repairs Plan(thousand yen）
172,725

75,913

From October
2018 to March

45,1552019
From February
2019 to April 2019

OthersNot applicable

From October
2018 to April 2019

Construction Cost－

38,650130,168
462,612

5 Expenses and Liabilities(1) Details of Expenses Related to Asset Management(thousand yen)

5th FP

Item

From May 1, 2018 to October 31, 2018

Asset Management Fee (Note)

From November 1, 2018 to April 30,
2019326,754364,770

Fee for custodian

5,708

7,041

Fee for general administrator

12,79014,556

Director’s Compensation

3,696

3,696

Other expenses

36,50938,320385,459

428,385

Total(Note)

6 FP
th

In addition to the above amount, asset management fees include fees related to property acquisition that are included in book values of individual properties:

142,860,000 yen for the 5th Period and 211,500,000 yen for the 6th Period.

(2) Details of the Borrowings
The following table shows details of the Borrowings as of April 30, 2019 are as follows.

Classification

Date of theLenderborrowings

Sumitomo
Mitsui Banking
Corporation
ResonaBank,

Ltd.
Mitsui Banking
Corporation
Resona

Bank,

Ltd.
Bank

of

Sumitomo Mitsui
Trust

Bank,

Limited

Borrowings

Sumitomo Mitsui
Trust

Bank,

LimitedShinsei

Bank,

Ltd.

December16, 2016
DecemberBank of JapanInc.
MizuhoBank,

Ltd.
Banking
Corporation
Sumitomo Mitsui
Bank,

LimitedShinsei

16, 2016
December16, 2016

Bank,

Balanceat theat theAverage

beginningendinterestof theof therate

periodperiod(Note 1)(million(million(Note 2)

yen)

yen)

7,500

7,500

500

500

6,500

6,500

1,500

1,500

2,000

2,000

5,000

5,000

5,000

5,000

2,000

2,000

2,000

2,000

10,00010,000

2,000

2,000

2,000

2,000

1,000

1,000

Payment

Payment

due

Method

0.74500

November％30, 2026

0.74500

November％30, 2026

0.49960

November％30, 2023

0.49960

November％30, 2023

0.49960

November％30, 2023

0.59470

November％29, 2024

0.37250

November

Bullet％30, 2022

Payment

0.37250

November％30, 2022

0.62125

November％30, 2023

0.37000

November％30, 2021

0.45000

April 30,％2024

0.54375

July 31,％2025

0.54375

July 31,

％

2025

Use

Security

Unsecured
December16, 2016
December

December16, 2016
December16, 2016

Mizuho Trust &Trust

December16, 2016

Development

Ltd.

December16, 2016

Fukuoka, Ltd.

Long-term

16, 2016

16, 2016

Sumitomo

The

December

Balance

April 28,
2017
October 26,
2017
October 26,
2017(Note 3)

/ NonGuarantee
d

The

Nanto

October 26,

Bank, Ltd
Resona2017
Bank,

October 26,

Ltd.

2017

Sumitomo
Mitsui Banking

October 31,
2017

Corporation
The

Bank

of

October 31,

Fukuoka, Ltd.
Shinsei

2017

Bank,

March 1,

Ltd.

2018

ResonaBank,

March 1,

Ltd.

2018

MizuhoBank,

March 1,

1,000

1,000

1,000

1,000

4,000

4,000

1,000

1,000

1,000
500

1,000
500

1,000

1,000

May 15, 2018

2,000

2,000

May 15, 2018

1,500

1,500

Ltd.

2018

Sumitomo
Mitsui Banking
Corporation
Mizuho

Bank,

Ltd.
MUFG

Bank,

Ltd.

June 1, 2018

Mizuho Trust &August 1,

Banking

2018

Corporation
MizuhoBank,

November 1,

Ltd.

2018

Sumitomo
Mitsui Banking

November 1,
2018

Corporation
Sumitomo Mitsui
Trust

Bank,

November 1,
2018

LimitedShinseiBank,

November 1,

Ltd.

2018

MUFG

Bank,

November 1,

Ltd.

2018

Subtotal
Total

1,500

1,500

1,700

1,700

－

2,500

－

3,000

－

2,500

－

1,000

－

1,500

63,20073,70063,20073,7000.54375

July 31,％2025

0.70900

July 30,％2027

0.72750

October 29,％
0.727502027
October 29,％
0.573502027
January 30,％
0.573502026
January 30,％
0.48000

2026
January 31,

％

2024

0.52770

April 30,％2025

0.56000

April 30,％2025

0.31000

April 30,％2021

0.62000

July 31,％2028

0.68000

October 30,％
0.56800

2026
October 31,％
0.42180

2025
October 31,％
0.42180

2023
October 31,％
0.32000

2023
October 29,

％

2021

(Note 1) The average interest rate indicates a weighted-average according to the number of days during the period.
(Note 2) Interest rate swaps are traded with the aim to avert interest rate fluctuation risk. Interest rates are indicated taking into account the effects of interest rate swaps(fixation of interest rate).
(Note 3) All proceeds were used to fund acquisition of trust beneficiary interests in real estate, refinancing borrowing and working capital, etc.

(3) Investment Corporation Bonds
The following table shows details of investment corporation bonds as of April 30, 2019 are as follows.
Balance atthebeginning
Name

Issue dateof theperiod(millionyen)

Balance atthe endof theCouponRedemption

Redemption

periodRate

date

Method0.640％

July 26, 2028

Use

Security(millionyen)First Series
Unsecured

July 26,

Investment
Corporation

2018

1,000

1,000

1,000

1,000

Bonds
Total

(Note) Special conditions regarding the same rank among investment corporation bonds are attached.

BulletRepayment

Payment

of loan(Note)

(4) Details of Short-term Investment Corporation Bonds
Not applicable(5) New Unit Acquisition Rights
Not applicable6 Status of Purchase and Disposal of Assets during the Fiscal Period under Review(1) Purchase and Disposals of Real Estate and etc., Asset Backed Securities, etc., Infrastructure Asset, etc., Infrastructure
Acquisition

Disposition

Acquisition

Name of the property

Acquisition date

price (million
yen)（Note）

Disposit

Book

Disposition price

value

Profit/L
oss

ion date(million(million(million

yen)

yen)

yen)

Smile Hotel Naha City Resort

November 1, 2018

4,000

－

－

－

－

Smile Hotel Hakataeki-Mae

November 1, 2018

3,800

－

－

－

－

Smile Hotel Nagoya-Sakae

November 1, 2018

2,950

－

－

－

－

November 1, 2018

1,750

－

－

－

－

November 1, 2018

8,650

－

－

－

－

－

21,150

－

－

－

－

Hotel

WBF

Yodoyabashi-

Minami
Rokko Island DC
Total(Note) Acquisition price does not include consumption tax and cost regarding acquisition.

(2) Purchase and Disposal of Other Assets
Not applicable(3) Investigation of the Appraisal Value and Price of Specified Assetsa) Real Estate Assets etc.
Acquisiti
on price

Acquisiti
on orName of theTransaction

dispositi

propertydateorAsset typedispositi
on priceon(million

Appraisalvalue(million

Appraiser

As of

Daiwa Real Estate

July 31,

Appraisal Co., Ltd.

2018

Daiwa Real Estate

July 31,

Appraisal Co., Ltd.

2018

Daiwa Real Estate

July 31,

Appraisal Co., Ltd.

2018

JLL Morii Valuation

July 31,& Advisory K.K.

2018

Japan Valuers Co.,

July 31,

Ltd.

2018

yen)

yen)
Smile

Hotel

Naha

City

November
1, 2018

Resort
Smile

Hotel

Hakataeki-

November 1,
2018

Mae
Acquis
ition

Smile

Hotel

Nagoya-November 1,
2018

Sakae
Hotel

WBF

Yodoyabashi-

November 1,
2018

Minami
Rokko

IslandNovember 1,

DC

2018

Trust
Benefici

4,000

4,230

3,800

3,910

2,950

3,120

1,750

1,960

8,650

8,710

aries
Trust
Benefici
aries
Trust
Benefici
aries
Trust
Benefici
aries
Trust
Benefici
aries(Note 1) Appraisal of properties, etc., relating to specified assets that are required for appraisal based on Article 201-1 of the Act on Investment Trusts and Investment
Corporations are conducted based on “Appraisal on prices of real estate to be securitized,” Chapter 3 of itemized discussion, Real Estate Appraisal Standards. MIRAI
receives notice of the results of the appraisals.
(Note 2) Acquisition price does not include consumption tax and cost regarding acquisition.

b) Others
Not applicable(4) Transaction Involving Related Partiesa) Purchase Transaction Involving Related Parties
Classification
AmountTransaction price
Acquisition price

Disposition price

21,150 million yen－million yen

Composition of transaction involving related parties（Note）
TMK Rokko Investment

8,650 million yen－million yen(Specific Purpose Company)（40.9％）（－％）

8,650 million yen－million yen（40.9％）

（－％）

Total

(Note) Related parties refer to the interested persons, etc., of asset management companies that have concluded an asset management agreement with MIRAI, asprescribed in Article 123 of the Enforcement Order for the Investment Trusts and Investment Corporations Law and Article 26-27 of regulations concerning asset
management reports related to investment trusts and investment corporations of the Investment Trusts Association, Japan.

b) Amount of Commission Fee, etc.
Not applicable(5) Transactions with Asset Management Company regarding Subsidiary Business Managed by Such Asset Management
Company
As the end of fiscal period under review, the Asset Management Company conducts Building Lots and Building Transaction
Business as its subsidiary business. However, there are no transactions with regards to such subsidiary business.

7 Status of Accounting(1) Assets, Liabilities, Net Assets, and Profit/Loss etc.
Please refer to “Ⅱ Balance Sheets” , “ Ⅲ Statements of Income” , “ Ⅳ Statements of Changes in Net Assets” , “ ⅤStatements of Cash Distributions” and “Ⅵ Notes to Financial Statements”.
(2) Changes in Calculation Method of Depreciation
Not applicable(3) Changes in Valuation Method for Reals Estate etc. and Infrastructure Assets etc.
Not applicable

8 Disclosure regarding In-House Investment Trust Beneficiary Interests
Not applicable

9 Disclosure regarding Affiliated Foreign Real Estate Companies
Not applicable

10 Disclosure regarding Real Estate Owned by Affiliated Foreign Real Estate Companies
Not applicable11 Others(1) Noticesa) General Meeting of Unitholders
Not applicableb) Board of the Directors of MIRAI
Not applicable(2) Rounding Method for Amount of Money and Ratios Described in this Document
Unless otherwise specified, amount of money is rounded down to the nearest units and ratios are rounded off to one decimal
place.

II. Balance Sheet(Thousands of yen)(For reference)

Fiscal period ended

Fiscal period endedApril 30, 2019

October 31, 2018
AssetsCurrent assets
Cash and deposits

2,958,159

2,227,890

Cash and deposits in trust

2,264,410

2,327,433

Operating accounts receivable

148,462

165,692

Prepaid expenses

97,626

121,030

Consumption taxes receivable

151,742

230,350

Other
Total current assets

355

113

5,620,756

5,072,510

Non-current assets
Property, plant and equipment
Buildings in trust＊1

27,930,029＊1

33,316,557

Accumulated depreciation(1,361,585)(1,897,328)

Buildings in trust, net

26,568,444

31,419,228

Structures in trust

179,399

331,851

Accumulated depreciation(21,886)(31,625)

Structures in trust, net

157,513300,226

Machinery and equipment in trust

144,463

186,524(19,853)(25,861)

Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net

124,610＊1

19,846(2,041)

160,663＊1

26,404(3,812)

17,805

22,592Land in trust

98,819,428

115,070,938

Total property, plant and equipment

125,687,800

146,973,649

1,974

1,654

Intangible assets
Software
Other
Total intangible assets

231

231

2,206

1,886

369,171364,910Investments and other assets
Long-term prepaid expenses
Deferred tax assets

7

11

Guarantee deposits

10,90011,006

Other

69,36058,165

Total investments and other assets

449,440

434,092

126,139,447

147,409,628

Investment corporation bond issuance costs

11,802

11,191

Total deferred assets

11,802

11,191

131,772,006

152,493,331

Total non-current assets
Deferred assets

Total assets

III. Statement of Income and Retained Earnings(Thousands of yen)(For reference)

Fiscal period ended

Fiscal period endedApril 30, 2019

October 31, 2018
Liabilities
Current liabilities
Operating accounts payable

405,396

Distribution payable

13,17013,466

Accounts payable - other

385,087

409,858

Accrued expenses

909

5,318

Income taxes payable

760

839

Advances received

532,255

607,961

Deposits received

3,284

591

1,340,864

1,376,869

Total current liabilities

338,833

Non-current liabilities
Investment corporation bonds

1,000,000

1,000,000

Long-term loans payable

63,200,000

73,700,000

Tenant leasehold and security deposits in trust

4,640,654

5,070,225

Derivatives liabilities
Total non-current liabilities
Total liabilities－

491,936

68,840,654

80,262,161

70,181,519

81,639,030

59,656,493

69,074,546

Net assets
Unitholders' equity
Unitholders' capital
Deduction from unitholders' capital
Allowance for temporary difference adjustments＊4

Total deduction from unitholders' capital(61,393)＊4－(61,393)－59,595,100

69,074,546

Unappropriated retained earnings (undisposed loss)

1,984,191

2,271,690

Total surplus

1,984,191

2,271,690

61,579,291

71,346,236

Deferred gains or losses on hedges

11,195(491,936)

Total valuation and translation adjustments

11,195Unitholders' capital, net
Surplus

Total unitholders' equity
Valuation and translation adjustments

Total net assets
Total liabilities and net assets＊3

61,590,487
131,772,006(491,936)＊3

70,854,300
152,493,331

IV. Statement of Income and Retained Earnings(Thousands of yen)(For reference)

Fiscal period ended

Fiscal period endedApril 30, 2019

October 31, 2018
Operating revenue
Lease business revenue＊1

3,256,490＊1

Other lease business revenue＊1

1,160,808＊1

Total operating revenue

4,417,298

4,023,601
935,741
4,959,342

Operating expenses
Expenses related to rent business＊1

Asset management fee

1,909,732＊1

326,754

1,999,495
364,770

Asset custody fee

5,708

7,041

Administrative service fees

12,79014,556

Directors' compensations

3,696

3,696

Other operating expenses

36,50938,320Total operating expenses

2,295,191

2,427,880

2,122,106

2,531,462

Operating profit
Non-operating income
Interest income

23

18Interest on refund－

543

Total non-operating income

23

561

167,278

193,476

1,686

3,200

Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Amortizationofinvestment

corporation

bond

406

610

Borrowing related expenses

41,41942,145Investment unit issuance expenses

44,23518,899issuance costs

Other
Total non-operating expenses
Ordinary profit

－

3,000

255,026

261,3311,867,103

2,270,692

Extraordinary income
Subsidy income
Insurance income
Total extraordinary income－＊256,08020,090＊2

56,0806,308
26,398Extraordinary losses
Loss on reduction of non-current assets－

Total extraordinary losses－

24,7181,923,183

2,272,372

Income taxes - current

763

842

Income taxes - deferred

11

(3)

Total income taxes

775

838

1,922,408

2,271,534

Profit before income taxes

ProfitRetained earnings brought forward
Unappropriated retained earnings (undisposed loss)＊3

24,71861,782

155

1,984,191

2,271,690

(For reference) Fiscal Period ended October 31, 2018
(Thousands of yen)

Unitholders' equity
Unitholders' capital

Surplus

Deduction fromunitholders' capital
Unitholders'
capitalAllowance

Total

for

deduction

temporaryfromdifference

unitholders

adjustment' capital(119,262)(119,262)

Unitholders'
capital, net

Unappropriatedretained earnings(undisposed loss)

Total
Total

unitholders'surplusequityBalanceatbeginning

51,892,335

51,773,072

1,825,457

1,825,457

53,598,530

of current
periodChangesof

items

duringperiodIssuanceof

new

7,764,158

investm

7,764,158

7,764,158

ent
units
Dividendsof(1,705,806)

surplus(1,705,806(1,705,806))

Reversalofallowancefortempor

57,868ary

57,86857,868(57,868)(57,868)－

1,922,408

1,922,408

1,922,408

differenceadjustment
ProfitNetchange
s

of

items
other
than
unitholders'equityTotalchangesof

items

7,764,158

57,86857,868

7,822,027

158,733

158,733

7,980,761(61,393)(61,393)59,595,100

1,984,191

1,984,191

61,579,291

duringperiodBalanceat end of＊1unitcurrent

59,656,493

period(Thousands of yen)

Valuation and translation adjustments

BalanceatbeginningofDeferred gains or losses on

Total valuation and translation

hedgesadjustments(61,678)(61,678)

Total net assets

53,536,851

current period
Changes of items
during period
Issuance of new

7,764,158

investment units
Dividendsof(1,705,806)

surplus
Reversalofallowance

for

temporary－difference
adjustment
Profit

1,922,408

Net changes of
items other thanunitholders'

72,87472,87472,87472,87472,874

8,053,635

11,195

11,19561,590,487

equityTotal changes of
items

duringperiodBalance at end ofcurrent period

Fiscal Period ended April 30, 2019
(Thousands of yen)

Unitholders' equity
Unitholders' capital

Surplus

Deduction fromunitholders' capital
Allowance
Unitholder

fors' capital

temporarydifference
adjustmentBalanceatbeginningof

59,656,493(61,393)

Unappropr

Total

Unitholder

deductions' capital,

from

net

unitholder

Totalunitholder

earnings

surpluss' equity

1,984,191

61,579,291(undispos
ed loss)

s' capital(61,393)

Total

iated
retained

59,595,100

1,984,191

current period
Changes of items
during period
Issuance of new
investment units
Dividends

9,418,052

9,418,052

ofsurplus
Reversalofallowance

for

temporary

61,393

61,393

61,3939,418,052(1,922,642)(1,922,642)(1,922,642)(61,393)(61,393)－2,271,534

2,271,534

2,271,534

difference
adjustment
ProfitNet changes of
items other thanunitholders'equityTotal changes of
items

during9,418,052

61,393

61,3939,479,445

287,498

287,498

9,766,944＊69,074,546－－

69,074,546

2,271,690

2,271,690

71,346,236

periodBalance at end ofcurrent period

(Thousands of yen)

Valuation and translation adjustments

Balance at beginningof current period
ChangesofDeferred gains or

Total valuation andlosses on hedges

translation adjustments

11,195

11,195

Total net assets

61,590,487

items

during period
Issuanceof

new

9,418,052

investment units
Dividendsof(1,922,642)

surplus
Reversalofallowance

for

temporary－difference
adjustment
Profit2,271,534

Netchanges

of

items

other

than

(503,131)(503,131)(503,131)(503,131)(503,131)

9,263,812(491,936)(491,936)

70,854,300

unitholders' equity
Total changes of items
during period
Balanceatcurrent period

end

of

V. Note[Notes on Assumption of Going Concern](For reference)

Fiscal period ended

Fiscal period endedApril 30, 2019

October 31, 2018
Not applicableNot applicable[Summary of Significant Accounting Policies](For reference)

Fiscal period ended

Fiscal period endedApril 30, 2019

October 31, 2018
1. Depreciation method forA.

non-current assets(including trust assets)

Property,plant,

andequipment

A.

Property,plant,

andequipment(including trust assets)

The straight-line method is used.

The straight-line method is used.

The useful lives of property, plant and

The useful lives of property, plant andequipment are listed below.

equipment are listed below.

Buildings

2 to 65 years

Buildings

2 to 65 years

Structures

2 to 40 years

Structures

2 to 40 years

Tools and furniture

5 to 29 years

Tools and furniture

5 to 29 years

fixtures5 to 15 years

fixtures5 to 15 years

B. Intangible assets

B. Intangible assets

As for software (for internal use), theAs for software (for internal use), thestraight-line method is used with anstraight-line method is used with an

expected useful life of 5 years.

expected useful life of 5 years.

C. Long-term prepaid expenses

C. Long-term prepaid expenses

The straight-line method is used.

The straight-line method is used.

2. Accounting for deferred

A. Investment corporation bond issuance

A. Investment corporation bond issuanceassets

costs

costs

Investment corporation bond issuance

Investment corporation bond issuancecosts are amortized by the straight-line

costs are amortized by the straight-line

methodmethodovertheperiodthrough

redemption.
B. Investment unit issuance expenses

3. Accounting for income andexpensesthe

periodthrough

B. Investment unit issuance expenses

Investment unit issuance expenses are

Investment unit issuance expenses arerecognized at the time of cash out.

recognized at the time of cash out.

Accounting for property taxes
Property

tax,

city

Accounting for property taxes

planning

tax,

Property

tax,

city

planning

tax,

depreciable asset tax, and the like

depreciable asset tax, and the likelevied on real estate assets and otherlevied on real estate assets and otherproperties

properties

areaccounted

for

as

are

accounted

foras

expenses related to rent business at

expenses related to rent business at

the amounts corresponding to thethe amounts corresponding to thefiscal period.

4. Hedge accounting method

overredemption.

fiscal period.

The amount of property tax, etc. paid to

The amount of property tax, etc. paid tothe seller as part of settlement forthe seller as part of settlement for

acquisition of real estate and real estate

acquisition of real estate and real estatein trust is not accounted for as expenses

in trust is not accounted for as expenses

but included in acquisition cost of the

but included in acquisition cost of therespective real estate, etc. In the 5th

respective real estate, etc. In the 5th

Period, the property tax, etc. included in

Period, the property tax, etc. included in

the acquisition cost of real estate wasthe acquisition cost of real estate was29,552 thousand yen.

14,476 thousand yen.

A. Hedge accounting method

A. Hedge accounting method

Deferred hedge accounting is applied.
B.

Hedging

methodandhedging

objective
Hedging method: Interest rate swap

Deferred hedge accounting is applied.
B.

Hedging

methodandhedging

objective
Hedging method: Interest rate swap

transactionstransactions

Hedged items: Interest on borrowings
C. Hedging policy

Hedged items: Interest on borrowings
C. Hedging policy

MIRAI utilizes derivative transactions

MIRAI utilizes derivative transactions

to hedge the risks specified in theto hedge the risks specified in the

ArticlesArticlesof

Incorporation

of

the

Investment Corporation based on its
risk management policy.
D.

Methodofof

Incorporation

of

the

Investment Corporation based on its
risk management policy.

assessinghedge

effectivenessD.

Methodofassessinghedge

effectivenessHedge effectiveness is assessed byHedge effectiveness is assessed bymaking a comparison between themaking a comparison between the

cumulative

cumulative

total

of

cash

flow

total

of

cash

flow

fluctuations attributable to hedged

fluctuations attributable to hedged

items and the cumulative total of cash

items and the cumulative total of cash

flow fluctuations attributable to theflow fluctuations attributable to themeans of hedging, and examining themeans of hedging, and examining theratio of these totals of fluctuations.

ratio of these totals of fluctuations.

5. Other significant basis for

A. Accounting for trust beneficiary right

A. Accounting for trust beneficiary rightpreparation

for real estate, etc. as trust asset

for real estate, etc. as trust asset

offinancialstatements

With regard to trust beneficiary rightWith regard to trust beneficiary rightfor real estate, etc. held as trust asset,

for real estate, etc. held as trust asset,

all assets and liabilities as well as all

all assets and liabilities as well as all

revenue and expense items associatedrevenue and expense items associatedwith trust assets are accounted forwith trust assets are accounted forunder the respective account items ofunder the respective account items of

the Balance Sheet and Statement of

the Balance Sheet and Statement of

Income and Retained Earnings.

Income and Retained Earnings.

Of the trust assets accounted for under

Of the trust assets accounted for under

the respective account items, thethe respective account items, thefollowing items with significance arefollowing items with significance are

separately indicated on the Balance

separately indicated on the Balance

Sheet.

Sheet.

(a) Cash and deposits in trust(a) Cash and deposits in trust(b) Buildings in trust, Structures in trust,(b) Buildings in trust, Structures in trust,Tools, furniture and fixtures in trust

Tools, furniture and fixtures in trust

and Land in trust(c)Tenantand Land in trust

leaseholdandsecurity(c)deposits in trust
B.

MethodofTenantleaseholdandsecurity

deposits in trust
accountingforconsumption taxes

B.

Methodofaccountingforconsumption taxes

Transactions subject to consumption

Transactions subject to consumption

taxes

taxes

are

recordedatamounts

exclusive of consumption taxes.

arerecordedatamounts

exclusive of consumption taxes.

Consumption taxes unqualified forConsumption taxes unqualified for

deduction

deduction

for

tax

purposes

for

for

tax

purposesfornoncurrent assets, etc. are included in

noncurrent assets, etc. are included inacquisition cost for each asset.

acquisition cost for each asset.

[Notes to Changes in Presentation](For reference)
Fiscal period ended
October 31, 2018
(Change with the application of “Partial Amendments to
Accounting Standard for Tax Effect Accounting”)
MIRAI has applied “Partial Amendments to AccountingStandard for Tax Effect Accounting ” (ASBJ Statement
No.28 on February 16, 2018) from the beginning of the
fiscal period under review, and the deferred tax assets areclassified in the investments and other assets.

Fiscal period endedApril 30, 2019－

[Notes to Balance Sheet]*1. The reduction entry amount of the tangible fixed assets
The reduction entry amount of the tangible fixed assets acquired by government subsidies(Thousands of yen)(For reference)

The 6th Period

The 5th Period(as of April 30, 2019)(as of October 31, 2018)
Buildings

150,834

175,552

328

328

Tools, furniture, and fixtures

２．Commitment line contracts
MIRAI has the commitment line contracts with the banks.
(Thousands of yen)

The 5th Period

The 6th Period(as of October 31, 2018)(as of April 30, 2019)

Total amount specified in thecommitment line contracts

3,000,000

3,000,000－－

3,000,000

3,000,000

Loan balance at end of
periodOutstanding

loan

commitments

at

end

of

period＊3．Minimum amount of net assets prescribed in Article 67, Item 4 of the Investment Trusts Act(Thousands of yen)

The 5th Period

The 6th Period(as of October 31, 2018)(as of April 30, 2019)50,00050,000＊4．Allowance for Temporary Difference Adjustment(For reference) Fiscal Period ended October 31, 2018
1

Reason for occurrence of provision and reversal, assets identified and the allowance(Thousands of yen)

Assetsidentified

Reason for
occurrence ofprovision

The

The balance
Initialat theamountbeginning of

Allowance

Reversalthe 5th periodbalance at

Reason for

the ending

occurrence ofof the 5threversal

periodOccurrence
Deferred
losses onhedgesChanges inofrevaluation
losses frominterest rateswap

fair value of
216,200

119,262－

57,86861,393thederivativetransactions

2

Specific approach of reversal
Deferred losses on hedges
MIRAI plans to reverse the allowance depending on the changes in fair value of the derivative transactions used for hedge
purposes.

Fiscal Period ended April 30, 20191

Reason for occurrence of provision and reversal, assets identified and the allowance(Thousands of yen)

The
Assetsidentified

Reason for
occurrenceof provisionThebalance at
Initialtheamountbeginning

Allowance

Reversalof the 5th

Occurrlosses onence ofhedgesrevalua

Reason for

the ending

occurrenceof the 6thof reversal

periodperiodDeferredbalance at

Changes in fair
value

tion
lossesfrominterest
rate

216,200

61,393－

61,393－of thederivativetransac
tions

swap
2

Specific approach of reversal
Deferred losses on hedges
MIRAI plans to reverse the allowance depending on the changes in fair value of the derivative transactions used for hedge
purposes.

[Notes to Statement of Income and Retained Earnings](For reference)

Fiscal Period ended April 30, 2019

Fiscal Period ended October 31, 2018
※1 Breakdown of income from real(Thousands of yen)

※1 Breakdown of income from realestate leasing businessestate leasing business

Ａ ． Real estate leasing business

Ａ ． Real estate leasing businessrevenuerevenue

Rent revenue-real estate(Thousands of yen)

Rent revenue-real estate

Rent income

3,087,436

Land rents received

3,644

Facility charges

165,409

Total

3,256,490

Other lease business revenue

Rent income

3,858,561

Land rents received

3,644

Facility charges

161,396

Total

4,023,601

Other lease business revenue

Utilities charges

621,917

Utilities charges

558,129

Other operating income

538,890

Other operating income

377,612

Total
Total

1,160,808

realestateleasing

4,417,298

business revenue

Total
Total

935,741

real

estateleasingbusiness revenue

Ｂ ． Real estate leasing business

Ｂ ． Real estate leasing business

expenses

expenses

Expensesrelated

4,959,342

to

rent

Expensesbusinessrelatedtorentbusiness

Outsourcing

service323,748

expenses

Outsourcing

service332,879

expensesUtilities expenses

523,830

Utilities expenses

453,633

Taxes and dues

319,885

Taxes and dues

337,635

Repair expenses

53,721

Repair expenses

66,847

Depreciation

452,956

Depreciation

553,261

Other expenses related to235,590

Other expenses related to255,239rent business
Total

real

estaterent businessleasing

1,909,732

business expenses

Total

real

estateleasing

1,999,495

Ｃ．Income from real estate leasing

2,959,847

business expenses

Ｃ．Income from real estate leasing

2,507,566

business (A－B)

business (A－B)※2 Insurance income※2 Insurance income

The insurance claim concerning damage caused by
the fire which occurred at Kawasaki Tech Center isaccounted as insurance income.
－The insurance claim concerning escalator damage
which occurred at Mi-Nara is accounted as
insurance income.
※3 Breakdown of loss on reduction of non-current assets
Loss on reduction of non-current assets is the value
directly deducted from the acquisition price of newly
acquired tangible fixed assets as a result of receipt
of subsidies and insurance claims. The breakdown
are as follows:(Thousands of yen)

Buildings in trust

24,718

Total

24,718

[Notes to Statement of Changes in Net Assets](For reference)

Fiscal period ended

Fiscal period endedApril 30, 2019

October 31, 2018※1

Total number of investment units authorized and※1

Total number of investment units authorized andTotal number of investment units issued and outstanding

Total number of investment units issued and outstanding

Total number of investment units authorized

Total number of investment units authorized

5,000,000

units

5,000,000

units

Total number of investment units issued andTotal number of investment units issued andoutstanding

outstanding

339,210 units

395,410 units[Tax Effect Accounting](For reference)

Fiscal period ended

Fiscal period endedApril 30, 2019

October 31, 2018
1. Breakdown of major causes of deferred tax assets and

1. Breakdown of major causes of deferred tax assets anddeferred tax liabilities

deferred tax liabilities(Thousands of(Thousands ofyen)
Deferred tax assets, current

yen)
Deferred tax assets, current

Enterprise tax not deductible

7

Enterprise tax not deductible

Deferred losses on hedges－

Deferred losses on hedges

155,009

Subtotal deferred tax assets,

7

Subtotal deferred tax assets,

155,020

current

11

current

Valuation allowance－

Valuation allowance

Total deferred tax assets,

7

Total deferred tax assets,

noncurrent(155,009)
11

noncurrent

Deferred tax assets, net,

7

noncurrent

Deferred tax assets, net,

11

noncurrent

2. Breakdown by major cause of material difference

2. Breakdown by major cause of material difference

between the effective statutory tax rate and the

between the effective statutory tax rate and theeffective tax rate after applying tax effect accounting

effective tax rate after applying tax effect accounting(％)
Effective statutory tax rate

31.51

(Adjustments)
Other
applying
accounting

tax
tax

31.51

(Adjustments)

Deductible cash distributions
Effective(％)
Effective statutory tax rate

rate

after
effect(31.50)

Deductible cash distributions

0.03

Other

0.04

Effective
applying
accounting(31.50)
0.03

tax
tax

rate

after
effect0.04

[Financial Instruments](For reference) Fiscal Period ended October 31, 2018
1．Matters concerning the status of financial instruments
A. Policies on financial instruments
MIRAI procures funds mainly by additionally issuing investment units, borrowing funds, or issuing investment corporation
bonds for the purpose of securing funds required for acquisition of assets and repair of assets, payments of dividends, andoperation of MIRAI or repayment of debts.
With respect to borrowing of funds and issuance of investment corporation bonds, we consider the balance between
flexibility of financing and financial stability. Specifically, we consider, among other things, the long-term ratio, fixedinterest ratio, diversification of maturities, financing method (borrowings and/or investment corporation bonds) andestablishment of commitment lines.
MIRAI uses derivative transactions for the purpose of hedging interest rate fluctuation risk and other risks and does notenter into derivative transactions for speculative or trading purpose.
MIRAI invests surplus funds in securities and monetary claims with a focus on safety and liquidity, and does not engage
into speculative investment.
B. Description of financial instruments and associated risks, and the risk management system
Deposits are one means of investing the surplus funds of MIRAI and are exposed to credit risk such as the bankruptcy ofdeposit financial institutions. MIRAI works to mitigate credit risk by shortening the period of deposits and dealing withdeposit financial institutions with high credit ratings.
Loans payable and investment corporation bonds are used primarily for acquisition of assets and repayments of debts,
and are exposed to liquidity risk at the time of repayment/redemption. MIRAI strives to mitigate liquidity risk by diversifying
lenders, repayment periods, and means of funds procurement and by securing liquidity on hand by setting commitment
lines and manages liquidity risk by preparing cash flow management sheet and other methods.
As some loans are borrowed on variable interest rates, they are exposed to the risk of higher interest payment. MIRAI
works to mitigate the risk of higher interest payment by maintaining a lower interest-bearing debt ratio as well asheightening the ratio of loan with long-term fixed interest rate.
Variable interest rate borrowings are exposed to the risk of interest rate fluctuations. Derivative transactions are used tohedge the risk of fluctuations in the interest rate payable for a portion of the borrowings. See “4. Hedge accounting method”
above under “Summary of Significant Accounting Policies” for details about the hedging method, hedged items, hedging
policy, and method of assessing hedge effectiveness, etc. in hedge accounting.
C. Description of financial instruments
Fair value of financial instruments comprises value based on market prices or rationally calculated value in the case themarket prices are not available. As certain assumptions are applied in performing calculation of such value, the value may
differ if different assumptions are used.
2. Matters concerning fair value, etc. of financial instruments
Amounts on the Balance Sheet, fair value and their difference as of October 31, 2018 are as follows;(Thousands of yen)Amounton the balance sheet

Difference(i) Cash and deposits

2,958,159

2,958,159－(ii) Cash and deposits in trust

2,264,410

2,264,410－

Total assets

5,222,569

5,222,569－

1,000,000

990,500(9,500)(iv) Long-term loans payable

63,200,000

63,239,167

39,167

Total liabilities

64,200,000

64,229,667

29,667

11,195

11,195－(iii) Investment corporation
bonds(v) Derivative transactions*(*)

Fair value

Net amounts are shown for credits and liabilities attributable to derivative transactions, and the total of the items that constitute net liabilities is shown in negative.

(Note 1) Matters concerning the method of calculating the market value of financial instruments and derivative transactions.
(ⅰ) Cash and deposits, (ⅱ) Cash and deposits in trust
The fair value of these is presented same as the book value, as they are settled in the short-term period and accordingly fair value is almost equal to book value.

(iii) Investment corporation bonds
The reference value disclosed by the Japan Securities Dealers Association is used as the fair value.
(iv) Long-term loans payable
Due to the short maturities and the floating interest rates, the book value of these instruments is deemed a reasonable approximation of the fair value.
(v) Derivative transactions
1. Transactions not applicable to hedge accounting：Not applicable
2. Transactions applicable to hedge accounting：The following table shows the contract amount on the closing date for derivative transactions, or the amountcorresponding to the principal specified in the contract.
(Thousands of yen)
Hedge accounting
methodType of derivativetransactions

Contract amount(*1)

Primary
hedgedFair value

Amountitems

over one year(*2)

Interest rate swap
Deferred hedgetransactions

Long-term

50,000,000

50,000,000

accounting

Receive variable, payborrowings

(*3)

(*3)

11.195fixed(*1)

Contract amount based on notional amounts(*2) Fair value is calculated based on the price by business partner financial institutions.
(*3)

Includes an interest rate swap agreement (with a contract amount of 6.5 billion yen) executed as of October 30, 2018 as a hedge against the borrowings
made on November 1, 2018.

(Note 2) Financial instruments for which fair value is difficult to determine
Accounts(Thousands of yen)Amount on the balance sheet

Tenant leasehold and security deposits in trust

4,640,654(※)※Tenant leasehold and security deposits that are deposited by lessees of rental properties are not subject to disclosure of fair value because discerning of the fair value isrecognized to be extremely difficult as future cash flows cannot be reasonably estimated due to there being no market price and difficulty in calculation of the actual deposit
period.
(Note 3) Return schedule for monetary claims after the settlement date (as of October 31, 2018)(Thousands of yen)
Within 1 year
Cash and deposits

2,958,159

Cash and deposits in trust

2,264,410

Total

5,222,569(Note 4) Return schedule for loans after the settlement date (as of October 31, 2018)
Within(Thousands of yen)

1-2 years

2-3 years

3-4 years

4-5 years

After 5 years

－

－

－

－

－

1,000,000－－

1,500,000

10,000,000

7,000,000

44,700,000－－

1,500,000

10,000,000

7,000,000

45,700,000

1 yearInvestment
corporationbonds
Long-term
loans
payableTotal

Fiscal period ended April 30, 2019
1. Matters concerning the status of financial instruments
A. Policies on financial instruments
MIRAI procures funds mainly by additionally issuing investment units, borrowing funds, or issuing investment corporation
bonds for the purpose of securing funds required for acquisition of assets and repair of assets, payments of dividends, andoperation of MIRAI or repayment of debts.
With respect to borrowing of funds and issuance of investment corporation bonds, we consider the balance between
flexibility of financing and financial stability. Specifically, we consider, among other things, the long-term ratio, fixedinterest ratio, diversification of maturities, financing method (borrowings and/or investment corporation bonds) andestablishment of commitment lines.
MIRAI uses derivative transactions for the purpose of hedging interest rate fluctuation risk and other risks and does notenter into derivative transactions for speculative or trading purpose.
MIRAI invests surplus funds in securities and monetary claims with a focus on safety and liquidity, and does not engage
into speculative investment.

B. Description of financial instruments and associated risks, and the risk management system
Deposits are one means of investing the surplus funds of MIRAI and are exposed to credit risk such as the bankruptcy ofdeposit financial institutions. MIRAI works to mitigate credit risk by shortening the period of deposits and dealing withdeposit financial institutions with high credit ratings.
Loans payable and investment corporation bonds are used primarily for acquisition of assets and repayments of debts,
and are exposed to liquidity risk at the time of repayment/redemption. MIRAI strives to mitigate liquidity risk by diversifying
lenders, repayment periods, and means of funds procurement and by securing liquidity on hand by setting commitment
lines and manages liquidity risk by preparing cash flow management sheet and other methods.
As some loans are borrowed on variable interest rates, they are exposed to the risk of higher interest payment. MIRAI
works to mitigate the risk of higher interest payment by maintaining a lower interest-bearing debt ratio as well asheightening the ratio of loan with long-term fixed interest rate.
Variable interest rate borrowings are exposed to the risk of interest rate fluctuations. Derivative transactions are used tohedge the risk of fluctuations in the interest rate payable for a portion of the borrowings. See “4. Hedge accounting method”
above under “Summary of Significant Accounting Policies” for details about the hedging method, hedged items, hedging
policy, and method of assessing hedge effectiveness, etc. in hedge accounting.
C. Description of financial instruments
Fair value of financial instruments comprises value based on market prices or rationally calculated value in the case themarket prices are not available. As certain assumptions are applied in performing calculation of such value, the value may
differ if different assumptions are used.
2. Matters concerning fair value, etc. of financial instruments
Amounts on the Balance Sheet, fair value and their difference as of April 30, 2019 are as follows;(Thousands of yen)AmountFair value

Difference

on the balance sheet(ⅰ) Cash and deposits

2,227,890

2,227,890－(ⅱ) Cash and deposits in trust

2,327,433

2,327,433－

Total assets

4,555,324

4,555,324

－

(iii)

Investment

corporation

1,000,000

996,600(3,400)(ⅳ) Long-term loans payable

73,700,000

73,835,436

135,436

Total liabilities

74,700,000

74,832,036

132,036（491,936）（491,936）

bonds(v) Derivative transactions*－*Net amounts are shown for credits and liabilities attributable to derivative transactions, and the total of the items that constitute net liabilities is shown in negative.
(Note 1) Matters concerning the method of calculating the market value of financial instruments and derivative transactions.
(ⅰ) Cash and deposits, (ⅱ) Cash and deposits in trust
The fair value of these is presented same as the book value, as they are settled in the short-term period and accordingly fair value is almost equal to book value.
(iii) Investment corporation bonds
The reference value disclosed by the Japan Securities Dealers Association is used as the fair value.
(iv) Long-term loans payable
Due to the short maturities and the floating interest rates, the book value of these instruments is deemed a reasonable approximation of the fair value.
(v) Derivative transactions
1. Transactions not applicable to hedge accounting：Not applicable
2. Transactions applicable to hedge accounting：The following table shows the contract amount on the closing date for derivative transactions, or the amountcorresponding to the principal specified in the contract.
(Thousands of yen)
Hedge accounting
methodType of derivativetransactions

Primary

Contract amount(*1)

hedgedAmountitems

over one year

Fair value(*2)

Interest rate swap
Deferred hedgetransactions

Long-term

accounting

Receive variable, payborrowings

50,000,000

fixed
(*1)

Contract amount based on notional amounts(*2) Fair value is calculated based on the price by business partner financial institutions.

50,000,000(491,936)

(Note 2) Financial instruments for which fair value is difficult to determine
Accounts(Thousands of yen)Amount on the balance sheet

Tenant leasehold and security deposits in trust *5,070,225* Tenant leasehold and security deposits that are deposited by lessees of rental properties are not subject to disclosure of fair value because discerning of the fair value isrecognized to be extremely difficult as future cash flows cannot be reasonably estimated due to there being no market price and difficulty in calculation of the actual deposit
period.
(Note 3) Return schedule for monetary claims after the settlement date (as of April 30, 2019)(Thousands of yen)
Within 1 year
Cash and deposits

2,227,890

Cash and deposits in trust

2,327,433

Total

4,555,324(Note 4) Return schedule for Investment corporation bonds and loans after the settlement date (as of April 30, 2019)(Thousands of yen)
Within1-2 years

2-3 years

3-4 years

4-5 years

－

－

－

－

－

1,000,000－

1,500,000

11,500,000

7,000,000

18,500,000

35,200,000－

1,500,000

11,500,000

7,000,000

18,500,000

36,200,000

1 yearAfter

Investment
corporationbonds
Long-term
loans
payableTotal［Notes to Lease Properties］(For reference)Fiscal period ended October 31, 2018
MIRAI holds offices, retails and hotels in Tokyo and other regions.
The amounts on the Balance Sheet changes during the fiscal period, and fair value of lease properties are as follows.
(Thousands of yen)Amount on the balance sheet
Balance at the beginning

Changes during theBalance at the end of theof the period

periodperiod111,245,042

14,442,757

125,687,800

Fair value at the end of theperiod129,805,800(Note 1) The amount on the balance sheet is acquisition cost less accumulated depreciation.
(Note 2) Of the amount of increase (decrease) of the lease properties during the 5th period, the reason of increase is mainly attributable to acquisition of 3 real estate trust
beneficiary rights (14,645,974 thousand yen) and the reason of decrease is mainly attributable to depreciation (452,956 thousand yen).
(Note 3) The fair value at the end of the fiscal period is the appraisal value provided by an outside real estate appraiser.

The income concerning lease properties, etc. for the fiscal period ended October 31, 2018 is indicated under "Notes toStatement of Income and Retained Earnings" above.
Fiscal period ended April 30, 2019MIRAI holds offices, retails hotels and industrial real estates in Tokyo and other regions.
The amounts on the Balance Sheet changes during the fiscal period, and fair value of lease properties are as follows.
(Thousands of yen)Amount on the balance sheet
Balance at the beginning

Changes during theBalance at the end of theof the period

periodperiod125,687,800

21,285,848

146,973,649

Fair value at the end of theperiod153,692,000(Note 1) The amount on the balance sheet is acquisition cost less accumulated depreciation.
(Note 2) Of the amount of increase (decrease) of the lease properties during the 6th period, the reason of increase is mainly attributable to acquisition of 5 real estate trust
beneficiary rights (21,401,215 thousand yen) and the reason of decrease is mainly attributable to depreciation (553,261thousand yen).
(Note 3) The fair value at the end of the fiscal period is the appraisal value provided by an outside real estate appraiser.

The income concerning lease properties, etc. for the fiscal period ended April 30, 2019 is indicated under "Notes to Statementof Income and Retained Earnings" above.

[Transactions with Related Parties](For reference)Fiscal period ended October 31, 2018
Classifycation

Name ofcompany orindividualBusiness

VotingTransactio

Balance at

description

rightsNature ofn amount

end of periodorholdingtransaction(Thousandoccupation

ratio (％)

Accounts of yen)(Thousandsof yen)Maintenance,RelatedpartiesAcquisition

managemeofof realGK

nt andasset

FushimipurchasemanagemeFirstand sale ofnt company－

estate trust

8,886,000－－

beneficiariestrust
beneficiaries

Borrowing

Sumitomo
Asset

Mitsuicustody

TrustcompanyBank,of long-term
Banking

loans

－

Long－

payableInterest

Limitedexpenses

term
loans

12,000,000

payable34,906

Accrued190

expenses(Note 1) Of the above amounts, the transaction amount does not include consumption taxes while the balance at the end of fiscal period does.
(Note 2) Transaction conditions are determined based on market rate.

Fiscal period ended April 30, 2019
Classifycation

Name ofcompany orindividualBusiness

Votingdescription

rightsNature ofTransactio
n amountorholdingtransaction(Thousandoccupation

ratio (％)

Balance at
Accounts of yen)end of period(Thousandsof yen)Maintenance,partiesAcquisitio

manageme

Relatedofasset
manageme

TMK Rokko
Investment

nt company

n of real

nt andpurchase－and sale ofestatetrust

8,650,000－－

beneficiar

trust

ies

beneficiaries

BorrowingAssetcustody
company

Mitsui Trust
Bank,

Long-

of long-

Sumitomo

termBanking

Limited

－2,500,000

loans
Interest

14,500,000

payablepayableexpenses

term
loans

41,080Accruedexpenses(Note 1) Of the above amounts, the transaction amount does not include consumption taxes while the balance at the end of fiscal period does.
(Note 2) Transaction conditions are determined based on market rate.

1,134[Per Unit Information](For reference)

Fiscal period ended

Fiscal period endedApril 30, 2019

October 31, 2018
Net assets per unit

181,570 yen

Profit per unit

5,763yen

Net assets per unit

44,797yen

Profit per unit

1,437yen

Profit per unit was calculated by dividing profit by average

Profit per unit was calculated by dividing profit by average

number of investment units during period.

number of investment units during period.

Diluted profit per unit is not stated as there are no dilutive

Diluted profit per unit is not stated as there are no

investment units.

dilutive investment units.

(Note 1) MIRAI Corporation implemented a four-for-one investment unit split with May 1, 2019 as effective date. Net assets per unit in the above table shows pro forma perunit information which has been adjusted to reflect the unit split as if it had been effective at the beginning of the 6th fiscal period.
(Note 2) The calculation of profit per unit is based on the following.
(Thousands of yen)(For reference)

Fiscal period ended

Fiscal period endedApril 30, 2019

October 31, 2018
Profit

1,922,408

Amount not attributable to common

Profit－unitholders
Profitpertaining

2,271,534

Amount not attributable to common－

unitholders
tocommon1,922,408

Profitinvestment units
Average number of investment units

pertaining

tocommon2,271,534

Average number of investment units

1,580,088

investment units
333,539

during period

during period[Notes to Significant Subsequent Events](For reference) Fiscal period ended October 31, 2018(i) Issue of new investment units
MIRAI made a resolution at a meeting of its Board of Directors held on October 16, 2018 and October 24, 2018. Payments
for issue of new investment units by public offering (primary offering) and issue of new investment units through a thirdparty allotment were completed on November 1, 2018 and November 27, 2018, respectively and conditions of the issuanceare as follows. As a result, total unitholders’ equity is 69,074,546 thousand yen and total number of investment units
outstanding is 395,410 units.
Issue of new investment units (public offering)Number of investment units to be issued

53,500 units

Issue price (offer price)\173,452 per unit

Total amount of issue value (offer price)\9,279,682,000

Paid-in amount\167,581 per unit

Total paid-in amountPayment date

\8,965,583,500
November 1 (Thursday), 2018

Issue of new investment units through a third-party allotment
Number of investment
units to be issued
Paid-in amount
Total paid-in amountPayment date
Allottee

2,700 units\167,581 per unit
\452,468,700
November 27,2018
Nomura Securities Co., Ltd.

Use of proceeds of funds to be procured
Net proceeds from the public offering was used to fund part of the acquisition of “Smile Hotel Naha City Resort”, “Smile
Hotel Hakataeki-Mae”, “Smile Hotel Nagoya-Sakae”, “Hotel WBF Yodoyabashi-Minami” and “Rokko Island DC”. Net

proceeds from third-party allotment option have been retained and will be reserved to fund part of acquisition of specified
assets or repayment of loans or repayment of loans in the future.
(ii) Split of investment units
MIRAI made a resolution at a meeting of its Board of Directors held on December 13, 2018.
Purpose of the split
MIRAI will implement the split for the purpose of making an environment which enables investors to invest more easily
by reducing the investment unit price, which would ultimately broaden MIRAI’s investor base.
Method of the split
MIRAI will implement a four-for-one split of the investment units of MIRAI held by unitholders stated or recorded on theregistry of unitholders as of the record date of April 30, 2019.
Number of investment units to be increased through the split
Number of investment units issued and outstanding before the split
Number of investment units to be increased through the split

395,410 units
1,186,230 units

Number of investment units issued and outstanding after the split

1,581,640 units

Number of investment units authorized after the split

20,000,000 units

Schedule of the split
Record date

April 30, 2019

Effective date

May 1, 2019

Effect of the split
Per-unit information assuming that the split had been in effect as of the beginning of the fiscal period is as follows:
Net assets per unit

45,392 yen

Profit per unit

1,440 yen

Fiscal period ended April 30, 2019
Split of investment units
MIRAI implemented a four-for-one investment unit split with April 30, 2019 as record date and May 1, 2019 as effective
date.
Purpose of the split
MIRAI implemented the split for the purpose of making an environment which enables investors to invest more easily by
reducing the investment unit price, which would ultimately broaden MIRAI’s investor base.
Method of the split
MIRAI implemented a four-for-one split of the investment units of MIRAI held by unitholders stated or recorded on theregistry of unitholders as of the record date of April 30, 2019.
Number of investment units increased through the split
Number of investment units issued and outstanding before the split
Number of investment units to be increased through the split

395,410 units
1,186,230 units

Number of investment units issued and outstanding after the split

1,581,640 units

Number of investment units authorized after the split

20,000,000 units

See “[Per Unit Information]” for details about each figure per unit which has been adjusted to reflect the unit split as if it
had been effective at beginning of the fiscal period ended April 30, 2019.
[Notes to Allowance for Temporary Difference Adjustment](For reference)
Fiscal period ended
October 31, 2018

Fiscal period endedApril 30, 2019

The allowance for temporary difference adjustment,

The allowance for temporary difference adjustment,

61,393 thousands yen, which responds to changes in the491,890 thousands yen concerning the deferred hedge

fair value of interest rate swaps, is reversaled inloss of interest rate swaps, is reversaled in distribution

distribution information.

information. Such allowance for temporary difference
adjustment will reversal amounts responds to changes infair value after the 7th fiscal period.

VI.

Cash Distributions Statement(For reference)

Fiscal period ended

Fiscal period endedApril 30, 2019

October 31, 2018
Ⅰ

Unappropriated retained

earnings (undisposed loss)
Ⅱ

1,984,191,650

2,271,690,017－

491,890,040－

491,890,040

61,393,750－

61,393,750－

1,922,642,280

2,271,630,450

Distribution of excess

profit distribution
Temporarydifference

adjustment
Ⅲ

Capitalization
Reversal of allowance fortemporarydifference

adjustment
Ⅳ

Distributions[Distributions per unit]
Distributions of earnings[Distributions(5,668)(5,745)

1,922,642,280

1,779,740,410(5,668)(4,501)－

491,890,040(－)(1,244)

155,620

491,949,607

ofearnings per unit]
Temporarydifference

adjustment[Distributions in excessofearnings

per(attributabletemporaryunit
todifference

adjustment)]
Ⅴ

Retained earnings to be

carriedforward(retained

loss)

Methodofdistributions

calculationofIn accordance with the distribution policy

In accordance with the distribution policy

set forth in Article 36 (1) of the Articles ofset forth in Article 36 (1) of the Articles ofIncorporation of MIRAI, the distribution

Incorporation of MIRAI, the distribution

amountisdistributabletoexceedincome

90%
of

of

the

amountMIRAI

as

distributableistoexceedincome

90%
of

of

the

MIRAI

as

stipulated in Article 67.15 Paragraph 1 ofstipulated in Article 67.15 Paragraph 1 of

the Act on Special Measures Concerning

the Act on Special Measures Concerning

Taxation.

Taxation.

Based

on

this

policy,

Based

on

this

policy,1,922,642,280 yen, which is the total

1,779,740,410 yen, which is the total

amountretainedamount of earnings set forth in Article 136

earnings after deduction of reversal ofofunappropriated(1) of Act on Investment Trusts andallowance

Investmentfor

temporarydifference

Corporations,excludingaadjustment (as stipulated in Article 2,

fraction of one yen in distribution per

Paragraph 2, Item 30 of the Ordinance on

investment

Accountings of Investment Corporations),

distribution (exclusive of distributions in

excluding a fraction of one yen inexcess of earnings).

distribution per investment unit, will be
paid

as

distribution(exclusive

distributions in excess of earnings).

of

unit,

will

be

paid

as

In addition, based on the policy of
distribution of excess profit distribution
set forth in Article 36 (2) of the Articles ofIncorporationof

MIRAI,

takingintoaccount an impact on distribution from net
asset deduction items (as stipulated in
Article 2, Paragraph 2, Item 30 of theOrdinance on Accountings of Investment
Corporations),

amounts

which

MIRAI

decides as amounts equivalent to net
asset deduction items will be paid as
distribution and as amount equivalent to
the deferred hedge loss, 491,936,021 yen,
491,890,040 yen calculated excluding afraction of one yen in distribution perinvestment

unit

paid

as

distribution

concerning

will

allowance

befor

temporarydifference

adjustment(asstipulated in Article 2, Paragraph 2, Item
30 of the Ordinance on Accountings ofInvestment Corporations) As a result, theamounts of distributions is 271,630,450
yen.

VII.

Cash Flow Statement (Reference)(Thousands of yen)

Fiscal period ended

Fiscal period ended

October 31, 2018

April 30, 2019

Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of investment corporation bondissuance costs
Investment unit issuance expenses
Interest income
Interest expenses
Loss on reduction of non-current assets
Decrease (increase) in operating accounts
receivable
Decrease (increase) in accounts receivable other
Decrease (increase) in prepaid expenses
Decrease (increase) in consumption taxes
refund receivable
Increase (decrease) in operating accounts
payableIncrease (decrease) in accounts payable other
Increase (decrease) in accrued consumption
taxes
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid
expenses

1,923,183

2,272,372

453,276

553,581406

610

44,23518,899(23)(18)

168,965

196,676－

24,718(26,332)(17,230)

151,450－

5,448(23,404)(151,742)(78,607)(41,483)(81,336)

10,82924,771(140,698)－

62,59375,705

7,681

4,261

Other, net

12,150(2,450)Subtotal

2,479,941

2,968,548

Interest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating
activities

23

18(171,811)(192,266)

(998)

(763)

2,307,154

2,775,537(15,355,562)(21,849,054)(110,066)(204,920)

734,027

634,492

Cash flows from investing activities
Purchase of property, plant and equipment in
trust
Repayments of tenant leasehold and security
deposits in trust
Proceeds from tenant leasehold and security
deposits in trust
Payments for restricted deposits held in trust
Other payments
Net cash provided by (used in) investing
activities

(0)

(0)

(31,131)(106)(14,762,733)(21,419,590)

Cash flows from financing activities
Decrease in short-term loans payable(1,000,000)－

Proceeds from long-term loans payable

6,700,000

10,500,000

Proceedsfromissuanceofinvestment

corporation bonds
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
periodCash and cash equivalents at end of period＊1987,790－

7,719,923

9,399,153(1,701,790)(1,922,346)

12,705,924

17,976,806

250,345(667,246)

4,790,128

5,040,473

5,040,473＊1

4,373,227

[Summary of Significant Accounting Policies] (For reference)
Fiscal period ended

Fiscal period ended

October 31, 2018

April 30, 2019

5. Scope of cash and cash

Cash and cash equivalents consist of

Cash and cash equivalents consist ofequivalents in the statement

cash on hand, cash in trust, deposits andcash on hand, cash in trust, deposits andof cash flows

deposits

deposits

in

trust

withdrawable

on

in

trust

withdrawableondemand, and short-term investments,

demand, and short-term investments,

which are easily convertible into cash,

which are easily convertible into cash,with low risk of price fluctuation andwith low risk of price fluctuation andwith a maturity of less than threewith a maturity of less than threemonths.

months.

[Notes to Statement of Cash Flows] (For reference)＊1 Relationship between cash and cash equivalents at end of period and the amount on the balance sheet(Thousands of yen)
Fiscal period ended

Fiscal period ended

October 31, 2018

April 30, 2019

Cash and deposits

2,958,159

2,227,890

Cash and deposits in trust

2,264,410

2,327,433(182,095)(182,096)

5,040,473

4,373,227

Restricted deposits in trust(Note)Cash and cash equivalents(Note) These are deposits that are reserved for the return of security deposits from tenants.