Ichigo Office REIT Semi-Annual Report (Audited) 27th Fiscal Period November 1, 2018 – April 30, 2019 Ichigo Office REIT Investment Corporation Imperial Hotel Tower, 1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo 100-0011
Dear Shareholders, We extend our gratitude to all of you for your trust. For the April 2019 fiscal period, Ichigo Office focused on organic growth through sustaining high occupancy and proactive negotiations to increase rents, as well as conducting a strategic acquisition and sale of assets aimed to drive shareholder value. We acquired two mid-size offices (Ichigo Minami Otsuka Building and Ichigo Nogizaka Building, total acquisition price 6.0 billion yen) in December 2018 as part of our strategic acquisition and sales. Both assets are located in central Tokyo and can expect ongoing rental growth. At the same time, we sold two retail assets. As a result, Ichigo Office's AUM (assets under management) at the end of the fiscal period was 85 assets, with a total acquisition price of 203 billion yen. We also deployed our value-add capex capabilities to expand our tailored leasing activities via our Ichigo Layout Office and Ichigo Lounge high-quality office spaces. Both provide comfortable working environments which supports the recent changes in Japan's work habits by offering a flexible layout to suit the diverse needs of our tenants. Through these measures to increase tenant satisfaction, occupancy was over 99% throughout the fiscal period. In terms of financing policies, we issued our third Investment Corporation Bond, and we continue to borrow long- term and at fixed rates in order to hedge future interest rate risk. As a result of these actions, Ichigo Office's April 2019 results were operating revenue of 8,451 million yen, operating profit of 4,510 million yen, recurring profit of 3,733 million yen, and net income of 3,732 million yen. Base EPS, which is earnings per share minus capital gains per share, was 2,000 yen, and continues to grow. As we distributed the capital gains from the aforementioned asset sale, the dividend per share was 2,255 yen, marking eighteen consecutive periods of dividend growth, ranking Ichigo Office No.1 among all J-REITs. Ichigo Office aims to drive sustainable growth and maximize shareholder value through growth investments that reflect a full understanding of and responsiveness to the market environment. Ichigo Office's name comes from the ancient Japanese proverb, Ichigo Ichie , literally meaning "One lifetime, one encounter." We will continue to embrace this philosophy of sincerity and service. We work to build strong long-term relationships to support the success of our clients, shareholders, and all stakeholders. Thank you so much for your continued support. Yoshihiro Takatsuka, Executive Director Ichigo Office REIT Investment Corporation Hiroshi Iwai, President and Representative Statutory Executive Officer Ichigo Investment Advisors Co., Ltd.

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Historical Investment Performance

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(1) Overview
In the fiscal period ending April 30, 2019, Ichigo Office's 27th fiscal period, Ichigo Office worked to increase its attractiveness as a specialized office REIT focusing on mid-size offices by selling two retail assets and acquiring two mid-sized offices in return. Ichigo Office also strengthened its organic growth potential. Key action items during the period were: 1) driving increased asset value and investment efficiency through value-add capex (Note) and 2) further development of the Ichigo Office brand. Ichigo Office seeks to construct a portfolio specializing in mid-sized offices which can generate both earnings stability and earnings growth. (Note)  "Value-add capex" is capital expenditure that enhances the competitiveness and profitability of Ichigo Office assets.
(2) Market Environment and Investment Performance
(i) Market Environment
During the current fiscal period, the Japanese economy was able to maintain its steady growth trend although exports and manufacturing were affected by the economic conditions overseas. Going forward, negative impact from the consumption tax increase scheduled in October 2019 is a concern, but domestic demand is expected to grow steadily, supported by monetary easing and government expenditures. There are also concerns about the future of the global economy, which may be affected by the U.S policy changes, multinational trade disputes, and further turmoil caused by BREXIT. In the real estate market, cap rates should continue to be low, as demand remains quite strong from both domestic and overseas investors, backed by the favorable financing environment. Meanwhile, in the office leasing market, vacancies continues to be limited in Central Tokyo, leading to robust demand for larger office space and new supply, and strong growth in rents. In particular, the supply/demand balance for the mid-size offices in which Ichigo Office specializes continues to be tight.
(ii) Investment Performance
In order to pursue a robust mid-size office portfolio and maximize shareholder value, Ichigo Office conducted strategic acquisitions and sales of assets, by selling the Ichigo Machida East Building and Ichigo Shin Yokohama Arena Dori Building (total sale price for two assets: 3,600 million yen) and acquiring the Ichigo Minami Otsuka Building (acquisition price: 2,780 million yen) and Ichigo Nogizaka Building (acquisition price: 3,315 million yen) in return. Ichigo Office also sold a section of the underlying land of Ichigo Toyama Building (sale price: 12 million yen); therefore, the number of assets owned at period-end was 85 assets (total acquisition price: 203,017 million yen). Ichigo office has focused on NOI growth, and worked to raise both rents and occupancy in order to increase the profitability of its assets. During the current fiscal period, Ichigo Office took various actions to enhance the competitiveness and profitability of its assets, such as the Ichigo Lounge, a shared lounge and conference space available only to tenants, designed for comfort and functionality, in the Ichigo Uchi Honmachi Building. As a result of such efforts, the occupancy for the overall portfolio at period-end was 99.3%. (Note)   Ichigo Lounge is Ichigo Office's original leasing strategy to increase tenant satisfaction by providing a high-quality shared work space designed to support tenants to communicate and collaborate.
(3) Financing
During the current fiscal period, Ichigo Office borrowed a total of 5,866 million yen from banks in November 2018 and April 2019 and issued its third Investment Corporation Bond (1,000 million yen) to repay loans that came due in those months (a total of 6,867 million yen). It also borrowed 3,000 million yen in new loans to acquire the Ichigo Minami Otsuka Building and the Ichigo Nogizaka Building. To maintain a stable financial base, Ichigo Office works to diversify repayment dates and is prudent about interest rate risks.
(4) Earnings and Dividends
As a result of the management initiatives above, Ichigo Office recorded an operating revenue of 8,451 million yen, operating profit of 4,510 million yen, recurring profit of 3,733 million yen and net income of 3,732 million yen for the fiscal period. With respect to dividends, the dividend policy set out in Article 37 of the Articles of Incorporation of the Investment Corporation stipulates that the amount of dividends shall exceed the amount equivalent to 90% of distributable earnings as provided for in Article 67-15, Paragraph 1 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957 including subsequent amendments, hereinafter the "Special Measures Taxation Act"). Ichigo Office has voluntary reserves for temporary difference adjustments and dividends. Of these voluntary reserves, it uses temporary difference adjustments of 105 million yen or more every period based on the revised Rules on Real Estate Investment Trusts and Real Estate Investment Corporations in 2015 (hereinafter the "Rules of the Investment Trust Association, Japan"). Similarly, Ichigo Office may use dividend reserves from the standpoint of stabilizing the dividend level, taking cash flows into account. However, because Ichigo Office also has a tax loss carried forward ( Noe ), mainly due to the loss on sales of real estate posted when assets were transferred in the past for the purpose of improving portfolio quality, it may internally reserve profits if it has total net gains on sales of real estate assets and other profits from operations. For this period, Ichigo Office has decided to distribute 3,455 million yen, which is the total amount of unappropriated retained earnings (3,733 million yen) and the reversal of reserves for temporary difference adjustments (105 million yen) minus gain on sales of real estate transferred to dividend reserves in compliance with J-REIT conduit rules (382 million yen). As a result, the dividend per share was 2,255 yen. (Note)   The balance of tax losses carried forward owned by Ichigo Office is approximately 1.0 billion yen, and the expiration of the tax losses carrying forward period is t ending April 30, 2022. Restrictions regarding the maximum reduction of losses able to be included in deductible expenses will not be applied.
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Issuance of New Shares
Increases and decreases in the total number of shares outstanding and the total amount of shareholders' equity for the most recent five years are as follows:
(Note I)    khigo Office issued new shares via public offering at an issue price of 83,167 yen per share (underwriting price of 80,266 yen) for the purpose of raising funds (Note 2) Ichigo Office issued new shares via a third-party allotment (Greenshoe) at an issue price of 80,266 yen per share for the purpose of repaying loans. Ichigo Office issued new shares via public offering at an issue price of 89,212 yen per share (underwriting price of 86,192 yen) for the purpose of raising funds to acquire (Note 3) (Note 4) Ichigo Office issued new shares via a third-party allotment (Greenshoe) at an issue price of 86,192 yen per share for the purpose of repaying loans. Ichigo Office issued new shares via public offering at an issue price 79,365 yen per share (underwriting price of 76,695 yen) for the purpose of raising funds to acquire new (Note 5) (Note 6) Ichigo Office issued new shares via a third-party allotment (Greenshoe) at an issue price of 76,695 yea per share for the purpose of repaying loans. Share Price Performance The table below shows the high and low prices (closing prices) on the Tokyo Stock Exchange REIT market, where Ichigo Office lists its shares, for each period.

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Dividends
With respect to dividends in the current fiscal period, the dividend distribution policy set out in Article 37 of the Articles of Incorporation of the Investment Corporation stipulates that the amount of dividends shall exceed the amount equivalent to 90% of distributable earnings as provided for in Article 67-15, Paragraph 1 of the Special Measures Taxation Act. Based on this policy, Ichigo Office has decided to pay a total dividend of 3,455 million yen, which is the entire amount (except for fractions in which the dividend per share is less than one yen) of unappropriated retained earnings of 3,733 million yen, plus 105 million yen, which is the reversal of reserves for temporary difference adjustments, minus 382 million yen, which is gain on sales of real estate transferred to dividend reserves in compliance with

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(1) Asset Acquisitions (Acquisition-Driven Growth)
Ichigo Office invests in real estate mainly located in central Tokyo, the Tokyo metropolitan area, major regional cities and prefectural capitals whose primary use is as offices, as well as real estate-backed securities related to these assets. In particular, Ichigo Office builds a portfolio specializing in mid-size offices with a focus on growth potential while securing earnings stability, given that both stability and growth potential can be expected in mid-size offices and that the replacement of assets in the portfolio in a mobilized manner according to the market conditions is also possible because the absolute number of assets is large and there are numerous opportunities for acquisition. When acquiring assets, Ichigo Office works to obtain quality investment information at an early stage and promote an arm's length transaction, using information from Ichigo Investment Advisors Co., Ltd., the asset management company (hereinafter the "Asset Manager") of Ichigo Office, based on the Asset Manager's own network. In addition, based on the sponsor support agreement with Ichigo Inc., Ichigo Office also promotes steady external growth, taking advantage of the warehousing function of Ichigo Inc. Ichigo Office also strives to improve the quality of the portfolio through asset replacements by considering sales of assets with limited room for organic growth.
(2) Portfolio Management (Organic Growth)
In the management and operation of the assets owned, Ichigo Office strengthens their competitiveness by establishing the "Ichigo Office" brand through the active promotion of the following initiatives that will lead to the strengthening of the earnings power of individual assets. - Provide differentiated Ichigo Layout Office and Ichigo Lounge high-quality office spaces - Increase asset value and investment returns via value-add capex - Maintain and drive earnings growth with a focus on tenant satisfaction - Minimize downtime at re-tenanting and free-rent periods
(3) Financing Strategy
For the refinancing of existing loans, Ichigo Office will take advantage of the low-interest-rate environment by fixing borrowing rates and promoting the extension and diversification of borrowing periods. With respect to the long-term issuer rating it has acquired from Japan Credit Rating Agency, Ltd., Ichigo Office will strengthen its financial base and expand its cash flows while diversify financing using investment corporation bonds, with the aim of further improving the current rating of "A (Outlook: Stable)."

(1) Asset Acquisition
The sales and purchase agreements for the following asset has been made in accordance with the guidelines specified in Ichigo Office's Articles of Incorporation.
(Note 1) After the acquisition by Ichigo Office, the building name will be changed from "Takeyama Hakata Building" to "Ichigo Hakata East Building". The acquisition price is the sales value of the trust beacficiary interest in real estate that does not include expenses for acquisition, the amount equivalent to settled fi (Note 2) taxes and city planning taxes, and the amount equivalent to consumption taxes.
(2) Asset Sale
The purchase and sales agreements for the following asset has been made in accordance with the guidelines specified in Ichigo Office's Articles of Incorporation.
(Note I) The sale price is the transaction price of the trust beneficiary interest in real estate (juekiken) and does not include expenses for transfer, the amount equivalen asset taxes and city planning taxes, and the amount equivalent to consumption taxes. In the 28th fiscal period (from May 1, 2019 to October 310, 2019), gain on sales of real estate of approximately 440,477 thousand yen is expected to be recorded. (Note 2) The book value is the price as of April 30, 2019. The legal form of asset has changed from real estate to trust beneficiary interest in real estate ( jaekiken ) on the closing date, and the trust benefiary interest has bee (Note 3) to the buyer.

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Shares and Shareholders’ Equity

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Major Shareholders

(Note) The ratio of shares held to the total number of shares issued is rounded down to the first decimal place.
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Executive Director and Supervisory Directors

(2) Policy for Determining Dismissal or Non-Reappointment of Accounting Auditor
The Board of Directors will determine the dismissal of the accounting auditor pursuant to the provisions of the Act on Investment Trusts and Investment Corporations and the refusal to reappoint the accounting auditor, taking various factors into consideration, including the quality of the audit and compensation for the audit.
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Asset Management Company, Asset Custodian, and Administrative Agents
The asset management company, asset custodian, and administrative agents as of April 30, 2019 are as follows:

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Asset Composition

(Note l) Areas are defined as follows: Central Tokyo: Chiyoda, Minato, Chuo, Shinjuku, Shibuya and Shinagawa Wards Tokyo Metropolitan Area: Tokyo (excluding the six wards above) and Kanagawa, Chiba and Saitama Prefectures Four Major Regional Cities: Osaka, Nagoya, Fukuoka and Sapporo Other Regional Cities: Regional cities other than the above (prefectural capitals, etc.) Book Value is the amount recorded on the balance sheet as of the closing date (for real estate and the trust beneficiary interest in real estate, the book value after depre (Note 2) Construction in progress and construction in progress in trust are not included in the subtotal of real estate and the trust beneficiary interest in real estate. (Note 3) Land leaschold rights in trust held together with buildings in trust are stated in the section on the trust beneficiary interest in real estate by adding them to bu
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Major Assets Owned

Occupancy is the ratio of the Leased Area writhin the Leasable Area of the real estate or real estate in trust as of period-end. The ratio is rounded off to the first decima (Note 2)
Office Order No. 47 of 2006 including subsequent amendments). The book value at period-end does not include construction in progress or construction in progress in trust. (Note 2)
master lease contract has been concluded with a master leasing company other than Ichigo Office, the number of tenants is counted as one. (Note 2) "Occupuncy Rate at Period-end" is the ratio of the Leased Area within the Leasable Area of the real estate or real estate in trust as of period-end. The ratio is rounded off first decimal place. (Note 3) The asset was sold on March 30, 2018. The asset was sold on April 20, 2018. (Note 4) The asset was sold on December 20, 2018. (Note 5) Details of Renewable Energy Power Generation Equipment N/A Details of PPP and PFI N/A Details of Investments in Securities N/A
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Status of Other Assets
Trust beneficiary rights whose major asset is real estate are included in "3. Portfolio Overview" above, and major specified assets in which the Investment Corporation invests as of April 30, 2019 are as follows.
Contract Value and Market Value of Specified Transactions
The table below shows the contract value and fair value of a specified transaction at Ichigo Office as of April 30, 2019.
(Note 1) (Note 2) The contract amount of interest rate swap is based on the notional principal.
 Since the above transaction meets the specific matching criteria of the Accounting Standard f
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Assets by Country and Region
All Ichigo Office assets are located in Japan.

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Schedule of Capital Expenditures
The major renovation-related capital expenditures planned as of April 30, 2019 are as described below. The payment amount for the

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Capital Expenditures during the Current Fiscal Period
Capital expenditures during the current fiscal period amounted to 442,533 thousand yen, and construction work of a total of 581,382 thousand yen were conducted, combined with repair expenses of 138,848 thousand yen.
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Cash Reserves for Long-Term Repair and Maintenance Plans
Based on each asset's long-term repair and maintenance plans, Ichigo Office reserves funds for future large-scale repairs and renovations from cash flow during each fiscal period as follows.

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Details of Operating Expenses

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Borrowings

effect of the interest rate swap is stated. (Note 3) The remaining balance was repaid on November 30, 2018. (Note 4) The remaining balance was repaid on April 26, 2019. 4 miilion yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. (Note 5) The entire amount of the balance at period-end is included in long-term borrowings due within one year. (Note 6) 3 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The balance at period-end includes long-term borrowings due within one year of 13 million yen. (Note 7) 3 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The entire amount of the bulance at period-end is included in long-term borrowings due within one year. I million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. (Note 8) The entire amount of the balance at period-end is included in long-term borrowings due within one year. (Note 9) 2 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The balance at period-end includes long-term borrowings due within one year of 10 million yen. (Note 10) 4 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The balance at period-end includes long-term borrowings due within one year of 18 million yen. (Note 11) 2 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The balance at period-end includes long-term borrowings due within one year of 9 million yen. (Note 12) 0.4 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The entire amount of the balance at period-end is long-term borrowings due within one year. (Note 13)  1 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The balance at period-end includes long-term borrowings due within one year of 7 million yen. (Note 14) 2 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The balance at period-end includes long-term borrowings due within one year of 11 million yen. (Note 15) The proceeds are used for acquisition of assets and/or beneficiary rights of real estate in trust and repayment of loans.
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Investment Corporation Bonds
The status of investment corporation bonds outstanding as of April 30, 2019 is as follows:
(Note 1)      The proceeds are used for repaying existing loans.
(Note 2)     A ranking pari passu among Ichigo Office investment corporation bonds is attached. 4 Short-Term Investment Corporation Bonds N/A
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Share Options N/A

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Acquisitions and Sales of Real Estate and Asset-Backed Securities, Infrastructure Assets, and Infrastructure-Related Assets
(Note 1) Acquisition and sales prices exclude incidental expenses such as fees and property, city planning, and consumption taxes (Note 2) Sales Price is the total sale price of the two assets, because the buyer did not provide consent to disclose each asset's sales price. (Note 3) Price includes 11million yen of compensation to Ichigo Office from the buyer
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Acquisition and Sales of Other Assets
Assets other than the assets acquired shown above are mostly bank deposits and bank deposits in trust.
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Review of Asset Values (Appraisal Values)
(1) Real Estate

(Note 1) Transaction Prices exclude incidental expenses such as fees and property, city planning, and consumption taxes.
The appraisal above is carried out by applying the "Appraisal (Note 2) Appraisal Standards." (Note 3) The total sale price of the two assets is 3,600 million yen, unit sales price is undisclosed, because the buyer did not provide consent to disclose each asset's sales price.
(2) Other
For assets that require a transaction price investigation pursuant to Article 201 of the Act on Investment Trusts and Investment Corporations and were not part of the list shown above, Ichigo Office entrusted the price inspection to Grant Thornton Taiyo LLC. For the inspection period of November 1, 2018 to April 30, 2019, the transactions subject to price verification were three interest rate swaps. With respect to the price verification of these interest rate swaps, all related research work was outsourced, including identification of the transaction counterparties, currency, interest rates, maturity, and other relevant transaction information. 4 Transactions with Related Parties(Note 1) (1) Transactions N/A (2) Amount of Fees Paid N/A (Note 1)    Related Parties are as defined in Article 123 of the Enforcement Ordinance of the Investment Trust and Investment Corporation Law and Article 26 Paragraph 27 of of the Investment Trust Association, Japan. S Transactions between the Asset Management Company and its Other Businesses While Ichigo Investment Advisors Co., Ltd., the Asset Management Company of Ichigo Office, concurrently engages in operations of the Type II Financial Instruments Business, Real Estate Brokerage Business, and Real Estate Syndication Business, there are no applicable transactions.
1 Assets, Liabilities, Principal, Profit and Loss Please refer to "II. Balance Sheet," "III. Income Statement," "IV. Statement of Changes in Net Assets," "V. Notes to Financial Statements," and "VI. Statement of Dividends" later in this report. 2 Changes in Method of Depreciation N/A
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Changes in Method of Real Estate and Infrastructure Assets Appraisal N/A
Other
1 Ichigo Office Shares Held by Asset Management Company Details of Ichigo Office shares held by Ichigo Investment Advisors Co., Ltd., the Asset Management Company, are as follows: (1) Transactions
(Note) Reflects a 7-for-1 share split with November 1, 2011 as the effective date. (2) Status of Holdings
(Note) The Value of Shares Held at Period-end is calculated by multiplying the Number of Shares Held by the share price at period-end. 2 Notices N/A 3 Disclosure of Affiliated Foreign Real Estate Holding Companies N/A 4 Disclosure of Assets Owned by Affiliated Foreign Real Estate Holding Companies N/A S Other In this document, whole numbers are rounded down and ratios are rounded off, unless otherwise specified.
To the Board of Directors of Ichigo Office REIT Investment Corporation We have audited the accompanying financial statements of Ichigo Office REIT Investment Corporation ("the Company"), which comprise the balance sheet as at April 30, 2019, and the income statement, the statement of changes in net assets, the statement of dividends and the cash flow statement for the six months then ended, and a summary of significant accounting policies, other explanatory information and supplementary schedules, all expressed in Japanese ven. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Ministerial Order for the Rules on Terminology, Forms, and Preparation Methods of Financial Statements, the Ordinance on Accountings of Investment Corporations and accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we comply with ethical řequirements and plán and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, while the objective of the finančial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as at April 30, 2019, its financial performance and conditions of cash flow for the six months then ended in accordance with the Ministerial Order for the Rules on Terminology, Forms, and Preparation Methods of Financial Statements, the Ordinance on Accountings of Investment Corporations and accounting principles generally accepted in Japan.
Emphasis of matter
As described in "Notes to significant subsequent events", the Company carried out acquisition and sales of assets. The auditor's opinion is not modified with respect to the matter emphasized. September 12, 2019 Tokyo, Japan
(3) Statement of Changes in Net Assets Previous fiscal period (May 1, 2018 to October 31, 2018)
Current fiscal period (November 1, 2018 to April 30, 2019)
(6) Notes to Financial Statements (Going concern note)
(Notes to accounting standards not yet applied) -  “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29 on March 30, 2018, Accounting Standards Board of Japan) - "Implementation Guidance on Accounting Standard for Revenue Recognition" (ASBJ Guidance No. 30 on March 30, 2018, Accounting Standards Board of Japan) (1) Overview The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the United States jointly developed comprehensive accounting standards for revenue recognition, and "Revenue from Contracts with Customers" was issued in May 2014 (IFRS 15 in IASB and Topic 606 in FASB). Given that IFRS 15 and Topic 606 would be applied from a business year starting on or after January 1, 2018 and after December 15, 2017, respectively, the Accounting Standards Board of Japan (ASBJ) developed comprehensive standards for revenue recognition and published the Accounting Standard for Revenue Recognition with the Implementation Guidance. The basic policy of ASBJ for the development of accounting standards for revenue recognition is believed to set the accounting standards from the perspective of comparability between financial statements, which is one of the benefits of promoting consistency with IFRS 15, with the incorporation of the basic principles of IFRS 15 as a starting point, and if there are items that should be considered in practices implemented in Japan, to add alternative handlings to the extent to which comparability is not impaired. (2) Planned date of application The Accounting Standard for Revenue Recognition, etc. will be applied at the beginning of the fiscal period ending October 2021. (3) Impact of applying the accounting standard, etc. The amount of the impact of applying the Accounting Standard for Revenue Recognition, etc. on the financial statements is currently under review. (Notes to Balance Sheet) *1. Amount of advanced depreciation of property, plant, and equipment Amount of advanced depreciation of property, plant, and equipment acquired with insurance proceeds (Thousand yen)
*2. Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts and Investment Corporation
*3. Provision and reversal of temporary difference adjustment reserves Previous fiscal period (As of October 31, 2018)
(Note) The initial amount of gain on negative goodwill is the amount previously transferred from gain on negative goodwill to the temporary difference adjustment reserves account. For the current fiscal period, 162,422,000 yen, which is greater than the fixed reversal amount of 105,000,000 yen was reversed from the reserve. Current fiscal period (As of April 30, 2019)
(Note)  The initial amount of gain on negative goodwill is the amount previously transferred from gain on negative goodwill to the temporary difference adjustment reserves account. For the current fiscal period, 105,000,000 yen was reversed from the reserve.
*2. Details of real estate sales (Thousand yen) Previous fiscal period (May 1, 2018 to October 31, 2018) N/A Current fiscal period (November 1, 2018 to April 30, 2019) Ichigo Toyamaeki Nishi Building
(Note) Real estate sale revenue includes 11,800 thousand yen of compensation to Ichigo Office from the buyer. Ichigo Machida East Building, Ichigo Shin Yokohama Arena Dori Building
(Note)   Sale Price is the total sale price of the two assets, because the buyer did not provide consent to disclose each asset's sale price.
*3. Details of insurance income
Previous fiscal period (May 1, 2018 to October 31, 2018) Insurance proceeds associated with the restoration work of air-conditioning equipment due to hail damage to the Ichigo Higashi Ikebukuro Building in July 2017 is posted as insurance income. Current fiscal period (November 1, 2018 to April 30, 2019) N/A *4. Details of loss on reduction of non-current assets Previous fiscal period (May 1, 2018 to October 31, 2018) The loss on reduction of fixed assets is a value that is directly reduced from the acquisition cost of property, plant, and equipment newly acquired using insurance proceeds associated with the restoration work of air-conditioning equipment due to hail damage to the Ichigo Higashi Ikebukuro Building in July 2017, and its breakdown is as follows: N/A Current fiscal period (November 1, 2018 to April 30, 2019)
(Notes to Cash Flow statement) *1. Relationship between cash and cash equivalents at the end of the fiscal period and items shown on the Balance Sheet
(Notes to Financial Instruments) 1. Matters concerning the status of financial instruments (1) Policy for handling financial instruments Ichigo Office manages its assets by investing mainly in specified assets such as real estate with the aim of securing stable earnings in the medium to long terms. It raises funds primarily through the issuance of investment units, the borrowing of bank loans and the issuance of investment corporation bonds. Derivative transactions are used for the purpose of mitigating the risk of future fluctuations in interest rates, and not for trading or speculative purposes. Ichigo Office also invests surplus funds carefully in consideration of safety and liquidity so as not to bear excess risks, taking the financial environment and cash management into full consideration. (2) Description of financial instruments and associated risks, and risk management structure Funds raised from loans and investment corporation bonds are used for the purchase of real estate and trust beneficiary interests in real estate and the repayment of loans, and they are exposed to the liquidity risk on the dates of repayment and redemption. Ichigo Office not only works to reduce the liquidity risk through the diversification of financing and the decentralization of repayment dates and lenders by controlling LTV in the range that is deemed appropriate, but also manages the liquidity risk in terms of the way the asset management company formulates a cash management plan. Loans with floating interest rates are exposed to the risk of fluctuations in interest rates, but LTV is managed appropriately to limit the impact of rising market interest rates on the operations of Ichigo Office. (3) Supplementary explanation of matters concerning the market value, etc. of financial instruments In addition to values based on market prices, the market value of financial instruments includes values based on reasonable calculations when there is no market price. Because certain preconditions, etc. are adopted in the calculation of the values concerned, there may be cases where the values concerned will vary when different preconditions, etc. are adopted. 2. Matters concerning the market value, etc. of financial instruments The carrying amount on the balance sheet on October 31, 2018, the market value, and the difference between the carrying amount and the market value were as follows. Financial instruments whose market value is deemed to be extremely difficult to determine are not included in the table below (see (Note2)), and those that are not material are omitted.
(1) Cash and deposits (2) Cash and deposits in trust The book value is used as the market value because the market values of these items are almost equal to their book values since they are settled within a short period of time. (3) Long-term borrowings (due within one year) (5) Long-term borrowings The market value of long-term loans with fixed interest rates is calculated by discounting the present value by an interest rate that is assumed if the total amount of principal and interest is borrowed in similar new loans. The market value of long- term loans with floating interest rates is based on the book value because the market value is approximately equal to the book value due to the situation in which the interest rate is renewed periodically. For some long-term loans with floating interest rates that are subject to the special treatment of interest rate swaps (see "Notes to Derivative Transactions" below), the present value is calculated by discounting the combined total of principal and interest translated at the logically estimated rates for similar loans. (4) Investment corporation bonds The market value of investment corporation bonds is calculated by discounting it based on the reference values announced by the Japan Securities Dealers Association. (6) Derivative transactions Please refer to "Notes to Derivative Transactions" below. The carrying amount on the balance sheet on April 30, 2019, the market value, and the difference between the carrying amount and the market value were as follows: Financial instruments whose market value is deemed to be extremely difficult to determine are not included in the table below (see (Note2)), and those that are not material are omitted.
(1) Cash and deposits (2) Cash and deposits in trust The book value is used as the market value because the market values of these items are almost equal to their book values since they are settled within a short period of time. (3) Long-term borrowings (due within one year) (5) Long-term borrowings The market value of long-term loans with fixed interest rates is calculated by discounting the present value by an interest rate that is assumed if the total amount of principal and interest is borrowed in similar new loans. The market value of long- term loans with floating interest rates is based on the book value because the market value is approximately equal to the book value due to the situation in which the interest rate is renewed periodically. For some long-term loans with floating interest rates that are subject to the special treatment of interest rate swaps (see "Notes to Derivative Transactions" below), the present value is calculated by discounting the combined total of principal and interest translated at the logically estimated rates for similar loans.
(4) Investment corporation bonds
The market value of investment corporation bonds is calculated by discounting it based on the reference values announced by the Japan Securities Dealers Association.
(6) Derivative transactions
Please refer to "Notes to Derivative Transactions" below. (Note 2) Financial instruments whose market value is deemed to be extremely difficult to determine
deposits in trust are not subject to the disclosure of market values because it is deemed to be extremely difficult to rationally estimate future cash flows given that they do not have a market price and that it is difficult to determine the substantive deposit period of lessees from when they move in until they vacate the asset.
(Note 4) Maturity profile of investment corporation bonds and long-term loans after the fiscal period-end date (October 31, 2018)
Maturity profile of investment corporation bonds and long-term loans after the fiscal period-end date (April 30, 2019)
(Securities) Previous fiscal period (As of October 31, 2018) N/A Current fiscal period (As of April 30, 2019) N/A (Notes to Derivative Transactions) 1. Non-hedge accounting derivatives Not applicable in the previous fiscal period (ended October 31, 2018) and the current fiscal period (ended April 30, 2019). 2. Hedge accounting derivatives Previous fiscal period (As of October 31, 2018)
long-term borrowing). Therefore, their market values are included in the market values of (3) Long-term borrowings (due within one year) (5) long-term borrowings payable in (Note 1) of "Notes to financial instruments, 2. Matters concerning the market value, etc. of financial instruments" above.
Current fiscal period (As of April 30, 2019) long-term borrowings). Therefore, their market values are included in the market values of (3) Long-term borrowings (due within one year) (5) long-term borrowings payable in (Note 1) of "Notes to financial instruments, 2. Matters concerning the market value, etc. of financial instruments" above. (Notes to retirement benefits) Previous fiscal period (As of October 31, 2018) N/A Current fiscal period (As of April 30, 2019) N/A
(Notes to share of profit and loss of entities accounted for using the equity method) Previous fiscal period (May 1, 2018 to October 31, 2018) N/A Current fiscal period (November 1, 2018 to April 30, 2019) N/A (Notes to Related Party Transactions) 1. The parent company and principal shareholders of Ichigo Office Not applicable in the previous fiscal period (from May 1, 2018 to October 31, 2018) and the current fiscal period (from November 1, 2018 to April 30, 2019) 2. Affiliated companies Not applicable in the previous fiscal period (from May 1, 2018 to October 31, 2018) and the current fiscal period (from November 1, 2018 to April 30, 2019) 3. Fellow subsidiaries Not applicable in the previous fiscal period (from May 1, 2018 to October 31, 2018) and the current fiscal period (from November 1, 2018 to April 30, 2019) 4. Directors and principal individual shareholders Not applicable in the previous fiscal period (from May 1, 2018 to October 31, 2018) and the current fiscal period (from November 1, 2018 to April 30, 2019)
(Asset Retirement Obligations)
Previous fiscal period (May 1, 2018 to October 31, 2018) The statement is omitted because the total amount of asset retirement obligations is not material. Current fiscal period (November 1, 2018 to April 30, 2019) The statement is omitted because the total amount of asset retirement obligations is not material.
(Notes to Rental Assets)
Ichigo Office owns rental assets mainly in the six wards of central Tokyo, other Tokyo metropolitan areas, the four largest cities and other major cities for the purpose of earning stable rental revenues. The carrying amounts, increase (decrease) during the period, and market values of these rental assets are as follows:
(Note 2)  The major increase in rental assets during the previous fiscal period was due to the acquisition of trust beneficiary interests in real estate of three assets (7,514,322 thousand yen), and the major decrease was due to depreciation. The major increase during the current fiscal period was due to the acquisition of trust beneficiary interests in real estate of two assets (6,222,103 thousand yen), and the major decrease was due to sales of trust beneficiary interest in real estate of two assets (2,947,990 thousand yen), a partial sale of a trust beneficiary interest in real estate of one asset (4,734 thousand yen) and depreciation. (Note 3) The market value at the end of the period was based on the appraisal value or investigation value estimated by external real estate appraisers. The details of real estate rental income is stated in "Income Statement." (Segment Information) The segment information is omitted because Ichigo Office has only one segment of the real estate rental business. (Related Information) Previous fiscal period (May 1, 2018 to October 31, 2018) 1. Information by product and service The statement is omitted because operating revenue from external customers in a single product and service category comprises more than 90% of operating revenue on the Income Statement. 2. Information by region (1) Operating revenue The statement is omitted because operating revenue from external customers in Japan comprises more than 90% of operating revenue on the income statement. (2) Property, plant and equipment The statement is omitted because the amount of property, plant and equipment located in Japan comprises more than 90% of the amount of property, plant and equipment on the balance sheet. 3. Information by main customer The statement is omitted because all operating revenue from a single external customer comprises less than 10% of operating revenue on the income statement.
Current fiscal period (November 1, 2018 to April 30, 2019)
1. Information by product and service The statement is omitted because operating revenue from external customers in a single product and service category comprises more than 90% of operating revenue on the income statement. 2. Information by region (1) Operating revenue The statement is omitted because operating revenue from external customers in Japan comprises more than 90% of operating revenue on the income statement. (2) Property, plant and equipment The statement is omitted because the amount of property, plant and equipment located in Japan comprises more than 90% of the amount of property, plant and equipment on the balance sheet. 3. Information by main customer The statement is omitted because all operating revenue from a single external customer comprises less than 10% of operating revenue on the income statement.
income per share is not stated because there are no diluted shares.
(Notes to Significant Subsequent Events) 1. Acquisition of assets Ichigo Office acquired the following assets based on the basic policy for asset management set forth in the Articles of Incorporation.
(Note 1)   After the acquisition, Ichigo Office will change the building name from "Takeyama Hakata Building" to "Ichigo Hakata East Building". (Note 2)  The acquisition price is the transaction price of the trust beneficiary interest ( juekiken ) and does not include expenses for acquisition, the amount equivalent to settled fixed asset taxes and city planning taxes, and the amount equivalent to consumption taxes. 2. Sales of assets Ichigo Office sold the following assets based on the basic policy for asset management set forth in the Articles of Incorporation.
(Note 1) The sales price is the transaction price of the trust beneficiary interest ( juekiken ) and does not include expenses for acquisition, the amount equivalent to settled fixed asset taxes and city planning taxes, and the amount equivalent to consumption taxes. In the 28th fiscal period (from May 1, 2019 to October 31, 2019), a gain on sale of real estate of approximately 440,477,000 yen is expected to be recorded. (Note 2) The book value is the price as of April 30, 2019. (Note 3)  The legal form of asset has been changed from real estate to trust beneficiary interest in real estate ( juekiken ) on the closing date, and the trust beneficiary interest has been transferred to the buyer. (7) Supplementary Schedules (i) Securities Held (a) Equities N/A (b) Securities other than equities N/A (ii) Contract value and market value of derivative transactions and forward exchange contracts
(Note 2)  Since the above transaction meets the specific matching criteria of the Accounting Standard for Financial Instruments, the statement of market value is omitted.
assets (6,222,103,000 yen), and the major decrease was due to sales of trust beneficiary interest in real estate of two assets (2,947,990,000 yen), a partial sale of a trust beneficiary interest in real estate of one asset (4,734,000 yen) and depreciation. (iv) Other assets held N/A
(v) Investment corporation bonds outstanding

(Note 2) A ranking pari passu among Ichigo Office investment corporation bonds is attached. (Note 3)  The maturity profile of investment corporate bonds for each year within five years after the balance sheet date is as follows. (Thousand yen)
rounded down to the stated unit. To avoid interest rate risk, an interest rate swap agreement has been signed separately to fix the interest rates, and the weighted (Note 2) average interest rate during the period after the effect of the interest rate swap is stated. (Note 3) The remaining balance was repaid on November 30, 2018. (Note 4) The remaining balance was repaid on April 26, 2019. (Note 5) 4 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The entire amount of the balance at period-end is included in long-term borrowings due within one year. 3 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due (Note 6) date. The balance at period-end includes long-term borrowings due within one year of 13 million yen. 3 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due (Note 7) date. The entire amount of the balance at period-end is included in long-term borrowings due within one year. 1 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due (Note 8) date. The entire amount of the balance at period-end is included in long-term borrowings due within one year. (Note 9) 2 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The balance at period-end includes long-term borrowings due within one year of 10 million yen. (Note 10)  4 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The balance at period-end includes long-term borrowings due within one year of 18 million yen. (Note 11)  2 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The balance at period-end includes long-term borrowings due within one year of 9 million yen. (Note 12)  0.4 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The entire amount of the balance at period-end is long-term borrowings due within one year. (Note 13)  1 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The balance at period-end includes long-term borrowings due within one year of 7 million yen. (Note 14) 2 million yen is repaid on the final business day every three months, and the remaining balance will be repaid on the last due date. The balance at period-end includes long-term borrowings due within one year of 11 million yen. (Note 15)  The proceeds are used for acquisition of assets and/or beneficiary rights of real estate in trust and repayment of loans. (Note 16)  The total amounts of long-term loans to be repaid for each year within five years after the balance sheet date are as follows.