6th Fiscal Period Semi-Annual Report From November 1, 2016 to April 30, 2017

Transcription

1 6-10-1, Roppongi, Minato-ku Tokyo 6th Fiscal Period Semi-Annual Report From November 1, 2016 to April 30, 2017 (Securities Code: 3298)

2 To Our Unitholders FP6 Highlights We would first like to extend our sincere gratitude for your continued support and business with Invesco Office J-REIT, Inc. (the Investment Corporation ). The Investment Corporation was listed on the Real Estate Investment Trust (REIT) Securities Market of the Tokyo Stock Exchange on June 5, 2014, with the fundamental goal of maximizing investor value by making focused investments in large-scale office buildings located in metropolitan areas. The Investment Corporation has completed its sixth fiscal period (ended April 30, 2017), and we are pleased to report the following results. During the sixth fiscal period, with a view to enhance its portfolio value, the Investment Corporation disposed of Harumi Island Triton Square Office Tower Z in December Net proceeds from the disposition were used to acquire Kinshicho Prime Tower in January The Investment Corporation also acquired Aqua Dojima East in March 2017 using cash on hand. With these transactions, the Investment Corporation s portfolio expanded to 14 properties representing a total acquisition price of billion (up from 13 properties representing a total acquisition price of billion as of the end of the fifth fiscal period). Regarding the disposition of Harumi Island Triton Square Office Tower Z, the Investment Corporation recorded a gain on the sale of the property of 784 million, all of which was distributed to unitholders. Furthermore, consistent with its long-term financial strategy, the Investment Corporation issued the first and the second series of its investment corporation bonds. The proceeds of such bonds were then used to repay existing loans and provide operating capital following the successful completion of the Aqua Dojima East acquisition. The issuance of the investment corporation bonds also allowed the Investment Corporation to broaden its source of funding, reduce funding costs, and improve the stability of fund-raising capability in the mid- to long-term by prolonging the funding period. In addition, to further enhance investor value and effectively utilize cash on hand, the Investment Corporation acquired a number of its own investment units, resulting in a return of profits to investors and improved DPU. Distributions Financial Summary Changes in DPU ( ) 4,000 3,000 2,000 1,000 0 FP6 Actual DPU 1,005 FP1 (Actual) Operating Revenues 3,638 3,638 2,605 2,575 2,697 2,733 2,879 FP2 (Actual) FP3 (Actual) 6,543 mm FP4 (Actual) FP5 (Actual) Total Assets FP7 DPU Forecast 2,879 FP6 (Actual) FP7 (Forecast) (Note1) As for the number of total investment units forecasted for the period, it is based on the assumption of 815,547 units which are issued as of the end of April For the earnings forecast for the fiscal period ending October 31, 2017 (FP7) in case considering acquiring and cancelling own investment units, please refer to page 9. (Note2) As the Investment Corporation has not made cash distribution in excess of retained earnings, actual DPU for FP6 and DPU forecast for FP7 described above do not include any portion of the amount that exceeds the profits. Operating Income 3,324 mm 179,894 mm Net Assets 81,935 mm On the asset management front, the occupancy rate of the entire portfolio stood at 96.8% as of the end of April 2017 through steady leasing activities for vacant spaces in holding properties. Along with improving the occupancy rate, we are also working to further increase revenues from the entire portfolio and promote internal growth by pursuing the possibility of raising rents when renewing lease contracts. Ordinary Income 2,967 mm Net Asset per Unit 100,467 As a result, operating results for the sixth fiscal period reflected operating revenues of 6,543 million, operating income of 3,324 million, ordinary profit of 2,967 million and net income of 2,966 million, all surpassing the forecasts. Distributions per unit were 3,638. With your support, we look forward to continuing to work diligently to build up our portfolio by making focused investments in large-scale office buildings located in metropolitan areas. We aim to maximize investor value by securing stable earnings in the medium and long term and steadily enhancing the value of assets. We ask for the continued support and encouragement of our investors as we pursue these goals. Yugo Minemura Executive Director, Yugo Minemura Yasuyuki Tsuji Yasuyuki Tsuji Representative in Japan, Invesco Global Real Estate Asia Pacific, Inc. Table of Contents To Our Unitholders Net Income FP6 Highlights 1 Overview of 2 External Growth 3 Further Diversification in the Portfolio 4 New Portfolio Properties in FP6 6 Major Initiatives during FP6 and Future Growth Strategy 8 NAV per Unit (Note) 2,966 mm 115,640 As of the end of April 2017 (Note) NAV per unit is calculated dividing net asset value, reflecting the gap between book-value and appraisal value of investment assets, by the number of outstanding investment units. Internal Growth 10 Overview of Portfolio Properties 12 Portfolio Properties 14 Financial Information 20 Investment Unit Information 21 Asset Management Report 22 Balance Sheets 48 Statements of Income 50 Statements of Changes in Net Assets 51 Statements of Cash Distributions 52 Statements of Cash Flows 53 Notes to Financial Statements 54 Independent Auditor s Report 72 Overview of Invesco Group 73 1

3 Overview of External Growth 1 Focused investment in large-scale office buildings in metropolitan areas The Investment Corporation believes that metropolitan areas centers for economic activity where companies and labor concentrate have relatively large size of office building markets, and consequently, there are abundant investment opportunities and relatively high leasing demand can be expected. Large-scale office buildings are believed to enjoy relatively high and stable rents paid by quality corporate tenants with ample rent payment capacity. 2 Asset management that leverages the Invesco Group s high levels of specialization Invesco Group is one of the world s leading independent asset managers and provides global management capabilities. Invesco Real Estate, one business division of the Invesco Group, has accumulated asset management expertise by engaging in management of global real property direct investment and investment in real estaterelated products such as publicly traded real property securities on a world-leading scale. Aiming to enhance the portfolio quality, the Investment Corporation acquired Kinshicho Prime Tower (purchase price: 15.1bn) in January 2017 utilizing funds generated from disposition of Harumi Island Triton Square Office Tower Z in December In addition, the Investment Corporation acquired Aqua Dojima East (purchase price: 1.9bn) in March 2017 by using available cash in hand. Through these acquisitions, the Investment Corporation enhanced property and tenant diversification with steady asset growth. Change in Portfolio and LTV FP5 (at the end of October 2016) FP6 (at the end of April 2017) No. of properties 13 properties 14 properties Total purchase price 154.2bn 161.9bn Average building age 18 years 19 years Average occupancy rate 98.6% 96.8% NOI yield (Note1) 5.0% 5.1% NOI yield after depreciation (Note1) 4.0% 4.1% Top 10 tenant ratio 43.7% (39.1%) Top 10 tenant ratio 38.7% (32.9%) Diversification by Tenants (Note2) Total number of tenants 384 Total number of tenants Asset management by an independent asset manager with an ample track record Top 10 tenant 43.7% Others 56.3% Investment ratio of Tokyo metropolitan area 84.3% Top 10 tenant 38.7% Others 61.3% Investment ratio of Tokyo metropolitan area 83.9% The Asset Manager has conducted real property investment and asset management in Japan for the past 18 years, has a cumulative investment amount of approximately 1.1trillion, and has experience in investment and managing as many as 122 properties. Diversification in Area (Note3) 23 wards of Tokyo 65.5% Tokyo metropolitan area other than the above 18.8% Other major urban areas 12.4% Other investment target regions 3.2% 23 wards of Tokyo 66.0% Tokyo metropolitan area other than the above 17.9% Other major urban areas 13.0% Other investment target regions 3.1% LTV 47.7% 49.5% (Note1) For Aqua Dojima East, the ratio is calculated by the following formula: appraisal NOI before depreciation by a direct capitalization method as of the end of FP6/ purchase price. For other managed assets, the ratio is calculated using the following formula: (actual NOI before depreciation during the fiscal period / operating days during the fiscal period*365 days) / total purchase price of the portfolio as of the end of the fiscal period. However, we have applied adjustments to treat certain capitalized property-related taxes as expenses. (Note2) Tenant ratio based on leased area and the ratio based on rental income is shown in parentheses. (Note3) Investment ratio is based on the purchase price. Aqua Dojima East 2 3

4 Further Diversification in the Portfolio Expansion of asset under management The Investment Corporation has continuously grown in asset under management since its listing. The asset under management has reached 161.9bn after new acquisition in March The Investment Corporation aims to expand asset under management by acquiring quality assets. Assets acquired at IPO (Initial portfolio properties) Assets newly acquired during FP5 Asset disposed during FP6 Ebisu Prime Square Harumi Island Triton Square Office Tower Z Cs Tower, Cs Tower Annex Assets newly acquired during FP3 Shinagawa Seaside East Tower Akiba CO Building Sun Towers Center Building Harumi Island Triton Square Office Tower Z Assets newly acquired during FP6 Queen s Square Yokohama Nagoya Prime Central Tower Tokyo Nissan Nishi Gotanda Building ORTO Yokohama Nishi Shinjuku KF Building Sendai Honcho Building Hakata Prime East 5 assets worth 78.6 billion 3 assets worth 26.3 billion 5 assets worth 49.2 billion Kinshicho Prime Tower Aqua Dojima East 2 assets worth 17.0 billion Purchase price ( 100mm) 2,000 1,600 1,542 1,449 1,619 1,200 1, IPO FP1 (October 2014) FP2 (April 2015) FP3 (October 2015) FP4 (April 2016) FP5 (October 2016) December 2016 FP6 (April 2017) 4 5

5 New Portfolio Properties in FP6 The Property is 8 minutes walking distance from the JR Kinshicho station. It has good access to central business districts, and is approximately 8 minutes to Tokyo station by the JR Sobu Line (Rapid Service). The property is an office tower with 17 stories with 1 basement floor and has a parking lot which can accommodate 113 cars. Standard floor area is approximately 998 sqm (approximately 302 tsubo) and the regular shaped office floor without pillars provides flexible layout and is highly competitive in terms of size. The property has high locational competitiveness as it is located 10-minute walk from Osaka station, a major terminal station in Kansai district and has good accessibility from widespread areas. It has an excellent location and is located in front of Dojima entrance of Hanshin Expressway. Standard floor area is approximately 630sqm (approximately 191 tsubo) and provides a comparably wide standard floor area in the market. Kinshicho Prime Tower Aqua Dojima East Residential Address 1-5-7, Kameido, Koto-ku, Tokyo Date of Building August 31, 1994 Gross Floor Area of the whole building Structure (Land) Structure (Building) Nearest station/ Walking distance 28, sqm 9 minutes walking distance from Kameido Station on JR Sobu Line 7 minutes walking distance from Kinshicho Station on Tokyo Metro Hanzomon Line 8 minutes walking distance from Kinshicho Station on JR Sobu Line Hanzomon Subway Line Kinshi Park Kinshicho Sta. Kinshicho Exit Kuramaebashi-dori St. Keiyo Road Sobu Line Kinshicho Prime Tower Kameido Sta. Metropolitan Expressway Route No.7 Komatsugawa Line Residential Address Date of Building April 21, 1993 Gross Floor Area of the whole building Structure (Land) Structure (Building) Nearest station/ Walking distance 1-4-4, Dojimahama, Kita-ku, Osaka-shi, Osaka 24, sqm (sectional ownership) (Note) Co-ownership of sectional ownership 10 minutes walking distance from Osaka Station on JR Tokaido Main Line or Osaka Loop Line 6 minutes walking distance from Nishi Umeda Station on Subway Yotsubashi Line 2 minutes walking distance from Watanabebashi Station on Keihan Nakanoshima Line Tokaido Line Osaka Loop Line Osaka Sta. Umeda Sta. Nishi-Umeda Sta. Higashi-Umeda Sta. Aqua Dojima East Kitashinchi Sta. Watanabebashi Sta. Oebashi Sta. Mido-suji Ave. Hanshin Expressway Route No.1 Loop Line Yotsubashi-suji Ave. Osaka City Hall Naniwabashi Sta. Yodoyabashi Sta. (Note) The land of the property is owned partially by each sectional owner and the sectional owners agree to use other sectional owners land each other. 6 7

6 Major Initiatives during FP6 and Future Growth Strategy Amendments to asset management guideline adding rules regarding investment unit buyback On April 21, 2017, Invesco Global Real Estate Asia Pacific, Inc. ( IGRE or Asset Manager ) added provisions regarding the investment unit buyback ( unit buyback ) and retirement to the asset management guidelines as part of its financial and capital management strategy. Expected Benefits of Unit Buyback 1. Increase Net Income Per Unit and DPU Assuming that net income and the total available dividend remains unchanged, decreasing the number of issued investment units will: Increase the net income per unit Increase the dividend per unit (DPU) 2. Return Profit to Investors Provide returns to investors by efficiently using available cash in hand DPU increases in line with decrease in investment units NAV per unit increases if IOJ buys its own investment units below NAV per unit Effective capital policy to improve investor value Assumed main sources of capital for unit buyback are as follows: 3. Efficient Use of Available Cash in Hand Acquiring investment units might be regarded as an efficient way of utilizing available cash in hand, depending on the state of the real estate market 1. Available cash in hand generated from the gap between depreciation expenses and capital expenditures Depreciation expenses are costs by which property and equipment are depreciated over the remaining period of use and recorded as expenses in the income statement. Because depreciation expenses are not funded by cash, the amount of depreciation expenses remains as cash in hand. In contrast, capital expenditures, which are expenses paid to repair property and equipment, are not recorded as profit/loss but are funded by the payment of cash. As a result, the difference between the actual capital expenditure and depreciation expenses remains as cash in hand. 2. Potential excess funds generated from asset dispositions The Investment Corporation does not intend to sell its own assets to provide funds to acquire investment units. Unit Buyback Based on the amendments of the asset management guidelines above, the Investment Corporation decided to conduct a buyback of our investment units as the first J-REIT to formally approve such a measure by using the capital source mentioned above at 1. Available cash in hand generated from the gap between depreciation expenses and capital expenditures, which was an accumulated total of approximately 1,487 million at the end of FP6. After the completion of the unit buyback, the Investment Corporation plans to cancel all acquired own units in FP7 ending October 31, The Investment Corporation aims to improve investor value by increasing DPU, BPU (Note1) or NAV (Note2) per unit in line with decrease in outstanding investment units. Consideration of Efficient Use of Available Cash in Hand If the Investment Corporation conducts effective use of available cash in hand of 800 mm for the following transactions, the impact on DPU is expected to be as follows. The Investment Corporation ultimately decided that unit buyback would be the most effective initiative in terms of DPU improvement. 1 Unit buyback (See Reference Information below) Impact to DPU: + 29 (Reference Information) Impact on DPU amount from the unit buyback mentioned above Expected DPU amount for FP7 ending October 31, 2017 with taking into consideration the unit buyback is as follows. It is expected that the DPU forecast for FP7 would increase by 29 compared to the case without taking into account the unit buyback. (Assumption) Credit Rating Acquisition and Issuance of Investment Corporation Bonds After acquiring its credit rating in October 2016, the Investment Corporation issued investment corporation bonds in April 2017 for the purpose of diversifying the funding methods, reducing funding cost and prolonging funding period, and simultaneously aiming to improve stability of funding in mid- to long-term. Details of issuance of the investment corporation bonds are as follows. (%) 1.0 Issue Date Amount of Issued Duration Interest rate Redemption date First Series Bonds April 20, bn 5 years 0.320% April 20, 2022 Second Series Bonds 2 Prepayment of short-term borrowing Impact to DPU: + 2 Average purchase price: 100,900 (closing price of June 9, 2017) No. of units of unit buyback and retirement: 7,928 units April 20, bn 7 years 0.520% April 19, 2024 Average remaining years (Right scale) Average borrowing rate (Left scale) 3 Asset acquisition * IOJ is not considering buying an asset for 800 million DPU forecast for FP7 with taking into consideration the unit buyback: 2,908 (Note) Each expected number mentioned above is calculated based on certain conditions as the date hereof, and the actual DPU amount may differ in accordance with the changes in such assumed conditions. Also, these figures are not a guarantee of the amount of DPU in the future. By issuing investment corporation bonds and repayment of borrowings which came due on June 2017, it tends to improve the Investment Corporation s financial stability both in average borrowing rate and average remaining years. (Year) 6.0 (Note1) Book-value per unit is calculated by dividing net asset value mentioned in the financial statements by the issued number of investment units. (Note2) NAV per unit is calculated by dividing net asset value, reflecting the gap between book value and appraisal value of investment assets, by issued number of investment units Details of Unit Buyback Total Number of Own Investment Units to be acquired Total Acquisition Price 10,000 units (maximum) 800mm (maximum) Acquisition Period From June 13, 2017 to July 20, 2017 (Note 3) The Investment Corporation will terminate the transaction regarding the unit buyback when either total number of acquired own investment units or total acquisition price reaches the maximum amount, or when the acquisition period ends FP1 FP2 FP3 FP4 FP5 FP6 June 6,

7 Internal Growth Successful in Leasing and Occupancy Improvements In FP6, the average portfolio occupancy rate resulted a 96.7% because some major tenants vacated from Ebisu Prime Square, Nagoya Prime Central Tower and Sendai Honcho Building. The Investment Corporation is focusing on leasing activities at Ebisu Prime Square whose several tenants vacated during FP6, Sun Towers Center Building which occupancy rate is expected to decrease and Aqua Dojima East which is a newly acquired asset in March The average portfolio occupancy rate in FP7 is expected to improve to 98.1% due to new leases in Nagoya Prime Central Tower, Sendai Honcho Building and Shinagawa Seaside East Tower. Leasing Achievements and Occupancy (%) 100 Move-in Move-out Actual occupancy rate Estimated occupancy rate FP4 FP November December FP4 98.4% FP5 98.8% 2017 January February March April May June (Forecast) Portfolio average occupancy rate during fiscal period FP6 96.7% July (Forecast) August September (Forecast) (Forecast) FP7 (Forecast) 98.1% (m 2 ) 15,000 12,000 9,000 6,000 3,000 0 October (Month) (Forecast) Leasing Achievements by Individual Asset The Investment Corporation was focusing on leasing at Ebisu Prime Square due to the anchor tenant relocation in FP6. In addition, occupancy rate of Sendai Honcho Building was improved because of renewal works at entrance lobby and common areas of each floor. Leasing achievements at Ebisu Prime Square Stable demand for rare large vacant spaces in Ebisu sub market. Succeeded in leasing after tenant relocations. Occupancy rate (%) The anchor tenant that occupied a total of 4.25 floors (2,057sqm) vacated at the end of December 2016 and February 2017 resulting in a total of 2,780 sqm of available space. Implemented floor space division to further tenant diversification and improve flexibility in leasing. As a result, succeeded in filling 1,657sqm of space through leasing the vacant space to 10 tenants January 1, 2017 April 30, 2017 June 17, 2017 Leasing achievements at Sendai Honcho Building Effective renovation led to successful leasing. Occupancy rate (%) The building was fully renovated including entrance lobby space and common areas at each floor in January The renovation work was highly evaluated in the market. The occupancy rate improved to 98.2% as at June 17, 2017 with successful leasing to 12 new tenants (leased area: 2,233sqm) January 1, 2017 April 30, 2017 June 17, 2017 Summary for Lease Renewal Status and Portfolio Average Rent (Office part) The Investment Corporation renewed 67 contracts in FP6 of which 19 contracts (39.3% of total leased area renewed in FP6) were renewed with upward revisions and the average rent increased by 7.8% from the previous contracted rents. In addition, 46 contracts (56.2% of total leased area renewed in FP6) were renewed with the same rent. In FP7, it is expected that many lease contract renewals whose in place rent are lower than market rent. Accordingly, the Investment Corporation aims to continuously raise rents in FP7 due to potential for further upward rent revisions for the tenants whose rent is lower than the market price to improve rental revenue. Lease Renewal Status (Leased Area Basis) (%) % (9 contracts) 30.2% (14 contracts) 39.3% (19 contracts) Average Rent at the end of Fiscal Period (included CAM) (Note) Upward revision Flat Downward revision Portfolio average rent Market rent Rent difference ( /tsubo) (%) 16, , Leasing Achievements (Note) (Note) The number of move-in/move out tenant is only for office tenants (including City/Plaza). Proactive Cost Control during FP6 and FP7 Leasing Achievements 6 tenants moved out 10 tenants moved in 6 tenants moved out 12 tenants moved in Cost reduction has contributed to enhanced NOI By reviewing building maintenance and power supply contracts of each asset as well as a change in vending machine vendor and introduction of sub-leasing for cancelled parking lots, the Investment Corporation succeeded in reducing total expenses of the portfolio. Also, portfolio income was improved by initiatives to increase revenue, such as vending machine installments. Reduction in Building Maintenance Costs Reduction in Power Supply Contract Costs Other Income Improvement 28.8 million per period 27.2 million per period 4.5 million per period % (46 contracts) 0.1% (1 contract) 69.8% (44 contracts) 56.2% (46 contracts) 4.5% (2 contracts) FP4 FP5 FP6 15,500 15,000 14,500 15,384 15,862 FP5 (12 assets) 15,414 16,020 FP6 (12 assets) (Note) Figures above are assumed impact of cost reduction through a whole fiscal period. DPU Improvement Approximately 74 per unit (Note) It is a comparison based on 12 assets which is adjusted by excluding Triton Square Z from the portfolio at the end of FP5 and Kinshicho Prime Tower and Aqua Dojima East from the portfolio at the end of FP6. Market rent above represents contracted rent for a typical floor of assets managed by the Investment Corporation evaluated by CBRE

8 Overview of Portfolio Properties (As of the end of FP6) Purchase Price Average NOI Yield 161.9bn (Note1) Portfolio Map 12 Sendai City Tokyo Metropolitan Area 5.1% Average Portfolio Occupancy Rate 96.8% Fukuoka City 13 Nagoya City 5 15 Osaka City 4 7 Yokohama City Portfolio PML Average Purchase Price per Property 2.32% 11.5bn Average Gross Floor Area per Property (Note2) 64,163sqm Date as of the end of April 2017 Portfolio Diversification Diversification in Area Diversification by Size Tokyo 23 wards 66.0% Tokyo Metropolitan Area other than the above 17.9% Other Major Urban Areas 13.0% Other investment target regions 3.1% Gross Floor Area of over 10,000 sqm 88.2% Property Summary Property name Location Purchase price ( mm) Appraisal value (Note1) ( mm) Investment ratio (Note2) (%) 1 Ebisu Prime Square Shibuya-ku, Tokyo 25,014 27, CS Tower / CS Tower Annex Taito-ku, Tokyo 13,700 16, Queen s Square Yokohama Yokohama-shi, Kanagawa 16,034 18, Nagoya Prime Central Tower Nagoya-shi, Aichi 14,600 18, Tokyo Nissan Nishi-Gotanda Building Shinagawa-ku, Tokyo 6,700 7, ORTO Yokohama Yokohama-shi, Kanagawa 13,000 14, Nishi-Shinjuku KF Building Shinjuku-ku, Tokyo 6,600 7, Shinagawa Seaside East Tower Shinagawa-ku, Tokyo 25,066 26, Akiba CO Building Chiyoda-ku, Tokyo 8,078 9, Sun Towers Center Building Setagaya-ku, Tokyo 6,615 7, Sendai Honcho Building Sendai-shi, Miyagi 5,000 5, (Note1) For Aqua Dojima East, the ratio is calculated by the following formula: appraisal NOI before depreciation by a direct capitalization method as of the Gross Floor Area of over end of FP6/ purchase price. For other managed assets, the ratio is calculated using the following formula: (actual NOI before depreciation during the fiscal 5,000 sqm 13 Hakata Prime East Fukuoka-shi, Fukuoka 4,500 4, period / operating days during the fiscal period*365 days) / total purchase 11.8% price of the portfolio as of the end of the fiscal period. However, we have applied adjustments to treat certain capitalized property-related taxes as 14 Kinshicho Prime Tower Koto-ku, Tokyo 15,145 15, expenses. (Note2) Average total floor area is the sum of the floor areas of the whole building as 15 Aqua Dojima East Osaka-shi, Osaka 1,910 2, indicated in the registry. For each asset s total floor area, please refer to the information on Gross Floor Area (a whole building) in New Portfolio Total 161, , Properties acquired in FP6 and Portfolio Properties sections. Date as of the end of April 2017 (Note1) The date of value for the asset was April 30, (Note2) The investment ratio is based on the purchase price. As percentage of investment ratio is rounded to the second decimal place, total of the ratio may not be 100%. 13

9 Portfolio Properties 1 Ebisu Prime Square 4 Queen s Square Yokohama Meiji St. JR Line Ebisu Prime Square Shibuya-bashi Komazawa St. Tokyo Metro Hibiya Line Ebisu Sta. JR Ebisu Sta. Residential Address Date of Building January 31, 1997 Gross Floor Area of the whole building Structure (Land) Structure (Building) 1-1-7/39/40, Hiroo, Shibuya-ku, Tokyo 67, sqm rights (quasi-co-ownership interests of the trust beneficial interests: 49%) rights (quasi-co-ownership interest of the trust beneficial interests: 49%) Minatomirai Sta. Queen s Square Yokohama Minatomirai Line Residential Address Date of Building June 30, 1997 Gross Floor Area of the whole building Structure (Land) Structure (Building) 2-3-2/3/4/5/7/8/9, Minatomirai, Nishi-ku, Yokohama, Kanagawa 498, sqm (Note) rights (co-ownership interests) Sectional ownership (co-ownership interests) (Note) The area of the entire building of Queen s Square Yokohama recorded on the registry is stated here. 3 CS Tower / CS Tower Annex 5 Nagoya Prime Central Tower JR Line Tokyo Metro Hibiya Line JR Akihabara Sta. Akihabara Sta. Toei Shinjuku Line Kanda River Iwamotocho Sta. Kuramaebashi-dori St. CS Tower/ CS Tower Annex Kiyosubashidori St. JR Sobu Line Asakusabashi Sta. JR Line Tokaido Shinkansen Meitetsu Nagoya Main Line JR Nagoya Sta. Nagoya Sta. Nagoya Prime Central Tower Meitetsu Nagoya Sta. Kintetsu Nagoya Sta. Kokusai Center Sta. Nagoya City Subway Sakura-dori Line Nagoya City Subway Higashiyama Line Bakurocho Sta. Residential Address , Meieki, Nishi-ku, Nagoya, Aichi Prefecture Residential Address /6, Asakusabashi, Taito-ku, Tokyo Date of Building March 18, 2009 Date of Building August 31, 1991 Gross Floor Area of the whole building Structure (Land) Structure (Building) 32, sqm (Note) Rights to site Sectional ownership (co-ownership interests of part of the sectional ownership) (Note) This section states the structure/ stories and gross floor area of the whole building including this property, inclusive of those corresponding to the interests of the other sectional owners and co-owners. Gross Floor Area of the whole building Structure (Land) Structure (Building) 59, sqm (Note) rights (co-ownership interests) (Office) Sectional ownership (Parking lot) Interests acquired for the common spaces under the regulations and the common spaces of the condominium (Note) The gross floor area of the whole building for the parking space of Nagoya Prime Central Tower

10 Portfolio Properties 6 Tokyo Nissan Nishi-Gotanda Building 8 Nishi-Shinjuku KF Building Yamatedori St. Meguro Sta. Tokyu Meguro Line JR Yamanote Line Metropolitan Expressway Route No.2 Meguro Line Nishi-Shinjuku KF Building Nishi-Shinjuku Sta. Tokyo Metro Marunouchi Line Ome Kaido St. Shinjuku Nishiguchi Sta. JR Line Tokyo Nissan Nishi-Gotanda Building Gotanda Sta. Fudo-Mae Sta. Central Circular Route Toei Asakusa Line Tochomae Sta. Toei Oedo Line JR Shinjuku Sta. Residential Address /9, Nishi-Gotanda, Shinagawa-ku, Tokyo Residential Address , Nishi-Shinjuku, Shinjuku-ku, Tokyo Date of Building April 25, 1990 (completed renewal works in 2010) Date of Building January 29, 1993 Gross Floor Area of the whole building Structure (Land) Structure (Building) 21, sqm (Note) Rights to site Sectional ownership Gross Floor Area of the whole building Structure (Land) Structure (Building) 9, sqm Rights to site Sectional ownership (Note) (Note) The structure/number of stories and the gross floor area are stated for the whole building that make up the subject property and the area includes common areas as well as other exclusive use areas of a condominium. (Note) Although ownership structure for the subject property is sectional ownership, the seller owns the entire sectional ownerships of the subject property though the trustee. 7 ORTO Yokohama 9 Shinagawa Seaside East Tower Oguchi Sta. Tokaido Line Oimachi Sta. Daiichi Keihin Rd. Keikyu Line Aomono-yokocho Sta. Rinkai Line of the Tokyo Waterfront Area Rapid Transit Samezu Sta. National Route No.357 Shinagawa Seaside Sta. Shinagawa Seaside East Tower Tokyo Monorail Metropolitan Expressway Route No.1 Haneda Line Residential Address Date of Building November 30, 2000 Gross Floor Area of the whole building Structure (Land) Structure (Building) 1-2-4/5, Shin-Koyasu, Kanagawa-ku, Yokohama, Kanagawa 57, sqm (Note) Rights to site Sectional ownership (co-ownership interests for a portion of the sectional ownership) JR Yokohama Line Koyasu Sta. Keikyu Line Daini Keihin Rd. ORTO Yokohama Shin-Koyasu Sta. Keikyu- Shin-Koyasu Sta. Daiichi Keihin Rd. JR Keihin-Tohoku Line Residential Address Date of Building August 31, 2004 Gross Floor Area of the whole building Structure (Land) Structure (Building) , Higashi-Shinagawa, Shinagawa-ku, Tokyo 43, sqm (Note) The structure/number of stories and the gross floor area are stated as total spaces of office building, commercial building, parking Garage and the area includes common areas as well as other exclusive use space of a condominium

11 Portfolio Properties 10 Akiba CO Building 12 Sendai Honcho Building Kuramaebashi-dori St. Akiba CO Building Sobu Line Suehirocho Sta. Ginza Subway Line Chuo-dori St. Akihabara Dai Building Yamanote Line, Keihin-Tohoku Line Akihabara UDX JR Akihabara Sta. Tsukuba Express Route 4 Sendai Honcho Building Subway Namboku Line Higashi Nibancho-dori St. Aoba-dori Ichibancho Sta. Hirose-dori Sta. Atago Kamisugi-dori St. Aoba-dori Sta. Subway Tozai Line Tohoku-Shinkansen Tohoku-Main Line Ekimae-dori St. Sendai Sta. Senseki Line Sendai Sta. Residential Address Soto-Kanda, Chiyoda-ku, Tokyo Residential Address , Honcho, Aoba-ku, Sendai, Miyagi Date of Building May 23, 2000 Date of Building November 26, 1984 Gross Floor Area of the whole building 6, sqm Gross Floor Area of the whole building 13, sqm Structure (Land) Structure (Land) Structure (Building) Structure (Building) 11 Sun Towers Center Building 13 Hakata Prime East Tokyu Setagaya Line Setagaya-dori St. Sangen-jaya Sta. Carrot Tower Sangen-jaya Sta. National Route No.246 Tokyu Den-en-toshi Line Hakata Sta. Subway Kuko Line Nakahie Park Dori St. Sun Towers Center Building Metropolitan Expressway Route No.3 Shibuya Line Chikushi Dori St. Hakata Prime East Sanyo-Shinkansen Line Kyusyu-Shinkansen Line JR Line Nakahie Park Residential Address , Sangen-jaya, Setagaya-ku, Tokyo Residential Address , Hakataeki-Higashi, Hakata-ku, Fukuoka-shi, Fukuoka Date of Building June 22, 1992 Date of Building April 22, 1992 Gross Floor Area of the whole building 25, sqm (Note) Gross Floor Area of the whole building 9, sqm Structure (Land) (sectional ownership) Structure (Land) Structure (Building) Sectional ownership Structure (Building) Sectional ownership (Note) (Note) The land of the Property is owned partially by each sectional owner and the sectional owners agree to use other sectional owners' land each other. (Note) Although ownership structure for the subject property is sectional ownership, the seller owns the entire sectional ownerships of the subject property though the trustee

12 Financial Information (As of June 6, 2017) Investment Unit Information Status of Credit Rating Current credit rating of the Investment Corporation is as follows. Details of Credit Rating Rating Agency Subject Rating Rating Outlook Japan Credit Rating Agency, Ltd. (JCR) Long-term Issuer Rating A+ Stable Bond Rating (Note) A+ Trend of Investment Unit Price The Investment Corporation s investment unit price at Tokyo Stock Exchange has trended since June 5, 2014 as follows. The data is as of June 23, Investment Unit Price (Closing price: ) Trading Volume (No. of units) 130, , ,000 60,000 (Note) The bond rating is for the first and second series bonds. 90,000 40,000 Financial Stability and Flexibility The fundamental policy of Investment Corporation is the conduct of stable and sound financial management to ensure stable income over the medium to long term together with steady growth in asset value. In regard to borrowings, the Investment Corporation will seek stable financial management through building diversified bank formation centered on leading Japanese financial institutions. 70,000 0 IPO December 30, June 30, December 30, June 30, 2016 December 30, ,000 0 June 23, 2017 LTV Interest bearing debt Average remaining years 2.7years 49.5% 89bn Average borrowing rate 0.58% Lender s Diversification 28% The Bank of Tokyo-Mitsubishi UFJ 17% Mizuho Bank 15% Trust Bank 11% Resona Bank 11% Development Bank of Japan 5% Diversification of Debt Maturities Long-term loan ratio 100.0% Fixed interest rate ratio 86.6% As of June 6, 2017 Mitsubishi UFJ Trust and 4% Shinsei Bank 3% Aozora Bank 2% The Bank of Fukuoka 2% ORIX Bank Corporation 1% The Nishi-Nippon City Bank 1% Borrowings Corporate Bonds Unitholders Composition Breakdown by Units (Units) Total 815,547 Breakdown by Unitholders (Unitholders) Total 24,211 Domestic individuals 303,930 (37.27%) Financial institutions 316,395 (38.79%) Domestic corporations 34,693 (4.25%) Foreign corporations and individuals 160,529 (19.68%) (Note) As percentage of unitholders ratio is rounded to the third decimal place, total of the ratio may not be 100%. Environmental Initiatives and Energy-Saving Measures The Investment Corporation acquired certification for each asset as follows. Certification for CASBEE for Real Estate Nagoya Prime Central Tower CS Tower ORTO Yokohama Domestic individuals 23,576 (97.38%) Financial institutions Domestic corporations 89 (0.38%) 394 (1.63%) Foreign corporations and individuals 152 (0.63%) As of the end of April 2017 Acquired S Rank Certification number: HPCAS Acquired A Rank Certification number: HPCAS Acquired A Rank Certification number: HPCAS Tokyo Nissan Nishi-Gotanda Building Acquired A Rank Certification number: HPCAS (Note) CASBEE (The Comprehensive Assessment System for Built Environment Efficiency) is a tool for assessing and rating the environmental performance of buildings built and used in Japan. ( mn) 16,000 DBJ Green Building Certification Ebisu Prime Square Achieved 3 stars (Properties with excellent environmental and social awareness) as of February 27, ,000 8,000 4, ,800 12,000 12,000 13,350 12,550 10,600 5,500 5,500 6,600 7, ,600 0 FP7 FP8 FP9 FP10 FP11 FP12 FP13 FP14 FP15 FP16 FP17 FP18 FP19 FP20 FP21 (Note) DBJ Green Building Certification is a certification system that Development Bank of Japan selects and evaluates properties with environmental and social awareness, which is necessary in the current real estate market, based on its comprehensive assessment measure. Invesco Group has been a Member of GRESB since 2014 (Note) GRESB (Global Real Estate Sustainability Benchmark) is a benchmark to evaluate sustainability performance of private and listed real estate portfolio from environmental and social perspectives. As of June 6,

13 Asset Management Report 1. Overview of the asset management performance (1) Investment performance of the Investment Corporation Fiscal Period Second Fiscal Period Third Fiscal Period Fourth Fiscal Period Fifth Fiscal Period Sixth Fiscal Period November 1,2014 May 1,2015 November 1,2015 May 1,2016 November 1,2016 to April 30, 2015 to October 31, 2015 to April 30, 2016 to October 31, 2016 to April 30, 2017 Operating revenue (million yen) 3,009 4,003 4,183 5,684 6,543 [Revenues from the real estate rental business] (million yen) [3,009] [4,003] [4,179] [5,678] [5,755] Operating expenses (million yen) 1,699 2,327 2,453 3,087 3,218 [Expenses for the real estate rental business] (million yen) [1,403] [1,976] [2,041] [2,592] [2,583] Operating income (million yen) 1,309 1,675 1,730 2,597 3,324 Ordinary income (million yen) 1,128 1,397 1,463 2,230 2,967 (Note1) (Note 2) (Note 3) (Note 4) The fiscal period of the Investment Corporation is for six months; from May 1 and to October 31 of each year and from November 1 to April 30 of the following year. Consumption tax is not included in Operating Income and etc. Unless otherwise mentioned, the amounts of money shown above are rounded down and the percentages are rounded off to one decimal place. Each figure above is calculated by the formula below; The ratio of ordinary income to total assets Ordinary income / [(Total assets at the beginning of the period + Total assets at the end of the period)/ 2] 100 Return on equity Net income / [(Net assets at the beginning of the period + Net assets at the end of the period) / 2] 100 The ratio of unitholders equity to total assets at Net assets at the end of the period / Total assets at the end of the period 100 the end of the period Payout ratio Distributions per unit (excluding distributions in excess of earnings) / Net income per unit 100 The payout ratio in the first fiscal period and the third fiscal period and the fifth fiscal period is calculated using the following formula, as the number of investment units during the period changed because of capital increase through public offering during the period. Payout ratio = Total distributions (excluding distributions in excess of earnings) / Net income 100 Rental business NOI Revenues from the real estate rental business Expenses for the real estate rental business + Depreciation FFO Net income + Depreciation Gains or losses on sales of real estate FFO per unit FFO / Total number of investment units issued Net income (million yen) 1,127 1,396 1,462 2,229 2,966 Total assets (million yen) 89, , , , ,894 [Comparison with the previous fiscal period] (%) [-0.1] [+31.9] [+0.3] [+45.8] [+4.5] Net assets (million yen) 44,134 55,287 55,353 81,183 81,935 [Comparison with the previous fiscal period] (%) [+1.6] [+25.3] [+0.1] [+46.7] [+0.9] Interest-bearing debt (million yen) 40,200 56,200 56,200 82,100 89,000 Unitholders equity (million yen) 43,007 53,891 53,891 78,913 78,913 Total number of investment units issued (units) 432, , , , ,547 Net assets per unit (yen) 102, , ,088 99, ,467 Total distributions (million yen) 1,127 1,396 1,462 2,228 2,966 Distributions per unit (yen) 2,605 2,575 2,697 2,733 3,638 [Profit distributions per unit] [Distributions in excess of earnings per unit] Ratio of ordinary income to total assets (Note 4) (yen) [2,605] [2,575] [2,697] [2,733] [3,638] (yen) [-] [-] [-] [-] [-] (%) [Annualized value] (%) [2.5] [2.7] [2.5] [3.0] [3.4] Return on equity (Note 4) (%) [Annualized value] (%) [5.2] [5.6] [5.3] [6.5] [7.3] Ratio of unitholders equity to total assets at the end of the period (Note 4) [Change from the previous fiscal period] (%) (%) [+0.8] [-2.5] [-0.1] [+0.3] [-1.6] Payout ratio (Note 4) (%) Other Reference information Number of operation days Days Number of assets Assets Depreciation (million yen) Capital expenditure (million yen) NOI (Net operating income) (Note 4) FFO (Funds from operation)(note 4) (million yen) 2,034 2,564 2,698 3,796 3,924 (million yen) 1,556 1,933 2,023 2,939 2,934 (2) Summary of operating results for the fiscal period ended April 30, 2017 (the Sixth Fiscal Period ) a) Historical background of the Investment Corporation The Investment Corporation was established on February 27, 2014 by Invesco Global Real Estate Asia Pacific, Inc. as the organizer under the Act on Investment Trusts and Investment Corporations of Japan (hereinafter referred to as the Investment Trust Act ). The Investment Corporation was listed on the Real Estate Investment Trust Securities Market of the Tokyo Stock Exchange (Securities code: 3298) on June 5, The Investment Corporation is managed by Invesco Global Real Estate Asia Pacific, Inc. (hereinafter referred to as the Asset Management Company ). The Asset Management Company belongs to the Invesco Group, one of the world s leading independent asset management companies. The Investment Corporation aims to provide investors with opportunities to invest in office buildings in Japan with a strong focus on large-scale office buildings (see Note 1) located in Japan s major urban areas (see Note 2). These assets will be selected by experienced investment management specialists belonging to the Asset Management Company with the view to maximize investor value. (Note 1) Large-scale office buildings refers to real estate related assets (real estate related assets which are defined in Article 28, Paragraph 1 of the Investment Corporation s Articles of Incorporation (hereinafter referred to as the Articles of Incorporation )) are buildings or mortgage-backed securities for which the underlying assets are buildings which have scale that meets the following standards and therefore regarded as large-scale and are used primarily as office space. Tokyo Metropolitan Area: Total floor area of 10,000 m 2 or greater with a standard exclusive floor area on one floor covering at least 600 m 2. Other regions: Total floor area of 7,000 m 2 or greater with a standard exclusive floor area on one floor covering at least 400 m 2. (Note 2) The Investment Corporation defines major metropolitan areas as the Tokyo Metropolitan Area (Tokyo, Yokohama-shi, Kawasaki-shi, Saitama-shi, and Chiba-shi), Osaka-shi, Nagoya-shi and Fukuoka-shi; and sets this as its focused investment target area. b) Investment Environment and Business Performance During the Sixth Fiscal Period, domestic demand in the Japanese economy improved and accordingly, gradual growth in the domestic economy continued. The appreciation of the Japanese yen from the beginning of 2016 turned to depreciation after the presidential election of the United States in November 2016 and supported exports and the earnings of corporations. On the other hand, the future outlook is unclear due to increased geopolitical risks from the policies of the new administration in the United States and the rapid rise of protectionism in some developed countries. FFO per Unit (Note 4) (yen) 3,596 3,566 3,731 3,604 3,598 LTV (Book value basis) (%) 45.0% 47.7% 47.6% 47.7% 49.5% 22 23

14 As for the domestic office leasing market, demand for office space continued to increase as a result of the corporate sector s strong performance. However, the market showed signs of change. Because of the psychological impact arising from huge supply after 2018, rent increase slowed in the central Tokyo metropolitan area. In regional areas where the new supply is relatively small, the trend of increasing occupancy rates and rents still remain stable. With regards to real estate transactions, due to the difficulties in fund management stemming from the negative interest policy by Bank of Japan, acquisitions by both listed and private J-REITs increased and transaction volume turned to increase compared to that of last year. Under these conditions, the Investment Corporation disposed of trust beneficiary interests of Harumi Island Triton Square Office Tower Z (Chuo-ku, Tokyo, Disposition price: 10,100 million yen) on December 16, Also, the Investment Corporation acquired trust beneficiary interests of two properties in the Sixth fiscal period as follows: Kinshicho Prime Tower (Koto-ku, Acquisition price: 15,145 million yen) on January 20, 2017 and Aqua Dojima East (Osaka-shi, Osaka, Acquisition price: 1,910 million yen) on March 31, These acquisitions were based on the Investment Corporation s management philosophy. The fiscal period under review ended with the ownership of real estate trust beneficiary interests relating to fourteen (14) properties (total acquisition price: 161,962 million yen) that have a total leasable area of 212, m 2. Regarding property management the occupancy rate of the entire portfolio was 96.8% as of the end of the fiscal period under review. Along with this, the Investment Corporation pursued to improve earnings of the entire portfolio by seeking the possibility to increase rent on lease renewals. c) Overview of Financing Activities The fundamental policy of the Investment Corporation is to conduct stable and sound financial management to secure stable income over the medium to long term together with steady growth in asset value. Financing activities in the Sixth Fiscal Period are as follows. The Investment Corporation borrowed 5,500 million yen on January 20, The loan proceeds were used for the acquisition of trust beneficiary interests of Kinshicho Prime Tower and payment for related cost. Also, the Investment Corporation issued the 1 st Unsecured Investment Corporation Bonds (Special pari passu conditions among specified investment corporation bonds) of 1,800 million yen and the 2 nd Unsecured Investment Corporation Bonds (Special pari passu conditions among specified investment corporation bonds) of 1,600 million yen. The proceeds of issuing these corporate bonds were used for the repayment of short term loans of 2,000 million yen, which came due on April 28, (Credit Rating) As of the end of the Sixth Fiscal Period, credit ratings of the Investment Corporation are as follows. Rating Agency Rating Rating Outlook Japan Credit Rating Agency, Ltd. Long-term Issuer Rating: A+ Stable (JCR) Bonds : A+ - (Note) Rating for the 1st Unsecured Investment Corporation Bonds and the 2nd Unsecured Investment Corporation Bonds. (Shelf Registration Statement regarding investment corporation bonds) The Investment Corporation filed a shelf registration statement regarding investment corporation bonds (excluding short-term investment corporation bonds) on February 27, The details of the statement are as follows. Amount to be issued 50,000 million yen Planned period of issuance From March 7, 2017 to March 6, 2019 Acquisition of specific assets (as defined under Paragraph 1, Article 2 of the Investment Trust Act, as amended), debt repayment, redemption of investment corporation bonds Use of proceeds (including short-term investment corporation bonds), refund of tenant security deposit, payment of repairs and maintenance expenses, working capital, etc. d) Overview of Financial Results and Cash Distribution As a result of the above, operating revenue amounted to 6,543 million yen, operating income amounted to 3,324 million yen, ordinary income amounted to 2,967 million yen, and net income amounted to 2,966 million yen for the fiscal period under review. It was decided that all retained earnings would be distributed, except a fraction of less than one (1) yen per investment unit, with the aim to maximize the tax deductible expense of the profit distribution that is allowed under the special provisions for taxation (Article of the Act on Special Measures Concerning Taxation). Consequently, distributions per investment unit amounted to 3,638 yen. Outstanding loans as of the end of the Sixth Fiscal Period totaled 89,000 million yen. The ratio of total interest-bearing debt (the total amount of loans and bonds) to total assets (i.e., the loan-to-value or LTV ) was at 49.5% at the end of the Sixth Fiscal Period

15 (3) Status of Issuance of New Investment Units Changes to Total Unitholders Equity, net from the establishment of the Investment Corporation through the end of the Sixth Fiscal Period are as follows: Date February 27, 2014 Incorporation through private placement 1,500 1, (Note1) June 4, 2014 Capital increase through public offering 411, ,500 40,851 41,001 (Note 2) June 25, 2014 Capital increase through third-party allotment 20, ,680 2,005 43,007 (Note 3) May 26, 2015 Capital increase through public offering 104, ,980 10,364 53,371 (Note 4) June 24, 2015 Capital increase through third-party allotment 5, , ,891 (Note 5) May 31, 2016 Capital increase through public offering 261, ,710 23,939 77,830 (Note 6) June 29, 2016 Capital increase through third-party allotment 11, ,547 1,083 78,913 (Note 7) (Note 1) At the incorporation of the Investment Corporation, investment units were issued with an issue price per unit of 100,000 yen. (Note 2) New investment units were issued through a public offering with an issue price per unit of 103,000 yen (issue value: 99,395 yen). (Note 3) New investment units were issued through a third-party allotment accompanying a capital increase through a public offering with an issue price per unit of 99,395 yen. (Note 4) New investment units were issued through a public offering with an issue price per unit of 102,960 yen (issue value: 99,369 yen). (Note 5) New investment units were issued through a third-party allotment accompanying a capital increase through a public offering with an issue price per unit of 99,369 yen. (Note 6) New investment units were issued through a public offering with an issue price per unit of 94,672 yen (issue value: 91,545 yen). (Note 7) New investment units were issued through a third-party allotment accompanying a capital increase through a public offering with an issue price per unit of 91,545 yen. [Changes in Investment Unit Price at the Tokyo Stock Exchange] Fiscal Period Event Total Number of Investment Units Issued and Outstanding (units) Total Unitholders Equity, (millions of Yen) Change Balance Change Balance Notes Second Fiscal Period Third Fiscal Period Fourth Fiscal Period Fifth Fiscal Period Sixth Fiscal Period November 1,2014 May 1,2015 November 1,2015 May 1,2016 November 1,2016 to April 30, 2015 to October 31, 2015 to April 30, 2016 to October 31, 2016 to April 30, 2017 Highest (yen) 126, , , , ,400 Lowest (yen) 99,700 87,300 94,200 84,800 81,100 (4) Actual Cash Distribution per Unit Pursuant to the distribution policy as defined in Article 35, Paragraph 1 of the Articles of Incorporation of the Investment Corporation, the amount of distributions shall be the amount that does not exceed the amount of profits but exceeds 90% of the distributable profit as defined in Article of the Act on Special Measures Concerning Taxation. Based on the distribution policy, the Investment Corporation declared a distribution per unit of 3,638 yen. Total net income Retained earnings brought forward Fiscal Period Total distributions [Distribution per Unit] Total Profit distribution [Profit distributions per unit] Total Return of capital [Return of capital per unit] Of total return of capital, total distribution from allowance for temporary difference adjustment [ Of return of capital per unit, total distribution per unit from allowance for temporary difference adjustment] Of total return of capital, total distribution through reduction in unitholders; capital for tax purpose [Of total return of capital per unit, total distribution per unit through reduction in unitholders; capital for tax purpose] (thousands of y en) (thousands of y en) (thousands of y en) Second Fiscal Period Third Fiscal Period Fourth Fiscal Period Fifth Fiscal Period Sixth Fiscal Period November 1,2014 May 1,2015 November 1,2015 May 1,2016 November 1,2016 to April 30, 2015 to October 31, 2015 to April 30, 2016 to October 31, 2016 to April 30, ,127,368 1,396,523 1,462,617 2,229,474 2,967, ,127,131 1,396,190 1,462,340 2,228,889 2,966,959 (yen) [2,605] [2,575] [2,697] [2,733] [3,638] (thousands of y en) 1,127,131 1,396,190 1,462,340 2,228,889 2,966,959 (yen) [2,605] [2,575] [2,697] [2,733] [3,638] (thousands of y en) (yen) [-] [-] [-] [-] [-] (thousands of y en) (yen) [-] [-] [-] [-] [-] (thousands of y en) (yen) [-] [-] [-] [-] [-] (5) Future Management Policy and Other Issues The pace of recovery of the Japanese economy is expected to be accelerated slightly because of the resurgent investment in public sector and private sector. However, it is necessary to remain cautious about the global economy s future, especially the political administration in the US, the possible outcome of the monetary easing measures by FRB, economic trends in China, and impact from volatility in exchange rates and natural resource prices. Also, it will be necessary to pay attention to the monetary easing policy by Bank of Japan. In the office leasing market, the potential demand from the newly-built offices and corporate expansion remains steady. However, it is expected that cyclical expansion will slow down. In the central business district in Tokyo area, the market is expected to be loosened because of the huge and concentrated supply in this area and it is likely that the rent in a higher price ranges is expected to decrease. As for the real estate transaction market, in case the investment demand and the favorable financing 26 27

16 environment continue to be steady, it is expected that the transaction volume and price will be likely to increase. However, in the mid-term, it is necessary to be prepared for the situation that real estate prices head downward by further adjustments in the capital market. rents that are relatively high compared to other office buildings. Furthermore, relatively strong tenant demand can be expected in the areas in which such office buildings are located and it may also be possible to maintain high occupancy rates through tenant diversification and flexibility when setting rents. In view of the market environment described above, the Investment Corporation recognizes that it is crucial to pursue external growth through the acquisition of properties that will help enhance portfolio quality and profitability. This will be achieved by making maximum use of the investment expertise the Asset Management Company has accumulated over the past eighteen (18) years in Japan and the close relationships it has built with various market players as an independent asset manager. The Investment Corporation also needs to quickly achieve regional and tenant diversification in relation to the managed assets to secure stable earnings across its entire portfolio. Furthermore, the Investment Corporation considers it necessary to pursue internal growth through improvement in the profitability of managed properties, as rents in the office lease market are currently trending upward. Based on the recognition of the issues described above, the Investment Corporation has been aiming to provide stable profit and to enhance the portfolio quality by investing mainly in large-scale office buildings in metropolitan areas such as the Tokyo area and steadily operating them, and it has been conducting its asset management for the purpose of improving both DPU amount and investors value. However, as the current real estate investment market is fiercely competitive and it is necessary to sustainably secure and increase opportunities to acquire assets in order to maximize investor value through external growth, the Investment Corporation has determined to broaden the type of investable assets which it may invest, into the assets other than office building subject to certain limitations. By broadening the type of investable assets and assessing appropriate investment timing to make rigorously selected investments in various assets, the Investment Corporation aims to realize sustainable external growth. As a result of expanding the size of the portfolio, diversification of both asset and tenants is expected to be improved. Portfolio sustainability is also expected to be improved by combining assets having different cash flow characteristics. For these circumstances, upon the resolution of the General Meeting of Unitholders, which was held on January 31, 2017, the Investment Corporation amended the part of the Articles of Incorporation and accordingly, the Investment Corporation amended the Asset Management Guideline. From this perspective, the Investment Corporation will continue to place its focus on large-scale office buildings (investment ratio of 70% or more) located in major metropolitan areas as its investment targets. At the same time, in the current fiercely competitive real estate investment market, the Investment Corporation regards it is necessary to sustain and expand the opportunities of acquiring assets, and therefore, the Investment Corporation plans to invest in investable assets other than large-scale office buildings are planned to be middle-scale offices, retail facilities, residential properties, hotels, logistics and others. The investment ratio of these assets is to be limited to less than 30% of the total portfolio. The Investment Corporation expects this investment policy leads to increase of opportunities to acquire assets that can improve the quality and profitability of the portfolio, and contribute to continuous external growth. Furthermore, it is expected that the diversification of both assets and tenants and the profitability of portfolio can be improved by combing the assets with different types of profit characteristics. b) Management Policy / Internal Growth Strategy The Investment Corporation will endeavor to (i) maintain and improve tenant satisfaction through meticulous property management services, (ii) maintain and improve rental income and occupancy rates, (iii) perform appropriate management and repairs, and (iv) promote rationalization and efficiency of management costs. In its tenant leasing activities, the Investment Corporation will set appropriate rent levels based upon its assessment and understanding of market trends and consideration of real estate characteristics for each managed asset. It will also fully utilize property management companies (hereinafter referred to as the PM Companies ) to select high-quality tenants. Leasing activities will also be carried out by giving consideration to the impact of the tenant composition of not only each individual property, but also the portfolio as a whole. a) Investment Policy / External Growth Strategy Japan s economic activities are extremely concentrated in major urban areas, which serve as the base for business and consumption. Office buildings located in major urban areas offer a wealth of investment opportunities and relatively high rental demand can be expected. In addition, due to the concentration of economic activity, demand for office buildings as the site for economic activity and essential infrastructure is also likely to increase. Given the potential for growth driven by the scale of economic activity and population in these districts, office buildings located in major urban areas are likely to remain attractive investment targets. Rents of office buildings in the Tokyo Metropolitan Area and other major urban areas show an upward trend, especially large office buildings. Rents in these areas can expect to rise ahead of other rents in a recovery phase and that may offer upside revenue potential through increased rents and higher occupancy rates. In addition, such office buildings are generally occupied by blue-chip companies with strong lease payment capacity. Depending on the equipment specifications, these office buildings can promise stable Since existing tenants are important clients, the Investment Corporation will make regular contact with them through the PM Companies to quickly identify tenant trends. Such trends include tenants that are considering increasing or decreasing leased space and tenants who are dissatisfied or are considering termination. At such time, the Investment Corporation will take appropriate and swift action. The Investment Corporation will prepare a repair and maintenance plan along with a capital expenditure plan as part of the annual management review for each managed asset. The Investment Corporation will systematically carry out necessary repairs, maintenance and capital expenditures to improve the market competitiveness of the managed assets and to improve tenant satisfaction. c) Financing Strategy In line with the fundamental policy of conducting steady and sound financial management to ensure stable income over the medium-to-long term and to support continuous growth in asset value, the Investment Corporation, paying careful attention to financial market trends, raises funds as follows

17 Decisions on equity financing will be made on a comprehensive basis taking into account such matters as (i) the timing of new real property-related asset acquisitions, (ii) the specific LTV on each asset, (iii) the repayment schedules, (iv) the terms of the interest bearing debt, and (v) the market environment. This will all be viewed while giving consideration to the possible dilution of the interests of existing investors and any resulting decrease in the trading price of investment units. In debt financing, the Investment Corporation aims to keep LTV levels within the range of 40% to 50% to maintain stable leverage control. However, there may be times when those LTV levels are temporary exceeded. The Investment Corporation will seek stable financial management through repayment dates, diversification of lenders and the use of long-term fixed debt. At the same time, the Investment Corporation will take into account borrowing costs. In regard to lenders, the Investment Corporation will build a stable bank foundation centered on leading Japanese financial institutions. Furthermore, for the purpose of improving capital efficiency and returning profit to unitholders, as a part of financial and capital policy, Investment Corporation will examine acquisition and cancellation of its own investment units. When such examination, improving investors value in mid- to long-term is prioritized and the decision whether to conduct such acquisition is based on the prudent assessments of level of investment unit price, situation of cash in hand, financial situation, and market environment. (6) Significant Events after the Balance Sheet Date (1) Resolution regarding acquisition of own investment units The Investment Corporation has decided to acquire own investment units (hereinafter referred to as the Acquisition of Own Investment Units ) based on the Article 80-2 of the Investment Trust Act applied by the reading of terms in the Article 80-5 of the Investment Trust Act at a meeting of the board of directors of the Investment Corporation held on June 12, The Investment Corporation plans to cancel all the acquired units during the fiscal period ending October 31, a) Reason for acquisition of own investment units Considering various facts such as the level of investment unit price, situation of cash in hand, financial situation and market environment, the Investment Corporation expects that improving capital efficiency and returning profit to investors through acquiring own investment units will improve the investors value in the mid- to long-term. In case the market price of investment units is below its book-value per unit (BPU) or NAV per unit, the Investment Corporation believes that acquiring its own investment units and cancelling them will improve investors value. DPU is expected to increase due to the fact that the number of outstanding investment units decreases. b) Details of acquisition of own investment units Total number of own investment units to be acquired 10,000 units (maximum) Total acquisition price 800 million yen (maximum) Method of acquisition The Investment Corporation entrusts the market purchase of its own investment units at Tokyo Stock Exchange to a securities company by discretionary transaction contract Acquisition period From June 13, 2017 to July 20, 2017 (Reference Subsequent Events) The Investment Corporation undertook the borrowing of funds for the purpose of refinancing the existing loan of 13,000 million yen which came due on June 6, Classification Long- term Lender Date of Borrowing Borrowing Amount (millions of yen) Banking 1,250 Corporation The Bank of Tokyo-Mitsubishi UFJ, 1,250 Ltd., June 6 Mizuho Bank, Ltd ,000 Trust 1,000 Bank, Ltd. Resona Bank, Ltd. 1,000 Banking 1,250 Corporation The Bank of Tokyo-Mitsubishi UFJ, 1,250 Ltd., Mizuho Bank, Ltd. June 6 1, Trust 1,000 Bank, Ltd. Resona Bank, Ltd. 1,000 Interest Rate (Notes 1 and 2) Base rate (JBA one-month JPY TIBOR) plus 0.25% Base rate (JBA three-month JPY TIBOR) plus 0.45% (Note 4) Maturity Date November 30, 2018 November 30, 2021 Purpose of Borrowing (Note 3) (Note 3) Security Unsecured and Unguaranteed Unsecured and Unguaranteed Development Bank of Japan Inc. 2,000 Total 13, (Note 1) Loan fees and other charges to be paid to the lenders are not included. (Note 2) Base Rate applicable to the period for the calculation of the interest payable on an interest payment date is the one-month or three-month Japanese yen Tokyo Interbank Offered Rate (TIBOR) published by Japanese Bankers Association ( JBA ) TIBOR Administration as of a date two (2) business days prior to the most recent interest payment date of each interest payment date. The base rate will be reviewed on every payment date. However, if there is no base rate that corresponds to the interest calculation period, the base rate corresponding to the period calculated based on the method defined in the agreements will apply. (Note 3) Purpose of Borrowing is to refinance the existing loan which came due on June 6, (Note 4) The interest rate of the borrowing mentioned above is floating. For the purpose of avoiding the interest-rate risk, the Investment Corporation concluded an interest rate swap agreement and the interest rate are effectively fixed at %. 2. Overview of the Investment Corporation (1) Over view of the unitholders equity Fiscal period Total number of investment units that the Investment Corporation is authorized to issue (unit) Total number of investment units issued and outstanding (unit) Total unitholders equity (millions of yen) Second Fiscal Period Third Fiscal Period Fourth Fiscal Period Fifth Fiscal Period Sixth Fiscal Period November 1, 2014 May 1,2015 November 1,2015 May 1,2016 November 1,2016 to April 30,2015 to October 31, 2015 to April 30, 2016 to October 31, 2016 to April 30, ,000,000 10,000,000 10,000,000 10,000,000 10,000, , , , , ,547 43,007 53,891 53,891 78,913 78,913 Number of unitholders 11,935 15,708 16,640 24,826 24,

18 (2) Overview of the unitholders Principal unitholders Number of units owned (units) Ratio of number of units owned to total number of units issued (Note1)(%) Japan Trustee Services Bank, Ltd. (trust account) 88, The Master Trust Bank of Japan, Ltd. (trust account) 68, Trust & Custody Services Bank, Ltd. (securities investment trust account) 54, The Nomura Trust and Banking Co., Ltd. (investment trust account) 28, HSBC BANK PLC A/C CLIENTS, NON TREATY 1(Note 2) 24, NORTHERN TRUST CO. (AVFC) RE IEDU UCITS CLIENTS NON LENDING 15 PCT, TREATY ACCOUNT 15, GOLDMAN, SACHS & CO. REG 13, Japan Trustee Services Bank, Ltd. (trust account 9) 6, State Street Bank and Trust Company , Morgan Stanley & Co. LLC 6, Total 312, (Note 1) (Note2) Each figures described in Ratio of number of units owned to total number of units issued are rounded off to one decimal. HSBC BANK PLC A/C CLIENTS, NON TREATY 1 holds 24,504 units as trustee for the benefit of Invesco Investments (Bermuda) Ltd. Invesco Investments (Bermuda) Ltd. is a subsidiary of Invesco Ltd., the parent company of the Asset Manager. (3) Overview of the directors a) The members of the board of directors as of the end of the Sixth Fiscal Period is as follows Position Name Concurrent post Executive Director (Note1), (Note2), (Note 3) Supervisory Director (Note1), (Note2), (Note 4) Accounting Auditor (Note2) (Note 1) (Note 2) Total fees paid during the sixth fiscal period (thousands of yen) Yugo Minemura Fund Manager at Invesco Global Real Estate Asia Pacific Inc. - Yoshifumi Matsumoto Head of Business Development at Invesco Global Real Estate Asia Pacific Inc. - Takashi Shimokado Attorney at law of Shimokado International Law Office 3,900 Eiji Kawasaki - Pricewaterhouse Coopers Aarata LLC - 10,500 Executive directors and supervisory directors do not own investment units issued by the Investment Corporation under their name or other third parties name. In addition, supervisory directors may be appointed as a director of other companies but such companies are not related parties to the Investment Corporation. No fee is paid to executive directors. As for supervisory directors, the actual amount paid during the sixth fiscal period is described herein. Regarding the fees for the accounting auditor, the amount described herein is equivalent to the accounting audit fee for the sixth fiscal period and the accounting audit fee for issuing comfort letters for investment corporation bonds. (Note 3) Executive director Yoshifumi Matsumoto stepped down from his office on January 31, 2017 and Yugo Minemura was newly elected as an executive director at the 3rd general unitholders meeting held on the same day. (Note 4) Supervisory directors of the Investment Corporation were reelected at the 3rd general unitholders meeting held on January 31, (Note 5) At the 3rd general unitholders meeting held on January 31, 2017, Yasuyuki Tsuji was elected as a substitute executive director in preparation for cases where there is vacancy or a shortfall in the number of executive directors as provided by laws and regulation. b) Policy for Determining Dismissal or refusal of reappointment of auditors The Board of Directors of the Investment Corporation will determine whether to dismiss an auditor in accordance with the provisions of the Investment Trusts Act and will determine whether to refuse reappointment by comprehensively considering the quality of the auditing, 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 the Investment Corporation as the end of the sixth fiscal period are as follows; Names Asset manager Invesco Global Real Estate Asia Pacific Inc. Custodian General administrator (transfer agent) General administrator (operation) General administrator (accounting) General administrator (Financial agent) 3. Overview of Investment Assets (1) Status of Investment Type of Assets Entrusted Real Estate (Note 3) Major Metropolitan Areas (Note 4) Region Tokyo Metropolitan Area (Note 5) Trust Bank, Limited Mitsubishi UFJ Trust and Trust Bank, Limited Tokyo Kyodo Accounting Office Fifth Period As of October 31, 2016 Total Amount Held (millions of yen) (Note 1) Percentage to Total Assets (%) (Note 2) Sixth Fiscal Period As of April 30, 2017 Total Amount Percentage to Held Total Assets (millions of yen) (%) (Note 2) (Note 1) Tokyo 23 Wards 102, , Tokyo Metropolitan Area Outside the 23 Wards 28, , Other Major Metropolitan Areas 19, , Other Investment Target Regions 5, , Total Entrusted Real Estate 155, , Silent Partnership Equity Interest (Note 6) Deposits and Other Assets 16, , Total Assets 172, , (Note 1) Total amount held is based on the balance sheet carrying amount (book value less depreciation in the case of entrusted real estate). (Note 2) Percentage to total assets is rounded to one decimal place. (Note 3) All entrusted real estate is used primarily as offices. (Note 4) Major Metropolitan Areas refer to Tokyo Metropolitan Area, Osaka-shi, Nagoya-shi, and Fukuoka-shi. (Note 5) Tokyo Metropolitan Area refers to Tokyo, Yokohama-shi, Kawasaki-shi, Saitama-shi, and Chiba-shi. (Note 6) Silent Partnership Equity Interest mentioned herein is the total amount of Silent Partnership Equity Interests, which is operated by Godo Kaisha Condor Property

19 (2) Major Investment Assets The table below shows the Investment Corporation s major investment assets as of the end of the Sixth Fiscal Period. Name of Property Book Value (millions of Yen) Leasable Area (m 2 ) (Note 1) Leased Area (m 2 ) (Note 2) Occupancy Rate (%) (Note 3) Percentage to Total Real Estate Rental Revenues (%) (Note 4) Main Usage Ebisu Prime Square 25,413 17, , Office CS Tower/CS Tower Annex 13,812 19, , Office Queen s Square Yokohama 16,046 41, , Office Nagoya Prime Central Tower (Note 5) 14,379 17, , Not disclosed Office Tokyo Nissan Nishi-Gotanda Building 6,899 8, , Office ORTO Yokohama 12,983 23, , Office Nishi-Shinjuku KF Building 6,845 6, , Office Shinagawa Seaside East Tower 25,260 27, , Office Akiba CO Building 8,316 5, , Not disclosed Office Sun Towers Center Building 6,695 7, , Office Sendai Honcho Building 5,337 8, , Office Hakata Prime East 4,535 7, , Office Kinshicho Prime Tower 15,360 17, , Office Aqua Dojima East 1,953 3, , Office Total 163, , , (Note 1) Unless otherwise specified, Leasable Area is part of the total area that is available for lease in accordance with the relevant lease agreement or architectural drawing pertaining to each managed asset as of the end of the Sixth Fiscal Period that is the area equal to the Investment Corporation s interest. (Note 2) Unless otherwise specified, Leased Area represents the part of the total leased area stated in the relevant lease agreement pertaining to each managed asset as of the end of the Sixth Fiscal Period, which is the area equal to the Investment Corporation s interest. If a pass-through-type contract is concluded with respect to the managed asset, Leased Area represents the part of the total leased area according to the lease agreement with the end tenant which is the area equal to the Investment Corporation s interest, and if a fixed-type master lease agreement under which the Investment Corporation receives constant rent regardless of fluctuations in end tenant s rent, Leased Area represents the part of the leased area according to the master lease agreement that is the area equal to the Investment Corporation s interest. (Note 3) Occupancy Rate represents the ratio of leased area to leasable area pertaining to each managed asset as of the last day of the Sixth Fiscal Period unless otherwise specified, rounded to one decimal place. Total section shows the ratio of total leased area to total leasable area pertaining to each managed asset, rounded to one decimal place. (Note 4) Information is not disclosed for some properties because the tenant s authorization has not been obtained. (Note 5) Regarding Nagoya Prime Central Tower, the Investment Corporation holds sectional ownership as well as an interest of bylaw common elements and housing complex common elements, but the master lease agreement stipulates that the master lease company shall add together the rents for the entire office building and parking lot building (office building common areas) so that distributions can be received based exclusively on owned area percentage. Consequently, Leased Area and Leasable Area represent the part of each area of the entire building that is the area equal to the Investment Corporation s exclusively owned area percentage, and Total Number of Tenants and Occupancy Rate represent the total number of tenants and occupancy rate for the entire building. (Note 6) Leased Area and Occupancy Rate represent the leased area and occupancy rate pursuant to the lease agreement that is in effect as of the end of the Sixth Fiscal Period, and does not take into account situations where the lease agreement pertaining to an end tenant is to be cancelled, to be terminated or in the event of non-payment of rents. (3) Details of investment assets a) 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 the end of the Sixth Fiscal Period. Name of Property Location Holding method Ebisu Prime Square CS Tower/CS Tower Annex Queen s Square Yokohama Nagoya Prime Central Tower Tokyo Nissan Nishi-Gotanda Building ORTO Yokohama Nishi-Shinjuku KF Building Shinagawa Seaside East Tower Akiba CO Building Sun Towers Center Building Sendai Honcho Building Hakata Prime East Kinshicho Prime Tower Shibuya-ku, Tokyo Taito-ku, Tokyo Yokohama-shi, Kanagawa Nagoya-shi, Aichi Shinagawa-ku, Tokyo Yokohama-shi, Kanagawa Shinjuku-ku, Tokyo Shinagawa-ku Tokyo Chiyoda-ku, Tokyo Setagaya-ku, Tokyo Sendai-shi, Miyagi Fukuoka-shi, Fukuoka Koutou-ku, Tokyo Leasable Area (m 2 ) (Note 1) Book Value at End of Period (millions of yen) Assessed Value at End of Period (millions of yen) (Note 2) Trust beneficiary interest 17, ,413 27,538 Trust beneficiary interest 19, ,812 16,300 Trust beneficiary interest 41, ,046 18,200 Trust beneficiary interest 17, ,379 18,000 Trust beneficiary interest 8, ,899 7,340 Trust beneficiary interest 23, ,983 14,400 Trust beneficiary interest 6, ,845 7,030 Trust beneficiary interest 27, ,260 26,600 Trust beneficiary interest 5, ,316 9,330 Trust beneficiary interest 7, ,695 7,070 Trust beneficiary interest 8, ,337 5,200 Trust beneficiary interest 7, ,535 4,620 Trust beneficiary interest 17, ,360 15,600 Osaka-shi, Aqua Dojima East Trust beneficiary interest 3, ,953 2,010 Osaka Total 212, , ,238 (Note 1) Unless otherwise specified, Leasable Area is part of the total area that is available for lease in accordance with the relevant lease agreement or architectural drawing pertaining to each managed asset as of the end of the Sixth Fiscal Period that is the area equal to the Investment Corporation s interest. (Note 2) Assessed Value at End of Period represents the appraisal value shown on the appraisal report of property as of the valuation date of the last day of the Sixth Fiscal Period rounded to the nearest million yen

20 The table below shows the leasing status of the real estate and real estate related assets of the Investment Corporation as the end of the period. Name of Property Total Number of Tenants (Note 1) Fifth Fiscal Period From May 1, 2016 to October 31,2016 Occupancy Rate (%) (Note 2) Real Estate Rental Revenues (millions of yen) (Note 3) Percentage to Total Real Estate Rental Revenues (%) (Note 3) Total Number of Tenants (Note 1) Sixth Fiscal Period From November 1, 2016 to April 30,2017 Occupancy Rate (%) (Note 2) Real Estate Percentage to Rental Revenues Total Real Estate (millions of yen) Rental Revenues (Note 3) (%) (Note 3) Ebisu Prime Square Harumi Island Triton Square Office Tower Z (Note 4) Not disclosed Not disclosed - - Not disclosed Not disclosed CS Tower/CS Tower Annex Queen s Square Yokohama Nagoya Prime Central Tower Not disclosed Not disclosed Not disclosed Not disclosed Tokyo Nissan Nishi-Gotanda Building ORTO Yokohama Nishi-Shinjuku KF Building Shinagawa Seaside East Tower Akiba CO Building Not disclosed Not disclosed Not disclosed Not disclosed (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 the end of sixth fiscal period is as follows. category Transaction Amount described in transaction contract (thousands of yen) (Note 1) More than 1 year Market value (thousands of yen) (Note2) Transaction other than market place transaction Interest rate swap transaction 55,400,000 55,400,000-48,499 Total 55,400,000 55,400,000-48,499 (Note 1) The amount described in transaction contract regarding interest rate swap is based on estimated principal amount. (Note 2) Market value is evaluated by the value which was calculated by using the actual market interest rate of the counterparty of the contract. (Note 3Special accounting treatment is applied to the interest-rate swaps in accordance with the Accounting Standard for Financial Instruments (issued by the Accounting Standards Board of Japan(ASBJ) on March 10, 2008;ASBJ Statement No.10) and therefore interest rate swaps are not stated at fair value in the balance sheets. (5) Details of other asset The details of trust beneficiary interests which the Investment Corporation owns are described in above (3) and there are no other assets as the end of the sixth fiscal period. (6) Details of investment asset in overseas As of the end of the sixth fiscal period, there is no real estate investment asset located outside Japan. Sun Towers Center Building Sendai Honcho Building Hakata Prime East Kinshicho Prime Tower Aqua Dojima East Total , , (Note 1) Unless otherwise specified, Total Number of Tenants represents the number of tenants under the lease agreement indicated in the relevant lease agreement pertaining to each managed asset as of the end of the Sixth Fiscal Period. If pass-through-type master lease agreements under which rents from end tenants are received intact, in principle, (hereinafter referred to as pass-through-type master lease agreement(s) ) are concluded with respect to managed assets, Total Number of Tenants represents the total number of end tenants. Total Number of Tenants is calculated taking one tenant that leases multiple leased spaces as one tenant if the leased spaces are the same property and as multiple tenants if the leased spaces are spread across multiple properties. With regards to the numbers of tenants at Nagoya Prime Central Tower, please refer to note 5 in (2) Major investment asset. (Note 2) Occupancy Rate represents the ratio of leased area to leasable area pertaining to each managed asset as of the last day of the Sixth Fiscal Period unless otherwise specified, rounded to one decimal place. Total section shows the ratio of total leased area to total leasable area pertaining to each managed asset, rounded to one decimal place. (Note 3) Information is not disclosed for some properties because the tenant s authorization has not been obtained. (Note 4) Harumi Island Triton Square Office Tower Z was disposed on December 16, b) Details of renewable energy power generation facility c) Details of right to operate public facility public facilities d) Details of securities 4. Capital Expenditure (1) Future Plan for Capital Expenditure The following table summarizes the major capital expenditure plan associated with renovation scheduled as of the end of the Sixth Fiscal Period for real estate and entrusted real estate held by the Investment Corporation as of the said date. Estimated construction cost includes the amounts to be expensed for accounting purpose. Name of Property Location Purpose Planned Period Ebisu Prime Square CS Tower/CS Tower Annex Queen s Square Yokohama Tokyo Nissan Nishi-Gotanda Building Shibuya-ku, Tokyo Taito-ku, Tokyo Yokohama-shi, Kanagawa Shinagawa-ku, Tokyo Replacement of security system in Tower building (Period II) Renewal of rest rooms in Tower building Renewal of standard floors in Tower building Renewal of common spaces (1 floor) Repair of external wall (east side) Replacement of accounting system Replacement of automatic fire alarms in office area Replacement of broadcast facilities in hotel area Replacement of automatic fire alarms in retail area Replacement of automatic fire alarms in hotel area Replacement of broadcast facilities in office and retail area Replacement of floor tiles of outdoor structure on the ground floor (Period I) From January 2017 to October 2017 From July 2017 to October 2017 From July 2017 to October 2017 From May 2017 to July 2017 From June 2017 to September 2017 From April 2017 to March 2018 From June 2017 to March 2018 From June 2017 to March 2018 From April 2018 to March 2019 From April 2019 to March 2020 From April 2020 to March 2021 From August 2017 to October 2017 Total Amount Estimated Construction Cost (thousands of yen) (Note) Paid During the Period Total Amount Paid 27, , , , , , , , , , , ,

21 Name of Property Location Purpose Planned Period ORTO Yokohama Nishi-Shinjuku KF Building Kinshicho Prime Tower Yokohama-shi, Kanagawa Shinjuku-ku, Tokyo Koto-ku, Tokyo Replacement of air conditioning system Renewal of rest rooms and kitchens (2nd and 3rd floor) Replacement of steam pipes Construction of new entrance on the ground floor From May 2017 to October 2017 From May 2017 to October 2017 From May 2017 to October 2017 From May 2017 to October 2017 Total Amount Estimated Construction Cost (Thousands of Yen) (Note) Name of Property Location Paid During the Period Total Amount Paid 10, , , , (Note) Estimated Construction Cost represents the amount equal to the Investment Corporation s interest that was actually borne by the Investment Corporation. (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 Sixth Fiscal Period by the Investment Corporation that resulted in capital expenditures for the current period. Capital expenditures for the current period amounted to 648,489 thousand yen. The total construction costs amounted to 811,150 thousand yen, including repair and maintenance of 162,661 thousand yen that was accounted for as an expense in the current period. Name of Property Ebisu Prime Square Queen s Square Yokohama Tokyo Nissan Nishi-Gotanda Building ORTO Yokohama Nishi-Shinjuku KF Building Location Purpose Period Shibuya-ku, Tokyo Yokohama-shi, Kanagawa Shinagawa-ku, Tokyo Yokohama-shi, Kanagawa Shinjuku-ku, Tokyo Replacement of air-conditioning system in common spaces (Period II) Replacement of security system in Tower building (Period I) Replacement of central management system Replacement of central management system for equipment information Replacement of high pressure electric power receiving facilities Replacement of parts of co-generation system Renewal of rest rooms (4th, 5th, and 6th floor) and kitchens (4th and 6th floor) From June 2016 to January 2017 From January 2017 to March 2017 From September 2016 to March 2017 From February 2015 to February 2017 From December 2016 to January 2017 From November 2016 to December 2016 From January 2017 to April 2017 Construction Costs (thousands of yen) (Note) 12,644 14,376 38, ,045 Sendai Honcho Sendai-shi, Renewal of common spaces (Entrance From October 2016 to 124,800 Building Miyagi lobby and 10 standard floors) January 2017 (Note) Construction Costs represents the amount equal to the Investment Corporation s interest that was actually borne by the Investment Corporation. 16,139 11,000 17,826 (3) Reserved Amount for Long-Term Repairs Plan The Investment Corporation formulates long-term repair plans for each real estate and entrusted real estate, and allocates a portion of its cash flows generated during the period to a reserve for repairs to meet large-scale repair projects over the medium-to-long terms. The following amount has been transferred to the reserve from period cash flows. (millions of Yen) Reserve at the beginning of the period Reserve for the fiscal period under review Reversal of reserve for the fiscal period under review Reserve brought forward to the next period Second Fiscal Period November 1, 2014 through April 30, Expenses and Liabilities (1) Details of expenses related to asset management Item Asset Management Fee (Note) Fee for general administrator and custodian Third Fiscal Period May 1, 2015 through October 31, 2015 Fourth Fiscal Period November 1, 2015 through April 30, 2016 Fifth Fiscal Period May 1, 2016 through October 31, 2016 Sixth Fiscal Period November 1, 2016 thorough April 30, Fifth Fiscal Period From May 1, 2016 to October 31,2016 (thousands of Yen) Sixth Fiscal Period From November 1, 2016 to April 30, , ,620 16,472 17,618 Director s Compensation 4,800 3,900 Other expenses 63, ,850 Total 494, ,989 (Note) Asset Management Fee mentioned above includes the fee regarding asset disposition and acquisition (493,590 thousand yen was recorded for the fifth fiscal period and 221,050 thousand yen was recorded for the sixth fiscal period) 38 39

22 (2) Details of the borrowings Details of the borrowings as the end of the sixth fiscal period are as follows. Classification Lender Date of the borrowing Balance at the beginning of the period (millions of yen) Balance at the end of the period (millions of yen) Average interest rate (%) due date Method Use Security Classification Short-term Loans The Bank of Lender Date of the borrowing Tokyo-Mitsubishi UFJ, Ltd. April 28, 2016 Balance at the beginning of the period (millions of yen) Balance at the end of the period (millions of yen) 1,000-1,000 - Average interest rate (%) due date (Note1 Method Bullet Use (Note6 Subtotal 2, Security Non- guaranteed The Bank of Tokyo-Mitsubishi UFJ, Ltd. September 30, ,000 3, ,000 3,000 Mizuho Bank, Ltd. 1,500 1,500 September 30, Trust ,500 1,500 Bank, Limited (Note 2) Resona Bank, Ltd. 1,500 1, (Note4) June 6, 2018 Bullet (Note5 Nonguaranteed The Bank of Tokyo-Mitsubishi UFJ, Ltd. June 6, ,500 2, Development Bank of Japan Inc. 1,500 1,500 Current Portion of Long-term Loans June 6, 2014 (Note 2) 2,500 2,500 Mizuho Bank, Ltd. 2,000 2,000 Trust Bank, Limited 2,000 2,000 Resona Bank, Ltd. 2,000 2,000 Development Bank of Japan Inc. 2,000 2, June 6, 2017 Bullet (Note5 Non- guaranteed Long-term Loans The Bank of Tokyo-Mitsubishi UFJ, Ltd. June 6, ,000 4, ,000 4,000 Mizuho Bank, Ltd. 1,000 1,000 June 6, 2014 Trust (Note 2) 1,000 1,000 Bank, Limited (Note4) June 6, 2019 Bullet (Note5 Nonguaranteed - 3,100 January 20, Mizuho Bank, Ltd. - 1, The Bank of Tokyo-Mitsubishi UFJ, Ltd January 31, 2018 Bullet (Note5 Non- guaranteed Subtotal 13,000 18, Resona Bank, Ltd. 1,000 1,000 Development Bank of Japan Inc. The Bank of Tokyo-Mitsubishi UFJ, Ltd. 1,000 1,000 June 1, ,800 3, ,800 3,800 Trust June 1, ,000 1,000 Bank, Limited (Note 2) Resona Bank, Ltd. 1,000 1, (Note4) May 31, 2020 Bullet (Note7 Nonguaranteed Mitsubishi UFJ Trust and 1,000 1,000 June 1, (Note 3) Mizuho Bank, Ltd November 29, 2019 Bullet (Note5 Non- guaranteed 40 41

23 Classification Lender Trust Bank, Limited Date of the borrowing Balance at the beginning of the period (millions of yen) Balance at the end of the period (millions of yen) 2,300 2,300 1,400 1,400 Average interest rate (%) due date Method Use Security (Note 1) Repayment was made on April 28, (Note 2) Borrowings from Syndicate Loan with The Bank of Tokyo-Mitsubishi UFJ, Ltd. and as arranger. (Note 3) Borrowings from Syndicate Loan with as arranger and Mizuho Bank, Ltd. as co-arranger. (Note 4) Borrowings for which interest rate swap transactions were implemented in order to hedge the interest rate volatility risk. The interest rates are effectively fixed through interest rate swap agreement. (Note 5) All borrowings were used to fund acquisition of trust beneficiary interests in real estate and related expenses. (Note 6) All borrowings were used to refinance the short-term loans of 2,000 million yen that were due for repayment on April 28, (Note 7) All borrowings were used to fund acquisition of trust beneficiary interests in real estate and related expenses and refinance the short-term loans of 3,200 million yen that were due for repayment on June 5, 2015, and refinance the short-term loans of 5,000 million yen on May 11, (Note 8) All borrowings were used to refinance the short-term loans of 6,600 million yen that were due for repayment on June 30, Long-term Loans Resona Bank, Ltd. 1,400 1,400 Mizuho Bank, Ltd. 2,400 2,400 Mitsubishi UFJ Trust June 1, and (Note 3) Shinsei Bank, Ltd. 1,250 1,250 Aozora Bank, Ltd. 1,000 1,000 The Bank of Fukuoka 1,000 1,000 ORIX Bank Corporation The Nishi-nippon City Bank, Ltd. 2,550 2,550 Trust 1,400 1,400 Bank, Limited Resona Bank, Ltd. 1,400 1, (Note4) November 29, 2019 Bullet (Note5 Nonguaranteed (3) Details of investment corporation bonds The following table lists bond series, issue amounts, interest rates, issue dates, redemption dates and remarks with respect to each investment corporation bond issuance we have conducted under such debt registration statement. Name First Series Unsecured Investment Corporation Bonds Second Series Unsecured Investment Corporation Bonds Issue date April 20, 2017 April 20, 2017 Balance at the beginning of the period (millions of yen) Balance at the end of the period (millions of yen) Coupon rate - 1, % - 1, % Redemption date April 20, 2022 April 19, 2024 Redemption Method Bullet Bullet Use of proceeds (Note1) (Note1) Security Unsecure d/ Nonguarante ed Note2 Unsecure d/ Nonguarante ed (Note2 Total - - 3, Mizuho Bank, Ltd. 2,500 2,500 Mitsubishi UFJ Trust June 1, and (Note 3) Shinsei Bank, Ltd. 1,000 1,000 Aozora Bank, Ltd. 1,000 1,000 The Bank of Fukuoka 1,000 1, (Note4) May 31, 2021 Bullet (Note5 Nonguaranteed (Note 1) All investment corporation bonds were used as the funds for repayment of the short-term loans of 2,000 million yen that were due for repayment on April 28, 2017 and for acquisition of trust beneficiary interests in real estate (Aqua Dojima East) and related expenses of 1,987 million yen. (Note 2) This investment corporation bonds is equipped with pari passu clause among special investment corporation bonds. (4) Details of short-term investment corporation bonds Not applicable ORIX Bank Corporation The Nishi-nippon City Bank, Ltd. (5) New unit acquisition rights Not applicable 2,000 2,000 Trust June 30, 1,000 1,000 Bank, Limited 2016 Resona Bank, Ltd. 1,000 1,000 (Note 3) Mitsubishi UFJ Trust 1,000 1,000 and (Note4) November 30, 2020 Bullet (Note8) Non- guaranteed Mizuho Bank, Ltd. 1,600 1,600 Subtotal 67,100 67, Total 82,100 85,

24 6. Status of purchase and disposal of assets during the sixth fiscal period (1) Purchase and disposals of real estate and etc., asset backed securities, etc., infrastructure asset, etc., infrastructure related assets Acquisition Disposition Name of the property Acquisition price Disposition price Profit/Loss Date of acquisition Date of disposition Book value (millions of yen) (millions of yen) (millions of yen) Harumi Island Triton Square 10, December 16, Office Tower Z (Note) Kinshicho Prime Tower January 20, , Aqua Dojima East 1,910 March 31, 2017 (Note) Total 17,055 10, (Note) Acquisition price and Disposition price mentioned herein are the price of asset described in each related purchase and sale agreement. Consumption tax and cost regarding acquisition or disposition are not included. (2) Purchase and disposals of other assets Not applicable Assets other than real estate and etc., asset backed securities, etc., infrastructure asset, etc., infrastructure related assets are primarily consisted of bank deposit and bank deposit of trust account. (4) Transaction involving related parties Not applicable (5) Transactions with Asset Management Company regarding subsidiary business managed by such asset management companies. As the end of sixth fiscal period, the Asset Management Company conducts type II Financial Instruments Business and 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 Balance Sheets, Statements of Income, Statements of Changes in Net Assets, Statements of Cash Distributions and 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 (3) Investigation of the appraisal value of price of specified assets a) Real estate assets etc. Acquisition or disposition Name of the property Transaction date Asset type Acquisition price or disposition price (millions of yen) Appraisal value (millions of yen) Appraiser Acquisition Kinshicho Prime Tower January 20, 2017 Trust beneficiary The Tanizawa Sg Appraisal October 31, 15,145 15,600 interest Co., Ltd Aqua Dojima East March 31, 2017 Trust beneficiary Morii Appraisal & Investment February 1,910 2,010 interest Consulting, Inc. 28, 2017 Disposition Harumi Island Triton December 13, Trust beneficiary October 31, 10,100 10,900 Japan Real Estate Institute Square Office Tower Z 2017 interest 2016 Total 27,155 28, (Note 1) Acquisition price and Disposition price mentioned herein are the price of asset described in each related purchase and sale agreement. Consumption tax and cost regarding acquisition or disposition are not included. (Note 2) The appraisals of the above-mentioned real estate were conducted by applying Real Estate Appraisal Standard Section 3: Appraisals Regarding Prices of Real Estate for Securitization. b) Investment securities Not applicable c) Others Not applicable As of 8. Others (1) Notices a) General unitholders meeting The 3rd general unitholders meeting was held on January 31, Details of the proposals which were passed at the meeting are as follows. Approved items Detail Amendment of the Articles of Incorporation The proposal regarding the amendment of the Articles of Incorporation was passed. The details are as follows (i) Once the Investment Corporation specifies certain date of convocation of the general unitholders meeting in the Articles of Incorporation, it is allowed to omit the public notice in the procedures for such convocation under the Investment Trust Act and the Articles of Incorporation. Currently, it is stated that certain date is December 25, 2017 and the Investment Corporation changes it to December 25, In addition, a provision relating to the record date for determining which unitholders may exercise voting rights at the general unitholders meeting will be amended. (ii) The investment target of the Investment Corporation is mainly office buildings in metropolitan areas such as the Tokyo area. Considering the current real estate market situation, the Investment Corporation stays focus on investment in large scale office buildings in metropolitan areas, but plans to broaden its investable assets to enable selectively invest in other office buildings, retail facilities, residential properties, hotels, logistics and other (including the complex of these assets). The corresponding provisions are amended. (iii) To ensure the possible option to outsource the operation of the assets under management of the Investment Corporation, the corresponding provisions are amended. In line with the outsourcings, the corresponding provisions regarding the calculation method of Asset Management Fees (2) are amended. As the date hereof, the Investment Corporation does not expect to outsource the operation of any assets under management or any assets considering acquisition. (iv) A new provision is added to clarify that it is allowed for the Investment Corporation to lease real estate and sublease it to the third party. (v) To conform the definition of distributable amount which is described in the rules of the Investment Trusts Association, Japan the corresponding provisions are amended. (vi) Considering the current situation of economic environment, real estate market, real estate leasing market, J-REIT market, the corresponding provisions are made to clarify the standard of distribution in excess of amount of profit. (vii) Other than mentioned above, respective amendments will be made in line with necessary changes in expressions, clarification, and revision of wording

25 Election of one Yugo Minemura was elected as an executive director. executive director Election of one Yasuyuki Tsuji was elected as a substitute executive director. substitute executive director Election of two Takashi Shimokado and Eiji Kawasaki were elected as supervisory directors. supervisory directors b) Board of the directors of the Investment Corporation Details of major agreements that the Board of Directors of the Investment Corporation approved to conclude and modify during the sixth fiscal period are as follows. Date of approval Approved items Details January 27, 2017 Execution of the second amendment to the Asset Management Agreement In accordance with the amendment to the Articles of Incorporation which was authorized on January 31, 2017, the articles regarding asset management fees were revised. February 27, 2017 Execution of the investment corporation bond underwriting contract With regards to issuance of investment corporation bonds which was approved at the meeting of the board of directors held on the same day, the Investment Corporation appointed SMBC Nikko Securities Inc., Nomura Securities Co., Ltd. and Mizuho Securities Co., Ltd. and entrusted operations regarding offering of investment corporation bonds. February 27, 2017 Execution of the financial agent agreement With regards to issuance of investment corporation bonds which was approved at the meeting of the board of directors held on the same day, the Investment Corporation appointed as a financial agent and entrusted operations regarding administrative work related to issuing investment corporation bonds, the payment of interest or redemption money to investment corporation bondholders, the preparation and keeping of the registry and other administrative work, the reception of offers from bondholders and other works related to mentioned above. Financial Statements Balance Sheets Statements of Income Statements of Changes in Net Assets Statements of Cash Distributions Statements of Cash Flows Notes to Financial Statements Independent Auditor s Report (2) Disclosure regarding in-house investment trust beneficiary interests Not applicable (3) Disclosure regarding affiliated foreign real estate companies and real estate owned by them Not applicable (4) Rounding method for amount of money and ratios described in this document Unless otherwise specified, amount of money are rounded down to the nearest units and ratios are rounded off to one decimal place

26 Balance Sheets Fifth Fiscal Period As of October 31, 2016 Sixth Fiscal Period As of April 30, 2017 ASSETS Current assets: Cash and cash deposits 3,711,863 4,108,833 Entrusted cash and entrusted cash deposits 10,264,404 10,230,271 Account receivables - operating 438, ,022 Consumption tax receivable 648, ,882 Income taxes receivable 1,386 2,251 Short-term prepaid expenses 270, ,269 Deferred tax assets 21 6 Other current assets 1,518 5,867 Total current assets 15,336,173 15,184,404 Fixed assets: Property and equipment Entrusted buildings 40,348,924 41,543,129 Accumulated depreciation (2,445,998) (2,974,670) Entrusted buildings, net 37,902,926 38,568,458 Entrusted building improvements 370, ,568 Accumulated depreciation (70,988) (75,407) Entrusted building improvements, net 299, ,161 Entrusted machineries 20,386 19,735 Accumulated depreciation (2,362) (2,935) Entrusted machineries, net 18,024 16,800 Entrusted furniture and equipment 62,847 81,622 Accumulated depreciation (12,451) (18,341) Entrusted furniture and equipment, net 50,396 63,280 Entrusted land 117,507, ,928,377 Entrusted construction in progress 20,525 21,603 Total property and equipment 155,798, ,841,681 Intangible assets: Other intangible assets 4,738 6,009 Total intangible assets 4,738 6,009 Investment and other assets: Investment in securities 102,531 - Security deposits and guarantee deposits 10,101 10,088 Long-term prepaid expenses 463, ,660 Derivative assets 58,496 79,972 Other investments 430, ,971 Total investment and other assets 1,064, ,693 Total fixed assets 156,868, ,686,384 Differed assets: Investment corporation bond issuance expenses - 23,823 Total differed assets - 23,823 TOTAL ASSETS 172,204, ,894,611 The accompanying notes form an integral part of these financial statements. The accompanying notes form an integral part of these financial statements. Fifth Fiscal Period As of October 31, 2016 Sixth Fiscal Period As of April 30, 2017 LIABILITIES Current liabilities: Accounts payable - operating 563, ,428 Short-term loans 2,000,000 - Current portion of long-term loans 13,000,000 18,500,000 Accounts payable - other 332, ,735 Accrued expenses 82,475 82,938 Income tax payable Rent received in advance 678, ,832 Other current liabilities 151, ,928 Total current liabilities 16,809,237 20,122,508 Non-current liabilities: Investment corporation bonds - 3,400,000 Long-term loans 67,100,000 67,100,000 Entrusted tenant leasehold and security deposits 7,093,376 7,311,222 Deferred tax liabilities 18,478 25,263 Total non-current liabilities 74,211,855 77,836,485 TOTAL LIABILITIES 91,021,093 97,958,994 NET ASSETS Unitholders' equity: Unitholders' equity 78,913,658 78,913,658 Surplus: Retained earnings 2,229,474 2,967,250 Total surplus 2,229,474 2,967,250 Total Unitholders' equity 81,143,132 81,880,908 Valuation and translation adjustments: Deferred income on hedges 40,017 54,708 Total valuation and translation adjustments 40,017 54,708 TOTAL NET ASSETS *1 81,183,149 *1 81,935,617 TOTAL LIABILITIES AND NET ASSETS 172,204, ,894,

27 Statements of Income Fifth Fiscal Period From May 1, 2016 to October 31, 2016 Sixth Fiscal Period From November 1, 2016 to April 30, 2017 Operating revenues Rental revenues *1 5,151,585 *1 5,239,918 Other rental revenues *1 527,258 *1 515,660 Gain on sales of real estate properties *2 - *2 784,581 Dividend income from investments in securities 5,470 3,142 Total operating revenues 5,684,314 6,543,304 Operating expenses Property-related expenses *1 2,592,499 *1 2,583,389 Asset management fees 410, ,620 General administration and Custodian fees 16,472 17,618 Compensation for directors 4,800 3,900 Other operating expenses 63, ,850 Total operating expenses 3,087,162 3,218,378 Operating income 2,597,151 3,324,925 Non-operating revenues Interest income Interest income on tax refund - 4,349 Other non-operating revenues Total non-operating revenues 138 4,632 Non-operating expenses Interest expense 242, ,167 Interest expense on investment corporation bonds Amortization of investment corporation bonds issuance costs Public offering costs 25,054 - Financing costs 97, ,694 Other non-operating expenses 1,440 1,545 Total non-operating expenses 367, ,134 Ordinary income 2,230,238 2,967,423 Net income before income taxes 2,230,238 2,967,423 Current income taxes 1, Deferred tax expenses (9) 15 Total income taxes 1, Net income 2,229,196 2,966,666 Retained earnings at beginning of period Retained earnings at the end of period 2,229,474 2,967,250 The accompanying notes form an integral part of these financial statements. Statements of Changes in Net Assets Fifth Fiscal Period: From May 1, 2016 to October 31, 2016 Valuation and Unitholders' Equity translation adjustments Surplus Deferred Total Total Net Total income on valuation Unitholders' Assets Unitholders' hedges Equity Retained Total and Earnings Surplus Equity translation adjustments Balance at the beginning of the period 53,891,022 1,462,617 1,462,617 55,353, ,353,640 Changes during the period: Issuance of new investment units 25,022, ,022, ,022,635 Cash distribution declared - (1,462,340) (1,462,340) (1,462,340) - - (1,462,340) Net income - 2,229,196 2,229,196 2,229, ,229,196 Net changes of items other than unitholders' equity ,017 40,017 40,017 Total changes during the period 25,022, , ,856 25,789,491 40,017 40,017 25,829,509 Balance at the end of the period *1 78,913,658 2,229,474 2,229,474 81,143,132 40,017 40,017 81,183,149 Sixth Fiscal Period: From November 1, 2016 to April 30, 2017 Valuation and Unitholders' Equity translation adjustments Surplus Deferred Total Total Net Total income on valuation Unitholders' Assets Unitholders' hedges Equity Retained Total and Earnings Surplus Equity translation adjustments Balance at the beginning of the period 78,913,658 2,229,474 2,229,474 81,143,132 40,017 40,017 81,183,149 Changes during the period: Cash distribution declared - (2,228,889) (2,228,889) (2,228,889) - - (2,228,889) Net income - 2,966,666 2,966,666 2,966, ,966,666 Net changes of items other than unitholders' equity ,691 14,691 14,691 Total changes during the period - 737, , ,776 14,691 14, ,467 Balance at the end of the period *1 78,913,658 The accompanying notes form an integral part of these financial statements. 2,967,250 2,967,250 81,880,908 54,708 54,708 81,935,

28 Statements of Cash Distributions Fifth Fiscal Period From May 1, 2016 to October 31, 2016 Sixth Fiscal Period From November 1, 2016 to April 30, 2017 I. Unappropriated retained earnings 2,229,474,086 yen 2,967,250,139yen II. Distributions 2,228,889,951 yen 2,966,959,986yen (Distributions per unit) 2,733 yen 3,638yen III. Retained earnings carried forward 584,135 yen 290,153yen Calculation method of distribution amount Pursuant to the distribution policy as defined in Article 35, Paragraph 1 of the Articles of Incorporation of the Investment Corporation, the amount of distributions shall be the amount that does not exceed the amount of profits but exceeds 90% of the distributable profit as defined in Article of the Act on Special Measures Concerning Taxation. Based on the distribution policy, the Investment Corporation declared a distribution amount of 2,228,889,951 yen, which does not exceed retained earnings and is the greatest value among integral multiples of 815,547 units, which is the number of investment units issued. Note that the Investment Corporation has not paid any portion of the amount that exceeds the profits defined in Article 35, Paragraph 2 of the Articles of Incorporation of the Investment Corporation. The accompanying notes form an integral part of these financial statements. Pursuant to the distribution policy as defined in Article 35, Paragraph 1 of the Articles of Incorporation of the Investment Corporation, the amount of distributions shall be the amount that does not exceed the amount of profits but exceeds 90% of the distributable profit as defined in Article of the Act on Special Measures Concerning Taxation. Based on the distribution policy, the Investment Corporation declared a distribution amount of 2,966,959,986 yen, which does not exceed retained earnings and is the greatest value among integral multiples of 815,547 units, which is the number of investment units issued. Note that the Investment Corporation has not paid any portion of the amount that exceeds the profits defined in Article 35, Paragraph 2 of the Articles of Incorporation of the Investment Corporation. Statements of Cash Flows Fifth Fiscal Period From May 1, 2016 to October 31, 2016 Sixth Fiscal Period From November 1, 2016 to April 30, 2017 Cash flows from operating activities: Net income before income taxes 2,230,238 2,967,423 Depreciation expenses 711, ,532 Amortization of investment corporation bonds issuance costs Public offering costs 25,054 - Financing costs 97, ,694 Interest income (38) (44) Interest expense 242, ,550 (Increase) decrease in account receivables - operating (102,124) 36,046 (Increase) decrease in consumption tax receivable (648,094) 464,212 (Increase) decrease in income taxes receivable (1,386) (864) (Increase) decrease in short-term prepaid expenses (23,066) 6,896 (Increase) decrease in long-term prepaid expenses (17,792) (5,521) (Increase) decrease in other current assets 34,830 62,225 Increase (decrease) in accounts payable - operating 171,753 (73,673) Increase (decrease) in accounts payable - other 78,229 53,795 Increase (decrease) in consumption tax payable (198,012) - Increase (decrease) in rental received in advance 426,505 (84,736) Decrease in property and equipment held in trust due to sale - 9,190,016 Increase (decrease) in other current liabilities 148,091 9,724 Others 1, Sub-total 3,177,058 13,740,523 Interest received Interest expenses paid (219,206) (252,088) Income taxes paid (766) (738) Net cash provided by (used in) operating activities 2,957,123 13,487,742 Cash flows from Investing activities: Purchase of entrusted property and equipment (50,526,106) (18,080,298) s for purchases of intangible assets - (2,277) Redemption of investment in securities 304, ,531 Purchase of investment in securities (102,535) - of entrusted leasehold and security deposits (101) 12 Net cash provided by (used in) investing activities (50,324,382) (17,981,032) Cash flows from Financing activities: Repayments of short-term borrowings (6,600,000) (2,000,000) Proceeds from long-term borrowings 32,500,000 5,500,000 of financing costs (402,387) (11,000) Proceeds from issuance of investment corporation bonds - 3,400,000 of investment corporation bonds issuance costs - (24,167) Proceeds from issuance of investment units 25,022,635 - of investment units issuance costs (25,054) - Distribution payments (1,461,578) (2,226,551) Net cash provided by (used in) financing activities 49,033,614 4,638,280 Net change in cash and cash equivalents 1,666, ,990 Cash and cash equivalents at the beginning of period 5,216,535 6,882,891 Cash and cash equivalents at the end of period *1 6,882,891 *1 7,027,882 The accompanying notes form an integral part of these financial statements

29 Notes to Financial Statements 1. Organization (the Investment Corporation ) is a real estate investment trust mainly investing in office properties. The Investment Corporation was established on February 27, 2014, with Invesco Global Real Estate Asia Pacific, Inc. as the organizer under the Act on Investment Trusts and Investment Corporations of Japan (the Investment Trust Act ) and registered with the Kanto Local Finance Bureau on March 20, On June 5, 2014, the Investment Corporation was listed on the real estate investment trust securities market of Tokyo Stock Exchange. During the Sixth fiscal period, the Investment Corporation disposed trust beneficiary interests of Harumi Island Triton Square Office Tower Z (Chuo-ku, Tokyo, Disposition price: 10,100 million yen) on December 16, Also, the Investment Corporation acquired trust beneficiary interests in two properties during the Sixth fiscal period as follows: Kinshicho Prime Tower (Koutou-ku, Acquisition price: 15,145 million yen) on January 20, 2017 and Aqua Dojima East (Osaka-shi, Osaka, Acquisition price: 1,910 million yen) on March 31, As of April 30, 2017, the Investment Corporation held 14 properties, and total acquisition cost of which was 161,962 million yen. 2. Basis of Presentation The Investment Corporation maintains its books of accounts in accordance with the provisions set forth in the Investment Trust Act, the Financial Instruments and Exchange Act of Japan and other related accounting regulations and in conformity with accounting principles generally accepted in Japan ( Japanese GAAP ), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards or accounting principles generally accepted in the United States of America. The accompanying financial statements have been compiled from the financial statements of the Investment Corporation, which were in accordance with Japanese GAAP and were filed with the Director of the Kanto Local Finance Bureau as required by the Financial Instruments and Exchange Act of Japan. In preparing the accompanying financial statements, certain rearrangements have been made to the financial statements issued domestically in order to present them in a form that is more familiar to readers outside Japan. The accompanying financial statements are stated in Japanese yen, the currency of the country in which the Investment Corporation is incorporated and operates. As permitted by the regulation under the Financial Instruments and Exchange Act of Japan, amounts of less than one thousand yen have been omitted. As a result, the totals shown in the accompanying financial statements in yen do not necessarily agree with the sums of the individual amounts. The Investment Corporation does not prepare consolidated financial statements. The Investment Corporation has sixmonth fiscal periods ending April 30 and October 31 of each calendar year. 3. Summary of Significant Accounting Policies 1. Basis and Method of Valuation of Assets 2. Method of Depreciation of Fixed Assets 3. Accounting Method for (1) Public offering costs: Securities Other securities Non-marketable securities The cost method based on the moving-average method is applied to securities with no market price available. The equity method is applied to an investment in silent partnership. The net income from the silent partnership is allocated to the Silent Partnership Equity Interest owned by the Investment Corporation. (1) Property and equipment The straight-line method is used. The useful lives of property and equipment are listed below. Entrusted buildings 2 to 46 years Entrusted building improvements 4 to 20 years Entrusted machineries 2 to 17 years Entrusted furniture and equipment 4 to 15 years (2) Intangible fixed assets The straight-line method is used. (3) Long-term prepaid expenses The straight-line method is used. Deferred Assets All public offering costs are expensed when incurred. (2) Investment corporation bonds issuance costs: Bond issuance costs are amortized by applying the straight-line method for the entire redemption period. 4. Recognition of Revenue and Expenses 5. Method of Hedge Accounting 6. Scope of Cash and Cash Equivalents in the Statements of Cash Flows 7. Other Significant Information for Preparation of Financial Statements 4. Net Assets Accounting treatment of fixed asset tax and other property-related taxes: For fixed asset tax, city planning tax, depreciable asset tax, etc., the amount of tax levied on real properties held corresponds to the accounting period and is recorded as property-related expenses. The amount equivalent to fixed asset tax to be paid by the Investment Corporation in the first year of acquisition relating to the real properties or trust beneficiary interests in real estate is not recorded as an expense, but included in the acquisition cost for the related properties. The fixed asset tax included in acquisition costs for properties acquired during the Sixth Fiscal Period was 95,606 thousand yen. (1) Method of hedge accounting: Deferred hedge accounting is generally used for interest rate swaps. Special treatment is applied for interest rate swaps which satisfy the requirements for special treatment. (2) Hedge instruments and hedged items: Hedge instruments: Interest rate swap transactions Hedged items: Interest on borrowings (3) Hedging policy: The Investment Corporation conducts derivative transactions for the purpose of hedging risks provided for in the Articles of Incorporation of the Investment Corporation pursuant to the regulations that stipulate the basic policy of risk management. (4) Method of assessing hedge effectiveness: The effectiveness of hedging is measured by comparing the cumulative total cash flow fluctuation of the hedged items and that of the hedging instruments and verifying the ratio of differences in the amount of changes from both the hedged items and the hedging instruments. The assessment of hedge effectiveness is omitted for the interest rate swaps which satisfy the requirements for special treatment. Cash and cash equivalents in the statements of cash flows include cash on hand, entrusted cash, demand deposits, entrusted cash deposits, and highly liquid short-term investments that are readily convertible, bear little risk in price fluctuations, and mature within three months from the date of acquisition. (1) Accounting policy for trust beneficiary interests in real estate: With regard to trust beneficiary interests in real estate, all assets and liabilities as well as all revenue and expense items associated with all entrusted assets are accounted for under the respective account item of the balance sheet and statements of income and retained earnings. Of the entrusted assets accounted for under the respective account item, the following significant items are separately indicated on the balance sheet: i) Entrusted cash and entrusted cash deposits; ii) Entrusted buildings, entrusted building improvements, entrusted machineries, entrusted furniture and equipment, entrusted land and entrusted construction in progress; and iii) Entrusted tenant leasehold and security deposits. (2) Accounting policy for consumption tax: All amounts in the accompanying financial statements exclude consumption tax. *1. Minimum net assets as provided in Article 67, paragraph 4, of the Act on Investment Trusts and Investment Corporations Fifth Fiscal Period As of October 31, 2016 Sixth Fiscal Period As of April 30, 2017 Statutory Minimum Net Assets under Article 67 50,000 50,

30 5. Breakdown of Rental and Other Operating Revenues and Property-Related Expenses *1. Breakdown of net operating income (loss) A. Rental and other operating revenues: Fifth Fiscal Period From May 1, 2016 to October 31, 2016 (Unit: Thousands of yen) Sixth Fiscal Period From November 1, 2016 to April 30, 2017 Rental revenues Rental revenues 4,019,495 4,016,686 Common area service fee 850, ,308 Other rental revenues 281, ,923 Total rental revenues 5,151,585 5,239,918 Other rental-related revenues Other rental-related revenues 527, ,660 Total other rental-related revenues 527, ,660 Total rental and other related revenues 5,678,843 5,755,579 B. Property-related expenses: Property management fees 675, ,776 Utility expenses 601, ,495 Insurance 15,420 14,521 Repair and maintenance 134, ,661 Other taxes 395, ,590 Depreciation expenses 710, ,526 Other rental-related expenses 59,544 66,817 Total property-related expenses 2,592,499 2,583,389 C. Net operating income (A-B) 3,086,344 3,172, Breakdown of Gain on Sales of Real Estate Properties *2. Breakdown of gain on sales of real estate properties Fifth Fiscal Period (From May 1, 2016 to October 31, 2016) Sixth Fiscal Period (From November 1, 2016 to April 30, 2017) (Unit: Thousands of yen) Harumi Island Triton Square Office Tower Z Revenue from sales of real estate properties 10,100,000 Cost of property 9,190,016 Other related expenses 125,401 Gain on sales of real estate properties 784, Unitholders Equity *1. Total number of authorized investment units and total number of investment units issued Fifth Fiscal Period From May 1, 2016 to October 31, 2016 Sixth Fiscal Period From November 1, 2016 to April 30, 2017 Total number of authorized investment units 10,000,000 units 10,000,000 units Total number of investment units issued 815,547 units 815,547 units 8. Cash and Cash Equivalents *1. Reconciliation between cash and cash equivalents at end of period and relevant amount on the balance sheets (Units: Thousands of Yen) Fifth Fiscal Period From May 1, 2016 to October 31, 2016 Sixth Fiscal Period From November 1, 2016 to April 30, 2017 Cash and deposits 3,711,863 4,108,833 Entrusted cash and entrusted cash deposits 10,264,404 10,230,271 Entrusted cash deposits with restrictions (Note) (7,093,376) (7,311,222) Cash and cash equivalents 6,882,891 7,027,882 (Note) Entrusted cash deposits with restrictions are retained for the refund of tenants leasehold and security deposits. 9. Leases The Company leases its properties to tenants. The future minimum lease payments to be received under noncancelable operating leases of properties as of October 31, 2016 and April 30, 2017 are as follows: (Units: Thousands of Yen) Fifth Fiscal Period As of October 31, 2016 Sixth Fiscal Period As of April 30, 2017 Due within 1 year 2,147,214 2,130,672 Due after 1 year 1,813,295 1,800,793 Total 3,960,510 3,931, Financial Instruments (1) Qualitative information about financial instruments (a) Policy for financial instruments The Investment Corporation s basic policy is to conduct stable and sound financial management to contribute to the continuous growth of assets under management and their efficient and appropriate management. The Investment Corporation procures funds by borrowing, issuing investment corporation bonds (including shortterm investment corporation bonds; same shall apply hereinafter), and issuing investment units for the purpose of acquiring assets, paying repair, maintenance and other management expenses, making distributions, and funding the Investment Corporation s operations including necessary working capital and debt repayments. Temporary surpluses and entrusted tenant leasehold and security deposits are also invested in bank deposits considering the safety of the investment and convertibility into cash. Derivative transactions are carried out only to hedge the risk of fluctuations in interest rates associated with borrowings and other risks

31 (b) Content and risks of financial instruments and risk management system Investment in the equity interest in the silent partnership are exposed to credit risks of the issuer of the silent partnership as well as to general price risks of the overall real estate market. The Investment Corporation tries to mitigate such risks by monitoring the financial status of the issuer and environment of overall real estate market. Proceeds from borrowings and issuing investment corporation bonds are received mainly for the purpose of acquiring real estate and trust beneficiary interests in real estate. Proceeds from borrowings and issuing investment corporation bonds are exposed to liquidity risk on due dates. However, the Investment Corporation manages this risk mainly by appropriately managing the LTV (loan-tovalue) ratio to limit the impact of higher market interest rates on the Investment Corporation s operations and endeavoring to maintain and strengthen its ability to raise capital from capital markets through capital increases. Also, management constantly monitors on-hand liquidity by preparing monthly cash flow projections and formulates fund raising plans at an early stage to maintain required capital. Floating-rate loans are exposed to the risk of fluctuations in interest rates. However, the Investment Corporation manages this risk mainly by adjusting the ratio of outstanding floating-rate loans to total borrowing depending on the finance environment. Furthermore, these risks are managed through derivative transactions (interest rate swaps) as hedging instruments in certain floating-rate loans in order to fix interest rate payments and hedge the risk of fluctuations in interest rates. The hedge effectiveness of the interest rate swaps is assessed by comparing the cumulative changes in the cash flows of the hedging instruments and the hedged items and based on the respective amount of changes; provided, however, that the assessment of hedge effectiveness is omitted for those interest rate swaps that satisfy the requirements for special treatment. Derivative transactions are conducted and managed in accordance with the internal regulations that specify the basic policy of risk management. The surplus funds deposited to the financial institutions are exposed to the financial institutions credit risk. However, the risks are managed through our selection of financial institutions with certain creditworthiness and by limiting the term of the deposit to short term. Entrusted tenant leasehold and security deposits are deposits provided by tenants under lease agreements. This is exposed to liquidity risk due to the cancellation of the lease agreement before the original term. The risks are managed by monitoring liquidity on hand. (c) Supplementary remarks on fair value of financial instruments The fair value of financial instruments is based on market prices or reasonably calculated value if there is no market price available. As certain assumptions are used in calculating these values, these values may vary in the event different assumptions are used. (2) Matters regarding fair value of financial instruments Balance sheet carrying amounts, fair values, and the difference between the two values are shown below. Financial instruments whose fair value is considered to be extremely difficult to determine are not included in the table below (Note 2). Fifth Fiscal Period (as of October 31, 2016) Balance Sheet Carrying Amount (Note1) Fair Value (Note1) Difference (1) Cash and deposits 3,711,863 3,711,863 - (2) Entrusted cash and entrusted cash deposits 10,264,404 10,264,404 - Total assets 13,976,267 13,976,267 - (3) Short-term loans 2,000,000 2,000,000 - (4) Current portion of long-term loans 13,000,000 13,006,247 6,247 (5) Long-term loans 67,100,000 67,532, ,053 Total liabilities 82,100,000 82,538, ,300 (6) Derivative transactions 58,496 58,496 - Sixth Fiscal Period (as of April 30, 2017) Balance Sheet Carrying Amount (Note1) Fair Value (Note1) Difference (1) Cash and deposits 4,108,833 4,108,833 - (2) Entrusted cash and entrusted cash deposits 10,230,271 10,230,271 - Total assets 14,339,104 14,339,104 - (3) Current portion of long-term loans 18,500,000 18,500, (4) Investment corporation bonds 3,400,000 3,394,940 (5,060) (5) Long-term loans 67,100,000 67,531, ,915 Total liabilities 89,000,000 89,427, ,850 (6) Derivative transactions 79,972 79,972 - (Note 1) Measurement of fair values of financial instruments: (1) Cash and deposits and (2) Entrusted cash and entrusted cash deposits The book value is used as the fair value of these assets, given that the fair value is equivalent to the amount of the book value, as it is settled in a short time. (3) Current portion of long-term loans and (5) Long-term loans Because the interest rates of current portion of long-term loans and long-term loans carrying floating interest rates are to be revised periodically and thus their fair value is essentially the same as the book value, the book value is used as the fair value of these liabilities. The fair value of current portion of long-term loans and long-term loans carrying fixed interest rates is calculated by discounting the total of principal and interest at the rate assumed when a new, similar loan corresponding to the remaining period is made. The fair values for interest rate swaps, to which special treatment is applied, are included in the fair value of long-term loans as the hedged item. Some current portion of long-term loans and long-term loans are cancellable loans with a clause on early cancellation through exercise of early cancellation rights (i.e., compounded financial instruments), and these are included in the fair value of the current portion of long-term loans and long-term loans. (4) Investment corporation bonds The fair value of investment corporation bonds is based on market prices. (6) Derivative transactions Please refer to 12. Derivative Transactions described below

32 (Note 2) Balance sheet carrying amounts of financial instruments whose fair value is considered to be extremely difficult to determine: Fifth Fiscal Period As of October 31, 2016 Sixth Fiscal Period As of April 30, 2017 (1)Investment in securities 102,531 - (2)Entrusted tenant leasehold and security deposits 7,093,376 7,311,222 (1) Investment in securities (Silent Partnership Equity Interest) are not subject to fair value disclosure because there are no market prices to compare and it is not possible to reasonably estimate future cash flows. Therefore it is considered to be extremely difficult to determine their fair values. (2) Entrusted tenant leasehold and security deposits, which are deposited by lessees of rental properties, are not subject to fair value disclosure because there are no market prices to compare. It is not possible to reasonably estimate future cash flows because, even if a lease agreement period is specified, there is the possibility of midterm cancellation, renewal or re-contract and it is impossible to estimate the real deposit term, and therefore it is considered to be extremely difficult to determine their fair values. (Note 3) Redemption schedule for monetary claims after the balance sheet date Fifth Fiscal Period (as of October 31, 2016) Due within One (1) Year Cash and deposits 3,711,863 Entrusted cash and entrusted cash deposits 10,264,404 Total 13,976,267 Sixth Fiscal Period (as of April 30, 2017) Due within One (1) Year Cash and deposits 4,108,833 Entrusted cash and entrusted cash deposits 10,230,271 Total 14,339,104 (Note 4) Expected amount of repayments of loans and investment corporation bonds after the balance sheet date Fifth Fiscal Period (As of October 31, 2016) Due within 1 year Due after 1 to 2 years Due after 2 to 3 years Due after 3 to 4 years Due after 4 to 5 years Due after 5 years Short-term loans 2,000, Long-term loans 13,000,000 12,000,000 12,000,000 23,950,000 19,150,000 - Sixth Fiscal Period (As of April 30, 2017) Investment corporation bonds Due within 1 year Due after 1 to 2 years Due after 2 to 3 years Due after 3 to 4 years Due after Due after 4 to 5 years 5 years ,800,000 1,600,000 Long-term loans 18,500,000 12,000,000 25,350,000 17,200,000 12,550, Securities Fifth Fiscal Period (As of October 31, 2016) Silent partnership equity interest (102,531 thousand yen on the balance sheet amount) are not subject to fair value disclose because there are no market price to compare and it is not possible to reasonably estimate future cash flows. It is considered to be extremely difficult to determine their fair values. Sixth Fiscal Period (As of April 30, 2017) 12. Derivative Transactions (1) Derivative transactions not applying hedge accounting: Fifth Fiscal Period (As of October 31, 2016) Sixth Fiscal Period (As of April 30, 2017) (2) Derivative transactions applying hedge fund accounting: The following table shows the contracted amount or principal equivalent amount as set forth in the contract as of the balance sheet date for each hedge accounting method. Fifth Fiscal Period (As of October 31, 2016) Hedge Accounting Method Standard method Special treatment for interest rate swaps Type of Derivative Transaction Interest rate swap transaction : fixed interest rate Receipt: floating interest rate Interest rate swap transaction : fixed interest rate Receipt: floating interest rate Major Hedged Item Long-term loans Long-term loans Contracted Amount Portion Due after 1 Year Fair Value 31,600,000 31,600,000 58,496 Measurement Method for Fair Value The fair value is based on the price presented by the correspondent financial institutions. 23,800,000 23,800,000 (Note) - Total 55,400,000 55,400,000 58,496 - (Note) Fair value for interest rate swaps with this special treatment is included in the fair value of Long-term loans in 10. Financial Instruments, (2) Matters regarding fair value of financial instruments described above, as it is accounted for as a single unit with the hedged long-term loan. Sixth Fiscal Period (As of April 30, 2017) Hedge Accounting Method Type of Derivative Transaction Major Hedged Item Contracted Amount Portion Due after 1 Year The fair value Interest rate swap transaction Long-term is based on Standard method : fixed interest rate 31,600,000 31,600,000 79,972 loans the price Receipt: floating interest rate presented by Fair Value Measurement Method for Fair Value

33 Special treatment for interest rate swaps Total 55,400,000 55,400,000 79,972 - (Note) Fair value for interest rate swaps with this special treatment is included in the fair value of Long-term loans in 10. Financial Instruments, (2) Matters regarding fair value of financial instruments described above, as it is accounted for as a single unit with the hedged long-term loan. 13. Retirement Benefits Fifth Fiscal Period (As of October 31, 2016) Sixth Fiscal Period (As of April 30, 2017) 14. Income Taxes Interest rate swap transaction : fixed interest rate Receipt: floating interest rate Long-term loans (1) Significant components of deferred tax assets and liabilities Fifth Fiscal Period As of October 31, 2016 Sixth Fiscal Period As of April 30, 2017 Deferred tax assets: Accrued business office taxes, currently not deductible 21 6 Total deferred tax assets 21 6 Deferred tax liabilities: Deferred income on hedges 18,478 25,263 Total deferred tax liabilities 18,478 25,263 Net deferred tax assets (liabilities) (18,457) (25,256) (2) Reconciliation of significant differences between the normal effective statutory tax rate and the effective tax rate (Unit: %) Fifth Fiscal Period As of October 31, 2016 the correspondent financial institutions. 23,800,000 23,800,000 (Note) - Sixth Fiscal Period As of April 30, 2017 Normal effective statutory tax rate Adjustments: Distributions paid included as tax deductible (31.72) (31.74) Other Effective tax rate after application of deferred tax accounting Profit or Loss of Affiliates Accounted for Under the Equity Method Fifth Fiscal Period (As of October 31, 2016) Sixth Fiscal Period (As of April 30, 2017) 16. Related Party Transactions (1) Parent Company, major corporate unitholders and other Fifth Fiscal Period (As of October 31, 2016) Sixth Fiscal Period (As of April 30, 2017) (2) Affiliated companies and other Fifth Fiscal Period (As of October 31, 2016) Sixth Fiscal Period (As of April 30, 2017) (3) Fellow subsidiary companies and other Fifth Fiscal Period (As of October 31, 2016) Sixth Fiscal Period (As of April 30, 2017) (4) Directors, major individual unitholders and other Fifth Fiscal Period (As of October 31, 2016) Sixth Fiscal Period (As of April 30, 2017) 17. Asset Retirement Obligations Fifth Fiscal Period (As of October 31, 2016) Sixth Fiscal Period (As of April 30, 2017) 62 63

34 18. Investment and Rental Properties The Investment Corporation holds large office buildings in major metropolitan areas. The balance sheet carrying amounts, changes during the period, and fair values of these rental properties are as follows: Fifth Fiscal Period From May 1, 2016 to October 31, 2016 Sixth Fiscal Period From November 1, 2016 to April 30, 2017 Balance sheet carrying amounts Balance at beginning of period 105,937, ,798,472 Changes during the period 49,861,404 8,043,209 Balance at end of period 155,798, ,841,681 Fair value at end of period 170,478, ,238,000 (Note 1) The balance sheet carrying amount is the acquisition cost (including incidental expenses associated with acquisition) less accumulated depreciation. Intangible fixed assets (totaling 4,738 thousand yen at the end of the Fifth Fiscal Period and 6,009 thousand yen at the end of the Sixth Fiscal Period) are not included. (Note 2) Relating to the changes during the Fifth Fiscal Period, the increase is mainly due to asset acquisitions (50,237,755 thousand yen) and capital expenditures (333,915 thousand yen), while the decrease is principally attributable to depreciation (710,266 thousand yen). In the Sixth Fiscal Period, the increase is mainly due to asset acquisitions (17,337,262 thousand yen) and capital expenditures (648,489 thousand yen), while the decrease is principally attributable to asset disposition (9,190,016 thousand yen) and depreciation (752,526 thousand yen). (Note 3) The fair value at the end of the period is the appraisal value provided by an independent real estate appraiser. As for the fair value at the end of the Fifth Fiscal Period, the fair value of Harumi Island Triton Square Office Tower Z is the sales price (10,100,000 thousand yen) which was stated in the sales and purchase agreement as of December 7, The profit or loss concerning investment and rental properties is indicated under 5. Breakdown of Rental and Other Operating Revenues and Property-Related Expenses 19. Segment Information (1) Segment Information Disclosure is omitted as the Investment Corporation is comprised of a single reportable segment engaged in the real estate rental business. (2) Related information Fifth Fiscal Period (From May 1, 2016 to October 31, 2016) (a) Information about products and services Disclosure is omitted as operating revenues from external customers of products and services within a single segment exceeds 90% of operating revenues on the Statements of Income. segment exceeds 90% of operating revenues on the Statements of Income. (b) Information about geographical area i) Operating revenues Disclosure is omitted since operating revenues from external customers in Japan exceeds 90% of operating revenues on the Statements of Income. ii) Property and equipment Disclosure is omitted since the amount of property and equipment located in Japan exceeds 90% of property and equipment on the Balance Sheet. (c) Information about major customers Name of customer Operating Revenues Related segment (Note) 784,581 Property rental business (Note) Name of customer is not disclosed because the customer s authorization has not been obtained. The customer is not a related or interested parties under the Investment Trust Act. 20. Per Unit Information Fifth Fiscal Period From May 1, 2016 to October 31, 2016 Sixth Fiscal Period From November 1, 2016 to April 30, 2017 Net assets per unit 99,544 yen 100,467 yen Net income per unit 2,898 yen 3,637 yen (Note 1) Net income per unit is calculated by dividing net income by the day-weighted average number of investment units for the period. Fully diluted net income per investment unit is not presented, as there is no potential dilutive investment unit. (Note 2) The basis for calculating net income per unit is as follows: Fifth Fiscal Period From May 1, 2016 to October 31, 2016 Sixth Fiscal Period From November 1, 2016 to April 30, 2017 Net income (Thousands of Yen) 2,229,196 2,966,666 Amount not attributable to common unitholders (Thousands of Yen) - - Net income attributable to common investment units (Thousands of Yen) 2,229,196 2,966,666 Average number of investment units for the period (Units) 769, ,547 (b) Information about geographical area i) Operating revenues Disclosure is omitted since operating revenues from external customers in Japan exceeds 90% of operating revenues on the Statements of Income. ii) Property and equipment Disclosure is omitted since the amount of property and equipment located in Japan exceeds 90% of property and equipment on the Balance Sheet. (c) Information about major customers Disclosure is omitted as there is no external customer whose operating income accounts for 10 percent or more of total operating revenues on the Statements of Income. Sixth Fiscal Period (From November 1, 2016 to April 30, 2017) (a) Information about products and services Disclosure is omitted as operating revenues from external customers of products and services within a single 64 65

35 21. Significant Subsequent Events (1) Resolution regarding acquisition of own investment units The Investment Corporation has decided the acquisition of own investment units based on the Article 80-2 of Investment Trust Act applied upon reading the terms in the Article 80-5, Paragraph 2 of the Investment Trust Act at a meeting of the board of directors of the Investment Corporation held on June 12, The Investment Corporation cancelled all the acquired units on August 10, (a) Reason for acquisition of own investment units Considering various facts such as the level of investment unit price, situation of cash in hand, financial situation and market environment, the Investment Corporation expects that improving capital efficiency and returning profit to investors through acquiring own investment units will improve the investors value in mid- to long-term. In case the market price of the investment units is below its book-value per unit (BPU) or NAV per unit, the Investment Corporation believes that acquiring own investment units and cancelling them will improve investors value. DPU is expected to increase due to the fact that the number of outstanding investment units decreases. (b) Details of acquisition of own investment units Total number of own investment units to be acquired 10,000 units (maximum) Total acquisition price 800 million yen (maximum) Method of acquisition The Investment Corporation entrusts the market purchase of its own investment units at Tokyo Stock Exchange to a securities company by discretionary transaction contract Acquisition period From June 13, 2017 to July 20, 2017 (2) Result regarding acquisition of own investment units The Investment Corporation has acquired own investment units based on the above resolution regarding acquisition of own investment units. Details of acquisition of own investment units Total number of own investment units acquired 7,640 units Total acquisition price 799,984,693 yen Method of acquisition The Investment Corporation entrusts the market purchase of its own investment units at Tokyo Stock Exchange to a securities company by discretionary transaction contract Acquisition period From June 13, 2017 to July 10, 2017 (3) Cancellation of own investment units The Investment Corporation has decided the cancellation of own investment units based on the Article 80-2 and 80-4 of Investment Trust Act at a meeting of the board of directors of the Investment Corporation held on July 27, The total investment amount of the Investment Corporation is 78,113 million yen, and the total number of outstanding investment units is 807,907 units after the cancellation of own investment units. Property, plant and equipment 22. Contract Amounts and Fair Value of Derivative Transactions Classification Transactions other than market transactions Contract Amount Type Amount over one year Fair Value Interest rate swap transactions Floating rate receipt, Fixed rate 55,400,000 55,400,000 48,499 payment Total 55,400,000 55,400,000 48,499 (Note 1 The contract amount of interest rate swap transactions is based on the notional principals. (Note 2 The fair value is based on the estimation made by the interest rate swap counterparty using the prevailing interest rate. (Note 3 Special accounting treatment is applied to the interest-rate swaps in accordance with the Accounting Standard for Financial Instruments (issued by the Accounting Standards Board of Japan(ASBJ) on March 10, 2008;ASBJ Statement No.10) and therefore interest rate swaps are not stated at fair value in the balance sheets. 23. Property, Plant and Equipment Property, plant and equipment consists of the following as of April 30, 2017: Type of asset Balance at the beginning of the period Increase during the period (Note 1) Decrease during the period (Note 2) Balance at the end of the period Depreciation Depreciation Accumulated for the depreciation period Net balance at the end of the period Entrusted buildings 40,348,924 3,093,171 1,898,966 41,543,129 2,974, ,672 38,568,458 - Entrusted building improvements 370,321 3,524 55, ,568 75,407 18, ,161 - Entrusted machineries 20,386 1,677 2,328 19,735 2, ,800 - Entrusted furniture and equipment 62,847 20,142 1,367 81,622 18,341 6,310 63,280 - Entrusted land 117,507,265 14,865,052 7,443, ,928, ,928,377 - Entrusted construction in progress 20,525 1,077-21, ,603 - Subtotal 158,330,272 17,984,644 9,401, ,913,037 3,071, , ,841,681 - Intangible assets 8,920 2,277-11,197 5,187 1,005 6,009 - Total 158,339,192 17,986,921 9,401, ,924,234 3,076, , ,847,690 - (Note 1 The increase during the period is primarily attributable to the acquisition of Kinshicho Prime Tower and Aqua Dojima East. (Note 2) The decrease during the period is primarily attributable to the disposition of Harumi Island Triton Square Office Tower Z. Remarks Total number of own investment units cancelled 7,640 units Date of cancellation August 10,

36 24. Investment Corporation Bonds 25. Loans The following summarizes investment corporation bonds outstanding as of April 30, 2017: Balance at Decrease Balance at Name Issue date the beginning during the the end Coupon Redemption Use Security of the period period of the period rate date First Series April 20, April 20, Non- Unsecured Investment - - 1,800, % (Note1) guaranteed Corporation Bonds Note2 Second Series April 20, April 19, Non- Unsecured Investment - - 1,600, % (Note1) guaranteed Corporation Bonds (Note2 Total ,400, (Note 1) All investment corporation bonds were used as the funds for repayment of the short-term loans of 2,000 million yen that were due for repayment on April 28, 2017 and for acquisition of trust beneficiary interests in real estate (Aqua Dojima East) and related expenses of 1,987 million yen. (Note 2) This investment corporation bonds is equipped with pari passu clause among special investment corporation bonds. (Note 3) The following is the maturity schedule of investment corporation bonds within five years of the balance sheet date. Due after 1 year through 2 years Due after 2 years through 3 years Due after 3 years Due after 4 years through 4 years through 5 years Investment Corporation Bonds ,800,000 The following summarizes short-term loans, current portion of long-term loans and long-term loans outstanding as of April 30, 2017: Classification Short-term Loans Current Portion of Long-term Loans Long-term Loans Lender The Bank of Tokyo- Mitsubishi UFJ, Ltd. Balance at the beginning of the period Increase during the period Decrease during the period Balance at the end of the period 1,000,000-1,000,000-1,000,000-1,000,000 - Average interest rate (%) due date Use (Note1 (Note6 Remarks Nonguaranteed/ Floating interest rate Subtotal 2,000,000-2,000, The Bank of Tokyo- Mitsubishi UFJ, Ltd. 2,500, ,500, ,500, ,500,000 Mizuho Bank, Ltd. 2,000, ,000,000 Trust Bank, Limited 2,000, ,000,000 Resona Bank, Ltd. 2,000, ,000,000 Development Bank of Japan Inc. 2,000, ,000,000-3,100,000-3,100,000 Mizuho Bank, Ltd. - 1,600,000-1,600,000 The Bank of Tokyo- Mitsubishi UFJ, Ltd , , (Note2) June 6, 2017 June 6, 2017 January 31, 2018 (Note5 (Note5 (Note5 Nonguaranteed/ Fixed interest rate Nonguaranteed/ Floating interest rate Nonguaranteed/ Floating interest rate Subtotal 13,000,000 5,500,000-18,500, The Bank of Tokyo- Mitsubishi UFJ, Ltd. 3,000, ,000, ,000, ,000,000 Mizuho Bank, Ltd. 1,500, ,500,000 Trust Bank, Limited 1,500, ,500,000 Resona Bank, Ltd. 1,500, ,500,000 Development Bank of Japan Inc. The Bank of Tokyo- Mitsubishi UFJ, Ltd. 1,500, ,500, (Note2) (Note4) 4,000, ,000, ,000, ,000, (Note2) (Note4) June 6, 2018 June 6, 2018 June 6, 2019 June 6, 2019 (Note5 (Note5 (Note5 (Note5 Nonguaranteed/ Fixed interest rate Nonguaranteed/ Fixed interest rate Nonguaranteed/ Fixed interest rate Nonguaranteed/ Fixed interest rate

37 Classification Long-term Loans Lender Balance at the beginning of the period Increase during the period Decrease during the period Balance at the end of the period Mizuho Bank, Ltd. 1,000, ,000,000 Trust Bank, Limited 1,000, ,000,000 Resona Bank, Ltd. 1,000, ,000,000 Development Bank of Japan Inc. The Bank of Tokyo- Mitsubishi UFJ, Ltd. Trust Bank, Limited 1,000, ,000,000 Average interest rate (%) (Note2) (Note4) 3,800, ,800, ,800, ,800,000 1,000, ,000,000 Resona Bank, Ltd. 1,000, ,000,000 Mitsubishi UFJ Trust and Banking Corporation 1,000, ,000, , ,000 Mizuho Bank, Ltd. 300, ,000 Trust Bank, Limited 2,300, ,300,000 1,400, ,400,000 Resona Bank, Ltd. 1,400, ,400,000 Mizuho Bank, Ltd. 2,400, ,400,000 Mitsubishi UFJ Trust and Banking Corporation 700, ,000 Shinsei Bank, Ltd. 1,250, ,250,000 Aozora Bank, Ltd. 1,000, ,000, (Note2) (Note4) (Note3) (Note3) (Note4) due date June 6, 2019 May 31, 2020 May 31, 2020 November 29, 2019 November 29, 2019 Use (Note5 (Note7 (Note7 (Note5 (Note5 Remarks Nonguaranteed/ Fixed interest rate Nonguaranteed/ Fixed interest rate Nonguaranteed/ Fixed interest rate Nonguaranteed/ Floating interest rate Nonguaranteed/ Fixed interest rate Classification Long-term Loans Lender Balance at the beginning of the period Increase during the period Decrease during the period Balance at the end of the period ORIX Bank Corporation 500, ,000 The Nishi-nippon City Bank, Ltd. Trust Bank, Limited 500, ,000 2,000, ,000,000 1,000, ,000,000 Resona Bank, Ltd. 1,000, ,000,000 Mitsubishi UFJ Trust and Banking Corporation 1,000, ,000,000 Mizuho Bank, Ltd. 1,600, ,600,000 Average interest rate (%) (Note3) (Note4) (Note3) (Note4) due date May 31, 2021 November 30, 2020 Use (Note5 (Note8) Remarks Nonguaranteed/ Fixed interest rate Nonguaranteed/ Fixed interest rate Subtotal 67,100, ,100, Total 82,100,000 5,500,000 2,000,000 85,600, (Note 1) Repayment was made on April 28, (Note 2) Borrowings from Syndicate Loan with The Bank of Tokyo-Mitsubishi UFJ, Ltd. and as arranger. (Note 3) Borrowings from Syndicate Loan with as arranger and Mizuho Bank, Ltd. as coarranger. (Note 4) Borrowings for which interest rate swap transactions were implemented in order to hedge the interest rate volatility risk. The interest rates are effectively fixed through interest rate swap agreement. (Note 5) All debts were used to fund acquisition of trust beneficiary interests in real estate and related expenses. (Note 6) All debts were used to refinance the short-term loans of 2,000 million yen that were due for repayment on April 28, (Note 7) All debts were used to fund acquisition of trust beneficiary interests in real estate and related expenses and refinance the short-term loans of 3,200 million yen that were due for repayment on June 5, 2015, and refinance the short-term loans of 5,000 million yen on May 11, (Note 8) All debts were used to refinance the short-term loans of 6,600 million yen that were due for repayment on June 30, (Note 9) The following is the maturity schedule of long-term loans within five years of the balance sheet date. Due after 1 year through 2 years Due after 2 years through 3 years Due after 3 years Due after 4 years through 4 years through 5 years Long-term loans 12,000,000 25,350,000 17,200,000 12,550,000 The Bank of Fukuoka 1,000, ,000,000 ORIX Bank Corporation 500, ,000 The Nishi-nippon City Bank, Ltd. Trust Bank, Limited 500, ,000 2,550, ,550,000 1,400, ,400,000 Resona Bank, Ltd. 1,400, ,400,000 Mizuho Bank, Ltd. 2,500, ,500,000 Mitsubishi UFJ Trust and Banking Corporation 700, , (Note3) (Note4) May 31, 2021 (Note5 Nonguaranteed/ Fixed interest rate Shinsei Bank, Ltd. 1,000, ,000,000 Aozora Bank, Ltd. 1,000, ,000,000 The Bank of Fukuoka 1,000, ,000,

38 Overview of Invesco Group The Invesco Group sets its mission as helping investors worldwide achieve their financial objectives, and is a worldleading independent asset manager that provides global management capabilities. The Invesco Group engages in business on a global scale and has offices in more than 20 countries. As of the end of March 2017, the balance of assets under management of Invesco Group was approximately US$834.8 billion (approximately 74.9 trillion). Invesco Ltd. is publicly traded on the NYSE. The credit rating agencies listed below have assigned the ratings indicated to Invesco Ltd. Rating Company Moody s Investors Service Standard & Poor s Fitch Ratings Rating A2 Stable A / Negative A- Stable Invesco Real Estate, one business division of the Invesco Group, places priority on core asset management, but also has experience with value-added asset management and opportunistic asset management. Having experience with leasing and renewals as well as property sales and acquisitions and leverage control, Invesco Real Estate possesses diverse real estate management know-how. Invesco Real Estate manages real estate and securities through 21 offices in 16 countries worldwide with assets under management of US$66.1billion (approximately 7.4 trillion). (Note) The yen amounts for assets under management presented above have been converted from U.S. dollars using the exchange rate as of the end of March 2017 (US$1 = ). Breakdown of Invesco Real Estate s Asset Under Management (As of March 31, 2017) North America US$28.2bn 42% Europe US$8.4bn 13% Asia US$5.1bn 8% Publicly traded real property securities US$24.4bn 37% Real property direct investment US$41.7bn 63% Publicly traded real property securities US$24.4bn 37% (Note) As percentage of asset under management is rounded to the first decimal place, total of the ratio may not be 100%. Invesco Real Estate s Investment Properties Office: Washington DC, USA 2 Retail: Las Vegas, NV, USA 3 Hotel: Paris, France Retail: Seoul, South Korea 5 Residential: New York, NY, USA 6 Office: London, UK 7 Logistics: Melbourne, Australia 72 73