[For Information Purpose Only.
The Japanese language press release should be referred to as the original.]
May 25, 2017
To All Concerned Parties
Name of REIT Issuer:
Invincible Investment Corporation
Name of representative:
Naoki Fukuda, Executive Director
Roppongi Hills Mori Tower
6-10-1 Roppongi, Minato-ku, Tokyo, Japan(Securities code:8963)
Asset manager:
Consonant Investment Management Co., Ltd.
Naoki Fukuda, CEOContact: Jun Komo,
General Manager of Planning Department(Tel. +81-3-5411-2731)

Notice concerning Revision of Forecast of Financial Results and Distribution for the 28th
Fiscal Period Ending June 2017 and the 29th Fiscal Period Ending December 2017
Invincible Investment Corporation (“INV”) today announced the revision of its forecast of financial
results and distribution per unit (“DPU”) for the fiscal period ending June 2017 (28th fiscal period)
and the fiscal period ending December 2017 (29th fiscal period), which were previously announced
in “Notice concerning Revision of Forecast of Financial Results and Distribution for the 28th Fiscal
Period Ending June 2017 and 29th Fiscal Period Ending December 2017” dated February 22,
2017.
Details

1.

Revision of forecasts of financial results and DPU for the fiscal periods ending June 2017 (fromJanuary 1, 2017 to June 30, 2017) and December 2017 (from July 1, 2017 to December 31,
2017)This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

1

<Fiscal Period Ending June 2017>
Total
Distribution
AmountOperating
Revenues

Operating
IncomeOrdinary
Income

JPY million

JPY million

JPY million

JPY million

JPY million

9,285

5,268

4,590

4,589

4,798

JPY million

JPY million

JPY million

9,282

5,311

4,653

JPY million
4,652

JPY million
4,841

Amount of variance(B) – (A)JPY million(2)

JPY million
42

JPY million
62

JPY million
62

JPY million

Rate of variance((B) – (A)) / (A)

%

%

%

%

%

(0.0)

0.8

1.4

1.4

0.9

Previous forecast (A)(announced on
February 22, 2017)
Revised forecast (B)Earnings per
Unit(Note)

Previous forecast (A)(announced on
February 22, 2017)

Distribution
per Unit(Excluding
Excess Profit
Distribution perUnit) (Note)

Net Income

Excess Profit
Distribution
per Unit(Note)

Distribution
per Unit(Including Excess
Profit Distribution
per Unit) (Note)

JPY

JPY

JPY

JPY

1,185

1,185

55

1,240

JPY

JPY

JPY

JPY

1,205

1,205

49

1,254

Amount of variance(B) – (A)

JPY

JPY

JPY

JPY

20

20

(6)

14

Rate of variance((B) – (A)) / (A)

%

%

%

%

1.7

1.7

(10.9)

1.1

Revised forecast (B)(Note)

42

The number of investment units issued and outstanding at the end of the fiscal period: 3,870,074 (previous forecast) and
3,860,824 units (revised forecast).

This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

2<Fiscal Period Ending December 2017>
Total
Distribution
AmountOperating
Revenues

Operating
IncomeOrdinary
Income

JPY million

JPY million

JPY million

JPY million

JPY million

10,498

6,245

5,652

5,651

5,731

JPY million
10,687

JPY million
6,402

JPY million
5,776

JPY million
5,775

JPY million

Amount of variance(B) – (A)JPY million

JPY million

JPY million

JPY million

JPY million

189

157

123

123

121

Rate of variance((B) – (A)) / (A)

%

%

%

%

%

1.8

2.5

2.2

2.2

2.1

Previous forecast (A)(announced on
February 22, 2017)
Revised forecast (B)Distribution
per Unit

Net Income

Excess Profit
Distribution
per Unit (Note)

Distribution
per Unit

Earnings per
Unit (Note)(Excluding
Excess Profit
Distribution perUnit) (Note)

JPY

JPY

JPY

JPY

1,460

1,460

21

1,481

JPY

JPY

JPY

JPY

1,495

1,495

21

1,516

Amount of variance(B) – (A)

JPY

JPY

JPY

JPY

35

35

-

35

Rate of variance((B) – (A)) / (A)

%

%

%

%

2.4

2.4

-

2.4

Previous forecast (A)(announced on
February 22, 2017)
Revised forecast (B)(Note)

5,853(Including Excess
Profit Distribution
per Unit) (Note)

The number of investment units issued and outstanding at the end of the fiscal period: 3,870,074 (previous forecast) and
3,860,824 units (revised forecast).

This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

32. Reasons for the revision of forecast of financial results and distribution
As announced in the press releases “Notice concerning Acquisition of Asset and Entering into
Leasing Contract” and “Notice concerning Debt Financing” INV will acquire one hotel property
on May 29, 2017 by using funds from the borrowing of a new loan and cash-on-hand.
The revision of the forecast of financial results and distribution for the fiscal periods ending
June 2017 and December 2017 are primarily based on expectation of an increase in revenue
owing to the contributions from the property to be acquired.
3. Excess profit distribution policy
INV believes maintaining the stability of cash distributions over the medium term is one of themost important factors in determining the amount of distribution for a given fiscal period, andtherefore, INV has adopted the policy to make distributions in excess of profits in order tostabilize distributions, in cases where dilution of investment units or significant expenses are to
be recorded in connection with, among other things, the acquisition of assets or the raising of
capital, leading to a temporary decrease in distribution, taking into consideration the level of
distribution per unit assuming such acquisition of assets or capital raising had contributed for a
full fiscal period.
INV may also consider making distributions in excess of profits for the purpose of mitigating
the impact of corporate tax increase arising from different rules and practices in tax andaccounting, such as treatment on depreciation of fixed term land lease or asset retirement
obligation.
The acquisition of “Hotel MyStays Premier Hamamatsucho,” scheduled for May 29, 2017, is
not leading to a temporary decline in distribution per unit due to dilution of investment units orsignificant expenses. Therefore, INV does not intend to make distributions in excess of profits
in connection with the effect of this acquisition.
For the fiscal periods ending June 2017 and December 2017, INV intends to make (i)distributions in excess of profits in order to stabilize distributions to offset the effect of the
public offering of investment units and new borrowings implemented in March 2017 and (ii)distributions in excess of profits for the purpose of mitigating the impact of corporate tax
increase arising from different rules and practices in tax and accounting. Please refer to thepress “Notice concerning Revision of Forecast of Financial Results and Distribution for the
28th Fiscal Period Ending June 2017 and the 29th Fiscal Period Ending December 2017”
dated February 22, 2017, as well as “(appendix 1) <Assumptions Underlying the Forecast of
Financial Results and Distribution for the 28th Fiscal Period and the 29th Fiscal Period >” fordetails of such distributions in excess of profits.

This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

44. Reasons for Forecast Revision
The revised DPU for the fiscal period ending June 2017 is forecast to be JPY 1,254 (+5.7%
year-on-year) and the DPU for the fiscal period ending December 2017 is forecast to be JPY
1,516 (+2.6% year-on-year); the full year DPU for calendar year 2017 is forecast to be JPY
2,770 (+4.0% year-on-year). (Appendix 2)
NOI for the hotel and residential portfolio in the June 2017 fiscal period is expected to grow by
3.7% during the period from April to June year-on-year, following a decline of 0.9% during theperiod from January to March, and the overall forecast growth for the June 2017 fiscal period is1.5%. (Appendix 3)
NOI for the hotel portfolio1 in the ending June 2017 is expected to grow by 3.4% during theperiod from April to June year-on-year, following a decline of 1.8% year-on-year during theperiod from January to March, and the overall forecast growth for the fiscal period ending June2017 is forecasted to be 1.0%. INV believes that Initial bookings for the summer indicate that
this positive trend should continue.
INV is working closely with the hotel operators, mainly MyStays Hotel Management Co., Ltd.
(“MyStays”), to realize internal growth. MyStays is taking various actions based on extensive
operational analysis and customer feedback through TrustYou 2 Analytics to improve thecustomer experience. MyStays expects to increase direct bookingsand maximize revenue attime of high demand through promotional campaigns, an improved website and enhanced
revenue management analytics. MyStays is also focused on the following initiatives such asincreasing overbooking ratios strategically in order to offset increased cancelations, convertinga select number of smoking rooms to non-smoking to generate higher ADRs for non-smoking
rooms, saving cost for linen and cleaning, increasing services for Chinese speaking guests,
and strengthening relations with travel agents, airlines and OTA’s (online travel agents) basedin China, Hong Kong, Taiwan and Korea to diversify and improve distribution channel. For
more details on specific initiatives, please refer to the presentation materials “Invincible
Investment Corporation Follow on Acquisition” as of today
In the residential portfolio, INV has also achieved internal growth. INV’s residential rent
increase program continues to make progress. INV believes that the progress has been
accelerated especially by the replacement of Property Managers at 16 residential properties in
December 2016 and through the first four months of 2017, the figure of average rent increaseis 2.3% (in calendar year 2016, the figure was 1.2%) as shown in Appendix 4. The residential
portfolio is expected to provide internal NOI growth of 2.1% (for 66 residential properties inwhich a year-on-year comparison can be made 3) year-on-year, the occupancy is expected toincrease from 95.2% to 95.3% and the rent per tsubo is expected to increase from JPY 9,969
to JPY 10,051 (+0.8%) year-on-year.
(Note 1)

Based on the 38 hotel properties of the 48 hotel properties in our portfolio as of the date of this notice, nine hotels
with fixed-rent lease agreements and one hotel which was renovated in 2016, Hotel MyStays Kanda, are excluded.
Nine hotels with fixed-rent are Super Hotel Shinbashi/ Karasumoriguchi, Comfort Hotel Toyama, Super HotelThis English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

5Tokyo-JR Tachikawa Kitaguchi, Super Hotel JR Ueno-iriyaguchi, Comfort Hotel Kurosaki, Comfort Hotel Maebashi,
Comfort Hotel Tsubamesanjo, Comfort Hotel Kitami, and Takamatsu Tokyu REI Hotel.
(Note 2)TrustYou analyzes hundreds of millions of travel reviews and is one of the world’s largest guest feedback
platforms(Note 3)

Based on the 66 residential properties owned as of the end of December 2015. Excludes one‐off insurance‐related
revenues and expenses in NOI.

(Reference)<Forecasts for Performance Indicators of Hotel Properties (38 hotels1)>

Occupancy Rate2
ADR (JPY)3
RevPAR (JPY)4
GOP (JPY million)5June fiscal
period(Forecast)
89.3%
9,188
8,208
5,050

Y2017
December fiscal
period(Forecast)
92.1%
9,975
9,192
5,963

June fiscal
period(Forecast)-0.6pt
+0.4%
-0.3%
+0.9%

Y2017
December fiscal
period(Forecast)+0.9pt
+0.2%
+1.2%
+1.8%

Full-Year(Forecast)
90.8%
9,591
8,704
11,013Year-on-Year Changes

Occupancy Rate2
ADR3
RevPAR4
GOP5

Full-Year(Forecast)+0.2pt
+0.3%
+0.5%
+1.3%

(Note 1) Based on the 38 hotel properties stated in Note 4 of ”4. Reasons for Forecast Revision” above.
(Note 2) “Occupancy Rate” for hotel portfolio is calculated using the following formula: room occupancy rate = total number of rooms
occupied during the relevant period ÷ (aggregate number of rooms during the relevant period x number of business days during
target period)(Note 3) “ADR,” or Average Daily Rate, is the value of the total room sales for a certain period (excluding service fees) divided by the
total number of sold rooms for the same period.
(Note 4) “RevPAR,” or Revenues Per Available Room, is calculated by dividing the total sales for a certain period by the aggregate
number of rooms for the same period (rooms x number of days), and is the same figure as that of a product of ADR andoccupancy rate.
(Note 5) “GOP,” or Gross Operating Profit, is rent revenue INV receives as a rent which is the amount remaining after deducting thepersonnel, material, water, electricity, and heating and advertising expenses as well as the management service fee for the
hotel operations (if any) from the hotel’s revenues.

This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

6<Forecasts for Performance Indicators of Residential Properties (66 properties1)>

Occupancy Rate2
Average Rent per Tsubo
per Month3 (JPY)NOI4 (JPY million)2June fiscal
period(Forecast)
95.3%

Y2017
December fiscal
period(Forecast)
95.4%

10,024

10,07910,051

1,723

1,704

3,428

June fiscal
period(Forecast)-0.4ptY2017
December fiscal
period(Forecast)+0.7pt

+1.0%

+0.7%

+0.8%

+2.9%

+1.3%

+2.1%

Full-Year(Forecast)
95.3%

Year-on-Year Changes

Occupancy Rate2
Average Rent per Tsubo
per Month3
NOI4

Full-Year(Forecast)+0.2pt(Note 1) Based on the 66 hotel properties stated in Note 3 of ”4. Reasons for Forecast Revision” above.
(Note 2) “Occupancy Rate” is calculated by dividing the sum of total residential leased area by the sum of total residential leasablearea at the end of each month of each period.
(Note 3) “Average Rent per Tsubo per Month” is calculated by dividing the total residential rental revenue including common area
charges for each month by the sum of total residential leasable area at the end of each month, indicating the average rent
per Tsubo weighted by leased area
(Note 4) Figures are rounded down to the indicated amount. Excludes one‐off insurance‐related revenues and expenses.

Based on the above, earnings per unit and distribution per unit for the full calendar year 2017
are as follows:<Full-year 2017> (Aggregate of the fiscal periods ending in June 2017 and December 2017)

JPY

Distribution
per Unit(Excluding
Excess Profit
Distribution per
Unit)(Note)JPY

JPY

Distribution
per Unit(Including
Excess Profit
Distribution
per Unit)(Note)
JPY

2,645

2,645

76

2,721

JPY

JPY

JPY

JPY

2,700

2,700

70

2,770

Amount of variance(B)- (A)

JPY

JPY

JPY

JPY

55

55

(6)

49

Rate of variance((B) – (A)) / (A)

%

%

%

%

2.1

2.1

(7.9)

1.8

Earnings per
Unit(Note)
Previous forecast (A)(announced on
December 22, 2016)
Revised forecast (B)(Note)

Excess Profit
Distribution
per Unit(Note)The number of investment units issued and outstanding at the end of the fiscal period: 3,870,074 (previous forecast) and
3,860,824 units (revised forecast).

This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

7

(Appendix 1)<Assumptions Underlying the Forecast of Financial Results and Distribution for the
28th Fiscal Period and the 29th Fiscal Period >Item
Fiscal period

Assumptions
The 28th fiscal period: from January 1, 2017 to June 30, 2017 (181 days)
The 29th fiscal period: from July 1, 2017 to December 31, 2017 (184 days)
Properties held as of the end of the 28th fiscal period: 127 properties
Properties held as of the end of the 29th fiscal period: 127 properties

Assets undermanagement

INV assumes that INV will newly acquire on hotel property (Note) as of May 29, 2017 inaddition to existing 126 properties, and there will be no change through the end of the
fiscal period ending December 2017.
(Note) Regarding the acquisition of properties as of May 29, 2017, please refer to “Noticeconcerning Acquisition and of Asset and Entering into Leasing Contract” dated as of today.

As of the end of the 28th fiscal period: 3,860,824 units
As of the end of the 29th fiscal period: 3,860,824 units

Units outstanding

As announced in “Notice Concerning Results of New Investment Units to be Issued via
Third-Party Allotment” dated April 7, 2017, new investment units were not issued via athird-party allotment. Therefore the units issued and outstanding is 3,860,824 units,
which is 9,250 units less than the assumption in “Notice concerning Revision of Forecastof Financial Results and Distribution for the 28th Fiscal Period Ending June 2017 and29th Fiscal Period Ending December 2017” (“the Previous Forecast”).
thBalance as of the end of the 28 fiscal period: JPY 163,990 mn
Balance as of the end of the 29th fiscal period: JPY 163,990 mn

Interest-bearing liabilities

INV assumes that Term Loan (G) is implemented as of May 29, 2017, as mentioned intoday’s release “Notice concerning Debt Financing” and no other loan or repayment is
implemented.

This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

8

Item

Assumptions
INV expects to record rental revenues for each fiscal period as follows:
June 2017 Fiscal
PeriodJPY 9,282 mn(JPY 5,544 mn)(JPY 2,663 mn)(JPY 2,881 mn)

・Rental revenues(of these, hotel rents)(fixed hotel rents)(variable hotel rents)
Operating revenues

December 2017 Fiscal
PeriodJPY 10, 687 mn(JPY 6,614 mn)(JPY 3,340 mn)(JPY 3,274 mn)

Rental revenues in the fiscal period ending June 2017 and the fiscal period ending
December 2017 are calculated based on estimates as of today from January 2017 to
December 2017. In addition, INV assumes there will be no delinquencies or
non-payment of rent by tenants.
The majority of INV’s owned hotels uses a variable rent scheme linked to performance ofthe relevant hotel. Hotel demand is affected by seasonal factors and the December
ending fiscal periods (from July to December) which include summer holiday andautumn outing seasons tend to record higher revenue than the June ending fiscal
periods (from January to June). Accordingly, rental revenue of INV tends to be higher inthe December ending fiscal periods than in the June ending fiscal periods.
INV expects to incur property related expenses for each fiscal period as follows:

Operating expenses

・Facility management fees(of these, repair costs)
・Taxes and other public charges
・Insurance expenses
・Depreciation expenses
・Other expenses
Total property related expenses

June 2017 Fiscal
PeriodJPY 485 mn(JPY 28 mn)
JPY 386 mn
JPY 9 mn
JPY 2,282 mn
JPY 373 mn
JPY 3,538 mn

December 2017
Fiscal Period
JPY 537 mn(JPY 36 mn)
JPY 470 mn
JPY 10 mn
JPY 2,434 mn
JPY 383 mn
JPY 3,835 mn

INV expects to incur other operating expenses than the property related expenses foreach fiscal period as follows:・Other operating expenses(of these, asset management
fees)

June 2017 Fiscal
PeriodJPY 432 mn

December 2017
Fiscal Period
JPY 448 mn(JPY 250 mn)(JPY 250 mn)

INV expects to record net operating income for each fiscal period as follows:

NOI

June 2017 Fiscal
PeriodJPY 8,026 mn(JPY 5,264 mn)(JPY 2,387 mn)

・NOI(of these, hotel NOI)(of these, residential NOI)

December 2017 Fiscal
PeriodJPY 9,286 mn(JPY 6,271 mn)(JPY 2,630 mn)

NOI calculation method in the above table is as follows
・NOI＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses

This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

9

Item

Assumptions

INV expects to incur non-operating expenses for each fiscal period as follows:・Interest expense
・Finance related costs
・Other non-operating expenses(expenses relating to theissuance of new units for the
public offering)
Total Non-operating expenses

June 2017 Fiscal
PeriodJPY 382 mn
JPY 224 mn
JPY 51 mn(JPY 51 mn)

December 2017 Fiscal
PeriodJPY 422 mn
JPY 203 mn(-)

JPY 658 mn

JPY 626 mn

Non-operating expenses
In the Previous Forecast, INV assumed JPY 80 million as “Other non-operating
expenses (expenses relating to the issuance of new units for the public offering)” (the“Offering Expenses”) for the fiscal period ending June 2017. INV revises down theOffering Expenses to approximately JPY 51 million, as the actual amount has almost
turned out.
INV has a policy to make distributions in excess of profits in order to stabilize
distributions, in cases where significant expenses are to be recorded in connection withthe raising of capital. Therefore, INV reduces the amount of distributions in excess of
profits in conjunction with the reduction in the Offering Expenses. However, the total
amount of distributions, which is a sum of distribution of profit and distribution in excess
of profit will not be affected, as the reduction in the Offering Expenses will result in an
increase of net income.

Distribution per unit

The distribution per unit is calculated in accordance with the cash distribution policy as
set forth in INV’s Articles of Incorporation.
With respect to the distribution for the fiscal period ending June 2017, INV expects todistribute an aggregate amount of JPY 4,841 million (distribution per unit: JPY 1,254)
based on the assumption that excess profit distribution will be paid (JPY 189 million), in
addition to net income for the fiscal period ending June 2017 (JPY 4,652 million) which
will be used as funds.
With respect to the distribution for the fiscal period ending December 2017, INV expects
to distribute an aggregate amount of JPY 5,853 million (distribution per unit: JPY 1,516)
based on the assumption that excess profit distribution will be paid (JPY 77 million), in
addition to net income for the fiscal period ending December 2017 (JPY 5,775 million)
which will be used as funds.
For the fiscal periods ending June 2017 and December 2017, INV expects to record
deferred gain on hedge of the interest rate swap as the valuation and conversion
adjustments, etc. of JPY 151 million, which is equal to the amount for the fiscal period
ended December 2016. The distribution per unit is calculated based on the assumptionthat fluctuation of the market value of the interest rate swap does not affect the
distribution per unit. Distribution per unit may vary due to various factors, includingchanges of the assets under management, fluctuation of rent income associated withreasons such as change of tenants and occurrences of unexpected repairs.

This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

10

Item

Excess profit distribution
per unit

Assumptions
INV believes maintaining the stability of cash distributions over the medium term is oneof the most important factors in determining the amount of distribution for a given fiscal
period, and therefore, INV has adopted the policy to make distributions in excess of
profits in order to stabilize distributions, in cases where dilution of investment units orsignificant expenses are to be recorded in connection with, among other things, theacquisition of assets or the raising of capital, leading to a temporary decrease in
distribution, taking into consideration the level of distribution per unit assuming suchacquisition of assets or capital raising had contributed for a full fiscal period.
INV may also consider making distributions in excess of profits for the purpose of
decreasing the impact from corporate tax increase arising from different rules in tax andaccounting practices, such as treatment on depreciation of fixed term land lease or
asset retirement obligation.
Based on such policy, INV intended to make distributions in excess of profits of JPY 43
per unit to offset a temporary decline in distribution per unit due to public offering andborrowing associated with the acquisition of two residential properties in the Previous
forecast. However, due to change in the estimated amount of Offering Expenses
described in “Non-operating expenses” above, INV revises the amount of excess profit
distribution per unit.
As described in “3. Excess profit distribution policy” above, the acquisition of “Hotel
MyStays Premier Hamamatsucho,” scheduled for May 29, 2017, is not leading to atemporary decline in distribution per unit due to dilution of investment units or significant
expenses to be recorded. Therefore, INV does not intend to make distributions inexcess of profits in connection with the effect of the acquisition of the property.
In addition, as described in “Units outstanding” above, the assumption of units issued
and outstanding has been changed from the Previous Forecasts.
Based on the above assumptions, INV intends to make distributions in excess of profitsof JPY 37 per unit to stabilize the distribution per unit.
In addition, INV also intends to make distributions in excess of profits (JPY 12 per unit
for the fiscal period ending June 2017, JPY 21 per unit for the fiscal period ending
December 2017) in order to cope with the discrepancy between tax and accounting
treatment for the fiscal period ending June 2017 and the fiscal period ending December
2017.

Excess profit distribution per unit

Other

June 2017 Fiscal
PeriodJPY 49December
2017
Fiscal Period
JPY 21

INV assumes there will be no amendments to applicable laws and regulations, thetaxation system, accounting standards and other regulations that would affect theforegoing forecasts.
In addition, INV assumes there will be no unforeseen material changes in general
economic trends, real estate market conditions and other trends and conditions.

This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

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(Appendix 2)<DPU Growth>This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

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(Appendix 3)<Performance of Existing Properties>(Note 1) Based on 38 hotel properties; of the 48 hotel properties in our portfolio as of the end of April 2017, 9
hotels with fixed‐rent lease agreements as well as Hotel MyStays Kanda, which were renovated in2016, are excluded(Note 2) Based on actual results of 66 residential properties owned by INV as of the end of 2015. Excludes
one-off insurance-related revenues and expenses

This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

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(Appendix 4)<Rent Increase Initiative>(Note 1) Based on the residential properties owned in relevant year excluding the performance for the
pre-acquisition period for the properties acquired during the year. The numbers of the properties atthe end each year is as follows: 63 properties for 2013, 63 properties for 2014, 66 properties for2015, and 68 properties for 2016, 70 properties for 2017 Jan-Apr(Note 2) Occupancy is calculated by dividing the sum of total residential leased area by the sum of total
residential leasable area at the end of each month of each year based on the properties owned in
the relevant year excluding the performance for the pre-acquisition period for the properties acquired
during the year.
(Note 3) Net Leasing Cost (Multiple of Monthly Rent) = Advertising Expenses (Multiple of Monthly Rent) +Free Rent (Multiple of Monthly Rent) – Key Money (Multiple of Monthly Rent). Multiple of Monthly
Rent is converted by the monthly rent for the relevant lease agreement during the relevant period
and rounded to two decimal places.
(Note 4) Renewal rate is calculated by the number of renewal rents during the relevant period divided by the
number of contracts due up for renewal during the relevant period. (Note 5) Average Rent
Increase/Decrease is increase or decrease (%) in the sum of monthly rents on new or renewal
contracts, or the total of both, compared with the sum of previous rents.

This English language notice is a translation of the Japanese-language notice released on May 25, 2017 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

14