[For Information Purpose Only.
The Japanese language press release should be referred to as the original.]
December 9, 2022
To All Concerned Parties
Name of REIT Issuer:
Invincible Investment Corporation
Naoki Fukuda, Executive Director(Securities code: 8963)
Asset manager:
Consonant Investment Management Co., Ltd.
Naoki Fukuda, President & CEO
Contact: Jun Komo
General Manager of Planning Department(Tel. +81-3-5411-2731)

Notice concerning Conclusion of Memorandum of Understanding to Amend the Fixed-term
Building Lease and Property Management Agreement pertaining to the rent conditions forthe period from October to December 2022 with Major Tenant
Invincible Investment Corporation (“INV”) announced the decision to enter into a Memorandum ofUnderstanding (the “MOU”) to amend each fixed-term building lease and property management agreement("MLPM Agreements") pertaining to the rent conditions for the period from October 1, 2022 to December 31,
2022 for domestic hotels owned by INV with INV's main tenant, MyStays Hotel Management Co., Ltd. (“MHM”)
and its affiliates (the "MHM Group"), who operate the hotels, as decided today by Consonant Investment
Management Co., Ltd. (“CIM”), the asset manager of INV.
The MHM Group has received investments through funds managed by affiliates of the Sponsor, Fortress
Investment Group LLC (“FIG”). Therefore, CIM has treated the MHM Group as equivalent to Sponsor-related
Persons. As such, CIM and INV have sincerely deliberated, discussed, and resolved to enter into the MOU in
accordance with the internal rules of CIM to handle the related party transactions.
1. Outline of the MOU
Since the spread of the new coronavirus (COVID-19) began to have a tremendous impact on the hotel
sector, INV entered into an MOU with the MHM Group to amend each MLPM Agreement eight times intotal starting from May 11, 2020 (collectively referred to as the “Executed MOU”).

For details of thepreviously Executed MOU, please refer to each press release described in "5. Reference Press Release List"
below.
These Executed MOU were agreed as a tentative measure with respect to the 73 domestic hotels leased
through the trustees to the MHM Group (the “Subject Properties”) for the period from March 1, 2020 to
September 30, 2022. Thus, unless otherwise agreed, from October 2022 onward, the terms and conditions
This English language notice is a translation of the Japanese-language notice released on December 9, 2022 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 toundertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language notice isprovided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and theJapanese original, the latter shall prevail in all respects.

1

under the MLPM Agreements prior to the amendment by each MOU (hereinafter referred to as the"Original Leasing Terms and Conditions") will be applied. Demand for domestic hotels owned by INV is
generally on a recovery trend, and the total GOP of all Subject Properties (73 properties) during the period
from October 1, 2022 to December 31, 2022 (the "Fourth Quarter of 2022") is trending at a level thatexceeds the total fixed rent stipulated in the Original Leasing Terms and Conditions by about 40%.
However, on an individual hotel basis, GOP of some hotels is still below the fixed rent stipulated in theOriginal Leasing Terms and Conditions, in which the rent payment is calculated for each hotel. Therefore,(i) for hotels where the GOP exceeds the fixed rent, MHM will pay out all the surpluses as variable rent,
while (ii) for hotels where the GOP is lower than the fixed rent, MHM group needs to compensate for thedifference between the fixed rent and the GOP, making it difficult for MHM Group, which has limited bookequity given it’s a hotel management company, to pay the rent based on the Original Leasing Terms andConditions. Therefore, to make it possible for the MHM Group to continue the hotel operation of the
Subject Properties, certain changes in Original Leasing Terms and Conditions is inevitable even after
October 2022.
Under such circumstances, INV has concluded that INV must accept to amend a part of the MLPM
Agreement as an additional tentative measure in order to continue the operations of the Subject Properties,
upon giving due consideration to INV’s interests to the fullest extent as well as its financial conditions.
Consequently, as a result of discussions and negotiations with the MHM Group, INV and CIM determined
to enter into the MOU with the MHM Group and change the Original Leasing Terms and Conditions as
described below as a tentative measure for the Fourth Quarter of 2022 with respect to the Subject
Properties. The period to be covered by the temporary reduction measures will be three months, thesame as the MOU to amend MLPM Contract concluded on December 8, 2021 (hereinafter referred to as
the “December 2021 MOU”). In calculating the variable rent, in summary, if the total GOP of all Subject
Properties (73 properties) is positive after deducting the management services fees and the total fixed
rent on a three-month basis, INV will receive the positive amount as variable rent.

This English language notice is a translation of the Japanese-language notice released on December 9, 2022 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 toundertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language notice isprovided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and theJapanese original, the latter shall prevail in all respects.

2

Items subject toOriginal Leasing Terms

Tentative Measures

Changeand Conditions(Fourth Quarter of 2022)

Fixed rent

Approx. JPY 2,685 million(For Reference)
Tentative Measures(Fourth Quarter of 2021)

Approx. JPY 2,685 million

JPY 950 million (Approx.

(Total rent for(Same as the total fixed

35% of the amount under

three months forrent amount under thethe Original Leasing Terms

73 properties)

Original

and Conditions)

Leasing

Terms

and Conditions)
Variable rent

Calculated on a 3-monthCalculated by summing

Same as in the column tobasis for each hotel.

up the rent of all 73

the left.

properties
The amount obtained bymonthsdeducting

(i)

the

below.

amountofexpenses,management

services

total

fees, and fixed rents of the

for
as

three

described

The amount obtained bydeducting (i) the above

hotel property from (ii) the

total fixed rent (the total

total monthly sales of therent for three months for

hotel

property(iftheresultsareaggregate of the amountnegative, the amount shallfor three months for 73

calculation
be JPY 0).

73 properties) from (ii) the

properties, which amountis obtained by deducting
the management services
fees for the hotel for eachmonth from the monthly
GOP(operating

gross

profit) for each hotel forthe same month (if thecalculation

results

negative,

the

are

amountshall be JPY 0).
Payment

Paid on a hotel-by- hotel

Paid on a total basis of 73 Same as in the column tomethod of rent

basis.

hotel properties.

the left.

This English language notice is a translation of the Japanese-language notice released on December 9, 2022 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 toundertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language notice isprovided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and theJapanese original, the latter shall prevail in all respects.

3

Payment date

The due date is the 11th

On February 10, 2023,

On February 10, 2022,of the month which is two

the sum of the total fixed

the sum of the total fixedmonths from the month inrent and the total variable

rent and the total variablewhich the last day of therent shall be paid.

rent shall be paid.

calculation

periodfalls(for the fixed rent, every
month,

and

for

the

variable rent, every threemonths).

The total fixed rent (for 73 properties for three months in aggregate) set forth in the MOU is the same as
the total fixed rent amount stipulated in the Original Leasing Terms and Conditions, and is about 2.8 times
as much as the total fixed rent (for 73 properties for three months in aggregate) of JPY 950 million in the
Fourth Quarter of 2021, reflecting the recovery of the hotel market. If the GOP for the Subject Properties(after deducting the management services fees) for the Fourth Quarter of 2022 performs well, and thereby
the actual result exceeds the total amount of the fixed rent (for 73 properties for three months in aggregate),
INV will receive the amount of such excess amount as variable rent.

Contrary to the MOU to amend the MLPM Contract concluded on May 11, 2020, INV will not bear theproperty management costs nor increase the amount of the management services fees payable to the
MHM Group under the provisional measure by the MOU.
For the list of the Subject Properties, please refer to the Appendix. For an overview of the current leaseagreements, including the terms and conditions of rent for each Subject Property, please refer to “Part I
Fund Information / 1 Status of Fund / 5 Management Status / (2) Investment Assets” of the Securities
Report for the 38th fiscal period (from January 1, 2022 to June 30, 2022) filed by INV on September 26,
2022 (available in Japanese only).
INV plans to make this change a provisional measure for the period up to the end of December 2022, and,if necessary, to discuss the details of the changes in the leasing terms and conditions after such period
based on the future situation.
2. Outline of MHM
(i)
(ii)

Name

(iii)

Title and name of
President and CEO, Ryoichi Shirota
representative officer
Business
Hotel and Ryokan (Japanese inn) operation and management
CapitalJPY 100 million (as of the end of November 2022)
Date of establishment
July 8, 1999
Relationship between INV/Asset Manager and the Tenant/Operator

(iv)
(v)
(vi)
(vii)

Location

MyStays Hotel Management Co., Ltd.
Roppongi Hills North Tower 14th Floor, 6-2-31, Roppongi, Minato-ku,
Tokyo, Japan

This English language notice is a translation of the Japanese-language notice released on December 9, 2022 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 toundertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language notice isprovided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and theJapanese original, the latter shall prevail in all respects.

4

(Note 1)

Capital relationships

While there are no capital relationships that should be noted between
INV/CIM and MHM, the parent company of MHM is owned by a fundoperated by affiliates of FIG. FIG is a subsidiary of SoftBank Group
Corp., which directly and indirectly holds 100% of CIM’s outstanding
shares.

Personnel relationships

As of today, among the directors of INV and the officers andemployees of CIM, Naoki Fukuda, who is Executive Director of INV
and CEO of CIM, Naoto Ichiki, who is Chairman and Director of CIM,
and Christopher Reed, who is a part-time director of CIM, areseconded from Fortress Investment Group Japan Godo Kaisha, asubsidiary of FIG.

Transactional relationships

As of today, INV has entered into lease agreements (Note 1) with MHM
with respect to 73 hotel properties.

Whether the
Tenant/Operator is arelated party

MHM is not a related party of INV/CIM. Further, related persons andaffiliates of MHM are not related parties of INV/CIM. Furthermore,
MHM is not an interested party, etc. of CIM as provided in the Act on
Investment Trusts and Investment Corporations.

Agreements with MHM subsidiaries and management contracts between MHM and tenants are included.

3. Transactions with Interested Persons etc.
The MHM Group, tenants and operators of the Subject Properties, are not Sponsor-related Persons (Note)under the voluntary rules established by CIM as countermeasures against conflicts of interests in the
management of INV’s investments. However, MHM or its Affiliates have received investments throughfunds managed by affiliates of the Sponsor, FIG. Therefore, CIM has treated MHM or its Affiliates as
equivalent to Sponsor-related Persons.
In accordance with Sponsor-Related Person Transaction Rules and Sponsor-Related Person Transaction
Management Manual, which are internal rules of CIM, and following the deliberation and resolution of thecompliance committee meeting and the investment committee meeting both held on December 9, 2022,
the board of directors of CIM and INV held on the same date each approved the conclusion of the MOU.
(Note) A Sponsor-related Person is (i) any person who falls under the “Interested Persons, etc.” set forth in the Investment Trust
Act and the Orders for Enforcement of the Act on Investment Trust and Investment Corporations, (ii) all shareholders of CIM
and (iii) special purpose companies (tokubetsu mokuteki kaisha) (a) which delegate their management to persons who fallunder (ii) above, or (b) which are invested by or invested through anonymous partnership (tokumei kumiai) by persons who
fall under (ii) above. Hereinafter the same.

4. Future Outlook
The impact of the conclusion the MOU is already incorporated in INV’s forecasts for financial results anddistribution for the fiscal period ending December 2022 (from July 1, 2022 to December 31, 2022) asannounced in “Notice concerning Revision of Forecast of Financial Results and Distribution for the 39th
Fiscal Period Ending December 2022”.

This English language notice is a translation of the Japanese-language notice released on December 9, 2022 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 toundertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language notice isprovided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and theJapanese original, the latter shall prevail in all respects.

55. Reference Press Release List
May 11, 2020
Notice concerning Conclusion of Memorandum of Understanding to Amend the Fixed-term Building
Lease and Property Management Agreement with Major Tenant
September 11, 2020
Notice concerning Conclusion of Memorandum of Understanding to Amend the Fixed-term Building
Lease and Property Management Agreement pertaining to the rent conditions for the period from Julyto September, 2020 with Major Tenant
December 11, 2020
Notice concerning Conclusion of Memorandum of Understanding to Amend the Fixed-term Building
Lease and Property Management Agreement pertaining to the rent conditions forthe period from October to December, 2020 with Major Tenant
March 11, 2021
Notice concerning Conclusion of Memorandum of Understanding to Amend the Fixed-term Building
Lease and Property Management Agreement pertaining to the rent conditions for the period fromJanuary to June, 2021 with Major Tenant
September 10, 2021
Notice concerning Conclusion of Memorandum of Understanding to Amend the Fixed-term Building
Lease and Property Management Agreement pertaining to the rent conditions for the period from Julyto September, 2021 with Major Tenant
December 8, 2021
Notice concerning Conclusion of Memorandum of Understanding to Amend the Fixed-term Building
Lease and Property Management Agreement pertaining to the rent conditions for the period from
October to December, 2021 with Major Tenant
March 11, 2022
Notice concerning Conclusion of Memorandum of Understanding to Amend the Fixed-term Building
Lease and Property Management Agreement pertaining to the rent conditions for the period fromJanuary to June, 2022 with Major Tenant
September 9, 2022
Notice concerning Conclusion of Memorandum of Understanding to Amend the Fixed-term Building
Lease and Property Management Agreement pertaining to the rent conditions for the period from
July to September, 2022 with Major Tenant

Website of INV: https://www.invincible-inv.co.jp/en/

This English language notice is a translation of the Japanese-language notice released on December 9, 2022 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 toundertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language notice isprovided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and theJapanese original, the latter shall prevail in all respects.

6

(Appendix)
List of Subject Properties
PropertyNo.
D1

Hotel MyStays Kanda

Property
No.
D47

D2

Hotel MyStays Asakusa

D49

Hotel MyStays Premier Hamamatsucho

D3

Hotel MyStays Kyoto-Shijo

D50

Hotel MyStays Shin Osaka Conference Center

D4

MyStays Shin-Urayasu Conference Center

D51

Hotel MyStays Premier Omori

D5

Hotel MyStays Maihama

D52

Kamenoi Hotel Beppu(formerly, Beppu Kamenoi Hotel)

D6

Hotel MyStays Premier Dojima

D53

Hotel MyStays Sapporo Station

D7

Hotel MyStays Nagoya-Sakae

D54

Hotel MyStays Yokohama Kannai

D8

Hotel MyStays Sakaisuji-Honmachi

D55

Art Hotel Joetsu

D9

Hotel MyStays Yokohama

D56

Art Hotel Hirosaki City

D10

Hotel MyStays Nippori

D57

Hotel MyStays Oita

D11

Hotel MyStays Fukuoka-Tenjin-Minami

D58

Hotel MyStays Gotanda

D12Flexstay Inn Iidabashi

D59

Hotel MyStays Tachikawa

D13

Hotel MyStays Ueno Inaricho

D60

Hotel MyStays Premier Akasaka

D14

Flexstay Inn Shinagawa

D61

Hotel MyStays Premier Sapporo Park

D15

Flexstay Inn Tokiwadai

D62

Hotel MyStays Ueno East

D16

Flexstay Inn Sugamo

D63

Hotel MyStays Midosuji Honmachi

D17

Hotel MyStays Otemae

D64

Hotel MyStays Sapporo Aspen

D18

Flexstay Inn Kiyosumi Shirakawa

D65

Art Hotel Ishigakijima

D19

Flexstay Inn Nakanobu P1

D66

Hotel MyStays Fuji Onsen Resort

D20

Flexstay Inn Nakanobu P2

D67

Hotel Sonia Otaru

D22

Hotel MyStays Hakodate-Goryokaku

D68

Hotel MyStays Kanazawa Castle

D23

Flexstay Inn Shirogane

D69

Art Hotel Niigata Station

D24

Hotel MyStays Haneda

D70

Hotel MyStays Nagoya Nishiki

D25

Hotel MyStays Kameido P1

D71

Hotel Nord Otaru

D26

Hotel MyStays Ueno Iriyaguchi

D72

Hotel MyStays Kagoshima Tenmonkan

D27

Hotel MyStays Kameido P2

D73

Art Hotel Asahikawa

D28

Hotel MyStays Shimizu

D74

Hotel MyStays Matsuyama

D30

Flexstay Inn Higashi-Jujo

D75

Hotel MyStays Sapporo Susukino

D31

Hotel MyStays Utsunomiya

D76

Hotel MyStays Sapporo Nakajima Park

D32

Flexstay Inn Kawasaki-Kaizuka

D77

Hotel MyStays Sapporo Nakajima Park Annex

D34

Flexstay Inn Kawasaki-Ogawacho

D78

Flexstay Inn Sakuragicho

D35

Flexstay Inn Ekoda

D79

MyCUBE by MYSTAYS Asakusa Kuramae

D38

Hotel MyStays Shinsaibashi

D80

Hotel MyStays Kagoshima Tenmonkan Annex

D43

Hotel MyStays Gotanda Station

D81

Hotel MyStays Nayoro

D44

Hotel Epinard Nasu

D82

Hotel MyStays Premier Narita

D45

Hotel MyStays Fukuoka Tenjin

D83

Art Hotel Morioka

D46

Hotel MyStays Hamamatsucho

Property Name

Property Name
Hotel MyStays Premier Kanazawa

This English language notice is a translation of the Japanese-language notice released on December 9, 2022 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 toundertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese-language notice isprovided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English
translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and theJapanese original, the latter shall prevail in all respects.

7