[For Information Purpose Only.
The Japanese language press release should be referred to as the original.]
February 14, 2018
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 for the 29th Fiscal Period Ended
December 2017, together with Forecast of Financial Results and Distribution for the 30th
Fiscal Period Ending June 2018 and 31st Fiscal Period Ending December 2018
Invincible Investment Corporation (“INV”) today announced the revision of its forecast of financial
results for the fiscal period ended December 2017 (29th Fiscal Period), as previously announced in“Notice concerning Revision of Forecast of Financial Results for the 29th Fiscal Period Ending
December 2017” dated December 26, 2017, together with the newly announced forecast offinancial results and DPU for the fiscal period ending June 2018 (30th Fiscal Period) and fiscal
period ending December 2018 (31st Fiscal Period).

This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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

1.

Revision of forecasts of financial results for the fiscal period ended December 2017 (from July
1, 2017 to December 31, 2017)<Fiscal Period Ended December 2017>
Operating
Revenues

Operating
IncomeOrdinary
Income

JPY million

JPY million

JPY million

JPY million

Total
Distribution
Amount
JPY million

12,589

8,117

7,111

7,093

7,496

Revised forecast (B)JPY million
12,647

JPY million
8,223

JPY million
7,303

JPY million
7,303

JPY million

Amount of Variance(B) – (A)JPY million
57

JPY million
105
%
1.3

JPY million
209%

JPY million%
0.5

JPY million
192
%
2.7

3.0

-

Previous forecast (A)(announced on
December 26, 2017)

Rate of variance((B) – (A)) / (A)Distribution
per Unit
Earnings per
Unit (Note)(Excluding
Excess Profit
Distribution per

Net Income

Excess Profit
Distribution
per Unit (Note)%

Distribution
per Unit(Including Excess
Profit Distribution

JPY

JPY

JPY

JPY

1,479

1,479

85

1,564

JPY

JPY

JPY

JPY

1,523

1,528

36

1,564

Amount of Variance(B) – (A)

JPY

JPY

JPY

JPY

44

49

(49)

-

Rate of variance((B) – (A)) / (A)

%

%

%

%

3.0

3.3

(57.6)-

Revised forecast (B)-per Unit) (Note)Unit) (Note)Previous forecast (A)(announced on
December 26, 2017)

7,496(Note) The number of investment units issued and outstanding at the end of the fiscal period: 4,793,181 units

This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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2.

Forecasts of financial results and Distribution per Unit (“DPU”) for the fiscal periods ending
June 2018 (from January 1, 2017 to June 30, 2018 ) and December 2018 (from July 1, 2018 to
December 31, 2018)<Fiscal Period Ending June 2018>

Forecast for the fiscal
period ending June
2018

Forecast for the fiscal
period ending June
2018

Total
Distribution
AmountOperating
Revenues

Operating
IncomeOrdinary
Income

JPY million

JPY million

JPY million

JPY million

JPY million

12,784

8,081

7,370

7,369

6,628

Distribution
per Unit

Net Income

Excess Profit
Distribution
per Unit (Note)

Distribution
per Unit

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

JPY

JPY

JPY

JPY

1,537

1,383

-

1,383

(Including Excess
Profit Distribution
per Unit)(Note)(Note) The number of investment units issued and outstanding at the end of the fiscal period: 4,793,181 units<Fiscal period ending December 2018>

Forecast for the fiscal
period ending
December 2018

Forecast for the fiscal
period ending
December 2018

Total
Distribution
AmountOperating
Revenues

Operating
IncomeOrdinary
Income

JPY million

JPY million

JPY million

JPY million

JPY million

12,884

8,129

7,410

7,409

7,486

Distribution
per Unit

Net Income

Excess Profit
Distribution
per Unit (Note)

Distribution
per Unit

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

JPY

JPY

JPY

JPY

1,545

1,562

-

1,562

(Including Excess
Profit Distribution
per Unit)(Note)(Note) The number of investment units issued and outstanding at the end of the fiscal period: 4,793,181 units

Assumptions underlying the forecast of financial results and distributions for the fiscal periods ending
December 2017, June 2018, and December 2018 are provided in Appendix 1.

This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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

3.

Reasons for the revision and disclosure of forecast of financial results and distribution

INV is revising its forecast of financial results and DPU for the fiscal period ended December 2017
since the overall outlook has become clearer. INV is also disclosing the financial results and DPU
forecasts for the fiscal periods ending June and December 2018, after reflecting the updated
performance based on information currently available to INV and certain assumptions that are
deemed reasonable by INV. An overview of each fiscal period is as follows:<Fiscal Period Ended December 2017>
INV is revising the earnings forecast upward due to positive growth from the hotel and residential
assets, lower than expected expenses. Operating Revenues are forecast to increase by JPY
57million (+0.5%), Operating Income to increase by JPY 105 million (+1.3%), Ordinary Income toincrease by JPY 192 million (+2.7%) and Net Income to increase by JPY 209 million (+3.0%)
compared to the previous forecast. The previous DPU forecast remains unchanged at JPY 1,564 or
5.9% higher than the same period last year as slightly less distributions in excess of earnings will
be paid out and the distribution held consistent with prior guidance. The full year DPU for 2017 is
expected to be JPY 2,828 or 6.2% higher than the full year 2016 results.
INV completed the sale of one office building on December 26, 2017 and completed the sale ofthree residential properties on December 28, 2017 (collectively the “Dispositions”). The
Dispositions resulted in a gain of sales of JPY 1,102 million which increased the total earnings forthe fiscal period ended December 2017. INV is maintaining the overall DPU forecast of JPY 1,564
mainly by lower distribution in excess of earnings being paid out due to one-time transaction costs
associated with the equity offering and asset acquisitions in October 2017.
The combined NOI for the hotel and residential portfolio1for the fiscal period ended December 2017
increased by 2.8% compared to the previous year. The hotel portfolio2 maintained moderate growthas Occupancy3, ADR4, and RevPAR5 increased by 0.1pt, 0.8% and 0.9% respectively compared tothe same period in the previous year. Importantly, NOI for the period was up 3.6%. The residential
assets6 continue to perform strongly due to the rent increase program initiated in 2014. Residential
rents, compared with immediately preceding leases, increased by 2.4% across all new leases,
2.0% across all renewal leases, and 2.2% across all combined new and renewal leases for the
December 2017 fiscal period, resulting in NOI growth of 1.0%.
(Note 1) Based on 40 hotel properties and 70 residential properties. Please refer to Note 2 and Note 6 below
for the definition of 40 hotel properties and 70 residential properties.
(Note 2) Based on 40 hotel properties; of the 49 hotel properties held as of the beginning of December 2017
Fiscal Period, Nine hotels with fixed-rent lease agreements are excluded. Nine hotels with fixed-rentlease agreements are D29 Super Hotel Shinbashi/ Karasumoriguchi, D33 Comfort Hotel Toyama,
D36 Super Hotel Tokyo-JR Tachikawa Kitaguchi, D37 Super Hotel JR Ueno-iriyaguchi, D39 Comfort
Hotel Kurosaki, D40 Comfort Hotel Maebashi, D41 Comfort Hotel Tsubamesanjo, D42 Comfort
Hotel Kitami, and D48 Takamatsu Tokyu REI Hotel.
(Note 3) “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 4) “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 5) “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 thesame figure as that of a product of ADR and occupancy rate.
This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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

(Note 6) Based on the 70 residential properties owned as of the beginning of December 2017 Fiscal Period.
Of the 70 properties, three properties (Casa Eremitaggio, Lexel Mansion Ueno-Matsugaya and Sun
Terrace Minami-Ikebukuro) were sold on December 28, 2017. Therefore, for the three properties,
July 1, 2017 through December 28, 2017, or the disposition date, is deemed the operating period forthe fiscal period ended December 2017, and the leased area and the leasable area as of December
28, 2017 is deemed as the leased area and the leasable area as of the end of December 2017 to
calculate each number. Hereinafter the same shall apply. In addition, the figures for the properties
acquired after 2015 are calculated on the assumption INV had acquired those properties on January
1, 2016, using the actual figures provided by the sellers of such properties for the period before theacquisition., for the purpose of comparison with previous year
(Note 7) Excludes one-off insurance-related revenues and expenses. Further, the NOI figure is preliminary
and may change at the time of announcement of the financial results.

<Major Hotel Performance Indicators (40 hotel properties)1>

June fiscal
period (Actual)
Occupancy Rate
ADR (JPY)
RevPAR (JPY)GOP (JPY million)

89.0%
9,345
8,320
5,365

Decemberfiscal period(Previous
forecast)
92.2%
10,076
9,291
6,269

Y2017
Decemberfiscal period(Revised
Forecast)
90.6%
10,0839,131
6,232

Decemberfiscal period(Previous
forecast)+1.8pt
+0.7%
+2.7%
+3.9%

Y2017
Decemberfiscal period(Revised
Forecast)+0.1pt
+0.8%
+0.9%
+3.3%

Full-Year(Previous
forecast)

Full-Year(Revised
Forecast)

90.6%
9,720
8,809
11,634

89.8%
9,720
8,729
11,597Year-on-Year Changes

June fiscal
period (Actual)
Occupancy Rate
ADR (JPY)
RevPAR (JPY)GOP (JPY million)-0.8pt
+0.7%
-0.2%
+1.6%

Full-Year(Previous
forecast)

Full-Year(Revised
Forecast)+0.5pt
+0.7%
+1.3%
+2.8%

-0.3pt
+0.8%
+0.4%
+2.5%

(Note 1) For details of 40 hotel properties, please refer to “Note 2” above.

<Forecasts for Major Residential Performance Indicators (70 residential properties)1>

95.2%

Decemberfiscal period(Previous
forecast)
95.9%

Y2017
Decemberfiscal period(Revised
Forecast)
94.8%

9,595

9,775

2,597

2,594

June fiscal
period (Actual)
Occupancy Rate
Average Rent per
Tsubo (JPY)NOI (JPY million)2

Full-Year(Previous
forecast)

Full-Year(Revised
Forecast)

95.5%

95.0%

9,714

9,685

9,652

2,574

5,191

5,172

Year-on-Year Changes
This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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-0.9pt

Decemberfiscal period(Previous
forecast)+0.6ptY2017
Decemberfiscal period(Revised
Forecast)-0.5pt

+1.6%

+2.5%

+2.4%

+1.7%

June fiscal
period (Actual)
Occupancy Rate
Average Rent per
Tsubo (JPY)NOI (JPY million)2

Full-Year(Previous
forecast)

Full-Year(Revised
Forecast)-0.2pt-0.7pt

+1.9%

+2.1%

+1.7%

+1.0%

+2.0%

+1.7%

(Note 1) For details of 70 residential properties, please refer to “Note 6” above.
(Note 2) Excludes one-off insurance-related revenues and expenses for the purpose of comparison of
NOI.

<Fiscal Periods Ending June 2018 and December 2018>
INV discloses the financial and DPU forecasts for the fiscal periods ending June and December
2018, after reflecting updated performance based on information currently available to INV andcertain assumptions that are deemed reasonable by INV.
The DPU forecast for June 2018 is JPY 1,383 or 9.4% higher than June 2017, and the December
2018 DPU forecast is JPY 1,562 or -0.1% compared to December 2017. INV will be retaining
earnings or reserves1 of JPY 740MM or JPY 154 Yen per unit at the end of fiscal period ending
June 2018, to provide the ability to INV of paying out additional funds if needed to help maintain the
distribution in the event of decline in revenues or sudden increase in expenses, therefore INV
believes such retained earnings or reserves will contribute to stabilizing the DPU in the future. The
full year DPU forecast for 2018 is JPY 2,945 or 4.1% higher than 2017. Full year Operating
Revenues are forecast to increase by JPY 3,760 million (+17.2% higher than previous year),
Operating Income to increase by JPY 2,642 million (+19.5%), Ordinary Income to increase by JPY
2,773 million (+23.1%) and Net Income to increase by JPY 2,773 million (+23.1%) compared to theprevious forecast.
As announced on February 5, 2018, INV acquired four hotels (hereinafter “Four Hotels Properties”)
from affiliates of the Sponsor, Fortress Investment Group LLC (“FIG”), using proceeds from the saleof nine assets announced on December 21, 2017 and December 26, 2017, for a price of JPY
12,425 million and an average appraisal NOI cap rate of 6.2%2. The combined sales price of thenine assets and one assets (hereinafter, collectively “Ten Sold Assets”) is JPY 14,906 million whichis equivalent to a 4.2% NOI cap rate3 and 3.1% after depreciation4. INV will have JPY 4.7 billion of
cash, equivalent to the book value6 of Lexington Plaza Nishi-Gotanda to be sold, to make additional
acquisitions aiming to make the transactions even more accretive. INV is currently working on
additional hotel acquisition(s) from the Sponsor pipeline which INV aims to close in the near term5.
The Ten Sold Assets are sold at a JPY 2,607 million or 21.2% premium to book value6 and a JPY
2,185 million or 17.2% premium to appraisal value7. The Four Hotel Properties are well located andpositioned in their respective sub-markets and are all operated by MyStays Hotel Management Co.,
Ltd. (hereinafter “MHM”). The acquisition is in line with the INV’s overall growth strategy, in
acquiring properties expected to contribute growth and improvement in stability of income focusing
on investment in hotels located in Tokyo metropolitan area and those that could capture theincreasing demand from inbound visitors, with competitive location and spec at a high cap rate.
This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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

Importantly, this acquisition occurred without issuing any new debt or equity.
MHM is continually enhancing its operations and recently launched its new website which has
initially resulted in higher conversion rates. MHM is also in the process of launching a new online
reservation system in order to increase direct bookings to save commissions and have more direct
customers. MHM has also recently launched a new revenue management system based onmachine learning to improve the overbooking algorithms to help offset cancelation and improve
revenue at the hotels overall. MHM is continuing to court the increasing foreign tourism business
which accounted for 42% of INV owned MyStays Hotel revenue in 2017. In addition to having
multi-lingual chat and staff, MHM has sought to increase its Chinese guest count by being the firstJapanese hotel company to list its rooms on Fliggy, Alibaba’s online marketplace in China selling
hotels, tours and other travel-related services from online travel agencies and direct travel service
providers. MHM was the top international chain by revenue on Fliggy and won an award for Single’s
Day in China.
(Note 1) Investment corporations under the J-REIT system can deduct the amount of cash distributions in
calculating its taxable income as long as they satisfy certain conditions (conduit requirements), in
order to prevent double taxation between J-REIT and unitholders. The portion that is not used for
cash distribution, however, will be subject to corporate income tax and other taxes. INV has some
tax loss carried forward resulted from the merger in the past, and by utilizing such tax loss carriedforward, INV can reserve its retained earnings without paying corporate income tax and other taxes.
(Note2) Averaged appraisal NOI yield of the four hotel properties is calculated by dividing the total NOI
derived from the direct capitalization method stated in the appraisal reports by The Tanizawa Sōgō
Appraisal Co., Ltd. on the valuation date of January 1, 2018 by the total acquisition price, androunded to one decimal place.
(Note3)Calculated by dividing aggregated actual NOI for January 1, 2017 – December 31, 2017 of
Properties (to be) Sold by the (anticipated) sale price.

(Note4)

Calculated by dividing aggregated actual NOI (after deducting the depreciation expenses) for
January 1, 2017 – December 31, 2017 of Property (to be) Sold by the (anticipated) sale price.

(Note5) The abovementioned planned acquisition will be announced at a later date, when it is determined.
Although such acquisition is under consideration as of today, INV may not determine or executesuch acquisition, and there is no assurance that INV will determine or execute such acquisition.
(Note6) Premium to book value is the difference between (anticipated) sales price and book value, whichindicates estimate for reference purpose calculated using the book value as of December 31, 2017
for Lexinton Plaza Nishi-Gotanda and other properties sold in 2018, and as of the date of sale forother properties sold in 2017, and it is different from the actual gain on sale.
(Note7) Appraisal Value is based on appraisal value stated in the appraisal report on the valuation date ofDecember 31, 2017 for Lexinton Plaza Nishi-Gotanda and as of December 1, 2017 for the othernine properties.

This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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Earnings per unit and distribution per unit for the full year 2017 and 2018 are as follows:<Full-year 2017> (Aggregate of the fiscal periods ended in June 2017 and December 2017)
Distribution
per Unit

Excess Profit
Distribution
per Unit (Note)

Distribution
per Unit

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

JPY

JPY

JPY

JPY

2,696

2,722

106

2,828

JPY

JPY

JPY

JPY

2,740

2,771

57

2,828

Amount of variance(B)- (A)

JPY

JPY

JPY

JPY

44

49

(49)

-

Rate of variance((B) – (A)) / (A)

%

%

%

%

1.6

1.8

(46.2)-

Previous forecast (A)(December 26, 2017)
Revised forecast (B)(Including Excess
Profit Distribution
per Unit)(Note)(Note) The number of investment units issued and outstanding at the end of the fiscal periods:
3,860,824 units (fiscal period ended June 2017),
4,793,181 units (fiscal period ended December 2017)<Full-year 2018> (Aggregate of the fiscal periods ending in June 2018 and December 2018)

Forecast

Distribution
per Unit

Excess Profit
Distribution
per Unit (Note)

Distribution
per Unit

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

JPY

JPY

JPY

JPY

3,082

2,945

-

2,945

(Including Excess
Profit Distribution
per Unit)(Note)(Note) The number of investment units issued and outstanding at the end of the fiscal period: 4,793,181 units

Website of INV: http://www.invincible-inv.co.jp/eng

This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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

(Appendix 1)<Assumptions Underlying the Forecast of Financial Results and Distribution for the
December 2017, June 2018, and December 2018 Fiscal Periods>
Item

Fiscal Period

Assumptions
The December 2017 fiscal period: from July 1, 2017 to December 31, 2017 (184 days)
The June 2018 fiscal period: from January 1, 2017 to June 30, 2018 (181 days)
The December 2018 fiscal period: from July 1, 2018 to December 31, 2018 (184 days)
Assets held as of the end of December 2017 fiscal period: 125 properties and preferred
equity interests in one special purpose company
Assets held as of the end of the June 2018 fiscal period: 123 properties and preferred equity
interests in one special purpose company
Assets held as of the end of the December 2018 fiscal period: 123 properties and preferred
equity interests in one special purpose company

Assets underManagement

Units Outstanding

INV assumes the transfer of two office buildings and three residential properties on January
31, 2018, the acquisition of four hotel properties on February 7, 2018 and the transfer of one
office building on March 9, 2018 and that there will no other changes through the end of the
fiscal period ending December 2018.
However, INV is considering acquisition of properties during the fiscal period ending June2018 by utilizing the proceeds to be obtained from the sale of one office building on March
9, 2018.
As of the end of December 2017 fiscal period: 4,793,181 units
As of the end of the June 2018 fiscal period: 4,793,181 units
As of the end of the December 2018 fiscal period: 4,793,181 units
INV assumes there will be no change to the current 4,793,181 units issued and outstanding
through the end of the fiscal periods.

Balance as of the end of December 2017 fiscal period: JPY 186,983 million
Balance as of the end of the June 2018 fiscal period: JPY 186,983 million
Balance as of the end of the December 2018 fiscal period: JPY 185,915 million
Interest-Bearing
Liabilities

INV assumes that of the current balance of JPY 186,983 million, INV intends to repay
consumption tax loan of JPY 1,068 million and refinance short term loan of JPY 2,000
million in December 2018 fiscal period at a similar condition. INV assumes no other new
loan or prepayment of loan through the end of the December 2018 fiscal period.

This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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 record operating revenues for each fiscal period as follows:・Rental revenues(of these, hotel rents)(fixed hotel rents)(variable hotel rents)
・Dividend amount・Gain on sale

December 2017
Fiscal Period
JPY 11,403 mn(JPY 7,364 mn)(JPY 3,623 mn)(JPY 3,741 mn)
JPY 1,244 mn

June 2018
Fiscal Period
JPY 11,592 mn(JPY 7,020 mn)(JPY 3,553 mn)(JPY 3,467 mn)
JPY 763 mn
JPY 1,191 mn

December 2018
Fiscal Period
JPY 12,884 mn(JPY 8,316 mn)(JPY 4,320 mn)(JPY 3,995 mn)
JPY 876 mn-

INV estimates gain on sales of JPY 141 million from sale of Kindai Kagaku Sha Building andTimes Kanda-Sudacho 4th completed on July 31, 2017, and JPY 1,102 million from sale ofCasa Eremitaggio, Lexel Mansion Ueno Matsugaya and Sun Terrace Minami-Ikebukuro
completed on December 28, 2017 for the fiscal period ended December 2017.
INV estimates gain on sales of JPY 796 million from sale of Harmony Ochanomizu, Growth
Maison Ikebukuro and Capital Heights Kagurazaka completed on January 31, 2018, and
JPY 395 million from sale of Lexinton Plaza Nishi-Gotanda to be completed on March 9,2018 for the fiscal period ending June 2018.
Operating Revenues

Moreover, we estimate the amount of dividends on the preferred equity interests based on
the performance of the underlying asset and the assumed amount incurred by the special
purpose company. However, since the first dividends from the special purpose company will
be paid after January 1, 2018, there is no dividend income for the fiscal period ending
December 2017.
Rental revenues in the fiscal period ended December 2017, the fiscal period ending June
2018, and the fiscal period ending December 2018 are calculated based on estimates as oftoday. In addition, INV assumes there will be no delinquencies or non-payment of rent bytenants.
The majority of INV’s owned hotels use a variable rent scheme linked to performance of therelevant hotel. Hotel demand is affected by seasonal factors and the December ending
fiscal periods (from July to December) which include summer holiday and autumn outing
seasons tend to record higher revenue than the June ending fiscal periods (from January toJune). Accordingly, rental revenue of INV tends to be higher in the December ending fiscal
periods than in the June ending fiscal periods.

This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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

Assumptions
INV expects to incur property related expenses for each fiscal period as follows:
December 2017
Fiscal Period
・Facility management
fees (of these, repair
costs)
・Taxes and other publiccharges・Insurance expenses
・Depreciation
expenses・Other expenses
Total property related
expenses

Operating Expenses

June 2018
Fiscal Period

December 2018
Fiscal Period

JPY 510 mn(JPY 21 mn)

JPY 503 mn(JPY 36 mn)

JPY 463 mn(JPY 28 mn)

JPY 470 mn

JPY 459 mn

JPY 538 mn

JPY 11 mn

JPY 11 mn

JPY 14 mn

JPY 2,567 mn

JPY 2,842 mn

JPY 2,871 mn

JPY 402 mn

JPY 403 mn

JPY 387 mn

JPY 3,962 mn

JPY 4,221 mn

JPY 4,274 mn(Note) Property taxes and city planning taxes on the assets acquired in 2017 are calculated
on a pro-rata basis with the previous owners and settled at the time of acquisition, and are
not recorded for the fiscal period ending December 2017 and recorded from the fiscal period
ending June 2018 as the amount equivalent to such settlement is included in the acquisitioncost.
INV expects to incur other operating expenses than the property related expenses for eachfiscal period as follows:
December 2017
Fiscal Period

June 2018
Fiscal Period

December 2018
Fiscal Period

・Other operating
JPY 461 mn
JPY 481 mn
JPY 479 mn
expenses(of these, asset(JPY 250 mn)(JPY 275 mn)(JPY 275 mn)
management fees)(of these, impairment(JPY 15 mn)
loss)
Although the sale of Ohki Aoba Building was implemented on January 31, 2018 which falls
into the fiscal period ending June 2018, the decision of such sale resulting in loss on sale
was determined on December 26, 2017, or during the fiscal period ended December 2017.
Therefore, INV recognizes such loss of JPY 15 million as an impairment loss for the fiscal
period ended December 2017. (Note)

This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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.

11

Item

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

・NOI

Net Operating Income

December 2017
Fiscal Period
JPY 10,008 mn

June 2018
Fiscal Period
JPY 10,213 mn

December 2018
Fiscal Period
JPY 11,480 mn(JPY 7,027 mn)(JPY 6,668 mn)(JPY 7,898 mn)(of these, hotel NOI)(JPY 2,549 mn)(JPY 2,522 mn)(of these, residential NOI) (JPY 2,616 mn)(of these, dividend
JPY 763 mn
JPY 876 mn
amount)NOI calculation method in the above table is as follows
・NOI＝ Rental Revenues (including the amount of dividends on the preferred equity
interests) ‐ Property Related Expenses + Depreciation Expenses
However, since the first dividends from the special purpose company will be paid afterJanuary 1, 2018, there is no dividend income for the fiscal period ended December
2017.
Since the first dividends from the special purpose company will be paid after January 1,
2018, there is no dividend income for the fiscal period ending December 2017.

INV expects to incur non-operating expenses for each fiscal period as follows:

Non-Operating
Expenses

Extraordinary Loss・Interest expense
・Finance related costs
・Other non-operating
expenses (of these,
expenses relating to
public offering)
Total Non-operating
expenses

December 2017
Fiscal Period
JPY 445 mn
JPY 304 mn

June 2018
Fiscal Period
JPY 478 mn
JPY 233 mn

December 2018
Fiscal Period
JPY 484 mn
JPY 234 mn

JPY 170 mn(JPY 170 mn)

(-)

(-)

JPY 920 mn

JPY 711 mn

JPY 719 mn

Not applicable.
While INV announced in “Notice concerning Revision of Forecast of Financial Results forthe 29th Fiscal Period Ending December 2017” dated December 26, 2017that it would
record an impairment loss with regard to sale of Ohki Aoba Building as an extraordinary loss
for the fiscal period ended December 2017, INV will record such impairment loss as
operating expenses for the fiscal period ended December 2017.
The distribution per unit is calculated in accordance with the cash distribution policy as set
forth in INV’s Articles of Incorporation.

Distribution per Unit

With respect to the distribution for the fiscal period ending December 2017, INV expects todistribute an aggregate amount of JPY 7,496 million (distribution per unit: JPY 1,564); INV
will pay JPY 7,323 million as profit distribution, out of distributable profit of JPY 7,326 million
which is a total of Net Income for the fiscal period ended December 2017 (JPY 7,303
million) adjusted by loss brought forward from the previous fiscal period and deferred tax
gain or loss. In addition, INV will pay excess profit distribution (JPY 172million)
With respect to the distribution for the fiscal period ending June 2018, INV expects todistribute an aggregate amount of JPY 6,628 million (distribution per unit: JPY 1,383) whichis the remaining amount after retaining JPY 740 million as internal reserve from Net Income
for the fiscal period ending June 2018 (JPY 7,369 million).
With respect to the distribution for the fiscal period ending December 2018, INV expects todistribute an aggregate amount of JPY 7,486 million (distribution per unit: JPY 1,562) based

This English language notice is a translation of the Japanese-language notice released on February 14, 2018 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.

12

Item

Assumptions
on JPY 7,405 million from Net Income for the fiscal period ending December 2018 (JPY
7,409 million) and JPY 81 million from internal reserve.
For the fiscal period ending December 2017, INV expects to record deferred gain on hedgeof the interest rate swap as the valuation and conversion adjustments, etc. of JPY 113
million. INV assumes a same amount of deferred gain on hedge of the interest rate swap as
the valuation and conversion adjustments, etc. for the fiscal periods ending June 2018 andDecember 2018. The distribution per unit is calculated based on the assumption thatfluctuation of the market value of the interest rate swap does not affect the distribution perunit.
Distribution per unit may vary due to various factors, including changes of the assets undermanagement, fluctuation of rent income associated with reasons such as change of tenants
and occurrences of unexpected repairs.
INV does not assume distributions in excess of profits from allowance for temporary
differences adjustment, based on the assumption that the market value of the interest rate
swap will remain unchanged for fiscal periods ending December 2017, June 2018 andDecember 2018.

Excess Profit
Distribution per Unit

INV believes maintaining the stability of cash distributions over the medium term is one of
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 orderto stabilize 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 theraising of capital, leading to a temporary decrease in distribution per unit, taking into
consideration the level of distribution per unit assuming such acquisition of assets or capitalraising 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.
With respect to the fiscal period ending December 2017, due to one-off expenses inconnection with the public offering and the borrowings, earnings per unit is expected todecrease. Therefore, from the perspective of maintaining stable distributions, INV intends tomake distributions in excess of profits (JPY 36 per unit) within the scope of the expectedshortfall between actual earnings per unit and the simulated earnings per unit after thetransactions mentioned above.
Moreover, INV will not make distributions in excess of profits for the fiscal period ending
June 2018, as INV intends to retain a certain amount of the net income.
Further, while INV will not make distributions in excess of profits as INV will have a certain
amount of internal reserve, INV intends to distribute a certain amount from internal reservein order to cope with the discrepancy between tax and accounting treatment,.
December 2017
Fiscal Period
・Excess profit distribution
per unit

Other

JPY 36

June 2018
Fiscal Period

December 2018
Fiscal Period--

INV assumes there will be no amendments to applicable laws and regulations, the taxation
system, accounting standards and other regulations that would affect the foregoing
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 February 14, 2018 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.

13