Investment
Invincible Corporation

Financial Summary
for the 24th Fiscal Period(from January 1, 2015 to June 30, 2015)

Name
Representative
Stock Listing
Securities CodeURL
Contact

:
:
:
:
:
:

Invincible Investment Corporation
Naoki Fukuda, Executive Director
Tokyo Stock Exchange8963
http://www.invincible‐inv.co.jp/eng/
Consonant Investment Management Co., Ltd.
(Asset Manager of Invincible Investment Corporation)
Akiko Watanabe, Manager, Planning Department
Tel. +81‐3‐5411‐2731

Start date fordividend distribution: September 29, 2015

This English language notice is a translation of the Japanese-language notice released on August 26, 2015 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 Japaneselanguage notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completenessof this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between thistranslation and the Japanese original, the latter shall prevail in all respects.

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period1.

(values are rounded down to the nearest million yen)
Financial Results for the Fiscal Period ended June 30, 2015 (from January 1, 2015 to June 30, 2015)(1)

Operating Results

Fiscal period ended
June 30, 2015
Fiscal period ended
December 31, 2014

Operating Revenues(Percentages indicate percentage change from the preceding period)
Operating Income
Ordinary Income
Net Income

Millions of yen%

Millions of yen

4,974

7.9

2,810

1.5

2,295

4,610

22.1

2,769

24.0

1,958

Net Income per Unit%

Millions of yen%

Millions of yen

%

17.2

2,295

17.2

117.0

1,958

117.1

Ordinary Income/
TotalAssets

Net Income/Unitholders’ Equity

Ordinary Income/OperatingRevenues

Fiscal period ended
June 30, 2015

yen

%

%

%

860

3.7

1.7

46.2

Fiscal period ended
December 31, 2014

762

4.0

1.9

42.5

(Note)(2)“Net Income per Unit” is calculated based on the average number of investment units during the period and is rounded to the nearest yen.
Net income per unit calculated based on the number of investment units issued and outstanding at the end of the fiscal period ended
December 31, 2014 (2,668,686 units) and rounded down to yen is JPY 860.

Distributions
Distribution
Distribution per
AmountUnit (Excluding
Excess Profit(Excludingexcess profit
Distribution per
excess profit
distribution per
Unit
distribution per
unit)
unit)

Excess Profit
Distribution
AmountDividend Payout
Ratio

Distribution/
Net AssetsyenMillions of yen

yen

Millions of yen%%

Fiscal period ended
June 30, 2015

860

2,295

0

0

100.0

3.7

Fiscal period ended
December 31, 2014

733

1,956

0

0

99.9

3.2

(Note)(3)

Dividend payout ratio is calculated by dividing “Distribution Amount” by “Net Income”.

Financial Position
Total Assets
Fiscal period ended
June 30, 2015

Fiscal period ended
December 31, 2014

Net Assets

Net Assets/Total Assets

Net Assets per Unit

Millions of yen

Millions of yen%

yen

136,299

61,731

45.3

23,132

130,477

61,39247.1

23,005(Note)“Net Assets per Unit” is calculated based on the number of investment units issued and outstanding at the end of each period, and is rounded
to the nearest yen.

(4)

Cash Flows
Cash Flows fromOperating Activities

Fiscal period ended
June 30, 2015
Fiscal period ended
December 31, 2014

Cash Flows from
Investment Activities

Cash Flows from
Financing Activities

Closing Balance of Cashand Cash Equivalents

Millions of yen

Millions of yen

Millions of yen

Millions of yen

4,545(13,202)

3,006

7,514

1,209

(40,119)

48,551

13,1652 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period2.

Forecast for the Fiscal Period ending December 31, 2015 (from July 1, 2015 to December 31, 2015)(Percentages in brackets represent change from preceding period)
Distribution
Distributionper
per
Excess Profit Unit (including
Unit
Ordinary
Distribution excess profit(excluding
Net Income
Incomeper Unit
excess profit
distribution per
unit)
distribution(Note)
per unit)

Operating
IncomeOperating
Revenues

FiscalPeriodendingDecember31, 2015

Millionsof yen(Reference)(Note)

Estimated net income per unit for the fiscal period ending December 31, 2015 is JPY 791.5
INV will appropriate all of the remainder of the JPY 75 million surplus after the distribution for the fiscal period ended June 2015 to the
distribution for the fiscal period ending December 31, 2015, in addition to excess profit distribution.
Distribution per unit (including excess profit distribution per unit) for the fiscal period ending December, 2015 (forecasted) is estimatedas follows:
Distribution per unit (including excess profit distribution per unit) for the fiscal period ending December, 2015 (forecasted): JPY 1,064= earnings per unit (forecasted): JPY 791.5 + reversal of surplus per unit: JPY 23.6 + excess profit distribution per unit: JPY 248.8

6,601

%

32.7

Millionsof yen3,986%Millionsof yen41.8 2,528

Millionsof yen

%

yen

yen

Yen

10.1 2,527

10.1

815

248

1,064

%

Others※(1)
Changes in Accounting Policies, Accounting Estimates or Restatements(a) Changes in Accounting Policies due to Revisions to
Accounting Standards and Other Regulations
None(b) Changes in Accounting Policies due to Other Reasons
None(c) Changes in Accounting Estimates
None(d) Restatements
None(2)
Number of Investment Units Issued and Outstanding(a) Number of Units Issued and Outstanding as of the
End of the Fiscal Period (Including Treasury Units)

June 30, 2015(b) Number of Treasury Units as of the End of Fiscal Period

June 30, 2015

2,668,686 December 31, 2014
02,668,686

December 31, 2014

(Note) Please refer to “Note concerning Information per Unit” regarding the number of investment units which is the basis for the calculation of net
income per unit.

ͤThe Implementation Status of Statutory Audit
At the time of this financial report, the audit procedures for the financial statements pursuant to the Financial Instruments
and Exchange Act are yet to be completed.
ͤExplanation on the Appropriate Use of the Forecast of Results and Other Matters of Special Consideration(Explanation on the Appropriate Use of the Forecast of Results)
The forward-looking statements in this financial report are based on the information currently available to us and certain
assumptions which we believe are reasonable. Actual operating performance may differ significantly due to factors wecannot predict as of this date, including gains or losses from the disposition of properties, repayment of borrowings,
decreases in rents and changes in operating conditions. Further, there is no guarantee of the payment of the forecast
distribution amount.
Please refer to “Assumptions for the Forecasts for the Fiscal Period ending December 31, 2015 (from July 1, 2015 to December
31, 2015), the Fiscal Period ending June 30, 2016 (from January 1, 2016 to June 30, 2016) and the Fiscal Period ending
December 31, 2016 (from July 1, 2016 to December 31, 2016)”, on page 19 for assumptions used in the forecasts andprecautions regarding the use of such forecasts.

3 / 230Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

1. Related Companies of the Investment Corporation
Disclosure is omitted because there have been no material changes in the “Structure of the Investment
Corporation” section of the latest securities report (filed on March 27, 2015).

2. Management Policy and Operating Conditions(1)

Management Policy
Disclosure of “Investment Policies” and the “Investment Targets” is omitted because there have been nomaterial changes from the relevant sections of the latest securities report (filed on March 27, 2015)(2)

Operating Conditionsa

Overview of the Reporting Period(a)Main Trends in the Investment Corporation
INV was established in January 2002 in accordance with the Investment Trust and Investment Corporation Act (ActNo. 198 of 1951, as amended; the “Investment Trust Act”). In May 2004, INV was listed on the Osaka Securities Exchange(application for delisting was made in August 2007), and in August 2006 was listed on the Real Estate Investment and Trust
Securities Section of the Tokyo Stock Exchange (Ticker Code: 8963).
After the merger with LCP Investment Corporation (“LCP”) was implemented on February 1, 2010, INV issued newinvestment units through a third-party allotment on July 29, 2011 and refinanced its debt. Calliope Godo Kaisha(“Calliope”), an affiliate of the Fortress Investment Group LLC (“FIG” and together with Calliope and other affiliates of
FIG, collectively the “Fortress Group”) was the main allottee, and the sponsor changed to the Fortress Group.
Ever since the commencement of sponsorship from the Fortress Group, INV has been focused on the improvement ofoccupancy rates as well as the reduction of expenditures related to its properties and investment corporations bystrengthening its asset management capabilities. Furthermore, in September 2012, INV newly acquired 24 residential
properties without issuing new equity, thereby improving the earning power of its portfolio and establishing a revenue basein order to implement stable distributions.
Following such measures, INV refinanced existing bank borrowings with new borrowings through syndicate loans
arranged by Sumitomo Mitsui Banking Corporation and The Bank of Tokyo-Mitsubishi UFJ, Ltd. together with funds
raised via a third-party allotment mainly to the Fortress Group on December 20, 2013. Through such refinancing, INV
reduced its interest-bearing debt ratio, improved its earning power due to the significant reduction in interest expenses, andstrengthened its lender formation, thereby improving its financial stability and establishing a financial base for future
growth.
With this platform as a base for future growth, INV acquired its first two limited-service hotel properties on May 23,
2014. On June 23, 2014, Consonant Investment Management Co., Ltd., the asset manager to which INV entrusts the
management of its assets (the “Asset Manager”) revised the Investment Guidelines for INV, and added hotels as a coreasset class alongside residential properties with a view towards expanding investments in the hotel sector in which demandis forecast to rise going forward. In July 2014, INV acquired 18 limited-service hotels from the sponsor group using funds
raised from a global public offering and the refinancing of existing loans. In the fiscal period ended June 2015 (the"Reporting Period"), INV acquired two hotels from the sponsor group and one hotel from a third-party on February 6, 2015
using the excess cash-on-hand and new loans, without issuing new equity.
INV’s distributions per unit ("DPU") from July 1, 2014 to June 30, 2015 reached JPY 1,593, an increase of
approximately 1.96 times year-on-year. INV's end-of-term market capitalization was JPY 174,265 million, approximately
4.56 times larger than the final day of June of the previous year.
At the board meetings of INV and the Asset Manager held on June 25, 2015, resolutions were passed to pursue a
4 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

global public offering and new share issuance (collectively, the "Capital Increase"), with the funds raised through theCapital Increase and new loans to acquire 11 hotels and three residential properties (the "Acquisition"), and to refinance all
existing loans (the "Refinancing"; collectively with the Capital Increase and the Acquisition, the "Measures"). In addition,
on June 25, 2015, INV entered into a Memorandum of Understanding (the " MOU") with affiliates of sponsor FortressGroup, thereby acquiring preferential negotiating rights regarding the acquisition of 21 hotels and nine residential properties,
securing a pipeline for external growth.
Through implementation of the Measures, INV will achieve further growth in DPU and an increase in scale for boththe portfolio and market capitalization. Furthermore, the conversion of all existing loans into unsecured debt has further
strengthened INV’s financial soundness and stability.
The Measures are described in greater detail below in “c. Significant Subsequent Events”.
(b)

Operational Environment and Performance
In the Reporting Period, real GDP growth rate for the period from April to June 2015 showed a decline of 1.6%

year-on-year compared to 4.5% increase year-on-year from January to March. However, the Japanese economy saw
strong corporate activity in the first half of the year, as corporate profits for the January-March 2015 quarter reachedpre-Lehman bankruptcy level of 2007 and capital investment increased. As a result, the employment and wage
environment showed further improvement, as the unemployment rate for June 2015 fell to 3.4%, the jobs-to-applicantsratio was 1.19x, and the number of unemployed declined for the 61st consecutive month. Going forward, it is necessary
to take notice of the risk such as slowdown in overseas economies including China, but the domestic economic upswing
is expected to continue due to the recovery in consumer spending on the back of the improved employment and wage
environment, the impact of the government’s financial policy and the Bank of Japan’s large-scale monetary easing
policy, and the increase in corporate profits in connection with the decline in the price of crude oil.
Regarding the real estate investment market, real estate transaction prices continued to rise in Tokyo and otherlarge cities as a result of Japan’s economic recovery and expectations of an end to deflation. According to the JapaneseReal Estate Investor Survey (April 2015) conducted by the Japan Real Estate Institute, investors expect capitalization
rates for offices, residences, retail facilities, and hotels to continue to decline. Although investors who responded thatthey will make new investments over the next year dropped by 4 points to 90% from the previous survey (October 2014),
investment demand remains high and maintains a positive stance.
Regarding the property rental market, Tokyo office building vacancy rates continue to decline while rates arebottoming out in parts of other major cities such as Osaka and Nagoya. Large corporations are consolidating their floor
space as well as expanding leasing space in the same buildings. Rents increased mainly for newly constructed buildings
and premium properties in the Tokyo area. With respect to the residential sector, market rent trends for small-type citycenter properties are continuingly improving. In the hotel sector, the Japanese government’s promotion of tourism
initiatives such as airport capacity expansion, the entry of LCC’s into the Japanese market, and the relaxation of visa
requirements for some Asian countries, etc., coupled with macro structural changes such as a sharp increase in thenumber of cross-border travelers due to the global rise of the middle-income bracket, has led to a significant increase in
the number of international visitors to Japan from China and Southeast Asian countries such as Thailand, Malaysia, thePhilippines, Indonesia and Vietnam. This robust combination helped Japan log a record high of 13.41 million visitors in
2014, providing firm demand for accommodations. In the current reporting period, this trend further accelerated and thenumber of international visitors to Japan from January to July 2015 increased to 11.05 million visitors (+47% year-onyear), leading to a significant increase in foreigner lodging demand.
INV implemented a rent increase program for new residential leases and renewals as well as a program to reduceleasing costs for residential properties based on a market analysis of each unit and property. As a result, in the Reporting
Period, INV realized a rent increase for 68.0% of the new residential lease contracts or a rent increase of 1.9% comparedto the previous rent, and a rent increase for 39.2% of contract renewals or a rent increase of 1.2% compared to the
5 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Periodprevious rent. Net leasing costs (advertising expenses + free rent – key money) were reduced to an average of 0.90
months per new lease, a reduction of 0.28 months year-on-year.
Regarding hotels, INV acquired two hotels from the sponsor group and one hotel from a third party at a total priceof JPY 13,261 million on February 6, 2015. In terms of internal growth, in addition to the abovementioned external
environmental factors, the hotel operators adeptly captured inbound demand through strong revenue management
techniques. INV’s 23 acquired hotels recorded a significant growth in the Reporting Period led by an occupancy rate
(Note 1) of 91.9% (+3.4 points year-on-year), ADR (Note 2) of JPY 8,130 (+20.9% year-on-year), and RevPAR (Note3) of JPY 7,470 (+25.4% year-on-year). The ratio of overseas sales (Note 4) at the acquired 23 hotels increased to33.7% (+25.1 points year-on-year) (Note 5) for the Reporting Period.
As a result, INV’s average occupancy rate across the entire portfolio for the Reporting Period maintained a highlevel of 96.8%, and the NOI increased by 6.9% year-on-year to JPY 4,127 million.
At the end of the Reporting Period, the number of properties held by INV totaled 94 properties including 23 hotels,
63 residential properties, seven office buildings and retail facilities as well as one parking lot at a total acquisition priceof JPY 131,188 million and total leasable area of 240,858.19 m2.
As a result of the internal growth performance and trends in the real estate investment and rental market, as well as
the strong performance of the hotels, the total appraisal value at the end of the Reporting Period was JPY 146,874
million, an increase of JPY 6,856 million (+4.9%) year-on-year (Note 6). In particular, the appraisal value of the 23
hotels increased to JPY 5,336 million (+8.1%) year-on-year (Note 6) and achieved an unrealized gain ratio of 15.4%(Note 7), significantly helping to continually enhance the overall portfolio asset value.
(Note 1) “Occupancy rates” are calculated in accordance with the following formula:
Occupancy rates = total number of occupied rooms during a certain period ÷ total number of rooms available during
the same period (number of rooms x number of days)(Note 2) “ADR” means average daily rate, and is calculated by dividing total room sales (except for service fee) for a certain
period by the total number of days per room for which each room was occupied during the same period.
(Note 3) “RevPar” means revenue per available room per day, and is calculated by dividing total room sales for a certain
period by total number of rooms available (number of rooms x number of days) during the same period, and is thesame as the figure obtained by multiplying occupancy rates by ADR.
(Note 4) “Overseas sales ratio” is the ratio of sales amount through overseas web agents to revenues. Overseas sales ratio isbased on the data of 20 hotels of the existing 23 hotels, excluding Hotel Vista Premio Dojima, APA Hotel
Yokohama-Kannai and Hotel Nets Hakodate, because the hotel operator is not K.K. Mystays Hotel Management(“MHM”).
(Note 5) The performance of the same period in the previous year (from January to June 2014) is based on the operational
performance data provided by the seller of the 23 hotels before INV acquired the 23 hotels. Likewise, theperformance of the period from January 1, 2015 to February 5, 2015 of the three hotels INV acquired on February 6,2015 is based on the operational performance data provided by the seller of those hotels.
(Note 6) Of the 23 hotels, the comparison was made after the appraisal value as of December 1, 2014 of the three properties
acquired as of February 6, 2015 was added to the total appraisal value of the portfolio assets of the end of theprevious period.
(Note 7) The unrealized gain ratio is calculated using the following formula: (the appraisal value as of the end of theReporting Period - book value as of the end of the Reporting Period) ÷ book value as of the end of the Reporting
PeriodRegarding the 11 hotels and three residential properties acquired by funds procured through a global offering anddecided upon by INV’s Board of Directors on June 25, 2015, refer to “c. Significant Subsequent Events” below.

6 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period(c)Overview of Fund Raising
In the Reporting Period, INV raised funds through a new syndicate loan (total borrowings: JPY 6,241 million;interest at time of borrowing: 0.93%) on February 6, 2015, with Sumitomo Mitsui Banking Corporation, The Bank ofTokyo-Mitsubishi UFJ and Mizuho Bank, Ltd. as arrangers, to acquire three new hotels and pay related expenses.
Using consumption tax refunds from two hotels acquired on May 23, 2014, INV repaid, on April 30, 2015, the portionof Syndicate Loan (C) that corresponds to the borrowings corresponding to the expected consumption tax refund (Note1), of JPY 1,200 million.
As a result of the above measures, the outstanding balance of interest-bearing debt for INV was JPY 72,301
million, and the Loan-to-Value ratio was 52.8% (Note 2) as of the end of the Reporting Period.
As described below in “C Subsequent material events”, INV decided on June 25, 2015 to procure a new
unsecured syndicate loan (total amount borrowed: JPY 88,338 million; interest at time of borrowing: 0.63%) dated
July 1, 2015 and executed on July 16, 2015 for use as a portion of the funds to acquire 11 hotels and three residential
properties on July 16, 2015 and repayment of all existing loans (Syndicate Loan (C), Syndicate Loan (D) and
Prudential LPS Loan B).
Through the Refinancing, INV converted all debt to unsecured debt, lengthened the debt maturity duration andfurther reduced loan costs. Henceforth, INV moved forward with a financial strategy that takes into consideration
obtaining a credit rating and the issuing investment corporation bonds.

(Note 1) Borrowings corresponding to the expected consumption tax refund mean the borrowings which will be prepaid
in the amount equivalent to the refund of consumption tax, which were paid in relation to the acquisition of thetrust beneficiary interests acquired by the borrowings executed at the same time, in the case where the abovementioned consumption tax refunds are received. The same shall apply hereinafter.
(Note 2) The calculation for the Loan-to-Value ratio uses the calculation formula below:
Loan-to-Value ratio = amount of interest-bearing debt (excluding JPY 321 million borrowings corresponding to
the expected consumption tax refund) ÷ amount of total assets at end of the Reporting Period x 100(d)

Overview of Results of Operations and Distributions
As results of the operations mentioned above, operating revenues for the reporting period increased by JPY 364

million from the previous period (+7.9%) to JPY 4,974 million, and net income increased by JPY 337 million from theprevious period (+17.2%) to JPY 2,295 million. Distribution per unit was JPY 860 yen, an increase of JPY 127(+17.3%) year-on-year.

b

Outlook for the Fiscal Period Ending June 30, 2015(a)

Future operational policy and issues to be addressed
Since July 2011, when the Fortress Group became sponsor, as mentioned above, INV has enhanced unitholder

value.
Going forward, INV will implement various strategies to maintain further growth, including the following
measures.
•

Continuous acquisition of properties from sponsor and third parties•

Further internal growth at hotel properties•

Obtain credit rating•

Diversification of financing measures, including the issuance of REIT bonds

Details of the future growth strategy are as follows.
7 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period(i)External growth strategy
New Property Acquisitions
As its basic strategy, INV will move forward with acquisition of new properties focusing on hotels, where growthin portfolio revenues is anticipated. INV will also acquire a certain proportion of residential properties and hotels using
fixed rent schemes, which contribute to stable revenue. This acquisition strategy will enable INV to build a portfoliowith a good balance between growth and stability.
In regards to hotels, INV will take into consideration the trends in foreign visitors, demands of business and leisurecustomers, the competitive hotel environment, and leasing contract types when making investment decisions, with theaim of acquiring properties where growth and stability of gross operating profit (GOP) and rental revenue are forecasted
to increase.
In regards to residential properties, INV will analyze occupancy rates, rental market trends, the presence ofcompeting properties and other factors, and consider acquiring mainly small-type properties in large cities with strong
competitiveness.
In recent years, the property acquisition environment has become increasingly severe, however, INV, as shown
below, has continued to achieve steady external growth from the pipeline of the sponsor, the Fortress Group.
Properties Acquired from affiliates of the Fortress Group (including anticipated acquisitions)
Date

Details

Total acquisition price

September 2012

Acquired 24 residential properties

JPY 14,043 million

May 2014

Acquired two hotels

JPY 5,435 million

July 2014

Acquired 18 hotels

JPY 39,938 million

February 2015

Acquired two hotels

JPY 4,911 million

July 2015
August 2015
(anticipated)
Total

Acquired 11 hotels and three residential

JPY 35,258 million

properties
Acquired one hotel

JPY 5,069 million

61 properties

JPY 104,654 million(of which 27 are residential and 34 are(of which residential: JPY 19,142 million;

hotels)hotels: JPY 85,512 million)

The Fortress Group manages four dedicated Japanese real estate funds, including the Fortress Japan Opportunity
Funds I and II. The Fortress Group’s committed equity is over JPY 300 billion and the number of properties that the
Fortress Group is invested in exceeds 1,400. In order to ensure future growth options for the portfolio, INV entered into
the MOU with the Fortress Group that provides preferential negotiation rights with respect to the acquisition of 21
hotels and nine residential properties as of June 25, 2015 (see the table below) (Note 1).
In addition, by utilizing the property transaction information available through the Fortress Group and INV’s own
network, INV will continuously consider and implement the acquisition of properties from third parties that willcontribute to stability and growth in revenue and cash flow and an increase in DPU.

No.

1Asset Name

Hotel MyStays Gotanda-Ekimae(Note 2)2 Hotel MyStays Akasaka (Note 3)

Asset Type

Location

No. ofRooms

Top 10 InboundTourist Destinations

Limited Service Hotel

Shinagawa-ku, Tokyo

333✔

Limited Service Hotel

Minato-ku,Tokyo327✔

8 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

No.

Asset Name

Asset Type

Location

No. ofRooms

Top 10 InboundTourist Destinations

3 Hotel MyStays Kanazawa

Limited Service Hotel Kanazawa-shi, Ishikawa

244

4 Hotel MyStays Fukuoka-Tenjin

Limited Service Hotel

217

✔

166

✔

5

Hotel MyStays Yokohama -Kannai(Note 4)

Limited Service Hotel

Fukuoka-shi, Fukuoka
Yokohama-shi,
Kanagawa

6 Hotel MyStays Hamamatsucho

Limited Service Hotel

Minato-ku, Tokyo105✔

7 Hotel MyStays Shinsaibashi

Limited Service Hotel

Osaka-shi, Osaka

54✔

8 Flexstay Inn Ekoda (Note 5)

Limited Service Hotel

Nerima-ku, Tokyo210✔

9 Rihga Royal Hotel Kyoto (Note 6)

Full Service Hotel

Kyoto-shi, Kyoto

475✔

10 Narita Excel Hotel Tokyu

Full Service Hotel

Narita-shi, Chiba

706✔

11 Art Hotels Sapporo

Full Service Hotel

Sapporo-shi, Hokkaido

412✔

12 Best Western Hotel Fino Sapporo

Limited Service Hotel

Sapporo-shi, Hokkaido

242✔

13 Best Western Hotel Fino Oita

Limited Service Hotel

Oita-shi, Oita

145

14 Takamatsu Tokyu REI Hotel

Limited Service Hotel Takamatsu-shi, Kagawa

191

15 Comfort Hotel Maebashi

Limited Service Hotel

Maebashi-shi, Gunma

153

16 Comfort Hotel Kurosaki

Limited Service Hotel Kitakyushu-shi, Fukuoka

151

17 Comfort Hotel Tsubame-Sanjo

Limited Service Hotel

Sanjo-shi, Niigata

132

18 Comfort Hotel Kitami

Limited Service Hotel

Kitami-shi, Hokkaido

127

Full Service Hotel

Hirosaki-shi, Aomori

134

19 Hotel Naqua City Hirosaki
20 Beppu Kamenoi Hotel

Resort Hotel

Beppu-shi, Oita

322

21 Fusaki Resort Village

Resort Hotel

Ishigaki-shi, Okinawa

195

Residential/Small Type
(Note 7)
Residential/Small Type

23 Plestay Win Kinshicho(Note 7)
Residential/Small Type

24 Gran Charm Kichijoji(Note 7)
Residential/Small Type

25 Green Patio Noda

(Note 7)
Residential/Small Type

26 Dainichi F-45

(Note 7)
Residential/Small Type

27 Gran Charm Urayasu(Note 7)
Residential/Small Type

28 Gran Charm Urayasu 5(Note 7)29 Gran Charm Minami Gyotoku I
30 Gran Charm Minami Gyotoku II

Residential/Small Type
(Note 7)
Residential/Small Type
(Note 7)

Residential Property Subtotal(Note 1)

✔

✔

5,041

Hotel Subtotal
22 Gran Charm Hiroo✔

Shibuya-ku, Tokyo

121

Sumida-ku, Tokyo

92

Musashino-shi, Tokyo28

Noda-shi, Chiba

240

Urayasu-shi, Chiba

54

Urayasu-shi, Chiba

54

Ichikawa-shi, Chiba

54

Ichikawa-shi, Chiba

52
48
743

Regarding the 29 properties, excluding “Flexstay Inn Ekoda” (Note 5), from the 30 properties listed above,
there is no guarantee that INV will be granted an opportunity for considering acquisition of the properties or
be able to acquire the properties.
9 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period(Note 2)

Hotel Gotanda-Ekimae partially reopened on August 24, 2015 after renewal and is scheduled to fully reopenon November 25, 2015.

(Note 3)

Hotel MyStays Akasaka is scheduled to be completed in August 2016.

(Note 4)

Hotel MyStays Yokohama Kannai is scheduled to be completed in August 2016.

(Note 5)Flexstay Inn Ekoda is schedule to be acquired by INV on August 28, 2015.

(Note 6)

Rihga Royal Hotel Kyoto is scheduled to partially reopen on September 1, 2016 after renewal and fully
reopen on November 1, 2016.

(Note 7)

“Small Type” means a residential property in which the majority of dwelling units are less than 30 m2.

Property Sales
While INV places priority on increasing unitholders’ value through external growth by taking into account theincreased level of activity in the real estate trading market, it also plans to consider the possibility of property sale upon
consideration of the portfolio sector composition, geographic distribution and competitiveness of each property, as
appropriate.
(ii)

Strategy for internal growth(Hotels)
Of the 37 hotels that INV owns or anticipates to acquire (including the three properties that it anticipates to acquireon August 28, 2015), 32 hotels use a variable rent scheme. In the variable rent scheme, in principle, INV receives grossoperating profit (GOP) after deducting management fees for the hotel operator, and INV’s variable rent scheme is set up
so that INV can directly enjoy the hotel revenue upside. For 29 hotels, MHM, a hotel operator in the sponsor group, has
implemented strict revenue management seeking to maximize revenue. INV will continue to accurately ascertain andanalyze operating conditions of its hotels, the conditions of nearby hotels, market trends and other factors throughoperating conferences and other contact with hotel operators and will focus on operations that maximize rent income.
(Residential properties and others)
INV will continue to strengthen its collaborative ties with Property Management (PM) companies and brokers tofurther boost occupancy rates and earning capabilities of its properties. With respect to INV’s residential properties,
while keeping in mind the off-season in the residential rental market that occurs during the December 2015 period, INV
will focus on increasing rent for new lease contracts as well as for lease renewals for each of its properties as well as
formulating net leasing management policies in order to continue maximizing profits.
Further, the implementation of appropriate maintenance and repair plans is of the utmost importance in maintaining
and enhancing the competitiveness and market value of the properties as well as ensuring stable operations and hightenant satisfaction. Therefore, INV will continue to monitor current strategic plans with flexible implementation as itsees fit.
(iii) Financial strategy
In continuation of the strengthening of the financial base via the new borrowings implemented in February 2015
and the refinancing resulting in its debt becoming unsecured borrowing implemented in July 2015, INV will promote a
financial strategy which envisages to obtain a future credit rating and to issue investment corporate bonds. Also, INV
seeks to maximize unitholders’ value by way of lengthening and diversification of borrowing terms, further reduction ofborrowing costs, adjustment of appropriate fixed/variable interest rate ratio taking into consideration the interest rate
trends and strengthening of its lender formation, in order to maximize unitholders’ value and increase distributions perunit.
10 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period(iv) Compliance risk management
While the executive officer of INV concurrently serves as the representative director at the Asset Manager, two
supervisory directors (an attorney and a certified public account) oversee the execution of the executive officer’s duties via
the Board of Directors of INV. In addition, the compliance officer of the Asset Manager attends each meeting of the Boardof Directors in the capacity of an observer.
The Asset Manager has a compliance officer who is responsible for compliance with laws, regulations and otherrelevant matters as well as overall management of transactions with sponsor related parties. Moreover, it has in place acompliance committee which, chaired by such compliance officer, is in charge of deliberating on compliance with laws,
regulations and other relevant matters as well as transactions with sponsor related parties. Compliance committee meetings
are attended by an outside expert (an attorney) who, sitting in as a compliance committee member, conducts rigorous
deliberations on the existence of conflicts of interest in transactions with sponsor related parties as well as strict
examinations with respect to INV’s compliance with laws and regulations.
INV intends to continually take steps to strengthen its compliance structure.

c

Significant Subsequent Events
INV issued the new investment units through a global public offering and the third-party allotment (collectively,
the “Capital Increase”) conducted in connection with the overallotment secondary offering for the global public offeringin the fiscal period ending December 31, 2015 (25th fiscal period). INV acquired the 11 hotels and the three residential
properties on July 16, 2015, from the funds procured through the Capital Increase along with the refinancing of theexisting borrowings.
Furthermore, the acquisition of three hotels by utilizing cash-on-hand and new loans was decided and the sale andpurchase agreement was executed on August 21, 2015.

(a)Issuance of New Investment Units
INV resolved at its meeting of the Board of Directors held on June 25, 2015 and July 8, 2015 respectively to

conduct the issuance of new investment units and secondary distribution of investment units. Payment for the newinvestment units issued through the public offering was completed on July 15, 2015, in accordance with the following
terms and conditions. In addition, with respect to the issuance of new investment units through the third-party allotment
in connection with the overallotment secondary offering, the payment was completed on August 12, 2015. As a result,the unitholders’ equity of INV is JPY 82,465 million and the number of investment units issued and outstanding of INV
increased to 3,193,686.
(i)Issuance of new investment units through public offering: 500,000 units
Domestic public offering: 211,250 units
Overseas offering: 288,750 units: JPY 57,817 per unit
: JPY 55,941 per unit
: JPY 27,970,500,000: July 15, 2015

Number of New Investment Units Issued
Issue Price (Offer Price)Amount Paid In (Issue Value)
Total Amount Paid In (Total Issue Value)
Payment Date

11 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period(ii) Secondary offering of investment units (overallotment secondary offering)Number of Investment Units Offered in the Secondary
Offering
Offer Price
Total Offer Value: 25,000 units: JPY 57,817 per unit
: JPY 1,445,425,000: July 16, 2015

Delivery Date(iii) Issuance of new investment units through third-party allotment
Number of New Investment Units Issued: 25,000 units

Amount Paid In (Issue Value): JPY 55,941 per unit
: JPY 1,398,525,000

Total Amount Paid In (Total Issue Value)
Payment Date
Allotee(b): August 12, 2015
: Mizuho Securities Co., Ltd.

Refinancing and New Borrowing
In order to implement refinancing via unsecured lower-interest borrowings for part of the funds for the acquisitionof 11 hotel properties and 3 residential properties acquired on July 16, 2015 and all of the existing secured loans (New
Syndicate Loan (C), New Syndicate Loan (D) and Prudential LPS Loan B), INV entered into a loan agreement for a new
syndicate loan (New Syndicate Loan (E)) at a variable interest rate of 0.40%, 0.50%, 0.60% and 0.20% plus one-month
JPY TIBOR as of July 1, 2015, and implemented the borrowing on July 16, 2015.
Furthermore, in order to procure a part of funds for the acquisition of 3 hotel properties, INV resolved at its
meeting of the Board of Directors held on August 21, 2015, to enter into a loan agreement (“New Borrowing”) for a
new term loan (New Term Loan A) at a variable interest rate of one-month JPY TIBOR (Base Rate) + spread (0.5%)(Note) on August 26, 2015 and to implement the New Borrowing on August 28, 2015.
As a result, INV’s outstanding balance of the interest-bearing debt is to be JPY 92,020 million, INV’s interestbearing debt ratio is to be 47.7%, and INV’s average interest rate is to be 0.63% after the implementation of the
Refinancing and the New Borrowing.
(Note)(i)

The interest rate applicable for the first interest calculation period only will be two-month JPY TIBOR (BaseRate) + spread (0.5%).
Overview of the Refinancing
Overview of the Refinancing implemented as of July 16, 2015 is as follows.
I. Overview of the New Borrowing
New Syndicate Loan (E)LenderSumitomo Mitsui Banking
Corporation
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Mizuho Bank, Ltd.
Shinsei Bank, Limited
Citibank Japan Ltd.
Sumitomo Mitsui Trust Bank,Limited

Borrowing
Date

BorrowingAmount(mn JPY)

July 16,
2015

28,979July 16,
2015

28,97912 / 23

Interest Rate(per annum)(Note 1)
0.53%
Variableinterest rate
(Note 2)
0.63%
Variableinterest rate
(Note 3)

Principal
Maturity
Date

Borrowing
MethodJuly 16,2018

Unsecured /nonguarantee

July 16,2019

Unsecured /nonguarantee

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

Borrowing
Date

BorrowingAmount(mn JPY)

Resona Bank, Limited
Mitsubishi UFJ Trust and Banking
Corporation

July 16,
2015

28,979Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Bank, Ltd.

July 16,
2015

1,401

Lender

Total

Interest Rate(per annum)(Note 1)
0.73%
Variableinterest rate
(Note 4)
0.33%
Variableinterest rate
(Note 5)

Principal
Maturity
Date

Borrowing
MethodJuly 16,
2020

Unsecured /nonguarantee

May 16,2016

Unsecured /nonguarantee

88,338(Note 1)

Interest rate applicable for the period from July 31, 2015 to August 30, 2015

(Note 2)One-month JPY TIBOR + spread (0.4%)(Note 3)One-month JPY TIBOR + spread (0.5%)(Note 4)One-month JPY TIBOR + spread (0.6%)(Note 5)One-month JPY TIBOR + spread (0.2%)

II. Overview of the Prepayment of the Existing Borrowing
New Syndicate Loan (C)LenderSumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Bank, Ltd.
Citibank Japan Ltd.
Shinsei Bank, Limited
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited

Borrowing
Date

July 17,2014

Prepayment
Amount(mn JPY)

Interest Rate(per annum)(Note 1)

Principal
Maturity
Date

Borrowing
Method56,1000.93%
Variableinterest rate
(Note 2)

July 14,2017

Secured /nonguarantee(Note 1)

Interest rate applicable for the period from June 30, 2015 to July 30, 2015

(Note 2)One-month JPY TIBOR + spread (0.8%)

New Syndicate Loan (D)LenderSumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Bank, Ltd.
Citibank Japan Ltd.
Shinsei Bank, Limited
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited

Borrowing
Date

February 6,
2015

Prepayment
Amount(mn JPY)

Interest Rate(per annum)(Note 1)

Principal
Maturity
Date

Borrowing
Method

6,241

0.93%
Variableinterest rate
(Note 2)February 6,
2018Secured / nonguarantee(Note 1)

Interest rate applicable for the period from June 30, 2015 to July 30, 2015

(Note 2)One-month JPY TIBOR + spread (0.8%)

13 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

Prudential LPS Loan B
Borrowing
Date

LenderPrepayment
AmountInterest Rate(per annum)

Principal
Maturity
Date

1.90%
Fixed
interest rateMarch
31, 2018

1.90%
Fixed
interest rateMarch
31, 2019

1.90%
Fixed
interest rateMarch
31, 2020

1.90%
Fixed
interest rateMarch
31, 2019(mn JPY)

Prudential Mortgage
Asset Holdings 1 Japan
Investment Limited
PartnershipFirst lending

September
28, 2012

2,700

Second lending

September
28, 2012

2,860

Third lending

September
28, 2012

1,830

Fourth lending

September
28, 2012

2,570

Total

(ii)

Borrowing
MethodSecured / nonguarantee
Secured / nonguarantee
Secured / nonguarantee
Secured / nonguarantee

9,960

Overview of the New Borrowing
Overview of the New Borrowing to be implemented as of August 28, 2015 is as follows.
Term Loan (A)LenderMizuho Bank, Ltd.

(Note)(a)Borrowing
Date

Prepayment
Amount(mn JPY)

Interest Rate(per annum)

Principal
Maturity
Date

Borrowing
MethodAugust 28,
2015

3,682

Variableinterest rate
(Note)

August 28,
2019

Unsecured / nonguarantee

One-month JPY TIBOR + spread (0.5%)

Acquisition of Assets
INV completed the Acquisition on July 16, 2015. In addition, INV decided on August 21, 2015 to acquire one

hotel from properties listed in the MOU and two hotels from a third-party (collectively “Additional Acquisition”), by
utilizing cash-on-hand and New Borrowing.
As a result, the total number of properties held by INV after the implementation of the Acquisition and Additional
Acquisition will increase to 111 properties (66 residential properties, 37 hotels, 7 retail and office buildings as well as
one parking lot) with a total acquisition price of JPY 173,815 million and total leasable area of 296,526.92 m2.

14 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

The overview of 11 hotels and three residential properties acquired in the Acquisition as of July 16, 2015 is asfollows.

Use

Hotel

Property
Number

Property
Name

Location

AcquisitionPrice(mn JPY)(Note 1)

D24

Hotel
Mystays
HanedaOta-ku, Tokyo

7,801

D25

Hotel
Mystays
Kameido P1

Koto-ku,
Tokyo

5,594

D26

Hotel
Mystays
Ueno
Iriyaguchi

Taito-ku,
Tokyo

D27

Hotel
Mystays
Kameido P2

Koto-ku,
Tokyo

D28

Hotel Vista
Shimizu

Shizuoka-shi,
Shizuoka

D29

Super Hotel
Shinbashi/
Karasumorigu
chiMinato-ku,
Tokyo

D30

Flexstay Inn
Higashi-Jujo

Kita-ku,
Tokyo

D31

Hotel
MyStays
Utsunomiya

Utsunomiya, shi Tochigi

D32

Flexstay Inn
KawasakiKaizuka

Kawasaki-shi,
Kanagawa

D33

ComfortHotel Toyama

Toyama-shi,ToyamaD34

Flexstay Inn
KawasakiOgawacho

Kawasaki-shi,
Kanagawa

Category ofSpecified
Assets

7,880

Trust
Beneficial
Interest

5,650

Nishi
TokuteiMokuteki
KaishaTrust
Beneficial
Interest

3,860

RannochTokuteiMokuteki
KaishaTrust
Beneficial
Interest

3,760

Nishi
TokuteiMokuteki
KaishaTrust
Beneficial
Interest

2,220

WakuseiTokuteiMokuteki
KaishaTrust
Beneficial
Interest

1,640

SuiseiTokuteiMokuteki
KaishaTrust
Beneficial
Interest

1,290

Aki
TokuteiMokuteki
KaishaTrust
Beneficial
Interest

1,250

Zephyrus
TokuteiMokuteki
KaishaTrust
Beneficial
Interest

990

RannochTokuteiMokuteki
KaishaTrust
Beneficial
Interest

989

SuiseiTokuteiMokuteki
KaishaTrust
Beneficial
Interest

906

915

RannochTokuteiMokuteki
KaishaTrust
Beneficial
Interest

30,15930,464

3,742

2,198

1,624

1,277

1,237

980

979

15 / 23

SellerSkye
TokuteiMokuteki
Kaisha3,821

Subtotal

Appraisal Value(mn JPY)(Note 2)

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

Use

Property
Number

Property
Name

Location

A100

City Court
Kitaichijo

A101

A102

Residential

AcquisitionPrice(mn JPY)(Note 1)

Appraisal Value(mn JPY)(Note 2)

SellerCategory ofSpecified
Assets

Sapporo-shi,
Hokkaido

1,782

1,800

Godo
KaishaBaretta

Trust
Beneficial
Interest

Lieto Court
Mukojima

Sumida-ku,
Tokyo

1,683

1,700

Godo
KaishaBaretta

Trust
Beneficial
Interest

Lieto Court
Nishi-Ojima

Koto-ku,
Tokyo

1,634

1,650

Godo
KaishaBaretta

Trust
Beneficial
Interest

Subtotal

5,099

5,150

Total

35,25835,614(Note 1)

Acquisition prices do not include adjustments for property taxes, city planning taxes, national or local
consumption taxes; hereinafter the same.

(Note 2)

Based on the appraisal value as of May 1, 2015 by a report of Japan Real Estate Institute.

The overview of three hotels to be acquired in the Additional Acquisition to be completed on August 28, 2015 is asfollows.

Use

Property
Number

Property
Name

Location

D35

Flexstay Inn
Ekoda

Nerima-ku,
Tokyo

5,069

D36

Super HotelTokyo-JRTachikawa
Kitaguchi

Tachikawashi, Tokyo

D37

Super Hotel
JR UenoIriyaguchi

Taito-ku,
Tokyo

Hotel

AnticipatedAcquisitionPrice(mn JPY)(Note 1)

Total

(Note 3)

Appraisal Value(mn JPY)(Note 3)SellerCategory ofSpecified
Assets

5,120

Nishi
Tokutei
Mokuteki
KaishaTrust
Beneficial
Interest

1,170

1,180

Tsukiji One
Godo
KaishaTrust
Beneficial
Interest

1,130

1,140

Tsukiji One
Godo
KaishaTrust
Beneficial
Interest

7,369

7,440

Flexstay Inn Ekoda is based on the appraisal value as of August 10, 2015 by a report of Japan Real Estate
Institute. Super Hotel Tokyo-JR Tachikawa Kitaguchi and Super Hotel JR Ueno-Iriyaguchi are based on theappraisal value as of July 31, 2015 by a report of Daiwa Real Estate Appraisal Co., Ltd.

16 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal PerioddOperational Outlook
The following forecast is made for the fiscal period ending December 31, 2015, the fiscal period ending June 30,

2016 and the fiscal period ending December 31, 2016.

Fiscal Period ending December 31, 2015 (from July 1, 2015 to December 31, 2015)
Operating Revenues

JPY 6,601 million

Operating Income

JPY 3,986 million

Ordinary Income

JPY 2,528 million

Net Income

JPY 2,527 million

Earnings per Unit

JPY 791

Reversal of Surplus per Unit

JPY 23Distribution per Unit (Excluding excess profit distribution per unit)

JPY 815

Excess Profit Distribution per Unit

JPY 248

Distribution per Unit (Including excess profit distribution per unit)

JPY 1,064

Fiscal Period ending June 30, 2016 (from January 1, 2016 to June 30, 2016)
Operating Revenues

JPY 6,500 million

Operating Income

JPY 3,631 million

Ordinary Income

JPY 3,225 million

Net Income

JPY 3,224 million

Earnings per Unit

JPY 1,009

Reversal of Surplus per Unit-

Distribution per Unit (Excluding excess profit distribution per unit)

JPY 1,009

Excess Profit Distribution per Unit-

Fiscal Period ending December 31, 2016 (from July 1, 2016 to December 31, 2016)
Operating Revenues

JPY 7,008 million

Operating Income

JPY 4,117 million

Ordinary Income

JPY 3,717 million

Net Income

JPY 3,716 million

Earnings per Unit

JPY 1,163

Reversal of Surplus per Unit-

Distribution per Unit (Excluding excess profit distribution per unit)
Excess Profit Distribution per Unit

JPY 1,163-

17 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

INV presents full year figures for financial results and distribution for information purpose only because rental
revenues of hotel properties tend to fluctuate by season.
(Reference) 2015 Annual (total of the fiscal periods ending June 30, 2015 and December 31, 2015)
Operating Revenues

JPY 11,576 million

Operating Income

JPY 6,797 million

Ordinary Income

JPY 4,824 million

Net Income

JPY 4,823 million

Earnings per Unit

JPY 1,651

Reversal of Surplus per Unit

JPY 23Distribution per Unit (Excluding excess profit distribution per unit)
Excess Profit Distribution per Unit

JPY 1,675
JPY 248

Distribution per Unit (Including excess profit distribution per unit)

JPY 1,924(Reference) 2016 Annual (total of the fiscal periods ending June 30, 2016 and December 31, 2016)
Operating Revenues

JPY 13,508 million

Operating Income

JPY 7,748 million

Ordinary Income

JPY 6,942 million

Net Income

JPY 6,941 million

Earnings per Unit

JPY 2,172

Reversal of Surplus per Unit-

Distribution per Unit (Excluding excess profit distribution per unit)
Excess Profit Distribution per Unit

JPY 2,172-

For the assumptions underlying the operational outlook for the fiscal periods ending December 31, 2015, the fiscal
period ending June 30, 2016 and the fiscal period ending December 31, 2016, please see “Assumptions for the Forecasts
for the Fiscal Period ending December 31, 2015 (from July 1, 2015 to December 31, 2015), the Fiscal Period ending June30, 2016 (from January 1, 2016 to June 30, 2016) and the Fiscal Period ending December 31, 2016 (from July 1, 2016 to
December 31, 2016) ”.
(Cautionary Note regarding Forward Looking Statements)
Forward looking statements such as the forecasts set forth herein are based on information currently available andcertain assumptions that are deemed reasonable. Actual operating performance may vary significantly due to factors notforeseen at the time of this present notice, such as the occurrence of gains and losses associated with the sale ofproperties, repayment of borrowings and a decrease in rent received.
distribution amounts.

18 / 23

Also, this forecast is not a guarantee ofInvincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period<Assumptions Underlying the Forecast of Financial Results and Distribution for the Fiscal Period ending December 31, 2015
(from July 1, 2015 to December 31, 2015), the Fiscal Period ending June 30, 2016 (from January 1, 2016 to June 30, 2016)
and the Fiscal Period ending December 31, 2016 (from July 1, 2016 to December 31, 2016)>

Item

Assumptions
The fiscal period ending December 31, 2015: from July 1, 2015 to December 31, 2015 (184 days)

Fiscal period

The fiscal period ending June 30, 2016: January 1, 2016 to June 30, 2016 (182 days)
The fiscal period ending December 31, 2016: from July 1, 2016 to December 31, 2016 (184 days)
Properties held as of the end of the fiscal period ending December 31, 2015: 111 properties
Properties held as of the end of the fiscal period ending June 30, 2016: 111 properties
Properties held as of the end of the fiscal period ending December 31, 2016: 111 properties

Assets under management
INV assumes that INV will newly acquire 3 hotel properties (Note) as of August 28, 2015 inaddition to existing 108 properties, and there will be no new acquisitions or disposals of existing
properties thereafter through the end of the fiscal period ending December 31, 2016.
As of the end of the fiscal period ending December 31, 2015: 3,193,686 units
As of the end of the fiscal period ending June 30, 2016: 3,193,686 units
Units outstanding

As of the end of the fiscal period ending December 31, 2016: 3,193,686 units
INV assumes that there will be no additional issuance of units thereafter through the end of the
fiscal period ending December 31, 2016.
Balance as of the end of the fiscal period ending December 31, 2015: JPY 91,699 mn (Note)
Balance as of the end of the fiscal period ending June 30, 2016: JPY 90,619 mn (Note)
Balance as of the end of the fiscal period ending December 31, 2016: JPY 90,619 mn (Note)

Interest-bearing liabilities(Note) JPY 321 million of the consumption tax loan of JPY 1,401 million implemented on July16, 2015 is assumed to be repaid on October 30, 2015 during the 25th fiscal period and JPY 1,080
million of consumption tax loan of JPY 1,401 million is assumed to be repaid on May 16, 2016
during the 26th fiscal period.
INV assumes that, as of August 28, 2015, it will draw down the New Term Loan A, and that there
will be no other borrowings or prepayments.

19 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

Item

Assumptions
INV expects to record rental revenues for each fiscal period as follows:The
fiscalperiodending December 31,
2015
・Rental revenues

JPY 6,601 mn(of these, hotel rents)(JPY 3,804 mn)(fixed hotel rents)(JPY1,645 mn)(variable hotel rents)(JPY2,159 mn)
Thefiscalperiodending June 30, 2016

The
fiscalperiodending December 31,
2016

・Rental revenues

JPY 6,500 mn

JPY 7,008 mn(of these, hotel rents)(JPY 3,745 mn)(JPY 4,186 mn)(fixed hotel rents)(JPY 1,614 mn)(JPY 1,726 mn)(variable hotel rents)(JPY 2,130 mn)(JPY 2,460 mn)

Operating revenues

Rental revenues in the fiscal period ending December 2015 are calculated based on estimates asof today from July 2015 to December 2015. In addition, INV assumes there will be nodelinquencies or non-payment of rent by tenants.
Rental revenues in the fiscal period ending June 2016 and the fiscal period ending December
2016 are calculated based on estimates as of today from January 2016 to December 2016. In
addition, INV assumes there will be no delinquencies or non-payment of rent by tenants.

20 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

Item

Assumptions
INV expects to incur property related expenses for each fiscal period as follows:The
fiscalperiodending December 31,
2015

Operating expenses

・Facility management fees

JPY 503 mn(of these, repair costs)(JPY 42 mn)

・Taxes and other public charges

JPY 256 mn

・Insurance expenses

JPY 8 mn・Depreciation expenses

JPY 1,329 mn

・ Other expenses

JPY 150 mn

Total property related expenses

JPY 2,249 mn
Thefiscalperiodending June 30, 2016

The
fiscalperiodending December 31,
2016

・Facility management fees

JPY 482 mn

JPY 505 mn(of these, repair costs)(JPY 33 mn)(JPY 43 mn)

・Taxes and other public charges

JPY 295 mn

JPY 346 mn

・Insurance expenses

JPY 8 mn

JPY 8 mn・Depreciation expenses

JPY 1,365 mn

JPY 1,356 mn

・Other expenses

JPY 191 mn

JPY 151 mn

Total property related expenses

JPY 2,344 mn

JPY 2,369 mn

INV expects to incur other operating expenses than the property related expenses for each fiscal
period as follows:The
fiscalperiodending December 31,
2015
・Other operating expenses

JPY 365 mn(of these, asset management fees)(JPY 180 mn)
Thefiscalperiodending June 30, 2016

The
fiscalperiodending December 31,
2016

・Other operating expenses

JPY 524 mn

JPY 521 mn(of these, asset management fees)(JPY 358 mn)(JPY 359 mn)

INV expects to record net operating income for each fiscal period as follows:The
fiscalperiodending December 31,
2015
Net Operating Income

・NOI

JPY 5,681 mn(of these, hotel NOI)(JPY 3,659 mn)
Thefiscalperiodending June 30, 2016

The
fiscalperiodending December 31,
2016

・NOI

JPY 5,521 mn

JPY 5,995 mn(of these, hotel NOI)(JPY 3,558 mn)(JPY3,959 mn)

21 / 23

Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

Item

Assumptions

INV expects to incur non-operating expenses for each fiscal period as follows:
The fiscal period ending
December 31, 2015
・Interest expense

JPY 307 mn

・Finance related costs

JPY 1,008 mn(Prepayment premiums (Note1))(JPY 273 mn)

・Other non-operating expenses

Non-operating expenses(Expenses relating to the issuanceof new units for theOffering(Note 2))

JPY 142 mn

Total Non-operating expenses

JPY 1,458 mn(JPY 142 mn)

The fiscal period ending
June 30, 2016

The fiscal period
ending December 31,
2016

JPY 286 mn

JPY 287 mn

・Finance related costs

JPY 119 mn

JPY 112 mn

・Other non-operating expenses

JPY － mn

JPY － mn

Total Non-operating expenses

JPY 405 mn

JPY 400 mn

・Interest expense(Note1) Prepayment penalty of Prudential LPS Loan
(Note2) Expenses incurred relating to the public offering implemented in July 2015

The distribution per unit is calculated in accordance with the cash distribution policy as set forthin INV’s Articles of Incorporation.
With respect to the distribution for the fiscal period ending December 31, 2015, INV expects todistribute an aggregate amount of JPY 3,398 million (distribution per unit: JPY 1,064) based on
the assumption that the earnings for the fiscal period ending December 2015 (JPY 2,527 million)
and all of the surplus based on the gain on negative goodwill resulting from the merger (JPY 75
million) will be used as funds.
Distribution per unit

With respect to the distribution for the fiscal period ending June 30, 2016, INV expects todistribute an aggregate amount of JPY 3,222 million (distribution per unit: JPY 1,009) based on
the assumption that the earnings for the fiscal period ending June 2016 (JPY 3,224 million) will
be used as funds.
With respect to the distribution for the fiscal period ending December 31, 2016, INV expects todistribute an aggregate amount of JPY 3,714 million (distribution per unit: JPY 1,163) based on
the assumption that the earnings for the fiscal period ending December 2016 (JPY 3,716 million)
will be used as funds.

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, in cases where dilution of units is to be occurred or significant expenses are to berecorded in connection with, among other things, the acquisition of assets or the raising of
capital, leading to a one-time decrease in distribution per unit, INV has decided to make
distributions in excess of profits in order to stabilize distributions using, as a benchmark,
Excess profit distribution per distribution per unit assuming that the acquisition of assets, the raising of capital or other things
unit
contributed to financial results through the whole period.
With respect to the distribution per unit for the fiscal period ending December 2015,
distributions per unit are expected to decrease due to various one-time expenses that are
expected to be recorded in connection with the transactions in connection with the Measure,including the Capital Increase. In addition, the Additional Acquisition and the New Borrowing(collectively, “Additional Measures”) are implemented by utilizing the excess cash-on-hand
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Invincible Investment Corporation (8963)
Financial Summary for the 24th Fiscal Period

Item

Assumptions
obtained from the Capital Increase. Therefore, from the perspective of maintaining stable
distributions, INV expects to pay distributions in excess of profits within the scope of the
expected shortfall between actual earnings per unit and of the simulated earnings per unit after
the Measure and the Additional Measures.
Excess profit distribution per unit for the fiscal period ending December 31, 2015: JPY 248(Reference) Simulated earnings per unit: JPY 1,084
INV does not intend to make no distributions in excess of profits (Excess profit distribution perunit) for the fiscal period ending June 30, 2016 and the fiscal period ending December 31, 2016as at the time of this report.

Other

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.

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