Investment
Invincible Corporation

Financial Summary
for the December 2019 Fiscal Period(from July 1, 2019 to December 31, 2019)
February 20, 2020

Name
Representative
Stock Listing
Securities CodeURL
Contact

:
:
:
:
:
:

Invincible Investment Corporation (“INV”)
Naoki Fukuda, Executive Director
Tokyo Stock Exchange8963
https://www.invincible-inv.co.jp/en/
Consonant Investment Management Co., Ltd.
(Asset Manager of INV)
Jun Komo, General Manager of Planning Department
Tel. +81-3-5411-2731

Start date fordividend distribution: March 23, 2020

This English language notice is a translation of the Japanese-language notice released on February 20, 2020 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.

1.

(Figures are rounded down to the nearest JPY million)
Financial Results for the Fiscal Period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)(1)

Operating Results(Percentages indicate percentage change from the preceding period)
Operating Revenues

Fiscal period ended
December 31, 2019
Fiscal period ended
June 30, 2019

Operating Income%

JPY million%

JPY million%

JPY million%

18,587(32.0)

12,858(42.0)

11,639(45.2)

11,638(45.2)

27,33989.2

22,185133.2

21,240153.3

21,239153.3

Fiscal period ended
December 31, 2019
Fiscal period ended
June 30, 2019(2)

Net Income

JPY million

Ordinary Income /Total Assets

Net Income /Unitholders’ Equity

Net Income per Unit

(Note)

Ordinary Income

Ordinary Income /Operating Revenues

JPY

%

%

%

1,910

4.7

2.4

62.6

3,748

9.3

4.6

77.7

“Net Income per Unit” in the table above is calculated based on the average number of investment units during the relevant period
and is rounded to the nearest yen. Net income per unit for the fiscal period ended December 31, 2019 is JPY 1,909, if calculated
based on the number of investment units issued and outstanding at the end of fiscal period ended December 31, 2019 (6,096,840
units) and rounded down to the nearest yen.

Distributions
Distribution(Excluding excess profit distribution)

Per Unit
Fiscal period ended
December 31, 2019
Fiscal period ended
June 30, 2019

Total

Excess Profit Distribution
Per Unit

Dividend Payout
Ratio

Distribution/ Net Assets

Total

JPY

JPY million

JPY

JPY million

%

%

1,725

10,517

0

0

90.4

4.1

1,656

9,384

0

0

44.2

4.1

(Note 1) Distribution (excluding excess profit distribution) differs from net income for the fiscal period ended December 31, 2019, since
INV reserved JPY 1,121 million of net income as internal reserve for the purpose of stabilizing the distribution level for the next
and subsequent periods.
(Note 2) Distribution (excluding excess profit distribution) differs from net income for the fiscal period ended June 30, 2019, since INV
reserved JPY 11,855 million of net income as internal reserve for the purpose of stabilizing the distribution level for the next andsubsequent periods.
(Note 3) Dividend Payout Ratio is calculated in accordance with the following formula and is rounded to the nearest one decimal place:
Dividend Payout Ratio = Distribution Amount (Excluding excess profit distribution) ÷ Net Income × 100
Dividend payout ratio for the fiscal period ended June 30, 2019 is 44.2% since INV reserved a portion of net income as internal
reserve, and distribution (excluding excess profit distribution) differs from net income for the fiscal period as mentioned in (Note2) above.
(Note 4) Distribution / Net Assets is calculated based on the figures excluding excess profit distribution.

(3)

Financial Position
Total Assets

Fiscal period ended
December 31, 2019
Fiscal period ended
June 30, 2019
(Note)

JPY million

Net Assets / Total%
AssetsNet Assets per Unit

JPY million

Net Assets

522,431259,730

49.7

42,601

467,931

233,04649.8

41,125JPY

Net Assets per Unit is calculated based on the number of investment units issued and outstanding at the end of each fiscal
period, and is rounded to the nearest yen.

2

(4)

Cash Flows
Cash Flows fromOperating
Activities

Cash Flows from
Investment
Activities

Cash Flows from
Financing
Activities

Closing Balance ofCash and
Cash Equivalents

JPY million

JPY million

JPY million

JPY million

Fiscal period ended
December 31, 2019

12,971(84,512)44,72928,787

Fiscal period ended
June 30, 201955,810(726)(10,548)

55,5992.

Forecasts for the Fiscal Periods ending June 30, 2020 (from January 1, 2020 to June 30, 2020) and December 31, 2020
(from July 1, 2020 to December 31, 2020)

Operating
Revenues

FiscalPeriodending June30, 2020
FiscalPeriodendingDecember31, 2020

JPY
million%

18,510(0.4)

17,441(5.8)

Operating
IncomeJPY
million(Percentages indicate percentage change from the preceding period)
Distribution per Excess Profit
Ordinary
Unit (excluding
Distribution per
Net Income
excess profit
IncomeUnit
distribution)%

JPY
million%JPY
million

%

JPY

JPY

12,342(4.0)

11,259(3.3)

11,258

(3.3)

1,812

0

11,112(10.0)

10,047(10.8)

10,047(10.8)

1,647

0※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

December 31, 2019

6,096,840

June 30, 2019

5,666,840

December 31, 20190June 30, 20190

as of the End of the Fiscal Period (Including Treasury Units)(b) Number of Treasury Units as of the End of the Fiscal Period(Note) Please refer to “Notes Related to Per Unit Information” regarding the number of investment units which is the basis for the
calculation of net income per unit.

3

・ Financial Summary report is not subject to audit procedure by certified public accountants or audit corporations.
・ Special Consideration(Other Matters of Special Consideration)
The forward-looking statements contained in this financial summary 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 we cannot predict as of this date, including gains or losses from thedisposition 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 Underlying the Forecast of Financial Results and Distribution for the Fiscal Periods
ending June 30, 2020 and December 31, 2020” on page 19 for assumptions used in the forecasts and precautions
regarding the use of such forecasts.
Unless otherwise specified herein, amounts less than JPY 1 are rounded down, and ratios are rounded to the nearest
one decimal place.

41. Operating Conditions(1) Operating Conditionsa

Overview of the Fiscal Period Ended December 31, 2019(a)Main Trends of INV

INV was established in January 2002 in accordance with the Investment Trust and Investment Corporation Act(Act No. 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 theReal Estate Investment and Trust Securities Section of the Tokyo Stock Exchange (Ticker Code: 8963).
After the absorption-type merger with LCP Investment Corporation (“LCP”) was implemented on February 1,
2010, INV issued new investment 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.
FIG became a subsidiary of SoftBank Group Corp. (“SoftBank Group”), after SoftBank Group acquired FIG
effective on December 27, 2017 (Note 1). Calliope, an affiliate of FIG, who owned 100% of the issued shares ofConsonant Investment Management Co., Ltd., the asset manager to which INV entrusts the management of its
assets (the “Asset Manager”), transferred 80.0% of issued shares of the Asset Manager to Fortress CIM Holdings
L.P., a subsidiary of SoftBank Group, and 20.0% to SoftBank Group on March 29, 2018, pursuant to the basic
agreement which was entered into as of September 7, 2017. Although FIG is no longer an indirect parent
company of the Asset Manager, FIG continues to support INV as the sponsor.
Ever since the commencement of sponsorship from the Fortress Group (Note 2), INV has been focusing its efforts
on improving the profitability of its portfolio and establishing a revenue base in order to secure stable
distributions, and has strengthened the lender formation through new borrowings and the refinancing of existingbank borrowings, thereby creating a financial base for external growth. With this platform as a base, in June
2014, the Asset Manager revised the Investment Guidelines for INV, positioned hotels as a core asset classalongside residential properties with a view towards expanding investments in the hotel sector in which demandis forecasted to rise going forward, and has expanded its portfolio.
Moreover, the Asset Manager revised the Investment Guidelines as of July 17, 2018. Such revision was
intended to establish an investment policy and asset management structure regarding investments in overseas
assets, and also to change the investment policy regarding domestic hotels to focus on (i) Limited service hotels,
which feature relatively higher profit margins and potential for revenue growth backed by increasing demand
for accommodations, and (ii) Full-service and Resort hotels, which have a variety of revenue sources, including
lodging, dining and sales of goods, that are expected to achieve stable growth in overall hotel revenues. Basedon such change in investment policy, in July 2018, INV decided on the acquisition of TK (Japanese anonymous
association (tokumei kumiai)) interest in two overseas hotels, “Westin Grand Cayman Seven Mile Beach Resort& SPA” and “Sunshine Suites Resort” (collectively, the “Cayman Hotels”) as underlying assets for the firsttime ever in J-REIT history. In September 2018, INV implemented the investment in the Cayman Hotels via
a global offering of new investment units and borrowing of funds. INV intends to improve both theprofitability and stability of the portfolio through such investments, including investment in the Cayman
Hotels, which is expected to even out the effects of seasonality in INV’s portfolio.
In the Fiscal Period ended December 31, 2019 (“Reporting Period”), INV implemented a global offering of new
investment units for the sixth consecutive year and acquired eighteen domestic hotels mainly in “prime tourism
areas (Note 3)”. In addition, INV decided to sell two residential properties on December 9, 2019, completing thesale of one property on December 17, 2019. This illustrates INV’s proactive asset management and acontinuation of it asset recycling initiatives, in which it sold two residential assets at a 3.4% NOI yield, andused part of the proceeds to acquire two hotels in January 2020 at a 5.8% NOI yield. As a result, INV's
portfolio at the end of Reporting Period comprised of 147 properties (84 hotels (Note 4) (Note 5), 61 residential
properties and two others) with a total acquisition price of JPY 497,979 million (Note 6). The total acquisition
price of the portfolio has significantly grown by 6.9 times, compared to the portfolio as of May 22, 2014, which isthe date immediately prior to INV’s initial investment in hotels. Furthermore, INV’s hotel portfolio has reached5the largest asset size (Note 7) of JPY 434.3 billion (84 properties, 14,665 rooms) among all J-REIT hotel portfolios
including hotel-and-inn-specific type investment corporations.
(Note 1)US Eastern Standard Time

(Note 2) As of July 2011, Calliope owned 97.35% of issued shares of the Asset Manager and the investment ratio
reached 100% in October 2013. Calliope transferred 80.0% of issued shares to Fortress CIM Holdings
L.P., a subsidiary of SoftBank Group and 20.0% to SoftBank Group on March 29, 2018. As of the dateof this document, SoftBank Group owns 100% of issued shares of the Asset Manager directly andindirectly.
(Note 3) “Prime tourism areas” refer to an area where INV has determined that there are tourist resources in thesurrounding area that have the ability to attract tourists and that demand for accommodation can be
expected mainly for foreign tourists visiting Japan (inbound visitors). Hereinafter the same shall apply.
(Note 4) The preferred equity interest held by INV is counted as one property. Such preferred equity interest
issued by a special purpose company (tokutei mokuteki kaisha) refers to 178,458 units of the preferred
equity interest issued by Kingdom Special Purpose Company (the “TMK”) (equivalent to 49.0% of
the total issued and outstanding preferred equity interest), which owns the trust beneficiary interestof the Sheraton Grande Tokyo Bay Hotel as an underlying asset. The property is classified as a hotel,
based on the use of Sheraton Grande Tokyo Bay Hotel, the underlying asset of the preferred equity
interest, and INV’s investment amount of the preferred equity interest is used as the acquisition priceof the preferred equity interest, unless otherwise stated. The “underlying asset” refers to the realestate or the real estate related assets owned by a TK operator of TK interest or a TMK relating to thepreferred equity interest which INV owns, thus the real estate or the real estate related assets which
will be the revenue source of INV. Hereinafter the same shall apply.
(Note 5) From September 28, 2018 (Cayman Island local time; September 29, 2018 in Japan local time), INV
owned 100% of the TK interest in Seven Mile Resort Holdings Ltd. (the “Cayman SPC”), a Cayman
Islands special purpose company that holds leasehold interests in the Cayman Hotels and ancillary
assets as underlying assets. However, INV implemented the investment structure change (the“Structure Change” in some cases hereinafter) regarding the Cayman Hotels on May 9, 2019 (Cayman
Island local time; May 10, 2019 in Japan local time) and has directly held the Leasehold Interests, etc.
of the Cayman Hotels thereafter. Both of the TK interest and the Cayman Hotels are counted as two
properties before and after the Structure Change. In addition, the “Leasehold Interests, etc.” means
leasehold interests (rights equivalent to long-term real estate leases on land and buildings under the
British Cayman laws) and furniture, fixtures, equipment, ornaments, kitchen instrument, and otherassets required for hotel operations. Hereinafter the same shall apply.
(Note 6) Due to the Structure Change, the book value of the leasehold interests of the Cayman Hotels recordedby the Cayman SPC as of May 9, 2019 (Cayman Island local time; May 10, 2019 in Japan local time),
when INV succeeded the leasehold interests of the Cayman Hotels from the Cayman SPC via
distribution in kind in connection with the termination of TK agreement, is deemed as the acquisition
price of the Cayman Hotels. The book value is converted into JPY amount via exchange rate of USD
1=JPY 110.45 based on the foreign exchange forward contracts executed on July 26, 2018 andimplemented on September 26, 2018 in connection with the investment in the TK interest by INV.
Hereinafter the same shall apply.
(Note 7) “The largest asset size … among all J-REIT hotel portfolios” refers to the total acquisition price of 84
hotels owned by INV as compared with the total acquisition price of hotels (including inns and otheraccommodation facilities) owned by listed investment corporations other than INV as of December
31, 2019.
(b)

Operational Environment and Performance

For the December 2019 period, the portfolio NOI (Note 1) increased by 16.3% or JPY 2,124 million to JPY 15,164
million compared to the same period in the previous year (the December 2018 period). The hotel portfolio
NOI increased by JPY 2,882 million, which is equivalent to the increase by 22.1% of the portfolio NOI. While
the residential portfolio has been benefitting from internal growth, NOI for the residential portfolio declined
6

by JPY 757 million, which is equivalent to the decrease by 5.8% of the portfolio NOI, due to asset sales as partof INV’s asset recycling. The portfolio continued to maintain a high average occupancy rate (Note 2) of 99.3%
for the period.
Commentary on hotel and residential performance in the Reporting Period is as described below.
The NOI for the Reporting Period of the 55 domestic hotels (Note 3) owned by INV decreased by 12.2%
compared to the same period in the previous year (figures exclude nine domestic hotels with fixed-rent leaseagreements among the 64 domestic hotels owned by INV as at the beginning of the December 2019 Fiscal
Period, including Sheraton Grande Tokyo Bay Hotel, the underlying asset of the preferred equity interest of
TMK owned by INV). The 55 domestic hotels recorded an occupancy rate (Note 4) of 89.2% (-1.4 points YoY),
ADR (Note 5) of JPY 10,705 (-4.8% YoY), and RevPAR (Note 6) of JPY 9,550 (-6.3% YoY). Fixed rent revenues
accounted for 54.9% (JPY 6,478 million) of total hotel revenue and variable rent revenues accounted for 45.1%(JPY 5,317 million) of total hotel revenue (figures are based on the 81 domestic hotels as of the end of the
December 2019 Fiscal Period, and excludes Sheraton Grande Tokyo Bay Hotel, the underlying asset of thepreferred equity interest of TMK owned by INV).
Westin Grand Cayman Seven Mile Beach Resort & Spa and Sunshine Suites Resort continues to perform
extremely well and recorded an average occupancy rate of 72.3% (-4.8 points YoY), ADR of USD 327 (+11.9%
YoY), and RevPAR of USD 237 (+4.9% YoY).
Regarding the hotel sector in Japan, the number of inbound visitors reached a record high of 31.88 million(+2.2% YoY) for January through December 2019, and the trend is in line with the government targets of 40
million inbound visitors in 2020 and 60 million inbound visitors in 2030. Japan will host the Tokyo Olympic
Games in 2020, which are anticipated to further increase attention to Japan driving further growth of inboundtourism. In the Cayman Islands, where the Cayman Hotels are located, the expansion of the Owen Roberts
International Airport located in the Grand Cayman Island was completed on March 29, 2019. The airport
expansion has significantly expanded its capacity and can now accommodate 2.7 million passengers annually,up from the old and overstretched capacity of 0.5 million passengers. The airport expansion will also facilitate
additional airlift to the islands, increasing lodging demand.
In 2019, air visitor arrivals to the Cayman
Islands increased by 8.6% year-over-year.
Regarding the residential portfolio, the average occupancy rate of 62 residential properties (Note 7) for theReporting Period was 96.3%, an increase of 0.3 points compared to the same period in the previous year. The
NOI (Note 8) of the 62 residential properties for the Reporting Period increased by 0.8% compared to the same
period in the previous year, due to internal growth through solid rent increases despite the sale of Winbell
Kagurazaka. For the residential sector, trends for rent at city-center residential properties with small-typerooms maintained a moderate increase. Under such positive circumstances in the macro environment, INV
continues to focus on its rent increase program for both new leases and renewals as well as initiatives to reduce
residential leasing costs based on a detailed market analysis of each property and unit.
In the Reporting Period, INV realized a rent increase for 44.4% (based on the number of contracts) of the newresidential lease contracts for an average rent increase of 0.3% compared to the previous rent across all newleases (Note 9). INV achieved a rent increase for 43.2% (based on the number of contracts) of contract
renewals for an average rent increase of 1.4% compared to the previous rent across all renewal leases (Note 9),
while maintaining a high contract renewal rate (Note 10) of 83.2%. Combined, new leases and renewal leases
were signed at 1.0% higher than the previous leases (Note 9).
The total appraisal value of 146 properties was JPY 557,099 million (1 out of the 147 properties owned by INV
at the end of the Reporting Period is excluded from the appraisal calculation: Sheraton Grande Tokyo Bay
Hotel (preferred equity interest) for which appraisal value of such interest is not available). The portfolio has
an unrealized gain of JPY 91,516 million (Note 11) and an unrealized gain ratio of 19.7% (Note 11). The total
appraisal value of 128 properties which were owned throughout the Reporting Period increased by 1.0% fromJPY 467,843 million at the end of June 2019 period to JPY 472,740 million at the end of the Reporting Period.

7

Key Performance Indicators of 55 Domestic Hotel Properties (Note 3)
December 2019 fiscal period

Year-on-year change

Occupancy Rate (Note 4)

89.2%-1.4ptADR (JPY) (Note 5)

10,705-4.8%

RevPAR (JPY) (Note 6)

9,550

-6.3%

GOP (JPY million) (Note 12)9,746-10.8%Key Performance Indicators of Cayman Hotels
December 2019 fiscal period

Year-on-year change

Occupancy Rate (Note 4)

72.3%-4.8ptADR (USD) (Note 5)327+11.9%

RevPAR (USD) (Note 6)

237

+4.9%

GOP (USD) (Note 12)

13,277,720+2.2%

Key Performance Indicators of 62 Residential Properties (Note 7)
December 2019 fiscal period
Occupancy Rate (Note 2)
Average Rent per Tsubo per Month(JPY) (Note 13)
NOI (JPY million) (Note 8)

Year-on-year change

96.3%+0.3pt

9,386

+0.4%

1,804

+0.8%

(Note 1) “NOI” for the hotel properties is calculated in accordance with the following formula:
NOI＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses + Dividend on thepreferred equity interest (TMK dividend) + TK distribution + (Management Contract Revenue of the
Cayman Hotels‐Management Contract Expense)(Note 2) “Average Occupancy Rate” for the entire portfolio and “Occupancy Rate” for the residential
properties are calculated by dividing the sum of total leased area by the sum of total leasable area atthe end of each month during the relevant period.
(Note 3) Of the 64 hotels held as of the beginning of the December 2019 Fiscal Period (including the Sheraton
Grande Tokyo Bay Hotel, the underlying asset of the preferred equity interest of TMK owned by INV),
the following nine hotels with fixed-rent lease agreements are excluded: Super Hotel
Shinbashi/Karasumoriguchi, Comfort Hotel Toyama, Super Hotel Tokyo-JR Tachikawa Kitaguchi,
Super Hotel JR Ueno-iriyaguchi, Comfort Hotel Kurosaki, Comfort Hotel Maebashi, Comfort Hotel
Tsubame-Sanjo, Comfort Hotel Kitami and Takamatsu Tokyu REI Hotel. In addition, the figures forthe properties acquired after June 2018 are calculated on the assumption INV had acquired those
properties on July 1, 2018, using the actual figures provided by the sellers of such properties for theperiod before the acquisition. Hereinafter the same shall apply.
(Note 4) “Occupancy rate” for the hotel properties is calculated in accordance with the following formula:
Occupancy rate = 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)
Hereinafter the same shall apply.
(Note 5) “ADR” means average daily rate, and is calculated by dividing total room sales (excluding service
fees) for a certain period by the total number of days per room for which each room was occupied
during the same period. Hereinafter the same shall apply.
(Note 6) “RevPAR” means revenues 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 the same as the figure obtained by multiplying ADR by occupancy rates.
Hereinafter the same shall apply.
(Note 7) Based on the 62 residential properties owned as of the beginning of December 2019 fiscal period.
8Ofthe 62 properties, Winbell Kagurazaka was sold on December 17, 2019. Therefore, for Winbell
Kagurazaka, July 1, 2019 through December 16, 2019, the day immediately preceding the sale date, isdeemed as the operating period for the December 2019 fiscal period, and the leased area and theleasable area as of December 16, 2019 are deemed as those as of the end of December 2019 to calculate
each number. Hereinafter the same shall apply. In addition, the figures for the properties acquired
after June 2018 are calculated on the assumption INV had acquired those properties on July 1, 2018,using the actual figures provided by the sellers of such properties for the period before the acquisition.
(Note 8) For the comparison of NOI for the residential properties, one-off insurance-related revenues andexpenses are excluded. NOI of Winbell Kagurazaka sold on December 17, 2019 is based on the data
through December 16, 2019, the day immediately preceding the sale date. Hereinafter the same shallapply.
(Note 9) Increase or decrease in the sum of monthly rents on new or renewal contracts, or the total of both,compared with the sum of previous rents.
(Note 10) Renewal rate is calculated by the number of renewed contracts during the relevant period divided by
the number of contracts due up for renewal during the relevant period(Note 11) The unrealized gain 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.
The unrealized gain ratio is calculated using the following formula: the unrealized gain ÷ book value
as of the end of the Reporting Period.
(Note 12) “GOP,” means the gross operating profit, and is the amount remaining after deducting costs of hotel
operations (the personnel, utility and advertising expenses and other expenses) and the management
services fee to operators (if any) from the hotel’s revenues. Hereinafter the same shall apply.
Moreover, GOP for the Sheraton Grande Tokyo Bay Hotel has been multiplied by 49%, or INV’sownership ratio of the preferred equity interest. Hereinafter the same shall apply.
(Note 13) “Average Rent per Tsubo per Month” is calculated by dividing the total rental revenue (includingcommon area charges) for each month by the sum of total leased area (tsubo) at the end of each month
during the relevant period.
(c)Overview of Fund Raising
As a result of the measures described below, INV’s interest-bearing debt outstanding balance was JPY
259,174 million and the Interest-Bearing Debt ratio (Note 1) and LTV (appraisal value basis) (Note 2) were49.1% and 44.6% respectively, as of the end of the Reporting Period, with an average interest rate (Note3) of 0.55%.
(Note 1) Interest-Bearing Debt ratio uses the calculation formula below:
Interest-Bearing Debt ratio = total outstanding interest (excluding short-term consumption taxloan) -bearing debt/total assets x 100(Note 2) LTV (appraisal value basis) uses the calculation formula below:
LTV = total outstanding interest (excluding short-term consumption tax loan) -bearing
debt/total appraisal value (*) x 100(*) Since appraisal value for Sheraton Grande Tokyo Bay Hotel (preferred equity interest) is notavailable, the acquisition price of the preferred equity interest (JPY 17,845 million) is deemed
as appraisal value of Sheraton Grande Tokyo Bay Hotel (preferred equity interest).
(Note 3) The average interest rate (annual rate) is calculated by the weighted average based on theoutstanding balance of borrowings and rounded to two decimal places.

(i) Equity Financing
INV implemented a global public offering which closed on July 18, 2019 (the number of new investment units
issued: 409,524; total issue value: JPY 23,317 million) and a third party allotment which closed on August 15,
2019 (the number of new investment units issued: 20,476; total issue value: JPY 1,165 million) in order to procure
9part of the funds for the acquisition of eighteen domestic hotels described in “(d) Overview of Acquisition ofAssets”.
(ii) Debt Financing
a. Borrowing of Funds
INV borrowed New Syndicate Loan (L) on July 19, 2019 (total amount borrowed: JPY 27,400 million; interest
rate: variable interest rate of 1-month JPY TIBOR plus 0.70000%, 1-month JPY TIBOR plus 0.55000%, 1-month
JPY TIBOR plus 0.50000% (by the interest swap agreement, it is fixed, in effect, at 0.57984%), 1-month JPY TIBOR
plus 0.45000% (by the interest swap agreement, it is fixed, in effect, at 0.52473%), 1-month JPY TIBOR plus
0.35000% (by the interest swap agreement, it is fixed, in effect, at 0.41326%), and 1-month JPY TIBOR plus
0.20000% for durations of six, five-and-a-half, five, four-and-a-half, three-and-a-half and one year), which wasarranged by Mizuho Bank, Ltd. in order to pay a portion of the acquisition price and related expenses for theacquisition of the eighteen domestic hotels described in “(d) Overview of Acquisition of Assets” with theequity financing described in the said (i).
Furthermore, INV borrowed New Syndicate Loan (M) on July 16, 2019 (total amount borrowed: JPY 28,979
million; interest rate: variable interest rate of 1-month JPY TIBOR plus 0.70000%, 1-month JPY TIBOR plus
0.55000%, 1-month JPY TIBOR plus 0.50000% (by the interest swap agreement, it is fixed, in effect, at 0.56310%),1-month JPY TIBOR plus 0.45000% (by the interest swap agreement, it is fixed, in effect, at 0.49859%) and 1month JPY TIBOR plus 0.35000% (by the interest swap agreement, it is fixed, in effect, at 0.40000%) for durationsof six, five-and-a-half, five, four-and-a-half and three-and-a-half years), which was arranged by Mizuho Bank,
Ltd. in order to repay New Syndicate Loan (E) in the amount of JPY 28,979 million due on July 16, 2019.
Additionally, INV borrowed Term Loan (L) on July 22, 2019 (total amount borrowed: JPY 700 million; interest
rate: variable interest rate of 1-month JPY TIBOR plus 0.70000% for duration of six years), which was arrangedby The Tokyo Star Bank, Limited in order to repay Term Loan (E) in the amount of JPY 700 million due on July20, 2019. This repayment deadline was a holiday (a day other than a business day) and thus the repayment
date was July 22, 2019, the next business day, according to the provisions of the agreement.
Moreover, INV borrowed New Syndicate Loan (N) on August 28, 2019 (total amount borrowed: JPY 3,682
million; interest rate: variable interest rate of 1-month JPY TIBOR plus 0.45000% (by the interest swap agreement,
it is fixed, in effect, at 0.46219%) for duration of four-point-four years), which was arranged by Mizuho Bank,
Ltd. in order to repay Term Loan (A) in the amount of JPY 3,682 million due on August 28, 2019.
In addition, INV borrowed New Syndicate Loan (O) on October 15, 2019 (total amount borrowed: JPY 3,700
million; interest rate: variable interest rate of 1-month JPY TIBOR plus 0.70000%, 1-month JPY TIBOR plus
0.55000%, 1-month JPY TIBOR plus 0.45000% (by the interest swap agreement, it is fixed, in effect, at 0.48590%)
for durations of six, five-and-a-half, and four-and-a-half years), which was arranged by Mizuho Bank, Ltd. inorder to repay New Syndicate Loan (H) in the amount of JPY 3,700 million due on October 13, 2019. This
repayment deadline was a holiday (a day other than a business day) and thus the repayment date was October
15, 2019, the next business day, according to the provisions of the agreement.
As described in “c Significant Subsequent Events (a) Debt Financing”, INV decided to borrow New
Syndicate Loan (P) on December 9, 2019 and borrowed on January 6, 2020 (total amount borrowed: JPY 6,980
million; interest rate: variable interest rate of 1-month JPY TIBOR plus 0.50000% (by the interest swap agreement,
it is fixed, in effect, at 0.64291%), 1-month JPY TIBOR plus 0.30000% (by the interest swap agreement, it is fixed,
in effect, at 0.41687%) and 1-month JPY TIBOR plus 0.20000% for durations of five, three and one year), which
was arranged by Sumitomo Mitsui Trust Bank, Limited in order to pay a portion of the acquisition price andrelated expenses for the acquisition of the two domestic hotels described in “c Significant Subsequent Events(b) Acquisition of Assets”.
In addition, a portion of INV’s existing loans from The Tokyo Star Bank, Limited of JPY 1,600 million wastransferred to THE TOWA BANK, LTD. in the amount of JPY 1,000 million on December 25, 2019.
b. Issuance of Investment Corporation Bonds
INV issued its investment corporation bonds as follows for the purpose of raising a portion of funds for strategic
capital expenditures to enhance the competitiveness and added value of existing properties, while at the same10

time lowering its financing costs, lengthening the average maturity period of its debt and further diversifying
repayment dates for interest-bearing debt.
Bond Series

Issue Date

Issue
Interest Rate Redemption
AmountDate(JPY million) (annual rate)

Fourth Series Unsecured
Investment Corporation
Bonds (with pari passu
conditions among specified
corporate bonds)

October 28,
2019

0.480%

October 28,
2024

Unsecured /Unguaranteed
Rating: A+(JCR)Fifth Series Unsecured
Investment Corporation
Bonds (with pari passu
conditions among specified
corporate bonds)

October 28,
2019

2,000

0.900%

October 26,
2029

Unsecured /Unguaranteed
Rating: A+
(JCR)

3,000

0.760%

1,000

Total Amount /Average Interest Rate

Abstract(d) Overview of Acquisition of Assets
The Asset Manager decided on the acquisition of trust beneficiary interests in eighteen domestic hotels as follows
on July 1, 2019, and acquisition of the assets was closed on July 19, 2019.

Property
Number

Property Name

Acquisition
Price(JPY million)(Note 1)

Appraisal
Value(JPY million)(Note 2)

SellerD64

Hotel MyStays Sapporo
Aspen

15,54315,700Touyako Godo Kaisha

D65

Art Hotel Ishigakijima

9,731

9,830

Yaeyama Resort Hotel
Tokutei Mokuteki
KaishaD66

Hotel MyStays Fuji Onsen
Resort

9,405

9,500

Saturnia Tokutei
Mokuteki Kaisha

D67

Hotel Sonia Otaru

5,930

5,990

Shirahama Tokutei
Mokuteki Kaisha

D68

Hotel MyStays Kanazawa
Castle

5,682

5,740

Calvis Tokutei Mokuteki
KaishaD69

Art Hotel Niigata Station

5,524

5,580

HL Investments 2
Tokutei Mokuteki
KaishaD70

Hotel MyStays Nagoya
Nishiki

5,197

5,250

Shirahama Tokutei
Mokuteki Kaisha

D71

Hotel Nord Otaru

4,296

4,340

Shirahama Tokutei
Mokuteki Kaisha

D72

Hotel MyStays Kagoshima
Tenmonkan

3,445

3,480

Kawaguchiko Tokutei
Mokuteki Kaisha

D73

Art Hotel Asahikawa

3,197

3,230

Shirahama Tokutei
Mokuteki Kaisha

11Acquisition
Price(JPY million)(Note 1)

Appraisal
Value(JPY million)(Note 2)

Hotel MyStays Matsuyama

3,098

3,130

Calvis Tokutei Mokuteki
KaishaD75

Hotel MyStays Sapporo
Susukino

3,059

3,090

Kawaguchiko Tokutei
Mokuteki Kaisha

D76

Hotel MyStays Sapporo
Nakajima Park

2,118

2,140

Shirahama Tokutei
Mokuteki Kaisha

D77

Hotel MyStays Sapporo
Nakajima Park Annex

1,584

1,600

Shirahama Tokutei
Mokuteki Kaisha

D78

Flexstay Inn Sakuragicho

1,425

1,440

Calvis Tokutei Mokuteki
Kaisha

D79

MyCUBE by MYSTAYS
Asakusa Kuramae

1,287

1,300

Calvis Tokutei Mokuteki
KaishaD80

Hotel MyStays Kagoshima
Tenmonkan Annex

1,168

1,180

Kawaguchiko Tokutei
Mokuteki Kaisha

D81

Hotel MyStays Nayoro

957

967

Kawaguchiko Tokutei
Mokuteki Kaisha

82,646

83,487-

Property
Number

Property Name

D74

Total
(Note 1)
(Note 2)(e)SellerAcquisition Price does not include adjustments for property taxes, city planning taxes, or nationalor local consumption taxes. Hereinafter the same shall apply.
Appraisal Value is based on appraisal value stated in the appraisal report by the Japan Real Estate
Institute., The Tanizawa Sōgō Appraisal Co., Ltd. or Daiwa Real Estate Appraisal Co., Ltd. on thevaluation date of April 1, 2019.

Overview of Sale of Assets
The Asset Manager decided to sell two residential properties, City House Tokyo Shinbashi and Winbell
Kagurazaka on December 9, 2019 in order to improve the profitability of the portfolio through thepreviously mentioned accretive asset recycling, as well as stabilizing future distributions by retaining thegain from sales as internal reserves. The sale of Winbell Kagurazaka was completed on December 17,
2019 and the sale of City House Tokyo Shinbashi was completed on January 15, 2020. The overview ofthe sold assets are as follows. A portion of the proceeds from the sales were used to fund a portion of theacquisition and the related expenses described in “c Significant Subsequent Events (b) Acquisition ofAssets”.

Property
NumberA51

A52

Property
Name

Acquisition
Price(JPY million)

City HouseTokyo
Shinbashi

2,520

WinbellKagurazaka

3,260Book Value
Sale Price(JPY million) (JPY million)(Note 1)
(Note 2)

2,269

4,465

(Estimated)
Gain on Sale
(JPY million)(Note 3)

Transferee

2,043
Undisclosed(Note 4)

2,992

12

5,135

1,970

Property
Number

Property
Name

Total
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(f)

Acquisition
Price(JPY million)

Book Value
Sale Price(JPY million) (JPY million)(Note 1)
(Note 2)

5,780

5,262

(Estimated)
Gain on Sale
(JPY million)(Note 3)

9,600

4,013

Transferee-

Book Value shows figures as of December 31, 2019 for City House Tokyo Shinbashi and as of thedate of sale for Winbell Kagurazaka.
Sale Price does not include transfer related cost, adjustments for fixed asset taxes or city planningtaxes, or national or local consumption taxes.
Gain on Sale is calculated by deducting the Book Value and transfer related cost (estimated transfer
related cost for City House Tokyo Shinbashi) from Sale Price.
The name of the transferee is not disclosed, as the transferee’s consent has not been obtained fordisclosure.
Amounts are rounded down to the nearest million yen.

Overview of Results of Operations and Distributions

As a result of the operations mentioned above, operating revenues for the Reporting Period decreased by JPY
8,752 million from the previous period (-32.0%) to JPY 18,587 million, net income decreased by JPY 9,600
million (-45.2%) to JPY 11,638 million and unappropriated retained earnings including the retained earnings
carried forward from the preceding fiscal period (JPY 11,622 million) reached JPY 23,261 million.
INV believes that maintaining the stability of cash distributions over the medium term is one of the mostimportant factors in determining the amount of distribution for a given fiscal period. With respect to theReporting Period, INV reserved a portion of net income increased due to the sale of Winbell Kagurazaka, andaims to maintain stable distributions in the future. INV reserved JPY 1,121 million of net income as internal
reserve and decided that distribution per unit (excluding excess profit distribution) is JPY 1,725 and does notmake distributions in excess of profits.
b

Outlook for the Fiscal Periods Ending June 30, 2020 and December 31, 2020

The DPU for the June 2020 fiscal period and December 2020 fiscal period are forecasted to be JPY 1,812 (+9.4%
YoY) and JPY 1,647 (-4.5% YoY), respectively. The full year DPU for calendar year 2020 is forecasted to be
JPY 3,459 (+2.3% YoY), providing expected continued steady growth.

Future operational policy and issues to be addressed
Since July 2011, INV has enhanced unitholder value by significantly increasing DPU and financial stability
with the Fortress Group as its sponsor. Since Fortress Group joined under the umbrella of SoftBank Groupin December 2017 and SoftBank Group owns 100% of issued shares of the Asset Manager directly andindirectly as of March 29, 2018, in addition to continued access to Fortress’s global real estate expertise, INV
will seek to leverage the resources that are expected to become available through SoftBank Group. SoftBank
Group has market-leading expertise in technology fields such as digital marketing for both mobile anddesktop, online payment systems, search engine optimization, AI and robotics. INV believes that
deployment of technology into INV’s real estate assets, especially its hotels, will enhance the ongoing
initiatives to improve its digital marketing, minimize labor costs and increase customer engagement. For
example, INV plans to pursue opportunities to better manage the increased number of foreign visitors andtheir related online research, bookings and payments, improve the process in setting hotel rates and manage
overbooking through the use of sophisticated AI algorithms, and reduce labor costs while enhancing
customer service through the use of robotics.
In addition to pursuing synergies with SoftBank Group, going forward, INV will continue to implement
various strategies to maintain further growth and financial stability, including the following measures.
Further external growth utilizing sponsor supportProperty acquisition from third parties with the aim of expanding the AUM
13Asset recycling and property acquisitions using the proceeds from sales



Further internal growth at hotel and residential properties

Diversification of funding sources and lengthening the average maturity period of its debt throughborrowings and the issuance of investment corporation bonds

Details of the future growth strategy are as follows.
(i)

External growth strategy
New Property Acquisitions
As its basic strategy, INV will move forward with the acquisition of new properties focusing on hotels,
where continued growth in portfolio revenues is anticipated and residential properties especially whererental growth can be achieved. Rent revenue from residential assets and other assets as well as the fixed
rent portion from hotels will also contribute to more stable revenue, which was 57.0% of total revenue(Note 1). This acquisition strategy will enable INV to build a portfolio with a good balance between
growth and stability.
In regards to hotels, INV will take into consideration the trends in foreign travelers visiting Japan,
demands of business and leisure customers in nearby areas, and leasing contract types when making
investment decisions, with the aim of acquiring properties where growth and stability of GOP and rental
revenue are forecasted to increase.
In regards to residential properties, INV will analyze occupancy rates, rental market trends, the presenceof competing properties among other factors, and consider acquiring properties that have mainly smalltype rooms with strong competitiveness in large cities, in which it believes it can achieve increases in rent.
INV has achieved steady external growth via the sponsor pipeline from the Fortress Group, as follows.
Properties Acquired from affiliates of the Fortress Group (as of the date of this document)
Date

Properties acquired

Total acquisition price

September 2012
May 2014

24 residential properties (Note 2)
Two hotels

JPY 14,043 million (Note 2)
JPY 5,435 million

July 2014
February 201518 hotels
Two hotels

JPY 39,938 million
JPY 4,911 million

July 2015

11 hotels andthree residential properties

JPY 35,258 million

August 2015
January 2016

One hotel
Five hotels andone residential property

JPY 5,069 million
JPY 10,207 million

March 2016

Four hotels andone residential property

JPY 66,697 million

June 2016
March 2017

Two hotels
Two residential properties

JPY 15,900 million
JPY 24,562 million

May 2017
October 2017

One hotel
Five hotels (Note 3)

JPY 8,000 million
JPY 57,444 million (Note 3)

February 2018
June 2018

Four hotels
Two hotels

JPY 12,425 million
JPY 7,325 million

August 2018
September 2018

Four hotels
Two hotels (Note 4)

JPY 47,747 million
JPY 36,783 million (Note 4)

July 2019
January 2020

18 hotels
Two hotels

JPY 82,646 million
JPY 16,236 million

Total

114 properties(of which 83 are hotels and 31 areresidential properties)

JPY 490,627 million(of which hotels: JPY 438,989 million;
residential: JPY 51,638 million)

14

The Fortress Group manages five dedicated Japanese real estate funds, including the Fortress Japan
Opportunity Funds I, II, III and IV. The Fortress Group’s committed equity is over JPY 450 billion and thenumber of properties that the Fortress Group is invested in exceeds 3,500. In order to ensure future
growth options for the portfolio, INV entered into an updated MOU with affiliates of the Fortress Group
that provides preferential negotiation rights with respect to the acquisition of two hotels and sevenresidential properties (see the table below) (Note 5). 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 acquisitions of properties from third parties that will contribute to stability
and growth in revenue and cash flow and an increase in DPU.
No.

Asset nameLocation

Asset type (Note 6)

No. of rooms

1

Rihga Royal Hotel Kyoto

Kyoto, Kyoto

Full Service Hotel489

2

Fusaki Beach Resort Hotel & Villas

Ishigaki, Okinawa

Resort Hotel

333

3

Gran Charm Hiroo

Shibuya-ku, Tokyo

Residential/Small Type

121

4

Gran Charm Kichijoji

Musashino, Tokyo

Residential/Small Type28

5

Dainichi F‐45

Urayasu, Chiba

Residential/Small Type

54

6

Gran Charm Urayasu

Urayasu, Chiba

Residential/Small Type54

7

Gran Charm Urayasu 5

Urayasu, Chiba

Residential/Small Type54

8

Gran Charm Minami Gyotoku I

Ichikawa, Chiba

Residential/Small Type52

9Gran Charm Minami Gyotoku II

Ichikawa, Chiba

Residential/Small Type48

(Note 1)

(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)

The percentage indicates composition of rent revenue and management contract revenue based on
the actual results for the fiscal period ended December 2019. Sheraton Grande Tokyo Bay Hotel(preferred equity interest) is excluded.
Of the properties acquired from affiliates of the Fortress Group, two residential properties (Sun
Terrace Minami-Ikebukuro and Royal Parks Tower Minami-Senju) have been sold.
Sheraton Grande Tokyo Bay Hotel acquired by a special purpose company, of which INV owns thepreferred equity interest, is counted as one property and the INV’s investment amount to thepreferred equity interest is counted as the acquisition price of the preferred equity interest.
The Cayman Hotels acquired by the Cayman SPC, of which INV owned the TK interest, are counted
as two properties and the INV’s investment amount to the TK interest is used as the acquisition priceof the TK interest. After the Structure Change, INV currently has direct ownership of the Leaseholdof the Cayman Hotels.
The term of validity of the MOU is from July 1, 2019, the date of execution of the updated MOU, toJune 30, 2020. However, regarding the 9 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 theproperties. INV has no preferential negotiation rights with respect to overseas assets.
Each “Asset Type” above is as follows:“Full Service Hotel” refers to a hotel generally having both restaurant facilities providing breakfast,
lunch and dinner (including meals provided by reservation) and meeting facilities that can be used
for banquet services.
“Limited Service Hotel” refers to a hotel that does not qualify as Full-Service Hotel.
“Resort Hotel” refers to a hotel located in areas where a substantial number of guests stay forsightseeing or recreational purposes and includes both full service hotels and limited service hotels.
With respect to a hotel that falls within the definition of both a full service hotel and a resort hotel,
we categorize the hotel as a full service hotel if it has substantial demand for meeting room, banquet
service, wedding service or food and beverage service (including demand from non-staying guests)
and as a resort hotel in all other cases. With respect to a hotel that falls within the definition of botha limited service hotel and a resort hotel, we categorize the hotel as a resort hotel.
“Small Type” refers to a residential property in which the majority of dwelling units are less than 30
m2.

15

Property Sales
While INV places priority on increasing unitholders’ value through external growth by taking into accountthe increased level of activity in the real estate trading market, it also considers the possibility of portfolio
optimization upon consideration of the portfolio sector composition, geographic distribution andcompetitiveness of each property, as appropriate and previously detailed in the Asset Recycling Program.
(ii)

Strategy for internal growth(Hotels)
Of the 82 domestic hotels (Note 1) owned by INV as of the end of the Reporting Period, 73 hotels use avariable rent scheme. In the variable rent scheme, in principle, INV receives all of gross operating profit(GOP) after deducting payment of management fees for the hotel operator as rents. For 71 hotels of the
73 hotels, MHM and subsidiaries of MHM have implemented sophisticated revenue management
initiatives seeking to maximize revenue through effectively taking in the accommodation demand. As aresult, INV can directly enjoy the hotel revenue upside through this variable rent scheme. For hotels,renovation of rooms and replacement of fixtures and fittings are indispensable to maintain and increase
revenues and operate stably in a planned manner.
(Residential properties and others)
INV will continue to strengthen its collaborative ties with PM and brokers to further boost occupancy
rates and earning capabilities of its properties. With respect to INV’s residential properties, while
keeping in mind the high-season in the residential rental market during the June 2020 period, INV will
focus on increasing the occupancy rates and rents for both new lease contracts and lease renewals for allof its properties as well as formulating net leasing cost reduction policies in order to continue maximizing
profits.
Further, the implementation of appropriate maintenance and repair plans is of the utmost importance inmaintaining and enhancing the competitiveness and market value of the properties as well as ensuringhigh tenant satisfaction. Therefore, INV will continue to monitor current strategic plans with flexible
implementation as it sees fit.
(Note 1) Including Sheraton Grande Tokyo Bay Hotel (the preferred equity interest).

(iii) Financial strategy
The credit rating from Japan Credit Rating Agency, Ltd. (JCR) has been changed as of February 4, 2020 as
follows by further making progress in reduction of funding costs, extending average interest-bearing debt
repayment period, diversification of interest-bearing debt repayment dates, and diversification of funding
methods. Going forward, INV seeks to maximize unitholders’ value through improvement of its credit
rating by way of further reduction of borrowing costs, extension of average interest-bearing debt
repayment period, diversification of loan maturity dates and financing measures.
Rating Object

Before Change

After Change

Long-term Issuer Rating(Outlook)A(Positive)A+(Stable)(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 Board of Directors in the capacity of an observer.
The Asset Manager has a compliance officer who is responsible for compliance with laws, regulations andother relevant matters as well as overall management of transactions with sponsor related parties.
16Moreover, it has in place a compliance committee which, chaired by such compliance officer, is in charge ofdeliberating on compliance with laws, regulations and other relevant matters as well as transactions withsponsor 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(a)Debt Financing
INV decided to borrow New Syndicate Loan (P) on December 9, 2019 and borrowed on January 6, 2020 inorder to pay a portion of the acquisition price and related expenses for the acquisition of the two domestic
hotels described in “(b) Acquisition of Assets”.
Borrowing
Date

LenderSumitomo Mitsui Trust Bank,
LimitedOutstanding
Interest Rate
Balance(annual rate)(JPY million)
Floating
4,550 interest rates(Note 1)January 6,
2020

Maturity
Date

Borrowing
MethodJanuary 6,
2025

1,550

Floating
interest rates(Note 2)January 6,
2023

880

Floating
interest rates(Note 3)January 6,
2021

Unsecured/
non guarantee

Total Debt
6,980
(Note 1) 1-month JPY TIBOR (Base Rate) + spread (0.50000%), fixed, in effect, at 0.64291% by the interest swap
agreement(Note 2) 1-month JPY TIBOR (Base Rate) + spread (0.30000%), fixed, in effect, at 0.41687% by the interest swap
agreement(Note 3) 1-month JPY TIBOR (Base Rate) + spread (0.20000%)(b)

Acquisition of Assets
The Asset Manager decided to acquire two hotels as follows on December 9, 2019, and acquisition of assets
was completed on January 6, 2020.

Acquisition Price(million yen)Appraisal Value(million yen)
(Note 1)

Hotel MyStays Premier Narita

10,593

10,700Adria Tokutei
Mokuteki Kaisha

Art Hotel Morioka

5,643

5,700

Heijo Tokutei
Mokuteki Kaisha

16,236

16,400Property
Number

Property Name

D82

D83

Total
(Note 1)(c)Seller-Appraisal Value is based on appraisal value stated in the appraisal report by The Tanizawa Sōgō Appraisal Co.,
Ltd. or JLL Morii Valuation & Advisory K.K. on the valuation date of October 1, 2019.

Sale of Assets
The Asset Manager decided to sell one residential property as follows on December 9, 2019, and sale ofasset was completed on January 15, 2020.

17

Property
Number

Property Name

Acquisition
Price(JPY million)

A51

City House
Tokyo Shinbashi

2,520(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)d

Estimated
Book Value
Sale Price
Gain on Sale
(JPY million) (JPY million) (JPY million)(Note 1)
(Note 2)
(Note 3)
2,269

4,465

2,043

Transferee

Undisclosed(Note 4)

Book Value shows a figure as of December 31, 2019.
Sale Price does not include transfer related cost, adjustments for fixed asset taxes or city planningtaxes, or national or local consumption taxes.
Estimated Gain on Sale is calculated by deducting the Book Value and estimated transfer related
cost from Sale Price.
The name of the transferee is not disclosed, as the transferee’s consent has not been obtained fordisclosure.
Amounts are rounded down to the nearest million yen.

Operational Outlook

The forecasts of financial results for the fiscal periods ending June 30, 2020 (from January 1, 2020 to June 30,2020) and December 31, 2020 (from July 1, 2020 to December 31, 2020) are as follows. For reference purposes,
full-year forecasts (aggregate of the fiscal periods ending June 30, 2020 and December 31, 2020) are provided
as well, since hotel revenues are influenced by seasonal effects.
June 2020
Fiscal Period(Anticipated)

December 2020
Fiscal Period(Anticipated)(Reference)
Full-year 2020

Operating Revenues

JPY 18,510 million

JPY 17,441 million

JPY 35,951 million

Operating Income

JPY 12,342 million

JPY 11,112 million

JPY 23,454 million

Ordinary Income

JPY 11,259 million

JPY 10,047 million

JPY 21,306 million

Net Income

JPY 11,258 million

JPY 10,047 million

JPY 21,305 million

Total Distribution Amount(Including excess profit distribution)

JPY 11,047 million

JPY 10,041 million

JPY 21,088 million

Net Income per Unit

JPY 1,846

JPY 1,647

JPY 3,493

Distribution per Unit
(Excluding excess profit distribution)

JPY 1,812

JPY 1,647

JPY 3,459---

JPY 1,812

JPY 1,647

JPY 3,459

Excess Profit Distribution per Unit
Distribution per Unit
(Including excess profit distribution)

For the assumptions underlying the operational outlook for the fiscal period ending June 30, 2020 and
December 31, 2020, please see “Assumptions Underlying the Forecast of Financial Results and Distribution
ending June 30, 2020 and December 31, 2020”.
Further, the new coronavirus, which has been spreading in China and is spreading across the world is
expected to have a negative impact on hotel property revenues. However, since it is difficult to estimate
such impact at this moment, the forecasts of financial results herein do not reflect such impact. We willpromptly notify you if there is a need to amend the outlook for the operating situation in light of future
effects.
(Cautionary Note regarding Forward Looking Statements)
Forward looking statements such as the forecasts set forth herein are based on information currently
available and certain assumptions that are deemed reasonable. Actual operating performance may varysignificantly due to factors not foreseen at the time of this present notice, such as the occurrence of gains
and losses associated with the sale of properties, repayment of borrowings and a decrease in rent received.
Also, this forecast is not a guarantee of distribution amounts.

18

<Assumptions Underlying the Forecast of Financial Results and Distribution for the Fiscal Periods ending June 30,
2020 and December 31, 2020>

Item

Fiscal period

Assets undermanagement

Assumptions

The June 2020 Fiscal Period: from January 1, 2020 to June 30, 2020 (182 days)
The December 2020 Fiscal Period: from July 1, 2020 to December 31, 2020 (184 days)
Properties held as of the end of the June 2020 Fiscal Period: 147 properties and preferred
equity interests in one TMK
Properties held as of the end of the December 2020 Fiscal Period: 147 properties andpreferred equity interests in one TMK
Based on the properties held as of today (147 properties and preferred equity interests in
one TMK), and INV assumes that there will be no change in the portfolio through theend of the fiscal period ending December 2020.
As of the end of the June 2020 Fiscal Period: 6,096,840 units
As of the end of the December 2020 Fiscal Period: 6,096,840 units

Units outstanding
INV assumes that there will be no change to the current 6,096,840 units issued andoutstanding through the end of the December 2020 Fiscal Period.
Balance as of the end of the fiscal period ending June 2020: JPY 263,468 million(borrowing: JPY 256,468 million, investment corporation bonds: JPY 7,000 million)
Balance as of the end of the fiscal period ending December 2020: JPY 263,468 million(borrowing: JPY 256,468 million, investment corporation bonds: JPY 7,000 million)
INV assumes that of the current total balance of JPY 266,154 million, INV intends to repay
consumption tax loan of JPY 2,686 million maturing on July 18, 2020 in the fiscal period
ending June 2020. Regarding other loans maturing during the June 2020 Fiscal Period
and December 2020 Fiscal Period, INV intends to refinance at a similar condition during
the respective fiscal periods.
INV assumes no other new loan or prepayment of loan through the end of the December
2020 Fiscal Period.

Interest-bearing liabilities

19

INV expects to record rental revenues for each fiscal period as follows:
June 2020
Fiscal Period
JPY 12,741 million

December 2020
Fiscal Period
JPY 15,306 million(of these, hotel rents)(JPY 10,172 million)(JPY 12,767 million)(fixed hotel rents)(JPY 5,514 million)(JPY 7,015 million)(variable hotel rents)(JPY 4,658 million)(JPY 5,752 million)

JPY 2,963 million

JPY 1,324 million

JPY 768 million

JPY 811 million

・Gain on sale

JPY 2,038 million-

Total operating revenues

JPY 18,510 million

JPY 17,441 million

・Rental revenues

・Management contract revenue
・TMK dividend amountOperating revenues

INV estimates the amount of dividends on the preferred equity interests based on theperformance of the underlying asset and the assumed amount of expenses incurred by
the special purpose company.
INV recognizes management contract revenue from the overseas hotels as a real estate
investment income from management contracts of the Cayman Hotels. The forecasts ofmanagement contract revenue are based on estimated performance of the underlying
assets and the assumed amount of expenses incurred by the hotel management company.
Management contract revenue have been calculated based on the exchange rate of USD
1 = JPY 110.00, as the exchange rate is fixed based on the currency put/call options
covering approximately 85% of expected cash flow. With respect to the Cayman Hotels,
the forecast of the fiscal period ending December 2020 assumes a slight decline in roomand spa revenue based on the assumption that the expansion and renovation of the
Cayman Hotels will commence in the summer of 2020, with the aim for completionaround the end of 2022, because in such case, the part of rooms will not be available forsale and the spa will be temporarily closed. Although the commencement of such
expansion and renovation has not been decided, INV is conservatively incorporatingthese factors into the forecast of December 2020 Fiscal Period. INV is currently
continuing its due diligence work on the costs and work of the development. If thedevelopment does go forward, there will be certain one-off costs such as demolition costs
and a non-cash expense from the retirement of a part of existing buildings, but theestimated amount is not yet unknown, so such impact is not reflected in the forecast.
Rental revenues are calculated based on estimates as of today. In addition, INV
assumes there will be no delinquencies or non-payment of rent by tenants.

20

INV expects to incur property related expenses and management contract expenses outof operating expenses for each fiscal period as follows:・Facility management fees(of these, repair costs)
・Taxes and other public charges(Note)
・Insurance expenses
・Depreciation expenses
・Other expenses
Total property related expenses
and management contract
expenses
Operating expenses

June 2020
Fiscal Period
JPY 561 million(JPY 37 million)

December 2020
Fiscal Period
JPY 518 million(JPY 21 million)

JPY 599 million

JPY 773 million

JPY 147 million
JPY 4,088 million
JPY 205 million

JPY 152 million
JPY 4,159 million
JPY 173 million

JPY 5,602 million

JPY 5,776 million(Note) Property taxes and city planning taxes on the acquired assets 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 periods ending June and December during the year ofacqusition and recorded from the fiscal period ending June in the next year as the amountequivalent to such settlement is included in the acquisition cost.
For the two hotel properties acquired on January 6, 2020, INV expects to record theproperty taxes and city planning taxes of JPY 41 million in total as part of the totalacquisition cost, and an annual amount of JPY 42 million of such taxes as expenses
starting from the fiscal period ending June 2021.
INV expects to incur other operating expenses than the property related expenses ormanagement contract expenses for each fiscal period as follows:・Other operating expenses(of these, asset management
fees)

June 2020
Fiscal Period
JPY 565 million

December 2020
Fiscal Period
JPY 553 million(JPY 300 million)(JPY 300 million)

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

NOI

・NOI

June 2020
Fiscal Period
JPY 14,958 million

December 2020
Fiscal Period
JPY 15,824 million(of these, domestic hotel NOI)(JPY 10,344 million)(JPY 12,834 million)(of these, overseas hotel NOI)(JPY 2,791 million)(JPY 1,147 million)(of these, residential NOI)(JPY 1,641 million)(JPY 1,659 million)

NOI calculation method in the above table is as follows
・NOI＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses+
Dividends on the preferred equity interest (TMK dividend) + (Management Contract
Revenue‐Management Contract Expense)
INV expects to incur non-operating expenses for each fiscal period as follows:

Non-operating expenses

June 2020
Fiscal Period
JPY 711 million
JPY 342 million

・Interest expense
・Finance related costs・Interest for investment corporation
JPY 22 million
bonds
・Depreciation of investment
JPY 6 million
corporation bonds issuance expenses
Total non-operating expenses
JPY 1,082 million

21

December 2020
Fiscal Period
JPY 711 million
JPY 323 million
JPY 23 million
JPY 6 million
JPY 1,064 million

The distribution per unit is calculated in accordance with the cash distribution policy as
set forth in INV’s Articles of Incorporation.
With respect to the distribution for the fiscal period ending June 2020, INV expects todistribute an aggregate amount of JPY 11,047 million (distribution per unit: JPY 1,812)
which is the remaining amount after retaining JPY 211 million (which is equivalent to an
one-off revenue associated with the acquisition of the two hotel properties acquired on
January 6, 2020) for internal reserve from net income for the fiscal period ending June
2020 (JPY 11,258 million).

Distribution per unit

With respect to the distribution for the fiscal period ending December 2020, INV expects
to distribute an aggregate amount of JPY 10,041 million (distribution per unit: JPY 1,647)
from the net income for the fiscal period ending December 2020 (JPY 10,047 million).
For the fiscal periods ending June 2020 and December 2020, INV expects to record
deferred gain on hedge of the interest rate swap and the currency option as the valuationand conversion adjustments, etc. of JPY 87 million, which is equal to the amount for the
fiscal period ended June 2019. The distribution per unit is calculated based on theassumption that fluctuation of the market value of the interest rate swap and the currency
option does not affect the distribution per unit.
Distribution per unit may vary due to various factors, including changes of the assets
under management, fluctuation of rent income associated with reasons such as changeof tenants and occurrences of unexpected repairs.

Excess profit distribution
per unit

INV believes maintaining the stability of cash distributions over the medium term is oneof the most important factors in determining the amount of distribution for a given fiscal
period, and therefore, INV has adopted the policy to make distributions in excess of
profits in order to stabilize distributions, in cases where dilution of investment units orsignificant expenses are to be recorded in connection with, among other things, theacquisition of assets or the raising of capital, leading to a temporary decrease in
distribution per unit, taking into consideration the level of distribution per unit assuming
such acquisition of assets or capital raising had contributed for a full fiscal period.
INV may also consider making distributions in excess of profits for the purpose of
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 periods ending June 2020 and December 2020, INV will notmake distributions in excess of profits. In addition, INV will not make distributions inexcess of profits in order to cope with the discrepancy between tax and accounting
treatment.
June 2020
December 2020
Fiscal Period
Fiscal Period
Excess profit distribution per unit
-

Other

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

(2) Investment Risk
Disclosure is omitted because there have been no material changes in the “Investment Risk” section of the latest
securities report (filed on September 24, 2019).

22

2. Financial Statements(1)

Balance Sheet
Fiscal period ended
June 30, 2019(as of June 30, 2019)

AssetsCurrent assets:
Cash and bank deposits
Cash and bank deposits in trust
Accounts receivable
Rental receivables
Deposits paid
Prepaid expenses
Income taxes receivable
Consumption taxes receivable
Other
Allowance for doubtful accounts
Total current assets
Non-current assets:
Property and equipment
Buildings
Accumulated depreciation
Buildings, net
Buildings and accompanying facilities
Accumulated depreciation
Buildings and accompanying facilities, net
Tools, furniture and fixtures, at cost
Accumulated depreciation
Tools, furniture and fixtures, net
Construction in progress
Buildings in trust, at cost
Accumulated depreciation
Buildings in trust, net
Buildings and accompanying facilities in trust,at costAccumulated depreciation
Buildings and accompanying facilities intrust, net
Structures in trust, at cost
Accumulated depreciation
Structures in trust, net
Tools, furniture and fixtures in trust, at cost
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property and equipment, net
Intangible assets
Leasehold rights
Leasehold rights in trust
Total intangible assets
Investments and other assets
Investment securities
Guarantee deposits
Long-term prepaid expenses
Derivatives assets
Other
Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Total deferred assets
Total assets

23(Unit: JPY thousand)Fiscal period ended
December 31, 2019(as of December 31, 2019)48,833,358
6,766,348
647,2102,758,865
371,720
483,656
168,970(148)
60,029,983

17,924,733
10,862,669
613,5633,448,548
482,506
718,710
137,528
2,239,471
154
36,427,886

19,142,244(62,908)
19,079,335
5,111,168(42,886)
5,068,281
1,069,418(14,924)
1,054,494
9,817
130,105,036(13,178,580)
116,926,456

19,142,244(278,377)
18,863,867
5,111,514(190,462)
4,921,052
1,087,303(64,425)
1,022,877
534,690
159,549,904(15,114,933)
144,434,970*3 29,757,547

33,269,242(7,460,526)(8,355,624)

22,297,021

24,913,618

227,665(94,980)
132,685
1,816,296(611,887)
1,204,408
199,037,787
14,364364,824,652

234,012(100,967)
133,045
2,382,539(763,771)
1,618,767
245,771,234
3,179
442,217,302

10,637,811
12,864,608
23,502,420

10,637,811
13,265,876
23,903,688

17,856,387
803,721
601,259
255,404
22,667
19,539,440
407,866,513

17,856,387
803,721974,554
166,234
22,667
19,823,566
485,944,557

35,47835,478467,931,975

59,55659,556522,431,999

Fiscal period ended
June 30, 2019(as of June 30, 2019)(Unit: JPY thousand)Fiscal period ended
December 31, 2019(as of December 31, 2019)

Liabilities
Current liabilities:
Accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable-otherAccrued expenses
Income taxes payable
Consumption taxes payable
Advances received

511,902-443,004
2,686,000

51,744,000
136,155

50,130,000
125,221362,920605

272,659605

2,764,397
454,614

798,980

26,15952,12856,000,754

54,508,599

4,000,000
173,030,000

7,000,000
199,358,000

1,746,941
75,543

1,765,094
37,007

Asset retirement obligations

32,321

32,539Total non-current liabilities

178,884,805

208,192,641

234,885,560

262,701,240

211,092,540

235,701,512

6,264,432

6,264,432*2 (131,332)*2 (6,130)(5,398,804)(5,524,006)(5,530,137)(5,530,137)

734,294734,294

Retained earnings

21,131,966

23,261,426

Total surplus

21,866,261

23,995,720

232,958,801

259,697,232

Deferred gains or losses on hedges

87,612

33,525

Total valuation and translation adjustments

87,612

33,525*1 233,046,414*1 259,730,758

467,931,975

522,431,999

Deposits received
Total current liabilities
Non-current liabilities:
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits in trust
Derivatives liabilities

Total liabilities
Net assets
Unitholders’ equity:
Unitholders’ capital
Surplus:Capital surplus
Deduction of capital surplus
Allowance for temporary differences
adjustment
Other deduction of capital surplus
Total deduction of capital surplus
Capital surplus (net)Total unitholders’ equity
Valuation and translation adjustments:

Total net assets
Total liabilities and net assets

24

(2)

Statement of Income and Retained Earnings(Unit: JPY thousand)Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)

Fiscal period ended
June 30, 2019(from January 1, 2019 toJune 30, 2019)
Operating revenue
Rental revenue―real estate*1 12,153,399*2 580,588

Management contract revenue
Gain on sale of real estate properties*3 11,117,983
827,477

Dividend income
TK Dividend amount
Total operating revenue*1 14,545,826*2 1,397,621*3 1,970,306

2,660,220

673,498-

27,339,670

18,587,253*1 4,490,658*1 4,673,007*2 537,542

Operating expenses
Property related expenses
Management contract expenses*2 164,376
300,000

Asset management fees
Directors’ compensation

4,800
22,233

Asset custody fees
Administrative service fees

47,312
148

Provision of allowance for doubtful accounts
Other
Total operating expenses
Operating income

300,000
4,800
25,51857,444125,069

129,956

5,154,599

5,728,269

22,185,070

12,858,984

811

179

1,005

40,710
289

800

2,091

2,617

43,270588,555
33,648687,208-

11,405

15,654

3,506

4,256

310,089-

412,550
143,029

Non-operating income
Interest income
Foreign exchange gains
Interest on tax refund
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Interest expenses on investment corporation bonds
Amortization of investment corporation bond issuancecosts
Loan-related costs
Investment unit issuance costs
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Subsidy income
Total extraordinary income
Extraordinary losses
Loss on reduction entry of non-current assets

01

947,206

1,262,700

21,240,482

11,639,553

115,319-

115,319-

115,319-

Total extraordinary losses

115,319-

Income before income taxes

21,240,482

11,639,553

Income taxes

605

605

Total income taxes

605

605

21,239,877

11,638,948(107,910)

11,622,477

21,131,966

23,261,426

Net income
Retained earnings (deficit) brought forward
Unappropriated retained earnings
25

(3)

Statement of Changes in Net Assets

Fiscal period ended June 30, 2019 (from January 1, 2019 to June 30, 2019)(Unit: JPY thousand)Unitholders’ equity
SurplusCapital surplus
Unitholders’capitalDeduction of capital surplus
Capital surplus

Balance at the beginningof the period
Changes during theperiodDistributions fromsurplus
Reversal of allowancefor temporary
differences adjustment
Other excess profit
distribution

211,092,540

Allowance fortemporarydifferences
adjustment

6,264,432(46,329)

Other
deduction ofcapital surplus(5,194,798)

Total
deduction ofcapital surplus

Capital surplus(net)(5,241,128)

1,023,303(85,002)(85,002)(204,006)(204,006)(204,006)(85,002)

Net income
Changes other thanunitholders’ equity(net)
Total changes during theperiodBalance at the end of theperiod－－(85,002)(204,006)(289,008)(289,008)

211,092,540

6,264,432(46,329)(5,194,798)(5,241,128)

1,023,303

Unitholders’ equity
SurplusRetainedearnings
Balance at the beginningof the period
Changes during theperiodDistributions fromsurplus

Changes other thanunitholders’ equity(net)
Total changes during theperiodBalance at the end of theperiodTotalunitholders’equityDeferred
gains or losses
on hedges

Totalvaluation andtranslation
adjustments

108,684

108,684

Total
net assets

9,140,372

10,163,675

221,256,215(9,248,282)(9,248,282)(9,248,282)(9,248,282)(85,002)(85,002)(85,002)(204,006)(204,006)(204,006)

21,239,877

21,239,877

21,239,877

Reversal of allowancefor temporary
differences adjustment
Other excess profit
distribution
Net income

Total
surplus

Valuation and translation adjustments

21,239,877

221,364,900(21,072)(21,072)(21,072)

11,991,594

11,702,585

11,702,585(21,072)(21,072)

11,681,513

21,131,966

21,866,261

232,958,801

87,612

87,612233,046,414

26

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)(Unit: JPY thousand)Unitholders’ equity
SurplusCapital surplus
Unitholders’capitalDeduction of capital surplus
Capital surplus

Balance at the beginningof the period
Changes during theperiodIssuance of new
investment units
Reversal of allowancefor temporary
differences adjustment
Distributions fromsurplus211,092,540

Allowance fortemporarydifferences
adjustment

6,264,432

Otherdeduction ofcapital surplus

Total
deduction ofcapital surplus

Capital surplus(net)(131,332)(5,398,804)(5,530,137)

734,294

125,201(125,201)－－

24,483,770
125,201

Net income
Changes other thanunitholders’ equity(net)
Total changes during theperiodBalance at the end of theperiod

24,608,971－

125,201(125,201)－－

235,701,512

6,264,432(6,130)(5,524,006)(5,530,137)

734,294

Unitholders’ equity
Surplus

Balance at the beginningof the period
Changes during theperiodRetainedearnings

Total
surplus21,131,966

21,866,261

Valuation and translation adjustments
Totalunitholders’equity232,958,801

Issuance of new
investment units
Reversal of allowancefor temporary
differences adjustment
Distributions fromsurplus
Net income
Changes other thanunitholders’ equity(net)
Total changes during theperiodBalance at the end of theperiodDeferred
gains or losses
on hedges

Totalvaluation andtranslation
adjustments

87,612

87,612Total
net assets

233,046,414

24,483,770

24,483,770(125,201)(125,201)－－(9,384,287)(9,384,287)(9,384,287)(9,384,287)

11,638,948

11,638,948

11,638,948

11,638,948(54,086)(54,086)(54,086)

2,129,459

2,129,459

26,738,431(54,086)(54,086)

26,684,344

23,261,426

23,995,720

259,697,232

33,52533,525

259,730,758

27

(4) Statement of Cash Distribution(Unit: JPY)
Fiscal period ended June 30, 2019(from January 1, 2019 to June 30, 2019)

Fiscal period ended December 31, 2019(from July 1, 2019 to December 31, 2019)I

Unappropriated retained earnings

21,131,966,492

23,261,426,001

II

Incorporation into unitholders'
capitalOf which, reversal of allowance fortemporary differences adjustment

125,201,855-

9,384,287,040

10,517,049,000(1,656)(1,725)

IV Retained earnings (deficit) carriedforward11,622,477,597

12,744,377,001

Calculation method of distribution amountIn accordance with the distribution policy set

In accordance with the distribution policy set

forth in Article 17, Paragraph 1 of the Articles

forth in Article 17, Paragraph 1 of the Articles

of Incorporation of INV, the distributionof Incorporation of INV, the distribution

amount shall be the amount which does notamount shall be the amount which does notexceed the amount of profits but exceeds 90%

exceed the amount of profits but exceeds 90%of the distributable profit as defined in Articleof the distributable profit as defined in Article

67-15 of the Special Taxation Measures Act.

67-15 of the Special Taxation Measures Act.

However, in the event that any tax losses

However, in the event that any tax losses

arise, or if no profits have been recorded forarise, or if no profits have been recorded fortax purposes due to tax losses carried forward,

tax purposes due to tax losses carried forward,

the distribution amount may be as reasonably

the distribution amount may be as reasonably

determined by INV.

determined by INV.

III Distributions(Distribution per unit)

Pursuant to this policy,

Pursuant to this policy,

INV determined the distribution amount to be

INV determined the distribution amount to be

JPY 9,384,287,040 out of net income of JPY

JPY 10,517,049,000 out of net income of JPY

21,239,877,303. Moreover, INV does not

11,638,948,404. Moreover, INV does notmake excess profit distribution set forth inmake excess profit distribution set forth in

Article 17, Paragraph 4 of the Articles of

Article 17, Paragraph 4 of the Articles ofIncorporation.

Incorporation.

28

(5)

Statement of Cash Flows
Fiscal period ended
June 30, 2019(from January 1, 2019 toJune 30, 2019)

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Loss on reduction entry of non-current assets
Investment unit issuance costs
Amortization of investment corporation bond issuance costs
Loan-related costs
Interest income
Interest expenses
Foreign exchange losses (gains)
Increase (decrease) in allowance for doubtful accounts
Decrease (increase) in rental receivable
Decrease (Increase) in deposits paid
Decrease (increase) in refundable income taxes
Decrease (increase) in consumption taxes receivable
Increase (decrease) in accounts payable
Increase (decrease) in consumption taxes payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Increase (decrease) in deposits received
Decrease from sales of property and equipment in trust
Decrease from sales of intangible assets in trust
Others, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Purchases of property and equipment
Purchases of property and equipment in trust
Purchases of leasehold rights in trust
Repayments of tenant leasehold and security deposits in trust
Payments of tenant leasehold and security deposits
Collection of tenant leasehold and security deposits
Other, net
Net cash used in investing activities
Cash flows from financing activities
Increase in short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment corporation bonds
Borrowing related expenses
Payment of distributions of earnings
Payments of distributions in excess of retained earnings fromallowance for temporary differences adjustment
Payment of other distributions in excess of retained earnings
Proceeds from issuance of investment units
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

29(Unit: JPY thousand)Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)21,240,482
3,168,320
115,319
3,506
310,089(811)
599,960(23,481)62
285,339
96,4703,830
434,326
22,952
2,764,397
40,334
118,454(117,053)(347,981)
21,268,952
7,047,749(617,969)
56,413,251
811(603,432)(605)
55,810,025

11,639,553
3,757,778
143,0294,256
412,550(179)
702,863(32,090)(148)(344,338)(110,785)
31,539(2,426,511)(36,363)(2,577,357)(29,060)(92,670)(12,896)(199,247)
2,991,980(148,847)
13,673,054
179(701,225)(605)
12,971,404(1,302,310)(323,779)
61,654
896,949(58,789)(726,275)(543,104)(83,576,781)(440,504)(48,255)
67,02228,651(84,512,972)(1,099,000)
17,684,000(17,684,000)(167,123)(8,993,502)

2,686,000
61,775,000(37,061,000)
2,971,665(839,086)(9,144,041)(85,002)-(204,006)(10,548,635)(12)
44,535,102
11,064,604*1 55,599,707

24,340,740
44,729,277(13)(26,812,304)
55,599,707*1 28,787,403

(6)Notes to Concerning Going Concerns Assumption
Not applicable(7)

Notes to Concerning Significant Accounting Policies
1. Evaluation standards and evaluation method of assets
Other securitiesThose with no fair value
Cost method through moving-average method is used.
2. Method of depreciation of non-current assets(a) Property and equipment (including assets in trust)The straight-line method is used.
The useful lives of major property and equipment are as follows.
Buildings
16-50 years
Buildings and accompanying facilities
5-29 years
Tools, furniture and fixtures
3-10 years
Buildings in trust
5-67 years
Buildings and accompanying facilities in trust
2-33 years
Structures in trust
9-55 years
Tools, furniture and fixtures in trust
2-19 years(b) Intangible assets
For fixed-term land lease for business purposes in Japan, the straight-line method based on the lease period is used.
(c) Long-term prepaid expenses
The straight-line method is used.
3. Accounting treatment of deferred assets(a) Investment unit issuance costs
The full amount is recorded as expense at the time of expenditure.
(b) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the straight-line method over a period up to redemptionof the investment corporation bonds.
4. Method of calculating allowances
Allowance for doubtful accounts
To reserve for losses on doubtful accounts, allowances are provided for normal receivables using a rate determinedbased on past bad debt experiences, and specific allowances are provided for accounts with a possibility of default basedon the estimated amounts considered to be uncollectible by considering the collectability of accounts on an individual
basis.
5. Conversion of assets and liabilities in foreign currency into Japanese yen
Receivables and payables denominated in foreign currencies are translated into yen at the spot exchange rate at the endof the fiscal period date, and differences arising from the translation are treated as a profit or loss.

30

6. Revenue and expense recognition
Accounting treatment of property taxes and other taxes
With respect to property taxes, city planning taxes and depreciable asset taxes, of the tax amount assessed anddetermined, the amount corresponding to the relevant fiscal period is accounted for as property related expenses.
Of the amounts paid to the seller for acquisitions of real estate, the amount equivalent to property taxes is capitalized aspart of the acquisition cost of the real estate instead of being charged as expense. The amount equivalent to property
taxes that was included as part of the acquisition of real estate during the fiscal period ended December 31, 2019 is JPY
111,155 thousand.
7. Method of hedge accounting(a) Method of hedge accounting
Deferred hedge accounting is used.
(b) Hedging instrument and hedged item
(Borrowings)
Hedging instrument: interest rate swap
Hedged item: interest on borrowings(Scheduled foreign currency-denominated transactions)
Hedging instrument: Foreign exchange option
Hedged item: Scheduled foreign currency-denominated transaction(c) Hedge policy
INV enters into derivative transactions for the purpose of hedging against the risks set forth in INV’s Articles ofIncorporation in accordance with its risk management policy.
(d) Method of evaluating hedge effectivenessHedge effectiveness is evaluated by comparing the cumulative amount of changes in cash flows of the hedging
instrument and the cumulative amount of changes in cash flows of the hedged item and verifying the difference in theamounts of change of both the hedged item and the hedging instrument.
8. Cash and cash equivalents as stated in Statement of Cash Flows
Cash and cash equivalents as stated in the Statement of Cash Flows consist of cash on hand and cash in trust, floating
deposits, deposits in trust and short-term investments that are very liquid and realizable with a maturity of three months
or less when purchased and that are not subject to significant risks of changes in value.
9. Other significant matters which constitute the basis for preparation of financial statements(i) Accounting treatment of trust beneficiary interests in real estate
As to trust beneficiary interests in real estate, all accounts of assets and liabilities within assets in trust, as well as all
income generated and expenses incurred from assets in trust, are recorded in the relevant balance sheets and income
statement accounts. Of such items, the following significant trust assets and liabilities are shown separately on thebalance sheet.
(a) Cash and bank deposits in trust(b) Buildings in trust
Buildings and accompanying facilities in trust
Structures in trust
Tools, furniture and fixtures in trust
Land in trust
Construction in progress in trust(c) Leasehold rights in trust(d) Tenant leasehold and security deposits in trust31

(ii) Accounting treatment of consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
(Additional Information)(Notes Related to Provision and Reversal of Allowance for Temporary Differences Adjustment)
Fiscal period ended June 30, 2019 (from January 1, 2019 to June 30, 2019)
The following reversal was made in the statement of cash distribution:
1. Reasons, related assets and amounts

Related assets, etc.

(Unit: JPY thousand)Allowance fortemporary differences
adjustment

ReasonSale of properties with leasehold
rights in trust

Leasehold rights in trust(125,201)

2. Method of reversal
Related assets, etc.

Method of reversal

Leasehold rights in trust

The corresponding amount is scheduled to be reversed upon sale, etc.

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)
Not applicable(8)

Notes to the Financial Statements(Notes to the Balance Sheet)*1. Minimum net assets as required by Article 67, Paragraph 4 of the Act on Investment Trusts and Investment Corporations(Unit: JPY thousand)Fiscal period ended
Fiscal period ended
June 30, 2019
December 31, 2019(as of June 30, 2019)(as of December 31, 2019)50,00050,000*2. Allowance for temporary differences adjustment
Fiscal period ended June 30, 2019 (from January 1, 2019 to June 30, 2019)
1. Reasons, related assets and amounts
Balance atthe end of
previous
periodAllowance
set aside
duringperiod(Unit: JPY thousand)
Balance atReversalthe end of
duringcurrent
periodperiodRelatedassets, etc.

ReasonInitialamountLeaseholdrights in trust

Depreciationof leasehold
rights(131,332)(46,329)(85,002)-(131,332)(131,332)(46,329)(85,002)-(131,332)

Total
2. Method of reversal(1) Leasehold rights in trust

The corresponding amount is scheduled to be reversed upon sale, etc. of the relevant property.

32

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)
1. Reasons, related assets and amounts(Unit: JPY thousand)
Balance atReversalthe end of
duringcurrent
periodperiodRelatedassets, etc.

ReasonInitialamountBalance atthe end of
previous
periodLeaseholdrights in trust

Sale of asset
with leasehold
rights in trust(131,332)(131,332)-

125,201(6,130)(131,332)(131,332)-

125,201(6,130)Total

Allowance
set aside
duringperiod

2. Method of reversal(1) Leasehold rights in trust
The corresponding amount is scheduled to be reversed upon sale, etc. of the relevant property.
*3. Reduction entry amount of property and equipment acquired with governmental subsidies, etc.
(Unit: JPY thousand)Fiscal period ended

Fiscal period ended

June 30, 2019(as of June 30, 2019)

December 31, 2019(as of December 31, 2019)

Building and accompanying
facilities in trust

115,31933-

(Notes to Statement of Income and Retained Earnings)*1. Real estate rental revenues and expenses
Fiscal period ended
June 30, 2019(from January 1, 2019 toJune 30, 2019)
A.

(Unit: JPY thousand)Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)

Real estate rental revenues

Rental revenue-real estate
Rent/common area charges (Note)

11,795,812

14,306,734

357,587

239,092

12,153,399

14,545,826

Maintenance costs

662,160

539,778

Taxes and public dues

565,715

631,040

Non-life insurance expenses

13,723

17,6393,048,495

3,345,473

200,561

139,076

Total

4,490,658

4,673,007

C.

7,662,741

9,872,819

4,304,181

5,317,963

Other revenues
Total

B.

Real estate rental expenses

Property related expenses

Depreciation expenses
Other expenses

Real estate rental income (A-B)(Note) Of which, revenue from variable hotel rents*2. Management contract income

Fiscal period ended
June 30, 2019(from January 1, 2019 toJune 30, 2019)(Unit: JPY thousand)Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)

A.

Hotel operating revenue

1,406,749

3,927,961

B.

Hotel operating expenses

826,160

2,530,339

C.

Management contract revenue (A-B)

580,588

1,397,621

3,490

12,276

Non-life insurance expenses

36,279111,278

Depreciation expenses

119,824

412,305

4,782

1,680

Total

164,376

537,542E.

416,211860,079

D.

Management contract expenses
Management fee

Other expenses
Management contract income (C-D)

34

*3. Gain on sales of properties
Fiscal period ended June 30, 2019 (from January 1, 2019 to June 30, 2019)(Unit: JPY thousand)Spacia Ebisu

Royal Parks Tower Minami-Senju

Proceeds from sales of properties

12,209,814

27,745,250

Cost of sales of properties

6,422,775

21,923,169

153,225

337,910

5,633,813

5,484,169

Other expenses on sales of properties
Gain on sales of properties

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)(Unit: JPY thousand)Winbell Kagurazaka
Proceeds from sales of properties

5,135,530

Cost of sales of properties

2,992,380

Other expenses on sales of properties

172,843

Gain on sales of properties

1,970,306(Notes to Statement of Changes in Net Assets)
Number of issuable investment units authorized and number of investment units issued and outstanding
Fiscal period ended
June 30, 2019(from January 1, 2019 toJune 30, 2019)

Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)

Number of issuable investment units

10,000,000 units

10,000,000 units

Number of investment units issued and outstanding

5,666,840 units

6,096,840 units(Notes to Statement of Cash Flows)*1. Relationship between cash and cash equivalents in statement of cash flows and amounts in accompanying balance
sheet is as follows:
Fiscal period ended
June 30, 2019(from January 1, 2019 toJune 30, 2019)48,833,358(Unit: JPY thousand)Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)17,924,733

Cash and bank deposits in trust

6,766,348

10,862,669

Cash and cash equivalents

55,599,707

28,787,403

Cash and bank deposits(Notes Related to Lease Transactions)Operating lease transactions (as lessee)
Unexpired lease fees

Due within one year

268,487(Unit: JPY thousand)Fiscal period ended
December 31, 2019(as of December 31, 2019)
268,487

Due after one year

7,824,534

7,690,291

Total

8,093,022

7,958,778

Fiscal period ended
June 30, 2019(as of June 30, 2019)35

Operating lease transactions (as lessor)
Unexpired lease fees

Due within one year

9,754,753(Unit: JPY thousand)Fiscal period ended
December 31, 2019(as of December 31, 2019)12,306,447

Due after one year

58,695,396

76,858,696

Total

68,450,150

89,165,143

Fiscal period ended
June 30, 2019(as of June 30, 2019)(Notes Related to Financial Instruments)
1.

Status of financial instruments(1) Policy for financial instruments
INV principally conducts its operations through investments in real estate and other specified assets to seek to ensurestable income in the medium to long term.
The policy for raising funds is principally through issuing new investment units, investment corporation bonds, etc. orborrowing loans.
Derivative transactions are to be entered into for the purpose of hedging against the risks of future interest rate fluctuations,exchange rate fluctuations, etc. and not for speculation.
Surplus funds are managed after carefully taking into account safety, liquidity, the interest rate environment andfinancing.
(2) Nature and extent of risks arising from financial instruments and risk management
The funds raised through borrowings and issuing investment corporation bonds are mainly used to acquire real estate
properties or trust beneficiary interest in real estate (including related acquisition costs) and for the refinancing ofexisting loans. Liquidity risks relating to loans are managed by the finance department of the Asset Manager by
preparing and updating plans for funds, and monitoring the financial covenants set forth in loan agreements.
(3) Supplemental information regarding market value, etc. for financial instruments
The fair value of financial instruments is based on quoted market prices if available. When quoted market prices are
not available, fair value is determined through a reasonable estimate. Since certain assumptions, etc. are used inestimating the fair value, different assumptions, etc. may result in the variance of such value.

36

2.

Estimated fair value of financial instruments

Fiscal period ended June 30, 2019 (as of June 30, 2019)
Book value, fair value and the difference between values as of June 30, 2019, are as follows.
(Unit: JPY thousand)Book Value

Fair Value

Difference(1) Cash and bank deposits

48,833,358

48,833,358-(2) Cash and bank deposits in trust

6,766,348

6,766,348-

Total assets

55,599,707

55,599,707-(3) Short-term loans payable

-

-

-

(4) Current portion of long-term loans payable(51,744,000)(51,744,000)-(5) Investment corporation bonds(4,000,000)(4,005,300)(5,300)(173,030,000)(173,030,000)-(228,774,000)(228,779,300)(5,300)179,861

179,861-(6) Long-term loans payable
Total liabilities(7) Derivatives

Fiscal period ended December 31, 2019 (as of December 31, 2019)
Book value, fair value and the difference between values as of December 31, 2019, are as follows.
(Unit: JPY thousand)Book Value

Fair Value

Difference(1) Cash and bank deposits

17,924,733

17,924,733-(2) Cash and bank deposits in trust

10,862,669

10,862,669-

Total assets

28,787,403

28,787,403-(3) Short-term loans payable(2,686,000)(2,686,000)-(4) Current portion of long-term loans payable(50,130,000)(50,130,000)-(5) Investment corporation bonds(7,000,000)(6,957,300)

42,700(199,358,000)(199,358,000)-(259,174,000)(259,131,300)

42,700129,227

129,227-(6) Long-term loans payable
Total liabilities(7) Derivatives(Note 1) Items recorded in the Liabilities Section are shown in parenthesis.
(Note 2) Receivables and payables arising from derivative transactions are recorded in net amounts, and if the total net
amount is a negative amount, such amount is shown in parenthesis.

37

(Note 1) Methods to calculate fair values of financial instruments(1) Cash and bank deposits(2) Cash and bank deposits in trust(3) Short-term loans payable
Due to the short maturities, the book value of these instruments is deemed a reasonable approximation of thefair value, and therefore, the book value is used as the fair value.
(4) Current portion of long-term loans payable (6) Long-term loans payable
Long-term loan with floating interest rates reflecting changes in market rates within a short-term period arestated at their book value as their book value approximate their fair value.
(5) Investment corporation bonds
Fair value is calculated using a method based on market price.
(7) Derivatives
Please refer to the “Notes Related to Derivative Transactions” below.

(Note 2) Financial instruments for which fair value is extremely difficult to value

Tenant leasehold and security deposits in trust

1,746,941(Unit: JPY thousand)Fiscal period ended
December 31, 2019(as of December 31, 2019)
1,765,094

Investment securities

17,856,387

17,856,387

Fiscal period ended
June 30, 2019(as of June 30, 2019)

Tenant leasehold and security deposits in trust have no observable market price, and it is impracticable to reasonably
estimate their future cash flows because the repayment dates of those deposits and the timing of the lessee’s exit fromthe property are not certain. Thus, their fair value is not disclosed.
Investment securities (preferred equity interest) have no observable market price, and it is impracticable to assess its fairvalue. Thus, its fair value is not disclosed.
(Note 3) Remaining schedule of monetary claims after the closing date of the fiscal period
Fiscal period ended June 30, 2019 (as of June 30, 2019)

Cash and bank deposits
Cash and bank deposits in
trust
Total

(Unit: JPY thousand)Due within Due after one Due after two Due after three Due after four
Due after
one yearto two years to three years to four years to five years
five years
48,833,358
6,766,348

-

-

-

-

-

55,599,707

-

-

-

-

-

Fiscal period ended December 31, 2019 (as of December 31, 2019)

Cash and bank deposits
Cash and bank deposits in
trust
Total

(Unit: JPY thousand)Due within Due after one Due after two Due after three Due after four
Due after
one yearto two years to three years to four years to five years
five years
17,924,733
10,862,669

-

-

-

-

-

28,787,403

-

-

-

-

-

38

(Note 4) Repayment schedule of investment corporation bonds, long-term loans payable and other interest-bearing debts
after the closing date of the fiscal period
Fiscal period ended June 30, 2019 (as of June 30, 2019)
Due within
one year
Short-term loans payable(Unit: JPY thousand)Due after one Due after two Due after three Due after four
Due after
to two years to three years to four years to five years
five years-

Current portion of long-termloans payable

51,744,000

-

-

-

-

-

Investment corporation bonds

-

-

-

1,000,000

2,000,000

1,000,000

Long-term loans payable-

57,380,000

52,602,000

29,645,000

28,843,000

4,560,000

51,744,000

57,380,000

52,602,000

30,645,000

30,843,000

5,560,000

Total

Fiscal period ended December 31, 2019 (as of December 31, 2019)

Short-term loans payable(Unit: JPY thousand)Due within Due after one Due after two Due after three Due after four
Due after
one yearto two years to three years to four years to five years
five years
2,686,000-

Current portion of long-termloans payable

50,130,000

-

-

-

-

-

Investment corporation bonds

-

-

-

3,000,000

1,000,000

3,000,000-

55,601,000

47,079,000

38,582,000

32,920,000

25,176,000

52,816,000

55,601,000

47,079,000

41,582,000

33,920,000

28,176,000

Long-term loans payable
Total(Notes Related to Investment Securities)

Fiscal period ended June 30, 2019 (from January 1, 2019 to June 30, 2019)
Other securities
Preferred equity interest (JPY 17,856,387 thousand in the balance sheet) has no observable market price, and it isimpracticable to assess its fair value.

Thus, its fair value is not disclosed.

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)
Other securities
Preferred equity interest (JPY 17,856,387 thousand in the balance sheet) and TK interest (JPY 36,783,826 thousand in thebalance sheet) have no observable market price, and it is impracticable to assess its fair value. Thus, their fair values are
not disclosed.

(Notes Related to Derivative Transactions)1.

Derivative transactions to which hedge accounting is not applied
Fiscal period ended June 30, 2019 (as of June 30, 2019)
Not applicable
Fiscal period ended December 31, 2019 (as of December 31, 2019)
Not applicable

39

2.

Derivative transactions to which hedge accounting is applied
Fiscal period ended June 30, 2019 (as of June 30, 2019)
The contract amount as of the closing date under each hedge-accounting method and the amount equivalent to thenotional principal prescribed in the contracts are as shown below.
(Unit: JPY thousand)
Method of hedge
accounting

Principle
accounting
methodDerivativetransaction type, etc.

Primary hedged
itemInterest rate swap
Receive floating
rate/pay fixed rate

Borrowings

Currency option
transaction
USD/Call(Option fees)
Currency option
transaction
USD/Put

Contract amount, etc. (Note 1)
Amount due
after one year

Scheduledforeigncurrencydenominatedtransactions(Option fees)

84,074,000

51,413,000

5,134,140

1,933,140(133,171)(42,806)

5,134,140

1,933,140(225,420)(102,873)

Fair value(Note 2)
(19,845)(33,916)(233,622)(Note 1) The contract amount, etc. for interest rate swap are stated based on a notional principal.
(Note 2) Estimation method for fair value
Interest rate swap
Estimated based on the price, etc. presented by the correspondent financial institutions.
Currency option
Indicates fair values of option fees, etc. presented by the correspondent financial institutions.
Fiscal period ended December 31, 2019 (as of December 31, 2019)
The contract amount as of the closing date under each hedge-accounting method and the amount equivalent to thenotional principal prescribed in the contracts are as shown below.
(Unit: JPY thousand)
Method of hedge
accounting

Principle
accounting
methodContract amount, etc. (Note 1)

Derivativetransaction type, etc.

Primary hedged
itemInterest rate swap
Receive floating
rate/pay fixed rate

Borrowings

95,112,000

66,133,000

Scheduledforeigncurrencydenominatedtransactions

3,836,140

622,160(95,963)(13,687)

3,836,140

622,160(191,665)(38,743)

Currency option
transaction
USD/Call(Option fees)
Currency option
transaction
USD/Put(Option fees)

Amount due
after one year

Fair value(Note 2)64,609(24,788)(89,405)(Note 1) The contract amount, etc. for interest rate swap are stated based on a notional principal.
(Note 2) Estimation method for fair value
Interest rate swap
Estimated based on the price, etc. presented by the correspondent financial institutions.
Currency option
Indicates fair values of option fees, etc. presented by the correspondent financial institutions.
(Notes Related to Retirements Payments)
Not applicable40

(Notes Related to Asset Retirement Obligations)1.

Summary of the asset retirement obligations for the period
INV has recorded asset retirement obligations in regard to its obligation to restore the land to its original condition
related to the fixed-term land lease agreement of Comfort Hotel Maebashi held by INV.

2.

Calculation method for asset retirement obligations for the period
The amount of the asset retirement obligations has been calculated by estimating the period of use at 43 years, basedon the remaining period until the expiration of the fixed-term land lease agreement, and by using a discount rate of
1.342%.

3.

Increase/decrease in the total amount of asset retirement obligations

Balance at the beginning of the period
Increase due to the acquisition of property and equipment
Accretion expense
Balance at the end of the period

Fiscal period ended
June 30, 2019(from January 1, 2019 toJune 30, 2019)32,107213
32,321(Unit: JPY thousand)Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)
32,321
218
32,539(Notes Related to Segment and Related Information)
I. Segment Information
Disclosure is omitted because the real estate investment business is INV’s sole business and it has no reportable segments.
II. Related Information
Fiscal period ended June 30, 2019 (from January 1, 2019 to June 30, 2019)
1. Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category accounted forover 90% of the operating revenue on the statement of income.
2. Information about each geographic area
(1) Net sales(Unit: JPY thousand)Japan

The Cayman Islands
24,098,860(Note)

Total

3,240,809

27,339,670

Net sales are based on the location of the customer and categorized by country or territory.

(2) Property and equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounted for over 90% of
the amount of property and equipment on the balance sheet.
3. Information about each major customer(Unit: JPY thousand)Name of customer

Operating revenues

Related segment

MyStays Hotel Management Co., Ltd.

6,581,126

Real Estate Investment

Undisclosed (Note 1)

5,633,813

Real Estate Investment

Undisclosed (Note 2)

5,484,169

Real Estate Investment(Note 1)

The customer is an affiliate of a foreign real estate fund. However, the name is not disclosed sinceconsent for the disclosure has not been obtained. The customer is not a group company of INV/the AssetManager.

(Note 2)The customer is a domestic special purpose company. However, the name is not disclosed since consent
for the disclosure has not been obtained. The customer is not a group company of INV/the AssetManager.
41

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)
1. Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category accounted forover 90% of the operating revenue on the statement of income.
2. Information about each geographic area
(1) Net sales(Unit: JPY thousand)Japan

The Cayman Islands
17,189,631(Note)

Total

1,397,621

18,587,253

Net sales are based on the location of the customer and categorized by country or territory.

(2) Property and equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounted for over 90% of
the amount of property and equipment on the balance sheet.
3. Information about each major customer(Unit: JPY thousand)Name of customer

Operating revenues

Related segment

MyStays Hotel Management Co., Ltd.

8,084,924

Real Estate Investment

Undisclosed (Note)

1,970,306

Real Estate Investment(Note)

The customer is an affiliate of a foreign real estate fund. However, the name is not disclosed since consent
for the disclosure has not been obtained. The customer is not a group company of INV/the Asset Manager.

42

(Notes Related to Rental Properties)
INV owns residential properties and hotels as core assets principally in the Tokyo area and major regional cities with an aim
to establish a portfolio focusing on both stability and growth potential. The book value changed during the period andbalance at the end of the period are as follows.

Book value
Residences

Balance at the
beginning of the period
Change during theperiodBalance at the end of
the period

Fair value at the end of the period

Book value
Commercial facilities

Balance at the
beginning of the period
Change during theperiodBalance at the end of
the period

Fair value at the end of the period

Book value
HotelsBalance at the
beginning of the period
Change during theperiodBalance at the end of
the period

Fair value at the end of the period

Book value
Total

Balance at the
beginning of the period
Change during theperiodBalance at the end of
the period

Fair value at the end of the period

Fiscal period ended
June 30, 2019(from January 1, 2019 toJune 30, 2019)(Unit: JPY thousand)Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)85,908,280

56,921,817(28,986,463)(3,368,841)

56,921,817

53,552,976

72,197,000

69,671,000

4,866,739

4,825,236(41,503)(35,280)

4,825,236

4,789,956

6,140,000

6,150,000

291,874,909

326,555,836

34,680,926

80,684,352

326,555,836

407,240,188

393,926,158

482,093,260

382,649,930

388,302,890

5,652,960

77,280,230

388,302,890

465,583,121

472,263,158

557,914,260(Note 1) Book value is the figure calculated by subtracting accumulated depreciation from acquisition price (including
acquisition-related costs).
(Note 2) The major factors of increase for the fiscal period ended June 30, 2019, were a change in the investment structure
concerning overseas assets and construction work related to capital expenditures, and the major factor of thedecrease was sale of residential properties and depreciation. The major factors of increase for the Reporting
Period were acquisition of hotels and construction work related to capital expenditures, and the major factors ofdecrease were sale of residential properties and depreciation.
(Note 3) The fair value as of the end of the reporting period is determined based on the appraisal value or survey value
provided by Asset Research and Development Inc., Japan Real Estate Institute, JLL Morii Valuation & Advisory
K.K., Tanizawa Sogo Appraisal Co., Ltd., Daiwa Real Estate Appraisal Co., Ltd. and CBRE, Inc. However, thesale price is deemed the fair value of City House Tokyo Shinbashi, for which the purchase and sale agreement wasentered into on December 9, 2019.
For information related to profits and losses from rental properties, please refer to “Notes to Statement of Income and Retained
Earnings.”

43

(Notes Related to Tax Accounting)
1. Significant components of deferred tax assets and liabilities(Unit: JPY thousand)Fiscal period ended
June 30, 2019

Fiscal period ended
December 31, 2019

(Deferred tax assets)
Enterprise tax payable

1,294

Allowance for doubtful accounts

821

46

-

Buildings and other (merger)

428,965

375,803

Land (merger)

786,792

695,171

Loss carried forward (Note 1)

747,198

522,444

Asset retirement obligations

10,168

10,237

Depreciation of fixed-term leasehold rights
Adjustment of acquisition prices (overseas
properties)
Deposit received

76,182

88,526477,213472,363-

9,301

2,527,862

2,174,669(747,198)(522,444)(1,743,389)(1,652,225)

Subtotal(2,490,588)(2,174,669)

Total

37,274-

Subtotal
Valuation allowance for tax loss carried forward
Valuation allowance for the total of deductible
temporary differences, etc.

(Deferred tax liabilities)
Removal expenses included in asset retirement
obligations

9,711

Deferred gains or losses on hedges

27,562

Total-

37,274(Deferred tax assets, net)--

(Note 1) The amounts of tax loss carried forward and the deferred tax assets by carry-forward period are as follows.
Fiscal period ended June 30, 2019 (as of June 30, 2019)
Due within Due after one Due after two Due after three Due after four
one yearto two years to three years to four years to five years
Tax loss carried forward(a)Valuation allowance(Unit: JPY thousand)Due after
Total
five years-

78,982-

668,215--

747,198-(78,982)-(668,215)--(747,198)

-

-

-

-

-

Deferred tax assets(a) Tax loss carried forward is multiplied by statutory tax rate.

Fiscal period ended December 31, 2019 (as of December 31, 2019)
Due within Due after one Due after two Due after three Due after four
one yearto two years to three years to four years to five years
Tax loss carried forward(a)Valuation allowance(Unit: JPY thousand)Due after
Total
five years--

201,976

320,467--

522,444--(201,976)(320,467)--(522,444)

-

-

-

-

Deferred tax assets(a) Tax loss carried forward is multiplied by statutory tax rate.

44

2. Significant difference between statutory tax rate and the effective tax rate
(Unit: %)Fiscal period ended
June 30, 2019
Statutory tax rate

Fiscal period ended
December 31, 2019
31.51

31.51

-

(28.47)

Changes in valuation allowance(31.58)(3.03)

Effect of tax rate change(0.05)-

Others0.12

0.00

Effective tax rate

0.00

0.01

Deductible cash distributions(Notes Related to Equity-Method Income)Fiscal period ended June 30, 2019 (from January 1, 2019 to June 30, 2019)
Amount of investment in affiliates
JPY 17,856,387 thousand
Amount of investment when accounted for by the equity method
JPY 17,856,387 thousand
Amount of investment profit when accounted for by the equity method JPY 3,487,698 thousand
Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)
Amount of investment in affiliates
JPY 17,856,387 thousand
Amount of investment when accounted for by the equity method
JPY 17,856,387 thousand
Amount of investment profit when accounted for by the equity method JPY 673,498 thousand

45

(Notes Related to Transactions with Related Parties)
1. Transactions with Parent Company and Major Unitholders
Fiscal period ended June 30, 2019 (from January 1, 2019 to June 30, 2019)
Classification

Interested
party of theAsset Manager(Note 1)
(Note 2)

Percentage
Relationshipof votingBusiness orType ofrights Common
occupation
Business transaction
owned
board
relationship(%)
memberTransaction
amount(JPY
thousand)(Note 1)

Account

Balance atthe end of
the period(JPY
thousand)(Note 1)

Accounts
receivable

197,253

Name

Address

Statedcapital(JPY
million)Naqua Hotel &Resorts
Management
Co., Ltd.
(Note 2)

Minato-ku,
Tokyo

10

Hotel
business--

Lessee andoperator of
hotelsRentalrevenues

590,306

MyStays HotelManagement
Co., Ltd.
(Note 2)

Minato-ku,
Tokyo

100

Hotel
business--

Lessee andoperator of
hotelsRentalrevenues

6,581,126

Accounts
1,834,677
receivable

Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
Naqua Hotel & Resorts Management Co., Ltd. and MyStays Hotel Management Co., Ltd. have no capital relationship to be disclosed with
the Asset Manager. However, this tenant and operator have received an anonymous partnership investment or investment through funds
that are managed by affiliates of FIG (a subsidiary of SoftBank Group Corp., a parent company of the Asset Manager directly/indirectly
owning 100% of its issued shares). Accordingly, INV treats Naqua Hotel & Resorts Management Co., Ltd. and MyStays HotelManagement Co., Ltd. as the equivalent to interested parties.

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)
Classification

Name

Address

Shirahama
Tokutei
Minato-ku,
Mokuteki Kaisha
Tokyo(Note 3)

Touyako Godo
Kaisha(Note 3)

Interested
party of the
Asset
Manager

Minato-ku,
Tokyo

Calvis Tokutei
Minato-ku,
Mokuteki Kaisha
Tokyo(Note 3)

Yaeyama Resort
Hotel Tokutei
Minato-ku,
Mokuteki Kaisha
Tokyo(Note 3)

Statedcapital Business or(JPYoccupation
million)Investment
0.1 managementbusiness

Investment
0.1 managementbusiness

Investment
0.1 managementbusiness

Investment
0.1 managementbusiness

Type oftransaction

Transaction
amount(JPY
thousand)(Note 1)

Account

Balance atthe end of
the period(JPY
thousand)(Note 1)-

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 4)

22,322,000

-

-

-

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 4)

15,543,000

-

-

-

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 4)

11,492,000

-

-

-

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 4)

9,731,000--

9,405,000--

8,629,000--

Percentage
Relationshipof votingrightsCommon Business
owned
board
relation(%)
member
ship

-

-

-

-

Saturnia Tokutei
Minato-ku,
Mokuteki Kaisha
Tokyo(Note 3)

Investment
0.1 managementbusiness--

Kawaguchiko
Tokutei Mokuteki Minato-ku,
KaishaTokyo(Note 3)

Investment
0.1 managementbusiness--

46

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 4)Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 4)

Classification

Name

Address

Statedcapital Business or(JPYoccupation
million)5,524,000

-

-

Hotel
business--

Lessee andoperator of
hotelsRentalrevenues

1,133,572

Accounts
receivableHotelbusiness--

Lessee andoperator of
hotelsRentalrevenues

8,084,924

Accounts
2,664,336
receivable

Naqua Hotel &Resorts
Minato-ku,
Management Co.,
Tokyo
Ltd.
(Note 3)10

MyStays HotelManagement Co., Minato-ku,
Ltd.
Tokyo
(Note 3)100

(Note 4)

Account

Balance atthe end of
the period(JPY
thousand)(Note 1)-

Investment
0.1 managementbusiness(Note 3)

Type oftransaction

Transaction
amount(JPY
thousand)(Note 1)

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 4)

HL Investments 2
Tokutei Mokuteki Minato-ku,
KaishaTokyo(Note 3)(Note 1)
(Note 2)

Percentage
Relationshipof votingrightsCommon Business
owned
board
relation(%)
membership-

195,942

Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
The terms and conditions have been determined based on the Asset Manager’s internal rules and manual regarding transactions with sponsor
related parties.
Shirahama Tokutei Mokuteki Kaisha, Touyako Godo Kaisha, Calvis Tokutei Mokuteki Kaisha, Yaeyama Resort Hotel Tokutei Mokuteki
Kaisha, Saturnia Tokutei Mokuteki Kaisha, Kawaguchiko Tokutei Mokuteki Kaisha, HL Investments 2 Tokutei Mokuteki Kaisha, Naqua
Hotel & Resorts Management Co., Ltd. and MyStays Hotel Management Co., Ltd. have no capital relationship to be disclosed with theAsset Manager. However, these Tokutei Mokuteki Kaisha or the tenant and operator have received an anonymous partnership investment
or investment through funds that are managed by affiliates of FIG (a subsidiary of SoftBank Group Corp., which is a parent company of
the Asset Manager directly/indirectly owning 100% of its issued shares). Accordingly, INV treats Shirahama Tokutei Mokuteki Kaisha,
Touyako Godo Kaisha, Calvis Tokutei Mokuteki Kaisha, Yaeyama Resort Hotel Tokutei Mokuteki Kaisha, Saturnia Tokutei Mokuteki
Kaisha, Kawaguchiko Tokutei Mokuteki Kaisha, HL Investments 2 Tokutei Mokuteki Kaisha, Naqua Hotel & Resorts Management Co.,
Ltd. and MyStays Hotel Management Co., Ltd. as the equivalent to interested parties.
The purchase of trust beneficiary interests pertains to the following properties. The transaction amount is the purchase price stated in thetrust beneficiary purchase agreement, to which other expenses for acquisition, property taxes, city planning taxes and consumption taxes
are not included.

Property
NumberName of Property

Counterparty

D64

Hotel MyStays Sapporo Aspen

Touyako Godo Kaisha

15,543,000

D65

Art Hotel Ishigakijima

Yaeyama Resort Hotel Tokutei Mokuteki Kaisha

9,731,000

D66

Hotel MyStays Fuji Onsen Resort

Saturnia Tokutei Mokuteki Kaisha

9,405,000

D67

Hotel Sonia Otaru

Shirahama Tokutei Mokuteki Kaisha

5,930,000

D68

Hotel MyStays Kanazawa Castle

Calvis Tokutei Mokuteki Kaisha

5,682,000

D69

Art Hotel Niigata Station

HL Investments 2 Tokutei Mokuteki Kaisha

5,524,000

D70

Hotel MyStays Nagoya Nishiki

Shirahama Tokutei Mokuteki Kaisha

5,197,000

D71

Hotel Nord Otaru

Shirahama Tokutei Mokuteki Kaisha

4,296,000

D72

Hotel MyStays Kagoshima Tenmonkan

Kawaguchiko Tokutei Mokuteki Kaisha

3,445,000

D73

Art Hotel Asahikawa

Shirahama Tokutei Mokuteki Kaisha

3,197,000

D74

Hotel MyStays Matsuyama

Calvis Tokutei Mokuteki Kaisha

3,098,000

D75

Hotel MyStays Sapporo Susukino

Kawaguchiko Tokutei Mokuteki Kaisha

3,059,000

D76

Hotel MyStays Sapporo Nakajima Park

Shirahama Tokutei Mokuteki Kaisha

2,118,000

D77

Hotel MyStays Sapporo Nakajima Park Annex

Shirahama Tokutei Mokuteki Kaisha

1,584,000

D78

Flexstay Inn Sakuragicho

Calvis Tokutei Mokuteki Kaisha

1,425,000

D79

MyCUBE by MYSTAYS Asakusa Kuramae

Calvis Tokutei Mokuteki Kaisha

1,287,000

D80

Hotel MyStays Kagoshima Tenmonkan Annex

Kawaguchiko Tokutei Mokuteki Kaisha

1,168,000

D81

Hotel MyStays Nayoro

Kawaguchiko Tokutei Mokuteki Kaisha

957,000

Total

Purchase Price(JPY thousand)

82,646,000

47

2.

Transactions with Affiliates
Fiscal period ended June 30, 2019 (from January 1, 2019 to June 30, 2019)

Classification

Affiliate(Note 1)
(Note 2)

(Note 3)Name

Address

Investment
amount (JPY
Investment Relationship
Business or
million)ratio
with related
occupation(Note 1)(%)
parties(Note 2)Type oftransaction

Transaction
amount(JPY
million)Balance atthe end of
Account the period(JPYmillion)Refund of TK
investment
36,783Seven Mile
(Note 3)
Investment (Investment
ResortGrand Cayman,
TK
36,783 management
ratio)
Acquisition of
Holdings Cayman Islands
investment
business
100.0
non-current
Ltd.
35,903
assets(Note 3)
Investment amount in USD is converted to yen using the exchange rate fixed by foreign exchange forward (USD 1=JPY 110.45 (rounded
down to two decimal places)).
INV initially funded USD 339,836 thousand (JPY 37,534 million). However, based on the closing settlement, the Cayman SPC did notneed as much capital as anticipated. Therefore, INV received a refund of the TK investment in the amount of USD 6.8 million on
December 10, 2018 (Cayman Island local time) from the Cayman SPC. Thus, the amounts indicated are those after the partial refund.
The TK is a TK with Seven Mile Resort Holdings Ltd. as an operator and had made investments based on a TK agreement. Following theagreed termination of the agreement on May 9, 2019, however, the TK has received dividend in kind of non-current assets it owns. Since
the acquisition price of non-current assets acquired in this manner is the book value as of the date of the agreed termination of the agreement,
there is a difference from the amount of the refund of the TK investment.

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)
Not applicable
3.

Transactions with Companies under Common Control
None for both the fiscal period ended June 30, 2019 and the fiscal period ended December 31, 2019.

4.

Transactions with Directors and Major Unitholders
Fiscal period ended June 30, 2019 (from January 1, 2019 to June 30, 2019)

Classification

Directors
and close
relatives

Same as
above

Name

Business or occupation

Naoki
FukudaExecutive Director of
INV and President &CEO of Consonant
Investment
Management Co., Ltd.

Same asabove

Same as above

Details of transaction

Transaction
amount(JPY
thousand)(Note 3)

Account

Balance atthe end of
the period(JPY
thousand)(Note 3)-

Payment of asset
management fees toConsonant Investment
Management Co., Ltd.
(Note 1)

419,700

Accruedexpenses291,276-

Payment ofadministrative agency
fees for organizational
management toConsonant Investment
Management Co., Ltd.
(Note 2)600

Accruedexpenses324

Ratio ofvotingrights(%)(Note 1)

Naoki Fukuda served as a representative of the third party (the Asset Manager), and the fee is as set forth in the Articles of Incorporation of INV.

(Note 2)

Naoki Fukuda served as a representative of the third party (the Asset Manager), and the fee is as set forth in “Administrative Agency
Agreement for Organizational Management,” entered into by and between INV and the Asset Manager.

(Note 3)

Consumption taxes, etc. are not included in the transaction amounts, but are included in the balance at the end of the period.

48

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)

Classification

Directors
and close
relatives

Same as
above

Name

Business or occupation

Naoki
FukudaExecutive Director of
INV and President &CEO of Consonant
Investment
Management Co., Ltd.

Same asabove

Same as above

Details of transaction

Transaction
amount(JPY
thousand)(Note 3)

Account

Balance atthe end of
the period(JPY
thousand)(Note 3)-

Payment of asset
management fees toConsonant Investment
Management Co., Ltd.
(Note 1)

323,669

Accruedexpenses

181,945-

Payment ofadministrative agency
fees for organizational
management toConsonant Investment
Management Co., Ltd.
(Note 2)

1,100

Accruedexpenses880

Ratio ofvotingrights(%)(Note 1)

Naoki Fukuda served as a representative of the third party (the Asset Manager), and the fee is as set forth in the Articles of Incorporation of INV.

(Note 2)

Naoki Fukuda served as a representative of the third party (the Asset Manager), and the fee is as set forth in “Administrative Agency
Agreement for Organizational Management,” entered into by and between INV and the Asset Manager.

(Note 3)

Consumption taxes, etc. are not included in the transaction amounts, but are included in the balance at the end of the period.

(Notes Related to Parent Company or Any Material Affiliated Company)
1. Information of parent company
Not applicable
2. Summarized financial information of material affiliated company
Kingdom Special Purpose Company was the material affiliated company during the Reporting Period, and the summaryof financial statements are as below:(Unit: JPY thousand)
Kingdom Special Purpose Company
Fiscal period ended
June 30, 2019

Fiscal period ended
December 31, 2019

Total specified assets
Total other assets

100,524,164
3,972,036

100,450,855
3,753,104

Total current liabilities
Total non-current liabilities

106,709
66,280,661

128,71266,280,661

Total net assets

38,108,830

37,794,586

Operating revenue
Income before income taxes
Net income

2,333,624
1,689,613
1,688,730

2,010,770
1,375,369
1,374,486

49

(Notes Related to Per Unit Information)
Fiscal period ended
June 30, 2019(from January 1, 2019 toJune 30, 2019)

Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)

Net assets per unit

JPY 41,125

JPY 42,601

Net income per unit

JPY 3,748

JPY 1,910

Net income per unit is calculated by dividing net income for the period by the average number of investment units during theperiod. Diluted net income per unit is not stated as there are no diluted units.
(Note)The basis for calculating net income per unit is as follows.

Net income (JPY thousand)Fiscal period ended
June 30, 2019(from January 1, 2019 toJune 30, 2019)21,239,877

Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)
11,638,948--

21,239,877

11,638,948

5,666,840

6,093,427

Amounts not attributable to common unitholders(JPY thousand)Net income attributable to common units(JPY thousand)Average number of investment units during the period(units)(Notes Related to Significant Subsequent Events)
1. Sale of asset (property)
INV completed the sale of the following property on January 15, 2020.
Property Number: A51

City House Tokyo Shinbashi

Sale Date

January 15, 2020

Location

Minato-ku, Tokyo

BookValue (Note 1)

JPY 2,269 million

Sale Price (Note 2)

JPY 4,465 million

Gain on Sale (Note 3)

JPY 2,043 million

Transferee

Undisclosed (Note 4)

Legal Form of Asset

Trust beneficiary interest(Note 1)

As of June 30, 2019.

(Note 2)

Sale price shows sale prices set forth in the PSA of property and does not include adjustment for property taxes or city planning taxes, or nationalor local consumption taxes.

(Note 3)Gain on sale is calculated by deducting the estimated transfer related cost and is subject to change upon finalization of the financial results.

(Note 4)

The name of the transferee is not disclosed, as the transferee’s consent has not been obtained for disclosure.

(Note 5)For an overview of the sale of asset, please refer to “(2) Real Estate Properties, Etc.” of “3. Reference Information” as described below.

50

2. Debt Financing
In order to fund a portion of the acquisition price for two hotel properties (domestic real estate trust beneficiary interests)
acquired on January 6, 2020, INV resolved the following debt financing and entered into a loan agreement on the sameday.

LenderOutstanding balance
Interest rate, etc.
Interest payment date

:
:
:
:

Principal repayment method
Borrowing method
Borrowing date
Maturity date

:
:
:
:

Sumitomo Mitsui Trust Bank, Limited
JPY 6,980 million
Base Rate (1-month JPY TIBOR) + 0.500%, 0.300%, 0.200%
The last Japanese business day of each month before the principal
maturity date with January 31, 2020 as the first payment date, andthe principal maturity dateLump-sum repayment
Unsecured/ non-guarantee
January 6, 2020
January 6, 2025, January 6, 2023, January 6, 2021

3. Acquisition of assets (properties)
INV completed acquisition of the following two hotel properties on January 6, 2020.
Property Number: D82

Hotel MyStays Premier Narita

Acquisition Date

January 6, 2020

Acquisition Price (Note 1)

JPY 10,593 million

Location

Narita-shi, Chiba

Completion Date

May 1985

Legal Form of Asset

Trust beneficiary interest

SellerAdria Tokutei Mokuteki Kaisha

Total Floor Area

36,519.70 m2

Leasable Area

36,519.70 m2

Property Number: D83

Art Hotel Morioka

Acquisition Date

January 6, 2020

Acquisition Price (Note 1)

JPY 5,643 million

Location

Morioka-shi, Iwate

Completion Date

March 1981

Legal Form of Asset

Trust beneficiary interest

Seller

Heijo Tokutei Mokuteki Kaisha

Total Floor Area

16,727.08 m2

Leasable Area

16,727.08 m2(Note 1)

Acquisition price is based on the purchase price indicated in the relevant purchase agreement and does notinclude acquisition-related expenses, property taxes, city planning taxes or consumption taxes.

51

(9)

Changes in Total Number of Investment Units Issued and Outstanding
Changes in the number of investment units issued and outstanding and unitholders’ capital for the past 10 years up to
the end of the Reporting Period are as follows.

Date

Type of Issue

Total Number of Investment
Units Issued and Outstanding(units)Increase
Total

Unitholders’ Capital (JPY)
Increase

Reference

Total

February 1, 2010

Unit split

215,596

269,495-

19,134,417,100(Note 1)February 1, 2010

Merger367,200

636,695-

19,134,417,100(Note 2)

711,597

1,348,292

6,999,979,689

26,134,396,789(Note 3)

224,887

1,573,179

2,999,992,580

29,134,389,369(Note 4)

July 29, 2011
December 20, 2013

Third-party
allotment
Third-party
allotment

July 16, 2014

Public offering

1,040,000

2,613,179

22,747,920,000

51,882,309,369(Note 5)

August 13, 2014

Third-party
allotment

55,5072,668,686

1,214,104,611

53,096,413,980(Note 6)

July 15, 2015

Public offering

500,000

3,168,686

27,970,500,000

81,066,913,980(Note 7)

August 12, 2015

Third-party
allotment

25,0003,193,686

1,398,525,000

82,465,438,980(Note 8)March 30, 2016

Public offering

459,5123,653,198

36,123,157,344

118,588,596,324(Note 9)22,626

3,675,824

1,778,675,112

120,367,271,436(Note 10)-

3,675,824

224,225,264

120,591,496,700(Note 11)

April 27, 2016

February 22, 2017

Third-party
allotment
Reversal of
allowance fortemporarydifferences
adjustment

March 13, 2017

Public offering

185,000

3,860,824

8,393,450,000

128,984,946,700(Note 12)October 12, 2017

Public offering

887,959

4,748,783

37,917,625,218

166,902,571,918(Note 13)

November 1, 2017

Third-party
allotment

44,3984,793,181

1,895,883,396

168,798,455,314(Note 14)

August 1, 2018

Public offering

909,524

5,702,705

40,280,089,388

209,078,544,702(Note 15)

August 21, 2018

Third-party
allotment

45,476

5,748,181

2,013,995,612

211,092,540,314(Note 16)

December 28, 2018

Retirement(81,341)

5,666,840-

211,092,540,314(Note 17)

July 18, 2019

Public offering

409,524

6,076,364

23,317,887,036

234,410,427,350(Note 18)

20,476

6,096,840

1,165,882,964

235,576,310,314(Note 19)-

6,096,840

125,201,855

235,701,512,169(Note 20)

August 15, 2019

August 22, 2019

(Note 1)
(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

Third-party
allotment
Reversal of
allowance fortemporarydifferences
adjustment

An investment unit split of 5 units per 1 unit was conducted.
A merger by absorption pursuant to Article 147 of the Act on Investment Trusts and Investment Corporations was conducted with
LCP, with INV as the surviving entity. As a result of the merger by absorption, 4 investment units of INV (after the investment
unit split) were allotted for each LCP investment unit. The number of LCP investment units issued as of the time of the merger
by absorption was 91,800 units.
New investment units were issued through third-party allotment at a price of JPY 9,837 per unit to make repayment of existing
loan, etc.
New investment units were issued through third-party allotment at a price of JPY 13,340 per unit to make repayment of existing
loan, etc.
New investment units were issued through public offering at a price of JPY 22,688 per unit (JPY 21,873 after deducting theunderwriters’ discount) to raise funds for the acquisition of new properties.
New investment units were issued through third-party allotment at a price of JPY 21,873 per unit for the purpose of cash reserve
to appropriate to repayment in future borrowings.
New investment units were issued through public offering at a price of JPY 57,817 per unit (JPY 55,941 after deducting theunderwriters’ discount) to raise a part of the funds for the acquisition of new properties.

52

(Note 8)(Note 9)(Note 10)(Note 11)
(Note 12)(Note 13)
(Note 14)
(Note 15)
(Note 16)
(Note 17)

(Note 18)
(Note 19)
(Note 20)

New investment units were issued through third-party allotment at a price of JPY 55,941 per unit for the purpose of allocation to
cash reserves to be used as part of the funds for future acquisition of properties.
New investment units were issued through public offering at a price of JPY 81,217 per unit (JPY 78,612 after deducting theunderwriters’ discount) to raise a part of the funds for the acquisition of new properties.
New investment units were issued through third-party allotment at a price of JPY 78,612 per unit for the purpose of allocation to
cash reserves to be used as a part of the funds for future acquisition of properties.
Reversal of allowance for temporary differences adjustment was decided at the meeting of the Board of Directors of INV held on
February 22, 2017 and the amount was incorporated into unitholders’ capital.
New investment units were issued through public offering at a price of JPY 46,897 per unit (JPY 45,370 after deducting theunderwriters’ discount) to raise a part of the funds for the acquisition of new properties.
New investment units were issued through public offering at a price of JPY 44,118 per unit (JPY 42,702 after deducting theunderwriters’ discount) to raise a part of the funds for the acquisition of new properties.
New investment units were issued through third-party allotment at a price of JPY 42,702 per unit for the purpose of allocation
to cash reserves to be used as part of the funds for future acquisition of specified assets.
New investment units were issued through public offering at a price of JPY 45,776 per unit (JPY 44,287 after deducting theunderwriters’ discount) to raise a part of the funds for the acquisition of new properties.
New investment units were issued through third-party allotment at a price of JPY 44,287 per unit for the purpose of raising apart of the funds for the acquisition of new properties.
INV acquired own investment units from December 13, 2018 to December 18, 2018 (on a trade date basis) through the market
purchase at Tokyo Stock Exchange based on a discretionary transaction contract with a security company.
INV resolved the retirement of all the acquired own investment units at the Board of Directors' Meeting held on December 25,
2018 and the acquired own investment units were retired on December 28, 2018.
The acquisition of own investment units was conducted using capital surplus, and thus there is no change to unitholders’ capital.
New investment units were issued in a public offering at a price of JPY 58,898 per unit (JPY 56,939 after deducting theunderwriters’ discount) to raise a part of the funds for the acquisition of new properties.
New investment units were issued in a third-party allotment at a price of JPY 56,939 per unit for the purpose of raising a partof the funds for the acquisition of specified properties.
Reversal of allowance for temporary differences adjustment was decided at the meeting of the Board of Directors of INV held on
August 22, 2019 and the amount was incorporated into unitholders’ capital.

53

3. Reference Information(1)

Composition of INV’s Assets
Fiscal period ended June 30, 2019(as of June 30, 2019)

Type ofasset

Purpose

Geographic area
(Note 1)

Fiscal period ended December 31, 2019(as of December 31, 2019)

Percentage of
total assets(%)

Amount held
(JPY million)

2

0.0

3

0.0

Amount held
(JPY million)(Note 2)

Percentage of
total assets(%)(Note 2)

Greater Tokyo
area (Note 3)
Major regional
CitiesOverseas (Note 4)

-

-

-

-

35,8377.7

35,442

6.8

Subtotal

35,8397.7

35,445

6.8

Total real estate
Greater Tokyo
area
Major regional
Residences
citiesSubtotal
Greater Tokyo
area
Real
Offices/Commercial Major regional
estate infacilities
citiestrust
Subtotal
Greater Tokyo
area
Major regional
HotelscitiesSubtotal

35,8397.7

35,445

6.8

41,5758.9

38,366

7.3

15,346

3.3

15,186

2.9

56,921

12.2

53,552

10.3

-

-

-

-

4,825

1.0

4,789

0.9

4,825

1.0

4,789

0.9

158,74533.9

161,20230.9

131,97028.2

210,592

40.3

Real
estateHotels290,71562.1

371,794

71.2

Total real estate in trust

352,46275.3

430,137

82.3

Preferred equity interest (Note 5)

17,856

3.8

17,856

3.4

Deposits and other assets
Total assets (Note 6)(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)

61,77213.2

38,992

7.5

467,931100.0

522,431100.0(388,302)(83.0)(465,583)(89.1)“Greater Tokyo area” refers to Tokyo, Kanagawa, Chiba and Saitama.
“Amount held” is from the balance sheet as of the end of the reporting period (book value after depreciation for real estate, leasehold andreal estate in trust). The amounts held for hotels are calculated by including book value of accompanying FF&E, in principle.
While Hotel MyStays Haneda is held as trust beneficiary interests, part of accompanying FF&E is held in kind, which falls under this category.
The Leasehold of the Cayman Hotels falls under the category of “Real estate” for “Overseas.” The leasehold interests are the rights
equivalent to long-term real estate leasehold rights for buildings and land under the laws of the Cayman Islands (Term: 99 years; annual lease
payment: USD 1 or KYD 1). INV implemented an investment structure change regarding “Westin Grand Cayman Seven Mile Beach Resort& Spa” and “Sunshine Suites Resort” on May 9, 2019 (Cayman Islands local time), a change from making investments based on the TK
agreement to directly owning the Leasehold of the Cayman Hotels, which are the undying assets of the TK.
Preferred equity interest issued by Kingdom Special Purpose Company, with the Sheraton Grande Tokyo Bay Hotel as an underlying asset(asset in trust of trust beneficiary interest acquired by Kingdom Special Purpose Company, which is the real estate that serves as the main
source of revenue for Kingdom Special Purpose Company).
The figures indicated in parenthesis under “Total assets” show the amounts related to owned real estate (excluding the amount of preferred
equity interest)

54

Total Liabilities

Fiscal period ended June 30, 2019(as of June 30, 2019)
Percentage ofAmount (JPY million)
total assets (%)
234,885
50.2

Total Net Assets
Total Liabilities
and Net Assets(2)

Fiscal period ended December 31, 2019(as of December 31, 2019)
Percentage ofAmount (JPY million)
total assets (%)
262,70150.3

233,04649.8

259,73049.7

467,931100.0

522,431100.0

Real Estate Properties, Etc.
The following summarizes the real estate assets (real estate or trust beneficiary interest comprised mainly of realestate) as well as preferred equity interest held by INV as of December 31, 2019.

aProperty
number(Note 1)

A26

A27

A28

A29

A30

A32

A33

A34

A35

A37

A38

A39

A40

A41

Price and investment percentage

Name of property

Location(Note 2)Trust
beneficiary
1-31-2 Izumi, Suginami-ku, Tokyo
interests(Note 8)
Trust
Nisshin Palacestage
beneficiary
5-4-1 Nagasaki, Toshima-ku, Tokyo
Higashi-Nagasaki
interests(Note 8)Trust
2-26-6 Nishi-Gotanda,
Growth Maison Gotanda
beneficiary
Shinagawa-ku, Tokyo
interests
Trust
Growth Maison Kameido
6-58-16 Kameido, Koto-ku, Tokyo
beneficiaryinterests
Trust
Emerald House
3-27-18 Itabashi, Itabashi-ku, Tokyo beneficiaryinterests
Trust
3-15-35 Takanodai, Nerima-ku,
beneficiary
Suncrest Shakujii-Koen
Tokyo
interests(Note 8)Trust
Growth Maison Shin3-16-2 Shin-Yokohama, Kohoku-ku, beneficiary
Yokohama
Yokohama-shi, Kanagawa
interests(Note 8)
Trust
Belle Face Ueno1-27-5 Higashi-Ueno, Taito-ku,
beneficiary
Okachimachi
Tokyointerests(Note 8)Trust
beneficiaryGrand Rire Kameido
3-39-12 Kameido, Koto-ku, Tokyo
interests(Note 8)Trust
1-15-15 Okamoto, Setagaya-ku,
beneficiary
Growth Maison Yoga
Tokyo
interests(Note 8)Trust
3-7-6 Nishikicho, Tachikawa-shi,
Route Tachikawa
beneficiaryTokyo
interests
Trustbeneficiary
Shibuya-Honmachi Mansion 2-35-2 Honmachi, Shibuya-ku, Tokyo
interests(Note 8)
Trust
City Heights Kinuta
4-13-15 Kinuta, Setagaya-ku, Tokyo
beneficiaryinterests
Trust
Acseeds Tower
2-5-13 Namiki, Kawaguchi-shi,
beneficiary
Kawaguchi-Namiki
Saitamainterests(Note 8)Nisshin Palacestage
Daitabashi

55

Appraisalvalue at theend of the
Appraiser
period(Note 7)
(JPY
million)(Note 5)

Balancesheet
carryingvalue(JPY
million)Investment
percentage(%)(Note 4)

1,251

1,097

0.3

1,230

A

1,229

1,055

0.2

1,340

A

888

839

0.2

1,030

A

1,070

954

0.2

1,160

A

1,505

1,329

0.3

1,430

A

1,088

1,060

0.2

1,110

A

1,059

937

0.2

1,180

A

1,023

925

0.2

1,090

A

906

797

0.2

1,010

A

795

729

0.2

775

A

676

636

0.1

674

A

651

698

0.1

666

A

646

649

0.1

535

A

620

522

0.1

761

A

Acquisition
Legal form
price
of asset(JPY million)(Note 3)

Property
number(Note 1)Name of property

Acquisition
Legal form
price
of asset(JPY million)(Note 3)

Location(Note 2)

A43

College Square Machida

3-4-4 Nakamachi, Machida-shi,
Tokyo

A44

Belair Meguro

1-2-15 Meguro, Meguro-ku, Tokyo

A45

Wacore Tsunashima I

2-7-47 Tarumachi, Kohoku-ku,
Yokohama-shi, Kanagawa

A46

Foros Nakamurabashi

1-6-6 Kouyama, Nerima-ku, Tokyo

A47

Growth Maison Kaijin

5-29-51 Kaijin, Funabashi-shi,
Chiba

A48

College Square Machiya

7-3-1 Arakawa, Arakawa-ku, Tokyo

A51

City House Tokyo Shinbashi 6-19-1 Shinbashi, Minato-ku, Tokyo

A53

Nishiwaseda Cresent
Mansion3-18-9 Nishi-Waseda, Shinjuku-ku,
Tokyo

A54

Lexington Square
Akebonobashi

3-8 Yochomachi, Shinjuku-ku, Tokyo

A59

Towa City Coop Shinotsuka 5-49-7 Higashi-Ikebukuro,
IIToshima-ku, Tokyo

A61

Bichsel Musashiseki

1-22-7 Sekimachi-Kita, Nerima-ku,
Tokyo

A63

Towa City Coop Sengencho

4-338-2 Sengencho, Nishi-ku,
Yokohama-shi, Kanagawa

A64Royal Park Omachi

2-11-10 Omachi, Aoba-ku,
Sendai-shi, Miyagi

A65

Lexington Square
Haginomachi

1-15-16 Haginomachi,
Miyagino-ku, Sendai-shi, Miyagi

A66

Visconti Kakuozan

2-44 Otanacho, Chikusa-ku, Nagoyashi, Aichi

A71

Lexington Square
Daitabashi

1-33-18 Izumi, Suginami-ku, Tokyo

A72

Lexington Square Honjo
Azumabashi

4-20-6 Higashikomagata,
Sumida-ku, TokyoA73

AMS TOWER Minami 6-Jo

2-5-15 Minami 6-Jo Nishi,
Chuo-ku, Sapporo-shi, Hokkaido

A76

Neo Prominence

3-21-5 Shimo, Kita-ku, Tokyo

A77

Invoice Shin-Kobe
Residence

3-3-8 Ikutacho Chuo-ku, Kobe-shi,
Hyogo

A78

Cosmo Court Motomachi

3-12-20 Motomachidori Chuo-ku,
Kobe-shi, Hyogo

A79

Revest Honjin

2-13 Toriidori Nakamura-ku,
Nagoya-shi, Aichi

56

Trust
beneficiaryinterests(Note 8)Trust
beneficiaryinterests(Note 8)Trust
beneficiaryinterests(Note 8)Trust
beneficiaryinterests(Note 8)Trust
beneficiaryinterests(Note 8)Trust
beneficiaryinterests(Note 8)Trust
beneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests

Balancesheet
carryingvalue(JPY
million)Appraisalvalue at theInvestment
end of thepercentage
Appraiser
period(%)(Note 7)(JPY
(Note 4)
million)(Note 5)

589

561

0.1

540

A

589

549

0.1

627

A

572

514

0.1

524

A

566

505

0.1

585

A

557

509

0.1

514

A

510

441

0.1

557

A

2,520

2,269

0.5

3,650

B

1,880

1,889

0.4

2,780

C

1,450

1,294

0.3

1,970

D

866

805

0.2

1,250

B

577

554

0.1

828

C

1,110

1,006

0.2

1,440

B

415

386

0.1

663

B

330

274

0.1

417

B

255

230

0.1

286

D

977

825

0.2

1,260

D

511

424

0.1

653

D

1,180

911

0.2

1,260

D

1,660

1,597

0.3

2,250

B

1,260

1,134

0.3

1,470

B

973

864

0.2

1,130

B

674

592

0.1

845

B

Property
number(Note 1)Name of property

Acquisition
Legal form
price
of asset(JPY million)(Note 3)

Location(Note 2)

A80

Revest Matsubara

3-13-12 Matsubara Naka-ku,
Nagoya-shi, Aichi

A82

Alba Noritake Shinmachi

3-6-8 Noritake Shinmachi, Nishi-ku,
Nagoya-shi, Aichi

A83

Revest Meieki Minami

2-13-33 Meieki-Minami, Nakamuraku, Nagoya-shi, Aichi

A84

Revest Heian

2-13-17 Heian, Kita-ku,
Nagoya-shi, Aichi

A85

Vendir Hamaotsu Ekimae

1-2-15 Hamaotsu, Otsu-shi, Shiga

A86

Salvo Sala

2-6-21 Shimanouchi Chuo-ku,
Osaka-shi, Osaka

A87

Excellente Kagurazaka

128-1 Yamabukicho Shinjuku-ku,
Tokyo, and one other parcel

A88

Luna Court Edobori

3-4-11 Edobori, Nishi-ku,
Osaka-shi, Osaka

A89

Winntage Kobe Motomachi

7-2-2 Motomachidori, Chuo-ku,
Kobe-shi, Hyogo

A90

Queen's Court Fukuzumi

1-3-10 Fukuzumi, Koto-ku, Tokyo

A91

Corp Higashinotoin

380-1 Kawaranomachi,
Higashinotoindori Nijo Kudaru,
Nakagyo-ku, Kyoto-shi, Kyoto, andtwo other parcels

A92

Belair Oimachi

5-14-17 Higashi-Oi, Shinagawa-ku,
Tokyo

A93

Siete Minami-Tsukaguchi

3-18 Minami-Tsukaguchimachi,
Amagasaki-shi, Hyogo

A94

Prime Life Sannomiya
Isogami Koen

4-3-23 Isogamidori, Chuo-ku, Kobeshi, Hyogo

A95

HERMITAGE NANBA
WEST

4-10-3 Sakuragawa, Naniwa-ku,
Osaka-shi, Osaka

A96

Century Park Shinkawa 1bankan

4-1-2 Shinkawacho, Minato-ku,
Nagoya-shi, Aichi

A97

West Avenue

1-5-17 Nishi, Kunitachi-shi, Tokyo

A98

Little River Honmachibashi

1-34 Honmachibashi, Chuo-ku,
Osaka-shi, Osaka

A99

Prime Life Mikage

2-25-11 Mikage Tsukamachi,
Higashinada-ku, Kobe-shi, Hyogo

A100 City Court Kitaichijo

1-6-3 Kita 1-jo Higashi, Chuo-ku,
Sapporo-shi, Hokkaido

A101 Lieto Court Mukojima

5-45-10 Mukojima, Sumida-ku,
Tokyo

A102 Lieto Court Nishi-Ojima

2-41-14 Ojima, Koto-ku, Tokyo

A103 Royal Parks Momozaka

5-38 Fudegasakicho, Tennouji-ku,
Osaka-shi, Osaka

Trust
beneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests

57

Trust
beneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests

Balancesheet
carryingvalue(JPY
million)Appraisalvalue at theInvestment
end of thepercentage
Appraiser
period(%)(Note 7)(JPY
(Note 4)
million)(Note 5)

657

583

0.1

841

B

608

533

0.1

775

B

597

523

0.1

810

B

595

525

0.1

746

B

581

504

0.1

784

B

544

485

0.1

677

B

543

498

0.1

690

B

525

468

0.1

606

B

512

451

0.1

637

B

456

424

0.1

681

B

446

403

0.1

539

B

412

383

0.1

569

B

374

342

0.1

464

B

373

335

0.1

477

B

355

319

0.1

467

B

335

311

0.1

466

B

331

309

0.1

337

B

310

282

0.1

415

B

297

268

0.1

345

B

1,782

1,708

0.4

2,140

B

1,683

1,654

0.3

1,990

B

1,634

1,600

0.3

1,920

B

2,910

2,742

0.6

3,240

C

Property
number(Note 1)

A104 Royal Parks Shinden

A106

Acquisition
Legal form
price
of asset(JPY million)(Note 3)

Location(Note 2)Name of property

Trustbeneficiaryinterests
Trustbeneficiaryinterests

3-35-20 Shinden, Adachi-ku, Tokyo

Royal Parks Seasir Minami- 3-41-7 Minami-Senju, Arakawa-ku,
Senju
Tokyo
Subtotal (61 properties)

B17

Lexington Plaza Hachiman

3-1-50 Hachiman, Aoba-ku,
Sendai-shi, Miyagi

B18

AEON TOWN Sukagawa

105 Furukawa, Sukagawa-shi,
Fukushima

Trust
beneficiaryinterests
Trustbeneficiaryinterests

Subtotal (2 properties)

D01

D02

D03

D04

D05

D06

D07

D08

D09

D10

D11

D12

D13

D14

D15

D16

D17

D18

Trust
beneficiaryinterests
Trust
Hotel MyStays Asakusa
1-21-11 Honjo, Sumida-ku, Tokyo
beneficiaryinterests
52, Kasabokocho, Higashiiru,
Trust
Hotel MyStays Kyoto-Shijo Aburanokoji, Shijyodori, Shimogyo- beneficiaryku, Kyoto-shi, Kyoto
interests
Trust
MyStays Shin-Urayasu
2-1-4 Akemi, Urayasu-shi, Chiba
beneficiary
Conference Centerinterests
Trust
Hotel MyStays Maihama
3-5-1 Tekkodori, Urayasu-shi, Chiba beneficiaryinterests
Trust
Hotel MyStays Premier
2-4-1 Sonezakishinchi, Kita-ku,
beneficiary
DojimaOsaka-shi, Osakainterests
Trust
Hotel MyStays Nagoya2-23-22 Higashi-Sakura, Naka-ku,
beneficiary
Sakae
Nagoya-shi, Aichi
interests
Trust
Hotel MyStays
1-4-8 Awaji-machi, Chuo-ku, Osakabeneficiary
Sakaisuji-Honmachi
shi, Osakainterests
Trust
4-81 Sueyoshicho, Naka-ku,
Hotel MyStays Yokohama
beneficiary
Yokohama-shi, Kanagawa
interests
Trust
5-43-7 Higashi-Nippori,
Hotel MyStays Nippori
beneficiaryArakawa-ku, Tokyo
interests
Trust
Hotel MyStays
3-14-20 Haruyoshi, Chuo-ku,
beneficiary
Fukuoka-Tenjin-Minami
Fukuoka-shi, Fukuoka
interests
Trust
3-26 Shin-Ogawamachi,
Flexstay Inn Iidabashi
beneficiary
Shinjuku-ku, Tokyo
interests
Trust
Hotel MyStays Ueno
1-5-7 Matsugaya, Taito-ku, Tokyo
beneficiary
Inarichointerests
Trust
1-22-19 Kita-Shinagawa, ShinagawaFlexstay Inn Shinagawa
beneficiaryku, Tokyo
interests
Trust
Flexstay Inn Tokiwadai
1-52-5 Tokiwadai, Itabashi-ku, Tokyo beneficiaryinterests
Trust
Flexstay Inn Sugamo
3-6-16 Sugamo, Toshima-ku, Tokyo
beneficiaryinterests
Trust
1-3-2 Tokuicho, Chuo-ku,
Hotel MyStays Otemae
beneficiary
Osaka-shi, Osakainterests
Hotel MyStays Kiyosumi
Trust
Shirakawa
1-12-16 Tokiwa, Koto-ku, Tokyo
beneficiary(Note 9)interests
Hotel MyStays Kanda

1-2-2 Iwamotocho, Chiyoda-ku,
Tokyo

58

Balancesheet
carryingvalue(JPY
million)Appraisalvalue at theInvestment
end of thepercentage
Appraiser
period(%)(Note 7)(JPY
(Note 4)
million)(Note 5)

5,024

4,850

1.0

5,830

C

2,683

2,661

0.5

2,920

B

58,00553,552

11.6

68,856

-

3,280

3,022

0.7

3,700

C

2,320

1,767

0.5

2,450

C

5,600

4,789

1.1

6,150

-

2,851

2,945

0.6

5,070

B

2,584

2,530

0.5

4,590

B

6,024

5,828

1.2

11,700

B

4,930

4,627

1.0

7,490

B

4,870

4,741

1.0

7,010

B

3,845

3,738

0.8

7,090

B

2,958

2,624

0.6

5,890

B

2,514

2,361

0.5

4,980

B

2,119

2,338

0.4

4,060

B

1,898

1,800

0.4

2,580

B

1,570

1,471

0.3

5,900

B

1,381

1,352

0.3

2,160

B

1,331

1,243

0.3

2,060

B

1,242

1,200

0.2

2,040

B

1,242

1,204

0.2

2,260

B

1,192

1,117

0.2

2,360

B

1,192

1,143

0.2

3,260

B

749

900

0.2

1,560

B

Property
number(Note 1)Name of property

D19

Flexstay Inn Nakanobu P1

D20

D21

D22

D23

D24

D25

D26

D27

D28

D29

D30

D31

D32

D33

D34

D35

D36

D37

D38

D39

D40

D41

D42

Acquisition
Legal form
price
of asset(JPY million)(Note 3)

Location(Note 2)Trust
beneficiaryinterests
Trust
Flexstay Inn Nakanobu P2 4-27-8 Futaba, Shinagawa-ku, Tokyo beneficiaryinterests
Trust
APA Hotel Yokohama3-37-2 Sumiyoshicho, Naka-ku,
beneficiary
Kannai
Yokohama-shi, Kanagawa
interests
Trust
Hotel MyStays
26-17 Honcho, Hakodate-shi,
beneficiary
Hakodate-Goryokaku
Hokkaido
interests
Trust
5-10-15 Shirokane, Minato-ku,
Flexstay Inn Shirogane
beneficiaryTokyo
interests
Trust
Hotel MyStays Haneda
5-1-13 Haneda, Ota-ku, Tokyo
beneficiaryinterests
Trust
Hotel MyStays Kameido P1 6-32-1 Kameido, Koto-ku, Tokyo
beneficiaryinterests
Trust
Hotel MyStays Ueno
5-5-13 Higashi-Ueno, Taito-ku,
beneficiary
IriyaguchiTokyo
interests
Trust
Hotel MyStays Kameido P2 6-7-8 Kameido, Koto-ku, Tokyo
beneficiaryinterests
Trust
1-23 Masagocho, Shimizu-ku,
Hotel MyStays Shimizu
beneficiary
Shizuoka-shi, Shizuoka
interests
Trust
Super Hotel Shinbashi/
5-16-4 Shinbashi, Minato-ku, Tokyo beneficiaryKarasumoriguchiinterests
Trust
Flexstay Inn Higashi-Jujo
2-10-2 Nakajujo, Kita-ku, Tokyo
beneficiaryinterests
Trust
2-4-1 Higashi-Shukugo, UtsunomiyaHotel MyStays Utsunomiya
beneficiaryshi, Tochigi
interests
Trust
Flexstay Inn Kawasaki1-13-2 Kaizuka, Kawasaki-ku,
beneficiary
Kaizuka
Kawasaki-shi, Kanagawa
interests
Trust
1-3-2 Takara-machi, Toyama-shi,
Comfort Hotel Toyama
beneficiary
Toyamainterests
Trust
Flexstay Inn Kawasaki15-9 Ogawacho, Kawasaki-ku,
beneficiary
Ogawacho
Kawasaki-shi, Kanagawa
interests
Trust
Flexstay Inn Ekoda
8-6 Sakaecho, Nerima-ku, Tokyo
beneficiaryinterests
Trust
Super Hotel Tokyo-JR
2-21-9 Akebonocho, Tachikawa-shi,
beneficiary
Tachikawa KitaguchiTokyo
interests
Trust
Super Hotel JR Ueno7-9-14 Ueno, Taito-ku, Tokyo
beneficiary
iriyaguchiinterests
Trust
1-9-30 Nishi-Shinsaibashi,
Hotel MyStays Shinsaibashi
beneficiary
Chuo-ku, Osaka-shi, Osakainterests
Trust
3-13-13 Kurosaki, Yahatanishi-ku,
Comfort Hotel Kurosaki
beneficiary
Kitakyusyu-shi, Fukuoka
interests
Trust
2-18-14 Omotecho, Maebashi-shi,
Comfort Hotel Maebashi
beneficiary
Gunmainterests
Trust
Comfort Hotel Tsubame2-115 Sugoro, Sanjo-shi, Niigata
beneficiarySanjointerests
Trust
3-4 Ohdori-Nishi, Kitami-shi,
Comfort Hotel Kitami
beneficiary
Hokkaido
interests
4-27-12 Futaba, Shinagawa-ku,
Tokyo

59

Balancesheet
carryingvalue(JPY
million)Appraisalvalue at theInvestment
end of thepercentage
Appraiser
period(%)(Note 7)(JPY
(Note 4)
million)(Note 5)

589

565

0.1

850

B

283

286

0.1

409

B

8,350

7,681

1.7

9,950

B

2,792

2,811

0.6

4,000

B

2,119

2,091

0.4

2,420

B

7,801

7,301

1.6

8,820

B

5,594

5,377

1.1

7,560

B

3,821

3,687

0.8

3,850

B

3,742

3,584

0.8

5,110

B

2,198

2,139

0.4

2,460

B

1,624

1,590

0.3

1,940

B

1,277

1,275

0.3

1,340

B

1,237

1,232

0.2

2,130

B

980

910

0.2

1,170

B

979

919

0.2

1,160

B

906

883

0.2

912

B

5,069

4,858

1.0

4,640

B

1,170

1,105

0.2

1,270

E

1,130

1,083

0.2

1,250

E

3,160

3,044

0.6

2,950

B

1,148

1,064

0.2

1,250

E

1,128

1,034

0.2

1,160

E

1,010

945

0.2

1,100

E

851

788

0.2

926

E

Property
number(Note 1)

Acquisition
Legal form
price
of asset(JPY million)(Note 3)Name of property

Location(Note 2)

D43

Hotel MyStays Gotanda
Station (Note 10)

2-6-8 Nishi-Gotanda,
Shinagawa-ku, Tokyo

D44

Hotel Epinard Nasu

1-10 Kaidoue, Oaza-Takakuhei,
Nasu-machi, Nasu-gun, Tochigi (and59 other parcels)

D45

Hotel MyStays Fukuoka
Tenjin3-5-7 Tenjin, Chuo-ku, Fukuoka-shi,
Fukuoka

D46

Hotel MyStays
Hamamatsucho

1-18-14 Hamamatsucho, Minato-ku,
Tokyo

D47

Hotel MyStays PremierKanazawa

2-13-1 Hirooka, Kanazawa-shi,Ishikawa

D48

Takamatsu Tokyu REI Hotel

9-9 Hyogomachi, Takamatsu-shi,
KagawaD49

Hotel MyStays Premier
Hamamatsucho

1-8-5 Hamamatsucho, Minato-ku,
Tokyo

D50

Hotel MyStays Shin Osaka
Conference Center

6-2-19 Nishinakashima,
Yodogawa-ku, Osaka-shi, Osaka

D51

Hotel MyStays PremierOmori

6-19-3 Minami Oi, Shinagawa-ku,
Tokyo

D52

Beppu Kamenoi Hotel

5-17 Chuo cho, Beppu-shi, Oita

D53

Hotel MyStays Sapporo
Station4-15 Kita Hachijyo Nishi, Kita-ku,
Sapporo-shi, Hokkaido

D54

Hotel MyStays Yokohama
Kannai

5-65, Onoe-cho, Naka-ku,
Yokohama-shi, Kanagawa and3 other lots

D55

Art Hotel Joetsu

5-1-11, Hon-cho Joetsu-shi, Niigata

D56

Art Hotel Hirosaki City

1-1-2, 1-1-6, 1-1-7, 1-2-1, Omachi,
Hirosaki-shi, Aomori

D57

Hotel MyStays Oita

1-32, Niagemachi Oita-shi, Oita

D58

Hotel MyStays Gotanda

2-5-4, Higashigotanda
Shinagawa-ku, Tokyo

D59

Hotel MyStays Tachikawa

1-8-14, Nishiki-cho Tachikawa-shi,
Tokyo

D60

Hotel MyStays Premier
Akasaka

2-17-54, Akasaka Minato-ku, Tokyo

D61

Hotel MyStays Premier
Sapporo Park

2-2-10, Minamikujo Chuo-ku,
Sapporo-shi, Hokkaido

D62

Hotel MyStays Ueno East

5-5-6, Higashi Ueno Taito-ku, Tokyo

D63

Hotel MyStays Midosuji
Honmachi

3-2-10, Honmachi, Chuo-ku, Osakashi, Osaka

D64

Hotel MyStays Sapporo
Aspen

5-1 Nishi 4-chome, Kita 8-jo, Kitaku, Sapporo-shi, Hokkaido, andseven other lots

D65

Art Hotel Ishigakijima554-2 Nishimaji Okawa, Ishigaki‐
shi, Okinawa, and four other lots

D66

Hotel MyStays Fuji Onsen
Resort2654 Arakura Deguchi, Fujiyoshidashi, Yamanashi, and 15 other lots

60

Trust
beneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests

Balancesheet
carryingvalue(JPY
million)Appraisalvalue at theInvestment
end of thepercentage
Appraiser
period(%)(Note 7)(JPY
(Note 4)
million)(Note 5)

26,523

26,392

5.3

25,800C

20,981

19,585

4.2

23,500

C

8,059

7,792

1.6

8,710

C

7,959

7,793

1.6

6,890

C

13,761

13,023

2.8

14,200

C

2,139

2,122

0.4

2,270

E

8,000

8,005

1.6

10,700B

13,068

12,952

2.6

13,500

D

9,781

9,699

2.0

10,200

D

8,870

8,280

1.8

9,180

D

7,880

7,715

1.6

8,430

D

5,326

5,235

1.1

5,540

D

2,772

2,728

0.6

2,810

D

2,723

2,644

0.5

2,770

D

1,604

1,550

0.3

1,640

D

4,068

4,067

0.8

4,140

D

3,257

3,232

0.7

3,380

E

20,691

20,542

4.2

23,900B

16,731

16,486

3.4

17,100

D

5,286

5,236

1.1

5,390

D

5,039

4,966

1.0

4,980

B

15,543

15,517

3.1

15,700

D

9,731

9,706

2.0

9,830

B

9,405

9,323

1.9

10,100B

Property
number(Note 1)

Acquisition
Legal form
price
of asset(JPY million)(Note 3)

Location(Note 2)Name of property

D67

Hotel Sonia Otaru

1-4-20 Ironai, Otaru-shi, Hokkaido

D68

Hotel MyStays Kanazawa
Castle10-17 Konohana-machi, Kanazawashi, Ishikawa

D69

Art Hotel Niigata Station

1-1 Sasaguchi, Chuo-ku, Niigata-shi,
Niigata

D70

Hotel MyStays Nagoya
Nishiki

3-8-21 Nishiki, Naka-ku, Nagoyashi, Aichi

D71

Hotel Nord Otaru

1-4-16 Ironai, Otaru-shi, Hokkaido

D72

Hotel MyStays Kagoshima
Tenmonkan

2-7 Yamanokuchi-cho, Kagoshimashi, Kagoshima

D73

Art Hotel Asahikawa

6-29-2 7-jo-dori, Asahikawa-shi,
Hokkaido

D74

Hotel MyStays Matsuyama

1-10-10 Otemachi, Matsuyama-shi,
Ehime

D75

Hotel MyStays Sapporo
Susukino

1-6 Nishi 5-Chome, Minami 7-jo,
Chuo-ku, Sapporo-shi, Hokkaido,
and one other lot

D76

Hotel MyStays Sapporo
Nakajima Park

1-20 Nishi 1-chome, Minami 14-jo,
Chuo-ku, Sapporo-shi, Hokkaido

D77

Hotel MyStays Sapporo
Nakajima Park Annex

4-3 Nishi 1-chome, Minami 11-jo,
Chuo-ku, Sapporo-shi, Hokkaido

D78

Flexstay Inn Sakuragicho

2-72-2 Hanasaki-cho, Naka-ku,
Yokohama-shi, Kanagawa, and fourother lot

D79

MyCUBE by MYSTAYS
Asakusa Kuramae

2-6-7 Kuramae, Taito-ku, Tokyo

D80

Hotel MyStays Kagoshima
Tenmonkan Annex

1-20 Gofuku-machi, Kagoshima-shi,
Kagoshima

D81

Hotel MyStays Nayoro

11 Minami 5-chome, Nishi 3-jo,
Nayoro-shi, Hokkaido, and one other
lot

Trust
beneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests

Balancesheet
carryingvalue(JPY
million)Appraisalvalue at theInvestment
end of thepercentage
Appraiser
period(%)(Note 7)(JPY
(Note 4)
million)(Note 5)

5,930

5,889

1.2

5,990

D

5,682

5,679

1.1

5,740

D

5,524

5,480

1.1

5,590

D

5,197

5,185

1.0

5,260

C

4,296

4,279

0.9

4,340

D

3,445

3,436

0.7

3,540

E

3,197

3,165

0.6

3,250

D

3,098

3,068

0.6

3,190

E

3,059

3,053

0.6

3,090

C

2,118

2,113

0.4

2,140

C

1,584

1,579

0.3

1,600

D

1,425

1,424

0.3

1,470

E

1,287

1,289

0.3

1,350

E

1,168

1,167

0.2

1,210

E

957

950

0.2

969

C

6.0

35,585(USD
324,800,000)(Note 12)
6,431
(USD
1.2
58,700,000)(Note 12)

Westin Grand Cayman
D200 Seven Mile Beach Resort& SPA

30620 Seven Mile Beach Road,
Grand Cayman, Cayman Islands

The
Leasehold(Note 11)30,061(USD
272,171,000)

29,701

D201 Sunshine Suites Resort

1465 Esterley Tibbetts Highway,
Grand Cayman, Cayman Islands

The
Leasehold(Note 11)

5,842
(USD
52,898,000)

5,740

Subtotal (83 properties)

416,527

407,240

83.6

482,093-

Total (146 properties)

480,133

465,58396.4

557,099-

17,845

17,856

3.6- (Note 5)

Subtotal of preferred equity interest issued by special purpose company (1 property)

17,845

17,856

3.6--

Total (147 properties)

497,979

483,439

100.0

-

-

-

Sheraton Grande Tokyo Bay
Hotel (preferred equity
interest)-

Preferredequity interest
issued by
specialpurposecompany(Note 13)

61

F

F

(Note 1)“Property number” indicates the use categorization of properties owned by INV, with “A” standing for residence, “B” standing for office andcommercial facility, “C” standing for parking lots and “D” standing for hotel, and the number assigned for each property. The number
following “A”, “B”, “C” and “D” is assigned based on how early the acquisition was made, except for acquisitions made at the same time alower number is assigned to the property with a greater acquisition price.

(Note 2)

“Location” is, in principle, based on the indicated address (jyukyohyoji), except that if the jyukyohyoji system has not been implemented forsuch property, the location is based on the land number (chiban).

(Note 3)

“Acquisition price” is the purchase price indicated in the real estate or trust beneficiary purchase agreement except for Sheraton Grande Tokyo
Bay Hotel (preferred equity interest), Westin Grand Cayman Seven Mile Beach Resort & SPA and Sunshine Suites Resort. For Sheraton
Grande Tokyo Bay Hotel (preferred equity interest), “Acquisition price” indicates the amount invested by INV for the preferred equity interest,
excluding investment in the specified equity interests in the Kingdom Tokutei Mokuteki Kaisha and the acquisition price of the equity interest
held by the employees in a G.K., which is a master lease company. For Westin Grand Cayman Seven Mile Beach Resort & SPA and Sunshine
Suites Resort, the book value of the Leasehold of each of the Cayman Hotels is stated by the Cayman SPC as of May 9, 2019 (Cayman Islands
local time; May 10, 2019 in Japan local time), which is the date when INV succeeded the Leasehold from the Cayman SPC as dividend in kindin line with the agreed termination of the TK agreement. The amounts in USD are converted into JPY as shown. Such price excludes
consumption tax and other taxes, and has been rounded down to the nearest million yen.

(Note 4)

“Investment percentage” is the ratio of the acquisition price to the aggregate acquisition price of INV’s portfolio, and has been rounded to
the first decimal place.

(Note 5)

“Appraisal value at the end of the period” is the value appraised or determined based on research by the real estate appraiser as of the end of
the fiscal period in accordance with the Articles of Incorporation of INV and the regulations of The Investment Trust Association, Japan. As
to appraisal of Westin Grand Cayman Seven Mile Beach Resort & SPA and Sunshine Suites Resort, the local appraiser verification method(Note 6) is adopted. The appraisal value for Sunshine Suites Resort includes the unused land adjacent to the hotel. Appraisal is entrusted tothose described in (Note 7) below. For Sheraton Grande Tokyo Bay Hotel (preferred equity interest), there is no appraisal value at the end of
the period due to it being preferred equity interest. An appraisal value for the underlying asset as of the closing date of the fiscal period is asfollows.
Name of property

Appraisal value

Sheraton Grande Tokyo Bay Hotel(Note 6)

JPY 101,000 million

Appraiser(Note 7)C

Under the “local appraiser verification method,” a real estate appraiser licensed in Japan determines appraisal value based on theunderstanding and analyses of basic data and information necessary for real estate appraisal, including appraisal methods employed by local
appraisers, and transaction examples and trends in local markets that are used for real estate appraisal, and by verifying the validity ofdecisions made in appraisal reports and appropriateness of appraisal value prepared by local appraisers. INV appoints CBRE, Inc., aprofessional appraiser licensed and certified in the Cayman Islands, as a local appraiser to engage in appraisal of the Underlying Asset andprepare a local appraisal report. INV then engages CBRE K.K., a company appointed as a real estate appraiser in Japan, to verify the local
appraisal report and then obtains a report on verification of appraisal performed by local appraiser.

(Note 7) “Appraiser” is shown in code in the table above.

The code used to represent the appraisers is as follows:

Appraiser
A: Assets Research and Development Inc.
B: Japan Real Estate Institute
C: JLL Morii Valuation & Advisory K.K.
D: The Tanizawa Sogo Appraisal Co., Ltd.
E: Daiwa Real Estate Appraisal Co., Ltd.
F: CBRE K.K.
As to appraisal of Westin Grand Cayman Seven Mile Beach Resort & SPA and Sunshine Suites Resort, the local appraiser verification method
is adopted and CBRE K.K. has entrusted such appraisal to CBRE, Inc. The appraisal value for Sunshine Suites Resort includes the acquisition
price of the unused land adjacent to the hotel.
(Note 8)

These trust beneficiary interests were integrated into three groups with other trust beneficiary interests when INV procured funds through debt
financing backed by trust assets in July 2011. The grouping of trust beneficiary interests at the end of the Reporting Period is as follows:
Group 1
Nisshin Palacestage Daitabashi, Nisshin Palacestage Higashi-Nagasaki, Growth Maison Shin-Yokohama, Belle Face Ueno-Okachimachi,
Growth Maison Yoga, Shibuya-Honmachi Mansion, and Foros Nakamurabashi
Group 2
College Square Machida, Belair Meguro, and Wacore Tsunashima I
Group 3
Suncrest Shakujii-Koen, Grand Rire Kameido, Acseeds Tower Kawaguchi-Namiki, Growth Maison Kaijin, and College Square Machiya(Note 9)The property name was changed to Hotel MyStays Kiyosumi Shirakawa on September 9, 2019 along with the change of the hotel name.

(Note 10) Appraisal value at the end of the period indicates appraisal value calculated deeming the owned portion and the floor expansion portion asone.
(Note 11) The leasehold interests are the rights equivalent to long-term real estate leasehold rights for buildings and land under the laws of the Cayman
Islands (Term: 99 years; annual lease payment: USD 1 or KYD 1). INV implemented an investment structure change regarding “Westin
Grand Cayman Seven Mile Beach Resort & Spa” and “Sunshine Suites Resort” on May 9, 2019 (Cayman Islands local time), a change frommaking investments based on the TK agreement to directly owning the movable assets such as leasehold and FF&E of the Cayman Hotels (theLeasehold, etc.), which are the undying assets of the TK.
(Note 12) Appraisal value at the end of the period are converted into JPY using the exchange rate of USD 1 = JPY 109.56, which is the exchange rate on
the closing date of the fiscal period (December 31, 2019).
(Note 13) Preferred equity interest issued by special purpose company refers to 178,458 units of preferred equity interest issued by Kingdom Special
Purpose Company (equivalent to 49.0% of preferred equity interest issued and outstanding after the issuance of the said preferred equity
interest), with the Sheraton Grande Tokyo Bay Hotel as an underlying asset, and is recorded as one property.

62bCapital expenditures for assets under management(a) Schedule for capital expenditures
The schedule for the principal capital expenditures for property maintenance construction, etc., as of the end of the
fiscal period ended December 31, 2019 for the real estate assets is as follows.
Estimated Cost (JPY thousand)Name of Property

Location

PurposeScheduled Time of
Implementation

Total

Payment for
the Fiscal Advance
Period ended Payments
Dec. 2019

D12

Flexstay Inn
Iidabashi

Shinjuku-ku,
Tokyo

Conversion of
guestrooms

From January 2020
To June 2020

200,000--

D53

Hotel MyStays
Sapporo Station

Sapporo-shi,
Hokkaido

Renovation work

From January 2020
To June 2020

150,000--

D46

Hotel MyStays
Hamamatsucho

Minato-ku,TokyoRenovation work

From January 2020
To June 2020

134,368--

D45

Hotel MyStays
Fukuoka Tenjin

Fukuoka-shi,
FukuokaRenovation work

From January 2020
To June 2020

121,800--

D44 Hotel Epinard Nasu

Nasu-gun,Tochigi

Renovation work

From January 2020
To June 2020

56,000--(b) Capital expenditures for the fiscal period ended December 31, 2019
The principal construction work constituting capital expenditures for the real estate assets for the fiscal period ended
December 31, 2019 is as follows. Capital expenditures for the fiscal period totaled JPY 1,138,430 thousand, andtogether with JPY 24,816 thousand in repair costs included in this fiscal period’s expenses, construction work totaling
JPY 1,163,247 thousand was implemented.
Name of property

Location

PurposeTime ofimplementation

Payment(JPY thousand)

D18

Hotel MyStays
Kiyosumi Shirakawa

Koto-ku,Tokyo

Renovation work

From July 2019
To December 2019

190,601

D09

Hotel MyStays
Yokohama

Yokohama-shi,
Renovation work
Kanagawa

From July 2019
To December 2019

169,218

D53

Hotel MyStays
Sapporo Station

Sapporo-shi,
Hokkaido

Renovation work

From July 2019
To December 2019

48,046

D22

Hotel MyStays
Hakodate-Goryokaku

Hakodate-shi,
Hokkaido

Parking lot repair work

From July 2019
To December 201945,100D43

Hotel MyStays
Gotanda Station

Shinagawa-ku,
Conversion of guestrooms
Tokyo

From July 2019
To December 201913,815

Other construction

671,647
Total(3)

1,138,430

Tenant Summary

a Summary of lease conditions by property
Disclosure is omitted because the information is described in the presentation material for the 33rd Fiscal Period
Ended December 2019 separately announced today.
b Occupancy trend
Disclosure is omitted because the information is described in the presentation material for the 33rd Fiscal Period
Ended December 2019 separately announced today.
63