Investment
Invincible Corporation

Financial Summary
for the December 2022 Fiscal Period(from July 1, 2022 to December 31, 2022)
February 22, 2023

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, 2023

This English language notice is a translation of the Japanese-language notice released on February 22, 2023 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, 2022 (from July 1, 2022 to December 31, 2022)(1)

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

Fiscal period ended
December 31, 2022
Fiscal period ended
June 30, 2022

Ordinary Income

Net Income

JPY million%

JPY million%

JPY million%

JPY million%

11,929

55.3

6,257

195.9

5,075

399.7

5,075

400.0

7,680

-8.6

2,114

-7.8

1,015

0.1

1,015

0.1

Ordinary Income /Total Assets

Ordinary Income /Operating Revenues

Net Income per Unit

Net Income /Unitholders’ Equity

JPY

%

%

%

832

2.0

1.0

42.5

167

0.4

0.2

13.2

Fiscal period ended
December 31, 2022
Fiscal period ended
June 30, 2022
(2)

Operating Income

Distributions
Distribution(Excluding excess profit distribution)

Per Unit
Fiscal period ended
December 31, 2022
Fiscal period ended
June 30, 2022

Total

Excess Profit Distribution
Per Unit

Dividend Payout
Ratio

Distribution/ Net Assets

Total

JPY

JPY million

JPY

JPY million

%

%

832

5,072

-

-

99.9

2.0

166

1,012

-

-

99.7

0.4

(Note 1) 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(Note 2) Distribution / Net Assets is calculated based on the figures excluding excess profit distribution.

(3)

Financial Position
Total Assets

Fiscal period ended
December 31, 2022
Fiscal period ended
June 30, 2022
(Note)

JPY million

Net Assets / Total%
AssetsNet Assets per Unit

JPY million

Net Assets

494,237

250,32150.6

41,058490,118

246,21150.2

40,383JPY

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

Closing Balance ofCash and
Cash Equivalents

Cash Flows from
Financing
Activities

JPY million

JPY million

JPY million

JPY million

Fiscal period ended
December 31, 2022

6,670

(993)

(2,178)20,521

Fiscal period ended
June 30, 2022

5,728

(574)

(4,856)

17,0232.

Forecasts for the Fiscal Periods ending June 30, 2023 (from January 1, 2023 to June 30, 2023) and December 31, 2023
(from July 1, 2023 to December 31, 2023)

Operating
Revenues
JPY
millionFiscal period
ending
11,690June 30, 2023
Fiscal period
ending13,469December 31, 2023

Operating
Income(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
million

%

JPY

JPY

-2.0

5,964

-4.7

4,657

-8.2

4,656

-8.3

763

-

15.2 7,467

25.2

6,324

35.8 6,324

35.8

1,037

-

※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, 2022 6,096,840

June 30, 2022

6,096,840

December 31, 2022

June 30, 20220

as of the End of the Fiscal Period (Including Treasury Units)(b) Number of Treasury Units as of the End of the Fiscal Period0(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.

・ Financial Summary report is not subject to audit procedure by certified public accountants or audit corporations.
・ 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 the date of this document, including gains or losses
from the disposition of properties, repayment of borrowings, decreases in rents and changes in operating
conditions. Unless otherwise specified herein, amounts less than JPY 1 are rounded down, and ratios are rounded
to the nearest one decimal place.

31. Operating Conditions(1) Operating Conditionsa

Overview of the Fiscal Period Ended December 31, 2022(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 (“CIM”), transferred 80.0% of issued shares of CIM 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 CIM, 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, CIM revised the Investment Guidelines for INV, positioned hotels as a core asset class alongside residential
properties with a view towards expanding investments in the hotel sector in which demand is forecasted to risegoing forward, and has expanded its portfolio.
Moreover, CIM 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 tochange 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 foraccommodations, 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 first timeever 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, 2022 (“Reporting Period”), INV additionally acquired the land adjacentto Hotel Epinard Nasu (the “Adjacent Land”) on September 9, 2022. Since the Adjacent Land is positioned as
an integral portion of the existing hotel, the number of INV's properties remained unchanged. INV's portfolio
at the end of the Reporting Period comprised of 128 properties (86 hotels (Note 3) (Note 4), 41 residential
properties and one retail facility) with a total acquisition price of JPY 491,416 million (Note 5) that increased by
the additional acquisition of the Adjacent Land. Furthermore, INV’s hotel portfolio has the largest asset size
(Note 6) of JPY 450,631 million (86 properties, 15,597 rooms) among all J-REIT hotel portfolios including hoteland-inn-specific type investment corporations.
(Note 1)US Eastern Standard Time.
4

(Note 2) As of July 2011, Calliope owned 97.35% of issued shares of CIM and the investment ratio reached 100%in October 2013. Calliope transferred 80.0% of issued shares to Fortress CIM Holdings L.P., asubsidiary of SoftBank Group and 20.0% to SoftBank Group on March 29, 2018. As of the date of thisdocument, SoftBank Group owns 100% of issued shares of CIM directly and indirectly.
(Note 3) 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 4) 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 arecounted 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 andbuildings under the British Cayman laws) and furniture, fixtures, equipment, ornaments, kitchen
instrument, and other assets required for hotel operations. Hereinafter the same shall apply.
(Note 5) 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 6) “The largest asset size … among all J-REIT hotel portfolios” refers to the total acquisition price of 86
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, 2022.
(b)

Operational Environment and Performance

Given the enormous impact of COVID-19 on the economy as a whole, especially in the hotel sector, on
September 9, 2022 and December 9, 2022, INV entered into Memorandum of Understanding (the “MOU”) to
amend each fixed-term building lease and property management agreement (“MLPM Agreements”)
pertaining to the rent conditions for the periods from July 1, 2022 to September 30, 2022 and from October 1,
2022 to December 31, 2022 for domestic hotels owned by INV and operated by INV's main tenant, MyStays
Hotel Management Co., Ltd. (“MHM”) and its affiliates (collectively the “MHM Group” along with MHM).
Pursuant to the MOU, we have changed the rent payment conditions of MLPM Agreements in terms of theamount of fixed rent payment, the variable rent calculation method, payment method of rent and payment
date. With the recovery in hotel portfolio performance, the total fixed rent for the properties operated by the
MHM Group from October 1, 2022 to December 31, 2022 was the same as the total fixed rent amount stipulated
in the original MLPM Agreements.
For the December 2022 fiscal period, the portfolio NOI (Note 1) increased by 150.1% or JPY 6,308 million
compared to the same period in the previous year (the December 2021 fiscal period) to JPY 10,509 million.
5

The hotel portfolio NOI increased by JPY 6,528 million. The residential and retail portfolio NOI decreased by
JPY 220 million due to asset sales. Compared to the December 2019 fiscal period prior to the COVID-19
pandemic, the portfolio NOI decreased by 30.7% or JPY 4,654 million, of which the hotel portfolio NOI
decreased by JPY 3,861 million and the residential and retail portfolio NOI decreased by JPY 792 million due
to asset sales.
Commentary on hotel and residential performance in the Reporting Period is as described below.
The NOI for the Reporting Period of the 75 domestic hotels (Note 2) owned by INV increased by 171.8%
compared to the same period in the previous year (figures exclude nine domestic hotels with fixed-rent leaseagreements among the 84 domestic hotels owned by INV as of the end of the Reporting Period, including
Sheraton Grande Tokyo Bay Hotel, the underlying asset of the preferred equity interest of TMK owned by
INV). The 75 domestic hotels recorded an occupancy rate (Note 3) of 75.9% (+23.5 points YoY), ADR (Note 4)of JPY 10,199 (+33.0% YoY), and RevPAR (Note 5) of JPY 7,744 (+92.6% YoY). Compared to the December
2019 fiscal period prior to the COVID-19 pandemic, the NOI decreased by 36.8%, the occupancy rate decreasedby 12.4pt, ADR decreased by 3.9%, and RevPAR decreased by 17.4%.
Westin Grand Cayman Seven Mile Beach Resort & Spa and Sunshine Suites Resort recorded an averageoccupancy rate of 56.2% (+41.3 points YoY), ADR of USD 403 (+108.9% YoY), and RevPAR of USD 226 (+687.6%
YoY) for the Reporting Period. Compared to the December 2019 fiscal period prior to the COVID-19
pandemic, the occupancy rate decreased by 16.1pt, ADR increased by 22.9%, and RevPAR decreased by 4.5%.
Regarding the hotel sector in Japan, Japan was hit by the seventh wave of COVID-19 infections from summer
to early autumn. However, there were no restrictions on movement during this period. Tourism andaccommodation demand were solid, partly because events such as fireworks festivals and summer festivals
resumed in various places for the first time in three years. The government’s travel subsidy program"National Travel Discount Campaign" which started in October 2022 helped to boost domestic accommodation
demand. As a result, the total number of domestic guests in the market exceeded the 2019 levels each monthfrom October to December 2022 according to the “Stay-over Travel Statistical Survey” released by the Japan
Tourism Agency on January 31, 2023. Moreover, in response to the substantial relaxation of border measuresin October 2022 and the depreciation of the yen, inbound demand also recovered significantly.
As for the Cayman Hotels, demand has been on a recovery trend, as all travel-related restrictions to the Cayman
Islands have been lifted on August 24, 2022 and the total number of seats on commercial flights to and fromthe United States by major airlines has recovered to the 2019 levels. Visitors are more willing to pay a
premium for their long-delayed vacations, and the ADR in 2022 consistently exceeded the ADR of the samemonth in 2019 since May 2022. Further, RevPAR in 2022 consistently exceeded the RevPAR of the samemonth in 2019 since October 2022. Moreover, GOP and NOI of the Cayman hotels in the 4th quarter of 2022
exceeded those of 4th quarter 2019, both in USD and in JPY.
Regarding the residential portfolio (Note 6), the occupancy rate (Note 7) of 41 residential properties increased
by 0.4 points from 96.0% at the end of the previous fiscal period to 96.4% at the end of the Reporting Period.
The average occupancy rate (Note 7) increased by 0.5 points YoY at 96.3%. The NOI (Note 8) for the Reporting
Period increased by 0.8% YoY.
In the Reporting Period, INV realized a rent increase for 31.4% (based on the number of contracts) of the newresidential lease contracts, however the new rent decreased by 1.3% compared to the previous rent across all
new leases (Note 9). INV achieved a rent increase for 49.8% (based on the number of contracts) of contract
renewals with an average rent increase of 1.6% compared to the previous rent across all renewal leases, while
maintaining a high contract renewal rate (Note 10) of 79.7%. Combined, new lease and renewal lease rents
were signed at 0.5% higher than the previous leases. The average rent per tsubo per month (Note 11) for theReporting Period increased by 0.3% YoY at JPY 9,172.
The total appraisal value of 127 properties was JPY 532,570 million (one out of the 128 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 the appraisal value of such interest is not available). The portfolio
has an unrealized gain of JPY 89,278 million (Note 12) and an unrealized gain ratio of 20.1% (Note 12). The
total appraisal value of 127 properties which were owned throughout the Reporting Period increased by 0.4%
from JPY 530,212 million at the end of the June 2022 fiscal period to JPY 532,570 million at the end of theReporting Period.
6

Key Performance Indicators of 75 Domestic Hotel Properties (Note 2)
December 2022
fiscal period

Year-on-year change

vs 2H 2019

Occupancy Rate (Note 3)

75.9%+23.5pt-12.4pt

ADR (JPY) (Note 4)

10,199+33.0%-3.9%

RevPAR (JPY) (Note 5)

7,744+92.6%-17.4%GOP (JPY million) (Note 13)8,855+165.5%-31.3%Key Performance Indicators of Cayman Hotels
December 2022
fiscal period

Year-on-year change

vs 2H 2019

Occupancy Rate (Note 3)

56.2%+41.3pt-16.1pt

ADR (USD) (Note 4)403+108.9%+22.9%

RevPAR (USD) (Note 5)

226+687.6%-4.5%

GOP (USD) (Note 13)

13,177,397- (Note 14)-0.8%

Key Performance Indicators of 41 Residential Properties (Note 6)
December 2022
fiscal period
Occupancy Rate (Note 7)
Average Rent per Tsubo per Month(JPY) (Note 11)
NOI (JPY million) (Note 8)

Year-on-year change

96.4%+0.8pt

9,172

+0.3%

1,118

+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) + (Management Contract Revenue of the Cayman Hotels‐Management Contract Expense)(Note 2) Of the 84 hotels held as of the end of December 2022 (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 for the properties acquired after July 2019 are
calculated on the assumption INV had acquired those properties on July 1, 2019, using the actual
figures provided by the sellers of such properties for the period before the acquisition. Hereinafter
the same shall apply.
(Note 3) “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 4) “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 5) “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 6) Based on the 41 residential properties owned as of the end of December 2022.
7

Hereinafter the same

shall apply.
(Note 7) “Occupancy Rate” and “Average Occupancy Rate” for the portfolio or the residential properties arecalculated by dividing the sum of total leased area by the sum of total leasable area at the end of eachmonth during the relevant period. Hereinafter the same shall apply.
(Note 8) For the comparison of NOI for the residential properties, one-off insurance-related revenues andexpenses are excluded. Hereinafter the same shall apply.
(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. Hereinafter the same shall apply.
(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) “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.
(Note 12) 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 13) “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. GOP for each fiscal period ended June
2020 and onwards includes the amount of employment adjustment subsidies received by the hotel
operators for the respective fiscal periods. In addition, GOP for the Sheraton Grande Tokyo Bay
Hotel has been multiplied by 49%, or INV’s ownership ratio of the preferred equity interest.
Hereinafter the same shall apply.
(Note 14) GOP of the Cayman Hotels was USD -1,151,126 in the same period of 2021.

(c)

Overview of Fund Raising
As a result of the measures described below, INV’s interest-bearing debt outstanding balance was JPY
240,797 million and the Interest-Bearing Debt ratio (Note 1) and LTV (appraisal value basis) (Note 2) were
48.7% and 44.5% respectively, as of the end of the Reporting Period, with an average interest rate (Note3) of 0.45%.
(Note 1) Interest-Bearing Debt ratio uses the calculation formula below:
Interest-Bearing Debt ratio = total outstanding interest-bearing debt (excluding short-term
consumption tax loan) / total assets x 100(Note 2) LTV (appraisal value basis) uses the calculation formula below:
LTV = total outstanding interest-bearing debt (excluding short-term consumption tax loan)/ 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). For
appraisal value of the Cayman Hotels, USD is converted into JPY amount via the forward
exchange rate of USD 1=JPY 110.45 based on the foreign exchange forward contract enteredinto on July 26, 2018 and executed on September 26, 2018.
(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.

8

(i)

Borrowing of Funds

INV borrowed New Syndicate Loan (003) on July 19, 2022 (total amount borrowed: JPY 49,684 million; interest
rate: variable interest rate of 1-month JPY TIBOR plus 0.25000% for a duration of one year), which was arranged
by Mizuho Bank, Ltd. and Term Loan (005) on July 20, 2022 (total amount borrowed: JPY 600 million; interest
rate: variable interest rate of 1-month JPY TIBOR plus 0.35000% for a duration of three years), which wasarranged by The Tokyo Star Bank, Limited in order to repay New Syndicate Loan (V) in the amount of JPY
40,024 million due on July 16, 2022, one of the tranches of New Syndicate Loan (I) in the amount of JPY 9,660
million due on July 17, 2022, and Term Loan (N) in the amount of JPY 600 million due on July 20, 2022.
Moreover, INV borrowed Term Loan (006) on September 14, 2022 (total amount borrowed: JPY 3,000 million;interest rate: variable interest rate of 1-month JPY TIBOR plus 0.25000% for a duration of one year), which wasarranged by Sumitomo Mitsui Banking Corporation in order to repay Term Loan (X) in the amount of JPY 3,000
million due on September 14, 2022.
Furthermore, INV borrowed New Syndicate Loan (004) on September 26, 2022, September 27, 2022 and October
13, 2022 (total amount borrowed: JPY 28,571 million; interest rate: variable interest rate of 1-month JPY TIBOR
plus 0.25000% for a duration of one year) and New Syndicate Loan (005) on September 27, 2022 (total amountborrowed: JPY 639 million; interest rate: variable interest rate of 1-month JPY TIBOR plus 0.25000% for aduration of one year), which were arranged by Mizuho Bank, Ltd., and Term Loan (007) on September 27, 2022
(total amount borrowed: JPY 1,256 million; interest rate: variable interest rate of 1-month JPY TIBOR plus
0.25000% for a duration of one year), which was arranged by Citibank, N.A., Tokyo Branch, and Term Loan(008) on October 13, 2022 (total amount borrowed: JPY 1,190 million; interest rate: variable interest rate of 1month JPY TIBOR plus 0.50000% for a duration of five years), which was arranged by The Tokyo Star Bank,
Limited in order to repay one of the tranches of New Syndicate Loan (J) in the amount of JPY 13,120 million due
on September 26, 2022, and New Syndicate Loan (W) in the amount of JPY 11,851 million, New Syndicate Loan
(X) in the amount of JPY 639 million and Term Loan (Y) in the amount of JPY 1,256 million due on September
27, 2022, and one of the tranches of New Syndicate Loan (H) in the amount of JPY 5,365 million due on October
13, 2022.
In addition, INV borrowed Term Loan (009) on November 29, 2022 (total amount borrowed: JPY 4,321 million;interest rate: variable interest rate of 1-month JPY TIBOR plus 0.25000% for a duration of one year), which wasarranged by Mizuho Bank, Ltd. in order to repay Term Loan (Z) in the amount of JPY 4,321 million due on
November 29, 2022.
As described in “c Significant Subsequent Events, (Reference Information), (a) Debt Financing” below, INV
decided to borrow Term Loan (010) on December 22, 2022 and borrowed on January 6, 2023 (total amountborrowed: JPY 1,550 million; interest rate: variable interest rate of 1-month JPY TIBOR plus 0.25000% for aduration of one year), which was arranged by Sumitomo Mitsui Trust Bank, Limited in order to repay one of
the tranches of New Syndicate Loan (P) in the amount of JPY 1,550 million due on January 6, 2023.

9

(d)

Overview of Acquisition of Assets

INV completed the additional acquisition of real estate (Note 1) pertaining to one hotel on September 9, 2022 as
follows.
Property
Number

Property Name

D44

Hotel Epinard Nasu
(Additional acquisition of
adjacent land)(Note 1)

(Note 2)
(Note 3)(Note 4)(e)Acquisition Price(JPY million)(Note 2)
21

Appraisal Value(JPY million)(Note 3)Seller

27 Nasu Estate Co., Ltd.

The acquired asset is actual real estate. We established an additional trust on the real estate
management and disposal trust pertaining to Hotel Epinard Nasu with Sumitomo Mitsui Trust
Bank, Limited as the trustee on the acquisition date.
Acquisition 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 JLL Morii Valuation& Advisory K.K. on the valuation date of June 21, 2022.
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 increased by
JPY 4,249 million from the previous period (+55.3%) to JPY 11,929 million, resulting in a net income of JPY
5,075 million, an increase of JPY 4,060 million from the previous period (+400.0%). Unappropriatedretained earnings including the retained earnings carried forward from the preceding fiscal period (JPY
8,667 million) is JPY 13,742 million. INV has decided to set the distribution per unit (excluding excess
profit distribution) of JPY 832 without reversing retained earnings.

10b

Outlook for the Fiscal Period Ending June 30, 2023

The Japanese economy is gradually recovering due to the resumption of economic activity through the spreadof the “With Corona” lifestyle, which aims to coexist with COVID-19, and the recovery of inboundconsumption, which is supported by the depreciation of the yen along with the pent-up demand for travel.
On the other hand, there is a risk that a further slowdown in overseas economies may trigger a temporary
slowdown in domestic economic growth, so it is necessary to pay close attention to the impact of fluctuationsin the financial and capital markets and international affairs.
In the hotel market, the recovery trend is expected to continue for domestic and inbound demand in both
leisure and business segments. However, it may take some time for the number of Chinese tourists to returnto pre-2019 levels since border measures are again being implemented upon entry into Japan as of the dateof this document, due to the rapid spread of COVID-19 infections in China after the change in its zero-Corona
policy. Travelers from China accounted for about 30% of all inbound travelers to Japan in 2019.
In the rental housing market, lifestyle changes due to the impact of COVID-19 infections are expected to affecttenant trends, and INV will keep an eye on such trends.
(a)Future operational policy and issues to be addressed

Since July 2011, INV has focused on improving the profitability of its portfolio and strengthening its financialbase in order to enhance unitholder value with the Fortress Group as its sponsor. Fortress Group became amember of SoftBank Group in December 2017 and SoftBank Group has owned 100% of issued shares of CIM
directly and indirectly since March 29, 2018. In addition to access to Fortress’ global real estate expertise,
INV will collaborate with SoftBank Group affiliates that have cutting-edge expertise in various technology
fields.
INV will actively promote efforts to acquire new demand under the environment of "With Corona" andflexibly respond to changes in the external environment while emphasizing customer safety and security.
Going forward, INV will continue to implement various strategies for further growth and financial stability,
including the following measures.
Asset recycling: property acquisitions using the proceeds from salesInternal growth at hotels through reducing costs, stimulating existing demand and creating new
demand by collaborating with hotel operators

Further internal growth at residential properties

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

External growth strategy
New Property Acquisitions
As its basic strategy, INV had moved forward with the acquisition of new properties focusing on hotels,
where continued growth in portfolio revenues would be anticipated, and residential properties, especiallywhere rental growth could be achieved, to build a portfolio with a good balance between growth andstability. However, for the time being, it is necessary to carefully consider the acquisition of hotel
properties, which have been greatly affected due to COVID-19 infections, while looking for the possibilityof acquiring property at an attractive price.
In regard to hotels, INV will take into consideration 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 regard to residential properties, INV will analyze occupancy rates, rental market trends, the presenceof competing properties among other factors, and consider acquiring properties with strong
competitiveness, in which it believes it can achieve increases in rent.

11Property Sales
INV considers the possibility of portfolio optimization upon consideration of the portfolio sector
composition, geographic distribution, and competitiveness of each property as appropriate.
(ii)

Strategy for internal growth(Hotels)
Of the 84 domestic hotels (Note 1) owned by INV as of the end of the Reporting Period, 75 hotels use avariable rent scheme. In the variable rent scheme, in principle, INV receives all of the gross operating
profit (GOP) after deducting payment of management fees for the hotel operator as rents. For 73 hotelsof the 75 hotels, MHM and subsidiaries of MHM have implemented sophisticated revenue management
initiatives seeking to maximize revenue through effectively taking in accommodation demand. As aresult, INV can directly enjoy the hotel revenue upside through this variable rent scheme.
In response to the reduction in hotel demand, the MHM Group is taking steps to reduce hotel operating
expenses and recover revenues by reviewing its operational strategy. GOP significantly recovered in the
fourth quarter of 2022 due to a thorough review of staffing and work shifts, continuous efforts to reduce
fixed costs, and strategies to maximize GOPPAR (GOP per the number of rooms available for sale). In
particular, both GOP and GOP ratio (Note 2) for December 2022 exceeded the levels in the same month of
2019. In order to minimize the impact of rising costs such as utility costs and foodstuffs, we set detailed
rates for each hotel based on factors such as occupancy rates and costs.
The MHM Group is vigorously working to stimulate demand from domestic customers by providing
corporate customers with diverse options including a new lineup of meeting options highlighting strictmeasures to reduce the spread of COVID-19 and various options including educational tours andemployee training while grasping changes in customer demand under the “With Corona” environment.
In addition, the MHM Group is focusing on creating demand, including continuation of delivery and takeout services and the development of new menus through directly managed restaurants in the hotel.
For hotels, renovation of rooms and replacement of fixtures and fittings are indispensable to maintain andincrease revenues and operate stably in a planned manner.
(Note 1) Including Sheraton Grande Tokyo Bay Hotel (the preferred equity interest).
(Note 2) An indicator of hotel profitability, calculated as GOP divided by sales.

(Residential properties and others)
INV will continue to strengthen its collaborative ties with property managers and brokers to further boost
occupancy rates and earning capabilities of its properties. With respect to INV’s residential properties,
INV will focus on increasing the occupancy rates and rents for both new lease contracts and lease renewals
for all 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.
(iii) Financial strategy
The long-term issuer rating from Japan Credit Rating Agency, Ltd. (JCR) is “A” (Outlook: Stable) as of thedate of this document.
INV has implemented initiatives that restrict an increase in interest payments upon refinancing of existing
borrowings and ensure continued refinancing. From now on INV will implement financial strategies
such as the extension of average interest-bearing debt repayment periods as well as diversification of loan
maturity dates and financing measures in the “With Corona” environment.
(iv)

Compliance risk management
12While the executive director of INV concurrently serves as the representative director at CIM, two
supervisory directors (an external attorney and an external certified public account) oversee the execution of
the executive director’s duties via the Board of Directors of INV.
CIM has a compliance officer who is responsible for compliance with laws, regulations and other relevant
matters as well as overall management of transactions with sponsor related parties. Moreover, it has inplace a compliance committee which, chaired by such compliance officer, is in charge of deliberating on
compliance with laws, regulations and other relevant matters as well as transactions with sponsor relatedparties. 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 intransactions with sponsor related parties as well as strict examinations with respect to INV’s compliancewith laws and regulations. No resolution will be adopted unless the outside expert agrees.
When INV conducts certain transactions such as asset acquisition with sponsor related parties, priorapprovals by the Board of Directors of INV are required to ensure an objectivity in deliberation regarding
conflicts of interests. In such agenda, only two supervisory directors (a lawyer and a certified public
accountant) will participate in the vote, and the executive director who concurrently serves as therepresentative director of CIM will not participate in the vote as he is a special interested party.
INV intends to continually take steps to strengthen its compliance structure.
(v)

Initiatives for Sustainability
INV and CIM recognize the importance of environmental, social, and governance (ESG) considerations
in real estate investment management from the viewpoint of sustainability such as economic and social
development and contributing to global environmental conservation, and regard improvement ofsustainability as an important management issue. INV and CIM believe that the incorporation of ESG
considerations into the real estate investment management business, which is our primary business, isessential to maximizing unitholder value over the medium to long term and contributes to maximizing
INV's investment returns.
Thus, INV and CIM have established a “Sustainability Policy” to set basic policies for sustainability andput them into practice in our daily operations.
Under this policy, CIM has formulated the “Energy Conservation Policy”, the “Greenhouse Gas
Emissions Reduction Policy”, the “Water Saving Policy” and the “Waste Management Policy” which
stipulate efforts to reduce environmental impact as initiatives for environment. In addition, CIM has
established the “Sustainable Procurement Policy” in order to promote initiatives for ESG throughout thevalue chain of INV's real estate portfolio and concluded the “Green Lease” contract with tenants tocollaborate with tenants on measures related to the environmental consideration of real estate, such asproactive introductions of energy-saving equipment such as LED lighting. Furthermore, Eight hotels
owned by INV acquired the certification of Building-Housing Energy-efficiency Labeling System(“BELS”). In particular, Hotel MyStays Premier Akasaka, Hotel MyStays Yokohama Kannai, and Hotel
MyStays Fukuoka Tenjin have been rated five stars “★★★★★”, and Hotel MyStays Premier Kanazawa
and Hotel MyStays Fuji Onsen Resort have been rated four stars “ ★ ★ ★ ★ ” due to high energy
conservation performance.
As initiatives for society, CIM is working on various measures for tenants and CIM’s officers andemployees. CIM conducts the “Tenant Satisfaction Survey” for residents of INV’s residential properties
to collect opinions and requests of residents and utilize them for asset management, and provides
sustainability-focused training for all officers and employees at least once a year to help officers andemployees acquire knowledge and raise awareness of sustainability considerations in line with businesspractices. Moreover, as initiatives for CIM’s employees, CIM conducts an employee satisfaction survey
once every three years with the aim of improving its working environment, provides paid vaccine leaveso that officers and employees can receive COVID-19 vaccines and deal with any potential side-effects,
and gives full subsidy for a comprehensive medical checkup without age restrictions.
As the spread of COVID-19 continues, some hotels owned by INV (APA Hotel Yokohama-Kannai, Hotel
MyStays Oita and Comfort Hotel Kitami) have been used as accommodation and medical facilities forpatients with mild symptoms or quarantine facilities for returnees from overseas in terms of social
13contributions. Also, meeting rooms at Hotel MyStays Shin Osaka Conference Center were provided asa vaccination venue.
INV will continue to recognize its social responsibility to the environment and local communities as a JREIT with hotels and residences as our core assets, and will proactively implement ESG-friendly
investment management and sustainability initiatives that take advantage of asset characteristics andcarry out social contribution activities.

c

Significant Subsequent Events
Not applicable.

Reference information is stated below.

(Reference Information)(a)Debt Financing
INV decided to borrow Term Loan (010) on December 22, 2022 and borrowed on January 6, 2023 in orderto repay one of the tranches of New Syndicate Loan (P) in the amount of JPY 1,550 million due on January
6, 2023.
Moreover, INV decided to borrow New Syndicate Loan (006), Term Loan (011), and Term Loan (012) on
January 12, 2023 and borrowed on January 16 and January 24, 2023 in order to repay (i) one of the tranches
of New Syndicate Loan (L) in the amount of JPY 4,943 million due on January 16, 2023, (ii) one of thetranches of New Syndicate Loan (M) in the amount of JPY 5,796 million due on January 16, 2023, (iii) Term
Loan (001) in the amount of JPY 1,700 million due on January 24, 2023, and (iv) Term Loan (002) in theamount of JPY 6,800 million due on January 24, 2023.

(i)

Term Loan (010)
LenderBorrowing
Date

BorrowingAmount(JPY million)

Sumitomo Mitsui Trust Bank,
LimitedJanuary 6,
2023

1,550

Interest Rate(annual rate)
Floating
interest rates(Note 1)Maturity
Date

Borrowing
MethodJanuary 24,
2024

Unsecured/
non guarantee

Maturity
Date

Borrowing
MethodJanuary 16,
2024

Unsecured/
non guarantee(Note 1) 1-month JPY TIBOR (Base Rate) + spread (0.25000%)(ii) New Syndicate Loan (006)
LenderBorrowing
Date

BorrowingAmount(JPY million)

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,
Limited
Citibank, N.A., Tokyo Branch
SBI Shinsei Bank, Limited
Development Bank of Japan,
Inc.
Resona Bank, Limited
The Nomura Trust andBanking Co., Ltd.

January 16,
2023

10,408Interest Rate(annual rate)

Floating
interest rates(Note 1)

(Note 1) 1-month JPY TIBOR (Base Rate) + spread (0.25000%)(iii) Term Loan (011)14

Lender

Borrowing
Date

BorrowingAmount(JPY million)

MUFG Bank, Ltd.

January 24,
2023

1,700

Interest Rate(annual rate)
Floating
interest rates(Note 1)Maturity
Date

Borrowing
MethodJanuary 24,
2024

Unsecured/
non guarantee

Maturity
Date

Borrowing
MethodJanuary 24,
2024

Unsecured/
non guarantee(Note 1) 1-month JPY TIBOR (Base Rate) + spread (0.25000%)(iv) Term Loan (012)
LenderBorrowing
Date

BorrowingAmount(JPY million)

Sumitomo Mitsui Trust Bank,
LimitedJanuary 24,
2023

6,800

Interest Rate(annual rate)
Floating
interest rates(Note 1)

(Note 1) 1-month JPY TIBOR (Base Rate) + spread (0.25000%)d

Operational Outlook

The forecasts of financial results for the fiscal periods ending June 30, 2023 (from January 1, 2023 to June 30,2023) and December 31, 2023 (from July 1, 2023 to December 31, 2023) are as follows. For reference purposes,
full-year forecasts (aggregate of the fiscal periods ending June 30, 2023 and December 31, 2023) are provided
as well, since hotel revenues are influenced by seasonal effects.
June 2023
Fiscal Period(Anticipated)

December 2023
Fiscal Period

Operating Revenues

JPY 11,690 million

JPY 13,469 million

JPY 25,159 million

Operating Income

JPY 5,964 million

JPY 7,467 million

JPY 13,432 million

Ordinary Income

JPY 4,657 million

JPY 6,324 million

JPY 10,981 million

Net Income

JPY 4,656 million

JPY 6,324 million

JPY 10,980 million

Total Distribution Amount(Including excess profit distribution)

JPY 4,651 million

JPY 6,322 million

JPY 10,974 million

Net Income per Unit

JPY 763

JPY 1,037

JPY 1,800

Distribution per Unit
(Excluding excess profit distribution)

JPY 763

JPY 1,037

JPY 1,800---

JPY 763

JPY 1,037

JPY 1,800

Excess Profit Distribution per Unit
Distribution per Unit
(Including excess profit distribution)(Reference)
Full-year 2023

(Anticipated)

For the assumptions underlying the operational outlook for the fiscal periods ending June 30, 2023 andDecember 31, 2023, please see “Assumptions Underlying the Forecast of Financial Results and Distribution for
the Fiscal Periods ending June 30, 2023 and December 31, 2023” as follows.
(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 vary significantly
due to factors not foreseen as of the date of this document, such as the occurrence of gains and losses associatedwith the sale of properties, repayment of borrowings and a decrease in rent received. Also, this forecast is
not a guarantee of distribution amounts.

15

<Assumptions Underlying the Forecast of Financial Results and Distribution for the Fiscal Periods
ending June 30, 2023 and December 31, 2023>

Item

Fiscal period

Assumptions

The June 2023 Fiscal Period: from January 1, 2023 to June 30, 2023 (181 days)
The December 2023 Fiscal Period: from July 1, 2023 to December 31, 2023 (184 days)
Properties held as of the end of the June 2023 Fiscal Period: 127 properties and preferred equity
interests in one TMK

Assets undermanagement

Properties held as of the end of the December 2023 Fiscal Period: 127 properties and preferred
equity interests in one TMK
Based on the properties held as of today (127 properties and preferred equity interests in one TMK),
and INV assumes that there will be no change in the portfolio through the end of the fiscal period
ending December 2023.
As of the end of the June 2023 Fiscal Period: 6,096,840 units

Units outstanding

As of the end of the December 2023 Fiscal Period: 6,096,840 units
INV assumes that there will be no change to the current 6,096,840 units issued and outstanding
through the end of the December 2023 Fiscal Period.
Balance as of the end of the June 2023 Fiscal Period: JPY 240,466 million (borrowing: JPY 232,266
million, investment corporation bonds: JPY 8,200 million)
Balance as of the end of the December 2023 Fiscal Period: JPY 240,466 million (borrowing: JPY
232,266 million, investment corporation bonds: JPY 8,200 million)

Interest-bearing
liabilities

INV implemented a total of JPY 20,458 million of borrowing (refinance) in January 2023, and thetotal balance as of today is JPY 240,466 million. Regarding the loans maturing February onwards
during the June 2023 Fiscal Period (a total of JPY 22,317 million), INV intends to refinance at similar
conditions. Regarding the investment corporation bonds (JPY 1,000 million) maturing in May
2023, INV intends to redeem them by issuing investment corporation bonds of the same amountor by borrowing the same amount.
Regarding loans maturing during the December 2023 Fiscal Period (a total of JPY 113,814 million),
INV intends to refinance at similar conditions. Regarding the investment corporation bonds (JPY
2,000 million) maturing October 2023, INV intends to redeem by issuing investment corporation
bonds of the same amount or by borrowing the same amount.
INV assumes no other new loan or prepayment of loan through the end of the December 2023
Fiscal Period.

16

INV expects to record rental revenues for the fiscal periods as follows:・Rental revenues(of these, hotel rents)
・Management contract revenue
・TMK dividend amount
Total operating revenues

June 2023
December 2023
Fiscal Period
Fiscal Period
JPY 9,080 million
JPY 11,765 million(JPY 7,321 million)(JPY 10,019 million)
JPY 2,609 million
JPY 1,704 million(USD 21,745 thousand) (USD 14,200 thousand)
JPY 11,690 million
JPY 13,469 million

INV estimates the amount of dividends on the preferred equity interests based on the performanceof the underlying asset and the assumed amount of expenses incurred by the TMK.

Operating revenues

INV recognizes management contract revenue from the overseas hotels as real estate investment
income from management contracts of the Cayman Hotels. The forecasts of management contract
revenue are based on estimated performance of the overseas hotels and the assumed amount ofexpenses incurred by the hotel management company. Management contract revenues for
January to December 2023 have been calculated based on the exchange rate of USD 1 = JPY 120,and the foreign currency risk on the management contract revenues are partially hedged by foreignexchange forward contracts. Previously, INV had assumed that the expansion and renovation of
the Cayman Hotels would begin in the summer of 2020 with the goal of completion in the summerof 2023. However, considering the situation of the Cayman Hotels under the impact of COVID19, INV was forced to refrain from discussions on the expansion and renovation project. WhileINV resumed consideration of expansion and renovation based on the changes in the market
environment, etc., INV does not anticipate and incorporate any particular impact of the expansion
and renovation for the purpose of this forecast through the end of the fiscal period ending
December 2023.
Rental revenues are calculated assuming certain changes in rent conditions with the MHM Group
in 2023, and are based on estimates as of today. In addition, INV assumes there will be nodelinquencies or non-payment of rent by other tenants.
INV expects to incur property related expenses and management contract expenses out of
operating expenses for the fiscal periods as follows:

Operating expenses

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

June 2023
Fiscal Period
JPY 442 million(JPY 18 million)
JPY 589 million
JPY 158 million
JPY 3,839 million
JPY 115 million

December 2023
Fiscal Period
JPY 435 million(JPY 16 million)
JPY 739 million
JPY 172 million
JPY 3,997 million
JPY 94 million

JPY 5,146 million

JPY 5,439 million

INV expects to incur other operating expenses than the property related expenses or management
contract expenses for the fiscal periods as follows:・Other operating expenses

June 2023
Fiscal Period
JPY 579 million

December 2023
Fiscal Period
JPY 562 million(of these, asset management fees)(JPY 300 million)(JPY 300 million)

17

INV expects to record net operating income for the fiscal periods as follows:

NOI

June 2023
Fiscal Period

December 2023
Fiscal Period・NOI

JPY 10,383 million

JPY 12,027 million(of these, domestic hotel NOI)(of these, overseas hotel NOI)(of these, residential NOI)(JPY 6,754 million)(JPY 2,436 million)(JPY 1,115 million)(JPY 9,309 million)(JPY 1,518 million)(JPY 1,121 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)
NOI for the June 2023 fiscal period and the December 2023 fiscal period are calculated assumingchanges in rent conditions for the period from January to December 2023 with the MHM Group.
INV expects to incur non-operating expenses for the fiscal periods as follows:

Non-operating
expenses・Interest expense
・Finance related costs・Interest for investment
corporation bonds
・Depreciation of investment
corporation bonds issuance
expenses
Total non-operating expenses

June 2023
Fiscal Period
JPY 560 million
JPY 537 million

December 2023
Fiscal Period
JPY 557 million
JPY 548 million

JPY 28 million

JPY 31 million

JPY 6 million

JPY 6 million

JPY 1,132 million

JPY 1,143 million

The distribution per unit is calculated in accordance with the cash distribution policy as set forthin INV’s Articles of Incorporation.
With respect to the distribution for the fiscal period ending June 2023, INV expects to distribute anaggregate amount of JPY 4,651 million (distribution per unit: JPY 763) from the net income for the
fiscal period ending June 2023 (JPY 4,656 million).

Distribution perunitWith respect to the distribution for the fiscal period ending December 2023, INV expects todistribute an aggregate amount of JPY 6,322 million (distribution per unit: JPY 1,037) from the net
income for the fiscal period ending December 2023 (JPY 6,324 million).
For the fiscal periods ending June 2023 and December 2023, INV expects to record a deferred gainon the hedge of the interest rate swap as the valuation and conversion adjustments, etc. of JPY 142
million, which is equal to the amount for the fiscal period ended December 2022. The distribution
per unit is calculated based on the assumption that a fluctuation of the market value of the interest
rate swap does not affect the distribution per unit and earnings per unit.
Distribution per unit and earnings 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.

18

INV believes maintaining the stability of cash distributions over the medium term is one of themost important factors in determining the amount of distribution for a given fiscal period, andtherefore, INV has adopted the policy to make distributions in excess of profits in order to stabilize
distributions, in cases where dilution of investment units or significant expenses are to be recordedin connection with, among other things, the acquisition 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.
Excess profit
distribution per unit

INV may also consider making distributions in excess of profits for the purpose of decreasing theimpact from a corporate tax increase arising from different rules in tax and accounting practices,such as treatment on depreciation of fixed term land lease or asset retirement obligation.
With respect to the fiscal periods ending June 2023 and December 2023, INV will not have to make
distributions in excess of profits in order to cope with the discrepancy between tax and accounting
treatment.
June 2023
Fiscal Period
Excess profit distribution per unit-

December 2023
Fiscal Period-

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

(2)

In addition, INV assumes there will be no unforeseen material changes in general economic trends,
real estate market conditions and other trends and conditions.

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 26, 2022).

19

2. Financial Statements(1)

Balance Sheet(Unit: JPY thousand)Fiscal period ended
June 30, 2022
(as of June 30, 2022)

AssetsCurrent assets:
Cash and bank deposits
Cash and bank deposits in trust
Rental receivables
Deposits paid
Prepaid expenses
Income taxes receivable
Other
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
Structures, at cost
Accumulated depreciation
Structures, 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 cost
Accumulated depreciation
Buildings and accompanying facilities in trust, 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
20

Fiscal period ended
December 31, 2022
(as of December 31, 2022)

13,794,814
6,028,407
3,396,197
332,876
411,977
11
23,964,286

15,553,174
7,768,621
4,845,162
1,703,315
651,46913
5,060
30,526,816

19,429,981(1,369,148)
18,060,833
5,303,078(953,381)
4,349,696
1,458
(150)
1,308
1,195,031(350,708)
844,322701,230
158,812,478(24,417,810)
134,394,668
32,062,171(11,735,097)
20,327,073
204,879(104,096)
100,783
2,942,196(1,631,561)
1,310,634
241,290,860
26,237421,407,648

19,479,753(1,588,329)
17,891,423
5,308,557(1,106,696)
4,201,860
1,458
(183)
1,275
1,228,513(411,059)
817,453
714,997
159,079,641(26,638,315)
132,441,325
32,688,012(12,614,111)
20,073,900
212,818(109,514)
103,304
3,195,160(1,810,584)
1,384,575
241,319,447
418,949,564

10,637,811
14,458,659
25,096,471

10,637,811
14,419,422
25,057,234

17,856,387
1,372,719
257,854
96,567
22,667
19,606,196

17,856,387
1,372,719
271,704
142,841
22,667
19,666,320

(Unit: JPY thousand)Fiscal period ended
June 30, 2022
(as of June 30, 2022)
466,110,317

Fiscal period ended
December 31, 2022
(as of December 31, 2022)
463,673,119

44,14844,148490,118,752

37,84437,844494,237,781

Accounts payable
Short-term loans payable

349,844
88,135,000

629,231
114,515,000

Current portion of investment corporation bonds
Current portion of long-term loans payable

1,000,000
44,807,000

3,000,000
42,405,000

Accounts payable-otherAccrued expenses

31,175
240,333

3,366
264,276

Income taxes payable
Consumption taxes payable

605
50,190605
371,675

Advances received
Deposits received

317,935
10,397317,350
13,490134,942,482

161,519,996

Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Total deferred assets
Total assets
Liabilities
Current liabilities:

Total current liabilities
Non-current liabilities:
Investment corporation bonds

7,200,000

5,200,000

100,230,000
1,500,948

75,677,000
1,485,701

Derivatives liabilities
Asset retirement obligations

546
33,644

119
33,872

Total non-current liabilities

108,965,140

82,396,693

243,907,622

243,916,689

Unitholders’ equity:
Unitholders’ capital

235,701,512

235,701,512

Surplus:Capital surplus

6,264,432

6,264,432

Long-term loans payable
Tenant leasehold and security deposits in trust

Total liabilities
Net assets

Deduction of capital surplus
Allowance for temporary differences adjustment*2(6,130)*2(6,130)

Other deduction of capital surplus(5,524,006)(5,524,006)

Total deduction of capital surplus(5,530,137)(5,530,137)

Capital surplus (net)
Retained earnings
Total surplus
Total unitholders’ equity
Valuation and translation adjustments:
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets*1

Total liabilities and net assets

734,294734,294

9,679,301

13,742,562

10,413,596

14,476,857

246,115,108

250,178,369

96,020142,72196,020142,721

246,211,129
490,118,752

21*1

250,321,091
494,237,781

(2)Statement of Income and Retained Earnings(Unit: JPY thousand)Fiscal period ended
June 30, 2022
(from January 1, 2022 toJune 30, 2022)

Operating revenue
Rental revenue―real estateManagement contract revenue
Gain on sale of real estate properties*1

5,198,229*2

1,013,790
1,468,206*3

Total operating revenue

Fiscal period ended
December 31, 2022
(from July 1, 2022 to
December 31, 2022)
10,182,751*1

11,929,599

7,680,227

Operating expenses
Property related expenses*1

Management contract expenses
Asset management fees*2

4,498,723
543,095
300,000
4,800

Directors’ compensation
Asset custody fees

24,556
42,618

1,746,848-*2

4,606,538*1*2

569,669
300,000
4,800
24,475Administrative service fees
Other

152,051

50,047
117,057

Total operating expenses

5,565,846

5,672,588

2,114,380

6,257,011

78

90

1,316
-

92

2,606

17,6574,000

17,840Interest expenses
Foreign exchange losses

562,607-542,104
68,859Interest expenses on investment corporation bonds
Amortization of investment corporation bond issuance costs

27,7696,200

28,2306,303

Loan-related costs
Other

505,414629

553,412-

1,102,621

1,198,910

Ordinary income

1,015,760

5,075,941

Income before income taxes

1,015,760

5,075,941

Income taxes

605

605

Total income taxes

605

605

Net income

1,015,155

5,075,336

Retained earnings brought forward

8,664,146

8,667,226

Unappropriated retained earnings

9,679,301

13,742,562

Operating income
Non-operating income
Interest income
Foreign exchange gains
Interest on tax refund
Miscellaneous income
Total non-operating income
Non-operating expenses

Total non-operating expenses

22

(3)

Statement of Changes in Net Assets

Fiscal period ended June 30, 2022 (from January 1, 2022 to June 30, 2022)(Unit: JPY thousand)Unitholders’ equity
SurplusCapital surplus
Unitholders’capitalDeduction of capital surplus
Capital surplus

Balance at the
beginning of theperiodChanges during theperiodDistributions fromsurplus

Allowance fortemporarydifferences
adjustment

Other
deduction ofcapital surplus

Total
deduction ofcapital surplus

Capital surplus(net)

235,701,512

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

734,294

－

－

－

－

－

－

235,701,512

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

734,294

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

Valuation and translation
adjustments

Unitholders’ equity
SurplusRetainedearnings(deficit)
Balance at the
beginning of theperiodChanges during theperiodTotal
surplusTotal
unitholders’equityDeferred
gains or losses
on hedges

Totalvaluation andtranslation
adjustments

18,32518,325Total
net assets

9,676,221

10,410,516

246,112,028

Distributions fromsurplus(1,012,075)(1,012,075)(1,012,075)(1,012,075)

Net income

1,015,155

1,015,155

1,015,155

1,015,155

Changes other thanunitholders’ equity(net)
Total changes during
the period
Balance at the end of
the period

246,130,354

77,69577,69577,695

3,080

3,080

3,080

77,69577,69580,775

9,679,301

10,413,596

246,115,108

96,02096,020246,211,129

23

Fiscal period ended December 31, 2022 (from July 1, 2022 to December 31, 2022)(Unit: JPY thousand)Unitholders’ equity
SurplusCapital surplus
Unitholders’capitalDeduction of capital surplus
Capital surplus

Balance at the
beginning of theperiodChanges during theperiodDistributions fromsurplus

Allowance fortemporarydifferences
adjustment

Other
deduction ofcapital surplus

Total
deduction ofcapital surplus

Capital surplus(net)

235,701,512

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

734,294

－

－

－

－

－

－

235,701,512

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

734,294

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

Valuation and translation
adjustments

Unitholders’ equity
SurplusRetainedearnings(deficit)
Balance at the
beginning of theperiodChanges during theperiodDistributions fromsurplus
Net income
Changes other thanunitholders’ equity(net)
Total changes during
the period
Balance at the end of
the period

Total
surplusTotal
unitholders’equityDeferred
gains or losses
on hedges

Totalvaluation andtranslation
adjustments

96,02096,020Total
net assets

9,679,301

10,413,596

246,115,108

246,211,129(1,012,075)(1,012,075)(1,012,075)(1,012,075)

5,075,336

5,075,336

5,075,336

5,075,336
46,701

46,701

46,701

4,063,260

4,063,260

4,063,260

46,701

46,701

4,109,962

13,742,562

14,476,857

250,178,369

142,721

142,721250,321,091

24

(4) Statement of Cash Distribution(Unit: JPY)
Fiscal period ended June 30, 2022
(from January 1, 2022 to June 30, 2022)

Fiscal period ended December 31, 2022
(from July 1, 2022 to December 31, 2022)

I

Unappropriated retained
earnings

9,679,301,911

13,742,562,778

II

Distributions

1,012,075,440

5,072,570,880

(166)

(832)

Retained earnings (deficit)
carried forward

8,667,226,471

8,669,991,898

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

exceed the amount of profits but exceeds

90% of the distributable profit as defined in

90% of the distributable profit as defined in

ArticleArticle(Distribution per unit)
III

67-15

Measures Act.

of theSpecialTaxation

However, in the event that

67-15

Measures Act.

of theSpecialTaxation

However, in the event thatany tax losses arise, or if no profits have been

any tax losses arise, or if no profits have beenrecorded for tax purposes due to tax losses

recorded for tax purposes due to tax losses

carried forward, the distribution amountcarried forward, the distribution amount

may be as reasonably determined by INV.

may be as reasonably determined by INV.

Pursuant to this policy, INV determined the

Pursuant to this policy, INV determined the

distribution amount to be JPY 1,012,075,440

distribution amount to be JPY 5,072,570,880

out of net income of JPY 1,015,155,471.

out of net income of JPY 5,075,336,307.

Moreover, INV does not make excess profit

Moreover, INV does not make excess profit

distribution set forth in Article 17, Paragraphdistribution set forth in Article 17, Paragraph

4 of the Articles of Incorporation.

4 of the Articles of Incorporation.

25

(5)

Statement of Cash Flows(Unit: JPY thousand)Fiscal period ended
June 30, 2022
(from January 1, 2022 toJune 30, 2022)

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Amortization of investment corporation bond issuance costs
Loan-related costs
Interest income
Interest expenses
Foreign exchange losses (gains)
Decrease (increase) in rental receivables
Decrease (Increase) in deposits paid
Decrease (increase) in receivable income taxes
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 in property and equipment in trust due to sale
Others, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payment into time deposits
Proceeds from time deposits
Purchases of property and equipment
Purchases of property and equipment in trust
Repayments of tenant leasehold and security deposits in trust
Proceeds from tenant leasehold and security deposits in trust
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
Borrowing related expenses
Payment of distributions of earnings
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

26

Fiscal period ended
December 31, 2022
(from July 1, 2022 to
December 31, 2022)

1,015,760
3,766,009
6,200
505,414(78)
590,377
158(1,102,461)(179,359)(1)(511,128)(490,678)
26,469(48,167)(240,841)
1,583
2,867,202
116,612
6,323,071
78(593,962)(605)
5,728,582

5,075,941
3,756,303
6,303
553,412(90)
570,334(29)(1,448,964)(1,370,438)(1)(3,505)
321,485(26,469)
20,843(585)
3,093(219,196)
7,238,437
90(567,445)(605)
6,670,476(2,000,000)
2,000,000(24,384)(531,563)(35,672)
16,777(574,843)(800,000)
800,000(102,499)(875,748)(27,487)
12,239(993,494)

27,044,000(10,695,000)(19,922,000)(271,524)(1,011,974)(4,856,498)(158)
297,081
16,726,139
17,023,221

87,471,000(61,091,000)
1,790,000(28,745,000)(591,633)(1,011,803)(2,178,436)
29
3,498,574
17,023,221
20,521,796

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

Notes Concerning Significant Accounting Policies(Notes Concerning Significant Accounting Policies)
1. Evaluation standards and evaluation method of assets(a) Investment in affiliates
Cost method through moving-average method is used.
(b) Claims generated and debt incurred through derivative transactions
Market value 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
Structures
20 years
Tools, furniture and fixtures
3-18 years
Buildings in trust
5-67 years
Buildings and accompanying facilities in trust 3-33 years
Structures in trust
7-55 years
Tools, furniture and fixtures in trust
2-20 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
Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the straight-line method over a period up to
redemption of 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
determined based on past bad debt experiences, and specific allowances are provided for accounts with apossibility of default based on the estimated amounts considered to be uncollectible by considering thecollectability 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 end of the fiscal period date, and differences arising from the translation are treated as a profit or loss.

27

6. Revenue and expense recognition(a) Accounting treatment of property taxes and other taxes
With respect to property taxes, city planning taxes and depreciable asset taxes, of the tax amount assessedand determined, the amount corresponding to the Reporting 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 iscapitalized as part of the acquisition cost of the real estate instead of being charged as expense. The amountequivalent to property taxes that was capitalized as part of the acquisition cost of real estate during theReporting Period is zero.
(b) Recognition of revenue
The following is the content of principal performance obligations related to revenue from contracts with
INV’s customers and the normal timing for the satisfaction of such obligations (normal timing for revenue
recognition).
Sale of real estate, etc.
For the sale of real estate, etc., revenue will be recognized at the time the control of such real estate, etc. is
obtained by the purchaser, who is the customer, as the transfer obligation will be fulfilled pursuant to thecontract pertaining to the sale of real estate.
7. Method of hedge accounting(a) Method of hedge accounting
Deferred hedge accounting is used.
(b) Hedging instrument and hedged item
Hedging instrument: interest rate swap
Hedged item: interest on borrowings(c) Hedge policy
INV enters into derivative transactions for the purpose of hedging against the risks set forth in INV’s Articles
of Incorporation 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 thehedging instrument and the cumulative amount of changes in cash flows of the hedged item and verifying
the difference in the amounts 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 intrust, floating deposits, deposits in trust and short-term investments that are very liquid and realizable witha maturity of three months or less when purchased and that are not subject to significant risks of changes
in value.
9. Other matters which constitute the basis for preparation of financial statements(a) 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 the balance sheet.
(i) Cash and bank deposits in trust(ii) Buildings in trust28Buildings and accompanying facilities in trust
Structures in trust
Tools, furniture and fixtures in trust
Land in trust
Construction in progress in trust(iii) Leasehold rights in trust(iv) Tenant leasehold and security deposits in trust(b) Accounting treatment of non-deductible consumption taxes
Non-deductible consumption taxes etc. regarding the acquisition of assets are capitalized as part ofacquisition cost of each asset.
(8)Notes on Material Accounting Estimates
1. Valuation of non-current assets(a) Amount recorded in the financial statements for the Reporting Period
Fiscal period ended
June 30, 2022
(from January 1, 2022 toJune 30, 2022)(Unit: JPY thousand)Fiscal period ended
December 31, 2022
(from July 1, 2022 to
December 31, 2022)-

Impairment loss
Non-current assets
445,776,652
443,291,801(Rental Properties)
Although no impairment loss was recorded in the Reporting Period, we recognize it as a disclosure item inview of the risk of having a significant impact on the financial statements for the next fiscal period.
(b) Information about the content of material accounting estimates for the identified item
We determine whether or not there are any signs of possible impairment pertaining to rental properties
owned by INV. If there are any signs, we determine whether or not INV should recognize the impairment
loss. No impairment loss was recognized for INV’s rental properties, since future cash flows before
discounting exceed the book value of rental properties.
In estimating future cash flows, we assume that the business environment will recover in earnest from 2023
onwards, since the adverse effect by the COVID-19 infection is gradually showing signs of abating.
However, it is difficult to accurately predict when the business environment will recover and how much theimpacts will be. Changes in the infection status may affect the above estimates and INV may incur
impairment loss.

29

(9)

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, 2022
December 31, 2022
(as of June 30, 2022)(as of December 31, 2022)
50,00050,000*2. Allowance for temporary differences adjustment
Fiscal period ended June 30, 2022 (from January 1, 2022 to June 30, 2022)
1. Reasons, related assets and amounts(Unit: JPY thousand)
Balance atthe end of
previous
periodAllowance
set aside
duringperiodBalance atthe end ofcurrent
periodReversalduringperiodRelatedassets, etc.

ReasonInitialamountLeaseholdrights intrust

Amortizationof leasehold
rights in trust(131,332)(6,130)--(6,130)(131,332)(6,130)--(6,130)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.
Fiscal period ended December 31, 2022 (from July 1, 2022 to December 31, 2022)
1. Reasons, related assets and amounts(Unit: JPY thousand)
Balance atthe end of
previous
periodAllowance
set aside
duringperiod(131,332)(6,130)--(6,130)(131,332)(6,130)--(6,130)Relatedassets, etc.

ReasonInitialamountLeaseholdrights intrust

Amortizationof leasehold
rights in trust

Total

Balance atthe end ofcurrent
periodReversalduringperiod

2. Method of reversal(1) Leasehold rights in trust
The corresponding amount is scheduled to be reversed upon sale, etc. of the relevant property.

30

(Notes to Statement of Income and Retained Earnings)*1. Real estate rental revenues and expenses(Unit: JPY thousand)Fiscal period ended
December 31, 2022
(from July 1, 2022 to
December 31, 2022)

Fiscal period ended
June 30, 2022
(from January 1, 2022 toJune 30, 2022)
A. Real estate rental revenues
Rental revenue-real estate
Rent/common area charges (Note)

5,046,284

10,037,349

151,944

145,401

5,198,229

10,182,751

Maintenance costs

439,577

426,784

Taxes and public dues

588,582

739,194

Other revenues
Total

B.

Real estate rental expenses

Property related expenses

Non-life insurance premium

19,867

20,233

3,335,739

3,323,690

114,957

96,634Total

4,498,723

4,606,538

C.

699,505

5,576,212

2,038,648

3,118,811

Depreciation expenses
Other expenses

Real estate rental income (A-B)(Note) Of which, revenue from variable hotel rents*2. Management contract income(Unit: JPY thousand)Fiscal period ended
December 31, 2022
(from July 1, 2022 to
December 31, 2022)

Fiscal period ended
June 30, 2022
(from January 1, 2022 toJune 30, 2022)
A. Hotel operating revenue

3,180,828

5,096,139

B.

Hotel operating expenses

2,167,037

3,349,290

C.

Management contract revenue (A-B)

1,013,790

1,746,848

Non-life insurance premium

112,825

136,505

Depreciation expenses

430,270432,613-550

D. Management contract expenses

Others
Total
E.

Management contract income (C-D)

31

543,095

569,669

470,695

1,177,179

*3. Gain on sales of properties
Fiscal period ended June 30, 2022 (from January 1, 2022 to June 30, 2022)(Unit: JPY thousand)
Revest Honjin, Revest Matsubara, Alba Noritake
Shinmachi, Revest Meieki Minami, Luna Court
Edobori and Little River Honmachibashi (Note)
Proceeds from sales of properties

4,450,000

Cost of sales of properties

2,867,202

Other expenses on sales of properties

114,591

Gain on sales of properties

1,468,206(Note) The sale price of individual properties is not disclosed as the transferee’s consent has not been obtained fordisclosure.
Fiscal period ended December 31, 2022 (from July 1, 2022 to December 31, 2022)
Not applicable(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, 2022
(from January 1, 2022 toJune 30, 2022)
Number of issuable investment units
Number of investment units issued andoutstanding

Fiscal period ended
December 31, 2022
(from July 1, 2022 to
December 31, 2022)

10,000,000 units

10,000,000 units

6,096,840 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:

Cash and bank deposits

Fiscal period ended
June 30, 2022
(from January 1, 2022 toJune 30, 2022)
13,794,814(Unit: JPY thousand)Fiscal period ended
December 31, 2022
(from July 1, 2022 to
December 31, 2022)
15,553,174

6,028,407

7,768,621(2,800,000)(2,800,000)

17,023,221

20,521,796

Cash and bank deposits in trust
Time deposits with a deposit period of more than
three months
Cash and cash equivalents

32

(Notes Related to Lease Transactions)Operating lease transactions (as lessee)
Unexpired lease fees
Fiscal period ended
June 30, 2022
(as of June 30, 2022)(Unit: JPY thousand)Fiscal period ended
December 31, 2022
(as of December 31, 2022)

Due within one year

320,447

320,447

Due after one year

8,390,198

8,229,974

Total

8,710,645

8,550,422

Fiscal period ended
June 30, 2022
(as of June 30, 2022)
13,061,273(Unit: JPY thousand)Fiscal period ended
December 31, 2022
(as of December 31, 2022)
13,068,093

Due after one year

52,172,023

44,885,587

Total

65,233,297

57,953,680

Operating lease transactions (as lessor)
Unexpired lease fees

Due within one year

(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 ensure stable income in the medium to long term.
The policy for raising funds is principally through issuing new investment units, investment corporation
bonds, etc. or borrowing 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 rateenvironment and financing.
(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 forthe refinancing of existing loans. Liquidity risks relating to loans are managed by the finance departmentof CIM by preparing and updating plans for funds, and monitoring the financial covenants set forth in loan
agreements.
(3) Supplemental information regarding fair value of financial instruments
Since certain assumptions, etc. are used in estimating the fair value of financial instruments, different
assumptions, etc. may result in the variance of such value.

33

2.

Estimated fair value of financial instruments
Book value, fair value and the difference between values are as follows. “Cash and bank deposits”, “Cashand bank deposits in trust” and “Short-term loans payable” are omitted because their fair values are close
to their book values since they are settled in cash and in a short period of time. Moreover, “Tenantleasehold and security deposits in trust” is omitted because it is not material.

Fiscal period ended June 30, 2022 (as of June 30, 2022)(Unit: JPY thousand)Book Value

Fair Value

Difference

17,856,387

17,521,928(334,458)

Total assets

17,856,387

17,521,928(334,458)(2) Current portion of Investment Corporation
Bonds(1,000,000)(985,500)

14,500(3) Current portion of long-term loans payable(44,807,000)(44,807,000)-(4) Investment corporation bonds(7,200,000)(6,689,440)

510,560(100,230,000)(100,230,000)-(153,237,000)(152,711,940)

525,060

96,02096,020-(1) Investment securities(5) Long-term loans payable
Total liabilities(6) Derivatives

Fiscal period ended December 31, 2022 (as of December 31, 2022)(Unit: JPY thousand)Book Value

Fair Value

Difference

17,856,387

17,553,373(303,014)

Total assets

17,856,387

17,553,373(303,014)(2) Current portion of Investment Corporation
Bonds(3,000,000)(2,970,200)

29,800(3) Current portion of long-term loans payable(42,405,000)(42,405,000)-(4) Investment corporation bonds(5,200,000)(4,734,340)

465,660(5) Long-term loans payable(75,677,000)(75,677,000)-(126,282,000)(126,786,540)

495,460

142,721

142,721-(1) Investment securities

Total liabilities(6) 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 thetotal net amount is a negative amount, such amount is shown in parenthesis.

34

(Note 1) Methods to calculate fair values of financial instruments(1) Investment securities
For preferred equity interest, the assets and liabilities of the investee are valued at fair value, and theequity equivalent in the obtained net asset value is deemed as the fair value of the preferred equity
interest.
(2) Current portion of Investment Corporation Bonds (4) Investment corporation bonds
Fair value is calculated using a method based on market price.
(3) Current portion of long-term loans payable (5) Long-term loans payable
Long-term loan with floating interest rates reflecting changes in market rates within a short-term
period are stated at their book value as their book value approximate their fair value.
(6) Derivatives
Please refer to the “Notes Related to Derivative Transactions” below.

(Note 2) Repayment schedule of investment corporation bonds, long-term loans payable and other interestbearing debts after the closing date of the fiscal period
Fiscal period ended June 30, 2022 (as of June 30, 2022)(Unit: JPY thousand)Due after
Due within Due after one Due after two
Due after four Due after
three to four
one yearto two years to three years
to five years five years
years
Current portion of
investment corporation
bonds
Current portion of longterm loans payable
Investment corporationbonds
Long-term loans payable
Total

1,000,000

-

-

-

-

-

44,807,000

-

-

-

-

-

-

2,000,000

1,000,000--

4,200,000-

44,589,000

42,243,000

12,437,000-

961,000

45,807,000

46,589,000

43,243,000

12,437,000-

5,161,000

Fiscal period ended December 31, 2022 (as of December 31, 2022)(Unit: JPY thousand)Due after
Due within Due after one Due after two
Due after four Due after
three to four
one yearto two years to three years
to five years five years
years
Current portion of
investment corporation
bonds
Current portion of longterm loans payable
Investment corporationbonds
Long-term loans payable
Total

3,000,000

-

-

-

-

-

42,405,000

-

-

-

-

-

-

1,000,000---

4,200,000-

34,127,000

39,399,000-

1,190,000

961,000

45,405,000

35,127,000

39,399,000-

1,190,000

5,161,000

35

(Notes Related to Investment Securities)
Fiscal period ended June 30, 2022 (from January 1, 2022 to June 30, 2022)
Investment in subsidiaries and affiliates
Book Value
Investment in affiliates
Total

Fair Value(Unit: JPY thousand)Difference

17,856,387

17,521,928(334,458)

17,856,387

17,521,928(334,458)

Fiscal period ended December 31, 2022 (from July 1, 2022 to December 31, 2022)
Investment in subsidiaries and affiliates
Book Value
Investment in affiliates
Total

36

Fair Value(Unit: JPY thousand)Difference

17,856,387

17,553,373(303,014)

17,856,387

17,553,373(303,014)

(Notes Related to Derivative Transactions)
1. Derivative transactions to which hedge accounting is not applied
Fiscal period ended June 30, 2022 (as of June 30, 2022)
Not applicable
Fiscal period ended December 31, 2022 (as of December 31, 2022)
Not applicable
2. Derivative transactions to which hedge accounting is applied
Fiscal period ended June 30, 2022 (as of June 30, 2022)
The contract amount and the amount equivalent to the notional principal prescribed in the contracts as of
the closing date under each hedge-accounting method are as shown below.
(Unit: JPY thousand)
Method of hedge
accounting

Derivativetransaction type,
etc.

Primary
hedged item

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

Fair value(Note 2)

Interest rate swap
Receive floating
Borrowings
96,02050,476,000
36,687,000
rate/pay fixed
rate(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.
Principle
accounting
methodFiscal period ended December 31, 2022 (as of December 31, 2022)
The contract amount and the amount equivalent to the notional principal prescribed in the contracts as of
the closing date under each hedge-accounting method are as shown below.
(Unit: JPY thousand)
Method of hedge
accounting

Derivativetransaction type,
etc.

Primary
hedged item

Principle
accounting
methodInterest rate swap
Receive floating
rate/pay fixedrate

Borrowings

Contract amount, etc. (Note 1)
Amount due
after one year
50,476,000

36,687,000

Fair value(Note 2)

142,721(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.
(Notes Related to Retirements Payments)
Not applicable37

(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, based on the remaining period until the expiration of the fixed-term land lease agreement, and byusing 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 andequipment
Accretion expense
Balance at the end of the period

38

Fiscal period ended
June 30, 2022
(from January 1, 2022 toJune 30, 2022)
33,422(Unit: JPY thousand)Fiscal period ended
December 31, 2022
(from July 1, 2022 to
December 31, 2022)
33,644--

222
33,644

227
33,872

(Notes Related to Revenue Recognition)
1. Breakdown of revenue from contracts with customers
Fiscal period ended June 30, 2022 (from January 1, 2022 to June 30, 2022)(Unit: JPY thousand)
Revenue from contracts
Net sales to externalwith customers (Note 1)
customers
Sale of real estate, etc.
21,2817,680,227
Other
21,2817,680,227
Total(Note 1) Revenue from the leasing business subject to the “Accounting Standard for Lease Transactions”(ASBJ Statement No. 13), dividend income subject to the “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10) and the sale of real estate, etc. subject to the “Practical
Guidelines on Accounting by Transferors for Securitization of Real Estate Using Special Purpose
Companies” (Accounting System Committee Report No. 15 of the Japanese Institute of Certified
Public Accountants) are not included in “Revenue from contracts with customers” as they are notcovered by the Accounting Standard for Revenue Recognition. Major revenue from contracts withcustomers is proceeds from sale of real estate properties.
Fiscal period ended December 31, 2022 (from July 1, 2022 to December 31, 2022)(Unit: JPY thousand)
Revenue from contracts
Net sales to externalwith customers (Note 1)
customers
Sale of real estate, etc.
31,966
11,929,599
Other
31,966
11,929,599
Total(Note 1) Revenue from the leasing business subject to the “Accounting Standard for Lease Transactions”(ASBJ Statement No. 13), dividend income subject to the “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10) and the sale of real estate, etc. subject to the “Practical
Guidelines on Accounting by Transferors for Securitization of Real Estate Using Special Purpose
Companies” (Accounting System Committee Report No. 15 of the Japanese Institute of Certified
Public Accountants) are not included in “Revenue from contracts with customers” as they are notcovered by the Accounting Standard for Revenue Recognition. Major revenue from contracts withcustomers is proceeds from sale of real estate properties.
2.

Information utilized as the basis for understanding revenue from contracts with customers
The information is as described in “Notes Concerning Significant Accounting Policies” above.

3.

Information on relationship of fulfillment of performance obligations based on contracts with customers withcashflow generated from said contracts as well as amount of revenue and period expected to be recognized in
the next calculation period or thereafter from contracts with customers existing at the end of the Reporting
Period(1) Balance of contract assets and contract liabilities, etc.
(Unit: JPY thousand)Fiscal period ended
Fiscal period ended
June 30, 2022
December 31, 2022
(from January 1, 2022 to(from July 1, 2022 toJune 30, 2022)
December 31, 2022)
Claims generated from contracts with customers
2,114
2,250
(balance at the beginning of the period)
Claims generated from contracts with customers
2,250
4,231
(balance at the end of the period)
Contract assets(balance at the beginning of the period)
Contract assets(balance at the end of the period)
Contract liabilities(balance at the beginning of the period)
Contract liabilities(balance at the end of the period)(2) Transaction value allocated to remaining performance obligations
Not applicable39

(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 noreportable segments.
II. Related Information
Fiscal period ended June 30, 2022 (from January 1, 2022 to June 30, 2022)
1. Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category
accounted for over 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
6,666,436

Total

1,013,790

7,680,227(Note) 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 forover 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.

2,190,756

Real Estate Investment

Kansai Residence Tokutei Mokuteki Kaisha

1,468,206

Real Estate Investment

Fiscal period ended December 31, 2022 (from July 1, 2022 to December 31, 2022)
1. Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category
accounted for over 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
10,182,751

Total

1,746,848

11,929,599(Note) 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 forover 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
5,771,441

MyStays Hotel Management Co., Ltd.

40

Related segment
Real Estate Investment

(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, balance at the end of the period and the fair value are as follows.

Residences

Book value

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

Fair value at the end of the period

Commercial
facilities

Book value

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

Fair value at the end of the period

HotelsBook value

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

Fair value at the end of the period

Total

Book value

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

Fair value at the end of the period

Fiscal period ended
June 30, 2022
(from January 1, 2022 toJune 30, 2022)(Unit: JPY thousand)Fiscal period ended
December 31, 2022
(from July 1, 2022 to
December 31, 2022)

37,693,472

34,567,566(3,125,906)(184,066)

34,567,566

34,383,500

46,074,000

47,357,000

1,649,608

1,621,984(27,624)(16,661)

1,621,984

1,605,322

2,380,000

2,380,000

412,461,201

409,587,102(2,874,099)(2,284,122)

409,587,102

407,302,979

481,758,260

482,833,730

451,804,282

445,776,652(6,027,630)(2,484,850)

445,776,652

443,291,801

530,212,260

532,570,730(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 in change during the previous fiscal period were construction work related
to capital expenditures, and the major factors of decrease were sale of residential properties anddepreciation. The major factors of increase in change during the Reporting Period were construction
work related to capital expenditures, and the major factor of decrease was depreciation.
(Note 3) The fair value as of the end of the 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.
For information related to profits and losses from rental properties, please refer to “Notes to Statement of Income
and Retained Earnings.”

41

(Notes Related to Tax Accounting)
1. Significant components of deferred tax assets and liabilities(Unit: JPY thousand)Fiscal period ended
December 31, 2022
(as of December 31, 2022)

Fiscal period ended
June 30, 2022
(as of June 30, 2022)(Deferred tax assets)
Enterprise tax payable
Buildings and other (merger)
Land (merger)
Loss carried forward (Note 1)

615

615

187,068

186,398

116,724

116,724

1,799,777

1,609,063

Asset retirement obligations

10,584

10,656

Amortization of fixed-term leasehold rights
Adjustment of acquisition prices (overseas
properties)

149,710

162,054453,535

449,589

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

2,718,017

2,535,101(1,799,777)(1,609,063)(918,239)(926,038)(2,718,017)(2,535,101)--

Subtotal (Note 2)
Total(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, 2022 (as of June 30, 2022)(Unit: JPY thousand)Due within
one year

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years

Due after
five years

Total

Tax loss carriedforward (a)511,182

-

-

-

-

1,288,595 1,799,777

Valuation allowance(511,182)

-

-

-

-

(1,288,595) (1,799,777)

Deferred tax assets

-

-

-

-

-

-

-

(a) Tax loss carried forward is multiplied by statutory tax rate.
Fiscal period ended December 31, 2022 (as of December 31, 2022)(Unit: JPY thousand)Due within
one year

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years

Due after
five years

Total

Tax loss carriedforward (a)330,700

-

-

-

-

1,278,362 1,609,063

Valuation allowance(330,700)

-

-

-

-

(1,278,362) (1,609,063)

Deferred tax assets

-

-

-

-

-

-

-

(a) Tax loss carried forward is multiplied by statutory tax rate.
(Note 2) Valuation allowance decreased by JPY 182,915 thousand mainly due to a decrease in tax loss carriedforward.

42

2. Significant difference between statutory tax rate and the effective tax rate

Statutory tax rate

Fiscal period ended
June 30, 2022
(as of June 30, 2022)
31.46(Unit: %)Fiscal period ended
December 31, 2022
(as of December 31, 2022)
31.46

Deductible cash distributions(31.35)(31.44)

Changes in valuation allowance(0.11)(3.60)-

3.58

Others0.06

0.01

Effective tax rate

0.06

0.01

Expiration of loss carried forward(Notes Related to Equity-Method Income)Fiscal period ended June 30, 2022 (from January 1, 2022 to June 30, 2022)
Amount of investment in affiliates
Amount of investment when accounted for by the equity method
Amount of investment profit when accounted for by the equity method

JPY 17,856,387 thousand
JPY 17,419,488 thousand
JPY -67,970 thousand

Fiscal period ended December 31, 2022 (from July 1, 2022 to December 31, 2022)
Amount of investment in affiliates
Amount of investment when accounted for by the equity method
Amount of investment profit when accounted for by the equity method43

JPY 17,856,387 thousand
JPY 17,360,140 thousand
JPY -59,347 thousand

(Notes Related to Transactions with Related Parties)
1. Transactions with Parent Company and Major Corporate Unitholders
Fiscal period ended June 30, 2022 (from January 1, 2022 to June 30, 2022)
Balance atClassification

Interested
party of CIM

Name

Address

Statedcapital Business or(JPYoccupation
million)

Percentage
Transaction
Relationshipthe end ofof votingamountType ofthe periodrights(JPY
Account
Common Business transaction
(JPY
owned
thousand)board
relationthousand)(%)(Note 1)
membership(Note 1)Naqua Hotel &Resorts
Minato-ku,
Management
Tokyo
Co., Ltd.
(Note 2)10

Hotelbusiness--

Lessee andoperator of
hotelsRentalrevenues

MyStays HotelManagement Minato-ku,
Co., Ltd.
Tokyo(Note 2)

100

Hotel
business--

Lessee andoperator of
hotelsRentalrevenues

Accounts
422,206 receivable

464,466

Accounts
2,190,756 receivable 2,407,825(Note 1) Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
(Note 2) Naqua Hotel & Resorts Management Co., Ltd. and MyStays Hotel Management Co., Ltd. have no capital relationship to bedisclosed with CIM. However, these tenants and operators have received an anonymous partnership investment orinvestment through funds that are managed by affiliates of FIG (a subsidiary of SoftBank Group Corp., which is a parent
company of CIM directly/indirectly owning 100% of its issued shares). Accordingly, INV treats Naqua Hotel & Resorts
Management Co., Ltd. and MyStays Hotel Management Co., Ltd. as the equivalent to interested parties.

Fiscal period ended December 31, 2022 (from July 1, 2022 to December 31, 2022)
Balance atClassification

Interested
party of CIM

Name

Address

Statedcapital Business or(JPYoccupation
million)

Percentage
Transaction
Relationshipthe end ofof votingamountType ofthe periodrights(JPY
Account
Common Business transaction
(JPY
owned
thousand)board
relationthousand)
(%)
(Note
1)
membership(Note 1)Naqua Hotel &Resorts
Minato-ku,
Management
Tokyo
Co., Ltd.
(Note 2)10

Hotelbusiness--

Lessee andoperator of
hotelsRentalrevenues

1,152,194

Accounts
receivable

MyStays HotelManagement Minato-ku,
Co., Ltd.
Tokyo(Note 2)

100

Hotel
business--

Lessee andoperator of
hotelsRentalrevenues

5,771,441

Accounts
3,864,932
receivable

404,531(Note 1) Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
(Note 2) Naqua Hotel & Resorts Management Co., Ltd. and MyStays Hotel Management Co., Ltd. have no capital relationship to bedisclosed with CIM. However, these tenants and operators have received an anonymous partnership investment orinvestment through funds that are managed by affiliates of FIG (a subsidiary of SoftBank Group Corp., which is a parent
company of CIM directly/indirectly owning 100% of its issued shares). Accordingly, INV treats Naqua Hotel & Resorts
Management Co., Ltd. and MyStays Hotel Management Co., Ltd. as the equivalent to interested parties.

2.

Transactions with Affiliates
None for both the fiscal period ended June 30, 2022 and the fiscal period ended December 31, 2022.

3.

Transactions with Companies under Common Control
None for both the fiscal period ended June 30, 2022 and the fiscal period ended December 31, 2022.

44

4.

Transactions with Directors and Major Individual Unitholders
Fiscal period ended June 30, 2022 (from January 1, 2022 to June 30, 2022)

Details of transaction

Transaction
amount(JPY
thousand)(Note 3)

Account

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

Classification

Name

Business or occupation

Ratio ofvotingrights(%)

Directors andclose relatives

Naoki
FukudaExecutive Director of
INV and President &CEO of CIM-

Payment of asset
management fees to
CIM (Note 1)

313,350

Accruedexpenses

165,000-

Payment ofadministrative
agency fees fororganizational
management to CIM(Note 2)600

Accruedexpenses

330

Same asabove(Note 1)
(Note 2)
(Note 3)Same asabove

Same as above

Naoki Fukuda served as a representative of the third party (CIM), and the fee is as set forth in the Articles ofIncorporation of INV.
Naoki Fukuda served as a representative of the third party (CIM), and the fee is as set forth in “Administrative
Agency Agreement for Organizational Management,” entered into by and between INV and CIM.
Consumption taxes, etc. are not included in the transaction amounts, but are included in the balance at the end of
the period.

Fiscal period ended December 31, 2022 (from July 1, 2022 to December 31, 2022)

Details of transaction

Transaction
amount(JPY
thousand)(Note 3)

Account

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

Classification

Name

Business or occupation

Ratio ofvotingrights(%)

Directors
and close
relatives

Naoki
FukudaExecutive Director of
INV and President &CEO of CIM-

Payment of asset
management fees to
CIM (Note 1)

300,064

Accruedexpenses

165,000-

Payment ofadministrative
agency fees fororganizational
management to CIM(Note 2)

1,100

Accruedexpenses

880

Same asabove(Note 1)
(Note 2)
(Note 3)Same asabove

Same as above

Naoki Fukuda served as a representative of the third party (CIM), and the fee is as set forth in the Articles ofIncorporation of INV.
Naoki Fukuda served as a representative of the third party (CIM), and the fee is as set forth in “Administrative
Agency Agreement for Organizational Management,” entered into by and between INV and CIM.
Consumption taxes, etc. are not included in the transaction amounts, but are included in the balance at the end of
the period.

45

(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, andthe summary of financial statements are as below:(Unit: JPY thousand)
Kingdom Special Purpose Company

Total specified assets
Total other assets

From October 1, 2021 From April 1, 2022
to March 31, 2022 to September 30, 2022
100,317,015
100,114,466
1,393,697
1,550,642

Total current liabilities
Total non-current liabilities

7,377
66,174,866

73,592
66,184,166

Total net assets

35,528,468

35,407,351

546,895(138,111)(138,716)

565,320(120,512)(121,117)

Operating revenue
Income before income taxes
Net income(Notes Related to Per Unit Information)

Fiscal period ended
June 30, 2022
(from January 1, 2022 toJune 30, 2022)

Fiscal period ended
December 31, 2022
(from July 1, 2022 to
December 31, 2022)

Net assets per unit

JPY 40,383

JPY 41,058

Net income per unit

JPY 167

JPY 832

Net income per unit is calculated by dividing net income for the period by the average number of investment
units during the period. 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, 2022
(from January 1, 2022 toJune 30, 2022)
1,015,155

Amounts not attributable to common unitholders(JPY thousand)Net income attributable to common units(JPY thousand)Average number of investment units during theperiod (units)(Notes Related to Significant Subsequent Events)
Not applicable

46

Fiscal period ended
December 31, 2022
(from July 1, 2022 to
December 31, 2022)
5,075,336--

1,015,155

5,075,336

6,096,840

6,096,840

(10) 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
five years up to the end of the Reporting Period are as follows.

Date

Type of Issue

Total Number of
Investment Units Issued andOutstanding (units)
Increase

Total

Unitholders’ Capital (JPY)
Increase

Total

Reference

August 1, 2018

Public offering

909,524

5,702,705

40,280,089,388

209,078,544,702(Note 1)

August 21, 2018

Third-party
allotment

45,476

5,748,181

2,013,995,612

211,092,540,314(Note 2)

December 28, 2018

Retirement(81,341)

5,666,840-

211,092,540,314(Note 3)

July 18, 2019

Public offering

409,524

6,076,364

23,317,887,036

234,410,427,350(Note 4)

20,476

6,096,840

1,165,882,964

235,576,310,314(Note 5)-

6,096,840

125,201,855

235,701,512,169(Note 6)

August 15, 2019

August 22, 2019

(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)

Third-party
allotment
Reversal of
allowance fortemporarydifferences
adjustment

New investment units were issued through public offering at a price of JPY 45,776 per unit (JPY 44,287 after
deducting the underwriters’ 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 purposeof raising a part 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) throughthe market purchase at Tokyo Stock Exchange based on a discretionary transaction contract with a securities
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 tounitholders’ capital.
New investment units were issued in a public offering at a price of JPY 58,898 per unit (JPY 56,939 after deducting
the underwriters’ 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 ofraising a part of the funds for the acquisition of specified assets.
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.

47

3. Reference Information(1)

Type ofasset

Composition of INV’s Assets

Geographic
area

PurposeFiscal period ended June 30, 2022
(as of June 30, 2022)
Percentage of
total assets(%)

Amount held
(JPY million)

1

0.0

2

0.0

-

-

-

-

Overseas (Note 4)

33,892

6.9

33,546

6.8

Subtotal

33,893

6.9

33,5496.8

33,893

6.9

33,5496.8

28,597

5.8

28,483

5.8

5,969

1.2

5,900

1.2

34,567

7.1

34,383

7.0

-

-

-

-

1,621

0.3

1,605

0.3

1,621

0.3

1,605

0.3

167,68934.2

167,03533.8

208,004

42.4

206,71841.8

375,69376.7

373,75375.6(Note 1)

Amount held
(JPY million)(Note 2)Real
estateHotelsGreater Tokyo
area (Note 3)
Major regional
CitiesTotal real estate

Residences

Greater Tokyo
area
Major regional
citiesSubtotal

Greater Tokyo
area
Real
Offices/Commercial
Major regional
estate infacilities
citiestrust
Subtotal

HotelsFiscal period ended December 31, 2022
(as of December 31, 2022)

Greater Tokyo
area
Major regional
citiesSubtotal(Note 2)

Percentage of
total assets(%)

Total real estate in trust

411,882

84.0

409,741

82.9

Preferred equity interest (Note 5)

17,856

3.6

17,856

3.6

Deposits and other assets

26,485

5.4

33,0896.7

490,118100.0

494,237100.0(445,776)(91.0)(443,291)(89.7)

Total assets (Note 6)(Note 1)“Greater Tokyo area” refers to Tokyo, Kanagawa, Chiba and Saitama.

(Note 2) “Amount held” is from the balance sheet as of the end of the Reporting Period (book value after depreciation for real estate,leasehold and real estate in trust). The amounts held for hotels are calculated by including book value of accompanying FF&E,
in principle.
(Note 3)(Note 4)(Note 5)(Note 6)

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 therights 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 were theunderlying assets of the TK.
Preferred equity interest issued by Kingdom Special Purpose Company, with the Sheraton Grande Tokyo Bay Hotel as anunderlying asset (asset in trust of trust beneficiary interest acquired by Kingdom Special Purpose Company, which is the realestate 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 amountof preferred equity interest).

48

Fiscal period ended June 30, 2022
(as of June 30, 2022)
Percentage ofAmount (JPY million)
total assets (%)

Fiscal period ended December 31, 2022
(as of December 31, 2022)
Percentage ofAmount (JPY million)
total assets (%)

Total Liabilities

243,90749.8

243,916

49.4

Total Net Assets

246,21150.2

250,321

50.6

Total Liabilities
and Net Assets

490,118100.0

494,237

100.0

(2)

Real Estate Properties, Etc.
The following summarizes the real estate assets (real estate or trust beneficiary interest comprised mainlyof real estate) as well as preferred equity interest held by INV as of the end of the Reporting Period.

aPrice and investment percentage

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)
Trust
Nisshin Palacestage
beneficiaryA26
1-31-2 Izumi, Suginami-ku, Tokyo
1,251
1,065
0.3
1,260
A
Daitabashi
interests(Note 8)Trust
2-26-6 Nishi-Gotanda,
A28 Growth Maison Gotanda
beneficiary
888
813
0.2
1,100
A
Shinagawa-ku, Tokyo
interests
Trust
Growth Maison
A29
6-58-16 Kameido, Koto-ku, Tokyo beneficiary
1,070
932
0.2
1,240
A
Kameidointerests
Trust
3-27-18 Itabashi, Itabashi-ku,
A30 Emerald House
beneficiary
1,505
1,302
0.3
1,430
A
Tokyo
interests
Trust
3-15-35 Takanodai, Nerima-ku,
beneficiary
A32 Suncrest Shakujii-Koen
1,088
1,044
0.2
1,210
A
Tokyo
interests(Note 8)Trust
Growth Maison Shin3-16-2 Shin-Yokohama, Kohoku- beneficiary
A33
1,059
914
0.2
1,250
A
Yokohama
ku, Yokohama-shi, Kanagawa
interests(Note 8)
Trust
Belle Face Ueno1-27-10 Higashi-Ueno, Taito-ku,
beneficiary
A34
1,023
901
0.2
1,120
A
Okachimachi
Tokyointerests(Note 8)Trust
beneficiary
A35 Grand Rire Kameido
3-39-12 Kameido, Koto-ku, Tokyo
906
767
0.2
1,070
A
interests(Note 8)Trust
1-15-15 Okamoto, Setagaya-ku,
beneficiary
A37 Growth Maison Yoga
795
708
0.2
823
A
Tokyo
interests(Note 8)Trust
3-7-6 Nishikicho, Tachikawa-shi,
A38 Route Tachikawa
beneficiary
676
637
0.1
696
A
Tokyo
interests
Trust
Shibuya-Honmachi
2-35-2 Honmachi, Shibuya-ku,
beneficiary
A39
651
713
0.1
706
A
MansionTokyo
interests(Note 8)49

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)Trust
4-13-15 Kinuta, Setagaya-ku,
A40 City Heights Kinuta
beneficiary
646
658
0.1
605
A
Tokyo
interests
Trust
2-5-13 Namiki, Kawaguchi-shi,
Acseeds Tower
beneficiary
A41
620
496
0.1
789
A
Saitama
Kawaguchi-Namiki
interests(Note 8)Trust
3-4-4 Nakamachi, Machida-shi,
beneficiary
A43 College Square Machida
589
552
0.1
517
A
Tokyo
interests(Note 8)Trust
beneficiary
A44 Belair Meguro
1-2-15 Meguro, Meguro-ku, Tokyo
589
543
0.1
630
A
interests(Note 8)Trust
2-7-47 Tarumachi, Kohoku-ku,
beneficiary
A45 Wacore Tsunashima I
572
549
0.1
550
A
Yokohama-shi, Kanagawa
interests(Note 8)Trust
1-6-6 Kouyama, Nerima-ku,
beneficiary
A46 Foros Nakamurabashi
566
494
0.1
620
A
Tokyo
interests(Note 8)Trust
5-29-51 Kaijin, Funabashi-shi,
beneficiary
A47 Growth Maison Kaijin
557
521
0.1
546
A
Chiba
interests(Note 8)Trust
7-3-1 Arakawa, Arakawa-ku,
beneficiary
A48 College Square Machiya
510
427
0.1
600
A
Tokyo
interests(Note 8)
Trust
Towa City Coop
5-49-7 Higashi-Ikebukuro,
beneficiary
A59
866
788
0.2
1,390
B
Shinotsuka II
Toshima-ku, Tokyo
interests
Trust
1-22-7 Sekimachi-Kita, Nerima-ku,
beneficiary
A61 Bichsel Musashiseki
577
568
0.1
856
C
Tokyo
interests
Trust
Towa City Coop
4-338-2 Sengencho, Nishi-ku,
beneficiary
A63
1,110
994
0.2
1,570
B
Sengencho
Yokohama-shi, Kanagawa
interests
Trust
2-11-10 Omachi, Aoba-ku,
beneficiary
A64 Royal Park Omachi
415
381
0.1
715
B
Sendai-shi, Miyagi
interests
Trust
Lexington Square
1-15-18 Haginomachi,
beneficiary
A65
330
256
0.1
464
B
Haginomachi
Miyagino-ku, Sendai-shi, Miyagi
interests
Trust
2-44 Otanacho, Chikusa-ku,
beneficiary
A66 Visconti Kakuozan
255
227
0.1
310
D
Nagoya-shi, Aichi
interests
Trust
Lexington Square Honjo 4-20-6 Higashikomagata,beneficiary
A72
511
401
0.1
736
D
Azumabashi
Sumida-ku, Tokyo
interests
Trust
AMS TOWER Minami
2-5-15 Minami 6-Jo Nishi,
beneficiary
A73
1,180
850
0.2
1,270
D
6-Jo
Chuo-ku, Sapporo-shi, Hokkaido
interests
Trust
2-13-17 Heian, Kita-ku,
beneficiary
A84 Revest Heian
595
490
0.1
877
B
Nagoya-shi, Aichi
interests
Trust128-1 Yamabukicho Shinjuku-ku,
beneficiary
A87 Excellente Kagurazaka
543
487
0.1
859
B
Tokyo, and one other parcel
interests

50

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)Trust
A90 Queen's Court Fukuzumi 1-3-10 Fukuzumi, Koto-ku, Tokyo beneficiary
456
407
0.1
814
B
interests
Trust
5-14-17 Higashi-Oi, Shinagawabeneficiary
A92 Belair Oimachi
412
376
0.1
686
B
ku, Tokyo
interests
Trust
3-18-29 MinamiA93 Siete Minami-Tsukaguchi Tsukaguchimachi, Amagasaki-shi, beneficiary
374
329
0.1
571
B
interests
Hyogo
Trust
Prime Life Sannomiya
4-3-23 Isogamidori, Chuo-ku,
beneficiary
A94
373
323
0.1
578
B
Isogami Koen
Kobe-shi, Hyogo
interests
Trust
Century Park Shinkawa 4-1-2 Shinkawacho, Minato-ku,
beneficiary
A96
335
290
0.1
549
B
1-bankan
Nagoya-shi, Aichi
interests
Trust
A97 West Avenue
1-5-17 Nishi, Kunitachi-shi, Tokyo beneficiary
331
306
0.1
426
B
interests
Trust
2-25-11 Mikage Tsukamachi,
beneficiary
A99 Prime Life Mikage
297
257
0.1
434
B
Higashinada-ku, Kobe-shi, Hyogo
interests
Trust
5-45-10 Mukojima, Sumida-ku,
beneficiary
A101 Lieto Court Mukojima
1,683
1,586
0.3
2,310
B
Tokyo
interests
Trustbeneficiary
A102 Lieto Court Nishi-Ojima 2-41-14 Ojima, Koto-ku, Tokyo
1,634
1,536
0.3
2,240
B
interests
Trust
5-38 Fudegasakicho, Tennouji-ku,
beneficiary
A103 Royal Parks Momozaka
2,910
2,492
0.6
3,280
C
Osaka-shi, Osakainterests
Trust
3-35-20 Shinden, Adachi-ku,
beneficiary
A104 Royal Parks Shinden
5,024
4,520
1.0
6,360
C
Tokyo
interests
Trust
Royal Parks Seasir
3-41-7 Minami-Senju, Arakawabeneficiary
A106
2,683
2,463
0.5
3,300
B
Minami-Senju
ku, Tokyo
interests
Subtotal (41 properties)

B18

AEON TOWN Sukagawa

105 Furukawa, Sukagawa-shi,
Fukushima

Trust
beneficiaryinterests

Subtotal (1 property)

D01

D02

D03

D04

D05

D06

Trust
beneficiaryinterests
Trust
Hotel MyStays Asakusa 1-21-11 Honjo, Sumida-ku, Tokyo beneficiaryinterests
Trust
52, Kasabokocho, Higashiiru,
Hotel MyStays Kyotobeneficiary
Aburanokoji, Shijyodori,Shijointerests
Shimogyo-ku, Kyoto-shi, Kyoto
Trust
MyStays Shin-Urayasu
2-1-4 Akemi, Urayasu-shi, Chiba beneficiary
Conference Centerinterests
Trust
3-5-1 Tekkodori, Urayasu-shi,
Hotel MyStays Maihama
beneficiary
Chibainterests
Trust
Hotel MyStays Premier 2-4-1 Sonezakishinchi, Kita-ku,
beneficiary
DojimaOsaka-shi, Osakainterests
Hotel MyStays Kanda

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

51

38,46534,3837.8

47,357

-

2,320

1,605

0.5

2,380

C

2,320

1,605

0.5

2,380

-

2,851

2,803

0.6

4,900

B

2,584

2,454

0.5

4,410

B

6,024

5,496

1.2

8,160

B

4,930

4,382

1.0

7,200

B

4,870

4,499

1.0

6,820

B

3,845

3,588

0.8

6,420

B

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)
Trust
Hotel MyStays Nagoya- 2-23-22 Higashi-Sakura, Naka-ku,
beneficiary
D07
2,958
2,498
0.6
5,520
B
Sakae
Nagoya-shi, Aichi
interests
Trust
Hotel MyStays
1-4-8 Awaji-machi, Chuo-ku,
beneficiary
D08
2,514
2,240
0.5
3,210
B
Sakaisuji-Honmachi
Osaka-shi, Osakainterests
Trust
Hotel MyStays
4-81 Sueyoshicho, Naka-ku,
beneficiary
D09
2,119
2,118
0.4
3,940
B
Yokohama
Yokohama-shi, Kanagawa
interests
Trust
5-43-7 Higashi-Nippori,beneficiary
D10 Hotel MyStays Nippori
1,898
1,732
0.4
2,510
B
Arakawa-ku, Tokyo
interests
Trust
Hotel MyStays
3-14-20 Haruyoshi, Chuo-ku,
beneficiary
D11
1,570
1,388
0.3
5,560
B
Fukuoka-Tenjin-Minami Fukuoka-shi, Fukuoka
interests
Trust
3-26 Shin-Ogawamachi,
beneficiaryD12 Flexstay Inn Iidabashi
1,381
1,313
0.3
2,090
B
Shinjuku-ku, Tokyo
interests
Trust
Hotel MyStays Ueno
D13
1-5-7 Matsugaya, Taito-ku, Tokyo beneficiary
1,331
1,179
0.3
2,010
B
Inarichointerests
Trust
1-22-19 Kita-Shinagawa,beneficiaryD14 Flexstay Inn Shinagawa
1,242
1,166
0.3
1,980
B
Shinagawa-ku, Tokyo
interests
Trust
1-52-5 Tokiwadai, Itabashi-ku,
beneficiary
D15 Flexstay Inn Tokiwadai
1,242
1,174
0.3
2,120
B
Tokyo
interests
Trust
3-6-16 Sugamo, Toshima-ku,
beneficiaryD16 Flexstay Inn Sugamo
1,192
1,068
0.2
2,200
B
Tokyo
interests
Trust
1-3-2 Tokuicho, Chuo-ku,
beneficiary
D17 Hotel MyStays Otemae
1,192
1,107
0.2
2,410
B
Osaka-shi, Osakainterests
Trust
Hotel MyStays Kiyosumi
beneficiary
D18
1-12-16 Tokiwa, Koto-ku, Tokyo
749
835
0.2
1,460
B
Shirakawainterests
Trust
Flexstay Inn Nakanobu 4-27-12 Futaba, Shinagawa-ku,
beneficiary
D19
589
544
0.1
803
B
P1
Tokyo
interests
Trust
Flexstay Inn Nakanobu 4-27-8 Futaba, Shinagawa-ku,
beneficiary
D20
283
277
0.1
387
B
P2
Tokyo
interests
Trust
APA Hotel Yokohama- 3-37-2 Sumiyoshicho, Naka-ku,
beneficiary
D21
8,350
7,228
1.7
9,930
B
Kannai
Yokohama-shi, Kanagawa
interests
Trust
Hotel MyStays
26-17 Honcho, Hakodate-shi,
beneficiary
D22
2,792
2,594
0.6
3,910
B
Hakodate-Goryokaku
Hokkaido
interests
Trust
5-10-15 Shirokane, Minato-ku,
beneficiary
D23 Flexstay Inn Shirogane
2,119
2,054
0.4
2,430
B
Tokyo
interests
Trustbeneficiary
D24 Hotel MyStays Haneda 5-1-13 Haneda, Ota-ku, Tokyo
7,801
6,964
1.6
8,320
B
interests
Trust
Hotel MyStays Kameido
D25
6-32-1 Kameido, Koto-ku, Tokyo beneficiary
5,594
5,206
1.1
7,540
B
P1
interests
Trust
Hotel MyStays Ueno
5-5-13 Higashi-Ueno, Taito-ku,
beneficiary
D26
3,821
3,568
0.8
3,940
B
IriyaguchiTokyo
interests
Trust
Hotel MyStays Kameido
beneficiaryD27
6-7-8 Kameido, Koto-ku, Tokyo
3,742
3,447
0.8
5,060
B
P2
interests

52

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)Trust
1-23 Masagocho, Shimizu-ku,
beneficiary
D28 Hotel MyStays Shimizu
2,198
2,001
0.4
2,460
B
Shizuoka-shi, Shizuoka
interests
Trust
Super Hotel Shinbashi/ 5-16-4 Shinbashi, Minato-ku,
beneficiary
D29
1,624
1,561
0.3
1,880
B
KarasumoriguchiTokyo
interests
Trustbeneficiary
D30 Flexstay Inn Higashi-Jujo 2-10-2 Nakajujo, Kita-ku, Tokyo
1,277
1,253
0.3
1,380
B
interests
Trust
Hotel MyStays
2-4-1 Higashi-Shukugo,
beneficiary
D31
1,237
1,164
0.3
2,090
B
Utsunomiya
Utsunomiya-shi, Tochigi
interests
Trust
Flexstay Inn Kawasaki- 1-13-2 Kaizuka, Kawasaki-ku,
beneficiary
D32
980
861
0.2
1,160
B
Kaizuka
Kawasaki-shi, Kanagawa
interests
Trust
1-3-2 Takara-machi, Toyama-shi,
beneficiary
D33 Comfort Hotel Toyama
979
875
0.2
1,170
B
Toyamainterests
Trust
Flexstay Inn Kawasaki- 15-9 Ogawacho, Kawasaki-ku,
beneficiary
D34
906
851
0.2
902
B
Ogawacho
Kawasaki-shi, Kanagawa
interests
Trust
D35 Flexstay Inn Ekoda
8-6 Sakaecho, Nerima-ku, Tokyo beneficiary
5,069
4,715
1.0
4,650
B
interests
Trust
Super Hotel Tokyo-JR
2-21-9 Akebonocho, Tachikawabeneficiary
D36
1,170
1,054
0.2
1,190
E
Tachikawa Kitaguchi
shi, Tokyo
interests
Trust
Super Hotel JR UenobeneficiaryD37
7-9-14 Ueno, Taito-ku, Tokyo
1,130
1,045
0.2
1,180
E
iriyaguchiinterests
Trust
Hotel MyStays
1-9-30 Nishi-Shinsaibashi,
beneficiary
D38
3,160
2,933
0.6
2,110
B
Shinsaibashi
Chuo-ku, Osaka-shi, Osakainterests
Trust
3-13-13 Kurosaki, Yahatanishi-ku,
beneficiary
D39 Comfort Hotel Kurosaki
1,148
992
0.2
1,250
E
Kitakyusyu-shi, Fukuoka
interests
Trust
2-18-14 Omotecho, Maebashi-shi,
beneficiary
D40 Comfort Hotel Maebashi
1,128
934
0.2
1,110
E
Gunma
interests
Trust
Comfort Hotel TsubamebeneficiaryD41
2-115 Sugoro, Sanjo-shi, Niigata
1,010
888
0.2
1,080
E
Sanjo
interests
Trust
3-4 Ohdori-Nishi, Kitami-shi,
beneficiary
D42 Comfort Hotel Kitami
851
736
0.2
907
E
Hokkaido
interests
Trust
Hotel MyStays Gotanda 2-6-8 Nishi-Gotanda,
beneficiaryD43
26,523
26,157
5.4
23,800C
Station (Note 9)
Shinagawa-ku, Tokyo
interests
Trust
1-10 Kaidoue, Oaza-Takakuhei,
Hotel Epinard Nasu
beneficiaryD44
Nasu-machi, Nasu-gun, Tochigi
21,002
18,421
4.3
22,900C(Note 10)interests(and 59 other parcels)
Trust
Hotel MyStays Fukuoka 3-5-7 Tenjin, Chuo-ku, Fukuokabeneficiary
D45
8,059
7,649
1.6
8,020
C
Tenjinshi, Fukuoka
interests
Trust
Hotel MyStays
1-18-14 Hamamatsucho, Minatobeneficiary
D46
7,959
7,755
1.6
6,140
C
Hamamatsucho
ku, Tokyo
interests
Trust
Hotel MyStays Premier 2-13-5 Hirooka, Kanazawa-shi,
beneficiary
D47
13,761
12,3602.8
12,800C
Kanazawa
Ishikawa
interests
Trust
Takamatsu Tokyu REI
9-9 Hyogomachi, Takamatsu-shi,
beneficiary
D48
2,139
2,115
0.4
2,240
E
Hotel
Kagawainterests

53

Property
number(Note 1)Name of property

Location(Note 2)

D49

Hotel MyStays Premier
Hamamatsucho

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

D50

Hotel MyStays Shin
6-2-19 Nishinakashima,
Osaka Conference Center Yodogawa-ku, Osaka-shi, Osaka

D51

Hotel MyStays PremierOmori

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

D52

Kamenoi Hotel Beppu

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 Tachikawashi, Tokyo

D60

Hotel MyStays Premier
Akasaka

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

D61

Hotel MyStays Premier
Sapporo Park

2-2-10, Minamikujonishi Chuoku, Sapporo-shi, Hokkaido

D62

Hotel MyStays Ueno
East

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

D63

Hotel MyStays Midosuji 3-2-10, Honmachi, Chuo-ku,
HonmachiOsaka-shi, 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, Ishigakishi, Okinawa, and four other lots

D66

Hotel MyStays Fuji
Onsen Resort

2654 Arakura Deguchi,
Fujiyoshida-shi, Yamanashi, and15 other lots

D67

Hotel Sonia Otaru

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

D68

Hotel MyStays
Kanazawa Castle

10-17 Konohana-machi,
Kanazawa-shi, Ishikawa

D69

Art Hotel Niigata Station

1-1 Sasaguchi, Chuo-ku, Niigatashi, Niigata

Appraisal
Balancevalue at theAcquisition
sheet
Investment
end of theLegal form
price
carrying percentage
Appraiser
periodof asset (JPY million) value(%)(Note 7)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)Trust
beneficiary
8,000
7,911
1.6
10,300B
interests
Trustbeneficiary
13,068
12,7702.7
12,800D
interests
Trustbeneficiary
9,781
9,745
2.0
9,660
D
interests
Trustbeneficiary
8,870
7,701
1.8
8,720
D
interests
Trustbeneficiary
7,880
7,438
1.6
8,220
D
interests
Trustbeneficiary
5,326
5,056
1.1
5,280
D
interests
Trustbeneficiary
2,772
2,566
0.6
2,690
D
interests
Trustbeneficiary
2,723
2,550
0.6
2,740
D
interests
Trustbeneficiary
1,604
1,431
0.3
1,600
D
interests
Trustbeneficiary
4,068
4,033
0.8
3,960
D
interests
Trustbeneficiary
3,257
3,160
0.7
3,330
E
interests
Trustbeneficiary
20,691
20,1594.2
23,100B
interests
Trustbeneficiary
16,731
15,857
3.4
15,800D
interests
Trustbeneficiary
5,286
5,120
1.1
5,120
D
interests
Trustbeneficiary
5,039
4,779
1.0
3,130
B
interests
Trustbeneficiary
15,543
15,1673.2
15,000D
interests
Trustbeneficiary
9,731
9,424
2.0
9,330
B
interests
Trustbeneficiary
9,405
8,663
1.9
9,770
B
interests
Trustbeneficiary
5,930
5,533
1.2
5,780
D
interests
Trustbeneficiary
5,682
5,600
1.2
5,440
D
interests
Trustbeneficiary
5,524
5,250
1.1
5,350
D
interests

54

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)
Trust
Hotel MyStays Nagoya 3-8-21 Nishiki, Naka-ku, Nagoyabeneficiary
D70
5,197
5,046
1.1
5,020
C
Nishikishi, Aichi
interests
Trust
1-4-16 Ironai, Otaru-shi,
beneficiary
D71 Hotel Nord Otaru
4,296
4,118
0.9
4,080
D
Hokkaido
interests
Trust
Hotel MyStays
2-7 Yamanokuchi-cho,beneficiary
D72
3,445
3,324
0.7
3,420
E
Kagoshima Tenmonkan Kagoshima-shi, Kagoshima
interests
Trust
6-29-2 7-jo-dori, Asahikawa-shi,
beneficiary
D73 Art Hotel Asahikawa
3,197
2,883
0.7
3,110
D
Hokkaido
interests
Trust
Hotel MyStays
1-10-10 Otemachi, Matsuyamabeneficiary
D74
3,098
2,820
0.6
3,180
E
Matsuyamashi, Ehime
interests
Trust
1-6 Nishi 5-Chome, Minami 7-jo,
Hotel MyStays Sapporo
D75
Chuo-ku, Sapporo-shi, Hokkaido, beneficiary
3,059
2,969
0.6
2,920
C
Susukino
interests
and one other lot
Trust
Hotel MyStays Sapporo 1-20 Nishi 1-chome, Minami 14-jo,beneficiary
D76
2,118
2,019
0.4
1,980
C
Nakajima Park
Chuo-ku, Sapporo-shi, Hokkaido
interests
Trust
Hotel MyStays Sapporo 4-3 Nishi 1-chome, Minami 11-jo,beneficiary
D77
1,584
1,516
0.3
1,520
D
Nakajima Park Annex
Chuo-ku, Sapporo-shi, Hokkaido
interests
Trust
2-72-2 Hanasaki-cho, Naka-ku,
beneficiary
D78 Flexstay Inn Sakuragicho Yokohama-shi, Kanagawa, and
1,425
1,386
0.3
1,420
E
interests
four other lot
Trust
MyCUBE by MYSTAYS
beneficiary
D79
2-6-7 Kuramae, Taito-ku, Tokyo
1,287
1,257
0.3
1,250
E
Asakusa Kuramaeinterests
Hotel MyStays
Trust
1-20 Gofuku-machi, Kagoshimabeneficiary
D80 Kagoshima Tenmonkan
1,168
1,144
0.2
1,190
E
shi, Kagoshima
Annex
interests
Trust
11 Minami 5-chome, Nishi 3-jo,beneficiary
D81 Hotel MyStays Nayoro Nayoro-shi, Hokkaido, and one
957
866
0.2
951
C
interests
other lot
Trust
Hotel MyStays Premier 40 Yokomine Oyama, Narita-shi,
beneficiary
D82
10,593
9,929
2.2
10,200D
NaritaChibainterests
Trust
D83 Art Hotel Morioka
3-3-18 Odori, Morioka-shi, Iwate beneficiary
5,643
5,285
1.1
5,420
C
interests
46,16630,061The(USD
Westin Grand Cayman(USD30620 Seven Mile Beach Road,
347,900
LeaseholdD200 Seven Mile Beach
28,170
6.1
FGrand Cayman, Cayman Islands
272,171
thousand)Resort & SPA(Note 11)thousand)(Note 12)
8,227
The
5,842
(USD
1465 Esterley Tibbetts Highway,
62,000
Leasehold (USD 52,898
D201 Sunshine Suites Resort
5,376
1.2
F
Grand Cayman, Cayman Islands
thousand)(Note 11)thousand)(Note 12)-Subtotal (85 properties)

432,785

407,302

88.1

482,833-

Total (127 properties)

473,570

443,291

96.4

532,570-

17,845

17,856

3.6

Sheraton Grande Tokyo
Bay Hotel (preferred
equity interest)

Preferredequityinterest
issued by
specialpurposecompany(Note 13)-55

- (Note 5)Property
number(Note 1)

Appraisal
Balancevalue at theAcquisition
sheet
Investment
end of theLegal form
price
carrying percentage
Appraiser
periodof asset (JPY million) value(%)(Note 7)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)

Location(Note 2)Name of property

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

17,845

17,856

3.6--

Total (128 properties)

491,416

461,148

100.0

-

-

(Note 1)

“Property number” indicates the use categorization of properties owned by INV, with “A” standing for residence, “B” standingfor office and commercial 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 a lower 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 for such 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 kind in line with the agreed terminationof the TK agreement. The amounts in USD are converted into JPY as shown. Such price excludes consumption tax and othertaxes, 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 beenrounded 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 to those 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 Reporting Period is as follows.
Name of property

Appraisal value

Sheraton Grande Tokyo Bay Hotel(Note 6)

JPY 98,400 million

Appraiser(Note 7)
D

Under the “local appraiser verification method,” a real estate appraiser licensed in Japan determines appraisal value based on
the understanding 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, andby verifying the validity of decisions made in appraisal reports and appropriateness of appraisal value prepared by local
appraisers. INV appoints CBRE, Inc., a professional appraiser licensed and certified in the Cayman Islands, as a local appraiser
to engage in appraisal of the Underlying Asset and prepare 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 ofappraisal 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 the 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, Growth Maison Shin-Yokohama, Belle Face Ueno-Okachimachi, Growth Maison Yoga,
Shibuya-Honmachi Mansion, and Foros Nakamurabashi

56

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)Acquisition price includes the floor expansion portion. Appraisal value at the end of the period indicates appraisal value
calculated deeming the owned portion and the floor expansion portion as one.

(Note 10) Acquisition price includes the adjacent land portion. Appraisal value at the end of the period indicates appraisal value calculated
deeming the owned portion and the adjacent land portion as one.
(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 from making investments based on the TK agreement to directly owning the movable assets such as leasehold
and FF&E of the Cayman Hotels (the Leasehold, etc.), which were the underlying assets of the TK.
(Note 12) Appraisal value at the end of the period is converted into JPY using the exchange rate of USD 1 = JPY 132.70, which is the exchange
rate on the closing date of the Reporting Period (December 31, 2022).
(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.

57b

Capital 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 endof the Reporting Period for the real estate assets is as follows.

Name of Property

Location

APA Hotel
Yokohama-shi,
Yokohama-Kannai Kanagawa

D21

Hotel MyStays

D61 Premier Sapporo
Park

All air conditioning
facility renovation work

Sapporo-shi,
Hokkaido

Air conditioning facility
renovation work

Osaka-shi, Osaka

Automatic fire alarmsystem renovation work

Hotel MyStays

D50 Shin OsakaPurposeConference Center

D201

Sunshine Suites
ResortGrand Cayman,
Cayman Islands

Stair construction

D201

Sunshine Suites
ResortGrand Cayman,
Cayman Islands

Power generator
renovation work

Scheduled Timeof
Implementation
From January2023
To June 2023
From January2023
To June 2023
From January2023
To June 2023
From January2023
To June 2023
From January2023
To June 2023

Estimated Cost (JPY thousand)Payment for
Advance
Total the Reporting
Payments
Period355,000--

82,700--65,000--52,076--

41,661--(Note) The estimated cost for overseas real estate is converted at USD 1 = JPY 110(b) Capital expenditures for the Reporting Period
The principal construction work constituting capital expenditures for the real estate assets for the Reporting
Period is as follows. Capital expenditures for the Reporting Period totaled JPY 1,244,738 thousand, andtogether with JPY 16,747 thousand in repair costs included in this fiscal period’s expenses, construction
work totaling JPY 1,261,486 thousand was implemented.
Name of property

Location

PurposeTime of implementation

Payment(JPY thousand)

D52

Kamenoi Hotel
Beppu

Beppu-shi, Oita

Renovation work forenergy saving

From July 2022
To December 2022

114,251

D51

Hotel MyStays
Premier Omori

Shinagawa-ku,
Tokyo

Automatic fire alarmsystem renovation
work

From July 2022
To December 2022

85,000

D56

Art Hotel
Hirosaki City

Hirosaki-shi,
Aomori

Exterior wallrenovation work

From July 2022
To December 2022

79,507

D201

Sunshine Suites
ResortGrand Cayman,
Cayman Islands

Roof renovation work

From July 2022
To December 2022

47,652

D51

Hotel MyStays
Premier Omori

Shinagawa-ku,
Tokyo

Air conditioning facility
renovation work

From July 2022
To December 2022

40,673

Other construction

877,654
Total(3)

1,244,738

Tenant Summary

a Summary of lease conditions by property
Disclosure is omitted because the information is described in the presentation material, “December 2022
Fiscal Period Results (July 1, 2022 to December 31, 2022)” separately announced on February 22, 2023.
b Occupancy trend
Disclosure is omitted because the information is described in the presentation material, “December 2022
Fiscal Period Results (July 1, 2022 to December 31, 2022)” separately announced on February 22, 2023.
58