This is a summary English language version of the original Japanese Asset Management Reportavailable on our Website. However, no assurance or warranties are given with respect to theaccuracy or completeness of this summary English language version. The Japanese original shallprevail in the case of any discrepancies between this summary English language version and theJapanese original.

Invincible Investment Corporation
Asset Management Report
Fiscal Period ended June 30, 2016 (January 1, 2016 to June 30, 2016)
Contents
Greetings from Naoki Fukuda, Executive Director of Invincible Investment Corporation
and President & CEO of Consonant Investment Management Co., Ltd.
Summary of Financial Results
Track Record of Asset Growth
Performance and Forecast of Core Assets
Status of Portfolio by Core Assets
MyStays Hotel Management
Sponsor Pipeline
Financial Conditions
I.
II.
III.
IV.
V.
VI.
VII.
VIII.

Asset Management Report
Balance Sheet
Statement of Income
Statement of Unitholders’ Equity
Notes
Statement of Cash Distribution
Audited ReportStatement of Cash Flows (Reference Information)

Portfolio Map
Portfolio Overview
Newly Acquired Properties for the 26th Fiscal Period (Fiscal Period ended June 30, 2016)

Overview of Unitholders/Investment Units
Information for Unitholders

Greetings from Naoki Fukuda, Executive Director of Invincible Investment Corporation
and President & CEO of Consonant Investment Management Co., Ltd.
I would like to take this opportunity to express my sincere gratitude to all investors in Invincible
Investment Corporation (“INV”) for your continued support.
We hereby provide you with a report on INV’s asset management and financial results for the 26th
fiscal period (covering the period from January 1, 2016 to June 30, 2016; the “Reporting Period”).
As described below, INV achieved robust results for the Reporting Period, despite changes in the
hotel macro environment such as the sharp yen appreciation.
In March of this year, we conducted our third global public offering (the “Capital Increase”) in three
years that raised JPY 37.9 billion in funds (including third-party allotment). The proceeds from the
Capital Increase were used together with new loans to acquire four hotels and one residential
property in March 2016. In total INV completed three separate property acquisitions to maintain its
external growth strategy during the Reporting Period, with a total acquisition price of JPY 92.8
billion. As a result, the total value of the assets under management (AUM) as of June 30, 2016 was
JPY 266.6 billion (of which, hotels accounted for JPY 181.0 billion), sustaining a strong track recordof external growth in which AUM increased by 53.4% compared to the end of the previous fiscal
period (based on acquisition price).
The hotel portfolio maintained solid internal growth; the average daily rate (the “ADR”) across theentire portfolio increased 8.5% and net operating income (the “NOI”) increased 11.0% compared tothe same period in the previous year, respectively(i), despite the temporary decline in room demand
experienced as a result of the effects of the Kumamoto Earthquake in April, and the day
configuration for the Golden Week holidays in May. In addition, INV achieved consistently strong
internal growth in its residential portfolio, a core asset class alongside hotels, with increases in boththe average occupancy rate and the average rent per tsubo (1 tsubo = 3.3 square meters), and NOI
increased by 5.1% compared to the same period in the previous year(ii) for the same properties thatwere owned as of the end of 2014.
With respect to financial operations, INV introduced five new financial institutions(iii) as lenders,
including Development Bank of Japan Inc., to further strengthen its lender formation. INV also
executed interest rate swap agreements of JPY 99.1 billion in order to improve its financial stability
by fixing the interest rate on 69.8% of its existing borrowings.
As a result of the efforts mentioned above, operating revenues increased by 64.0% over the same
period in the previous year to JPY 8,158 million, net income increased by 90.1% to JPY 4,363
million, and the distribution per unit (the “DPU”) increased by 37.9% to JPY 1,186.
INV renewed the Memorandum of Understanding (the “MOU”) with Fortress-related special
purpose companies, concerning preferential negotiation rights regarding 22 hotels and 9 residential
properties, thereby securing a pipeline of assets in which the hotel room count is comparable to thetotal number of hotel rooms owned by INV. Going forward, we seek to promote the acquisition of
hotels and residential properties to build a portfolio that demonstrates both growth and stability by
utilizing this extensive Sponsor pipeline. Moreover, with respect to INV’s internal growth, we willcontinue our efforts to maximize revenue from the hotel portfolio, which is expected to achieve
steady growth in the medium to long-term. For the residential properties, we will continue ourefforts in the rent increase program to maximize NOI by taking advantage of a portfolio consisting1

2

Summary of Financial Results
Period from
July 1, 2014 toDecember 31, 2014

Period fromJanuary 1, 2015 toJune 30, 2015

Period from
July 1, 2015 to
December 31, 2015

Period fromJanuary 1, 2016 toJune 30, 2016

Operating Revenue(JPY million)

4,610

4,974

6,863

8,158

Ordinary Income(JPY million)

1,958

2,295

2,953

4,364

Net Income(JPY million)

1,958

2,295

2,952

4,363

Net Assets(JPY million)

61,392

61,73191,758130,005

Total Assets(JPY million)

130,477

136,299

185,918

284,106

Net Assets per Unit
(JPY)

23,005

23,132

28,73135,368Net Assets/Total Assets
(%)

47.1

45.3

49.4

45.8

Distribution per Unit
(JPY)

733

860

1,187

1,186

Number of Units Issued(Unit)

2,668,686

2,668,686

3,193,686

3,675,824(Note)

Figures are rounded down to the indicated unit and percentages are rounded to one decimal place.
However, “Net Assets per Unit” are rounded to the nearest yen.

(Note) Figures are rounded down to the indicated unit and percentages are rounded to one decimal place.

3

Track Record of Asset Growth■ INV acquired 13 properties in the fiscal period ended June 2016 and expanded its asset
size by 53.4% compared to the end of the previous period■ As of the end of June 2016, percentage of hotels increased to 67.9%, and percentage ofproperties in Greater Tokyo1 maintained a high level at 62.2%

Growth of AUM (Based on Acquisition Price)

Growth of Portfolio(Note 1)
(Note 2)
(Note 3)“Greater Tokyo” is Tokyo, Kanagawa, Chiba and Saitama.
“Others” includes offices, retail facilities and parking lots.
Based on acquisition price4Performance and Forecast of Core Assets
HotelsPerformance for the fiscal period ended June 2016 and forecast for the fiscal period ending
December 2016 are stated as follows. INV forecasts ADR growth of 6.9%, RevPAR growth of
6.5%, GOP growth of 6.9% and a slight decline in occupancy rate for the 2016 full year comparedwith 2015.

(Note 1)

(Note 2)

Based on 48 hotels in INV’s portfolio as of the end of June, 2016, which excludes nine hotels with fixed
rent structures and includes all hotels with variable rent structures except for Hotel MyStays Haneda andHotel MyStays Kanazawa, which opened in 2014, as well as Hotel MyStays Shinsaibashi and Hotel
MyStays Gotanda Station, which underwent renovation in 2015
In calculating the GOP, the rent paid for APA Hotel Yokohama-Kannai, is regarded as GOP of the hotel.

Residential Properties
NOI for the fiscal period ended June 2016 derived from properties that have been held continuously
increased 5.1% compared to the same period for the previous year. INV forecasts growth inoccupancy rate and average rent per Tsubo for the 2016 full year.

(Note 3)(Note 4)

Based on 63 properties owned as of the end of 2014
Excludes one-off insurance-related revenues and expenses

5Status of Portfolio by Core Assets
Hotels
87.7% of the hotel portfolio
are limited-service hotels

94.5% of the hotel
portfolio are variable-rent
hotels

57.2% of the hotel portfolio islocated in the Greater Tokyoand 9.2% in the Kansai area

Kyushu(Note 1)
(Note 2)

Based on acquisition price
Please refer to the notes on page 27 for “Hotel Type”.

Residential Properties
94.8% of the residential
portfolio is concentrated inTokyo 23 wards and othermajor cities

87.3% of the residential
units are smaller than 60m2

Average rent per month perunit is JPY 102,227(Note 1)

Based on acquisition price(Note 2)

INV defines as ʺSmall” a unit with an area of less than 30m2, “Medium” as a unit with an area of 30 m2 to60 m2 and “Large” as a unit with an area of 60 m2 or more.
Based on leasable units as of June 30, 2016

(Note 3)

6

MyStays Hotel Management■ MyStays Hotel Management (MHM), primary operator of hotels held by INV, has
emerged as one of the major hotel management companies in Japan.
MHM Background

Further strengthen MHM’s branding▪ MyStays manages 69 hotels1 in Japan▪ MHM is actively promoting advertising to further
strengthen MHM’s branding in transport facilities
such as airports and stations.

▪ MyStays was founded in 1999 and was acquired in2012 by Fortress Group

Advertising at Narita Airport▪ MyStays had 1,193 employees as of May 2016

Improvement of Website Features andServices▪ Improved website with easier booking navigation anddisplaying star ratings from TrustYou2▪ In the process of cleaning up site architecture tofurther improve navigation and search engine
optimization▪ Increased live-chat languages to four and expanded its
operation to 9am - 11pm, 7 days per week (previously
9am – 5pm, 5 days per week)

Narita Airport Terminal 3, 1F

Advertising at JR Tokyo Station▪ Increased multi-lingual capabilities at the front desks▪ Launching initiatives including a new customer
loyalty program to encourage repeat direct visitors

Displayed by Large-Scale LED Monitor

Advertising of “Hotel Mystays Kanazawa”

7(Note 1)

Includes hotels managed by MyStays HotelManagement subsidiary Naqua Hotels andResorts. Figures is as of August 17, 2016

(Note 2)TrustYou analyzes hundreds of millions oftravel reviews and considers themselves theworld’s largest guest feedback platform.

Sponsor Pipeline■ INV renewed the MOU1 with the Sponsor in January and March 2016, adding 10 hotels
to the pipeline, including the Sheraton Grande Tokyo Bay Hotel

Properties Covered by the MOU2(Note 1)
(Note 2)
(Note 3)

MOU providing preferential negotiation rights
INV may elect to acquire only selected assets covered by the MOU or none at all and there is no
assurance that INV will be able to acquire these assets.
Please refer to the notes on page 27.

8Major Sponsor Pipeline Properties

Number of guest rooms

Number of leasable apartment units

6,116 rooms

743 units

9Financial Conditions■ INV has invited nine new lenders since January 2016, doubling the number of lenders.

10(Note 1)(Note 2)

(Note 3)(Note 4)

LTV is calculated using the following formula: Interest‐bearing Debts (excluding c‐tax loan) / Total
Appraisal Value
The average interest rate is calculated using the following formula:(Total of loan amount outstanding at the end of each fiscal period multiplied by applicable interest rate at
the end of each fiscal period for each of loans) / The loan amount outstanding at the end of each fiscal
periodDSCR (Based on Portfolio) is calculated using the following formula:(Operating Income + Depreciation Expenses + Profit/Loss derived from Sale of Real Estate) ÷ (Contract
Payment Amount + Interest Amount).
DSCR (Excluding Hotel Variable Rent) is calculated using the following formula:(Operating Income - Hotel Variable Rental Income + Depreciation Expenses + Profit/Loss derived from
Sale of Real Estate) ÷ (Contract Payment Amount + Interest Amount)11Asset Management ReportⅠ.

Overview of Asset Management
1

Trends in Investment Corporation’s Operating Results
22nd

23rd

24th

25th

26th

Fiscal Period

Fiscal Period

Fiscal Period

Fiscal Period

Fiscal Period

Jan. 1, 2014 toJul. 1, 2014 toJan. 1, 2015 toJul. 1, 2015

toJan. 1, 2016 toJun. 30, 2014

Dec. 31, 2014

Jun. 30, 2015

Dec 31, 2015

Jun. 30, 2016

(Note 1) (JPY thousand)

3,775,772

4,610,717

4,974,760

6,863,775

8,158,220(Rental revenue)(JPY thousand)

2,772,419

4,610,717

4,974,760

6,863,775

8,158,220

Operating expenses(JPY thousand)

1,541,127

1,840,796

2,163,828

2,494,667

3,084,315(Property-related expenses)(JPY thousand)

1,281,791

1,586,854

1,834,039

2,178,165

2,697,986

Operating income(JPY thousand)

2,234,644

2,769,920

2,810,931

4,369,108

5,073,905

Ordinary income(JPY thousand)902,420

1,958,607

2,295,909

2,953,293

4,364,025

By Period

Calculated period

Operating revenue

Operating Results

Net income(JPY thousand)

901,815

1,958,002

2,295,304

2,952,688

4,363,420

Total assets(a) (JPY thousand)

79,261,754

130,477,232

136,299,746

185,918,871

284,106,133

(%)

0.1

64.6

4.5

36.4

52.8

(change from last period)
AssetsInterest-bearing debt

(JPY thousand)

41,000,850

67,260,000

72,301,000

91,699,000

141,917,000(b) (JPY thousand)

36,373,796

61,392,392

61,731,550

91,758,194

130,005,009

(%)

1.5

68.8

0.6

48.6

41.7

Total contribution(JPY thousand)

29,134,389

53,096,413

53,096,413

82,465,438

120,367,271

Total distributions(c) (JPY thousand)

901,431

1,956,146

2,295,069

3,790,905

4,359,527(Note 2) (%)

100.0

99.9

100.0

102.5

94.8

(d) (Units)

1,573,179

2,668,686

2,668,686

3,193,686

3,675,824(b) / (d) (JPY) (Note 3)

23,121

23,005

23,132

28,73135,368

Net assets(change from last period)

Dividend

Dividend payout ratio
Number of investment units

Information per Unit

Issued and outstanding
Net assets per unit
Distributions per unit(c) / (d) (JPY)

573

733

860

1,187

1,186

(Distributions of earnings per unit)

(JPY)

573

733

860

948

1,125

(Distributions in excess of retained

(JPY)

—

—

—

239

61

1.1

1.9

1.7

1.8

1.9

2.3

3.7

3.5

3.6

3.7

2.5

4.0

3.7

3.8

3.9

5.0

7.9

7.5

7.6

7.9

(b) / (a) (Note 4) (%)

45.9

47.1

45.3

49.4

45.8

(%)

0.6

1.2

(1.8)

4.1

(3.6)

(Note 4) (JPY thousand)

2,018,542

3,861,122

4,127,486

5,961,324

7,136,971

earnings per unit)
Return on assets(change over year)
Financial Measures

Return on equity(change over year)
Capital ratio(change from last period)
NOI(Net Operating Income)(Note 4) (%)(Note 4) (%)(Note 1) Consumption taxes etc. are not included in the items including operating revenue.

12

(Note 2) The “Dividend Payout Ratio” is calculated in accordance with the following formula:
Dividend Payout Ratio = Distribution Amount (Distributions in excess of retained earnings) ÷ Net Income
× 100“Dividend Payout Ratio” is rounded to one decimal place.
In addition, the Dividend Payout Ratio calculated with the following formula for the fiscal period ended
June 30, 2016 is 99.9%:
Dividend Payout Ratio = Distribution Amount (Including distributions in excess of retained earnings) ÷
Net Income × 100(Note 3) Distributions per unit are rounded to the nearest unit.
(Note 4) Published benchmarks are calculated as below, and ratios are rounded to one decimal place.
Return on Assets = Ordinary Income / (Total Assets at start of reporting period + Total Assets at end ofreporting period) / 2 x 100
Return on Equity = Net Income this period / (Net Assets at start of reporting period + Net Assets at end ofreporting period) / 2 x 100
Capital Ratio = Net Assets at end of reporting period / Total Assets at end of reporting period x 100
Rental NOI = Rental Revenue – Leasing Costs + Depreciation for fiscal period ended June 30, 2016

2

Operating Conditions(1)

Main trends in the Investment Corporation

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 the Real Estate Investment and Trust Securities Section of theTokyo Stock Exchange (Ticker Code: 8963).
After the 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 themain allottee of the third-party allotment, and the sponsor changed to the Fortress Group.
Ever since the commencement of sponsorship from the Fortress Group, INV focused its efforts on
improving the profitability of its portfolio by establishing a revenue base in order to implement
stable distributions. INV has also strengthened the lender formation through new borrowings, therefinancing of existing bank borrowings, and thereby has established a financial base for future
external growth. With this platform as a base, Consonant Investment Management Co., Ltd., theasset manager to which INV entrusts the management of its assets (the “Asset Manager”) revised theInvestment Guidelines for INV in June 2014, and positioned hotels as a core asset class alongsideresidential properties with a view towards expanding investments in the hotel sector in which
demand is forecasted to rise going forward. As a result of these external growth efforts, INV's
portfolio as of the end of the previous period ended December 2015 comprised 111 properties (37hotels, 66 residential properties and eight others) with a total acquisition value of JPY 173,815
million, and market capitalization of JPY 224,835 million. This represents a 2.4x increase inportfolio acquisition value and a 7.6x increase in market capitalization compared to May 22, 2014,
the time immediately prior to INV’s initial investment in hotels.
In the fiscal period ended June 2016 (the "Reporting Period"), INV acquired five hotels and one
residential property on January 22, 2016 with funds raised through new loans. On March 10, 2016,
INV conducted its third consecutive global public offering (the "Capital Increase") in order toacquire four hotels and one residential property (the "Acquisition") on March 31, 2016 with thefunds raised through (i) the Capital Increase and (ii) new loans. In addition, INV acquired two
additional hotels on June 15, 2016 with (a) the cash-on-hand raised through the Capital Increase andthird-party allotment conducted in relation to the Capital increase and (b) new loans. As a result,
INV's portfolio comprised 124 properties (48 hotels, 68 residential properties and eight others) with13

a total acquisition value of JPY 266,619 million and a market capitalization of JPY 238,193 million
as of the end of the Reporting Period.
With respect to financial management, taking advantage of the negative interest rate policy adopted
by the Bank of Japan, INV executed interest rate swap agreements with regards to a part of its
existing borrowings (the total notional principal of which is JPY 99,119 million) on March 4, 2016,
with the aim to improve the financial stability through fixing interest rate. As a result, the ratio of
fixed interest rate related to the borrowings of INV increased from 0% as of the end of the previous
period to 69.8% as of the end of the Reporting Period.
In parallel with the acquisition of properties, on January 20, 2016 and March 10, 2016, INV added
new properties to the properties subject to a Memorandum of Understanding (the "MOU") withaffiliates of Fortress Group with respect to preferential negotiating rights regarding the acquisition of
hotels and residential properties, and thereby expanded a pipeline for further growth. As of the endof the Reporting Period, the properties of which INV has preferential negotiation rights regarding theacquisition under the MOU are 22 hotels (6,116 rooms) and nine residential properties (743 units),
and they continue to provide INV with a great opportunity for external growth.
(2)

Operational Environment and Performance

In the hotel segment, the Japanese government’s promotion of tourism initiatives such as airport
capacity expansion, the entry of LCC’s into the Japanese market, and the relaxation of visa
requirements for some Asian countries, coupled with macro structural changes such as a sharp
increase in the number of cross-border travelers due to the global rise of the middle-income bracket,
has led to a continued increase in the number of international visitors to Japan from China andSoutheast Asian countries such as Thailand, Malaysia, the Philippines, Indonesia and Vietnam. Thisrobust combination helped Japan log a record high of 19.737 million visitors in 2015 (47.1%
increase from the 13.413 million visitors of the previous year), and the number of foreigners entering
Japan exceeded the number of Japanese departing for the first time in 45 years. In the Reporting
Period, regardless of the effect of the Kumamoto Earthquake and the development of yen
appreciation, the number of foreigners entering Japan during the period from January to July of 2016
logged a record high of 14.010 million (+26.7% compared to the same period for the previous year),and demand in foreigners for accommodations continued to increase.
Regarding INV’s hotels, in addition to the abovementioned external factors, the hotel operators
adeptly captured inbound demand through strong revenue management techniques. 39 of the hotels
owned by INV (Note 1) recorded ADR (Note 2) of JPY 9,148, RevPAR (Note 3) of JPY 8,213, andan occupancy rate (Note 4) of 89.8%. Among the 35 hotels (Note 5) in which a comparison can bemade to the same period in the previous year, ADR was JPY 8,874 (+8.5%), RevPAR was JPY 7,896(+6.9%) (Note 6), with an occupancy rate of 89.0% (-1.3 points). The ratio of overseas sales (Note7)
at the 35 hotels (Note 8) increased to 34.2% (+ 5.2 points compared to the same period for theprevious year).
With respect to the residential portfolio, market rent trends for small-type city-center properties
continue to improve. Under the positive circumstances in the macro environment, INV implemented
a rent increase program for new leases and renewals as well as an initiative to reduce residential
leasing costs based on a market analysis of each unit and property in 2014. As a result, in theReporting Period, INV realized a rent increase for 49.0% of the new residential lease contracts or an
average rent increase of 1.1% compared to the previous rent, and a rent increase for 42.4% of
contract renewals or an average rent increase of 1.4% compared to the previous rent, while
maintaining a high contract renewal rate of 83.6%. The average occupancy rate for the Reporting
Period achieved a stable 95.7% (the average of 66 properties, excluding two properties acquired
during the Reporting Period; the average occupancy rate including such two properties was 96.3%),
and the average occupancy rate of 63 properties that can be compared to the same period for the14

previous year (Note 9) increased 1.8%. The NOI (Note 10) for the 63 properties (Note 9) in which
previous year comparisons can be made increased 5.1% compared to the same period for theprevious year.
As a result, INV maintained a high average occupancy rate of 98.3% across the entire portfolio, andthe NOI increased by 19.7% from the previous period to JPY 7,136 million.
As a result of the internal growth and the external growth through the acquisition of properties for
the Reporting Period, the trends in the real estate investment and rental market, as well as the strong
performance of the hotels, the total appraisal value at the end of the Reporting Period was JPY
323,291 million, an increase of JPY 108,339 million (+50.4%) over the previous period. The
appraisal value of 111 properties held at the end of the previous period increased from JPY 214,952
million to JPY 229,296 million (+6.7%), and in particular, the appraisal value of the 37 hotels
increased by JPY 13,718 million (+10.3%) year-on-year, significantly enhancing the overall
portfolio asset value. The portfolio has an unrealized gain of JPY 61,819 million (Note 11) and an
unrealized gain ratio of 23.6% (Note 11) were achieved.
(Note 1) Of the 48 acquired hotels, the following hotels on fixed rents 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.
(Note 2) “ADR” means average daily rate, and is calculated by dividing total room sales (excluding service fees) fora certain period by the total number of days per room for which each room was occupied during the same
period.
(Note 3) “RevPar” means revenue per available room per day, and is calculated by dividing total room sales for acertain 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.
(Note 4) “Occupancy rates” are calculated in accordance with the following formula:
Occupancy rates = total number of occupied rooms during a certain period ÷total number of rooms
available during the same period (number of rooms x number of days)(Note 5) Hotel MyStays Haneda and Hotel MyStays Kanazawa, for which there are no performance figures in andprior to 2014, Hotel MyStays Shinsaibashi, which was not operated for a certain period due to renovation in2015 (renovation period: from January 25 2015 through March 31, 2015), and Hotel MyStays Gotanda
Station, which was not operated for a certain period due to renovation in 2015 (renovation period: fromMarch 1, 2015 through November 24, 2015) are excluded, in addition to the properties excluded per Note
1.
(Note 6) The 34 properties excluded per Note 5 and Hotel MyStays Kanda, which underwent renovation for theperiod from May 20, 2016 through August 22, 2016, recorded an occupancy rate of 89.1% (-1.1 points
compared to the same period for the previous year), ADR of JPY 8,876 (+8.7% compared to the same
period for the previous year), and RevPAR of JPY 7,911 (+7.5% compared to the same period for theprevious year).
(Note 7) Of the 48 acquired hotels, APA Hotel Yokohama-Kannai, Hotel Nets Hakodate, 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, the tenants of which do notdisclose the ratio of overseas sales; Hotel Mystays Gotanda Station, the prior operator of which did not
calculate the ratio of overseas sales; and Hotel Epinard Nasu, the ratio of overseas sales of which has notbeen calculated for the period in and prior to May 2015, are excluded.
(Note 8) “Overseas sales ratio” is the ratio of sales amount through overseas web agents to revenues.
(Note 9) Of the 68 acquired residential properties, City Court Kitaichijo, Lieto Court Mukojima, Lieto Court
Nishi-Ojima, Royal Parks Momozaka and Royal Parks Shinden, which were not held by INV in the same
period in the previous year, are excluded.
(Note 10) For the comparison of NOI of the 63 properties, insurance payment as the temporary revenue and repair
expenses and other expenses that correspond to the insurance payment are excluded.
(Note 11) The unrealized gain is calculated using the following formula: the appraisal value as of the end of theReporting Period - book value as of the end of the Reporting Period
The unrealized gain ratio is calculated using the following formula: the unrealized gain ÷ book value as ofthe end of the Reporting Period

15

(3)

Overview of Fund Raising(i) Equity Finance
INV executed (i) a global public offering of investment units that closed on March 30, 2016 (numberof new investment units issued: 459,512; total issue value: JPY 36,123 million) and (ii) a third-party
allotment in conjunction with the global offering that closed on April 27, 2016, (number of new
investment units issued: 22,626; total issue value: JPY 1,778 million), in order to procure part of thefunds for the acquisition of four hotels and one residential property.
(ii) Debt Finance
INV implemented the borrowing of Term Loan (B) (amount borrowed: JPY 8,998 million; interest
rate: variable interest rate of 1-month JPY TIBOR plus 0.4%, 0.6% and 0.2%) from Sumitomo
Mitsui Trust Bank, Limited and Mitsubishi UFJ Trust and Banking Corporation on January 22, 2016
for use as a portion of the funds and related expenses to acquire five hotels and one residential
property.
In addition, INV introduced Development Bank of Japan Inc., as a new lender and implemented theborrowing of New Syndicate Loan (F) (amount borrowed: JPY 34,418 million; interest rate: variableinterest rate of 1-month JPY TIBOR (Note 1) plus 0.4%, 0.5%, 0.6% and 0.2%) on March 31, 2016,
with Mizuho Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Sumitomo Mitsui Trust Bank,
Limited. as arrangers, for use as portion of the funds and related expenses to acquire four hotels andone residential property, together with the equity finance described in (i) above.
On April 28, 2016, INV repaid a portion of New Syndicate Loan (E) in the amount of JPY 1,080
million that corresponds to the borrowings equivalent to the expected consumption tax refund (Note2), using the consumption tax refunds from the 11 hotels acquired on July 16, 2015.
Furthermore, INV implemented the borrowing of Term Loan (C) (amount borrowed: JPY 3,882
million; interest rate: variable interest rate of 1-month JPY TIBOR (Note 1) plus 0.4%, 0.5%, 0.6%
and 0.2%) from Citibank Japan Ltd. on June 15, 2016 for use as a portion of the funds and related
expenses to acquire two hotels. Additionally, INV implemented the borrowing of Term Loan (D)(amount borrowed: JPY 4,000 million; interest rate: 1-month JPY TIBOR plus 0.4% and 0.6%) from
Development Bank of Japan Inc. and AEON Bank, Ltd.
INV also fixed interest rates by executing interest rate swap agreements with regard to its existing
borrowing totaling JPY 99,119 million under New Syndicate Loan (E), Term Loan (A) and a part ofTerm Loan (B), on March 4, 2016, in order to prepare for future increases in interest rates.
Accordingly, INV pursued the improvement of the financial stability as the ratio of fixed interest
rates for the total amount of interest-bearing liabilities of INV became 69.8%.
As a result of the above measures, INV’s interest-bearing debt outstanding balance was JPY 141,917
million and the Loan-to-Value ratio was 48.7% (Note 3) as of the end of the Reporting Period and,the average interest rate was 0.50% (Note 4).
(Note 1) With respect only to the first interest calculation period, the 2-month JPY TIBOR.
(Note 2) Borrowings corresponding to the expected consumption tax refund mean the borrowings which will be
prepaid in the amount equivalent to the refund of consumption tax and local tax, which were paid in
relation to the acquisition of the trust beneficiary interests acquired by the borrowings executed at the sametime, in the case where the above-mentioned consumption tax refunds are received. The same shall apply
hereinafter.
(Note 3) The calculation for the Loan-to-Value ratio uses the calculation formula below:
Loan-to-Value ratio = amount of interest-bearing debt (excluding JPY 3,498 million borrowings
corresponding to the expected consumption tax refund) ÷ amount of total assets at end of the Reporting
Period x 100(Note 4) The average borrowing interest rate (annual rate) is calculated by the weighted average based on theoutstanding balance of borrowings, excluding borrowings corresponding to the expected consumption tax
refund. In addition, the said rate is rounded to two decimal places.

16

(4)

Overview of Acquisition of Assets

The overview of five hotels and one residential property acquired on January 22, 2016 is asfollows:
Appraisal
Acquisition
Value
Category of
Property
Property
Price
Use
Location(JPY
SellerSpecified
NumberName(JPY million)
million)Assets(Note 1)
(Note 2)Hotel
Aki
MyStays
Osaka-shi,
Tokutei
D38
3,160
3,190
Shinsaibas Osaka
Mokutekihi
KaishaNavaroComfortKitakyush
TokuteiD39
Hotelu-shi,
1,148
1,160
Mokuteki
KurosakiFukuoka
KaishaNavaroComfortMaebashiTokutei
Hotel
D40
Hotel
shi,
1,128
1,140
Mokuteki
Maebashi
Gunma
Trust
KaishaBeneficiary
ComfortNavaroInterests
Hotel
Sanjo-shi,
Tokutei
D41
1,010
1,020
TsubameNiigata
Mokuteki
Sanjo
KaishaNavaroComfortKitami-shi,
Tokutei
D42
Hotel
851
860
Hokkaido
Mokuteki
KitamiKaishaMomo
Royal
Osaka-shi,
Tokutei
Residential A103
Parks
2,910
2,940
Osaka
MokutekiMomozaka
KaishaTotal
10,207
10,310(Note 1) Acquisition price does not include adjustments for property taxes, city planning taxes, national or local
consumption taxes; hereinafter the same.
(Note 2) The appraisal value is based on that as of November 20, 2015 by reports of the Japan Real Estate
Institute, Daiwa Real Estate Appraisal Co., Ltd. and Morii Appraisal & Investment Consulting, Inc.

17

The overview of four hotels and one residential property acquired on March 31, 2016 is asfollows:
Appraisal
Acquisition
Value
Category of
Property
Property
Price
Use
Location(JPY
SellerSpecified
NumberName(JPY
million)Assetsmillion)(Note 1)
Hotel
Tsuki
MyStays
Shinagawa
TokuteiD43
24,67424,800Gotanda-ku, Tokyo
Mokuteki
StationKaishaSeptentrio
Tokutei
Mokuteki
KaishaSeptentrio
Hotel
Nasu-gun,2 Tokutei
D44
Epinard
20,981
21,300Tochigi
Mokuteki
Nasu
KaishaHotel
Septentrio
Trust
3 Tokutei
Beneficiary
MokutekiInterests
KaishaHotel
NavaroFukuokaMyStays
Tokutei
D45
shi,
8,059
81,000Fukuoka
Mokuteki
FukuokaTenjinKaishaHotel
NavaroMyStaysMinato-ku,
Tokutei
D46
7,959
8,000
Hamamats Tokyo
Mokutekiucho
KaishaMomo
Royal
Adachi-ku,
Tokutei
Residential A104
Parks
5,024
5,100
Tokyo
Mokuteki
Shinden
KaishaTotal

66,69767,300(Note 1) The appraisal value is based on that as of November 20, 2015, January 1, 2016 and January 31, 2016
by reports of Morii Appraisal & Investment Consulting, Inc.

18

The overview of two hotels acquired on June 15, 2016 is as follows:
Appraisal
Acquisition
Value
Property
Property
Price
Use
Location(JPY
NumberName(JPY
million)million)(Note 1)
D47

Hotel
MyStaysKanazawa

Kanazawashi,
Ishikawa

13,761

Takamatsu
Tokyu
REI Hotel

Takamatsu-shi,
Kagawa

2,139

2,160

15,90016,06013,900

Hotel
D48

Total

SellerCategory ofSpecified
AssetsGinga
Tokutei
Mokuteki
KaishaWakuseiTokutei
Mokuteki
KaishaTrust
BeneficiaryInterests(Note 1) The appraisal value is based on that as of May 31, 2016 by reports of Morii Appraisal & Investment
Consulting, Inc. and Daiwa Real Estate Appraisal Co., Ltd.

(e)

Overview of Results of Operations and Distribution

As a result of the operations mentioned above, operating revenues for the Reporting Period increasedby JPY 1,294 million from the previous period (+18.9%) to JPY 8,158 million, and net income
increased by JPY 1,410 million from the previous period (+47.8%) to JPY 4,363 million. DPU for
the Reporting Period was JPY 1,186, a decrease of JPY 1 (-0.1%) compared to the same period forthe previous year.
With respect to distributions, INV includes profit distributions in deductible expenses in accordancewith Section 1 of Article 67-15 of the Act on Special Taxation Measures Law. Profit distributions(not including distributions in excess of profit) declared for the six months ended June 30, 2016 were
¥4,135,302,000 which were all profit as defined in Article 136, Paragraph 1 of the Investment Trust
Act, except for fractional distribution per unit less than JPY 1. In addition, INV makes distributions
in excess of profit considering the effect of items deducted from net assets and distributions inexcess of retained earnings for the six months ended June 30, 2016 were ¥224,225,264, whichcorresponds to ¥227,532,553 of deferred losses on hedges at the end of Reporting Period divided by
the number of outstanding units (except for fractional distribution per unit in excess of profit lessthan JPY 1). All of the distributions in excess of retained earnings for the six months ended June 30,
2016 amounting to ¥224,225,264 consist only of allowance for temporary difference adjustment. As
a result, the distribution per unit for the Reporting Period is JPY 1,186.
In addition, INV has decided not to conduct the distribution in excess of retained earnings for theReporting Period, which was announced in the release “Notice concerning Revision of Forecast of
Financial Results and Distribution for the 26th Fiscal Period Ending June 2016 and the 27th Fiscal
Period Ending December 2016” on March 10, 2016, since the sum of adjustment accounts has nodiscrepancy between tax and accounting profits which can incur taxation.

19

3

Changes in Number of Investment Units Issued and Outstanding

Changes in the number of investment units issued and outstanding and unitholders’ equity by the endof the reporting period are as follow.

Date

Type of issue

January 18,
2002

Privateplacement forincorporation
Privateplacement
PrivatePlacement
Privateplacement
Privateplacement
Privateplacement
Privateplacement
Privateplacement
Privateplacement
Public offering

December26, 2003
January
9, 2004
January 21,
2004
January 27,
2004
January 28,
2004
January 31,
2004
February 5,
2004
February 7,
2004
May
17, 2004
February 7,
2005
July
31, 2006
February 1,
2010
February 1,
2010
July
29, 2011
December20, 2013
July
16, 2014
August13, 2014
July
15,
2015
August 12,
2015
March 30,
2016
April 27,2016

Public offering
Public offering
Unit split
MergerThird-party
allotment
Third-party
allotment
Public offering
Third-party
allotment
Public offering
Third-party
allotment
Public offering
Third-party
allotment

Number of investment units
issued and outstanding (units)
Increase
Total

Unitholders’ equity(JPY)
Increase
Total

Reference

400

400

200,000,000

200,000,000(Note 1)

2,700

3,100

1,012,500,000

1,212,500,000(Note 2)

1,350

4,450

506,250,000

1,718,750,000(Note 2)

1,333

5,783

499,875,000

2,218,625,000(Note 2)

267

6,050

100,125,000

2,318,750,000(Note 2)

800

6,850

300,000,000

2,618,750,000(Note 2)

266

7,116

99,750,000

2,718,500,000(Note 2)

800

7,916

300,000,000

3,018,500,000(Note 2)

1,333

9,249

499,875,000

3,518,375,000(Note 2)

9,000

18,2493,377,250,000

6,895,625,000(Note 3)

10,65028,8993,937,667,100

10,833,292,100(Note 4)25,00053,8998,301,125,000

19,134,417,100(Note 5)215,596

269,495―

19,134,417,100(Note 6)367,200

636,695―

19,134,417,100(Note 7)

711,597

1,348,292

6,999,979,689

26,134,396,789(Note 8)224,887

1,573,179

2,999,992,580

29,134,389,369(Note 9)1,040,000

2,613,179

22,747,920,000

51,882,309,369(Note 10)55,5072,668,686

1,214,104,611

53,096,413,980(Note 11)500,000

3,168,686

27,970,500,000

81,066,913,980(Note 12)25,0003,193,686

1,398,525,000

82,465,438,980(Note 13)459,5123,653,198

36,123,157,344

118,588,596,324(Note 14)

22,626

3,675,824

1,778,675,112

120,367,271,436(Note 15)20

(Note 1) The Investment Corporation was incorporated through a private placement at a price of JPY 500,000 per
unit.
(Note 2) New investment units were issued in a private placement at a price of JPY 375,000 per unit to raise funds
for the acquisition of new properties.
(Note 3) New investment units were issued in a public offering at a price of JPY 395,000 per unit (JPY 375,250 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.
(Note 4) New investment units were issued in a public offering at a price of JPY 385,140 per unit (JPY 369,734 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.
(Note 5) New investment units were issued in a public offering at a price of JPY 348,740 per unit (JPY 332,045 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.
(Note 6) An investment unit split of 5 units per 1 unit was conducted.
(Note 7) A merger by absorption pursuant to Article 147 of the Act on Investment Trusts and Investment
Corporations was conducted with LCP, with INV as the surviving entity. As a result of the merger by
absorption, 4 investment units of INV (after the investment unit split) were allotted for each LCP
investment unit. The number of LCP investment units issued as of the time of the merger by absorption
was 91,800 units.
(Note 8) New investment units were issued in a third party allotment at a price of JPY 9,837 per unit to makerepayment of existing debt, etc.
(Note 9) New investment units were issued in a third party allotment at a price of JPY 13,340 JPY per unit to makerepayment of existing debt, etc.
(Note 10) New investment units were issued in a public offering at a price of JPY 22,688 per unit (JPY 21,873 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.
(Note 11) New investment units were issued in a third party allotment at a price of JPY 21,873 per unit for the
purpose of cash reserve to appropriate to repayment in future borrowings.
(Note 12) New investment units were issued in a public offering at a price of JPY 57,817 per unit (JPY 55,941 after
deducting the underwriters’ discount) to appropriate a portion of funds for the acquisition of new properties.
(Note 13) New investment units were issued in a third party allotment at a price of JPY 55,941 per unit for the
purpose of cash reserve to appropriate a portion of funds for the acquisition of properties in future.
(Note 14) New investment units were issued in a public offering at a price of JPY 81,217 per unit (JPY 78,612 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 15) New investment units were issued in a third party allotment at a price of JPY 78,612 per unit for the
purpose of allocation to cash reserves to be used as a part of the funds for future acquisition of properties.

Trends in Trading Prices of Investment Securities
The highest and lowest prices (trading prices) in the Real Estate Investment and Trust Securities
Section of the Tokyo Securities Exchange on which the investment securities of INV are listed are as
follow.
Real Estate Investment and Trust Securities Section, Tokyo Securities Exchange
PeriodClosing
Month
HighestLowest22nd Fiscal
PeriodJune
201424,76016,74023rd Fiscal
PeriodDecember
2014
50,90023,02024th Fiscal
PeriodJune
201566,40044,50021

25th Fiscal
PeriodDecember
2015
76,40057,900(Unit: JPY)
26th Fiscal
PeriodJune
201688,40061,1004Distribution PerformanceWith respect to distributions for the Reporting Period, it was determined to distribute allunappropriated retained earnings, excluding fractions of distribution per investment unit that are lessthan JPY 1, with the aim of having the maximum amount of profit distribution deducted as expenses
based on application of the special taxation provisions (Article 67-15 of the Act on Special Measures
Concerning Taxation). As a result, the distribution of earnings per unit for the Reporting Period wasdetermined to be JPY 1,125.
In addition, in accordance with the distribution policy as set forth in Article 17, Paragraph 4 of the
Articles of Incorporation, INV makes distributions in excess of retained earnings of the amount thatit determines as the amount equivalent to items deducted from net assets (as set forth in Article 2,
Paragraph 2, Item 30 (b) of the Ordinance on Accountings of Investment Corporations), taking into
consideration the effect of the items deducted from net assets on the distributions (the “Excess Profit
Distribution”). For the Reporting Period, INV makes Distribution in excess of retained earnings of
JPY 224 million out of deferred losses on hedges of JPY 227 million as allowance for temporary
difference adjustment, and the distribution per unit of the allowance for temporary difference
adjustment is JPY 61.
As a result, distribution per unit (including excess profit distribution) was determined to be JPY
1,186.

22

Period
Calculated Period
Total unappropriatedretained earnings forperiod(JPY thousand)Reserved profit(JPY thousand)Total cash distribution(JPY thousand)(Distribution per unit)(JPY)
Total profit distribution(JPY thousand)(Profit distribution per
unit)
(JPY)
Total refund ofinvestment(JPY thousand)(Refund of investment
per unit )(JPY)
Total distribution fromthe reserve fortemporary difference
adjustments out of total
refund of investment(JPY thousand)(Distribution of thereserve for temporary
difference adjustments
per unit out of refundof investment per unit)(JPY)
Total distribution fromunitholders’ equity
under the tax laws outof the total refund ofinvestment(JPY thousand)Distribution fromunitholders’ equity
under the tax laws outof refund of investment
per unit(JPY)

22nd Fiscal
PeriodJan. 1, 2014
to Jun. 30,
2014

23rd Fiscal
PeriodJul. 1, 2014
to Dec. 31,
2014

24th Fiscal
PeriodJan. 1, 2015
to Jun. 30,
2015

25th Fiscal
PeriodJul. 1, 2015
to Dec. 31,
2015

26th Fiscal
PeriodJan. 1, 2016
to Jun. 30,
2016974,975

2,031,546

2,370,704

3,028,323

4,363,420

73,54375,39975,634－

228,827

901,431

1,956,146

2,295,069

3,790,905

4,359,527

573

733

860

1,187

1,186

901,431

1,956,146

2,295,069

3,027,614

4,135,302

573

733

860

948

1,125

−

−

−

763,290

224,225

−

−

−

239

61

−

−

−

−

224,225

−

−

−

−

61

−

−

−

763,290

−

−

−

−

239

−

23

5

Future Operational Policy and Issues to be Addressed

Forecast for Next Period and Issues to be Addressed
Since July 2011, INV has enhanced unitholder value by significantly increasing DPU with theFortress Group as its sponsor. Going forward, INV will implement various strategies to maintainfurther growth, including the following measures.
•
Continuous acquisition of properties from sponsor and third parties•
Further internal growth at hotel properties•
Obtain credit rating•
Diversification of financing measures, including the issuance of invest corporation bonds
Details of the future growth strategy are as follows.
(i)

External growth strategy

New Property Acquisitions
As its basic strategy, INV will move forward with the acquisition of new properties focusing on
hotels, where continued growth in portfolio revenues is anticipated. INV will also acquire a certain
proportion of residential properties and hotels using fixed rent schemes, which contribute to stablerevenue. This acquisition strategy will enable INV to build a portfolio with a good balance between
growth and stability.
In regards to hotels, INV will take into consideration the trends in foreign travelers visiting Japan,
demands of business and leisure customers, the competitive hotel environment, and leasing contract
types when making investment decisions, with the aim of acquiring properties where growth andstability of gross operating profit (GOP) and rental revenue are forecast to increase.
In regards to residential properties, INV will analyze occupancy rates, rental market trends, thepresence of competing properties and other factors, and consider acquiring mainly small-type
properties in large cities with strong competitiveness. In addition, INV will consider acquiring
family-type properties in cases where it is determined by INV to be beneficial to portfolio
diversification regarding residential properties.
In recent years, the property acquisition environment has become increasingly severe, however, INV,
as shown below, has continued to achieve steady external growth from the pipeline of the sponsor,
the Fortress Group.

24Properties Acquired from affiliates of the Fortress Group
Date
Properties acquired
September 201224 residential properties
May 2014
Two hotels
July 201418 hotels
February 2015
Two hotels
July 2015
11 hotels and three residential properties
August 2015
One hotel
January 2016
Five hotels and one residential property
March 2016
Four hotels and one residential property
June 2016
Two hotels
74 properties
Total(of which 29 are residential and 45 are hotels)

Total acquisition price
JPY 14,043 million
JPY 5,435 million
JPY 39,938 million
JPY 4,911 million
JPY 35,258 million
JPY 5,069 million
JPY 10,207 million
JPY 66,697 million
JPY 15,900 million
JPY 197,458 million(of which residential: JPY 27,076
million; hotels: JPY 170,382 million)

The Fortress Group manages four dedicated Japanese real estate funds, including the Fortress Japan
Opportunity Funds I and II. The Fortress Group’s committed equity is over JPY 300 billion and thenumber of properties that the Fortress Group is invested in exceeds 1,400. In order to ensure future
growth options for the portfolio, INV entered into an updated MOU with the Fortress Group thatprovides preferential negotiation rights with respect to the acquisition of 22 hotels and nineresidential properties (see the table below) (Note 1). As a result of the acquisition of two properties
as of June 15, 2016, the properties with preferential negotiation rights as of the date of this document
are as set forth below.
In addition, by utilizing the property transaction information available through the Fortress Groupand INV’s own network, INV will continuously consider and implement the acquisition of properties
from third parties that will contribute to stability and growth in revenue and cash flow and anincrease in DPU.

25

No.

Asset Type
(Note 6)

Asset Name

Location

No. of Rooms

1 Hotel MyStays Premier Akasaka

Limited Service Hotel

Minato-ku,Tokyo327

2 Hotel MyStays Yokohama-Kannai (Note 2)

Limited Service Hotel

Yokohama-shi, Kanagawa

166

3 Rihga Royal Hotel Kyoto (Note 3)

Full Service Hotel

Kyoto-shi, Kyoto

489

4 Narita Excel Hotel Tokyu

Full Service Hotel

Narita-shi, Chiba

706

5 Art Hotels Sapporo

Full Service Hotel

Sapporo-shi, Hokkaido

418

6 Best Western Hotel Fino Sapporo

Limited Service Hotel

Sapporo-shi, Hokkaido

242

7 Best Western Hotel Fino Oita

Limited Service Hotel

Oita-shi, Oita

145

8 Hotel Naqua City Hirosaki

Full Service Hotel

Hirosaki-shi, Aomori

134

9 Beppu Kamenoi Hotel

Resort Hotel

Beppu-shi, Oita

322

10 Fusaki Resort Village

Resort Hotel

Ishigaki-shi, Okinawa

195

Full Service Hotel

Urayasu-shi, Chiba

1,016

Limited Service Hotel

Osaka-shi, Osaka

397

11 Sheraton Grande Tokyo Bay Hotel (Note 4)
Hotel MyStays Shin-Osaka Conference
12
Center
13 Art Hotels Asahikawa

Full Service Hotel

Asahikawa-shi, Hokkaido

265

Limited Service Hotel

Kanazawa-shi, Ishikawa

206

15 Hotel JAL City Matsuyama

Full Service Hotel

Matsuyama-shi, Ehime161

16 Hotel MyStays Ueno East

Limited Service Hotel

Taito-ku, Tokyo

150(Provisional Name) Hotel MyStays
17
Hommachi 3-chome (Note 5)

Limited Service Hotel

Osaka-shi, Osaka120

18 Hotel MyStays Sapporo Nakajima Koen

Limited Service Hotel

Sapporo-shi, Hokkaido

86

19 Flexstay Inn Sakuragicho

Limited Service Hotel

Yokohama-shi, Kanagawa

70

20 MyCUBE by MYSTAYS Asakusa Kuramae

Limited Service Hotel

Taito-ku, Tokyo

161

21 Art Hotels Hamamatsucho

Limited Service Hotel

Minato-ku, Tokyo

120

Limited Service Hotel

Shinagawa-ku, Tokyo

14 Hotel MyStays Kanazawa Castle

22 Art Hotels Omori

Hotel Subtotal

220
6,116

23 Gran Charm Hiroo

Residential/Small TypeShibuya-ku, Tokyo

121

24 Plestay Win Kinshicho

Residential/Small Type Sumida-ku, Tokyo92

25 Gran Charm Kichijoji

Residential/Small Type Musashino-shi, Tokyo

28

26 Green Patio Noda

Residential/Small Type

Noda-shi, Chiba

240

27 Dainichi F-45

Residential/Small Type

Urayasu-shi, Chiba

54

28 Gran Charm Urayasu

Residential/Small Type Urayasu-shi, Chiba

54

29 Gran Charm Urayasu 5

Residential/Small Type Urayasu-shi, Chiba

54

30 Gran Charm Minami Gyotoku I

Residential/Small Type Ichikawa-shi, Chiba

52

31 Gran Charm Minami Gyotoku II

Residential/Small Type48

Ichikawa-shi, Chiba

Residential Property Subtotal(Note 1) The term of validity of the MOU is from March 10, 2016, the date of execution of the new MOU, to March
9, 2017. Regarding the 31 properties listed above, there is no guarantee that INV will be granted an
opportunity for considering acquisition of the properties or be able to acquire the properties.
(Note 2) Hotel MyStays Yokohama-Kannai is scheduled to be completed in September 2016, and is scheduled toopen in October 2016.
(Note 3) Rihga Royal Hotel Kyoto is scheduled to partially reopen on September 8, 2016 after renewal and fully
reopen on November 1, 2016.
(Note 4) Extension work regarding the Annex site of Sheraton Grande Tokyo Bay Hotel is now underway and isscheduled to be completed in December 2016.
(Note 5) (Provisional Name) Hotel MyStays Hommachi 3-chome is scheduled to be completed in October 2017, andis scheduled to open in December 2017.

26

743

(Note 6) Each “Asset Type” above is as follows:“Limited Service Hotel” refers to a hotel focusing on revenues from room stay and offer limited service
regarding foods and beverages, banquet, spa or gymnasium facilities.
“Full Service Hotel” refers to a hotel having sections of stay, foods and beverages, and banquet.
“Resort Hotel” refers to a hotel located at tourist destinations or recreational lots, having sections of stay,foods and beverages, and incidental facilities.
“Small Type” refers to a residential property in which the majority of dwelling units are less than 30 m2.

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

Strategy for internal growth(Hotels)
Of the 48 hotels owned by INV as at the end of the Reporting Period, 39 hotels use a variable rent
scheme. In the variable rent scheme, in principle, INV receives all of the gross operating profit(GOP) after deducting management fees for the hotel operator as rent, and INV’s variable rent
scheme is set up so that INV can directly enjoy the hotel revenue upside. For 33 hotels, MyStays
Hotel Mamanagement Co., Ltd., a hotel operator in the sponsor group, has implemented strict
revenue management seeking to maximize revenue. INV will continue to accurately ascertain andanalyze operating conditions of its hotels, the conditions of nearby hotels, market trends and otherfactors through operation meetings and other contact with hotel operators and will focus on
operations that maximize rent income.
(Residential properties and others)
INV will continue to strengthen its collaborative ties with Property Management (PM) companies
and brokers to further boost occupancy rates and earning capabilities of its properties. With respect
to INV’s residential properties, while the fiscal period ending December 2016 is off-season for the
residential rental market, INV will focus on increasing an occupancy rate, rent for new lease
contracts as well as for lease renewals for each of its properties as well as formulating net leasing
cost management policies in order to continue maximizing profits.
Further, the implementation of appropriate maintenance and repair plans is of the utmost importancein maintaining and enhancing the competitiveness and market value of the properties as well as
ensuring stable operations and high tenant satisfaction. Therefore, INV will continue to monitor
current strategic plans with flexible implementation as it sees fit.
(iii)

Financial strategy

INV has strengthened its lender formation via the new borrowings in conjunction with the public
offering implemented in March 2016 and the new borrowings implemented in January 2016 andJune 2016, to further stabilize its financial base. Going forward, INV will work on diversifying
financing measures, including issuing investment corporation bonds, as well as obtaining a credit
rating. Also, INV seeks to maximize unitholders’ value by way of lengthening and diversification ofborrowing terms, further reduction of borrowing costs, solicitation of new financial institutions
strengthening its lender formation.

27

(iv)

Compliance risk management

While the executive officer of INV concurrently serves as the representative director at the AssetManager, two supervisory directors (an attorney and a certified public account) oversee theexecution of the executive officer’s duties via the Board of Directors of INV. In addition, thecompliance officer of the Asset Manager attends each meeting of the Board of Directors in thecapacity of an observer.
The Asset Manager 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 in place a compliance committee which, chaired by such complianceofficer, is in charge of deliberating on compliance with laws, regulations and other relevant matters
as well as transactions with sponsor related parties. Compliance committee meetings are attended byan outside expert (an attorney) who, sitting in as a compliance committee member, conducts rigorous
deliberations on the existence of conflicts of interest in transactions with sponsor related parties aswell as strict examinations with respect to INV’s compliance with laws and regulations.
INV intends to continually take steps to strengthen its compliance structure.

28

6Significant subsequent events

Borrowing of Funds
INV implemented the new borrowings described in the following table on July 20, 2016 for use as a
portion of the fund and related expenses to acquire properties described in “(4) Overview ofAcquisition of Assets” of “2. Operating Conditions” above.
Term Loan (E)Lender

The Tokyo Star Bank, Limited

Borrowing
Date

BorrowingAmount(mn JPY)

July 20, 2016

700

July 20,
2016

1,600

July 20,
2016

1,700

Total

Interest Rate(per annum)
Variable interest
rate(Note 1)
Variable interest
rate(Note 2)
Variable interest
rate(Note 3)

Principal
Maturity
Date

Borrowing
MethodUnsecured /nonguarantee
Unsecured /July 20, 2020
nonguarantee
Unsecured /July 20, 2021
nonguarantee
July 20, 2019

4,000

(Note 1) 1-month JPY TIBOR (Base Rate) + spread (0.4%)(Note 2) 1-month JPY TIBOR (Base Rate) + spread (0.5%)(Note 3) 1-month JPY TIBOR (Base Rate) + spread (0.6%)(Reference Information)
Loan Transfer with respect to Existing LoansINV decided on July 15, 2016 to consent to the transfer of a portion of its existing loans from
Mizuho Bank, Ltd. as follows.
(i)

Financial institution transferring INV’s loan:
Mizuho Bank, Ltd.

(ii)

Financial institution to which INV’s loan is transferred to:Japan Post Bank Co., Ltd.

(iii)

Loan to be transferred:
A total amount of JPY 4,000 million of the New Syndicate Loan (F) as announced in therelease “Notice concerning Debt Financing” on March 10, 2016, which is the sum of (a)JPY 2,000 million of the loan held by Mizuho Bank, Ltd. (original principal amount: JPY
4,465 million), out of the three-year loan amounting JPY 11,434 million and (b) JPY 2,000
million of the loan held by Mizuho Bank, Ltd. (original principal amount: JPY 4,465
million), out of the four-year loan amounting JPY 10,433 million(iv)

Date of loan transfer agreement:
July 15, 2016(v)

Date of transfer:
July 15, 201629

In addition, INV decided on July 27, 2016 to consent to the partial transfer of its existing loans from
Mizuho Bank, Ltd. as follows.
(i)

Financial institution transferring INV’s loans:
Mizuho Bank, Ltd.

(ii)

Financial institutions to which INV’s loans are transferred to:
The Kagawa Bank, Ltd., The Shizuoka Bank, Ltd., The Hyakugo Bank, Ltd., and The
Bank of Fukuoka, Ltd.

(iii)

Loans to be transferred:
A total amount of JPY 4,000 million of the New Syndicate Loan (F) as announced in therelease “Notice concerning Debt Financing” on March 10, 2016. The breakdown of loans
is as follows.
(a) The Kagawa Bank, Ltd.
The sum of (1) JPY 500 million of the loan held by Mizuho Bank, Ltd. (principal
amount: JPY 2,465 million), out of the four-year loan amounting JPY 10,433 millionand (2) JPY 500 million of the loan held by Mizuho Bank, Ltd. (principal amount:
JPY 4,465 million), out of the five-year loan amounting JPY 10,433 million(b) The Shizuoka Bank, Ltd.
JPY 1,000 million of the loan held by Mizuho Bank, Ltd. (principal amount: JPY
2,465 million), out of the three-year loan amounting JPY 11,434 million(c) The Hyakugo Bank, Ltd.
JPY 1,000 million of the loan held by Mizuho Bank, Ltd. (principal amount: JPY
2,465 million), out of the four-year loan amounting JPY 10,433 million(d) The Bank of Fukuoka, Ltd.
JPY 1,000 million of the loan held by Mizuho Bank, Ltd. (principal amount: JPY
4,465 million), out of the five-year loan amounting JPY 10,433 million(iv)

Date of loan transfer agreements:
July 27, 2016(v)

Date of transfer:
July 29, 2016

There is no change to the content of the loan agreements, including the loan terms and conditions
due to the loan transfer.
As a result, the number of lenders has increased from 15 to 17 after the loan transfer above, andINV’s lender formation has been further strengthened.

30

Overview of the Investment Corporation
1

Overview of Investment
By Period

Results Dates
Number ofinvestment
units
authorized(Unit)
Number ofinvestment
units issued
andoutstanding(Unit)
Unitholders’equity(JPY million)
Number of
totalunitholders

22nd Fiscal
PeriodAs of Jun.
30, 2014

23rd Fiscal
PeriodAs of Dec. 31,
2014

24th Fiscal
PeriodAs of Jun. 30,
2015

25th Fiscal
PeriodAs of Dec. 31,
2015

26th Fiscal
PeriodAs of Jun. 30,
2016

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000

1,573,179

2,668,686

2,668,686

3,193,686

3,675,824

29,13453,09653,09682,465

120,367

10,005

12,148

10,731

10,587

12,13531

2Notes regarding Unitholders

Major unitholders at the end of the reporting period are as below.
Name

Number of units held

Calliope Godo Kaisha
The Master Trust Bank of Japan, Ltd.
(trust account)
Japan Trustee Services Bank, Ltd.
(trust account)
Trust & Custody Services Bank, Ltd.
(securities investment trust account)
The Nomura Trust and Banking Co.,
Ltd. (investment trust account)
Rayo Godo Kaisha
STATE STREET BANK AND TRUSTCOMPANY 505225
STATE STREET BANK AND TRUSTCOMPANY
JP MORGAN CHASE BANK 385628
NORTHERN TRUST CO. (AVFC) RE
IEDU UCITS CLIENTS NONLENDING 15
PCT TREATY ACCOUNT
Total% of total number of investment
units issued and outstanding

609,94216.59

440,880

11.99

432,104

11.75

327,680

8.91

157,460

4.28

149,925

4.07

77,714

2.11

77,5402.10

65,0901.77

59,1491.60

2,397,484

65.22(Note 1) Percentages are rounded down to two decimal places.

3

Notes regarding Directors

Directors at the end of the reporting period are as below.

Position

Name

Executive Director

Naoki Fukuda

Primary Responsibilities

Takashi Takahashi
Supervisory Director
Hiroyuki Fujimoto
Auditor(Note)

Ernst & Young
ShinNihon LLC

Directors’ remunerationfor operating period(JPY thousand)President and CEO,
Consonant Investment
Management Co. Ltd.
Attorney, Ocean General
Law Office
Tax accountant, CPA
Fujimoto Office--

Executive and supervisory directors do not hold the Investment Corporation’s units either in their names orin the names of third parties. In addition, while they may be directors of organizations not listed above,
those organizations as well as those listed above have no conflicts of interest with the Investment
Corporation.

32-2,4002,400
31,700Determination policy for dismissal or non-reappointment of Auditor
The auditing agreement with the auditor is renewed every accounting period. Dismissals are made inaccordance with the Investment Trust Act, and in addition, non-reappointments are considered by theboard of directors of INV by comprehensively taking into account the auditing quality, auditor
remuneration, and other various circumstances.
Matters Related to parties which have received Business suspension order within the past two years
The Auditor of INV received business suspension order from the Financial Services Agency on
December 22, 2015 to suspend accepting new engagements for 3 months (from January 1, 2016, to
March 31, 2016).
4
Asset Management
Administrative Agents

Company,

Asset

CustodyCompanies,

andGeneralThe asset management company, asset custody companies, and general administrative agents at theend of the Reporting Period are as below.
Delegation Category
Asset management company
Asset custody company
General administrative agent (institutional
operations (Note 1) administration of investors’
registry, etc.)
General administrative agent (institutional
operations (Note 2))
Generaladministrative
agent(auditingoperations, etc.)
Special account management company

Name
Consonant Investment Management Co., Ltd.
Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Trust Bank, Limited

Consonant Investment Management Co., Ltd.
EP Consulting Services Corporation
Mitsubishi UFJ Trust and Banking Corporation
Limited (Note 3) /Sumitomo Mitsui Trust Bank,
Limited (Note 4)(Note 1) Of the administrative tasks for the Investment Corporation’s institutional operations, tasks related to themailing of general unitholders’ meetings and the receipt and counting of voting forms are delegated(Note 2) (i) Tasks related to the running of general unitholders’ meetings for INV (excluding tasks related to themailing of general unitholders’ meetings and the receipt and counting of voting forms), (ii) Tasks related to
the running of the meetings of the Board of Directors of INV, and (iii) the aforementioned in (i) or tasks
incidental or related to (ii) are delegated.
(Note 3) Conducts administrative tasks related to the creation, maintenance, and disposition of transfer savings
account registers for special accounts of unitholders of the INV before the merger (former Tokyo Growth
REIT Fund) as well as tasks related to other transfer savings account registers.
(Note 4) Conducts administrative tasks related to the creation, maintenance, and disposition of transfer savings
account registers for special accounts of unitholders of the former LCP as well as tasks related to othertransfer savings account registers.

33

Status of Investment Corporation’s Assets under Management
1

Composition of Investment Corporation’s Assets

Type of
Asset

Previous period(as of December 31, 2015)

Geographic Area
(Note 1)

PurposeAmount Held(JPY million)(Note 2)

Reporting period(as of June 30, 2016)

Ratio of Total
Assets (%)

Amount Held(JPY million)(Note 2)

Ratio of Total
Assets (%)

Greater Tokyo area

－

－

－

－

Major regional cities

－

－

－

－

Subtotal

－

－

－

－

Greater Tokyo area

707

0.4

705

0.2

Major regional cities

－

－

－

－

Subtotal

707

0.4

705

0.2

Greater Tokyo area

100

0.1

100

0.0

Major regional cities

－

－

－

－

Subtotal

100

0.1

100

0.0

Greater Tokyo area

－

－

－

－

Major regional cities

－

－

－

－

Subtotal

－

－

－

－

808

0.4

806

0.3

Greater Tokyo area

45,941

24.7

51,86018.3

Major regional cities

13,505

7.3

16,413

5.8

Subtotal

59,44632.0

68,27424.0

Greater Tokyo area

7,037

3.8

7,023

2.5

Major regional cities

5,877

3.2

5,828

2.1

Subtotal

12,9146.9

12,852

4.5

Greater Tokyo area

－

－

－

－

Major regional cities

－

－

－

－

Subtotal

－

－

－

－

Greater Tokyo area

67,20736.1

102,445

36.1

Major regional cities

23,037

12.4

77,092

27.1

Subtotal

90,245

48.5

179,537

63.2

Total Real Estate in Trust

162,606

87.5

260,664

91.7

Deposits and Other Assets

22,50412.1

22,6348.0

185,918100.0

284,106

100.0(163,414)(87.9)(261,471)(92.0)

Residential

Office/RetailReal
EstateHourly parking, etc.

Hotel

Total real estate

Residential

Office/RetailRealestate intrust
Hourly parking, etc.

Hotel

Total Assets (Note 3)(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 and is calculated bydeducting the accumulated depreciation from the acquisition price (including acquisition related costs).
(Note 3) The figure indicated in“( )” in “Total Assets” shows the amount relevant to the real estate actually heldamong Total Assets.

34

2

Major Properties

The overview of the Investment Corporation’s major properties (top 10 properties by book value) atthe end of the reporting period is as below.

Occupancy

Book Value

Leasable

Leased Area

(JPY million)

Area (m )(m )D43 Hotel MyStays Gotanda Station

24,686

8,752.42

8,752.42

100.0

3.1

Hotel

D44 Hotel Epinard Nasu

20,89637,702.33

37,702.33

100.0

7.7

Hotel

D47 Hotel MyStays Kanazawa

13,776

13,250.03

13,250.03

100.0

0.6

Hotel

D21 APA Hotel Yokohama-Kannai

8,190

6,568.51

6,568.51

100.0

2.8

Hotel

D45 Hotel MyStays Fukuoka Tenjin

8,058

5,083.06

5,083.06

100.0

1.3

Hotel

D46 Hotel MyStays Hamamatsucho

7,961

1,951.90

1,951.90

100.0

0.9

Hotel

D24 Hotel MyStays Haneda

7,700

5,400.16

5,400.16

100.0

2.2

Hotel

A75 Spacia Ebisu

6,566

7,794.91

7,147.78

91.7

2.4

Residential

D03 Hotel MyStays Kyoto-shijo

5,862

7,241.51

7,241.51

100.0

4.4

Hotel

D25 Hotel MyStays Kameido P1

5,546

4,349.67

4,349.67

100.0

2.2

Hotel

109,246

98,094.50

97,447.37

99.3

27.7

-

Name of Property

Total

2

2

Rate (%)(Note)

Ratio of Rental
Revenue (%)

Main Use(Note) “Occupancy Rate” is computed by dividing the leased area by leasable area, and rounded to one decimal
place.

35

3

Asset Portfolio of Real Estate, etc.

The portfolio of the properties (real estate accounts of assets and liabilities within assets in trust)
held by the Investment Corporation at the end of the reporting period is as below.
Appraisal Value
Name of Property

Location

Type of

Leasable Area

(Note 1)

Ownership

(m2)

as of

Book Value

June 30, 2016

(JPY

(JPY million)

million)(Note 2)
A26

A27

A28

Nisshin Palacestage
Daitabashi
Nisshin Palacestage HigashiNagasaki

Growth Maison Gotanda

Trust1-31-2 Izumi, Suginami-ku, Tokyo

beneficiary

1,771.13

1,150

1,128

2,681.94

1,270

1,095

1,051.50

993

831

1,367.96

1,110

990

2,152.31

1,370

1,383

1,748.24

1,320

1,357

3,029.16

1,070

1,082

1,858.44

1,180

972

1,351.11

1,040

961

1,562.26

979

835

952.89878

757

1,015.34703

752

1,368.57641

643

1,167.50

620

654

interest
Trust
5-4-1 Nagasaki, Toshima-ku, Tokyo

beneficiaryinterest

2-26-6 Nishi-Gotanda, Shinagawa-ku,
Tokyo

Trust
beneficiaryinterest
Trust

A29

Growth Maison Kameido

6-58-16 Kameido, Koto-ku, Tokyo

beneficiaryinterest
Trust

A30

Emerald House

3-27-18 Itabashi, Itabashi-ku, Tokyo

beneficiaryinterest
Trust

A31

Harmonie Ochanomizu

2-5-5 Yushima, Bunkyo-ku, Tokyo

beneficiaryinterest
Trust

A32

Suncrest Shakujii-Koen

3-15-35 Takanodai, Nerima-ku, Tokyo

beneficiaryinterest

A33

A34

Growth Maison

3-16-2 Shin-Yokohama, Kohoku-ku,

Shin-Yokohama

Yokohama-shi, Kanagawa

Belle Face
Ueno-Okachimachi

Trustbeneficiaryinterest
Trust

1-27-5 Higashi-Ueno, Taito-ku, Tokyo

beneficiaryinterest
Trust

A35

Grand Rire Kameido

3-39-12 Kameido, Koto-ku, Tokyo

beneficiaryinterest

A36

Growth Maison Ikebukuro3-31-14 Nishi-Ikebukuro, Toshima-ku,
Tokyo

Trust
beneficiaryinterest
Trust

A37

Growth Maison Yoga

1-15-15 Okamoto, Setagaya-ku, Tokyo

beneficiaryinterest
Trust

A38

Route Tachikawa

3-7-6 Nishikicho, Tachikawa-shi, Tokyo

beneficiaryinterest
Trust

A39

Shibuya-Honmachi Mansion

2-35-2 Honmachi, Shibuya-ku, Tokyo

beneficiaryinterest

36

Appraisal Value
Name of Property

Location

Type of

Leasable Area

(Note 1)

Ownership

(m2)

as of

Book Value

June 30, 2016

(JPY

(JPY million)

million)(Note 2)
Trust
A40

City Heights Kinuta

4-13-15 Kinuta, Setagaya-ku, Tokyo

beneficiary

1,235.93492

645

1,210.74

716

551

1,126.65567

619

1,047.75

534

564

557.05601

563

907.46515

535

815.77565

524

2,040.27

449

525

871.35536

463

3,364.00

3,090

2,355

4,032.70

3,850

3,071

4,310.77

2,400

1,886

1,987.88

1,780

1,346

1,197.19

1,050

967

1,627.13

1,050

827

1,220.24

705

553

interest
A41

Acseeds Tower

2-5-13 Namiki, Kawaguchi-shi, Saitama

Kawaguchi- Namiki

Trustbeneficiaryinterest
Trust

A42

Capital Heights Kagurazaka

71-1 Enokicho, Shinjuku-ku, Tokyo

beneficiaryinterest
Trust

A43

College Square Machida

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

beneficiaryinterest
Trust

A44

Belair Meguro

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

beneficiaryinterest

A45

Wacore Tsunashima I

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

Trustbeneficiaryinterest
Trust

A46

Foros Nakamurabashi

1-6-6 Koyama, Nerima-ku, Tokyo

beneficiaryinterest

A47

Growth Maison Kaijin

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

Trustbeneficiaryinterest
Trust

A48

College Square Machiya

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

beneficiaryinterest
Trust

A51

City House Tokyo Shinbashi

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

beneficiaryinterest

A52

A53

A54

Winbell Kagurazaka

6-15 Shin-Ogawacho, Shinjuku-ku,
Tokyointerest

Nishiwaseda Cresent

3-18-9 Nishi-Waseda, Shinjuku-ku,

MansionTokyo

Lexington Square
Akebonobashi

Trustbeneficiary
Trustbeneficiaryinterest
Trust

3-8 Yochomachi, Shinjuku-ku, Tokyo

beneficiaryinterest
Trust

A56

Casa Eremitaggio

1-14-15 Nakane, Meguro-ku, Tokyo

beneficiaryinterest

A59

A61

Towa City Coop Shinotsuka

5-49-7 Higashi-Ikebukuro, Toshima-ku,

II

Tokyo

Bichsel Musashiseki

Trustbeneficiaryinterest

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

Trust
beneficiaryinterest

37

Appraisal Value
Name of Property

Location

Type of

Leasable Area

(Note 1)

Ownership

(m2)

as of

Book Value

June 30, 2016

(JPY

(JPY million)

million)(Note 2)
A62

A63

A64

A65

A66

Lexel Mansion Ueno
Matsugaya

Towa City Coop Sengencho

Royal Park Omachi

Trust
3-10-2 Matsugaya, Taito-ku, Tokyo

1,969.45

1,170

870

3,426.36

1,350

1,022

1,929.59549

398

1,528.58446

292

705.75260

234

1,430.64

1,150

875

784.74593

451

4,460.56

1,200

1,001

7,794.91

7,840

6,566

3,574.70

1,870

1,628

2,773.71

1,420

1,205

2,310.49

1,070

927

1,933.80785

642

1,955.40

769

629

898.70709

605

1,731.68

715

580

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

Trustbeneficiaryinterest

2-11-10 Omachi, Aoba-ku, Sendai-shi,
MiyagiTrust
beneficiaryinterest

Lexington Square

1-15-16 Haginomachi, Miyagino-ku,

Haginomachi

Sendai-shi, Miyagi

Visconti Kakuozan

beneficiary

Trustbeneficiaryinterest

2-44 Otanacho, Chikusa-ku,
Nagoya-shi, Aichi

Trust
beneficiaryinterest
Trust

A71

Lexington Square Daitabashi

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

beneficiaryinterest

A72

A73

Lexington Square Honjo

4-20-6 Higashikomagata, Sumida-ku,

Azumabashi

Tokyo

AMS TOWER Minami 6-Jo

Trust
beneficiaryinterest

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

Trustbeneficiaryinterest
Trust

A75

Spacia Ebisu

3-6-22 Higashi, Shibuya-ku, Tokyo

beneficiaryinterest
Trust

A76

Neo Prominence

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

beneficiaryinterest

A77

A78

A79

A80

A81

A82

Invoice Shin-Kobe

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

Residence

Hyogo

Cosmo Court Motomachi

Revest Honjin

Revest Matsubarainterest

3-12-20 Motomachi Dori Chuo-ku,
Kobe-shi, Hyogo

Trust
beneficiaryinterest

2-13 Torii Dori Nakamura-ku,
Nagoya-shi, Aichi

Trust
beneficiaryinterest

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

Trust
beneficiaryinterest

Sun Terrace Minami

2-22-6 Minami Ikebukuro, Toshima-ku,

IkebukuroTokyo

Alba Noritake Shinmachi

Trustbeneficiary

Trustbeneficiaryinterest

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

Trust
beneficiaryinterest

38

Appraisal Value
Name of Property

Location

Type of

Leasable Area

(Note 1)

Ownership

(m2)

as of

Book Value

June 30, 2016

(JPY

(JPY million)

million)(Note 2)
A83

A84

Revest Meieki Minami

Revest Heian

2-13-33 Meiekiminami, Nakamura-ku,
Nagoya-shi, Aichi

Trust
beneficiary

1,634.60

723

570

1,554.03

667

567

2,670.66

684

549

1,428.12623

521

701.92615

525

1,185.50568

502

1,433.35

601

487

765.18568

442

1,029.05

502

429

530.60490

400

1,020.86

427

360

789.12433

357

992.76419

343

1,477.62422

326

794.80322

319

974.81

383

301

interest

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

Trust
beneficiaryinterest
Trust

A85

Vendir Hamaotsu Ekimae

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

beneficiaryinterest

A86

A87

A88

A89

Salvo Sala

Excellente Kagurazaka

Luna Court Edobori

Winntage Kobe Motomachi

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

Trust
beneficiaryinterest

128-1 Yamabukicho Shinjuku-ku,
Tokyo, and other one parcel
3-4-11 Edobori, Nishi-ku, Osaka-shi,
Osaka

Trust
beneficiaryinterest
Trust
beneficiaryinterest

7-2-2 Motomachi Dori, Chuo-ku,
Kobe-shi, Hyogo

Trust
beneficiaryinterest
Trust

A90

Queen's Court Fukuzumi

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

beneficiaryinterest

A91

Corp Higashinotoin

380-1 Kawaranomachi, Higashinotoin

Trust

Dori Nijo Kudaru, Nakagyo-ku, Kyoto

beneficiary-shi, Kyoto, and other two parcels
A92

A93

A94

A95

A96

Belair Oimachi

Siete Minami-Tsukaguchi

5-14-17 Higashi Oi, Shinagawa-ku,
Tokyointerest
Trust
beneficiaryinterest

3-18 Minami Tsukaguchimachi,
Amagasaki-shi, Hyogo

Trust
beneficiaryinterest

Prime Life Sannomiya

4-3-23 Isogamidori ,Chuo-ku,

Isogami Koen

Kobe-shi Hyogo

HERMITAGE NANBA

4-10-3 Sakuragawa Naniwa-ku,

WEST

Osaka-shi, Osaka

Century Park Shinkawa

4-1-2 Shinkawamachi Minato-ku,

1-bankan

Nagoya-shi, Aichi

West Avenue

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

Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust

A97

beneficiaryinterest

A98

Little River Honmachibashi

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

Trust
beneficiaryinterest

39

Appraisal Value
Name of Property

Location

Type of

Leasable Area

(Note 1)

Ownership

(m2)

as of

Book Value

June 30, 2016

(JPY

(JPY million)

million)(Note 2)
A99

A100

A101

A102

A103

Prime Life Mikage

City Court Kitaichijo

Lieto Court
Mukojima
Lieto Court
Nishi-Ojima

Royal Parks Momozaka

2-25-11 Mikage Tsukamachi Higashi
Nada-ku, Kobe-shi, Hyogo
1-6-3 Kitaichijohigashi, Chuo-ku,
Sapporo-shi, Hokkaido

Trustbeneficiary761.18337

284

5,230.18

1,890

1,858

2,940.20

1,700

1,746

2,048.28

1,700

1,685

8,776.26

2,970

3,040

15,797.29

5,050

5,272

144,376.66

77,214

68,274

1,451.54

1,040

1,217

526.43537

705

6,033.58

4,030

4,705

2,145.00

945

1,100

2,178.37

667

741

8,419.15

3,510

3,114

18,440.58

2,330

1,973

39,194.65

13,05913,557

81.04

113

100

81.04

113

100

2,585.72

5,180

2,933

interest
Trust
beneficiaryinterest
Trust

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

beneficiaryinterest
Trust

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

beneficiaryinterest

5-38, Fudegasaki-Chou, Tennouji-Ku,
Osaka-shi, Osaka

Trust
beneficiaryinterest
Trust

A104

Royal Parks Shinden

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

beneficiaryinterest

Subtotal

B8

B9

B14

Kindai Kagakusha Building

Shinjuku Island

2-7-15, Ichigaya Tamachi, Shinjuku-ku,
Tokyo

Trust
beneficiaryinterest

6-5-1 Nishi-Shinjuku, Shinjuku-ku,
Tokyo

Lexington Plaza

5-2-4 Nishigotanda, Shinagawa-ku,

Nishigotanda

Tokyo

Cross Square NAKANO

5-24-18 Nakano, Nakano-ku, Tokyo

Real estate
Trustbeneficiaryinterest
Trust

B15

beneficiaryinterest

B16

B17

B18

Ohki Aoba Building

Lexington Plaza Hachiman

AEON TOWN Sukagawa

9-7 Futsukacho, Aoba-ku, Sendai-shi,
MiyagiTrust
beneficiaryinterest

3-1-50 Hachiman, Aoba-ku, Sendai-shi,
MiyagiTrust
beneficiaryinterest

105 Furukawa, Sukagawa-shi,
Fukushima

Trust
beneficiaryinterest

Subtotal
C1

Times Kanda-Sudacho4th

1-22-7, 1-22-15 Kanda sudacho,
Chiyoda-ku, Tokyo

Real estate

Subtotal
Trust
D1

Hotel MyStays Kanda

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

beneficiaryinterest

40

Appraisal Value
Name of Property

Location

Type of

Leasable Area

(Note 1)

Ownership

(m2)

as of

Book Value

June 30, 2016

(JPY

(JPY million)

million)(Note 2)Trust
D2

Hotel MyStays Asakusa

1-21-11 Honjo,Sumida-ku, Tokyo

beneficiary

3,327.38

5,520

2,572

7,241.51

13,9005,862

6,232.30

7,000

4,795

2,456.36

6,550

4,752

9,445.32

7,370

3,722

9,064.71

5,660

2,824

4,188.83

8,440

2,456

7,379.43

3,500

2,054

1,719.29

3,760

1,852

3,412.71

4,170

1,537

2,953.38

2,170

1,366

1,150.76

2,680

1,291

1,134.52

2,120

1,226

2,539.75

2,300

1,234

2,089.86

2,160

1,165

4,956.66

4,250

1,174

interest
52, Kasaboko-cho, Higashiiru,
D3

D4

Hotel MyStays Kyoto-Shijo

MyStays Shin-Urayasu
Conference Center

Trust

Aburanokoji, Shijo-dori, Shimogyo,

beneficiary

Kyoto-shi, Kyoto

interest

2-1-4, Akemi, Urayasu-shi, Chiba

beneficiary

Trustinterest
Trust

D5

Hotel MyStays Maihama

3-5-1, Tekko-dori, Urayasu-shi, Chiba

beneficiaryinterest
Trust

D6

Hotel Vista Premio Dojima

2-4-1, Sonezakishinchi, Kita-ku, Osaka

beneficiaryinterest

D7

D8

D9

D10

D11

D12

D13

D14

Hotel MyStays

2-23-22, Higashisakura, Naka-ku,

Nagoya-Sakae

Nagoya-shi, Aichi

Hotel MyStays

1-4-8, Awaji-machi, Chuo-ku, Osaka-shi,

Sakaisuji-Honmachi

Osaka

Hotel MyStays Yokohama

Hotel MyStays Nippori

interest

4-81, Sueyoshi-cho, Naka-ku,
Yokohama-shi, Kanagawa
5-43-7, Higashi-Nippori, Arakawa-ku,
TokyoFukuoka-Tenjin-Minami

Fukuoka-shi, Fukuoka

Inaricho

Flexstay Inn Shinagawa

Trustbeneficiaryinterest
Trust
beneficiaryinterest

3-14-20, Haruyoshi, Chuo-ku,

Hotel MyStays Ueno

Trust
beneficiaryinterest

Hotel MyStays

Flexstay Inn Iidabashi

Trustbeneficiary

Trustbeneficiaryinterest

3-26, Shin-Ogawa-cho, Shinjuku-ku,
Tokyo

Trust
beneficiaryinterest
Trust

1-5-7, Matsugaya, Taito-ku, Tokyo

beneficiaryinterest

1-22-19, Kitashinagawa, Shinagawa-ku,
Tokyo

Trust
beneficiaryinterest
Trust

D15

Flexstay Inn Tokiwadai

1-52-5, Tokiwadai, Itabashi-ku, Tokyo

beneficiaryinterest
Trust

D16

Flexstay Inn Sugamo

3-6-16, Sugamo, Toshima-ku, Tokyo

beneficiaryinterest

D17

Hotel MyStays Otemae

1-3-2, Tokui-cho, Chuo-ku, Osaka-shi,
Osaka

Trust
beneficiaryinterest

41

Appraisal Value
Name of Property

Location

Type of

Leasable Area

(Note 1)

Ownership

(m2)

as of

Book Value

June 30, 2016

(JPY

(JPY million)

million)(Note 2)
D18

Flexstay Inn Kiyosumi
ShirakawaTrust
1-12-16, Tokiwa, Koto-ku, Tokyo

beneficiary

2,673.64

1,320

741

770.56837

581

391.49403

284

6,568.51

9,500

8,190

7,961.26

3,360

2,735

1,754.06

2,260

2,113

5,400.16

8,480

7,700

4,349.67

7,040

5,546

2,247.92

4,520

3,790

2,793.99

4,720

3,702

3,559.81

2,360

2,165

1,403.89

1,800

1,623

1,714.53

1,430

1,276

11,733.23

1,280

1,241

1,190.57

1,150

969

3,305.64

1,080

971

interest
Trust

D19

Flexstay Inn Nakanobu P1

4-27-12, Futaba, Shinagawa-ku, Tokyo

beneficiaryinterest
Trust

D20

Flexstay Inn Nakanobu P2

4-27-8, Futaba, Shinagawa-ku, Tokyo

beneficiaryinterest

D21

D22

APA Hotel

3-37-2, Sumiyoshi-cho, Naka-ku,

Yokohama-Kannai

Yokohama-shi, Kanagawa

Hotel Nets Hakodate

26-17, Motomachi, Hakodate-shi,
Hokkaido

Trustbeneficiaryinterest
Trust
beneficiaryinterest
Trust

D23

Flexstay Inn Shirogane

5-10-15, Shirokane, Minato-ku, Tokyo

beneficiaryinterest
Trust

D24

Hotel MyStays Haneda

5-1-13, Haneda, Ota-Ku, Tokyo

beneficiaryinterest
Trust

D25

Hotel MyStays Kameido P1

6-32-1, Kameido, Koto-Ku, Tokyo

beneficiaryinterest

D26

Hotel MyStays Ueno
Iriyaguchi

Trust
5-5-13, HigashiUeno, Taito-Ku, Tokyo

beneficiaryinterest
Trust

D27

Hotel MyStays Kameido P2

6-7-8, Kameido, Koto-Ku, Tokyo

beneficiaryinterest

D28

D29

Hotel Vista Shimizu

Super Hotel Shinbashi/
Karasumoriguchi

1-23, Masagomachi, Shimizu-Ku,
Shizuoka-shi, Sizuoka

Trustbeneficiaryinterest
Trust

5-16-4, Shinbashi, Minato-Ku, Tokyo

beneficiaryinterest
Trust

D30

Flexstay Inn Higashi-Jujo

2-10-2, Nakajujo, Kita-Ku, Tokyo

beneficiaryinterest

D31

D32

D33

Hotel MyStays Utsunomiya

2-4-1, Higashishukugo, Utsunomiya,Tochigiinterest

Flexstay Inn

1-13-2, Kaizuka, Kawasaki-Ku,

Kawasaki-Kaizuka

Kanagawa

Comfort Hotel Toyama

Trustbeneficiary
Trustbeneficiaryinterest

1-3-2, Takara-machi, Toyama-shi,ToyamaTrustbeneficiaryinterest

42

Appraisal Value
Name of Property

Location

Type of

Leasable Area

(Note 1)

Ownership

(m2)

as of

Book Value

June 30, 2016

(JPY

(JPY million)

million)(Note 2)
D34

Flexstay Inn

15-9, Ogawa-cho, Kawasaki-Ku,

Kawasaki-Ogawacho

Kawasaki, Kanagawa

Flexstay Inn Ekoda

8-6, Sakaecho, Nerima-ku, Tokyo

Trust
beneficiary725.60

1,030

901

3,932.93

5,220

5,028

1,832.97

1,210

1,165

1,279.16

1,200

1,128

1,942.01

3,290

3,154

3,207.60

1,180

1,147

3,660.96

1,150

1,154

3,099.90

1,040

1,014

3,009.50875

853

8,752.42

24,80024,68637,702.33

21,30020,896

5,083.06

8,270

8,058

1,951.90

8,010

7,961

13,250.03

13,90013,776

7,148.17

2,160

2,149

226,275.96

232,905

179,537

interest
Trust

D35

beneficiaryinterest

D36

D37

D38

D39

D40

D41

Super Hotel Tokyo-JR
Tachikawa Kitaguchi
Super Hotel JR
Ueno-iriyaguchi

Hotel MyStays Shinsaibashi

Comfort Hotel Kurosaki

Comfort Hotel Maebashi

Comfort Hotel
Tsubame-Sanjo

Trust
2-21-9, Akebono, Tachikawa-shi, Tokyo

beneficiaryinterest
Trust

7-9-14, Ueno, Taito-ku, Tokyo

beneficiaryinterest

1-9-30, Nishi-Shinsaibashi, Chuo-Ku,
Osaka-shi, Osaka

Trust
beneficiaryinterest

3-13-13, Kurosaki, Yahatanishi-Ku,
Kitakyusyu-shi, Fukuoka
2-18-14, Omote-Cho, Maebashi-shi,
Gunma

Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust

2-115, Sugoro, Sanjo-shi, Niigata

beneficiaryinterest
Trust

D42

Comfort Hotel Kitami

3-4, Ohdori-Nishi, Kitami-shi, Hokkaido

beneficiaryinterest

D43

D44

Hotel MyStays Gotanda

2-6-8, Nishigotanda, Shinagawa-ku,

StationTokyo

Hotel Epinard Nasu

interest

1-10 Kaidoue (and 59 other land parcels),
Oaza-Takakuhei,

Nasu-machi,

Nasu-gun, Tochigi
D45

D46

Trust
beneficiary

Hotel MyStays Fukuoka

3-5-7, Tenjin, Chuo-ku, Fukuoka-shi,

TenjinFukuoka

Hotel MyStays

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

Hamamatsucho

Tokyo

Hotel MyStays Kanazawa

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

Trustbeneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust

D47

beneficiaryinterest

D48

Takamatsu Tokyu REI Hotel

9-9, Hyogomachi, Takamatsu-shi,
KagawaTrustbeneficiaryinterest

Subtotal

43

Appraisal Value
Name of Property

Location

Type of

Leasable Area

(Note 1)

Ownership

(m2)

as of

Book Value

June 30, 2016

(JPY

(JPY million)

million)(Note 2)
Total

409,928.31

323,291(Note 1) “Location” is, in principle, based on the indicated address (jyukyohyoji), except that if the jyukyohyojisystem has not been implemented for such property, the location is based on the land number (banchi).
(Note 2) “Appraisal Value” is the value appraised or researched as of the end of the fiscal period in accordance with
the Articles of Incorporation of INV and the regulations of the Investment Trusts Association, Japan by
Asset Research and Development Inc., the Japan Real Estate Institute, Morii Appraisal & Investment
Consulting Inc., Tanizawa Sogo Appraisal Co., Ltd. or Daiwa Real Estate Appraisal Co., Ltd.

44

261,471Occupancy trends for the leasing operations of the properties that the Investment Corporation holds
are as below.

Name of Property

A26
A27

Nisshin Palacestage
Daitabashi
Nisshin Palacestage
Higashi- Nagasaki

25th Fiscal Period

26th Fiscal Period(July 1, 2015 to December 31, 2015)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

(January 1, 2016 to June 30, 2016)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

1

96.1

39,112

0.6

1

97.0

39,605

0.5

1

96.8

44,131

0.6

1

93.2

45,9520.6

A28

Growth Maison Gotanda

1

100.0

27,351

0.4

1

100.0

27,3490.3

A29

Growth Maison Kameido

1

97.0

33,293

0.5

1

95.5

34,4040.4

A30

Emerald House

1

97.9

42,204

0.6

1

100.0

50,7530.6

A31

Harmonie Ochanomizu

1

90.8

37,837

0.6

1

100.0

40,3890.5

A32

Suncrest Shakujii-Koen

1

97.0

36,341

0.5

1

84.3

34,709

0.4

1

97.2

35,887

0.5

1

89.7

34,823

0.4

1

100.0

30,622

0.4

1

98.3

33,342

0.4

A33
A34

Growth Maison
Shin-Yokohama
Belle Face
Ueno-Okachimachi

A35

Grand Rire Kameido

1

100.0

26,619

0.4

1

100.0

26,6190.3

A36Growth Maison Ikebukuro

1

97.6

25,305

0.4

1

97.6

26,4080.3

A37Growth Maison Yoga

1

94.8

22,164

0.3

1

97.5

21,8390.3

A38

Route Tachikawa

1

96.6

21,787

0.3

1

93.2

20,7000.3

A39

Shibuya-Honmachi Mansion

1

96.4

20,262

0.3

1

95.9

20,4730.3

A40City Heights Kinuta

1

89.2

17,163

0.3

1

100.0

17,446

0.2

1

86.0

24,609

0.4

1

94.8

24,2620.3

A41

Acseeds Tower KawaguchiNamiki

A42

Capital Heights Kagurazaka

1

97.2

18,605

0.3

1

97.2

18,752

0.2

A43

College Square Machida

1

100.0

17,484

0.3

1

100.0

17,4840.2

A44

Belair Meguro

1

96.0

16,591

0.2

1

96.1

16,4360.2

A45

Wacore Tsunashima I

1

91.9

18,189

0.3

1

98.0

18,4660.2

A46

Foros Nakamurabashi

1

100.0

17,872

0.3

1

96.2

18,5460.2

A47

Growth Maison Kaijin

1

96.7

22,357

0.3

1

97.7

21,9180.3

A48

College Square Machiya

1

100.0

14,706

0.2

1

100.0

14,7060.2

A51City House Tokyo Shinbashi

1

98.6

91,326

1.3

1

96.1

90,692

1.1

45

Name of Property

A52
A53
A54

Winbell Kagurazaka
Nishiwaseda Cresent
MansionLexington Square
Akebonobashi

25th Fiscal Period

26th Fiscal Period(July 1, 2015 to December 31, 2015)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

(January 1, 2016 to June 30, 2016)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

1

98.3

102,344

1.5

1

98.6

107,429

1.3

1

97.5

70,527

1.0

1

100.0

72,347

0.9

1

98.8

49,358

0.7

1

95.4

51,132

0.6

A56

Casa Eremitaggio

1

100.0

30,488

0.4

1

100.0

31,694

0.4

A59

Towa City Coop Shinotsuka II

1

96.4

33,697

0.5

1

97.6

35,1680.4

A61

Bichsel Musashiseki

1

97.1

24,129

0.4

1

95.7

24,923

0.3

1

100.0

34,353

0.5

1

100.0

46,9880.6

A62

Lexel Mansion Ueno
Matsugaya

A63

Towa City Coop Sengencho

1

93.1

54,348

0.8

1

91.1

59,002

0.7

A64Royal Park Omachi

1

98.3

25,904

0.4

1

96.7

26,051

0.3

1

92.6

17,373

0.3

1

100.0

17,646

0.2

A65

Lexington Square
Haginomachi

A66

Visconti Kakuozan

1

86.3

9,620

0.1

1

100.0

10,5330.1

A71

Lexington Square Daitabashi

1

90.1

31,704

0.5

1

97.2

29,731

0.4

1

97.0

17,679

0.3

1

94.1

17,760

0.2

A72

Lexington Square Honjo
Azumabashi

A73

AMS TOWER Minami 6-Jo

1

94.3

46,125

0.7

1

87.6

47,9640.6

A75

Spacia Ebisu

1

95.6

203,351

3.0

1

91.7

199,105

2.4

A76

Neo Prominence

1

96.6

63,002

0.9

1

96.2

65,5930.8

A77

Invoice Shin-Kobe Residence

1

94.9

46,814

0.7

1

98.2

49,9930.6

A78

Cosmo Court Motomachi

1

96.2

37,098

0.5

1

96.3

37,7780.5

A79

Revest Honjin

1

98.8

31,945

0.5

1

97.5

31,2650.4

A80

Revest Matsubara

1

93.1

28,756

0.4

1

88.7

28,956

0.4

1

97.4

22,630

0.3

1

100.0

23,817

0.3

A81

Sun Terrace Minami
Ikebukuro

A82

Alba Noritake Shinmachi

1

91.0

25,999

0.4

1

97.2

26,647

0.3

A83

Revest Meieki Minami

1

100.0

26,282

0.4

1

96.6

26,5390.3

A84

Revest Heian

1

100.0

23,297

0.3

1

100.0

24,0760.3

A85

Vendir Hamaotsu Ekimae

1

88.4

30,247

0.4

1

95.3

33,371

0.4

A86

Salvo Sala

1

98.0

24,735

0.4

1

100.0

25,7950.3

46Name of Property

25th Fiscal Period

26th Fiscal Period(July 1, 2015 to December 31, 2015)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

(January 1, 2016 to June 30, 2016)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

A87

Excellente Kagurazaka

1

91.2

18,265

0.3

1

97.1

17,871

0.2

A88

Luna Court Edobori

1

96.0

20,341

0.3

1

96.0

21,4990.3

A89

Winntage Kobe Motomachi

1

85.9

22,271

0.3

1

86.0

21,396

0.3

A90

Queen's Court Fukuzumi

1

95.9

17,033

0.2

1

93.1

17,2400.2

A91

Corp Higashinotoin

1

97.9

17,945

0.3

1

90.8

17,4640.2

A92

Belair Oimachi

1

96.4

14,857

0.2

1

100.0

15,5820.2

A93

Siete Minami-Tsukaguchi

1

95.0

16,431

0.2

1

97.5

16,684

0.2

1

100.0

14,943

0.2

1

93.8

15,129

0.2

1

91.2

15,790

0.2

1

100.0

14,372

0.2

1

91.0

16,411

0.2

1

95.4

17,500

0.2

A94
A95
A96

Prime Life Sannomiya
Isogami Koen
HERMITAGE NANBA
WEST
Century Park Shinkawa
1-bankan

A97

West Avenue

1

80.0

10,366

0.2

1

85.0

11,0370.1

A98

Little River Honmachibashi

1

100.0

13,332

0.2

1

100.0

13,951

0.2

A99

Prime Life Mikage

1

100.0

12,003

0.2

1

96.7

12,1430.1

A100 City Court Kitaichijo

1

96.6

59,410

0.9

1

95.7

66,535

0.8

A101 Lieto Court Mukojima

1

97.6

47,395

0.7

1

96.8

53,918

0.7

A102 Lieto Court Nishi-Ojima

1

100.0

44,694

0.7

1

98.0

48,584

0.6

-

-

-

-

4

100.0

124,216

1.5

-

-

-

-

4

100.0

108,933

1.3

66

95.9

2,175,138

31.7

74

96.4

2,481,468

30.4

A103
A104

Royal Parks Momozaka(Note 4)
Royal Parks Shinden(Note 5)
Subtotal

B8

Kindai Kagakusha Building

1

100.0

38,433

0.6

1

100.0

37,0690.5

B9Shinjuku Island

1

100.0

(Note 3)(Note 3)1100.0(Note 3)(Note 3)

B14

Lexington Plaza Nishigotanda

7

100.0

150,219

2.2

7

100.0

149,977

1.8

B15

Cross Square NAKANO

1

79.1

36,311

0.5

1

84.1

39,4160.5

B16

Ohki Aoba Building

1

100.0

39,494

0.6

1

83.6

39,0810.5

B17

Lexington Plaza Hachiman

1

100.0

166,052

2.4

1

98.8

163,598

2.0

B18

AEON TOWN Sukagawa

1

100.0

142,027

2.1

1

100.0

142,027

1.7

47

Name of Property

Subtotal
C1

Times Kanda-Sudacho4th
Subtotal

D1

Hotel MyStays Kanda

25th Fiscal Period

26th Fiscal Period(July 1, 2015 to December 31, 2015)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

(January 1, 2016 to June 30, 2016)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

13

98.9

589,738

8.6

13

98.0

588,368

7.2

1

100.0

2,700

0.0

1

100.0

2,700

0.0

1

100.0

2,700

0.0

1

100.0

2,700

0.0

1

100.0

117,428

1.7

1

100.0

88,987

1.1

D2

Hotel MyStays Asakusa

1

100.0

142,768

2.1

1

100.0

128,239

1.6

D3

Hotel MyStays Kyoto-Shijo

1

100.0

370,894

5.4

1

100.0

358,013

4.4

1

100.0

217,548

3.2

1

100.0

179,1102.2

D4

MyStays Shin-Urayasu
Conference Center

D5

Hotel MyStays Maihama

1

100.0

188,788

2.8

1

100.0

148,450

1.8

D6Hotel Vista Premio Dojima

1

100.0

216,812

3.2

1

100.0

206,141

2.5

1

100.0

201,397

2.9

1

100.0

180,607

2.2

1

100.0

240,538

3.5

1

100.0

194,326

2.4

D7
D8

Hotel MyStays
Nagoya-Sakae
Hotel MyStays
Sakaisuji-Honmachi

D9

Hotel MyStays Yokohama

1

100.0

134,323

2.0

1

100.0

111,541

1.4

D10

Hotel MyStays Nippori

1

100.0

83,977

1.2

1

100.0

72,466

0.9

1

100.0

125,043

1.8

1

100.0

110,274

1.4

1

100.0

59,153

0.9

1

100.0

52,789

0.6

1

100.0

61,488

0.9

1

100.0

53,901

0.7

D11
D12
D13

Hotel MyStays
Fukuoka-Tenjin-Minami
Flexstay Inn Iidabashi
Hotel MyStays
Ueno Inaricho

D14

Flexstay Inn Shinagawa

1

100.0

56,956

0.8

1

100.0

48,4530.6

D15

Flexstay Inn Tokiwadai

1

100.0

69,464

1.0

1

100.0

64,9320.8

D16

Flexstay Inn Sugamo

1

100.0

57,405

0.8

1

100.0

55,6570.7

D17Hotel MyStays Otemae

1

100.0

121,301

1.8

1

100.0

137,938

1.7

1

100.0

43,269

0.6

1

100.0

40,0240.5

D18

Flexstay Inn Kiyosumi
Shirakawa

D19

Flexstay Inn Nakanobu P1

1

100.0

24,491

0.4

1

100.0

22,9140.3

D20

Flexstay Inn Nakanobu P2

1

100.0

13,100

0.2

1

100.0

12,159

0.1

1

100.0

236,234

3.4

1

100.0

231,479

2.8

1

100.0

124,347

1.8

1

100.0

110,080

1.3

D21
D22

APA Hotel
Yokohama-Kannai
Hotel Nets Hakodate

48

Name of Property

25th Fiscal Period

26th Fiscal Period(July 1, 2015 to December 31, 2015)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

(January 1, 2016 to June 30, 2016)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

D23

Flexstay Inn Shirogane

1

100.0

57,114

0.8

1

100.0

58,1220.7

D24

Hotel MyStays Haneda

1

100.0

204,721

3.0

1

100.0

177,466

2.2

D25

Hotel MyStays Kameido P1

1

100.0

182,201

2.7

1

100.0

176,496

2.2

1

100.0

121,374

1.8

1

100.0

106,248

1.3

D26

Hotel MyStays Ueno
Iriyaguchi

D27

Hotel MyStays Kameido P2

1

100.0

125,072

1.8

1

100.0

123,608

1.5

D28

Hotel Vista Shimizu

1

100.0

81,760

1.2

1

100.0

67,741

0.8

1

100.0

36,303

0.5

1

100.0

39,426

0.5

D29Super Hotel
Shinbashi/Karasumoriguchi

D30

Flexstay Inn Higashi-Jujo

1

100.0

45,317

0.7

1

100.0

40,1140.5

D31

Hotel MyStays Utsunomiya

1

100.0

110,292

1.6

1

100.0

77,939

1.0

1

100.0

35,764

0.5

1

100.0

31,955

0.4

1

100.0

33,030

0.5

1

100.0

35,928

0.4

1

100.0

31,266

0.5

1

100.0

29,136

0.4

1

100.0

84,916

1.2

1

100.0

113,216

1.4

1

100.0

21,704

0.3

1

100.0

31,787

0.4

1

100.0

18,623

0.3

1

100.0

27,275

0.3

-

-

-

-

1

100.0

84,282

1.0

-

-

-

-

1

100.0

33,616

0.4

-

-

-

-

2

100.0

38,901

0.5

-

-

-

-

2

100.0

31,003

0.4

-

-

-

-

1

100.0

26,879

0.3

-

-

-

-

1

100.0

254,397

3.1

-

-

-

-

1

100.0

627,563

7.7

-

-

-

-

1

100.0

109,967

1.3

-

-

-

-

1

100.0

77,364

0.9

D32
D33
D34
D35
D36
D37
D38
D39
D40
D41
D42
D43
D44
D45
D46

Flexstay Inn
Kawasaki-Kaizuka
Comfort Hotel Toyama
Flexstay Inn
Kawasaki-Ogawacho
Flexstay Inn Ekoda
Super Hotel Tokyo-JR
Tachikawa Kitaguchi
Super Hotel JR
Ueno-iriyaguchi
Hotel MyStays Shinsaibashi(Note 4)
Comfort Hotel Kurosaki(Note 4)
Comfort Hotel Maebashi(Note 4)
Comfort Hotel
Tsubame-Sanjo (Note 4)
Comfort Hotel Kitami (Note4)
Hotel MyStays Gotanda
Station (Note 5)
Hotel Epinard Nasu (Note 5)
Hotel MyStays Fukuoka
Tenjin (Note 5)
Hotel MyStays
Hamamatsucho (Note 5)49Name of Property

D47
D48

Hotel MyStays Kanazawa

25th Fiscal Period

26th Fiscal Period(July 1, 2015 to December 31, 2015)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

(January 1, 2016 to June 30, 2016)
RentalOccupancy
Number of
Revenue
Rate
Ratio of
Tenants(during(at end of
Rental(at end of
period)period)Revenueperiod)
(JPY
(%)
(%)
(unit)
thousand)(Note 1)
(Note 2)

-

-

-

-

1

100.0

49,162

0.6

-

-

-

-

3

100.0

7,591

0.1

Subtotal

37

100.0

4,096,198

59.7

52

100.0

5,085,683

62.3

Total

117

98.2

6,863,775

100.0

140

98.5

8,158,220100.0(Note 6)
Takamatsu Tokyu REI Hotel(Note 6)(Note 1) “Occupancy Rate” is computed by dividing the leased area by leasable area, and is rounded to one decimal
place.
(Note 2) “Rental Revenue (during period)” indicates each property’s leasing operation revenues during the fiscal
period, and has been rounded down to the nearest thousand yen.
(Note 3) Undisclosed due to inability to gain approval from the property tenant for document disclosure.
(Note 4) Since the property was acquired on January 22, 2016, the calculation period of the rental revenue of therelevant property for the Reporting Period was set for the period commenced on January 22, 2016 andended on June 30, 2016.
(Note 5) Since the property was acquired on March 31, 2016, the calculation period of the rental revenue of therelevant property for the Reporting Period was set for the period commenced on March 31, 2016 and ended
on June 30, 2016.
(Note 6) Since the property was acquired on June 15, 2016, the calculation period of the rental revenue of therelevant property for the Reporting Period was set for the period commenced on June 15, 2016 and ended
on June 30, 2016.

4

Asset Portfolio of Facilities Generating Renewable Energy, etc.

N/A
5

Asset Portfolio Including Rights to Operate Public Facilities, etc.

N/A

50

6

Status of Contract Amount and Fair Value of Specified Transaction

As of June 30, 2016, the contract amount and fair value of the outstanding transaction under the
specified transaction account of INV are as follows.
(Unit: JPY thousand)
Method of hedge
accounting

Derivativetransaction type,
etc.

Contractual amount, etc.
(Note 1)
Amounts due
after one year

Fair value(Note 2)

Interest rate swap
Receive floating
99,119,000
99,119,000(227,532)
rate/pay fixed
rate(Note 1) The contractual amount, etc. are stated based on a notional principal.
(Note 2) The fair value is estimated based on the price, etc. presented by the correspondent financial institutions.
Standard methodof treatment

7

Status of Other Assets

Trust beneficiary interests in real estate and real estate held in trust are listed together in the “3 Asset
Portfolio of Real Estate, etc.” and “6 Status of Contract Amount and Fair Value of Specified
Transaction” above. As of the end of this reporting period, there are no investments in specified
assets that are significant investment targets for INV outside of the above 3 and 6.
8

Asset Holdings Outside of Japan or the Region

There are no relevant items outside of Japan or the region.

51

Capital expenditures for properties held by INV
1Schedule for capital expenditures

The schedule for the principal capital expenditures for property maintenance construction, etc. as ofthe end of the fiscal period for the properties held by INV is as follows.
Estimated Cost (JPY thousand)Name of Property

Location

PurposeScheduled Time of
Implementation

Total

Payment for
the Fiscal
Advance
Period ended
Payments
June 30,
2016

D01

Hotel MyStays
Kanda

Chiyoda Ward,Tokyo

Renovation work

From January 2016
to December 2016

125,000--

A53

Nishiwaseda
Cresent Mansion

Shinjuku
Ward, Tokyo

Outer wall repair
work

From July 2016
to December 2016

90,000--A75

Spacia Ebisu

Shibuya Ward,Tokyo

Entrance area
improvement work

From July 2016
to December 2016

53,900--

A62

Lexel Mansion
Ueno Matsugaya

Taito Ward,Tokyo

Exterior wall repair
work

From July 2016
to December 2016

39,500--2

Capital expenditures for the fiscal period ended June 30, 2016

The principal construction constituting capital expenditures for the real estate assets for the fiscal
period ended June 30, 2016 is as follows. Capital expenditures for the fiscal period was JPY 438,859
thousand, and together with JPY 30,405 thousand of repair cost included in this fiscal period’s
expenses, construction work totaling JPY 469,265 thousand was implemented.
Name of Property

Location

PurposeTime of Implementation

Payment(JPY thousand)

D01

Hotel MyStays
Kanda

Chiyoda Ward,Tokyo

Renovation work

From January 2016
to June 2016

125,000

D12

Flexstay Inn
Iidabashi

Shinjuku
Ward, Tokyo

Installation of additional
steel-frame staircases

From January 2016
to June 2016

9,250

D02

Hotel MyStays
Asakusa

Sumida Ward,Tokyo

Replacement of automatic fire
alarm system

From January 2016
to June 2016

7,600

A53

Nishiwaseda
Cresent Mansion

Shinjuku
Ward, Tokyo

Replacement of intercom
systemFrom January 2016
to June 2016

5,800

B16

Ohki Aoba
Building

Sendai City,
Miyagi

Maintenance work on parking
lot equipment

From January 2016
to June 2016

5,000

Other construction

286,209
Total

438,859

52

3

Reserved funds for long-term maintenance plan (repair reserves)

INV has reserved funds, as below, from the cash flow of the relevant fiscal period towards
large-scale maintenance repairs in the medium to long term future in accordance with the long-term
maintenance plan for each property.

Fiscal period

Reserved funds at
beginning of period
Amount reserved(Note)
Amount reversed(Note)
Amount carried over for
next fiscal period(Note)

22nd Fiscal
Period23rd Fiscal
Period24th Fiscal
Period25th Fiscal
Period26th Fiscal
PeriodFrom January 1,
2014 to June 30,
2014

From July 1, 2014
to December 31,
2014

From January 1,
2015 to June 30,
2015

From July 1, 2015
to December 31,
2015

From January 1,
2016 to June 30,
2016

JPY 524,730
thousandJPY 199,177
thousandJPY 144,225
thousandJPY 579,682
thousandJPY 579,682
thousandJPY 268,495
thousandJPY 109,812
thousandJPY 738,365
thousandJPY 738,365
thousandJPY 283,147
thousandJPY 168,813
thousandJPY 852,699
thousandJPY 852,699
thousandJPY 352,490
thousandJPY 222,439
thousandJPY 982,750
thousandJPY 982,750
thousandJPY 543,275
thousandJPY 222,339
thousandJPY 1,303,685
thousandThe amount reserved for the relevant fiscal period includes the reserves for acquired properties, and theamount reversed includes the reserves for disposed properties.

53

Overview of Expenses and Liabilities
1

Statement of Operating Expenses(JPY thousand)

Item

25th Fiscal Period

26th Fiscal Period

July 1, 2015 to December 31, 2015

January 1, 2016 to June 30, 2016(a) Asset management fees

180,000

250,000(b) Asset custody fees

6,794

9,128

(c) Administrative services fees

25,17024,010(d) Directors’ compensation

4,800

4,800

(e) Other

99,736

98,390316,501

386,329

Total
2

Borrowing Conditions

Borrowing conditions by financial institution at the end of this reporting period are as below.
Type

LenderBalance at Balance at End
Borrowing Beginning of of Reporting
Date
Reporting
PeriodPeriod(JPY thousand)(JPY thousand)

Sumitomo Mitsui Banking

360,000

Corporation
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

Jul. 16,
2015

Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedShort-term
loan
Mizuho Bank, Ltd.
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

-

360,000--

498,000-

604,000-

826,000-

688,000-

882,000

1,080,000

3,498,000

5,992,000

5,992,000

5,992,000

5,992,000

Mar. 31,2016

Sumitomo Mitsui Trust Bank,
Limited
Citibank Japan Ltd.

Jun. 15,2016

Subtotal
Sumitomo Mitsui Banking
Corporation
The Bank of Tokyo-Mitsubishi
Long-term UFJ, Ltd.
loan
Mizuho Bank, Ltd.
Shinsei Bank, Limited

Jul. 16,
2015

5,992,000

5,992,000

3,330,000

3,330,000

54

Repayment Payment Purpose
Date
MethodNotes-

360,000

Jan. 22,2016

Average
Interest
Rate(%)(Note 1)

0.302

May 16,2016

Unsecured(Note 3)(Note 2) / with no(Note 4)guarantee

0.276

Jan. 22,2017

Unsecured(Note 3) (Note 2) / with noguarantee

0.247

Mar. 30,
2017

Unsecured(Note 3) (Note 2) / with noguarantee

0.252

Jun. 15,2017

Unsecured(Note 3) (Note 2) / with noguarantee

0.375Jul. 16,2018

Unsecured(Note 4) (Note 2) / with noguarantee

Type

LenderBalance at Balance at End
Borrowing Beginning of of Reporting
Date
Reporting
PeriodPeriod(JPY thousand)(JPY thousand)

Citibank Japan Ltd.
Sumitomo Mitsui Trust Bank,
LimitedResona Bank, Limited
Mitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Banking
Corporation
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Mizuho Bank, Ltd.
Shinsei Bank, Limited
Citibank Japan Ltd.

Jul. 16,2015

Sumitomo Mitsui Trust Bank,
LimitedResona Bank, Limited
Mitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Banking
Corporation
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Long-term Mizuho Bank, Ltd.
loan
Shinsei Bank, Limited
Citibank Japan Ltd.

Jul. 16,2015

2,670,000

1,335,000

1,335,000

668,000

668,000

5,992,000

5,992,000

5,992,000

5,992,000

5,992,000

5,992,000

3,330,000

3,330,000

3,000,000

3,000,000

2,670,000

2,670,000

1,335,000

1,335,000

668,000

668,000

5,992,000

5,992,000

5,992,000

5,992,000

5,992,000

5,992,000

3,330,000

3,330,000

0.480

Jul. 16,2019

Unsecured(Note 4) (Note 2) / with noguarantee

0.590Jul. 16,
2020

Unsecured(Note 4) (Note 2) / with noguarantee

2,670,000

2,670,000

1,335,000

1,335,000

668,000

668,000

Aug. 28,2015

3,682,000

3,682,000

0.480

Aug. 28,2019

Unsecured(Note 4) (Note 2) / with noguarantee

Jan. 22,2016-

3,400,000

0.343

Jan. 22,2019

Unsecured(Note 4) (Note 2) / with noguarantee

Resona Bank, Limited
Mitsubishi UFJ Trust andBanking Corporation

Limited

2,670,000

Notes

3,000,000

LimitedSumitomo Mitsui Trust Bank,

3,000,000

Repayment Payment Purpose
Date
Method3,000,000

Sumitomo Mitsui Trust Bank,

Mizuho Bank, Ltd

3,000,000

Average
Interest
Rate(%)(Note 1)

55

Type

LenderBalance at Balance at End
Borrowing Beginning of of Reporting
Date
Reporting
PeriodPeriod(JPY thousand)(JPY thousand)

Mitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Trust Bank,
LimitedMitsubishi UFJ Trust andJan. 22,2016-

850,000-

3,400,000-

850,000

Mizuho Bank, Ltd-

4,465,000

The Bank of Tokyo-Mitsubishi-

1,125,000-

2,181,000-

650,000-

570,000

Banking Corporation

UFJ, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedMitsubishi UFJ Trust andBanking Corporation
Shinsei Bank, Limited
Long-term
Resona Bank, Limited
loan

Mar. 31,2016-

570,000-

1,000,000

The Bank of Fukuoka, Ltd.

-

333,000

The Shizuoka Bank, Ltd.

-

270,000

The Nomura Trust and-

270,000

Mizuho Bank, Ltd-

4,465,000

The Bank of Tokyo-Mitsubishi-

1,125,000-

2,180,000-

650,000

Development Bank of Japan,
Inc.

Banking Company, Limited

UFJ, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedMitsubishi UFJ Trust andBanking Corporation

Mar. 31,2016-

570,000

Resona Bank, Limited-

570,000

The Bank of Fukuoka, Ltd.

-

333,000

The Shizuoka Bank, Ltd.

-

270,000

Shinsei Bank, Limited

56

Average
Interest
Rate(%)(Note 1)

Repayment Payment Purpose
Date
Method

Notes

0.600

Jan. 22,2021

Unsecured(Note 4) (Note 2) / with noguarantee

0.447

Mar. 30,
2019

Unsecured(Note 4) (Note 2) / with noguarantee

0.547

Mar. 30,
2020

Unsecured(Note 4) (Note 2) / with noguarantee

Type

LenderBalance at Balance at End
Borrowing Beginning of of Reporting
Date
Reporting
PeriodPeriod(JPY thousand)(JPY thousand)

The Nomura Trust and-

270,000

Mizuho Bank, Ltd-

4,465,000

The Bank of Tokyo-Mitsubishi-

1,125,000-

2,180,000-

650,000-

570,000-

570,000

The Bank of Fukuoka, Ltd.

-

333,000

The Shizuoka Bank, Ltd.

-

270,000

The Nomura Trust and-

270,000

Banking Company, Limited

UFJ, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedMitsubishi UFJ Trust andBanking Corporation
Shinsei Bank, Limited.

Mar. 31,2016

Long-term Resona Bank, Limitedloan

Banking Company, Limited

Average
Interest
Rate(%)(Note 1)

Repayment Payment Purpose
Date
Method0.647

Mar. 30,
2021

Citibank Japan Ltd.

Jun. 15,2016-

1,000,000

0.452

Jun. 15,
2019

Citibank Japan Ltd.

Jun. 15,2016-

1,000,000

0.552

Jun. 15,
2020

Citibank Japan Ltd.

Jun. 15,2016-

1,000,000

0.652

Jun. 15,2021

Jun. 30,2016-

1,000,000

0.434

Jun. 30,
2019

Jun. 30,2016-

3,000,000

0.634

Jun. 30,
2021

Subtotal

90,619,000

138,419,000

Total

91,699,000

141,917,000

Development Bank of Japan,
Inc.
AEON Bank, Ltd.

Unsecured(Note 4) (Note 2) / with noguarantee

Unsecured(Note 4) (Note 2) / with noguarantee
Unsecured(Note 4) (Note 2) / with noguarantee
Unsecured(Note 4) (Note 2) / with noguarantee
Unsecured(Note 4) (Note 2) / with noguarantee
Unsecured(Note 4) (Note 2) / with noguarantee(Note 1) Average interest rate is the daily weighted average number of the period according to the number of days,
and is rounded to three decimal places. In regards to borrowings with respect to which interest rate swap
transactions are entered into for the purpose of avoiding risk from interest rate fluctuation, interest rates
reflecting the interest rate swap are shown.
(Note 2) The funds raised through borrowings are mainly used to acquire real estate properties or trust beneficiaryinterests and to prepay the borrowings.
(Note 3) INV repaid the portion of the principal (JPY 1,080 million) accompanied with the receipt of consumption
tax refund on April 28, 2016.
(Note 4) The balance at the end of the period will be repaid in full on the repayment date

57

Notes

3

Investment Corporation Bonds

N/A
4

Short-Term Investment Corporation Bonds

N/A
5

Investment Unit Options

N/A

58

Acquisitions and Sales for the Fiscal Period Ended June 30, 2015
1
Acquisitions and Sales of Real Estate and Asset-Backed Securities, andInfrastructure Assets and Infrastructure Related-Assets
Acquisition
Name of Property
Date

Price
(JPY thousand)

A103

Royal Parks Momozaka

Jan. 22, 2016

2,910,000

A104Royal Parks Shinden

Mar. 31, 2016

5,024,000

D38

Hotel MyStays Shinsaibashi

Jan. 22, 2016

3,160,000

D39

Comfort Hotel Kurosaki

Jan. 22, 2016

1,148,000

D40

Comfort Hotel Maebashi

Jan. 22, 2016

1,128,000

D41

Comfort Hotel Tsubame-Sanjo

Jan. 22, 2016

1,010,000

D42

Comfort Hotel Kitami

Jan. 22, 2016

851,000

D43

Hotel MyStays Gotanda Station

Mar. 31, 2016

24,674,000

D44Hotel Epinard Nasu

Mar. 31, 2016

20,981,000

D45

Hotel MyStays Fukuoka Tenjin

Mar. 31, 2016

8,059,000

D46

Hotel MyStays Hamamatsucho

Mar. 31, 2016

7,959,000

D47

Hotel MyStays Kanazawa

Jun. 15, 2016

13,761,000

D48

Takamatsu Tokyu REI Hotel

Jun. 15, 2016

2,139,000

Total

92,804,000(Note) Acquisition price does not include various costs (brokerage commissions, taxes and other public dues)
required for acquisition or transfer of the property, and indicate as stated in the purchase and saleagreement.

2

Acquisitions and Sales of Other Assets

Assets other than those described above were mostly bank deposits or bank deposits in trust.

59

3Transaction Price Verifications(1)

Real Estate

Acquisition/Sale

Name of Property

Specified
Assets TypeTransaction
Date

A103 Royal Parks Momozaka

Acquisition

D38

Hotel MyStays
Shinsaibashi

D39

Comfort Hotel Kurosaki

D40

Acquisition / orReal Estate
Disposal Price Appraisal Value Name of Appraiser(JPY thousand) (JPY thousand)Morii Appraisal &Investment
2,910,000
2,940,000
Consulting Inc.
Japan Real Estate
3,160,000
3,190,000
Institute
1,148,000

1,160,000

Comfort Hotel Maebashi

1,128,000

1,140,000

D41

Comfort Hotel
Tsubame-Sanjo

1,010,000

1,020,000

D42

Comfort Hotel Kitami

851,000

860,000

5,024,000

5,100,000

24,674,000

24,800,000

20,981,000

21,300,000

A104 Royal Parks Shinden

Jan. 22,
2016

trust
beneficiaryinterests

D43

Hotel MyStays Gotanda
StationD44

Hotel Epinard Nasu

D45

Hotel MyStays Fukuoka
Tenjin8,059,000

8,100,000

D46

Hotel MyStays
Hamamatsucho

7,959,000

8,000,000

D47

Hotel MyStays
Kanazawa

13,761,000

13,900,000

D48

Takamatsu Tokyu REI
HotelMar. 31,2016

Jun. 15,2016

2,139,000

2,160,000

Daiwa Real EstateAppraisal Co., Ltd.

Nov. 20,
2015

Jan. 1,
2016
Morii Appraisal &Investment
Consulting Inc.

Daiwa Real EstateAppraisal Co., Ltd(Note 1) Acquisition price does not include various costs (brokerage commissions, taxes and other public dues)
required for acquisition of the property, and indicate as stated in the purchase and sale agreement.
(Note 2) The real estate appraisal described above is conducted by applying “Section 3: appraisals concerning pricesof real estate subject to securitization” of “Real Estate Appraisal Standard.”(2)
Others
As for transactions conducted by INV other than the transactions stated above “Real Estates” that
require verification of value, etc. of specified assets pursuant to Article 201 of the Investment Trust
Act, INV entrusts the inspection to Akasaka Audit LLC
During the 26th fiscal period (from January 1, 2016 to June 30, 2016), six interest rate swap
transactions were subject to such verification, and INV has received the reports from Akasaka Audit
LLC. As for the inspection, INV entrusted the inspection on name of counterparty of the transactions,contract interest rate, transaction period, type of financial instruments or financial index, notional
principal amount and other matters related to the interest rate swap transaction.

60

Date of
AppraisalJan. 31,2016
Jan. 1,
2016

May. 31,2016

4Transactions with Interested Parties(1)

Transactions

N/A
(2)

Commissions Paid

N/A
5

Transactions between the Asset Manager and Its Other Businesses

As the Asset Manager (Consonant Investment Management Co., Ltd.) does not engage in any otherbusiness, such as the first financial instruments business and the second financial instruments
business, the building lots and buildings transaction business, or the designated real estate joint
business, there are no applicable transactions.

61

Financial Condition
1

Assets, Liabilities, Principal, and Profit and Loss

Please refer to “II. Balance Sheet,” “III. Statement of Income,” “IV. Statement of Unitholders’Equity,” “V. Notes” and “VI. Statement of Cash Distribution”.
2

Changes in the Calculation Method of Depreciation

N/A
3

Changes in the Evaluation Method of Real Estate and Infrastructure Assets, etc.

N/A
4

Beneficiary Certificates of Investment Trusts, etc. Set Up by the Company

N/A
Other
1

NoticeBoard of Directors of Investment Corporation
Of the execution and amendment of the principal agreement approved by the Board of Directors of
the Investment Corporation in the fiscal period ended June 30, 2016, principal summary is asfollows.
Approval Date
March 10, 2016

Proposal
Conclusion of theUnderwriting
Agreement related tothe issuance of new
investment units etc.

Overview
INV approved that INV would entrust underwriters(Note) with the service related to the issuance of
new investment units through public offering andsecondary offering of investment units which wereapproved at meetings of the board of directors of
INV held on March 10, 2016.

(Note)

Domestic underwriters are Mizuho Securities Co., Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.,SMBC Nikko Securities Inc., Ltd., Nomura Securities Co., Ltd. and Citigroup Global Markets Japan Inc.
Overseas underwriters are Morgan Stanley & Co. International plc, Mizuho International plc, Citigroup
Global Markets Limited., SMBC Nikko Capital Markets Limited, and Nomura International plc.

2

Disclosure of companies owing real estate overseas

N/A
3

Disclosure of real estate owned by companies owing real estate overseas

N/A

62

4

Risk Factors

An investment in our units involves significant risks. The principal risks with respect to investment
in Invincible Investment Corporation are as follows.
Property and Business Risks

Any adverse conditions in the Japanese economy could adversely affect our properties.



We may not be able to acquire properties to execute our growth and investment strategy ina manner that is accretive to earnings.



Our reliance on Fortress Group could have a material adverse effect on our business.

Because of our repositioning of our portfolio in 2014 to include hotels, which include leaseterms that contain a variable rent structure, our results of operations will be inherently
more volatile and not comparable to previous fiscal periods, and we may not be able toeffectively manage our hotel portfolio due to our limited operating history in the hotelbusiness, especially with respect to full service hotels, resort hotels and other non-limited
service hotels that we may decide to acquire in greater numbers in the future.



Increases in prevailing market interest rates, particularly following the Bank of Japan’s
announcement of a major new policy for monetary easing, would increase our interest
expense and may result in a decline in the market price of our units.

The high geographic concentration of our real estate portfolio in the greater Tokyo area andother major cities could have a material adverse effect on our business.

Competition for tenants and hotel guests may adversely affect our ability to retain ourcurrent tenants and find new tenants, and to maintain occupancy rates and revenue.



Our hotels are subject to the operating risks common to the hospitality industry, whichhave a direct effect on the variable rent component of our portfolio’s revenue.

The cyclical and seasonal nature of the hospitality industry may cause fluctuations in ouroperating performance, which could have a material adverse effect on us and our variable
rent revenues.



We may incur unexpected expenses, expenditure or other losses for repair or maintenanceof our properties, and our hotels require periodic capital reinvestment for renovation.



The majority of our hotels are leased to MyStays Hotel Management, which is owned byFortress Group-managed funds, and subject to the risk of default under its hotel leaseagreements.



Our focus on residential properties could have a material adverse effect on our business.



We may lose rental revenues in the event of defaults by end-tenants under their leaseagreements for properties other than hotels.



Master leases may give rise to certain risks.



We may suffer large losses if any of our properties incur damage from a natural or
man-made disaster or acts of violence.



We may be strictly liable for an unforeseen loss, damage or injury suffered by a third party
at our properties.



Because most of our operating expenses are largely fixed, we may suffer adverse
consequences if our rental revenues decline.

63

We may not be able to promptly acquire suitable properties or sell those in our portfolio on
acceptable terms in response to changing economic, financial or investment conditions.



Defects relating to our properties may adversely affect our financial condition and resultsof operations.



We rely on expert appraisals and engineering, environmental and seismic reports, which
are subject to significant uncertainties.



The environmental assessments of our properties made prior to our ownership may nothave uncovered all environmental liabilities, and Japanese laws subject property owners tostrict environmental liabilities.



Decreases in tenant leasehold and/or security deposits would increase our funding costs.



Any inability to obtain financing for future acquisitions, or any restrictions on our activities
under our financing arrangements, could adversely affect us.

A high LTV ratio may increase our exposure to changes in interest rates and have amaterial adverse effect on our results of operations.



We may suffer impairment losses relating to our properties and may also suffer adverse tax
effects upon recognizing impairments.



The performance of Fortress Group is not an indicator or guarantee of our future results.



Our financial statements are prepared in accordance with Japanese GAAP, which differs incertain material respects from IFRS, U.S. GAAP and generally accepted accounting
principles and financial reporting standards in other jurisdictions.



We rely on industry and market data that are subject to significant uncertainties.

Management and Governance Risks


Our success depends on the performances of service providers to which we are required toassign various key functions.



There are potential conflicts of interest between us and certain Fortress Group affiliates or
Fortress Group-related companies including the Asset Manager, MyStays HotelManagement and Naqua Hotels & Resorts Management



We depend on the efforts of our executive director and key personnel of the Asset Manager.

Unitholders have limited control over our policies.



The Japanese regulatory authorities have tightened regulatory supervision of J-REITs andtheir asset managers and their corporate governance.



If unitholders do not exercise their voting rights, we may count their votes in favor of
proposals at a general meeting of unitholders.

Taxation Risks


Our failure to satisfy a complex series of requirements pursuant to Japanese tax regulations
would disqualify us from certain taxation benefits and significantly reduce our distributions
to our unitholders.



If the Japanese tax authorities disagree with the interpretations we used for prior periods,
we may be forced to pay additional taxes for those periods.

64

We may not be able to benefit from reductions in certain real estate taxes enjoyed byqualified J-REITs.



Changes in Japanese tax laws may significantly increase our tax burden.

We expect to be treated as a “passive foreign investment company” for U.S. federal income
tax purposes.

Unitholders may be subject to U.S. Foreign Account Tax Compliance Act (FATCA)
withholding tax after 2018.

Legal and Regulatory Risks

5

Our ownership rights in some of our properties may be declared invalid or limited.



We may lose our rights in a property we own if the purchase of the property is
recharacterized as a secured financing.



Acquisition of properties for which third parties hold leasehold interests in the land andown the buildings may subject us to various risks.



Our leasehold interests may be terminated or may not be asserted against a third party insome cases, or our leases with our tenants could be modified.



We currently hold several properties in the form of compartmentalized ownership interests(kubun shoyu-ken) and our rights relating to such properties may be affected by theintentions of other owners



We may acquire properties in the form of co-ownership (kyoyu) and our rights relating tosuch properties may be affected by the intentions of other owners.

Tax increases or adverse changes in applicable laws may affect our potential liabilities
relating to our properties and operations.

Compliance with energy conservation regulations in Japan may adversely affect our
financial results.



Our costs of complying with regulations applicable to our properties could adversely affectour results of operations.



We own a substantial portion of our properties through trust beneficiary interests and may
suffer losses as a trust beneficiary.



The Alternative Investment Fund Managers Directive may negatively affect our ability tomarket our units in the EEA and increase our compliance costs associated with themarketing of our units in the EEA.



Our units may be deemed to constitute “plan assets” for ERISA purposes, which
may lead to the rescission of certain transactions, tax or fiduciary liability andour being held in violation of ERISA requirements.

Other

Unless there are specific statements to the contrary, monetary figures are rounded down to thenearest yen and percentages are rounded off for unspecified values.

65

II.

Balance Sheet
Fiscal Period ended
December 31, 2015 (Reference)(as of December 31, 2015)(Unit: JPY thousand)Fiscal Period ended
June 30, 2016(as of June 30, 2016)

7,885,398
5,933,582
124
1,069,352
241,931928,02535
2,494)

11,322,762
5,441,316
201
1,375,846
394,524
2,672,787
35(2,764)

16,055,955

21,204,709※1

85,914
9,407)

85,914(9,948)

Buildings, net
Buildings and accompanying facilities, at cost

76,50775,96538,862

38,862

Accumulated depreciation

20,593)(21,375)

Buildings and accompanying facilities, net

18,26817,487※1

2,779
1,335)

2,779(1,401)

1,443

1,377

※1

711,834
65,882,282
4,510,729)

711,834
101,837,752(5,539,382)

61,371,553

96,298,370

15,364,500

23,193,164

3,006,062)(3,592,722)

12,358,438

19,600,442

327,632
138,040)

336,691(147,949)

189,591

188,742

401,404
150,073)

500,608(179,738)

AssetsCurrent assets:
Cash and bank deposits
Cash and bank deposits in trust
Accounts receivable
Rental receivables
Prepaid expenses
Consumption taxes receivable
Other
Allowance for doubtful accounts※1※1

Total current assets
Non-current assets:
Property and equipment
Buildings, at cost
Accumulated depreciation※1

Structures, at cost
Accumulated depreciation
Structures, net
Land
Buildings in trust, at cost
Accumulated depreciation※1

Buildings in trust, net
Buildings and accompanying facilities in trust,at cost※1
Accumulated depreciation
Buildings and accompanying facilities intrust, net
Structures in trust, at cost※1
Accumulated depreciation
Structures in trust, net
Tools, furniture and fixtures in trust, at cost ※1
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust※1

251,331

320,869

88,435,785

135,384,518

Construction in progress in trust-

46,368

Total property and equipment, net

163,414,753

252,645,976

5,836,789

8,871,542

Intangible assets
Leasehold rights in trust66

Fiscal Period ended
December 31, 2015 (Reference)(as of December 31, 2015)
Other(Unit: JPY thousand)Fiscal Period ended
June 30, 2016(as of June 30, 2016)15-

Total intangible assets

5,836,804

8,871,542

Investment and other assets
Guarantee deposits
Long-term prepaid expenses
Others39,518533,40938,429613,914729,351
40,640611,357

1,383,905

169,862,915

262,901,424

185,918,871

284,106,133

Fiscal Period ended
December 31, 2015 (Reference)(as of December 31, 2015)(Unit: JPY thousand)Fiscal Period ended
June 30, 2016(as of June 30, 2016)

136,766
1,080,000
47,597
134,010564
473,164
23,043

188,3623,498,000
8,957,286
186,571605
507,135
21,072

1,895,146

13,359,034

90,619,000
1,617,867
28,663

138,419,000
2,035,843
28,663

Total investments and other assets
Total non-current assets
Total assets

Liabilities
Current liabilities:
Accounts payable
Short-term loans payable
Accounts payable-otherAccrued expenses
Income taxes payable
Advances received
Deposits received
Total current liabilities
Non-current liabilities:
Long-term loans payable
Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits
Derivatives liabilities-

227,532

Asset retirement obligations-

31,050Total non-current liabilities

92,265,530

140,742,089

94,160,677

154,101,123

82,465,438

120,367,271

6,264,432
6,264,432

6,264,432(763,290)
5,501,141

3,028,323※1 708

Total liabilities
Net assets
Unitholders’ equity:
Unitholders’ equity
Surplus:Capital surplus
Deduction of capital surplus
Capital surplus, net
Voluntary retained earnings
Reserve for temporary differences adjustments
Voluntary retained earnings
Retained earnings

67

708
4,363,420

Fiscal Period ended
December 31, 2015 (Reference)(as of December 31, 2015)
Total surplus
Total unitholders’ equity(Unit: JPY thousand)Fiscal Period ended
June 30, 2016(as of June 30, 2016)

9,292,755

9,865,270

91,758,194

130,232,542-(227,532)

Valuation and translation adjustments:
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets※2

Total liabilities and net assets

68-(227,532)

91,758,194

130,005,009

185,918,871

284,106,133

III.

Statement of Income

Operating revenue
Rental revenue

Fiscal Period ended
December 31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)(Unit: JPY thousand)Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)

6,863,775

8,158,220

6,863,775

8,158,220

2,178,165
180,000
4,800
6,794
25,17058
99,677

2,697,986
250,000
4,800
9,128
24,010269
98,1202,494,667
4,369,108

3,084,315
5,073,905

814
936
454

1,316
1,372
213

Total non-operating income

2,205

2,902

Non-operating expenses
Interest expenses
Loan-related costs
Investment unit issuance costs

296,892
982,261
138,866

295,185
280,326
137,270

Total non-operating expenses

1,418,020

712,782

Ordinary income

2,953,293

4,364,025

Income before income taxes

2,953,293

4,364,025※1

Total operating revenue
Operating expenses
Property related expenses
Asset management fees
Directors’ compensation
Asset custody fees
Administrative service fees
Provision of allowance for doubtful accounts
Other

※1

Total operating expenses
Operating income
Non-operating income
Interest income
Interest on tax refund
Other

Income taxes.

605

605

Total income taxes

605

605

Net income

2,952,688

4,363,420

Retained earnings brought forward
Unappropriated retained earnings

75,634
3,028,323

4,363,420

69

IV. Statement of Unitholders’ Equity

Fiscal Period ended December 31, 2015 (reference) (from July 1, 2015 to December 31, 2015)(Unit: JPY thousand)Unitholders’ Equity
Surplus
Unitholders’ Equity
Balance at the beginningof the period

53,096,413

Capital Surplus

Retained Earnings

6,264,432

2,370,704

Total Surplus
8,635,136

Total Unitholders’EquityTotal Net Assets

61,731,550

61,731,550

29,369,025

29,369,025

Changes during the period
Issuanceofinvestment units

new29,369,025

Dividends from surplus(2,295,069)(2,295,069)(2,295,069)(2,295,069)

Net income

2,952,688

2,952,688

2,952,688

2,952,688

Total changes during theperiodBalance at the end of theperiod29,369,025－

657,618

657,618

30,026,643

30,026,643

82,465,438

6,264,432

3,028,323

9,292,755

91,758,194

91,758,194

Fiscal Period ended June 30, 2016 (from January 1, 2016 to June 30, 2016)(Unit: JPY thousand)Unitholders’ Equity
Surplus

Balance at the beginningof the period
Changes during theperiodIssuance of new
investment units
Dividends in excess ofretained earnings
Reserve for temporary
difference adjustment
Dividends fromsurplus82,465,438

Voluntary retained earnings

Capital Surplus

Unitholders’CapitalCapital Surplus

Deduction from
capital surplus

Capital surplus(Net)

6,264,432－

6,264,432(763,290)(763,290)

Reserve fortemporarydifference
adjustment

Voluntary
retained earnings
－

－

708

708

37,901,832

Net income
Net changes otherthan unitholders’equityTotal changes during theperiodBalance at the end of theperiod37,901,832－(763,290)(763,290)

708

708

120,367,271

6,264,432(763,290)

5,501,141

708

708

70

Valuation and conversion
adjustments, etc.

Unitholders’ Equity
Surplus
UnappropriatedRetained
Earnings/Loss
Balance at the beginningof the period
Changes during theperiodIssuance of new
investment units
Dividends in excess ofretained earnings
Reserve for temporary
difference adjustment
Dividends fromsurplus
Net income
Net changes otherthan unitholders’equityTotal changes during theperiodBalance at the end of theperiod

3,028,323

Total Unitholders’ Deferred gains orEquitylosses on hedges

Total surplus
9,292,755

91,758,194－

Total valuation and Total Net Assets
translation
adjustments－

91,758,194

37,901,832

37,901,832(763,290)(763,290)(763,290)

(708)

－

－

－

(3,027,614)(3,027,614)(3,027,614)(3,027,614)

4,363,420

4,363,420

4,363,420

4,363,420(227,532)(227,532)(227,532)

1,335,097

572,515

38,474,348(227,532)(227,532)

38,246,815

4,363,420

9,865,270

130,232,542(227,532)(227,532)

130,005,009

71

V.

Notes

[Notes Concerning Significant Accounting Policies]

By Period
Item
1. Method of depreciationof non-current assets

2. Method of calculatingallowances

3. Revenue and expense
recognition

Fiscal Period ended
December 31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)(a) Property and equipment
The straight-line method is used.
The useful lives of major property, plantand equipment are as follows.
Buildings
77 years
Buildings and accompanying facilities
8-24 years
Structures
7-18 years
Buildings in trust
2-67 years
Buildings and accompanying facilities in trust
2-32 years
Structures in trust
4-55 years
Tools, furniture and fixtures in trust 2-15 years(b)Intangible assets
The straight-line method is used.
(c) Long-term prepaid expenses
The straight-line method is used.

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 specificallowances are provided for accounts with apossibility of default based on the estimatedamounts considered to be uncollectible byconsidering the collectability of accounts on
an individual basis.
Accounting treatment of property taxes andother taxes
With respect to property taxes, city planningtaxes and depreciable asset taxes, of the tax
amount assessed and determined, the amountcorresponding to the relevant fiscal period is
accounted for as property related expenses.
Of the amounts paid to the seller for
acquisitions of real estate, the amountequivalent to property taxes is capitalized aspart of the acquisition cost of the real estate ortrust beneficiary interests in real estate insteadof being charged as expense. The amountequivalent to property taxes that was included
as part of the acquisition of real estate during
this fiscal period is JPY 59,232 thousand.

72

Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)(a) Property and equipment
The straight-line method is used.
The useful lives of major property, plantand equipment are as follows.
Buildings
77 years
Buildings and accompanying facilities
8-24 years
Structures
7-18 years
Buildings in trust
2-67 years
Buildings and accompanying facilities in trust
2-33 years
Structures in trust
3-55 years
Tools, furniture and fixtures in trust 2-19 years(b)Intangible assets
The straight-line method is used. For
leasehold interests (fixed-term land leasefor business purposes), the straight-line
method based on the lease period is used.
(c) Long-term prepaid expenses
The straight-line method is used.
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 specificallowances are provided for accounts with apossibility of default based on the estimatedamounts considered to be uncollectible byconsidering the collectability of accounts on
an individual basis.
Accounting treatment of property taxes andother taxes
With respect to property taxes, city planningtaxes and depreciable asset taxes, of the tax
amount assessed and determined, the amountcorresponding to the relevant fiscal period is
accounted for as property related expenses.
Of the amounts paid to the seller for
acquisitions of real estate, the amountequivalent to property taxes is capitalized aspart of the acquisition cost of the real estate ortrust beneficiary interests in real estate insteadof being charged as expense. The amountequivalent to property taxes that was included
as part of the acquisition of real estate during
the fiscal period ended June 30, 2016 is JPY
176,385 thousand.

By Period
Item
4. Method of hedge
accounting

Fiscal Period ended
December 31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)
Nothing applicable.

Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)(a) Method of hedge accounting
Deferral 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 derivatives transactions forthe purpose of hedging against the risks set
forth in INV’s Articles of Incorporation inaccordance with its risk management
policy.

(d)Method of evaluating hedge effectivenessHedge effectiveness is evaluated bycomparing the cumulative amount ofchanges in cash flows of the hedging
instrument and the cumulative amount ofchanges in cash flows of the hedged item
and verifying the difference in the amountsof change of both the hedged item and thehedging instrument.
5. Other significant matters (1)Accounting treatment of trust beneficiary (1)Accounting treatment of trust beneficiaryinterests in real estate
which constitute the basis
interests in real estate
As to trust beneficiary interests in realfor preparation of
As to trust beneficiary interests in realestate, all accounts of assets and liabilities
financial statements
estate, all accounts of assets and liabilities
within assets in trust, as well as all income
within assets in trust, as well as all income
generated and expenses incurred fromgenerated and expenses incurred fromassets in trust, are recorded in the relevant
assets in trust, are recorded in the relevantbalance sheets and income statementbalance sheets and income statement
accounts. Of such items, the following
accounts. Of such items, the following
significant trust assets and liabilities are
significant trust assets and liabilities areshown separately on the balance sheet.
shown separately on the balance sheet.
(a) Cash and bank deposits in trust(a) Cash and bank deposits in trust(b)Buildings in trust(b)Buildings in trust
Buildings and accompanying facilities in
Buildings and accompanying facilities in trust
trust
Structures in trust
Structures in trust
Tools, furniture and fixtures in trust
Tools, furniture and fixtures in trust
Land in trust
Land in trust(c) Land leasehold rights in trust
Construction in progress in trust(d)Tenant leasehold and security deposits in(c) Land leasehold rights in trust
trust(d)Tenant leasehold and security deposits intrust(2)Accounting treatment of deferred charges
Investment unit issuance costs
The full amount is recorded as expense at
the time of expenditure.

(2)Accounting treatment of deferred charges
Investment unit issuance costs
The full amount is recorded as expense at
the time of expenditure.

(3)Accounting treatment of consumption taxes
Transactions subject to consumption taxes
are recorded at amounts exclusive ofconsumption taxes.

(3)Accounting treatment of consumption taxes
Transactions subject to consumption taxes
are recorded at amounts exclusive ofconsumption taxes.

73

[Notes to the Balance Sheet]
Fiscal Period ended
December 31, 2015 (Reference)(as of December 31, 2015)-※2. Minimum net assets as required by Article 67, Paragraph
4 of the Act on Investment Trusts and Investment
Corporations
JPY 50,000 thousand

74

Fiscal Period ended
June 30, 2016(as of June 30, 2016)※1. Matters concerning treatment of reversal of reserve fortemporary difference adjustment.
INV plans to reverse all of the reserve for temporary
difference adjustment in the amount of JPY 708 thousand,and use the fund as part of the profit distributions to bemade in the next fiscal period.
※2. Minimum net assets as required by Article 67, Paragraph
4 of the Act on Investment Trusts and Investment
Corporations
JPY 50,000 thousand

[Notes to Statement of Income]Fiscal Period ended
December 31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)※1. Rental revenues and property related expenses(Unit: JPY thousand)
A. Real property rental revenue
Rental revenue

Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)※1. Rental revenues and property related expense(Unit: JPY thousand)
A. Real property rental revenue
Rental revenue(Rent/common area charges)

6,652,619(Rent/common area charges)

7,889,877(Other revenue)

211,156(Other revenue)

268,342

Total rental revenues

6,863,775

Total rental revenues

8,158,220

B. Real property related expenses

B. Real property related expenses

Property related expenses

Property related expenses(Maintenance costs)

472,597(Maintenance costs)

554,149(Taxes and public dues)

250,268(Taxes and public dues)

281,065(Insurance expenses)

9,934(Insurance expenses)

12,669(Depreciation expenses)

1,676,736(Depreciation expenses)

1,275,714(Other expenses)

169,651
2,178,165

Total real property related expenses(Other expenses)
Total real property related expenses

173,364
2,697,986

C. Operating income from rental revenue

C. Operating income from rental revenue(A-B)

4,685,610(A-B)

5,460,234[Notes to Statement of Unitholders’ Equity]
Fiscal Period ended
December 31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)
Number of investment units authorized and number ofinvestment units issued and outstanding

Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)
Number of investment units authorized and number ofinvestment units issued and outstanding

Number of investment units authorized

10,000,000 units

Number of investment units authorized

10,000,000 units

Number of investment units issued andoutstanding

3,193,686 units

Number of investment units issued andoutstanding

3,675,824 units

75

[Notes Related to Tax Accounting]
Fiscal Period ended
Fiscal Period ended
December 31, 2015 (Reference)
June 30, 2016
1. Significant components of deferred tax assets and liabilities 1. Significant components of deferred tax assets and liabilities(Deferred tax assets - current assets)(Deferred tax assets - current assets)(Unit: JPY thousand)(Unit: JPY thousand)Enterprise tax payable
489 Enterprise tax payable
481
Accounts receivable (merger)

186

Accounts receivable (merger)

183

Allowance for doubtful accounts

806

Allowance for doubtful accounts

877

Subtotal

1,482

Subtotal

1,542

Valuation allowance

1,482

Valuation allowance

1,542

Total

-

Total

-

(Net deferred tax assets - current)-(Net deferred tax assets - current)-(Deferred tax assets - non-current assets)
Buildings and other (merger)

735,158(Deferred tax assets - non-current assets)
Buildings and other (merger)

711,143

Land (merger)

2,129,657

Land (merger)

Long-term accrued expenses

7,329,595

Deferred gains/losses on hedges

72,218Subtotal

10,194,411

Long-term accrued expenses

7,200,289

Valuation allowance

10,194,411

Asset retirement obligations

9,855

Total

-

(Net deferred tax assets - non-current)-

2,092,087

Subtotal(Deferred tax liabilities –non-current liabilities)
Removal expenses included in asset
retirement obligations
Subtotal

10,085,594

Valuation allowance

10,075,797

Total

9,797
9,797
-

2. Significant difference between statutory tax rate and theeffective tax rate
Statutory tax rate
32.31%(Net deferred tax assets - non-current)
2. Significant difference between statutory tax rate and theeffective tax rate
Statutory tax rate
32.31%

Deductible cash distributions(31.93)%

Deductible cash distributions(32.21)%

Provision of reserve for reduction entry(0.38)%

Provision of reserve for reduction entry(2.72)%

Others0.02%

Others2.63%

Effective tax rate

0.02%

Effective tax rate

0.01%

-

3. Modifications to the amount of deferred tax assets anddeferred tax liabilities due to changes in the corporation tax
rate, etc.
Due to the enactment of the “Act to Partially Revise theIncome Tax Act and Others” (Act No. 15 of 2016) and the“Act to Partially Revise the Local Tax Act and Others”(Act No. 13 of 2016) on March 29, 2016, the corporation
tax rate, etc. was reduced from the fiscal period
commencing after April 1, 2016.
Accordingly, thestatutory effective tax rate used for calculating deferred tax
assets and deferred tax liabilities will be changed from theexisting rate of 32.31% to 31.74% for the temporary
difference expected to be reversed during fiscal periods
commencing after July 1, 2016. There is little impact fromthis change.

76

[Notes Related to Financial Instruments]
Fiscal Period ended
December 31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)
1. Status of financial instruments(1)Policy for financial instruments
INV principally conducts its operations throughinvestments 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 or entering into a loan agreement.
Derivative transactions are to be entered into for the
purpose of hedging against the risk of future interest rateincreases, etc. and not for speculation. There are currently
no derivative transactions that have been entered into.
Surplus funds are managed after carefully taking into
account safety, liquidity, the interest rate environment andfinancing.

Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)
1. Status of financial instruments(1)Policy for financial instruments
INV principally conducts its operations throughinvestments 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 or entering into a loan agreement.
Derivative transactions are to be entered into for the
purpose of hedging against the risk of future interest rateincreases, etc. and not for speculation.
Surplus funds are managed after carefully taking into
account safety, liquidity, the interest rate environment andfinancing.

(2)Nature and extent of risks arising from financial
instruments and risk management
The funds raised through borrowings are mainly used toacquire real estate properties or properties in trust(including related acquisition costs) and for the repaymentof existing loan. Liquidity risks relating to loan are
managed by the finance department of the Asset Manager
by preparing and updating plans for funds, and monitoring
the covenants set forth in loan agreements.

(2)Nature and extent of risks arising from financial
instruments and risk management
The funds raised through borrowings are mainly used toacquire real estate properties or properties in trust(including related acquisition costs) and for the repaymentof existing loan. Liquidity risks relating to loan are
managed by the finance department of the Asset Manager
by preparing and updating plans for funds, and monitoring
the covenants set forth in loan agreements.

(3)Supplemental information regarding market value, etc. forfinancial instruments
The fair value of financial instruments is based on quoted
market prices if available. When quoted market prices are
not available, fair value is determined through areasonable estimate. Since certain assumptions are used inestimating the fair value, different assumptions may resultin the variance of such value.
2. Estimated fair value of financial instruments
Book value, fair value and the difference between values asof December 31, 2015 are as follows.
(Unit: JPY thousand)(3)Supplemental information regarding market value, etc. forfinancial instruments
The fair value of financial instruments is based on quoted
market prices if available. When quoted market prices are
not available, fair value is determined through a reasonableestimate. Since certain assumptions, etc. are used inestimating the fair value, different assumptions, etc. may
result in the variance of such value.
2. Estimated fair value of financial instruments
Book value, fair value and the difference between values asof June 30, 2016 are as follows.
(Unit: JPY thousand)Book ValueBook Value

Fair Value

Difference

Fair Value

Difference(1) Cash and bankdeposits

7,885,398

7,885,398-(1) Cash and bankdeposits

11,322,762

11,322,762-(2) Cash and bankdeposits in trust

5,933,582

5,933,582-(2) Cash and bankdeposits in trust

5,441,316

5,441,316-

Total assets

13,818,981

13,818,981-

Total assets

16,764,078

16,764,078-(3) Short-term loans(1,080,000)(1,080,000)-(3) Short-term loans(3,498,000)(3,498,000)-(4) Long-term loans(90,619,000)(90,619,000)-(4) Accounts payable(8,957,286)(8,957,286)-

Total liabilities(91,699,000)(91,699,000)-(5) Long-term loans(138,419,000)(138,419,000)

Total liabilities(150,874,286)(150,874,286)(227,532)(227,532)(※1) Items recorded in the Liabilities Section are shown inparenthesis.

(6) Derivativetransactions77-

Fiscal Period ended
December 31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)

Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)(※1) Items recorded in the Liabilities Section are shown inparenthesis.
( ※ 2) Receivables and payables arising from derivativetransactions are recorded in net amounts, and if the total net
amount is a negative amount, such amount are be shown inparenthesis.

(Note 1) Methods to calculate fair values of financial (Note 1) Methods to calculate fair values of financial
instruments
instruments(1) Cash and bank deposits(2) Cash and bank deposits in (1) Cash and bank deposits(2) Cash and bank deposits intrust(3) Short-term loans
trust(3) Short-term loans(4) Accounts payable
Due to the short maturities, the book value of theseDue to the short maturities, the book value of these instruments
instruments is deemed a reasonable approximation of the fairis deemed a reasonable approximation of the fair value, andvalue, and therefore, the book value is used as the fair value.
therefore, the book value is used as the fair value.
(4) Long-term loans
Long-term loans with floating interest rates reflecting changes
in market rates within a short term period are stated at theirbook value as their book values approximate their fair values.

(5) Long-term loans
Long-term loans with floating interest rates reflecting changes
in market rates within a short term period are stated at theirbook value as their book values approximate their fair values.
(6) Derivative transactions(a) Hedge accounting was not applied
None(b) Hedge accounting was applied
The contractual amount as of the closing date undereach hedge-accounting method and the amountequivalent to the notional principal prescribed in thecontracts are as shown below.
(Unit: JPY thousand)
Method of Derivative Primary
hedgetransaction hedged

accounting type, etc.

Contractual amount, etc.

Fair value(Note 1)

(Note 2)

Amount due

item

after one year

Interest
Standard
method oftreatment

rate swap
Receivefloating
rate/pay

Longterm

99,119,000

99,119,000 (227,532)

loans

fixed rate

(Note 1) The contractual amount, etc. are stated based on a
notional principal.
(Note 2) The fair value is estimated based on the price, etc.
presented by the correspondent financial
institutions.

(Note 2) Financial instruments for which fair value isextremely difficult to value(Unit: JPY thousand)Category(Note 2) Financial instruments for which fair value isextremely difficult to value(Unit: JPY thousand)Category

Book Value

Tenant leasehold and28,663security deposits
Tenant leasehold and1,617,867
security deposits in trust
Tenant leasehold and security deposits and tenantleasehold and security deposits in trust have no observable

78

Book Value

Tenant leasehold and28,663security deposits
Tenant leasehold and2,035,843
security deposits in trust
Tenant leasehold and security deposits and tenantleasehold and security deposits in trust have no observable
market price, and it is impracticable to reasonably estimate

Fiscal Period ended
December 31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)
market price, and it is impracticable to reasonably estimate
their future cash flows because the repayment dates of
those deposits and the timing of the lessee’s exit from theproperty are not certain. Thus, their fair value is notdisclosed.

Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)
their future cash flows because the repayment dates of
those deposits and the timing of the lessee’s exit from theproperty are not certain. Thus, their fair value is notdisclosed.
(Note 3) Remaining schedule of monetary claims after
the closing date of the fiscal period(Note 3) Remaining schedule of monetary claims after
the closing date of the fiscal period

As of June 30, 2016
(Unit: JPY thousand)As of December 31, 2015
(Unit: JPY thousand)Due within
One Year

Due after One Due after Two
to Two Years to Three Years

Cash and bank deposits

7,885,398--

Cash and bank deposits intrust

5,933,582

-

-

Total

13,818,981--

Due after Three Due after Four Due after Five
to Four Years to Five Years
Years
Cash and bank deposits

-

-

-

Cash and bank deposits in
trust

-

-

-

Total

-

-

-

(Note 4) Redemption schedule of long-term loans and otherinterest-bearing debts after the closing date of the
fiscal period

Due within
One Year

Due after One Due after Two
to Two Years to Three Years

Cash and bank deposits

11,322,762--

Cash and bank deposits intrust

5,441,316

-

-

Total

16,764,078--

Due after Three Due after Four Due after Five
to Four Years to Five Years
Years
Cash and bank deposits

-

-

-

Cash and bank deposits in
trust

-

-

-

Total

-

-

-

(Note 4) Redemption schedule of long-term loans and otherinterest-bearing debts after the closing date of the
fiscal period
As of June 30, 2016
(Unit: JPY thousand)As of December 31, 2015
(Unit: JPY thousand)Due within
One Year

Due after One Due after Two
to Two Years to Three Years

Short-term loans

1,080,000--

Long-term loans--

28,979,000

Total

1,080,000-

Due within
One Year

Due after One Due after Two
to Two Years to Three Years

Short-term loans

3,498,000--

Long-term loans--

46,663,000

Total

3,498,000-

46,663,000

28,979,000

Due after
Due after Four Due after Five
Three to Four
to Five Years
Years
Years
Short-term loans

-

-

-

Long-term loans

32,661,000

28,979,000

-

Total

32,661,000

28,979,000-79

Due after
Due after Four Due after Five
Three to Four
to Five Years
Years
Years
Short-term loans

-

-

-

Long-term loans

44,094,000

47,662,000

-

Total

44,094,000

47,662,000-

[Notes Related to Asset Retirement Obligations]Fiscal Period ended
December 31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)
Nothing applicable.

Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)
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 land of
Comfort Hotel Maebashi held by INV.
2. Calculation method for asset retirement obligations for theperiodThe amount of the asset retirement obligations has been
calculated by fixing the estimated period of use at 43 years,
based on the period until the expiration of the fixed-term
land lease agreement, and by using a discount rate of
1.342%.
3. Increase/decrease in the total amount of asset retirement
obligations for the current fiscal period(Unit: JPY thousand)
Balance at the beginning of the period
Liabilities incurred due to the acquisition of properties
Accretion expense
Balance at the end of the period

80

30,868182
31,050[Notes Related to Rental Properties]
Fiscal Period ended
December 31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)
INV owns residential properties and hotels as core assets aswell as other various properties including offices and retailassets principally in the Tokyo area and major regional
cities in order to establish a portfolio which focuses on bothstability and growth potential. The book value amountchanged during the period and balance at the end of theperiod are as follows.
(Unit: JPY thousand)
Use

Book Value
Fair Value atBalance at theBalance at the the End of the
Change during
PeriodBeginning ofEnd of thethe Period
the Period
PeriodResidences

55,269,403

5,036,303

60,305,706

68,592,000

Offices

8,514,702(26,826)

8,487,876

Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)
INV owns residential properties and hotels as core assets aswell as other various properties including offices and retailassets principally in the Tokyo area and major regional cities
in order to establish a portfolio which focuses on bothstability and growth potential. The book value amountchanged during the period and balance at the end of theperiod are as follows.
(Unit: JPY thousand)
Use

Book Value
Fair Value atBalance at theBalance at the the End of the
Change during
PeriodBeginning ofEnd of thethe Period
the Period
PeriodResidences60,305,706

7,968,789

68,274,496

77,214,000

7,206,000

Offices

8,487,876(17,489)8,470,387

7,219,000

5,134,083(46,557)

5,087,525

5,840,000

Commercial
facilities

5,178,288(44,205)

5,134,083

5,830,000

Commercial
facilities

Parking lot

100,822(1)

100,821112,000

Parking lot

100,821(1)

100,820

113,000

Hotels

58,211,612

37,011,441

95,223,054

133,212,000

Hotels95,223,054

84,314,865

179,537,920

232,905,000

Total

127,274,829

41,976,712

169,251,542

214,952,000

Total

169,251,542

92,219,607

261,471,150

323,291,000(Note 1) Book value is the figure calculated by subtracting the (Note 1) Book value is the figure calculated by subtracting theamount of depreciation from acquisition priceamount of depreciation from acquisition price (including
acquisition-related costs).
(including acquisition-related costs).
(Note 2) The major factors for the increase for the fiscal period (Note 2) The major factors for the increase for the fiscal period
ended June 30, 2016 were acquisition of new residential
ended December 31, 2015 were acquisition of newresidential properties/hotels, capital expendituresproperties and hotels, capital expenditures related toconstruction work.
related to construction work.
(Note 3) The major factor for the decrease was depreciation.
(Note 3) The major factor for the decrease was depreciation.
(Note 4) The fair value as of the end of the reporting period is (Note 4)The fair value as of the end of the reporting period isdetermined based on the appraisal value provided bydetermined based on the appraisal value provided by
Asset Research and Development Inc., Japan Real
Asset Research and Development Inc., Japan Real
Estate Institute, Morii Appraisal & Investment
Estate Institute, Morii Appraisal & Investment
Consulting Inc., Tanizawa Sogo Appraisal Co., Ltd., andConsulting Inc. and Tanizawa Sogo Appraisal Co.,
Daiwa Real Estate Appraisal Co., Ltd.
Ltd.
For information related to profits and losses from rental
For information related to profits and losses from rental
properties in the fiscal period ended December 31, 2015,
properties in the fiscal period ended June 30, 2016, pleaseplease refer to “Notes to Statement of Income.”refer to “Notes to Statement of Income.”[Notes Related to Restriction on Asset Management]
Fiscal Period ended
December 31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)
Nothing applicable.

Fiscal Period ended
June, 2016
(from January 1, 2016 toJune 30, 2016)
Nothing applicable.

81

[Notes Related to Transactions with Related Parties]
Fiscal Period ended December 31, 2015 (Reference) (from July 1, 2015 to December 31, 2015)
1

Interested parties of the Asset Manager

Classification

Interested party of
the Asset Manager

Name

Business or
Occupation

Ratio of
Voting Rights
Owned
(%)

Skye Tokutei
Mokuteki Kaisha(Note 3)

Investment
managementbusiness-

Nishi Tokutei
Mokuteki Kaisha(Note 3)

Investment
managementbusiness-

Rannoch Tokutei
Mokuteki Kaisha(Note 3)

Investment
managementbusiness-

Wakusei Tokutei
Mokuteki Kaisha(Note 3)

Investment
managementbusiness-

Suisei Tokutei
Mokuteki Kaisha(Note 3)

Investment
managementbusiness-

Aki Tokutei
Mokuteki Kaisha(Note 3)

Investment
managementbusiness-

Zephyrus Tokutei
Mokuteki Kaisha(Note 3)

Investment
managementbusiness-

Investment
Godo Kaisha Baretta
management(Note 3)business-

MyStays HotelManagement
Co., Ltd.
(Note 3)

Hotel businessType of Transaction

Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)-

Rental revenues

Transaction
Amount(JPY
thousand)(Note 1)

Account

7,801,000--

14,405,000--

5,707,000--

2,198,000--

2,603,000--

1,277,000--

1,237,000--

5,099,000--

3,125,985

Accounts
receivables

Balance at the Endof the Period(JPY thousand)(Note 1)

(Note 1) Consumption taxes are not included in transaction amounts, but are included in the balance at the end of theperiod.
(Note 2) The terms and conditions have been determined based on the Asset Manager’s internal rules and manual
regarding transactions with the sponsor company.
(Note 3) Skye Tokutei Mokuteki Kaisha, Nishi Tokutei Mokuteki Kaisha, Rannoch Tokutei Mokuteki Kaisha,
Wakusei Tokutei Mokuteki Kaisha, Suisei Tokutei Mokuteki Kaisha, Aki Tokutei Mokuteki Kaisha,
Zephyrus Tokutei Mokuteki Kaisha, Godo Kaisha Baretta and MyStays Hotel Management Co., Ltd. haveno capital relationship to be disclosed with the Asset Manager. The Tokutei Mokuteki Kaisha or the lessee
and operator have received an anonymous partnership investment or investment through funds that aremanaged by affiliates of Fortress Investment Group LLC (“FIG”), an affiliate of Calliope. Accordingly,
INV treats Skye Tokutei Mokuteki Kaisha, Nishi Tokutei Mokuteki Kaisha, Rannoch Tokutei Mokuteki
Kaisha, Wakusei Tokutei Mokuteki Kaisha, Suisei Tokutei Mokuteki Kaisha, Aki Tokutei Mokuteki Kaisha,
Zephyrus Tokutei Mokuteki Kaisha, Godo Kaisha Baretta and MyStays Hotel Management Co., Ltd. as theequivalent to interested parties.
(Note 4) Calliope holds 609,942 units (holding ratio: 19.09%) of the issued investment units of INV.
(Note 5) The purchase of trust beneficiary interests pertains to following properties. The transaction amount is thepurchase price stated in the trust beneficiary purchase agreement, to which other expenses on acquisition,
property taxes, city planning taxes and consumption taxes are not included.

82

920,391

Property
NumberName of Property

Counterparty

A100

City Court Kitaichijo

Godo Kaisha Baretta

1,782,000

A101

Lieto Court Mukojima

Godo Kaisha Baretta

1,683,000

A102

Lieto Court Nishi-Ojima

Godo Kaisha Baretta

1,634,000

D24

Hotel MyStays Haneda

Skye Tokutei Mokuteki Kaisha

7,801,000

D25

Hotel MyStays Kameido P1

Nishi Tokutei Mokuteki Kaisha

5,594,000

D26

Hotel MyStays Ueno Iriyaguchi

Rannoch Tokutei Mokuteki
Kaisha3,821,000

D27

Hotel MyStays Kameido P2

Nishi Tokutei Mokuteki Kaisha

3,742,000

D28

Hotel Vista Shimizu

Wakusei Tokutei Mokuteki
Kaisha2,198,000

D29Super Hotel Shinbashi/
Karasumoriguchi

Suisei Tokutei Mokuteki Kaisha

1,624,000

D30

Flexstay Inn Higashi-Jujo

Aki Tokutei Mokuteki Kaisha

1,277,000

Purchase Price (JPY thousand)

Zephyrus Tokutei Mokuteki
KaishaRannoch Tokutei Mokuteki
KaishaD31

Hotel MyStays Utsunomiya

D32

Flexstay Inn Kawasaki-Kaizuka

D33

Comfort Hotel Toyama

Suisei Tokutei Mokuteki Kaisha

979,000

D34

Flexstay Inn Kawasaki-Ogawacho

Rannoch Tokutei Mokuteki
Kaisha906,000

D35

Flexstay Inn Ekoda

Nishi Tokutei Mokuteki Kaisha

5,069,000

1,237,000
980,000

Total

240,327,000

Asset Custody Companies
Classification

Name

Business or
Occupation

Ratio of
Voting Rights(%)

Type of Transaction
Borrowing forlong-term loan
Repayment of current
portion of long-term loan

Asset CustodyCompany

Sumitomo Mitsui
Banking andTrust Bank, Limited trust business

Finance related fees

Interest expenses(Note 1)

Transaction
Amount(JPY thousand)Account

Balance at theEnd of the Period(JPY thousand)Long-termloans payable
Current portion of
long-term debts

8,010,000

Prepaid expenses

18,186Long-term
Prepaid expenses

46,07725,318 Accrued expenses

276

8,010,000
5,470,000
47,895

Consumption taxes are not included in transaction amounts, but are included in the balance at the end of theperiod.
(Note 2) The terms and conditions have been determined based on market conditions.

83-

Fiscal Period ended June 30, 2016 (from January 1, 2016 to June 30, 2016)
1

Interested parties of the Asset Manager
Name

Business or
Occupation

Ratio of
Voting Rights
Owned
(%)

Aki Tokutei
Mokuteki Kaisha

Investment
managementbusiness-

Investment
managementbusiness-

Investment
managementbusiness-

Investment
managementbusiness-

Investment
managementbusiness-

Interested party ofInvestment
the Asset Manager Septentrio 2 Tokutei manage-ment
Mokuteki Kaisha
business-

Septentrio 3 Tokutei
Mokuteki Kaisha

Investment
managementbusiness-Ginga Tokutei
Mokuteki Kaisha

Investment
managementbusiness-

Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)

13,761,000 Accounts payable

Wakusei Tokutei
Mokuteki Kaisha

Investment
managementbusiness-

Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)

2,139,000--

Rental revenues

627,563

Accounts
receivable

220,811-

Rental revenues

3,389,166

Accounts
receivable

990,543Classification

Navaro Tokutei
Mokuteki Kaisha

Momo Tokutei
Mokuteki Kaisha
Tsuki Tokutei
Mokuteki Kaisha

Septentrio Tokutei
Mokuteki Kaisha

Naqua Hotel &Resorts Management Hotel businessCo., Ltd.
MyStays HotelManagement
Hotel businessCo., Ltd.

Type of Transaction
Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)Purchase of trust beneficiaryinterests in real estate(Note 2)
(Note 5)

Transaction
Amount(JPY thousand)(Note 1)

Account

Balance at the Endof the Period(JPY thousand)(Note 1)

3,160,000--

20,155,000--

7,934,000--

24,674,000--

12,588,600--

4,196,199--

4,196,199--(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) The terms and conditions have been determined based on the Asset Manager’s internal rules and manual
regarding transactions with the sponsor company.
(Note 3) Aki Tokutei Mokuteki Kaisha, Navaro Tokutei Mokuteki Kaisha, Momo Tokutei Mokuteki Kaisha, Tsuki
Tokutei Mokuteki Kaisha, Septentrio Tokutei Mokuteki Kaisha, Septentrio 2 Tokutei Mokuteki Kaisha,
Septentrio 3 Tokutei Mokuteki Kaisha, Ginga Tokutei Mokuteki Kaisha, Wakusei Tokutei Mokuteki Kaisha,
Naqua Hotel & Resorts Management Co., Ltd., and MyStays Hotel Management Co., Ltd. have no capital
relationship to be disclosed with the Asset Manager. The Tokutei Mokuteki Kaisha or the lessee andoperator have received an anonymous partnership investment or investment through funds that are managed
by affiliates of Fortress Investment Group LLC (“FIG”), an affiliate of Calliope. Accordingly, INV treats
Aki Tokutei Mokuteki Kaisha, Navaro Tokutei Mokuteki Kaisha, Momo Tokutei Mokuteki Kaisha, Tsuki
Tokutei Mokuteki Kaisha, Septentrio Tokutei Mokuteki Kaisha, Septentrio 2 Tokutei Mokuteki Kaisha,
Septentrio 3 Tokutei Mokuteki Kaisha, Ginga Tokutei Mokuteki Kaisha, Wakusei Tokutei Mokuteki Kaisha,
Naqua Hotel & Resorts Management Co., Ltd., and MyStays Hotel Management Co., Ltd. as the equivalent
to interested parties.
(Note 4) Calliope holds 609,942 units (holding percentage: 16.6%) of the issued investment units of INV.
(Note 5) The purchase of trust beneficiary interests pertains to the following properties. The transaction amount is
the purchase price stated in the trust beneficiary purchase agreement, to which other expenses for acquisition,
property taxes, city planning taxes and consumption taxes are not included.

84

8,800,548-

Property
NumberName of Property

Counterparty

A103

Royal Parks Momozaka

Momo Tokutei Mokuteki Kaisha

2,910,000

A104Royal Parks Shinden

Momo Tokutei Mokuteki Kaisha

5,024,000

D38

Hotel MyStays Shinsaibashi

Aki Tokutei Mokuteki Kaisha

3,160,000

D39

Comfort Hotel Kurosaki

Navaro Tokutei Mokuteki Kaisha

1,148,000

D40

Comfort Hotel Maebashi

Navaro Tokutei Mokuteki Kaisha

1,128,000

D41

Comfort Hotel Tsubame-Sanjo

Navaro Tokutei Mokuteki Kaisha

1,010,000

D42

Comfort Hotel Kitami

Navaro Tokutei Mokuteki Kaisha

851,000

D43

Hotel MyStays Gotanda Station

Tsuki Tokutei Mokuteki Kaisha

24,674,000

D44Hotel Epinard Nasu

Serpentrio Tokutei Mokuteki
KaishaSerpentrio 2 Tokutei Mokuteki
KaishaSerpentrio 3 Tokutei Mokuteki
Kaisha20,981,000

D45

Hotel MyStays Fukuoka Tenjin

Navaro Tokutei Mokuteki Kaisha

8,059,000

D46

Hotel MyStays Hamamatsucho

Navaro Tokutei Mokuteki Kaisha

7,959,000

D47

Hotel MyStays Kanazawa

Ginga Tokutei Mokuteki Kaisha

13,761,000

D48

Takamatsu Tokyo REI Hotel

Wakusei Tokutei Mokuteki Kaisha

2,139,000

Purchase Price (JPY thousand)

Total

2

92,804,000

Asset Custody Companies
Classification

Asset CustodyCompany

NameBusiness or
Occupation

Sumitomo Mitsui
Banking andTrust Bank, Limited trust business

Ratio of
Voting Rights(%)-

Type of Transaction

Transaction
Amount(JPY thousand)Account

Borrowing forlong-term loan

13,341,000

Long-termloans payable

21,351,000

Prepaid expenses

50,170Finance related fees

120,832

Long-term
Prepaid expenses

126,21250,413 Accrued expenses

320Interest expenses(Note 1)

Balance at theEnd of the Period(JPY thousand)Consumption taxes are not included in transaction amounts, but are included in the balance at the end of theperiod.
(Note 2) The terms and conditions have been determined based on market conditions.

85

[Notes Related to Per Unit Information]
Fiscal Period ended December 31, 2015 (Reference)(from July 1, 2015 to December 31, 2015)

Fiscal Period ended June 30, 2016
(from January 1, 2016 to June 30, 2016)

Net assets per unit

JPY 28,731

Net assets per unit

JPY 35,368

Net income per unit

JPY 937

Net income per unit

JPY 1,270

Net income per unit is calculated by dividing net income forthe period by the daily weighted average number ofinvestment units issued and outstanding. Diluted net income
per unit is not stated as there are no diluted units.

Note.

Net income per unit is calculated by dividing net income forthe period by the daily weighted average number ofinvestment units issued and outstanding. Diluted net income
per unit is not stated as there are no diluted units.

The basis for calculating net income per unit is as follows.

Fiscal Period ended December 31, 2015 (Reference)(from July 1, 2015 to December 31, 2015)
Net income for the fiscal period (JPY thousand)Amounts not attributable to common unit holders(JPY thousand)Net income attributable to common unit holders(JPY thousand)Average number of investment units during theperiod (units)

Fiscal Period ended June 30, 2016
(from January 1, 2016 to June 30, 2016)

2,952,688
2,952,688
3,149,936

86

Net income for the fiscal period (JPY thousand)Amounts not attributable to common unit holders(JPY thousand)Net income attributable to common unit holders(JPY thousand)Average number of investment units during theperiod (units)

4,363,420
4,363,420
3,436,572

[Notes Related to Significant Subsequent Events]

Fiscal Period ended December 31, 2015 (Reference)(from July 1, 2015 to December 31, 2015)

Fiscal Period ended June 30, 2016
(from January 1, 2016 to June 30, 2016)

1. Borrowing of Funds

1. Borrowing of Funds

In order to raise a part of the funds to be used for theacquisition of trust beneficiary interests for the 5 hotel
properties and 1 residential property acquired on January
22, 2016 (see “2. Acquisition of Assets” below), INV
implemented the following borrowing on January 22,
2016.

In order to raise a part of the funds to be used for theacquisition of trust beneficiary interests for the 2 hotel
properties acquired on June 15, 2016, INV implemented
the following borrowing on July 20, 2016.

Term Loan (B)LenderTerm Loan (E)LenderBorrowing amountInterest rate, etc.

Interest payment datePrincipal
repayment
methodBorrowing method
Borrowing date
Maturity date

: Sumitomo Mitsui Trust
Bank, Limited.,
Mitsubishi UFJ Trustand Banking
Corporation.
: JPY8,998 million: Base Rate (1-month
JPY TIBOR; however,
2-month JPY TIBOR for
the first interest
calculation period only)+ 0.20%, 0.40%, 0.60%: On (i) the last Japanesebusiness day of eachmonth before theprincipal maturity date,
beginning with February
29, 2016, and (ii) the
principal maturity date
: Lump-sum repayment

Borrowing amountInterest rate, etc.

Interest payment datePrincipal
repayment
methodBorrowing method
Borrowing date
Maturity date

: Unsecured / with noguarantee: January 22, 2016
: January 22, 2017,
January 22, 2019,
January 22, 2021

87

: The Tokyo Star Bank,
Limited: JPY 4,000 million: Base Rate (1-month
JPY TIBOR) + 0.40%,
0.50%, 0.60%: On (i) the last Japanesebusiness day of eachmonth before theprincipal maturity date,
beginning with July 29,
2016, and (ii) the
principal maturity date
: Lump-sum repayment: Unsecured / with noguarantee:July 20, 2016
: July 20, 2019, July 20,
2020, July 20, 2021

Fiscal Period ended December 31, 2015 (Reference)(from July 1, 2015 to December 31, 2015)

Fiscal Period ended June 30, 2016
(from January 1, 2016 to June 30, 2016)

2. Acquisition of Assets
INV decided to acquire the following 6 properties (totalacquisition price of JPY 10,207 million) on January 20,
2016, and completed the acquisition of all of the 6
properties on January 22, 2016.
Property number: D38
Name of property: Hotel MyStays Shinsaibashi
Acquisition Date
January 22, 2016
Acquisition Price (Note )JPY3,160 million
Location
Osaka-shi, Osaka
Construction Date
September 1984
Category of Assets
Trust BeneficiaryInterestSeller
Aki Tokutei Mokuteki
KaishaTotal Floor Area
1,942.01m2
Total Leasable Area
1,942.01m2
Property number: D39
Name of property: Comfort Hotel Kurosaki
Acquisition Date
January 22, 2016
Acquisition Price (Note )JPY1,148 million
Location
Kitakyushu-shi,
Fukuoka
Construction Date
February 2009
Category of Assets
Trust BeneficiaryInterestSellerNavaro Tokutei
Mokuteki Kaisha
Total Floor Area
3,207.60m2
Total Leasable Area
3,207.60m2
Property number: D40
Name of property: Comfort Hotel Maebashi
Acquisition Date
January 22, 2016
Acquisition Price (Note )JPY1,128 million
Location
Maebashi-shi, Gunma
Construction Date
March 2009
Category of Assets
Trust BeneficiaryInterestSellerNavaro Tokutei
Mokuteki Kaisha
Total Floor Area
3,660.96m2
Total Leasable Area
3,660.96m2

Property number: D41

88

Fiscal Period ended December 31, 2015 (Reference)(from July 1, 2015 to December 31, 2015)

Fiscal Period ended June 30, 2016
(from January 1, 2016 to June 30, 2016)

Name of property: Comfort Hotel Tsubame-Sanjyo
Acquisition Date
January 22, 2016
Acquisition Price (Note )JPY1,010 million
Location
Sanjyo-shi, Niigata
Construction Date
June 2007
Category of Assets
Trust BeneficiaryInterestSellerNavaro Tokutei
Mokuteki Kaisha
Total Floor Area
3,099.90m2
Total Leasable Area
3,099.90m2
Property number: D42
Name of property: Comfort Hotel Kitami
Acquisition Date
January 22, 2016
Acquisition Price (Note )JPY851 million
Location
Kitami-shi, Hokkaido
Construction Date
March 2008
Category of Assets
Trust BeneficiaryInterestSellerNavaro Tokutei
Mokuteki Kaisha
Total Floor Area
3,009.50m2
Total Leasable Area
3,009.50m2
Property number: A103
Name of property: Royal Parks Momozaka
Acquisition Date
January 22, 2016
Acquisition Price (Note )JPY2,910 million
Location
Osaka-shi, Osaka
Construction Date
June 2007
Category of Assets
Trust BeneficiaryInterestSellerMomo Tokutei
Mokuteki Kaisha
Total Floor Area
10,541.69m2
Total Leasable Area
8,776.26m2(Note) Acquisition price is based on the purchase priceindicated in the relevant purchase agreement anddoes not include acquisition costs, property taxes,
city planning taxes and consumption taxes, etc.

89

[Other Notes]
Fiscal Period ended December 31, 2015
(from July 1, 2015 to December 31, 2015)

Fiscal Period ended June 30, 2016
(from January 1, 2016 to June 30, 2016)

In the statement of cash distribution, INV recorded JPY
708 thousand of reserve for temporary difference
adjustment regarding the gain on negative goodwill that
accrued during a fiscal period prior to the Reporting
Period.
The entire amount of such reserve is scheduled to bereversed in the following fiscal period.

In the statement of cash distribution, INV recorded JPY
708 thousand of reserve for temporary difference
adjustment regarding the gain on negative goodwill forthe purpose of appropriating for cash distribution.
In the statement of cash distribution, INV recorded JPY
224,225 thousand of allowance for temporary difference
adjustment regarding deferred losses on hedges ofinterest rate swap.
The amount of such allowance corresponding to theamounts of change of fair value is scheduled to bereversed.

90

VI.

I.

Statement of Cash Distribution

Unappropriated retained
earnings
II.
Reversal of voluntary
retained earnings
Reversal of reserve fortemporary difference
adjustments
III. Distribution in excess ofretained earnings
Allowance for temporary
difference adjustments
Deduction from capitalsurplus
IV Distributions(Distribution per unit)
Of which, distributions ofearnings(Distributions of earnings
per unit)
Of which, allowance foradjustment for temporary
difference(Distributions in excess of
net earnings per unit
(Allowance for adjustment
for temporary difference))
Of which, distributions inexcess of net earnings(Distributions in excess of
net earnings per unit
(Other distributions inexcess of net earnings))
V. Voluntary retained
earnings
Reserve for temporary
difference adjustment
VI. Retained earnings carriedforwardCalculation method of
distribution amountFiscal Period ended December
31, 2015 (Reference)(from July 1, 2015 to
December 31, 2015)

Fiscal Period ended
June30, 2016
(from January 1, 2016 toJune 30, 2016)

JPY 3,028,323,270

JPY 4,363,420,951-

JPY 708,942-

JPY 224,225,264

JPY 763,290,954-

JPY 3,790,905,282(JPY 1,187)

JPY 4,359,527,264(JPY 1,186)

JPY 3,027,614,328

JPY 4,135,302,000(JPY 948)(JPY 1,125)-

JPY 224,225,264(-)(JPY 61)

JPY 763,290,954-(JPY 239)(-)

JPY 708,942--

JPY 228,827,893

In accordance with the
distribution policy set forth in
Article 17, Paragraph 1 of the

91

As
shown
above,
thedistribution per unit for theReporting Period is JPY 1,186.

Articles of Incorporation of
INV, the distribution amountshall be the amount which does
not exceed the amount of
profits but exceeds 90% of the
distributable profit as definedin Article 67-15 of the Special
Taxation
MeasuresAct.
However, in the event that any
tax losses arise, or if no profits
have been recorded for tax
purposes due to tax losses
carried forward, the distribution
amount may be as reasonably
determined by INV. Pursuant tothis policy, INV determined the
distribution amount to be JPY
3,027,614,328 out of theunappropriatedretainedearnings of JPY 3,028,323,270.
Moreover, INV make exessprofit distribution (refund ofinvestment), based on policy on
the distribution of funds as set
forth in Article 17, Paragraph 4of the Articles of Incorporation.
Based on such policy, INV
declared a distribution (refundofinvestment)ofJPY
763,290,954, which is theamountequivalent
toapproximately 60% of thedepreciation expense of JPY
1,275,714,057.

92

With
respect
toprofitdistributions (not including
distributions in excess of
profit), INV decided to
distribute almost all of its profit
as defined in Article 136,
Paragraph 1 of the Investment
Trust Act, other than fractionalamount per unit less than JPY
1, aiming to include themaximum amount of profit
distributions in deductible
expenses in accordance with
Article 67-15, Paragraph 1 of
the Act on Special Taxation
Measures (Act No. 26, 1957).
As a result, the distribution of
earnings per unit (not including
distributions in excess of profit
per unit) is JPY 1,125.
In addition, in accordance withthe distribution policy as set
forth in the Articles ofIncorporation, INV makes
distributions in excess ofearnings of the amount that it
determines as the amountequivalent to items deductedfrom net assets (as set forth in
Article 2, Paragraph 2, Item 30(b) of the Ordinance on
Accountings of Investment
Corporations), taking into
considering the effect of theitems deducted from net assets
on the distributions (the“Excess Profit Distribution”).
For the Reporting Period, INV
makes Distribution in excess ofearnings of JPY 227 million,
corresponding to deferredlosses on hedges, of which, thedistribution of allowance fortemporarydifference
adjustment is JPY 224 million,
and the distribution per unit of
the allowance for temporary
difference adjustment is JPY
61.

Note
Accompanying English financial information, comprising Balance Sheet, Statement of Income,Statement of Unitholders’ Equity, Notes to financial statements and statement of Cash Distribution,
have been translated from the Japanese financial statements of the Investment Corporation preparedin accordance with the Act on Investment Trusts and Investment Corporations of Japan.
Under Article 130 of the Act on Investment Trusts and Investment Corporations of Japan, theJapanese financial statements for the six months ended June 30, 2016 have been audited by Ernst &Young ShinNihon LLC, in accordance with auditing standards generally accepted in Japan.
However, English translation of the Japanese language report of independent auditors is not attachedherein since the accompanying English translation of Balance Sheet, Statement of Income,Statements of Unitholders’ Equity, Notes to financial statements and Statement of Cash Distribution
are unaudited.
Regarding the English audited financial statements, please refer to the “Audited Financial
Statements” on the website of Invincible Investment Corporation:
http://www.invincible-inv.co.jp/eng/cms/doc.html

93

VII.

Statement of Cash Flow (Reference Information)(Unit: JPY thousand)Fiscal Period ended
December 31, 2015
(Reference)(from July 1, 2015 to
December 31, 2015)
Cash flows from operating activities
Net income before taxes
Depreciation and amortization
Investment unit issuance costs
Loan-related costs
Interest income
Interest expenses
Increase (decrease) in allowance for doubtful
accounts
Decrease (increase) in rental receivable
Decrease (increase) in consumption taxes
receivable
Increase (decrease) in accounts payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Increase (decrease) in deposits received
Others, net

Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)

2,953,293
1,275,744
138,866
982,261814)
296,892

4,364,025
1,676,751
137,270
280,326(1,316)295,18558

269(431,538)(306,493)(611,612)(1,744,762)(25,114)
1,989(9,097)52,504
12,935

7,056
884,265
38,57733,971(14,615)

4,131(34,907)5,615,604

Subtotal

4,640,500

Interest income received
Interest expenses paid
Income taxes paid

814
(328,496)
583)

Net cash provided by operating activities

4,312,234

1,316(297,081)(564)
5,319,276

Purchases of property and equipment in trust
Purchases of leasehold rights in trust
Proceeds from tenant leasehold and security
deposits in trust
Repayments of tenant leasehold and security
deposits in trust
Payments of tenant leasehold and security
deposits
Other, net(37,422,498)(5,836,789)(82,786,898)(3,055,031)

40,738)(56,280)

239,098474,368(29,483)(574,396)(2,211)

Net cash used in investing activities

43,092,621)(2,211)(86,000,448)

Cash flows from investing activities

Cash flows from financing activities
Proceeds from short-term loans payable
Repayment of short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Repayment of long-term loans payable in trust
Payments for loan-related costs
Payment of distributions of earnings

1,401,000(321,000)
90,619,000(62,341,000)(9,960,000)(1,250,43)(2,292,901)

94

3,498,000(1,080,000)
47,800,000(594,356)(3,014,523)

(Unit: JPY thousand)Fiscal Period ended
December 31, 2015
(Reference)(from July 1, 2015 to
December 31, 2015)

Fiscal Period ended
June 30, 2016
(from January 1, 2016 toJune 30, 2016)

Payment of distributions in excess of retained
earnings
Proceeds from issuance of investment units
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period-(763,290)

29,230,158
45,084,824

Cash and cash equivalents at end of period

13,818,981

37,780,441
83,626,270
2,945,097
13,818,981
16,764,078

6,304,437
7,514,543[Notes Concerning Significant Accounting Policies (Reference Information)]
By Period
Item
Cash and cash equivalents as statedin Statement of Cash Flows

Fiscal Period ended December 31,
2015 (from July 1 to
December 31, 2015)
Cash and cash equivalents as statedin the Statement of Cash Flows
consist of cash on hand and cash intrust, floating deposits, deposits intrust and short-term investments thatare very liquid and realizable with amaturity of three months or lesswhen purchased and that are subject
to insignificant risks of changes invalue.

Fiscal Period ended June 30, 2016
(from January 1, 2016 toJune 30, 2016)
Cash and cash equivalents as statedin the Statement of Cash Flows
consist of cash on hand and cash intrust, floating deposits, deposits intrust and short-term investments thatare very liquid and realizable with amaturity of three months or lesswhen purchased and that are subject
to insignificant risks of changes invalue.

[Notes to changes in indication method (Reference Information)]
Fiscal Period ended December 31, 2015
(from July 1 to December 31, 2015)-

Fiscal Period ended June 30, 2016
(from January 1, 2016 to June 30, 2016)
In the fiscal period ended December 31, 2015, “Payment
for leasehold and security deposits” was included in“Other” under “Cash flows from investing activities”.
However, due to an increase in the relevant amount, it
has become significant enough to be recorded as aseparate item in the fiscal period ended June 30, 2016.
As a result, the entry for (JPY 2,211,000), which wasrecorded under “Cash flows from investing activities –Others” for the previous period is now indicated under“Payments of tenant leasehold and security deposits”.

95

[Notes to Statement of Cash Flow (Reference Information)]
By Period
Item※1.
Relationship between cash
and cash equivalents in statement ofcash flows and amounts inaccompanying balance sheet

Fiscal Period ended December 31,
2015 (from July 1 to
December 31, 2015)(As of December 31, 2015)(Unit: JPY thousand)Cash and bank7,885,398
deposits
Cash and bank5,933,582
deposits in trust
Cash and cash
13,818,981
equivalents

96

Fiscal Period ended June 30, 2016
(from January 1, 2016 toJune 30, 2016)(As of June 30, 2016)(Unit: JPY thousand)Cash and bank
11,322,762
deposits
Cash and bank5,441,316
deposits in trust
Cash and cash
16,764,078
equivalents

“My Number” informed by municipalities is necessary for taxation procedure on investment units.
Thus, it is necessary for unitholders to notify your “My Number” with your brokerage, etc.
Usage of “My Number” in investment units related affairs“My Number” is recorded on payment record and the payment record is filed with the relevant tax
authority pursuant to laws and ordinances.
Major payment record *Payment record regarding cash distribution
Usage of “My Number” includes taxation related procedures on the investment units. It is necessary
for unitholders to notify your “My Number” with your brokerage, etc.
Inquiries regarding notifying “My Number”Unitholders whose investment units are managed in brokerage accounts
Each brokerage
Unitholders who have no brokerage accountTransfer Agent Department, Sumitomo Mitsui Trust Bank, Limited
Toll-free Telephone Number 0120-782-031

97

Portfolio Map

98

99

Portfolio Overview(as of June 30,2016)
Purpose Residential

Property
NumberName of Property(Note 1)

A26
A27

Location(Note 2)Nisshin Palacestage
Suginami-ku, Tokyo
Daitabashi
Nisshin Palacestage HigashiToshima-ku, Tokyo
NagasakiLeasable Area(m2)

RentableUnits

Acquisition
Price(JPY mn)

Investment
Ratio
(%)

(Note 3)(Note 4)

Occupancy
Rate(%)

1,771.13

98

1,251

0.5

97.0

2,681.94

60

1,229

0.5

93.2

A28

Growth Maison Gotanda

Shinagawa-ku, Tokyo

1,051.50

48

888

0.3

100.0

A29

Growth Maison Kameido

Koto-ku, Tokyo

1,367.96

66

1,070

0.4

95.5

A30

Emerald House

Itabashi-ku, Tokyo

2,152.31

96

1,505

0.6

100.0

A31

Harmonie Ochanomizu

Bunkyo-ku, Tokyo

1,748.24

65

1,428

0.5

100.0

Suncrest Shakujii-Koen

Nerima-ku, Tokyo

3,029.16

29

1,088

0.4

84.3

A32
A33
A34

Growth Maison ShinYokohama
Belle Face UenoOkachimachi

Yokohama-shi, Kanagawa

1,858.44

68

1,059

0.4

89.7

Taito-ku, Tokyo

1,351.11

64

1,023

0.4

98.3

A35

Grand Rire Kameido

Koto-ku, Tokyo

1,562.26

72

906

0.3

100.0

A36

Growth Maison Ikebukuro

Toshima-ku, Tokyo

952.89

42

825

0.3

97.6

A37

Growth Maison Yoga

Setagaya-ku, Tokyo

1,015.34

39

795

0.3

97.5

A38

Route Tachikawa

Tachikawa-shi, Tokyo

1,368.57

24

676

0.3

93.2

A39

Shibuya-Honmachi Mansion Shibuya-ku, Tokyo

1,167.50

25

651

0.2

95.9

A40

City Heights Kinuta

1,235.93

19

646

0.2

100.0

A41

Acseeds Tower KawaguchiKawaguchi-shi, Saitama
Namiki

1,210.74

57

620

0.2

94.8

A42

Capital Heights Kagurazaka Shinjuku-ku, Tokyo

1,126.65

26

604

0.2

97.2

A43

College Square Machida

Machida-shi, Tokyo

1,047.75

62

589

0.2

100.0

A44

Belair Meguro

Meguro-ku, Tokyo

557.05

25

589

0.2

96.1

A45

Wacore Tsunashima I

Yokohama-shi, Kanagawa

907.46

50

572

0.2

98.0

A46

Foros Nakamurabashi

Nerima-ku, Tokyo

815.77

37

566

0.2

96.2

A47

Growth Maison Kaijin

Funabashi-shi, Chiba

2,040.27

34

557

0.2

97.7

A48

College Square Machiya

Arakawa-ku, Tokyo

871.35

43

510

0.2

100.0

A51

City House Tokyo Shinbashi Minato-ku, Tokyo

3,364.00

86

2,520

0.9

96.1

A52

Winbell Kagurazaka

Shinjuku-ku, Tokyo

4,032.70

118

3,260

1.2

98.6

Shinjuku-ku, Tokyo

4,310.77

69

1,880

0.7

100.0

Shinjuku-ku, Tokyo

1,987.88

88

1,450

0.5

95.4

Meguro-ku, Tokyo

1,197.19

17

1,070

0.4

100.0

A53
A54

Nishiwaseda Cresent
MansionLexington Square
Akebonobashi

Setagaya-ku, Tokyo

A56

Casa Eremitaggio

A59

Towa City Coop Shinotsuka
Toshima-ku, TokyoII

1,627.13

58

866

0.3

97.6

A61

Bichsel Musashiseki

Nerima-ku, Tokyo

1,220.24

70

577

0.2

95.7

A62

Lexel Mansion Ueno
Matsugaya

Taito-ku, Tokyo

1,969.45

29

970

0.4

100.0

A63

Towa City Coop Sengencho Yokohama-shi, Kanagawa

3,426.36

154

1,110

0.4

91.1

A64

Royal Park Omachi

Sendai-shi, Miyagi

1,929.59

51

415

0.2

96.7

A65

Lexington Square
Haginomachi

Sendai-shi, Miyagi

1,528.58

39

330

0.1

100.0

A66

Visconti Kakuozan

Nagoya-shi, Aichi

A71

Lexington Square Daitabashi Suginami-ku, Tokyo

A72

Lexington Square Honjo
Azumabashi

784.74

A73

AMS TOWER Minami 6-Jo Sapporo-shi, Hokkaido

4,460.56

A75

Spacia Ebisu

Shibuya-ku, Tokyo

7,794.91

A76

Neo Prominence

Kita-ku, Tokyo

A77

Invoice Shin-Kobe Residence Kobe-shi, Hyogo

A78

Cosmo Court Motomachi

A79

Revest Honjin

705.75

8

255

0.1

100.0

1,430.64

43

977

0.4

97.2

33

511

0.2

94.1

120

1,180

0.4

87.6

109

7,010

2.6

91.7

3,574.70

52

1,660

0.6

96.2

2,773.71

81

1,260

0.5

98.2

Kobe-shi, Hyogo

2,310.49

82

973

0.4

96.3

Nagoya-shi, Aichi

1,933.80

80

674

0.3

97.5

Sumida-ku, Tokyo

100

Purpose

Property
NumberName of Property(Note 1)

Location(Note 2)

Leasable Area(m2)

RentableUnits

Acquisition
Price(JPY mn)

Investment
Ratio
(%)

(Note 3)(Note 4)

Occupancy
Rate(%)

Residential

A80

Revest Matsubara

Nagoya-shi, Aichi

1,955.40

70

657

0.2

88.7

A81

Sun Terrace Minami
Ikebukuro

Toshima-ku, Tokyo

898.70

38

625

0.2

100.0

A82

Alba Noritake Shinmachi

Nagoya-shi, Aichi

1,731.68

64

608

0.2

97.2

A83

Revest Meieki Minami

Nagoya-shi, Aichi

1,634.60

61

597

0.2

96.6

A84

Revest Heian

Nagoya-shi, Aichi

1,554.03

40

595

0.2

100.0

A85

Vendir Hamaotsu Ekimae

Otsu-shi, Shiga

2,670.66

81

581

0.2

95.3

A86

Salvo Sala

Osaka-shi, Osaka

1,428.12

54

544

0.2

100.0

A87

Excellente Kagurazaka

Shinjuku-ku,Tokyo

701.92

33

543

0.2

97.1

A88

Luna Court Edobori

Osaka-shi, Osaka

1,185.50

50

525

0.2

96.0

A89

Winntage Kobe Motomachi

Kobe-shi, Hyogo

1,433.35

57

512

0.2

86.0

A90

Queen's Court Fukuzumi

Koto-ku, Tokyo

765.18

25

456

0.2

93.1

A91

Corp Higashinotoin

Kyoto-shi, Kyoto

1,029.05

42

446

0.2

90.8

A92

Belair Oimachi

Shinagawa-ku, Tokyo

530.60

26

412

0.2

100.0

A93

Siete Minami-Tsukaguchi

Amagasaki-shi, Hyogo

1,020.86

40

374

0.1

97.5

A94

Prime Life Sannomiya
Isogami Koen

Kobe-shi, Hyogo

789.12

32

373

0.1

93.8

A95

HERMITAGE NANBA WEST

Osaka-shi, Osaka

992.76

21

355

0.1

100.0

A96

Century Park Shinkawa
1-bankan

Nagoya-shi, Aich

1,477.62

44

335

0.1

95.4

A97

West Avenue

Kunitachi-shi, Tokyo

794.80

40

331

0.1

85.0

A98

Little River Honmachibashi

Okasa-shi, Osaka

974.81

31

310

0.1

100.0

A99

Prime Life Mikage

Kobe-shi, Hyogo

761.18

28

297

0.1

96.7

A100

City Court Kitaichijo

Sapporo-shi, Hokkaido

5,230.18

127

1,782

0.7

95.7

A101

Lieto Court Mukojima

Sumida-ku, Tokyo

2,940.20

82

1,683

0.6

96.8

A102

Lieto Court Nishi-Ojima

Koto-ku, Tokyo

2,048.28

91

1,634

0.6

98.0

A103

Royal Parks Momozaka

Osaka-shi, Osaka

8,776.26

147

2,910

1.1

100.0

A104

Royal Parks Shinden

Adachi-ku, Tokyo

15,797.29

248

5,024

1.9

100.0

144,376.66

4,108

71,116

26.7

96.4

B08

Kindai Kagakusha Building

Shinjuku-ku, Tokyo

1,451.54

13

1,301

0.5

100.0

B09

Shinjuku Island

Shinjuku-ku, Tokyo

526.43

1

715

0.3

100.0

B14

Lexington Plaza Nishigotanda

Shinagawa-ku, Tokyo

6,033.58

11

4,880

1.8

100.0

B15

Cross Square NAKANO

Nakano-ku, Tokyo

2,145.00

45

1,060

0.4

84.1

B16

Ohki Aoba Building

Sendai-shi, Miyagi

2,178.37

13

816

0.3

83.6

B17

Lexington Plaza Hachiman

Sendai-shi, Miyagi

8,419.15

18

3,280

1.2

98.8

B18

AEON TOWN Sukagawa

Sukagawa-shi, Fukushima

18,440.58

1

2,320

0.9

100.0

39,194.65

102

14,372

5.4

98.0

81.04

1

97

0.0

100.0

81.04

1

97

0.0

100.0

Subtotal
Office Buildings/Retail Facilities

Subtotal
Parking
Lots

C01

Times Kanda-Sudacho 4th

Chiyoda-ku Tokyo

Subtotal
HotelsD01

Hotel MyStays Kanda

Chiyoda-ku, Tokyo

2,585.72

126

2,851

1.1

100.0

D02

Hotel MyStays Asakusa

Sumida-ku, Tokyo

3,327.38

161

2,584

1.0

100.0

D03

Hotel MyStays Kyoto-Shijo

Kyoto-shi, Kyoto

7,241.51

225

6,024

2.3

100.0

101

Purpose

Property
NumberName of Property(Note 1)

Location(Note 2)

Leasable Area(m2)

RentableUnits

Acquisition
Price(JPY mn)

Investment
Ratio
(%)

(Note 3)(Note 4)

Occupancy
Rate
(%)

D04

MyStays Shin-Urayasu
Conference Center

Urayasu-shi, Chiba

6,232.30

175

4,930

1.8

100.0

D05

Hotel MyStays Maihama

Urayasu-shi, Chiba

2,456.36

90

4,870

1.8

100.0

D06

Hotel Vista Premio Dojima

Osaka-shi, Osaka

9,445.32

153

3,845

1.4

100.0

D07

Hotel MyStays Nagoya-Sakae

Nagoya-shi, Aichi

9,064.71

279

2,958

1.1

100.0

D08

Hotel MyStays
Sakaisuji-Honmachi

Osaka -shi, Osaka

4,188.83

191

2,514

0.9

100.0

D09

Hotel MyStays Yokohama

Yokohama-shi, Kanagawa

7,379.43

190

2,119

0.8

100.0

D10

Hotel MyStays Nippori

Arakawa-ku , Tokyo

1,719.29

93

1,898

0.7

100.0

D11

Hotel MyStays
Fukuoka-Tenjin-Minami

Fukuoka-shi, Fukuoka

3,412.71

177

1,570

0.6

100.0

D12

Flexstay Inn Iidabashi

Shinjuku-ku, Tokyo

2,953.38

62

1,381

0.5

100.0

D13

Hotel MyStays Ueno Inaricho

Taito-ku, Tokyo

1,150.76

72

1,331

0.5

100.0

D14

Flexstay Inn Shinagawa

Shinagawa-ku, Tokyo

1,134.52

55

1,242

0.5

100.0

D15

Flexstay Inn Tokiwadai

Itabashi-ku, Tokyo

2,539.75

130

1,242

0.5

100.0

D16

Flexstay Inn Sugamo

Toshima-ku, Tokyo

2,089.86

105

1,192

0.4

100.0

D17

Hotel MyStays Otemae

Osaka-shi, Osaka

4,956.66

111

1,192

0.4

100.0

D18

Flexstay Inn Kiyosumi
Shirakawa

Koto-ku, Tokyo

2,673.64

56

749

0.3

100.0

D19

Flexstay Inn Nakanobu P1

Shinagawa-ku, Tokyo

770.56

39

589

0.2

100.0

D20

Flexstay Inn Nakanobu P2

Shinagawa-ku, Tokyo

391.49

22

283

0.1

100.0

D21

APA Hotel Yokohama-Kannai

Yokohama-shi, Kanagawa

6,568.51

452

8,350

3.1

100.0

D22

Hotel Nets Hakodate

Hakodate-shi, Hokkaido

7,961.26

205

2,792

1.0

100.0

D23

Flexstay Inn Shirogane

Minato-ku, Tokyo

1,754.06

84

2,119

0.8

100.0

D24

Hotel MyStays Haneda

Ota-ku, Tokyo

5,400.16

174

7,801

2.9

100.0

D25

Hotel MyStays Kameido P1

Koto-ku, Tokyo

4,349.67

266

5,594

2.1

100.0

D26

Hotel MyStays Ueno Iriyaguchi Taito-ku, Tokyo

2,247.92

97

3,821

1.4

100.0

D27

Hotel MyStays Kameido P2

Koto-ku, Tokyo

2,793.99

177

3,742

1.4

100.0

D28

Hotel Vista Shimizu

Shizuoka-shi, Shizuoka

3,559.81

152

2,198

0.8

100.0

D29

Super Hotel Shinbashi/
Karasumoriguchi

Minato-ku, Tokyo

1,403.89

74

1,624

0.6

100.0

D30

Flexstay Inn Higashi-Jujo

Kita-ku, Tokyo

1,714.53

89

1,277

0.5

100.0

D31

Hotel MyStays Utsunomiya

Utsunomiya-shi, Tochigi

11,733.23

126

1,237

0.5

100.0

D32

Flexstay Inn Kawasaki-Kaizuka Kawasaki-shi, Kanagawa

1,190.57

64

980

0.4

100.0

D33

Comfort Hotel Toyama

Toyama-shi, Toyama

3,305.64

150

979

0.4

100.0

D34

Flexstay Inn
Kawasaki-Ogawacho

Kawasaki-shi, Kanagawa

725.60

62

906

0.3

100.0

D35

Flexstay Inn Ekoda

Nerima-ku, Tokyo

3,932.93

210

5,069

1.9

100.0

D36

Super Hotel Tokyo-JR
Tachikawa Kitaguchi

Tachikawa-shi, Tokyo

1,832.97

96

1,170

0.4

100.0

D37

Super Hotel JR Ueno-iriyaguchi Taito-ku, Tokyo

1,279.16

69

1,130

0.4

100.0

D38

Hotel MyStays Shinsaibashi

Osaka-shi, Osaka

1,942.01

57

3,160

1.2

100.0

D39

Comfort Hotel Kurosaki

Kitakyushu-shi, Fukuoka

3,207.60

151

1,148

0.4

100.0

D40

Comfort Hotel Maebashi

Maebashi-shi, Gunma

3,660.96

154

1,128

0.4

100.0

D41

Comfort Hotel
Tsubame-Sanjo

Sanjo-shi, Niigata

3,099.90

133

1,010

0.4

100.0

D42

Comfort Hotel Kitami

Kitami-shi, Hokkaido

3,009.50

127

851

0.3

100.0

D43

Hotel MyStays Gotanda Station Shinagawa-ku, Tokyo

8,752.42

335

24,674

9.3

100.0

D44

Hotel Epinard Nasu

Nasu-gun, Tochigi

37,702.33

310

20,981

7.9

100.0

D45

Hotel MyStays Fukuoka Tenjin

Fukuoka-shi, Fukuoka

5,083.06

217

8,059

3.0

100.0

D46

Hotel MyStays Hamamatsucho

Minato-ku, Tokyo

1,951.90

105

7,959

3.0

100.0

D47

Hotel MyStays Kanazawa

Kanazawa-shi, Ishikawa

13,250.03

261

13,761

5.2

100.0

102

Purpose

Property
NumberName of Property(Note 1)

D48

(Note 1)

(Note 2)
(Note 3)(Note 4)

Takamatsu Tokyu REI Hotel

Location(Note 2)

Leasable Area(m2)

RentableUnits

Acquisition
Price(JPY mn)

Investment
Ratio
(%)

(Note 3)(Note 4)

Occupancy
Rate(%)

7,148.17

193

2,139

0.8

100.0

Subtotal

226,275.96

7,102

181,032

67.9

100.0

Total

409,928.31

11,313

266,619

100.0

98.5

Takamatsu-shi, Kagawa“Property number” indicates the use categorization of properties acquired by INV, with “A” standing forresidential, “B” standing for office and retail, “C” standing for parking lots and “D” standing for hotel, andthe number assigned for each property. The number following “A”, “B”, “C” and “D” is assigned based on
how early the acquisition was made, except that for acquisitions made at the same time a lower number isassigned to the property with a greater acquisition price.
“Location” is, in principle, based on the indicated address (jyukyohyoji), except that if the jyukyohyojisystem has not been implemented for such property, the location is based on the land number (banchi).
“Acquisition price” is the purchase price indicated in the real estate or trust beneficiary purchase agreement.
Such price excludes consumption tax and other taxes, and has been rounded down to the nearest hundred
million yen.
“Investment ratio” is the ratio of the acquisition price to the aggregate acquisition price of INV’s portfolio,
and has been rounded to the first decimal place.

103Newly Acquired Properties for the 26th Fiscal Period(Fiscal Period ended June 30, 2016)
5 Hotels and 1 Residential Property Acquired in January 2016

4 Hotels and 1 Residential Property Acquired in March 2016

104

105

(Note 1)(Note 2)

Pass through type contract is entered into for the retail space in this property.
Building for parking lots is excluded.

106

2 Hotels Acquired in June 2016107

Overview of Unitholders/Investment Units■Historical Unit Price(Note) Unit prices indicate the closing price on the TSE market. Development of Tokyo Stock Exchange REIT
Index indicates on or after January 4, 2013 on the assumption that the closing price of INV’s unit price isdeemed as identical to the closing price of Tokyo Stock Exchange REIT index as of January 4, 2013.

■ Distribution of Unitholders

Annual Schedule108

Information for Unitholders
For Unitholders
Investors’ Registry
Administrator
Special Account Management
Institution

Correspondence(Telephone Assistance)

Sumitomo Mitsui Trust Bank, Limited 4-1, Marunouchi 1-chome,
Chiyoda-ku, Tokyo<Unitholders of the former Tokyo Growth REIT Fund>
Mitsubishi UFJ Trust and Banking Corporation Limited
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo<Unitholders of the forme LCP Investment Corporation>
Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome Chiyoda-ku, Tokyo
Transfer Agent Department, Sumitomo Mitsui Trust Bank,
Limited8-4, Izumi 2-chome, Suginami-ku, Tokyo, 168-0063
Toll-free Telephone Number 0120-782-031
Administrative services are available at the main and branch
offices throughout
Japan of Sumitomo Mitsui Trust Bank, Limited

Notification Process for Address Changes
Please notify your brokerage (financial instruments business operator) regarding changes toaddresses, names, registered seals, and the like. Unitholders who have special accounts instead of
brokerage accounts should contact the transfer account management institution (financial
instruments business operator) below.
Unitholders of the pre-merger Investment Corporation (former Tokyo Growth REIT Fund)
Mitsubishi UFJ Trust and Banking Corporation Limited
Toll-free Number: 0120-255-100
Unitholders of the former LCP Investment Corporation
Sumitomo Mitsui Trust Bank, Limited Toll-free Number: 0120-782-031
Dividends
Unitholders may collect “dividends” by submitting the “Dividends Receipt” at your local Japan Post
Bank or at the deposit teller of a post office. In the case that the collection period is past, please
specify the collection method on the back of the “Dividends Receipt,” and either mail the receipt to
the Transfer Agent Department of the Sumitomo Mitsui Trust Bank, Limited or collect from a branchteller.
(Bank Transfers)
Should you desire to specify bank transfers for future dividends, please notify your brokerage(financial instruments business operator).
(Note)

Please collect dividends within 3 years of distribution. Please note that payments cannot be made after 3
years due to the rules and regulations of the Articles of Incorporation of the Investment Corporation.

109

Notification(Notice of Dividend Payment)
The 2008 amendment of the Special Taxation Measures Law (Act No. 23 of April 30, 2008)
mandated the sending to unitholders a “Notice of Dividend Payment” stating the dividend amount,amount of taxes withheld, and the like. If you collect dividends via a “Dividends Receipt,” pleaseview the “Notice of Dividend Payment” sent alongside it. If you have specified a wire transfer, the“Dividend Statement” delivered with the dividend payment is the “Notice of Dividend Payment.”
Both documents may be used as supporting documents when filing income tax returns.
(Characters for Addresses and Names of Unitholders)With the digitization of investment securities, if there are Chinese characters in your address ornames that the Japan Securities Depository Center (JASDEC) has not included in the transfer system,
please list in the Investors’ Registry by converting part or all of the characters to those that JASDEC
has included in the transfer system or to katakana. Please be aware that correspondence may be
addressed using characters that JASDEC has included in the transfer system. Please inquire withyour brokerage regarding characters registered for your address and name.
Inquiries
For inquiries regarding INV: Consonant Investment Management Co., Ltd.
TEL: 03-5411-2731 (Main)
Weekdays 9:30-17:30

110