Investment
Invincible Corporation

Financial Summary
for the June 2018 Fiscal Period(from January 1, 2018 to June 30, 2018)
August 22, 2018

Name
Representative
Stock Listing
Securities CodeURL
Contact

:
:
:
:
:
:

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

Start date fordividend distribution: September 21, 2018

This English language notice is a translation of the Japanese-language notice released on August 22, 2018 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment
decisions based on their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes
only, and no warranties or assurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original
Japanese-language notice. In the event of any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

1.

(values are rounded down to the nearest JPY million)
Financial Results for the Fiscal Period ended June 30, 2018 (from January 1, 2018 to June 30, 2018)(1)

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

Operating Income

Ordinary Income

JPY million%

Net Income

JPY million%

JPY million%

Fiscal period ended
June 30, 201813,104

3.6

8,433

2.6

7,722

5.7

7,721

5.7

Fiscal period ended
December 31, 2017

12,647

36.6

8,223

53.9

7,303

55.3

7,303

55.3

Net Income per Unit

Ordinary Income /Total Assets

Net Income /Unitholders’ Equity

Ordinary Income /Operating Revenues

JPY

%

%

%

Fiscal period ended
June 30, 2018

1,611

4.3

2.1

58.9

Fiscal period ended
December 31, 2017

1,712

4.6

2.2

57.7

(Note1)(2)“Net Income per Unit” is calculated based on the average number of investment units during the period and is rounded to the nearest yen.
Net income per unit calculated based on the number of investment units issued and outstanding at the end of fiscal period ended December
31, 2017 (4,793,181 units) and rounded down to the nearest yen is JPY 1,523.

Distributions
Distribution(Excluding excess profit
distribution)

Per Unit

Total

Distribution

Excess Profit
Distribution
Per Unit(Including excess profit
distribution)

Per Unit

Total

Total

Dividend
PayoutRatio

Distribution/ Net
AssetsJPY

JPY million

JPY

JPY million

JPY

JPY million%%

Fiscal period ended
June 30, 2018

1,430

6,854

-

-

1,430

6,854

88.8

3.8

Fiscal period ended
December 31, 2017

1,528

7,323

36

172

1,564

7,496

100.3

4.1

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

(3)

Distribution (excluding excess profit distribution) differs from net income for the Fiscal period ended June 30, 2018, since INV distributes
90% of Distributable Income (JPY 7,610 million, which is a total of net income and JPY 111 million of retained deficits carried forward)
and reserve the remaining amount as internal reserve.
Distribution (excluding excess profit distribution) differs from net income for the Fiscal period ended December 31, 2017, since INV
distributes almost all of the profit as defined in Article 136, Paragraph 1 of the Investment Trust and Investment Corporation Act, which
includes deferred gain on hedge of the interest rate swap.
The distribution in excess of profit for the fiscal period ended December 31, 2017 is JPY 172 million (JPY 36 per unit), all of which is therefund of investment for the purpose of stabilizing distributions.
The “Dividend Payout Ratio” is calculated in accordance with the following formula:
Dividend Payout Ratio = Distribution Amount (Excluding excess profit distribution) ÷ Net Income × 100
Moreover, the “Dividend Payout Ratio” calculated in accordance with the following formula is 90.1%:
Dividend Payout Ratio = Distribution Amount (Excluding excess profit distribution) ÷ Distributable Income × 100“Dividend Payout Ratio” is rounded to the nearest one decimal place.
“Distribution/ Net Assets” is calculated based on the figures excluding excess profit distribution.

Financial Position
Total Assets

Net Assets

Net Assets / Total Assets

Net Assets per Unit

JPY million

JPY million%

JPY

Fiscal period ended June30, 2018

374,512

181,52348.5

37,871

Fiscal period ended
December 31, 2017371,758

181,32048.8

37,829(Note)“Net Assets per Unit” is calculated based on the number of investment units issued and outstanding at the end of each period, and isrounded to the nearest yen.

2

(4)

Cash Flows
Cash Flows fromOperating
Activities

Cash Flows from
Investment
Activities

Closing Balance ofCash and
Cash Equivalents

Cash Flows from
Financing
Activities

JPY million

JPY million

JPY million

JPY million

Fiscal period ended
June 30, 2018

20,483(21,020)(5,083)

15,072

Fiscal period ended
December 31, 2017

13,676(60,034)

57,453

20,6932.

Forecasts for the Fiscal Period ending December 31, 2018 (from July 1, 2018 to December 31, 2018)

Operating
IncomeOperating
Revenues

JPY
millionFiscal Period
endingDecember31, 2018

14,278(Percentages indicate percentage change from the preceding period)
Distribution
Distribution
per Unit
per Unit
Excess Profit
Ordinary(including(excluding Distribution
Net Income
Incomeexcess profit
per Unit
excess profit
distribution)
distribution)

%

9.5

JPY
million%9,247 11.4

JPY
million%7,961 4.9

JPY
million

%

JPY

JPY

JPY

7,960 4.9

1,516

167

1,383

(Reference) Estimated net income per unit for the fiscal periods ending December 31, 2018 is JPY 1,384.
Estimated net income per unit is calculated in accordance with the following formula:
Estimated net income per unit = Estimated Net Income ÷ Estimated Number of Units Issued and Outstanding as of the End of the
Fiscal Period* Others(1) Changes in Accounting Policies, Accounting Estimates or Restatements(a) Changes in Accounting Policies due to Revisions to
Accounting Standards and Other Regulations(b) Changes in Accounting Policies due to Other Reasons(c) Changes in Accounting Estimates(d) Restatements

None
None
None
None

(2) Number of Investment Units Issued and Outstanding(a) Number of Units Issued and Outstanding
June 30, 2018 4,793,181
as of the End of the Fiscal Period (Including Treasury Units)(b) Number of Treasury Units as of the End of the Fiscal Period June 30, 2018
(Note)

0

December 31, 2017

4,793,181

December 31, 2017

0

Please refer to “Notes Related to Per Unit Information” regarding the number of investment units which is the basis for the calculation of
net income per unit.

3ͤThe Implementation Status of Statutory Audit
At the time of this financial report, the audit procedures for the financial statements pursuant to the Financial Instruments
and Exchange Act are yet to be completed.
ͤExplanation on the Appropriate Use of the Forecast of Results and Other Matters of Special Consideration(Explanation on the Appropriate Use of the Forecast of Results)
The forward-looking statements in this financial report are based on the information currently available to us and certain
assumptions which we believe are reasonable. Actual operating performance may differ significantly due to factors wecannot predict as of this date, including gains or losses from the disposition of properties, repayment of borrowings,
decreases in rents and changes in operating conditions. Further, there is no guarantee of the payment of the forecast
distribution amount.
Please refer to “Assumptions Underlying the Forecast of Financial Results and Distribution for the Fiscal Period ending
December 2018” on page23 for assumptions used in the forecasts and precautions regarding the use of such forecasts.
Unless otherwise specified herein, amounts less than JPY 1 are rounded down, and ratios are rounded to the nearest one
decimal place.

41. Related Companies of the Investment Corporation
Disclosure is omitted because there have been no material changes in the “Structure of the Investment Corporation”
section of the latest securities report (filed on March 26, 2018) and the extraordinary report (filed on March 30, 2018).

2. Management Policy and Operating Conditions(1) Management Policy
Consonant Investment Management Co., Ltd., the asset manager to which Invincible Investment Corporation (“INV”)
entrusts the management of its assets (the “Asset Manager”) changed its Investment Policy due to Revision of theInvestment Guidelines which are its internal rules on July 17, 2018. Due to this change, “Investment policy” has beenchanged. Please refer to “c Significant Subsequent Events (Reference Information) (b) Change in the Investment
Guidelines” and the press release entitled “Notice concerning Partial Change in Investment Policy due to Revision ofInternal Rules (the “Investment Guidelines”) of the Asset Manager” dated July 17, 2018 for this change.
Disclosure o f “Investment Targets,” “Distribution Policies” and the “Investment Restriction” is omitted because there
have been no material changes from the relevant sections of the latest securities report (filed on March 26, 2018)(2) Operating Conditionsa

Overview of the Fiscal Period Ended June 2018 (“Reporting Period”)(a)Main Trends of INV

INV was established in January 2002 in accordance with the Investment Trust and Investment Corporation Act (Act No. 198of 1951, as amended; the “Investment Trust Act”). In May 2004, INV was listed on the Osaka Securities Exchange(application for delisting was made in August 2007), and in August 2006 was listed on the Real Estate Investment and Trust
Securities Section of the Tokyo Stock Exchange (Ticker Code: 8963).
After the absorption-type merger with LCP Investment Corporation (“LCP”) was implemented on February 1, 2010, as
specified in Article 147 of the Investment Trust Act, with LCP as the absorbed corporation, 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 “FortressGroup”) was the main allottee, and the sponsor changed to the Fortress Group. FIG became a subsidiary of Softbank Group
Corp. (“SoftBank Group”), effective December 27, 2017 (Note1). Calliope, an affiliate of FIG, who owned 100% of issued
shares of the Asset Manager, transferred 80.0% of issued shares of the Asset Manager to Fortress CIM Holdings L.P., asubsidiary of SoftBank Group, and 20.0% to SoftBank Group on March 29, 2018, pursuant to the basic agreement which
was entered into as of September 7, 2017. Although FIG is no longer an indirect parent company of the Asset Manager,
FIG continues to support INV as the sponsor.
Ever since the commencement of sponsorship from the Fortress Group, INV has been focusing its efforts on improving the
profitability of its portfolio and establishing a revenue base in order to secure stable distributions, and has strengthened thelender formation through new borrowings and the refinancing of existing bank borrowings, thereby creating a financial basefor external growth. With this platform as a base, in June 2014, the Asset Manager revised the Investment Guidelines for
INV, and positioned hotels as a core asset class alongside residential properties with a view towards expanding investmentsin the hotel sector in which demand is forecasted to rise going forward. As a result of the external growth efforts andportfolio rebalance to be described below, INV's portfolio at the end of the previous period ended December 2017 comprisedof 126 properties (54 hotels (Note 3), 67 residential properties and five others) with a total acquisition price of JPY 353,695
million. The acquisition price of the portfolio has increased a significant 4.5x, compared to May 22, 2014, which is the date
immediately prior to INV’s initial investment in hotels.
In the Fiscal Period ended June 30, 2018 (“Reporting Period”), INV continued to pursue its portfolio rebalancing strategy
with its Asset Recycling Program which began in the fiscal period ended December 2017, selling properties at low cap rates
and utilizing the funds raised to buy properties at more accretive or higher cap rates. INV sold three residential properties
and three office properties for the total sale price of JPY 10,624 million which is equivalent to a weighted average 4.4%
NOI yield (Note 4), and used the proceeds to acquire four hotel properties in February 2018 and two hotel properties in June2018 for the total acquisition price of JPY 19,750 million which is equivalent to a weighted average 5.7% appraisal NOI
yield (Note 5). As a result, INV's portfolio at the end of Reporting Period comprised of 126 properties (60 hotels (Note53), 64 residential properties and two others) with a total acquisition price of JPY 363,831 million. The acquisition priceof the portfolio has increased a significant 5.0x, compared to May 22, 2014.
INV revised the Investment Guidelines as of July 17, 2018 and newly established an investment policy for overseas realestate related assets as well as changing its domestic investment policy. Please refer to “(1) Management Policy “and“c Significant Subsequent Events (Reference Information) (b) Change in the Investment Guidelines” for more details.
INV revised the Memorandum of Understanding (the “MOU") on July 17, 2018 with affiliates of Fortress Group with respect
to preferential negotiating rights regarding the acquisition of hotels and residential properties, which will continue to provide
INV with considerable opportunities for external growth. As of the date of this document, there are 19 hotels and nineresidential properties in the MOU.
In addition to acquiring a long-term issuer credit rating (Note 6) of A (positive outlook) from Japan Credit Rating Agency,
Ltd. (“JCR”), INV issued its first corporate bond for the purpose of raising part of funds for property acquisition, as thesebonds helped to diversify the financing sources for INV, while at the same time lowering its financing costs and lengthening
the average maturity period of its debt. The two Investment Corporation Bonds have five and 10 year maturities and coupon
rates of 40 and 80 basis points respectively, and have an “A” credit rating from JCR.
(Note 1)US Eastern Standard Time

(Note 2)As of July 2011, Calliope owned 97.35% of issued shares of the Asset Manager and the investment ratio reached100% in October 2013. Calliope transferred 80.0% of issued shares to Fortress CIM Holdings L.P., a subsidiaryof SoftBank Group and 20.0% to SoftBank Group on March 29, 2018. As of the date of this document, SoftBank
Group owns 100% of issued shares of the Asset Manager directly and indirectly.

(Note 3)The preferred equity interest is counted as a hotel property, based on the use of Sheraton Grande Tokyo Bay
Hotel, the underlying asset of the preferred equity interest. Such preferred equity interest issued by special
purpose company refers to 178,458 units of preferred equity interest issued by Kingdom Special Purpose
Company (equivalent to 49.0% of preferred equity interest), which owns the trust beneficiary interest of theSheraton Grande Tokyo Bay Hotel as an underlying asset. Moreover, INV’s investment amount of thepreferred equity interest is counted as the acquisition price of the preferred equity interest. Hereinafter thesame, unless otherwise noted. The underlying asset is the real estate or the real estate related assets to beacquired or owned by a TK operator of TK interest to INV or a TMK relating to the preferred equity interest
which INV owns, thus the real estate which will be the revenue source of INV. Hereafter the same.

(Note 4)

Calculated by dividing the aggregated actual NOI for January 1, 2017 – December 31, 2017 of the soldproperties by the total sale price and rounded to one decimal place.

(Note 5)

Appraisal NOI yield is calculated by dividing the total NOI derived from the direct capitalization method statedin the appraisal reports by The Tanizawa Sōgō Appraisal Co., Ltd. or Daiwa Real Estate Appraisal Co., Ltd. on
the valuation date of January 1, 2018 or April 1, 2018 by the total of acquisition price and rounded to one
decimal place.

(Note 6) The above rating is the issuer rating granted to INV, and not a rating granted to its investment units. Furthermore,
INV’s investment units have no credit rating that have been or will be granted or submitted for inspection by
any rating agency at the request of INV.

(b)

Operational Environment and Performance

For the June 2018 period, the portfolio NOI increased by 21.6% or JPY 1,734 million to JPY 9,758 million compared tothe same period in the previous year (the June 2017 period). Of the 21.6% increase in NOI, the hotel portfolio accounted
for an increase of 21.2% or JPY 1,701 million, the residential portfolio accounted for an increase of 2.3% or JPY 186
million, and other portfolio assets accounted for a decrease of 1.9% or JPY 153 million due to sale of assets. In addition,
the portfolio maintained a high average occupancy rate (Note 1) of 98.5%.
Commentary on hotel and residential performance in the Reporting Period is described below.
The NOI of the 45 hotels owned by INV (Note 2) decreased by 0.8% for the period compared to the same period in theprevious year partially due to the renovation and associated partial downtime of five hotels. If these five hotels were notincluded, NOI would have increased by 2.6%. The 45 hotels recorded an occupancy rate (Note 3) of 88.4% (-0.2 points
6YoY), ADR (Note 4) of JPY 10,279 (-0.7% YoY), and RevPAR (Note 5) of JPY 9,087 (-0.9% YoY). As describedabove, five hotels (Hotel MyStays Kyoto-Shijo, Hotel MyStays Shin-Urayasu Conference Center, Hotel MyStays
Maihama, Hotel MyStays Premier Dojima (Note 6) and Hotel MyStays Hakodate Goryokaku (Note 7)) were renovatedduring the Reporting Period at a total cost of approximately JPY 1.1 billion. Based on the portfolio of 40 hotels excluding
such five hotels under renovation, the NOI, occupancy rate, ADR and RevPAR were +2.6% YoY, +0.9 points YoY,
+0.4% YoY, and +1.4% YoY, respectively. Of the total hotel revenue from the 59 hotels INV owns (Note 8), fixed rents
accounted for 48.6% (JPY 3,587 million) and variable rents accounted for 51.4% (JPY 3,790 million) at the 59 hotels.
Inbound visitors reached a record high of 28.6 million (+19.3% YoY) in 2017 while government targets are 40 million in2020 and 60 million in 2030. For year to date through July 2018, inbound visitors to Japan reached 18.7 million, or
13.9% higher than the same period of the previous year. Under such circumstances, MyStays Hotel Management Co.,Ltd (“MHM”), a hotel operator in the sponsor group which operates 87 hotels nationwide, including 52 hotels in INV’s
portfolio as of the date of this document, is continually enhancing its operations and recently launched its new website
and booking engine to increase direct bookings and reduce commissions. MHM has also recently launched a newrevenue management system based on machine learning to improve the overbooking algorithms to help offset cancelations
and improve revenue at the hotels overall. MHM is continuing to court the increasing foreign tourism business which
accounted for 33.7% (Note 9) of hotel revenue at INV owned MyStays Hotel (Note 10) in the Reporting Period. In
addition to having multi-lingual chat and staff, MHM has sought to increase its Chinese guest count by being the firstJapanese hotel company to list its rooms on Fliggy, Alibaba’s online marketplace in China, selling hotels, tours and othertravel-related services from online travel agencies and direct travel service providers, commencing from September 2017.
MHM was the top international chain by revenue on Fliggy and won an award for Single’s Day in China. Aside fromthe topline, MHM has also been focused on expense management and cut the building management costs on 38 of INV`shotels by 13.9% and cut the elevator maintenance costs on 34 of INV`s hotels by 50.4%.
The NOI (Note 11) of the 64 residential properties (Note 12) for the Reporting Period increased 3.2% compared to thesame period in the previous year, and the average occupancy rate achieved a stable 95.6%, an increase of 0.5 points
compared to the same period in the previous year.
Trends for rent at city-center residential properties with small-type rooms maintained a moderate increase. Due to thepositive circumstances in the macro environment, INV continues to focus on its rent increase program for new leases andrenewals as well as initiatives to reduce residential leasing costs based on a detailed market analysis of each property andunit. In the Reporting Period, INV realized a rent increase for 50.1% (based on the number of contracts) of the newresidential lease contracts for an average rent increase of 2.6% compared to the previous rent across all new leases (Note13). Specifically, at Royal Parks Tower Minami-Senju, INV’s flagship residential property, INV achieved strong resultswith rent increases for 84.9% (based on the number of contracts) of the new lease contracts with an average rent increaseof 10.1% compared to the previous rent across all new leases (Note 13). INV achieved a rent increase for 54.4% (basedon the number of contracts) of contract renewals for an average rent increase of 2.3% compared to the previous rent acrossall renewal leases (Note 14), while maintaining a high contract renewal rate of 84.9% (Note 13). Combined, new leases
and renewal leases were signed at 2.4% higher than the previous leases.
The total appraisal value of 125 properties (Note 8) at the end of the Reporting Period was JPY 411,542 million. The
portfolio has an unrealized gain of JPY 74,607 million (Note 15) and an unrealized gain ratio of 22.1% (Note 15). The
total appraisal value of 119 properties which were owned throughout the Reporting Period, increased by 0.2% from JPY
390,955 million at the end of December 2017 period to JPY 391,542 million at the end of the Reporting Period.
Key Performance Indicators of 45 Hotel Properties (Note 2)
Occupancy Rate(Note 3)
ADR (JPY) (Note 4)
RevPAR (JPY) (Note 5)
GOP (JPY million) (Note 16)

June 2018 fiscal period
88.4%
10,279
9,087
7,417

7

Year-on-year change-0.2pt
-0.7%
-0.9%
-1.0%

Key Performance Indicators of 64 Residential Properties (Note 12)
Occupancy Rate (Note 1)
Average Rent per Tsubo per Month(JPY) (Note 17)
NOI (JPY million) (Note 11)

June 2018 fiscal period
95.6%

Year-on-year change+0.5pt

9,737

+2.6%

2,534

+3.2%

(Note 1)

“Occupancy Rate” for the entire portfolio and for the residential properties is calculated by dividing the sum of
total leased area by the sum of total leasable area at the end of each month during the relevant period.

(Note 2)Of the 54 acquired hotels held as of the beginning of the June 2018 Fiscal Period (including the Sheraton GrandeTokyo Bay Hotel, the underlying asset of the preferred equity interest of TMK owned by INV), the following
nine hotels with fixed-rent lease agreements are excluded: Super Hotel Shinbashi/ Karasumoriguchi, Comfort
Hotel Toyama, Super Hotel Tokyo-JR Tachikawa Kitaguchi, Super Hotel JR Ueno-iriyaguchi, Comfort Hotel
Kurosaki, Comfort Hotel Maebashi, Comfort Hotel Tsubame-Sanjo, Comfort Hotel Kitami and Takamatsu
Tokyu REI Hotel. The figures assume that all properties acquired after January 2016 by INV had been owned
since January 1, 2017. The actual results before acquisition by INV are based on the data provided by thesellers.

(Note 3) “Occupancy rate” for the hotel properties is calculated in accordance with the following formula:
Occupancy rate = total number of occupied rooms during a certain period ÷ total number of rooms available
during the same period (number of rooms x number of days)
Hereinafter the same shall apply.
(Note 4)“ADR” means average daily rate, and is calculated by dividing total room sales (excluding service fees) for acertain period by the total number of days per room for which each room was occupied during the same period.
Hereinafter the same shall apply.

(Note 5)

“RevPAR” means revenues per available room per day, and is calculated by dividing total room sales for 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. Hereinafter the same shallapply.

(Note 6)

The property name was changed from “Hotel MyStays Dojima” as of March 10, 2018.
shall apply.

(Note 7)

Due to an operator change, the property name was changed from “Hotel Nets Hakodate” as of May 1, 2018.
Hereinafter the same shall apply.

(Note 8)

Excluding Sheraton Grande Tokyo Bay Hotel (preferred equity interest) which does not have appraisal value.

(Note 9)The ratio of sales amount through overseas web agents to revenues.

Hereinafter the same

(Note 10) The ratio of the amount of revenues from bookings through the overseas travel agencies to total revenues for
47 hotels in INV’s portfolio that MHM operates as of the end of June 2018 Fiscal Period, excluding Hotel
Epinard Nasu operated by a subsidiary of MHM. The figures assume that all hotels acquired in and afterJanuary 2018 by INV had been owned since January 1, 2018. The actual results before acquisition by INV
are based on the data provided by the sellers.
(Note 11) For the comparison of NOI, insurance income and related repair expenses, which are temporary items, areexcluded.
(Note 12) Based on the 64 residential properties; of the 67 properties owned as of the beginning of June 2018 Fiscal Period,
three properties (Harmonie Ochanomizu, Growth Maison Ikebukuro and Capital Heights Kagurazaka) sold on
December 28, 2017 are excluded. Hereinafter the same shall apply. In addition, the figures for the properties
acquired after January 2017 are calculated on the assumption INV had acquired those properties on January 1,
2017, using the actual figures provided by the sellers of such properties for the period before the acquisition,
for the purpose of comparison with previous year.
(Note 13) Increase or decrease in the sum of monthly rents on new or renewal contracts, or the total of both, comparedwith the sum of previous rents.
8

(Note 14) Renewal rate is calculated by the number of renewed contracts during the relevant period divided by the numberof contracts due up for renewal during the relevant period(Note 15) The unrealized gain is calculated using the following formula: the appraisal value as of the end of the Reporting
Period - book value as of the end of the Reporting Period.
The unrealized gain ratio is calculated using the following formula: the unrealized gain ÷ book value as of theend of the Reporting Period.
(Note 16) “GOP,” means the gross operating profit, and is the amount remaining after deducting costs of hotel operations(the personnel, utility and advertising expenses and other expenses) and the management services fee tooperators (if any) from the hotel’s revenues. Hereinafter the same shall apply. Moreover, GOP for theSheraton Grande Tokyo Bay Hotel has been multiplied by 49%, or INV’s ownership ratio of the preferred equity
interest.
(Note 17) “Average Rent per Tsubo per Month” is calculated by dividing the total rental revenue including common area
charges for each month by the sum of total leased area at the end of each month during the relevant period.
(c)Overview of Fund Raising
As a result of the measures described below, INV’s interest-bearing debt outstanding balance was JPY 189,415
million and the Interest-Bearing Debt ratio (Note 1) and LTV (Note 2) were 50.6% and 44.1% respectively, as ofthe end of the Reporting Period, with an average interest rate (Note 3) of 0.52%.
(Note 1) Interest-Bearing Debt ratio uses the calculation formula below:
Interest-Bearing Debt ratio = total outstanding interest-bearing debt/total assets x 100(Note 2) LTV uses the calculation formula below:
LTV = total outstanding interest-bearing debt/total appraisal value (*) x 100(*) Since appraisal value for Sheraton Grande Tokyo Bay Hotel (preferred equity interest) is not available,
the acquisition price of the preferred equity interest (JPY 17,845 million) has been added as appraisal
value of Sheraton Grande Tokyo Bay Hotel (preferred equity interest).
(Note 3) The average interest rate (annual rate) is calculated by the weighted average based on the outstandingbalance of borrowings and rounded to two decimal places.

(i) Issuance of Investment Corporation Bonds
INV issued its first investment corporation bonds issuance for the purpose of raising part of funds for property
acquisition, as these bonds helped to diversify the financing sources for INV, while at the same time lowering its
financing costs and lengthening the average maturity period of its debt.

Bond SeriesFirst Series Unsecured Investment
Corporation Bonds(with pari passu
conditions among specified corporate
bonds)
Second Series Unsecured Investment
Corporation Bonds(with pari passu
conditions among specified corporate
bonds)
Total Investment Corporation Bonds /Average Interest Rate

Issue
Date

May 25,2018

May 25,2018

Issue Amount(JPY million)

1,000

1,000

2,000

9

InterestRate(annualrate)

0.400%

0.800%

0.600%

Redemption
Date

May 25,2023

May 25,2028

Security/
Guaranty

Unsecured /Unguaranteed
Rating: A (JCR)
Unsecured /Unguaranteed
Rating: A (JCR)

(ii) Debt Financing
INV decided on new borrowings (Term Loan (H)) on June 25, 2018 and borrowed the funds on June 27, 2018 inorder to procure a portion of the acquisition price and related expenses of two hotel properties as described in “(d)Overview of Acquisition of Assets (ii) Acquisition of two hotels”.
Overview of Term Loan (H)Borrowing

Lender

Date

MUFG Bank, Ltd.

June 27,

Shinsei Bank, Limited

2018(Note 1)

Outstanding
Amount(JPY million)

1,500Interest
Rate

Maturity

Borrowing(annualDate

Methodrate)
0.74950%

June 27,(Note 1)

2023

Unsecured/nonguarantee
This borrowing has a floating interest rate, but the interest rate is fixed through an interest rate swap
agreement as of June 25, 2018. Therefore, the interest rate stated is fixed in consideration of the swap.

(iii) Prepayment of Loan
INV’s short-term consumption tax loan (Note 1) in the New Syndicate Loan (H) (in the amount of JPY 1,068
million) was prepaid on May 31, 2018 from the consumption tax refund concerning asset acquisitions on October
13, 2017 and cash on hand.
(Note 1)(d)

Short-term consumption tax loan is a loan which is to be repaid before the maturity date from a refundof consumption taxes and regional consumption taxes on an acquisition of a property.

Overview of Acquisition of Assets(i) Acquisition of four hotels
The Asset Manager decided to acquire four hotel properties on February 5, 2018 and the acquisition was completed
on February 7, 2018. The overview of four hotels acquired is as follows:
Acquisition
Price

Use

Property
Number

Property Name

D54

Hotel MyStays
Yokohama-Kannai

D55

Location

Appraisal
Value
Seller(JPY
million)(Note 1)(JPY million)(Note 2)

Yokohama,
Kanagawa

5,326

5,380

Ginga Tokutei
Mokuteki Kaisha

Art Hotel Joetsu

Joetsu,Niigata

2,772

2,800

HL Investments
Tokutei Mokuteki
KaishaD56

Art Hotel Hirosaki
City

Hirosaki,
Aomori

2,723

2,750

Monza Tokutei
Mokuteki Kaisha

D57

Hotel MyStays Oita

Oita, Oita

1,604

1,620

Suisei Tokutei
Mokuteki Kaisha

12,425

12,550

Hotel

Total

10

Category ofSpecified
Assets

Trust
Beneficial
Interest

(Note 1)(Note 2)Acquisition Prices do not include adjustments for property taxes, city planning taxes, or national or local
consumption taxes; the same shall apply hereinafter.
Appraisal Value is based on appraisal value stated in the appraisal report by The Tanizawa Sōgō Appraisal Co.,
Ltd. on the valuation date of January 1, 2018.

(ii) Acquisition of two hotels
The Asset Manager decided to acquire two hotel properties on June 25, 2018 and the acquisition was completed onJune 27, 2018. The overview of four hotels acquired is as follows:

Use

Property
NumberD58

Acquisition
Appraisal Value
Price
Property Name

Location(JPY
million)Hotel MyStays
GotandaShinagawaku, Tokyo

4,068(JPY million)(Note 1)

Hotel MyStays
Tachikawa

Tachikawa,
Tokyo

Total
(Note 1)(e)Category ofSpecified
AssetsCalvis Tokutei
Mokuteki Kaisha

Trust
Beneficial
Interest

4,110

Hotel
D59

Seller

3,257

3,290

7,325

7,400

Appraisal Value is based on appraisal value stated in the appraisal report by The Tanizawa Sōgō Appraisal Co.,
Ltd. or Daiwa Real Estate Appraisal Co., Ltd. on the valuation date of April 1, 2018.

Overview of Sale of Assets

INV sold its assets as follows for the purpose of improving the profitability of its portfolio by rebalancing of assets andstabilizing the distribution by recognizing a gain on sales.

11(i) Sale of three residential properties and two office buildings
The Asset Manager decided to sell three residential properties and two office buildings on December 21, 2017 andDecember 26, 2017 respectively. Sales of the five assets closed on January 31, 2018. The overview of assets sold is
described below. The proceeds from the sale were used to fund the acquisition and a portion of the related expenses
described in “(d) Overview of Acquisition of Assets (i) Acquisition of four hotels.”
Acquisition

Office Building

Residential

Use

Property
Number

Property
Name

Price
(JPY
million)

Book
Value

Sales
Price

(JPY
(JPY
million) million)(Note 1) (Note 2)

The Difference
between Sales
Price and Book
Value
(Note 1)

A31

Harmonie
Ochanomizu

A36

Growth
MaisonIkebukuro

825

743

1,057

314

A42

CapitalHeights
Kagurazaka

604

623

732

108

B15

Cross Square
NAKANO

1,060

1,125

1,350

224

Ohki Aoba
Building

816

709

721

11

4,734

4,549

5,464

915

B16

Total

1,428

1,346

1,603

Category
Transfereeof Specified
Assets256

Undisclosed(Note 3)

Taisei-Yuraku
Real EstateCo., Ltd

Trust
BeneficiaryInterest(Note 4)Trust
BeneficiaryInterest

Kubota Honten(Note 1) The difference between sales price and book value is used as an estimate for reference purposes and is calculatedusing the book values as of the date of sale. INV recognized a gain on sales of JPY 816 million after deducting
related expenses in the fiscal period ended June 2018.
(Note 2) Sales prices do not include adjustments for fixed asset taxes or city planning taxes, or national or local
consumption taxes. Hereafter the same.
(Note 3) The name of the transferee (a domestic TMK) is not disclosed, as the transferee’s consent has not been obtainedfor disclosure.
(Note 4) Each of the trust beneficiary interest of Harmonie Ochanomizu, Growth Maison Ikebukuro and Capital Heights
Kagurazaka was integrated in a single trust account with other trust accounts when INV procured funds throughdebt financing backed by trust assets in July 2011. In transferring the sole trust beneficiary interest of the above
mentioned three properties by itself, INV incurred some expenses to detach from the integrated trust account,
effective as of December 22, 2017.

12

(ii) Sale of one office building

Use

Property
Number

Property
Name

OfficeBuilding

The Asset Manager decided to sell the following asset on February 13, 2018, and the sale of the asset closed on March 9,
2018. The overview of asset sold described below. The proceeds from the sale were used to the fund the acquisition
and a portion of the related expenses described in “(d) Overview of Acquisition of Assets (ii) Acquisition of two hotels.”

B14

Lexington Plaza
Nishi-Gotanda

Acquisition
Price

Book
Value
(Note 1)

4,880

4,632

Sale
Price

5,160

The
Difference
between Sale
Price andBook Value(Note 1)

Transferee

Categoryof Specified
Asset

527

Undisclosed(Note 2)Trust
BeneficiaryInterest(Note 1) The difference between sales price and book value is used as an estimate for reference purposes and is calculatedusing the book values as of the date of sale. INV recognized a gain on sales of JPY 432 million after deducting
related expenses in the fiscal period ended June 2018.
(Note 2) The name of the transferee is not disclosed, as the transferee’s consent has not been obtained for disclosure.

(f)Overview of Results of Operations and Distributions

As a result of the operations mentioned above, operating revenues for the Reporting Period increased by JPY 457 million
from the previous period (+3.6%) to JPY 13,104 million, and net income increased by JPY 418 million (+5.7%) to JPY
7,721 million.
INV believes that maintaining the stability of cash distributions over the medium term is one of the most importantfactors in determining the amount of distribution for a given fiscal period. In the Reporting Period, INV recorded again on sale of properties (JPY 1,249 million) and decided to retain a portion of the gains, to the extent allowed by the
conduit requirement, in order to stabilize the distribution per unit (“DPU”) in the future. Therefore, INV will make a
distribution of profit of JPY 6,854 million, or JPY 1,430 per unit, which is equivalent to 90% of its distributable incomeof JPY 7,610 million (which is a total of net income and JPY 111 million of retained deficits carried forward). INV
will not make an excess profit distribution in the Reporting Period.
The majority of INV’s owned hotels use a variable rent scheme linked to performance of the relevant hotel. Hoteldemand is affected by seasonal factors and the fiscal period ending December (from July to December) which include
summer holiday and autumn outing seasons tend to record higher revenue than the fiscal period ending June (from January
to June). Accordingly, INV’s rental revenues tend to be higher in the fiscal period ending December than in the fiscal
period ending June.

b

Outlook for the Fiscal Period Ending December 31, 2018

The DPU for the December 2018 period is forecast to be JPY 1,683 (+7.6% YoY). Combined with the DPU for theJune 2018 fiscal period, the full year DPU for calendar year 2018 is forecast to be JPY 3,113 (+10.1% YoY), providing
steady growth.

Future operational policy and issues to be addressed
Since July 2011, INV has enhanced unitholder value by significantly increasing DPU and financial stability with theFortress Group as its sponsor. Since Fortress Group joined under the umbrella of SoftBank Group in December 2017
and SoftBank Group owns 100% of issued shares of the Asset Manager directly and indirectly as of March 29, 2018, in
addition to continued access to Fortress’s global real estate expertise, INV will seek to leverage the resources that are
expected to become available through SoftBank Group. SoftBank Group has market-leading expertise in technology
fields such as digital marketing for both mobile and desktop, online payment systems, search engine optimization, AI
and robotics. INV believes that deployment of technology into INV’s real estate assets, especially its hotels, will13

enhance the ongoing initiatives to improve its digital marketing, minimize labor costs and increase customer engagement.
For example, INV plans to pursue opportunities to better manage the increased number of foreign visitors and theirrelated online research, bookings and payments, improve the process in setting hotel rates and manage overbooking
through the use of sophisticated AI algorithms, and reduce labor costs while enhancing customer service through theuse of robotics.
In addition to pursuing synergy with SoftBank Group, going forward, INV will continue to implement various strategies
to maintain further growth and financial stability, including the following measures.
Further external growth utilizing sponsor supportProperty acquisition from third parties with the aim of expanding the AUM

Asset recycling and property acquisitions using the proceeds from sales



Further internal growth at hotel and residential properties

Diversification of funding sources and loan duration maturities and lengthening the average maturity periodof its debt and diversifying the maturity date of its debt by the issuance of investment corporation bonds

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

External growth strategy
New Property Acquisitions
As its basic strategy, INV will move forward with the acquisition of new properties focusing on hotels, wherecontinued growth in portfolio revenues is anticipated, and residential properties especially where rental growth canbe achieved. Rent revenue from residential assets and other assets as well as the fixed rent portion from hotels will
also contribute to more stable revenue, which was 65.9% of total revenue (Note 1). This acquisition strategy will
enable INV to build a portfolio with a good balance between growth and stability.
In regards to hotels, INV will take into consideration the trends in foreign travelers visiting Japan, demands ofbusiness and leisure customers in nearby areas, and leasing contract types when making investment decisions, withthe aim of acquiring properties where growth and stability of GOP and rental revenue are forecasted to increase.
After the Reporting Period, on August 2, 2018, INV acquired four hotels as mentioned in below “c Significant
Subsequent Events (c) Acquisition of assets.” For the further achievement of the profitability and stability, INV
also will acquire the TK Interest which holds two overseas hotels in Grand Cayman.
In regards to residential properties, INV will analyze occupancy rates, rental market trends, the presence ofcompeting properties among other factors, and consider acquiring properties that have mainly small-type rooms withstrong competitiveness in large cities, in which it believes it can achieve increases in rent.
INV has achieved steady external growth via the sponsor pipeline from the Fortress Group, as follows.

14

Properties Acquired from affiliates of the Fortress Group (as of the date of this document)
Date

Properties acquired

Total acquisition price

September 2012
May 2014

24 residential properties
Two hotels

JPY 14,043 million
JPY 5,435 million

July 2014
February 201518 hotels
Two hotels

JPY 39,938 million
JPY 4,911 million

July 2015

11 hotels andthree residential properties

JPY 35,258 million

August 2015
January 2016

One hotel
Five hotels andone residential property

JPY 5,069 million
JPY 10,207 million

March 2016

Four hotels andone residential property

JPY 66,697 million

June 2016
March 2017

Two hotels
Two residential properties

JPY 15,900 million
JPY 24,562 million

May 2017
October 2017

One hotel
Five hotels (Note 2)

JPY 8,000 million
JPY 57,444 million (Note 2)

February 2018
June 2018

Four hotels
Two hotels

JPY 12,425 million
JPY 7,325 million

August 2018

Four hotels
92 properties(of which 61 are hotels and 31 areresidential properties)

JPY 47,747 million
JPY 354,961 million(of which hotels: JPY 303,323 million;
residential: JPY 51,638 million)

Total

The Fortress Group manages five dedicated Japanese real estate funds, including the Fortress Japan Opportunity
Funds I, II, III and IV. The Fortress Group’s committed equity is over JPY 300 billion and the number of properties
that the Fortress Group is invested in exceeds 3,500. In order to ensure future growth options for the portfolio, INV
entered into an updated MOU with affiliates of the Fortress Group that provides preferential negotiation rights withrespect to the acquisition of 19 hotels and nine residential properties (see the table below) (Note 3). In addition, by
utilizing the property transaction information available through the Fortress Group and INV’s own network, INV
will continuously consider and implement the acquisitions of properties from third parties that will contribute tostability and growth in revenue and cash flow and an increase in DPU.
No.

Asset name

Asset type (Note 4)

Location

No. of rooms

1

Rihga Royal Hotel Kyoto

Full Service Hotel

Kyoto-shi, Kyoto

489

2

Hotel MyStays Premier Narita

Full Service Hotel

Narita, Chiba

711

3

Fusaki Resort Village

Resort Service Hotel

Ishigaki, Okinawa

188

4

Art Hotel Asahikawa

Full Service Hotel

Asahikawa, Hokkaido

265

5

Hotel MyStays Kanazawa Castle

Limited Service Hotel

Kanazawa, Ishikawa

206

6

Hotel MyStays Matsuyama

Full Service Hotel

Matsuyama, Ehime

162

7

Hotel Mystays Sapporo Nakajima
Park

Limited Service Hotel

Sapporo, Hokkaido

868

Flexstay Inn Sakuragicho

Limited Service Hotel

Yokohama, Kanagawa

70

9

MyCUBE by MYSTAYS Asakusa
Kuramae

Limited Service Hotel

Taito‐ku, Tokyo

161

Resort HotelFujiyoshida, Yamanashi

159

11 Hotel Nord Otaru

Limited Service Hotel

Otaru, Hokkaido

98

12 Hotel Sonia Otaru

Limited Service Hotel

Otaru, Hokkaido

94

10 Hotel MyStays Fuji Onsen Resort

13 Art Hotel Niigata Station

Full Service Hotel

Niigata, Niigata

304

14 Art Hotel Ishigakijima

Resort Hotel

Ishigaki, Okinawa

245

15 Hotel MyStays Shinsaibashi East

Limited Service Hotel

Osaka, Osaka85

16 Hotel MyStays Sapporo Aspen

Limited Service Hotel

Sapporo, Hokkaido

305

15

Asset name
Hotel MyStays Sapporo Nakajima
17Park Annex
18 Hotel MyStays Sapporo Susukino

Asset type (Note 4)

Location

No. of rooms

Limited Service Hotel

Sapporo, Hokkaido

80

Limited Service Hotel

Sapporo, Hokkaido

104

19 Hotel MyStays Nayoro

Limited Service Hotel

Nayoro, Hokkaido

70

No.

Hotel subtotal

3,882

20 Gran Charm Hiroo

Residential/Small TypeShibuya‐ku, Tokyo

121

21 Plestay Win Kinshicho

Residential/Small Type

Sumida‐ku, Tokyo92

22 Gran Charm Kichijoji

Residential/Small TypeMusashino, Tokyo28

23 Green Patio Noda

Residential/Small Type

Noda, Chiba

240

24 Dainichi F‐45

Residential/Small Type

Urayasu, Chiba

54

25 Gran Charm Urayasu

Residential/Small Type

Urayasu, Chiba

54

26 Gran Charm Urayasu 5

Residential/Small Type

Urayasu, Chiba

54

27 Gran Charm Minami Gyotoku I

Residential/Small Type

Ichikawa, Chiba

52

28 Gran Charm Minami Gyotoku II

Residential/Small Type

Ichikawa, Chiba

48

Residential property subtotal

743

Total

4,625

(Note 1)The percentage indicates composition of rent revenue based on the actual results for the fiscal period ended
June 2018. Sheraton Grande Tokyo Bay Hotel (preferred equity interest) is excluded.

(Note 2)

Sheraton Grande Tokyo Bay Hotel acquired by a special purpose company, of which INV owns the preferred
equity interest, is counted as one property and the INV’s investment amount to the preferred equity interest iscounted as the acquisition price of the preferred equity interest.

(Note 3)

The term of validity of the MOU is from July 17, 2018, the date of execution of the updated MOU, to July 16,
2019. Regarding the 28 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 4)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 segments of stay, foods and beverages, and banquet.
“Resort Hotel” refers to a hotel located at tourist destinations or recreational lots, having segments 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 considers the possibility of portfolio optimization upon
consideration of the portfolio sector composition, geographic distribution and competitiveness of each property, as
appropriate and previously detailed in the Asset Recycling Program.
(ii) Strategy for internal growth(Hotels)
Of the 59 hotels (Note 1) owned by INV as of the end of the Reporting Period, 50 hotels use a variable rent scheme.
In the variable rent scheme, in principle, INV receives all of gross operating profit (GOP) after deducting
management fees for the hotel operator as rents, and as a result INV can directly enjoy the hotel revenue upside. In
the case where GOP enters into a downward trend, INV could take advantage from the fixed rent portion or downside
floor to protect itself from further loss. For 48 hotels, MHM and subsidiaries of MHM have implemented
sophisticated revenue management initiatives seeking to maximize revenue. INV will continue to accurately
ascertain and analyze operating conditions of its hotels, the conditions of nearby hotels, market trends and other16

factors through operation meetings and other contact with hotel operators and will focus on operations that maximize
rent income.
For hotels, renovation of rooms and replacement of fixtures and fittings are indispensable to maintain and increase
revenues and operate stably in a planned manner.
(Residential properties and others)
INV will continue to strengthen its collaborative ties with PM and brokers to further boost occupancy rates andearning capabilities of its properties. With respect to INV’s residential properties, while keeping in mind the lowseason in the residential rental market that occurs during the December 2018 period, INV will focus on increasing
the occupancy rates and rents for both new lease contracts and lease renewals for all of its properties as well as
formulating net leasing cost reduction policies in order to continue maximizing profits.
Further, the implementation of appropriate maintenance and repair plans is of the utmost importance in maintaining
and enhancing the competitiveness and market value of the properties as well as ensuring high tenant satisfaction.
Therefore, INV will continue to monitor current strategic plans with flexible implementation as it sees fit.
(Note 1)

Excluding Sheraton Grande Tokyo Bay Hotel (the preferred equity interest).

(iii) Financial strategy
In the Reporting Period, INV issued its first investment corporation bonds and lowered its financing costs while atthe same time lengthened the average maturity period of its debt and diversified the maturity date of its debt andfunding sources. Going forward, INV seeks to maximize unitholders’ value by way of further reduction ofborrowing costs, diversification of loan maturity dates and financing measures, and improvement of its credit rating.
(iv) Compliance risk management
While the executive officer of INV concurrently serves as the representative director at the Asset Manager, two
supervisory directors (an attorney and a certified public account) oversee the execution of the executive officer’s duties
via the Board of Directors of INV. In addition, the compliance officer of the Asset Manager attends each meeting of
the Board of Directors in the capacity of an observer.
The Asset Manager has a compliance officer who is responsible for compliance with laws, regulations and other relevant
matters as well as overall management of transactions with sponsor related parties. Moreover, it has in place acompliance committee which, chaired by such compliance officer, is in charge of deliberating on compliance with laws,
regulations and other relevant matters as well as transactions with sponsor related parties. Compliance committee
meetings are attended by an outside expert (an attorney) who, sitting in as a compliance committee member, conducts
rigorous deliberations on the existence of conflicts of interest in transactions with sponsor related parties as well as strict
examinations with respect to INV’s compliance with laws and regulations.
INV intends to continually take steps to strengthen its compliance structure.

17

cSignificant Subsequent Events(a) Issuance of New Investment Units
On July 17, 2018, INV launched its fifth Global Share Offering, and sixth share offering in total since Fortress became its
Sponsor. The offering size and funds raised are described below. The funds used from the issuance of new units wereused to procure a portion of acquisition price for four domestic hotels and TK Interest with two overseas hotels as
underlying assets defined in “(c) Acquisition of assets”. Payment for the issuance of new investment units and for thethird-party allotment in connection with overallotment secondary offering were completed on August 1, 2018 and August21, 2018 respectively. As a result, total equity for INV is JPY 211,092 million, total number of issued investment units is5,748,181 units.
(i) Issuance of new investment units through Public Offering
Number of investment
units to be offered:

Issue price(offer price)
Total issue price(total offer price)Amount to be paid (issue
value)
Total amount to be paid
(total issue value)
Payment date:909,524 investment units
Domestic public offering: 432,024 investment units
Overseas offering: 477,500 investment units
JPY 45,776 per unit
JPY 41,634,370,624:

JPY 44,287 per unit:

JPY 40,280,089,388:

August 1, 2018(ii) Secondary offering of investment units (overallotment secondary offering)Number of Investment
Units to be offered in thesecondary offering
Offer priceTotal offer price
Delivery date:

45,476 investment units:::

JPY 45,776 per unit
JPY 2,081,709,376
August 2, 2018(iii) Issuance of new investment units through third-party allotment
Number of investment
units to be offered
Amount to be paid
(issue value)
Total amount to be paid
(total issue value)
Payment date
Allottee:

45,476investment units:

JPY 44,287per unit:

JPY2,013,995,612::

August 21, 2018
Mizuho Securities Co., Ltd.

(b) Debt Financing
Along with equity finance defined in “(a) Issuance of New Investment Units”, INV has decided to execute new borrowings(New Syndicate Loan (J)) on July 17, 2018 in order to fund a portion of the acquisition price of four domestic hotel
properties and TK Interest with two overseas hotels as underlying assets later described in “(c) Acquisition of assets”.

18New Syndicate Loan (J)LenderOutstanding

Borrowing

Balance

Date(JPY million)

Interest
Rate

Maturity

Borrowing(annualDate

Methodrate)
VariableMizuho Bank, Ltd.

13,119Sumitomo Mitsui Banking(Note 2)

Corporation
MUFG Bank, Ltd.

interest rate

September

Shinsei Bank, Limited

12,

Citibank, N.A.,Tokyo Branch

2018

Development Bank of Japan, Inc.

(Note 1)

Variable
13,120interest rate
(Note 3)

The Nomura Trust and Banking

VariableCo., Ltd.

10,761

AEON Bank, Ltd.

interest rate
(Note 4)September
12,2023(Note 1)
September
12,2022(Note 1)
September
12,
2021(Note 1)

Mizuho Bank, Ltd.

Unsecured/nonguarantee

Sumitomo Mitsui Banking
Corporation
MUFG Bank, Ltd.

Variable

Shinsei Bank, Limited
Citibank, N.A.,Tokyo Branch
The Nomura Trust and Banking

2,359interest rate
(Note 4)

August 2,

August 2,
2021

2018

Co., Ltd.
AEON Bank, Ltd.
Mizuho Bank, Ltd.

Variable

Sumitomo Mitsui Banking

1,099

MUFG Bank, Ltd.

interest rate
(Note 5)

Total Debt

August 2,
201940,458(Note 1) Borrowing Date and Maturity Date is scheduled as of the date of this document, and it may be changed in the
future.
(Note 2) 1-month JPY TIBOR (Base Rate) + spread (0.50%)(Only in first calculation period, 2-month JPY TIBOR (Base Rate) + spread (0.50%))(Note 3) 1-month JPY TIBOR (Base Rate) + spread (0.40%)(Only in first calculation period, 2-month JPY TIBOR (Base Rate) + spread (0.40%))(Note 4) 1-month JPY TIBOR (Base Rate) + spread (0.30%)(Only in first calculation period, 2-month JPY TIBOR (Base Rate) + spread (0.30%))(Note 5) 1-month JPY TIBOR (Base Rate) + spread (0.20%)(Only in first calculation period, 2-month JPY TIBOR (Base Rate) + spread (0.20%))

19

(c)

Acquisition of assets(i) Acquisition of four domestic hotel properties
The Asset Manager decided to acquire hotels as follows on July 17, 2018, and acquisition of assets has been closed
on August 2, 2018.

Use

Property
Number

Property Name

Location

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

D60

Hotel MyStays Premier Minato-ku,
AkasakaTokyo

20,691

20,900

Aki Tokutei
Mokuteki Kaisha

D61

Hotel MyStays Premier Sapporo,
Sapporo Park
Hokkaido

16,731

16,900Raetia Tokutei
Mokuteki Kaisha

D62

Hotel MyStays Ueno
East

Taito-ku,
Tokyo

5,286

5,340

D63

Hotel MyStays
Midosuji Honmachi

Osaka, Osaka

5,039

5,090

Dogo Tokutei
Mokuteki Kaisha

47,747

48,230

-

Hotel

Total
(Note 1)

SellerCategory ofSpecified
AssetsTrust
HL Investments 2 Beneficial
Tokutei Mokuteki Interest
Kaisha-Appraisal Value is based on appraisal value stated in the appraisal report by the Japan Real Estate Institute or The Tanizawa Sōgō
Appraisal Co., Ltd. on the valuation date of June 1, 2018.

(ii) Acquisition of TK Interest with two Overseas Real Estate as Underlying Assets
The Asset Manager decided to acquire TK Interest as follows on July 17, 2018 and executed the TK Agreement on the samedate.
(1) Asset to be acquired

TK interest in a Cayman Islands special purpose company that plans to acquire 99year Leasehold Interests (Note 1) (with a lease payment of USD 1 or KYD 1 per year)
in overseas real estate as underlying assets (the “Cayman Hotel TK Interest”)(2) Anticipated acquisition price
USD 339,836,000 (JPY 37,534 million) (Note 2) for 100.0% of the Cayman Hotel TK
Interest (Note 3)(3) Name of underlying asset
Westin Grand Cayman Seven Mile Beach Resort & Spa and Sunshine Suites Resort(each an “Underlying Asset”, and collectively the “Underlying Assets”, or the “TwoOverseas Hotel Assets”)(4) Anticipated acquisition date
One business day prior to the acquisition date of the underlying assets, which is
expected to close by October 31, 2018 or the date separately agreed (Note 4)(5) TK operator
Seven Mile Resort Holdings Ltd (the “Cayman SPC”).
(Note 1)
Rights equivalent to long-term real estate leasehold rights in Japan (hereinafter referred to collectively as the“Leasehold”). The TK operator will also acquire some movables including FF&E pertaining to hotel
operations. “FF&E” is an abbreviation for furniture, fixtures and equipment, which are the assets necessary
for hotel operation, such as furniture, fixtures, equipment and kitchen equipment (hereinafter the same).
(Note 2)
The anticipated investment amount is fixed by the foreign exchange forward contract executed on July 26, 2018
in Japanese Yen denomination which were calculated using an exchange rate of 1 USD=110.45. Hereinafter
the same.
(Note 3)
The anticipated acquisition price is INV’s anticipated investment amount for the Cayman Hotel TK Interest.
The amount does not include any taxes payable including consumption tax and is rounded down.
(Note 4)The “anticipated acquisition date” (hereinafter the same) will be one business day prior to the date when the
Cayman SPC (TK operator) will acquire the underlying assets, which will be (a) as soon as possible, using
commercially reasonable efforts, after all conditions to closing have been satisfied or waived, and in any event
by October 31, 2018, or (b) such other date as may be agreed upon with the sellers. Conditions precedent toclosing under the purchase and sale agreement include, among others, obtaining (i) governmental approvals
relating to the transfer of the Leasehold and (ii) permits under the laws of the Cayman Islands required for theoperation of the two Overseas Hotel Assets (including operation by the Special Purpose Company to which the
Cayman SPC entrusts the hotel operation).
20

(Reference Information)(a)Debt Financing
INV has decided to execute new borrowings (New Syndicate Loan (I)) on July 12, 2018 in order to repay a portion of New
Syndicate Loan (E) in the amount of JPY 28,979 million which was due on July 17, 2018.
New Syndicate Loan (I)LenderOutstanding

Borrowing

Balance

Date(JPY million)

Mizuho Bank, Ltd.

9,659

MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

July 17,

Sumitomo Mitsui Trust Bank,

2018

Interest
Rate

Maturity

Borrowing(annualDate

Methodrate)
Variableinterest rate
(Note 1)
Variable

9,660

interest rate
(Note 2)

LimitedVariable

Shinsei Bank, Limited

9,660

Citibank, N.A.,Tokyo Branchinterest rate
(Note 3)

Total Debt

July 14,2023
July 17,2022

Unsecured/nonguarantee

July 17,2021

28,979(Note 1) 1-month JPY TIBOR (Base Rate) + spread (0.50%)(Only in first calculation period, 2-month JPY TIBOR (Base Rate) + spread (0.50%))(Note 2) 1-month JPY TIBOR (Base Rate) + spread (0.40%)(Only in first calculation period, 2-month JPY TIBOR (Base Rate) + spread (0.40%))(Note 3) 1-month JPY TIBOR (Base Rate) + spread (0.30%)(Only in first calculation period, 2-month JPY TIBOR (Base Rate) + spread (0.30%))(b)
Change in the Investment Guidelines
The Asset Manager decided to revise the Investment Guidelines as of July 17, 2018, prior to the anticipated acquisition ofoverseas assets. Such revision is intended to establish an investment policy and asset management structure regarding
investments in overseas assets, and also to change the investment policy regarding domestic hotels to focus on (i) Limited
service hotels, which feature relatively higher profit margins and potential for revenue growth backed by increasing demand
for accommodations, and (ii) Full-service and Resort hotels, which have a variety of revenue sources, including rooms,
food and beverage and banquet facilities, that are expected to achieve stable growth in overall hotel revenues. Please referto the press release entitled “Notice concerning Partial Change in Investment Policy due to Revision of Internal Rules (the“Investment Guidelines”) of the Asset Manager” dated July 17, 2018.

21

dOperational Outlook

The forecasts of financial results for the fiscal period ending December 31, 2018 are as follows.
Fiscal period ending December 31, 2018 (from July 1, 2018 to December 31, 2018)
Operating Revenues

JPY 14,278 million

Operating Income

JPY 9,247 million

Ordinary Income

JPY 7,961 million

Net Income

JPY 7,960 million

Total Distribution Amount (Including excess profit distribution)

JPY 9,674 million

Net Income per Unit

JPY 1,384

Distribution per Unit (Excluding excess profit distribution)

JPY 1,516

Excess Profit Distribution per Unit

JPY 167

Distribution per Unit (Including excess profit distribution)

JPY 1,683

For the assumptions underlying the operational outlook for the fiscal period ending December 31, 2018, please see“Assumptions Underlying the Forecast of Financial Results and Distribution for the Fiscal Period ending December
31, 2018”(Cautionary Note regarding Forward Looking Statements)
Forward looking statements such as the forecasts set forth herein are based on information currently available andcertain assumptions that are deemed reasonable. Actual operating performance may vary significantly due to factors
not foreseen at the time of this present notice, such as the occurrence of gains and losses associated with the sale ofproperties, repayment of borrowings and a decrease in rent received. Also, this forecast is not a guarantee of
distribution amounts.

22

<Assumptions Underlying the Forecast of Financial Results and Distribution for the Fiscal Period ending December 2018 >Item
Fiscal period

Assumptions
The December 2018 fiscal period: from July 1, 2018 to December 31, 2018 (184 days)
Properties held as of the end of the December 2018 fiscal period: 129 properties and preferred
equity interests in one special purpose company and a TK interest in one special purpose company
In addition to the properties held as of the date of this document (Note1), INV assumes that INV
will newly acquire Cayman Hotel TK Interest (Note2), and that there will be no other change
through the end of the fiscal period ending December 2018.

Assets undermanagement(Note1) A portion (JPY 2.7 billion) of the acquisition price of the four domestic hotel properties
acquired on August 2, 2018 remains unpaid as of the date of this document. INV
intends to pay the amount payable by August 1, 2019 using cash on hand etc., pursuant
to the provisions on the purchase and sale agreements for the four hotel properties.
Please refer to the press release entitled “Notice concerning Completion of Acquisitionof Domestic Trust Beneficiary Interests” dated August 2, 2018 for detail.
(Note2) As the distribution from Cayman Hotel TK interest will be made in or after the fiscal
period ending June 2019, the acquisition of Cayman Hotel TK Interest will not affect theforecast of the operating revenues of the INV for the fiscal period ending December
2018. However, in relation to the interest-bearing liabilities (borrowings), INV
assumes that it will implement the borrowings prior to the acquisition of Cayman Hotel
TK Investment on September 27, 2018.
As of the end of the December 2018 fiscal period: 5,748,181 units

Units outstanding

INV assumes that there will be no change to the current 5,748,181 units issued and outstanding
through the end of the fiscal period ending December 2018.
Balance as of the end of the fiscal period ending December 2018: JPY 229,873 million (borrowing:
JPY 227,873 million, investment corporation bonds: JPY 2,000 million)

Interest-bearing liabilities

In addition to the balance JPY 192,873 million (borrowing: JPY 190,873 million, investment
corporation bonds: JPY 2,000 million) as of the date of this document, INV assumes that JPY
37,000 million of borrowing is implemented in September 2018. In addition, INV intends
refinance short term loan of JPY 2,000 million due October 13, 2018 in December 2018 fiscal
period at a similar condition. INV assumes no other new loan or prepayment of loan through theend of the December 2018 fiscal period.
INV expects to record rental revenues as follows:
December 2018 Fiscal
PeriodJPY 13,447 million(JPY 9,731 million)(JPY 4,909 million)(JPY 4,821 million)
JPY 831 million- million

・Rental revenues(of these, hotel rents)(fixed hotel rents)(variable hotel rents)
・TMK Dividend amount・TK Dividend amountOperating revenues

We estimate the amount of dividends on the preferred equity interests (TMK dividend) based on
the performance of the underlying asset and the assumed amount of expenses incurred by the
special purpose company.
With respect to dividend from Cayman Hotel TK Interest (TK dividend), as the initial dividend
from SPC is to be made during fiscal period ending June 2019, the dividend amount is not recorded
in fiscal period ending December 2018.
Rental revenues are calculated based on estimates as of the date of this document.
INV assumes there will be no delinquencies or non-payment of rent by tenants.

23

In addition,

Item

Assumptions
The majority of INV’s owned hotels use a variable rent scheme linked to performance of therelevant hotel. Hotel demand is affected by seasonal factors and the December ending fiscal
periods (from July to December) which include summer holiday and autumn outing seasons tend
to record higher revenue than the June ending fiscal periods (from January to June).
Accordingly, rental revenue of INV tends to be higher in the December ending fiscal periods thanin the June ending fiscal periods.
INV expects to incur property related expenses as follows:

Operating expenses

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

December 2018 Fiscal
PeriodJPY 680 million(JPY 24 million)
JPY 542 million
JPY 12 million
JPY 3,091 million
JPY 191 million
JPY 4,519 million(Note) Property taxes and city planning taxes on the assets acquired in 2018 are calculated on a
pro-rata basis with the previous owners and settled at the time of acquisition, and are not recorded
for the fiscal period ending December 2018 and recorded from the fiscal period ending June 2019as the amount equivalent to such settlement is included in the acquisition cost.
INV expects to incur other operating expenses than the property related expenses as follows:
December 2018 Fiscal
PeriodJPY 512 million

・Other operating expenses(of these, asset management fees)(JPY 275 million)

INV expects to record net operating income as follows:
December 2018 Fiscal
PeriodJPY 12,851 million

・NOI
NOI

(of these, hotel NOI)(of these, residential NOI)(of these, TMK dividend amount)(of these, TK dividend amount)(JPY 9,313 million)(JPY 2,522 million)(JPY 831 million)(-)

NOI calculation method in the above table is as follows
・NOI＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses + Dividends on
the preferred equity interests (TMK dividend) + Dividend on TK interest (TK dividend)
INV expects to incur non-operating expenses as follows:

Non-operating expenses

・Interest expense
・Finance related costs・Interest for investment corporation
bonds
・Depreciation of investment corporation
bonds issuance expenses
・Other non-operating expenses(expenses relating to the issuance of newunits for the public offering)
Total Non-operating expenses

24

December 2018 Fiscal
PeriodJPY 575 million
JPY 502 million
JPY 6 million
JPY 1 million
JPY 200 million
JPY 1,286 million

Item

Distribution per unit

Assumptions
The distribution per unit is calculated in accordance with the cash distribution policy as set forthin INV’s Articles of Incorporation.
With respect to the distribution for the fiscal period ending December 2018, INV expects todistribute an aggregate amount of JPY 9,674 million (distribution per unit: JPY 1,683) based on
the assumption that excess profit distribution in the amount of JPY 959 million will be paid, in
addition to JPY 8,714 million from net income for the fiscal period ending December 2018 (JPY7,960 million) and JPY 756 million from internal reserve.
For the fiscal period ending December 2018, INV does not expect to record any deferred gain orloss on hedge of the interest rate swap as the valuation and conversion adjustments, etc.
Distribution per unit may vary due to various factors, including changes of the assets undermanagement, fluctuation of rent income associated with reasons such as change of tenants andoccurrences of unexpected repairs.

Excess profit distribution
per unit

INV believes maintaining the stability of cash distributions over the medium term is one of themost important factors in determining the amount of distribution for a given fiscal period, andtherefore, INV has adopted the policy to make distributions in excess of profits in order to stabilize
distributions, in cases where dilution of investment units or significant expenses are to be recordedin connection with, among other things, the acquisition of assets or the raising of capital, leading
to a temporary decrease in distribution per unit, taking into consideration the level of distribution
per unit assuming such acquisition of assets or capital raising had contributed for a full fiscal
period.
INV may also consider making distributions in excess of profits for the purpose of decreasing theimpact from corporate tax increase arising from different rules in tax and accounting practices,such as treatment on depreciation of fixed term land lease or asset retirement obligation.
With respect to the fiscal period ending December 2018, due to i) one-off expenses inconnection with the public offering, the asset acquisition and the borrowings, ii) therevenues of the four domestic hotel acquired during the December 2018 fiscal period willcontribute for only a part of the period, and iii) distributions from the TK interest will startfrom the fiscal period ending June 2019, earnings per unit is expected to decrease in the second
half. Therefore, from the perspective of maintaining stable distributions, INV intends to make
distributions in excess of profits (JPY 153 per unit) within the scope of the expected shortfall
between actual earnings per unit and the simulated earnings per unit after the transactions
including i) the asset acquisitions and dispositions in the fiscal period ended June 2018, ii) asset
acquisitions completed or to be completed, in the fiscal period ending December 2018, and iii)
refinancing, issuance of new investment unit by public offering and third-party allotment, andnew borrowing (Note). Further, INV intends to make distribution in excess of profits (JPY 14
per unit) in order to cope with the discrepancy between tax and accounting treatment on
depreciation of fixed term land lease or asset retirement obligation etc.

Excess profit distribution per unit

December 2018
Fiscal Period
JPY 167(Note) Please refer to “Notice concerning Revision of Forecast of Financial Results andDistribution for the 30th Fiscal Period Ended June 2018 and 31st Fiscal Period Ending
December 2018” dated July 17, 2018 for details of the distribution in excess of profits.

Other

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

(3) Investment Risk
Disclosure is omitted because there have been no material changes in the “Investment Risk” section of the latest
securities registration statement (filed on July 17, 2018).

25

3. Financial Statements(1)

Balance Sheet
Fiscal period ended
December 31, 2017(as of December 31, 2017)

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

26(Unit: JPY thousand)Fiscal period ended
June 30, 2018(as of June 30, 2018)

14,367,140
6,326,653
1,984,728
489,0988
613,566
0(89)
23,781,107

8,505,792
6,566,761
6,483
1,826,596
428,536
149,632
0(89)
17,483,714

3,192
(218)
2,973
128,867,905(9,412,123)
119,455,782

3,192
(444)
2,748
133,579,099(10,479,742)
123,099,357

28,454,395

28,918,145(5,758,755)(6,237,852)

22,695,639

22,680,292

262,372(112,316)
150,055
1,065,760(335,109)
730,651
167,845,958
310,881,062

225,353(86,498)
138,854
1,395,339(392,369)
1,002,969
173,298,062
320,222,285

16,828,843
16,828,843

16,712,637
16,712,637

17,854,460
1,651,565
587,753
113,592
59,86920,267,241
347,977,146

17,856,387
1,681,565
426,222
92,561
12,667
20,069,404
357,004,327

371,758,254

24,94524,945374,512,988

Fiscal period ended
December 31, 2017(as of December 31, 2017)(Unit: JPY thousand)Fiscal period ended
June 30, 2018(as of June 30, 2018)

Liabilities
Current liabilities:
Accounts payable
Short-term loans payable

254,936
3,068,000

598,870
2,000,000

Current portion of long-term loans payable
Accounts payable-other

28,979,000
51,836

46,663,000
131,783

Accrued expenses
Income taxes payable

270,486605

195,481605

Consumption taxes payable
Advances received

600,752

14,902551,506

Deposits received

29,19021,69733,254,807

50,177,846

154,936,000

2,000,000
138,752,000

2,215,299-

2,026,400
1,586

Asset retirement obligations

31,68031,891

Total non-current liabilities

157,182,980

142,811,878

190,437,787

192,989,724

168,798,455

168,798,455

6,264,432

6,264,432*2 (46,329)*2 (46,329)(1,022,263)(1,194,818)(1,068,593)(1,241,148)

5,195,838

5,023,283

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

Total liabilities
Net assets
Unitholders’ equity:
Unitholders’ capital
Surplus:Capital surplus
Deduction of capital surplus
Allowance for temporary differences
adjustment
Other deduction of capital surplus
Total deduction of capital surplus
Capital surplus (net)
Retained earnings

7,212,580

7,610,548

Total surplus

12,408,419

12,633,832

181,206,874

181,432,288

Deferred gains or losses on hedges

113,592

90,975

Total valuation and translation adjustments

113,592

90,975*1 181,320,466*1 181,523,263

371,758,254

374,512,988

Total unitholders’ equity
Valuation and translation adjustments:

Total net assets
Total liabilities and net assets

27

(2)

Statement of Income and Retained Earnings(Unit: JPY thousand)Fiscal period ended
June 30, 2018(from January 1, 2018 toJune 30, 2018)

Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)
Operating revenue
Rental revenue―real estate*1 11,403,236*1 11,122,481*2 1,244,033-*2 1,249,645
732,714

12,647,270

13,104,841

Property related expenses
Impairment loss

*1 3,962,183*3 15,677*1 4,136,619*3 -Asset management fees
Directors’ compensation

250,000
4,800

275,000
4,800

Asset custody fees
Administrative service fees

15,23037,347

18,162
39,697

Provision of allowance for doubtful accounts
Other

89
138,2882
197,039

4,423,618

4,671,320

8,223,652

8,433,520

Interest income
Interest on tax refund

54
234

78
3,086

Other

507

1,181

Total non-operating income

796

4,347

445,855-

479,456
1,216

-

379

304,073

234,197

170,817-64

Gain on sale of real estate properties
Dividend income
Total operating revenue
Operating expenses

Total operating expenses
Operating income
Non-operating income

Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Amortization of investment corporation bond issuancecosts
Loan-related costs
Investment unit issuance costs
Other

920,746

715,314

Ordinary income

Total non-operating expenses

7,303,702

7,722,553

Income before income taxes

7,303,702

7,722,553

605

605

Income taxes
Total income taxes
Net income
Retained earnings (deficit) brought forward
Unappropriated retained earnings

28

605

605

7,303,097

7,721,948(90,516)(111,399)

7,212,580

7,610,548

(3)Statement of Changes in Net Assets

Fiscal period ended December 31, 2017 (from July 1, 2017 to December 31, 2017)(Unit: JPY thousand)Unitholders’ equity
SurplusCapital surplus
Unitholders’capitalDeduction of capital surplus
Capital surplus

Balance at the beginningof the period
Changes during theperiodIssuance of new
investment units
Distributions fromsurplus
Reversal of allowancefor temporary
differences adjustment
Other excess profit
distribution

128,984,946

Allowance fortemporarydifferences
adjustment

6,264,432－

Otherdeduction ofcapital surplus(987,516)

Total
deduction ofcapital surplus

Capital surplus(net)(987,516)

5,276,915(46,329)(46,329)(34,747)(34,747)(34,747)

39,813,508(46,329)

Net income
Changes other thanunitholders’ equity(net)
Total changes during theperiodBalance at the end of theperiod39,813,508－(46,329)(34,747)(81,077)(81,077)

168,798,455

6,264,432(46,329)(1,022,263)(1,068,593)

5,195,838

Unitholders’ equity
SurplusRetainedearnings
Balance at the beginningof the period
Changes during theperiodIssuance of new
investment units
Distributions fromsurplus4,708,487(4,799,004)

Reversal of allowancefor temporary
differences adjustment
Other excess profit
distribution
Net income
Changes other thanunitholders’ equity(net)
Total changes during theperiodBalance at the end of theperiod7,303,097

Total
surplus

Valuation and translation adjustments
Totalunitholders’equity9,985,403

138,970,350

Deferred
gains or losses
on hedges

Totalvaluation andtranslation
adjustments

92,24392,243Total
net assets

139,062,593

39,813,508

39,813,508(4,799,004)(4,799,004)(4,799,004)(46,329)(46,329)(46,329)(34,747)(34,747)(34,747)

7,303,097

7,303,097

7,303,097
21,34821,34821,3482,504,093

2,423,015

42,236,524

21,34821,34842,257,873

7,212,580

12,408,419

181,206,874

113,592

113,592

181,320,466

29

Fiscal period ended June 30, 2018 (from January 1, 2018 to June 30, 2018)(Unit: JPY thousand)Unitholders’ equity
SurplusCapital surplus
Unitholders’capitalDeduction of capital surplus
Capital surplus

Balance at the beginningof the period
Changes during theperiodDistributions fromsurplus
Other excess profit
distribution

168,798,455

Allowance fortemporarydifferences
adjustment

6,264,432(46,329)

Other
deduction ofcapital surplus

Total
deduction ofcapital surplus

Capital surplus(net)(1,022,263)(1,068,593)

5,195,838(172,554)(172,554)(172,554)

Net income
Changes other thanunitholders’ equity(net)
Total changes during theperiodBalance at the end of theperiod－－－(172,554)(172,554)(172,554)

168,798,455

6,264,432(46,329)(1,194,818)(1,241,148)

5,023,283

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

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

Totalvaluation andtranslation
adjustments

113,592

113,592

Total
net assets

7,212,580

12,408,419

181,206,874(7,323,980)(7,323,980)(7,323,980)(7,323,980)(172,554)(172,554)(172,554)

7,721,948

7,721,948

7,721,948

Other excess profit
distribution
Net income

Total
surplus

Valuation and translation adjustments

7,721,948

181,320,466(22,616)(22,616)(22,616)

397,968

225,413

225,413(22,616)(22,616)

202,796

7,610,548

12,633,832

181,432,288

90,97590,975

181,523,263

30

(4) Statement of Cash Distribution(Unit: JPY)
Fiscal period ended December 31, 2017(from July 1, 2017 to December 31, 2017)

Fiscal period ended June 30, 2018(from January 1, 2018 to June 30, 2018)

7,212,580,928

7,610,548,999--

172,554,516-

7,496,535,084

6,854,248,830(1,564)(1,430)Of which, distributions ofearnings(Distributions of earnings perunit)
Of which, allowance fortemporary differences adjustment(Excess profit distribution perunit (Allowance for temporary
differences adjustment))
Of which, other excess profit
distribution(Excess profit distribution perunit (Other excess profit
distribution))

7,323,980,568

6,854,248,830(1,528)(1,430)

-

-

-

-

172,554,516

-

(36)

-

IV Retained earnings (deficit) carriedforward(111,399,640)

756,300,169

I

Unappropriated retained earnings

II

Excess profit distribution
Allowance for temporary
differences adjustment
Other deduction of capital surplus

III Distributions(Distribution per unit)

31Calculation method of distribution
amountAs shown above, the distribution per unit
for the Reporting Period is JPY 1,564.
With respect to profit distributions (notincluding Excess Profit Distribution),
INV decided to distribute almost all of its
profit as defined in Article 136,
Paragraph 1 of the Investment Trust Act,
other than fractional amount per unit lessthan JPY 1, aiming to include themaximum amount of profit distributions
in deductible expenses in accordancewith Article 67-15, Paragraph 1 of the
Act on Special Taxation Measures (ActNo. 26, 1957).
As a result, thedistribution of earnings per unit (notincluding Excess Profit Distribution perunit) is JPY 1,528.
In addition, in accordance with the
distribution policy as set forth in the
Articles of Incorporation, INV makes
distributions in excess of earnings of theamount that it determines (the “Excess
Profit Distribution”). For the Reporting
Period, INV decided to also make Excess
Profit Distribution of JPY 172 million as
refund of investment in order to stabilize
distributions, making other Excess Profit
Distribution of JPY 36 per unit.
Under the Reporting Period, deferredgain on hedge of the interest rate swap of
JPY 113 million has arisen. Deferredgain on hedge of the interest rate swap isincluded in profit as defined in Article
136, Paragraph 1 of the Investment Trustand Investment Corporation Act, andINV has decided to distribute almost allof the profit as defined in Article 136,
Paragraph 1 of the Investment Trust andInvestment Corporation Act.
As a
result, retained deficit carried forward of
JPY 111 million is recorded.

32

In accordance with the distribution policy
set forth in Article 17, Paragraph 1 of the
Articles of Incorporation of INV, thedistribution amount shall be the amountwhich does not exceed the amount of
profits but exceeds 90% of the
distributable profit as defined in Article
67-15 of the Special Taxation Measures
Act. However, in the event that any tax
losses arise, or if no profits have beenrecorded for tax purposes due to tax
losses carried forward, the distribution
amount may be as reasonably determinedby INV. Pursuant to this policy, INV
determined the distribution amount to be
JPY 6,854,248,830 out of net income of
JPY 7,721,948,639.
Moreover, INV
does not make excess profit distribution
set forth in Article 17, Paragraph 4 of the
Articles of Incorporation.

(5)Statement of Cash Flows
Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)

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

33(Unit: JPY thousand)Fiscal period ended
June 30, 2018(from January 1, 2018 toJune 30, 2018)

7,303,702
2,567,215
15,677
170,817304,073(54)445,85555(564,535)
2(640,464)(7,867)47,721(67,922)
98,06560,077(7,567)802,750
3,590,653(1,277)
14,116,980
54(439,861)(605)
13,676,568

7,722,553
2,772,510
379
234,197(78)
480,6720
158,132(149,624)
661,287
39,752(32,819)
49,627(75,177)(49,246)(47,348)
9,181,866
20,177
20,966,865
78(483,261)(605)
20,483,077(797)(42,111,738)(17,854,460)(28,663)(139,629)
115,173(14,807)(60,034,922)(20,847,991)(1,927)(320,542)
132,593(30,000)
47,201(21,020,665)

3,068,000
19,925,000(325,727)(4,776,561)(1,068,000)
1,500,000
1,977,436(40,494)(7,280,040)(46,329)-(34,747)
39,644,352
57,453,986
11,095,633
9,598,161*1 20,693,794(172,554)(5,083,652)(5,621,240)
20,693,794*1 15,072,553

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

Notes to Concerning Significant Accounting Policies
1. Evaluation standards and evaluation method of assets
Other securitiesThose with no fair value
Cost method through moving-average method is used.
2. Method of depreciation of non-current assets(a) Property and equipment (including assets in trust)The straight-line method is used.
The useful lives of major property, plant and equipment are as follows.
Tools, furniture and fixtures
4-8 years
Buildings in trust
5-67 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 rights in trust (fixed-term land lease for business purposes), the straightline method based on the lease period is used.
(c) Long-term prepaid expenses
The straight-line method is used.
3. Accounting treatment of deferred assets(a) Investment unit issuance costs
The full amount is recorded as expense at the time of expenditure.
(b) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the straight-line method over a period up to redemptionof the investment corporation bonds.
4. Method of calculating allowances
Allowance for doubtful accounts
To reserve for losses on doubtful accounts, allowances are provided for normal receivables using a rate determinedbased on past bad debt experiences, and specific allowances are provided for accounts with a possibility of default basedon the estimated amounts considered to be uncollectible by considering the collectability of accounts on an individual
basis.
5. Revenue and expense recognition
Accounting treatment of property taxes and other taxes
With respect to property taxes, city planning taxes and depreciable asset taxes, of the tax amount assessed anddetermined, the amount corresponding to the relevant fiscal period is accounted for as property related expenses.
Of the amounts paid to the seller for acquisitions of real estate, the amount equivalent to property taxes is capitalized aspart of the acquisition cost of the real estate instead of being charged as expense. The amount equivalent to property
taxes that was included as part of the acquisition of real estate during the fiscal period ended June 30, 2018 is JPY 77,833
thousand.

34

6. Method of hedge accounting(a) Method of hedge accounting
Deferred hedge accounting is used.
(b) Hedging instrument and hedged item
Hedging instrument: interest rate swap
Hedged item: interest on borrowings(c) Hedge policy
INV enters into derivative transactions for the purpose of hedging against the risks set forth in INV’s Articles ofIncorporation in accordance with its risk management policy.
(d) Method of evaluating hedge effectivenessHedge effectiveness is evaluated by comparing the cumulative amount of changes in cash flows of the hedging
instrument and the cumulative amount of changes in cash flows of the hedged item and verifying the difference in theamounts of change of both the hedged item and the hedging instrument.
7. Cash and cash equivalents as stated in Statement of Cash Flows
Cash and cash equivalents as stated in the Statement of Cash Flows consist of cash on hand and cash in trust, floating
deposits, deposits in trust and short-term investments that are very liquid and realizable with a maturity of three months
or less when purchased and that are not subject to significant risks of changes in value.
8. Other significant matters which constitute the basis for preparation of financial statements(i) Accounting treatment of trust beneficiary interests in real estate
As to trust beneficiary interests in real estate, all accounts of assets and liabilities within assets in trust, as well as all
income generated and expenses incurred from assets in trust, are recorded in the relevant balance sheets and income
statement accounts. Of such items, the following significant trust assets and liabilities are shown separately on thebalance sheet.
(a) Cash and bank deposits in trust(b) Buildings in trust
Buildings and accompanying facilities in trust
Structures in trust
Tools, furniture and fixtures in trust
Land in trust(c) Leasehold rights in trust(d) Tenant leasehold and security deposits in trust(ii) Accounting treatment of consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
(8)Notes to changes in indication method“Income taxes receivable” was included in “Accounts receivable” under “Current assets” in the balance sheet for theprevious fiscal period. However, due to an increase in its monetary significance, it is recorded as a separate item fromthe Reporting Period.
As a result, JPY 8,000 which was recorded under “Accounts receivable” under “Current assets” in the balance sheet forthe previous fiscal period is now restated as JPY 8,000 for Income taxes receivable.
Furthermore, in line with the above change, (JPY 1,274,000) recorded under “Other” under “Cash flows from operating
activities” in the statement of cash flows for the previous fiscal period is now restated as JPY 2,000 for “Decrease(Increase) in refundable income taxes” and (JPY 1,277,000) for “Other.”

35

(9)

Notes to the Financial Statements(Notes to the Balance Sheet)*1. Minimum net assets as required by Article 67, Paragraph 4 of the Act on Investment Trusts and Investment Corporations(Unit: JPY thousand)Fiscal period ended
Fiscal period ended
December 31, 2017
June 30, 2018(as of December 31, 2017)(as of June 30, 2018)
50,00050,000*2. Allowance for temporary differences adjustment
Fiscal period ended December 31, 2017 (as of December 31, 2017)
1. Reasons, related assets and amounts

Relatedassets, etc.

ReasonLeaseholdrights in trust

Depreciationof leasehold
rights

Total

InitialamountBalance atthe end of
previous
period(Unit: JPY thousand)
Balance atReversalthe end of
duringcurrent
periodperiodAllowance
set aside
duringperiod(46,329)-(46,329)-(46,329)(46,329)-(46,329)-(46,329)

2. Method of reversal(1) Leasehold rights in trust
The corresponding amount is scheduled to be reversed upon sale, etc. of the relevant property.
Fiscal period ended June 30, 2018 (as of June 30, 2018)
1. Reasons, related assets and amounts

Relatedassets, etc.

ReasonLeaseholdrights in trust

Depreciationof leasehold
rights

Total

InitialamountBalance atthe end of
previous
period(Unit: JPY thousand)
Balance atReversalthe end of
duringcurrent
periodperiodAllowance
set aside
duringperiod(46,329)(46,329)--(46,329)(46,329)(46,329)--(46,329)

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

36

(Notes to Statement of Income and Retained Earnings)*1. Real estate rental revenues and expenses(Unit: JPY thousand)Fiscal period ended
June 30, 2018(from January 1, 2018 toJune 30, 2018)

Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)
A.

Real estate rental revenues

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

11,060,128

10,769,777

343,107352,704

11,403,236

11,122,481

Maintenance costs

707,458

665,093

Taxes and public dues

470,600

470,692

Other revenues
Total

B.

Real estate rental expenses

Property related expenses

Non-life insurance expenses
Depreciation expenses
Other expenses

11,49912,8452,567,215

2,772,510

205,408

215,476

Total

3,962,183

4,136,619

C.

7,441,052

6,985,862

3,741,186

3,789,484

Real estate rental income (A-B)(Note) Of which, revenue from variable hotel rents*2. Gain on sales of properties

Fiscal period ended December 31, 2017 (from July 1, 2017 to December 31, 2017)(Unit: JPY thousand)
Proceeds from sales ofproperties
Cost of sales ofproperties
Other expenses onsales of properties
Gain on sales ofproperties

Proceeds from sales ofproperties
Cost of sales ofproperties
Other expenses onsales of properties
Gain on sales ofproperties

Kindai Kagaku Sha
Building)

Kanda-Sudacho 4th

Shinjuku Island

Casa Eremitaggio

1,364,791

130,217705,102

1,312,035

1,197,764

100,818

701,931

948,287

51,333

3,658

10,22828,743

115,693

25,740(7,057)335,004

Lexel Mansion Ueno
Matsugaya

Sun Terrace Minami
Ikebukuro

1,329,240

934,980

853,265

591,335

26,547

18,419449,428

325,224

37

Fiscal period ended June 30, 2018 (from January 1, 2018 to June 30, 2018)
Harmonie
Ochanomizu
Proceeds from sales ofproperties
Cost of sales ofproperties
Other expenses onsales of properties
Gain on sales ofproperties

Growth Maison
Ikebukuro

1,606,646

1,059,850

734,817

1,357,090

1,346,372

743,659

623,867

1,125,668

38,843

26,625

20,81723,268221,430

289,565

90,132

208,153

Ohki Aoba
Building
Proceeds from sales ofproperties
Cost of sales ofproperties
Other expenses onsales of properties
Gain on sales ofproperties(Unit: JPY thousand)
Cross Square
NAKANO

Capital Heights
Kagurazaka

Lexington Plaza
Nishi-Gotanda

728,446

5,180,003

709,604

4,632,693

11,439114,348

7,402

432,961

3. Impairment loss
Fiscal period ended December 31, 2017 (from July 1, 2017 to December 31, 2017)
Name of property: Ohki Aoba Building
Use

Location

Type

Retail facility

Sendai-shi, Miyagi

Land in trust

Impairment loss
JPY 15,677 thousand

Upon calculating impairment loss, book value of the asset sold was reduced to recoverable value and the amount reduced wasposted in operating expenses as impairment loss for the land in trust.

The net sales price which is obtained by subtracting

expected sales expenses from actual selling price is deemed as recoverable value.
Fiscal period ended June 30, 2018 (from January 1, 2018 to June 30, 2018)
Not applicable(Notes to Statement of Changes in Net Assets)
Number of issuable investment units authorized and number of investment units issued and outstanding
Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)

Fiscal period ended
June 30, 2018(from January 1, 2018 toJune 30, 2018)

Number of issuable investment units

10,000,000 units

10,000,000 units

Number of investment units issued and outstanding

4,793,181 units

4,793,181 units(Notes to Statement of Cash Flows)*1. Relationship between cash and cash equivalents in statement of cash flows and amounts in accompanying balance
sheet is as follows:
Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)
14,367,140(Unit: JPY thousand)Fiscal period ended
June 30, 2018(from January 1, 2018 toJune 30, 2018)
8,505,792

Cash and bank deposits in trust

6,326,653

6,566,761

Cash and cash equivalents

20,693,794

15,072,553

Cash and bank deposits

38

(Notes Related to Lease Transactions)Operating lease transactions (as lessee)
Unexpired lease fees
Fiscal period ended
December 31, 2017(as of December 31, 2017)
312,959(Unit: JPY thousand)Fiscal period ended
June 30, 2018(as of June 30, 2018)
312,959

Due after one year

10,247,035

10,090,556

Total

10,559,994

10,403,515

Fiscal period ended
December 31, 2017(as of December 31, 2017)
7,970,088(Unit: JPY thousand)Fiscal period ended
June 30, 2018(as of June 30, 2018)
8,623,053

Due after one year

56,088,357

58,058,083

Total

64,058,446

66,681,137

Due within one year

Operating lease transactions (as lessor)
Unexpired lease fees

Due within one year

(Notes Related to Financial Instruments)
1.

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

39

2.

Estimated fair value of financial instruments

Fiscal period ended December 31, 2017 (as of December 31, 2017)
Book value, fair value and the difference between values as of December 31, 2017 are as follows.
(Unit: JPY thousand)Book Value

Fair Value

Difference(1) Cash and bank deposits

14,367,140

14,367,140-(2) Cash and bank deposits in trust

6,326,653

6,326,653-

Total assets

20,693,794

20,693,794-(3) Short-term loans payable(3,068,000)(3,068,000)-(4) Current portion of long-term loans payable(28,979,000)(28,979,000)-(6) Long-term loans payable(154,936,000)(154,936,000)-(186,983,000)(186,983,000)-

113,592

113,592-

Total liabilities(7) Derivatives

Fiscal period ended June 30, 2018 (as of June 30, 2018)
Book value, fair value and the difference between values as of June 30, 2018 are as follows.
(Unit: JPY thousand)Book Value

Fair Value

Difference(1) Cash and bank deposits

8,505,792

8,505,792-(2) Cash and bank deposits in trust

6,566,761

6,566,761-

Total assets

15,072,553

15,072,553-(3) Short-term loans payable(2,000,000)(2,000,000)-(4) Current portion of long-term loans payable(46,663,000)(46,663,000)-(5) Investment corporation bonds(2,000,000)(1,998,500)

1,500(138,752,000)(138,752,000)-(189,415,000)(189,413,500)

1,500

90,97590,975-(6) Long-term loans payable
Total liabilities(7) Derivatives(Note 1) Items recorded in the Liabilities Section are shown in parenthesis.
(Note 2) Receivables and payables arising from derivative transactions are recorded in net amounts, and if the total net
amount is a negative amount, such amount is shown in parenthesis.

40

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

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

Tenant leasehold and security deposits in trust

2,215,299(Unit: JPY thousand)Fiscal period ended
June 30, 2018(as of June 30, 2018)
2,026,400

Investment securities

17,854,460

17,856,387

Fiscal period ended
December 31, 2017(as of December 31, 2017)

Tenant leasehold and security deposits in trust have no observable market price, and it is impracticable to reasonably
estimate their future cash flows because the repayment dates of those deposits and the timing of the lessee’s exit fromthe property are not certain. Thus, their fair value is not disclosed.
Investment securities (preferred equity interest) has no observable market price, and it is impracticable to assess its fairvalue. Thus, its fair value is not disclosed.
(Note 3) Remaining schedule of monetary claims after the closing date of the fiscal period
Fiscal period ended December 31, 2017 (as of December 31, 2017)

Cash and bank deposits
Cash and bank deposits in
trust
Total

(Unit: JPY thousand)Due within Due after one Due after two Due after three Due after four
Due after
one yearto two years to three years to four years to five years
five years
14,367,140
6,326,653

-

-

-

-

-

20,693,794

-

-

-

-

-

Fiscal period ended June 30, 2018 (as of June 30, 2018)

Cash and bank deposits
Cash and bank deposits in
trust
Total

(Unit: JPY thousand)Due within Due after one Due after two Due after three Due after four
Due after
one yearto two years to three years to four years to five years
five years
8,505,792
6,566,761

-

-

-

-

-

15,072,553

-

-

-

-

-

(Note 4) Repayment schedule of investment corporation bonds, long-term loans payable and other interest-bearing debts
after the closing date of the fiscal period

41

Fiscal period ended December 31, 2017 (as of December 31, 2017)

Short-term loans payable
Current portion of long-termloans payable(Unit: JPY thousand)Due within Due after one Due after two Due after three Due after four
Due after
one yearto two years to three years to four years to five years
five years
3,068,000
28,979,000

-

-

-

-

-

-

54,745,000

50,130,000

32,821,000

10,115,000

7,125,000

32,047,000

54,745,000

50,130,000

32,821,000

10,115,000

7,125,000

Long-term loans payable
Total

Fiscal period ended June 30, 2018 (as of June 30, 2018)

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

Current portion of long-termloans payable

46,663,000

Investment corporation bonds--

Long-term loans payable-

51,744,000

48,663,000

51,744,000

57,380,000

Total

-

-

-

-

-

-

-

1,000,000

1,000,000

57,380,000

15,638,000

6,865,000

7,125,000

15,638,000

7,865,000

8,125,000(Notes Related to Investment Securities)
Fiscal period ended December 31, 2017 (as of December 31, 2017)
Other securities
Preferred equity interest (JPY 17,854,460 thousand in the balance sheet) has no observable market price, and it isimpracticable to assess its fair value.

Thus, its fair value is not disclosed.

Fiscal period ended June 30, 2018 (as of June 30, 2018)
Other securities
Preferred equity interest (JPY 17,856,387 thousand in the balance sheet) has no observable market price, and it isimpracticable to assess its fair value.

Thus, its fair value is not disclosed.

(Notes Related to Derivative Transactions)1.

Derivative transactions to which hedge accounting is not applied
Fiscal period ended December 31, 2017 (as of December 31, 2017)
Not applicable
Fiscal period ended June 30, 2018 (as of June 30, 2018)
Not applicable

42

2.

Derivative transactions to which hedge accounting is applied
Fiscal period ended December 31, 2017 (as of December 31, 2017)
The contract amount as of the closing date under each hedge-accounting method and the amount equivalent to thenotional principal prescribed in the contracts are as shown below.
(Unit: JPY thousand)
Method of hedge
accounting

Derivativetransaction type,
etc.

Primary
hedged item

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

Fair value (*2)

Principle
Interest rate swap
Long-term
accounting
Receive floating
loans
99,119,000
70,140,000
113,592
methodrate/pay fixed rate
payable(Note 1) The contract amount, etc. is stated based on a notional principal.
(Note 2) The fair value is estimated based on the price, etc. presented by the correspondent financial institutions.
Fiscal period ended June 30, 2018 (as of June 30, 2018)
The contract amount as of the closing date under each hedge-accounting method and the amount equivalent to thenotional principal prescribed in the contracts are as shown below.
(Unit: JPY thousand)
Method of hedge
accounting

Derivativetransaction type,
etc.

Primary
hedged item

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

Fair value (*2)

Principle
Interest rate swap
Long-term
accounting
Receive floating
loans
100,619,000
67,390,000
90,975methodrate/pay fixed rate
payable(Note 1) The contract amount, etc. is stated based on a notional principal.
(Note 2) The fair value is estimated based on the price, etc. presented by the correspondent financial institutions.
(Notes Related to Retirements Payments)
Not applicable(Notes Related to Asset Retirement Obligations)1.

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

2.

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

3.

Increase/decrease in the total amount of asset retirement obligations
Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)
31,468212
31,680

Balance at the beginning of the period
Increase due to the acquisition of properties
Accretion expense
Balance at the end of the period

43(Unit: JPY thousand)Fiscal period ended
June 30, 2018(from January 1, 2018 toJune 30, 2018)
31,680210
31,891

(Notes Related to Segment and Related Information)
I. Segment Information
Disclosure is omitted because the real estate investment business is INV’s sole business and it has no reportable segments.
II. Related Information
Fiscal period ended December 31, 2017 (from July 1, 2017 to December 31, 2017)
1. Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category accounted forover 90% of the operating revenue on the statement of income.
2. Information about each geographic area
(1) Net sales
Disclosure is omitted because net sales to external customers in Japan accounted for over 90% of the operating
revenue on the statement of income.
(2) Property and equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounted for over 90% of
the amount of property and equipment on the balance sheet.
3. Information about each major customer(Unit: JPY thousand)Name of customer

Operating revenues
4,794,080

MyStays Hotel Management Co., Ltd.

Related segment
Real Estate Investment

Fiscal period ended June 30, 2018 (from January 1, 2018 to June 30, 2018)
1. Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category accounted forover 90% of the operating revenue on the statement of income.
2. Information about each geographic area
(1) Net sales
Disclosure is omitted because net sales to external customers in Japan accounted for over 90% of the operating
revenue on the statement of income.
(2) Property and equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounted for over 90% of
the amount of property and equipment on the balance sheet.
3. Information about each major customer(Unit: JPY thousand)Name of customer

Operating revenues
5,324,738

MyStays Hotel Management Co., Ltd.

44

Related segment
Real Estate Investment

(Notes Related to Rental Properties)
INV owns residential properties and hotels as core assets principally in the Tokyo area and major regional cities with an aim
to establish a portfolio focusing on both stability and growth potential. The book value changed during the period andbalance at the end of the period are as follows.
(Unit: JPY thousand)Fiscal period ended
June 30, 2018(from January 1, 2018 toJune 30, 2018)

Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)

Residences

Book value

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

Fair value at the end of the period

OfficesBook value

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

Fair value at the end of the period

Commercial facilities

Book value

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

Fair value at the end of the period

Parking lots

Book value

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

Fair value at the end of the period

HotelsBook value

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

Fair value at the end of the period

Total

Book value

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

Fair value at the end of the period

45

93,113,195

89,949,664(3,163,531)(3,380,554)

89,949,664

86,569,109

102,353,000

100,387,000

8,424,734

6,474,931(1,949,803)(6,474,931)

6,474,931-

6,130,000-

5,001,269

4,957,292(43,977)(44,824)

4,957,292

4,912,468

6,100,000

6,170,000

100,818-(100,818)

-

-

-

-

-

185,897,957

226,328,017

40,430,059

19,125,328

226,328,017

245,453,345

285,424,000

304,985,000

292,537,976

327,709,905

35,171,929

9,225,018

327,709,905

336,934,923

400,007,000

411,542,000

(Note 1) Book value is the figure calculated by subtracting accumulated depreciation from acquisition price (including
acquisition-related costs).
(Note 2) The major factors for the increase for the fiscal period ended December 31, 2017 were acquisition of hotels andcapital expenditures related to construction work, and the major factors for the decrease were sale of residential
properties, office properties and parking, and depreciation and impairment loss. The major factors for the increase
for the Reporting Period were acquisition of hotels and construction work related to capital expenditures, and the
major factors for the decrease were sale of residential properties and office properties, and depreciation.
(Note 3) The fair value as of the end of the reporting period is determined based on the appraisal value or survey value
provided by Asset Research and Development Inc., Japan Real Estate Institute, JLL Morii Valuation & Advisory
K.K., Tanizawa Sogo Appraisal Co., Ltd., and Daiwa Real Estate Appraisal Co., Ltd.
For information related to profits and losses from rental properties, please refer to “Notes to Statement of Income and Retained
Earnings.”

46

(Notes Related to Tax Accounting)
1. Significant components of deferred tax assets and liabilities(Unit: JPY thousand)Fiscal period ended
December 31, 2017

Fiscal period ended
June 30, 2018

(Deferred tax assets - current assets)
1,325Enterprise tax payable

1,331

Impairment loss

2,367

-

28

28

Subtotal

3,726

1,354

Valuation allowance

Allowance for doubtful accounts

3,726

1,354

Total

-

-

(Deferred tax assets, net)--(Deferred tax assets - non-current assets)
730,990561,751

Land (merger)

1,918,655

1,374,216

Loss carried forward

Buildings and other (merger)

7,200,289

7,200,289

Asset retirement obligations

10,055

10,122

Depreciation of fixed-term leasehold rights

79,644

116,528

9,939,635

9,262,907

Subtotal(Deferred tax liabilities – non-current liabilities)
Removal expenses included in asset retirement
obligations
Deferred gains or losses on hedges

9,797

9,797

36,05428,875

Subtotal

45,851

38,673

9,893,783

9,224,234

Valuation allowance
Total(Deferred tax assets, net)

-

-

-

-

2. Significant difference between statutory tax rate and the effective tax rate
(Unit: %)Fiscal period ended
December 31, 2017

Fiscal period ended
June 30, 2018

Statutory tax rate

31.74

31.74

Deductible cash distributions(30.49)(22.95)

Changes in valuation allowance(1.25)(8.79)

Others0.01

0.01

Effective tax rate

0.01

0.01

(Notes Related to Equity-Method Income)Fiscal period ended December 31, 2017 (as of December 31, 2017)
Not applicable
Fiscal period ended June 30, 2018 (as of June 30, 2018)
Amount of investment in affiliates
JPY 17,856,387,000
Amount of investment when accounted for by the equity method
JPY 17,845,800,000
Amount of investment profit when accounted for by the equity method JPY 722,127,000

47

(Notes Related to Transactions with Related Parties)
1.

Transactions with Parent Company and Major Unitholders
Fiscal period ended December 31, 2017 (from July 1, 2017 to December 31, 2017)Classification

Name

Address

HL Investments
Minato-ku,
TokuteiTokyo
Mokuteki Kaisha(Note 3)Septentrio3
Tokutei Mokuteki Minato-ku,
KaishaTokyo(Note 3)

MonzaTokutei
Minato-ku,
Mokuteki Kaisha
Tokyo
(Note
3)
Interested partyof the AssetManagerStatedcapital(JPY
million)Type oftransaction

Transaction
amount(JPY
thousand)(Note 1)

Account

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

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 5)

13,068,000

-

-

-

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 5)9,781,000---

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 5)8,870,000

-

-

-

-

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 5)7,880,000--

130,953

Percentage
Relationshipof votingBusiness orrightsCommon Businessoccupation
owned
board
relation(%)
membership

Investment
0.1 managementbusiness

Investment
0.1 managementbusiness

Investment
0.1 managementbusiness---

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

Investment
0.1 managementbusiness

Naqua Hotel &Resorts
Management
Co., Ltd.
(Note 3)

Minato-ku,
Tokyo

10

Hotel
business--

Lessee andoperator of
hotelsRentalrevenues

1,103,226

Accounts
receivable

MyStays HotelManagement
Co., Ltd.
(Note 3)

Minato-ku,
Tokyo

100

Hotel
business--

Lessee andoperator of
hotelsRentalrevenues

4,794,080

Accounts
1,551,920
receivable(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)

Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
The terms and conditions have been determined based on the Asset Manager’s internal rules and manual regarding transactions with thesponsor company.
HL Investments Tokutei Mokuteki Kaisha, Septentrio3 Tokutei Mokuteki Kaisha, Monza Tokutei Mokuteki Kaisha, Suisei Tokutei
Mokuteki Kaisha and Naqua Hotel & Resorts Management Co., Ltd. and MyStays Hotel Management Co., Ltd. have no capital relationshipto be disclosed with the Asset Manager. However, these Tokutei Mokuteki Kaisha or the tenant and operator have received an anonymous
partnership investment or investment through funds that are managed by affiliates of Fortress Investment Group LLC (“FIG”), an affiliate
of Calliope. Accordingly, INV treats HL Investments Tokutei Mokuteki Kaisha, Septentrio3 Tokutei Mokuteki Kaisha, Monza Tokutei
Mokuteki Kaisha, Suisei Tokutei Mokuteki Kaisha and Naqua Hotel & Resorts Management Co., Ltd. and MyStays Hotel Management
Co., Ltd. as the equivalent to interested parties.
Calliope holds 609,942 units (holding percentage: 12.7%) of the issued investment units of INV.
The purchase of trust beneficiary interests pertains to the following properties. The transaction amount is the purchase price stated in thetrust beneficiary purchase agreement, to which other expenses for acquisition, property taxes, city planning taxes and consumption taxes
are not included.

Purchase Price(JPY thousand)

Property Number

Name of Property

Counterparty

D50

Hotel MyStays Shin Osaka
Conference Center

HL Investments Tokutei Mokuteki Kaisha

13,068,000

D51

Hotel MyStays Premier Omori

Septentrio3 Tokutei Mokuteki Kaisha

9,781,000

D52

Beppu Kamenoi Hotel

Monza Tokutei Mokuteki Kaisha

8,870,000

D53

Hotel MyStays Sapporo Station

Suisei Tokutei Mokuteki Kaisha

7,880,000

Total

39,599,00048

Fiscal period ended June 30, 2018 (from January 1, 2018 to June 30, 2018)
Classification

Name

Address

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

HL Investments
Tokutei
Minato-ku,
Mokuteki Kaisha
Tokyo

Statedcapital(JPY
million)Account

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

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests in 5,326,000
interests in real estate
real estate (Note 2)(Note 4)---Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests in 2,772,000
interests in real estate
real estate(Note 2)
(Note 4)---Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests in 2,723,000
interests in real estate
real estate(Note 2)
(Note 4)---Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests in 1,604,000
interests in real estate
real estate(Note 2)
(Note 4)

-

-

-

-

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests in 7,325,000
interests in real estate
real estate(Note 2)
(Note 4)--

Percentage
Relationshipof votingBusiness orrightsCommon Businessoccupation
owned
board
relation(%)
membership

Investment
0.1 managementbusiness

Investment
0.1 managementbusiness--(Note 3)

MonzaTokutei
Minato-ku,
Mokuteki Kaisha
Tokyo(Note 3)

Interested partyof the AssetManager
Suisei Tokutei
Minato-ku,
Mokuteki Kaisha
Tokyo(Note 3)(Note 1)
(Note 2)
(Note 3)(Note 4)

Investment
0.1 managementbusiness

Investment
0.1 managementbusiness--

Type oftransaction

Transaction
amount(JPY
thousand)(Note 1)

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

Investment
0.1 managementbusiness

Naqua Hotel &Resorts
Management
Co., Ltd.
(Note 3)

Minato-ku,
Tokyo

10

Hotel
business--

Lessee andoperator of
hotelsRentalrevenues

576,941 receivable 221,582

MyStays HotelManagement
Co., Ltd.
(Note 3)

Minato-ku,
Tokyo

100

Hotel
business--

Lessee andoperator of
hotelsRentalrevenues

5,324,738 receivable 1,387,974

Accounts

Accounts

Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
The terms and conditions have been determined based on the Asset Manager’s internal rules and manual regarding transactions with thesponsor company.
Ginga Tokutei Mokuteki Kaisha, HL Investments Tokutei Mokuteki Kaisha, Monza Tokutei Mokuteki Kaisha, Suisei Tokutei Mokuteki
Kaisha, Calvis Tokutei Mokuteki Kaisha, Naqua Hotel & Resorts Management Co., Ltd., and MyStays Hotel Management Co., Ltd. haveno capital relationship to be disclosed with the Asset Manager. However, (i) Ginga Tokutei Mokuteki Kaisha, HL Investments Tokutei
Mokuteki Kaisha, Monza Tokutei Mokuteki Kaisha, Suisei Tokutei Mokuteki Kaisha have received an anonymous partnership investment
or investment through funds that are managed by affiliates of FIG (an affiliate of Calliope, which is a parent company of the Asset Manager
directly owning 100% of its issued shares) upon transactions with the Tokutei Mokuteki Kaisha, (ii) Calvis Tokutei Mokuteki Kaisha hasreceived an anonymous partnership investment or investment through funds that are managed by affiliates of FIG (a subsidiary of SoftBank
Group Corp., which is a parent company of the Asset Manager directly/indirectly owning 100% of its issued shares) upon transactions with
the Tokutei Mokuteki Kaisha, and (iii) Naqua Hotel & Resorts Management Co., Ltd., and MyStays Hotel Management Co., Ltd. havereceived an anonymous partnership investment or investment through funds that are managed by affiliates of FIG (an affiliate of Calliope,
which is a parent company of the Asset Manager directly owning 100% of its issued shares until March 29, 2018; a subsidiary of SoftBank
Group Corp., which is a parent company of the Asset Manager directly/indirectly owning 100% of its issued shares on and after March 29,2018). Accordingly, INV treats Ginga Tokutei Mokuteki Kaisha, HL Investments Tokutei Mokuteki Kaisha, Monza Tokutei Mokuteki
Kaisha, Suisei Tokutei Mokuteki Kaisha, Calvis Tokutei Mokuteki Kaisha, Naqua Hotel & Resorts Management Co., Ltd., and MyStays
Hotel Management Co., Ltd. as the equivalent to interested parties.
The purchase of trust beneficiary interests pertains to the following properties. The transaction amount is the purchase price stated in thetrust beneficiary purchase agreement, to which other expenses for acquisition, property taxes, city planning taxes and consumption taxes
are not included.

49

Purchase Price(JPY thousand)

Property Number

Name of Property

Counterparty

D54

Hotel MyStays Yokohama Kannai

Ginga Tokutei Mokuteki Kaisha

5,326,000

D55

Art Hotel Joetsu

HL Investments Tokutei Mokuteki Kaisha

2,772,000

D56

Art Hotel Hirosaki City

Monza Tokutei Mokuteki Kaisha

2,723,000

D57

Hotel MyStays Oita

Suisei Tokutei Mokuteki Kaisha

1,604,000

D58

Hotel MyStays Gotanda

Calvis Tokutei. Mokuteki Kaisha

4,068,000

D59

Hotel MyStays Tachikawa

Calvis Tokutei. Mokuteki Kaisha

3,257,000

Total

2.

19,750,000

Transactions with Affiliates
None for both the fiscal period ended December 31, 2017 and the fiscal period ended June 30, 2018.

3.

Transactions with Companies under Common Control
None for both the fiscal period ended December 31, 2017 and the fiscal period ended June 30, 2018.

4.

Transactions with Directors and Major Unitholders
Fiscal period ended December 31, 2017 (as of December 31, 2017)Classification

Directors andclose
relatives

Same as
above

Name

Business or occupation

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

Same asabove

Same as above

Account

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

Ratio ofvoting rights(%)

Details of transaction

Transaction
amount(JPY
thousand)(Note 3)-

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

276,823

Accruedexpenses

159,138-

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

1,100

Accruedexpenses

864(Note 1)

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

(Note 2)

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

(Note 3)

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

50

Fiscal period ended June 30, 2018 (from January 1, 2018 to June 30, 2018)

Classification

Directors andclose
relatives

Same as
above

Name

Business or occupation

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

Same asabove

Same as above

Account

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

Ratio ofvoting rights(%)

Details of transaction

Transaction
amount(JPY
thousand)(Note 3)-

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

308,849

Accruedexpenses

149,291-

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

Accruedexpenses

324(Note 1)

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

(Note 2)

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

(Note 3)

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

(Notes Related to Parent Company or Any Material Affiliated Company)
1. Parent company and major corporate unitholders, etc.

Not applicable
2. Summarized financial information of material affiliated company

Kingdom Special Purpose Company was the material affiliated company during the Reporting Period, andthe summary of financial statements are as below;(Unit: JPY thousand)
Kingdom Special Purpose Company
Total specified assets
100,422,370
Total other assets
5,409,900
Total current liabilities
Total non-current liabilities

1,436,173
66,480,660

Total net assets

37,915,436

Operating revenue
Income before income taxes
Net income

1,957,744
1,496,394
1,495,336

51

(Notes Related to Per Unit Information)
Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)

Fiscal period ended
June 30, 2018(from January 1, 2018 toJune 30, 2018)

Net assets per unit

JPY 37,829

JPY 37,871

Net income per unit

JPY 1,712

JPY 1,611

Net income per unit is calculated by dividing net income for the period by the daily weighted average number of investment
units issued and outstanding. Diluted net income per unit is not stated as there are no diluted units.
(Note)The basis for calculating net income per unit is as follows.
Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)

Net income (JPY thousand)Amounts not attributable to common unitholders(JPY thousand)Net income attributable to common units(JPY thousand)Average number of investment units during the period(units)7,303,097

Fiscal period ended
June 30, 2018(from January 1, 2018 toJune 30, 2018)
7,721,948--

7,303,097

7,721,948

4,266,437

4,793,181(Notes Related to Significant Subsequent Events)
1. Issuance of new investment units
INV resolved at its meetings of the Board of Directors held on July 17, 2018 and July 25, 2018 respectively to conduct
the issuance of new investment units and secondary distribution of investment units. Payment for the new investment
units issued through the public offering was completed on August1, 2018, in accordance with the following terms andconditions. In addition, with respect to the issuance of new investment units through the third-party allotment inconnection with the overallotment secondary offering, the payment was completed on August 21, 2018. As a result, theunitholders’ capital of INV is JPY 42,294 million and the number of investment units issued and outstanding of INV
increased to 5,748,181.
(1) Issuance of new investment units through public offering
Number of investment units to beofferedOf whichdomestic public offering
overseas offering
Issue price(offer price)
Total issue price(offer price)Amount to be paid (issue value)
Total amount to be paid (total
issue value)
Payment date:909,524 investment units:::

432,024 investment units
477,500 investment units
JPY 45,776 per unit
JPY 41,634,370,624::

JPY 44,287 per unit
JPY 40,280,089,388:

August 1, 201852

(2) Secondary offering of investment units (overallotment secondary offering)Number of Investment Units to beoffered in the secondary offering
Offer priceTotal offer price
Delivery date:

45,476 investment units:::

JPY 45,776 per unit
JPY 2,081,709,376
August 2, 2018(3) Issuance of new investment units through third-party allotment
Number of investment units to beofferedAmount to be paid
(issue value)
Total amount to be paid
(total issue value)
Payment date
Allottee:

45,476investment units:

JPY 44,287per unit:

JPY2,013,995,612::

August 21, 2018
Mizuho Securities Co., Ltd.

2. Debt Financing
In order to fund a portion of acquisition price of four domestic hotel properties (domestic trust beneficiary interests)
acquired on August 2, 2018 and TK Interest with overseas real estate as underlying assets to be acquired on October
31, 2018 or on a date to be separately agreed, INV resolved the following debt financing at its meetings of the Boardof Directors held on July 17, 2018 and entered into a loan agreement on July 31, 2018.
New Syndicate Loan (J)LenderOutstanding balance
Interest rate, etc.

:::

Interest payment date:Principal repayment method
Borrowing method
Borrowing date
Maturity date

:
:
:
:

Syndicate of lenders arranged by Mizuho Bank, Ltd.
JPY 40,458 million
Base Rate (1-month JPY TIBOR; however, 2-month JPY
TIBOR for the first calculation period) + 0.50%, 0.40%,
0.30%, 0.30%, 0.20%
The last Japanese business day of each month before theprincipal maturity date with September 28, 2018 as the firstpayment date, and the principal maturity date
The last Japanese business day of each month before theprincipal maturity date with October 31, 2018 (Note 1) as thefirst payment date, and the principal maturity dateLump-sum repayment
Unsecured/ non-guarantee
August 2, 2018, September 12, 2018 (Note 1)
August 2, 2019, August 2, 2021, September 12, 2021 (Note1), September 12, 2022 (Note 1), September 12, 2023 (Note1)(Note 1) Borrowing date, interest payment date and maturity date are those expected as of the date of this document
and are subject to change.

53

3. Acquisition of assets (properties)
INV resolved acquisition of the following four hotel properties (total acquisition price: JPY 47,747 million) on July 17,
2018 and completed the acquisition on August 2, 2018.
Property Number: D60

Property Name: Hotel MyStays Premier Akasaka

Acquisition Date

August 2, 2018

Acquisition Price (Note 1)

JPY20,691 million

Location

Minato-ku, Tokyo

Completion Date

June 2016

Legal Form of Asset

Trust beneficiary interest

Seller

Aki Tokutei Mokuteki Kaisha

Total Floor Area

8,620.69 m2

Leasable Area

8,620.69 m2

Property Number: D61

Property Name: Hotel MyStays Premier Sapporo Park

Acquisition Date

August 2, 2018

Acquisition Price (Note 1)

JPY16,731 million

Location

Sapporo-shi, Hokkaido

Completion Date

March 1998

Legal Form of Asset

Trust beneficiary interest

SellerRaetia Tokutei Mokuteki Kaisha

Total Floor Area

21,670.64 m2

Leasable Area

21,670.64 m2

Property Number: D62

Property Name: Hotel MyStays Ueno East

Acquisition Date

August 2, 2018

Acquisition Price (Note 1)

JPY5,286 million

Location

Taito-ku, Tokyo

Completion Date

September 1991

Legal Form of Asset

Trust beneficiary interest

Seller

HL Investments 2 Tokutei Mokuteki Kaisha

Total Floor Area

4,396.02 m2

Leasable Area

4,396.02 m2

Property Number: D63

Property Name: Hotel MyStays Midosuji Honmachi

Acquisition Date

August 2, 2018

Acquisition Price (Note 1)

JPY5,039 million

Location

Osaka-shi, Osaka

Completion Date

October 2017

Legal Form of Asset

Trust beneficiary interest

Seller

Dogo Tokutei Mokuteki Kaisha

Total Floor Area

3,429.43 m2

Leasable Area

3,429.43 m2
54(Note 1) Acquisition price is based on the purchase price indicated in the relevant purchase agreement and does notinclude acquisition-related expenses, property taxes, city planning taxes or consumption taxes.
4. Acquisition of assets (TK interest with overseas real estate as underlying assets)
INV resolved acquisition of the following TK interest on July 17, 2018 and executed the TK Agreement on the same
date.
Overview of acquisition
Asset to be acquired
Anticipated acquisition price

TK interest in a Cayman Islands special purpose company that plans to acquire Leasehold
Interests in overseas real estate as underlying assets
USD 339,836,000 (JPY 37,534 million) (Note 1) for 100.0% of the Cayman Hotel TK
Interest

Name of underlying asset

Westin Grand Cayman Seven Mile Beach Resort & Spa and Sunshine Suites Resort

Anticipated acquisition date

One business day prior to the acquisition date of the underlying assets, which is expected
to close by October 31, 2018 or the date separately agreed

TK operator

Seven Mile Resort Holdings Ltd.

(Note 1) The anticipated investment amount is fixed by the foreign exchange forward contract executed on July 26, 2018
in Japanese Yen denomination which were calculated using an exchange rate of 1 USD=110.45.

Overview of underlying assets
Name of underlying asset
Anticipated acquisition price (Note 1)(Note 2)
Location

Westin Grand Cayman Seven Mile Beach Resort & Spa
USD 255,300,000 (JPY 28,197 million)
Seven Mile Beach Road, Grand Cayman, Cayman Islands

Completion Date

1994

Total Floor Area

231,728 ft2 (approx. 21,528 m2)

Name of underlying asset

Sunshine Suites Resort

Anticipated acquisition price (Note 1)(Note 2)
Location

USD 49,700,000 (JPY 5,489 million)
Esterley Tibbetts Highway, Grand Cayman, Cayman Islands

Completion Date

1999

Total Floor Area

72,367 ft2 (approx. 6,723 m2)(Note 2) This price is not the anticipated acquisition price of the Cayman Hotel TK Interest acquired by INV but the
anticipated acquisition price of the Leasehold, etc. of the Underlying Asset acquired by the Cayman SPC.

55

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

Type of Issue

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

Unitholders’ Capital (JPY)
Increase

Reference

Total

February 1, 2010

Unit split

215,596

269,495-

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

Merger367,200

636,695-

19,134,417,100(Note 2)

711,597

1,348,292

6,999,979,689

26,134,396,789(Note 3)

224,887

1,573,179

2,999,992,580

29,134,389,369(Note 4)

July 29, 2011
December 20, 2013

Third-party
allotment
Third-party
allotment

July 16, 2014

Public offering

1,040,000

2,613,179

22,747,920,000

51,882,309,369(Note 5)

August 13, 2014

Third-party
allotment

55,5072,668,686

1,214,104,611

53,096,413,980(Note 6)

July 15, 2015

Public offering

500,000

3,168,686

27,970,500,000

81,066,913,980(Note 7)

August 12, 2015

Third-party
allotment

25,0003,193,686

1,398,525,000

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

Public offering

459,5123,653,198

36,123,157,344

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

3,675,824

1,778,675,112

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

3,675,824

224,225,264

120,591,496,700(Note 11)

April 27, 2016

February 22, 2017

Third-party
allotment
Reversal of
allowance fortemporarydifferences
adjustment

March 13, 2017

Public offering

185,000

3,860,824

8,393,450,000

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

Public offering

887,959

4,748,783

37,917,625,218

166,902,571,918(Note 13)

November 1, 2017

Third-party
allotment

44,3984,793,181

1,895,883,396

168,798,455,314(Note 14)

(Note 1)
(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)(Note 10)(Note 11)
(Note 12)(Note 13)
(Note 14)

An investment unit split of 5 units per 1 unit was conducted.
A merger by absorption pursuant to Article 147 of the Act on Investment Trusts and Investment Corporations was conducted with
LCP, with INV as the surviving entity. As a result of the merger by absorption, 4 investment units of INV (after the investment
unit split) were allotted for each LCP investment unit. The number of LCP investment units issued as of the time of the merger
by absorption was 91,800 units.
New investment units were issued in a third-party allotment at a price of JPY 9,837 per unit to make repayment of existing loan,etc.
New investment units were issued in a third-party allotment at a price of JPY 13,340 per unit to make repayment of existing loan,etc.
New investment units were issued in a public offering at a price of JPY 22,688 per unit (JPY 21,873 after deducting theunderwriters’ discount) to raise funds for the acquisition of new properties.
New investment units were issued in a third-party allotment at a price of JPY 21,873 per unit for the purpose of cash reserve toappropriate to repayment in future borrowings.
New investment units were issued in a public offering at a price of JPY 57,817 per unit (JPY 55,941 after deducting theunderwriters’ discount) to raise a part of the funds for the acquisition of new properties.
New investment units were issued in a third-party allotment at a price of JPY 55,941 per unit for the purpose of allocation to cash
reserves to be used as part of the funds for future acquisition of properties.
New investment units were issued in a public offering at a price of JPY 81,217 per unit (JPY 78,612 after deducting theunderwriters’ discount) to raise a part of the funds for the acquisition of new properties.
New investment units were issued 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.
Reversal of allowance for temporary differences adjustment was decided at the meeting of the Board of Directors of INV held on
February 22, 2017 and the amount was incorporated into unitholders’ capital.
New investment units were issued in a public offering at a price of JPY 46,897 per unit (JPY 45,370 after deducting theunderwriters’ discount) to raise a part of the funds for the acquisition of new properties.
New investment units were issued in a public offering at a price of JPY 44,118 per unit (JPY 42,702 after deducting theunderwriters’ discount) to raise a part of the funds for the acquisition of new properties.
New investment units were issued in a third-party allotment at a price of JPY 42,702 per unit for the purpose of allocation to
cash reserves to be used as part of the funds for future acquisition of specified assets.

56

4. Change in Directors
Changes in directors are disclosed in a timely manner upon the determination of such changes.

5. Reference Information(1)

Composition of INV’s Assets

Type of
Purpose

Geographic area

Fiscal period ended December 31, 2017(as of December 31, 2017)

Fiscal period ended June 30, 2018(as of June 30, 2018)

Percentage of
total assets(%)

Amount held
(JPY million)

2

0.0

2

0.0

-

-

-

-

2
2

0.0
0.0

2
2

0.0
0.0

74,091

19.9

70,87718.9

15,858

4.3

15,691

4.2

89,94924.2

86,569

23.1

5,765

1.6

-

-

5,666

1.5

4,912

1.3

11,432

3.1

4,912

1.3

121,22532.6

133,640

35.7

105,09928.3

111,80929.9

226,32560.9

245,450

65.5

Total real estate in trust

327,706

88.2

336,932

90.0

Preferred equity interest (Note 4)

17,8544.8

17,856

4.8

Deposits and other assets

26,1937.0

19,721

5.3

371,758

100.0

374,512100.0(327,709)(88.2)(336,934)(90.0)

asset

Amount held
(JPY million)(Note 1)

(Note 2)

Greater Tokyo
area (Note 3)
Major regional
HotelscitiesSubtotal
Total real estate
Greater Tokyo
area
Major regional
Residences
citiesSubtotal
Greater Tokyo
area
Real
Offices/Commercial Major regional
estate in
Facilities
citiestrust
Subtotal
Greater Tokyo
area
Major regional
HotelscitiesSubtotalRealestateTotal assets (Note 5)(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)Percentage of
total assets(%)(Note 2)“Greater Tokyo area” refers to Tokyo, Kanagawa, Chiba and Saitama.
“Amount held” is from the balance sheet as of the end of the reporting period and is calculated by deducting accumulated depreciationfrom the acquisition price (including acquisition related costs).
Part of Hotel MyStays Haneda falls under this category.
Preferred equity interest issued by Kingdom Special Purpose Company, with the Sheraton Grande Tokyo Bay Hotel as an underlying asset(asset in trust of trust beneficiary interest acquired by Kingdom Special Purpose Company, which is the real estate that serves as the main
source of revenue for Kingdom Special Purpose Company).
The figures indicated in parenthesis under “Total assets” show the amounts related to owned real estate (excluding the amount of preferred
equity interest owned).

Total Liabilities
Total Net Assets
Total Liabilities
and Net Assets

Fiscal period ended December 31, 2017(as of December 31, 2017)
Percentage ofAmount (JPY million)
total assets (%)
190,437
51.2

Fiscal period ended June 30, 2018(as of June 30, 2018)
Percentage ofAmount (JPY million)
total assets (%)
192,98951.5

181,32048.8

181,52348.5

371,758

100.0

374,512

100.0

57

(2)

Real Estate Properties, Etc.
The following summarizes the real estate and real estate held in trust as well as preferred equity interest that INV
held as of June 30, 2018.

aProperty
number(Note 1)Price and investment percentage

Name of property

A26

Nisshin Palacestage Daitabashi

A27

Nisshin Palacestage
Higashi-Nagasaki

A28

Growth Maison Gotanda

A29

Growth Maison Kameido

A30

Emerald House

A32

Suncrest Shakujii-Koen

A33

Growth Maison Shin-Yokohama

A34

Belle Face Ueno-Okachimachi

A35

Grand Rire Kameido

A37

Growth Maison Yoga

A38

Route Tachikawa

A39

Shibuya-Honmachi Mansion

A40

City Heights Kinuta

A41

Acseeds Tower
Kawaguchi-Namiki

A43

College Square Machida

A44

Belair Meguro

Appraisal
BalanceAcquisition
value atsheet
Investment
pricethe end of
Location
Legal form
carrying percentage
Appraiser(JPY
the period(Note 2)of asset
value(%)(Note 6)
million)(JPY(JPY(Note 4)(Note 3)
million)million)(Note 5)Trust
beneficiary
1-31-2 Izumi, Suginami-ku, Tokyo
1,251
1,112
0.3
1,210
A
interests(Note 7)Trust
beneficiary
5-4-1 Nagasaki, Toshima-ku, Tokyo
1,229
1,076
0.3
1,330
A
interests(Note 7)Trust
2-26-6 Nishi-Gotanda,
beneficiary
888
848
0.2
1,040
A
Shinagawa-ku, Tokyo
interests(Note 7)Trust
beneficiary
6-58-16 Kameido, Koto-ku, Tokyo
1,070
968
0.3
1,140
A
interests(Note 7)Trust
beneficiary
3-27-18 Itabashi, Itabashi-ku, Tokyo
1,505
1,353
0.4
1,430
A
interests(Note 7)Trust
3-15-35 Takanodai, Nerima-ku,
beneficiary
1,088
1,073
0.3
1,090
A
Tokyo
interests(Note 7)Trust
3-16-2 Shin-Yokohama, Kohoku-ku, beneficiary
1,059
952
0.3
1,180
A
Yokohama-shi, Kanagawa
interests(Note 7)Trust
1-27-5 Higashi-Ueno, Taito-ku,
beneficiary
1,023
940
0.3
1,090
A
Tokyo
interests(Note 7)Trust
beneficiary
3-39-12 Kameido, Koto-ku, Tokyo
906
813
0.2
1,010
A
interests(Note 7)Trust
1-15-15 Okamoto, Setagaya-ku,
beneficiary
795
739
0.2
747
A
Tokyo
interests(Note 7)Trust
3-7-6 Nishikicho, Tachikawa-shi,
beneficiary
676
637
0.2
669
A
Tokyo
interests(Note 7)Trust
2-35-2 Honmachi, Shibuya-ku,
beneficiary
651
664
0.2
638
A
Tokyo
interests(Note 7)Trust
beneficiary
4-13-15 Kinuta, Setagaya-ku, Tokyo
646
654
0.2
499
A
interests(Note 7)Trust
2-5-13 Namiki, Kawaguchi-shi,
beneficiary
620
532
0.2
746
A
Saitamainterests(Note 7)Trust
3-4-4 Nakamachi, Machida-shi,
beneficiary
589
557
0.2
535
A
Tokyo
interests(Note 7)Trust
beneficiary
1-2-15 Meguro, Meguro-ku, Tokyo
589
556
0.2
621
A
interests(Note 7)58

Property
number(Note 1)Name of property

A45

Wacore Tsunashima I

A46

Foros Nakamurabashi

A47

Growth Maison Kaijin

A48

College Square Machiya

A51

City House Tokyo Shinbashi

A52

Winbell Kagurazaka

A53

Nishiwaseda Cresent Mansion

A54

Lexington Square Akebonobashi

A59

Towa City Coop Shinotsuka II

A61Bichsel Musashiseki

A63

Towa City Coop Sengencho

A64

Royal Park Omachi

A65

Lexington Square Haginomachi

A66

Visconti Kakuozan

A71

Lexington Square Daitabashi

A72

Lexington Square Honjo
Azumabashi

A73

AMS TOWER Minami 6-Jo

A75

Spacia Ebisu

A76

Neo Prominence

A77

Invoice Shin-Kobe Residence

A78

Cosmo Court Motomachi

A79

Revest Honjin

A80

Revest Matsubara

Appraisal
BalanceAcquisition
value atsheet
Investment
pricethe end of
Location
Legal form
carrying percentage
Appraiser(JPY
the period(Note 2)of asset
value(%)(Note 6)
million)(JPY(JPY(Note 4)(Note 3)
million)million)(Note 5)Trust
2-7-47 Tarumachi, Kohoku-ku,
beneficiary
572
523
0.2
515
A
interests
Yokohama-shi, Kanagawa(Note 7)Trust
beneficiary
1-6-6 Kouyama, Nerima-ku, Tokyo
566
515
0.2
573
A
interests(Note 7)Trust
5-29-51 Kaijin, Funabashi-shi,
beneficiary
557
513
0.2
486
A
Chiba
interests(Note 7)Trust
beneficiary
7-3-1 Arakawa, Arakawa-ku, Tokyo
510
450
0.1
554
A
interests(Note 7)Trust
6-19-1 Shinbashi, Minato-ku, Tokyo beneficiary
2,520
2,305
0.7
3,270
B
interests
Trust
6-15 Shin-Ogawacho, Shinjuku-ku,
beneficiary
3,260
3,027
0.9
4,150
C
Tokyo
interests
Trust
3-18-9 Nishi-Waseda, Shinjuku-ku,
beneficiary
1,880
1,878
0.5
2,590
C
Tokyo
interests
Trust
3-8 Yochomachi, Shinjuku-ku, Tokyo beneficiary
1,450
1,313
0.4
1,910
D
interests
Trust
5-49-7 Higashi-Ikebukuro,
beneficiary
866
817
0.2
1,110
B
Toshima-ku, Tokyo
interests
Trust
1-22-7 Sekimachi-Kita, Nerima-ku,
beneficiary
577
551
0.2
722
C
Tokyo
interests
Trust
4-338-2 Sengencho, Nishi-ku,
beneficiary
1,110
1,012
0.3
1,370
B
Yokohama-shi, Kanagawa
interests
Trust
2-11-10 Omachi, Aoba-ku,
beneficiary
415
386
0.1
574
B
Sendai-shi, Miyagi
interests
Trust
1-15-16 Haginomachi,
beneficiary
330
280
0.1
453
B
Miyagino-ku, Sendai-shi, Miyagi
interests
Trust
2-44 Otanacho, Chikusa-ku,
beneficiary
255
230
0.1
281
D
Nagoya-shi, Aichi
interests
Trust
1-33-18 Izumi, Suginami-ku, Tokyo beneficiary
977
845
0.3
1,240
D
interests
Trust
4-20-6 Higashikomagata,beneficiary
511
432
0.1
640
D
Sumida-ku, Tokyo
interests
Trust
2-5-15 Minami 6-Jo Nishi,
beneficiary
1,180
949
0.3
1,290
D
Chuo-ku, Sapporo-shi, Hokkaido
interests
Trust
3-6-22 Higashi, Shibuya-ku, Tokyo beneficiary
7,010
6,463
1.9
8,110
B
interests
Trust
3-21-5 Shimo, Kita-ku, Tokyo
beneficiary
1,660
1,610
0.5
2,050
B
interests
Trust
3-3-8 Ikutacho Chuo-ku, Kobe-shi,
beneficiary
1,260
1,164
0.3
1,400
B
Hyogo
interests
Trust
3-12-20 Motomachidori Chuo-ku,
beneficiary
973
890
0.3
1,100
B
Kobe-shi, Hyogo
interests
Trust
2-13 Toriidori Nakamura-ku,
beneficiary
674
613
0.2
816
B
Nagoya-shi, Aichi
interests
Trust
3-13-12 Matsubara Naka-ku,
beneficiary
657
603
0.2
800
B
Nagoya-shi, Aichi
interests

59

Property
number(Note 1)Name of property

A82

Alba Noritake Shinmachi

A83

Revest Meieki Minami

A84

Revest Heian

A85

Vendir Hamaotsu Ekimae

A86

Salvo Sala

A87

Excellente Kagurazaka

A88

Luna Court Edobori

A89

Winntage Kobe Motomachi

A90

Queen's Court Fukuzumi

A91

Corp Higashinotoin

A92

Belair Oimachi

A93

Siete Minami-Tsukaguchi

A94

Prime Life Sannomiya Isogami
Koen

A95

HERMITAGE NANBA WEST

A96

Century Park Shinkawa 1-bankan

A97

West Avenue

A98

Little River Honmachibashi

A99

Prime Life Mikage

A100 City Court Kitaichijo

A101 Lieto Court Mukojima

A102 Lieto Court Nishi-Ojima

A103 Royal Parks Momozaka

A104 Royal Parks Shinden

Appraisal
BalanceAcquisition
value atsheet
Investment
pricethe end of
Location
Legal form
carrying percentage
Appraiser(JPY
the period(Note 2)of asset
value(%)(Note 6)
million)(JPY(JPY(Note 4)(Note 3)
million)million)(Note 5)Trust
3-6-8 Noritake Shinmachi, Nishi-ku,
beneficiary
608
554
0.2
743
B
Nagoya-shi, Aichi
interests
Trust
2-13-33 Meieki-Minami,
beneficiary
597
544
0.2
734
B
Nakamura-ku, Nagoya-shi, Aichi
interests
Trust
2-13-17 Heian, Kita-ku,
beneficiary
595
543
0.2
709
B
Nagoya-shi, Aichi
interests
Trust
1-2-15 Hamaotsu, Otsu-shi, Shiga
beneficiary
581
522
0.2
717
B
interests
Trust
2-6-21 Shimanouchi Chuo-ku,
beneficiary
544
499
0.1
637
B
Osaka-shi, Osakainterests
Trust128-1 Yamabukicho Shinjuku-ku,
beneficiary
543
510
0.1
635
B
Tokyo, and other one parcel
interests
Trust
3-4-11 Edobori, Nishi-ku,
beneficiary
525
482
0.1
573
B
Osaka-shi, Osakainterests
Trust
7-2-2 Motomachidori, Chuo-ku,
beneficiary
512
465
0.1
615
B
Kobe-shi, Hyogo
interests
Trust
1-3-10 Fukuzumi, Koto-ku, Tokyo
beneficiary
456
430
0.1
619
B
interests
380-1 Kawaranomachi,
Trust
Higashinotoindori Nijo Kudaru,
beneficiary
446
415
0.1
530
B
Nakagyo-ku, Kyoto-shi, Kyoto, andinterests
other two parcels
Trust
5-14-17 Higashi-Oi, Shinagawa-ku,
beneficiary
412
391
0.1
530
B
Tokyo
interests
Trust
3-18 Minami-Tsukaguchimachi,
beneficiary
374
350
0.1
438
B
Amagasaki-shi, Hyogo
interests
Trust
4-3-23 Isogamidori, Chuo-ku,
beneficiary
373
345
0.1
447
B
Kobe-shi, Hyogo
interests
Trust
4-10-3 Sakuragawa, Naniwa-ku,
beneficiary
355
329
0.1
439
B
Osaka-shi, Osakainterests
Trust
4-1-2 Shinkawacho, Minato-ku,
beneficiary
335
321
0.1
436
B
Nagoya-shi, Aichi
interests
Trust
1-5-17 Nishi, Kunitachi-shi, Tokyo beneficiary
331
312
0.1
320
B
interests
Trust
1-34 Honmachibashi, Chuo-ku,
beneficiary
310
289
0.1
389
B
Osaka-shi, Osakainterests
Trust
2-25-11 Mikage Tsukamachi,
beneficiary
297
273
0.1
327
B
Higashinada-ku, Kobe-shi, Hyogo
interests
Trust
1-6-3 Kita 1-jo Higashi, Chuo-ku,
beneficiary
1,782
1,770
0.5
1,990
B
Sapporo-shi, Hokkaido
interests
Trust
5-45-10 Mukojima, Sumida-ku,
beneficiary
1,683
1,693
0.5
1,760
B
Tokyo
interests
Trust
2-41-14 Ojima, Koto-ku, Tokyo
beneficiary
1,634
1,637
0.4
1,770
B
interests
Trust
5-38 Fudegasakicho, Tennouji-ku,
beneficiary
2,910
2,865
0.8
3,080
C
Osaka-shi, Osakainterests
Trust
3-35-20 Shinden, Adachi-ku, Tokyo beneficiary
5,024
5,015
1.4
5,510
C
interests

60

Property
number(Note 1)

Location(Note 2)Name of property

A105 Royal Parks Tower Minami-Senju

4-7-3 Minami-Senju, Arakawa-ku,
Tokyo

A106 Royal Parks Seasir Minami-Senju

3-41-7 Minami-Senju, Arakawa-ku,
Tokyo

Appraisal
BalanceAcquisition
value atsheet
Investment
pricethe end of
Legal form
carrying percentage
Appraiser(JPY
the periodof asset
value(%)(Note 6)
million)(JPY(JPY(Note 4)(Note 3)
million)million)(Note 5)Trust
beneficiary
21,87922,3886.0
22,700B
interests
Trustbeneficiary
2,683
2,756
0.7
2,760
B
interests

Subtotal (64 properties)

B17

Lexington Plaza Hachiman

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

B18

AEON TOWN Sukagawa

105 Furukawa, Sukagawa-shi,
Fukushima

Trust
beneficiaryinterests
Trustbeneficiaryinterests

Subtotal (2 properties)

D01

Hotel MyStays Kanda

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

D02

Hotel MyStays Asakusa

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

D03

Hotel MyStays Kyoto-Shijo

52, Kasabokocho, Higashiiru,
Aburanokoji, Shijyodori,Shimogyo-ku, Kyoto-shi, Kyoto

D04

MyStays Shin-Urayasu Conference
2-1-4 Akemi, Urayasu-shi, Chiba
CenterD05

Hotel MyStays Maihama

3-5-1 Tekkodori, Urayasu-shi,
Chiba

D06

Hotel MyStays Premier Dojima

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

D07

Hotel MyStays Nagoya-Sakae

2-23-22 Higashi-Sakura, Naka-ku,
Nagoya-shi, Aichi

D08

Hotel MyStays
Sakaisuji-Honmachi

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

D09

Hotel MyStays Yokohama

4-81 Sueyoshicho, Naka-ku,
Yokohama-shi, Kanagawa

D10

Hotel MyStays Nippori

5-43-7 Higashi-Nippori,
Arakawa-ku, Tokyo

D11

Hotel MyStays
Fukuoka-Tenjin-Minami

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

D12

Flexstay Inn Iidabashi

3-26 Shin-Ogawamachi,
Shinjuku-ku, Tokyo

D13

Hotel MyStays Ueno Inaricho

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

D14

Flexstay Inn Shinagawa

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

D15

Flexstay Inn Tokiwadai

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

D16

Flexstay Inn Sugamo

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

D17

Hotel MyStays Otemae

1-3-2 Tokuicho, Chuo-ku,
Osaka-shi, Osaka

D18

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

61

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

90,15486,56924.8

100,387

-

3,280

3,056

0.9

3,720

C

2,320

1,855

0.6

2,450

C

5,600

4,912

1.5

6,170

-

2,851

3,003

0.8

4,920

B

2,584

2,553

0.7

4,670

B

6,024

5,821

1.7

15,100

B

4,930

4,730

1.4

7,140

B

4,870

4,848

1.3

6,580

B

3,845

3,810

1.1

7,340

B

2,958

2,717

0.8

6,290

B

2,514

2,414

0.7

7,240

B

2,119

1,999

0.6

3,500

B

1,898

1,821

0.5

2,960

B

1,570

1,507

0.4

5,460

B

1,381

1,366

0.4

1,980

B

1,331

1,262

0.4

2,240

B

1,242

1,212

0.3

1,950

B

1,242

1,217

0.3

2,090

B

1,192

1,137

0.3

2,050

B

1,192

1,153

0.3

4,530

B

749

729

0.2

1,270

B

Appraisal
BalanceAcquisition
value atsheet
Investment
Property
price
the end of
Location
Legal form
carrying percentage
Appraiser
numberName of property(JPY
the period(Note 2)of asset
value(%)(Note 6)(Note 1)
million)(JPY(JPY(Note 4)(Note 3)
million)million)(Note 5)Trust
4-27-12 Futaba, Shinagawa-ku,
D19 Flexstay Inn Nakanobu P1
beneficiary
589
573
0.2
763
B
Tokyo
interests
Trust
4-27-8 Futaba, Shinagawa-ku,
D20 Flexstay Inn Nakanobu P2
beneficiary
283
290
0.1
367
B
Tokyo
interests
Trust
3-37-2 Sumiyoshicho, Naka-ku,
D21 APA Hotel Yokohama-Kannai
beneficiary
8,350
7,897
2.3
9,650
B
Yokohama-shi, Kanagawa
interests
Trust
Hotel MyStays
26-17 Honcho, Hakodate-shi,
D22
beneficiary
2,792
2,848
0.8
3,640
B
Hakodate-Goryokaku
Hokkaido
interests
Trust
5-10-15 Shirokane, Minato-ku,
D23 Flexstay Inn Shirogane
beneficiary
2,119
2,101
0.6
2,220
B
Tokyo
interests
Trust
D24 Hotel MyStays Haneda
5-1-13 Haneda, Ota-ku, Tokyo
beneficiary
7,801
7,470
2.1
8,160
B
interests
Trust
D25 Hotel MyStays Kameido P1
6-32-1 Kameido, Koto-ku, Tokyo
beneficiary
5,594
5,454
1.5
7,020
B
interests
Trust
5-5-13 Higashi-Ueno, Taito-ku,
D26 Hotel MyStays Ueno Iriyaguchi
beneficiary
3,821
3,728
1.1
3,900
B
Tokyo
interests
Trust
D27 Hotel MyStays Kameido P2
6-7-8 Kameido, Koto-ku, Tokyo
beneficiary
3,742
3,649
1.0
4,670
B
interests
Trust
1-23 Masagocho, Shimizu-ku,
D28 Hotel Vista Shimizu
beneficiary
2,198
2,082
0.6
2,430
B
Shizuoka-shi, Shizuoka
interests
Trust
Super Hotel Shinbashi/
D29
5-16-4 Shinbashi, Minato-ku, Tokyo beneficiary
1,624
1,604
0.4
1,790
B
Karasumoriguchiinterests
Trust
D30 Flexstay Inn Higashi-Jujo
2-10-2 Nakajujo, Kita-ku, Tokyo
beneficiary
1,277
1,268
0.4
1,340
B
interests
Trust
2-4-1 Higashi-Shukugo,
D31 Hotel MyStays Utsunomiya
beneficiary
1,237
1,230
0.3
1,540
B
Utsunomiya-shi, Tochigi
interests
Trust
1-13-2 Kaizuka, Kawasaki-ku,
D32 Flexstay Inn Kawasaki-Kaizuka
beneficiary
980
936
0.3
1,150
B
Kawasaki-shi, Kanagawa
interests
Trust
1-3-2 Takara-machi, Toyama-shi,
D33 Comfort Hotel Toyama
beneficiary
979
941
0.3
1,090
B
Toyamainterests
Trust
15-9 Ogawacho, Kawasaki-ku,
D34 Flexstay Inn Kawasaki-Ogawacho
beneficiary
906
884
0.2
1,030
B
Kawasaki-shi, Kanagawa
interests
Trust
D35 Flexstay Inn Ekoda
8-6 Sakaecho, Nerima-ku, Tokyo
beneficiary
5,069
4,939
1.4
4,800
B
interests
Trust
Super Hotel Tokyo-JR Tachikawa 2-21-9 Akebonocho, Tachikawa-shi,
D36
beneficiary
1,170
1,131
0.3
1,230
E
KitaguchiTokyointerests
Trust
D37 Super Hotel JR Ueno-iriyaguchi
7-9-14 Ueno, Taito-ku, Tokyo
beneficiary
1,130
1,102
0.3
1,220
E
interests
Trust
1-9-30 Nishi-Shinsaibashi,
D38 Hotel MyStays Shinsaibashi
beneficiary
3,160
3,095
0.9
3,220
B
Chuo-ku, Osaka-shi, Osakainterests
Trust
3-13-13 Kurosaki, Yahatanishi-ku,
D39 Comfort Hotel Kurosaki
beneficiary
1,148
1,096
0.3
1,220
E
Kitakyusyu-shi, Fukuoka
interests
Trust
2-18-14 Omotecho, Maebashi-shi,
D40 Comfort Hotel Maebashi
beneficiary
1,128
1,084
0.3
1,160
E
Gunma
interests
Trust
D41 Comfort Hotel Tsubame-Sanjo
2-115 Sugoro, Sanjo-shi, Niigata
beneficiary
1,010
975
0.3
1,070
E
interests
Trust
3-4 Ohdori-Nishi, Kitami-shi,
D42 Comfort Hotel Kitami
beneficiary
851
812
0.2
905
E
Hokkaido
interests

62

Appraisal
BalanceAcquisition
value atsheet
Investment
Property
price
the end of
Location
Legal form
carrying percentage
Appraiser
numberName of property(JPY
the period(Note 2)of asset
value(%)(Note 6)(Note 1)
million)(JPY(JPY(Note 4)(Note 3)
million)million)(Note 5)
Trust
Hotel MyStays Gotanda Station
2-6-8 Nishi-Gotanda,
D43
beneficiary
26,523
26,464
7.3
27,500C(Note 9)
Shinagawa-ku, Tokyo
interests
1-10 Kaidoue, Oaza-Takakuhei,
Trust
D44 Hotel Epinard Nasu
Nasu-machi, Nasu-gun, Tochigi
beneficiary
20,981
20,2185.8
23,100C(and 59 other land parcels)interests
Trust
3-5-7 Tenjin, Chuo-ku, Fukuoka-shi,
D45 Hotel MyStays Fukuoka Tenjin
beneficiary
8,059
7,911
2.2
8,740
C
Fukuokainterests
Trust
1-18-14 Hamamatsucho, Minato-ku,
D46 Hotel MyStays Hamamatsucho
beneficiary
7,959
7,865
2.2
7,480
C
Tokyo
interests
Trust
2-13-1 Hirooka, Kanazawa-shi,
D47 Hotel MyStays Premier Kanazawa
beneficiary
13,761
13,3393.8
14,500C
Ishikawa
interests
Trust
9-9 Hyogomachi, Takamatsu-shi,
D48 Takamatsu Tokyu REI Hotelbeneficiary
2,139
2,106
0.6
2,220
E
Kagawainterests
Trust
Hotel MyStays Premier
1-8-5 Hamamatsucho, Minato-ku,
D49
beneficiary
8,000
7,980
2.2
8,270
B
HamamatsuchoTokyo
interests
Trust
Hotel MyStays Shin Osaka
6-2-19 Nishinakashima,
D50
beneficiary
13,06813,0393.6
13,200D
Conference Center
Yodogawa-ku, Osaka-shi, Osakainterests
Trust
6-19-3 Minami Oi, Shinagawa-ku,
D51 Hotel MyStays Premier Omori
beneficiary
9,781
9,746
2.7
9,930
D
Tokyo
interests
Trust
D52 Beppu Kamenoi Hotel
5-17 Chuo Cho, Beppu-shi, Oita
beneficiary
8,870
8,689
2.4
9,010
D
interests
Trust
4-15 Kita Hachijyo Nishi, Nita-ku,
D53 Hotel MyStays Sapporo Station
beneficiary
7,880
7,811
2.2
8,140
D
Sapporo-shi, Hokkaido
interests
5-65, Onoe-cho, Naka-ku,
Trust
D54 Hotel MyStays Yokohama Kannai Yokohama-shi, Kanagawa andbeneficiary
5,326
5,324
1.5
5,380
D
3 other lots
interests
Trust
D55 Art Hotel Joetsu
5-1-11, Hon-cho Joetsu-shi, Niigata beneficiary
2,772
2,769
0.8
2,810
D
interests
Trust
1-1-2, 1-6, 1-7, 2-1, Omachi,
D56 Art Hotel Hirosaki City
beneficiary
2,723
2,730
0.7
2,760
D
Hirosaki-shi, Aomori
interests
Trust
D57 Hotel MyStays Oita
1-32, Niagemachi Oita-shi, Oita
beneficiary
1,604
1,600
0.4
1,640
D
interests
Trust
2-5-4, Higashigotanda
D58 Hotel MyStays Gotanda
beneficiary
4,068
4,077
1.1
4,120
D
Shinagawa-ku, Tokyo
interests
Trust
1-8-14, Nishiki-cho Tachikawa-shi,
D59 Hotel MyStays Tachikawa
beneficiary
3,257
3,268
0.9
3,290
E
Tokyo
interests－

Subtotal (59 properties)

250,230

245,45368.8

304,985-

Total (125 properties)

345,985

336,93495.1

411,542-

17,845

17,856

4.9--

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

17,845

17,856

4.9--

Total (126 properties)

363,831354,791

100.0

-

-

Sheraton Grande Tokyo Bay
Hotel (preferred equity
interest)

Preferredequity interest
issued by
specialpurposecompany(Note 8)－63

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

(Note 2)

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

(Note 3)

“Acquisition price” is the purchase price indicated in the real estate or trust beneficiary purchase agreement. (However, for Sheraton GrandeTokyo Bay Hotel (preferred equity interest) described below (Note 8), “Acquisition price” indicates the amount invested by INV for the
preferred equity interest. The same shall apply hereinafter in this document.) Such price excludes consumption tax and other taxes, and has
been rounded down to the nearest million yen.

(Note 4)

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

(Note 5)

“Appraisal value at the end of the period” is the value appraised or determined based on research by the real estate appraiser as of the end of
the fiscal period in accordance with the Articles of Incorporation of INV and the regulations of The Investment Trust Association, Japan.
For Sheraton Grande Tokyo Bay Hotel (preferred equity interest), there is no Appraisal value at the end of the period due to it being preferred
equity interest.

(Note 6)

“Appraiser” is shown in code in the table above.

The code used to represent the appraisers is as follows:

Appraiser
A: Assets Research and Development Inc.
B: Japan Real Estate Institute
C: JLL Morii Valuation & Advisory K.K.
D: The Tanizawa Sogo Appraisal Co., Ltd.
E: Daiwa Real Estate Appraisal Co., Ltd.
(Note 7) These trust beneficiary interests were integrated into three groups with other trust beneficiary interests when INV procured funds through debt
financing backed by trust assets in July 2011. The grouping of trust beneficiary interests at the end of the fiscal period ended June 30, 2018is as follows:
Group 1
Nisshin Palacestage Daitabashi, Nisshin Palacestage Higashi-Nagasaki, Growth Maison Shin-Yokohama, Belle Face Ueno-Okachimachi,
Growth Maison Yoga, Shibuya-Honmachi Mansion, City Heights Kinuta, and Foros Nakamurabashi
Group 2Growth Maison Gotanda, Growth Maison Kameido, Emerald House, Route Tachikawa, College Square Machida, Belair Meguro, andWacore Tsunashima I
Group 3
Suncrest Shakujii-Koen, Grand Rire Kameido, Acseeds Tower Kawaguchi-Namiki, Growth Maison Kaijin, and College Square Machiya(Note 8)Preferred equity interest issued by special purpose company refers to 178,458 units of preferred equity interest issued by Kingdom Special
Purpose Company (equivalent to 49.0% of preferred equity interest issued and outstanding after the issuance of the said preferred equity interest),
with the Sheraton Grande Tokyo Bay Hotel as an underlying asset, and is recorded as 1 property.

(Note 9)Appraisal value at the end of the period indicates appraisal value calculated deeming the owned portion and the floor expansion portion as one.

64

b

Capital expenditures for assets under management(a) Schedule for capital expenditures
The schedule for the principal capital expenditures for property maintenance construction, etc., as of the end of the
fiscal period ended June 30, 2018 for the real estate assets is as follows.
Estimated Cost (JPY thousand)Name of Property

Location

PurposeScheduled Time of
Implementation

Total

Payment for
the Fiscal
Advance
Period ended
Payments
June 30,
2018

D44 Hotel Epinard Nasu

Nasu-gun,Tochigi

Renovation work

From July 2018
To December 2018

390,000--

Hotel MyStays
D51 Premier Omori

Shinagawa-ku,
TokyoRenovation work

From July 2018
To December 2018

90,000--Hotel MyStays
D49 Premier
Hamamatsucho

Minato-ku,TokyoRenovation work

From July 2018
To December 2018

40,000--

D48

Takamatsu Tokyu
REI Hotel

Takamatsu-shi,
KagawaRenovation work

From July 2018
To December 2018

22,500--

A39

Shibuya-Honmachi
MansionShibuya-ku,
Tokyo

Outer wall repair
work

From July 2018
To December 2018

19,570--(b) Capital expenditures for the fiscal period ended June 30, 2018
The principal construction work constituting capital expenditures for the real estate assets for the fiscal period ended
June 30, 2018 is as follows. Capital expenditures for the fiscal period totaled JPY 1,315,508 thousand, and together
with JPY 24,050 thousand in repair costs included in this fiscal period’s expenses, construction work totaling JPY
1,339,558 thousand was implemented.
Name of property

Location

PurposeTime ofimplementation

Payment(JPY thousand)Hotel MyStays
D22 HakodateGoryokaku

Hakodate-shi,
Hokkaido

Renovation work

From January 2018
To June 2018

225,642

D05

Hotel MyStays
Maihama

Urayasu-shi,
Chiba

Renovation work

From January 2018
To June 2018219,683

D06

Hotel MyStays
Premier Dojima

Osaka-shi,
Osaka

Renovation work

From January 2018
To June 2018

183,241

D03

Hotel MyStays
Kyoto-Shijo

Kyoto-shi,
Kyoto

Renovation work

From January 2018
To June 2018

102,308

MyStays ShinD04 Urayasu ConferenceCenterUrayasu-shi,
Chiba

Renovation work

From January 2018
To June 2018

69,592Other construction

515,039
Total

1,315,508

65

(c) Reserved funds for long-term maintenance plan (repair reserves)
INV has reserved funds from the cash flow of the fiscal period, as shown below, towards large-scale maintenancerepairs in the medium to long term in accordance with the long-term maintenance plan for each property.

Fiscal period

Reserved funds at beginningof period
Amount reserved(Note 1)
Amount reversed(Note 1)
Amount carried over for
next fiscal period(Unit: JPY thousand)
26th
27th
28th
29th
30th
fiscal period
fiscal period
fiscal period
fiscal period
fiscal period
From January 1, From July 1, 2016 From January 1, From July 1, 2017 From January 1,
2016 to June 30, to December 31, 2017 to June 30, to December 31, 2018 to June 30,
2016
2016
2017
2017
2018
982,750

1,303,685

1,397,286

1,397,243

1,566,108

543,275

446,066

468,145

697,444468,448

222,339

352,464

468,189

528,579

422,728

1,303,685

1,397,286

1,397,243

1,566,108

1,611,828(Note 1) The amount reserved for the relevant fiscal period includes the reserves for acquired properties, and the amount reversed includes
the reserves for disposed properties.

66

(3)

Tenant SummaryaSummary of lease conditions by property(As of June 30, 2018)
Rental revenue(JPY thousand)(Note7)

Ratio ofrentalrevenue(%)(Note 11)

Best Property Corporation

38,880

0.3

Pass throughmaster lease1

Best Property Corporation

47,087

0.4

Pass throughmaster lease48

1

Pacific Development &Management Co., Ltd

27,485

0.2

Pass throughmaster lease

66

63

1

Mitsui Home Estate Co., Ltd.

35,011

0.3

Pass throughmaster lease

2,152.31

96

96

1

Tokyo Gakusei-life Co., Ltd.

49,218

0.4

Pass throughmaster lease

3,029.16

2,942.22

29

28

1

Mitsui Home Estate Co., Ltd.

37,634

0.3

Pass throughmaster lease

Growth Maison Shin-Yokohama

1,858.44

1,830.44

68

67

1

Pacific Development &Management Co., Ltd

36,661

0.3

Pass throughmaster lease

A34

Belle Face Ueno-Okachimachi

1,351.11

1,308.81

64

62

1

Tokyo Gakusei-life Co., Ltd.

33,4990.3

Pass throughmaster lease

A35

Grand Rire Kameido

1,562.26

1,562.26

72

72

1

J.S.B. Co., Ltd.

26,6190.2

Guaranteed
rent

A37

Growth Maison Yoga

1,015.34

989.41

39

38

1Mitsui Home Estate Co., Ltd.

22,616

0.2

Pass throughmaster lease

A38

Route Tachikawa

1,368.57

1,368.57

24

24

1

Pacific Development &Management Co., Ltd

21,540

0.2

Pass throughmaster lease

A39

Shibuya-Honmachi Mansion

1,167.50

1,076.52

25

23

1

Pacific Development &Management Co., Ltd

19,472

0.2

Pass throughmaster lease

A40

City Heights Kinuta

1,235.93

1,235.93

19

19

1

Mitsui Home Estate Co., Ltd.

18,102

0.2

Pass throughmaster lease

A41

Acseeds Tower KawaguchiNamiki

1,210.74

1,189.12

57

56

1

Goodworks Co., Ltd.

24,754

0.2

Pass throughmaster lease

A43

College Square Machida

1,047.75

1,047.75

62

62

1

Mainichicomnet Co., Ltd.

17,484

0.2

Guaranteed
rent

A44

Belair Meguro

557.05535.51

25

24

1

Pacific Development &Management Co., Ltd

16,1430.1

Pass throughmaster lease

A45

Wacore Tsunashima I

907.46871.5650

48

1

Pacific Development &Management Co., Ltd

18,127

0.2

Pass throughmaster lease

A46

Foros Nakamurabashi

815.77775.3937

35

1

Mitsui Home Estate Co., Ltd.

18,716

0.2

Pass throughmaster lease

A47

Growth Maison Kaijin

2,040.27

1,907.41

34

32

1

Mitsui Home Estate Co., Ltd.

22,200

0.2

Pass throughmaster lease

A48

College Square Machiya

871.35871.354343

1

Mainichicomnet Co., Ltd.

14,706

0.1

Guaranteed
rent

A51

City House Tokyo Shinbashi

3,364.00

3,295.78

86

84

1

Mitsui Home Estate Co., Ltd.

92,985

0.8

Pass throughmaster lease

A52

Winbell Kagurazaka

4,032.70

3,961.22

118

116

1

Mitsui Home Estate Co., Ltd.

109,221

1.0

Pass throughmaster lease

A53

Nishiwaseda Cresent Mansion

4,310.77

4,242.90

69

68

1

Pacific Development &Management Co., Ltd

74,348

0.7

Pass throughmaster lease

A54

Lexington Square Akebonobashi

1,987.88

1,967.13

88

87

1

Mitsui Home Estate Co., Ltd.

51,097

0.5

Pass throughmaster lease

A59

Towa City Coop Shinotsuka II

1,627.13

1,563.09

58

56

1

Mitsui Home Estate Co., Ltd.

35,917

0.3

Pass throughmaster lease

A61

Bichsel Musashiseki

1,220.24

1,202.39

70

69

1

Mitsui Home Estate Co., Ltd.

24,762

0.2

Pass throughmaster lease

A63

Towa City Coop Sengencho

3,426.36

3,188.64

154

143

1

Pacific Development &Management Co., Ltd

54,977

0.5

Pass throughmaster lease

A64

Royal Park Omachi

1,929.59

1,860.47

51

49

1

Goodworks Co., Ltd.

27,001

0.2

Pass throughmaster lease

A65

Lexington Square Haginomachi

1,528.58

1,488.53

39

38

1

Goodworks Co., Ltd.

18,145

0.2

Pass throughmaster lease

A66

Visconti Kakuozan

705.75705.758

8

1

Mitsui Home Estate Co., Ltd.

11,157

0.1

Pass throughmaster lease

A71

Lexington Square Daitabashi

1,430.64

1,400.45

43

42

1

Goodworks Co., Ltd.

33,0790.3

Pass throughmaster lease

A72

Lexington Square Honjo
Azumabashi

784.74784.7433

33

1

Mitsui Home Estate Co., Ltd.

18,426

0.2

Pass throughmaster lease

A73

AMS TOWER Minami 6-Jo

4,460.56

3,697.19

120

101

1

Big Service Co., Ltd.

42,761

0.4

Pass throughmaster lease

A75

Spacia Ebisu

7,794.91

7,452.16

109

104

1

Pacific Development &Management Co., Ltd

208,597

1.9

Pass throughmaster lease

A76

Neo Prominence

3,574.70

3,513.35

52

51

1

Goodworks Co., Ltd.

67,322

0.6

Pass throughmaster lease

A77

Invoice Shin-Kobe Residence

2,773.71

2,748.92

81

80

1

Goodworks Co., Ltd.

50,828

0.5

Pass throughmaster lease

A78

Cosmo Court Motomachi

2,310.49

2,281.50

82

81

1

Goodworks Co., Ltd.

38,2680.3

Pass throughmaster lease

Leasable area2(m )(Note 1)

Leased area2(m )(Note 2)

Leasableunits(units)(Note 3)Nisshin Palacestage Daitabashi

1,771.13

1,684.22

98

93

1

A27

Nisshin Palacestage HigashiNagasaki

2,681.94

2,681.94

60

60

A28

Growth Maison Gotanda

1,051.50

1,051.50

48

A29

Growth Maison Kameido

1,367.96

1,305.52

A30

Emerald House

2,152.31

A32

Suncrest Shakujii-Koen

A33

Property
No.

Property name

A26

LeasedTotalunits
number of(units)tenants(Note 4) (Note 5)

67

Tenants (Note 6)

Type oflease(Note 8)

Property
No.

Property nameLeasable area2(m )(Note 1)

Leased area2(m )(Note 2)

Leasableunits(units)(Note 3)

LeasedTotalunits
number of(units)tenants(Note 4) (Note 5)

Tenants (Note 6)

Rental revenue(JPY thousand)(Note7)

Ratio ofrentalrevenue(%)(Note 11)

Type oflease(Note 8)

A79

Revest Honjin

1,933.80

1,812.56

80

75

1

Mininet, Inc.

31,286

0.3

Pass throughmaster lease

A80

Revest Matsubara

1,955.40

1,918.74

70

69

1

Mininet, Inc.

30,4390.3

Pass throughmaster lease

A82

Alba Noritake Shinmachi

1,731.68

1,647.21

64

61

1

Mininet, Inc.

28,107

0.3

Pass throughmaster lease

A83

Revest Meieki Minami

1,634.60

1,480.07

61

55

1

Mininet, Inc.

25,584

0.2

Pass throughmaster lease

A84

Revest Heian

1,554.03

1,504.03

40

38

1

Mininet, Inc.

23,865

0.2

Pass throughmaster lease

A85

Vendir Hamaotsu Ekimae

2,670.66

2,436.54

81

74

1

Mininet, Inc.

33,886

0.3

Pass throughmaster lease

A86

Salvo Sala

1,428.12

1,321.78

54

50

1

Goodworks Co., Ltd.

25,210

0.2

Pass throughmaster lease

A87

Excellente Kagurazaka

701.92660.7733

31

1

Goodworks Co., Ltd.

19,9690.2

Pass throughmaster lease

A88

Luna Court Edobori

1,185.50

1,138.36

50

48

1

Goodworks Co., Ltd.

21,320

0.2

Pass throughmaster lease

A89

Winntage Kobe Motomachi

1,433.35

1,409.18

57

56

1

Goodworks Co., Ltd.

22,7780.2

Pass throughmaster lease

A90

Queen's Court Fukuzumi

765.18765.1825

25

1

Goodworks Co., Ltd.

18,525

0.2

Pass throughmaster lease

A91

Corp Higashinotoin

1,029.05

1,029.05

42

42

1

Goodworks Co., Ltd.

19,154

0.2

Pass throughmaster lease

A92

Belair Oimachi

530.60530.6026

25

1Goodworks Co., Ltd.

15,490

0.1

Pass throughmaster lease

A93

Siete Minami-Tsukaguchi

1,020.86

1,020.86

40

40

1

Goodworks Co., Ltd.

17,437

0.2

Pass throughmaster lease

A94

Prime Life Sannomiya Isogami
Koen

789.12789.12

32

32

1

Goodworks Co., Ltd.

15,4880.1

Pass throughmaster lease

A95

HERMITAGE NANBA WEST

992.76992.7621

21

1

Goodworks Co., Ltd.

16,0830.1

Pass throughmaster lease

A96

Century Park Shinkawa
1-bankan

1,477.62

1,309.27

44

39

1

Goodworks Co., Ltd.

20,955

0.2

Pass throughmaster lease

A97

West Avenue

794.80774.9440

39

1

Goodworks Co., Ltd.

12,185

0.1

Pass throughmaster lease

A98

Little River Honmachibashi

974.81974.8131

31

1Goodworks Co., Ltd.

14,005

0.1

Pass throughmaster lease

A99

Prime Life Mikage

761.18761.1828

28

1

Goodworks Co., Ltd.

12,672

0.1

Pass throughmaster lease

A100

City Court Kitaichijo

5,230.18

5,148.41

127

125

1

Big Service Co., Ltd.

66,770

0.6

Pass throughmaster lease

A101

Lieto Court Mukojima

2,940.20

2,911.94

82

81

1

Mitsui Home Estate Co., Ltd.

55,654

0.5

Pass throughmaster lease

A102

Lieto Court Nishi-Ojima

2,048.28

2,027.36

91

90

1

Mitsui Home Estate Co., Ltd.

48,968

0.4

Pass throughmaster lease

A103

Royal Parks Momozaka

8,776.26

7,900.49

147

130

4

Goodworks Co., Ltd.

155,151

1.4

A104

Royal Parks Shinden

15,797.29

15,797.29

248

248

4

Goodworks Co., Ltd.

217,076

A105

Royal Parks Tower MinamiSenju

39,113.46

36,405.23

557

516

1

Goodworks Co., Ltd.

763,803

A106

Royal Parks Seasir MinamiSenju

6,496.86

6,294.27

113

110

1

Goodworks Co., Ltd.

113,119

1.0

Pass throughmaster lease

B17

Lexington Plaza Hachiman

8,419.15

8,419.15

18

18

1

Tokyo Biso Kogyo
Corporation

164,195

1.5

Pass throughmaster lease

B18

AEON TOWN Sukagawa

18,440.58

18,440.58

1

1

1

AEONTOWN Co., Ltd.

141,593

1.3

D01

Hotel MyStays Kanda

2,585.72

2,585.72

126

126

1

MyStays Hotel Management
Co., Ltd.

111,338

1.0

D02

Hotel MyStays Asakusa

3,327.38

3,327.38

161

161

1

MyStays Hotel Management
Co., Ltd.

106,530

1.0

D03

Hotel MyStays Kyoto-Shijo

7,241.51

7,241.51

225

225

1

MyStays Hotel Management
Co., Ltd.

190,995

1.7

D04

MyStays Shin-Urayasu
Conference Center

6,232.30

6,232.30

175

175

1

MyStays Hotel Management
Co., Ltd.

170,174

1.5

D05

Hotel MyStays Maihama

2,456.36

2,456.36

90

90

1

MyStays Hotel Management
Co., Ltd.

110,898

1.0

D06

Hotel MyStays Premier Dojima

9,445.32

9,445.32

153

153

1

MGH Master Lease Co., Ltd.

180,563

68

Pass throughmaster lease
Guaranteed
rent and pass
2.0
throughmaster lease
Pass through6.9
master lease

Guaranteed
rent
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation

Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
1.6
rent type
operation

Property
No.

Property nameLeasable area2(m )(Note 1)

Leased area2(m )(Note 2)

Leasableunits(units)(Note 3)

LeasedTotalunits
number of(units)tenants(Note 4) (Note 5)

Tenants (Note 6)

Rental revenue(JPY thousand)(Note7)

Ratio ofrentalrevenue(%)(Note 11)

Type oflease(Note 8)Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation

D07

Hotel MyStays Nagoya-Sakae

9,064.71

9,064.71

279

279

1

Yugen Kaisha Nagoya HotelManagement

189,920

1.7

D08

Hotel MyStays
Sakaisuji-Honmachi

4,188.83

4,188.83

191

191

1

MyStays Hotel Management
Co., Ltd.

134,391

1.2

D09

Hotel MyStays Yokohama

7,379.43

7,379.43

190

190

1

MyStays Hotel Management
Co., Ltd.

118,488

1.1

D10

Hotel MyStays Nippori

1,719.29

1,719.29

93

93

1

MyStays Hotel Management
Co., Ltd.

61,9620.6

D11

Hotel MyStays
Fukuoka-Tenjin-Minami

3,412.71

3,412.71

178

178

1

MyStays Hotel Management
Co., Ltd.

145,371

1.3

D12

Flexstay Inn Iidabashi

2,953.38

2,953.38

62

62

1

MyStays Hotel Management
Co., Ltd.

53,4160.5

D13Hotel MyStays Ueno Inaricho

1,150.76

1,150.76

72

72

1

MyStays Hotel Management
Co., Ltd.

49,251

0.4

D14

Flexstay Inn Shinagawa

1,134.52

1,134.52

55

55

1

MyStays Hotel Management
Co., Ltd.

43,7700.4

D15

Flexstay Inn Tokiwadai

2,539.75

2,539.75

130

130

1

MyStays Hotel Management
Co., Ltd.

55,2150.5

D16

Flexstay Inn Sugamo

2,089.86

2,089.86

105

105

1

MyStays Hotel Management
Co., Ltd.

55,2320.5

D17Hotel MyStays Otemae

4,956.66

4,956.66

111

111

1

MyStays Hotel Management
Co., Ltd.

94,1220.8

D18

Flexstay Inn Kiyosumi
Shirakawa

2,673.64

2,673.64

56

56

1

MyStays Hotel Management
Co., Ltd.

36,7920.3

D19

Flexstay Inn Nakanobu P1

770.56770.5639

39

1

MyStays Hotel Management
Co., Ltd.

22,9840.2

D20

Flexstay Inn Nakanobu P2

391.49391.4922

22

1

MyStays Hotel Management
Co., Ltd.

11,8730.1

D21

APA Hotel Yokohama Kannai

6,568.51

6,568.51

452

452

1

APA Hotel Kabushiki Kaisha

229,000

2.1

D22

Hotel MyStays HakodateGoryokaku

7,961.26

7,961.26

211

211

1

Hakodate Hospitality Godo
Kaisha (Note 9)76,8500.7

D23

Flexstay Inn Shirogane

1,754.06

1,754.06

84

84

1

MyStays Hotel Management
Co., Ltd.

55,1630.5

D24

Hotel MyStays Haneda

5,400.16

5,400.16

174

174

1

MyStays Hotel Management
Co., Ltd.

183,749

1.7

D25

Hotel MyStays Kameido P1

4,349.67

4,349.67

266

266

1

MyStays Hotel Management
Co., Ltd.

183,133

1.6

D26

Hotel MyStays Ueno Iriyaguchi

2,247.92

2,247.92

97

97

1

MyStays Hotel Management
Co., Ltd.

95,0110.9

D27

Hotel MyStays Kameido P2

2,793.99

2,793.99

177

177

1

MyStays Hotel Management
Co., Ltd.

120,229

1.1

D28

Hotel Vista Shimizu

3,559.81

3,559.81

152

152

1

Vista Hotel Management Co.,Ltd.

61,6520.6

D29Super Hotel
Shinbashi/ Karasumoriguchi

1,403.89

1,403.89

74

74

1

Super Hotel Co., Ltd.

39,426

0.4

Fixed rent

D30

Flexstay Inn Higashi-Jujo

1,714.53

1,714.53

89

89

1

MyStays Hotel Management
Co., Ltd.

38,3490.3

Fixed rent
plus variable
rent type
operation

69

Property
No.

Property nameLeasable area2(m )(Note 1)

Leased area2(m )(Note 2)

Leasableunits(units)(Note 3)

LeasedTotalunits
number of(units)tenants(Note 4) (Note 5)

Tenants (Note 6)

Rental revenue(JPY thousand)(Note7)

Ratio ofrentalrevenue(%)(Note 11)0.9Type oflease(Note 8)Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
0.3
rent type
operation

D31

Hotel MyStays Utsunomiya

11,733.23

11,733.23

126

126

1

MyStays Hotel Management
Co., Ltd.

99,599D32

Flexstay Inn Kawasaki-Kaizuka

1,190.57

1,190.57

64

64

1

MyStays Hotel Management
Co., Ltd.

32,101

D33

Comfort Hotel Toyama

3,305.64

3,305.64

150

150

1

Greens Co., Ltd.

35,9280.3

D34

Flexstay Inn KawasakiOgawacho

725.60725.606262

1MyStays Hotel Management
Co., Ltd.

25,4630.2

D35

Flexstay Inn Ekoda

3,932.93

3,932.93

210

210

1

MyStays Hotel Management
Co., Ltd.

115,864

D36

Super Hotel Tokyo-JR Tachikawa
Kitaguchi

1,832.97

1,832.97

96

96

1

Super Hotel Co., Ltd.

31,787

0.3

Fixed rent

D37Super Hotel JR Ueno-iriyaguchi

1,279.16

1,279.16

69

69

1

Super Hotel Co., Ltd.

27,275

0.2

Fixed rent

D38

Hotel MyStays Shinsaibashi

1,942.01

1,942.01

57

57

1

MyStaysCo., Ltd.

67,682

0.6

Fixed rent
plus variable
rent type
operation

D39

Comfort Hotel Kurosaki

3,207.60

3,207.60

151

151

1

Greens Co., Ltd.

37,894

0.3

Fixed rent

D40

Comfort Hotel Maebashi

3,660.96

3,660.96

154

154

2

Greens Co., Ltd.

43,811

0.4

Fixed rent

D41

Comfort Hotel Tsubame-Sanjo

3,099.90

3,099.90

133

133

2

Greens Co., Ltd.

34,9490.3

Fixed rent

D42

Comfort Hotel Kitami

3,009.50

3,009.50

127

127

1

Greens Co., Ltd.

30,300

0.3

Fixed rent

D43

Hotel MyStays Gotanda Station

10,137.88

10,137.88

385

385

1

MyStays Hotel Management
Co., Ltd.

482,750

4.3

D44

Hotel Epinard Nasu

37,702.33

37,702.33

310

310

1

Naqua Hotels and Resorts
Management Co., Ltd.

576,941

5.2

D45

Hotel MyStays Fukuoka Tenjin

5,083.06

5,083.06

217

217

1

MyStays Hotel Management
Co., Ltd.

218,700

2.0

D46

Hotel MyStays Hamamatsucho

1,951.90

1,951.90

105

105

1

MyStays Hotel Management
Co., Ltd.

112,104

1.0

D47

Hotel MyStays Premier Kanazawa

13,250.03

13,250.03

261

261

1

MyStays Hotel Management
Co., Ltd.

306,064

2.8

D48

Takamatsu Tokyu REI Hotel

7,148.17

7,148.17

193

193

3

Tokyu Hotels Co., Ltd.

105,549

0.9

D49

Hotel MyStays Premier
Hamamatsucho

6,151.93

6,151.93

134

134

1

MyStays Hotel Management
Co., Ltd.

223,983

2.0

D50

Hotel MyStays Shin Osaka
Conference Center

13,026.99

13,026.99

397

397

1

MyStays Hotel Management
Co., Ltd.

393,186

3.5

D51

Hotel MyStays Premier Omori

11,849.61

11,849.61

256

256

1

MyStays Hotel Management
Co., Ltd.

273,325

2.5

D52

Beppu Kamenoi Hotel

19,422.08

19,422.08

323

323

1

MyStays Hotel Management
Co., Ltd. (Note 10)347,901

3.1

D53

Hotel MyStays Sapporo Station

7,267.88

7,267.88

243

243

1

MyStays Hotel Management
Co., Ltd.

221,703

2.0

D54

Hotel MyStays Yokohama Kannai

4,501.18

4,501.18

166

166

1

MyStays Hotel Management
Co., Ltd.

133,413

1.2

D55

Art Hotel Joetsu

7,563.60

7,563.60

198

198

1

HL Investments Co., Ltd.

145,193

1.3

D56

Art Hotel Hirosaki City

14,826.30

14,826.30

158

158

1

Hirosaki Hotel Management
Godo Kaisha

152,005

1.4

D57

Hotel MyStays Oita

3,254.69

3,254.69

145

145

1

MyStays Hotel Management
Co., Ltd.

69,444

0.6

70

Hotel

Management

Fixed rent

Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
1.0
rent type
operation

Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
rent type
operation

Rental revenue(JPY thousand)(Note7)

Ratio ofrentalrevenue(%)(Note 11)

MyStays Hotel Management
Co., Ltd.

3,843

0.0

1

MyStays Hotel Management
Co., Ltd.

3,472

135

－

Property nameLeasable area2(m )(Note 1)

Leased area2(m )(Note 2)

Leasableunits(units)(Note 3)

D58

Hotel MyStays Gotanda

1,839.77

1,839.77

110

110

1

D59

Hotel MyStays Tachikawa

3,844.64

3,844.64

122

122

530,163.68

522,573.77

13,991

13,812

Property
No.

Total

LeasedTotalunits
number of(units)tenants(Note 4) (Note 5)

Tenants (Note 6)

Type oflease(Note 8)Fixed rent
plus variable
rent type
operation
Fixed rent
plus variable
0.0
rent type
operation

11,033,744

99.2(Note 1)

“Leasable Area” is the total leasable floor area for guest room, residential, office, retail and others, for each real estate or real estate intrust.

(Note 2)

“Leased Area” is the total sum of the leased area with respect to which a lease agreement with an end-tenant has actually been enteredinto and which are leased to the end-tenant (the area specified in the lease agreement). With respect to the rent-guarantee type master
lease agreement, the area leased to master lessee is listed.

(Note 3)

“Leasable Units” with respect to hotel properties means the total number of guest rooms and rentable retail units, etc. for each realestate or real estate in trust, and with respect to properties other than hotel properties, means the total number of rentable units andretail units, etc. in each real estate or real estate in trust.

(Note 4)

“Leased Units” with respect to hotel properties means the total number of guest rooms, retail spaces, etc. actually leased to tenants or
end-tenants based on lease agreements, and with respect to properties other than hotel properties, means the total number of units,
retail units, etc. actually leased to tenants or end-tenants based on lease agreements.

(Note 5)

“Total Number of Tenants” is calculated by counting a lessee who has directly concluded a lease agreement for each property as one
tenant, and a tenant who has rented two or more rooms in a single property is calculated as one tenant.

(Note 6)

“Tenant” is the master lessee where there is a master lease agreement between INV or the trustee and a master lease company, and theprincipal lessee where there are direct lease agreements with end-tenants.

(Note 7)

“Rental Revenue” is the aggregate rent revenue for each property for the Reporting Period, rounded down to the nearest thousand yen.

(Note 8)With respect to the properties for which a master lease agreement has been entered into, the type of lease (either a pass-through master
lease or a fixed rent) is indicated. “Pass-through master lease” is defined as a lease under which, pursuant to the pass-through master
lease agreement entered into between the master lease company and INV or the trustee, the amount equal to the rent under the subleaseagreement between the master lease company and the end tenant shall be paid to INV or the trustee.
“Guaranteed rent” is defined as a lease under which a specified rent shall be paid to INV or the trustee, regardless of the rent under thesublease agreement between the master lease company and the end tenant. Moreover, with respect to hotel properties, the type ofrent received from the relevant operator (either a fixed-rent or a fixed rent plus variable rent type operation) is indicated. “Fixed rent”
is defined as an agreement under which INV or the trustee shall receive a specified rent, regardless of the operational results of therelevant hotel. “Fixed rent plus variable rent type operation” is defined as an agreement under which INV or the trustee shall receive
rent that varies based on the GOP (Gross Operating Profit), in addition to a fixed rent.

(Note 9)The operator to which the tenant entrusts management of hotel operations was changed from Nets Management Co., Ltd. on May 1,
2018.

(Note 10) The master lessee and property manager was changed from Beppu Hotel Management Godo Kaisha on February 1, 2018.
(Note 11) “Ratio of rental revenue (%)” is calculated excluding rental revenue of properties sold during the period (Harmonie Ochanomizu,
Growth Maison Ikebukuro, Capital Heights Kagurazaka, Lexington Plaza Nishi‐Gotanda, Cross Square NAKANO and Ohki Aoba
Building) and thus the total does not add up to 100%. Rental revenue and ratio of rental revenue for these properties during theReporting Period are as follows.

Property
Number

Property nameRental revenue(JPY thousand)Ratio of rental revenue (%)

A31

Harmonie Ochanomizu

6,624

0.1

A36

Growth Maison Ikebukuro

4,168

0.0

A42

Capital Heights Kagurazaka

3,226

0.0

B14

Lexington Plaza Nishi-Gotanda

59,8930.5

B15

Cross Square NAKANO

7,963

0.1

B16

Ohki Aoba Building

6,862

0.1

71

－

b

Occupancy trend(Unit: %)Property
No.

A26
A27

Property nameNisshin Palacestage
Daitabashi
Nisshin Palacestage
Higashi-Nagasaki

25th
26th
27th
28th
29th
fiscal period fiscal period fiscal period fiscal period fiscal period
As of
As of
As of
As of
As of
the end of
the end of
the end of
the end of
the end of
Dec. 2015
June 2016
Dec. 2016
June 2016
Dec. 2017

As of
the end of
Jan. 2018

As ofthe end of
Feb. 201830th
fiscal period
As of
As of
the end of
the end of
Mar. 2018
Apr. 2018

As ofthe end of
May 2018

As ofthe end ofJune 2018

96.1

97.0

98.0

89.8

92.9

89.9

93.0

95.8

96.9

96.0

95.1

96.8

93.2

96.5

93.6

97.2

95.1

95.3

98.8

99.1

97.2

100.0

A28

Growth Maison Gotanda

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

A29

Growth Maison
Kameido

97.0

95.5

92.4

92.4

94.0

94.0

97.0

97.0

98.5

96.9

95.4

A30

Emerald House

97.9

100.0

96.9

98.9

96.8

94.8

93.8

100.0

100.0

100.0

100.0

A31

Harmonie Ochanomizu

90.8

100.0

100.0

97.5

97.4

―

―

―

―

―

―

A32

Suncrest Shakujii-Koen

97.0

84.3

94.0

94.7

100.0

97.0

100.0

100.0

95.3

95.3

97.1

97.2

89.7

94.2

97.1

95.5

92.6

95.4

97.0

95.5

98.5

98.5

100.0

98.3

95.2

90.6

87.5

87.5

89.3

90.4

96.9

96.9

96.9

A33
A34

Growth Maison ShinYokohama
Belle Face UenoOkachimachi

A35

Grand Rire Kameido

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

A36

Growth Maison
Ikebukuro

97.6

97.6

100.0

95.2

97.6

―

―

―

―

―

―

A37

Growth Maison Yoga

94.8

97.5

94.8

92.4

97.4

94.9

94.9

94.9

94.9

100.0

97.4

A38

Route Tachikawa

96.6

93.2

100.0

89.8

100.0

100.0

100.0

100.0

100.0

100.0

100.0

A39

Shibuya-Honmachi
Mansion

96.4

95.9

91.9

100.0

91.3

91.3

91.3

95.5

91.9

96.4

92.2

A40

City Heights Kinuta

89.2

100.0

94.6

89.2

94.6

100.0

100.0

100.0

100.0

100.0

100.0

86.0

94.8

89.4

98.3

96.5

96.5

93.0

92.9

91.2

92.9

98.2

97.2

97.2

97.2

83.4

97.2

―

―

―

―

―

―

A41
A42

Acseeds Tower
Kawaguchi-Namiki
Capital Heights
Kagurazaka

A43

College Square Machida

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

A44

Belair Meguro

96.0

96.1

92.1

92.0

92.1

92.1

88.1

96.0

96.0

96.0

96.1

A45

Wacore Tsunashima I

91.9

98.0

89.9

92.1

94.1

86.2

86.0

98.0

94.0

96.0

96.0

A46

Foros Nakamurabashi

100.0

96.2

91.2

97.5

97.5

97.5

97.5

95.1

92.6

92.6

95.1

A47

Growth Maison Kaijin

96.7

97.7

97.4

100.0

96.7

93.5

96.7

96.7

93.5

93.5

93.5

A48

College Square Machiya

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

A51

City House Tokyo
Shinbashi

98.6

96.1

93.3

92.8

96.5

96.5

98.7

100.0

95.1

95.6

98.0

A52

Winbell Kagurazaka

98.3

98.6

95.5

98.4

97.9

95.9

95.8

100.0

98.3

98.2

98.2

97.5

100.0

95.8

100.0

98.8

98.8

100.0

98.9

100.0

100.0

98.4

98.8

95.4

96.7

96.6

96.5

95.4

94.2

96.6

94.5

94.5

99.0

A53
A54

Nishiwaseda Cresent
MansionLexington Square
Akebonobashi

A56

Casa Eremitaggio

100.0

100.0

96.7

94.0

―

―

―

―

―

―

―

A59

Towa City Coop
Shinotsuka II

96.4

97.6

96.3

91.4

98.8

98.8

100.0

93.5

98.8

95.0

96.1

A61

Bichsel Musashiseki

97.1

95.7

91.5

95.7

94.4

94.4

92.9

94.3

98.5

97.1

98.5

100.0

100.0

96.4

92.7

―

―

―

―

―

―

―

93.1

91.1

89.7

83.8

84.2

83.5

84.8

89.3

89.9

92.4

93.1

98.3

98.1

96.4

A62
A63

Lexel Mansion Ueno
Matsugaya
Towa City Coop
Sengencho

A64

Royal Park Omachi

98.3

96.7

92.8

98.3

94.5

91.2

100.0

100.0

A65

Lexington Square
Haginomachi

92.6

100.0

92.1

89.5

94.8

97.4

97.4

97.4

94.8

94.8

97.4

A66

Visconti Kakuozan

86.3

100.0

83.8

88.6

83.8

83.8

83.8

83.8

100.0

100.0

100.0

90.1

97.2

92.9

92.2

100.0

97.9

95.1

97.2

95.8

91.5

97.9

97.0

94.1

96.9

94.0

97.0

97.0

97.0

97.0

96.9

100.0

100.0

94.3

87.6

86.1

79.7

81.2

79.0

82.6

80.0

81.8

82.2

82.9

A71
A72
A73

Lexington Square
Daitabashi
Lexington Square Honjo
Azumabashi
AMS TOWER Minami
6-Jo

A75

Spacia Ebisu

95.6

91.7

94.0

95.2

91.2

90.6

93.0

92.7

95.7

94.9

95.6

A76

Neo Prominence

96.6

96.2

95.0

91.2

100.0

98.3

96.5

93.9

97.4

95.7

98.3

94.9

98.2

81.5

91.7

100.0

98.6

97.7

100.0

94.4

94.4

99.1

96.2

96.3

86.5

95.3

98.7

96.4

97.5

100.0

98.8

98.7

98.7

A77
A78

Invoice Shin-Kobe
Residence
Cosmo Court
Motomachi

72

Property
No.

Property name

25th
26th
27th
28th
29th
fiscal period fiscal period fiscal period fiscal period fiscal period
As of
As of
As of
As of
As of
the end of
the end of
the end of
the end of
the end of
Dec. 2015
June 2016
Dec. 2016
June 2016
Dec. 2017

As of
the end of
Jan. 2018

As ofthe end of
Feb. 201830th
fiscal period
As of
As of
the end of
the end of
Mar. 2018
Apr. 2018

As ofthe end of
May 2018

As ofthe end ofJune 2018

A79

Revest Honjin

98.8

97.5

95.0

92.5

91.2

90.0

91.2

91.2

93.7

95.0

93.7

A80

Revest Matsubara

93.1

88.7

91.8

93.1

94.4

96.9

93.7

97.5

98.7

98.7

98.1

97.4

100.0

97.4

86.8

―

―

―

―

―

―

―

91.0

97.2

91.0

87.5

93.7

87.5

92.4

98.6

95.8

97.2

95.1

A81
A82

Sun Terrace Minami
IkebukuroAlba Noritake
Shinmachi

A83

Revest Meieki Minami

100.0

96.6

93.6

95.4

90.9

90.9

89.0

89.4

90.5

90.5

90.5

A84

Revest Heian

100.0

100.0

88.7

100.0

95.2

93.6

92.0

100.0

100.0

98.4

96.8

A85

Vendir Hamaotsu
Ekimae

88.4

95.3

93.4

98.5

97.7

97.7

98.5

96.6

92.1

90.9

91.2

A86

Salvo Sala

98.0

100.0

96.7

95.9

100.0

96.3

97.8

96.9

98.3

96.2

92.6

A87

Excellente Kagurazaka

91.2

97.1

88.3

94.1

94.1

100.0

100.0

97.1

97.1

100.0

94.1

A88

Luna Court Edobori

96.0

96.0

98.0

94.0

94.0

94.0

92.0

96.0

98.0

100.0

96.0

85.9

86.0

80.7

85.9

94.8

94.8

94.8

98.3

98.3

98.3

98.3

95.9

93.1

96.6

95.9

89.7

93.1

100.0

100.0

100.0

92.5

100.0

A89
A90

Winntage Kobe
Motomachi
Queen's Court
Fukuzumi

A91

Corp Higashinotoin

97.9

90.8

95.2

97.6

97.7

95.3

97.6

100.0

97.6

100.0

100.0

A92

Belair Oimachi

96.4

100.0

92.9

96.1

92.9

92.9

92.9

92.6

100.0

100.0

100.0

95.0

97.5

97.5

95.0

90.1

90.1

90.1

100.0

97.5

97.5

100.0

100.0

93.8

87.5

96.9

100.0

96.9

100.0

100.0

100.0

96.9

100.0

91.2

100.0

88.0

100.0

100.0

100.0

96.0

100.0

100.0

100.0

100.0

91.0

95.4

90.9

88.7

95.4

93.2

93.2

95.4

93.2

88.6

88.6

A93
A94
A95
A96

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

A97

West Avenue

80.0

85.0

87.5

85.0

87.5

90.0

87.5

97.5

97.5

97.5

97.5

A98

Little River
Honmachibashi

100.0

100.0

96.9

87.7

90.7

93.8

100.0

96.9

100.0

100.0

100.0

A99

Prime Life Mikage

100.0

96.7

86.8

96.6

96.7

93.4

92.1

100.0

100.0

96.6

100.0

A100

City Court Kitaichijo

96.6

95.7

94.8

93.8

96.1

96.6

96.4

97.3

97.4

97.2

98.4

A101

Lieto Court Mukojima

97.6

96.8

95.3

97.0

99.0

100.0

99.0

97.6

98.1

97.2

99.0

A102

Lieto Court Nishi-Ojima

100.0

98.0

96.8

99.0

99.0

99.0

97.8

100.0

100.0

99.0

99.0

－

100.0

100.0

100.0

93.6

92.7

93.9

93.2

92.5

91.4

90.0

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

－

－

92.7

94.1

94.1

95.0

94.9

93.2

93.1

93.1

－

－

－

100.0

95.7

96.7

98.1

95.9

97.8

97.9

96.9

90.6

90.6

90.6

100.0

－

－

－

－

－

－

－

A103
A104
A105
A106
B08

Royal Parks
Momozaka
Royal Parks
ShindenRoyal Parks
Tower Minami-Senju
Royal Parks
Seasir Minami-Senju
Kindai Kagakusha
Building

B09

Shinjuku Island

100.0

100.0

100.0

100.0

－

－

－

－

－

－

－

B14

Lexington Plaza
Nishigotanda

100.0

100.0

91.8

100.0

100.0

100.0

100.0

－

－

－

－

B15

Cross Square NAKANO

79.1

84.1

89.1

87.3

95.2

－

－

－

－

－

－

B16

Ohki Aoba Building

100.0

83.6

83.6

88.7

88.7

－

－

－

－

－

－

100.0

98.8

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

－

－

－

－

－

－

B17
B18
C01

Lexington Plaza
Hachiman
AEON TOWN
Sukagawa
Times Kanda-Sudacho
4th

D01

Hotel MyStays Kanda

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D02

Hotel MyStays Asakusa

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D03
D04
D05
D06
D07
D08

Hotel MyStays KyotoShijo
MyStays Shin-Urayasu
Conference Center
Hotel MyStays Maihama
Hotel MyStays Premier
DojimaHotel MyStays NagoyaSakae
Hotel MyStays
Sakaisuji-Honmachi

73Property
No.

Property name

25th
26th
27th
28th
29th
fiscal period fiscal period fiscal period fiscal period fiscal period
As of
As of
As of
As of
As of
the end of
the end of
the end of
the end of
the end of
Dec. 2015
June 2016
Dec. 2016
June 2016
Dec. 2017

As of
the end of
Jan. 2018

As ofthe end of
Feb. 201830th
fiscal period
As of
As of
the end of
the end of
Mar. 2018
Apr. 2018

As ofthe end of
May 2018

As ofthe end ofJune 2018

D09

Hotel MyStays
Yokohama

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D10

Hotel MyStays Nippori

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D11

Hotel MyStays FukuokaTenjin-Minami

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D12

Flexstay Inn Iidabashi

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D13

Hotel MyStays Ueno
Inaricho

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D14

Flexstay Inn Shinagawa

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D15

Flexstay Inn Tokiwadai

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D16

Flexstay Inn Sugamo

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D17

Hotel MyStays Otemae

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D18
D19
D20
D21
D22

Flexstay Inn Kiyosumi
ShirakawaFlexstay Inn Nakanobu
P1
Flexstay Inn Nakanobu
P2
APA Hotel YokohamaKannai
Hotel MyStays
Hakodate-Goryokaku

D23

Flexstay Inn Shirogane

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D24

Hotel MyStays Haneda

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D25
D26
D27
D28
D29
D30
D31
D32

Hotel MyStays Kameido
P1
Hotel MyStays Ueno
Iriyaguchi
Hotel MyStays Kameido
P2
Hotel Vista Shimizu
Super Hotel Shinbashi/
Karasumoriguchi
Flexstay Inn HigashiJujo
Hotel MyStays
Utsunomiya
Flexstay Inn KawasakiKaizuka

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D33

Comfort Hotel Toyama

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D34

Flexstay Inn KawasakiOgawacho

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D35

Flexstay Inn Ekoda

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D36
D37
D38

Super Hotel Tokyo-JR
Tachikawa Kitaguchi
Super Hotel JR Uenoiriyaguchi
Hotel MyStays
Shinsaibashi

D39

Comfort Hotel Kurosaki

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D40

Comfort Hotel Maebashi

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D41

Comfort Hotel
Tsubame-Sanjo

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D42

Comfort Hotel Kitami

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D43

Hotel MyStays
Gotanda Station

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D44

Hotel Epinard Nasu

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

－

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

－

－

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

－

－

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

D45
D46
D47
D48
D49
D50
D51

Hotel MyStays
Fukuoka Tenjin
Hotel MyStays
Hamamatsucho
Hotel MyStays PremierKanazawa
Takamatsu Tokyu REI
Hotel
Hotel MyStays Premier
Hamamatsucho
Hotel MyStays Shin
Osaka ConferenceCenterHotel MyStays Premier
Omori

74

Property
No.

Property name

D52

Beppu Kamenoi Hotel

D53
D54

Hotel MyStays Sapporo
StationHotel MyStays
Yokohama Kannai

25th
26th
27th
28th
29th
fiscal period fiscal period fiscal period fiscal period fiscal period
As of
As of
As of
As of
As of
the end of
the end of
the end of
the end of
the end of
Dec. 2015
June 2016
Dec. 2016
June 2016
Dec. 2017

As of
the end of
Jan. 2018

As ofthe end of
Feb. 201830th
fiscal period
As of
As of
the end of
the end of
Mar. 2018
Apr. 2018

As ofthe end of
May 2018

As ofthe end ofJune 2018

－

－

－

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

－

－

－

100.0

100.0

100.0

100.0

100.0

100.0

100.0

－

－

－

－

－

－

100.0

100.0

100.0

100.0

100.0

D55

Art Hotel Joetsu

－

－

－

－

－

－

100.0

100.0

100.0

100.0

100.0

D56

Art Hotel Hirosaki City

－

－

－

－

－

－

100.0

100.0

100.0

100.0

100.0

D57

Hotel MyStays Oita

－

－

－

－

－

－

100.0

100.0

100.0

100.0

100.0

D58

Hotel MyStays Gotanda

－

－

－

－

－

－

－

－

－

－

100.0

D59

Hotel MyStays
Tachikawa

－

－

－

－

－

－

－

－

－

－

100.0

Total

98.2

98.5

97.9

97.7

98.2

98.1

98.4

98.6

98.5

98.5

98.6

(Note) “Occupancy Rate” is calculated by dividing the leased area by the leasable area, and rounded to the first decimal place.

75