This is an English language summary of the original Japanese Asset Management Report available on our
Website. However, no assurance or warranties are given with respect to the accuracy or completeness of
this English language summary. The Japanese original shall prevail in the case of any discrepancies
between this summary and the Japanese original.

Invincible Investment Corporation
Asset Management Report
Fiscal Period ended December 31, 2017 (July 1, 2017 to December 31, 2017)
Contents
Greetings from Naoki Fukuda, Executive Director of Invincible Investment Corporation
and President & CEO of Consonant Investment Management Co., Ltd.
Summary of Financial Results
Sheraton Grande Tokyo Bay Hotel (preferred equity interest)
Properties Newly Acquired in October 2017
Properties Newly Acquired in February 2018
Portfolio Rebalance (Property Disposition)
Sponsor Pipeline
Unitholder Benefit Program

I.
II.
III.
IV.
V.
VI.
VII.
VIII.

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

Portfolio Map
Portfolio Overview
Financial Conditions

Overview of Unitholders/Investment Units
Information for Unitholders

Greetings from Naoki Fukuda, Executive Director of Invincible Investment Corporation andPresident & CEO of Consonant Investment Management Co., Ltd.
I would like to take this opportunity to express my sincere gratitude to all unitholders of Invincible
Investment Corporation (“INV”) for your continued support.
We hereby provide you with a report on INV’s asset management and financial results for the 29th fiscal
period (covering the period from July 1, 2017 to December 31, 2017; the “Reporting Period”).
INV positions hotels and residential properties as its core assets and conducts management activities tomaximize growth potential and stability of the portfolio.
During the Reporting Period, INV conducted a global public offering of new investment units to acquire
four hotels located in Tokyo, Osaka, Sapporo and Oita and the additional floors of an existing hotel, alongwith a preferred equity interest in a special purpose company (the “TMK”) in October 2017 with funds
raised in the global offering. The TMK holds Sheraton Grande Tokyo Bay Hotel (the “Sheraton”), a fullservice and Tokyo Disney Resort official hotel with 1,016 rooms. The Sheraton was acquired through a
joint venture investment with an affiliate of Government of Singapore Investment Corporation (“GIC”).
The acquisition of a flagship hotel such as the Sheraton as well as hotels that are well situated to capture an
increase in demand from foreign visitors is expected to contribute to the growth, improvement in stabilityof income, and overall quality of the portfolio.
INV commenced an Asset Recycling Program in July 2017 to sell assets that INV believes generate low
yield, using those proceeds in an accretive manner to acquire assets that INV believes generate higher yield,
aiming to improve the overall NOI yield of the portfolio. INV disposed six residential properties, five officebuildings and one parking lot between July 2017 and March 2018, and used the proceeds to acquire four
hotels in February 2018. The four newly acquired hotels are highly competitive in terms of location andspecifications and are expected to deliver higher yields than the disposed assets. Through these measures,
INV intends to further strengthen the portfolio, while providing an increase in property operating revenues
and distribution per unit.
INV has signed a Memorandum of Understanding (the “MOU”) with affiliates of Fortress Group withrespect 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 March 9,
2018, there are 17 hotels with 3,995 rooms and nine residential properties with 743 units that are coveredby the MOU. Going forward, INV aims to improve revenue and distribution per unit through further
property acquisitions utilizing the remaining proceeds from past property dispositions as well as proceedsfrom property dispositions currently under consideration.
As a continued focus on proactive asset management, INV changed the master lessee and property manager
for four residential properties to reduce property management fees, and improved the economics of two
properties by changing the lease agreement structure. In addition, INV changed the operator of one hotel to
MyStays Hotel Management Co., Ltd. with the goal of improving hotel revenue through enhanced web
marketing and sales to inbound tourists.
As a result of the operations mentioned above, operating revenues reached JPY12,647 million, operating
income of JPY 8,223 million and net income of JPY 7,303 million, with a distribution per unit of JPY 1,564,
an increase of 5.9% year-on-year(1). Annual distribution per unit for 2017, which combines distributions
for the 28th and 29th fiscal periods, came to JPY 2,828, an increase of 6.2% over the previous year.
INV will continue to implement its basic policy to “increase distribution per unit,” and will ensure theimplementation of measures to maximize unitholder value.

Your continued support is highly appreciated.
Naoki Fukuda
Executive Director, Invincible Investment Corporation
President & CEO, Consonant Investment Management Co., Ltd.

(1) Comparison with the fiscal period ended December 2016. In order to eliminate seasonal factors of
hotel variable rents, which is one of the major revenues of INV, in the comparison, the comparison ismade with the same period in the previous year and not with the previous fiscal period (ended June2017).
Distribution per unit for the 29th fiscal period(the fiscal period ended December 2017)(Note)

JPY 1,564

The forward-looking statements, forecasts and goals described in this report are based on available information,
assumptions and estimates as of December 31, 2017. These assumptions and estimates are unavoidably uncertain, andcould be affected by various risks and factors beyond INV’s control. Thus, no guarantee can be made regarding therealization of such future forecasts and targets, and actual results may vary significantly.

Summary of Financial Results
Period fromJanuary 1, 2016 toJune 30, 2016

Period from
July 1, 2016 to
December 31, 2016

Period fromJanuary 1, 2017 toJune 30, 2017

Period from
July 1, 2017 to
December 31, 2017

Operating Revenues(JPY million)

8,158

9,511

9,260

12,647

Ordinary Income(JPY million)

4,364

5,431

4,702

7,303

Net Income(JPY million)

4,363

5,431

4,702

7,303

Net Assets(JPY million)

130,005

131,455

139,062

181,320

Total Assets(JPY million)

284,106

277,361

306,421371,758

Net Assets per Unit
(JPY)

35,36835,76236,01937,829Net Assets/Total Assets
(%)

45.8

47.4

45.4

48.8

Distribution per Unit
(JPY)

1,186

1,477

1,264

1,564

Number of Units Issued(Unit)

3,675,824

3,675,824

3,860,824

4,793,181(Note) Figures are rounded down to the indicated unit and percentages are rounded off to one decimal place.
However, “Net Assets per Unit” have been rounded off to the nearest specified unit.

Sheraton Grande Tokyo Bay Hotel (preferred equity interest)
INV acquired 49% preferred equity interest in a special purpose company that owns the Sheraton GrandeTokyo Bay Hotel for approximately JPY 17.8 billion in October 2017.

Ocean Dream Room

Conference Room

Crystal Chapel

Garden Pool

Grand Café (Restaurant)Location
AccessCompletion

1-9 Maihama, Urayasu-shi, Chiba
1-minute walk from Bayside Station on the Disney Resort Line
2,600 m from Maihama Station on the JR Keiyo Line
March 1988 / May 1996 / February 2002
October 2016 (Annex)

Renovation Period

September 2014 - July 2015

Number of Guest Rooms

1,016 rooms

Leasable Area

118,186.86 m2

Properties Newly Acquired in October 2017
D50

Hotel MyStays Shin Osaka ConferenceCenterPerfect location and specifications to capture MICE (2)demand. A 7-minute walk from the Shinkansen stop at
Shin-Osaka Station

Location

Osaka-shi, Osaka
7-minute walk from Shin Osaka Station on the JR
Tokaido Shinkansen/Sanyo Shinkansen/Tokaido
AccessMain Line
4-minute walk from Shin Osaka Station on the
Osaka Municipal Subway Midosuji Line
Hotel Type
LimitedCompletion
June 1974
Renovation Period November 2015 – March 2016
No. of Guest Rooms 397 rooms(Note 1)

(Note 2)

D51

Hotel MyStays Premier Omori

Large room sizes of over 22.5 m2 for all rooms. A
7-minute walk from Oomori Station and offering
excellent access to Shinagawa Station, Haneda Airport
and Yokohama Station

Location

Shinagawa-ku, Tokyo
7-minute walk from Omori Station on the JR
Keihin Tohoku Line
Access8-minute walk from Omori Kaigan Stationon the Keihin Kyuko Line
Hotel Type
LimitedCompletion
February 1995
Renovation Period August 2016 - November 2016
Hotel: 232 rooms
No. of Guest Rooms
Serviced Apartments: 24 units

As to “Hotel Type,” “Limited” refers to “Limited Service Hotel, which means a hotel focusing on revenues fromroom stay and offer limited service regarding foods and beverages, banquet, spa or gymnasium facilities,” “Full”
refers to “Full Service Hotel, which means a hotel having segments of stay, foods and beverages, and banquet,”and “Resort” refers to “Resort Hotel, which means a hotel located at tourist destinations or recreational spots,
having segments of stay, foods and beverages, and incidental facilities.”
The capital letters of MICE stand for Meeting (held by business companies), Incentive (travel organized forcompany employees for incentive and training purposes), Convention (held by international

organizations/associations or academic societies) and Exhibition/Event. It is also a collective term for businessevents that are expected to attract many guests and interactions.

D52

Beppu Kamenoi Hotel

D53

Hotel MyStays Sapporo Station

Located in Beppu, one of Japan’s most famous hot spring
resort areas. The hotel has a conference room andspacious rooms that can accommodate up to six guests

Located in the heart of Sapporo, and walking distance to
Odori Park, home of the famous Snow Festival

Location

Location
AccessHotel Type
Completion
Renovation Period
No. of Guest Rooms

AccessHotel Type
Completion
Renovation Period
No. of Guest Rooms

Beppu-shi, Oita
4-minute walk from Beppu Station on the
JR Nippo Main Line
12 minutes by car from Beppu I.C. on the
Oita Expressway
ResortMay 1997
May 2015 - July 2015
322 rooms

Sapporo-shi, Hokkaido
4-minute walk from JR Sapporo Station
Limited
October 2007
242 rooms

Properties Newly Acquired in February 2018
D54

Hotel MyStays Yokohama Kannai

Newly opened in October 2016, the stylish hotel islocated 1 minute by foot from Kannai Station and 5
minutes by train to Yokohama Station

Location

Yokohama-shi, Kanagawa
1-minute walk from Kannai Station on
the Yokohama Municipal Subway Blue
AccessLine
4-minute walk from Kannai Station on
the JR Negishi Line
Hotel Type
LimitedCompletion
August 2016
Renovation Period
No. of Guest Rooms 165 rooms(Note 1)

D55

Art Hotel Joetsu

This hotel with 198 rooms offers a variety of services to
fit the needs of business or leisure travelers alike, withconference and banquet space, a wedding chapel, beer
garden, and two restaurants in addition to concierge andmassage services.

Location

Joetsu-shi, Niigata
4-minute walk from Takada Station on the
Myoko-Haneuma-Line of the Echigo
AccessTokimaki Railway
15 minutes by car from Joetsu Takada I.C.
(Joshinetsu Expressway)
Hotel Type
Full
Completion
November 1993
Renovation Period No. of Guest Rooms 198 rooms

As to “Hotel Type,” “Limited” refers to “Limited Service Hotel, which means a hotel focusing on revenues fromroom stay and offer limited service regarding foods and beverages, banquet, spa or gymnasium facilities,” “Full”
refers to “Full Service Hotel, which means a hotel having segments of stay, foods and beverages, and banquet,”and “Resort” refers to “Resort Hotel, which means a hotel located at tourist destinations or recreational spots,
having segments of stay, foods and beverages, and incidental facilities.”

D56

Art Hotel Hirosaki City

Located in Hirosaki City, a well-known tourist destinationin northern Japan, the hotel offers a wide variety of room
types, with ample space for travelling families and iseasily accessible as it sits in front of JR Hirosaki Station

Location

AccessHotel Type
Completion
Renovation Period
No. of Guest Rooms

Hirosaki-shi, Aomori
1-minute walk from JR Hirosaki Stationon the JR Ou Main Line and Konan
Railway Konan Line
15 minutes by car from Owani/Hirosaki
I.C. along the Tohoku Expressway
Full
August 1989
March 2008
134 rooms

D57

Hotel MyStays Oita

Conveniently located a 10-minute walk from Oita Station.
The hotel features high ceilings and large windows
providing spatial comfort

Location

AccessHotel Type
Completion
Renovation Period
No. of Guest Rooms

Oita-shi, Oita
10-minute walk from Oita Station on the
JR Nippo Main Line, Kyudai Main Lineand Hohi Main Line
15 minutes by car from Oita I.C.
along the Oita Expressway
LimitedJuly 2007
145 rooms

Portfolio Rebalance (Property Disposition)
As portfolio rebalance, INV sold part of its properties (12 properties in total) between July 2017 and March 9, 2018.

Total sales priceAgainst book value(1): +JPY 2,799 million (+20.6%)

JPY 16,397 million

Against appraisal value(2): +JPY 2,503 million (+18.0%)

Actual NOI yield(3) ofproperties sold
4.1%

List of Properties Sold (July 2017 to March 2018)
6 residential properties

Harmonie
Ochanomizu(Bunkyo Ward)

Casa
Eremitaggio(Meguro Ward)

Lexel Mansion
Ueno Matsugaya(Taito Ward)

Growth Maison
Ikebukuro(Toshima Ward)

Sun Terrace
Minami-Ikebukuro(Toshima Ward)

5 office buildings

Kindai
Kagaku Sha Building(Shinjuku Ward)(Note 1)
(Note 2)
(Note 3)

Capital Heights
Kagurazaka(Shinjuku Ward)

Parking lot

Shinjuku
Island(Shinjuku Ward)

Ohki Aoba
Building(Sendai City)

Cross Square
NAKANO(Nakano Ward)

Lexington
Plaza Nishi-Gotanda(Shinagawa Ward)

Times KandaSudacho 4th(Chiyoda Ward)

Based on book value as of the sales date for the six properties sold in 2017, or as of December 31, 2017 for theother six properties. ”Against book value” indicates estimate for reference purpose and are not actual gain on sale.
Based on the appraisal reports as of the most recent state prior to sale
Calculated by dividing actual NOI from July 2016 to June 2017 for the two properties sold in July 2017, or total
actual NOI for 2017 full year for the other 10 properties (actual NOI from January 1, 2017 up to the sales date forthe four properties sold in December 2017) by total sales price.

INV’s Portfolio Composition(4) (As of March 9, 2018)(Note 4)

Indicated based on acquisition price. The preferred equity interest held by INV is counted as one property in theportfolio. The preferred equity interest is categorized as hotel based on the use of its underlying asset, Sheraton
Grande Tokyo Bay Hotel; and the amount INV has invested in the preferred equity interest is used as acquisition
price.

Sponsor Pipeline
INV continues to hold sponsor pipeline of 26 properties (17 hotels and nine residential properties) evenafter the portfolio rebalance.
Properties Covered by the MOU (Hotels)(1)(2)(Note 1) The MOU refers to the MOU providing preferential negotiation rights. INV is granted an opportunity to consider theacquisition in priority to a third party when any property covered by the MOU is to be sold.
(Note 2) There are no properties INV has decided to acquire as of March 9, 2018 and there is no guarantee that we will beable to acquire any of these properties in the future.
(Note 3) Each “Asset Type” above is as follows:“Limited” refers to a limited service hotel focusing on revenues from room stay and offer limited services regarding
food and beverage, banquet, spa or gymnasium facilities.
“Full” refers to a full-service hotel having sections of stay, food and beverage, and banquet.
“Resort” refers to a resort hotel located at tourist destinations or recreational lots, having sections of stay, food andbeverage, and incidental facilities.

Synergy with SoftBank Group
Fortress Group, INV’s sponsor, became a 100% subsidiary of SoftBank Group Corp. (SoftBank Group) on
December 27, 2017.(4)INV is expected to benefit from collaboration of MyStays Hotel Management Co., Ltd. (MHM), the hotel
operator under the sponsor, and SoftBank Group.

Remote concierge by Pepper

Alliance with Alibaba Group (Fliggy) Pepper introduced at some MHM hotels
from July 2017.

 40 MHM hotels made available on the
Fliggy(5) platform, of which 26 hotels are
owned by INV.
 Won “Most Popular Store of W11 2017”
during the 11.11 Global Online Shopping
Festival held on November 11, known as
Single’s Day in China.

(Note 4) For details, please refer to “Overview of Asset Management 2. Operating Conditions (2) Operational Environment
and Performance.”(Note 5) Fliggy is an equity method affiliate of SoftBank Group, and is a travel service platform provided by the world’s
largest e-commerce firm, Alibaba Group. It offers various travel-related products and services including
domestic/international flight tickets, train/bus tickets, hotel reservation, package tours and entrance tickets tosightseeing spots, and has over 200 million users (as of the end of 2016).

Unitholder Benefit Program
INV newly introduced the unitholder benefit program to improve the satisfaction of its unitholders andexpand the unitholder base. Eligible unitholders can stay at Sheraton Grande Tokyo Bay Hotel and all
MyStays hotels(2) at special discount rates.
Overview of the Unitholder Benefit Program(1)Applicable Hotels

Eligible Unitholders

 Sheraton Grande Tokyo Bay Hotel All MyStays hotels(2)Unitholders who hold 10 or more Invincible units and whose names are on
Invincible’s Unitholders’ Registry as of these record dates:

Record Date

The last day of every fiscal period (June 30 and December 31 of each year)

Program Details

Stay with unitholder special discount rates at the above applicable hotels

Hotel Reservation
Available Period (3)Reservation via designated website posting accommodation plans for theunitholder benefit program
From April 1 to September 30 (eligible unitholders as of December 31)
From October 1 to March 31 (eligible unitholders as of June 30)

Sheraton Grande Tokyo Bay Hotel

Fusaki Resort Village

Hotel Epinard Nasu

Hotel MyStays PremierKanazawa

Beppu Kamenoi Hotel(Note 1) The details of the unitholder benefit program described above are as planned by Invincible as ofMarch 9, 2018, and the program may be changed or abolished even after it is has been
introduced.
(Note 2) Refers to all hotels under MyStays brand managed by MHM, and hotels shown on the MyStays
Hotel Group’s official website (https://www.mystays.com/en-us/) will be applicable. (84 hotels asof February 28, 2018)(Note 3) Available Period represents a period during which you can lodge by using the unitholder benefit
program. To enjoy the unitholder benefit program, you actually need to lodge during theavailability period.

I.

Asset Management Report

Overview of Asset Management
1

Trends in Investment Corporation’s Operating Results
25th

26th

27th

28th

29th

fiscal period

fiscal period

fiscal period

fiscal period

fiscal period

Jul. 1, 2015 toJan. 1, 2016 toJul. 1, 2016 toJan. 1, 2017 toJul. 1, 2017 to

Dec 31, 2015

Jun. 30, 2016

Dec 31, 2016

Jun. 30, 2017

Dec 31, 2017

(Note 1) (JPY thousand)

6,863,775

8,158,220

9,511,466

9,260,917

12,647,270(Rental revenue – real estate)(JPY thousand)

6,863,775

8,158,220

9,511,466

9,260,917

11,403,236

Operating expenses(JPY thousand)

2,494,667

3,084,315

3,577,255

3,916,456

4,423,618(Property related expenses)(JPY thousand)

2,178,165

2,697,986

3,162,067

3,518,684

3,962,183

Operating income(JPY thousand)

4,369,108

5,073,905

5,934,211

5,344,461

8,223,652

Ordinary income(JPY thousand)

2,953,293

4,364,025

5,431,608

4,702,678

7,303,702

Net income(JPY thousand)

2,952,688

4,363,420

5,431,003

4,702,073

7,303,097

Total assets(a) (JPY thousand)

185,918,871

284,106,133

277,361,874

306,421,050

371,758,254

(%)

36.4

52.8

(2.4)

10.5

21.3

(JPY thousand)

91,699,000

141,917,000

142,419,000

163,990,000

186,983,000(b) (JPY thousand)

91,758,194

130,005,009

131,455,278

139,062,593

(%)

48.6

41.7

1.1

5.8

181,320,466
30.4

Unitholders’ capital(JPY thousand)

82,465,438

120,367,271

120,367,271

128,984,946

168,798,455

Total distributions(c) (JPY thousand)

3,790,905

4,359,527

5,429,192

4,880,081

7,496,535(Note 2) (%)

102.5

94.8

100.0

102.1

100.3

(d) (Units)

3,193,686

3,675,824

3,675,824

3,860,824

4,793,181(b) / (d) (JPY) (Note 3)

28,73135,36835,76236,01937,829By Period

Reporting period

Operating revenue

Operating Results(change from last period)
AssetsInterest-bearing debt
Net assets(change from last period)

Dividend
StatusDividend payout ratio
Number of investment units

Information per Unit

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

1,187

1,186

1,477

1,264

(Distributions of earnings per unit)

(JPY)

948

1,125

1,477

1,243

1,564

(Distributions in excess of retained

(JPY)

239

61

-

21

1,528
36

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

Return on equity(change over year)
Capital ratio(change from last period)(Note 4) (%)(Note 4) (%)

1.8

1.9

1.9

1.6

2.2

3.6

3.7

3.8

3.2

(4.3)

3.8

3.9

4.2

3.5

4.6

7.6

7.9

8.2

7.0

(9.0)

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

49.4

45.8

47.4

45.4

48.8

(%)

4.1

(3.6)

1.6

(2.0)

(3.4)

(Note 4) (JPY thousand)

5,961,324

7,136,971

8,414,465

8,023,607

10,008,268

NOI(Net Operating Income)(Note 1) Consumption taxes etc. are not included in the items including operating revenues.
(Note 2) The “Dividend payout ratio” is calculated in accordance with the following formula:
Dividend payout ratio = Distribution amount (Excluding distributions in excess of retained earnings) ÷ Net income × 100“Dividend payout ratio” is rounded to one decimal place.
(Note 3) Distributions per unit are rounded to the nearest unit.
(Note 4) Financial measures above are calculated as below, and ratios are rounded to one decimal place.

Return on assets = Ordinary income / (Total assets at start of reporting period + Total assets at end of reporting
period) / 2) x 100.
Return on equity = Net income for period ended December 31, 2017 / (Net assets at start of reporting period + Net
assets at end of reporting period) / 2) x 100.
Capital ratio = Net assets at end of reporting period / Total assets at end of reporting period x 100.
Rental NOI = Rental revenue – Leasing costs + Depreciation for period ended December 31, 2017.

2

Operating Conditions(1)

Main trends of INV
INV was established in January 2002 in accordance with the Investment Trust and Investment Corporation Act (Act No.
198 of 1951, as amended; the “Investment Trust Act”). In May 2004, INV was listed on the Osaka Securities Exchange(application for delisting was made in August 2007), and in August 2006 was listed on the Real Estate Investment andTrust 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 “Fortress Group”) 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. SoftBank Group acquired FIG, helping to
improve INV’s relationships with Japanese banks and companies, and is working with MyStays Hotel Management Co.,
Ltd. (“MHM”) on several technology, online, and distribution initiatives which MHM believes will provide benefits
to the hotels.
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 the lender formation through new borrowings and the refinancing of existing bank borrowings, thereby
creating a financial base for external growth. With this platform as a base, in June 2014, Consonant Investment
Management Co., Ltd., the asset manager to which INV entrusts the management of its assets (the “Asset Manager”)
revised the Investment Guidelines for INV, and positioned hotels as a core asset class alongside residential properties
with a view towards expanding investments in the hotel sector in which demand is forecasted to rise going forward. As aresult of the external growth efforts and portfolio rebalance to be described below, INV's portfolio at the end of theprevious period ended December 2017 comprised of 126 properties (54 hotels, 67 residential properties and five others)(Note 1)with a total acquisition price of JPY 353,695 million. The acquisition price of the portfolio has increased asignificant 4.5x, compared to May 22, 2014, which is the date immediately prior to INV’s initial investment in hotels.
In the Reporting Period, INV conducted an issuance of new investment units (the “Public Offering”) and secondaryoffering on September 21, 2017 in order to acquire four hotels and a preferred equity interest in a special purpose
company (the “TMK”) on October 13, 2017 with funds raised through the Public Offering and new borrowings. The
TMK holds Sheraton Grande Tokyo Bay Hotel (the “Sheraton”), a full service hotel with 1,016 rooms, the highest
room count among the Disney hotels and the Tokyo Disney Resort official hotels (Note 2). By investing in a flagshiphotel such as the Sheraton via the preferred equity interest, INV aimed to improve the portfolio profitability throughthe high 8.8% simulated dividend yield (Note 3) and the stability through portfolio diversification. The acquisitionof the five hotels located both in the Tokyo metropolitan area and in regional areas well situated to capture theincrease in demand from foreign visitors is expected to contribute to the growth, improvement in stability of income,and overall quality of the portfolio.

INV commenced an Asset Recycling Program in July 2017 to sell assets that INV believed generate low yield, and using
those proceeds in an accretive manner to acquire assets that INV believes generate higher yield, aiming to improve theoverall NOI yield of the portfolio. INV sold two non-core assets (an office building and a parking lot) on July 31, 2017,and announced the sale of three office properties and six residential properties on December 21, 2017 and December
26, 2017 in order to further pursue the portfolio rebalance. Of the December dispositions, the sale of one officebuilding and three residential properties were closed by the end of the Reporting Period, and the remainder closed in
January 2018. In the December 2017 period, INV sold six properties for JPY 5,772 million at an actual NOI cap rate
(Note 4) of 3.6%. The sales price is JPY 1,378 million or 31.4% above book value (Note 5) and JPY 930 million or
19.2% above appraisal value (Note 5). The proceeds of the sale were used to acquire four hotels for JPY 12,425
million at an appraisal NOI cap rate (Note 7) of 6.2% in February 2018, which is detailed on page 11. As a result of
the asset sales, INV will retain earnings of JPY 740 million or JPY 154 per unit at the end of fiscal period June 2018.
Japanese REIT’s are required to pay out at least 90% of income to maintain tax deductibility status. The retained
earnings will serve as a reserve that could be used as a cushion to help insure that projected DPU targets are met.
As a continued focus on proactive asset management, INV changed the master lessee (“ML”) and property manager(“PM”) for four residential properties to reduce property management fees, and improve the economics of two
properties by changing the lease agreement structure. In addition, INV changed the operator of one hotel property to
MHM in an aim to increase the hotels profitability, particularly by focusing on increasing the number of inboundtourists to the hotel.
INV has signed a Memorandum of Understanding (the “MOU") with affiliates of Fortress Group with respect topreferential negotiating rights regarding the acquisition of hotels and residential properties, which will continue toprovide INV with considerable opportunities for external growth. As of the date of this document, there are 17 hotels(3,995 rooms) and nine residential properties (743 units) in the MOU.
(Note 1)

Portfolio includes the preferred equity interest in the special purpose company (the TMK); the preferred
equity interest is counted as a hotel property, based on the use of Sheraton Grande Tokyo Bay Hotel, theunderlying asset of the preferred equity interest. Moreover, INV’s investment amount to the preferred equity
interest is counted as the acquisition price of the preferred equity interest. Hereinafter the same, unlessotherwise noted.

(Note 2)The “Disney hotels” are hotels under direct management of Oriental Land Co., Ltd. operating TDR using
the Disney brand (four hotels). The “Tokyo Disney Resort official hotels” consist of the designated hotels
within the Tokyo Disney Resort Area (six hotels). Such specified names are based on the TDR’s hotel
alliance program. “Tokyo Disney Resort” means Tokyo Disneyland, Tokyo DisneySea and related facilities,
while the “Tokyo Disney Resort Area” means the bayside area to the south of “Maihama Station” on JR
Keiyo Line where Tokyo Disneyland, Tokyo DisneySea and the related facilities are located.

(Note 3)The simulated dividend yield is calculated by dividing (A) the product of (a) the simulated dividend, whichis calculated by deducting (i) simulated expenses such as operating expense of the TMK and the interest ofdebt from (ii) the NOI of the Sheraton Grande Tokyo Bay Hotel stated in the appraisal report of the
Tanizawa Sōgō Appraisal Co., Ltd. on the valuation date of July 1, 2017, and multiplied by (b) ownership
ratio of the preferred equity interest (49.0%), by (B) the acquisition price (INV’s investment amount to thepreferred equity interest). As the simulated dividend is the reference data calculated based on the appraisal
NOI and simulated expenses calculated by the Asset Manager, there are possibilities that the actual dividend
yield is far differed from such reference data or the dividend is not distributed at all.

(Note 4)

Calculated by dividing actual NOI for July1, 2016 – June 30, 2016 for the properties sold in July 2017 andJanuary 1, 2017 – December 31, 2017 for other properties by the sale price.

(Note 5)

Based on the book value as of the date of sale.

(Note 6)

Appraisal Value is based on appraisal value stated in the appraisal reports by Assets Research andDevelopment Inc. on the valuation date of June 30, 2017 or December 1, 2017, appraisal reports by Japan
Real Estate Institute on the valuation date of December 1, 2017 or December 31, 2017, appraisal reports by
Tanizawa Sōgō Appraisal Co., Ltd. on the valuation date of December 1, 2017 , or appraisal report by Morii
Appraisal & Investment Consulting, Inc. on the valuation date of December 1, 2017.
(Note 7)(2)

Calculated by dividing the total NOI derived from the direct capitalization method stated in the appraisal
reports by The Tanizawa Sōgō Appraisal Co., Ltd. on the valuation date of January 1, 2018 by the totalacquisition price, and rounded to one decimal place.

Operational Environment and Performance
For the December 2017 period, the portfolio NOI increased by 18.9% or JPY 1,593 million to JPY 10,008 million
compared to the same period in the previous year (the December 2016 period), with an 11.2% increase from the hotel
portfolio and a 7.8% increase from the residential portfolio.
In addition, the portfolio maintained a high average occupancy rate (Note 1) of 97.9%. Commentary on hotel andresidential performance in the first half of 2017 is described below.
The NOI at the 40 hotels owned by INV (Note 2) increased by 3.6% for the period compared to the same period in theprevious year. The 40 hotels recorded an occupancy rate (Note 3) of 90.6% (+0.1 points YoY), ADR (Note 4) of JPY
10,083 (+0.8% YoY), and RevPAR (Note 5) of JPY 9,131 (+0.9% YoY). Of the total hotel revenue from the 53 hotels
INV owns (Note 6), fixed rents accounted for 49.1% (JPY 3,623 million) and variable rents accounted for 50.8% (JPY
3,741 million) at the 53 hotels.
Inbound visitors reached a record high of 28.6 million (+19.3% YoY) in 2017 while government targets are 40 million
in 2020 and 60 million in 2030. Under such circumstances, MHM, a hotel operator in the sponsor group which
operates 84 hotels nationwide, including 45 hotels in INV’s portfolio, is continually enhancing its operations andrecently launched its new website which has initially resulted in higher conversion rates. MHM is also in the processof launching a new online reservation system in order to increase direct bookings to save commissions and have more
direct customers. MHM has also recently launched a new revenue management system based on machine learning to
improve the overbooking algorithms to help offset cancelation and improve revenue at the hotels overall. MHM iscontinuing to court the increasing foreign tourism business which accounted for 42% (Note 7) of INV owned MyStays
Hotel (Note 8) revenue in 2017. In addition to having multi-lingual chat and staff, MHM has sought to increase its
Chinese guest count by being the first Japanese hotel company to list its rooms on Fliggy, Alibaba’s online
marketplace in China selling hotels, tours and other travel-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.
The NOI (Note 9) of the 70 residential properties (Note 10) increased 0.9% compared to the same period in theprevious year, and the average occupancy rate achieved a stable 94.8%, a decrease of 0.5 points compared to the same
period in the previous year.
As a continued focus on proactive asset management INV changed ML/PM for four residential properties (Note 11)
including Royal Parks Tower Minami-Senju, a flagship residential asset aiming to increase NOI by JPY 39 million peryear on an estimated basis (Note 12).
Trends for rent at city-center residential properties with small-type rooms maintained a moderate increase. Under the
positive circumstances in the macro environment, INV continues to focus on its rent increase program for new leases
and renewals as well as initiatives to reduce residential leasing costs based on a market analysis of each unit andproperty. In the Reporting Period, INV realized a rent increase for 47.5% (based on the number of contracts) of the
new residential lease contracts for an average rent increase of 2.4% compared to the previous rent across all newleases (Note 13). Specifically, at Royal Parks Tower Minami-Senju, the flagship residential property which wasacquired during the previous period, INV achieved strong results with a rent increase for 87.3% (based on the numberof contracts) of the new lease contracts with an average rent increase of 10.3% compared to the previous rent acrossall new leases (Note 13). INV achieved a rent increase for 59.2% (based on the number of contracts) of contract
renewals for an average rent increase of 2.0% compared to the previous rent across all renewal leases (Note 14), while
maintaining a high contract renewal rate of 85.3% (Note 13). Combined, new leases and renewal leases were signed at
2.2% higher than the previous leases.
The total appraisal value of 125 properties (Note 6) at the end of the Reporting Period was JPY 400,007 million. The
portfolio has an unrealized gain of JPY 72,297 million (Note 15) and an unrealized gain ratio of 22.1% (Note 15). The
total appraisal value of 121 properties which were owned throughout the Reporting Period (including an additional
portion of Hotel MyStays Gotanda Station), increased by 0.4% from JPY 358,719 million at the end of June 2017
period to JPY 360,007 million at the end of the Reporting Period.

Key Performance Indicators of 40 Hotel Properties (Note 2)

Occupancy Rate (Note 3)
ADR (JPY) (Note 4)
RevPAR (JPY) (Note 5)
GOP (JPY million) (Note 16)

December 2017
fiscal period
90.6%
10,083
9,131
6,232

Year-on-year change+0.1pt
+0.8%
+0.9%
+3.3%

Key Performance Indicators of 70 Residential Properties (Note 11)

Occupancy Rate (Note 1)
Average Rent per Tsubo per Month(JPY) (Note 17)
NOI (JPY million) (Note 10)

December 2017
fiscal period
94.8%

Year-on-year change-0.5pt

9,709

+1.8%

2,574

+0.9%

(Note 1)

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

(Note 2)Of the 49 acquired hotels held as of the beginning of the December 2017 Fiscal Period, 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 in and after July, 2016 by INV
had been owned since July 1, 2016. The actual results before acquisition by INV are based on the data
provided by the sellers.

(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) fora certain period by the total number of days per room for which each room was occupied during the same
period. Hereinafter the same shall apply.

(Note 5)

“RevPAR” means revenues per available room per day, and is calculated by dividing total room sales for acertain period by total number of rooms available (number of rooms x number of days) during the same
period, and is the same as the figure obtained by multiplying ADR by occupancy rates. Hereinafter the same
shall apply.
(Note 6)

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

(Note 7)

The ratio of sales amount through overseas web agents to revenues.

(Note 8)The ratio of the amount of revenues from bookings through the overseas travel agencies to total revenues
for 29 hotels of the41 hotels in INV’s portfolio that MHM operates as of the date of this document,
excluding the following 12 hotels without comparable data against 2016 due to rebranding etc.; Hotel
MyStays Nagoya-Sakae, Hotel MyStays Haneda, Hotel MyStays Utsunomiya, Hotel MyStays Gotanda
Station, Hotel Epinard Nasu, Hotel MyStays Premier Kanazawa, Hotel MyStays Premier Hamamatsucho,
Hotel MyStays Dojima, Hotel MyStays Shin Osaka Conference Center, Hotel MyStays Premier Omori,Beppu Kamenoi Hotel and Hotel MyStays Sapporo Station. The figures assume that all hotels acquired inand after July 2016 by INV had been owned since July 1, 2016. The actual results before acquisition by
INV are based on the data provided by the sellers.

(Note 9)For the comparison of NOI, insurance income and related repair expenses, which are temporary items, areexcluded.

(Note 10) Based on the 70 residential properties owned as of the beginning of December 2017 Fiscal Period.
Of the 70 properties, three properties (Casa Eremitaggio, Lexel Mansion Ueno-Matsugaya and Sun Terrace
Minami-Ikebukuro) were sold on December 28, 2017. Therefore, for the three properties, July 1, 2017
through December 28, 2017, or the disposition date, is deemed the operating period for the fiscal period
ended December 2017, and the leased area and the leasable area as of December 28, 2017 is deemed as theleased area and the leasable area for such properties as of the end of December 2017 to calculate eachnumber. Hereinafter the same shall apply. In addition, the figures for the properties acquired after July 2016
are calculated on the assumption INV had acquired those properties on January 1, 2016, using the actual
figures provided by the sellers of such properties for the period before the acquisition, for the purpose ofcomparison with previous year.
(Note 11) ML and PM for Royal Parks Shinden and Royal Parks Momozaka were changed on July 1, 2017 andAugust 1, 2017 respectively, and ML and PM for both Royal Parks Tower Minami-Senju and Royal Parks
Seasir Minami-Senju were changed on December 1, 2017.
(Note 12) This is a figure estimated by the Asset Manager as of the date of this document, and there is no guaranteethat INV can realize such increase in NOI.
(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.
(Note 14) Renewal rate is calculated by the number of renewed contracts during the relevant period divided by the
number of contracts due up for renewal during the relevant period(Note 15) The unrealized gain is calculated using the following formula: the appraisal value as of the end of theReporting Period - book value as of the end of the Reporting Period.
The unrealized gain ratio is calculated using the following formula: the unrealized gain ÷ book value as ofthe end of the Reporting Period.
(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 to operators (if any) from the hotel’s revenues. Hereinafter the same shall apply.
(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.

(3) Overview of Fund Raising
As a result of the measures described below, INV’s interest-bearing debt outstanding balance was JPY 186,983
million and the Interest-Bearing Debt ratio (Note 1) and LTV (Note 2) were 50.0% and 44.5% respectively, asof the end of the Reporting Period, with an average interest rate (Note 3) of 0.51%.
(i) Equity Finance
INV executed a global public offering (the “Public Offering”) which closed on October 12, 2017 (number of
new investment units issued: 887,959; total issue value: JPY 37,917 million) and a third party allotment whichclosed on November 1, 2017 (number of new investment units issued: 44,398; total issue value: JPY 1,895
million) in connection with the Public Offering in order to procure part of the funds for the acquisition of five
hotels (including an additional portion of Hotel MyStays Gotanda Station, an existing hotel) and preferred
equity interest in a special purpose company.
(ii) Debt FinanceIn tandem with the Public Offering as described in (i) above, INV borrowed a new loan, New Syndicate Loan(H) (amount borrowed: JPY 22,993 million; interest rate: variable interest rate of 1-month JPY TIBOR plus
0.8%, 0.7%, 0.6%, 0.4%, 0.3%, 0.25% and 0.2% for durations of seven, six, five, four, three, two and one years),
which was arranged by Mizuho Bank, Ltd. as arranger and Sumitomo Mitsui Banking Corporation as
co-arranger in order to pay a portion of the acquisition price and related expenses for the acquisition of thespecified assets.
In the Reporting Period, INV also filed a shelf registration statement of investment corporation bonds to the
Kanto Local Finance Bureau (planned amount of issue: JPY 100 billion, planned issue period: from August 2,
2017 to August 1, 2019) on July 25, 2017.
(Note 1) Interest-Bearing Debt ratio uses the calculation formula below:
Interest-Bearing Debt ratio = total outstanding interest-bearing debt (excluding consumption tax loanof JPY 1,068 million)/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 notavailable, 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.

(4)Overview of Acquisition of Assets(i) Acquisition of preferred equity interest
The overview of preferred equity interest in Kingdom Special Purpose Company (the “Kingdom TMK”) acquiredon October 13, 2017 is as follows:(1) Asset acquired

Preferred equity interest (the “Preferred Equity Interest”) provided
in Article 2(9) of the Act on Securitization of Assets (Act No. 105
of 1998, as amended) (Note1)(2) Number of units of preferred equity interest
to be issued

Preferred Equity Interest: 364,200 units(3) Number of units of preferred equity interest
acquired (ratio of interest holding)Preferred Equity Interest: 178,458 units (49.0%)(4) Acquisition price

JPY 17,845 million for 49.0% of the Preferred Equity Interest(Note 2)(5) Name of underlying asset

The Sheraton Grande Tokyo Bay Hotel (the “Underlying Asset”)(Note 1)

(Note 2)

Along with acquisition of the Preferred Equity Interest, INV have acquired a 24.0% stake in the specified equity interestsin the TMK, as well as 49.0% of equity interest in a limited liability company (LLC), a holding company, (the “Holding
Company”) that owns 100% of equity interest in Keiyo Resort Development, G.K., a master lease company of theUnderlying Asset (the “ML”).
The acquisition price is the investment amount. The amount does not include any taxation including consumption tax andis rounded down to the nearest million yen. In addition, the acquisition price of the specified equity interest and theequity interest in the Holding Company described in (Note 1) is JPY 24,000 and JPY 9.8 million, respectively. Since
these amounts are very small, they are not included in the acquisition price.

(ii) Acquisition of four hotels
The overview of four hotels acquired on October 13, 2017 is as follows:

Use

Hotel

Hotel

Appraisal value(JPY million)(Note 2)

Seller13,200

HL Investments
Tokutei Mokuteki
Kaisha

9,781

9,880

Septentrio3 Tokutei
Mokuteki Kaisha

Beppu, Oita

8,870

8,960

Monza Tokutei
Mokuteki Kaisha

Sapporo,Hokkaido

7,880

7,960

Suisei Tokutei
Mokuteki Kaisha

39,59940,000Property
number

Property name

D50

Hotel MyStays
Shin Osaka
Conference Center

Osaka, Osaka

D51

Hotel MyStays
Premier Omori

Shinagawa-ku,
Tokyo

D52

Beppu Kamenoi
Hotel

D53

Hotel MyStays
Sapporo Station
Total(Note 1)

Acquisition
price(JPY million)(Note 1)

Location

13,068Categoryof specified
asset

Trust
Beneficial
Interest

Trust
Beneficial
Interest

Acquisition Prices show purchase prices set forth in the purchase and sale agreements for the trust
beneficiary interests and do not include adjustments for property taxes, city planning taxes, or nationalor local consumption taxes.

(Note 2)

Appraisal Value is based on appraisal value stated in the appraisal report by the Tanizawa Sōgō
Appraisal Co., Ltd. on the valuation date of July 1, 2017.

(iii) Additional acquisition of one hotel property
The overview of additional portion of a hotel (Note 1) acquired on October 31, 2017 is as follows:

Use

Hotel

Property
number

Property nameLocation

D43

Hotel MyStays
Gotanda Station(Additional
Acquisition
Portion)Shinagawa-ku,
Tokyo

Acquisition
price(JPY million)

1,849

Appraisal value(JPY million)(Note 2)

2,600

SellerCategoryof specified
asset

Trust
Undisclosed (Note 3) BeneficiaryInterest(Note 1) This is the acquisition of hotel floor expanded by conversion in addition to the portion of hotel alreadyowned by INV.
(Note 2) As the floor expansion portion was under construction at the time of acquisition, the appraisal value shows
the research value set forth in the research report on the valuation date of June 30, 2017, issued by Morii
Appraisal & Investment Consulting, Inc. The research value shows the difference between (i) the researchvalue of existing hotel portion and floor expansion portion combined, assuming the completion of theconversion (JPY 27,400 million) and (ii) the research value for the existing hotel portion before theadditional acquisition (JPY 24,800 million).
(Note 3) The name of the seller is not disclosed, as the seller’s consent has not been obtained for disclosure.

(5)Overview of Sale of Assets

The Asset Manager decided sales of assets as follows for the purpose of improving the profitability of INV’s
portfolio by rebalancing of assets and stabilizing the distribution by recognizing a gain on sales.
(i) Sale of one office building and one parking lot
The Asset Manager decided to sell following assets on July 25, 2017, and sales of the assets has been closed on July
31, 2017. The proceeds from the sales were appropriated to the funds for the acquisition described in “(d) Overview
of Acquisition of Assets (iii) Additional acquisition of one hotel property.”

Use

OfficeBuilding

Parking Lot

Property
number

Property name

B08

Kindai Kagaku
Sha Building

C01

Times
Kanda-Sudacho
4th

Difference
Acquisition
Book value
Sales price b/w sales price
price(JPY million) (JPY million)
and book(JPY million)(Note 1)
(Note 2)
value
(Note 1)

Total

1,301

1,197

1,361

Transferee

Categoryof specified
asset

163

Undisclosed(Note 3)Trust
BeneficiaryInterest(Note 4)

WastecHOLDINGS Real Property
Co., Ltd.

97

100

130

29

1,398

1,298

1,491

192

(Note 1) The book values are as of July 31, 2017. The difference between sales price and book value is provided forreference purpose. INV recognized a gain on sales of JPY 141 million (of which, JPY 115 million for Kindai
Kagaku Sha Building, and JPY 25 million for Times Kanda-Sudacho 4th) in the December 2017 period, after
deducting sales-related expenses.
(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 is not disclosed, as the transferee’s consent has not been obtained for disclosure.
(Note 4) The trust beneficiary interest of Kindai Kagaku Sha Building was integrated in a single trust account withother trust accounts when INV procured funds through debt financing backed by trust assets in July 2011. Intransferring the sole trust beneficiary interest of Kindai Kagaku Sha Building by itself, INV incurred some
expenses to detach the asset from the integrated trust account.

(ii) Sale of six residential properties
The Asset Manager decided to sell following assets on December 21, 2017, the sale of the three assets (A56, A62 andA81) has been completed on December 28, 2017, and the sale of the three assets (A31, A36 and A42) has been
completed on January 31, 2017. The proceeds from the sales were appropriated to the funds for the acquisition
described in “6 Significant Subsequent Events (a) Acquisition of assets.”

Use

Acquisition
Book value
Sales price
price(JPY million)(JPY million)(JPY million)(Note 1)

Difference
b/w sales
price andbook value(Note 1)

Property
number

Property name

A31

Harmonie
Ochanomizu

1,428

1,346

1,603

256

A36

Growth Maison
Ikebukuro

825

743

1,057

314

A42

Capital Heights
Kagurazaka

604

623

732

108

Transferee

Categoryof specified
asset

Trust
BeneficiaryInterest(Note 3)A56

Casa
Eremitaggio

1,070

948

1,312

Undisclosed
363 (Note 2)

A62

Lexel Mansion
Ueno
Matsugaya

970

853

1,329

475

A81

Sun Terrace
Minami-Ikebuku
ro

625

591

934

343

5,523

5,106

6,970

1,863

Residential

Total(Note 1) The difference between sales price and book value indicates estimate for reference purpose calculated using
the book values as of December 28, 2017, the date of sale, for the properties sold during the fiscal period
ended December 2017, and as of December 31, 2017 for the remainder; INV recognize a gain on sales of
JPY 1,109 million in the fiscal period ended December 2017, and estimate to recognize JPY 594 million for
the fiscal period ending June 2018.
(Note 2) The name of the transferee (a Japanese TMK (Tokutei Mokuteki Kaisha)) is not disclosed, as the transferee’s
consent has not been obtained for disclosure.
(Note 3) Each of the trust beneficiary interest of Harmoni Ochanomizu, Growth Maison Ikebukuro and Capital
Heights Kagurazaka was integrated in a single trust account with other trust accounts when INV procured
funds through debt financing backed by trust assets (the “Trust Asset-Backed Borrowing”) in July 2011. Intransferring the sole trust beneficiary interest of the abovementioned three properties by itself, INV incurred
some expenses to detach from the integrated trust account, effective as of December 22, 2017.

(iii) Sale of three office buildings
The Asset Manager decided to sell following assets on December 26, 2017, the sale of one asset (B09) has been
completed on the date and the sale of two assets (B15 and B16) has been completed on January 31, 2017. The
proceeds from the sales were appropriated to the funds for the acquisition described in “6 Significant Subsequent
Events (a) Acquisition of assets.”

Use

OfficeBuilding

Property
number

Property name

B09

Shinjuku Island

B15

Cross Square
NAKANO

B16

Ohki Aoba
Building

Total

Acquisition
Book value
Sales price
price(JPY million)(JPY million)(JPY million)(Note 1)

715

1,060

701

1,125

705

1,350

Difference
b/w sales
price andbook value(Note 1)

Transferee3

Undisclosed
Real Property(Note 2)

Taisei-Yurak
224 u Real Estate
Co.,Ltd

816

725

721

(4)

2,591

2,552

2,776

223

Categoryof specified
asset

KubotaHontenTrust
BeneficiaryInterest
Trust
BeneficiaryInterest(Note 1) The difference between sales price and book value indicates estimate for reference purpose calculated using
the book values as of December 26, 2017, the date of sale, for the property sold during the fiscal period ended
December 2017, and as of December 31, 2017 for the remainder; INV recognized a loss on sales of JPY 7
million (Shinjuku Island) and an impairment loss of JPY 15 million (Ohki Aoba Building) for the fiscal
period ended December 2017, and estimates to record a gain on sale of JPY 202 million (Cross Square
NAKANO) for the fiscal period ending June 2018.
(Note 2) The name of the transferee (a Japanese business corporation) is not disclosed, as the transferee’s consent has
not been obtained for disclosure.

(6)

Overview of Results of Operations and Distributions

As a result of the operations mentioned above, operating revenues for the Reporting Period increased by JPY 3,387
million from the previous period (+36.6%) to JPY 12,647 million, and net income increased by JPY 2,601 million(+55.3%) to JPY 7,303 million. The distribution per unit (“DPU”) for the Reporting Period was JPY 1,564, anincrease of JPY 300 (+23.7%) compared to the previous 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 (fromJanuary to June). Accordingly, INV’s rental revenues tend to be higher in the fiscal period ending December than in
the fiscal period ending June.
INV aims to include maximum profit distributions (excluding excess profit distribution) in deductible expenses inaccordance with Section 1 of Article 67-15 of the Act on Special Taxation Measures Law (Act No. 26 of 1957; asamended), and decided to distribute almost all of the profit as defined in Article 136, Paragraph 1 of the Investment
Trust Act, except for fractional distribution per unit less than JPY 1.

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. Therefore, INV has adopted the policy tomake distributions in excess of profits in order to stabilize distributions, in cases where dilution of investment units
or significant expenses are to be recorded in connection with, among other things, the acquisition of assets or theraising of capital, leading to a temporary decrease in distribution, 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 mitigating the impact of corporate tax increasearising from different rules and practices in tax and accounting, such as treatment on depreciation of fixed term landlease or asset retirement obligation.
With respect to the distribution for the fiscal period ended December 2017, INV will distribute an aggregate amountof JPY 7,496 million (distribution per unit: JPY 1,564); of which, INV pay JPY 7,323 million as profit distribution,out of distributable profit of JPY 7,326 million which is a total of Net Income for the fiscal period ended December
2017 (JPY 7,303 million) adjusted by loss brought forward from the previous fiscal period and deferred tax gain or
loss. In addition, INV pays excess profit distribution of JPY 172million (JPY 36 per unit).

3

Changes in Total Number of Investment Units Issued and Outstanding

Changes in the number of investment units issued and outstanding and unitholders’ capital from the date ofestablishment to the end of the Reporting Period are as follows.

Date

Type of issue

Total number of investment
units issued and outstanding(units)Unitholders’ capital (JPY)

Increase

Increase

Total

Total

Reference

January 18, 2002

Private placement
for incorporation

400

400

200,000,000

200,000,000(Note 1)

December 26, 2003

Private placement

2,700

3,100

1,012,500,000

1,212,500,000(Note 2)January 9, 2004

Private placement

1,350

4,450

506,250,000

1,718,750,000(Note 2)January 21, 2004

Private placement

1,333

5,783

499,875,000

2,218,625,000(Note 2)January 27, 2004

Private placement

267

6,050

100,125,000

2,318,750,000(Note 2)January 28, 2004

Private placement

800

6,850

300,000,000

2,618,750,000(Note 2)January 31, 2004

Private placement

266

7,116

99,750,000

2,718,500,000(Note 2)February 5, 2004

Private placement

800

7,916

300,000,000

3,018,500,000(Note 2)February 7, 2004

Private placement

1,333

9,249

499,875,000

3,518,375,000(Note 2)

May 17, 2004

Public offering

9,000

18,2493,377,250,000

6,895,625,000(Note 3)February 7, 2005

Public offering

10,65028,8993,937,667,100

10,833,292,100(Note 4)

July 31, 2006

Public offering

25,00053,8998,301,125,000

19,134,417,100(Note 5)February 1, 2010

Unit split

215,596

269,495-

19,134,417,100(Note 6)

February 1, 2010

Merger367,200

636,695-

19,134,417,100(Note 7)

711,597

1,348,292

6,999,979,689

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

1,573,179

2,999,992,580

29,134,389,369(Note 9)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 10)

August 13, 2014

Third-party
allotment

55,5072,668,686

1,214,104,611

53,096,413,980(Note 11)

July 15, 2015

Public offering

500,000

3,168,686

27,970,500,000

81,066,913,980(Note 12)

August 12, 2015

Third-party
allotment

25,0003,193,686

1,398,525,000

82,465,438,980(Note 13)

March 30, 2016

Public offering

459,5123,653,198

36,123,157,344

118,588,596,324(Note 14)

22,626

3,675,824

1,778,675,112

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

3,675,824

224,225,264

120,591,496,700(Note 16)

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 17)

October 12, 2017

Public offering

887,959

4,748,783

37,917,625,218

166,902,571,918(Note 18)

44,3984,793,181
1,895,883,396
168,798,455,314
allotment
INV was incorporated through a private placement at a price of JPY 500,000 per unit.

(Note 19)

November 1, 2017
(Note 1)

Third-party(Note 2)

New investment units were issued in a private placement at a price of JPY 375,000 per unit to raise funds for theacquisition of new properties.

(Note 3)New investment units were issued in a public offering at a price of JPY 395,000 per unit (JPY 375,250 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.

(Note 4)

New investment units were issued in a public offering at a price of JPY 385,140 per unit (JPY 369,734 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.

(Note 5)New investment units were issued in a public offering at a price of JPY 348,740 per unit (JPY 332,045 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.

(Note 6)

An investment unit split of five units per one unit was conducted.

(Note 7)A merger by absorption pursuant to Article 147 of the Act on Investment Trusts and Investment Corporations
was conducted with LCP, with INV as the surviving entity. As a result of the merger by absorption, four
investment units of INV (after the investment unit split) were allotted for each LCP investment unit. The
number of LCP investment units issued as of the time of the merger by absorption was 91,800 units.

(Note 8)New investment units were issued in a third-party allotment at a price of JPY 9,837 per unit to make repaymentof existing loan, etc.

(Note 9)New investment units were issued in a third-party allotment at a price of JPY 13,340 per unit to makerepayment of existing loan, etc.

(Note 10) New investment units were issued in a public offering at a price of JPY 22,688 per unit (JPY 21,873 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.
(Note 11) New investment units were issued in a third-party allotment at a price of JPY 21,873 per unit for the purpose of
cash reserve to appropriate to repayment in future borrowings.
(Note 12) New investment units were issued in a public offering at a price of JPY 57,817 per unit (JPY 55,941 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 13) New investment units were issued in a third-party allotment at a price of JPY 55,941 per unit for the purpose of
allocation to cash reserves to be used as part of the funds for future acquisition of properties.
(Note 14) New investment units were issued in a public offering at a price of JPY 81,217 per unit (JPY 78,612 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 15) New investment units were issued in a third-party allotment at a price of JPY 78,612 per unit for the purpose of
allocation to cash reserves to be used as a part of the funds for future acquisition of properties.
(Note 16) INV has decided on Board of Directors' Meeting held on February 22, 2017, the reversal of allowance fortemporary difference adjustments for incorporation into unitholders' capital.
(Note 17) New investment units were issued in a public offering at a price of JPY 46,897 per unit (JPY 45,370 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 18) New investment units were issued in a public offering at a price of JPY 44,118 per unit (JPY 42,702 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 19) New investment units were issued in a third party allotment at a price of JPY 42,702 per unit for the purposeof allocation to cash reserves to be used as part of the funds for future acquisition of specified assets.

Trends in Trading Prices of Investment Securities
The highest and lowest prices (trading prices) in the Real Estate Investment and Trust Securities Section of

the Tokyo Securities Exchange on which the investment securities of INV are listed are as follow.
Real Estate Investment and Trust Securities Section, Tokyo Securities Exchange
PeriodClosingmonth
HighestLowest4

25th fiscal
periodDecember
2015
76,40057,90026th fiscal
periodJune
201688,40061,10027th fiscal
periodDecember
2016
70,30049,60028th fiscal
periodJune
201754,80041,500(Unit: JPY)
29th fiscal
periodDecember
2017
50,20044,450Distribution PerformanceWith respect to profit distributions for the Reporting Period, 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 perunit less than JPY 1, aiming to include the maximum amount of profit distributions in deductible expenses
in accordance with Article 67-15, Paragraph 1 of the Act on Special Taxation Measures (Act No. 26, 1957).
In addition, in accordance with the cash distribution policy as set forth in Article 17, Item 4 of the Articles
of Incorporation, INV makes distributions of cash in excess of earnings of the amount that it determines(the “Excess Profit Distribution”). For the Reporting Period, INV decided to distribute JPY 172 million(JPY 36 per unit) as refund of investment in order to level total distributions because the amount of profit
distributions decreases temporarily due to the incurrence expenses from the issuance of new investment
units and of one-off expenses associated with borrowings. As a result, distribution (including Excess Profit
Distribution) is JPY 1,564 per unit.
PeriodCalculated Period
Unappropriatedretained earnings(JPY thousand)Reserved profit(JPY thousand)Total cash distribution(JPY thousand)(Distribution per unit)(JPY)
Total profit
distribution(JPY thousand)(Profit distribution per
unit)
(JPY)
Total refund ofinvestment(JPY thousand)25th fiscal
periodJul. 1, 2015
to Dec. 31,
2015

26th fiscal
periodJan. 1, 2016
to Jun. 30,
2016

27th fiscal
periodJul. 1, 2016
to Dec. 31,
2016

28th fiscal
periodJan. 1, 2017
to Jun. 30,
201729th fiscal
periodJul. 1, 2017
to Dec. 31,
20173,028,323

4,363,420

5,659,831

4,708,487

7,212,580-

228,8276,414(90,516)(111,399)

3,790,905

4,359,527

5,429,192

4,880,081

7,496,535

1,187

1,186

1,477

1,264

1,564

3,027,614

4,135,302

5,429,192

4,799,004

7,323,980

948

1,125

1,477

1,243

1,528

763,290

224,225-

81,077

172,554

Period
Calculated Period(Refund of investment
per unit)(JPY)
Total distribution fromthe allowance fortemporary differences
adjustment out of total
refund of investment(JPY thousand)(Distribution from theallowance fortemporary differences
adjustment per unit outof refund ofinvestment per unit)(JPY)
Total distribution fromunitholders’ equity
under the tax laws outof the total refund ofinvestment(JPY thousand)Distribution fromunitholders’ equity
under the tax laws outof refund ofinvestment per unit
(JPY)
5

25th fiscal
periodJul. 1, 2015
to Dec. 31,
2015

26th fiscal
periodJan. 1, 2016
to Jun. 30,
2016

27th fiscal
periodJul. 1, 2016
to Dec. 31,
2016

28th fiscal
periodJan. 1, 2017
to Jun. 30,
201729th fiscal
periodJul. 1, 2017
to Dec. 31,
2017

239

61

-

21

36

-

224,225-

46,329

-

-

61

-

12

-

763,290--

34,747

172,554

239

-

-

9

36

Future Operational Policy and Issues to be Addressed
Outlook for the Fiscal Period Ending June 30, 2018 and December 31, 2018
The DPU (including excess profit distribution) for the June 2018 and December 2018 periods are forecast to be JPY
1,383 (+9.4% YoY) and JPY 1,562 (-0.1% YoY), respectively. The full year DPU (including excess profit
distribution) for calendar year 2018 is forecast to be JPY 2,945 (+4.1% 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,
in addition to continued access to Fortress’s global real estate expertise, INV will seek to leverage the resources thatare expected to become available through SoftBank Group. SoftBank Group has market-leading expertise intechnology 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, will enhance the ongoing initiatives to improve its digital marketing, minimize labor costs and increasecustomer engagement. For example, INV plans to pursue opportunities to better manage the increased number offoreign visitors and their related online research, bookings and payments, improve the process in setting hotel rates
and manage overbooking through the use of sophisticated AI algorithms, and reduce labor costs while enhancing
customer service through the use of robotics.
In addition to pursuing synergy with Softbank Group, going forward, INV will continue to implement various
strategies to maintain further growth and financial stability, including the following measures.
•••

Continuous acquisition of properties from large pipeline provided by the sponsor and third parties
Further internal growth at hotel and residential properties
Diversification of financing measures including the issuance of investment corporation bonds andextension and diversification of loan maturities

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
can be achieved. Rent revenue from residential assets and other assets as well as the fixed rent portion fromhotels will also contribute to more stable revenue, which was 67.2% 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,with the aim of acquiring properties where growth and stability of GOP and rental revenue are forecasted toincrease. On February 7, 2018, INV acquired four hotels as mentioned in below “6 Significant Subsequent
Events (a) Acquisition of assets.”
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
with strong competitiveness in large cities, in which it believes it can achieve increases in rent.
INV has achieved steady external growth via the sponsor pipeline from the Fortress Group, as follows.

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

Properties acquired

Total acquisition price

September 201224 residential properties

JPY 14,043 million

May 2014
July 2014

Two hotels
18 hotels

JPY 5,435 million
JPY 39,938 million

February 2015

Two hotels
11 hotels andthree residential properties

JPY 4,911 million

July 2015
August 2015

JPY 35,258 million

June 2016

One hotel
Five hotels andone residential property
Four hotels andone residential property
Two hotels

March 2017
May 2017

Two residential properties
One hotel

JPY 24,562 million
JPY 8,000 million

October 2017
February 2018

Five hotels (Note 2)
Four hotels

JPY 57,444 million (Note 2)
JPY 12,425 million

Total

87 properties(of which 56 are hotels and 31 areresidential properties)

JPY 307, 889 million(of which hotels: JPY 256, 251 million;
residential: JPY 51,638 million)

January 2016
March 2016

JPY 5,069 million
JPY 10,207 million
JPY 66,697 million
JPY 15,900 million

The Fortress Group manages four dedicated Japanese real estate funds, including the Fortress Japan Opportunity
Funds I, II, and III. The Fortress Group’s committed equity is over JPY 300 billion and the number of properties
that the Fortress Group is invested in exceeds 1,400. In order to ensure future growth options for the portfolio,
INV entered into an updated MOU with affiliates of the Fortress Group that provides preferential negotiationrights with respect to the acquisition of 17 hotels and nine residential properties (see the table below) (Note 2). 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 willcontribute to stability and growth in revenue and cash flow and an increase in DPU.
No.

Asset name

Asset type (Note 3)

Location

No. of rooms

Limited Service Hotel

Minato-ku, Tokyo

327

1

Hotel MyStays Premier Akasaka

2

Rihga Royal Hotel Kyoto

Full Service Hotel

Kyoto-shi, Kyoto

489

3

Hotel MyStays Premier Narita

Full Service Hotel

Narita, Chiba

711

4

Hotel MyStays Premier Sapporo
Park

Full Service Hotel

Sapporo, Hokkaido

418

5

Fusaki Resort Village

Resort Service Hotel

Ishigaki, Okinawa

188

6

Art Hotel Asahikawa

Full Service Hotel

Asahikawa, Hokkaido

265

7

Hotel MyStays Kanazawa Castle

Limited Service Hotel

Kanazawa, Ishikawa

206

8

Hotel MyStays Matsuyama

Full Service Hotel

Matsuyama, Ehime

161

9

Hotel MyStays Ueno East

Limited Hotel

Taito-ku, Tokyo

150

Limited Hotel

Osaka, Osaka

108

Limited Service Hotel

Sapporo, Hokkaido

86

Limited Service Hotel

Yokohama, Kanagawa

70

10 Hotel MyStays Midosuji Honmachi
11

S Hotel Mystays Sapporo Nakajima
Park

12 Flexstay Inn Sakuragicho

No.

Asset name

Asset type (Note 3)

Location

No. of rooms

13

MyCUBE by MYSTAYS Asakusa
Kuramae

Limited Service Hotel

Taito-ku, Tokyo

161

Resort HotelFujiyoshida, Yamanashi

159

15 Hotel Nord Otaru

Limited Service Hotel

Otaru, Hokkaido

98

16 Hotel Sonia Otaru

Limited Service Hotel

Otaru, Hokkaido

94

Full Service Hotel

Niigata, Niigata

304

14 Hotel MyStays Fuji Onsen Resort

17 Art Hotel Niigata Station

Hotel subtotal

3,995

18 Gran Charm Hiroo

Residential/Small TypeShibuya-ku, Toky

121

19 Plestay Win Kinshicho

Residential/Small Type

Sumida-ku, Tokyo92

20 Gran Charm Kichijoji

Residential/Small TypeMusashino, Tokyo28

21 Green Patio Noda

Residential/Small Type

Noda, Chiba

240

22 Dainichi F‐45

Residential/Small Type

Urayasu, Chiba

54

23 Gran Charm Urayasu

Residential/Small Type

Urayasu, Chiba

54

24 Gran Charm Urayasu 5

Residential/Small Type

Urayasu, Chiba

54

25 Gran Charm Minami Gyotoku I

Residential/Small Type

Ichikawa, Chiba

52

26 Gran Charm Minami Gyotoku II

Residential/Small Type

Ichikawa, Chiba

48

Residential property subtotal

743

Total

4,738

(Note 1)The percentage indicates composition of rent revenue based on the actual results for the fiscal period ended
December 2017.

(Note 2)

Sheraton Grande Tokyo Bay Hotel acquired by the TMK, of which INV owned the preferred equity interest,
is counted as one property and the INV’s investment amount to the preferred equity interest is counted as
the acquisition price of the preferred equity interest.

(Note 3)

The term of validity of the MOU is from September 21, 2017, the date of execution of the updated MOU, toSeptember20, 2018. Regarding the 26 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 theincreased 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 54 hotels owned by INV as of the end of the Reporting Period, 45 hotels use a variable rent scheme. In thevariable 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 casewhere 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 41 hotels (Note 1), MHM has implemented sophisticated revenue
management 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 other 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 is indispensable to maintain and increase
revenues. In the fiscal period ending June 2018, INV plans to renovate the following five hotels; Hotel MyStays
Kyoto-Shijo, MyStays Shinurayasu Conference Center, Hotel MyStays Maihama and Hotel MyStays Dojima andHotel Nets Hakodate.
(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 thehigh-season in the residential rental market that occurs during the June 2018 period, INV will focus on
increasing the occupancy rate and rent for both new lease contracts and lease renewals for each 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 inmaintaining and enhancing the competitiveness and market value of the properties as well as ensuring stable
operations and high tenant satisfaction. Therefore, INV will continue to monitor current strategic plans withflexible implementation as it sees fit.
(Note 1)

Hotel MyStays Dojima (former Hotel Vista Premio Dojima), whose operator was changed effective on
August 1, 2017, is included. As of the date of this document, MHM manages 45 hotels in INV’s
portfolio, including the four hotels acquired on February 7, 2018. In addition, MHM will commence tomanagement one hotel as of May 1, 2018.

(iii) Financial strategy
In the Reporting Period, INV further stabilized its financial base executing a public offering in October 2017, byborrowing new loans in connection with the public offering, and strengthening and maintaining relationships
with existing lenders. Going forward, INV will work on diversifying financing measures including issuinginvestment corporation bonds. Also, INV seeks to maximize unitholders’ value by way of extension of loan tenor,
diversification of loan maturity dates, further reduction of borrowing costs 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 eachmeeting 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 otherrelevant matters as well as overall management of transactions with sponsor related parties. Moreover, it has in placea compliance committee which, chaired by such compliance officer, is in charge of deliberating on compliance withlaws, regulations and other relevant matters as well as transactions with sponsor related parties. Compliancecommittee 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 relatedparties 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.

6

Significant Subsequent Events
INV used the proceeds from the above sales and previous asset sales to acquire four hotels on February 7, 2018 fromaffiliates of the Sponsor, FIG, for a price of JPY 12,425 million and at an average appraisal NOI cap rate of 6.2%. The
four hotels are well located and positioned in their respective sub-markets and are all operated by MHM. Thisacquisition was accretive to the portfolio on an NOI basis and occurred without issuing any new debt or equity.

INV announced the sale of Lexington Plaza Nishi-Gotanda (“Nishi-Gotanda”), a non-core office building, for JPY
5,160 million at an NOI cap rate of 4.2%, or 3.2% after depreciation. The sale is at a JPY 498 million or 10.7%
premium to book value and a JPY 910 million or 21.4% premium to appraisal value. Furthermore, INV gained JPY
4,700 million of cash on hand from the sale of Nishi-Gotanda on March 9, 2018, and is currently working on several
acquisitions to further invest the cash by utilizing the Sponsor pipeline.
(a)Acquisition of assets
The Asset Manager decided to acquire four hotels on February 5, 2018, and acquisition of assets has been closed
on February 7, 2018 as follows:

Use

Location

Acquisition
price(JPY million)

Appraisal
value(JPY million)(Note 1)

SellerHotel MyStays
Yokohama-Kannai

Yokohama,
Kanagawa

5,326

5,380

Ginga Tokutei Mokuteki
KaishaD55

Art Hotel Joetsu

Joetsu, Niigata

2,772

2,800

HL Investments Tokutei
Mokuteki Kaisha

D56

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
Kaisha12,425

12,550Property
number

Property name

D54

Hotel

Total

Categoryof specified
asset

Trust
Beneficial
Interest(Note 1) 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.

(b)

Use

OfficeBuilding

Sale of asset

Property
number

Property name

B14

Lexington Plaza
Nishi-Gotanda

Difference
Acquisition
Book value
Sales price b/w sales price
price(JPY million) (JPY million)
and book(JPY million)(Note 1)
(Note 2)
value
(Note 1)

4,880

4,639

5,160

520

Transferee

Categoryof specified
asset

Undisclosed(Note 3)Trust
BeneficiaryInterest(Note 4)(Note 1) The book values are as of December 31, 2017. The difference between sales price and book value is provided
for reference purpose. INV estimates to recognize a gain on sales of JPY 395 million in the June 2018 period,
after deducting sales-related expenses.
(Note 2) Sales prices do not include adjustments for fixed asset taxes or city planning taxes, or national or local
consumption taxes.
(Note 3) The name of the transferee is not disclosed, as the transferee’s consent has not been obtained for disclosure.

Overview of the Investment Corporation
1

Overview of Investment
By Period
Results Dates

25th fiscal
periodAs of Dec. 31,
2015

26th fiscal
periodAs of Jun. 30,
2016

27th fiscal
periodAs of Dec. 31,
2016

28th fiscal
periodAs of Jun. 30,
201729th fiscal
periodAs of Dec. 31,
2017

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000

3,193,686

3,675,824

3,675,824

3,860,824

4,793,181

82,465

120,367

120,367

128,984

168,798

10,587

12,135

15,634

17,493

26,761

Number of issuable
investment units(Unit)
Number ofinvestment units
issued andoutstanding(Unit)
Unitholders’ capital(JPY million)
Number of total
unitholders
2

Notes regarding Unitholders

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

Number of units held

Calliope Godo Kaisha
The Master Trust Bank of Japan, Ltd.
(trust account)
Japan Trustee Services Bank, Ltd.
(trust account)
Trust & Custody Services Bank, Ltd.
(securities investment trust account)
Rayo Godo Kaisha
The Nomura Trust and Banking Co.,
Ltd. (investment trust account)
THE BANK OF NEW YORKMELLON SA/NV 10
JP MORGAN CHASE BANK 385628
STATE STREET BANK - WESTPENSION FUND CLIENTS EXEMPT 505233
STATE STREET BANK AND TRUSTCOMPANY 505223
Total(Note) Percentages are rounded down to two decimal places.

% of total number of investment
units issued and outstanding

609,942

12.72

599,567

12.50

464,824

9.69

194,917

4.06

149,925

3.12

146,937

3.06

130,716

2.72

74,626

1.55

61,082

1.27

57,9161.20

2,490,452

51.95

3

Notes regarding Directors

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

Position

Name

Executive Director

Naoki Fukuda
Takashi Takahashi

Supervisory Director
Hiroyuki Fujimoto

Auditor(Note)

Primary responsibilities
President and CEO,
Consonant Investment
Management Co., Ltd.
Attorney,
Ocean General Law Office
Tax accountant,
CPA Fujimoto OfficeOutside Auditor,
BRYCEN Co., Ltd.
(current position)
Outside Director, Audit& Supervisory
Committee Member of
NEO MARKETING
INC. (current position)

Ernst & Young
ShinNihon LLC-

Directors’ remunerationfor operating period(JPY thousand)
2,400

2,400

39,800Executive and supervisory directors do not hold INV’s units either in their names or in the names of third parties.
In addition, while they may be directors of organizations not listed above, those organizations as well as thoselisted above have no conflicts of interest with INV.

Determination policy for dismissal or non-reappointment of Auditor
The auditing agreement with the auditor is renewed every accounting period. Dismissals are made inaccordance with the Investment Trust Act, and in addition, non-reappointments are considered by the boardof directors of INV by comprehensively taking into account the auditing quality, auditor remuneration, andother various circumstances.

4

Asset Management Company, Asset Custody Companies, and General Administrative AgentsThe asset management company, asset custody companies, and general administrative agents at the end of
the Reporting Period are as below.
Delegation category
Asset management company
Asset custody company
General administrative agent (institutional operations(Note 1) administration of unitholders’ registry, etc.)
General administrative agent (institutional operations(Note 2))
General administrative agent (accounting operations,etc.)
Special account management company

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

Status of Investment Corporation’s Assets under Management
1

Composition of INV’s Assets
Fiscal period ended June 30, 2017(as of June 30, 2017)

Type of

Purpose

Geographic area

asset

(Note 1)

Percentage of
total assets(%)

Amount held
(JPY million)(Note 2)

Greater Tokyo
area
Major regional
Residences
citiesSubtotal
Greater Tokyo
area
Offices/Commercial Major regional
Facilities
citiesSubtotalRealestateGreater Tokyo
area
Major regional
Parking lots, etc.
citiesSubtotal
Greater Tokyo
area
Major regional
HotelscitiesSubtotal
Total real estate
Greater Tokyo
area
Major regional
Residences
citiesSubtotal
Greater Tokyo
area
Offices/Commercial Major regional
Facilities
citiesReal
Subtotalestate inGreater Tokyo
trust
area
Major regional
Parking lots, etc.
citiesSubtotal
Greater Tokyo
area
Major regional
HotelscitiesSubtotal
Total real estate in trust (Note 3)
Deposits and other assets
Total assets (Note 4)

Fiscal period ended December 31, 2017(as of December 31, 2017)
Percentage of
total assets(%)

Amount held
(JPY million)(Note 2)

-

-

-

-

-

-

-

-

-

-

-

-

703

0.2

-

-

-

-

-

-

703

0.2

-

-

100

0.0

-

-

-

-

-

-

100

0.0

-

-

2

0.0

2

0.0

-

-

-

-

2
806

0.0
0.3

2
2

0.0
0.0

77,07325.2

74,091

19.9

16,0395.2

15,858

4.3

93,11330.4

89,949

24.2

6,990

2.3

5,765

1.6

5,732

1.9

5,666

1.5

12,722

4.2

11,432

3.1

-

-

-

-

-

-

-

-

-

-

-

-

109,90735.9

121,22532.6

75,98824.8

105,09928.3

185,895

60.7

226,32560.9

291,73195.2

327,706

88.2

-

-

17,854

4.8

13,883
306,421(292,537)

4.5
100.0
(95.5)

26,193371,758(327,709)

7.0
100.0
(88.2)

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

(Note 2)

“Amount held” is from the balance sheet as of the end of the reporting period and is calculated by deducting
accumulated depreciation from the acquisition price (including acquisition related costs).

(Note 3)Preferred equity securities 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 same shall apply hereinafter in this document.

(Note 4)

The figures indicated in parenthesis under “Total assets” show the amounts related to owned real estate(excluding the amount of preferred equity securities owned).

2

Major Properties

The overview of the Investment Corporation’s major properties (top 10 properties by book value) at the endof the Reporting Period is as below.

Name of property

D43

Hotel MyStays Gotanda Station (Note 3)

A105 Royal Parks Tower Minami-Senju

Occupancy rate

Ratio of(%)

rental revenue

Book value

Leasable area

Leased area

(JPY million)

(m2)

(m2)

26,493

10,137.88

10,137.88

100.0

3.7

Hotel

22,645

39,113.46

36,814.84

94.1

6.5

Residence

Main use(Note 1) (Note 2) (%) (Note 2)

D44

Hotel Epinard Nasu

20,47637,702.33

37,702.33

100.0

9.7

Hotel

D47

Hotel MyStays Premier Kanazawa

13,45013,250.03

13,250.03

100.0

3.2

Hotel

13,066

13,026.99

13,026.99

100.0

2.3

Hotel

Hotel MyStays Shin Osaka Conference
D50
CenterD51

Hotel MyStays Premier Omori

9,777

11,849.61

11,849.61

100.0

1.4

Hotel

D52

Beppu Kamenoi Hotel

8,818

19,422.08

19,422.08

100.0

1.9

Hotel

D49

Hotel MyStays Premier Hamamatsucho

8,000

6,151.93

6,151.93

100.0

2.0

Hotel

D21

APA Hotel Yokohama-Kannai

7,971

6,568.51

6,568.51

100.0

2.0

Hotel

D45

Hotel MyStays Fukuoka Tenjin

7,953

5,083.06

5,083.06

100.0

2.1

Hotel

138,656

162,305.88

160,007.26

98.6

35.0

-

Total

(Note 1) “Occupancy rate” is computed by dividing the leased area by leasable area.
(Note 2) “Occupancy rate” and “Ratio of rental revenue” are rounded to one decimal place.
(Note 3) On October 31, 2017, INV acquired the exclusive area for which guest room expansion work was implemented (the“Floor Expansion Portion”) as an addition to the exclusive area of the property INV had owned (the “Owned
Portion”). INV operates the Owned Portion and the Floor Expansion Portion as one, and thus book value, leasablearea, leased area and other figures indicate the total of the Owned Portion and the Floor Expansion Portion unlessotherwise specified. The same shall apply hereinafter in this document.
(Note 4) In addition to the above, INV owns preferred equity securities in Kingdom Special Purpose Company (book valueof JPY 17,854 million as of the end of the 29th fiscal period).

3

Asset Portfolio of Real Estate, etc.

The portfolio of the properties (real estate and trust beneficiary interest in real estate) held by theInvestment Corporation at the end of the Reporting Period is as below.

Name of property

Location(Note 1)

Legal form of Leasable area
asset
(m2)

Appraisal value
as of December Book value
31, 2017(JPY(JPY million)
million)(Note 2)

1-31-2 Izumi, Suginami-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

1,771.13

1,180

1,115

2,681.94

1,300

1,083

A26

Nisshin Palacestage
Daitabashi

A27

Nisshin Palacestage HigashiNagasaki

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

Trust
beneficiaryinterest(Note 3)Growth Maison Gotanda

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

Trust
beneficiaryinterest(Note 3)

1,051.50

1,030

821

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

Trust
beneficiaryinterest(Note 3)

1,367.96

1,130

974

2,152.31

1,410

1,357

A28

A29

Growth Maison Kameido

A30

Emerald House

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

Trust
beneficiaryinterest(Note 3)

A31

Harmonie Ochanomizu

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

Trust
beneficiaryinterest

1,748.24

1,420

1,346

3,029.16

1,090

1,081

A32

Suncrest Shakujii-Koen

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

Trust
beneficiaryinterest(Note 3)A33

Growth Maison
Shin-Yokohama

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

Trustbeneficiaryinterest(Note 3)

1,858.44

1,180

956

A34

Belle Face
Ueno-Okachimachi

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

Trust
beneficiaryinterest(Note 3)

1,351.11

1,070

946

1,562.26

999

819

952.89

915

743

A35

Grand Rire Kameido

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

Trust
beneficiaryinterest(Note 3)A36

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

Trust
beneficiaryinterestName of property

A37

A38

A39

Location(Note 1)

Legal form of Leasable area
asset
(m2)

Appraisal value
as of December Book value
31, 2017(JPY(JPY million)
million)(Note 2)Growth Maison Yoga

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

Trust
beneficiaryinterest(Note 3)

Route Tachikawa

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

Trust
beneficiaryinterest(Note 3)

1,368.57

660

639

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

Trust
beneficiaryinterest(Note 3)

1,167.50638

661

1,235.93

499

655

Shibuya-Honmachi Mansion

1,015.34

730

744

A40

City Heights Kinuta

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

Trust
beneficiaryinterest(Note 3)

A41

Acseeds Tower
Kawaguchi- Namiki

2-5-13 Namiki, Kawaguchi-shi,
SaitamaTrustbeneficiaryinterest(Note 3)

1,210.74

726

536

A42

Capital Heights Kagurazaka

71-1 Enokicho, Shinjuku-ku, Tokyo

Trust
beneficiaryinterest

1,126.65

587

623

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

Trust
beneficiaryinterest(Note 3)

1,047.75

535

558

Belair Meguro

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

Trust
beneficiaryinterest(Note 3)557.05607

557

Wacore Tsunashima I

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

Trustbeneficiaryinterest(Note 3)907.46515

525

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

Trust
beneficiaryinterest(Note 3)815.77570

518

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

Trustbeneficiaryinterest(Note 3)2,040.27476

515

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

Trust
beneficiaryinterest(Note 3)871.35

548

453

A43

A44

A45

A46

A47

A48

College Square Machida

Foros Nakamurabashi

Growth Maison Kaijin

College Square Machiya

Location(Note 1)Name of property

Legal form of Leasable area
asset
(m2)

Appraisal value
as of December Book value
31, 2017(JPY(JPY million)
million)(Note 2)

A51

City House Tokyo Shinbashi

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

Trust
beneficiaryinterest

3,364.00

3,260

2,316

A52

Winbell Kagurazaka

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

Trust
beneficiaryinterest

4,032.70

4,030

3,040

A53

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

Trust
beneficiaryinterest

4,310.77

2,540

1,880

A54

Lexington Square
Akebonobashi

3-8 Yochomachi, Shinjuku-ku, Tokyo

Trust
beneficiaryinterest

1,987.88

1,860

1,322

A59

Towa City Coop ShinotsukaII

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

Trustbeneficiaryinterest

1,627.13

1,080

821

A61

Bichsel Musashiseki

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

Trust
beneficiaryinterest

1,220.24

719

554

A63

Towa City Coop Sengencho

Trustbeneficiaryinterest

3,426.36

1,350

1,013

A64

Royal Park Omachi

Trustbeneficiaryinterest

1,929.59

560

390

A65

Lexington Square
Haginomachi

Trustbeneficiaryinterest

1,528.58

446

282

A66

Visconti Kakuozan

Trustbeneficiaryinterest

705.75

273

230

A71

Lexington Square Daitabashi

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

Trust
beneficiaryinterest

1,430.64

1,200

852

A72

Lexington Square Honjo
Azumabashi

4-20-6 Higashi-Komagata, Sumida-ku,

Trustbeneficiaryinterest

784.74

624

436

A73

AMS TOWER Minami 6-Jo

Trust
beneficiaryinterest

4,460.56

1,270

960

A75

Spacia Ebisu

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

Trust
beneficiaryinterest

7,794.91

8,060

6,487

A76

Neo Prominence

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

Trust
beneficiaryinterest

3,574.70

1,980

1,613

A77

Invoice Shin-Kobe
Residence

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

Trustbeneficiaryinterest

2,773.71

1,430

1,172

Tokyo

4-338-2 Sengencho, Nishi-ku,
Yokohama-shi, Kanagawa
2-11-10 Omachi, Aoba-ku, Sendai-shi,
Miyagi1-15-16 Haginomachi, Miyagino-ku,
Sendai-shi, Miyagi
2-44 Otanacho, Chikusa-ku, Nagoya-shi,
Aichi

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

HyogoLocation(Note 1)Name of property

A78

Cosmo Court Motomachi

A79

Revest Honjin

A80

Revest Matsubara

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

3-12-20 Motomachidori, Chuo-ku,
Kobe-shi, Hyogo
2-13 Toriidori, Nakamura-ku, Nagoya-shi,
Aichi
3-13-12 Matsubara, Naka-ku, Nagoya-shi,
Aichi
3-6-8 Noritake Shinmachi, Nishi-ku,
Nagoya-shi, Aichi
2-13-33 Meieki-Minami, Nakamura-ku,
Nagoya-shi, Aichi
2-13-17 Heian, Kita-ku, Nagoya-shi,
Aichi

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

2-6-21 Shimanouchi, Chuo-ku, Osaka-shi,Osaka128-1 Yamabukicho, Shinjuku-ku, Tokyo,
and other one parcel
3-4-11 Edobori, Nishi-ku, Osaka-shi,Osaka
7-2-2 Motomachidori, Chuo-ku,
Kobe-shi, Hyogo

1-3-10 Fukuzumi, Koto-ku, Tokyo
380-1 Kawaranomachi, Higashinotoindori
Nijo Kudaru, Nakagyo-ku, Kyoto-shi,
Kyoto, and other two parcels

A92

Belair Oimachi

A93

Siete Minami-Tsukaguchi

A94

Prime Life Sannomiya
Isogami Koen

5-14-17 Higashi-Oi, Shinagawa-ku,
Tokyo
3-18 Minami-Tsukaguchimachi,
Amagasaki-shi, Hyogo
4-3-23 Isogamidori, Chuo-ku, Kobe-shi,
Hyogo

Legal form of Leasable area
asset
(m2)

Appraisal value
as of December Book value
31, 2017(JPY(JPY million)
million)(Note 2)Trust
beneficiaryinterest

2,310.49

1,090

898

Trust
beneficiaryinterest

1,933.80

813

620

Trust
beneficiaryinterest

1,955.40

797

609

Trust
beneficiaryinterest

1,731.68

733

560

Trust
beneficiaryinterest

1,634.60

715

550

Trust
beneficiaryinterest

1,554.03

694

549

Trust
beneficiaryinterest

2,670.66

738

529

Trust
beneficiaryinterest

1,428.12

648

504

Trust
beneficiaryinterest

701.92

635

513

Trust
beneficiaryinterest

1,185.50

570

487

Trust
beneficiaryinterest

1,433.35

609

470

Trust
beneficiaryinterest

765.18

604

433

Trust
beneficiaryinterest

1,029.05

516

418

Trust
beneficiaryinterest

530.60

511

392

Trust
beneficiaryinterest

1,020.86

449

351

Trust
beneficiaryinterest

789.12

438

348

Location(Note 1)Name of property

Legal form of Leasable area
asset
(m2)

Appraisal value
as of December Book value
31, 2017(JPY(JPY million)
million)(Note 2)Trust
beneficiaryinterest

992.76

433

332

Trust
beneficiaryinterest

1,477.62

425

321

Trust
beneficiaryinterest

794.80

313

313

Trust
beneficiaryinterest

974.81

398

292

Trust
beneficiaryinterest

761.18

337

276

Trust
beneficiaryinterest

5,230.18

1,950

1,791

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

Trust
beneficiaryinterest

2,940.20

1,730

1,705

Lieto Court Nishi-Ojima

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

Trust
beneficiaryinterest

2,048.28

1,720

1,649

A103

Royal Parks Momozaka

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

Trust
beneficiaryinterest

8,776.26

3,080

2,908

A104

Royal Parks Shinden

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

Trust
beneficiaryinterest

15,797.29

5,490

5,072

A105

Royal Parks Tower
Minami-Senju

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

Trust
beneficiaryinterest

39,113.46

22,70022,645

A106

Royal Parks Seasir
Minami-Senju

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

Trust
beneficiaryinterest

6,496.86

2,720

2,787

185,921.64

102,353

89,949A95

HERMITAGE NANBA
WEST

4-10-3 Sakuragawa, Naniwa-ku,

A96

Century Park Shinkawa
1-bankan

4-1-2 Shinkawacho, Minato-ku,

A97West Avenue

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

A98

Little River Honmachibashi

A99

Prime Life Mikage

A100

City Court Kitaichijo

A101

Lieto Court Mukojima

A102

Osaka-shi, Osaka

Nagoya-shi, Aichi

1-34 Honmachibashi, Chuo-ku,
Osaka-shi, Osaka
2-25-11 Mikage Tsukamachi,
Higashinada-ku, Kobe-shi, Hyogo
1-6-3 Kita 1-jo Higashi, Chuo-ku,
Sapporo-shi, Hokkaido

Subtotal

B14

Lexington Plaza
Nishigotanda

5-2-4 Nishi-Gotanda, Shinagawa-ku,
Tokyo

Trust
beneficiaryinterest

6,033.58

4,250

4,639

B15

Cross Square NAKANO

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

Trust
beneficiaryinterest

2,145.00

1,170

1,125

B16

Ohki Aoba Building

9-7 Futsukamachi, Aoba-ku,
Sendai-shi, Miyagi

Trustbeneficiaryinterest

2,178.37

710

709

Location(Note 1)Name of property

Legal form of Leasable area
asset
(m2)

Appraisal value
as of December Book value
31, 2017(JPY(JPY million)
million)(Note 2)

B17

Lexington Plaza Hachiman

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

Trustbeneficiaryinterest

8,419.15

3,690

3,072

B18

AEON TOWN Sukagawa

105 Furukawa, Sukagawa-shi,
Fukushima

Trust
beneficiaryinterest

18,440.58

2,410

1,885

37,216.68

12,23011,432

Subtotal

D01

Hotel MyStays Kanda

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

Trust
beneficiaryinterest

2,585.72

5,020

3,022

D02

Hotel MyStays Asakusa

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

Trust
beneficiaryinterest

3,327.38

4,970

2,569

D03

Hotel MyStays Kyoto-Shijo

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

Trustbeneficiaryinterest

7,241.51

15,1005,757

D04

MyStays Shin-Urayasu
Conference Center

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

Trustbeneficiaryinterest

6,232.30

7,140

4,701

D05

Hotel MyStays Maihama

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

Trustbeneficiaryinterest

2,456.36

6,580

4,666

D06

Hotel MyStays Premier
Dojima (Note 4)2-4-1 Sonezakishinchi, Kita-ku, Osaka

Trust
beneficiaryinterest

9,445.32

7,340

3,663

D07

Hotel MyStays
Nagoya-Sakae

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

Trust
beneficiaryinterest

9,064.71

5,950

2,751

D08

Hotel MyStays
Sakaisuji-Honmachi

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

Trust
beneficiaryinterest

4,188.83

7,750

2,431

D09

Hotel MyStays Yokohama

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

Trustbeneficiaryinterest

7,379.43

3,500

2,017

D10

Hotel MyStays Nippori

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

Trust
beneficiaryinterest

1,719.29

3,100

1,830

D11

Hotel MyStays
Fukuoka-Tenjin-Minami

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

Trustbeneficiaryinterest

3,412.71

5,060

1,518

D12

Flexstay Inn Iidabashi

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

Trust
beneficiaryinterest

2,953.38

2,020

1,371

D13

Hotel MyStays Ueno
Inaricho

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

Trust
beneficiaryinterest

1,150.76

2,350

1,270

Name of property

Location(Note 1)

Legal form of Leasable area
asset
(m2)

Appraisal value
as of December Book value
31, 2017(JPY(JPY million)
million)(Note 2)

D14

Flexstay Inn Shinagawa

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

Trust
beneficiaryinterest

1,134.52

2,040

1,215

D15

Flexstay Inn Tokiwadai

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

Trust
beneficiaryinterest

2,539.75

2,210

1,220

D16

Flexstay Inn Sugamo

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

Trust
beneficiaryinterest

2,089.86

2,140

1,143

D17

Hotel MyStays Otemae

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

Trust
beneficiaryinterest

4,956.66

4,700

1,158

D18

Flexstay Inn Kiyosumi
Shirakawa

1-12-16 Tokiwa, Koto-ku, Tokyo

Trust
beneficiaryinterest

2,673.64

1,300

732

D19

Flexstay Inn Nakanobu P1

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

Trust
beneficiaryinterest

770.56

810

574

D20

Flexstay Inn Nakanobu P2

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

Trust
beneficiaryinterest

391.49

390

288

D21

APA Hotel
Yokohama-Kannai

3-37-2 Sumiyoshicho, Naka-ku,
Yokohama-shi, Kanagawa

Trustbeneficiaryinterest

6,568.51

9,650

7,971

D22

Hotel Nets Hakodate(Note 5)26-17 Honcho, Hakodate-shi,
Hokkaido

Trustbeneficiaryinterest

7,961.26

3,790

2,655

D23

Flexstay Inn Shirogane

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

Trust
beneficiaryinterest

1,754.06

2,310

2,104

D24

Hotel MyStays Haneda

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

Trust
beneficiaryinterest

5,400.16

8,320

7,527

D25

Hotel MyStays Kameido P1

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

Trust
beneficiaryinterest

4,349.67

7,020

5,486

D26

Hotel MyStays Ueno
Iriyaguchi

5-5-13 Higashi-Ueno, Taito-ku, Tokyo

Trust
beneficiaryinterest

2,247.92

4,130

3,744

D27

Hotel MyStays Kameido P2

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

Trust
beneficiaryinterest

2,793.99

4,750

3,671

D28

Hotel Vista Shimizu

1-23 Masagocho, Shimizu-ku,
Shizuoka-shi, Shizuoka

Trustbeneficiaryinterest

3,559.81

2,450

2,103

D29

Super Hotel Shinbashi/
Karasumoriguchi

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

Trust
beneficiaryinterest

1,403.89

1,790

1,608

Name of property

Location(Note 1)

Legal form of Leasable area
asset
(m2)

Appraisal value
as of December Book value
31, 2017(JPY(JPY million)
million)(Note 2)

D30

Flexstay Inn Higashi-Jujo

2-10-2 Nakajujo, Kita-ku, Tokyo

Trust
beneficiaryinterest

1,714.53

1,390

1,269

D31

Hotel MyStays Utsunomiya

2-4-1 Higashi-Shukugo,
Utsunomiya-shi, Tochigi

Trustbeneficiaryinterest

11,733.23

1,430

1,232

D32

Flexstay Inn
Kawasaki-Kaizuka

1-13-2 Kaizuka, Kawasaki-ku,
Kawasaki-shi, Kanagawa

Trustbeneficiaryinterest

1,190.57

1,180

945

D33

Comfort Hotel Toyama

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

3,305.64

1,090

948

D34

Flexstay Inn
Kawasaki-Ogawacho

15-9 Ogawacho, Kawasaki-ku,
Kawasaki-shi, Kanagawa

Trustbeneficiaryinterest

725.60

1,050

889

D35

Flexstay Inn Ekoda

8-6 Sakaecho, Nerima-ku, Tokyo

Trust
beneficiaryinterest

3,932.93

4,880

4,969

D36

Super Hotel Tokyo-JR
Tachikawa Kitaguchi

2-21-9 Akebonocho, Tachikawa-shi,
Tokyo

Trust
beneficiaryinterest

1,832.97

1,230

1,139

D37

Super Hotel JR
Ueno-iriyaguchi

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

Trust
beneficiaryinterest

1,279.16

1,220

1,108

D38

Hotel MyStays Shinsaibashi

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

Trust
beneficiaryinterest

1,942.01

3,410

3,109

D39

Comfort Hotel Kurosaki

3-13-13 Kurosaki, Yahatanishi-ku,
Kitakyusyu-shi, Fukuoka

Trustbeneficiaryinterest

3,207.60

1,220

1,110

D40

Comfort Hotel Maebashi

2-18-14 Omotecho, Maebashi-shi,
Gunma

Trust
beneficiaryinterest

3,660.96

1,170

1,101

D41

Comfort Hotel
Tsubame-Sanjo

2-115 Sugoro, Sanjo-shi, Niigata

Trustbeneficiaryinterest

3,099.90

1,070

985

D42

Comfort Hotel Kitami

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

Trustbeneficiaryinterest

3,009.50

904

822

D43

Hotel MyStays Gotanda
Station

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

Trust
beneficiaryinterest

10,137.88

27,40026,493

D44

Hotel Epinard Nasu

1-10 Kaidoue (and 59 other landparcels), Oaza-Takakuhei,
Nasu-machi, Nasu-gun, Tochigi

Trustbeneficiaryinterest

37,702.33

22,40020,476

D45

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

5,083.06

8,450

7,953

Location(Note 1)Name of property

Legal form of Leasable area
asset
(m2)

Appraisal value
as of December Book value
31, 2017(JPY(JPY million)
million)(Note 2)

D46

Hotel MyStays
Hamamatsucho

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

Trust
beneficiaryinterest

1,951.90

7,760

7,892

D47

Hotel MyStays PremierKanazawa

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

Trustbeneficiaryinterest

13,250.03

14,20013,450

D48

Takamatsu Tokyu REI Hotel

9-9 Hyogomachi, Takamatsu-shi,
KagawaTrustbeneficiaryinterest

7,148.17

2,210

2,116

D49

Hotel MyStays Premier
Hamamatsucho

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

Trust
beneficiaryinterest

6,151.93

8,080

8,000

D50

Hotel MyStays Shin Osaka
Conference Center

6-2-4 Nishinakashima, Yodogawa-ku,
Osaka-shi, Osaka and two other lots

Trust
beneficiaryinterest

13,026.99

13,20013,066

D51

Hotel MyStays PremierOmori

6-11-2 Minami Oi, Shinagawa-ku,
Tokyo and 13 other lots

Trust
beneficiaryinterest

11,849.61

9,880

9,777

D52

Beppu Kamenoi Hotel

2160-1 Chuocho, Beppu-shi, Oita and12 other lots

Trust
beneficiaryinterest

19,422.08

8,960

8,818

D53

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

Trustbeneficiaryinterest

7,267.88

7,960

7,867

Subtotal

285,379.91

285,424

226,328

Total

508,518.23

400,007327,709(Note 1) “Location” is, in principle, based on the indicated address (jyukyohyoji), except that if the jyukyohyoji system has
not been implemented for such property, the location is based on the land number (chiban).
(Note 2) “Appraisal value” is the value appraised or researched as of the end of the fiscal period in accordance with the
Articles of Incorporation of INV and the regulations of The Investment Trusts Association, Japan by Asset
Research and Development Inc., Japan Real Estate Institute, Morii Appraisal & Investment Consulting Inc., The
Tanizawa Sogo Appraisal Co., Ltd. or Daiwa Real Estate Appraisal Co., Ltd.
(Note 3) Individual 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 beneficiaryinterests at the end of the fiscal period ended December 31, 2017 is as follows:
Group 1
Nisshin Palacestage Daitabashi, Nisshin Palacestage Higashi-Nagasaki, Growth Maison Shin-Yokohama,
Belle Face Ueno-Okachimachi, Growth Maison Yoga, Shibuya-Honmachi Mansion, City Heights Kinuta, and Foros
Nakamurabashi.
Group 2Growth Maison Gotanda, Growth Maison Kameido, Emerald House, Route Tachikawa, College Square Machida,
Belair Meguro, and Wacore Tsunashima I.
Group 3
Suncrest Shakujii-Koen, Grand Rire Kameido, Acseeds Tower Kawaguchi-Namiki, Growth Maison Kaijin, andCollege Square Machiya.

(Note 4)

With the change of operator, the property name was changed from Hotel Vista Premio Dojima on August 1, 2017.
The name was changed again on March 10, 2018 to Hotel MyStays Premier Dojima. The same shall apply
hereinafter in this document.

(Note 5)

With the change of operator, the property name is scheduled to be changed to Hotel MyStays Hakodate-Goryokaku
on May 1, 2018.

(Note 6)

Appraisal value at the end of the period indicates appraisal value calculated deeming the Owned Portion and the
Floor Expansion Portion as one.

Trends for the leasing operations of the properties owned by INV are as below.

Name of property

28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)29th fiscal period(July 1, 2017 to December 31, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)

A26

Nisshin Palacestage
Daitabashi

1

89.8

39,187

0.4

1

92.9

37,9350.3

A27

Nisshin Palacestage
Higashi- Nagasaki

1

93.6

46,598

0.5

1

97.2

44,9360.4

A28

Growth Maison Gotanda

1

100.0

27,339

0.3

1

100.0

27,4290.2

A29

Growth Maison Kameido

1

92.4

33,024

0.4

1

94.0

34,0060.3

A30

Emerald House

1

98.9

49,146

0.5

1

96.8

42,5690.4

A31

Harmonie Ochanomizu

1

97.5

41,938

0.5

1

97.4

40,3270.4

A32

Suncrest Shakujii-Koen

1

94.7

39,074

0.4

1

100.0

36,1460.3

A33

Growth Maison
Shin-Yokohama

1

97.1

35,752

0.4

1

95.5

33,5180.3

A34

Belle Face
Ueno-Okachimachi

1

90.6

33,733

0.4

1

87.5

29,3470.3

A35Grand Rire Kameido

1

100.0

26,619

0.3

1

100.0

26,6190.2

A36

Growth Maison Ikebukuro

1

95.2

26,872

0.3

1

97.6

25,9130.2

A37Growth Maison Yoga

1

92.4

22,080

0.2

1

97.4

22,0040.2

A38

Route Tachikawa

1

89.8

21,618

0.2

1

100.0

20,3570.2

A39

Shibuya-Honmachi Mansion

1

100.0

20,042

0.2

1

91.3

19,6100.2

A40City Heights Kinuta

1

89.2

17,146

0.2

1

94.6

16,4990.1

A41

Acseeds Tower KawaguchiNamiki

1

98.3

25,110

0.3

1

96.5

24,6800.2

A42Capital Heights Kagurazaka

1

83.4

19,885

0.2

1

97.2

19,656

0.2

A43

College Square Machida

1

100.0

17,484

0.2

1

100.0

17,4840.2

A44

Belair Meguro

1

92.0

16,065

0.2

1

92.1

15,4620.1

A45

Wacore Tsunashima I

1

92.1

17,917

0.2

1

94.1

17,8790.2

A46

Foros Nakamurabashi

1

97.5

18,425

0.2

1

97.5

18,7300.2

A47

Growth Maison Kaijin

1

100.0

22,699

0.2

1

96.7

23,5100.2

A48

College Square Machiya

1

100.0

14,706

0.2

1

100.0

14,7060.1

A51City House Tokyo Shinbashi

1

92.8

90,996

1.0

1

96.5

91,8690.8

Name of property

28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)29th fiscal period(July 1, 2017 to December 31, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)

A52

Winbell Kagurazaka

1

98.4

105,442

1.1

1

97.9

106,463

0.9

A53

Nishiwaseda Cresent
Mansion1

100.0

74,338

0.8

1

98.8

73,034

0.6

A54

Lexington Square
Akebonobashi

1

96.6

52,492

0.6

1

96.5

50,044

0.4

A56

Casa Eremitaggio (Note 5)

1

94.0

32,5860.4-

32,725

0.3

A59

Towa City Coop Shinotsuka II

1

91.4

33,865

0.4

1

98.8

35,011

0.3

A61

Bichsel Musashiseki

1

95.7

23,233

0.3

1

94.4

23,5570.2

A62

Lexel Mansion Ueno
Matsugaya (Note 5)

1

92.7

35,106

0.4-

33,795

0.3

A63

Towa City Coop Sengencho

1

83.8

55,627

0.6

1

84.2

54,095

0.5

A64Royal Park Omachi

1

98.3

26,332

0.3

1

94.5

26,7900.2

A65

Lexington Square
Haginomachi

1

89.5

17,161

0.2

1

94.8

16,6710.1

A66

Visconti Kakuozan

1

88.6

10,730

0.1

1

83.8

10,327

0.1

A71

Lexington Square Daitabashi

1

92.2

31,574

0.3

1

100.0

31,873

0.3

A72

Lexington Square Honjo
Azumabashi

1

94.0

17,807

0.2

1

97.0

18,1080.2

A73

AMS TOWER Minami 6-Jo

1

79.7

44,905

0.5

1

81.2

42,8880.4

A75

Spacia Ebisu

1

95.2

214,592

2.3

1

91.2

208,979

1.8

A76

Neo Prominence

1

91.2

62,852

0.7

1

100.0

64,935

0.6

A77

Invoice Shin-Kobe Residence

1

91.7

45,538

0.5

1

100.0

49,8890.4

A78

Cosmo Court Motomachi

1

95.3

35,227

0.4

1

98.7

37,732

0.3

A79

Revest Honjin

1

92.5

32,201

0.3

1

91.2

29,7120.3

A80

Revest Matsubara

1

93.1

29,230

0.3

1

94.4

28,3880.2

A81

Sun Terrace Minami
Ikebukuro (Note 5)

1

86.8

22,5640.2-

22,533

0.2

A82

Alba Noritake Shinmachi

1

87.5

25,262

0.3

1

93.7

25,132

0.2

A83

Revest Meieki Minami

1

95.4

26,289

0.3

1

90.9

24,9790.2

A84

Revest Heian

1

100.0

23,712

0.3

1

95.2

23,6560.2

A85

Vendir Hamaotsu Ekimae

1

98.5

33,178

0.4

1

97.7

33,2790.3

A86

Salvo Sala

1

95.9

25,113

0.3

1

100.0

25,620

0.2

-

-

-

Name of property

28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)29th fiscal period(July 1, 2017 to December 31, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)

A87

Excellente Kagurazaka

1

94.1

18,775

0.2

1

94.1

17,9740.2

A88

Luna Court Edobori

1

94.0

20,548

0.2

1

94.0

20,7680.2

A89

Winntage Kobe Motomachi

1

85.9

20,080

0.2

1

94.8

20,8800.2

A90

Queen's Court Fukuzumi

1

95.9

17,350

0.2

1

89.7

17,2000.2

A91

Corp Higashinotoin

1

97.6

18,292

0.2

1

97.7

19,8470.2

A92

Belair Oimachi

1

96.1

15,291

0.2

1

92.9

14,6970.1

A93

Siete Minami-Tsukaguchi

1

95.0

17,206

0.2

1

90.1

16,6250.1

A94

Prime Life Sannomiya
Isogami Koen

1

96.9

14,025

0.2

1

100.0

15,321

0.1

A95

HERMITAGE NANBA
WEST

1

100.0

15,549

0.2

1

100.0

15,7670.1

A96

Century Park Shinkawa
1-bankan

1

88.7

17,688

0.2

1

95.4

17,0180.1

A97West Avenue

1

85.0

12,175

0.1

1

87.5

10,7150.1

A98

Little River Honmachibashi

1

87.7

13,459

0.1

1

90.7

12,8380.1

A99

Prime Life Mikage

1

96.6

12,663

0.1

1

96.7

12,2090.1

A100 City Court Kitaichijo

1

93.8

65,411

0.7

1

96.1

66,200

0.6

A101 Lieto Court Mukojima

1

97.0

54,123

0.6

1

99.0

54,091

0.5

A102 Lieto Court Nishi-Ojima

1

99.0

48,437

0.5

1

99.0

48,2980.4

A103 Royal Parks Momozaka

4

100.0

140,320

1.5

4

93.6

148,512

1.3

A104 Royal Parks Shinden

4

100.0

214,749

2.3

4

100.0

215,752

1.9

A105Royal Parks Tower
Minami-Senju

1

92.7

426,286

4.6

1

94.1

744,215

6.5

A106Royal Parks Seasir
Minami-Senju

1

100.0

55,958

0.6

1

95.7

96,1860.8

Subtotal

76

94.6

3,078,836

33.2

73

95.3

3,416,550

30.0

B08

Kindai Kagaku Sha Building(Note 5)1

100.0

36,913

0.4

-

-

6,827

0.1

B09

Shinjuku Island(Note 5)1100.0(Note 4)(Note 4)--(Note 4)(Note 4)

B14

Lexington Plaza Nishigotanda

8

100.0

144,100

1.6

7

100.0

152,362

1.3

B15

Cross Square NAKANO

1

87.3

43,431

0.5

1

95.2

46,5660.4

28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)Name of property

29th fiscal period(July 1, 2017 to December 31, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)

B16

Ohki Aoba Building

1

88.7

34,844

0.4

1

88.7

35,3180.3

B17Lexington Plaza Hachiman

1

100.0

161,712

1.7

1

100.0

165,805

1.5

B18

AEON TOWN Sukagawa

1

100.0

141,715

1.5

1

100.0

141,886

1.2

14

98.7

580,870

6.3

11

99.1

567,259

5.0

1

100.0

2,700

0.0

-

-

435

0.0

Subtotal

1

100.0

2,700

0.0

-

-

435

0.0

D01

Hotel MyStays Kanda

1

100.0

105,509

1.1

1

100.0

111,117

1.0

D02

Hotel MyStays Asakusa

1

100.0

116,739

1.3

1

100.0

106,946

0.9

D03

Hotel MyStays Kyoto-Shijo

1

100.0

321,887

3.5

1

100.0

315,937

2.8

D04

MyStays Shin-Urayasu
Conference Center

1

100.0

175,921

1.9

1

100.0

187,712

1.6

D05

Hotel MyStays Maihama

1

100.0

134,694

1.5

1

100.0

160,018

1.4

D06

Hotel Vista Premio Dojima

1

100.0

202,987

2.2

1

100.0

231,470

2.0

D07

Hotel MyStays
Nagoya-Sakae

1

100.0

188,852

2.0

1

100.0

220,601

1.9

D08

Hotel MyStays
Sakaisuji-Honmachi

1

100.0

161,661

1.7

1

100.0

176,288

1.5

D09

Hotel MyStays Yokohama

1

100.0

108,321

1.2

1

100.0

127,889

1.1

D10

Hotel MyStays Nippori

1

100.0

59,954

0.6

1

100.0

61,1520.5

D11Hotel MyStays
Fukuoka-Tenjin-Minami

1

100.0

133,097

1.4

1

100.0

167,915

1.5

D12

Flexstay Inn Iidabashi

1

100.0

50,702

0.5

1

100.0

52,6820.5

D13Hotel MyStays
Ueno Inaricho

1

100.0

55,096

0.6

1

100.0

50,4620.4

D14

Flexstay Inn Shinagawa

1

100.0

47,795

0.5

1

100.0

42,9550.4

D15

Flexstay Inn Tokiwadai

1

100.0

59,297

0.6

1

100.0

53,861

0.5

D16

Flexstay Inn Sugamo

1

100.0

56,654

0.6

1

100.0

49,6540.4

D17Hotel MyStays Otemae

1

100.0

124,567

1.3

1

100.0

127,898

1.1

D18

Flexstay Inn Kiyosumi
Shirakawa

1

100.0

40,634

0.4

1

100.0

36,9330.3

D19

Flexstay Inn Nakanobu P1

1

100.0

20,795

0.2

1

100.0

17,3740.2

Subtotalth

C01

Times Kanda-Sudacho 4(Note 5)Name of property

28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)29th fiscal period(July 1, 2017 to December 31, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)

D20

Flexstay Inn Nakanobu P2

1

100.0

11,168

0.1

1

100.0

10,1990.1

D21

APA Hotel
Yokohama-Kannai

1

100.0

230,016

2.5

1

100.0

229,958

2.0

D22

Hotel Nets Hakodate

1

100.0

112,960

1.2

1

100.0

148,450

1.3

D23

Flexstay Inn Shirogane

1

100.0

59,740

0.6

1

100.0

50,7880.4

D24

Hotel MyStays Haneda

1

100.0

182,340

2.0

1

100.0

187,483

1.6

D25

Hotel MyStays Kameido P1

1

100.0

174,873

1.9

1

100.0

180,675

1.6

D26

Hotel MyStays Ueno
Iriyaguchi

1

100.0

95,315

1.0

1

100.0

92,2020.8

D27

Hotel MyStays Kameido P2

1

100.0

118,142

1.3

1

100.0

123,808

1.1

D28

Hotel Vista Shimizu

1

100.0

76,066

0.8

1

100.0

82,1400.7

D29Super Hotel
Shinbashi/Karasumoriguchi

1

100.0

39,426

0.4

1

100.0

39,4260.3

D30

Flexstay Inn Higashi-Jujo

1

100.0

40,458

0.4

1

100.0

37,7470.3

D31

Hotel MyStays Utsunomiya

1

100.0

89,478

1.0

1

100.0

95,9750.8

D32

Flexstay Inn
Kawasaki-Kaizuka

1

100.0

32,054

0.3

1

100.0

32,833

0.3

D33

Comfort Hotel Toyama

1

100.0

35,928

0.4

1

100.0

35,9280.3

D34

Flexstay Inn
Kawasaki-Ogawacho

1

100.0

25,877

0.3

1

100.0

29,4090.3

D35

Flexstay Inn Ekoda

1

100.0

115,682

1.2

1

100.0

104,046

0.9

D36Super Hotel Tokyo-JR
Tachikawa Kitaguchi

1

100.0

31,787

0.3

1

100.0

31,7870.3

D37Super Hotel JR
Ueno-iriyaguchi

1

100.0

27,275

0.3

1

100.0

27,2750.2

D38

Hotel MyStays Shinsaibashi

1

100.0

82,484

0.9

1

100.0

88,8800.8

D39

Comfort Hotel Kurosaki

1

100.0

37,894

0.4

1

100.0

37,894

0.3

D40

Comfort Hotel Maebashi

2

100.0

43,811

0.5

2

100.0

43,811

0.4

D41

Comfort Hotel
Tsubame-Sanjo

2

100.0

34,949

0.4

2

100.0

34,9490.3

D42

Comfort Hotel Kitami

1

100.0

30,300

0.3

1

100.0

30,3000.3

D43

Hotel MyStays Gotanda
Station1

100.0

408,173

4.4

1

100.0

427,047

3.7

D44

Hotel Epinard Nasu

1

100.0

549,169

5.9

1

100.0

1,103,226

9.7

Name of property

28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)29th fiscal period(July 1, 2017 to December 31, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)

D45

Hotel MyStays Fukuoka
Tenjin1

100.0

192,325

2.1

1

100.0

237,370

2.1

D46

Hotel MyStays
Hamamatsucho

1

100.0

114,650

1.2

1

100.0

114,084

1.0

D47

Hotel MyStays Kanazawa

1

100.0

285,925

3.1

1

100.0

368,625

3.2

D48

Takamatsu Tokyu REI Hotel

3

100.0

104,257

1.1

3

100.0

106,156

0.9

D49

Hotel MyStays Premier
Hamamatsucho

1

100.0

50,800

0.5

1

100.0

228,976

2.0

D50

Hotel MyStays Shin Osaka
Conference Center

－

－

－

－

1

100.0

267,910

2.3

D51

Hotel MyStays Premier
Omori

－

－

－

－

1

100.0

160,256

1.4

D52

Beppu Kamenoi Hotel

－

－

－

－

1

100.0

221,531

1.9

D53

Hotel MyStays Sapporo
Station

－

－

－

－

1

100.0

108,954

1.0

Subtotal

53

100.0

5,598,510

60.5

57

100.0

7,418,990

65.1

Total

144

97.7

9,260,917

100.0

141

98.2

11,403,236

100.0(Note 1) “Occupancy rate” is calculated by dividing the leased area by leasable area.
(Note 2) “Rental revenue (during period)” indicates each property’s leasing operation revenues during the fiscal period andhas been rounded down to the nearest thousand yen.
(Note 3) “Occupancy rate” and “Ratio of rental revenue” are rounded off to one decimal place.
(Note 4) Not disclosed because the consent of the tenant was not obtained.
(Note 5) Kindai Kagaku Sha Building and Times Kanda Sudacho 4th were sold on July 31, 2017, Shinjuku Island was soldon December 26, 2017 and Casa Eremitaggio, Lexel Mansion Ueno Matsugaya and Sun Terrace Minami Ikebukuro
were sold on December 28, 2017.

4

Asset Portfolio of Facilities Generating Renewable Energy, etc.

Not applicable
5

Asset Portfolio Including Rights to Operate Public Facilities, etc.

Not applicable
6 Asset Portfolio of Securities
The portfolio of the securities held by the Investment Corporation at the end of the Reporting Period is as
below.

Name

Type

Preferred equity
securities in
Kingdom Special
Purpose Company

Quantity Book value (JPY million)(units)Unit priceAmountFair value (JPY million)
Unit priceAmountValuation
gain or loss
(JPY million)

Notes(Note 1)
(Note 2)Preferred equity 178,458
securities-

17,854-

17,854-

178,458-

17,854-

17,854-

Total(Note 1) Fair value of the preferred equity securities indicates the acquisition cost.
(Note 2) INV owns 178,458 units of preferred equity securities issued by Kingdom Special Purpose Company (equivalent
to 49.0% of preferred equity securities issued and outstanding after the issuance of the said preferred equity
securities), with the Sheraton Grande Tokyo Bay Hotel as an underlying asset.

7

Status of Contract Amount and Fair Value of Specified Transaction

As of December 31, 2017, the contract amount and fair value of the outstanding transaction under the
specified transaction account of INV are as follows.
(Unit: JPY thousand)Category

Transaction type, etc.

Non-market
transaction

Interest rate swap
Receive floating rate/pay fixed rate

Contract amount(Note 1)
Amounts due after
one year
99,119,000

70,140,000

Fair value(Note 2)

113,592(Note 1) The contract amount 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

8

Status of Other Assets

Real estate and trust beneficiary interests in real estate are listed together in “3 Asset Portfolio of Real
Estate, etc.” above. As of the end of this Reporting Period, there are no investments in specified assets thatare significant investment targets for INV outside of 3 and 6 above.
9

Asset Owned Outside of Japan or the Region

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

Capital Expenditures for Properties Held by INV

1Schedule for Capital Expenditures

The schedule for the principal capital expenditures for property maintenance construction, etc., as of theend of the Reporting Period for the real estate assets owned by INV is as follows.
Estimated cost (JPY thousand)Name of property

2

Location

PurposeScheduled time of
implementation

Total

Payment for
the fiscal
Advanceperiod ended
payments
December31, 2017

D06

Hotel MyStays
Premier Dojima

Osaka-shi,
Osaka

Renovation work

From January 2018
To June 2018260,700--

D03

Hotel MyStays
Kyoto-Shijo

Kyoto-shi,
Kyoto

Renovation work

From January 2018
To June 2018258,700--

D05

Hotel MyStays
Maihama

Urayasu-shi,
Chiba

Renovation work

From January 2018
To June 2018

243,500--

D04

MyStaysShin-Urayasu
Conference Center

Urayasu-shi,
Chiba

Renovation work

From January 2018
To June 201880,300--D44

Hotel Epinard Nasu

Nasu-gun,Tochigi

Renovation work

From January 2018
To June 2018

30,000--Capital Expenditures for the Fiscal Period Ended December 31, 2017

The principal construction work constituting capital expenditures for the real estate assets for the fiscal
period ended December 31, 2017 is as follows. Capital expenditures for the fiscal period totaled JPY
599,771 thousand, and together with JPY 21,767 thousand in repair costs included in this fiscal period’s
expenses, construction work totaling JPY 621,539 thousand was implemented.
Name of property

Location

PurposeTime ofimplementation

Payment(JPY thousand)

D44 Hotel Epinard Nasu

Nasu-gun,Tochigi

Renovation work

From July 2017
To December 201735,854

Hotel MyStays
Nagoya-Sakae

Nagoya-shi,
Aichi

Boiler equipment replacement

From July 2017
To December 2017

28,900

B15 Flexstay Inn Ekoda

Nerima-ku,
Tokyo

Guestroom interior renovation
work

From July 2017
To December 201725,482

D02

D03

Hotel MyStays
Kameido P2

Koto-ku, Tokyo

Conversion of guest rooms to
non-smoking

From July 2017
To December 2017

25,078

D08

Hotel MyStays
Kameido P1

Koto-ku, Tokyo

Conversion of guest rooms to
non-smoking

From July 2017
To December 201716,346

Other construction

468,109
Total

599,771

3

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
maintenance repairs in the medium- to long-term in accordance with the long-term maintenance plan foreach property.

Fiscal period

Reserved funds at beginningof period
Amount reserved(Note)
Amount reversed(Note)
Amount carried over for
next fiscal period(Unit: JPY thousand)
25th
26th
27th
28th
29th
fiscal period
fiscal period
fiscal period
fiscal period
fiscal period
From July 1, 2015 From January 1, From July 1, 2016 From January 1, From July 1, 2017
to December 31, 2016 to June 30, to December 31, 2017 to June 30, to December 31,
2015
2016
2016
2017
2017
852,699

982,750

1,303,685

1,397,286

1,397,243

352,490543,275

446,066

468,145

697,444

222,439

222,339

352,464

468,189

528,579

982,750

1,303,685

1,397,286

1,397,243

1,566,108(Note) The amount reserved for the relevant fiscal period includes the reserves for acquired properties, and the amountreversed includes the reserves for disposed properties.

Overview of Expenses and Liabilities

1

Statement of Operating Expenses
28th fiscal period
January 1, 2017 to June 30, 2017

Item

(JPY thousand)29th fiscal period
July 1, 2017 to December 31, 2017(a) Asset management fees

250,000

250,000(b) Asset custody fees

13,594

15,230(c) Administrative services fees

29,98337,347(d) Directors’ compensation

4,800

4,800

(e) Other

99,393

154,055

397,771

461,434

Total

2

Borrowing Conditions

Borrowing conditions by financial institution at the end of the Reporting Period are as below.
Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)―

1,023,000―

1,022,000―

1,023,000―

3,068,000

Sumitomo Mitsui Banking
Corporation

5,992,000

5,992,000

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

5,992,000

5,992,000

Mizuho Bank, Ltd.

5,992,000

5,992,000

3,330,000

3,330,000

3,000,000

3,000,000

2,670,000

2,670,000

1,335,000

1,335,000

668,000

668,000

5,992,000

5,992,000

5,992,000

5,992,000

Mizuho Bank, Ltd.
Short-term Sumitomo Mitsui Trust Bank,
Limitedloans
Sumitomo Mitsui Banking
Corporation

Oct. 13,2017

Subtotal

Shinsei Bank, Limited
Citibank, N.A., Tokyo BranchJul. 16,2015

Sumitomo Mitsui Trust Bank,
LimitedLong-term
Resona Bank, Limited
loans(Note 4) Mitsubishi UFJ Trust andBanking Corporation

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

Jul. 16,
2015

5,992,000

5,992,000

Shinsei Bank, Limited

3,330,000

3,330,000

Citibank, N.A., Tokyo Branch

3,000,000

3,000,000

Mizuho Bank, Ltd.

Repayment Repayment Purpose
date
method

Notes

0.244

Oct. 13,2018(Note 3) (Note 2)

Unsecured /with noguarantee

0.375Jul. 16,2018(Note 3) (Note 2)

Unsecured /with noguarantee

0.480

Jul. 16,2019(Note 3) (Note 2)

Unsecured /with noguarantee

Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)

Sumitomo Mitsui Trust Bank,
Limited

2,670,000

2,670,000

Resona Bank, Limited

1,335,000

1,335,000

Mitsubishi UFJ Trust andBanking Corporation

668,000

668,000

Sumitomo Mitsui Banking
Corporation

5,992,000

5,992,000

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

5,992,000

5,992,000

Mizuho Bank, Ltd.

5,992,000

5,992,000

3,330,000

3,330,000

Shinsei Bank, Limited

Jul. 16,
2015

Citibank, N.A., Tokyo Branch

3,000,000

3,000,000

Sumitomo Mitsui Trust Bank,
Limited

2,670,000

2,670,000

Resona Bank, Limited

1,335,000

1,335,000

Mitsubishi UFJ Trust andBanking Corporation

668,000

668,000

3,682,000

3,682,000

3,400,000

3,400,000

Mizuho Bank, Ltd

Aug. 28,
2015

Long-term Sumitomo Mitsui Trust Bank,
loans
Limited(Note 4)
Mitsubishi UFJ Trust andBanking Corporation

Jan. 22,2016

Sumitomo Mitsui Trust Bank,
LimitedMitsubishi UFJ Trust andBanking Corporation

850,000

850,000

3,400,000

3,400,000

Jan. 22,2016
850,000

850,000

465,000

465,000

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

1,125,000

1,125,000

Sumitomo Mitsui Trust Bank,
Limited2,181,000

2,181,000

570,000

570,000

570,000

570,000

650,000

650,000

Japan Post Bank Co., Ltd.

2,000,000

2,000,000

Development Bank of Japan,
Inc.

1,000,000

1,000,000

The Bank of Fukuoka, Ltd.

333,000

333,000

Mizuho Bank, Ltd

Shinsei Bank, Limited
Resona Bank, Limited
Mitsubishi UFJ Trust andBanking Corporation

Mar. 31,
2016

Repayment Repayment Purpose
date
method

Notes

0.590

Jul. 16,
2020(Note 3) (Note 2)

Unsecured /with noguarantee

0.480

Aug. 28,2019(Note 3) (Note 2)

Unsecured /with noguarantee

0.343

Jan. 22,2019(Note 3) (Note 2)

Unsecured /with noguarantee

0.600

Jan. 22,2021(Note 3) (Note 2)

Unsecured /with noguarantee

0.436

Mar. 30,
2019(Note 3) (Note 2)

Unsecured /with noguarantee

Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)

The Shizuoka Bank, Ltd.

1,270,000

1,270,000

The Daishi Bank, Ltd.

1,000,000

1,000,000

The Nomura Trust andBanking Co., Limited

270,000

270,000

Mizuho Bank, Ltd

965,000

965,000

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

1,125,000

1,125,000

Sumitomo Mitsui Trust Bank,
Limited

2,180,000

2,180,000

Shinsei Bank, Limited

570,000

570,000

Resona Bank, Limited

570,000

570,000

650,000

650,000

2,000,000

2,000,000

333,000

333,000

270,000

270,000

The Kagawa Bank, Ltd.

500,000

500,000

The Hyakugo Bank, Ltd.

1,000,000

1,000,000

The Nomura Trust andBanking Co., Limited

270,000

270,000

Mizuho Bank, Ltd.

1,965,000

1,965,000

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

1,125,000

1,125,000

Sumitomo Mitsui Trust Bank,
Limited

2,180,000

2,180,000

570,000

570,000

570,000

570,000

Mitsubishi UFJ Trust andBanking Corporation

650,000

650,000

The Bank of Fukuoka, Ltd.

1,333,000

1,333,000

The Shizuoka Bank, Ltd.

270,000

270,000

The Kagawa Bank, Ltd.

500,000

500,000

Mitsubishi UFJ Trust andBanking Corporation
Japan Post Bank Co., Ltd.

Mar. 31,2016

The Bank of Fukuoka, Ltd.
Long-termloans
The Shizuoka Bank, Ltd.
(Note 4)

Shinsei Bank, Limited.
Resona Bank, Limited

Mar. 31,
2016

Repayment Repayment Purpose
date
method

Notes

0.536

Mar. 30,
2020(Note 3) (Note 2)

Unsecured /with noguarantee

0.636

Mar. 30,2021(Note 3) (Note 2)

Unsecured /with noguarantee

Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)

The Hiroshima Bank, Ltd.
The Nomura Trust andBanking Co., Limited

1,000,000

1,000,000

270,000

270,000

Repayment Repayment Purpose
date
methodNotes

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

Citibank, N.A., Tokyo Branch

Jun. 15,2016

1,000,000

1,000,000

0.436

Jun. 15,
2019

Citibank, N.A., Tokyo Branch

Jun. 15,2016

1,000,000

1,000,000

0.536

Jun. 15,
2020

Citibank, N.A., Tokyo Branch

Jun. 15,2016

1,000,000

1,000,000

0.636

Jun. 15,2021

Development Bank of Japan,
Inc.

Jun. 30,2016

1,000,000

1,000,000

0.436

Jun. 30,
2019

AEON Bank, Ltd.

Jun. 30,2016

3,000,000

3,000,000

0.636

Jun. 30,
2021

Tokyo Star Bank, Limited

Jul. 20,2016

700,000

700,000

0.436

Jul. 20,
2019Tokyo Star Bank, Limited

Jul. 20,2016

1,600,000

1,600,000

0.536

Jul. 20,
2020

Tokyo Star Bank, Limited

Jul. 20,2016

1,700,000

1,700,000

0.636

Jul. 20,2021

634,000

634,000

1,000,000

1,000,000

333,000

333,000

333,000

333,000

0.436

Mar. 14,2020(Note 3) (Note 2)

Unsecured /with noguarantee

333,000

333,000

The Towa Bank, Ltd.

252,000

252,000

The Shizuoka Bank, Ltd.

200,000

200,000

The Gunma Bank, Ltd.

165,000

165,000

1,633,000

1,633,000

333,000

333,000

0.536

Mar. 14,2021(Note 3) (Note 2)

Unsecured /with noguarantee

333,000

333,000

Long-termloans
Mizuho Bank, Ltd.
(Note 4)Development Bank of Japan,
Inc.
Resona Bank, Limited
The Bank of Fukuoka, Ltd.
The Nomura Trust andBanking Co., Limited

Mar. 14,2017

Mizuho Bank, Ltd.
Resona Bank, Limited
The Bank of Fukuoka, Ltd.

Mar. 14,2017(Note 3) (Note 2)

Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)

The Nomura Trust andBanking Co., Limited

333,000

333,000

The Towa Bank, Ltd.

253,000

253,000

The Shizuoka Bank, Ltd.

200,000

200,000

The Gunma Bank, Ltd.

165,000

165,000

Mizuho Bank, Ltd.

1,733,000

1,733,000

Resona Bank, Limited

333,000

333,000

The Bank of Fukuoka, Ltd.

333,000

333,000

The Nomura Trust andBanking Co., Limited

333,000

333,000

900,000

900,000

The Towa Bank, Ltd.

253,000

253,000

The Shizuoka Bank, Ltd.

200,000

200,000

The Daiichi Life InsuranceCo., Ltd.

500,000

500,000

The Gunma Bank, Ltd.

165,000

165,000

3,000,000

3,000,000

7,321,000

4,321,000

Long-term
loans
AEON Bank, Ltd.
(Note 4)

Sumitomo Mitsui Banking
Corporation
Mizuho Bank, Ltd.
The Daiichi Life InsuranceCo., Ltd.

Mar. 14,2017

Mar. 14,2017

May 29,2017―

3,000,000

Shinsei Bank, Limited―

355,000

Citibank, N.A., Tokyo Branch―

355,000―

334,000

Resona Bank, Limited

Oct. 13,
2017

The Bank of Fukuoka, Ltd.

―

300,000

AEON Bank, Ltd.

―

190,000

The Nomura Trust andBanking Co., Limited―

167,000

Repayment Repayment Purpose
date
method

Notes

0.636

Mar. 14,2022(Note 3) (Note 2)

Unsecured /with noguarantee

0.486

Sept. 14,2020

(Note 3) (Note 2)

Unsecured /with noguarantee

0.586

Nov. 29,2021(Note 3) (Note 2)

Unsecured /with noguarantee

0.344

Oct. 132020(Note 3) (Note 2)

Unsecured /with noguarantee

Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)

The Hiroshima Bank, Ltd.

―

167,000

Shinsei Bank, Limited―

355,000

Citibank, N.A., Tokyo Branch―

355,000

Resona Bank, Limited―

333,000―

300,000

AEON Bank, Ltd.

―

190,000

The Nomura Trust andBanking Co., Limited―

167,000

The Hiroshima Bank, Ltd.

―

167,000

Mizuho Bank, Ltd.

―

500,000

Sumitomo Mitsui Trust Bank,
Limited

―500,000―

500,000―

355,000―

355,000―

333,000

The Bank of Fukuoka, Ltd.

Oct. 13,2017

Sumitomo Mitsui Banking
Long-term
Corporation
loans(Note 4) Shinsei Bank, Limited
Citibank, N.A., Tokyo Branch
Resona Bank, Limited
Development Bank of Japan,
Inc.

Oct. 13,2017―

1,500,000

The Bank of Fukuoka, Ltd.

―

300,000

AEON Bank, Ltd.

―

190,000

The Nomura Trust andBanking Co., Limited―

166,000

The Hiroshima Bank, Ltd.

―

166,000

The Daiichi Life InsuranceCo., Ltd.

―

500,000―

1,250,000

Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank,
Limited

Oct. 13,2017―

1,065,000

Repayment Repayment Purpose
date
method

Notes

0.444

Oct. 132021(Note 3) (Note 2)

Unsecured /with noguarantee

0.644

Oct. 132022(Note 3) (Note 2)

Unsecured /with noguarantee

0.744

Oct. 132023(Note 3) (Note 2)

Unsecured /with noguarantee

Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)

Sumitomo Mitsui Banking
Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank,
Long-term
Limitedloans(Note 4) Sumitomo Mitsui Banking
Corporation
Mizuho Bank, Ltd.

Oct. 13,2017

Oct. 13,2017

Sumitomo Mitsui Banking
Corporation―

1,250,000―

1,250,000―

1,060,000―

1,250,000―

1,850,000―

1,850,000

Subtotal

163,990,000 183,915,000

Total

163,990,000

Repayment Repayment Purpose
date
method

Notes

0.844

Oct. 132024(Note 3) (Note 2)

Unsecured /with noguarantee

0.294

Oct. 132019(Note 3) (Note 2)

Unsecured /with noguarantee

186,983,000(Note 1) Average interest rate is the daily weighted average number of the period according to the number of days and isrounded to three decimal places. In regards to borrowings which interest rate swap transactions are entered into forthe purpose of avoiding risk from interest rate fluctuation, interest rates reflecting the interest rate swap are shown.
(Note 2) The funds raised through borrowings are mainly used to acquire trust beneficiary interests in real estate and toprepay the borrowings.
(Note 3) The balance at the end of the period will be repaid in full on the repayment date.
(Note 4) Long-term loans includes current portion of long term loans payable.

3

Investment Corporation Bonds

Not applicable
4

Short-Term Investment Corporation Bonds

Not applicable
5

Investment Unit Options

Not applicableAcquisitions and Sales for the Fiscal Period Ended December 31, 20171

Acquisitions and Sales of Real Estate, Asset-Backed Securities, Infrastructure Assets andInfrastructure Related-Assets
Acquisition

Sale

Acquisition date

Acquisition
price(JPY million)(Note 1)

Sales date

Name of property

Sales priceGain/loss on
Book value(JPY million)
sales(JPY million)(Note 2)(JPY million)

A56

Casa Eremitaggio――

December 28, 2017

1,312

948

335

A62

Lexel Mansion Ueno
Matsugaya――

December 28, 2017

1,329

853

449

A81

Sun Terrace Minami Ikebukuro――

December 28, 2017

934

591

325

B08

Kindai Kagaku Sha Building――

July 31, 2017

1,361

1,197

115

B09

Shinjuku Island――

December 26, 2017

705

701

(7)

―

―

July 31, 2017

130

100

25

C01
D43
D50
D51
D52
D53

―

th

Times Kanda-Sudacho 4

Hotel MyStays Gotanda Station(Additional acquisition)(Note 3)
Hotel MyStays Shin Osaka
Conference Center (Note 3)
Hotel MyStays Premier Omori(Note 3)Beppu Kamenoi Hotel(Note 3)
Hotel MyStays Sapporo
Station (Note 3)
Preferred equity securities in
Kingdom Special Purpose
Company

October 31, 2017

1,849

―

―

―

―

October 13, 201713,068――――October 13, 2017

9,781

―

―

―

―

October 13, 2017

8,870

―

―

―

―

October 13, 2017

7,880

―

―

―

―

October 13, 2017

17,845――――59,293

―

5,772

4,393

1,244

(Note 4)
Total

(Note 1) Acquisition price does not include various costs (brokerage commissions, taxes and other public dues) required for
acquisition of the property and is the purchase price indicated in the trust beneficiary interest purchase agreement.
(Note 2) Sales price does not include various costs (brokerage commissions, taxes and other public dues) required for sale ofthe property, and is the sales price indicated in the trust beneficiary interest purchase agreement.
(Note 3) Acquired as trust beneficiary interest in real estate with the real estate as trust asset.
(Note 4) The preferred equity securities were issued by Kingdom Special Purpose Company, with the cash flow gained from
Sheraton Grande Tokyo Bay Hotel as guarantee. INV owns 178,458 units of preferred equity securities issued by
Kingdom Special Purpose Company (equivalent to 49.0% of preferred equity securities issued and outstanding
after the issuance of the said preferred equity securities).

2

Acquisitions and Sales of Other Assets

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

3

Transaction Price Verifications of Specified Assets(1) Real Estate Transactions
Acquisitionor saleAcquisition orCategory of Transaction
sales price Appraisal value
specified asset
date(JPY million)(JPY million)(Note 1)Name of property

Appraisal
date

Morii Appraisal &Investment Consulting
December 1,
Inc.
2017
Asset Research andDevelopment Inc.

December26, 2017

705

558

C01 Times Kanda-Sudacho 4

July 31,
2017

130

113

A56 Casa Eremitaggio

December28, 2017

1,312

1,120

Japan Real Estate
InstituteJune 30,
2017

B09 Shinjuku Island
Real estate
th

Sale

Appraiser

A62

Lexel Mansion Ueno
Matsugaya

December28, 2017

1,329

1,230

The Tanizawa Sogo
Appraisal Co., Ltd

December 1,
2017

A81

Sun Terrace Minami
IkebukuroDecember28, 2017

934

761

Japan Real Estate
Institute

December 1,
2017

B08

Kindai Kagaku Sha
Building

July 31,
2017

1,361

1,060

Asset Research andDevelopment Inc.

June 30,
2017

D43

Hotel MyStays Gotanda
Station (Note 2)

July 31,
2017

1,849

2,600

Morii Appraisal &Investment Consulting
Inc.

June 30,2017

13,068

13,200Hotel MyStays Shin
D50
Osaka Conference Center

Trust
beneficiaryinterest

Hotel MyStays Premier
Acquisition D51 Omori

The Tanizawa Sogo
Appraisal Co., Ltd
The Tanizawa Sogo
9,781

9,880

July 1,
2017

Appraisal Co., Ltd

October 13,
2017

The Tanizawa Sogo
8,870

D52 Beppu Kamenoi Hotel

July 1,
2017

8,960

July 1,
2017

Appraisal Co., Ltd

D53

The Tanizawa Sogo

Hotel MyStays Sapporo
Station

7,880

7,960

July 1,
2017

Appraisal Co., Ltd(Note 1) Acquisition price does not include various costs (brokerage commissions, taxes and other public dues) required for
acquisition of the property and is the purchase price indicated in the trust beneficiary interest purchase agreement.
(Note 2) As the Floor Expansion Portion was under construction upon the decision on the acquisition, the appraisal value shows
the research value set forth in the research report on the valuation date of June 30, 2017, issued by Morii Appraisal &Investment Consulting, Inc. The research value represents the difference between (i) the research value of the existing
hotel portion and the Floor Expansion Portion combined, valued at JPY 27,400 million assuming the completion of theconstruction, and (ii) the research value for the existing hotel portion before the additional acquisition valued at JPY
24,800 million.
(Note 3) The real estate appraisal described above is conducted by applying “Section 3: appraisals concerning prices of realestate subject to securitization” of “Real Estate Appraisal Standard.”(2) Preferred equity securities
Acquisition or
sale

Property
numberNameTransaction date

Acquisition―

Preferred equity securities in
Kingdom Special Purpose
Company

October 13, 2017

Acquisition or sales price Research value of specified(JPY million)
asset (JPY million)(Note 1)
(Note 2)
17,845

17,845(Note 1) Acquisition price does not include various costs (brokerage commissions, taxes and other public dues) required foracquisition of the preferred equity securities and is the purchase price indicated in the purchase agreement.
(Note 2) Transaction price verifications of specified assets were conducted by Akasaka International Audit LLC in
accordance with the Japan Institute of Certified Public Accountants Industrial Audit Report No. 23, “Research forSpecified Assets Value Held by Investment Trusts and Investment Corporations.”
Upon the verifications, INV has received from the auditor a research report on the name of the preferred equity
securities, transaction volume and other matters necessary for identifying preferred equity securities investing in
the real estate in addition to research value.

4

Transactions with Interested Parties(1) Transactions
Not applicable(2) Commissions Paid
Not applicable
5

Transactions between the Asset Manager and Its Other Businesses

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

Financial Condition
1

Assets, Liabilities, Principal, and Profit and Loss

Please refer to “II. Balance Sheet,” “III. Statement of Income and Retained Earnings,” “IV. Statement of
Changes in Net Assets,” “V. Notes” and “VI. Statement of Cash Distribution.”
2

Changes in the Calculation Method of Depreciation

Not applicable
3

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

Not applicable4

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

Not applicable
Other
1

Notice(1) General Meeting of Unitholders

INV’s General Meeting of Unitholders was held on December 21, 2017.
The summary of the matters approved at the General Meeting of Unitholders are as follows.
AgendaSummary
1. With the consent of the asset management company, the asset
management fees for the period from January 2013 to December
2017 have been reduced. INV has further obtained the consent of
the asset management company to reduce the amount of asset
management fees for the period from January 2018 to December
2018 to an amount which is lower than the amount that would beapplicable if such reduction were not made but higher than theamount that was applied in 2017. Accordingly, INV amended thestandards concerning the amount and payment for the asset

Proposal

Partial Amendment to Articles of

No. 1

Incorporation

management fees for the said period effective January 1, 2018.
2. Pursuant to the provisions of the Ordinance for Enforcement of
the Act on Investment Trusts and Investment Corporations, a
new provision was added to clarify that INV may acquire all or amajority of the outstanding shares or equity interests of the
Corporations Holding Overseas Real Estate. Furthermore, inorder for INV to be able to (a) invest in real estate outside ofJapan when it is determined as contributing to the enhancementof unitholder’s value and to the extent permissible under its basic
policy of asset management, and (b) choose from various
schemes in investing in real estate outside of Japan, (i) real estategoverned by foreign laws and regulations, (ii) assets equivalent
to trust beneficiary rights, etc. which are formed under foreignlaws and regulations and (iii) shares or contributions issued by
the Corporations Holding Overseas Real Estate, etc., were added
to the classes of the investment assets of INV and the relevant
provisions were amended accordingly.
3. In order to provide flexibility upon the timing of payment of
remuneration to the independent auditor, the relevant provision
was amended so that the payment of remuneration will be madewithin three months after INV’s receipt of a claim for
remuneration which claim shall be made after INV’s receipt ofan audit report from the independent auditor. At the same time,certain amendments were made as necessary to clarify that (a)the acquisition fee and the disposition fee will be accrued evenwhen INV acquires or disposes trust beneficiary interests andother assets backed by the Real Estates, etc. and (b) only aportion of the purchase price and the disposition price which iscontributed or received by INV shall be counted in thecalculation of the acquisition fee and the disposition fee.
In addition, necessary revision and clarification of expressions,other changes in the wording and adjustments in the numberingof the articles and paragraphs of INV’s Articles of Incorporation
were made.
ProposalAppointment

No. 2

Executive DirectorofProposalAppointment

No. 3

Substitute Executive Director

ProposalAppointment

No. 4

Supervisory Directors

of
of

One

(1)

One

(1)

Two

(2)

Naoki Fukuda was appointed.
Christopher Reed was appointed.
Takashi Takahashi and Hiroyuki Fujimoto were appointed.

(2) Board of Directors of Investment Corporation
Of the execution and amendment of the principal agreement approved by INV’s Board of Directors in theReporting Period, principal summary is as follows.
Approval date
September 21, 2017

(Note)

Item

Summary

Conclusion of theunderwriting agreement
related to the issuance of new
investment units, etc.

The Board of Directors of INV approved that INV would entrust
underwriters (Note) with the service related to the issuance of new
investment units through public offering and secondary offering ofinvestment units, which were approved at the meeting of the Board of
Directors of INV held on September 21, 2017.

The underwriters for the domestic public offering are Mizuho Securities Co., Ltd., SMBC Nikko Securities Inc.,
Nomura Securities Co., Ltd., Citigroup Global Markets Japan Inc. and Mitsubishi UFJ Morgan Stanley Securities
Co., Ltd. The underwriters for the global offering mainly in the U.S., Europe and Asia are SMBC Nikko CapitalMarkets Limited, Mizuho International plc, Nomura International plc, Citigroup Global Markets Limited, Morgan
Stanley & Co. International plc and Jefferies International Limited.

2

Disclosure of Companies Owning Real Estate Overseas

Not applicable
3

Disclosure of Real Estate Owned by Companies Owning Real Estate Overseas

Not applicable4

Risk Factors

An investment in our units involves significant risks. The principal risks with respect to investment in
Invincible Investment Corporation are as follows.
Property and Business Risks
 Any adverse conditions in the Japanese economy could adversely affect our properties.
 We may not be able to acquire properties to execute our growth and investment strategy in amanner that is accretive to earnings.
 Our reliance on Fortress Group could have a material adverse effect on our business.
 As a large portion of our hotels are subject to a variable rent structure, our results of operations are
inherently more volatile than the results of properties with fixed-lease arrangemments, and we may
not be able to effectively manage our hotel portfolio due to our relatively limited operating history
in owning full service hotels, resort hotels and other non-limited service hotels that we may decideto acquire in greater numbers in the future.
 Increases in prevailing market interest rates, particularly following the Bank of Japan’s
announcement of a major new policy for monetary easing, would increase our interest expense andmay result in a decline in the market price of our units.
 The high geographic concentration of our real estate portfolio in the greater Tokyo area and othermajor cities could have a material adverse effect on our business.
 Competition for tenants and hotel guests may adversely affect our ability to retain our current
tenants and find new tenants, and to maintain occupancy rates and revenue.
 Our hotels are subject to the operating risks common to the hospitality industry, which have a
direct effect on the variable rent component of our portfolio’s revenue.
 The cyclical and seasonal nature of the hospitality industry may cause fluctuations in our operating
performance, which could have a material adverse effect on us and our variable rent revenues.
 We may incur unexpected expenses, expenditure or other losses for repair or maintenance of ourproperties, and our hotels require periodic capital reinvestment for renovation.
 The majority of our hotels are leased to MyStays Hotel Management, which is owned by FortressGroup-managed funds, and subject to the risk of default under its hotel lease agreements.
 Our focus on residential properties could have a material adverse effect on our business.
 We may lose rental revenues in the event of defaults by end-tenants under their lease agreementsfor properties other than hotels.
 Master leases may give rise to certain risks.
 We may suffer large losses if any of our properties incur damage from a natural or man-madedisaster or acts of violence.
 We may be strictly liable for an unforeseen loss, damage or injury suffered by a third party at our
properties.
 Because most of our operating expenses are largely fixed, we may suffer adverse consequences if
our rental revenues decline.
 We may not be able to promptly acquire suitable properties or sell those in our portfolio on
acceptable terms in response to changing economic, financial or investment conditions.
 Defects relating to our properties may adversely affect our financial condition and results ofoperations.
 We rely on expert appraisals and engineering, environmental and seismic reports, which are subject
to significant uncertainties.
 The environmental assessments of our properties made prior to our ownership may not haveuncovered all environmental liabilities, and Japanese laws subject property owners to strict
environmental liabilities.
 Decreases in tenant leasehold and/or security deposits would increase our funding costs.









Any inability to obtain financing for future acquisitions, or any restrictions on our activities under
our financing arrangements, could adversely affect us.
A high LTV ratio may increase our exposure to changes in interest rates and have a material
adverse effect on our results of operations.
We may suffer impairment losses relating to our properties and may also suffer adverse tax effects
upon recognizing impairments.
The performance of Fortress Group is not an indicator or guarantee of our future results.
Our financial statements are prepared in accordance with Japanese GAAP, which differs in certain
material respects from IFRS, U.S. GAAP and generally accepted accounting principles andfinancial reporting standards in other jurisdictions.
We rely on industry and market data that are subject to significant uncertainties.
We may be exposed to risks relating to investments in the operators or master lessees of ourproperties.

Management and Governance Risks
 Our success depends on the performances of service providers to which we are required to assign
various key functions.
 There are potential conflicts of interest between us and certain Fortress Group affiliates or FortressGroup-related companies including the Asset Manager, MyStays Hotel Management.
 We depend on the efforts of our executive director and key personnel of the Asset Manager.
 Unitholders have limited control over our policies.
 The Japanese regulatory authorities have tightened regulatory supervision of J-REITs and theirasset managers and their corporate governance.
 If unitholders do not exercise their voting rights, we may count their votes in favor of proposals at
a general meeting of unitholders.
 The shareholder benefit plan that we intend to introduce may be cancelled, changed or abolished.
Taxation Risks
 Our failure to satisfy a complex series of requirements pursuant to Japanese tax regulations would
disqualify us from certain taxation benefits and significantly reduce our distributions to ourunitholders.
 If the Japanese tax authorities disagree with the interpretations we used for prior periods, we may
be forced to pay additional taxes for those periods.
 We may not be able to benefit from reductions in certain real estate taxes enjoyed by qualified
J-REITs.
 Changes in Japanese tax laws may significantly increase our tax burden.
 We expect to be treated as a “passive foreign investment company” for U.S. federal income tax
purposes.
 Unitholders may be subject to U.S. Foreign Account Tax Compliance Act (FATCA) withholding
tax after 2018.
Legal and Regulatory Risks
 Our ownership rights in some of our properties may be declared invalid or limited.
 We may lose our rights in a property we own if the purchase of the property is recharacterized as asecured financing.
 Acquisition of properties for which third parties hold leasehold interests in the land and own thebuildings may subject us to various risks.
 Our leasehold interests may be terminated or may not be asserted against a third party in somecases, or our leases with our tenants could be modified.
 We may hold interests in some properties through preferred equities of a TMK (tokutei mokuteki










5

kaisha), and illiquidity in the market for such equities may limit our ability to sell our interests, andwe may be exposed to risks unique to this investments structure.
We currently hold several properties in the form of compartmentalized ownership interests (kubun
shoyu-ken) and our rights relating to such properties may be affected by the intentions of otherowners
We may acquire properties in the form of co-ownership (kyoyu) and our rights relating to suchproperties may be affected by the intentions of other owners.
Tax increases or adverse changes in applicable laws may affect our potential liabilities relating toour properties and operations.
Compliance with energy conservation regulations in Japan may adversely affect our financial
results.
Our costs of complying with regulations applicable to our properties could adversely affect our
results of operations.
We own a substantial portion of our properties through trust beneficiary interests and may suffer
losses as a trust beneficiary.
The Alternative Investment Fund Managers Directive may negatively affect our ability to market
our units in the EEA and increase our compliance costs associated with the marketing of our units
in the EEA.
Our units may be deemed to constitute “plan assets” for ERISA purposes, which may lead to therescission of certain transactions, tax or fiduciary liability and our being held in violation of ERISA
requirements.

Other

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

II. Balance Sheet
Fiscal period ended
June 30, 2017 (Reference)(as of June 30, 2017)
AssetsCurrent assets:
Cash and bank deposits
Cash and bank deposits in trust
Accounts receivable
Rental receivables
Prepaid expenses
Consumption taxes receivable
Other
Allowance for doubtful accounts
Total current assets
Non-current assets:
Property and equipment
Buildings, at cost
Accumulated depreciation
Buildings, net
Buildings’ accompanying facilities, at cost
Accumulated depreciation
Buildings’ accompanying facilities, net
Structures, at cost
Accumulated depreciation
Structures, net
Tools, furniture and fixtures, at cost
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Buildings in trust, at cost
Accumulated depreciation
Buildings in trust, net
Buildings’ accompanying facilities in trust, at cost

Accumulated depreciation
Buildings’ accompanying facilities in trust, net

Structures in trust, at cost
Accumulated depreciation
Structures in trust, net
Tools, furniture and fixtures in trust, at cost
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Total property and equipment, net
Intangible assets
Leasehold rights in trust
Total intangible assets
Investment and other assets
Investment securities
Guarantee deposits
Long-term prepaid expenses
Derivatives assets
OthersTotal investments and other assets
Total non-current assets
Total assets(Unit: JPY thousand)Fiscal period ended
December 31, 2017(as of December 31, 2017)

3,532,405
6,065,755
8,204
1,420,192
445,116
20,8230(33)
11,492,465

14,367,140
6,326,653
8
1,984,728
489,098
613,566
0(89)
23,781,107

85,914(11,031)
74,88338,862(22,925)
15,9372,779(1,533)
1,245
2,395
(67)
2,327
711,834
118,192,822(8,155,443)
110,037,378
26,991,646(5,092,225)
21,899,421
345,467(169,049)
176,417
898,892(273,748)
625,143
142,046,411
275,591,001

-

3,192
(218)
2,973
128,867,905(9,412,123)
119,455,782
28,454,395(5,758,755)
22,695,639
262,372(112,316)
150,055
1,065,760(335,109)
730,651
167,845,958
310,881,062

16,946,974
16,946,974

16,828,843
16,828,843

1,651,565
601,737
92,24345,0622,390,608
294,928,585
306,421,050

17,854,460
1,651,565
587,753
113,592
59,86920,267,241
347,977,146
371,758,254-

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

Fiscal period ended
June 30, 2017 (Reference)(as of June 30, 2017)
Liabilities
Current liabilities:
Accounts payable

170,911

254,936

Short-term loans payable-

3,068,000

Current portion of long‐term loans payable-

28,979,000

Accounts payable-other

175,062

51,836

Accrued expenses

164,764

270,486605

605

Advances received

540,675

600,752

Deposits received

15,932

29,1901,067,951

33,254,807

163,990,000

154,936,000

2,240,373

2,215,299

28,663-

Income taxes payable

Total current liabilities
Non-current liabilities:
Long-term loans payable
Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits
Asset retirement obligations

31,46831,680Total non-current liabilities

166,290,505

157,182,980

167,358,457

190,437,787

128,984,946

168,798,455

6,264,432

6,264,432

Total liabilities
Net assets
Unitholders’ equity:
Unitholders’ capital
Surplus:Capital surplus
Deduction of unitholders' capital surplus
Allowance for temporary differences adjustment
Other deduction of capital surplus*2 -*2 (46,329)(987,516)(1,022,263)

Total deduction of unitholders' capital surplus(987,516)(1,068,593)

Capital surplus (net)5,276,915

5,195,838

Retained earnings

4,708,487

7,212,580

Total surplus

9,985,403

12,408,419

138,970,350

181,206,874

Deferred gains or losses on hedges

92,243

113,592

Total valuation and translation adjustments

92,243

113,592*1 139,062,593*1 181,320,466

306,421,050

371,758,254

Total unitholders’ equity
Valuation and translation adjustments:

Total net assets
Total liabilities and net assets

III.

Statement of Income and Retained Earnings(Unit: JPY thousand)Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)

Fiscal period ended
June 30, 2017 (Reference)(from January 1, 2017 toJune 30, 2017)
Operating revenue
Rental revenue – real estate
Gain on sales of properties*1 9,260,917*1 11,403,236-*2 1,244,033

9,260,917

12,647,270

Property related expenses
Impairment loss

*1 3,518,684*1 3,962,183-*3 15,677

Asset management fees
Directors’ compensation

250,000
4,800

250,000
4,800

Asset custody fees
Administrative service fees

13,59429,983

15,23037,347

Provision of allowance for doubtful accounts
Other

33
99,36089
138,2883,916,456

4,423,618

5,344,461

8,223,652

70
150

54
234

Other

1,077

507

Total non-operating income

1,297

796

Interest expenses
Loan-related costs

377,451
223,228445,855
304,073

Investment unit issuance costs

42,401

170,817

643,080

Total operating revenue
Operating expenses

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

Non-operating expenses

Ordinary income

Total non-operating expenses

4,702,678

920,746
7,303,702

Income before income taxes

4,702,678

7,303,702

Income taxes

605

605

Total income taxes

605

605

4,702,073

7,303,097

Retained earnings brought forward

6,414(90,516)

Unappropriated retained earnings

4,708,487

7,212,580

Net income

IV. Statement of Changes in Net Assets

Fiscal period ended June 30, 2017 (Reference) (from January 1, 2017 to June 30, 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
Reversal of allowancefor temporary
differences adjustment
Distributions fromsurplus120,367,271

6,264,432

Allowance fortemporarydifferences
adjustment

Other
deduction ofcapital surplus

Total
deduction ofcapital surplus

Capital surplus(net)(224,225)(763,290)(987,516)

5,276,915

224,225(224,225)－－

8,393,450
224,225

Net income
Changes other thanunitholders’ equity(net)
Total changes during theperiodBalance at the end of theperiod8,617,675－

224,225(224,225)－－

128,984,946

6,264,432-(987,516)(987,516)

5,276,915

Unitholders’ equity

Valuation and translation adjustments

SurplusRetainedearnings
Balance at the beginningof the period
Changes during theperiodIssuance of new
investment units
Reversal of allowancefor temporary
differences adjustment
Distributions fromsurplus
Net income
Changes other thanunitholders’ equity(net)
Total changes during theperiodBalance at the end of theperiod5,659,831

Total
surplus10,936,747

Total
unitholders’equity131,304,019

Deferred
gains or losses
on hedges

Totalvaluation andtranslation
adjustments

151,259

151,259

Total
net assets

131,455,278

8,393,450

8,393,450(224,225)(224,225)－－(5,429,192)(5,429,192)(5,429,192)(5,429,192)

4,702,073

4,702,073

4,702,073

4,702,073(59,016)(59,016)(59,016)(951,344)(951,344)

7,666,331(59,016)(59,016)

7,607,315

4,708,487

9,985,403

138,970,350

92,24392,243139,062,593

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 fromsurplusDistributions in excess
of retained earnings
from allowance fortemporary differences
adjustment
Other distribution inexcess of retained
earnings

128,984,946

Allowance fortemporarydifferences
adjustment

Other
deduction ofcapital surplus

Total
deduction ofcapital surplus

Capital surplus
(net)

－

(987,516)(987,516)

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

6,264,432

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

Valuation and translation
adjustments

SurplusDeferred
gains orlosses onhedgesTotalvaluation andtranslation
adjustments

Total net
assets

92,24392,243139,062,593

Retainedearnings
Balance at the beginningof the period
Changes during theperiodIssuance of new
investment units
Distributions fromsurplusDistributions in excess
of retained earnings
from allowance fortemporary differences
adjustment
Other distribution inexcess of retained
earnings
Net income
Changes other thanunitholders’ equity(net)
Total changes during theperiod4,708,487(4,799,004)

7,303,097

2,504,093

Total
unitholders’
Total surplus
equity9,985,403

138,970,350

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

2,423,015

42,236,524

21,34821,34821,34821,34821,34842,257,873

Unitholders’ equity

Valuation and translation
adjustments

SurplusDeferred
gains orlosses onhedgesTotalvaluation andtranslation
adjustments

Total net
assets113,592

113,592

181,320,466

Retainedearnings
Balance at the end of theperiod7,212,580

Total
unitholders’
Total surplus
equity12,408,419

181,206,874

V. Notes[Notes Concerning Significant Accounting Policies]

By Period
Item

Fiscal period ended
June 30, 2017 (Reference)(from January 1, 2017 toJune 30, 2017)

1. Evaluation standards and Not applicable.
evaluation method ofassets

2. Method of depreciationof non-current assets

3. Method of calculatingallowances

4. Revenue and expense
recognition

Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)
Other securitiesThose with no fair value
Cost method through moving-average method
is used.

(a) Property and equipment(a) Property and equipment
The straight-line method is used.
The straight-line method is used.
The useful lives of major property, plant
The useful lives of major property, plantand equipment are as follows.
and equipment are as follows.
Buildings
77 years
Buildings
77 years
Buildings and accompanying facilities
Buildings and accompanying facilities
8-24 years
8-24 years
Structures
7-18 years
Structures
7-18 years
Tools, furniture and fixtures
8 years
Tools, furniture and fixtures
4-8 years
Buildings in trust
5-67 years
Buildings in trust
5-67 years
Buildings and accompanying facilities in
Buildings and accompanying facilities intrust
2-33 years
trust
2-33 years
Structures in trust
3-55 years
Structures in trust
3-55 years
Tools, furniture and fixtures in trust
Tools, furniture and fixtures in trust
2-19 years
2-19 years(b) Intangible assets(b) Intangible assets
The straight-line method is used. For
The straight-line method is used. For
leasehold interests (fixed-term land lease
leasehold interests (fixed-term land leasefor business purposes), the straight-line
for business purposes), the straight-line
method based on the lease period is used.
method based on the lease period is used.
(c) Long-term prepaid expenses(c) Long-term prepaid expenses
The straight-line method is used.
The straight-line method is used.
Allowance for doubtful accounts
Allowance for doubtful accounts
To reserve for losses on doubtful accounts, To reserve for losses on doubtful accounts,
allowances are provided for normal allowances are provided for normal
receivables using a rate determined based on receivables using a rate determined based on
past bad debt experiences, and specific past bad debt experiences, and specificallowances are provided for accounts with a allowances are provided for accounts with apossibility of default based on the estimated possibility of default based on the estimatedamounts considered to be uncollectible by amounts considered to be uncollectible byconsidering the collectability of accounts on an considering the collectability of accounts on an
individual basis.
individual basis.
Accounting treatment of property taxes and Accounting treatment of property taxes andother taxes
other taxes
With respect to property taxes, city planning With respect to property taxes, city planningtaxes and depreciable asset taxes, of the tax taxes and depreciable asset taxes, of the tax
amount assessed and determined, the amount amount assessed and determined, the amountBy Period
Item

5. Method of hedge
accounting

Fiscal period ended
June 30, 2017 (Reference)(from January 1, 2017 toJune 30, 2017)
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 amountequivalent to property taxes is capitalized aspart of the acquisition cost of the real estate ortrust beneficiary interests in real estate insteadof being charged as expense. The amountequivalent to property taxes that was included
as part of the acquisition of real estate during
the fiscal period ended June 30, 2017 is JPY
78,074 thousand.
(a) Method of hedge accounting
Deferred hedge accounting is used.

Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)
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 amountequivalent to property taxes is capitalized aspart of the acquisition cost of the real estate ortrust beneficiary interests in real estate insteadof being charged as expense. The amountequivalent to property taxes that was included
as part of the acquisition of real estate during
the fiscal period ended December 31, 2017 is
JPY 24,256 thousand.
(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(b) Hedging instrument and hedged item
Hedging instrument: interest rate swap
Hedged item: interest on borrowings(c) Hedge policy
INV enters into derivatives transactions forthe purpose of hedging against the risks set
forth in INV’s Articles of Incorporation inaccordance with its risk management
policy.

(c) Hedge policy
INV enters into derivatives transactions forthe purpose of hedging against the risks set
forth in INV’s Articles of Incorporation inaccordance with its risk management
policy.

(d) Method of evaluating hedge effectiveness(d) Method of evaluating hedge effectivenessHedge effectiveness is evaluated byHedge effectiveness is evaluated bycomparing the cumulative amount ofcomparing the cumulative amount ofchanges in cash flows of the hedging
changes in cash flows of the hedging
instrument and the cumulative amount of
instrument and the cumulative amount ofchanges in cash flows of the hedged itemchanges in cash flows of the hedged item
and verifying the difference in the amounts
and verifying the difference in the amountsof change of both the hedged item and theof change of both the hedged item and thehedging instrument.
hedging instrument.
6. Other significant(1) Accounting treatment policy of trust (1) Accounting treatment policy of trust
matters which constitutebeneficiary interests in real estate
beneficiary interests in real estate
the basis for preparation
As to trust beneficiary interests in real
As to trust beneficiary interests in realof financial statements
estate, all accounts of assets and liabilities
estate, all accounts of assets and liabilities
within assets in trust, as well as all income
within assets in trust, as well as all income
generated and expenses incurred fromgenerated and expenses incurred fromassets in trust, are recorded in the relevant
assets in trust, are recorded in the relevantbalance sheets and income statementbalance sheets and income statement
accounts. Of such items, the following
accounts. Of such items, the following
significant trust assets and liabilities are
significant trust assets and liabilities areshown separately on the balance sheet.
shown separately on the balance sheet.
(a) Cash and bank deposits in trust(a) Cash and bank deposits in trust(b) Buildings in trust(b) Buildings in trust
Buildings and accompanying facilities
Buildings and accompanying facilities
in trust
in trust
Structures in trust
Structures in trust
Tools, furniture and fixtures in trust
Tools, furniture and fixtures in trust
Land in trust
Land in trust(c) Leasehold rights in trust(c) Leasehold rights in trust(d) Tenant leasehold and security deposits(d) Tenant leasehold and security deposits
in trust
in trust

By Period
Item

Fiscal period ended
June 30, 2017 (Reference)(from January 1, 2017 toJune 30, 2017)

Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)(2) Accounting treatment of deferred assets
Investment unit issuance costs
The full amount is recorded as expense at
the time of expenditure.

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

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

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

[Notes to the Balance Sheet]

Fiscal period ended June 30, 2017 (Reference)(as of June 30, 2017)

Fiscal period ended December 31, 2017(as of December 31, 2017)*1. Minimum net assets as required by Article 67, Paragraph
4 of the Act on Investment Trusts and Investment
Corporations
JPY 50,000 thousand*2. Allowance for temporary differences adjustment*1. Minimum net assets as required by Article 67, Paragraph
4 of the Act on Investment Trusts and Investment
Corporations
JPY 50,000 thousand

Fiscal period ended June 30, 2017 (from January 1, 2017 to December 31, 2017) (Reference)
1. Reasons, related assets and amounts(Unit: JPY thousand)
Balance atReversalthe end of
duringcurrent
periodperiodRelatedassets, etc.

ReasonInitialamountBalance atthe end of
previous
periodDeferred
gains orlosses onhedgesChanges infair value ofderivatives(224,225)(224,225)-

224,225-(224,225)(224,225)-

224,225-

Total

Allowance
set aside
duringperiod

2. Method of reversal(1) Deferred gains or losses on hedges
Based on changes in the fair value of derivatives used as hedging instruments, the corresponding amount is scheduled to bereversed.
Fiscal period ended December 31, 2017 (from July 1, 2017 to December 31, 2017)
1. Reasons, related assets and amounts

Relatedassets, etc.

ReasonLeaseholdrights in trust

Amortization ofleasehold rights

Total

InitialamountBalance atthe end of
previous
periodAllowance
set aside
duringperiod(Unit: JPY thousand)
Balance atReversalthe end of
duringcurrent
periodperiod(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.

[Notes to Statement of Income and Retained Earnings]

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

Fiscal period ended December 31, 2017(from July 1, 2017 to December 31, 2017)*1. Real estate rental revenues and expenses(Unit: JPY thousand)
A. Real estate rental revenues*1. Real estate rental revenues and expenses(Unit: JPY thousand)
A. Real estate rental revenues

Rental revenue – real estate(Rent/common area charges)(Other revenues)
Total

Rental revenue – real estate
8,927,781
333,135
9,260,917(Rent/common area charges)(Other revenues)
Total

B. Real estate rental expenses

B. Real estate rental expenses

Property related expenses

Property related expenses

11,060,128
343,107
11,403,236(Maintenance costs)

646,226(Maintenance costs)

707,458(Taxes and public dues)

390,797(Taxes and public dues)

470,600(Insurance expenses)

10,195(Insurance expenses)

11,499(Depreciation expenses)

2,281,374(Depreciation expenses)

2,567,215(Other expenses)
Total

190,0903,518,684

C. Real estate rental income(A-B)(Note) Of which, revenue from variable
hotel rents(Other expenses)
Total

205,408
3,962,183

C. Real estate rental income
5,742,232
2,932,843(A-B)

7,441,052(Note) Of which, revenue from variable
hotel rents

3,741,186*2 Gain on sales of properties(Unit: JPY
thousand)Kindai Kagaku Sha Building
Proceeds from sales of properties
Cost of sales of properties
Other expenses on sales of properties
Gain on sales of properties

1,364,791
1,197,764
51,333
115,693

Times Kanda-Sudacho 4th
Proceeds from sales of properties
Cost of sales of properties
Other expenses on sales of properties
Gain on sales of properties

130,217
100,818
3,658
25,740Shinjuku Island
Proceeds from sales of properties
Cost of sales of properties
Other expenses on sales of properties
Gain on sales of properties

705,102
701,931
10,228(7,057)

Casa Eremitaggio

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

Fiscal period ended December 31, 2017(from July 1, 2017 to December 31, 2017)
Proceeds from sales of properties
Cost of sales of properties
Other expenses on sales of properties
Gain on sales of properties

1,312,035
948,287
28,743335,004

Lexel Mansion Ueno Matsugaya
Proceeds from sales of properties
Cost of sales of properties
Other expenses on sales of properties
Gain on sales of properties

1,329,240
853,265
26,547449,428

Sun Terrace Minami Ikebukuro
Proceeds from sales of properties
Cost of sales of properties
Other expenses on sales of properties
Gain on sales of properties

934,980
591,335
18,419325,224*3. Impairment loss
Name of property
Use
LocationType: Ohki Aoba Building: Retail facility: Sendai-shi, Miyagi: Land in trust: JPY 15,677
Impairment loss
thousandUpon calculating impairment loss, book value of the asset
sold was reduced to recoverable value and the amountreduced was posted in operating expenses as impairment loss
for the land in trust. The net sales price which is obtained bysubtracting expected sales expenses from actual selling priceis deemed as recoverable value.

[Notes to Statement of Changes in Net Assets]

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

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

Number of issuable investment units and number of investment Number of issuable investment units and number of investment
units issued and outstanding
units issued and outstanding
Number of investment units authorized

10,000,000 units 0,000,000
Number ofunits
investment units authorized

10,000,000 units

Number of investment units issued andoutstanding

Number of investment units issued and3,860,824 units 3,193,686 units
outstanding

4,793,181 units

[Notes Related to Tax Accounting]

Fiscal period ended June 30, 2017 (Reference)(as of June 30, 2017)

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

1. Significant components of deferred tax assets and liabilities 1. Significant components of deferred tax assets and liabilities(Unit: JPY thousand)(Unit: JPY thousand)(Deferred tax assets - current assets)(Deferred tax assets - current assets)
Enterprise tax payable
996 Enterprise tax payable
1,331
Allowance for doubtful accounts
Subtotal
Valuation allowance

10

Impairment loss

2,367

1,006

Allowance for doubtful accounts

1,006

Subtotal

3,726
3,726

28

Total

-

Valuation allowance(Deferred tax assets - current)(Deferred tax assets - non-current assets)
Buildings and other (merger)

-

Total

-

Land (merger)

2,092,087(Deferred tax assets - current)(Deferred tax assets - non-current assets)
Buildings and other (merger)

Loss carried forward

7,200,289

Land (merger)

1,918,655
7,200,289

689,159

730,990

Asset retirement obligations

9,987

Loss carried forward

Amortization of leasehold right

42,149Asset retirement obligations

10,055

Amortization of leasehold right

79,644

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

10,033,674

9,797
29,27839,075
9,994,598

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

Total-

Valuation allowance(Deferred tax assets - non-current)

-

Total

9,939,635

9,797
36,05445,851
9,893,783-

2. Significant difference between statutory tax rate and theeffective tax rate
Statutory tax rate
31.74%(Deferred tax assets - non-current)
2. Significant difference between statutory tax rate and theeffective tax rate
31.74%
Statutory
tax rate
31.74%

31.7

Deductible cash distributions(32.06)%(31.71)%
Deductible
cash distributions(30.49)%(32.06

Changes in valuation allowance(0.32)%(0.09)%
Changesin valuation allowance(1.25)%(0.32

Others0.65%

Others 0.08%

0.01%

0.6

Effective tax rate

0.01%

Effective0.01%
tax rate

0.01%

0.0

[Notes Related to Financial Instruments]

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

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

1. Status of financial instruments

1. Status of financial instruments(1)Policy for financial instruments(1)Policy for financial instruments

INV principally conducts its operations throughinvestments in real estate and other specified assets to seek
to ensure stable income in the medium to long term.
The policy for raising funds is principally through issuing
new investment units or borrowing loans.
Derivative transactions are to be entered into for the
purpose of hedging against the risk of future interest rateincreases, etc. and not for speculation.
Surplus funds are managed after carefully taking into
account safety, liquidity, the interest rate environment andfinancing.

INV principally conducts its operations throughinvestments in real estate and other specified assets to seek
to ensure stable income in the medium to long term.
The policy for raising funds is principally through issuing
new investment units or borrowing loans.
Derivative transactions are to be entered into for the
purpose of hedging against the risk of future interest rateincreases, etc. and not for speculation.
Surplus funds are managed after carefully taking into
account safety, liquidity, the interest rate environment andfinancing.

(2)Nature and extent of risks arising from financial
instruments and risk management.

(2)Nature and extent of risks arising from financial
instruments and risk management.

The funds raised through borrowings are mainly used toacquire real estate properties or trust beneficiary interest inreal estate (including related acquisition costs) and for therefinancing of existing loan. Liquidity risks relating to loan
are managed by the finance department of the AssetManager by preparing and updating plans for funds, andmonitoring the covenants set forth in loan agreements.

The funds raised through borrowings are mainly used toacquire real estate properties or trust beneficiary interest inreal estate (including related acquisition costs) and for therefinancing of existing loan. Liquidity risks relating to loan
are managed by the finance department of the AssetManager by preparing and updating plans for funds, andmonitoring the covenants set forth in loan agreements.

(3)Supplemental information regarding market value, etc. forfinancial instruments.

(3)Supplemental information regarding market value, etc. forfinancial instruments.

The fair value of financial instruments is based on quoted
market prices if available. When quoted market prices are
not available, fair value is determined through a reasonableestimate. Since certain assumptions, etc. are used inestimating the fair value, different assumptions, etc. may
result in the variance of such value.

The fair value of financial instruments is based on quoted
market prices if available. When quoted market prices are
not available, fair value is determined through a reasonableestimate. Since certain assumptions, etc. are used inestimating the fair value, different assumptions, etc. may
result in the variance of such value.

2. Estimated fair value of financial instruments.
Book value, fair value and the difference between value asof June 30, 2017 are as follows.
(Unit: JPY thousand)2. Estimated fair value of financial instruments.
Book value, fair value and the difference between value asof December 31, 2017 are as follows.
(Unit: JPY thousand)Book Value

Fair Value

DifferenceBook Value

Fair Value

Difference

3,532,405

3,532,405-

14,367,140

14,367,140-

6,065,755

6,065,755-

6,326,653

6,326,653---(1) Cash and bankdeposits(2) Cash and bankdeposits in trust
Total assets

9,598,161

9,598,161(3) Long-term loans(163,990,000)(163,990,000)

Total liabilities(163,990,000)(163,990,000)

92,24392,243(4) Derivatives(1) Cash and bankdeposits(2) Cash and bankdeposits in trust
Total assets(3) Short-term loans(4) Current portion oflong‐term loans
payable(5) Long-term loans
Total liabilities(6) Derivatives

20,693,794

20,693,794(3,068,000)(3,068,000)(28,979,000)(28,979,000)(154,936,000)(154,936,000)(186,983,000)(186,983,000)

113,592

113,592-

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

Fiscal period ended December 31, 2017(from July 1, 2017 to December 31, 2017)(*1) Items recorded in the Liabilities Section are shown inparenthesis.
(*2) Receivables and payables arising from derivativetransactions are recorded in net amounts, and if thetotal net amount is a negative amount, such amount isshown in parenthesis.

(*1) Items recorded in the Liabilities Section are shown inparenthesis.
(*2) Receivables and payables arising from derivativetransactions are recorded in net amounts, and if thetotal net amount is a negative amount, such amount isshown in parenthesis.

(Note 1) Methods to calculate fair value of financial(Note 1) Methods to calculate fair value of financial
instruments.
instruments.
(1) Cash and bank deposits (2) Cash and bank deposits in trust
Due to the short maturities, the book value of these instruments (1) Cash and bank deposits (2) Cash and bank deposits in trust
is deemed a reasonable approximation of the fair value, and (3) Short-term loans
Due to the short maturities, the book value of these instruments
therefore, the book value is used as the fair value.
is deemed a reasonable approximation of the fair value, andtherefore, the book value is used as the fair value.
(3) Long-term loans
Long-term loans with floating interest rates reflecting changes
in market rates within a short-term period is stated at their (4) Current portion of long‐term loans payable (5) Long-term
loansbook value as their book value approximate their fair value.
Long-term loans with floating interest rates reflecting changes
in market rates within a short-term period is stated at theirbook value as their book value approximate their fair value.
(4) Derivatives(a) Derivatives transactions to which hedge accounting(6) Derivatives
was is applied(a) Derivatives transactions to which hedge accounting
Not applicable
was is applied(b) Derivatives transactions to which hedge accounting is
Not applicableapplied(b) Derivatives transactions to which hedge accounting is
The contract amount as of the closing date underappliedeach hedge-accounting method and the amountThe contract amount as of the closing date underequivalent to the notional principal prescribed in theeach hedge-accounting method and the amountcontracts are as shown below.
equivalent to the notional principal prescribed in thecontracts are as shown below.
(Unit: JPY thousand)
Method of Derivative Primary
hedge transaction hedged
accounting type, etc.
item
Interest
rate swap
Principle
Receiveaccounting
floating
methodrate/pay
fixed rate

Longterm
loans

Contract amount, etc.
(Note 1)

Fair value(Note 2)

Amount due
after
one year

99,119,000

99,119,000(Unit: JPY thousand)
Method of Derivative Primary
hedge transaction hedged
accounting type, etc.
item

92,243(*1) The contract amount, etc. is stated based on a notional
principal.
(*2) The fair value is estimated based on the price, etc.
presented by the correspondent financial institutions.
(Note 2) Financial instruments for which fair value isextremely difficult to value.
(Unit: JPY thousand)Category
Book value
Tenant leasehold and28,663security deposits
Tenant leasehold and2,240,373
security deposits in trust

Interest
rate swap
Principle
Receiveaccounting
floating
methodrate/pay
fixed rate

Longterm
loans

Contract amount, etc.
(Note 1)

Fair value(Note 2)

Amount due
after
one year

99,119,000

70,140,000

113,592(*1) The contract amount, etc. is stated based on a notional
principal.
(*2) The fair value is estimated based on the price, etc.
presented by the correspondent financial institutions.
(Note 2) Financial instruments for which fair value isextremely difficult to value.
(Unit: JPY thousand)Category
Book value
Tenant leasehold andsecurity deposits
Tenant leasehold and2,215,299
security deposits in trustFiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

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

Tenant leasehold and security deposits and tenant leasehold
and security deposits in trust have no observable market
price, and it is impracticable to estimate reasonably their
future cash flows because the repayment dates of those
deposits and the timing of the lessee’s exit from theproperty are not certain. Thus, their fair value is notdisclosed.
(Note 3) Remaining schedule of monetary claims after theclosing date of the fiscal period
As of June 30, 2017
(Unit: JPY thousand)Due within
one year

Due after one Due after two
to two years to three years

Cash and bank deposits

3,532,405--

Cash and bank deposits intrust

6,065,755

-

-

Total

9,598,161--

17,854,460

Investment securities

Tenant leasehold and security deposits and tenantleasehold and security deposits in trust have no observable
market price, and it is impracticable to estimate reasonably
their future cash flows because the repayment dates of
those deposits and the timing of the lessee’s exit from theproperty are not certain. Thus, their fair value is notdisclosed.
Since quoted market prices are not available for investment
securities (preferred equity interest), fair value is deemed
extremely difficult to value. Thus, prices are not subject tothe disclosure of fair value.
(Note 3) Remaining schedule of monetary claims after theclosing date of the fiscal period
As of December 31, 2017

Due after three Due after four Due after five
to four years to five years
years
Cash and bank deposits

-

-

-

Cash and bank deposits in
trust

-

-

-

Total

-

-

-

As of June 30, 2017
(Unit: JPY thousand)Due after one Due after two
to two years to three years

Long-term loans-

46,663,000

Total

-

46,663,000

Due after one Due after two
to two years to three years

Cash and bank deposits

14,367,140--

Cash and bank deposits in
trust

6,326,653

-

-

Total

20,693,794--

Due after three Due after four Due after five
to four years to five years
years(Note 4) Repayment schedule of long-term loans and otherinterest-bearing debts after the closing date of the
fiscal period

Due within
one year(Unit: JPY thousand)Due within
one year

48,044,000
48,044,000

Cash and bank deposits

-

-

-

Cash and bank deposits in
trust

-

-

-

Total

-

-

-

(Note 4) Repayment schedule of long-term loans and otherinterest-bearing debts after the closing date of the
fiscal period
As of December 31, 2017
(Unit: JPY thousand)Due after three Due after four Due after five
to four years to five years
years
Long-term loans

55,512,000

13,771,000

-

Total

55,512,000

13,771,000-

Due within
one year

Due after one Due after two
to two years to three years

Short-term loans

3,068,000--

Current portion of long‐term loans payable

28,979,000--

Long-term loans-

54,745,000

50,130,000

Total

32,047,000

54,745,000

50,130,000

Due after three Due after four Due after five
to four years to five years
years
Short-term loans

-

-

-

Current portion of long‐term loans payable

-

-

-

32,821,000

10,115,000

7,125,000

Long-term loans

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

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

32,821,000

10,115,000

7,125,000[Notes Related to Asset Retirement Obligations]Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

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

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 theperiodThe amount of the asset retirement obligations has been
calculated by fixing the estimated period of use at 43 years,
based on the period until the expiration of the fixed-term
land lease agreement, and by using a discount rate of
1.342%.
3. Increase/decrease in the total amount of asset retirement
obligations for the current fiscal period(Unit: JPY thousand)

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 theperiodThe amount of the asset retirement obligations has been
calculated by fixing the estimated period of use at 43 years,
based on the period until the expiration of the fixed-term
land lease agreement, and by using a discount rate of
1.342%.
3. Increase/decrease in the total amount of asset retirement
obligations for the current fiscal period(Unit: JPY thousand)

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

31,260208
31,468

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

31,468

31,05

212

20

31,68031,26

[Notes Related to Rental Properties]

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

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

INV owns residential properties and hotels as core assets aswell as other various properties including offices andcommercial facilities principally in the Tokyo area andmajor regional cities in order to establish a portfolio which
focuses on both stability and growth potential. The bookvalue changed during the period and balance at the end of
the period are as follows.
(Unit: JPY thousand)

INV owns residential properties and hotels as core assets aswell as other various properties including offices andcommercial facilities principally in the Tokyo area andmajor regional cities in order to establish a portfolio which
focuses on both stability and growth potential. The bookvalue changed during the period and balance at the end of
the period are as follows.
(Unit: JPY thousand)Book value

Fair value atBalance at theBalance at the the end of the
Change during
periodbeginning of
end of thethe period
the period
periodUse

Residences

67,835,839

25,277,356

93,113,195

104,752,000

Offices

8,440,981(16,247)

8,424,734

Book value

Fair value atBalance at theBalance at the the end of the
Change during
periodbeginning of
end of thethe period
the period
periodUse

Residences

93,113,195(3,163,531)

89,949,664

102,353,000

7,636,000

Offices

8,424,734(1,949,803)

6,474,931

6,130,000

5,001,269(43,977)

4,957,292

6,100,000

100,818(100,818)--

Commercial
facilities

5,049,226(47,956)

5,001,269

5,980,000

Commercial
facilities

Parking lot

100,819(1)

100,818

113,000

Parking lot

Hotels178,511,427

7,386,530

185,897,957

245,021,000

Hotels185,897,957

40,430,059

226,328,017

285,424,000

Total

259,938,294

32,599,681

292,537,976

363,502,000

Total

292,537,976

35,171,929

327,709,905

400,007,000(Note 1) Book value is the figure calculated by subtracting
amount of accumulated depreciation from acquisition
price (including acquisition-related costs).
(Note 2) The major factors for the increase for the fiscal period
ended June 30, 2017 were new acquisition ofresidential properties and hotel, and capital
expenditures related to construction work.
(Note 3) The major factor for the decrease was depreciation.
(Note 4) The fair value as of the end of the reporting period isdetermined based on the appraisal value or survey
value provided by Asset Research and Development
Inc., Japan Real Estate Institute, Morii Appraisal &Investment Consulting Inc., The Tanizawa Sogo
Appraisal Co., Ltd., and Daiwa Real Estate Appraisal
Co., Ltd.

For information related to profits and losses from rental
properties in the fiscal period ended June 30, 2017, pleaserefer to “Notes to Statement of Income and Retained
Earnings.”(Note 1) Book value is the figure calculated by subtracting
amount of 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 new acquisition of
hotels and capital expenditure-related construction
work.
(Note 3) The major factors of the decrease were sale ofresidential properties, office properties and parking,and depreciation and impairment loss.
(Note 4) The fair value as of the end of the reporting period isdetermined based on the appraisal value or survey
value provided by Asset Research and Development
Inc., Japan Real Estate Institute, Morii Appraisal &Investment Consulting Inc., The Tanizawa Sogo
Appraisal Co., Ltd., and Daiwa Real Estate Appraisal
Co., Ltd.
For information related to profits and losses from rental
properties in the fiscal period ended December 31, 2017,
please refer to “Notes to Statement of Income and Retained
Earnings.”[Notes Related to Restriction on Asset Management]

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)
Not applicable.

Fiscal period ended December 31, 2017(from July 1, 2017 to December 31, 2017)
Not applicable.

[Notes Related to Transactions with Related Parties]
Fiscal period ended June 30, 2017 (from January 1, 2017 to June 30, 2017) (Reference)
1

Interested parties of the Asset Manager
Classification

Business or
occupation

Name
Sakura Tokutei
Mokuteki Kaisha
Momo Tokutei
Mokuteki Kaisha

Interested party of Septentrio 2 Tokutei
the Asset Manager Mokuteki Kaisha
Naqua Hotel &Resorts Management
Co., Ltd.
MyStays HotelManagement
Co., Ltd.

Percentage ofvoting rights
owned
(%)

Investment
managementbusiness
Investment
managementbusiness
Investment
managementbusiness-

Type of transaction
Purchase oftrust beneficiary interests
in real estate
Purchase oftrust beneficiary interests
in real estate
Purchase oftrust beneficiary interests
in real estateTransaction
amount(JPY thousand)Account

Balance at theend of the period(JPY thousand)

21,879,000--

2,683,000--

8,000,000

-

-

Hotel
business-

Rental revenues

549,169

Accounts
receivable

198,247

Hotelbusiness-

Rental revenues

3,852,826

Accounts
receivable

1,043,190(Note 1) Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
(Note 2) The terms and conditions have been determined based on the Asset Manager’s internal rules and manual regardingtransactions with the sponsor company.
(Note 3) Sakura Tokutei Mokuteki Kaisha, Momo Tokutei Mokuteki Kaisha, Septentrio 2 Tokutei Mokuteki Kaisha, Naqua
Hotel & Resorts Management Co., Ltd., and MyStays Hotel Management Co., Ltd. have no capital relationship to bedisclosed with the Asset Manager. The tenant and operator have received an anonymous partnership investment orinvestment through funds that are managed by affiliates of Fortress Investment Group LLC (“FIG”), an affiliate ofCalliope. Accordingly, INV treats Sakura Tokutei Mokuteki Kaisha, Momo Tokutei Mokuteki Kaisha, Septentrio 2
Tokutei Mokuteki Kaisha, Naqua Hotel & Resorts Management Co., Ltd., and MyStays Hotel Management Co., Ltd.
as the equivalent to interested parties.
(Note 4) Calliope holds 609,942 units (holding percentage: 15.8%) of the issued investment units of INV.
(Note 5) The purchase of trust beneficiary interests pertains to the following properties. The transaction amount is thepurchase price stated in the trust beneficiary purchase agreement, to which other expenses for acquisition, property
taxes, city planning taxes and consumption taxes are not included.
Purchase price(JPY thousand)

Property number

Name of property

Counterparty

A105

Royal Parks Tower Minami-Senju

Sakura Tokutei Mokuteki Kaisha

21,879,000A106Royal Parks Seasir Minami-Senju

Momo Tokutei Mokuteki Kaisha

2,683,000

D49

Hotel MyStays Premier Hamamatsucho Septentrio 2 Tokutei Mokuteki Kaisha

8,000,000

Total

2

32,562,000

Asset Custody Company
Classification

Asset CustodyCompany

Name

Sumitomo Mitsui
Trust Bank,
LimitedBusiness or
occupation

Banking andtrust business

Percentage ofvoting rights
owned
(%)

-

Type of transaction

Transaction
amount(JPY thousand)Borrowing forlong-term loan-

Finance related fees-

Interest expenses

Account

Balance at theend of the period(JPY thousand)Long-termloans payable

21,351,000

Prepaid expenses

48,328Long-term
prepaid expenses

68,891

56,424 Accrued expenses

310(Note 1) Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
(Note 2) The terms and conditions have been determined based on actual market conditions.

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

Interested parties of the Asset Manager
Classification

Name

Business or
occupation

Percentage ofvoting rights
owned
(%)

Type of transaction

Transaction
amount(JPY thousand)Account

HL Investments
Tokutei Mokuteki
KaishaInvestment
managementbusiness-

Purchase oftrust beneficiary interests
in real estate

13,068,000--

9,781,000--

8,870,000--

Septentrio3 Tokutei
Mokuteki Kaisha
Monza Tokutei
Mokuteki Kaisha

Interested party of
the Asset Manager

Suisei Tokutei
Mokuteki Kaisha
Naqua Hotel &Resorts Management
Co., Ltd.
MyStays HotelManagement
Co., Ltd.

Investment
managementbusiness
Investment
managementbusiness
Investment
managementbusiness-

Purchase oftrust beneficiary interests
in real estate
Purchase oftrust beneficiary interests
in real estate
Purchase oftrust beneficiary interests
in real estate

Balance at theend of the period(JPY thousand)

7,880,000

Hotelbusiness-

Rental revenues

1,103,226

Accounts
receivable

130,953

Hotelbusiness-

Rental revenues

4,794,080

Accounts
receivable

1,551,920(Note 1) Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
(Note 2) The terms and conditions have been determined based on the Asset Manager’s internal rules and manual regardingtransactions with the sponsor company.
(Note 3) 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 HotelManagement Co., Ltd. have no capital relationship to 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.
(Note 4) Calliope holds 609,942 units (holding percentage: 2.7%) of the issued investment units of INV.
(Note 5) The purchase of trust beneficiary interests pertains to the following properties. The transaction amount is thepurchase price stated in the trust beneficiary purchase agreement, to which other expenses for acquisition, property
taxes, city planning taxes and consumption taxes are not included.
Property number

Name of property

Counterparty

Purchase price(JPY thousand)

D50

Hotel MyStays Shin Osaka Conference
HL Investments Tokutei Mokuteki Kaisha
Center

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

39,599,000

2Asset Custody Company
Classification

Asset CustodyCompany

Name

Sumitomo Mitsui
Trust Bank,
LimitedBusiness or
occupation

Banking andtrust business

Percentage ofvoting rights
owned
(%)

-

Type of transaction

Transaction
amount(JPY thousand)Borrowing forlong-term loan

3,647,000

Finance related fees

38,303

Interest expenses

Account

Balance at theend of the period(JPY thousand)Long-termloans payable

24,998,000

Prepaid expenses

53,375Long-term
prepaid expenses

77,317

61,771 Accrued expenses

1,139(Note 1) Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
(Note 2) The terms and conditions have been determined based on actual market conditions.

[Notes Related to Per Unit Information]

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

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

Net assets per unit

JPY 36,019

Net income per unit

JPY 1,241

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

Net JPY
assets35,762
per unit

JPY 35,368

JPY 28,731
JPY 37,829

Net income
JPY 1,477
per unit

JPY 1,270

JPY 937
JPY 1,712

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

(Note) The basis for calculating net income per unit is as follows.
Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)
Net income for the fiscal period (JPY thousand)Amounts not attributable to common unitholders(JPY thousand)Net income attributable to common units(JPY thousand)Average number of investment units during theperiod (units)

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

4,702,073
4,702,073
3,788,254

5,431,003
Net income for
4,363,420
the fiscal 2,952,688
period (JPY thousand)Amounts not attributable to common unitholders(JPY thousand)Net income attributable to common units
5,431,003
4,363,420 2,952,688(JPY thousand)Average number of investment units during the
3,675,824
3,436,572 3,149,936
period (units)

7,303,097
7,303,097
4,266,437

[Notes Related to Significant Subsequent Events]

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

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

1. Sale of Assets
INV decided on July 25, 2017 to sell the following two
properties and completed sale of all two properties on July
31, 2017.

1. Sale of Assets
INV completed sale of the following five properties on
January 31, 2018.

Property Number: B08
Property Name: Kindai Kagaku Sha Building
Sale dateJuly 31, 2017

Location

Shinjuku-ku, Tokyo

Book value (Note 1)

JPY 1,201 million

Sales price (Note 2)

JPY 1,361 million

Expected gain on sales(Note 3)

JPY 96 million

Transferee

Not disclosed (Note 4)

Legal form of asset

Trust beneficiary interest

Property Number: C01
Property Name: Times Kanda-Sudacho 4th
Sale dateJuly 31, 2017

Location

Chiyoda-ku, Tokyo

Book value (Note 1)

JPY 100 million

Sales price (Note 2)

JPY 130 million

Expected gain on sales(Note 3)

JPY 23 million

Transferee

Wastec HOLDINGS Co., Ltd.

Legal form of asset

Real estate(Note 1)
(Note 2)

(Note 3)(Note 4)(Note 5)

Book value is the book value as of the sale dateJuly 31, 2017.
Sales price does not include sales-related
expenses, adjustments for property taxes or city
planning taxes, or national or local consumption
taxes.
The amount of difference between sales priceand book value, and after deducting expectedsales-related expenses.
The name of the transferee is not disclosed, as
the transferee’s consent has not been obtainedfor disclosure.
For details of the sales assets, please refer to “I.
Asset Management Report; Status ofInvestment
Corporations’ Assets
underManagement; 3 Asset Portfolio of Real Estate,etc.” earlier in this document.

Property Number: A31
Property Name: Harmonie Ochanomizu
Sale dateJuly 31, 2018

Location

Bunkyo-ku, Tokyo

Book value (Note 1)

JPY 1,346 million

Sales price (Note 2)

JPY 1,603 million

Expected gain on sales(Note 3)

JPY 220 million

Transferee

Not disclosed (Note 4)

Legal form of asset

Trust beneficiary interest

Property Number: A36
Property Name: Growth Maison Ikebukuro
Sale dateJuly 31, 2018

Location

Toshima-ku, Tokyo

Book value (Note 1)

JPY 743 million

Sales price (Note 2)

JPY 1,057 million

Expected gain on sales(Note 3)

JPY 288 million

Transferee

Not disclosed (Note 4)

Legal form of asset

Trust beneficiary interest

Property Number: A42
Property Name: Capital Heights Kagurazaka
Sale dateJuly 31, 2018

Location

Shinjuku-ku, Tokyo

Book value (Note 1)

JPY 623 million

Sales price (Note 2)

JPY 732 million

Expected gain on sales(Note 3)

JPY 87 million

Transferee

Not disclosed (Note 4)

Legal form of asset

Trust beneficiary interest

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)
2. Acquisition of Assets
On July 25, 2017, INV resolved on additional acquisitionof the exclusive elements it has yet to acquire of one hotel
property that is already in its portfolio, using the proceedsfrom the sales outlined in “1. Sale of Assets” to fund partof the acquisition.
Property Number: D43
Property Name: Hotel MyStays Gotanda Station
Anticipated acquisition date

JPY 1,880 million

Location

Shinagawa-ku, Tokyo

Completion dateAugust 29, 1984 (Note 2)

Legal form of asset

Trust beneficiary interest

SellerNot disclosed (Note 3)(Note 1)

Property Number: B15
Property Name: Cross Square NAKANOSale date

January 31, 2018

Location

Nakano-ku, Tokyo

Book value (Note 1)

JPY 1,125 million

Sales price (Note 2)

JPY 1,350 million

Expected gain on sales(Note 3)

JPY 199 million

Transferee

Taisei-Yuraku Real Estate Co.,Ltd.

Legal form of asset

Trust beneficiary interest

October 31, 2017

Anticipated acquisition price(Note 1)

Area of additional
acquisition portion

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

2

1,385.46m

Anticipated acquisition price is the total of (i)purchase price set forth in the purchase and saleagreement, (ii) expenses with regard to theconversion work to convert to hotel rooms, (iii)transfer price of the furniture, fixture andequipment (FF&E), and other expenses.
Anticipated acquisition price does not include
adjustments for property taxes or city planningtaxes, or national or local consumption taxes.
(Note 2) The completion date of the building of theadditional acquisition portion.
(Note 3) The name of the seller is not disclosed, as theseller’s consent has not been obtained fordisclosure.

Property Number: B16
Property Name: Ohki Aoba Building
Sale date

January 31, 2018

Location

Sendai-shi, Miyagi

Book value (Note 1)

JPY 709 million

Sales price (Note 2)

JPY 721 million

Expected gain on sales(Note 3)-

Transferee

Kubota Honten

Legal form of asset

Trust beneficiary interest

In addition, INV decided on February 13, 2018 to sell thefollowing one property and completed its sale on March 9,
2018.
Property Number: B14
Property Name: Lexington Plaza Nishigotanda
Sale date

March 9, 2018

Location

Shinagawa-ku, Tokyo

Book value (Note 1)

JPY 4,639 million

Sales price (Note 2)

JPY 5,160 million

Expected gain on sales(Note 3)

JPY 431 million

Transferee

Not disclosed (Note 4)

Legal form of asset

Trust beneficiary interest(Note 1)
(Note 2)The book value is as of December 31, 2017.
Sales price does not include sales-related
expenses, adjustments for property taxes or city
planning taxes, or national or local consumption
taxes.

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

Fiscal period ended December 31, 2017(from July 1, 2017 to December 31, 2017)(Note 3)(Note 4)(Note 5)The amount of difference between sales priceand book value, and after deducting expectedsales-related expenses is indicated.
The name of the transferee is not disclosed, as
the transferee’s consent has not been obtainedfor disclosure
For details of the sales assets, please refer to “I.
Asset Management Report; Status ofInvestment
Corporations’ Assets
underManagement; 3 Asset Portfolio of Real Estate,etc.” earlier in this document.

2. Acquisition of Assets
On February 5, 2018, INV decided to acquire the following
four hotel properties and concluded a purchase and saleagreement on the same day. INV completed the acquisition
on February 7, 2018, using the proceeds from the sales
outlined in “1. Sale of Assets” to fund part of theacquisition.

Property Number: D54
Property Name: Hotel MyStays Yokohama Kannai
Acquisition dateFebruary 7, 2018

Acquisition price (Note)

JPY 5,326 million

Location

Yokohama-shi, Kanagawa

Completion dateAugust 2016

Legal form of asset

Trust beneficiary interest

SellerGinga Tokutei Mokuteki
KaishaTotal floor area

4,567.24m2

Total leasable area

4,567.24m2

Property Number: D55
Property Name: Art Hotel Joetsu
Acquisition dateFebruary 7, 2018

Acquisition price (Note)

JPY 2,772 million

Location

Joetsu, Niigata

Completion dateNovember 1993

Legal form of asset

Trust beneficiary interest

Seller

HL Investments Tokutei
Mokuteki Kaisha

Total floor area

7,551.78m2

Total leasable area

7,551.78m2

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

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

Property Number: D56
Property Name: Art Hotel Hirosaki City
Acquisition dateFebruary 7, 2018

Acquisition price (Note)

JPY 2,723 million

Location

Hirosaki-shi, Aomori

Completion dateAugust 1989

Legal form of asset

Trust beneficiary interest

SellerMonza Tokutei Mokuteki
KaishaTotal floor area

18,889.26m2

Total leasable area

18,889.26m2

Property Number: D57
Property Name: Hotel MyStays Oita
Acquisition dateFebruary 7, 2018

Acquisition price (Note)

JPY 1,604 million

Location

Oita-shi, Oita

Completion dateJuly 2007

Legal form of asset

Trust beneficiary interest

SellerSuisei Tokutei Mokuteki
KaishaTotal floor area

3,766.72m2

Total leasable area

3,766.72m2(Note)

Acquisition price is based on the purchase priceindicated in the relevant purchase agreementand does not include acquisition costs, property
taxes, city planning taxes and consumption
taxes.

[Notes Related to Provision and Reversal of Allowance for Temporary Differences Adjustment]

Fiscal period ended June 30, 2017 (Reference)(from January 1, 2017 to June 30, 2017)

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

The following provision was made in the Statement of CashDistribution:
1. Reasons, related assets and amounts

Related assets, etc.

ReasonLeasehold rights
in trust

Amortization ofleasehold rights(Unit: JPY thousand)Allowance fortemporary differences
adjustment
46,3292. Method of reversal
Related assets, etc.

Method of reversal

Leasehold rights
in trust

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

Not applicableVI. Statement of Cash Distribution

Fiscal period ended
June 30, 2017 (Reference)(from January 1, 2017 toJune 30, 2017)
I.

Unappropriated retained
earnings
II. Incorporation into
unitholders’ capital
Of which, reversal of
allowance for temporary
differences adjustment
III. Distribution in excess ofretained earnings
Allowance for temporary
differences adjustment
Other deduction ofcapital surplus
IV. Distributions(Distribution per unit)
Of which,
distribution of earnings(Distribution of earnings
per unit)
Of which,allowance for temporary
differences adjustment(Distribution in excess ofretained earnings per unit
(Allowance for temporary
differences adjustment))
Of which,other distribution in excess
of retained earnings(Distribution in excess ofretained earnings per unit
(Other distribution in excess
of retained earnings))
V. Retained earnings (deficit)
carried forward

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

JPY 4,708,487,837

JPY 7,212,580,928--

JPY 46,329,888-

JPY 34,747,416

JPY 172,554,516

JPY 4,880,081,536(JPY 1,264)

JPY 7,496,535,084(JPY 1,564)

JPY 4,799,004,232

JPY 7,323,980,568(JPY 1,243)(JPY 1,528)

JPY 46,329,888-(JPY 12)(-)

JPY 34,747,416

JPY 172,554,516(JPY 9)(JPY 36)(JPY 90,516,395)(JPY 111,399,640)

Calculation method of
distribution amountAs shown above, the distribution perunit for the Reporting Period is JPY
1,264.
With respect to profit distributions(notincluding
ExcessProfitDistribution),
INV decided
todistribute almost all of its profit as
defined in Article 136, Paragraph 1 ofthe Investment Trust Act, other thanfractional amount per unit less than
JPY 1, aiming to include themaximum
amountofprofitdistributions in deductible expenses inaccordance with Article 67-15,
Paragraph 1 of the Act on Special
Taxation Measures (Act No. 26,
1957). As a result, the distribution of
earnings per unit (not including
Excess Profit Distribution per unit) is
JPY 1,243.
In addition, in accordance with the
distribution policy as set forth in the
Articles of Incorporation, INV makes
distributions in excess of earnings ofthe amount that it determines (the“Excess Profit Distribution”). For theReporting Period, INV decided tomake Excess Profit Distribution of
JPY 46 million in order to cope withthe discrepancy between tax andaccounting treatment, making Excess
Profit Distribution from the allowancefor temporary differences adjustmentof JPY 12 per unit. INV decided toalso make Excess Profit Distributionof JPY 34 million as refund ofinvestment in order to level
distributions, making other Excess
Profit Distribution of JPY 9 per unit.
For the Reporting Period, there arosedeferred gain on hedges of JPY 92
million, which is regarded as profit as
stipulated in Article 136, Paragraph 1of the Investment Trust Act, and INV
decided to distribute almost the entire
amount of profit stipulated in Article
136, Paragraph 1 of the Investment
Trust Act. As a result, INV recorded
deferred loss on hedges of JPY 90
million for the next fiscal period.

As shown above, the distribution perunit for the Reporting Period is JPY
1,564.
With respect to profit distributions(notincluding
ExcessProfitDistribution),
INV decided
todistribute almost all of its profit as
defined in Article 136, Paragraph 1 ofthe Investment Trust Act, other thanfractional amount per unit less than
JPY 1, aiming to include themaximum
amountofprofitdistributions in deductible expenses inaccordance with Article 67-15,
Paragraph 1 of the Act on Special
Taxation Measures (Act No. 26,
1957). As a result, the distribution of
earnings per unit (not including
Excess Profit Distribution per unit) 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 ofthe amount that it determines (the“Excess Profit Distribution”). For theReporting Period, INV decided also
to make Excess Profit Distribution of
JPY 172 million as refund ofinvestment in order to level
distributions, making other Excess
Profit Distribution of JPY 36 per unit.
For the Reporting Period, there arosedeferred gain on hedges of JPY 113
million, which is regarded as profit as
stipulated in Article 136, Paragraph 1of the Investment Trust Act, and INV
decided to distribute almost the entire
amount of profit stipulated in Article
136, Paragraph 1 of the Investment
Trust Act. As a result, INV recorded
retained deficit carried forward ） of
JPY 111 million for the next fiscal
period.

Note
Accompanying English financial information, comprising Balance Sheet, Statement of Income andRetained Earnings, Statement of Changes in Net Assets, Notes to financial statements and Statement of
Cash Distribution, have been translated from the Japanese financial statements of the Investment
Corporation prepared in accordance with the Act on Investment Trusts and Investment Corporations ofJapan.
Under Article 130 of the Act on Investment Trusts and Investment Corporations of Japan, the Japanesefinancial statements for the six months ended December 31, 2017 have been audited by Ernst & Young
ShinNihon LLC, in accordance with auditing standards generally accepted in Japan. However, English
translation of the Japanese language report of independent auditors is not attached herein since theaccompanying English translation of Balance Sheet, Statement of Income and Retained Earnings,
Statements of Changes in Net Assets, Notes to financial statements and Statement of Cash Distribution is
unaudited.
Regarding the English audited financial statements, please refer to the “Audited Financial Statements” on
the website of Invincible Investment Corporation: http://www.invincible-inv.co.jp/eng/cms/doc.html

VII. Statement of Cash Flows (Reference Information)(Unit: JPY thousand)Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)

Fiscal period ended
June 30, 2017 (Reference)(from January 1, 2017 toJune 30, 2017)
Cash flows from operating activities
Net income before taxes
Depreciation and amortization
Impairment loss
Investment unit issuance costs
Loan-related costs
Interest income
Interest expenses
Increase (decrease) in allowance for doubtful accounts
Decrease (increase) in rental receivable
Decrease (increase) in consumption taxes receivable
Increase (decrease) in accounts payable
Increase (decrease) in 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 andequipment
Decrease from sales of property, plant andequipment in trust
Others, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Purchases of property and equipment
Purchases of property and equipment in trust
Purchases of leasehold rights in trust
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
Proceeds from short-term loans payable
Proceeds from long-term loans payable
Payment for loan-related expenses
Payment of distributions of earnings
Payment of distributions in excess of earnings fromallowance for temporary differences adjustment
Payment of other distributions in excess of earnings
Proceeds from issuance of investment units
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents

4,702,678
2,281,374
42,401
223,228(70)
377,451(1,301)(21,759)(20,823)
81,748(460,521)
25,473444
18,602(21,461)

7,303,702
2,567,215
15,677
170,817304,073(54)445,85555(564,535)(640,464)(7,867)47,721(67,922)
98,06560,077(7,567)-802,750-

3,590,653(17,577)
7,209,888
70(379,198)(605)
6,830,155(1,274)
14,116,980
54(439,861)(605)
13,676,568(2,395)(26,684,589)(8,187,950)-(797)(42,111,738)(17,854,460)-(28,663)(79,334)(139,629)

290,004

115,173(1,037,651)(2,211)(35,704,126)(14,807)(60,034,922)

21,571,000(257,922)(5,406,728)

3,068,000
19,925,000(325,727)(4,776,561)-(46,329)

8,351,048
24,257,397(4,616,573)(34,747)
39,644,352
57,453,986
11,095,633

Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period *1

Fiscal period ended
June 30, 2017 (Reference)(from January 1, 2017 toJune 30, 2017)14,214,734
9,598,161(Unit: JPY thousand)Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)
9,598,161
20,693,794[Notes Concerning Significant Accounting Policies (Reference Information)]
By Period
Item
Cash and cash equivalents as statedin Statement of Cash Flows

Fiscal period ended
June 30, 2017 (Reference)(from January 1, 2017 toJune 30, 2017)
Cash and cash equivalents as statedin the Statement of Cash Flows
consist of cash on hand and cash intrust, floating deposits, deposits intrust and short-term investments thatare very liquid and realizable with amaturity of three months or lesswhen purchased and that are subject
to insignificant risks of changes invalue.

Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)
Cash and cash equivalents as statedin the Statement of Cash Flows
consist of cash on hand and cash intrust, floating deposits, deposits intrust and short-term investments thatare very liquid and realizable with amaturity of three months or lesswhen purchased and that are subject
to insignificant risks of changes invalue.

[Notes to Statement of Cash Flows (Reference Information)]
By Period
Item*1. Relationship between cash andcash equivalents in Statement of
Cash Flows and amounts inaccompanying balance sheet

Fiscal period ended
June 30, 2017 (Reference)(from January 1, 2017 toJune 30, 2017)(As of June 30, 2017)(Unit: JPY thousand)Cash and bank3,532,405
deposits
Cash and bank6,065,755
deposits in trust
Cash and cash
9,598,161
equivalents

Fiscal period ended
December 31, 2017(from July 1, 2017 to
December 31, 2017)(As of December 31, 2017)(Unit: JPY thousand)Cash and bank
14,367,140
deposits
Cash and bank6,326,653
deposits in trust
Cash and cash
20,693,794
equivalents

“My Number” informed by municipalities is necessary for taxation procedure on investment units.
Thus, it is necessary for unitholders to notify your “My Number” to your brokerage, etc.
Usage of “My Number” in investment units related affairs“My Number” is recorded on the payment record and the payment record is filed with the relevant
tax authority pursuant to laws and regulations.
Major payment record*Payment record regarding cash distribution

Usage of “My Number” includes taxation related procedures on investment units. It is necessary for
unitholders to notify your “My Number” to your brokerage, etc.
Inquiries regarding notifying “My Number”Unitholders whose investment units are managed in brokerage accounts
Each brokerage
Unitholders who have no brokerage accountTransfer Agent Department, Sumitomo Mitsui Trust Bank, Limited
Toll-free Telephone Number 0120-782-031

Portfolio Map (As of March 9, 2018)

No. of Properties

No. ofHotelsNo. ofResidential
Properties

Others

124

58

64

2

(Note) For properties corresponding to the number and overview, please refer to pages 113-116.

Portfolio Overview(as of March 9, 2018)
Use

Property
NumberName of Property(Note 1)

A26
A27

Location

Nisshin Palacestage
Suginami-ku, Tokyo
Daitabashi
Nisshin Palacestage HigashiToshima-ku, Tokyo
NagasakiLeasable Area(m2)
(Note 5)

Rentable
Units(Note 4)(Note 5)Acquisition
Price(JPY mn)

Investment
Ratio
(%)

Occupancy
Rate(%)(Note 2)

(Note 3)(Note 5)

1,771.13

98

1,251

0.4

92.9

2,681.94

60

1,229

0.3

97.2

A28

Growth Maison Gotanda

Shinagawa-ku, Tokyo

1,051.50

48

888

0.2

100.0

A29

Growth Maison Kameido

Koto-ku, Tokyo

1,367.96

66

1,070

0.3

94.0

A30

Emerald House

Itabashi-ku, Tokyo

2,152.31

96

1,505

0.4

96.8

A32

Suncrest Shakujii-Koen

Nerima-ku, Tokyo

3,029.16

29

1,088

0.3

100.0

Yokohama-shi, Kanagawa

1,858.44

68

1,059

0.3

95.5

A33
A34

Growth Maison ShinYokohama
Belle Face UenoOkachimachi

Residential

Taito-ku, Tokyo

1,351.11

64

1,023

0.3

87.5

A35

Grand Rire Kameido

Koto-ku, Tokyo

1,562.26

72

906

0.3

100.0

A37

Growth Maison Yoga

Setagaya-ku, Tokyo

1,015.34

39

795

0.2

97.4

A38

Route Tachikawa

Tachikawa-shi, Tokyo

1,368.57

24

676

0.2

100.0

A39

Shibuya-Honmachi Mansion Shibuya-ku, Tokyo

1,167.50

25

651

0.2

91.3

A40

City Heights Kinuta

Setagaya-ku, Tokyo

1,235.93

19

646

0.2

94.6

A41

Acseeds Tower KawaguchiNamiki

Kawaguchi-shi, Saitama

1,210.74

57

620

0.2

96.5

A43

College Square Machida

Machida-shi, Tokyo

1,047.75

62

589

0.2

100.0

A44

Belair Meguro

Meguro-ku, Tokyo

557.05

25

589

0.2

92.1

A45

Wacore Tsunashima I

Yokohama-shi, Kanagawa

907.46

50

572

0.2

94.1

A46

Foros Nakamurabashi

Nerima-ku, Tokyo

815.77

37

566

0.2

97.5

A47

Growth Maison Kaijin

Funabashi-shi, Chiba

2,040.27

34

557

0.2

96.7

A48

College Square Machiya

Arakawa-ku, Tokyo

871.35

43

510

0.1

100.0

A51

City House Tokyo Shinbashi Minato-ku, Tokyo

3,364.00

86

2,520

0.7

96.5

A52

Winbell Kagurazaka

4,032.70

118

3,260

0.9

97.9

4,310.77

69

1,880

0.5

98.8

1,987.88

88

1,450

0.4

96.5

1,627.13

58

866

0.2

98.8

A53
A54
A59

Shinjuku-ku, Tokyo

Nishiwaseda Cresent
Shinjuku-ku, Tokyo
MansionLexington Square
Shinjuku-ku, Tokyo
Akebonobashi
Towa City Coop Shinotsuka
Toshima-ku, Tokyo
II

A61

Bichsel Musashiseki

Nerima-ku, Tokyo

1,220.24

70

577

0.2

94.4

A63

Towa City Coop Sengencho

Yokohama-shi, Kanagawa

3,426.36

154

1,110

0.3

84.2

A64

Royal Park Omachi

Sendai-shi, Miyagi

1,929.59

51

415

0.1

94.5

A65

Lexington Square
Haginomachi

Sendai-shi, Miyagi

1,528.58

39

330

0.1

94.8

A66

Visconti Kakuozan

Nagoya-shi, Aichi

705.75

8

255

0.1

83.8

A71

Lexington Square Daitabashi Suginami-ku, Tokyo

1,430.64

43

977

0.3

100.0

A72

Lexington Square Honjo
Azumabashi

784.74

33

511

0.1

97.0

A73

AMS TOWER Minami 6-Jo Sapporo-shi, Hokkaido

4,460.56

120

1,180

0.3

81.2

A75

Spacia Ebisu

Shibuya-ku, Tokyo

7,794.91

109

7,010

2.0

91.2

A76

Neo Prominence

Kita-ku, Tokyo

3,574.70

52

1,660

0.5

100.0

A77

Invoice Shin-Kobe Residence Kobe-shi, Hyogo

2,773.71

81

1,260

0.4

100.0

A78

Cosmo Court Motomachi

Kobe-shi, Hyogo

2,310.49

82

973

0.3

98.7

A79

Revest Honjin

Nagoya-shi, Aichi

1,933.80

80

674

0.2

91.2

A80

Revest Matsubara

Nagoya-shi, Aichi

1,955.40

70

657

0.2

94.4

A82

Alba Noritake Shinmachi

Nagoya-shi, Aichi

1,731.68

64

608

0.2

93.7

A83

Revest Meieki Minami

Nagoya-shi, Aichi

1,634.60

61

597

0.2

90.9

A84

Revest Heian

Nagoya-shi, Aichi

1,554.03

40

595

0.2

95.2

Sumida-ku, TokyoPurpose

Property
NumberName of Property(Note 1)

Location

Leasable Area(m2)
(Note 5)

Rentable
Units(Note 4)(Note 5)Acquisition
Price(JPY mn)

Investment
Ratio
(%)

Occupancy
Rate(%)(Note 2)

(Note 3)(Note 5)Residential

A85

Vendir Hamaotsu Ekimae

Otsu-shi, Shiga

2,670.66

81

581

0.2

97.7

A86

Salvo Sala

Osaka-shi, Osaka

1,428.12

54

544

0.2

100.0

A87

Excellente Kagurazaka

Shinjuku-ku, Tokyo

701.92

33

543

0.2

94.1

A88

Luna Court Edobori

Osaka-shi, Osaka

1,185.50

50

525

0.1

94.0

A89

Winntage Kobe Motomachi

Kobe-shi, Hyogo

1,433.35

57

512

0.1

94.8

A90

Queen's Court Fukuzumi

Koto-ku, Tokyo

765.18

25

456

0.1

89.7

A91

Corp Higashinotoin

Kyoto-shi, Kyoto

1,029.05

42

446

0.1

97.7

A92

Belair Oimachi

Shinagawa-ku, Tokyo

530.60

26

412

0.1

92.9

A93

Siete Minami-Tsukaguchi

Amagasaki-shi, Hyogo

1,020.86

40

374

0.1

90.1

A94

Prime Life Sannomiya
Isogami Koen

Kobe-shi, Hyogo

789.12

32

373

0.1

100.0

A95

HERMITAGE NANBA WEST

Osaka-shi, Osaka

992.76

21

355

0.1

100.0

A96

Century Park Shinkawa
1-bankan

Nagoya-shi, Aichi

1,477.62

44

335

0.1

95.4

A97

West Avenue

Kunitachi-shi, Tokyo

794.80

40

331

0.1

87.5

A98

Little River Honmachibashi

Osaka-shi, Osaka

974.81

31

310

0.1

90.7

A99

Prime Life Mikage

Kobe-shi, Hyogo

761.18

28

297

0.1

96.7

A100 City Court Kitaichijo

Sapporo-shi, Hokkaido

5,230.18

127

1,782

0.5

96.1

A101 Lieto Court Mukojima

Sumida-ku, Tokyo

2,940.20

82

1,683

0.5

99.0

A102 Lieto Court Nishi-Ojima

Koto-ku, Tokyo

2,048.28

91

1,634

0.5

99.0

A103 Royal Parks Momozaka

Osaka-shi, Osaka

8,776.26

147

2,910

0.8

93.6

A104 Royal Parks Shinden

Adachi-ku, Tokyo

15,797.29

248

5,024

1.4

100.0

A105 Royal Park Tower Minami-Senju

Arakawa-ku, Tokyo

39,113.46

557

21,8796.1

94.1

A106 Royal Parks Seasir Minami-Senju

Arakawa-ku, Tokyo

95.7

Subtotal
Commercial
Facilities

6,496.86

113

2,683

0.8

182,093.86

4,561

90,154

25.3

95.3

18

3,280

0.9

100.0
100.0

B17

Lexington Plaza Hachiman

Sendai-shi, Miyagi

8,419.15

B18

AEON TOWN Sukagawa

Sukagawa-shi, Fukushima

18,440.58

1

2,320

0.7

26,859.73

19

5,600

1.6

99.1

Subtotal

HotelsD01

Hotel MyStays Kanda

Chiyoda-ku, Tokyo

2,585.72

126

2,851

0.8

100.0

D02

Hotel MyStays Asakusa

Sumida-ku, Tokyo

3,327.38

161

2,584

0.7

100.0

D03

Hotel MyStays Kyoto-Shijo

Kyoto-shi, Kyoto

7,241.51

225

6,024

1.7

100.0

D04

MyStays Shin-Urayasu
Conference Center

Urayasu-shi, Chiba

6,232.30

175

4,930

1.4

100.0

D05

Hotel MyStays Maihama

Urayasu-shi, Chiba

2,456.36

90

4,870

1.4

100.0

D06

Hotel Vista Premio Dojima(Note 6)

Osaka-shi, Osaka

9,445.32

153

3,845

1.1

100.0

D07

Hotel MyStays Nagoya-Sakae

Nagoya-shi, Aichi

9,064.71

279

2,958

0.8

100.0

D08

Hotel MyStays
Sakaisuji-Honmachi

Osaka-shi, Osaka

4,188.83

191

2,514

0.7

100.0

D09

Hotel MyStays Yokohama

Yokohama-shi, Kanagawa

7,379.43

190

2,119

0.6

100.0

D10

Hotel MyStays Nippori

Arakawa-ku , Tokyo

1,719.29

93

1,898

0.5

100.0

D11

Hotel MyStays
Fukuoka-Tenjin-Minami

Fukuoka-shi, Fukuoka

3,412.71

177

1,570

0.4

100.0

D12

Flexstay Inn Iidabashi

Shinjuku-ku, Tokyo

2,953.38

62

1,381

0.4

100.0

D13

Hotel MyStays Ueno Inaricho

Taito-ku, Tokyo

1,150.76

72

1,331

0.4

100.0

D14

Flexstay Inn Shinagawa

Shinagawa-ku, Tokyo

1,134.52

55

1,242

0.3

100.0

D15

Flexstay Inn Tokiwadai

Itabashi-ku, Tokyo

2,539.75

130

1,242

0.3

100.0

D16

Flexstay Inn Sugamo

Toshima-ku, Tokyo

2,089.86

105

1,192

0.3

100.0

D17

Hotel MyStays Otemae

Osaka-shi, Osaka

4,956.66

111

1,192

0.3

100.0

D18

Flexstay Inn
Kiyosumi Shirakawa

Koto-ku, Tokyo

2,673.64

56

749

0.2

100.0

Purpose

Property
NumberName of Property(Note 1)

Location

Leasable Area(m2)
(Note 5)

Rentable
Units(Note 4)(Note 5)Acquisition
Price(JPY mn)

Investment
Ratio
(%)

Occupancy
Rate(%)(Note 2)

(Note 3)(Note 5)770.56

39

589

0.2

100.0

Hotels

D19

Flexstay Inn Nakanobu P1

Shinagawa-ku, Tokyo

D20

Flexstay Inn Nakanobu P2

Shinagawa-ku, Tokyo

391.49

22

283

0.1

100.0

D21

APA Hotel Yokohama-Kannai

Yokohama-shi, Kanagawa

6,568.51

452

8,350

2.3

100.0

D22

Hotel Nets Hakodate

Hakodate-shi, Hokkaido

7,961.26

205

2,792

0.8

100.0

D23

Flexstay Inn Shirogane

Minato-ku, Tokyo

1,754.06

84

2,119

0.6

100.0

D24

Hotel MyStays Haneda

Ota-ku, Tokyo

5,400.16

174

7,801

2.2

100.0

D25

Hotel MyStays Kameido P1

Koto-ku, Tokyo

4,349.67

266

5,594

1.6

100.0

D26

Hotel MyStays Ueno Iriyaguchi Taito-ku, Tokyo

2,247.92

97

3,821

1.1

100.0

D27

Hotel MyStays Kameido P2

Koto-ku, Tokyo

2,793.99

177

3,742

1.0

100.0

D28

Hotel Vista Shimizu

Shizuoka-shi, Shizuoka

3,559.81

152

2,198

0.6

100.0

D29

Super Hotel Shinbashi/
Karasumoriguchi

Minato-ku, Tokyo

1,403.89

74

1,624

0.5

100.0

D30

Flexstay Inn Higashi-Jujo

Kita-ku, Tokyo

1,714.53

89

1,277

0.4

100.0

D31

Hotel MyStays Utsunomiya

Utsunomiya-shi, Tochigi

11,733.23

126

1,237

0.3

100.0

D32

Flexstay Inn Kawasaki-Kaizuka Kawasaki-shi, Kanagawa

1,190.57

64

980

0.3

100.0

D33

Comfort Hotel Toyama

Toyama-shi, Toyama

3,305.64

150

979

0.3

100.0

D34

Flexstay Inn
Kawasaki-Ogawacho

Kawasaki-shi, Kanagawa

725.60

62

906

0.3

100.0

D35

Flexstay Inn Ekoda

Nerima-ku, Tokyo

3,932.93

210

5,069

1.4

100.0

D36

Super Hotel Tokyo-JR
Tachikawa Kitaguchi

Tachikawa-shi, Tokyo

1,832.97

96

1,170

0.3

100.0

D37

Super Hotel JR Ueno-iriyaguchi Taito-ku, Tokyo

1,279.16

69

1,130

0.3

100.0

D38

Hotel MyStays Shinsaibashi

Osaka-shi, Osaka

1,942.01

57

3,160

0.9

100.0

D39

Comfort Hotel Kurosaki

Kitakyushu-shi, Fukuoka

3,207.60

151

1,148

0.3

100.0

D40

Comfort Hotel Maebashi

Maebashi-shi, Gunma

3,660.96

154

1,128

0.3

100.0

D41

Comfort Hotel
Tsubame-Sanjo

Sanjo-shi, Niigata

3,099.90

133

1,010

0.3

100.0

D42

Comfort Hotel Kitami

Kitami-shi, Hokkaido

3,009.50

127

851

0.2

100.0

D43

Hotel MyStays Gotanda Station Shinagawa-ku, Tokyo

10,137.88

385

26,523

7.4

100.0

D44

Hotel Epinard Nasu

Nasu-gun, Tochigi

37,702.33

310

20,981

5.9

100.0

D45

Hotel MyStays Fukuoka Tenjin

Fukuoka-shi, Fukuoka

5,083.06

217

8,059

2.3

100.0

D46

Hotel MyStays Hamamatsucho

Minato-ku, Tokyo

1,951.90

105

7,959

2.2

100.0

D47

Hotel MyStays PremierKanazawa

Kanazawa-shi, Ishikawa

13,250.03

261

13,761

3.9

100.0

D48

Takamatsu Tokyu REI Hotel

Takamatsu-shi, Kagawa

7,148.17

193

2,139

0.6

100.0

Minato-ku, Tokyo

6,151.93

134

8,000

2.2

100.0

D49
D50

Hotel MyStays Premier
Hamamatsucho
Hotel MyStays Shin Osaka
Conference Center

Osaka-shi, Osaka

13,026.99

397

13,068

3.7

100.0

D51

Hotel MyStays Premier Omori

Shinagawa-ku, Tokyo

11,849.61

232

9,781

2.7

100.0

D52

Beppu Kamenoi Hotel

Beppu-shi, Oita

19,422.08

322

8,870

2.5

100.0

D53

Hotel MyStays Sapporo Station Sapporo-shi, Hokkaido

7,267.88

242

7,880

2.2

100.0

D54

Hotel MyStays Yokohama
Kannai

Yokohama-shi, Kanagawa

4,501.18

165

5,326

1.5

100.0

D55

Art Hotel Joetsu

Joetsu-shi, Niigata

7,563.60

198

2,772

0.8

100.0

D56

Art Hotel Hirosaki City

Hirosaki-shi, Aomori

14,826.30

134

2,723

0.8

100.0

D57

Hotel MyStays Oita

Oita-shi , Oita

3,254.69

145

1,604

0.4

100.0

Subtotal

315,525.68

9,121

242,905

68.1

100.0

Intermediate total

524,479.27

13,701

338,660

95.0

98.4

Sheraton Grande Tokyo Bay
Urayasu-shi, Chiba
Hotel (preferred equity interest)
Subtotal̶̶17,845

5.0

̶

̶

̶

17,8455.0

̶Purpose

Property
NumberName of Property(Note 1)

Total

Location

Leasable Area(m2)
(Note 5)

Rentable
Units(Note 4)(Note 5)Acquisition
Price(JPY mn)

Investment
Ratio
(%)

Occupancy
Rate(%)(Note 2)

(Note 3)(Note 5)

524,479.27

13,701

356,506

100.0

98.4

(Note 1)

“Property number” refers to the asset owned by INV, classifying the residential asset as A, the office / commercial
facility as B, the parking lot as C, the hotel as D according to the use of each property. The numbers with A, B, C, andD indicate the order of acquisition dates and properties with the same acquisition date are arranged in the order ofacquisition price.

(Note 2)“Acquisition price” is the purchase price indicated in the real estate or trust beneficiary purchase agreement (however,for Sheraton Grande Tokyo Bay Hotel (preferred equity interest) described in Note 7 below, the amount invested by
INV in the preferred equity interest). Such price excludes consumption tax and other taxes, and has been rounded
down to the nearest million yen.

(Note 3)

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

(Note 4)

“Rentable Units” is including shop, office and nursing home portions, which are counted as one unit each.

(Note 5)

“Rentable Units,” “Leased Area” and “Occupancy Rate” are as of the end of December 2017.

(Note 6)

With change of the operator, the property name was changed from Hotel Vista Premio Dojima on August 1, 2017.
The name is scheduled to be changed again to Hotel MyStays Premier Dojima on March 10, 2018.

(Note 7)

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.

Financial Conditions■ Continued strong support from main lenders■ Work on diversifying financing measures including issuing investment corporation bonds

Lender Formation (as of March 9, 2018)

Royal Parks Tower Minami‐Senju

Rating
Rating Agency

Rating Object

RatingOutlookJapan Credit Rating
Agency, Ltd.

Long-term
Issuer Rating

A

Positive(Note 1)

LTV (Appraisal Value Base) is calculated by the following formula: (Interest‐bearing debt at the end of therelevant fiscal period, excluding short‐term consumption tax loan) / (Total appraisal value as of the end of thesame period) (however, for “March 9, 2018,” it is calculated as: (Interest‐bearing debt as of March 9, 2018) /(Total appraisal value of assets owned as of the same day)). For the calculation of LTV after the acquisition of thepreferred equity interest in the JV TMK which holds Sheraton Grande Tokyo Bay Hotel, “total appraisal value”
includes the acquisition amount of preferred equity interest contribution by INV to the JV TMK of ¥17,845
million.

(Note 2)Average interest rate is calculated by the following formula: [Sum total of (Each loan’s loan amount outstandingat the end of the fiscal period multiplied by applicable interest rate at the end of the fiscal period)] / (Total loan
amount outstanding at the end of the fiscal period). For “March 9, 2018,” it is is calculated by the following
formula: [Sum total of (loan amount outstanding as of March 9, 2018 multiplied by applicable interest rate on thesame day)] / (Total loan amount outstanding on the same day).

(Note 3)

DSCR is calculated by dividing operating income, as adjusted for depreciation expenses from property rental
business and any loss (gain) on sales of property by scheduled payments of loans payable and interest expense forthe relevant period.

(Note 4)DSCR (excluding hotel variable rent) is in the same manner as DSCR, except for excluding hotel variable rent
from operating income.

Overview of Unitholders/Investment Units■ Historical Unit Price(Note) Unit prices indicate the closing price on the TSE market. TSE REIT Index has been indexed, assuming
the closing price of TSE REIT Index as of January 4, 2013 was the same as the closing price of INV
unit on the same day.
.

■ Distribution of Unitholders

Annual Schedule

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

Correspondence(Telephone Assistance)

Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo<Unitholders of the former Tokyo Growth REIT Investment Inc.>
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku, Tokyo<Unitholders of the former LCP Investment Corporation>
Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo
Transfer Agent Department, Sumitomo Mitsui Trust Bank,
Limited
2-8-4, Izumi, Suginami-ku, Tokyo, 168-0063
Toll-free Telephone Number 0120-782-031
Administrative services are available at the main and branch
offices throughout Japan of Sumitomo Mitsui Trust Bank,
LimitedNotification Process for Address Changes
Please notify your brokerage (financial instruments business operator) regarding changes to addresses,
names, registered seals, and the like. Unitholders who have special accounts instead of brokerage accounts
should contact the transfer account management institution (financial instruments business operator) below.
Unitholders of the pre-merger Investment Corporation (former Tokyo Growth REIT Investment Inc.)
Mitsubishi UFJ Trust and Banking Corporation Toll-free Number: 0120-255-100
Unitholders of the former LCP Investment Corporation
Sumitomo Mitsui Trust Bank, Limited
Toll-free Number: 0120-782-031
Dividends
Unitholders may collect “dividends” by submitting the “Dividends Receipt” at your local Japan Post Bankor at the deposit teller of a post office. In the case that the collection period is past, please specify thecollection method on the back of the “Dividends Receipt,” and either mail the receipt to the Transfer Agent
Department of the Sumitomo Mitsui Trust Bank, Limited or collect from a branch teller.

(Bank Transfers)
Should you desire to specify bank transfers for future dividends, please notify your brokerage(financial instruments business operator).
(Note)

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

Notification(Notice of Dividend Payment)
The 2008 amendment of the Special Taxation Measures Law (Act No. 23 of April 30, 2008) mandated thesending to unitholders a “Notice of Dividend Payment” stating the dividend amount, amount of taxes
withheld, and the like for dividends payable in and after January 2009. If you collect dividends via a“Dividends Receipt,” please view the “Notice of Dividend Payment” sent alongside it. If you havespecified a wire transfer, the “Dividend Statement” delivered with the dividend payment is the “Notice ofDividend Payment.” Both documents may be used as supporting documents when filing income tax returns.
(Characters for Addresses and Names of Unitholders)With the digitization of investment securities, if there are Chinese characters in your address or names that
the Japan Securities Depository Center (JASDEC) has not included in the transfer system, please list in theInvestors’ Registry by converting part or all of the characters to those that JASDEC has included in thetransfer system or to katakana. Please be aware that correspondence may be addressed using characters that
JASDEC has included in the transfer system. Please inquire with your brokerage regarding charactersregistered for your address and name.
Inquiries
For inquiries regarding INV: Consonant Investment Management Co., Ltd.
TEL: 03-5411-2731 (Main)
Weekdays 9:30-17:30