This is a summary English language version of the original Japanese Asset Management Reportavailable on our Website.

However, no assurance or warranties are given with respect to theaccuracy or completeness of this summary English language version.

The Japanese original shallprevail in the case of any discrepancies between this summary English language version and theJapanese original.

Invincible Investment Corporation
Asset Management Report
Fiscal Period ended June 30, 2014 (January 1, 2014 to June 30, 2014)
Contents
Greetings from Naoki Fukuda, Executive Director of Invincible Investment Corporation
and President & CEO of Consonant Investment Management Co., Ltd.
Summary of Financial Results
Track Record of Value Creation
Global Offering of Investment Units
Information for Unitholders

I.

Asset Management Report

II.

Balance Sheet

III.

Statement of Income

IV.

Statement of Unitholders’ Equity

V.

Notes

VI.

Statement of Cash Distribution

VII.

Statement of Cash Flows (Reference Information)

Portfolio Overview
Newly Acquired 20 Hotels-1-

■ Greetings from Naoki Fukuda, Executive Director of Invincible Investment Corporation andPresident & CEO of Consonant Investment Management Co., Ltd.

It gives me much pleasure to take this opportunity to express my sincere gratitude to all investors of
Invincible Investment Corporation (“INV”) for your ongoing support.
We hereby provide you with a report on INV’s financial results and operational condition for the
22nd period (covering the period from January 1, 2014 to June 30, 2014).
First, with respect to the operation of our properties, we completed the change of properties in our
portfolio through sale of seven senior housing properties on May 22, 2014 and acquisition of two
limited service/extended stay hotels on May 23, 2014.

Resulting therefrom, a gain on sales of realestate amounting JPY 1,003 million was recorded, and concurrently, the internal growth capability ofthe portfolio of properties was enhanced through acquiring the hotel assets with a potential for rent
upside in the future.
Additionally, with respect to the operation of the existing properties held, the rent revenue for theperiod was JPY 2,772 million, increased by JPY 31 million over the previous period due to the rent
increase program of residential properties, intensive approach to lower net leasing cost, andpromoting the leasing of office and retail properties, and the operating income for the period is, by
combining with the above-mentioned JPY 1,003 million of the gain on sales of real properties, JPY
3,775 million, which is an approximately 38% increase over the previous period.
With respect to financial management, on May 23, 2014, we successfully refinanced the existing
Prudential LPS Loan (total outstanding balance of JPY 11,000 million with an average interest rateof 2.50% as of the repayment), whose interest rate level was higher in comparison with the otherexisting loans, through a new syndicate loan (borrowing amount of JPY 13,500 million with aninterest rate of 0.98% as of the exercise of the refinancing (Note)) and further reduced the borrowing
costs.
Furthermore, on June 23, 2014, we resolved to conduct (i) a public offering by way of global
offering, (ii) new refinancing (borrowing amount of JPY 57,300 million with an interest rate of
0.98% as of the exercise of the refinancing (Note)) and (iii) acquisition of 18 limited service hotels
using the proceeds from financing (acquisition cost of JPY 39.9 billion) and formulated specificmeasures for the periods going forward to increase profitability by increasing assets and further
reducing borrowing costs.
-2-

Consequently, despite the one-time cost related to the borrowing and equity financing, the net
income for the period was JPY 901 million, approximately 1.6 times to the previous period, and theDPU (distribution per unit) was JPY 573, approximately 1.4 times to the previous period.
Furthermore, we expect that the net income for the fiscal period ending December 31, 2014, forwhich the effect resulting from the property acquisition and refinancing exercised in May and July
2014 will contribute for the full fiscal period, is estimated to be JPY 1,601 million, an increase by
JPY 699 million (77.6%) over the current period, and despite the increase in one-time cost related tothe equity financing and an increase in number of outstanding units, distribution per unit is estimatedto be JPY 600.
We are in another stage of growth through the achievement of the aforementioned global offering,refinancing and acquisition of 20 hotel properties.
Going forward, we will seek further growth of INV and further enhancement of unitholders’ value
through internal growth by pursuit of rent upside focusing on hotel and residential properties andfurther increases in occupancy rate, and additional reduction in borrowing costs, as well as throughexternal growth by acquisition of properties focusing on residential and hotel properties deemed as
being core assets.
We look forward to receiving the continued support of all of our unitholders.
Naoki Fukuda
Executive Officer, Invincible Investment Corporation
President and Representative Director, Consonant Investment Management Co. Ltd(Note)
0.80%.

1 month TIBOR + 0.80%.

As for the first interest calculation period, 2 months TIBOR +FixedDistributions

The 22nd fiscal period(the fiscal period ended June2014)

Per investment unit JPY 573

Forecast
Distributions

The 23rd fiscal period(the fiscal period ending
December 2014)

Per investment unit JPY 600(Note) We are forecasting operating revenues of JPY 4,323 million and net income of JPY 1,601
million for the 23rd fiscal period (the fiscal period ending December 2014).
-3-

The forward-looking statements, forecasts and goals mentioned above are based on available
information, assumptions and estimates as of August 27, 2014. These assumptions and estimates
are unavoidably uncertain, and could be affected by various risks and factors beyond INV’s control.
Thus, no guarantee can be made regarding the realization of such future forecasts and targets, andactual results may vary significantly.

-4-

■ Summary of Financial Results

Period from
July 1, 2012 to
December 31, 2012

Period fromJanuary 1, 2013 toJune 30, 2013

Period from
July 1, 2013 to
December 31, 2013

Period fromJanuary 1, 2014 toJune 30, 2014

Operating Revenue(Thousands of yen)

2,476,430

2,760,177

2,740,449

3,775,772

Ordinary Income(Thousands of yen)

114,784

335,683

353,360

902,420Net Income(Thousands of yen)

114,179

335,078

352,755

901,815Net Assets(Thousands of yen)

32,670,697

32,848,02

35,844,824

36,373,796

Total Assets(Thousands of yen)

80,200,022

80,249,063

79,176,632

79,261,754

Net Assets per Unit
(Yen)

24,231

24,36322,78523,121Net Assets/Total Assets
(%)

40.7

40.9

45.3

45.9

Distribution per Unit
(Yen)

117

264

237

573

1,348,292

1,348,292

1,573,179

1,573,179

Number of Units Issued(Unit)(Note) Figures are rounded down to the indicated unit and percentages are rounded to one decimal
place. However, “Net Assets per Unit” are rounded to the nearest yen.

(Note)
place.

Figures are rounded down to the indicated unit and percentages are rounded to one decimal-5-

■ Track Record of Value Creation■ Earnings per Unit (EPU) and Distribution per Unit (DPU)(Note 1) Earnings per unit (EPU) figures calculated using the number of units outstanding at theend of each period.
(Note 2) Stabilized earnings per unit refer to earnings per unit calculated by first assuming thefinancial results for the fiscal period ending December 2014 and then eliminating the effects of suchfactors as one-time expenses related to public offering acquisition of properties associated with it
and refinancing, and treating all assets acquired during the 22nd fiscal period as if the acquisitions
had occurred prior to the start of the fiscal period ending June 2014 (assumed that property taxes and-6-city planning taxes are expensed from the beginning of the fiscal period ending June 2014).
(Note 3) As the earnings per unit (EPU) for the fiscal period ending become a loss, only figures areindicated herein.

-7-

■ Global Offering of Investment Units (Implemented on July 17, 2014)■ Reduction of Borrowing Cost by Repositioning of Portfolio(Note 1) For existing properties, appraisal value as of June 30, 2014; and for 18 hotel properties,
newly acquired, appraisal value as of April 30, 2014.
(Note 2) NOI Yield is calculated by dividing the sum of the historical figures of 22nd fiscal period
and forecasted figures of 23rd fiscal period by the aggregate acquisition price. Although INV
actually recognizes GOP without deduction of hotel expenses for one month after the acquisition of
hotels, NOI Yield is calculated assuming the hotel expenses are incurred.
■ Ratio of hotel properties in portfolio increased (Based on acquisition price)
Hotel

Parking lots

Retail Facilities
Residential
Office■ Debt Refinancing

New Syndicate Loan (B)New Syndicate Loan (A)Prudential LPS Loan B

Total/Average Interest Rate
Loans
New Syndicate Loan (C)Prudential LPS Loan B

Total/Average Interest Rate
(Note 3) 1 month TIBOR + 0.80%.
0.80%(Note 4) 1 month TIBOR + 1.50%.
1.50%

Balance (million JPY)
13,48817,552
9,960
41,000(As of June 30, 2014)
Interest Rate
0.95% (3)
1.65% (4)
1.90%
1.48%

Balance (million JPY)
57,3009,960
67,260(As of July 31, 2014)
Interest Rate
0.98% (3)
1.90%
1.09%

As for the first interest calculation period, 2 months TIBOR +As for the first interest calculation period, 2 months TIBOR +-8-

Parking lots

Hotel

Residential

Hotel
RetailFacilities
Office■ Offering Overview

Offering Size(including Overallotment)
Newly Issued and Total Number ofUnits(including Overallotment)▪ Approximately JPY 26.4 billion (5)▪ Total: 1,165,658 units►Newly issued units: 1,095,507 unitsof which, Domestic: 582,829 units Overseas: 512,678 units► Secondary units: 70,151 units

Offering Format▪ Domestic: Public Offering▪ Overseas Offering: 144A/Regulation S

Domestic/International Split▪ 50%:50%

Lock-up Agreements▪ 90 days for the INV▪ 180 days for the sponsors (Calliope Godo Kaisha and Rayo
Godo Kaisha)

Joint Global Coordinators▪ SMBC Nikko Securities Inc., and Citigroup Global
Markets Japan Inc.

(Note 5) The amount is calculated by multiplying 1,165,658 units, the number of investment units
newly issued and the investment units offered (including overallotment secondary offering) by theissue price of JPY 22,688 and differs from the actual amount of proceeds.

-9-Conntinued effortt to reduce fin
nancing costss with supportt from leadingg Japanese annd global ban
nks
andd enhancemen
nt of INV’s aability to achiieve further exxternal growtth■ Avverage Interest Rate (1)End of Dec

End of Jun

End of Dec

End of Jun

2012

2013

2013

2014

July 31, 20
014

SCR (2)■ DS

End of Dec

End of Junn

End of Deec

End of Jun
J

End of De
ec 2014

2012

2013

2013

2014

（Forecast）

ned by(Notee 1) Averagee Interest Raate is calculaated by the sum of each amount thhat is obtain
multipplying (i) thee outstanding
g balance of ddebt as of thee end of the fiscalfperiod ffor each indiividual
borroowing by (ii) thet applicablee interest ratee as of the end of the fiscaal period, andd thereafter dividing
the agggregate amoount thereof byb (iii) the tottal outstandinng balance of debt.
(Notee 2) DSCR is calculated
d as (Operaating Profits + Depreciaation) divideed by (Scheeduled
Amorrtization + Interest Expensse).

■ Soources and Uses
U of Cash(unit: billionn JPY)
Use of Proceeeds
N
New propertyy acquisition pricepandccosts related tot acquisitionnFinancing
41.4

Borro
owing

57.3

R
Repayment off existing borrrowings

31.0

Publiic offering

23.9

C
Costs related to debt and publicpooffering, etc.

1.3

CCash on handd and Reservaation, etc.

7.3

T
Total

81.2

Totall81.2■ Looan to Valuee (LTV)- 10 -

(unit: billion JPY)
After
Implementationof Public
Offering andBorrowing

End of December
2013

End of June 2014

Outstanding Interest Bearing Debt
Balance

41.3

41.0

67.2

Total Assets

79.1

79.2

128.1 (3)

LTV based on Total Assets

52.2%

51.7%

52.5%

(Note 3) Total assets after the implementation of public offering and borrowing are calculated byadding (i) the acquisition price of 18 properties that were newly acquired as of July 17, 2014, (ii)acquisition costs, and (iii) cash on hand and reservation pertaining to the financing conducted as ofJuly 17, 2014, to (iv) the total assets as of the end of June 2014, on the assumption that there will be
no material change [thereafter].
■ Bank Information(As of June 30, 2014)
Prudential Mortgage
Asset Holdings 1
Japan. 24.3%

Sumitomo Mitsui
Banking Corporation
20.1%

Aozora Bank, Ltd.
2.8%

Shinsei Trust &Banking Co.,
Ltd. 4.2%

Citibank Japan Ltd.
4.2%
Sumitomo Mitsui
Trust Bank, Ltd.
7.3%

(As of July 31, 2014)
Resona Bank,
Limited.3.1%
Sumitomo Mitsui
Trust Bank, Ltd.
7.4%

The Bank ofTokyo‐Mitsubishi
UFJ, Ltd.
20.1%

Prudential Mortgage
Asset Holdings 1
Japan.
14.8%
Sumitomo Mitsui
Banking Corporation
18.4%

The Bank ofTokyo‐
Mitsubishi
UFJ, Ltd.
18.4%

Shinsei Bank,
Limited
9.7%
Citibank Japan
Ltd.
9.7%

Mizuho Bank, Ltd.
8.5%
Shinsei Bank,
Limited 8.4%

- 11 -

Mizuho Bank,
Ltd.
18.4%

■ List of 18 Hotels Newly Acquired(Acquired as of July 17, 2014)

Usage

Property

Property Name

Number

D3
D4

Location(Address)

Hotel MyStays Kyoto-Shijo

Kyoyo-shi, Kyoto

MyStays Shin-Urayasu

Urayasu-shi, Chiba

Conference Center

Leasable

NumberArea

of Guest

(㎡)

Rooms

AcquisitionPrice(millions ofyen)

Appraisal
Value as of

NOI

Acquisition

Yield(millions of(Note)

yen)

7,241.51

224

6,024

6,110

6.16%

6,232.30

175

4,930

4,980

6.45%

D5

Hotel MyStays Maihama

Urayasu-shi, Chiba

2,456.36

90

4,870

4,920

6.13%

D6

Hotel Vista Premio Dojima

Osaka-shi, Osaka

9,445.32

141

3,845

3,900

6.58%

D7

Hotel MyStays Nagoya-Sake

Nagoya-shi, Aichi

9,064.71

270

2,958

3,000

6.37%

Hotel MyStays

Osaka-shi, Osaka

4,188.83

190

2,514

2,530

6.69%

7,379.43

190

2,199

2,150

7.95%

1,719.29

93

1,898

1,910

5.83%

3,412.71

177

1,570

1,580

7.28%

D8

D9
D10
Hotel
D11

Sakaisuji-Honmachi
Hotel MyStays Yokohama

Yokohama-shi,
Kanagawa

Hotel MyStays Nippori

Arakawa-ku, Tokyo

Hotel MyStays Fukuoka-Tenjin

Fukuoka-shi, Fukuoka

Minami

D12

Flexstay Inn Iidabashi

Shinjuku-ku, Tokyo

2,953.38

59

1,381

1,390

5.66%

D13

Hotel MyStays Ueno Inaricho

Taito-ku, Tokyo

1,150.76

72

1,331

1,340

5.57%

D14

Flexstay Inn Shinagawa

Shinagawa-ku, Tokyo

1,134.52

55

1,242

1,250

5.90%

D15

Flexstay Inn Tokiwadai

Itabashi-ku, Tokyo

2,539.75

129

1,242

1,250

7.34%

D16

Flexstay Inn Sugamo

Toshima-ku, Tokyo

2,089.86

104

1,192

1,200

6.75%

D17

Hotel MyStays Otemae

Osaka-shi, Osaka

4,956.66

110

1,192

1,200

7.90%

Flexstay Inn Kiyosumi

Koto-ku, Tokyo

2,673.64

55

749

754

6.33%

D18

Shirakawa

D19

Flexstay Inn Nakanobu P1

Shinagawa-ku, Tokyo

770.56

39

589

593

5.92%

D20

Flexstay Inn Nakanobu P2

Shinagawa-ku, Tokyo

391.49

22

283

285

6.06%

69,801.08

2,195

39,93840,342

6.47%

Total

(Note) The “NOI Yield” was obtained by dividing the sum of the actual NOI during the period
from July 1, 2013 to June 30, 2014 by the aggregate acquisition price.

- 12 -

■ Information for Unitholders■ Notification Process for Address Changes
Please notify your brokerage (financial instruments business operator) regarding changes toaddresses, names, registered seals, and the like.

Unitholders who have special accounts instead of

brokerage accounts should contact the transfer account management institution (financial
instruments business operator) below.
Unitholders of the pre-merger Investment Corporation (former Tokyo Growth REIT Fund)
Mitsubishi UFJ Trust and Banking Corporation Limited

Toll-free Number: 0120-255-100

Unitholders of the former LCP Investment Corporation
Sumitomo Mitsui Trust Bank, Limited Toll-free Number: 0120-782-031■ Dividends
Unitholders may collect “dividends” by submitting the “Dividends Receipt” at your local Japan Post
Bank or at the deposit teller of a post office.

In the case that the collection period is past, please

specify the collection method on the back of the “Dividends Receipt,” and either mail the receipt to
the Transfer Agent Department of the Sumitomo Mitsui Trust Bank, Limited or collect from a branchteller.
(Bank Transfers)
Should you desire to specify bank transfers for future dividends, please notify your brokerage(financial instruments business operator).

(Note) Please collect dividends within 3 years of distribution. Please note that payments cannot
be made after 3 years due to the rules and regulations of the Articles of Incorporation of theInvestment Corporation.
■ Notification(Notice of Dividend Payment)
The 2008 amendment of the Special Taxation Measures Law (Act No. 23 of April 30, 2008)
mandated the sending to unitholders a “Notice of Dividend Payment” stating the dividend amount,amount of taxes withheld, and the like. If you collect dividends via a “Dividends Receipt,” please- 13 -

view the “Notice of Dividend Payment” sent alongside it.

If you have specified a wire transfer, the“Dividend Statement” delivered with the dividend payment is the “Notice of Dividend Payment.”
Both documents may be used as supporting documents when filing income tax returns.
(Characters for Addresses and Names of Unitholders)With the digitization of investment securities, if there are Chinese characters in your address ornames that the Japan Securities Depository Center (JASDEC) has not included in the transfer system,
please list in the Investors’ Registry by converting part or all of the characters to those that JASDEC
has included in the transfer system or to katakana.

Please be aware that correspondence may be

addressed using characters that JASDEC has included in the transfer system.
your brokerage regarding characters registered for your address and name.
■ Annual Schedule■ Inquiries
For inquiries regarding INV: Consonant Investment Management Co., Ltd.
TEL: 03-5411-2731 (Main)
Weekdays 9:30-17:30- 14 -

Please inquire with

■ Ovverview of Unitholders/I
U
Investment U
Units
Overrview of Unittholders■

N
Number of Unnitholders byy Owner■ Nuumber of Invvestment Unitts by Owner- 15 -

Histoorical Unit Price

Volume(mn
Units)

21st

2
20th
Unit Price (JPY)Tokyo Stock Exchange REIT Index
Volumme (Units)

Unit
Price
(JPY)

22nd
June
J
23, 2014
Annou
unced acquisition of
18 hootels, global public
offering, refinancing

May
M 21, 2014
Announced
d acquisition of 2 hotels
annd refinancing
D
December
6, 2013
3
Announced refinancing of Sh
hinsei TrusttLoan, equiity financing via third-party
allotment

Jan.
4,
2013

End ofDec.
2013

End of
Jun.
2013

End
of
Jun.
2014

End
of
Jul.
2014

SE market.
(Notee) Unit pricces indicate the closing prrice on the TS
Development of Tokyo
T
Stock Exchange R
REIT Index inndicates on oro after Januaary 4, 2013 ono the
mption that thhe closing price of INV’s unit price iss deemed as identicalito th
the closing prrice ofassumTokyo Stock Exchhange REIT in
ndex as of Jaanuary 4, 20144.

- 16 -

Asset ManagementMt Report

Ⅰ.

Overrview of Asseet Managemeent
1

Trends in Investmentt Corporationn’s Operating Results

By Periood

Calculateed period

Operating revenues(Notee 1) (Thousands of yeen)

Operating Results(Reental revenues)(Thousands of yeen)

Operating expenses(Thousands of yeen)(Prroperty-related expenses)(Thousands of yeen)

Operating income(Thousands of yeen)

Orddinary income(Thousands of yeen)

Nett income(Thousands of yeen)

Tottal assets(a) (Thousands of yeen)(change from last periiod)
Asset Condition

Inteerest-bearing debt
Nett assets(change from last periiod)(Thousands of yeen)(b) (Thousands of yeen)

Dividend Status

20th

21st

22nd

Fiscal Period

Fiscal Period

Fiscal Period

Fiscal Period

FiscalF
PeriodJan. 1, 2012 toJul. 1, 2012 toJan. 1, 2013 toJul. 1, 2013 toJan. 1, 2014

Jun. 30, 2012

Dec. 31, 2012

Jun. 30, 2013

Dec. 31, 2013

Jun.
J 30, 2014

2,176,839

2,476,430

2,760,177

2,740,449

3,775,772

2,176,839

2,476,430

2,760,177

2,740,449

2,772,419

1,282,766

1,392,258

1,528,940

1,474,679

1,541,127

1,024,277

1,156,672

1,295,403

1,261,221

1,281,791

894,072

1,084,171

1,231,237

1,265,770

2,243,644

125,981

114,784

335,683

353,360

902,420

128,175

114,179

335,078

352,755

901,815

67,698,887(0.6)

80,200,022
18.5

80,249,063
0.1

79,176,632(1.3)

79,261,754
0.1

31,603,500

43,982,500

43,851,500

41,310,000

41,000,850

32,826,175(0.4)

32,670,697(0.5)

32,848,025
0.5

35,844,824
9.1

36,373,796
1.5

26,134,396

26,134,396

26,134,396

29,134,389

29,134,389

269,658

157,750

355,949

372,843

901,431

210.5

137.6

106.0

105.7

100.0

1,348,292

1,348,292

1,348,292

1,573,179

1,573,179

24,34624,231

24,36322,78523,121

200

117

264

237

573

200

117

264

237

573

to

(%
%)
(Thousands of yeen)

Tottal distribution(c) (Thousands of yeen)Nummber of investment units
u

19th

(%
%)

Tottal contribution

Divvidend payout ratio

18th(Note 2) (%%)(d) (Uniits)

Issuued and outstanding
Information per Unit

Nett assets per unit(b) / (d) (yeen)(Notee 3)

Disstribution per unit(c) / (d) (yeen)(Prrofit distribution per unit)u(yeen)(Exxcess profit distributioon per unit)(yeen)

Financial Measures

Retturn on assets(Note 4) (%%)(chhange over year)
Retturn on equity(Note 4) (%%)(chhange over year)- 17 -

—

—

—

—

—

0.2

0.2

0.4

0.4

1.1

0.4

0.3

0.8

0.9

2.3

0.4

0.3

1.0

1.0

2.5

0.8

0.7

2.1

2.0

5.0

Capital ratio(b) / (a) (%)(change from last period)(Note 4)(%)

NOI(Note 4) (Thousands of yen)

48.5

40.7

40. 9

45.3

45.9

0.1

(7.8)

0.2

4.3

0.6

1,564,247

1,800,380

2,008,413

2,006,648

2,018,542(Net Operating Income)(Note 1) Consumption taxes etc. are not included in operating income.
(Note 2) Dividend payout ratio is calculated by dividing profit distribution by unit by net incomethat period. However, for the period after the 21st Fiscal Period, it is calculated by dividing thetotal profit distribution amount by net income.
(Note 3) Distribution by unit is rounded to the nearest unit.
(Note 4) Published benchmarks are calculated as below, and ratios are rounded to one decimal
place.
Return on Assets = Ordinary Income / (Total Assets at Start of Reporting Period + Total Assets at
End of Reporting Period) / 2 x 100
Return on Equity = Net Income this period / (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 Revenues – Leasing Costs + Fiscal Period Depreciation Expenses
2

Operating Conditions(1)

Main trends in the Investment Corporation

INV was established in January 2002 based on the Investment Trust and Investment Corporation Act(Law No. 198 of 1951, as amended; hereinafter referred to as the “Investment Trust Act”). In May
2004, INV was listed on the Osaka Securities Exchange (application for delisting was made in August2007), and in August 2006 it was listed on the Real Estate Investment and Trust Securities Section of
the Tokyo Securities Exchange (Ticker Code: 8963).
In addition, a merger (“the Merger”) with LCP Investment Corporation (“LCP”) was implemented
on February 1, 2010.
Ever since the commencement of sponsorship from Calliope Godo Kaisha (“Calliope”), an affiliate ofFortress Investment Group LLC (“FIG” and together with Calliope and its other affiliates, the“Fortress Group”) on July 2011, INV has been dedicating itself to the improvement of its properties’
occupancy rates and the reduction of various expenditures by strengthening its asset management
capabilities. Furthermore, in September 2012, it newly acquired 24 residential properties without
issuing any equity and strived to improve earnings and distributions per unit through the external
growth.
Moreover, in December 2013, INV implemented the refinancing of existing borrowings with new- 18 -

borrowings arranged by Sumitomo Mitsui Banking Corporation (SMBC) and The Bank ofTokyo-Mitsubishi UFJ, Ltd. (BTMU) and with funds raised via third-party allotment to the FortressGroup, etc.

I N V realized the improvement of its earnings-generating power as a result of thesignificant reduction of interest expenses and the strengthening of its lender formation andestablished the base for the external growth as well as improvement of the financial stability.

During the fiscal period ended June 30, 2014 (the “reporting period”), under the situation of
establishing the base for such internal and external growth, INV implemented the exchange of theproperties for the purpose of the establishment of the portfolio which might realize both stability
and growth of the rent income under the current economic environment, through sale of 7 senior
housing properties and acquisition of 2 limited service/extended stay hotels in May 2014.

In orderto make the funds for the acquisition of such 2 hotels and a prepayment of the existing borrowings
in the trust, INV obtained a new loan arranged by three megabanks Sumitomo Mitsui Banking
Corporation, The Bank of Tokyo‐Mitsubishi UFJ, Ltd. and Mizuho Bank, Ltd. and realized further
decreasing of loan costs and strengthening of its lender formation.
Moreover, INV resolved at its Board of Directors held on June 23, 2014 to issue new investment
units through the global public offering and the third-party allotment in connection with theoverallotment for the global offering (the “Capital Increase”).

INV made a decision to acquire

additional 18 limited service hotels (Trust Beneficiary Interests in Domestic Real Estates) in July
2014 (the “18 Hotels”) by the funds procured through the global offering and new loan along withthe refinancing of the existing syndicated loan (the “Refinancing” and together with the acquisitionof the 18 Hotels, the “Transactions”).

In addition, in order to endeavor to establish a portfolio

which places a strong emphasis on both improved stability and future growth, the Asset Manager
made a revision to the Investment Guidelines to the effect of positioning hotels as its Core Assets
along with residential properties as of June 23, 2014.
Through the Transactions, INV has realized the expansion of the asset scale and the aggregate
market value, the establishment of high-quality portfolio with stability of revenues and upside of therent and further decreasing the loan costs, and aims to further increase unitholder value through the
improvement of the net income and the distribution per unit that have been steadily implemented
after the commencement of the sponsorship of Fortress Group.
Please refer to “6 Significant subsequent events” below for the details of the Transactions.
(2)

Operational Environment and Performance- 19 -

During the first quarter of 2014, on the back of the rush demand due to the rise in the consumption
tax and strong corporate performance among other things, the actual GDP growth rate achieved
positive growth for 6 consecutive quarter period and the economic expansion continued.

In andafter April 2014, although the reaction of such rush demand produced the decrease, the income
environment gradually improved such as that the jobs-to-applicants ratio improved to be 1.1 and theoverall unemployment rate improved to be 3.7% in June 2014 and the movement of increase insalary including base salary expanded mainly in large-scale companies, it is expected that moderate
upswing would continue for the second half of 2014 due to solid corporate performance andrecovery of consumption.
Regarding the real estate investment market, on the back of economic recovery and expectation to
get out of deflation, etc., the transaction price rose in large city area, mainly Tokyo.

According to

the Japanese Real Estate Investor Survey (April 2014) by Japan Real Estate Institute, thecapitalization rate of investors decreased in respect of each use of offices, residences, retail felicities
and hotels, etc., and the investment demand of investors maintained a high standard such as the factthat 92% of the investors responded to positively make a new investment over the next year.
Regarding the property rental market, in the Tokyo metropolitan area and parts of other major cities,
the vacancy rate of the office building has bottomed, the floor intensive transfer per corporategroup unit has been activated as well as the expansion in leasing space in the same buildings,
and in central Tokyo, rents increased for new construction projects and premium properties.
In addition, with respect to the residential sector, which had seen a continuous trend in declining rent
after the Lehman shock, the market trend of the rent apparently improved with focusing theinner-city small type properties.

The Asset Manager grasped the movement of such recovery

of market, and as a result of the advance implementation of measures to increase rent, INV
realized the rent increase in respect of 53.3% of the new lease agreements for residential
properties (+1.8% increase compared to previous agreement) and the rent increase in respectof 24.9% of the renewed lease agreements for residential propreties (+0.8% increase comparedto agreements before renewal).

In addition, with respect to the net leasing cost (the numberof months subject to advertising expenses + the number of months subject to free rent – thenumber of months for key money), INV reduced an average of 0.87 month per new leaseagreement, the year-on-year 0.03 month decrease and -0.41 month decrease compared tobudget.
With respect to the hotels newly positioned as the Core Assets, in and after March 2014, the- 20 -

number of foreign passengers visiting Japan exceeded a million for 4 months in a row and thenumber of foreign guest of domestic accommodations for the first quarter of 2014 increased
by 37.3%, on year-on-year basis.

On the other hand, according to the Japan Construction

Starts Report of the Ministry of Land, Infrastructure, Transport and Tourism, the newprovisions of accommodations which started the construction remained at a low level aroundunder 1,000 buildings per year over the past 5 years compared with approximately 1,500
buildings per year before 2008, the average operating rate of business hotels in Tokyo which
was 82.7% in the preceding year increased to 84.0% from January to March in 2014 (the Japan
Tourism Agency Surveys) and high operating rate has been maintained and favorable condition
continued.
In such an environment, INV sold 7 senior housing properties and acquired 2 limited service hotels
in the reporting period, and acquired additional 18 Hotels properties in July 2014 as describedabove.
INV’s entire portfolio in the reporting period saw its occupancy rate recorded 97.1% in March 2014,
the highest after the Merger, and the average occupancy rate for the period was 96.2%,
remained stable from the year ended December 31, 2013 (the “preceding period”).
At the end of the reporting period, the number of properties held by INV totaled 73, including 63
residential properties, 2 hotels, 7 retail and office building as well as one parking lot with a totalacquisition value of JPY 77,988 million, the total appraisal value of JPY 77,268 million and a total
leasable area of 154,773.28 m2.
As a result of the above trends in real estate investments and the rental market, as well as the above
implementation of internal growth strategies, the appraisal value of 71 properties excluding 7 senior
housing properties sold on May 22, 2014 and 2 hotels acquired on May 23, 2014 increased by JPY
1,169 million (or 1.7%) over the preceding period, from JPY 70,608 million as of the end of thepreceding period to JPY 71,778 million as of the end of the reporting period, representing the fifth
consecutive fiscal period for which there was an increase.
(3)

Overview of Fund Raising

I n order to fund the acquisition of new 2 Hotels and a portion of various expenses related thereto
and the prepayment of a portion of existing borrowings in the trust (total balance of borrowings: JPY
11,000 million; average interest rate at the time of repayment: 2.50%), INV raised funds from a loan
- 21 -

(amount borrowed: JPY 13,500 million; interest on borrowings upon the execution of the refinancing:
0.98%)

syndicatedby

Sumitomo Mitsui Banking Corporation, The Bank ofTokyo-Mitsubishi UFJ, Ltd., Mizuho Bank, Ltd. and Sumitomo Mitsui Trust Bank, Limited as
lenders as of May 23, 2014. The refinancing has enabled INV to reduce its interest-bearing debt
ratio, decrease interest expenses, and further strengthen its lender formation including threemegabanks.
As a result of implementing the above measures, as of the end of the reporting period, the outstandingbalance of the interest-bearing debt of INV was JPY 41,000 million, with the interest-bearing debt
ratio cat 51.7% (Note).
Further, as described in “6 Significant subsequent events” below, in order to procude the funds forthe acquisition of the 18 Hotels acquired as of July 17, 2014 and refinancing of the existing
borrowings, INV decided to obtain a loan (amount borrowed: JPY 57,300 million; interest on
borrowings upon the execution of the Refinancing: 0.98%) through syndicated lenders arranged by
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo‐Mitsubishi UFJ, Ltd. and Mizuho
Bank, Ltd. on June 23, 2014, executed the loan agreement on the same date, and implemented theborrowings on July 17, 2014, and realized the further decrease in average borrowing costs.
(Note)

The calculation for the interest-bearing debt ratio uses the calculation formula below:

Interest-bearing debt ratio = amount of interest-bearing debt ÷ total amount of assets at end of period x
100.

3Changes in Number of Investment Units Issued and Outstanding

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

Type of issue

Number of investment
units

issuedUnitholders’ equity (yen)Referenceandoutstanding (units)
January

Private18, 2002

placement

Increase

Total

Increase

Total

400

400

200,000,000

200,000,000(Note 1)

2,700

3,100

1,012,500,000

1,212,500,000(Note 2)forincorporation
DecemberPrivate- 22 -

26, 2003

placement

January

Private9, 2004

Placement

January

Private21, 2004

placement

January

Private27, 2004

placement

January

Private28, 2004

placement

January

Private31, 2004

placement

February

Private5, 2004

placement

February

Private7, 2004

placementMay

Public17, 2004

offering

February

Public7, 2005

offering

July

Public31, 2006

offering

February

1,350

4,450

506,250,000

1,718,750,000(Note 2)

1,333

5,783

499,875,000

2,218,625,000(Note 2)

267

6,050

100,125,000

2,318,750,000(Note 2)

800

6,850

300,000,000

2,618,750,000(Note 2)

266

7,116

99,750,000

2,718,500,000(Note 2)

800

7,916

300,000,000

3,018,500,000(Note 2)

1,333

9,249

499,875,000

3,518,375,000(Note 2)

9,000

18,2493,377,250,000

6,895,625,000(Note 3)

10,65028,8993,937,667,100

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

19,134,417,100(Note 5)

Unit split

215,596

269,495―

19,134,417,100(Note 6)Merger367,200

636,695―

19,134,417,100(Note 7)

July

Third-party

711,597

1,348,292

6,999,979,689

26,134,396,789(Note 8)29, 2011

allotment

DecemberThird-party

224,887

1,573,179

2,999,992,580

29,134,389,369(Note 9)20, 2013

allotment

1, 2010February
1, 2010(Note 1) The Investment Corporation was incorporated through a private placement at a price of
500,000 yen per unit.
(Note 2) New investment units were issued in a private placement at a price of 375,000 yen per unit
to raise funds for the acquisition of new properties.
(Note 3) New investment units were issued in a public offering at a price of 395,000 per unit
(375,250 yen 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 385,140 yen per unit
(369,734 yen after deducting the underwriters’ discount) to raise funds for the acquisition of new- 23 -

properties.
(Note 5) New investment units were issued in a public offering at a price of 348,740 yen per unit
(332,045 yen after deducting the underwriters’ discount) to raise funds for the acquisition of new
properties.
(Note 6) An investment unit slit of 5 units per 1 unit was conducted.
(Note 7) A merger by absorption pursuant to Article 147 of the Act on Investment Trusts andInvestment Corporations was conducted with LCP, with INV as the surviving entity. As a result of
the merger by absorption, 4 investment units of INV (after the investment unit split) were allotted foreach 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 9,387 yen per unit
to make repayment of existing debt, etc.
(Note 9) New investment units were issued in a third party allotment at a price of 13,340 yen perunit to make repayment of existing debt, etc.
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(Unit: yen)
Period18th

Closing

Fiscal19th

Fiscal20th

Fiscal

21st

Fiscal

22th

FiscalPeriodPeriodPeriodPeriodPeriodJune 2012

DecemberJune 2013

DecemberJune 2014

Month

2012

2013

Highest

7,160

6,540

14,48020,00024,760

Lowest

6,060

6,080

6,230

12,61016,7404Distribution PerformanceWith respect to distributions, it was determined to distribute all net income excluding fractions of
distribution per investment unit that are less than one yen.

As a result, the distribution per unit for

the reporting period was determined to be JPY 573.
PeriodCalculated

18th

19th

20th

21st

22nd

FiscalFiscalFiscalFiscalFiscal

Jan.

1,

July

1,

- 24 -

Jan.

1,

July

1,

Jan.

1,

Period

Total

2012

to

2012

to

2013

to

2013

to

2014

to

June

30,

Dec.

31,

June

30,

Dec.

31,

June

30,

2012

2012

2013

2013

2014

427,346

271,868

449,196446,003

974,975

157,688

114,118

93,24773,15973,543

269,658

157,750

355,949

372,843

901,431

(200)

(117)

(264)

(237)

(573)

269,658

157,750

355,949

372,843

901,431

(200)

(117)

(264)

(237)

(573)

−

−

−

−

−

(−)

(−)

(−)

(−)

(−)

unappropriatedretainedearnings

forperiod(thousands ofyen)
Reserved
profit(thousands of
yen)
Cash
distribution(thousands ofyen)(Distribution
per unit) (yen)Distribution
amount(thousands ofyen)(Distribution
per unit) (yen)Contribution
return(thousands ofyen)(Contribution
returnperunit ) (yen)5

Future Operational Policy and Issues to be Addressed- 25 -

Forecast for Next Period and Issues to be Addressed(i)External growth strategy

New Property Acquisitions
INV believes that with significant increase of total market value through implementation of theCapital Increase as described above, significant reduction of borrowing costs throughimplementation of further refinancing and its further strengthened lender formation, both debt andequity fund raising capacity has been enhanced, thus greatly improving the external growth potentialof INV.
The Fortress Group is an investment manager committed to long-term, large-scale real estate
investments in the Japanese real estate market, and holds excellent pipeline assets that are wellbalanced in terms of sectors.

Upon acquisition of new properties from these pipeline assets throughimplementation of the Capital Increase, INV also entered into a memorandum, as of June 23, 2014,
concerning preferential negotiating rights in respect of the acquisition of 22 limited service hotels
out of the pipeline assets of the Fortress Group, in order to ensure further future growth.
By utilizing such pipeline support by the sponsor and the property sale information resulting fromthe independent network of the Asset Manager, to whom INV entrust the management of assets, INV
will consider and execute property acquisitions that contribute to stable growth in profits and cash
flow and increase the distribution per unit.
Property Sales
While INV places priority on increasing unitholders’ value through external growth, taking into
account the ongoing high level of activity in the real estate trading market, it also plans to review as
appropriate points such as its portfolio composition and geographic distribution in considering
property sales.
(ii)

Strategy for internal growth

INV will continue to strengthen its collaborative ties with Property Management (PM) companies
and brokers to further boost occupancy rates and earning capabilities of its properties.
With respect to residential properties, in consideration of the fact that the fiscal period ending
December 31, 2014 (the “next reporting period”), falls within the off-season of the housing rental- 26 -

market, INV will prepare policies concerning management of the new lease agreement, increasing
rent at lease renewals and administration of net leasing costs for each property held by INV.

INV

will continue to aim to maximize the actual rent following the reporting period.
With respect to the newly acquired hotel properties, INV intends to closely monitor the management,
for the purpose of increasing rent revenue, by adding 2 persons in charge of asset management (AM),establishing a system for checking the status of hotel operations in the meeting with hotel operators,
and proper understanding of the operational situations of each hotel held by INV, (ii) situation of thesurrounding hotels, and the market trends.
Furthermore, because the implementation of appropriate maintenance and repair plans is of theutmost importance in maintaining and enhancing the competitiveness and market value of properties
as well as improving tenant satisfaction, and, stable operation of hotels, thorough attention will beplaced on the preparation of strategic plans and on their flexible implementation.
(iii)

Financial strategy

As a result of strengthening the financial base by the refinancing implemented during the reporting
period and the Transactions implemented in July 2014, INV will promote a financial strategy which
envisages to make borrowings without securities in the future and to obtain credit ratings.

Also,

INV seeks to strengthen its earnings base by way of lengthening of the borrowing terms, further
reduction of borrowing costs, strengthening of its lender formation, improving fund raising capacityand flexibility, and, furthermore, by way of acquiring new properties and improving the earnings ofthe existing properties held by INV.

From a financial perspective, INV will aim to maximize

unitholders’ value, which will result in improving distributions per unit.
(iv)

Compliance risk management

While the executive officer of INV concurrently serves as the representative director at the AssetManager, two supervisory directors (an attorney and a certified public account) oversee theexecution of the executive officer’s duties via the Board of Directors of INV.

In addition, thecompliance officer of the Asset Manager attends each meeting of the Board of Directors in thecapacity of an observer.
The Asset Manager has a compliance officer who is responsible for compliance with laws,
regulations and other relevant matters as well as overall management of transactions with sponsor- 27 -

related parties.

Moreover, it has in place a compliance committee which, chaired by suchcompliance officer, is in charge of deliberating on compliance with laws, regulations and otherrelevant matters as well as transactions with sponsor related parties.

Compliance committee

meetings are attended by an outside expert (an attorney) who, sitting in as a compliance committee
member, conducts rigorous deliberations on the existence of conflicts of interest in transactions withsponsor related parties as well as strict examinations with respect to INV’s compliance with laws andregulations.
INV intends to continually take steps to strengthen its compliance structure.
6

Significant subsequent events

INV issued the new investment units through the global public offering and the third-party allotment
conducted in connection with the overallotment secondary offering for the global public offering in
the fiscal period ending December 31, 2014 (23rd fiscal period). INV acquired the 18 Hotels by thefunds procured through the Capital Increase along with the refinancing of the existing borrowings.
The Capital Increase, accompanying acquisition of the 18 Hotels, and the refinancing were
implemented in line with the portfolio repositioning and refinancing completed in May 2014, tofurther enhance INV’s unitholder value under the support of the sponsor, Fortress Group.
(a)Issuance of New Investment Units

INV resolved at its meeting of the Board of Directors held on June 23, 2014 and July 9, 2014
respectively to conduct the issuance of new investment units and secondary distribution of investment
units. Payment for the new investment units issued through the public offering was completed on
July 16, 2014, in accordance with the following terms and conditions. In addition, with respect to theissuance of new investment units through the third-party allotment in connection with theoverallotment secondary offering, the payment was completed on August 13, 2014. As a result, theunitholders’ equity of INV is JPY 53,096 million and the number of investment units issued andoutstanding of INV increased to 2,668,686.
(i)Issuance of new investment units through public offering: 1,040,000 units
Domestic public offering: 527,322 units

Number of New Investment Units Issued

Overseas offering: 512,678 units- 28 -

Issue Price (Offer Price): JPY 22,688 per unit

Amount Paid In (Issue Value): JPY 21,873 per unit

Total Amount Paid In (Total Issue Value): JPY 22,747,920,000

Payment Date

: July 16, 2014

(ii)

Secondary offering of investment units outside Japan

Number of Investment Units Offered in theSecondary Offering
Offer Price: JPY 22,688 per unit

Total Offer Value: JPY 1,591,585,888

Seller: Infinite Value Investment Ltd.

(iii)

Secondary offering of investment units (overallotment secondary offering)Number of Investment Units Offered in theSecondary Offering: 55,507 units

Offer Price: JPY 22,688 per unit

Total Offer Value: JPY 1,259,342,816

Delivery Date

: July 17, 2014

(iv)

(b)

: 70,151 units

Issuance of new investment units through third-party allotment

Number of New Investment Units Issued: 55,507 units

Amount Paid In (Issue Value): JPY 21,873 per unit

Total Amount Paid In (Total Issue Value): JPY 1,214,104,611

Payment Date

: August 13, 2014

Allotee: SMBC Nikko Securities Inc.

Refinancing

INV implemented a new syndicate loan (New Syndicate Loan (C)) with a variable interest rate of
0.8% + one-month JPY TIBOR to fund a portion of the acquisition of the 18 Hotels and to refinancethe New Syndicate Loan (A) (existing borrowings) carrying a variable interest rate of 1.50% +one-month JPY TIBOR at a more lower interest rate, in addition to the New Syndicate Loan (B)(existing borrowings).
As a result, INV’s outstanding balance of the interest-bearing debt of is JPY 67,260 million and INV’s
average interest rate is 1.09% after the implementation of refinancing as of July 17, 2014.
- 29 -

(i)Overview of Borrowing of Funds

New Syndicate Loan (C)LenderSumitomo

Mitsui

BankingBankof

Borrowing

Borrowing

Date

AmountInterest

Principal

Rate

Maturity(annual)Date

Borrowing
MethodCorporation
The

0.98000%

Tokyo-Mitsubishi UFJ, Ltd.
Mizuho Bank, Ltd.

July

Citibank Japan Ltd.

2014

Shinsei Bank, Limited

17,

JPY

Variable

57,300interest

millionrate (Note1)

Sumitomo Mitsui Trust Bank,

SecuredJuly 14,(Note 2) /

2017

with

no

guarantee

LimitedResona Bank, Limited(Note 1) Interest rate applicable for the period from July 17, 2014 to August 28, 2014.
One-month JPY TIBOR (Base Rate) + spread (0.8%); however, two-month JPY TIBOR + spread(0.8%) for the first interest calculation period only.
(Note 2) The following assets are pledged as collateral for the borrowings.
First priority pledges over the real estate trust beneficiary interests for 65 properties: Nisshin
Palacestage Daitabashi, Nisshin Palacestage Higashi-Nagasaki, Growth Maison Gotanda, Growth
Maison Kameido, Emerald House, Harmonie Ochanomizu, Suncrest Shakujii Koen, Growth Maison
Shin-Yokohama, Belle Face Ueno Okachimachi, Grand Rire Kameido, Growth Maison Ikebukuro,
Growth Maison Yoga, Route Tachikawa, Shibuya Honmachi Mansion, City Heights Kinuta, Acseeds
Tower Kawaguchi Namiki, Capital Heights Kagurazaka, College Square Machida, Belair Meguro,
Wacore Tsunashima I, Foros Nakamurabashi, Growth Maison Kaijin, College Square Machiya, City
House Tokyo Shinbashi, Winbell Kagurazaka, Nishiwaseda Cresent Mansion, Lexington Square
Akebonobashi, Casa Eremitaggio, Towa City Coop Shinotsuka II, Bichsel Musashiseki, Lexel
Mansion Ueno Matsugaya, Towa City Coop Sengencho, Royal Park Omachi, Lexington Square
Haginomachi, Visconti Kakuozan, Lexington Square Daitabashi, Lexington Square Honjo
Azumabashi, AMS TOWER Minami 6-Jo, Spacia Ebisu, Kindai Kagakusha Building, Lexington
Plaza Nishigotanda, Cross Square NAKANO, Ohki Aoba Building, Lexington Plaza Hachiman,
AEON TOWN Sukagawa, Hotel MyStays Kanda, Hotel MyStays Asakusa, Hotel MyStays
Kyoto-Shijo, MyStays Shin Urayasu Conference Center, Hotel MyStays Maihama, Hotel Vista
Premio Dojima, Hotel MyStays Nagoya-Sakae, Hotel MyStays Sakaisuji-Honmachi, Hotel MyStays
Yokohama, Hotel MyStays Nippori, Hotel MyStays Fukuoka-Tenjin-Minami, Flexstay Inn Iidabashi,
Hotel MyStays Ueno Inaricho, Flexstay Inn Shinagawa, Flexstay Inn Tokiwadai, Flexstay Inn Sugamo,
Hotel MyStays Otemae, Flexstay Inn Kiyosumi Shirakawa, Flexstay Inn Nakanobu P1 and Flexstay
Inn Nakanobu P2. First priority mortgages over two real estate properties: Shinjuku Island andTimes Kanda-Sudacho 4th. Floating lien over the real estate trust beneficiary interests for nine
properties: Hotel MyStays Kanda, Hotel MyStays Kyoto-Shijo, MyStays Shin Urayasu ConferenceCenter, Hotel MyStays Maihama, Hotel Vista Premio Dojima, Hotel MyStays Nagoya-Sakae, Hotel- 30 -

MyStays
Sakaisuji-Honmachi,
Fukuoka-Tenjin-Minami.
(ii)

Hotel

MyStays

Yokohama

and

Hotel

MyStays

Overview of Prepayment of Existing Borrowings

New Syndicate Loan (A)LenderBorrowing

Repayment

Date

AmountSumitomo Mitsui Banking
Corporation
The

Bank

of

Tokyo-Mitsubishi UFJ, Ltd.

December20, 2013

JPY 17,552
million(Note 1)

Shinsei Bank, Limited

Interest

Principal

Rate

Maturity(annual)Date

Borrowing
Method

1.64636%
Variable

December

Secured / withinterest rate

20, 2016

no guarantee(Note 2)

(Note 1) The repayment amount is the balance of borrowings after the repayment agreed as of June30, 2014(JPY 16.96 million).
(Note 2) Interest rate applicable for the period from June 30, 2014 to July 30, 2014.
One-month JPY TIBOR (Base Rate) + spread (1.5%)
New Syndicate Loan (B)LenderBorrowing

Repayment

Date

AmountSumitomo Mitsui Banking
May

Corporation
The

Bank

of

Tokyo-Mitsubishi UFJ, Ltd.

2014

23,

JPY 13,488
million(Note 1)

Interest

Principal

Rate

Maturity(annual)Date

Borrowing
Method

0.94636％
VariableMayinterest rate

2015

22,

Secured / with noguarantee(Note 2)

(Note 1) The repayment amount is the balance of borrowings after the repayment agreed as of June30, 2014 (JPY 11.25 million).
(Note 2) Interest rate applicable for the period from June 30, 2014 to July 30, 2014.
One-month JPY TIBOR (Base Rate) + spread (0.8%)(c)Acquisition of Assets

In addition to the high level of revenue stability provided up to now by the portfolio focused on thegreater Tokyo area and residential properties, INV, on July 17, 2014, acquired the 18 Hotels thatprovide both stability and potential for further growth, in order to bring in stable revenue and highgrowth potential of hotels and thereby construct a portfolio which places a strong emphasis on both- 31 -

improved stability and future growth.
As a result, the total number of properties held by INV after the acquisition increased to 91 properties(63 residential properties, 20 hotels, 7 retail and office buildings as well as one parking lot) with a totalacquisition price of JPY 117,927 million and total leasable area of 224,574.36 m2.
The overview of 18 Hotels is as follows,
Appraisal

Use

Property

Name

Number

PropertyofLocation

Acquisition

Value

at

Price

Acquisition(JPY million) (JPY
(Note 1)Categoryof

SellerSpecifiedmillion)Assets(Note 2)
D3

Shijodori Holding Trust

Hotel MyStays Kyoto-shi,
Kyoto-Shijo

6,024

Kyoto

6,110 Tokutei Mokuteki Beneficia
Kaishal Interest

MyStays
D4

Shin-Urayasu

Urayasu-sh

Conferencei, Chiba

4,930

4,980

Zephyrus Tokutei
Mokuteki Kaisha

Center
D5

Hotel

D6

D7

Hotel MyStays Urayasu-sh
Maihama
Hotel

Vista Osaka-shi,

Premio ojima

2,958

Nagoya-Sakae , Aichi

Sakaisuji-Hon
machi

D9

3,845

Osaka

Hotel MyStays Nayoga-shi

Hotel MyStays
D8

4,870

i, Chiba

Hotel MyStays
Yokohama

4,920

3,900

3,000

Zephyrus Tokutei
Mokuteki Kaisha
DanubeTokutei

Mokuteki Kaisha
Zephyrus Tokutei
Mokuteki Kaisha
Nagahoribashi

Osaka-shi,

2,514

Osaka

2,530 Holding

shi,

2,119

Kanagawa- 32 -

2,150

Beneficia
l Interest
Trust
Beneficia
l Interest
Trust
Beneficia
l Interest
Trust
Beneficia
l Interest
Trust

Tokutei Beneficia

Mokuteki Kaisha

Yokohama-

Trust

Zephyrus Tokutei
Mokuteki Kaishal Interest
Trust
Beneficia
l Interest

Appraisal

Use

Property

Name

Number

PropertyofLocation

Acquisition

Value

at

Price

Acquisition(JPY million) (JPY
(Note 1)Categoryof

SellerSpecifiedmillion)Assets(Note 2)
D10

Hotel MyStays Arakawa-k
Nippori
Hotel MyStays

D11

Fukuoka-Tenjin-Minami

D12

D13

D14

D15

D16

D17

i, Fukuoka

Inn Shinjuku-k

Iidabashiu, TokyoInn Shinagawa-Shinagawaku, Tokyo

Tokiwadai, TokyoFlexstay

Inn Toshima-k

Sugamou, Tokyo

1,192

Kiyosumi

Flexstay

1,192

Osaka
Inn

Koto-ku,

749

Tokyo
Inn Shinagawa-

Nakanobu P1

1,242

1,242

Hotel MyStays Osaka-shi,
Otemae

1,570

1,331

Flexstay

Inn Itabashi-ku

Mokuteki Kaisha

ku, Tokyo- 33 -

Trust
Beneficia
l Interest

Shijodori Holding Trust

1,381

Ueno Inaricho Tokyo

Flexstay

1,910

Tokutei

1,580 Tokutei Mokuteki Beneficia
KaishaHotel MyStays Taito-ku,

Shirakawa
D19

Fukuoka-sh

Flexstay

Flexstay
D18

1,898

u, Tokyo

Nishi

589

1,390

1,340

1,250

1,250

1,200

1,200

754

593

l Interest

Aki Tokutei
Mokuteki Kaisha
Nishi

Tokutei

Mokuteki Kaisha
Nishi

Tokutei

Mokuteki Kaisha
Aki

Tokutei

Mokuteki Kaisha
Aki

Tokutei

Mokuteki Kaisha
Aki

Tokutei

Mokuteki Kaisha
Aki

Tokutei

Mokuteki Kaisha
Aki

Tokutei

Mokuteki Kaisha

Trust
Beneficia
l Interest
Trust
Beneficia
l Interest
Trust
Beneficia
l Interest
Trust
Beneficia
l Interest
Trust
Beneficia
l Interest
Trust
Beneficia
l Interest
Trust
Beneficia
l Interest
Trust
Beneficia
l Interest

Appraisal

Use

Property

Nameof

Number

Property

Locatioon

Acquissition

Valu
ue

at

Price

Acqu
uisition(JPY million)m(JPY
Y(Note 1)1CategoryyofSelller

Specifiedd

milliion)

Assets(Notte 2)
Flexstay

D20

Inn Shinagaawa-P
Nakanobu P2

283

ku, Tokkyo

Total

39,938285

Akii

Tokuttei

Mokkuteki Kaishaa

Trust
Beneficiaa
l Interest

40,342o not include adjustments for property taxes or cityy planning tax
xes, or(Notee 1) Acquisittion prices donationnal or local coonsumption taxes.
tAmouunts are rounnded down to the nearest m
million yen.
(Notee 2) Appraisaal value at AcquisitionA
iss the appraisal value as ofo April 30, 22014 based ono theappraaisal report froom Japan Real Estate Insttitute.
Overrview of the Investment
I
Corporation
C
1

Overview
w of Investm
ment

By Peeriod

1
18th

Resullts Dates

Fiscaal

19th

F
Fiscal20th

Fiscal 21st2

FiscalPeriodPeriood

J 1, 2012 toJan.
oJuly 1, 2012

Jan. 1, 2013 to JulyJ
1, 20113

Jan. 1, 20
014 toJ
June
30, 2012
2

to Dec.

June 30, 2013

June 30, 201431,

PeriodP

22nd

P
Period2012
Numbber

FiscaaltotDec. 311,

Period

2013
2

of

1
10,000,000

10,000,0000

10,00
00,00010,000,000

10,000,0000

of

1
1,348,292

1,348,2922

1,348
8,292

1,573,179

1,573,17
79

2
26,134

26,13426,13
34

29,1342

29,134

1
10,703

10,325

10,09
93

8,783
8

10,005

investtment
units
authoorized
Numbber
investtment
units

issuedandUnithholders’capitaal
Numbberoftotal- 34 -

unitholders
2

Notes regarding Unitholders

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

Name

Number of units held

% of total number of investment units
issued and outstanding

Calliope Godo Kaisha

609,942

38.77

Rayo Godo Kaisha

149,925

9.53

The Master Trust Bank of

113,573

7.21

110,979

7.05

82,132

5.22

72,004

4.57

70,151

4.45

41,3102.62

20,3401.29

16,0371.01

1,286,393

81.77

Japan, Ltd. (trust account)
Japan Trustee Services Bank,
Ltd. (trust account)
Trust

&

Bank,

Custody
Ltd.

Services(securities

investment trust account)
JP MORGAN CHASE BANK
380180
INFINITEVALUE

INVESTMENT LTD
TheNomuraTrust

andBanking Co., Ltd. (investment
trust account)
New Mission Funding Co.,Ltd.
NORTHERN

TRUST

CO.

(AVFC) RE 15PCT TREATYACCOUNT
Total(Note 1) Percentages are rounded down to two decimal places.
3

Notes regarding Directors

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

- 35 -

Position

Name

Primary

Directors’

Responsibilities

remuneration for
operating period(thousands of yen)

Executive Director

Naoki Fukuda

President and CEO,--

Consonant Investment
Management Co. Ltd.
Supervisory Director

Takashi Takahashi

Attorney,

Ocean

2,400

General Law Office
Hiroyuki Fujimoto

Tax accountant, CPA

2,400

Fujimoto Office
AuditorErnst & Young

--

7,300

ShinNihon LLC(Note 1) Executive and supervisory directors do not hold the Investment Corporation’s units either
in their names or in the names of third parties. In addition, while they may be directors oforganizations not listed above, those organizations as well as those listed above have no conflicts ofinterest with the Investment Corporation.
(Note 2) The auditing agreement with the auditor is renewed every accounting period. Dismissals
are made in accordance with the Investment Trust Act, and in addition, non-reappointments are
considered by the board of directors of INV by comprehensively taking into account the auditing
quality, auditor remuneration, and other various circumstances.
4

Asset Management Company, Asset Custody Companies, and General Administrative

Agents
The asset management company, asset custody companies, and general administrative agents at theend of the 21st Fiscal Period are as below.
Delegation Category

Name

Asset management company

Consonant Investment Management Co., Ltd.

Asset custody company

Sumitomo Mitsui Trust Bank, Limited

Generaladministrative

agent(institutional

Sumitomo Mitsui Trust Bank, Limited

operations (Note 1) administration of investors’
registry, etc.)
Generaladministrative

agent(institutional

Consonant Investment Management Co., Ltd.

operations (Note 2))
Generaladministrative

agent(auditing

EP Consulting Services Corporation- 36 -

operaations, etc.)
Speciial account managementmcompany

Mitsu
ubishi UFJ TrustT
and Baanking Corpo
orationLimiited (Note 3) /Sumitomo M
Mitsui Trust Bank,
Limiited (Note 4)ae tasks for thee Investmentt Corporation’s institutionaal operations, tasks(Notee 1) Of the administrative
relateed to the mailling of general unitholderrs’ meetings anda the receip
pt and countin
ing of voting forms
are deelegated(Notee 2) (i) Taskss related to th
he running off general unitholders’ meeetings for INV
NV (excluding
g tasks
relateed to the mailling of generaal unitholderss’ meetings annd the receiptt and countinng of voting forms),f(ii) T
Tasks related to the runniing of the mmeetings of th
he Board of Directors off INV, and (iii) the
aforemmentioned inn (i) or tasks incidental or rrelated to (ii) are delegatedd.
(Notee 3) Conductts administraative tasks reelated to thee creation, maintenance,mand dispositiion oftransffer savings acccount registters for speci al accounts ofo unitholderss of the INV
V before the mergerm(form
mer Tokyo Growth
G
REIT Fund) as w
well as taskss related to other transfeer savings acccountregistters.
(Notee 4) Conductts administraative tasks reelated to thee creation, maintenance,mand dispositiion oftransffer savings acccount registters for speciial accounts ofo unitholders of the form
mer LCP as well
w astasks related to othher transfer saavings accounnt registers.

Statu
us of Investment Corpo
oration’s A
Assets underr Managemeent
1

Compossition of Invesstment Corpooration’s AsseetsType ofPreceding pe
eriod

Rep
porting period(as of December 31, 2013)(as off June 30, 2014)

Geographic Area
PurposeAsseetAmoount Held(Note 1 )Amount Held
Ratio of Total(millioons of yen)

Ratio off Total(millions of yeen)

Assets (%)

Assets (%)(N
Note 2)

Ressidential

Offiice/Retail
Reaal
EstatteSeniors, houurly parking, etc.

(Note 2)

Greater Tokyoo area

－

－

－

－

Major regionaal cities

－

－

－

－

Subtotaal

－

－

－

－

Greater Tokyoo area

714

0.9

712
7

0.9

Major regionaal cities

－

－

－

－

Subtotaal

714

0.9

712
7

0.9

Greater Tokyoo area

3,044

3.8

100
1

0.1

Major regionaal cities

1,441

1.8

－

－

Subtotaal

4,486

5.7

100
1

0.1

Greater Tokyoo area

－

－

－

－

Major regionaal cities

－

－

－

－

H
Hotel

- 37 -

Type ofPreceding period

Reporting period(as of December 31, 2013)(as of June 30, 2014)

Geographic Area
PurposeAsset

Amount Held

Amount Held

(Note 1)

Ratio of Total

Ratio of Total(millions of yen)(millions of yen)

Assets (%)

Assets (%)(Note 2)

(Note 2)
－

－

－

－

5,200

6.6

813

1.0

Greater Tokyo area

44,10855.7

43,90955.4

Major regional cities

12,08415.3

11,965

15.1

Subtotal

56,19271.0

55,874

70.5

Greater Tokyo area

7,111

9.0

7,106

9.0

Major regional cities

6,078

7.7

6,037

7.6

Subtotal

13,19016.7

13,143

16.6

Greater Tokyo area

－

－

－

－

Major regional cities

－

－

－

－

Subtotal

－

－

－

－

Greater Tokyo area

－

－

5,532

7.0

Major regional cities

－

－

－

－

Subtotal

－

－

5,532

7.0

Total Real Estate in Trust

69,383

87.6

74,55094.1

Deposits and Other Assets

4,593

5.8

3,898

4.9

79,176100.0

79,261

100.0（74,583）（94.2）（75,363）（95.1）

Subtotal
Total real estate

Residential

Real

Office/Retailestate intrust
Hourly parking, etc.

Hotel

Total Assets (Note 3)(Note 1) Greater Tokyo area refers to Tokyo, Kanagawa Prefecture, Chiba Prefecture and Saitama
Prefecture.
(Note 2) “Amount held” is from the balance sheet as of the end of the reporting period and is
calculated by deducting the accumulated depreciation from the acquisition price (including
acquisition related costs).
(Note 3) The figure indicated in“( )” in “total assets” shows the amount relevant to the real estate
actually held among the covered assets.

- 38 -

2

Major Properties

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

Occupancy

Book Value
Leasable
Name of Property

Ratio of Rental

Leased Area

Main Use

Rate (%)(millions ofArea (m )2

Revenue (%)(m )2(Note)yen)
A75 Spacia Ebisu

6,693

7,794.91

7,015.54

90.0

6.7

Residential

B14 Lexington Plaza Nishigotanda

4,801

6,033.58

6,033.58

100.0

4.6

OfficeB17 Lexington Plaza Hachiman

3,184

8,419.15

8,419.15

100.0

5.9 Retail Facilities

A52 Winbell Kagurazaka

3,128

4,032.70

3,975.60

98.6

3.8

Residential

D1 Hotel MyStays Kanda

2,907

2,585.72

2,585.72

100.0

1.0

Hotel

D2 Hotel MyStays Asakusa

2,625

3,327.38

3,327.38

100.0

1.1

Hotel

A51 City House Tokyo Shinbashi

2,405

3,364.00

3,178.86

94.5

3.2

Residential

B18 AEON Town Sukagawa

2,091

18,440.58

18,440.58

100.0

5.1 Retail Facilities

A53 Nishiwaseda Crescent Mansion

1,849

4,310.77

3,986.36

92.5

2.6

Residential

A76 Neo Prominence

1,656

3,574.70

3,177.27

88.9

2.3

Residential

31,341

61,883.49

60,140.04

97.2

36.2

―

Total

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

- 39 -

3

Asset Portfolio Including Real Estate
The portfolio of the properties (real estate accounts of assets and liabilities within assets in trust)

held by the Investment Corporation at the end of the reporting period is as below.
Appraisal Valueas of December Book Value
Name of Property

Type of

Leasable Area

Ownership(m2)

Location (Note 1)

31, 2013(millions of(millions of yen)

yen)

(Note 2)
A26

Nisshin Palacestage Daitabashi

1-31-2 Izumi, Suginami Ward, Tokyo

Real estate in trust

1,771.13

1,140

1,138

A27

Nisshin Palacestage HigashiNagasaki

5-4-1 Nagasaki, Toshima Ward, Tokyo

Real estate in trust

2,681.94

1,240

1,118

A28

Growth Maison Gotanda

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

Real estate in trust

1,051.50

931

846

A29

Growth Maison Kameido

6-58-16 Kameido, Koto Ward, Tokyo

Real estate in trust

1,367.96

1,060

1,012

A30

Emerald House

3-27-18 Itabashi, Itabashi Ward, Tokyo

Real estate in trust

2,152.31

1,190

1,419

A31

Harmonie Ochanomizu

2-5-5 Yushima, Bunkyo Ward, Tokyo

Real estate in trust

1,748.24

1,250

1,380

A32

Suncrest Shakujii-Koen

3-15-35 Takanodai, Nerima Ward, Tokyo

Real estate in trust

3,029.16

1,010

1,069

A33

Growth Maison
Shin-Yokohama

3-16-2 Shin-Yokohama, Kohoku-ku,
Yokohama City, Kanagawa Prefecture

Real estate in trust

1,858.44

1,080

994

A34

Belle Face Ueno-Okachimachi

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

Real estate in trust

1,351.11

924

983

A35

Grand Rire Kameido

3-39-12 Kameido, Koto Ward, Tokyo

Real estate in trust

1,562.26

918

855

A36

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

Real estate in trust952.89

838

777

A37

Growth Maison Yoga

1-15-15 Okamoto, Setagaya Ward, Tokyo

Real estate in trust

1,015.34

682

764

A38

Route Tachikawa

3-7-6 Nishikicho, Tachikawa City, Tokyo

Real estate in trust

1,368.57

595

653

A39

Shibuya-Honmachi Mansion

2-35-2 Honmachi, Shibuya Ward, Tokyo

Real estate in trust

1,167.50

591

655

A40

City Heights Kinuta

4-13-15 Kinuta, Setagaya Ward, Tokyo

Real estate in trust

1,235.93

457

646

A41

Acseeds Tower Kawaguchi- 2-5-13 Namiki, Kawaguchi City, Saitama
NamikiPrefecture

Real estate in trust

1,210.74

684

571

A42

Capital Heights Kagurazaka

71-1 Enokicho, Shinjuku Ward, Tokyo

Real estate in trust

1,126.65

540

616

A43

College Square Machida

3-4-4 Nakamachi, Machida City, Tokyo

Real estate in trust

1,047.75

529

570- 40 -

Appraisal Valueas of December Book Value
Name of Property

Type of

Leasable Area

Ownership(m2)

Location (Note 1)

31, 2013(millions of(millions of yen)

yen)

(Note 2)
A44

Belair Meguro

1-2-15 Meguro, Meguro Ward, Tokyo

Real estate in trust

557.05

551

572

A45

Wacore Tsunashima I

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

Real estate in trust

907.46499

547

City, Kanagawa Prefecture

A46

Foros Nakamurabashi

1-6-6 Koyama, Nerima Ward, Tokyo

Real estate in trust

815.77

550

530

A47

Growth Maison Kaijin

5-29-51 Kaijin, Funabashi City, Chiba

Real estate in trust

2,040.27

454

531

Prefecture

A48

College Square Machiya

7-3-1 Arakawa, Arakawa Ward, Tokyo

Real estate in trust

871.35

500

477

A51

City House Tokyo Shinbashi

6-19-1 Shinbashi, Minato Ward, Tokyo

Real estate in trust

3,364.00

2,720

2,405

A52

Winbell Kagurazaka

6-15 Shin-Ogawacho, Shinjuku Ward,
Tokyo

Real estate in trust

4,032.70

3,490

3,128

A53

Nishiwaseda Cresent Mansion

3-18-9 Nishi-Waseda, Shinjuku Ward,
Tokyo

Real estate in trust

4,310.77

2,180

1,849

A54

Lexington Square
Akebonobashi

3-8 Yochomachi, Shinjuku Ward, Tokyo

Real estate in trust

1,987.88

1,600

1,377

A56

Casa Eremitaggio

1-14-15 Nakane, Meguro Ward, Tokyo

Real estate in trust

1,197.19

996

996

A59

Towa City Coop Shinotsuka II

5-49-7 Higashi-Ikebukuro, Toshima Ward,
Tokyo

Real estate in trust

1,627.13

949

831

A61

Bichsel Musashiseki

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

Real estate in trust

1,220.24

634

558

A62

Lexel Mansion Ueno
Matsugaya

3-10-2 Matsugaya, Taito Ward, Tokyo

Real estate in trust

1,969.45

1,070

899

A63

Towa City Coop Sengencho

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

Real estate in trust

3,426.36

1,250

1,046

City, Kanagawa Prefecture

A64Royal Park Omachi

2-11-10 Omachi, Aoba-ku, Sendai City,
Miyagi Prefecture

Real estate in trust

1,929.59

508

393

A65

Lexington Square
Haginomachi

1-15-16 Haginomachi, Miyagino-ku,
Sendai City, Miyagi Prefecture

Real estate in trust

1,528.58

422

307

A66

Visconti Kakuozan

2-44 Otanacho, Chikusa-ku, Nagoya City,
Aichi Prefecture

Real estate in trust705.75

244

240

A71

Lexington Square Daitabashi

1-33-8 Izumi, Suginami Ward, Tokyo

Real estate in trust

1,430.64

1,040

906

A72

Lexington Square Honjo
Azumabashi

4-20-6 Higashikomagata, Sumida Ward,
Tokyo

Real estate in trust

784.74

549

468

A73

AMS TOWER Minami 6-Jo

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

Real estate in trust

4,460.56

1,120

1,057

A75

Spacia Ebisu

3-6-22 Higashi, Shibuya Ward, Tokyo

Real estate in trust

7,794.91

6,930

6,693

A76

Neo Prominence

3-21-5 Shimo, Kita Ward, Tokyo

Real estate in trust

3,574.70

1,720

1,656

- 41 -

Appraisal Valueas of December Book Value
Name of Property

Type of

Leasable Area

Ownership(m2)

Location (Note 1)

31, 2013(millions of(millions of yen)

yen)

(Note 2)
A77

Invoice Shin-Kobe Residence

3-3-8 Ikutacho Chuo Ward, Kobe City,
Hyogo Prefecture

Real estate in trust

2,773.71

1,300

1,250

A78

Cosmo Court Motomachi

3-12-20 Motomachi Dori Chuo Ward,
Kobe City, Hyogo Prefecture

Real estate in trust

2,310.49

1,040

966

A79

Revest Honjin

2-13 Torii Dori Nakamura Ward, Nagoya
City, Aichi Prefecture

Real estate in trust

1,933.80

718

669

A80

Revest Matsubara

3-13-12 Matsubara Naka Ward ,Nagoya
City, Aichi Prefecture

Real estate in trust

1,955.40

720

653

A81

Sun Terrace Minami Ikebukuro

2-22-6 Minami Ikebukuro, Toshima Ward,
Tokyo

Real estate in trust

898.70

667

620

A82

Alba Noritake Shinmachi

3-6-8 Noritake Shinmachi, Nishi Ward,
Nagoya City, Aichi Prefecture

Real estate in trust

1,731.68

644

604

A83

Revest Meieki Minami

2-13-33 Meiekiminami, Nakamura Ward,
Nagoya City, Aichi Prefecture

Real estate in trust

1,634.60

649

594

A84

Revest Heian

2-13-17 Heian, Kita Ward, Nagoya City,
Aichi Prefecture

Real estate in trust

1,554.03

619

591

A85

Vendir Hamaotsu Ekimae

1-2-15 Hama Otsu, Otsu City, Shiga
Prefecture

Real estate in trust

2,670.66

669

576

A86

Salvo Sala

2-6-21 Shimanouchi Chuo Ward, Osaka
City, Osaka Prefecture

Real estate in trust

1,428.12

577

542

A87

Excellente Kagurazaka

128-1 Yamabukicho
Tokyo

Real estate in trust

701.92

569

542

A88

Luna Court Edobori

3-4-11 Edobori, Nishi Ward, Osaka City,
Osaka Prefecture

Real estate in trust

1,185.50

549

522

A89

Winntage Kobe Motomachi

7-2-2 Motomachi Dori, Chuo Ward, Kobe
City, Hyogo Prefecture

Real estate in trust

1,433.35

553

508

A90

Queen's Court Fukuzumi

1-3-10 Fukuzumi, Koto Ward, Tokyo

Real estate in trust

765.18

497

454

A91

Corp Higashinotoin

380-1 Kawaranomachi, Higashinotoin
Dori Nijo Kudaru, Chukyo Ward, Kyoto
City, Kyoto Prefecture

Real estate in trust

1,029.05

474

444

A92

Belair Oimachi

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

Real estate in trust

530.60

455

411

A93

Siete Minami-Tsukaguchi

3-18 Minami Tsukaguchimachi,
Amagasaki City, Hyogo Prefecture

Real estate in trust

1,020.86

402

373

A94

Prime Life Sannomiya Isogami
Koen

4-3-23 Isogamidori ,Chuo Ward, Kobe
City Hyogo Prefecture

Real estate in trust

789.12

389

371

A95

HERMITAGE NANBA WEST

4-10-3 Sakuragawa Naniwa Ward, Osaka
City, Osaka Prefecture

Real estate in trust

992.76

382

355

A96

Century
1-bankan

4-1-2 Shinkawamachi Minato Ward,
Nagoya City, Aichi Prefecture

Real estate in trust

1,477.62

372

334

A97

West Avenue

1-5-17 Nishi, Kunitachi City, Tokyo

Real estate in trust

794.80

338

328

A98

Little River Honmachibashi

1-34 Honmachibashi Chuo Ward, Osaka
City, Osaka Prefecture

Real estate in trust

974.81

335

310

A99

Prime Life Mikage

2-25-11 Mikage Tsukamachi Higashi
Nada Ward, Kobe City, Hyogo Prefecture

Real estate in trust

761.18312295

109,584.45

58,86555,874Park

Shinkawa

Shinjuku

Subtotal- 42 -Ward,

Appraisal Valueas of December Book Value
Name of Property

Type of

Leasable Area

Ownership(m2)

Location (Note 1)

31, 2013(millions of(millions of yen)

yen)

(Note 2)
B8

Kindai Kagakusha Building

B9

Shinjuku Island

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

Real estate in trust

1,451.54

1,010

1,234

Real estate526.43556

712

5-2-4 Nishigotanda, Shinagawa Ward,
Tokyo

Real estate in trust

6,033.58

4,140

4,801

5-24-18 Nakano, Nakano Ward, Tokyo

Real estate in trust

2,145.00

938

1,070

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

B14
B15

Lexington Plaza Nishigotanda

Cross Square NAKANO

B16Ohki Aoba Building

9-7 Futsukacho, Aoba-ku, Sendai City,
Miyagi Prefecture

Real estate in trust

2,178.41

644

761

B17

Lexington Plaza Hachiman

3-1-50 Hachiman, Aoba-ku, Sendai City,
Miyagi Prefecture

Real estate in trust

8,419.15

3,330

3,184

B18

AEON TOWN Sukagawa

105 Furukawa, Sukagawa City, Fukushima
Prefecture

Real estate in trust

18,440.58

2,190

2,091

39,194.69

12,80813,855

81.04

105

100

81.04

105

100

Subtotal
C1

Stop Parking Kanda-Sudacho(Note 3)

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

Real estate

Subtotal
D1

Hotel MyStays Kanda

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

Real estate in trust

2,585.72

2,880

2,907

D2

Hotel MyStays Asakusa

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

Real estate in trust

3,327.38

2,610

2,625

Subtotal

5,913.10

5,490

5,532

Total

154,773.28

77,26875,363(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 (banchi).
(Note 2) “Appraisal Value” is the value appraised or researched as of the end of the fiscal period in
accordance with the Articles of Incorporation of INV and the regulations of the Investment Trust
Association, Japan by Asset Research and Development Inc., the Japan Real Estate Institute, Morii
Appraisal & Investment Consulting Inc., or Tanizawa Sogo Appraisal Co., Ltd.
(Note 3) The name of property was changed to “Times Kanda-Sudacho 4th” as of July 1, 2014.

- 43 -

Occupancy trends for the leasing operations of the real estate and accounts of assets andliabilities within assets in trust that the Investment Corporation holds are as below.

21st Fiscal Period

22nd Fiscal Period(July 1, 2013 to December 31, 2013)(January 1, 2014 to June 30, 2014)

RentalNumber of
Revenue
Tenants (atTenants (at(during
Ratio ofRate
period)Rentalend ofend of(at end of (Thousands Revenue (%)ofyen)
period) (%)
period)period)(Note 1)
(Note 2)
(unit)(unit)
Number ofName of Property

Occupancy

RentalRevenue
Ratio of(during
Rate
Rentalperiod)(at end of (Thousands Revenue (%)
period) (%)
of yen)(Note 1)
(Note 2)
Occupancy

A26 Nisshin Palacestage Daitabashi

1

95.0

40,764

1.5

1

94.1

39,801

1.4

Nisshin Palacestage HigashiNagasaki

1

97.4

44,828

1.6

1

97.7

46,4201.7

A28 Growth Maison Gotanda

1

100.0

27,386

1.0

1

100.0

27,344

1.0

A29 Growth Maison Kameido

1

89.3

31,655

1.2

1

89.3

32,376

1.2

A30 Emerald House

1

98.9

41,974

1.5

1

100.0

49,348

1.8

A31 Harmonie Ochanomizu

1

97.5

39,196

1.4

1

91.2

39,809

1.4

A32 Suncrest Shakujii-Koen

1

95.3

34,660

1.3

1

97.0

35,961

1.3

A33 Growth Maison Shin-Yokohama

1

94.1

36,146

1.3

1

86.9

33,246

1.2

A34 Belle Face Ueno-Okachimachi

1

100.0

30,564

1.1

1

98.3

33,576

1.2

A35 Grand Rire Kameido

1

100.0

26,619

1.0

1

100.0

26,6191.0

A36 Growth Maison Ikebukuro

1

97.6

24,244

0.9

1

90.4

26,2080.9

A37 Growth Maison Yoga

1

100.0

21,660

0.8

1

97.3

22,6530.8

A38 Route Tachikawa

1

83.5

17,305

0.6

1

96.6

20,2930.7

A39 Shibuya-Honmachi Mansion

1

96.4

18,641

0.7

1

100.0

20,105

0.7

A40 City Heights Kinuta

1

94.6

16,885

0.6

1

100.0

17,629

0.6

1

96.5

24,285

0.9

1

93.0

25,146

0.9

A42 Capital Heights Kagurazaka

1

91.0

18,084

0.7

1

90.5

18,0000.6

A43 College Square Machida

1

100.0

18,268

0.7

1

100.0

18,2680.7

A44 Belair Meguro

1

92.1

16,116

0.6

1

100.0

15,901

0.6

A45 Wacore Tsunashima I

1

82.1

16,987

0.6

1

94.1

17,314

0.6

A46 Foros Nakamurabashi

1

94.5

17,295

0.6

1

100.0

17,9580.6

A47 Growth Maison Kaijin

1

100.0

23,364

0.9

1

90.0

21,9220.8

A48 College Square Machiya

1

100.0

14,706

0.5

1

100.0

14,706

0.5

A27

A41

Acseeds
NamikiTower

Kawaguchi-- 44 -

21st Fiscal Period

22nd Fiscal Period(July 1, 2013 to December 31, 2013)(January 1, 2014 to June 30, 2014)

RentalNumber of
Revenue
Tenants (atTenants (at(during
Ratio ofRate
period)Rentalend ofend of(at end of (Thousands Revenue (%)
of yen)period)(%)
period)period)(Note 1)
(Note 2)
(unit)(unit)
Number ofName of Property

Occupancy

RentalRevenue
Ratio of(during
Rate
Rentalperiod)(at end of (Thousands Revenue (%)
period) (%)
of yen)(Note 1)
(Note 2)
Occupancy

A51 City House Tokyo Shinbashi

1

100.0

91,288

3.3

1

94.5

89,437

3.2

A52 Winbell Kagurazaka

1

96.5

101,996

3.7

1

98.6

105,410

3.8

A53 Nishiwaseda Cresent Mansion

1

94.8

70,856

2.6

1

92.5

70,931

2.6

Lexington
A54
Akebonobashi

1

89.7

46,136

1.7

1

93.3

47,715

1.7

A56 Casa Eremitaggio

1

90.0

30,392

1.1

1

97.0

28,492

1.0

A59 Towa City Coop Shinotsuka II

1

89.9

32,744

1.2

1

92.8

33,315

1.2

A61 Bichsel Musashiseki

1

92.9

22,455

0.8

1

94.3

24,028

0.9

1

100.0

32,797

1.2

1

96.3

33,839

1.2

A63 Towa City Coop Sengencho

1

90.5

60,085

2.2

1

89.1

59,396

2.1

A64 Royal Park Omachi

1

95.0

25,583

0.9

1

90.6

24,956

0.9

A65 Lexington Square Haginomachi

1

97.4

18,207

0.7

1

97.4

18,023

0.7

A66 Visconti Kakuozan

1

100.0

11,683

0.4

1

100.0

11,774

0.4

A71 Lexington Square Daitabashi

1

93.7

30,928

1.1

1

90.9

31,377

1.1

Lexington Square Honjo
Azumabashi

1

100.0

17,511

0.6

1

96.9

17,881

0.6

A73 AMS TOWER Minami 6-Jo

1

97.1

47,709

1.7

1

91.8

50,486

1.8

A75 Spacia Ebisu

1

89.2

180,121

6.6

1

90.0

186,312

6.7

A76 Neo Prominence

1

96.6

63,701

2.3

1

88.9

63,037

2.3

A77 Invoice Shin-Kobe Residence

1

95.4

48,899

1.8

1

94.4

45,927

1.7

A78 Cosmo Court Motomachi

1

98.7

37,159

1.4

1

90.4

36,802

1.3

A79 Revest Honjin

1

93.7

30,568

1.1

1

95.0

31,304

1.1

A80 Revest Matsubara

1

98.8

29,325

1.1

1

91.2

28,954

1.0

A81 Sun Terrace Minami Ikebukuro

1

97.4

21,707

0.8

1

89.5

21,891

0.8

A82 Alba Noritake Shinmachi

1

96.5

24,841

0.9

1

91.7

25,422

0.9

A83 Revest Meieki Minami

1

98.5

25,053

0.9

1

93.6

24,9190.9

A84 Revest Heian

1

98.4

23,423

0.9

1

98.4

23,5700.9

A85 Vendir Hamaotsu Ekimae

1

100.0

32,235

1.2

1

94.2

32,426

1.2

A62

A72

SquareLexel
MansionMatsugaya

Ueno- 45 -

21st Fiscal Period

22nd Fiscal Period(July 1, 2013 to December 31, 2013)(January 1, 2014 to June 30, 2014)

RentalNumber of
Revenue
Tenants (atTenants (at(during
Ratio ofRate
period)Rentalend ofend of(at end of (Thousands Revenue (%)
of yen)period)(%)
period)period)(Note 1)
(Note 2)
(unit)(unit)
Number ofName of Property

Occupancy

RentalRevenue
Ratio of(during
Rate
Rentalperiod)(at end of (Thousands Revenue (%)
period) (%)
of yen)(Note 1)
(Note 2)
Occupancy

A86 Salvo Sala

1

96.7

24,562

0.9

1

91.5

23,992

0.9

A87 Excellente Kagurazaka

1

91.2

17,831

0.7

1

97.1

17,8420.6

A88 Luna Court Edobori

1

98.0

21,738

0.8

1

88.1

20,9120.8

A89 Winntage Kobe Motomachi

1

86.0

22,696

0.8

1

91.1

22,1480.8

A90 Queen's Court Fukuzumi

1

100.0

16,668

0.6

1

100.0

16,521

0.6

A91 Corp Higashinotoin

1

95.1

17,678

0.6

1

90.3

16,9800.6

A92 Belair Oimachi

1

96.4

15,193

0.6

1

96.1

15,415

0.6

A93 Siete Minami-Tsukaguchi

1

97.5

16,916

0.6

1

92.5

16,4370.6

Prime Life Sannomiya Isogami
Koen

1

93.8

14,484

0.5

1

100.0

14,6400.5

A95 HERMITAGE NANBA WEST

1

96.0

15,418

0.6

1

92.0

14,842

0.5

1

97.7

16,960

0.6

1

100.0

17,1900.6

A97 West Avenue

1

90.0

12,084

0.4

1

85.0

12,666

0.5

A98 Little River Honmachibashi

1

96.9

13,438

0.5

1

93.9

12,971

0.5

A99 Prime Life Mikage

1

96.6

12,366

0.5

1

93.4

11,8090.4

Subtotal

63

95.4

1,997,099

72.9

63

93.8

2,022,623

73.0

B8 Kindai Kagakusha Building

1

100.0

39,112

1.4

1

95.0

38,735

1.4

B9 Shinjuku Island

1

100.0

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

B14 Lexington Plaza Nishigotanda

8

90.1

139,821

5.1

8

100.0

126,690

4.6

B15 Cross Square NAKANO

1

67.6

28,653

1.0

1

64.3

28,6851.0

B16 Ohki Aoba Building

1

100.0

40,415

1.5

1

100.0

40,5591.5

B17 Lexington Plaza Hachiman

1

100.0

162,868

5.9

1

100.0

163,313

5.9

B18 AEON TOWN Sukagawa

1

100.0

142,719

5.2

1

100.0

142,116

5.1

14

96.7

570,788

20.8

14

97.9

557,297

20.1

1

100.0

2,443

0.1

1

100.0

2,443

0.1

1

100.0

23,7980.9－－

18,592

0.7

1

100.0

22,4150.8－－

17,485

0.6

A94

A96

Century
1-bankan

Park

Shinkawa

Subtotal
C1
C21

Stop Parking Kanda-Sudacho
Bon Sejour Chitose Funabashi(Note 4)

C22 Bon Sejour Yotsugi (Note 4)- 46 -

21st Fiscal Period

22nd Fiscal Period(July 1, 2013 to December 31, 2013)(January 1, 2014 to June 30, 2014)

RentalNumber of
Revenue
Tenants (atTenants (at(during
Ratio ofRate
period)Rentalend ofend of(at end of (Thousands Revenue (%)
of yen)period)(%)
period)period)(Note 1)
(Note 2)
(unit)(unit)
Number ofName of Property

C23 Bon Sejour Hino (Note 4)

Occupancy

RentalRevenue
Ratio of(during
Rate
Rentalperiod)(at end of (Thousands Revenue (%)
period) (%)
of yen)(Note 1)
(Note 2)
Occupancy

1

100.0

21,3540.8－－

16,639

0.6

1

100.0

17,6970.6－－

13,8090.5

C25 Bon Sejour Komaki (Note 4)

1

100.0

45,224

1.7－－

35,226

1.3

Bon Sejour Hadano Shibusawa
C26(Note 4)

1

100.0

23,6590.9－－

18,441

0.7

C27 Bon Sejour Itami (Note 4)

1

100.0

15,9680.6－－

12,442

0.4

8

100.0

172,561

6.3

1

100.0

135,081

4.9

－

－

－

－

1

100.0

27,512

1.0

－

－

－

－

1

100.0

29,903

1.1

Subtotal

－

－

－

－

2

100.0

57,416

2.1

Total

85

96.3

2,740,449

100.0

80

95.1

2,772,419

100.0

C24

Bon Sejour Musashi Shinjo(Note 4)

Subtotal
Hotel MyStays Kanda(Note 5)
Hotel MyStays Asakusa
D2(Note 5)
D1

(Note 1) “Occupancy Rate” is computed by dividing the leased area by leasable area, and isrounded to one decimal place.
(Note 2) “Rental Revenue (during period)” indicates each property’s leasing operation revenues
during the fiscal period, and has been rounded down to the nearest thousand yen.
(Note 3) Undisclosed due to inability to gain approval from the property tenant for document
disclosure.
(Note 4) The property that was sold during the 22nd fiscal period. The date of sale was May 22,
2014.
(Note 5) Since the property was acquired during the 22nd fiscal period (as of May 23, 2014), thecalculation period of the rental revenue of the relevant property was set for the period commencing
on May 23, 2014 and ending on June 30, 2014.
4

Status of Size and Market Value of Trading Assets

No relevant items
5

Status of Other Assets

Trust beneficiary interests in real estate and real estate held in trust are listed together in the “3 Asset
Portfolio Including Real Estate” above.

As of the end of this reporting period, there are no

investments in specified assets that are significant investment targets for INV outside of the above 3.

- 47 -

Asset Hooldings Outsiide of Japan oor the Regionn6n.
Theree are no relevvant items outtside of Japann or the region
Capittal expenditu
ures for prop
perties held by INV
1Schedule for capital expenditurese
pal capital exppenditures fo
or property maintenancem
cconstruction, etc. as
The schedule foor the princip

f the properrties held by INVI
is as folllows.
of thee end of the fiiscal period forE
Estimated Cost (Thousands(of yen)yN
Name of Properrty

LoocationPurposeScheduleed Time of
Implemmentation

Payment for
Totalthee Fiscal
PeriodP

2

Aoba

Sendaai City,
Miyaagi
Prefecture

B16

Ohki
Building

A53

Nishiwasedaa
Crescent Maansion

Shinjuku
Wardd, Tokyo

B8

Kindai Kaggakusha
Building

Shinjukud, Tokyo
Ward

B17

Lexington
HachimanSendaai City,
Miyaagi
Prefecture

B15

Cross
SquareNAKANO

NakanoWardd, Tokyo

A26

Nisshin
Palacestage
Daitabashi

Sugin
nami
Ward
d, Tokyo

Plaza

Maintenance
N
M
From November
coonstructionof 2014 to DecemberD
exxterior walls
20
014
M
Maintenancecoonstructionof From Aug
gust 2014 tomiiscellaneous
Decembber 2014
draainage pipe
Reenewal
From Octtober 2014
coonstruction of air
to October 2014
coonditioning systtem
Reenewal
From NovemberNcoonstructionof2014 to DecemberDaspphalt for roofftop
20014
paarking area
From Seeptember
Reenovation2014 to DecemberDcoonstruction
20014
Reenewal
From DecemberDcoonstructionof2014 to DecemberD
preepaid hot waater
20
014
unnit

―

―

26,000――15,573――13,000

―

―

8,100

―

―

5,806

―

―

nstituting cappital expendittures for the real estate aassets for the fiscal
The pprincipal connstruction con
Capital exp
penditures forr the fiscal pperiod was 13
35,796thoussand yen, andd together withw 40,506 oof repair cost included inn this fiscal period’s exp
penses,mplemented.
constrruction workk totaling 176,,303 thousandd yen was im- 48 -

Paym
ments

40,800Capital expendituresefor the fiscall period endedd June 30, 20
014

periodd ended Junee 30, 2014 is as follows.

Advvance

Name of Property

Location

PurposePayment (Thousands of
yen)

A32

Suncrest
Shakujii-Koen

NerimaB8

Kindai Kagakusha
Building

Shinjuku
Ward, Tokyo

B16

Ohki
Building

Sendai City,
MiyagiPrefecture

Renewal construction of air
conditioning system on the first From April 2014 to
May 2014
basement floor and three otherfloorsRenewal construction of air
From April 2014 toconditioning system on the 1st,June 2014
2nd and 4th floors

ShinagawaWard, Tokyo

Renewal construction of air From April 2014 toconditioning system on 1st floor
April 2014

14,240

Funabashi
City,
Chiba
Prefecture

Maintenance construction work From March 2014
on mechanical parking facility
to March 2014

12,481

B14
A47

Aoba

Lexington
Plaza
Nishigotanda
GrowthKaijinMaisonWard, Tokyo

Large-scaleconstruction

Time of
Implementation
renovation From April 2014 toJune 2014

30,365

17,423

16,075

Other construction

45,210Total

3135,796

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

INV has reserved funds, as below, from the cash flow of the relevant fiscal period towards
large-scale maintenance repairs in the medium to long term future in accordance with the long-term
maintenance plan for each property.
18th Fiscal
PeriodFisacal period

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

From January
1, 2012 to June30, 2012

19th Fiscal
PeriodFrom July 1,
2012 toDecember 31,
2012

20th Fiscal
PeriodFrom January
1, 2013 to June30, 2013

21th Fiscal
PeriodFrom July 1,
2013 toDecember 31,
2013

22th Fiscal
PeriodFrom January 1,
2014 to June 30,2014

356,408
thousand yen

487,561thousand yen

541,609
thousand yen

571,543
thousand yen

524,730
thousand yen

163,931
thousand yen
32,777thousand yen

151,076
thousand yen
97,028thousand yen

165,233
thousand yen
135,298
thousand yen

165,271
thousand yen
212,084
thousand yen

199,177
thousand yen
144,225
thousand yen

487,561thousand yen

541,609
thousand yen

571,543
thousand yen

524,730
thousand yen

579,682
thousand yen(Note) The amount reserved for the relevant fiscal period includes the reserves for acquired
properties, and the amount reversed includes the reserves for disposed properties.

- 49 -

Overrview of Liabbilities and Expenses
E
1

Statemennt of Operatin
ng Expenses(T
Thousands of yeen)

21st Fiscaal Period

22nd Fiscall Period

D 31, 2013
3
Jully 1, 2013 to Dec.

Jan. 1, 2014 to Ju
une 30, 2014(a) A
Asset manageement fees

125,0000

125,0000(b) A
Asset custodiaan fees

3,986

3,9066(c) A
Administrativve services feees

19,08918,2244(d) D
Directors’ remmuneration

4,80
00

4,8000(e) O
Other operatinng expenses

60,582

107,4044

213,457

259,3366

Iteem

Tootal- 50 -

2

Borrowing Conditions

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

Type

LenderSumitomo

Mitsui

Balance at Start Balance at End

AverageBorrowingof Reportingof Reporting

Interest

Repayment

Payment

Date

PeriodPeriodRate

Date

Method(Thousands of(Thousands of(%) (Note

yen)

yen)

1)

Banking

Corporation
The Bank of Tokyo-Mitsubishi
Short-term
DebtUFJ, Ltd.

May. 23,―

3,497,083―

3,497,083

2014

May. 22, 2015 (Note 3)(Note 4)―

3,497,083―

2,997,500―

13,488,750

5,500,000

4,743,811

5,500,000

4,743,811

4,000,000

3,450,044

2,000,000

1,725,022

2,000,000

1,725,022

1,350,000

1,164,389

20,350,000

17,552,100

3,750,000

―

2.500

Jan. 25, 2017

3,620,000

―

2.500

Jan. 25, 2018 (Note 9) (Note 5)

3,630,000

―

2.500

Jan. 25, 2019

Sumitomo Mitsui Trust Bank,
LimitedSubtotal
Mitsui

0.979(Note 5)

Mizuho Bank, Ltd.

Sumitomo

Purpose Notes

SecuredConvent
i-onalBanking

Corporation
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Long-term Shinsei Bank, Limited.

Dec. 20,(Note 2)

2013

Debt

Citibank Japan Ltd.

(Note 6)
1.652

SecuredDec. 20, 2016 (Note 7) (Note 5) Convent
i-onalShinsei Trust & Banking Co.,
Ltd.
Aozora Bank, Ltd.
SubtotalMizuho Trust & Banking Co.,Ltd.
Long-term

Jul. 29, 2011

(Note 8)

Debts in
Trust

Mitsubishi

UFJ

Trust

SecuredConvent

andSep. 28.

2,700,000

2,700,000

1.900

Banking Corporation

Mar. 31, 2018
Sum

2012
(Note 10)i-onalLump

2,860,000- 51 -

2,860,000

1.900

Mar. 31, 2019 (Note 11)(Note 4)

1,830,000

1,830,000

1.900

Mar. 31, 2020

2,570,000

2,570,000

1.900

Mar. 31, 2019 (Note 12)

Subtotal

20,960,000

9,960,000

Total

41,310,000

41,000,850(Note 1) Average interest rate is the daily weighted average number of the period according to thenumber of days, and is rounded to three decimal place.
(Note 2) Includes long-term debt scheduled to be repaid within 1 year and long-term debt in trustscheduled to be repaid within 1 year.
(Note 3) Portion of the principal (JPY 11 million) was paid on (each of the interest payment dates).
The balance as of the end of the fiscal period was fully prepaid on July 17, 2014.
(Note 4) The funds raised through borrowings are mainly used to acquire real estate properties orproperties in trust.
(Note 5) Used for purposes including repayment of existing debt.
(Note 6) Portion of principal (16 million yen) was repaid on same day as interest payment date(monthly), and The balance as of the end of the fiscal period was fully prepaid on July 17, 2014.
(Note 7) A portion of the principal (JPY 2,696 million) was prepaid in connection with the sale ofreal estate completed on May 22, 2014.
(Note 8) Mizuho Trust & Banking Co., Ltd. is the trustee of the REIT of which the Investment
Corporation is the beneficiary, and has borrowed funds on Jul. 29, 2011 from Prudential Mortgage
Asset Holdings 1 Japan Investment Limited Partnership of Prudential Financial Inc. Group. The
Investment Corporation received said loan (after deduction of reserves) as grant of trust principal of
said REIT from Mizuho Trust & Banking Co. Ltd. on the same date.
(Note 9) On May 23, 2014, full amount of the balance was prepaid.
(Note 10) Mitsubishi UFJ Trust and Banking Corporation is the trustee of the REIT of which theInvestment Corporation is the beneficiary, and has borrowed funds on Sep. 28, 2012 from Prudential
Mortgage Asset Holdings 1 Japan Investment Limited Partnership of Prudential Financial Inc. Group.
The Investment Corporation received said loan (after deduction of reserves) as grant of trust
principal of said REIT from Mitsubishi UFJ Trust and Banking Corporation on the same date.
(Note 11) On each principal and interest payment date (every 3 months) that occurs after 5 years
from the borrowing date, amounts paid will be those calculated under the assumption that therepayment of the balance of the principal will be by the equal payment method for a term of 27 years(total 108 payments). The balance remaining after the payments above will be repaid in one lumpsum on the principal maturity date.
(Note 12) On each principal and interest payment date (every 3 months) that occurs after 3 years
from the borrowing date, amounts paid will be those calculated under the assumption that therepayment of the balance of the principal will be by the equal payment method for a term of 20 years(total 80 payments). The balance remaining after the payments above will be repaid in one lumpsum on the principal maturity date.
3

Investment Corporation Bonds

Nothing applicable.
4

Short-Term Investment Corporation Bonds

Nothing applicable.
- 52 -

Buyinng and Sellinng for the Fisscal Period E
Ended June 30,
3 20141

Buying anda Selling, etc.
e of Real E
Estate and Assset-Backed Securities, etc..
Acqquisition

Name of Prroperty

DisposalAcquisition

C21

Funabashi

Price

Disposal

Price

Date

(Thousands off

Date(Thousands oof
yen)

－

－

C222

Bon Sejour Yotsugi
Yo

－

－

C233

Bon Sejour Hino
H

－

－

C244

Bon Sejour Musashi
M
Shinjo－－C255

Bon Sejour Komaki
K

－

－

－

－

－

－

C266

Bon Sejour Hadano
H
Shibusawa

C277

Bon Sejour Ittami

D1

Hotel MyStayys Kanda

D2

Hotel MyStayys Asakusa

Book Vallue

Acquisitionyen)
Bon Sejour ChitoseC

Gain (Looss) on

DisposalMay. 23,
2014
May. 23,
2014

Total

May. 22,2014
May. 22,2014
May. 22,2014
May. 22,2014
May. 22,2014
May. 22,2014
May. 22,2014(Notee 2)

yen)(Thousaands of
yenn)

830,00
000

657
7,193

168,337

776,00
000

622
2,386

149,419

729,00
000

551
1,565

173,480

586,00
000

468
8,167

114,607

1,275,00
000

984
4,869

283,391

733,00
000

633
3,486

95,539471,00
000

449
9,783

18,5772,851,00
00

－

－

－

－

2,584,00
00

－

－

－

－

5,400,00
000

4,367
7,451

1,003,352

5,435,00
00v
costs (brokerage ccommissions,, taxes(Notee 1) Acquisittion or disposal price do nnot include various
and oother public charges) req
quired for accquisition or transfer of the propertyy, and indicaate thepurchhase and sale price of the propertyp
as deescribed in th
he the trust beeneficiary purrchase agreem
ment.
(Notee 2) Gain (looss) on dispo
osal is calcuulated by deccreasing boo
ok value andd various cossts fortransffer from dispoosal price.
2

Dispoosal(Thousandds ofBuying anda Selling, etc.
e of Other A
Assetst
describ
bed above weere mostly ban
nk deposits oro bank depossits within assets in
Assetts other than thosetrust.

- 53 -

3

Survey of Prices, etc. of Specified Assets

Real Estate Transactions
Acquisition /
Disposal

Name of Property

Specified Transaction
Assets TypeDate

C21 Bon Sejour Chitose Funabashi

830,000

762,000

C22 Bon Sejour Yotsugi

776,000

703,000

C23 Bon Sejour Hino
Disposal
C24 Bon Sejour Musashi Shinjo

729,000

662,000

586,000

561,000

1,275,000

1,060,000

C26 Bon Sejour Hadano Shibusawa

733,000

634,000

C27 Bon Sejour Itami

471,000

439,000

2,851,000

2,880,000

2,584,000

2,610,000

Real Estate

May. 22,2014

C25 Bon Sejour Komaki

Acuisition

Real Estate
Acquisition / or
Disposal Price Appraisal Value(Thousands of (Thousands of
yen)
yen)

D1

Hotel MyStays Kanda

D2

Hotel MyStays Asakusa

Real Estate,
Trust
BeneficiaryInterests

May. 23,
2014

Name of Appraiser

Date of
Appraisal

Japan Real Estate
Institute

Dec. 31,2013

Japan Real Estate
InstituteMar. 31,2014(Note 1) Acquisition or disposal price do not include various costs (brokerage commissions, taxes
and other public charges) required for acquisition or transfer of the property, and indicate thepurchase and sale price of the property as described in the the trust beneficiary purchase agreement.
(Note 2) The real estate appraisal described above is conducted by applying “Real Estate Appraisal
Standard Section 3: appraisals concerning prices of real estate subject to securitization.”
4

Transactions with Interested Parties(1)

Transactions

Nothing applicable.
(2)

Commissions Paid

Nothing applicable.
5

Transactions between the Asset Manager in Other Businesses of the Asset Manager

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

- 54 -

ncial Conditiion
Finan
1

Assets, Liabilities,
L
Prrincipal, and P
Profit and Lo
ossS“III. Statement ofo Income,” “IV.
“
Statemeent of Unitho
olders’Please refer to “III. Balance Sheet,”Cash Distribu
ution”.
Equitty,” “V. Notess” and “VI. Sttatement of C
Changess in the Calcu
ulation Methood of Depreciiation Expensses

2

Nothiing applicablee.
Changess in the Evalu
uation Methodd of Real Estate, etc.

3

Nothiing applicablee.
4

Beneficiiary Certificaates of Investm
ment Trusts, etc.
e Set Up by the Compan
anyNothiing applicablee.
Other
1

NoticeBoardd of Directorss of Investmeent Corporatioon
a amendmeent of the priincipal agreem
ment approveed by the Booard of Directtors of
Of thhe execution andn the fiscal pperiod endin
ng June 30, 2014,
2
princippal summary
y is asthe Innvestment Corporation infollow
ws.
Appproval Date
Junne 23, 2014

Item
Execution
n

of

Summ
mary
Underwritiing

With respectr
to issuance off new

Agreemennt concerninng issuance ofinvestm
ment units

and offerin
ng of

new invesstment units.

investm
ment units aapproved byy theBoard of Directors held on the samehe Board off Directors ofo thedate, th- 55 -

Investment Corporation approved to
entrust services concerning offering of
new investment units to underwriters(Note).
(Note) Underwriters in Japan are SMBC Nikko Securities Inc., Mitsubishi UFJ Morgan Stanley
Securities Co., Ltd., Mizuho Securities Co., Ltd. and Citigroup Global Markets Japan Inc.
Moreover, overseas underwriters are SMBC Nikko Capital Markets Limited, Citigroup Global
Markets Limited, Morgan Stanley & Co. International, plc and Mizuho International plc.
2

Other

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

- 56 -

II.

Balance Sheet(Unit: thousands of yen)
Fiscal Period ended
December 31, 2013(as of December 31, 2013)

AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Accrued revenue
Accounts receivables
Prepaid expenses
Consumption tax receivable
Advance payment
OthersAllowance for doubtful accounts※1※1

Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation※1

Buildings, net
Equipment
Accumulated depreciation※1

Equipment, net
Building improvements
Accumulated depreciation

2,680,174(218,377)

85,914(7,783)2,461,796

78,131

50,691(27,985)

38,862(17,352)
2,779(1,138)

2,330

1,640

※1

2,713,620
29,762,419(2,339,358)

711,834
31,162,188(2,623,404)

27,423,061

28,538,783

6,763,740(1,690,614)

7,151,824(1,891,879)

5,073,126

5,259,944

320,904(97,258)

321,317(109,047)

223,646

212,270※1

155,616(74,970)

177,438(85,898)

80,646

91,540※1

36,582,527

40,447,565

74,583,461

75,363,220

Equipment in trust, net※1

Building improvements in trust, net

Tools, furniture and fixtures in trust, net
Land in trust

3,735,018

21,510※1

Tools, furniture and fixtures in trust
Accumulated depreciation

4,325,286

3,848(1,518)

Buildings in trust, net

Building improvements in trust
Accumulated depreciation

759,058
2,765,504
2,574
71,193
120,941
17,1380(1,391)

22,706※1

Equipment in trust
Accumulated depreciation

1,457,257
2,729,902
10,948122,3217,419
10(2,573)※1

Building improvements, net
Land
Buildings in trust
Accumulated depreciation

Fiscal Period ended
June 30, 2014(as of June 30, 2014)

Total property, plant and equipment
Intangible assets
OthersTotal intangible assets- 57 -

137

106

137

106

(Unit: thousands of yen)
Fiscal Period ended
December 31, 2013(as of December 31, 2013)
Total investment and other assets
Guarantee deposits
Long-term prepaid expenses
OthersTotal investments and other assets
Total non-current assets
Total assets- 58 -

Fiscal Period ended
June 30, 2014(as of June 30, 2014)

10,000224,371
33,375

10,000
119,338
34,070267,746

163,40974,851,345

75,526,736

79,176,632

79,261,754

(Unit: thousands of yen)
Fiscal Period ended
December 31, 2013(as of December 31, 2013)
Liabilities
Current liabilities
Accounts payable
Short-term debts
Current portion of long-term debts
Current portion of long-term debts in trust
Accrued liabilities
Accrued expenses
Accrued income taxes
Accrued consumption taxes
Advances received
Deposits received

※1
※1
※1

Total current liabilities
Non-current liabilities
Long-term debts※1Long-term debts in trust※1
Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
SurplusCapital surplus
Unappropriated retained earnings/loss
Total surplus
Total unitholders’ equity
Total net assets※2

Total liabilities and net assets- 59 -

Fiscal Period ended
June 30, 2014(as of June 30, 2014)

174,201
203,520
105,833
5,000
229,843525
385,886
5,048

143,439
13,488,750
17,552,100
32,733
121,934520
143,637
357,52232,927

1,109,859

31,873,567

20,146,480
20,854,166
1,037,721
183,579

9,960,000
1,025,726
28,66342,221,948

11,014,390

43,331,808

42,887,957

29,134,389

29,134,389

6,264,432
446,0036,264,432
974,975

6,710,435

7,239,407

35,844,824

36,373,796

35,844,824

36,373,796

79,176,632

79,261,754

III.

Statement of Income(Unit: thousands of yen)
Fiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)
Operating revenues
Rental revenues
Gain on sales of properties※1※2

Total operating revenues
Operating expenses
Property related expenses
Asset management fees
Directors’ remuneration
Asset custodian fees
Administrative service fees
Provision of allowance for doubtful accounts
Bad debt loss
Other operating expenses※1

Total operating expenses
Operating income
Non-operating revenues
Interest revenues
Profit from finance related cost adjustment
Reversal of allowance for doubtful accounts
Miscellaneous income※3

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)

2,740,449-

2,772,419
1,003,352

2,740,449

3,775,772

1,261,221
125,000
4,800
3,986
19,0891,045
2,561
56,975

1,281,791
125,000
4,800
3,906
18,224
107,404

1,474,679

1,541,127

1,265,770

2,234,644

400
354,737
406

404
475
898

Total non-operating revenues

355,544

1,777

Non-operating expenses
Interest expenses
Finance related costs
Investment unit issuance expenses
Miscellaneous losses

672,128
579,038
15,4871,300

376,514842,043
115,438
5

Total non-operating expenses

1,267,953

1,334,001

Ordinary income

353,360

902,420

Net income before taxes

353,360

902,420

Corporate tax, etc.

605

605

Total corporate tax, etc.

605

605

Net income

352,755

901,815

Retained earnings at the beginning of the period
Unappropriated retained earnings/Loss at the end of theperiod93,24773,159446,003

974,975- 60 -

IV.

Statement of Unitholders’ Equity

Fiscal Period ended December 31, 2013 (from July 1, 2013 to December 31, 2013)(Unit: thousands of yen)
Unitholders’ Equity
Surplus
Unitholders’ Capital

Balance at the beginningof the period

26,134,396

Capital Surplus

UnappropriatedRetained
Earnings/Loss

6,264,432

449,196

Total Surplus
6,713,628

Total Unitholders’EquityTotal Net Assets

32,848,025

32,848,025

2,999,992

2,999,992

Change during the period
Issuance of new
investment units
Distributions fromsurplus2,999,992

Net income
Total change during theperiodBalance at the end of theperiod(355,949)(355,949)(355,949)(355,949)

352,755

352,755

352,755

352,755

2,999,992-(3,193)(3,193)

2,996,799

2,996,799

29,134,389

6,264,432

446,0036,710,435

35,844,824

35,844,824

Fiscal Period ended June 30, 2014 (from January 1, 2014 to June 30, 2014)(Unit: thousands of yen)
Unitholders’ Equity
Surplus
Unitholders’ Capital

Balance at the beginningof the period

29,134,389

Total Unitholders’EquityTotal Net Assets

Capital Surplus

UnappropriatedRetained
Earnings/Loss

6,264,432

446,0036,710,435

35,844,824

35,844,824(372,843)(372,843)(372,843)(372,843)

901,815

901,815

901,815

901,815

Total Surplus

Change during the period
Issuance of new
investment units
Distributions fromsurplus
Net income
Total change during theperiodBalance at the end of theperiod--528,972

528,972

528,972

528,972

29,134,389

6,264,432

974,975

7,239,407

36,373,796

36,373,796- 61 -

V.

Notes[Notes Concerning Significant Accounting Policies]

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

2. Method of calculatingallowances

3. Revenue and expense
recognition

Fiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)(a) Property, plant and equipment
The straight-line method is used.
The useful lives of major property, plantand equipment are as follows.
Buildings
40-77 years
Equipment
3-24 years
Building improvements
3-18 years
Buildings in trust
6-66 years
Equipment in trust
3-32 years
Building improvements in trust
3-55 years
Tools, furniture and fixtures in trust 2-15 years(b)Intangible assets
The straight-line method is used.
(c) Long-term prepaid expenses
The straight-line method is used.
Allowance for doubtful accounts
To reserve for losses on doubtful accounts,
allowances are provided for normal
receivables using a rate determined based on
past bad debt experiences, and specificallowances are provided for accounts with apossibility of default based on the estimatedamounts considered to be uncollectible byconsidering the collectability of accounts on
an individual basis.
Accounting treatment of property taxes andother taxes
With respect to property taxes, city planningtaxes and depreciable asset taxes, of the tax
amount assessed and determined, the amountcorresponding to the relevant fiscal period is
accounted for as property related expenses.
Of the amounts paid to the seller for
acquisitions of real estate, the amountequivalent to property taxes is capitalized aspart of the acquisition cost of the real estate
instead of being charged as expense. There
was no such amount equivalent to property
taxes that was included as part of theacquisition of real estate during this fiscal
period.

- 62 -

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)(a) Property, plant and equipment
The straight-line method is used.
The useful lives of major property, plantand equipment are as follows.
Buildings
40-77 years
Equipment
8-24 years
Building improvements
7-18 years
Buildings in trust
6-66 years
Equipment in trust
2-32 years
Building improvements in trust
4-55 years
Tools, furniture and fixtures in trust 2-15 years(b)Intangible assets
The straight-line method is used.
(c) Long-term prepaid expenses
The straight-line method is used.
Allowance for doubtful accounts
To reserve for losses on doubtful accounts,
allowances are provided for normal
receivables using a rate determined based on
past bad debt experiences, and specificallowances are provided for accounts with apossibility of default based on the estimatedamounts considered to be uncollectible byconsidering the collectability of accounts on
an individual basis.
Accounting treatment of property taxes andother taxes
With respect to property taxes, city planningtaxes and depreciable asset taxes, of the tax
amount assessed and determined, the amountcorresponding to the relevant fiscal period is
accounted for as property related expenses.
Of the amounts paid to the seller for
acquisitions of real estate, the amountequivalent to property taxes is capitalized aspart of the acquisition cost of the real estate ortrust beneficiary interests in real estate insteadof being charged as expense. The amountequivalent to property taxes that was included
as part of the acquisition of real estate during
this fiscal period is JPY 10,574 thousand.

Fiscal Period ended
Fiscal Period ended
December 31, 2013
June 30, 2014
(from July 1, 2013 to(from January 1, 2014 toItem
December 31, 2013)
June 30, 2014)
4. Other significant matters (1)Accounting treatment of trust beneficiary (1)Accounting treatment of trust beneficiary
which constitute the basis
interests in real estateinterests in real estatefor preparation of
As to trust beneficiary interests in real
As to trust beneficiary interests in real
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 from assets in generated and expenses incurred from assets intrust, are recorded in the relevant balance trust, are recorded in the relevant balance
sheets and income statement accounts.
sheets and income statement accounts.
Of such items, the following significant
Of such items, the following significant
trust assets and liabilities are shown separately trust assets and liabilities are shown separately
on the balance sheet.
on the balance sheet.
(a) Cash and deposits in trust(a) Cash and deposits in trust(b)Buildings in trust(b)Buildings in trust
Equipment in trust
Equipment in trust
Building improvements in trust
Building improvements in trust
Tools, furniture and fixtures in trust
Tools, furniture and fixtures in trust
Land in trust
Land in trust(c) Tenant leasehold and security deposits in (c) Tenant leasehold and security deposits in
trust
trust
(d)Long-term debts in trust(d)Long-term debts in trust
Current portion of long-term debts in trust
By Period(2)Accounting treatment of deferred charges(a) Investment unit issuance expenses
The full amount is recorded as expense at
the time of expenditure.

(2)Accounting treatment of deferred charges(a) Investment unit issuance expenses
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 Concerning Changes in Methods of Presentation]
Fiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)“Public listing related costs”, which was included as anindependent item under “non-operating expenses” for the
fiscal period ended June 30, 2013, has been included in“miscellaneous losses” under “non-operating expenses” forthe fiscal period ended December 31, 2013 due to theinsignificant amount. The financial statements for the first
period ended June 30, 2013 have been restated to reflect thischange in method of presentation.
As a result, the amount of 1,300 yen which was presented
as “public listing related costs” under “non-operating
expenses” has been restated to be included in “miscellaneous”
in the statement of income.

[Notes to the Balance Sheets]- 63 -

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)-

Fiscal Period ended
December 31, 2013(as of December 31, 2013)※1. Assets pledged as collateral and liabilities with collateral
Assets pledged as collateral are as follows.

Fiscal Period ended
June 30, 2014(as of June 30, 2014)※1. Assets pledged as collateral and liabilities with collateral
Assets pledged as collateral are as follows.

Cash and deposits

Cash and deposits

167,136 thousand yen

153,187 thousand yen
2,765,504 thousand yen

Cash and deposits in trust

2,729,902 thousand yen

Cash and deposits in trust

Buildings

2,461,796 thousand yen

Buildings

78,131 thousand yen

Equipment

22,706 thousand yen

Equipment

21,510 thousand yen

Building improvements

2,330 thousand yen

Building improvements

1,640 thousand yen
711,834 thousand yen

Land2,713,620 thousand yen

Land

Buildings in trust

27,423,061 thousand yen

Buildings in trust

28,538,783 thousand yen

Equipment in trust

5,073,126 thousand yen

Equipment in trust

5,259,944 thousand yen

Building improvements in trust

223,646 thousand yen

Building improvements in trust

212,270 thousand yen

Tools, furniture and fixtures in trust

80,646 thousand yen

Tools, furniture and fixtures in trust

91,540 thousand yen

Land in trust

36,582,527 thousand yen
Total

77,480,500 thousand yen

Liabilities with collateral are as follows.
Current portion of long-term debts
Long-term debts
Current portion of long-term debts
in trust
Long-term debts in trust
Total

40,447,565 thousand yen

Land in trust

78,281,912 yen

Total
Liabilities with collateral are as follows.

203,520 thousand yen
20,146,480 thousand yen
105,833 thousand yen
20,854,166 thousand yen

Short-term debts

13,488,750 thousand yen

Current portion of long-term debts 17,552,100 thousand yen
Long-term debts in trust
Total

9,960,000 thousand yen
41,000,850 thousand yen

41,310,000 thousand yen※2. Minimum net assets as required by Article 67, Paragraph 4 ※2. Minimum net assets as required by Article 67, Paragraph 4of the Act on Investment Trusts and Investmentof the Act on Investment Trusts and Investment
Corporations
Corporations
50,000 thousand yen
50,000 thousand yen- 64 -

[Notes to Statement of Income]Fiscal Period ended
Fiscal Period ended
December 31, 2013
June 30, 2014
(from July 1, 2013 to(from January 1, 2014 toDecember 31, 2013)
June 30, 2014)※1. Rental revenues and property related expenses※1. Rental revenues and property related expenses(Unit: thousands of yen)
(Unit: thousands of yen)
A. Real property rental revenues
A. Real property rental revenues
Rental revenues

Rental revenues(Rent/common area charges)(Other revenues)

2,542,588
197,861

Total rental revenues

2,740,449(Rent/common area charges)

2,555,746(Other revenues)

216,673

Total rental revenues

2,772,419

B. Real property related expenses

B. Real property related expenses

Property related expenses

Property related expenses(Maintenance costs)

435,966(Maintenance costs)

446,688(Taxes and public dues)

175,993(Taxes and public dues)

174,451(Insurance expenses)

5,085(Insurance expenses)

4,952(Other expenses)

116,754(Other expenses)

127,784(Depreciation expenses)

527,420(Depreciation expenses)

527,914

Total real property related expenses

1,261,221

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

1,281,791

Total real property related expenses
C. Operating income from rental revenues

1,479,227(A-B)

1,490,627※2. Gain on sales of properties(Unit: thousands of yen)

Bon Sejour Chitose Funabashi
Proceeds from sales of properties

832,153

Cost of sales of properties

657,193

Other expenses on sales of properties
Gain on sales of properties

6,623
168,337
Bon Sejour Yotsugi-

Proceeds from sales of properties

777,256

Cost of sales of properties

622,386

Other expenses on sales of properties
Gain on sales of properties

5,450
149,419
Bon Sejour Hino

Proceeds from sales of properties

730,459

Cost of sales of properties

551,565

Other expenses on sales of properties
Gain on sales of properties- 65 -

5,414
173,480

Fiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)Bon Sejour Musashi Shinjo
Proceeds from sales of properties

587,138

Cost of sales of properties

468,167

Other expenses on sales of properties
Gain on sales of properties

4,363
114,607
Bon Sejour Komaki

Proceeds from sales of properties

1,280,824

Cost of sales of properties

984,869

Other expenses on sales of properties

12,563Gain on sales of properties

283,391
Bon Sejour Hadano Shibusawa

Proceeds from sales of properties

735,268

Cost of sales of properties

633,486

Other expenses on sales of properties

6,243

Gain on sales of properties

95,539Bon Sejour Itami※3. Profit from finance related cost adjustment
With respect to the exit fees which were to be paid
pursuant to the Shinsei Trust Loan A and the Shinsei Trust
Loan B, 1,337,460 thousand yen was recognized as an
accrued expense in a prior period on the basis that it would be
paid on the maturity date of the borrowings. However, as aresult of the prepayment of such borrowings during the fiscal
period ended December 31, 2013, such exit fees wererefunded, which was recognized as profit from finance related
cost adjustment.

- 66 -

Proceeds from sales of properties

472,718

Cost of sales of properties

449,783

Other expenses on sales of properties

4,357

Gain on sales of properties

18,577-

[Notes to Statement of Unitholders’ Equity]
Fiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)
Number of investment units authorized and number ofinvestment units issued and outstanding

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)
Number of investment units authorized and number ofinvestment units issued and outstanding

Number of investment units authorized

10,000,000 units

Number of investment units authorized

10,000,000 units

Number of investment units issued andoutstanding

1,573,179 units

Number of investment units issued andoutstanding

1,573,179 units[Notes Related to Tax Accounting]
Fiscal Period ended
Fiscal Period ended
December 31, 2013
June 30, 2014
(from July 1, 2013 to(from January 1, 2014 toDecember 31, 2013)
June 30, 2014)
1. Significant components of deferred tax assets and liabilities 1. Significant components of deferred tax assets and liabilities(Deferred tax assets - current assets)(Deferred tax assets - current assets)
Enterprise tax payable
590 thousand yen Enterprise tax payable
517 thousand yen
Accounts receivable (merger)

211 thousand yen

Accounts receivable (merger)

197 thousand yen

Allowance for doubtful accounts

941 thousand yen

Allowance for doubtful accounts

475 thousand yen

Subtotal

1,743 thousand yen

Subtotal

1,190 thousand yen

Valuation allowance

1,743 thousand yen

Valuation allowance

1,190 thousand yen

Total- thousand yen

Total- thousand yen(Net deferred tax assets - current)- thousand yen(Net deferred tax assets - current)- thousand yen(Deferred tax assets - non-current assets)
Buildings and other (merger)
1,177,288 thousand yen(Deferred tax assets - non-current assets)
Buildings and other (merger)
812,820 thousand yen

Land (merger)

2,547,099 thousand yen

Land (merger)

2,251,597 thousand yen

Long-term accrued expenses

7,401,300 thousand yen

Long-term accrued expenses

7,746,144 thousand yen

Subtotal

11,125,688 thousand yen

Subtotal

10,810,561 thousand yen

Valuation allowance

11,125,688 thousand yen

Valuation allowance

10,810,561 thousand yen

Total- thousand yen

Total- thousand yen(Net deferred tax assets - non-current)- thousand yen(Net deferred tax assets - non-current)- thousand yen

2. Significant difference between statutory tax rate and theeffective tax rate
Statutory tax rate
36.59%

2. Significant difference between statutory tax rate and theeffective tax rate
Statutory tax rate
36.59%

Deductible cash distributions

Deductible cash distributions-%

Provision of reserve for reduction entry(36.59)%-%Provision of reserve for reduction entry(34.98)%Others0.17%

Others(1.54)%

Effective tax rate

0.17%

Effective tax rate

0.07%

3. Revision of the amounts of deferred tax assets and liabilities
due to changes in rate of any Corporation Tax, etc.
As a result of the promulgation of the “Act on Partial
Revision of the Income Tax Act, etc.” (Act No. 10 of 2014)
on March 31, 2014, the statutory tax rate used to calculatedeferred tax assets and liabilities is changed from 36.59% to-- 67 -

34.16% for temporary differences expected to be eliminatedin the fiscal period ending December 31, 2014 (23rd fiscal
period) and the fiscal period ending June 30, 2015 (24th fiscal
period). This change in tax rate has no effect on theamounts of deferred tax assets and liabilities, and deferredincome taxes.

[Notes Related to Lease Contracts]
Fiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)
Operating lease transactions(as lessee)(Unit: thousands of yen)
Due within one year
Remaining lease
payments

2,336,413

Total

2,448,662

Remaining lease
payments

Due within one year

112,249

Due after one year

2,280,288

Total

2,392,537(Unit: thousands of yen) (as lessor)
Due within one year

Remaining lease
payments

112,249

Due after one year

(as lessor)

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)
Operating lease transactions(as lessee)(Unit: thousands of yen)

669,922

Due after one year

6,914,939

Total

7,584,862

Remaining lease
payments(Unit: thousands of yen)
Due within one year

507,089

Due after one year

4,342,958

Total

4,850,048[Notes Related to Financial Instruments]
Fiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)
1. Status of financial instruments(1)Policy for financial instruments
INV principally conducts its operations throughinvestments in real estate and other specified assets to seek toensure stable income in the medium to long term.
The policy for raising funds is principally through issuing
new investment units or entering into debt.
Derivative transactions are to be entered into for the
purpose of hedging against the rate of future interest rateincreases, etc. and not for speculation. There are currently
no derivative transactions that have been entered into.
Surplus funds are managed carefully after carefully taking
into account safety, liquidity, the interest rate environment
and financing.

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)
1. Status of financial instruments(1)Policy for financial instruments
INV principally conducts its operations throughinvestments in real estate and other specified assets to seek toensure stable income in the medium to long term.
The policy for raising funds is principally through issuing
new investment units or entering into debt.
Derivative transactions are to be entered into for the
purpose of hedging against the rate of future interest rateincreases, etc. and not for speculation. There are currently
no derivative transactions that have been entered into.
Surplus funds are managed carefully after carefully taking
into account safety, liquidity, the interest rate environment
and financing.

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

- 68 -

Fiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)(3)Supplemental information regarding market value, etc. for (3)Supplemental information regarding market value, etc. forfinancial instruments
financial instruments
The fair value of financial instruments is based on quoted
The fair value of financial instruments is based on quoted
market prices if available. When quoted market prices are market prices if available. When quoted market prices are
not available, fair value is estimated using valuation not available, fair value is estimated using valuation
techniques which contain various assumptions. If other techniques which contain various assumptions. If othervaluation models or assumptions were used, the estimated valuation models or assumptions were used, the estimatedvalue may differ.
value may differ.
2. Estimated fair value of financial instruments
2. Estimated fair value of financial instruments
Book value, fair value and the difference between values
Book value, fair value and the difference between values
as of December 31, 2013 are as follows.
as of June 30, 2014 are as follows.
(Unit: thousands of yen)
(Unit: thousands of yen)Book Value

Fair Value

DifferenceBook Value

Fair Value(1) Cash and deposits

1,457,257

1,457,257-(1) Cash and deposits(2) Cash and deposits in trust

2,729,902

2,729,902-

Total assets

4,187,160

4,187,160(3) Current portion of
long-term debts

203,520

203,520

Difference

759,058

759,058-(2) Cash and deposits in trust

2,765,504

2,765,504--

Total assets

3,524,562

3,524,562--(3) Short-term debts

13,488,750

13,488,750-

17,552,100

17,552,100-(4) Long-term debts

20,146,480

20,146,480-(4) Current portion of
long-term debts(5) Current portion of
long-term debts in trust

105,833

106,409576(5) Long-term debts

-

-

-

-

-

-

(6) Long-term debts in trust

20,854,166

21,127,212

273,045(6) Current portion of
long-term debts in trust

Total liabilities

41,310,000

41,583,622

273,622(7) Long-term debts in trust

9,960,000

10,122,527

162,527

Total liabilities

41,000,850

41,163,378

162,527(Note 1) Methods to calculate fair values of financial (Note 1) Methods to calculate fair values of financial
instruments
instruments(1) Cash and deposits (2) Cash and deposits in trust(1) Cash and deposits (2) Cash and deposits in trust
Due to the short maturities, the book value of these(3) Short-term debts
instruments is deemed a reasonable approximation of the fairDue to the short maturities, the book value of thesevalue, and therefore, the book value is used as the fair value.
instruments is deemed a reasonable approximation of the fair(3) Current portion of long-term debts (4) Long-term debts
value, and therefore, the book value is used as the fair value.
(5) Current portion of long-term debts in trust (6) Long-term(4) Current portion of long-term debts (5) Long-term debts
debts in trust(6) Current portion of long-term debts in trust (7) Long-term
The fair values of long-term debt with fixed interest rates
debts in trust
are determined based on the present value of contractual cash
The fair values of long-term debt with fixed interest rates
flows discounted at current market interest rates which would are determined based on the present value of contractual cash
be applicable to new debt with the same amount.
flows discounted at current market interest rates which would
Long-term debt with floating interest rates reflecting
be applicable to new debt with the same amount.
changes in market rates within a short term period are statedLong-term debt with floating interest rates reflecting
at their book value as their book values approximate their fair changes in market rates within a short term period are statedvalues.
at their book value as their book values approximate their fairvalues.
(Note 2) Financial instruments for which fair value is (Note 2) Financial instruments for which fair value isextremely difficult to value
extremely difficult to value(Unit: thousands of yen)
(Unit: thousands of yen)
Category

Book Value

Category

Tenant leasehold and183,579
security deposits
Tenant leasehold and1,037,721
security deposits in trust
Tenant leasehold and security deposits and tenant- 69 -

Book Value

Tenant leasehold and28,663security deposits
Tenant leasehold and1,025,726
security deposits in trust
Tenant leasehold and security deposits and tenantFiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)leasehold and security deposits in trust have no observable
market price, and it is impracticable to reasonably estimate
their future cash flows because it because the repayment datesof those deposits and the timing of the lessee’s exit from theproperty are not certain. Thus, their fair value is notdisclosed.

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)leasehold and security deposits in trust have no observable
market price, and it is impracticable to reasonably estimate
their future cash flows because it because the repayment datesof those deposits and the timing of the lessee’s exit from theproperty are not certain. Thus, their fair value is notdisclosed.

(Note 3) Remaining schedule of monetary claims after the (Note 3) Remaining schedule of monetary claims after theclosing date of the fiscal period
closing date of the fiscal period(Unit: thousands of yen)
(Unit: thousands of yen)
Due within
One Year

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

Due within
One Year

Cash and deposits

1,457,257--

Cash and deposits

Cash and deposits in trust

2,729,902

-

-

Total

4,187,160--

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

759,058--

Cash and deposits in trust

2,765,504

-

-

Total

3,524,562--

Due after Three Due after Four Due after Five
to Four Years to Five Years
Years

Due after Three Due after Four Due after Five
to Four Years to Five Years
Years

Cash and deposits

-

-

-

Cash and deposits

-

-

-

Cash and deposits in trust

-

-

-

Cash and deposits in trust

-

-

-

Total

-

-

-

Total

-

-

-

(Note 4) Redemption schedule of long-term debts and otherinterest-bearing indebtedness after the closing date of
the fiscal period(Unit: thousands of yen)

(Note 4) Redemption schedule of long-term debts and otherinterest-bearing indebtedness after the closing date of
the fiscal period(Unit: thousands of yen)

Due within
One Year

Due within
One Year

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

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

Current portion of
long-term debts

203,520--

Current portion of
long-term debts

17,552,100--

Long-term debts-

203,520

19,942,960

Long-term debts

-

-

-

-

-

-

-

54,894

74,63917,552,100

54,894

74,639Current portion of
long-term debts in trust

105,833--

Current portion of
long-term debts in trust

Long-term debts in trust-

450,442516,273

Long-term debts in trust

309,353

653,962

20,459,233

Total

Total

Due after Three Due after Four Due after Five
to Four Years to Five Years
Years

Due after Three Due after Four Due after Five
to Four Years to Five Years
Years

Current portion of
long-term debts

-

-

-

Current portion of
long-term debts

-

-

-

Long-term debts

-

-

-

Long-term debts

-

-

-

-

-

-

Current portion of
long-term debts in trust

-

-

-

Current portion of
long-term debts in trust

Long-term debts in trust

3,819,427

6,196,028

9,871,993

Long-term debts in trust

2,863,679

5,217,347

1,749,439

Total

3,819,427

6,196,028

9,871,993

Total

2,863,679

5,217,347

1,749,439- 70 -

[Notes Related to Rental Properties]
Fiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)
INV owns residential and other properties principally in
the Tokyo area and major regional cities for the purpose of
earning stable rental revenues. The book value, amountchanged during the period and balance at the end of theperiod are as follows.
(Unit: thousands of yen)

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)
INV owns residential and other properties principally in
the Tokyo area and major regional cities for the purpose of
earning stable rental revenues. The book value, amountchanged during the period and balance at the end of theperiod are as follows.
(Unit: thousands of yen)Book ValueBook Value

Use

Fair Value atBalance at theBalance at the the End of the
Change during
PeriodBeginning ofEnd of thethe Period
the Period
PeriodUseFair Value atBalance at theBalance at the the End of the
Change during
PeriodBeginning ofEnd of thethe Period
the Period
PeriodResidential

56,520,161

327,357

56,192,804

57,921,000

Residential

56,192,804

318,340

55,874,464

58,865,000

Office8,567,749

17,8898,585,639

7,175,000

Office8,585,639

5,687

8,579,951

7,288,000

Retail

5,352,806

34,1495,318,657

5,420,000

Retail

5,318,657

43,0185,275,638

5,520,000

Parking

100,851

13

100,838

92,800Parking

100,838

13

100,825

105,000

Senior4,412,629

27,106

4,385,522

4,821,000

Senior4,385,522

4,385,522

―

―

Total

74,954,199

370,738

74,583,461

75,429,800

Hotel

―

5,532,341

5,532,341

5,490,000

Total

74,583,461

779,759

75,363,220

77,268,000(Note 1) Book value is the figure calculated by decreasing the (Note 1) Book value is the figure calculated by decreasing theamount of depreciation from acquisition price (including amount of depreciation from acquisition price (including
acquisition-related costs).
acquisition-related costs).
(Note 2) The major factor of the increase for the fiscal period (Note 2) The major factor of the increase for the fiscal period
ended December 31, 2013 was capital expenditures related to ended June 30, 2014 was acquisition of new hotels and capitalconstruction work.
expenditures related to construction work.
(Note 3) The major factor of the decrease was depreciation. (Note 3) The major factor of the decrease was sale of senior(Note 4) The fair value as of the end of the reporting period is housing properties and depreciation.
determined based on the appraisal value provided by Asset (Note 4) The fair value as of the end of the reporting period is
Research and Development Inc., Japan Real Estate Institute, determined based on the appraisal value provided by Asset
Morii Appraisal & Investment Consulting Inc. and Tanizawa Research and Development Inc., Japan Real Estate Institute,
Sogo Appraisal Co., Ltd.
Morii Appraisal & Investment Consulting Inc. and Tanizawa
Sogo Appraisal Co., Ltd.
For information related to profits and losses from rental
properties in the fiscal period ended June 30, 2014, please
For information related to profits and losses from rental
refer to “Notes to Statement of Income.”
properties in the fiscal period ended June 30, 2014, pleaserefer to “Notes to Statement of Income.”- 71 -

[Notes Related to Transactions with Related Parties]
Fiscal Period ended December 31, 2013 (from July 1, 2013 to December 31, 2013)
1

Interested parties of the Asset Manager

Classification

Interested party of
the Asset Manager

Name

Shinsei Trust andBanking Co., Ltd.

Rayo Godo Kaisha(Note 6)

Business or
Occupation

Financialbusiness

Investment
managementbusiness

Transaction
Ratio of Voting
AmountRightsType of Transaction(Thousands of yen)(%)
(Note 1)

Account

Repaymentof long-term debts(Note 2)
(Note 3)

Repayment oflong-term debts

-

9.53

Finance related fees
(Note 4)

9,604,000

143,196

Interest expenses

282,863

Subscription ofcapital increase

1,999,999

Balance at theEnd of the Period(Thousands ofyen) (Note 1)

Long-term
prepaid
expenses
Prepaid
expensesLong-term
accruedexpenses
Accruedexpenses
Accruedexpenses-(Note 1) Consumption taxes are not included in transaction amounts, but are included in the balanceat the end of the period.
(Note 2) For the terms and conditions, see “I. Asset Management Report - Overview of Liabilities
and Expenses - 2 Borrowing Conditions”.
(Note 3) The financing includes transactions for which Calliope, which became the parent companyof the Asset Manager on July 29, 2011, had a portion of the economic benefit.
(Note 4) Accrued expenses and long-term accrued expenses decreased due to redemption before
maturity date and this transaction is not included above.
(Note 5) Calliope holds 609,942 units (holding ratio: 38.77%) of the issued investment units of INV.
(Note 6) Rayo Godo Kaisha and the Asset Manager have no capital relationship to be disclosed. Rayo
Godo Kaisha has received an anonymous partnership investment through funds that are managed by
FIG, an affiliate of Calliope.

- 72 ---

2

Asset Custody Companies

None for the fiscal period ended December 31, 2013
Fiscal Period ended June 30, 2014 (from January 1, 2014 to June 30, 2014)
1

Interested parties of the Asset Manager

Classification

Interested party of
the Asset Manager

Transaction
Ratio of Voting
AmountRightsType of Transaction(Thousands of yen)(%)
(Note 1)Name

Business or
Occupation

Zephyrus Tokutei
Mokuteki Kaisha(Note 3).

Investment
managementbusiness-

Nishi Tokutei Mokuteki
Kaisha(Note 3)

Investment
managementbusiness-

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

Account

Balance at theEnd of the Period(Thousands ofyen) (Note 1)

2,851,000--

2,584,000--(Note 1) Consumption taxes are not included in transaction amounts, but are included in the balanceat the end of the period.
(Note 2) The terms and conditions have been determined based on the Asset Manager’s internal rules
and manual regarding transactions with the sponsor company.
(Note 3) Zephyrus Tokutei Mokuteki Kaisha and Nishi Tokutei Mokuteki Kaisha have no capital
relationship with the Asset Manager to be disclosed. The funds have received an anonymous
partnership investment through funds that are managed by FIG, an affiliate of Calliope. Accordingly,
INV treats Zephyrus Tokutei Mokuteki Kaisha and Nishi Tokutei Mokuteki Kaisha as the equivalentof interested party.
(Note 4) Calliope holds 609,942 units (holding ratio: 38.77%) of the issued investment units of INV.
(Note 5) The purchase of trust beneficiary interests pertains to following properties. The
transaction amount is the purchase price stated in the trust beneficiary purchase agreement, in which
other expenses on acquisition, property taxes, city planning taxes and consumption taxes are notincluded.
Property
NumberD1

Hotel MyStays Kanda

2,851,000

D2Hotel MyStays Asakusa

2,584,000

Total

5,435,000

Name of Property- 73 -

Purchase Price (Thousands of yen)

2

Asset Custody Companies

Classification

Asset CustodyCompany

NameBusiness or
Occupation

Ratio of
Voting Rights(%)

Sumitomo Mitsui
Banking andTrust Bank, Limited trust businessType of Transaction

Transaction
Amount(Thousands ofyen)

Repayment of short-term
debt

2,500

Loan for short-term debt

3,000,000

Account

Balance at theEnd of the Period(Thousands ofyen)

Short-term debt

2,997,500

Finance related fees

923 Prepaid expenses

5,630Interest expenses

3,138 Accrued expenses

77-(Note 1) Consumption taxes are not included in transaction amounts, but are included in the balanceat the end of the period.
(Note 2) The terms and conditions have been determined based on market conditions.
[Notes Related to Per Unit Information]
Fiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)

Net assets per unit

22,785 yen

Net assets per unit

23,121 yen

Net income per unit

259 yen

Net income per unit

573 yen

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

Note.

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

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

Fiscal Period ended
December 31, 2013
(from July 1, 2013 to
December 31, 2013)
Net income for the fiscal period (thousands ofyen)
Amounts not attributable to common unit holders(thousands of yen)
Net income attributable to common unit holders(thousands of yen)
Average number of investment units during theperiod (units)352,755
352,755
1,362,959- 74 -

Fiscal Period ended
June 30, 2014
(from January 1, 2014 toJune 30, 2014)
Net income for the fiscal period (thousands ofyen)
Amounts not attributable to common unit holders(thousands of yen)
Net income attributable to common unit holders(thousands of yen)
Average number of investment units during theperiod (units)

901,815
901,815
1,573,179

(Significant Subsequent Events)

Preceding Period (Reference)
Fiscal Period ended December 31, 2013
(from July 1 to December 31, 2013)

Fiscal Period ended June 30, 2014
(from January 1 to June 30, 2014)
1. Issuance of New Investment Units
INV resolved at its meeting of the Board of Directors
held on June 23, 2014 and July 9, 2014 respectively to
conduct the issuance of new investment units andsecondary distribution of investment units.
Thepayment for the new investment units issued through the
public offering was completed on July 16, 2014, and the
new investment units were issued in accordance with thefollowing terms and conditions. In addition, withrespect to the issuance of new investment units throughthe third-party allotment in connection with theoverallotment secondary offering, the payment wascompleted on August 13, 2014. As a result, theunitholders’ equity of INV is JPY 53,096 million and thenumber of investment units issued and outstanding of
INV increased to 2,668,686.
(i) Issuance of new investment units through public
offering
NumberofNew: 1,040,000 units
Investment Units Issued
Domestic public offering: 527,322 units
Overseas offering: 512,678 units
Issue Price (Offer Price): JPY 22,688 per unit
Total Issue Price (Total: JPY 23,595,520,000
Offer Price)Amount Paid In (Issue: JPY 21,873 per unit
Value)
Total Amount Paid In: JPY 22,747,920,000(Total Issue Value): Wednesday, July 16,
Payment Date
2014―(ii) Secondary offering of investment units outside Japan
Number of Investment
Units Offered in the : 70,151 units
Secondary Offering
Offer Price: JPY 22,688 per unit
Total Offer Value: JPY 1,591,585,888: Infinite Value
SellerInvestment Ltd.
(iii) Secondary offering of investment units(overallotment secondary offering)Number of Investment
Units Offered in the: 55,507 units
Secondary Offering
Offer Price: JPY 22,688 per unit
Total Offer Value: JPY 1,259,342,816: Thursday, July 17,
Delivery Date
2014(iv) Issuance of new investment units through third-party- 75 -

Preceding Period (Reference)
Fiscal Period ended December 31, 2013
(from July 1 to December 31, 2013)

Fiscal Period ended June 30, 2014
(from January 1 to June 30, 2014)
allotment
Number of New
Investment Units Issued
Amount Paid In (Issue
Value)
Total Amount Paid In(Total Issue Value): 55,507 units: JPY 21,873 per unit
: JPY 1,214,104,611: Wednesday, August
13, 2014: SMBC Nikko
Securities Inc.

Payment Date
Allotee

2. Borrowing of Funds
In order to fund a portion of the acquisition of the trust
beneficiary interests for the 18 hotel properties, which
INV acquired on July 17, 2014 (see “4. Acquisition ofAssets” below), and to refinance the existing syndicate
loan (New Syndicate Loan (A)) at a more lower interest
rate, INV completed the following new borrowing as ofJuly 17, 2014, in addition to the existing borrowing (New
Syndicate Loan (B)).
New Syndicate Loan (C)LenderBorrowingamountInterest rate,
etc.
Interest
payment date

: Sumitomo Mitsui Banking
Corporation,
The
Bank
of
Tokyo-Mitsubishi
UFJ,
Ltd.,
Mizuho Bank, Ltd., Citibank Japan
Ltd., Shinsei Bank, Limited,
Sumitomo Mitsui Trust Bank,
Limited and Resona Bank, Limited: JPY57,300 million: Base Rate (one-month JPY
TIBOR) + 0.80%: On (1) the last Japanese business
day of each month before theprincipal maturity date, beginningwith August 29, 2014, and (2) the
principal maturity date
: Lump-sum repayment

Principal
repayment
methodBorrowing: Secured (Note1) / with nomethodguarantee
Borrowing: July 17, 2014
date
Maturity: July 14, 2017
Date
(Note 1) The following assets are pledged as collateral
for the borrowings.
First priority pledges over the real estate trust beneficiaryinterests for 65 properties: Nisshin Palacestage
Daitabashi, Nisshin Palacestage Higashi-Nagasaki,
Growth Maison Gotanda, Growth Maison Kameido,
Emerald House, Harmonie Ochanomizu, Suncrest
Shakujii Koen, Growth Maison Shin-Yokohama, Belle
Face Ueno Okachimachi, Grand Rire Kameido, Growth- 76 -

Preceding Period (Reference)
Fiscal Period ended December 31, 2013
(from July 1 to December 31, 2013)

Fiscal Period ended June 30, 2014
(from January 1 to June 30, 2014)
Maison Ikebukuro, Growth Maison Yoga, RouteTachikawa, Shibuya Honmachi Mansion, City Heights
Kinuta, Acseeds Tower Kawaguchi Namiki, Capital
Heights Kagurazaka, College Square Machida, Belair
Meguro, Wacore Tsunashima I, Foros Nakamurabashi,
Growth Maison Kaijin, College Square Machiya, City
House Tokyo Shinbashi, Winbell Kagurazaka,
Nishiwaseda Cresent Mansion, Lexington Square
Akebonobashi, Casa Eremitaggio, Towa City Coop
Shinotsuka II, Bichsel Musashiseki, Lexel Mansion Ueno
Matsugaya, Towa City Coop Sengencho, Royal Park
Omachi, Lexington Square Haginomachi, Visconti
Kakuozan, Lexington Square Daitabashi, Lexington
Square Honjo Azumabashi, AMS TOWER Minami 6-Jo,
Spacia Ebisu, Kindai Kagakusha Building, Lexington
Plaza Nishigotanda, Cross Square NAKANO, Ohki Aoba
Building, Lexington Plaza Hachiman, AEON TOWN
Sukagawa, Hotel MyStays Kanda, Hotel MyStays
Asakusa, Hotel MyStays Kyoto-Shijo, MyStays ShinUrayasu Conference Center, Hotel MyStays Maihama,Hotel Vista Premio Dojima, Hotel MyStays
Nagoya-Sakae, Hotel MyStays Sakaisuji-Honmachi,
Hotel MyStays Yokohama, Hotel MyStays Nippori,
Hotel MyStays Fukuoka-Tenjin-Minami, Flexstay Inn
Iidabashi, Hotel MyStays Ueno Inaricho, Flexstay Inn
Shinagawa, Flexstay Inn Tokiwadai, Flexstay Inn
Sugamo, Hotel MyStays Otemae, Flexstay Inn Kiyosumi
Shirakawa, Flexstay Inn Nakanobu P1 and Flexstay Inn
Nakanobu P2. First priority mortgages over two realestate properties: Shinjuku Island and Times
Kanda-Sudacho 4th. Floating lien over nine properties:
Hotel MyStays Kanda, Hotel MyStays Kyoto-Shijo,
MyStays Shin Urayasu Conference Center, Hotel
MyStays Maihama, Hotel Vista Premio Dojima, Hotel
MyStays
Nagoya-Sakae,
Hotel
MyStays
Sakaisuji-Honmachi, Hotel MyStays Yokohama andHotel MyStays Fukuoka-Tenjin-Minami.
3. Prepayment of Borrowings
In order to complete the acquisition of the 18 hotel
properties on July 17, 2014, reduce borrowing costs
further and strengthen lender formation, IVN completed
the refinancing and the prepayment of the following
borrowings.
New Syndicate Loan (A)LenderBalance ofBorrowings
Initial Loan
Amount- 77 -: Sumitomo Mitsui Banking
Corporation,
The
Bank
of
Tokyo-Mitsubishi
UFJ,
Ltd.,
Shinsei Bank, Limited, Citibank
Japan Ltd., Shinsei Trust &Banking Co., Ltd. and Aozora
Bank, Ltd.
: JPY17,552 million: JPY20,350 million

Preceding Period (Reference)
Fiscal Period ended December 31, 2013
(from July 1 to December 31, 2013)

Fiscal Period ended June 30, 2014
(from January 1 to June 30, 2014)
Interest
Rate, Etc.
Borrowing
MethodBorrowing
Date
Maturity
Date
Prepayment
Date
Repayment
AmountBorrowingAmountOutstanding
After
Repayment: Base Rate (one-month JPY
TIBOR) + 1.50%: Borrowing based on the term loan
agreement dated as of December
17, 2013
Secured / with no guarantee: December 20, 2013
: December 20, 2016
: July 17, 2014
: JPY17,552 million: JPY0 million

New Syndicate Loan (B)LenderBalance ofBorrowings
Initial Loan
AmountInterest
Rate, Etc.
Borrowing
MethodBorrowing
Date
Maturity
Date
Prepayment
Date
Repayment
AmountBorrowingAmountOutstanding
After
Repayment: Sumitomo Mitsui Banking
Corporation,
The
Bank
of
Tokyo-Mitsubishi
UFJ,
Ltd.,
Mizuho Bank, Ltd. and Sumitomo
Mitsui Trust Bank, Limited: JPY13,448 million: JPY13,500 million: Base Rate (one-month JPY
TIBOR) + 0.80%: Borrowing based on the term loan
agreement dated as of May 21,
2014
Secured / with no guarantee: May 23, 2014
: May 22, 2015
: July 17, 2014
: JPY13,488 million: JPY0 million

4. Acquisition of Assets
INV decided to acquire the following 18 properties (totalacquisition price of JPY 39,938 million) on June 23,
2014, and completed the acquisition of all of the 18
properties on July 17, 2014.
Property number: D3 Name of property: Hotel MyStays- 78 -

Preceding Period (Reference)
Fiscal Period ended December 31, 2013
(from July 1 to December 31, 2013)

Fiscal Period ended June 30, 2014
(from January 1 to June 30, 2014)
Kyoto-Shijo
Acquisition Date
Acquisition Price(Note 1)
Location

Construction Date
Category ofAssetsSellerTotal Floor Area
Total Leasable
Area

July 17, 2014
JPY6,024 million
52, Kasaboko-cho,Higashiiru, Aburanokoji,
Shijyo-dori, Shimogyo,
Kyoto-shiJanuary 2008
Trust Beneficial Interest
Shijodori Holding Tokutei
Mokuteki Kaisha
7,241.51m2
7,241.51m2

Property number: D4 Name of property: MyStays
Shin-Urayasu Conference Center
Acquisition Date
July 17, 2014
Acquisition Price JPY4,930 million(Note 1)
Location
2-1-4, Akemi, Urayasu-shi,
ChibaConstruction Date March 2009
Categoryof Trust Beneficial Interest
AssetsSellerZephyrus Tokutei Mokuteki
KaishaTotal Floor Area
6,232.30m2
Total
Leasable 6,232.30m2
Area
Property number: D5
MaihamaAcquisition Date
Acquisition Price(Note 1)
Location
Construction Date
Categoryof
AssetsSellerTotal Floor Area
Total
Leasable
Area

Name of property: Hotel MyStays
July 17, 2014
JPY4,870 million
3-5-1,
Tekko-dori,
Urayasu-shi, Chiba
June 2005
Trust Beneficial Interest
Zephyrus Tokutei Mokuteki
Kaisha2,456.36m2
2,456.36m2

Property number: D6 Name of property: Hotel Vista
Premio Dojima
Acquisition July 17, 2014
Date
Acquisition JPY3,845 million
Price (Note1)
Location
2-4-1, Sonezakishinchi, Kita-ku,
Osaka- 79 -

Preceding Period (Reference)
Fiscal Period ended December 31, 2013
(from July 1 to December 31, 2013)

Fiscal Period ended June 30, 2014
(from January 1 to June 30, 2014)
Constructio
n DateCategory ofAssetsSellerTotal Floor
Area
Total
Leasable
Area

August 1990
Trust Beneficial Interest
Danube Tokutei Mokuteki Kaisha
9,445.32m2
9,445.32m2

Property number: D7 Name of property: Hotel MyStays
Nagoya-Sakae
Acquisition July 17, 2014
Date
Acquisition JPY2,958 million
Price (Note1)
Location
2-23-22, Higashisakura, Naka-ku,
Nagoya, Aichi
Constructio November 1979n DateCategory of Trust Beneficial Interest
AssetsSellerZephyrus Tokutei Mokuteki Kaisha
Total Floor 9,064.71m2
Area
Total
9,064.71m2
Leasable
Area
Property number: D8 Name of property: Hotel MyStays
Sakaisuji-Honmachi
Acquisition July 17, 2014
Date
Acquisition JPY2,514 million
Price (Note1)
Location
1-4-8,
Awaji-machi,
Chuo-ku,
Osaka-shi, Osaka
Constructio July 2008
n DateCategory of Trust Beneficial Interest
AssetsSellerNagahoribashi Holding Tokutei
Mokuteki Kaisha
Total Floor 4,188.83m2
Area
Total
4,188.83m2
Leasable
Area
Property number: D9 Name of property: Hotel MyStays
Yokohama
Acquisition July 17, 2014
Date
Acquisition JPY2,119 million
Price (Note- 80 -

Preceding Period (Reference)
Fiscal Period ended December 31, 2013
(from July 1 to December 31, 2013)

Fiscal Period ended June 30, 2014
(from January 1 to June 30, 2014)1)
Location
Constructio
n DateCategory ofAssetsSellerTotal Floor
Area
Total
Leasable
Area

4-81,
Sueyoshi-cho,Naka-ku,
Yokohama-shi, Kanagawa
October 1974
Trust Beneficial Interest
Zephyrus Tokutei Mokuteki Kaisha
7,379.43m2
7,379.43m2

Property number: D10 Name of property: Hotel MyStays
Nippori
Acquisition
July 17, 2014
Date
Acquisition JPY1,898 million
Price (Note1)
Location
5-43-7,
Higashi-Nippori,
Arakawa-ku, Tokyo
Constructio April 1987
n DateCategory of Trust Beneficial Interest
AssetsSellerNishi Tokutei Mokuteki Kaisha
Total Floor 1,719.29m2
Area
Total
1,719.29m2
Leasable
Area
Property number: D11 Name of property: Hotel MyStays
Fukuoka-Tenjin-Minami
Acquisition July 17, 2014
Date
Acquisition JPY1,570 million
Price (Note1)
Location
3-14-20,
Haruyoshi,
Chuo-ku,
Fukuoka-shi, Fukuoka
Constructio February 2008
n DateCategory of Trust Beneficial Interest
AssetsSellerShijodori
Holding
Tokutei
Mokuteki Kaisha
Total Floor 3,412.71m2
Area
Total
3,412.71m2
Leasable
Area
Property number: D12 Name of property: Flexstay Inn
Iidabashi
Acquisition
July 17, 2014

- 81 -

Preceding Period (Reference)
Fiscal Period ended December 31, 2013
(from July 1 to December 31, 2013)

Fiscal Period ended June 30, 2014
(from January 1 to June 30, 2014)
Date
Acquisition
Price (Note1)
Location
Constructio
n DateCategory ofAssetsSellerTotal Floor
Area
Total
Leasable
Area

JPY1,381 million
3-26,
Shin-Ogawa-cho,Shinjuku-ku, Tokyo
December 1990
Trust Beneficial Interest
Aki Tokutei Mokuteki Kaisha
2,953.38m2
2,953.38m2

Property number: D13 Name of property: Hotel MyStays
Ueno Inaricho
Acquisition July 17, 2014
Date
Acquisition JPY1,331 million
Price (Note1)
Location
1-5-7, Matsugaya, Taito-ku, Tokyo
Constructio December 1986n DateCategory of Trust Beneficial Interest
AssetsSellerNishi Tokutei Mokuteki Kaisha
Total Floor 1,150.76m2
Area
Total
1,150.76m2
Leasable
Area
Property number: D14 Name of property: Flexstay Inn
ShinagawaAcquisition July 17, 2014
Date
Acquisition JPY1,242 million
Price (Note1)
Location
1-22-19,
Kitashinagawa,Shinagawa-ku, Tokyo
Constructio October 1986n DateCategory of Trust Beneficial Interest
AssetsSellerNishi Tokutei Mokuteki Kaisha
Total Floor 1,134.52m2
Area
Total
1,134.52m2
Leasable
Area
Property number: D15 Name of property: Flexstay Inn
Tokiwadai- 82 -

Preceding Period (Reference)
Fiscal Period ended December 31, 2013
(from July 1 to December 31, 2013)

Fiscal Period ended June 30, 2014
(from January 1 to June 30, 2014)
Acquisition
Date
Acquisition
Price (Note1)
Location
Constructio
n DateCategory ofAssetsSellerTotal Floor
Area
Total
Leasable
Area

July 17, 2014
JPY1,242 million
1-52-5, Tokiwadai,Tokyo
December 1989

Itabashi-ku,

Trust Beneficial Interest
Aki Tokutei Mokuteki Kaisha
2,539.75m2
2,539.75m2

Property number: D16 Name of property: Flexstay Inn
SugamoAcquisition July 17, 2014
Date
Acquisition JPY1,192 million
Price (Note1)
Location
3-6-16,
Sugamo,Toshima-ku,
TokyoConstructio January 1992
n DateCategory of Trust Beneficial Interest
AssetsSeller
Aki Tokutei Mokuteki Kaisha
Total Floor 2,089.86m2
Area
Total
2,089.86m2
Leasable
Area
Property number: D17 Name of property: Hotel MyStays
OtemaeAcquisition July 17, 2014
Date
Acquisition JPY1,192 million
Price (Note1)
Location
1-3-2,
Tokui-cho,
Chuo-ku,
Osaka-shi, Osaka
Constructio December 1986n DateCategory of Trust Beneficial Interest
AssetsSeller
Aki Tokutei Mokuteki Kaisha
Total Floor 4,956.66m2
Area
Total
4,956.66m2
LeasableArea- 83 -

Preceding Period (Reference)
Fiscal Period ended December 31, 2013
(from July 1 to December 31, 2013)

Fiscal Period ended June 30, 2014
(from January 1 to June 30, 2014)
Property number: D18 Name of property: Flexstay Inn
Kiyosumi Shirakawa
Acquisition July 17, 2014
Date
Acquisition JPY749 million
Price (Note1)
Location
1-12-16, Tokiwa, Koto-ku, Tokyo
Constructio May 1992
n DateCategory of Trust Beneficial Interest
AssetsSeller
Aki Tokutei Mokuteki Kaisha
Total Floor 2,673.64m2
Area
Total
2,673.64m2
Leasable
Area
Property number: D19 Name of property: Flexstay Inn
Nakanobu P1Acquisition July 17, 2014
Date
Acquisition JPY589 million
Price (Note1)
Location
4-27-12, Futaba, Shinagawa-ku,
TokyoConstructio September 1986n DateCategory of Trust Beneficial Interest
AssetsSeller
Aki Tokutei Mokuteki Kaisha
Total Floor 770.56m2
Area
Total
770.56m2
Leasable
Area
Property number: D20 Name of property: Flexstay Inn
Nakanobu P2Acquisition July 17, 2014
Date
Acquisition JPY283 million
Price (Note1)
Location
4-27-8, Futaba, Shinagawa-ku,
TokyoConstructio March 1989
n DateCategory of Trust Beneficial Interest
AssetsSeller
Aki Tokutei Mokuteki Kaisha
Total Floor 319.49m2
Area
Total
319.49m2
LeasableArea- 84 -

Preceding Period (Reference)
Fiscal Period ended December 31, 2013
(from July 1 to December 31, 2013)

Fiscal Period ended June 30, 2014
(from January 1 to June 30, 2014)(Note 1) Acquisition price is based on the purchaseprice indicated in the relevant purchase agreement anddoes not include acquisition costs, property taxes, city
planning taxes and consumption taxes, etc.

- 85 -

VI.

Statement of Cash Distribution

Preceding Period (Reference)

Fiscal Period ended December

Fiscal Period ended December

31, 2014 (from January 1, 201431, 2013 (from July 1, 2013 toto June 30, 2014)

December 31, 2013)
I.

Unappropriatedretained

446,003,163 yen

974,975,488 yen

II. Distribution Amount372,843,423 yen

901,431,567 yen(Distribution per Unit)(237 yen)(573 yen)

III. Retained earnings carried

73,159,740 yen

73,543,921 yen

earnings

forwardCalculation

methoddistribution amountofIn

accordance

with

the

In

accordance

with

the

distribution policy set forth indistribution policy set forth in

Article 17, Paragraph 1 of the

Article 17, Paragraph 1 of the

Articles of Incorporation of

Articles of Incorporation of

Investment

Investment

Corporation,

the

Corporation,

thedistribution amount shall be the

distribution amount shall be theamount which does not exceed

amount which does not exceed

the amount of profits but

the amount of profits but

exceeds

exceeds

90%

of

the

90%

of

the

distributable profit as defined

distributable profit as definedin Article 67-15 of the Special

in Article 67-15 of the Special

Taxation

Taxation

MeasuresAct.

MeasuresAct.

However, in the event that any

However, in the event that any

tax losses arise, or if no profits

tax losses arise, or if no profits

have been recorded for tax

have been recorded for tax

purposes due to tax losses

purposes due to tax losses

carried forward, the distribution

carried forward, the distribution

amount may be as reasonably

amount may be as reasonably

determinedby

Investment

determinedbyCorporation.

Pursuant to thisCorporation.

Pursuant to thisInvestment

policy, Investment Corporation

policy, Investment Corporation

determined

determinedthedistribution

amount to be 372,843,423 yen,
- 86 -

thedistribution

amount to be 901,431,567 yen,

which is the sum of net income

out

of

352,755,880

of

net

income

of

yen

and

901,815,748 yen.

surplusof

Corporation did not distribute

Investment

any amounts in excess of profit,

Corporation did not distributeas set forth in Article 17,

any amounts in excess of profit,

Paragraph 4 of the Articles ofas set forth in Article 17,

Incorporation.

reversalof

20,870,811 yen.

Investment

Paragraph 4 of the Articles ofIncorporation.

Note
Accompanying English financial information, comprising Balance Sheet, Statement of Income,Statement of Unitholders’ Equity, Notes to financial statements and statement of Cash Distribution, havebeen translated from the Japanese financial statements of the Investment Corporation prepared inaccordance with the Act on Investment Trusts and Investment Corporations of Japan.
Under Article 130 of the Act on Investment Trusts and Investment Corporations of Japan, the Japanesefinancial statements for the six months ended June 30, 2014 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, Statements of Unitholders’Equity, Notes to financial statements and Statement of Cash Distribution are unaudited.
Regarding the English audited financial statements, please refer to the “Audited Financial Statements”
on the website of Invincible Investment Corporation: http://www.invincible-inv.co.jp/eng/cms/doc.html- 87 -

VII.

Statement of Cash Flow (Reference Information)(Unit：thousands of yen)Preceding Period (Reference)

Fiscal Period ended June 30, 2014

Fiscal Period ended December 31,(from January 1 to June 30, 2014)2013 (from July 1, 2013 to
December 31, 2013)
Cash flows from operating activities
Net income before taxes

353,360

902,420

Depreciation expenses

527,451

527,945

Investment unit issuance expenses

15,487

115,438

Finance related costs

579,038

842,043

Amortization of tenant leasehold and

(683)

(435)

Interest received

(400)

(404)

Profit from finance related cost

(354,737)-Interest Said

672,128

376,514

Increase (decrease) in allowance for

1,045(1,181)security deposits in trust

adjustment

doubtful accounts
Decrease(increase)inaccounts

6,458(60,244)(increase)indeposit748,197-

Decrease (increase) in consumption(7,419)7,419

accrued(24,902)

143,637

receivable
Decrease
payments

tax receivable
Increase(decrease)inconsumption tax payable
Increase(decrease)inaccounts

24,617(87,869)(decrease)inaccrued

-(1,613)(decrease)inaccrued(127,432)

18,110(decrease)inadvances

8,411(28,364)

payableIncreaseliabilities
Increase
expenses
Increase- 88 -

received
Increase(decrease)indeposits(3,553)

10,909-4,367,451

Others5,481(6,762)

Subtotal

2,422,548

7,125,015

Proceeds of interest

390

404

Payment of interest(650,982)(502,533)

Payment of corporate taxes, etc.

(606)

(609)

Cash flows from operating activities

1,771,350

6,622,276

received
Decrease in property and equipment
due to sale

Cash flows from investing Activities
Payment for acquisition of tangible(158,960)(5,618,018)

assets in trust
Repayment of tenant leasehold and-(154,916)

security deposits
Repayment of tenant leasehold and(49,761)(93,087)

security deposits in trust
Proceeds of tenant leasehold and39,531

81,527security deposits in trust
Others(694)(17,833)

Cash flows from investing activities(169,885)(5,802,328)

Proceeds from short-term debt-

13,500,000

Repayment of short-term debt-

(11,250)

Proceeds from long-term debt

20,350,000-

Repayment of long-term debt

(22,891,500)(2,797,899)

Repayment of long-term debt in trust-(11,000,000)

Finance related costs(1,618,501)(732,126)

Payment of distributions(355,323)(342,802)

Cash flows from financing activities

Proceedsfromissuanceof

2,999,992-

investment units
Payment of investment unit issuance-(98,468)

expenses
Others(16,787)-- 89 -Cash flows from financing activities(1,532,119)(1,482,546)

Increase (decrease) in cash and cash

69,344(662,597)

4,117,815

4,187,160

4,187,160

3,524,562

equivalents
Beginning balance of cash and cash
equivalents
Closing balance of cash and cash
equivalents ※1

Notes Concerning Significant Accounting Policies (Reference Information)
By Period
Item

Preceding Period (Reference)

Fiscal Period ended June 30, 2014

Fiscal Period ended December 31,(from January 1 to June 30, 2014)2013 (from July 1, 2013 to
December 31, 2013)
Cash and cash equivalents as statedCash and cash equivalents as statedCash and cash equivalents as statedin Statement of Cash Flowsin the Statement of Cash Flowsin the Statement of Cash Flows

consist of cash on hand and cash inconsist of cash on hand and cash intrust, floating deposits, deposits intrust, floating deposits, deposits intrust and short-term investments thattrust and short-term investments thatare very liquid and realizable with aare very liquid and realizable with amaturity of three months or lessmaturity of three months or lesswhen purchased and that are subject

when purchased and that are subject

to insignificant risks of changes in

to insignificant risks of changes invalue.

value.

Notes Concerning Changes in Methods of Presentation (Reference Information)
Preceding Period (Reference)

Fiscal Period ended June 30, 2014 (from January 1 to

Fiscal Period ended December 31, 2013 (from July 1,

June 30, 2014)2013 to December 31, 2013)“Public listing related costs”, which was included as an-independent item under “non-operating expenses” for the
fiscal period ended June 30, 2013, has been included in“miscellaneous losses “under “non-operating expenses”
for the fiscal period ended December 31, 2013 due to theinsignificant amount. The financial statements for the- 90 -

first period ended June 30, 2013 have been restated toreflect this change in method of presentation.

As a result, the amount of 1,300 yen which waspresented as “public listing related costs” under“non-operating expenses” has been restated to be
included in “miscellaneous” in the statement of income.

Notes to Statement of Cash Flow (Reference Information)※1.

Relationship between cash and cash equivalents in statement of cash flows and amounts inaccompanying balance sheet(unit：thousands of yen)
By Period
Item

Preceding Period (Reference)

Fiscal Period ended June 30, 2014

Fiscal Period ended December 31,(from January 1 to June 30, 2014)2013 (from July 1, 2013 to
December 31, 2013)
Cash and deposits

1,457,257

759,058

Cash and deposits in trust

2,729,902

2,765,504

Cash and cash equivalents

4,187,160

3,524,562- 91 -

■

Portofolio Data■

Portofolio Characteristics

At the end of the reporting period, the number of properties held by the Investment Corporation
totaled 73, including 63 residential properties, 7 retail and office buildings, and 2 hotels as well as
one parking lot with a total acquisition value of ¥77,988 million and a total leasable area of
154,773.28 ㎡.
(Note) The ratios below are indicated are based on the acquisition price and are rounded to one
decimal place.
Investment Ratio by Region(Note 1) Greater Tokyo Area indicates Tokyo excluding 23 Wards, Kanagawa, Chiba, and Saitama.
(Note 2) Major Regional Cities indicates “areas surrounding Tokyo” and “major cities including
ordinance designated cities and surrounding areas.
By Property Type- 92 -

By Prroperty Age(Notee) Open paarking lots aree not countedd in the propeerty age distribution sincee they lack bu
uilding
structtures.

- 93 -

■

Portfolio Overview

Property Number

Residential

A26

Name of Property

Location

Nisshin Palacestage
Suginami Ward, Tokyo
Daitabashi
Nisshin Palacestage HigashiToshima Ward, Tokyo
NagasakiLeasable Area

Rentable

Acquisition Appraisal(as of December 31, 2013)
Book Value
Investment Occupancy

(m2)

Units

Price

(JPY mn)

Value

Ratio

1,771.13

98

1,251

1,140

1,138

Rate
1.6

94.1

2,681.94

60

1,229

1,240

1,118

1.6

97.7

A28

Growth Maison Gotanda

Shinagawa Ward, Tokyo

1,051.50

48

888

931

846

1.1

100.0

A29

Growth Maison Kameido

Koto Ward, Tokyo

1,367.96

66

1,070

1,060

1,012

1.4

89.3

A30

Emerald House

Itabashi Ward, Tokyo

2,152.31

96

1,505

1,190

1,419

1.9

100.0

A31

Harmonie Ochanomizu

Bunkyo Ward, Tokyo

1,748.24

65

1,428

1,250

1,380

1.8

91.2
97.0

A27

Suncrest Shakujii-Koen

Nerima Ward, Tokyo

3,029.16

29

1,088

1,010

1,069

1.4

Growth Maison ShinYokohama
Belle Face UenoOkachimachi

Yokohama City, Kanagawa
Prefecture

1,858.44

68

1,059

1,080

994

1.4

86.9

Taito Ward, Tokyo

1,351.11

64

1,023

924

983

1.3

98.3

A35

Grand Rire Kameido

Koto Ward, Tokyo

1,562.26

72

906

918

855

1.2

100.0

A36

Growth Maison Ikebukuro

Toshima Ward, Tokyo

952.89

42

825

838

777

1.1

90.4

A37

Growth Maison Yoga

Setagaya Ward, Tokyo

1,015.34

39

795

682

764

1.0

97.3

A38

Route Tachikawa

Tachikawa City, Tokyo

1,368.57

24

676

595

653

0.9

96.6

A39

Shibuya-Honmachi Mansion Shibuya Ward, Tokyo

1,167.50

25

651

591

655

0.8

100.0

A40

City Heights Kinuta

1,235.93

19

646

457

646

0.8

100.0

A41

Acseeds Tower Kawaguchi- Kawaguchi City, Saitama
NamikiPrefecture

1,210.74

57

620

684

571

0.8

93.0

A42

Capital Heights Kagurazaka Shinjuku Ward, Tokyo

1,126.65

26

604

540

616

0.8

90.5

A43

College Square Machida

Machida City, Tokyo

1,047.75

62

589

529

570

0.8

100.0

A44

Belair Meguro

Meguro Ward, Tokyo

557.05

25

589

551

572

0.8

100.0

A45

Wacore Tsunashima I

Yokohama City, Kanagawa
Prefecture

907.46

50

572

499

547

0.7

94.1

A46

Foros Nakamurabashi

Nerima Ward, Tokyo

815.77

37

566

550

530

0.7

100.0

A47

Growth Maison Kaijin

Funabashi City, Chiba
Prefecture

2,040.27

34

557

454

531

0.7

90.0

A48

College Square Machiya

Arakawa Ward, Tokyo

871.35

43

510

500

477

0.7

100.0

A51

City House Tokyo Shinbashi Minato Ward, Tokyo

3,364.00

86

2,520

2,720

2,405

3.2

94.5

A52

Winbell Kagurazaka

Shinjuku Ward, Tokyo

4,032.70

118

3,260

3,490

3,128

4.2

98.6

Shinjuku Ward, Tokyo

4,310.77

69

1,880

2,180

1,849

2.4

92.5

Shinjuku Ward, Tokyo

1,987.88

88

1,450

1,600

1,377

1.9

93.3
97.0

A32
A33
A34

A53
A54

Nishiwaseda Cresent
MansionLexington Square
Akebonobashi

Setagaya Ward, Tokyo

A56

Casa Eremitaggio

Meguro Ward, Tokyo

1,197.19

17

1,070

996

996

1.4

A59

Towa City Coop Shinotsuka
Toshima Ward, TokyoII

1,627.13

58

866

949

831

1.1

92.8

A61

Bichsel Musashiseki

Nerima Ward, Tokyo

1,220.24

70

577

634

558

0.7

94.3

A62

Lexel Mansion Ueno
Matsugaya

Taito Ward, Tokyo

A63

Towa City Coop Sengencho

A64

Royal Park Omachi

A65

Lexington Square
Haginomachi

A66

Visconti Kakuozan

A71

Lexington Square Daitabashi Suginami Ward, Tokyo

A72

Lexington Square Honjo
Azumabashi

784.74

33

511

A73

AMS TOWER Minami 6-Jo Sapporo City, Hokkaido

4,460.56

120

1,180

A75

Spacia Ebisu

Shibuya Ward, Tokyo

7,794.91

109

7,010

A76

Neo Prominence

Kita Ward, Tokyo

3,574.70

52

1,660

A77

Invoice Shin-Kobe Residence Kobe City, Hyogo Prefecture

2,773.71

81

2,310.49
1,933.80

A78

Cosmo Court Motomachi

A79

Revest Honjin

Yokohama City, Kanagawa
Prefecture
Sendai City, Miyagi
Prefecture
Sendai City, Miyagi
Prefecture
Nagoya City, Aichi
Prefecture

Sumida Ward, Tokyo

Kobe City, Hyogo
Prefecture
Nagoya City, Aichi
Prefecture

1,969.45

29

970

1,070

899

1.2

96.3

3,426.36

154

1,110

1,250

1,046

1.4

89.1

1,929.59

51

415

508

393

0.5

90.6

1,528.58

39

330

422

307

0.4

97.4

705.75

8

255

244

240

0.3

100.0

1,430.64

43

977

1,040

906

1.3

90.9

549

468

0.7

96.9

1,120

-1,057

1.5

91.8

6,930

6,693

9.0

90.0

1,720

1,656

2.1

88.9

1,260

1,300

1,250

1.6

94.4

82

973

1,040

966

1.2

90.4

80

674

718

669

0.9

95.0

- 94 -

Residential

Nagoya City, Aichi
Prefecture

A80

Revest Matsubara

A81

Sun Terrace Minami IkebukuroToshima Ward, Tokyo
Nagoya City, Aichi
Prefecture
Nagoya City, Aichi
Prefecture
Nagoya City, Aichi
Prefecture

1,955.40

70

657

720

653

0.8

91.2

898.70

38

625

667

620

0.8

89.5

1,731.68

64

608

644

604

0.8

91.7

1,634.60

61

597

649

594

0.8

93.6

1,554.03

40

595

619

591

0.8

98.4

A82

Alba Noritake Shinmachi

A83

Revest Meieki Minami

A84

Revest Heian

A85

Vendir Hamaotsu Ekimae

Otsu City, Shiga Prefecture

2,670.66

81

581

669

576

0.7

94.2

A86

Salvo Sala

Osaka City, Osaka
Prefecutre

1,428.12

54

544

577

542

0.7

91.5

A87

Excellente Kagurazaka

Shinjuku Ward,Tokyo

701.92

33

543

569

542

0.7

97.1

1,185.50

50

525

549

522

0.7

88.1

Osaka City, Osaka
Prefecture
Kobe City, Hyogo
Prefecture

A88

Luna Court Edobori

A89

Winntage Kobe Motomachi

1,433.35

57

512

553

508

0.7

91.1

A90

Queen's Court Fukuzumi

Koto Ward, Tokyo

765.18

25

456

497

454

0.6

100.0

A91

Corp Higashinotoin

Kyoto City, Kyoto
Prefecture

1,029.05

42

446

474

444

0.6

90.3

A92

Belair Oimachi

Shinagawa Ward, Tokyo

530.60

26

412

455

411

0.5

96.1

A93

Siete Minami-Tsukaguchi

Amagasaki City, Hyogo
Prefecture

1,020.86

40

374

402

373

0.5

92.5

A94

Prime Life Sannomiya IsogamiKobe City, Hyogo
Koen
Prefecture789.12

32

373

389

371

0.5

100.0

A95

Osaka City, Osaka
HERMITAGE NANBA WEST
Prefecture992.76

21

355

382

355

0.5

92.0

A96

Century
1-bankan

ShinkawaNagoya City, Aichi
Prefecture

1,477.62

44

335

372

334

0.4

100.0

A97

West Avenue

794.80

40

331

338

328

0.4

85.0

974.81

31

310

335

310

0.4

93.9

761.18

28

297

312

295

0.4

93.4

109,584.45

3,413

58,08358,86555,874

74.5

93.8

Park

Kunitachi City, Tokyo

A98

Little River Honmachibashi

A99

Prime Life Mikage

Okasa City, Osaka
Prefecture
Kobe City, Hyogo
Prefecture

Subtotal
Office Buildings/Retail Facilities

B8

Kindai Kagakusha Building

Shinjuku Ward, Tokyo

1,451.54

13

1,301

1,010

1,234

1.7

95.0

B9

Shinjuku Island

Shinjuku Ward, Tokyo

526.43

1

715

556

712

0.9

100.0

B14

Lexington Plaza Nishigotanda Shinagawa Ward, Tokyo

6,033.58

11

4,880

4,140

4,801

6.3

100.0

B15

Cross Square NAKANO

2,145.00

45

1,060

938

1,070

1.4

64.3

2,178.41

13

816

644

761

1.0

100.0

8,419.15

18

3,280

3,330

3,184

4.2

100.0

B16

Ohki Aoba Building

B17

Lexington Plaza Hachiman

B18

AEON TOWN Sukagawa

Nakano Ward, Tokyo
Sendai City, Miyagi
Prefecture
Sendai City, Miyagi
Prefecture
Sukagawa City, Fukushima
Prefecture

Subtotal

2,320

2,190

2,091

3.0

100.0

102

14,372

12,80813,855

18.4

97.9

81.04

1

97

105

100

0.1

100.0

C1

Stop Parking Kanda-Sudacho Chiyoda Ward Tokyo

81.04

1

97

105

100

0.1

100.0

Hotels1

39,194.69

Parking
Lots

18,440.58

D1

Hotel MyStays Kanda

Chiyoda Ward, Tokyo

2,585.72

126

2,851

2,880

2,907

3.7

100.0

D2

Hotel MyStays Asakusa

Sumida Ward, Tokyo

3,327.38

160

2,584

2,610

2,625

3.3

100.0

Subtotal

5,913.10

286

5,435

5,490

5,532

7.0

100.0

Total

154,773.28

3,802

77,98877,26875,363

100.0

95.1

Subtotal(Note)
place.

Figures are rounded down to the indicated unit and percentages are rounded to one decimal- 95 -

■ Newly Acquirred 20 Hotells (1/10)(DD1) Hotel M
MyStays Kanda- 96 -

(D2) Hotel M
MyStays Asakusa- 97 -

(D3)) Hotel My
yStays Kyo
oto‐Shijo- 98 -

(DD4) MySta
ays Shin‐U
Urayasu Co
onference Center- 99 -

(DD5) Hotel M
MyStays Maihama- 100 -

(D66) Hotel Viista Premio Dojima- 101 -

(D7)) Hotel My
yStays Nag
goya‐Sakaae- 102 -

(D8) Hootel MyStaays Sakaisu
uji‐Honma
achi- 103 -

(DD9) Hotel M
MyStays Yo
okohama- 104 -

(DD10) Hotell MyStays Nippori- 105 -

(D11) Hoteel MyStay s Fukuoka
a‐Tenjin‐M
Minami- 106 -

(DD12) Flexsstay Inn Iid
dabashi- 107 -

(D13)) Hotel My
yStays Uen
no Inarichoo- 108 -

(D114) Flexstaay Inn Shinnagawa- 109 -

(DD15) Flexsttay Inn To
okiwadai- 110 -

(D16) Flexsstay Inn Su
ugamo- 111 -

(D17) Hoteel MyStayss Otemae- 112 -

(D18) Flexstay
FIn
nn Kiyosum
mi Shiraka
awa- 113 -

(D119) Flexstaay Inn Nak
kanobu P1- 114 -

(DD20) Flexstaay Inn Nak
kanobu P2
2

Weekly/Monthly are definned as Daily
y=1~6,(Notee 1) The perrcentages aree revenue bassis. Daily/W
Weekkly=7~29, Moonthly=over30 night stays basis.
(Notee 2) Total rooom sales for period divideed by aggregaate number of days per rooom for whichh eachroom was occupieed.
mber of days per room foror which eachh room(Notee 3) Total rooom sales for period divideed by the num
was aavailable duriing the periodd.
(Notee 4) Calculatted based on thet total num
mber of guest rooms.
r- 115 -

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Sumitomo Mitsui Trust Bank, Limited 4-1, Marunouchi 1-chome,

Administrator

Chiyoda-ku, Tokyo

Special Account Management<Unitholders of the former Tokyo Growth REIT Fund>

Institution

Mitsubishi UFJ Trust and Banking Corporation Limited
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo<Unitholders of the forme LCP Investment Corporation>
Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome Chiyoda-ku, Tokyo

Correspondence

Transfer Agent Department, Sumitomo Mitsui Trust Bank,
Limited8-4, Izumi 2-chome, Suginami-ku, Tokyo, 168-0063(Telephone Assistance)Toll-free Telephone Number 0120-782-031
Administrative services are available at the main and branch
offices throughout
Japan of Sumitomo Mitsui Trust Bank, Limited- 116 -