Investment
Invincible Corporation

Financial Summary
for the December 2020 Fiscal Period(from July 1, 2020 to December 31, 2020)
February 25, 2021

Name
Representative
Stock Listing
Securities CodeURL
Contact

:
:
:
:
:
:

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

Start date fordividend distribution: March 22, 2021

This English language notice is a translation of the Japanese-language notice released on February 25, 2021 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japaneselanguage notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completenessof this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between thistranslation and the Japanese original, the latter shall prevail in all respects.

1.

(Figures are rounded down to the nearest JPY million)
Financial Results for the Fiscal Period ended December 31, 2020 (from July 1, 2020 to December 31, 2020)(1)

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

Fiscal period ended
December 31, 2020
Fiscal period ended
June 30, 2020

Operating Income

Net Income

JPY million%

JPY million%

JPY million%

JPY million

%

8,340

(11.4)

1,690(13.0)

624

47.1

623

47.1

9,410

(49.4)

1,496(88.4)

424(96.4)

423(96.4)

Fiscal period ended
December 31, 2020
Fiscal period ended
June 30, 2020

Ordinary Income /Total Assets

Net Income /Unitholders’ Equity

Net Income per Unit

(2)

Ordinary Income

Ordinary Income /Operating Revenues

JPY

%

%

%

102

0.2

0.1

7.5

70

0.2

0.1

4.5

Distributions
Distribution(Excluding excess profit distribution)

Per Unit
Fiscal period ended
December 31, 2020
Fiscal period ended
June 30, 2020

Total

Excess Profit Distribution
Per Unit

Dividend Payout
Ratio

Distribution/ Net Assets

Total

JPY

JPY million

JPY

JPY million

%

%

167

1,018

-

-

163.2

0.4

69

420

-

-

99.2

0.2

(Note 1) Distribution (excluding excess profit distribution) differs from net income for the fiscal period ended December 31, 2020, since
INV will make a distribution by reversing retained earnings along with a distribution of net income.
(Note 2) Dividend Payout Ratio is calculated in accordance with the following formula and is rounded to the nearest one decimal place:
Dividend Payout Ratio = Distribution Amount (Excluding excess profit distribution) ÷ Net Income × 100
The dividend payout ratio for the fiscal period ended December 31, 2020 is 163.2% because distribution (excluding excess profit
distribution) differs from net income due to a distribution by reversing retained earnings along with a distribution of net income,as described in (Note 1).
(Note 3) Distribution / Net Assets is calculated based on the figures excluding excess profit distribution.

(3)

Financial Position
Total Assets

Fiscal period ended
December 31, 2020
Fiscal period ended
June 30, 2020
(Note)

JPY million

Net Assets / Total%
AssetsNet Assets per Unit

JPY million

Net Assets

516,490249,641

48.3

40,946516,663249,538

48.3

40,929JPY

Net Assets per Unit is calculated based on the number of investment units issued and outstanding at the end of each fiscal
period, and is rounded to the nearest yen.

2

(4)

Cash Flows
Cash Flows fromOperating
Activities

Cash Flows from
Investment
Activities

Cash Flows from
Financing
Activities

Closing Balance ofCash and
Cash Equivalents

JPY million

JPY million

JPY million

JPY million

Fiscal period ended
December 31, 2020

13,240(1,790)(1,591)

26,176

Fiscal period ended
June 30, 2020

12,931(18,898)(6,501)

16,3182.

Forecasts for the Fiscal Period ending June 30, 2021 (from January 1, 2021 to June 30, 2021)

Operating
Revenues

Fiscalperiodending June30, 2021(Note)

Operating
Income(Percentages indicate percentage change from the preceding period)
Distribution per Excess Profit
Ordinary
Unit (excluding
Distribution per
Net Income
excess profit
IncomeUnit
distribution)

JPY
million%JPY
million%JPY
million%JPY
million

%

JPY

JPY

TBD

(-)

TBD

(-)

TBD

(-)

TBD

(-)

TBD

TBD

The worldwide spread of COVID-19 has had a significant impact on hotel revenues. At this point in time, it remains difficult to predict
the spread of COVID-19 and its impact on the hotel industry and operators. Therefore, the forecast of financial results and DPU for theJune 2021 fiscal period (from January 1 to June 30, 2021) remains undetermined.

※Others(1) Changes in Accounting Policies, Accounting Estimates or Restatements(a) Changes in Accounting Policies due to Revisions to
Accounting Standards and Other Regulations

None(b) Changes in Accounting Policies due to Other Reasons

None(c) Changes in Accounting Estimates

None(d) Restatements

None(2) Number of Investment Units Issued and Outstanding(a) Number of Units Issued and Outstanding

December 31, 2020

6,096,840

June 30, 2020

6,096,840

December 31, 2020

0June 30, 20200

as of the End of the Fiscal Period (Including Treasury Units)(b) Number of Treasury Units as of the End of the Fiscal Period(Note) Please refer to “Notes Related to Per Unit Information” regarding the number of investment units which is the basis for the
calculation of net income per unit.

・ Financial Summary report is not subject to audit procedure by certified public accountants or audit corporations.
・ Special Consideration(Other Matters of Special Consideration)
The forward-looking statements contained in this financial summary report are based on the information
currently available to us and certain assumptions which we believe are reasonable. Actual operating performance
may differ significantly due to factors we cannot predict as of this date, including gains or losses from thedisposition of properties, repayment of borrowings, decreases in rents and changes in operating conditions.
Unless otherwise specified herein, amounts less than JPY 1 are rounded down, and ratios are rounded to the nearest
one decimal place.

31. Operating Conditions(1) Operating Conditionsa

Overview of the Fiscal Period Ended December 31, 2020(a)Main Trends of INV

INV was established in January 2002 in accordance with the Investment Trust and Investment Corporation Act(Act No. 198 of 1951, as amended; the “Investment Trust Act”). In May 2004, INV was listed on the Osaka
Securities Exchange (application for delisting was made in August 2007), and in August 2006 was listed on theReal Estate Investment and Trust Securities Section of the Tokyo Stock Exchange (Ticker Code: 8963).
After the absorption-type merger with LCP Investment Corporation (“LCP”) was implemented on February 1,
2010, INV issued new investment units through a third-party allotment on July 29, 2011 and refinanced its debt.
Calliope Godo Kaisha (“Calliope”), an affiliate of the Fortress Investment Group LLC (“FIG” and together with
Calliope and other affiliates of FIG, collectively the “Fortress Group”) was the main allottee, and the sponsor
changed to the Fortress Group.
FIG became a subsidiary of SoftBank Group Corp. (“SoftBank Group”), after SoftBank Group acquired FIG
effective on December 27, 2017 (Note 1). Calliope, an affiliate of FIG, who owned 100% of the issued shares ofConsonant Investment Management Co., Ltd., the asset manager to which INV entrusts the management of its
assets (the “Asset Manager”), transferred 80.0% of issued shares of the Asset Manager to Fortress CIM Holdings
L.P., a subsidiary of SoftBank Group, and 20.0% to SoftBank Group on March 29, 2018, pursuant to the basic
agreement which was entered into as of September 7, 2017. Although FIG is no longer an indirect parent
company of the Asset Manager, FIG continues to support INV as the sponsor.
Ever since the commencement of sponsorship from the Fortress Group (Note 2), INV has been focusing its efforts
on improving the profitability of its portfolio and establishing a revenue base in order to secure stable
distributions, and has strengthened the lender formation through new borrowings and the refinancing of existingbank borrowings, thereby creating a financial base for external growth. With this platform as a base, in June
2014, the Asset Manager revised the Investment Guidelines for INV, positioned hotels as a core asset classalongside residential properties with a view towards expanding investments in the hotel sector in which demandis forecasted to rise going forward, and has expanded its portfolio.
Moreover, the Asset Manager revised the Investment Guidelines as of July 17, 2018. Such revision was
intended to establish an investment policy and asset management structure regarding investments in overseas
assets, and also to change the investment policy regarding domestic hotels to focus on (i) Limited service hotels,
which feature relatively higher profit margins and potential for revenue growth backed by increasing demand
for accommodations, and (ii) Full-service and Resort hotels, which have a variety of revenue sources, including
lodging, dining and sales of goods, that are expected to achieve stable growth in overall hotel revenues.
Based on such change in investment policy, in July 2018, INV decided on the acquisition of TK (Japaneseanonymous association (tokumei kumiai)) interest in two overseas hotels, “Westin Grand Cayman Seven Mile
Beach Resort & Spa” and “Sunshine Suites Resort” (collectively, the “Cayman Hotels”) as underlying assets
for the first time ever in J-REIT history. In September 2018, INV implemented the investment in the Cayman
Hotels via a global offering of new investment units and borrowing of funds. INV intends to improve boththe profitability and stability of the portfolio through such investments, including investment in the Cayman
Hotels, which is expected to even out the effects of seasonality in INV’s portfolio.
In the Fiscal Period ended December 31, 2020 (“Reporting Period”), INV sold six residential properties on
December 18, 2020. As a result, INV's portfolio at the end of the Reporting Period comprised of 142 properties(86 hotels (Note 3) (Note 4), 54 residential properties and two retail properties) with a total acquisition price of
JPY 502,717 million (Note 5). Furthermore, INV’s hotel portfolio has the largest asset size (Note 6) of JPY 450.6
billion (86 properties, 15,597 rooms) among all J-REIT hotel portfolios including hotel-and-inn-specific type
investment corporations.
(Note 1)US Eastern Standard Time

(Note 2) As of July 2011, Calliope owned 97.35% of issued shares of the Asset Manager and the investment ratio
reached 100% in October 2013. Calliope transferred 80.0% of issued shares to Fortress CIM Holdings
4L.P., a subsidiary of SoftBank Group and 20.0% to SoftBank Group on March 29, 2018. As of the dateof this document, SoftBank Group owns 100% of issued shares of the Asset Manager directly andindirectly.
(Note 3) The preferred equity interest held by INV is counted as one property. Such preferred equity interest
issued by a special purpose company (tokutei mokuteki kaisha) refers to 178,458 units of the preferred
equity interest issued by Kingdom Special Purpose Company (the “TMK”) (equivalent to 49.0% of
the total issued and outstanding preferred equity interest), which owns the trust beneficiary interestof the Sheraton Grande Tokyo Bay Hotel as an underlying asset. The property is classified as a hotel,
based on the use of Sheraton Grande Tokyo Bay Hotel, the underlying asset of the preferred equity
interest, and INV’s investment amount of the preferred equity interest is used as the acquisition priceof the preferred equity interest, unless otherwise stated. The “underlying asset” refers to the realestate or the real estate related assets owned by a TK operator of TK interest or a TMK relating to thepreferred equity interest which INV owns, thus the real estate or the real estate related assets which
will be the revenue source of INV. Hereinafter the same shall apply.
(Note 4) From September 28, 2018 (Cayman Island local time; September 29, 2018 in Japan local time), INV
owned 100% of the TK interest in Seven Mile Resort Holdings Ltd. (the “Cayman SPC”), a Cayman
Islands special purpose company that holds leasehold interests in the Cayman Hotels and ancillary
assets as underlying assets. However, INV implemented the investment structure change (the“Structure Change” in some cases hereinafter) regarding the Cayman Hotels on May 9, 2019
(Cayman Island local time; May 10, 2019 in Japan local time) and has directly held the Leasehold
Interests, etc. of the Cayman Hotels thereafter. Both of the TK interest and the Cayman Hotels arecounted as two properties before and after the Structure Change. In addition, the “Leasehold
Interests, etc.” means leasehold interests (rights equivalent to long-term real estate leases on land andbuildings under the British Cayman laws) and furniture, fixtures, equipment, ornaments, kitchen
instrument, and other assets required for hotel operations. Hereinafter the same shall apply.
(Note 5) Due to the Structure Change, the book value of the leasehold interests of the Cayman Hotels recordedby the Cayman SPC as of May 9, 2019 (Cayman Island local time; May 10, 2019 in Japan local time),
when INV succeeded the leasehold interests of the Cayman Hotels from the Cayman SPC via
distribution in kind in connection with the termination of TK agreement, is deemed as the acquisition
price of the Cayman Hotels. The book value is converted into JPY amount via exchange rate of USD
1=JPY 110.45 based on the foreign exchange forward contracts executed on July 26, 2018 andimplemented on September 26, 2018 in connection with the investment in the TK interest by INV.
Hereinafter the same shall apply.
(Note 6) “The largest asset size … among all J-REIT hotel portfolios” refers to the total acquisition price of 86
hotels owned by INV as compared with the total acquisition price of hotels (including inns and otheraccommodation facilities) owned by listed investment corporations other than INV as of December
31, 2020.
(b)

Operational Environment and Performance

Given the enormous impact of COVID-19 on the economy as a whole, especially in the hotel sector, on
September 10 and December 11, 2020, INV entered into a Memorandum of Understanding (“MOU”) to amend
each fixed-term building lease and property management agreement ("MLPM Agreements") pertaining to therent conditions for the periods from July 1, 2020 to September 30, 2020 and from October 1, 2020 to December
31, 2020 for domestic hotels owned by INV and operated by INV's main tenant, MyStays Hotel Management
Co., Ltd. (“MHM”) and its affiliates (collectively the “MHM Group” along with MHM) (each MOU is referred
to as the “September 2020 MOU” and “December 2020 MOU”, respectively). Pursuant to the September 2020
MOU and the December 2020 MOU, we have changed the rent payment conditions of MLPM Agreements interms of the amount of fixed rent payment, the variable rent calculation method, payment method of rent andpayment date. The rent paid by the MHM Group for the three months of July through September was fixed
rent of JPY 800 million and variable rent of JPY 391 million, for a total of JPY 1,191 million, while for the threemonths of October through December was fixed rent of JPY 806 million and variable rent of JPY 652 million,
for a total of JPY 1,458 million. The rent paid by the MHM Group for the Reporting Period was fixed rent of5

JPY 1,606 million and variable rent of JPY 1,043 million, for a total of JPY 2,649 million. This is equivalent to41.0% of fixed rent for the same period under the original MLPM Agreements. As a result, NOI for the 73
hotels operated by the MHM Group for the Reporting Period was JPY 1,912 million.
For the December 2020 fiscal period, the portfolio NOI (Note 1) decreased by 75.6% or JPY 11,460 million to
JPY 3,703 million compared to the same period in the previous year (the December 2019 fiscal period). The
hotel portfolio NOI decreased by JPY 11,262 million, which represents 74.3% points of the decline in portfolio
NOI. The residential portfolio NOI (Note 2) also decreased by JPY 193 million, which represents 1.3% pointsof the decline in portfolio NOI, due to asset sales. The portfolio maintained a high average occupancy rate
(Note 3) of 99.1% for the Reporting Period.
Commentary on hotel and residential performance in the Reporting Period is as described below.
The NOI for the Reporting Period of the 75 domestic hotels (Note 4) owned by INV decreased by 83.6%
compared to the same period in the previous year (figures exclude nine domestic hotels with fixed-rent leaseagreements among the 84 domestic hotels owned by INV as of the end of the Reporting Period, including
Sheraton Grande Tokyo Bay Hotel, the underlying asset of the preferred equity interest of TMK owned by
INV). The 75 domestic hotels recorded an occupancy rate (Note 5) of 48.3% (-40.0 points YoY), ADR (Note 6)
of JPY 8,374 (-21.1% YoY), and RevPAR (Note 7) of JPY 4,046 (-56.9% YoY).
Westin Grand Cayman Seven Mile Beach Resort & Spa and Sunshine Suites Resort recorded an averageoccupancy rate of 4.5% (-67.8 points YoY), ADR of USD 173 (-47.1% YoY), and RevPAR of USD 8 (-96.7% YoY)
for the Reporting Period.
Regarding the hotel sector, domestic hotel demand significantly declined due to a sharp reduction in inboundvisitors and a shift in mindset to refrain from business trips and leisure travel. The temporary closure of the
Owen Roberts International Airport from March 23, 2020 due to the COVID-19 pandemic caused a significant
reduction in hotel demand at the two Cayman hotels. Owen Roberts International Airport has resumed
acceptance of foreign nationals on a limited basis and Sunshine Suites Resort has resumed operations from
October 2020 after being selected as one of the hotels for isolation facilities. However, Westin Grand Cayman
Seven Mile Beach Resort & Spa is expected to remain closed for the time being, except for one restaurant, as
the Cayman Islands government has not disclosed when the ban on tourists will be lifted.
Regarding the residential portfolio, the average occupancy rate (Note 3) of 60 residential properties (Note 8)
for the Reporting Period was 94.6%, a decrease of 1.7 points compared to the same period in the previous year
due to prolonged vacancy periods until a new tenant moves in, particularly in the Tokyo 23 wards and theTokyo metropolitan area, where INV has a large investment ratio. The NOI (Note 2) of the 60 residential
properties for the Reporting Period decreased by 2.3% compared to the same period in the previous year, due
to the sale of six residential properties executed on December 18, 2020. NOI for the 54 residential properties,
excluding the six properties sold, decreased by 0.8% year-over-year. COVID-19 seems to have only a minor
impact on the residential rental market, and trends for rent at city-center residential properties with small-typerooms maintained a moderate increase. Under such circumstances in the macro environment, INV continues
to focus on its rent increase program for both new leases and renewals as well as initiatives to reduce
residential leasing costs based on a detailed market analysis of each property and unit. The rent increaseprogram for the 60 residential properties (Note 8) continues to produce positive results, as rent has increased
for both new and renewal contracts of residential properties owned by INV. The average rent per tsubo permonth (Note 9) for the Reporting Period increased by 0.6% YoY to JPY 9,132, and the recovery of occupancy
rate is a top priority.
In the Reporting Period, INV realized a rent increase for 46.5% (based on the number of contracts) of the newresidential lease contracts for an average rent increase of 0.2% compared to the previous rent across all newleases (Note 10). INV achieved a rent increase for 36.8% (based on the number of contracts) of contract
renewals for an average rent increase of 1.2% compared to the previous rent across all renewal leases (Note10), while maintaining a high contract renewal rate (Note 11) of 84.1%, an increase of 0.9 points compared tothe same period in the previous year. Combined, new leases and renewal leases were signed at 0.7% higher
than the previous leases (Note 10).
The total appraisal value of 141 properties was JPY 530,860 million (1 out of the 142 properties owned by INV
at the end of the Reporting Period is excluded from the appraisal calculation: Sheraton Grande Tokyo Bay
Hotel (preferred equity interest) for which the appraisal value of such interest is not available). The portfolio
6has an unrealized gain of JPY 65,307 million (Note 12) and an unrealized gain ratio of 14.0% (Note 12). The
total appraisal value of 141 properties which were owned throughout the Reporting Period increased by 0.1%
from JPY 530,486 million at the end of the June 2020 fiscal period to JPY 530,860 million at the end of theReporting Period.
Key Performance Indicators of 75 Domestic Hotel Properties (Note 4)
December 2020 fiscal period

Year-on-year change

Occupancy Rate (Note 5)

48.3%-40.0pt

ADR (JPY) (Note 6)

8,374-21.1%

RevPAR (JPY) (Note 7)

4,046-56.9%GOP (JPY million) (Note 13)

3,344-74.0%Key Performance Indicators of Cayman Hotels
December 2020 fiscal period

Year-on-year change

Occupancy Rate (Note 5)

4.5%-67.8pt

ADR (USD) (Note 6)

173-47.1%

RevPAR (USD) (Note 7)8-96.7%GOP (USD) (Note 13)-3,775,765-

Key Performance Indicators of 60 Residential Properties (Note 8)
December 2020 fiscal period
Occupancy Rate (Note 3)
Average Rent per Tsubo per Month(JPY) (Note 9)
NOI (JPY million) (Note 2)

Year-on-year change

94.6%-1.7pt

9,132

+0.6%

1,614

-2.3%

(Note 1) “NOI” for the hotel properties is calculated in accordance with the following formula:
NOI＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses + Dividend on thepreferred equity interest (TMK dividend) + (Management Contract Revenue of the Cayman Hotels‐Management Contract Expense)(Note 2) For the comparison of NOI for the residential properties, one-off insurance-related revenues andexpenses as well as one-off custodian fee associated with a trust split are excluded. NOI of six
properties which are Nisshin Palacestage Higashi-Nagasaki, Nishiwaseda Cresent Mansion, Neo
Prominence, City Court Kitaichijo, Lexington Square Akebonobashi and Lexington Square
Daitabashi sold on December 18, 2020 is based on the data through the day before sale date, excluding
one-off custodian fee associated with property sales. Hereinafter the same shall apply.
(Note 3) “Average Occupancy Rate” and “Occupancy Rate” for the portfolio or the residential properties arecalculated by dividing the sum of total leased area by the sum of total leasable area at the end of eachmonth during the relevant period.
(Note 4) Of the 84 hotels held as of the end of the December 2020 Fiscal Period (including the Sheraton GrandeTokyo Bay Hotel, the underlying asset of the preferred equity interest of TMK owned by INV), thefollowing nine hotels with fixed-rent lease agreements are excluded: Super Hotel
Shinbashi/Karasumoriguchi, Comfort Hotel Toyama, Super Hotel Tokyo-JR Tachikawa Kitaguchi,
Super Hotel JR Ueno-iriyaguchi, Comfort Hotel Kurosaki, Comfort Hotel Maebashi, Comfort Hotel
Tsubame-Sanjo, Comfort Hotel Kitami and Takamatsu Tokyu REI Hotel. In addition, the figures forthe properties acquired after July 2019 are calculated on the assumption INV had acquired those
properties on July 1, 2019, using the actual figures provided by the sellers of such properties for theperiod before the acquisition. Hereinafter the same shall apply.
(Note 5) “Occupancy rate” for the hotel properties is calculated in accordance with the following formula:7

Occupancy rate = total number of occupied rooms during a certain period ÷ total number of rooms
available during the same period (number of rooms x number of days)
Hereinafter the same shall apply.
(Note 6) “ADR” means average daily rate, and is calculated by dividing total room sales (excluding service
fees) for a certain period by the total number of days per room for which each room was occupied
during the same period. Hereinafter the same shall apply.
(Note 7) “RevPAR” means revenues per available room per day, and is calculated by dividing total room sales
for a certain period by total number of rooms available (number of rooms x number of days) during
the same period, and is the same as the figure obtained by multiplying ADR by occupancy rates.
Hereinafter the same shall apply.
(Note 8) Based on the 60 residential properties owned as of the beginning of July 2020. Of the 60 properties,
six properties which are Nisshin Palacestage Higashi-Nagasaki, Nishiwaseda Cresent Mansion, Neo
Prominence, City Court Kitaichijo, Lexington Square Akebonobashi and Lexington Square
Daitabashi were sold on December 18, 2020. Therefore, for the six properties sold, July 1, 2020
through December 17, 2020 is deemed as the operating period for the December 2020 fiscal period,
and the leased area and the leasable area as of December 17, 2020 are deemed as them as of the endof December 2020 to calculate each number. Hereinafter the same shall apply.
(Note 9) “Average Rent per Tsubo per Month” is calculated by dividing the total rental revenue (includingcommon area charges) for each month by the sum of total leased area (tsubo) at the end of each month
during the relevant period.
(Note 10) Increase or decrease in the sum of monthly rents on new or renewal contracts, or the total of both,compared with the sum of previous rents.
(Note 11) Renewal rate is calculated by the number of renewed contracts during the relevant period divided
by the number of contracts due up for renewal during the relevant period(Note 12) The unrealized gain is calculated using the following formula: the appraisal value as of the end of theReporting Period - book value as of the end of the Reporting Period.
The unrealized gain ratio is calculated using the following formula: the unrealized gain ÷ book value
as of the end of the Reporting Period.
(Note 13) “GOP” means the gross operating profit, and is the amount remaining after deducting costs of hotel
operations (the personnel, utility and advertising expenses and other expenses) and the management
services fee to operators (if any) from the hotel’s revenues. Moreover, GOP for the Sheraton GrandeTokyo Bay Hotel has been multiplied by 49%, or INV’s ownership ratio of the preferred equity
interest. Hereinafter the same shall apply.

(c)

Overview of Fund Raising
As a result of the measures described below, INV’s interest-bearing debt outstanding balance was JPY
262,588 million and the Interest-Bearing Debt ratio (Note 1) and LTV (appraisal value basis) (Note 2)
were 50.8% and 47.6% respectively, as of the end of the Reporting Period, with an average interest rate
(Note 3) of 0.53%.
(Note 1) Interest-Bearing Debt ratio uses the calculation formula below:
Interest-Bearing Debt ratio = total outstanding interest-bearing debt (excluding short-term
consumption tax loan) / total assets x 100(Note 2) LTV (appraisal value basis) uses the calculation formula below:
LTV = total outstanding interest-bearing debt (excluding short-term consumption tax loan)/ total appraisal value (*) x 100(*) Since appraisal value for Sheraton Grande Tokyo Bay Hotel (preferred equity interest) is notavailable, the acquisition price of the preferred equity interest (JPY 17,845 million) is
deemed as appraisal value of Sheraton Grande Tokyo Bay Hotel (preferred equity interest).
For appraisal value of the Cayman Hotels, USD is converted into JPY amount via the8forward exchange rate of USD 1=JPY 110.45 based on the foreign exchange forward contract
entered into on July 26, 2018 and executed on September 26, 2018.
(Note 3) The average interest rate (annual rate) is calculated by the weighted average based on theoutstanding balance of borrowings and rounded to two decimal places.
(i)

Borrowing of Funds

INV borrowed New Syndicate Loan (R) on July 16, 2020 (total amount borrowed: JPY 28,979 million; interest
rate: variable interest rate of 1-month JPY TIBOR plus 0.25000% for duration of one year), which was arranged
by Mizuho Bank, Ltd. in order to repay New Syndicate Loan (E) in the amount of JPY 28,979 million due on July16, 2020.
On July 20, 2020, INV borrowed Term Loan (N) (total amount borrowed: JPY 600 million; interest rate: variableinterest rate of 1-month JPY TIBOR plus 0.25000% for duration of two years), which was arranged by The Tokyo
Star Bank, Limited and Term Loan (O) (total amount borrowed: JPY 1,000 million; interest rate: variable interest
rate of 1-month JPY TIBOR plus 0.25000% for duration of one year), which was arranged by Development Bankof Japan, Inc. in order to repay one of the tranches of Term Loan (E) in the amount of JPY 1,600 million due on
July 20, 2020.
Furthermore, INV borrowed Term Loan (P) on September 14, 2020 (total amount borrowed: JPY 3,000 million;interest rate: variable interest rate of 1-month JPY TIBOR plus 0.25000% for duration of one year), which wasarranged by Sumitomo Mitsui Banking Corporation in order to repay Term Loan (F) in the amount of JPY 3,000
million due on September 14, 2020.
In addition, on October 13, 2020, INV borrowed New Syndicate Loan (S) (total amount borrowed: JPY 1,539.5
million; interest rate: variable interest rate of 1-month JPY TIBOR plus 0.25000% for duration of one year) , which
was arranged by Mizuho Bank, Ltd. and Term Loan (Q) (total amount borrowed: JPY 328.5 million; interest rate:variable interest rate of 1-month JPY TIBOR plus 0.25000% for duration of one year), which was arranged by
Sumitomo Mitsui Trust Bank, Limited in order to repay one of the tranches of New Syndicate Loan (H) in theamount of JPY 1,868 million due on October 13, 2020.
(ii)

Prepayment of Loan

INV’s short-term consumption tax loan (Note 1) in the New Syndicate Loan (P) (in the amount of JPY 880
million) was prepaid on October 30, 2020 from the consumption tax refund concerning asset acquisitions on
January 6, 2020 and cash on hand.
(Note 1) Short-term consumption tax loan is a loan which is to be repaid before the maturity date from a refundof consumption taxes and regional consumption taxes on an acquisition of properties.

(d)

Overview of Sale of Assets

INV completed the sales of trust beneficiary interests in six residential assets as follows on December 18, 2020.

Property
NumberA27

A53

Property
Name

Acquisition
Price(JPY million)

Nisshin
Palacestage
HigashiNagasaki

1,229

Nishiwaseda
Cresent
Mansion

1,880

Sale PriceBook Value(JPY million)(JPY million)(Note 2)
(Note 1)
(Note 3)Gain on Sale
(JPY million)(Note 2)
(Note 4)

Transferee

1,509

Undisclosed(Note 5)

1,036
7,869
1,882

9

Property
Name

Acquisition
Price(JPY million)

A76

Neo
Prominence

1,660

1,585

1,782

1,678

1,450

1,280

A100

City Court
Kitaichijo

A54

Lexington
SquareAkebonobashi

A71

Lexington
SquareDaitabashi
Total(Note 1)
(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(e)

Sale PriceBook Value(JPY million)(JPY million)(Note 2)
(Note 1)
(Note 3)

Property
Number

977

820

8,978

8,284

Gain on Sale
(JPY million)(Note 2)
(Note 4)

3,270

1,092

11,1392,602

Transferee-

As of December 18, 2020.
The sale is a transaction under two purchase and sale agreements with different transferees, inwhich the six properties of the sold assets are divided into groups of four properties (A27, A53,
A76 and A100) and two properties (A54 and A71). The sale price and gain on sale show the total
amount of each of the abovementioned four properties and two properties. The sale prices ofindividual properties are not disclosed as the transferees’ consent has not been obtained fordisclosure. Accordingly, the gain on sales of individual properties are not disclosed, either.
Sale prices show the total sale prices set forth in the purchase and sale agreements for the trust
beneficiary interests of each of the four properties and two properties, and do not include
adjustments for property taxes or city planning taxes, or national or local consumption taxes.
Gain on sale is calculated by deducting the book value and the transfer related cost for each of
the four properties and two properties.
The names of the transferees are not disclosed, as the transferees’ consent has not been obtainedfor disclosure.
The trust beneficiary interest of Nisshin Palacestage Higashi-Nagasaki was integrated in a single
account with other trust accounts when INV procured funds through debt financing backed bytrust assets in July 2011. Therefore, for the purpose of selling the trust beneficiary interests ofthe property by itself, INV has implemented the procedures for the trust split effective on
November 17, 2020 and recorded certain expenses. For details on the debt financing backed bytrust assets and the integration of trust accounts, please refer to the press release “Noticeconcerning Fund Procurement through Debt Financing Backed by Trust Assets and Repaymentof Borrowings and Change in Trustee of Trust Assets” dated July 15, 2011.
Amounts are rounded down to the nearest million yen.

Overview of Results of Operations and Distributions

As a result of the operations mentioned above, operating revenues for the Reporting Period decreased by JPY
1,069 million from the previous period (-11.4%) to JPY 8,340 million, net income increased by JPY 199 million(47.1%) to JPY 623 million and unappropriated retained earnings including the retained earnings carriedforward from the preceding fiscal period (JPY 12,747 million) reached JPY 13,371 million.
INV decided that distribution per unit (excluding excess profit distribution) is JPY 167, which is the net income
per unit (JPY 102) plus the reversal of retained earnings (JPY 65 per unit).

10bOutlook for the Fiscal Period Ending June 30, 2021

From the next fiscal period onward, the Japanese economy is expected to begin a gradual recovery from thesevere situation caused by COVID-19 once the nationwide vaccination process gets underway. However,
the third wave of COVID-19 infections caused a suspension in the program, the government issuance ofanother state of emergency and the suspension of inbound travel by foreigners. Similar trends can be seen
overseas and harsh conditions are expected to continue, with a risk that the overall economy will deteriorate
causing a further rise in the unemployment rate. Therefore, it is necessary to closely monitor the impact of
COVID-19 infections in Japan and overseas, variables in the financial and capital markets, and other factors.
The worldwide spread of COVID-19 has had a significant impact on hotel revenues. At this point in time,
it remains difficult to predict the spread of COVID-19 and its impact on the hotel industry and operators.
Therefore, the forecast of financial results for the June 2021 fiscal period remains undetermined.

(a)Future operational policy and issues to be addressed

Since July 2011, INV has enhanced unitholder value by significantly increasing DPU and financial stability
with the Fortress Group as its sponsor. Fortress Group became a member of SoftBank Group in December
2017 and SoftBank Group owns 100% of issued shares of the Asset Manager directly and indirectly as ofMarch 29, 2018. In addition to continued access to Fortress’ global real estate expertise, INV will seek toleverage the resources that are expected to become available through SoftBank Group. SoftBank Group has
market-leading expertise in technology fields such as digital marketing for both mobile and desktop, online
payment systems, search engine optimization, AI and robotics. INV believes that deployment of technology
into INV’s real estate assets, especially its hotels, will enhance the ongoing initiatives to improve its digitalmarketing, minimize labor costs and increase customer engagement. For example, INV plans to pursue
opportunities to better manage online research, bookings and payments, improve the process in setting hotel
rates and manage overbooking through the use of sophisticated AI algorithms, and reduce labor costs while
enhancing customer service through the use of robotics.
In addition to pursuing synergies with SoftBank Group, INV will pay attention to an asset management with
an emphasis on customer safety and security in situations where accommodation demand has declined
drastically due to the impact of COVID-19, and focus on reviewing the operational strategy to restore
revenues from hotels. Going forward, INV will continue to implement various strategies for further growthand financial stability, including the following measures.
Asset recycling: property acquisitions using the proceeds from salesInternal growth at hotels through reducing costs, stimulating existing demand and creating new
demand by collaborating with hotel operators

Further internal growth at residential properties

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

External growth strategy
New Property Acquisitions
As its basic strategy, INV had moved forward with the acquisition of new properties focusing on hotels,
where continued growth in portfolio revenues would be anticipated and residential properties, especiallywhere rental growth could be achieved, to build a portfolio with a good balance between growth andstability. However, for the time being, it is necessary to carefully consider the acquisition of hotel
properties, which have been greatly affected by the sluggish demand for accommodation due to COVID19, while looking for the possibility of acquiring at an attractive price.
In regard to hotels, INV will take into consideration demands of business and leisure customers in nearby
areas, and leasing contract types when making investment decisions, with the aim of acquiring properties
where growth and stability of GOP and rental revenue are forecasted to increase.
In regard to residential properties, INV will analyze occupancy rates, rental market trends, the presence11

of competing properties among other factors, and consider acquiring properties that have mainly smalltype rooms with strong competitiveness in large cities, in which it believes it can achieve increases in rent.
Property Sales
INV considers the possibility of portfolio optimization upon consideration of the portfolio sector
composition, geographic distribution and competitiveness of each property as appropriate in the sluggish
accommodation demand due to the impact of COVID-19.
(ii)

Strategy for internal growth(Hotels)
Of the 84 domestic hotels (Note 1) owned by INV as of the end of the Reporting Period, 75 hotels use avariable rent scheme. In the variable rent scheme, in principle, INV receives all of gross operating profit(GOP) after deducting payment of management fees for the hotel operator as rents. For 73 hotels of the
75 hotels, MHM and subsidiaries of MHM have implemented sophisticated revenue management
initiatives seeking to maximize revenue through effectively taking in the accommodation demand. As aresult, INV can directly enjoy the hotel revenue upside through this variable rent scheme.
In response to the significant reduction in hotel demand, the MHM Group is taking steps to reduce hotel
operating expenses by reviewing its operational strategy. Specific measures include temporary hotel
closures and the suspension of non-essential capital expenditures as well as taking government subsidies,cutting payments to service providers such as cleaning vendors, significantly reducing marketing
expenses, utilities and other items under the COVID-19 environment. The MHM Group is vigorously
working to stimulate demand from existing domestic customers by following up on cancelled or
postponed functions and providing corporate customers with various options including new lineup of
meeting options highlighting strict measures to reduce the spread of COVID-19. In addition, the MHM
Group is focusing on creating new demand, including the provision of day-use telework environments toprovide individuals and corporates with a comfortable telework space as well as accommodation demandassociated with the 14-day voluntary quarantine period after returning to Japan.
For hotels, renovation of rooms and replacement of fixtures and fittings are indispensable to maintain andincrease revenues and operate stably in a planned manner while considering the hotel profit situation,
where demand has dropped significantly as described above.
(Residential properties and others)
INV will continue to strengthen its collaborative ties with property managers and brokers to further boost
occupancy rates and earning capabilities of its properties. With respect to INV’s residential properties,
INV will focus on increasing the occupancy rates and rents for both new lease contracts and lease renewals
for all of its properties as well as formulating net leasing cost reduction policies in order to continue
maximizing profits.
Further, the implementation of appropriate maintenance and repair plans is of the utmost importance inmaintaining and enhancing the competitiveness and market value of the properties as well as ensuringhigh tenant satisfaction. Therefore, INV will continue to monitor current strategic plans with flexible
implementation as it sees fit.
(Note 1) Including Sheraton Grande Tokyo Bay Hotel (the preferred equity interest).

(iii) Financial strategy
The credit rating outlook from Japan Credit Rating Agency, Ltd. (JCR) has been changed as described on
the following page as of December 14, 2020. As it is difficult to predict when the outbreak of COVID-19
will come to an end, for the time being INV will implement initiatives that restrict an increase in interest
payments on refinancing of existing borrowings and ensure refinancing. Over the medium to long term,
INV will implement financial strategies such as reduction of borrowing costs, extension of averageinterest-bearing debt repayment periods, diversification of loan maturity dates and financing measures.
12

(iv)

Credit Rating Object

Before Change

After Change

Long-term Issuer Rating

A+

A+(Outlook)(Stable)(Negative)

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

(v)

Initiatives for Sustainability
INV and CIM recognize the importance of environmental, social, and governance (ESG) considerations
in real estate investment management from the viewpoint of sustainability such as economic and social
development and contributing to global environmental conservation, and regard improvement ofsustainability as an important management issue. INV and CIM believe that the incorporation of ESG
considerations into the real estate investment management business, which is our primary business, isessential to maximizing unitholder value over the medium to long term and contributes to maximizing
INV's investment returns.
Thus, INV and CIM have established a “Sustainability Policy” to set basic policies for sustainability andput them into practice in our daily operations. Under this policy, CIM has formulated the “Energy
Conservation Policy”, which stipulates efforts to improve energy consumption management and energy
efficiency in the real estate investment management business, and the “Greenhouse Gas Emissions
Reduction Policy”, which stipulates an operation policy to reduce carbon emissions. In addition, inorder to promote initiatives for ESG throughout the value chain of INV's real estate portfolio, CIM has
established the Sustainable Procurement Policy to set guidelines in the real estate investment
management business, pertaining to the content of construction ordered, the criteria for selecting goods
to be procured in connection with construction, and the criteria for selecting and evaluating business
partners (suppliers). Furthermore, CIM has conducted sustainability-focused training for all officers
and employees, including temporary staff, at least once a year. The purpose of this training is to help
officers and employees acquire knowledge and raise awareness of sustainability considerations in linewith business practices.
As the COVID-19 pandemic continues, APA Hotel Yokohama-Kannai has been used as anaccommodation and medical facility for people with mild COVID-19 cases since August 2020 in terms ofinitiatives for society.
INV will continue to recognize its social responsibility to the environment and local communities as a JREIT with hotels and residences as our core assets, and will proactively implement ESG-friendly
investment management and sustainability initiatives that take advantage of asset characteristics andcarry out social contribution activities.

13

c

Significant Subsequent Events

Not applicable.

Reference information is stated below.

(Reference Information)(a)Prepayment of Loans
The Prepayment was implemented on January 29, 2021 to all lenders on a pro-rata basis by using JPY 10,000
million, a majority of the sales proceeds of the six residential properties sold on December 18, 2020.

Status of Loans Subject to Prepayment after the Prepayment (Note 1)(As of January 29, 2021)

Loan/Lender(s)New Syndicate
Loan (F)<5-Year Loan>
Mizuho Bank,Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui
Trust Bank,
LimitedShinsei Bank,
LimitedThe Hiroshima
Bank, Ltd.
The Kagawa
Bank, Ltd.
The Bank ofFukuoka, Ltd.
The Shizuoka
Bank, Ltd.
Resona Bank,
LimitedThe Nomura
Trust andBanking Co., Ltd.
New Syndicate
Loan (G)<4-Year Loan>
Mizuho Bank,
Ltd.
Resona Bank,
LimitedThe Bank ofFukuoka, Ltd.
The Nomura
Trust andBanking Co., Ltd.
The Shizuoka
Bank, Ltd.
The Towa Bank,Ltd.
The Gunma Bank,
Ltd.

Borrowing
Date

March 31,2016

BalancebeforeRepayment(JPY million)

Repayment
Amount(JPY million)

Balanceafter
Repayment(JPY million)

10,433

4,037

6,396

InterestRate(annual)0.68818%(Note 2)

Maturity

Borrowing

Date

MethodMar. 30,
2021

Unsecured/nonguaranteed

March 14,
2017

3,250

2,323

14

927

0.58818%(Note 2)Mar. 14,2021

New Syndicate
Loan (K)<3-Year Loan>
Mizuho Bank,Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui
Trust Bank,
LimitedShinsei Bank,
LimitedResona Bank,
LimitedDevelopment
Bank of Japan,
Inc.
The Bank ofFukuoka, Ltd.
The Shizuoka
Bank, Ltd.
The Nomura
Trust andBanking Co., Ltd.
The Senshu Ikeda
Bank, LtdNew Syndicate
Loan (K)<5-Year Loan>
Aozora Bank, Ltd
The NishiNippon City
Bank, Ltd.
The Tochigi Bank,Ltd.
New Syndicate
Loan (K)<10-Year Loan>
Kiraboshi Bank,Ltd.
New Syndicate
Loan (L)<4.5-Year Loan>
Mizuho Bank,
Ltd.
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui
Trust Bank,
Limited
Citibank,
N.A.,Tokyo
BranchDevelopment
Bank of Japan,
Inc.
AEON Bank, Ltd.
Aozora Bank, Ltd
The Nomura

March 29,
2019

7,934

12

7,922

March 29,
2019

2,500

99

2,401

0.59400%(Note 3)Mar. 29,2024

March 29,
2019

1,000

39

961

0.88818%(Note 2)Mar. 29,
2029

July 19,
2019

4,943

138

4,805

15

0.36100%(Note 3)0.52473%(Note 3)Mar. 29,2022

Jan. 16,2024

Trust andBanking Co., Ltd.

New Syndicate
Loan (N)<4.4-Year Loan>
Mizuho Bank,Ltd.
The Daisan Bank,Ltd.
New Syndicate
Loan (P)<5-Year Loan>
Sumitomo Mitsui
Trust Bank,
LimitedMomiji Bank,Ltd.
The Kiyo BankNew Syndicate
Loan (Q)<5-Year Loan>
Mizuho Bank,
Ltd.
Resona Bank,
LimitedDevelopment
Bank of Japan,
Inc.
The Bank ofFukuoka, Ltd.
The Nomura
Trust andBanking Co., Ltd.
The Shizuoka
Bank, Ltd.
The Yamaguchi
Bank, Ltd.
New Syndicate
Loan (Q)<5-Year Loan>
Mizuho Bank,Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui
Trust Bank,
LimitedShinsei Bank,
LimitedResona Bank,
LimitedThe Nomura
Trust andBanking Co., Ltd.
Aozora Bank, Ltd
The Shizuoka
Bank, Ltd.
The Kagawa
Bank, Ltd.
The Yamaguchi

August 28,
2019

3,682

138

3,544

0.46219%(Note 3)Jan. 16,2024

January 6,
2020

4,550

59

4,491

0.64291%(Note 3)Jan. 6,2025

March 16,
2020

3,250

39

3,211

0.48700%(Note 3)

March 30,
2020

6,960

39

6,921

0.58818%(Note 2)

16

Mar. 16,2025

Mar. 16,2025

Bank, Ltd.
The Chukyo
Bank, Ltd.
New Syndicate
Loan (R)<1-Year Loan>
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
Mizuho Bank,Ltd.
Shinsei Bank,
Limited
Citibank,
N.A.,Tokyo
BranchSumitomo Mitsui
Trust Bank,
LimitedResona Bank,
LimitedTerm Loan (C)<5-Year Loan>
Citibank,
N.A.,Tokyo
BranchTerm Loan (D)<5-Year Loan>
AEON Bank, Ltd.
Term Loan (E)<5-Year Loan>
The Tokyo Star
Bank, Limited
Term Loan (G)<4.5-Year Loan>
Mizuho Bank,Ltd.
The Dai-ichi Life
Insurance
Company,
LimitedTerm Loan (O)<1-Year Loan>
Development
Bank of Japan,
Inc.
Total

(Note 1)
(Note 2)
(Note 3)(b)

July 16,2020

28,9791,550

27,429June 15,
2016

1,000

651

349

0.68818%(Note 2)

Jun. 15,2021

June 30,
2016

3,000

267

2,733

0.68818%(Note 2)

Jun. 30,
2021

July 20,
2016

1,700

118

1,582

0.68818%(Note 2)

Jul. 20,2021

May 29,
2017

7,321

157

7,164

0.63818%(Note 2)

Nov. 29,
2021

July 20,
2020

1,000

334

666

0.33818%(Note 2)

Jul. 20,2021

91,502

10,00081,502

0.33818%(Note 2)

Jul. 16,
2021

Of the loans that are subject to prepayment, only the tranches that are eligible for prepayment arelisted.
The interest rate applicable as of January 20, 2021 is shown.
Figure is shown as virtually fixed interest rate because interest rate is fixed by interest rate swap
agreement while it is a borrowing with floating interest rate.

Debt Financing
INV decided to borrow Term Loan (R) and Term Loan (S) on January 20, 2021 in order to repay Term
Loan (B) in the amount of JPY 4,250 million due on January 22, 2021.
17

(i)

Term Loan (R)LenderSumitomo Mitsui Banking
Corporation

Borrowing
Date

Outstanding
Interest Rate
Balance(annual rate)(JPY million)

Maturity
Date

Borrowing
MethodFloating
interest rates(Note 1)January 22,2022

Unsecured/
non guarantee

Outstanding
Interest Rate
Balance(annual rate)(JPY million)

Maturity
Date

Borrowing
MethodFloating
interest rates(Note 1)January 22,2022

Unsecured/
non guarantee

January 22,
2021

3,400

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

Term Loan (S)LenderBorrowing
Date

MUFG Bank, Ltd.

January 22,
2021

850

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

Operational Outlook

The worldwide spread of COVID-19 has had a significant impact on hotel revenues. At this point in time, itremains difficult to predict the spread of COVID-19 and its impact on the hotel industry and operators.
Therefore, the forecast of financial results and DPU for the June 2021 fiscal period (from January 1 to June 30,2021) remains undetermined.
June 2021
Fiscal Period(Anticipated)(2)

Operating Revenues

TBD

Operating Income

TBD

Ordinary Income

TBD

Net Income

TBD

Total Distribution Amount(Including excess profit distribution)

TBD

Net Income per Unit

TBD

Distribution per Unit
(Excluding excess profit distribution)

TBD

Excess Profit Distribution per Unit

TBD

Distribution per Unit
(Including excess profit distribution)

TBD

Investment Risk

Disclosure is omitted because there have been no material changes in the “Investment Risk” section of the latest
securities report (filed on September 25, 2020).
(3) Material Events related to the Going Concern Assumption
As of the end of the Fiscal Period ended December 31, 2020, considering the overall outlook for business
operations for the foreseeable future, including the steady refinancing during the Fiscal Period ended December
31, 2020, the capability of payment for most of interest on interest-bearing debts and operating costs by rent
income from residential properties and retail facilities, and the level of cash on hand, INV has determined that
INV is not in the situation that falls under material events (events or circumstances that may cause material doubt18

on the assumption that an investment corporation will continue to operate in the future and other events that
may have a material impact on the management of an investment corporation) to be described in “(3) Material
Events related to the Going Concern Assumption”.

192. Financial Statements(1)

Balance Sheet(Unit: JPY thousand)Fiscal period ended
June 30, 2020(as of June 30, 2020)

AssetsCurrent assets:
Cash and bank deposits
Cash and bank deposits in trust
Rental receivables
Deposits paid
Prepaid expenses
Income taxes receivable
Consumption taxes receivable
Other
Total current assets
Non-current assets:
Property and equipment
Buildings
Accumulated depreciation
Buildings, net
Buildings and accompanying facilities
Accumulated depreciation
Buildings and accompanying facilities, net
Structures, at cost
Accumulated depreciation
Structures, net
Tools, furniture and fixtures, at cost
Accumulated depreciation
Tools, furniture and fixtures, net
Construction in progress
Buildings in trust, at cost
Accumulated depreciation
Buildings in trust, net
Buildings and accompanying facilities in trust, at cost
Accumulated depreciation
Buildings and accompanying facilities in trust, net
Structures in trust, at cost
Accumulated depreciation
Structures in trust, net
Tools, furniture and fixtures in trust, at cost
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property and equipment, net
Intangible assets
Leasehold rights
Leasehold rights in trust
Total intangible assets
Investments and other assets
Investment securities
Guarantee deposits
Long-term prepaid expenses
Derivatives assets
Other
20

Fiscal period ended
December 31, 2020(as of December 31, 2020)

10,190,672
6,127,902
304,863262,507582,415
129,613
831,675
18,429,649

21,210,252
6,295,192
1,717,908
356,534
708,338
16
6,536
30,294,779

19,392,579(494,780)
18,897,798
5,292,840(342,143)
4,950,697
1,458
(19)
1,439

19,406,379(713,241)
18,693,138
5,293,194(494,825)
4,798,368
1,458
(52)
1,406

1,160,530(117,632)
1,042,897
486,479
167,743,709(17,281,345)
150,462,363
33,693,125(9,275,639)
24,417,485
250,163(102,281)
147,8822,766,458(954,147)
1,812,311
250,271,308
129,129452,619,792

1,183,738(175,331)
1,008,406
588,930
164,029,805(18,754,443)
145,275,361
33,102,139(9,866,713)
23,235,425
233,505(98,339)
135,165
2,727,329(1,094,873)
1,632,456
245,560,970
440,929,629

10,637,811
14,614,328
25,252,140

10,637,811
14,575,091
25,212,903

17,856,387
1,362,721
898,626
152,275
22,667

17,856,387
1,362,721
681,990
66,417
22,667

(Unit: JPY thousand)Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Total deferred assets
Total assets

21

Fiscal period ended
June 30, 2020(as of June 30, 2020)
20,292,677
498,164,611

Fiscal period ended
December 31, 2020(as of December 31, 2020)
19,990,184
486,132,717

69,157
69,157
516,663,418

62,85362,853
516,490,350

(Unit: JPY thousand)Fiscal period ended
June 30, 2020(as of June 30, 2020)

Fiscal period ended
December 31, 2020(as of December 31, 2020)

Liabilities
Current liabilities:
Accounts payable

142,330

846,058

880,000
57,380,000

34,847,000
55,601,000

301,280
269,81424,701
344,243605-

605
578,858

Advances received
Deposits received

1,000,217
31,889580,016
11,143

Total current liabilities

60,006,137

92,833,627

Short-term loans payable
Current portion of long-term loans payable
Accounts payable-otherAccrued expenses
Income taxes payable
Consumption taxes payableNon-current liabilities:
Investment corporation bonds

8,200,000

8,200,000

197,008,000
1,749,862

163,940,000
1,672,037

Derivatives liabilities
Asset retirement obligations

128,466
32,756

170,488
32,977

Total non-current liabilities

207,119,086

174,015,504

267,125,223

266,849,131

Unitholders’ equity:
Unitholders’ capital

235,701,512

235,701,512

Surplus:Capital surplus

6,264,432

6,264,432(6,130)(6,130)

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

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

734,294734,294

Retained earnings

13,168,294

13,371,340

Total surplus

13,902,588

14,105,635

249,604,100

249,807,147(65,906)(165,929)(65,906)(165,929)

249,538,194

249,641,218

516,663,418

516,490,350

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

Total liabilities
Net assets

Deduction of capital surplus
Allowance for temporary differences adjustment

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

22

(2)

Statement of Income and Retained Earnings(Unit: JPY thousand)Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)

Operating revenue
Rental revenue―real estate

5,838,836*1Management contract revenue
Gain on sale of real estate properties

890,4422,046,294*2*3

Dividend income
Total operating revenue

Fiscal period ended
December 31, 2020
(from July 1, 2020 to
December 31, 2020)
5,738,249*1

2,602,343*3634,651-

9,410,225

8,340,593

Operating expenses
Property related expenses
Management contract expenses

6,801,584*1*2

Asset management fees
Directors’ compensation

535,279
300,000
4,800
26,231

Asset custody fees
Administrative service fees

*1
*2

5,044,533
983,288
300,000
4,800
25,68467,74947,259198,092

223,692

7,913,247

6,649,749

1,496,977

1,690,843

114
-

107
12,878

7,712
47,743

1,498
81,626

1,613

3,272

57,18399,382

Interest expenses
Foreign exchange losses

702,917
31,675

654,685-

Interest expenses on investment corporation bonds
Amortization of investment corporation bond issuance costs

25,911
5,928

28,2306,303

Loan-related costs
Other

362,534670

472,665
4,007

1,129,639

1,165,892

424,522624,333

Subsidy income

73,119-Total extraordinary income

73,119-

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

Total non-operating expenses
Ordinary income
Extraordinary income

Extraordinary losses
Loss on reduction entry of non-current assets

73,119-Total extraordinary losses

73,119-

Income before income taxes

424,522624,333

605

605

Income taxes
Total income taxes

605

605

423,917623,728

Retained earnings (deficit) brought forward

12,744,377

12,747,612

Unappropriated retained earnings

13,168,294

13,371,340

Net income

23

(3)

Statement of Changes in Net Assets

Fiscal period ended June 30, 2020 (from January 1, 2020 to June 30, 2020)(Unit: JPY thousand)Unitholders’ equity
SurplusCapital surplus
Unitholders’capitalDeduction of capital surplus
Capital surplus

Balance at the
beginning of theperiodChanges during theperiodDistributions fromsurplus

Allowance fortemporarydifferences
adjustment

Other
deduction ofcapital surplus

Total
deduction ofcapital surplus

Capital surplus(net)

235,701,512

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

734,294

－

－

－

－

－

－

235,701,512

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

734,294

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

Valuation and translation
adjustments

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

Total
surplusTotal
unitholders’equityDeferred
gains or losses
on hedges

Totalvaluation andtranslation
adjustments

33,52533,525Total
net assets

23,261,426

23,995,720

259,697,232

259,730,758(10,517,049)(10,517,049)(10,517,049)(10,517,049)

423,917423,917423,917423,917(99,432)(99,432)(99,432)(10,093,131)(10,093,131)(10,093,131)(99,432)(99,432)(10,192,564)

13,168,294

13,902,588

249,604,100(65,906)(65,906)

249,538,194

24

Fiscal period ended December 31, 2020 (from July 1, 2020 to December 31, 2020)(Unit: JPY thousand)Unitholders’ equity
SurplusCapital surplus
Unitholders’capitalDeduction of capital surplus
Capital surplus

Balance at the
beginning of theperiodChanges during theperiodDistributions fromsurplus

Allowance fortemporarydifferences
adjustment

Other
deduction ofcapital surplus

Total
deduction ofcapital surplus

Capital surplus(net)

235,701,512

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

734,294

－

－

－

－

－

－

235,701,512

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

734,294

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

Valuation and translation
adjustments

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

Total
surplusTotal
unitholders’equityDeferred
gains or losses
on hedges

Totalvaluation andtranslation
adjustments(65,906)(65,906)

Total
net assets

13,168,294

13,902,588

249,604,100

249,538,194(420,681)(420,681)(420,681)(420,681)

623,728

623,728

623,728

623,728(100,022)(100,022)(100,022)

203,046

203,046

203,046(100,022)(100,022)

103,024

13,371,340

14,105,635

249,807,147(165,929)(165,929)

249,641,218

25

(4) Statement of Cash Distribution(Unit: JPY)I

Unappropriated retained
earnings

II

Distributions

Fiscal period ended June 30, 2020
(from January 1, 2020 to June 30, 2020)

Fiscal period ended December 31, 2020
(from July 1, 2020 to December 31, 2020

13,168,294,104

13,371,340,907

420,681,960

1,018,172,280

(69)

(167)

12,747,612,144

12,353,168,627(Distribution per unit)
III

Retained earnings (deficit)
carried forward

Calculation method of distribution
amountIn accordance with the distribution policy

In accordance with the distribution policy

set forth in Article 17, Paragraph 1 of theset forth in Article 17, Paragraph 1 of the

Articles of Incorporation of INV, theArticles of Incorporation of INV, thedistribution amount shall be the amount

distribution amount shall be the amountwhich does not exceed the amount of

which does not exceed the amount of

profits but exceeds 90% of the distributableprofits but exceeds 90% of the distributableprofit as defined in Article 67-15 of the

profit as defined in Article 67-15 of theSpecial Taxation Measures Act. However,Special Taxation Measures Act. However,in the event that any tax losses arise, or if noin the event that any tax losses arise, or if no

profits have been recorded for tax purposes

profits have been recorded for tax purposesdue to tax losses carried forward, thedue to tax losses carried forward, thedistribution amount may be as reasonably

distribution amount may be as reasonably

determined by INV. Pursuant to thisdetermined by INV. Pursuant to thispolicy, INV determined the distribution

policy, INV determined the distribution

amount to be JPY 420,681,960 out of net

amount to be JPY 1,018,172,280 out of net

income of JPY 423,917,103. Moreover, INV

income of JPY 623,728,763 and a part ofdoes not make excess profit distribution set

retained earnings of JPY 394,443,517.

forth in Article 17, Paragraph 4 of theMoreover, INV does not make excess profit

Articles of Incorporation.

distribution set forth in Article 17,
Paragraph 4 of the Articles of Incorporation.

26

(5)

Statement of Cash Flows(Unit: JPY thousand)Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Loss on reduction entry of non-current assets
Amortization of investment corporation bond issuance costs
Loan-related costs
Interest income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) of derivatives
Decrease (increase) in rental receivables
Decrease (Increase) in deposits paid
Decrease (increase) in receivable income taxes
Decrease (increase) in consumption taxes receivable
Increase (decrease) in accounts payable
Increase (decrease) in consumption taxes payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Increase (decrease) in deposits received
Decrease in property and equipment in trust due to sale
Others, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payment into time deposits
Purchases of property and equipment
Purchases of property and equipment in trust
Purchases of leasehold rights in trust
Repayments of tenant leasehold and security deposits in trust
Proceeds from tenant leasehold and security deposits in trust
Payment of tenant leasehold and security deposits
Other, net
Net cash used in investing activities
Cash flows from financing activities
Increase in short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment corporation bonds
Borrowing related expenses
Payment of distributions of earnings
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

27

Fiscal period ended
December 31, 2020
(from July 1, 2020 to
December 31, 2020)

424,522
3,999,589
73,1195,928
362,534(114)
728,828
9,864(47,743)2,798,340
219,998
7,942
1,594,835(13,390)(187,039)
163,143(1,411)
546,581(20,238)
2,269,720
726,442
13,661,453
114(729,698)(605)
12,931,264

624,333
3,992,787
6,303
472,665(107)
682,915(30)(81,626)(1,413,044)(94,026)
129,597
831,675
640,046
578,858(256,749)
68,632(420,200)(20,746)
8,284,271(104,384)
13,921,171
107(680,307)(605)
13,240,366(458,135)(16,523,212)(1,387,263)(56,966)
42,113(559,000)
43,852(18,898,611)(1,328,500)(139,812)(358,986)(99,182)
26,461
109,484(1,790,534)

880,000(2,686,000)
19,583,000(14,683,000)
1,184,469(265,553)(10,514,410)(6,501,494)
13(12,468,828)
28,787,403
16,318,574

34,847,000(880,000)
600,000(35,447,000)(287,367)(424,124)(1,591,491)
30
9,858,370
16,318,574
26,176,945

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

Notes Concerning Significant Accounting Policies
1. Evaluation standards and evaluation method of assets(a) Other securitiesThose with no fair value
Cost method through moving-average method is used.
(b) Claims generated and debt incurred through derivative transactions
Market value method is used.
2. Method of depreciation of non-current assets(a) Property and equipment (including assets in trust)The straight-line method is used.
The useful lives of major property and equipment are as follows.
Buildings
16-50 years
Buildings and accompanying facilities
5-29 years
Structures
20 years
Tools, furniture and fixtures
3-18 years
Buildings in trust
7-67 years
Buildings and accompanying facilities in trust 2-33 years
Structures in trust
10-55 years
Tools, furniture and fixtures in trust
2-20 years(b) Intangible assets
For fixed-term land lease for business purposes in Japan, the straight-line method based on the lease period
is used.
(c) Long-term prepaid expenses
The straight-line method is used.
3. Accounting treatment of deferred assets
Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the straight-line method over a period up
to redemption of the investment corporation bonds.
4. Method of calculating allowances
Allowance for doubtful accounts
To reserve for losses on doubtful accounts, allowances are provided for normal receivables using a rate
determined based on past bad debt experiences, and specific allowances are provided for accounts with apossibility of default based on the estimated amounts considered to be uncollectible by considering thecollectability of accounts on an individual basis.
5. Conversion of assets and liabilities in foreign currency into Japanese yen
Receivables and payables denominated in foreign currencies are translated into yen at the spot exchange rate
at the end of the fiscal period date, and differences arising from the translation are treated as a profit or loss.

28

6. Revenue and expense recognition
Accounting treatment of property taxes and other taxes
With respect to property taxes, city planning taxes and depreciable asset taxes, of the tax amount assessedand determined, the amount corresponding to the relevant fiscal period is accounted for as property related
expenses.
Of the amounts paid to the seller for acquisitions of real estate, the amount equivalent to property taxes iscapitalized as part of the acquisition cost of the real estate instead of being charged as expense. The amountequivalent to property taxes that was included as part of the acquisition cost of real estate during the fiscal
period ended December 31, 2020 is zero.
7. Method of hedge accounting(a) Method of hedge accounting
Deferred hedge accounting is used.
(b) Hedging instrument and hedged item
Hedging instrument: interest rate swap
Hedged item: interest on borrowings(c) Hedge policy
INV enters into derivative transactions for the purpose of hedging against the risks set forth in INV’s
Articles of Incorporation in accordance with its risk management policy.
(d) Method of evaluating hedge effectivenessHedge effectiveness is evaluated by comparing the cumulative amount of changes in cash flows of thehedging instrument and the cumulative amount of changes in cash flows of the hedged item and verifying
the difference in the amounts of change of both the hedged item and the hedging instrument.
8. Cash and cash equivalents as stated in Statement of Cash Flows
Cash and cash equivalents as stated in the Statement of Cash Flows consist of cash on hand and cash intrust, floating deposits, deposits in trust and short-term investments that are very liquid and realizable witha maturity of three months or less when purchased and that are not subject to significant risks of changes
in value.
9. Other significant matters which constitute the basis for preparation of financial statements(i) Accounting treatment of trust beneficiary interests in real estate
As to trust beneficiary interests in real estate, all accounts of assets and liabilities within assets in trust, as
well as all income generated and expenses incurred from assets in trust, are recorded in the relevant balance
sheets and income statement accounts. Of such items, the following significant trust assets and liabilities
are shown separately on the balance sheet.
(a) Cash and bank deposits in trust(b) Buildings in trust
Buildings and accompanying facilities in trust
Structures in trust
Tools, furniture and fixtures in trust
Land in trust
Construction in progress in trust(c) Leasehold rights in trust(d) Tenant leasehold and security deposits in trust29

(ii) Accounting treatment of consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
(8)Notes to the Financial Statements(Notes to the Balance Sheet)*1. Minimum net assets as required by Article 67, Paragraph 4 of the Act on Investment Trusts and Investment
Corporations(Unit: JPY thousand)Fiscal period ended
Fiscal period ended
June 30, 2020
December 31, 2020(as of June 30, 2020)(as of December 31, 2020)
50,00050,000*2. Allowance for temporary differences adjustment
Fiscal period ended June 30, 2020 (from January 1, 2020 to June 30, 2020)
1. Reasons, related assets and amounts(Unit: JPY thousand)
Balance atthe end of
previous
periodAllowance
set aside
duringperiodBalance atthe end ofcurrent
periodReversalduringperiodRelatedassets, etc.

ReasonInitialamountLeaseholdrights intrust

Depreciationof leasehold
rights(131,332)(6,130)--(6,130)(131,332)(6,130)--(6,130)Total
2. Method of reversal(1) Leasehold rights in trust
The corresponding amount is scheduled to be reversed upon sale, etc. of the relevant property.
Fiscal period ended December 31, 2020 (from July 1, 2020 to December 31, 2020)
1. Reasons, related assets and amounts(Unit: JPY thousand)
Balance atthe end of
previous
periodAllowance
set aside
duringperiod(131,332)(6,130)--(6,130)(131,332)(6,130)--(6,130)Relatedassets, etc.

ReasonInitialamountLeaseholdrights intrust

Sale of asset
withleaseholdrights in trust

Total

Balance atthe end ofcurrent
periodReversalduringperiod

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

30

*3. Reduction entry amount of property and equipment acquired with governmental subsidies, etc.
(Unit: JPY thousand)Fiscal period ended

Fiscal period ended

June 30, 2020(as of June 30, 2020)

December 31, 2020(as of December 31, 2020)

Building and accompanying
facilities in trust

73,119-(Notes to Statement of Income and Retained Earnings)*1. Real estate rental revenues and expenses(Unit: JPY thousand)Fiscal period ended
December 31, 2020
(from July 1, 2020 to
December 31, 2020)

Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)
A. Real estate rental revenues
Rental revenue-real estate
Rent/common area charges (Note)

5,604,840

5,530,201

233,996

208,047

5,838,836

5,738,249

2,452,700

548,085

Taxes and public dues

598,839

779,062

Non-life insurance expenses

19,721

19,7193,578,589

3,564,224

Other revenues
Total

B.

Real estate rental expenses

Property related expenses
Maintenance costs

Depreciation expenses

151,732

133,441

Total

Other expenses

6,801,584

5,044,533

C.

(962,747)

693,715

1,246,746

1,105,021

Real estate rental income (A-B)(Note) Of which, revenue from variable hotel rents*2. Management contract income(Unit: JPY thousand)Fiscal period ended
December 31, 2020
(from July 1, 2020 to
December 31, 2020)

Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)
A. Hotel operating revenue

2,912,073

323,764

B.

Hotel operating expenses

2,021,630

774,406

C.

Management contract revenue (A-B)

890,442-

D. Management contract expenses
Management contract losses (A-B) (Note)-

450,641

4,096-

Non-life insurance expenses

109,853

101,221

Depreciation expenses

420,999

428,563

329

2,862

Management fee

Other expenses
Total
E.

Management contract income (C-D)
31

535,279

983,288355,162(983,288)

(Note) If hotel operating expenses exceed hotel operating revenues, excess amount is recorded as management
contract losses.
*3. Gain on sales of properties
Fiscal period ended June 30, 2020 (from January 1, 2020 to June 30, 2020)(Unit: JPY thousand)City House Tokyo Shinbashi
Proceeds from sale of property

4,474,757

Cost of sale of property

2,269,720

Other expenses on sale of property

158,741

Gain on sale of property

2,046,294

Fiscal period ended December 31, 2020 (from July 1, 2020 to December 31, 2020)(Unit: JPY thousand)Nisshin Palacestage HigashiNagasaki, Nishiwaseda Cresent Lexington Square Akebonobashi
Mansion, Neo Prominence and and Lexington Square Daitabashi
City Court Kitaichijo
Proceeds from sales of properties

7,870,163

3,270,294

Cost of sales of properties

6,183,306

2,100,964

176,967

76,876

1,509,889

1,092,453

Other expenses on sales of properties
Gain on sales of properties(Note) The sale price of individual properties are not disclosed as the transferees’ consent has not been obtained fordisclosure.
(Notes to Statement of Changes in Net Assets)
Number of issuable investment units authorized and number of investment units issued and outstanding
Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)
Number of issuable investment units
Number of investment units issued andoutstanding

Fiscal period ended
December 31, 2020
(from July 1, 2020 to
December 31, 2020)

10,000,000 units

10,000,000 units

6,096,840 units

6,096,840 units(Notes to Statement of Cash Flows)*1. Relationship between cash and cash equivalents in statement of cash flows and amounts in accompanying
balance sheet is as follows:
Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)
10,190,672(Unit: JPY thousand)Fiscal period ended
December 31, 2020
(from July 1, 2020 to
December 31, 2020)
21,210,252

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

6,127,902

6,295,192-(1,328,500)

Cash and cash equivalents

16,318,574

26,176,945

Cash and bank deposits

32

(Notes Related to Lease Transactions)Operating lease transactions (as lessee)
Unexpired lease fees
Fiscal period ended
June 30, 2020(as of June 30, 2020)(Unit: JPY thousand)Fiscal period ended
December 31, 2020(as of December 31, 2020)

Due within one year

315,287

317,915

Due after one year

8,822,415

8,769,532

Total

9,137,702

9,087,447

Operating lease transactions (as lessor)
Unexpired lease fees
Fiscal period ended
June 30, 2020(as of June 30, 2020)(Unit: JPY thousand)Fiscal period ended
December 31, 2020(as of December 31, 2020)

Due within one year

13,074,353

12,885,947

Due after one year

76,516,655

69,716,320

Total

89,591,008

82,602,268(Notes Related to Financial Instruments)
1.

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

33

2.

Estimated fair value of financial instruments

Fiscal period ended June 30, 2020 (as of June 30, 2020)
Book value, fair value and the difference between values are as follows.
(Unit: JPY thousand)Book Value

Fair Value

Difference(1) Cash and bank deposits

10,190,672

10,190,672-(2) Cash and bank deposits in trust

6,127,902

6,127,902-

Total assets

16,318,574

16,318,574-(3) Short-term loans payable(880,000)(880,000)-(4) Current portion of long-term loans
payable(57,380,000)(57,380,000)-(5) Investment corporation bonds(8,200,000)(7,351,740)

848,260(6) Long-term loans payable(197,008,000)(197,008,000)-

Total liabilities(263,468,000)(262,619,740)

848,260

23,80823,808-(7) Derivatives

Fiscal period ended December 31, 2020 (as of December 31, 2020)
Book value, fair value and the difference between values are as follows.
(Unit: JPY thousand)Book Value

Fair Value

Difference(1) Cash and bank deposits

21,210,252

21,210,252-(2) Cash and bank deposits in trust

6,295,192

6,295,192-

Total assets

27,505,445

27,505,445-(3) Short-term loans payable(34,847,000)(34,847,000)-(4) Current portion of long-term loans
payable(55,601,000)(55,601,000)-(5) Investment corporation bonds(8,200,000)(7,467,240)

732,760(6) Long-term loans payable(163,940,000)(163,940,000)-

Total liabilities(262,588,000)(261,855,240)

732,760(104,071)(104,071)-(7) Derivatives(Note 1) Items recorded in the Liabilities Section are shown in parenthesis.
(Note 2) Receivables and payables arising from derivative transactions are recorded in net amounts, and if thetotal net amount is a negative amount, such amount is shown in parenthesis.

34

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

(Note 2) Financial instruments for which fair value is extremely difficult to value(Unit: JPY thousand)Fiscal period ended
Fiscal period ended
June 30, 2020
December 31, 2020(as of December 31, 2020)(as of June 30, 2020)
Tenant leasehold and security deposits in trust

1,749,862

1,672,037

Investment securities

17,856,387

17,856,387

Tenant leasehold and security deposits in trust have no observable market price, and it is impracticable toreasonably estimate their future cash flows because the repayment dates of those deposits and the timing of
the lessee’s exit from the property are not certain. Thus, their fair value is not disclosed.
Investment securities (preferred equity interest) have no observable market price, and it is impracticable toassess its fair value. Thus, its fair value is not disclosed.
(Note 3) Remaining schedule of monetary claims after the closing date of the fiscal period
Fiscal period ended June 30, 2020 (as of June 30, 2020)

Cash and bank deposits

Due after
Due within Due after one Due after two
three to four
one yearto two years to three years
years
10,190,672-(Unit: JPY thousand)Due after
Due after
four to five
five years
years
-

-

Cash and bank deposits intrust

6,127,902

-

-

-

-

-

Total

16,318,574

-

-

-

-

-

Fiscal period ended December 31, 2020 (as of December 31, 2020)
Due after
Due within Due after one Due after two
three to four
one yearto two years to three years
years(Unit: JPY thousand)Due after
Due after
four to five
five years
years

Cash and bank deposits

21,210,252

-

-

-

-

-

Cash and bank deposits intrust

6,295,192

-

-

-

-

-

Total

27,505,445

-

-

-

-

-

35

(Note 4) Repayment schedule of investment corporation bonds, long-term loans payable and other interestbearing debts after the closing date of the fiscal period
Fiscal period ended June 30, 2020 (as of June 30, 2020)(Unit: JPY thousand)Due after
Due within Due after one Due after two
Due after four Due after
three to four
one yearto two years to three years
to five years five years
years
Short-term loans payable
Current portion of longterm loans payable
Investment corporation
bonds

880,000

-

-

-

-

-

57,380,000

-

-

-

-

-

-

-

1,000,000

2,000,000

1,000,000

4,200,000-

53,602,000

44,207,000

44,964,000

40,798,000

13,437,000

58,260,000

53,602,000

45,207,000

46,964,000

41,798,000

17,637,000

Long-term loans payable
Total

Fiscal period ended December 31, 2020 (as of December 31, 2020)(Unit: JPY thousand)Due after
Due within Due after one Due after two
Due after four Due after
three to four
one yearto two years to three years
to five years five years
years
Short-term loans payable
Current portion of longterm loans payable
Investment corporation
bonds

34,847,000

-

-

-

-

-

55,601,000

-

-

-

-

-

-

-

3,000,000

1,000,000-

4,200,000-

48,679,000

42,405,000

32,920,000

38,936,000

1,000,000

90,448,000

48,679,000

45,405,000

33,920,000

38,936,000

5,200,000

Long-term loans payable
Total(Notes Related to Investment Securities)

Fiscal period ended June 30, 2020 (from January 1, 2020 to June 30, 2020)
Other securities
Preferred equity interest (JPY 17,856,387 thousand in the balance sheet) has no observable market price, and it isimpracticable to assess its fair value.

Thus, its fair value is not disclosed.

Fiscal period ended December 31, 2020 (from July 1, 2020 to December 31, 2020)
Other securities
Preferred equity interest (JPY 17,856,387 thousand in the balance sheet) has no observable market price, and it isimpracticable to assess its fair value.

Thus, their fair values are not disclosed.

36

(Notes Related to Derivative Transactions)1.

Derivative transactions to which hedge accounting is not applied
Fiscal period ended June 30, 2020 (as of June 30, 2020)
About derivative transactions for which hedge accounting is not applied, the contract amount, amountequivalent to the principal provided in the contract, etc. as of the settlement of accounts are as follows.
(Unit: JPY thousand)Classification

OTC transaction

Derivativetransaction type, etc.

Contract amount, etc.
Amount due
after one year

Currency option
transaction, short
USD/Call

3,271,290

1,890,460(Option fees)(- 79,014)(- 46,376)

3,271,290

1,890,460(109,770)(70,605)

Currency option
transaction, long
USD/Put(Option fees)

Fair value(Note 1)

Valuation
gains/losses(- 48,852)(30,162)(138,567)(28,797)(Note 1) Estimation method for fair value
Currency option
Indicates fair values of option fees, etc. presented by the correspondent financial
institutions.
Fiscal period ended December 31, 2020 (as of December 31, 2020)
About derivative transactions for which hedge accounting is not applied, the contract amount, amountequivalent to the principal provided in the contract, etc. as of the settlement of accounts are as follows.
(Unit: JPY thousand)Classification

OTC transaction

Derivativetransaction type, etc.

Contract amount, etc.
Amount due
after one year

Currency option
transaction, short
USD/Call952,820

596,860(Option fees)(-23,788)(-14,921)

952,820

596,860(39,407)(25,719)

Currency option
transaction, long
USD/Put(Option fees)

Fair value(Note 1)

Valuation
gains/losses(-4,323)(19,464)(66,180)(26,773)(Note 1) Estimation method for fair value
Currency option
Indicates fair values of option fees, etc. presented by the correspondent financial
institutions.

37

2.

Derivative transactions to which hedge accounting is applied
Fiscal period ended June 30, 2020 (as of June 30, 2020)
The contract amount as of the closing date under each hedge-accounting method and the amountequivalent to the notional principal prescribed in the contracts are as shown below.
(Unit: JPY thousand)
Method of hedge
accounting

Derivativetransaction type,
etc.

Primary
hedged item

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

Fair value(Note 2)

Interest rate swap
Receive floating
Borrowings
98,362,000
65,133,000(65,906)
rate/pay fixed
rate(Note 1) The contract amount, etc. for interest rate swap are stated based on a notional principal.
(Note 2) Estimation method for fair value
Interest rate swap
Estimated based on the price, etc. presented by the correspondent financial
institutions.
Principle
accounting
methodFiscal period ended December 31, 2020 (as of December 31, 2020)
The contract amount as of the closing date under each hedge-accounting method and the amountequivalent to the notional principal prescribed in the contracts are as shown below.
(Unit: JPY thousand)
Method of hedge
accounting

Derivativetransaction type,
etc.

Primary
hedged item

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

Fair value(Note 2)

Interest rate swap
Receive floating
Borrowings
69,383,000
65,133,000(165,929)
rate/pay fixed
rate(Note 1) The contract amount, etc. for interest rate swap are stated based on a notional principal.
(Note 2) Estimation method for fair value
Interest rate swap
Estimated based on the price, etc. presented by the correspondent financial
institutions.
Principle
accounting
method(Notes Related to Retirements Payments)
Not applicable38

(Notes Related to Asset Retirement Obligations)1.

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

2.

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

3.

Increase/decrease in the total amount of asset retirement obligations

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

Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)
32,539(Unit: JPY thousand)Fiscal period ended
December 31, 2020
(from July 1, 2020 to
December 31, 2020)
32,756--217
32,756

221
32,977(Notes Related to Segment and Related Information)
I. Segment Information
Disclosure is omitted because the real estate investment business is INV’s sole business and it has noreportable segments.
II. Related Information
Fiscal period ended June 30, 2020 (from January 1, 2020 to June 30, 2020)
1. Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category
accounted for over 90% of the operating revenue on the statement of income.
2. Information about each geographic area
(1) Net sales(Unit: JPY thousand)Japan

The Cayman Islands
8,519,782(Note)

890,442

Total
9,410,225

Net sales are based on the location of the customer and categorized by country or territory.

(2) Property and equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounted forover 90% of the amount of property and equipment on the balance sheet.
3. Information about each major customer(Unit: JPY thousand)Name of customer

Operating revenues

Related segment

MyStays Hotel Management Co., Ltd.

2,205,610

Real Estate Investment

Undisclosed (Note)

2,046,294

Real Estate Investment(Note)

The customer is an affiliate of a foreign real estate fund. However, the name is not disclosed
since consent for the disclosure has not been obtained. The customer is not a group company of
INV/the Asset Manager.

39

Fiscal period ended December 31, 2020 (from July 1, 2020 to December 31, 2020)
1. Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category
accounted for over 90% of the operating revenue on the statement of income.
2. Information about each geographic area
(1) Net sales
Disclosure is omitted because net sales to external customers in Japan for over 90% of the operating
revenue on the statement of income.
(2) Property and equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounted forover 90% of the amount of property and equipment on the balance sheet.
3. Information about each major customer(Unit: JPY thousand)Name of customer

Operating revenues

Related segment

Undisclosed (Note)

2,602,343

Real Estate Investment

MyStays Hotel Management Co., Ltd.

1,389,730

Real Estate Investment

Naqua Hotel & Resorts Management Co., Ltd.

851,447

Real Estate Investment(Note)

The customer is a domestic TMK. However, the name is not disclosed since consent for thedisclosure has not been obtained. The customer is not a group company of INV/the AssetManager.

40

(Notes Related to Rental Properties)
INV owns residential properties and hotels as core assets principally in the Tokyo area and major regional cities
with an aim to establish a portfolio focusing on both stability and growth potential. The book value changed
during the period and balance at the end of the period are as follows.

Residences

Book value

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

Fair value at the end of the period

Commercial
facilities

Book value

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

Fair value at the end of the period

HotelsBook value

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

Fair value at the end of the period

Total

Book value

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

Fair value at the end of the period

Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)(Unit: JPY thousand)Fiscal period ended
December 31, 2020
(from July 1, 2020 to
December 31, 2020)

53,552,976

50,904,075(2,648,900)(8,610,346)

50,904,075

42,293,729

65,438,000

54,237,000

4,789,956

4,738,684(51,271)(49,457)

4,738,684

4,689,226

6,120,000

6,040,000

407,240,188

421,613,565

14,373,376(3,042,918)

421,613,565

418,570,646

470,778,826

470,583,650

465,583,121

477,256,324

11,673,203(11,702,721)

477,256,324

465,553,602

542,336,826

530,860,650(Note 1) Book value is the figure calculated by subtracting accumulated depreciation from acquisition price(including acquisition-related costs).
(Note 2) The major factors of increase for the fiscal period ended June 30, 2020, were acquisition of hotels andconstruction work related to capital expenditures, and the major factors of the decrease were sale ofresidential properties and depreciation. The major factors of increase for the Reporting Period wereconstruction work related to capital expenditures, and the major factors of decrease were sale ofresidential properties and depreciation.
(Note 3) The fair value as of the end of the period is determined based on the appraisal value or survey value
provided by Asset Research and Development Inc., Japan Real Estate Institute, JLL Morii Valuation &Advisory K.K., Tanizawa Sogo Appraisal Co., Ltd., Daiwa Real Estate Appraisal Co., Ltd. and CBRE,Inc.
For information related to profits and losses from rental properties, please refer to “Notes to Statement of Income
and Retained Earnings.”

41

(Notes Related to Tax Accounting)
1. Significant components of deferred tax assets and liabilities(Unit: JPY thousand)Fiscal period ended
June 30, 2020

Fiscal period ended
December 31, 20120(Deferred tax assets)
Enterprise tax payable

731

731

Buildings and other (merger)

301,485

312,445

Land (merger)

693,693472,381

Loss carried forward (Note 1)

522,444532,677

Asset retirement obligations

10,305

10,374

Depreciation of fixed-term leasehold rights
Adjustment of acquisition prices (overseas
properties)
Deposit received

100,736

113,080

469,321465,374

4,762-

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

2,103,480

1,907,065(522,444)(532,677)(1,581,036)(1,374,387)(2,103,480)(1,907,065)--

Subtotal
Total(Note 1) The amounts of tax loss carried forward and the deferred tax assets by carry-forward period are as
follows.

Fiscal period ended June 30, 2020 (as of June 30, 2020)(Unit: JPY thousand)Due within
one year

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

Due after
five years

Total

Tax loss carriedforward (a)--522,444---522,444

Valuation allowance--(522,444)---(522,444)

Deferred tax assets

-

-

-

-

-

-

-

(a) Tax loss carried forward is multiplied by statutory tax rate.
Fiscal period ended December 31, 2020 (as of December 31, 2020)(Unit: JPY thousand)Due within
one year

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

Due after
five years

Total

Tax loss carriedforward (a)-201,976

320,467--

10,232

Valuation allowance-(201,976)(320,467)--(10,232) (532,677)

Deferred tax assets

-

-

-

-

-

(a) Tax loss carried forward is multiplied by statutory tax rate.

42-532,677-

2. Significant difference between statutory tax rate and the effective tax rate
(Unit: %)Fiscal period ended
June 30, 2020

Fiscal period ended
December 31, 2020

31.46

Statutory tax rate

31.46

Deductible cash distributions(8.87)-

Changes in valuation allowance(16.98)(31.46)

Untaxable received dividends(5.61)-

Others0.15

0.10

Effective tax rate

0.14

0.10

(Notes Related to Equity-Method Income)Fiscal period ended June 30, 2020 (from January 1, 2020 to June 30, 2020)
Amount of investment in affiliates
Amount of investment when accounted for by the equity method
Amount of investment profit when accounted for by the equity method

JPY 17,856,387 thousand
JPY 17,856,387 thousand
JPY 558,924 thousand

Fiscal period ended December 31, 2020 (from July 1, 2020 to December 31, 2020)
Amount of investment in affiliates
Amount of investment when accounted for by the equity method
Amount of investment profit when accounted for by the equity method43

JPY 17,856,387 thousand
JPY 17,620,960 thousand
JPY -235,426 thousand

(Notes Related to Transactions with Related Parties)
1. Transactions with Parent Company and Major Corporate Unitholders
Fiscal period ended June 30, 2020 (from January 1, 2020 to June 30, 2020)
Classification

Interested
party of the
Asset
Manager

Name

Address

Percentage
RelationshipStatedof votingcapital Business orrightsCommon(JPY occupation
Business
owned
board
million)relationship(%)
memberAdria
Tokutei
Minato-ku,
MokutekiTokyo
Kaisha(Note 3)

Investment
manage0.1-ment
business

-

-

Heijo
Tokutei
Minato-ku,
MokutekiTokyo
Kaisha(Note 3)0.1

Investment
manage-mentbusiness

-

-

Naqua
Hotel &
Resorts
Minato-ku,
ManageTokyo-mentCo., Ltd.
(Note 3)

MyStays
HotelManage Minato-ku,
-ment
Tokyo
Co., Ltd.
(Note 3)

Type oftransaction

Purchase of
trust
Seller of trust
beneficiary
beneficiaryinterests ininterests inreal estate
real estate(Note 2)
(Note 4)Purchase of
trust
Seller of trust
beneficiary
beneficiaryinterests ininterests inreal estate
real estate(Note 2)
(Note 4)
Rentalrevenues

10

Hotelbusiness--

Lessee and Payment ofoperator of
property
hotelsmanagement
costs andmanagement
fees (Note 2)
Rentalrevenues

760

Hotel
business--

Lessee and Payment ofproperty
operator ofmanagement
hotelscosts andmanagement
fees (Note 2)

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

Transaction
amount(JPY
thousand)(Note 1)

Account

10,593,000--

5,643,000--

Rental112,358 receivables

273,674-

Rental40,124-2,205,610 receivables

93,116

Accounts
payableother

93,109985,476(Note 1) Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
(Note 2) The terms and conditions have been determined based on the Asset Manager’s internal rules and manual regardingtransactions with sponsor related parties.
(Note 3) Adria Tokutei Mokuteki Kaisha, Heijo Tokutei Mokuteki Kaisha, Naqua Hotel & Resorts Management Co., Ltd. and MyStays
Hotel Management Co., Ltd. have no capital relationship to be disclosed with the Asset Manager. However, these Tokutei
Mokuteki Kaisha or the tenant and operator have received an anonymous partnership investment or investment throughfunds that are managed by affiliates of FIG (a subsidiary of SoftBank Group Corp., which is a parent company of the AssetManager directly/indirectly owning 100% of its issued shares). Accordingly, INV treats Adria Tokutei Mokuteki Kaisha, Heijo
Tokutei Mokuteki Kaisha, Naqua Hotel & Resorts Management Co., Ltd. and MyStays Hotel Management Co., Ltd. as theequivalent to interested parties.
(Note 4) The purchase of trust beneficiary interests pertains to the following properties. The transaction amount is the purchase pricestated in the trust beneficiary purchase agreement, in which other expenses for acquisition, property taxes, city planning taxes
and consumption taxes are not included.

Property
NumberName of Property

Counterparty

D82

Hotel MyStays Premier Narita

Adria Tokutei Mokuteki Kaisha

10,593,000

D83

Art Hotel Morioka

Heijo Tokutei Mokuteki Kaisha

5,643,000

Total

Purchase Price(JPY thousand)

16,236,000

44

Fiscal period ended December 31, 2020 (from July 1, 2020 to December 31, 2020)
Balance atClassification

Interested
party of the
Asset
Manager

Name

Address

Statedcapital Business or(JPYoccupation
million)

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

Hotelbusiness--

Lessee andoperator of
hotelsRentalrevenues

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

760

Hotel
business--

Lessee andoperator of
hotelsRentalrevenues

Accounts
851,447 receivable

402,013

Accounts
receivable

966,790

1,389,730(Note 1) Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
(Note 2) Naqua Hotel & Resorts Management Co., Ltd. and MyStays Hotel Management Co., Ltd. have no capital relationship to bedisclosed with the Asset Manager. However, these the tenant and operator have received an anonymous partnershipinvestment or investment through funds that are managed by affiliates of FIG (a subsidiary of SoftBank Group Corp., which
is a parent company of the Asset Manager directly/indirectly owning 100% of its issued shares). Accordingly, INV treats
Naqua Hotel & Resorts Management Co., Ltd. and MyStays Hotel Management Co., Ltd. as the equivalent to interested parties.

2.

Transactions with Affiliates
None for both the fiscal periods ended June 30, 2020 and the fiscal period ended December 31, 2020.

3.

Transactions with Companies under Common Control
None for both the fiscal periods ended June 30, 2020 and the fiscal period ended December 31, 2020.

45

4.

Transactions with Directors and Major Individual Unitholders
Fiscal period ended June 30, 2020 (from January 1, 2020 to June 30, 2020)

Classification

Directors andclose relatives

Same as
above

Name

Business or occupation

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

Same asabove

Same as above

Details of transaction

Transaction
amount(JPY
thousand)(Note 3)

Account

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

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

315,018

Accruedexpenses

165,238-

Payment ofadministrative
agency fees fororganizational
management toConsonantInvestment
Management Co.,
Ltd. (Note 2)

600

Accruedexpenses330

Ratio ofvotingrights(%)(Note 1) Naoki Fukuda served as a representative of the third party (the Asset Manager), and the fee is as set forth in the Articles ofIncorporation of INV.
(Note 2) Naoki Fukuda served as a representative of the third party (the Asset Manager), and the fee is as set forth in “Administrative
Agency Agreement for Organizational Management,” entered into by and between INV and the Asset Manager.
(Note 3) Consumption taxes, etc. are not included in the transaction amounts, but are included in the balance at the end of the period.

Fiscal period ended December 31, 2020 (from July 1, 2020 to December 31, 2020)

Classification

Directors
and close
relatives

Same as
above

Name

Business or occupation

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

Same asabove

Same as above

Details of transaction

Transaction
amount(JPY
thousand)(Note 3)

Account

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

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

333,417

Accruedexpenses

201,758-

Payment ofadministrative
agency fees fororganizational
management toConsonantInvestment
Management Co.,
Ltd. (Note 2)

1,100

Accruedexpenses880

Ratio ofvotingrights(%)(Note 1) Naoki Fukuda served as a representative of the third party (the Asset Manager), and the fee is as set forth in the Articles ofIncorporation of INV.
(Note 2) Naoki Fukuda served as a representative of the third party (the Asset Manager), and the fee is as set forth in “Administrative
Agency Agreement for Organizational Management,” entered into by and between INV and the Asset Manager.
(Note 3) Consumption taxes, etc. are not included in the transaction amounts, but are included in the balance at the end of the period.

46

(Notes Related to Parent Company or Any Material Affiliated Company)
1. Information of parent company
Not applicable
2. Summarized financial information of material affiliated company
Kingdom Special Purpose Company was the material affiliated company during the Reporting Period, andthe summary of financial statements are as below:(Unit: JPY thousand)
Kingdom Special Purpose Company
Fiscal period ended
June 30, 2020
100,194,569
3,724,184

Fiscal period ended
December 31, 2020
100,174,273
2,043,010

Total current liabilities
Total non-current liabilities

79,072
66,278,918

18,72866,258,918

Total net assets

37,560,763

35,939,637

Operating revenue
Income before income taxes
Net income

1,748,867
1,141,544
1,140,663

201,274(479,858)(480,463)

Total specified assets
Total other assets(Notes Related to Per Unit Information)
Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)

Fiscal period ended
December 31, 2020
(from July 1, 2020 to
December 31, 2020)

Net assets per unit

JPY 40,929

JPY 40,946

Net income per unit

JPY 70

JPY 102

Net income per unit is calculated by dividing net income for the period by the average number of investment
units during the period. Diluted net income per unit is not stated as there are no diluted units.
(Note)The basis for calculating net income per unit is as follows.
Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)

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

47

Fiscal period ended
December 31, 2020
(from July 1, 2020 to
December 31, 2020)

423,917623,728--

423,917623,728

6,096,840

6,096,840

(Notes Related to other matters)(Accounting standards not yet applied)・“Accounting Standard for Revenue Recognition” (Corporate Accounting Standards No. 29 issued by the
Accounting Standards Board of Japan (ASBJ) on March 31, 2020)
・“Guidance on Accounting Standard for Revenue Recognition” (Implementation Guidance of Corporate
Accounting Standards No. 30 issued by ASBJ on March 31, 2020)
1. Overview
The International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB)
have jointly developed the comprehensive accounting standard for revenue recognition and have published“Revenue from Contracts with Customers” (International Financial Reporting Standards (IFRS) 15 by IASB
and Topic 606 by FASB) in May 2014. As IFRS 15 is effective for annual periods beginning on or after January
1, 2018 and Topic 606 is effective for annual periods beginning after December 15, 2017, ASBJ has developed
and published the comprehensive accounting standard and implementation guidance for revenue recognition
accordingly.
As the basic policy of ASBJ for the development of accounting standard for revenue recognition, the accounting
standard in Japan have been established while adopting the basic principle of IFRS 15 from the point of viewof the comparability between the financial statements based on IFRS or U.S. GAAP and Japanese GAAP as abenefit for the consistency with IFRS 15. In addition, in the case that there is an item that the actual practiceconducted in Japan is considered, the alternate treatments are added within the scope not to fail thecomparability.
2. Scheduled date of application
They will be applied at the beginning of the fiscal period ending December 31, 2021.
3. Effects of application of the accounting standard, etc.
The impact of application of the “Accounting Standard for Revenue Recognition”, etc. is currently underevaluation.

・“Accounting Standard for Fair Value Measurement” (Corporate Accounting Standards No. 30 issued by ASBJ
on July 4, 2019)
・“Accounting Standard for Financial Instruments” (Corporate Accounting Standards No. 10 issued by ASBJ
on July 4, 2019)
・ “Implementation Guidance on Accounting Standard for Fair Value Measurement” (Implementation
Guidance of Corporate Accounting Standards No. 31 issued by ASBJ on July 4, 2019)
・ “Implementation Guidance on Disclosure about Fair Value of Financial Instruments” (Implementation
Guidance of Corporate Accounting Standards No. 19 issued by ASBJ on March 31, 2020)
1. Overview
IASB and FASB have established detailed guidance for fair value measurement (IFRS 13 “Fair Value
Measurement” by IFRS and Topic 820 “Fair Value Measurement” by FASB). In order to improve thecomparability between the international accounting standard and Japanese accounting standard, ASBJ has
mainly considered guidance and disclosure on fair value of financial instruments and published the accounting
standard and implementation guidance for fair value measurement accordingly.
As the basic policy of ASBJ for the development of accounting standard for fair value measurement, ASBJ
basically adopted all provisions of IFRS 13 by using a unified calculation method, from the point of view of
improving the comparability between the financial statements based on IFRS or U.S. GAAP and Japanese
GAAP. Moreover, in consideration of the actual practice conducted in Japan, other treatments for individual
items are established within the scope not to fail the comparability.
2. Scheduled date of application
They will be applied at the beginning of the fiscal period ending December 31, 2021.
48

3. Effects of application of the accounting standard, etc.
The impact of application of the “Accounting Standard for Fair Value Measurement”, etc. is currently underevaluation.

・“Accounting Standard for Disclosure of Accounting Estimates” (Corporate Accounting Standards No. 31
issued by ASBJ on March 31, 2020)
1. Overview
With regard to “sources of estimation uncertainty” which are required to be disclosed under Paragraph 125 ofInternational Accounting Standard (IAS) 1 “Presentation of Financial Statements” (IAS 1) issued in 2003 by
IASB, ASBJ was requested to examine disclosures of such note information under Japanese GAAP as useful
information for users of financial statements. Accordingly, ASBJ has developed and published theaccounting standard for disclosures of accounting estimates.
The basic policy of ASBJ for the development of the said Accounting Standard was to provide generalprinciples (disclosure objectives) instead of expanding required information in the notes, and an entity shalldetermine specific disclosures in accordance with its disclosure objectives. The development of this standard
is based on Paragraph 125 of IAS 1.
2. Scheduled date of application
They will be applied at the end of the fiscal period ending June 30, 2021.

・“Accounting Standard for Accounting Policy Disclosures, Accounting Changes, and Error Corrections”(Corporate Accounting Standards No. 24 issued by ASBJ on March 31, 2020)
1. Overview
Following the recommendation to examine enhancements to note information concerning “application ofprinciples of accounting policies and procedures where provisions of related accounting standards are notavailable,” necessary amendments were made and the accounting standard for accounting policy disclosures,accounting changes, and error corrections was published by ASBJ. When enhancing note information
concerning “application of principles of accounting policies and procedures where provisions of related
accounting standards are not available,” in order to ensure consistency with past actual practice in case theprovisions of related accounting standards are clear, the provisions in the Notes on Corporate Accounting
Principles (Note 1-2) have been followed.
2. Scheduled date of application
They will be applied at the end of the fiscal period ending June 30, 2021.

49

(9)

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

Date

Type of Issue

Total Number of
Investment Units Issued andOutstanding (units)
Increase

July 29, 2011
December 20, 2013

Third-party
allotment
Third-party
allotment

Unitholders’ Capital (JPY)

Reference

Total

Increase

Total

711,597

1,348,292

6,999,979,689

26,134,396,789(Note 1)

224,887

1,573,179

2,999,992,580

29,134,389,369(Note 2)

July 16, 2014

Public offering

1,040,000

2,613,179

22,747,920,000

51,882,309,369(Note 3)

August 13, 2014

Third-party
allotment

55,5072,668,686

1,214,104,611

53,096,413,980(Note 4)

July 15, 2015

Public offering

500,000

3,168,686

27,970,500,000

81,066,913,980(Note 5)

August 12, 2015

Third-party
allotment

25,0003,193,686

1,398,525,000

82,465,438,980(Note 6)

March 30, 2016

Public offering

459,5123,653,198

36,123,157,344

118,588,596,324(Note 7)

22,626

3,675,824

1,778,675,112

120,367,271,436(Note 8)-3,675,824

224,225,264

120,591,496,700(Note 9)April 27, 2016

February 22, 2017

Third-party
allotment
Reversal of
allowance fortemporarydifferences
adjustment

March 13, 2017

Public offering

185,000

3,860,824

8,393,450,000

128,984,946,700(Note 10)October 12, 2017

Public offering

887,959

4,748,783

37,917,625,218

166,902,571,918(Note 11)

November 1, 2017

Third-party
allotment

44,3984,793,181

1,895,883,396

168,798,455,314(Note 12)

August 1, 2018

Public offering

909,524

5,702,705

40,280,089,388

209,078,544,702(Note 13)

August 21, 2018

Third-party
allotment

45,476

5,748,181

2,013,995,612

211,092,540,314(Note 14)

December 28, 2018

Retirement(81,341)

5,666,840-

211,092,540,314(Note 15)

July 18, 2019

Public offering

409,524

6,076,364

23,317,887,036

234,410,427,350(Note 16)

20,476

6,096,840

1,165,882,964

235,576,310,314(Note 17)-

6,096,840

125,201,855

235,701,512,169(Note 18)

August 15, 2019

August 22, 2019

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

Third-party
allotment
Reversal of
allowance fortemporarydifferences
adjustment

New investment units were issued through third-party allotment at a price of JPY 9,837 per unit to make repaymentof existing loan, etc.
New investment units were issued through third-party allotment at a price of JPY 13,340 per unit to make repaymentof existing loan, etc.
New investment units were issued through public offering at a price of JPY 22,688 per unit (JPY 21,873 after deducting
the underwriters’ discount) to raise funds for the acquisition of new properties.
New investment units were issued through third-party allotment at a price of JPY 21,873 per unit for the purpose of
cash reserve to appropriate to repayment in future borrowings.
New investment units were issued through public offering at a price of JPY 57,817 per unit (JPY 55,941 after deducting
the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
New investment units were issued through third-party allotment at a price of JPY 55,941 per unit for the purpose of
allocation to cash reserves to be used as part of the funds for future acquisition of properties.

50

(Note 7)

New investment units were issued through public offering at a price of JPY 81,217 per unit (JPY 78,612 after deducting
the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 8) New investment units were issued through third-party allotment at a price of JPY 78,612 per unit for the purpose of
allocation to cash reserves to be used as a part of the funds for future acquisition of properties.
(Note 9) Reversal of allowance for temporary differences adjustment was decided at the meeting of the Board of Directors of
INV held on February 22, 2017 and the amount was incorporated into unitholders’ capital.
(Note 10) New investment units were issued through public offering at a price of JPY 46,897 per unit (JPY 45,370 after deducting
the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 11) New investment units were issued through public offering at a price of JPY 44,118 per unit (JPY 42,702 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 12) New investment units were issued through third-party allotment at a price of JPY 42,702 per unit for the purposeof allocation to cash reserves to be used as part of the funds for future acquisition of specified assets.
(Note 13) New investment units were issued through public offering at a price of JPY 45,776 per unit (JPY 44,287 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 14) New investment units were issued through third-party allotment at a price of JPY 44,287 per unit for the purposeof raising a part of the funds for the acquisition of new properties.
(Note 15) INV acquired own investment units from December 13, 2018 to December 18, 2018 (on a trade date basis) throughthe market purchase at Tokyo Stock Exchange based on a discretionary transaction contract with a security
company.
INV resolved the retirement of all the acquired own investment units at the Board of Directors' Meeting held on
December 25, 2018 and the acquired own investment units were retired on December 28, 2018.
The acquisition of own investment units was conducted using capital surplus, and thus there is no change tounitholders’ capital.
(Note 16) New investment units were issued in a public offering at a price of JPY 58,898 per unit (JPY 56,939 after deducting
the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 17) New investment units were issued in a third-party allotment at a price of JPY 56,939 per unit for the purpose ofraising a part of the funds for the acquisition of specified properties.
(Note 18) Reversal of allowance for temporary differences adjustment was decided at the meeting of the Board of Directors of
INV held on August 22, 2019 and the amount was incorporated into unitholders’ capital.

51

3. Reference Information(1)

Type ofasset

Composition of INV’s Assets

Geographic
area

PurposeFiscal period ended June 30, 2020(as of June 30, 2020)
Percentage of
total assets(%)

Amount held
(JPY million)

2

0.0

2

0.0

-

-

-

-

Overseas (Note 4)

35,527

6.9

35,136

6.8

Subtotal

35,5306.9

35,1396.8

35,5306.9

35,1396.8

35,8806.9

29,098

5.6

15,023

2.9

13,194

2.6

50,9049.9

42,293

8.2

-

-

-

-

4,738

0.9

4,689

0.9

4,738

0.9

4,689

0.9

171,17033.1

170,27033.0

214,91241.6

213,16141.3

386,08274.7

383,43174.2(Note 1)

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

Residences

Greater Tokyo
area
Major regional
citiesSubtotal

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

HotelsFiscal period ended December 31, 2020(as of December 31, 2020)

Greater Tokyo
area
Major regional
citiesSubtotal(Note 2)

Percentage of
total assets(%)

Total real estate in trust

441,72585.5

430,414

83.3

Preferred equity interest (Note 5)

17,856

3.5

17,856

3.5

Deposits and other assets

21,5504.2

33,0806.4

516,663100.0

516,490100.0(477,256)(92.4)(465,553)(90.1)

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

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

While Hotel MyStays Haneda is held as trust beneficiary interests, part of accompanying FF&E is held in kind, which falls under
this category.
The Leasehold of the Cayman Hotels falls under the category of “Real estate” for “Overseas.” The leasehold interests are therights equivalent to long-term real estate leasehold rights for buildings and land under the laws of the Cayman Islands (Term:
99 years; annual lease payment: USD 1 or KYD 1). INV implemented an investment structure change regarding “Westin Grand
Cayman Seven Mile Beach Resort & Spa” and “Sunshine Suites Resort” on May 9, 2019 (Cayman Islands local time), a change
from making investments based on the TK agreement to directly owning the Leasehold of the Cayman Hotels, which were theunderlying assets of the TK.
Preferred equity interest issued by Kingdom Special Purpose Company, with the Sheraton Grande Tokyo Bay Hotel as anunderlying asset (asset in trust of trust beneficiary interest acquired by Kingdom Special Purpose Company, which is the realestate that serves as the main source of revenue for Kingdom Special Purpose Company).
The figures indicated in parenthesis under “Total assets” show the amounts related to owned real estate (excluding the amountof preferred equity interest)

52

Fiscal period ended June 30, 2020(as of June 30, 2020)
Percentage ofAmount (JPY million)
total assets (%)

Fiscal period ended December 31, 2020(as of December 31, 2020)
Percentage ofAmount (JPY million)
total assets (%)

Total Liabilities

267,12551.7

266,849

51.7

Total Net Assets

249,53848.3

249,641

48.3

Total Liabilities
and Net Assets

516,663100.0

516,490

100.0

(2)

Real Estate Properties, Etc.
The following summarizes the real estate assets (real estate or trust beneficiary interest comprised mainlyof real estate) as well as preferred equity interest held by INV as of December 31, 2020.

aPrice and investment percentage

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)
Trust
Nisshin Palacestage
beneficiaryA26
1-31-2 Izumi, Suginami-ku, Tokyo
1,251
1,087
0.2
1,230
A
Daitabashi
interests(Note 8)Trust
2-26-6 Nishi-Gotanda,
A28 Growth Maison Gotanda
beneficiary
888
830
0.2
1,040
A
Shinagawa-ku, Tokyo
interests
Trust
Growth Maison
A29
6-58-16 Kameido, Koto-ku, Tokyo beneficiary
1,070
944
0.2
1,170
A
Kameidointerests
Trust
3-27-18 Itabashi, Itabashi-ku,
A30 Emerald House
beneficiary
1,505
1,314
0.3
1,430
A
Tokyo
interests
Trust
3-15-35 Takanodai, Nerima-ku,
beneficiary
A32 Suncrest Shakujii-Koen
1,088
1,051
0.2
1,110
A
Tokyo
interests(Note 8)Trust
Growth Maison Shin3-16-2 Shin-Yokohama, Kohoku- beneficiary
A33
1,059
926
0.2
1,180
A
Yokohama
ku, Yokohama-shi, Kanagawa
interests(Note 8)
Trust
Belle Face Ueno1-27-5 Higashi-Ueno, Taito-ku,
beneficiary
A34
1,023
917
0.2
1,090
A
Okachimachi
Tokyointerests(Note 8)Trust
beneficiary
A35 Grand Rire Kameido
3-39-12 Kameido, Koto-ku, Tokyo
906
787
0.2
1,010
A
interests(Note 8)Trust
1-15-15 Okamoto, Setagaya-ku,
beneficiary
A37 Growth Maison Yoga
795
720
0.2
784
A
Tokyo
interests(Note 8)Trust
3-7-6 Nishikicho, Tachikawa-shi,
A38 Route Tachikawa
beneficiary
676
631
0.1
675
A
Tokyo
interests
Trust
Shibuya-Honmachi
2-35-2 Honmachi, Shibuya-ku,
beneficiary
A39
651
697
0.1
669
A
MansionTokyo
interests(Note 8)53

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)Trust
4-13-15 Kinuta, Setagaya-ku,
A40 City Heights Kinuta
beneficiary
646
651
0.1
561
A
Tokyo
interests
Trust
2-5-13 Namiki, Kawaguchi-shi,
Acseeds Tower
beneficiary
A41
620
512
0.1
769
A
Saitama
Kawaguchi-Namiki
interests(Note 8)Trust
3-4-4 Nakamachi, Machida-shi,
beneficiary
A43 College Square Machida
589
560
0.1
507
A
Tokyo
interests(Note 8)Trust
beneficiary
A44 Belair Meguro
1-2-15 Meguro, Meguro-ku, Tokyo
589
545
0.1
632
A
interests(Note 8)Trust
2-7-47 Tarumachi, Kohoku-ku,
beneficiary
A45 Wacore Tsunashima I
572
513
0.1
527
A
Yokohama-shi, Kanagawa
interests(Note 8)Trust
1-6-6 Kouyama, Nerima-ku,
beneficiary
A46 Foros Nakamurabashi
566
498
0.1
589
A
Tokyo
interests(Note 8)Trust
5-29-51 Kaijin, Funabashi-shi,
beneficiary
A47 Growth Maison Kaijin
557
530
0.1
521
A
Chiba
interests(Note 8)Trust
7-3-1 Arakawa, Arakawa-ku,
beneficiary
A48 College Square Machiya
510
434
0.1
567
A
Tokyo
interests(Note 8)
Trust
Towa City Coop
5-49-7 Higashi-Ikebukuro,
beneficiary
A59
866
797
0.2
1,280
B
Shinotsuka II
Toshima-ku, Tokyo
interests
Trust
1-22-7 Sekimachi-Kita, Nerima-ku,
beneficiary
A61 Bichsel Musashiseki
577
564
0.1
848
C
Tokyo
interests
Trust
Towa City Coop
4-338-2 Sengencho, Nishi-ku,
beneficiary
A63
1,110
1,007
0.2
1,440
B
Sengencho
Yokohama-shi, Kanagawa
interests
Trust
2-11-10 Omachi, Aoba-ku,
beneficiary
A64 Royal Park Omachi
415
382
0.1
679
B
Sendai-shi, Miyagi
interests
Trust
Lexington Square
1-15-16 Haginomachi,
beneficiary
A65
330
267
0.1
425
B
Haginomachi
Miyagino-ku, Sendai-shi, Miyagi
interests
Trust
2-44 Otanacho, Chikusa-ku,
beneficiary
A66 Visconti Kakuozan
255
228
0.1
296
D
Nagoya-shi, Aichi
interests
Trust
Lexington Square Honjo 4-20-6 Higashikomagata,beneficiary
A72
511
414
0.1
668
D
Azumabashi
Sumida-ku, Tokyo
interests
Trust
AMS TOWER Minami 6- 2-5-15 Minami 6-Jo Nishi,
beneficiary
A73
1,180
892
0.2
1,240
D
Jo
Chuo-ku, Sapporo-shi, Hokkaido
interests
Trust
Invoice Shin-Kobe
3-3-8 Ikutacho Chuo-ku, Kobebeneficiary
A77
1,260
1,113
0.3
1,510
B
Residence
shi, Hyogo
interests
Trust
3-12-20 Motomachidori Chuo-ku,
beneficiary
A78 Cosmo Court Motomachi
973
847
0.2
1,170
B
Kobe-shi, Hyogo
interests

54

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)Trust
2-13 Toriidori Nakamura-ku,
beneficiary
A79 Revest Honjin
674
581
0.1
858
B
Nagoya-shi, Aichi
interests
Trust
3-13-12 Matsubara Naka-ku,
beneficiary
A80 Revest Matsubara
657
571
0.1
879
B
Nagoya-shi, Aichi
interests
Trust
3-6-8 Noritake Shinmachi, Nishibeneficiary
A82 Alba Noritake Shinmachi
608
523
0.1
784
B
ku, Nagoya-shi, Aichi
interests
Trust
2-13-33 Meieki-Minami,
beneficiary
A83 Revest Meieki Minami
597
511
0.1
813
B
Nakamura-ku, Nagoya-shi, Aichi
interests
Trust
2-13-17 Heian, Kita-ku,
beneficiary
A84 Revest Heian
595
514
0.1
760
B
Nagoya-shi, Aichi
interests
Trust
A85 Vendir Hamaotsu Ekimae 1-2-15 Hamaotsu, Otsu-shi, Shiga beneficiary
581
490
0.1
814
B
interests
Trust
2-6-21 Shimanouchi Chuo-ku,
beneficiary
A86 Salvo Sala
544
475
0.1
681
B
Osaka-shi, Osakainterests
Trust128-1 Yamabukicho Shinjuku-ku,
beneficiary
A87 Excellente Kagurazaka
543
497
0.1
714
B
Tokyo, and one other parcel
interests
Trust
3-4-11 Edobori, Nishi-ku,
beneficiary
A88 Luna Court Edobori
525
463
0.1
618
B
Osaka-shi, Osakainterests
Trust
Winntage Kobe
7-2-2 Motomachidori, Chuo-ku,
beneficiary
A89
512
442
0.1
653
B
Motomachi
Kobe-shi, Hyogo
interests
Trust
A90 Queen's Court Fukuzumi 1-3-10 Fukuzumi, Koto-ku, Tokyo beneficiary
456
418
0.1
705
B
interests
380-1 Kawaranomachi,
Trust
Higashinotoindori Nijo Kudaru,
beneficiary
A91 Corp Higashinotoin
446
396
0.1
551
B
Nakagyo-ku, Kyoto-shi, Kyoto,interests
and two other parcels
Trust
5-14-17 Higashi-Oi, Shinagawabeneficiary
A92 Belair Oimachi
412
380
0.1
583
B
ku, Tokyo
interests
Trust
3-18 Minami-Tsukaguchimachi,
beneficiary
A93 Siete Minami-Tsukaguchi
374
338
0.1
465
B
Amagasaki-shi, Hyogo
interests
Trust
Prime Life Sannomiya
4-3-23 Isogamidori, Chuo-ku,
beneficiary
A94
373
332
0.1
489
B
Isogami Koen
Kobe-shi, Hyogo
interests
Trust
HERMITAGE NANBA 4-10-3 Sakuragawa, Naniwa-ku,
beneficiary
A95
355
314
0.1
477
B
WEST
Osaka-shi, Osakainterests
Trust
Century Park Shinkawa 4-1-2 Shinkawacho, Minato-ku,
beneficiary
A96
335
306
0.1
473
B
1-bankan
Nagoya-shi, Aichi
interests
Trust
A97 West Avenue
1-5-17 Nishi, Kunitachi-shi, Tokyo beneficiary
331
306
0.1
350
B
interests
Trust
Little River
1-34 Honmachibashi, Chuo-ku,
beneficiary
A98
310
276
0.1
421
B
Honmachibashi
Osaka-shi, Osakainterests
Trust
2-25-11 Mikage Tsukamachi,
beneficiary
A99 Prime Life Mikage
297
265
0.1
352
B
Higashinada-ku, Kobe-shi, Hyogo
interests

55

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)Trust
5-45-10 Mukojima, Sumida-ku,
beneficiary
A101 Lieto Court Mukojima
1,683
1,632
0.3
2,050
B
Tokyo
interests
Trustbeneficiary
A102 Lieto Court Nishi-Ojima 2-41-14 Ojima, Koto-ku, Tokyo
1,634
1,580
0.3
2,010
B
interests
Trust
5-38 Fudegasakicho, Tennouji-ku,
beneficiary
A103 Royal Parks Momozaka
2,910
2,657
0.6
3,290
C
Osaka-shi, Osakainterests
Trust
3-35-20 Shinden, Adachi-ku,
beneficiary
A104 Royal Parks Shinden
5,024
4,746
1.0
5,870
C
Tokyo
interests
Trust
Royal Parks Seasir
3-41-7 Minami-Senju, Arakawabeneficiary
A106
2,683
2,596
0.5
2,960
B
Minami-Senju
ku, Tokyo
interests
Subtotal (54 properties)

B17

Lexington Plaza
Hachiman

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

B18

AEON TOWN Sukagawa

105 Furukawa, Sukagawa-shi,
Fukushima

Trust
beneficiaryinterests
Trustbeneficiaryinterests

Subtotal (2 properties)

D01

D02

D03

D04

D05

D06

D07

D08

D09

D10

D11

D12

Trust
beneficiaryinterests
Trust
Hotel MyStays Asakusa 1-21-11 Honjo, Sumida-ku, Tokyo beneficiaryinterests
Trust
52, Kasabokocho, Higashiiru,
Hotel MyStays Kyotobeneficiary
Aburanokoji, Shijyodori,Shijointerests
Shimogyo-ku, Kyoto-shi, Kyoto
Trust
MyStays Shin-Urayasu
2-1-4 Akemi, Urayasu-shi, Chiba beneficiary
Conference Centerinterests
Trust
3-5-1 Tekkodori, Urayasu-shi,
Hotel MyStays Maihama
beneficiary
Chibainterests
Trust
Hotel MyStays Premier 2-4-1 Sonezakishinchi, Kita-ku,
beneficiary
DojimaOsaka-shi, Osakainterests
Trust
Hotel MyStays Nagoya- 2-23-22 Higashi-Sakura, Naka-ku,
beneficiary
Sakae
Nagoya-shi, Aichi
interests
Trust
Hotel MyStays
1-4-8 Awaji-machi, Chuo-ku,
beneficiary
Sakaisuji-Honmachi
Osaka-shi, Osakainterests
Trust
Hotel MyStays
4-81 Sueyoshicho, Naka-ku,
beneficiary
Yokohama
Yokohama-shi, Kanagawa
interests
Trust
5-43-7 Higashi-Nippori,
Hotel MyStays Nippori
beneficiaryArakawa-ku, Tokyo
interests
Trust
Hotel MyStays
3-14-20 Haruyoshi, Chuo-ku,
beneficiary
Fukuoka-Tenjin-Minami Fukuoka-shi, Fukuoka
interests
Trust
3-26 Shin-Ogawamachi,
Flexstay Inn Iidabashi
beneficiary
Shinjuku-ku, Tokyo
interests
Hotel MyStays Kanda

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

56

46,50742,293

9.3

54,237

-

3,280

2,980

0.7

3,660

C

2,320

1,708

0.5

2,380

C

5,600

4,689

1.1

6,040

-

2,851

2,897

0.6

4,920

B

2,584

2,500

0.5

4,410

B

6,024

5,710

1.2

9,960

B

4,930

4,539

1.0

7,200

B

4,870

4,659

1.0

6,770

B

3,845

3,659

0.8

6,650

B

2,958

2,572

0.6

5,530

B

2,514

2,320

0.5

4,000

B

2,119

2,260

0.4

3,890

B

1,898

1,776

0.4

2,510

B

1,570

1,443

0.3

5,560

B

1,381

1,335

0.3

2,090

B

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)
Trust
Hotel MyStays Ueno
D13
1-5-7 Matsugaya, Taito-ku, Tokyo beneficiary
1,331
1,220
0.3
2,010
B
Inarichointerests
Trust
1-22-19 Kita-Shinagawa,beneficiaryD14 Flexstay Inn Shinagawa
1,242
1,187
0.2
1,980
B
Shinagawa-ku, Tokyo
interests
Trust
1-52-5 Tokiwadai, Itabashi-ku,
beneficiary
D15 Flexstay Inn Tokiwadai
1,242
1,190
0.2
2,140
B
Tokyo
interests
Trust
3-6-16 Sugamo, Toshima-ku,
beneficiaryD16 Flexstay Inn Sugamo
1,192
1,099
0.2
2,260
B
Tokyo
interests
Trust
1-3-2 Tokuicho, Chuo-ku,
beneficiary
D17 Hotel MyStays Otemae
1,192
1,124
0.2
2,430
B
Osaka-shi, Osakainterests
Trust
Hotel MyStays Kiyosumi
beneficiary
D18
1-12-16 Tokiwa, Koto-ku, Tokyo
749
876
0.1
1,500
B
Shirakawainterests
Trust
Flexstay Inn Nakanobu 4-27-12 Futaba, Shinagawa-ku,
beneficiary
D19
589
557
0.1
803
B
P1
Tokyo
interests
Trust
Flexstay Inn Nakanobu 4-27-8 Futaba, Shinagawa-ku,
beneficiary
D20
283
282
0.1
387
B
P2
Tokyo
interests
Trust
APA Hotel Yokohama- 3-37-2 Sumiyoshicho, Naka-ku,
beneficiary
D21
8,350
7,530
1.7
9,930
B
Kannai
Yokohama-shi, Kanagawa
interests
Trust
Hotel MyStays
26-17 Honcho, Hakodate-shi,
beneficiary
D22
2,792
2,735
0.6
3,900
B
Hakodate-Goryokaku
Hokkaido
interests
Trust
5-10-15 Shirokane, Minato-ku,
beneficiary
D23 Flexstay Inn Shirogane
2,119
2,076
0.4
2,360
B
Tokyo
interests
Trustbeneficiary
D24 Hotel MyStays Haneda 5-1-13 Haneda, Ota-ku, Tokyo
7,801
7,185
1.6
8,590
B
interests
Trust
Hotel MyStays Kameido
D25
6-32-1 Kameido, Koto-ku, Tokyo beneficiary
5,594
5,313
1.1
7,370
B
P1
interests
Trust
Hotel MyStays Ueno
5-5-13 Higashi-Ueno, Taito-ku,
beneficiary
D26
3,821
3,644
0.8
3,760
B
IriyaguchiTokyo
interests
Trust
Hotel MyStays Kameido
beneficiaryD27
6-7-8 Kameido, Koto-ku, Tokyo
3,742
3,535
0.7
4,920
B
P2
interests
Trust
1-23 Masagocho, Shimizu-ku,
beneficiary
D28 Hotel MyStays Shimizu
2,198
2,091
0.4
2,380
B
Shizuoka-shi, Shizuoka
interests
Trust
Super Hotel Shinbashi/ 5-16-4 Shinbashi, Minato-ku,
beneficiary
D29
1,624
1,580
0.3
1,940
B
KarasumoriguchiTokyo
interests
Trustbeneficiary
D30 Flexstay Inn Higashi-Jujo 2-10-2 Nakajujo, Kita-ku, Tokyo
1,277
1,264
0.3
1,300
B
interests
Trust
Hotel MyStays
2-4-1 Higashi-Shukugo,
beneficiary
D31
1,237
1,207
0.2
1,990
B
Utsunomiya
Utsunomiya-shi, Tochigi
interests
Trust
Flexstay Inn Kawasaki- 1-13-2 Kaizuka, Kawasaki-ku,
beneficiary
D32
980
891
0.2
1,110
B
Kaizuka
Kawasaki-shi, Kanagawa
interests
Trust
1-3-2 Takara-machi, Toyama-shi,
beneficiary
D33 Comfort Hotel Toyama
979
902
0.2
1,160
B
Toyamainterests

57

Property
number(Note 1)Name of property

D34

Flexstay Inn KawasakiOgawacho

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

D35

Flexstay Inn Ekoda

8-6 Sakaecho, Nerima-ku, Tokyo

D36

Super Hotel Tokyo-JR
Tachikawa Kitaguchi

2-21-9 Akebonocho, Tachikawashi, Tokyo

D37

Super Hotel JR Uenoiriyaguchi

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

D38

Hotel MyStays
Shinsaibashi

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

D39

Comfort Hotel Kurosaki

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

D40

Comfort Hotel Maebashi

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

D41

Comfort Hotel Tsubame2-115 Sugoro, Sanjo-shi, Niigata
Sanjo

D42

Comfort Hotel Kitami

D43

Hotel MyStays Gotanda 2-6-8 Nishi-Gotanda,
Station (Note 9)
Shinagawa-ku, Tokyo

D44

Hotel Epinard Nasu

D45

Hotel MyStays Fukuoka 3-5-7 Tenjin, Chuo-ku, FukuokaTenjin
shi, Fukuoka

D46

Hotel MyStays
Hamamatsucho

1-18-14 Hamamatsucho, Minatoku, Tokyo

D47

Hotel MyStays PremierKanazawa

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

D48

Takamatsu Tokyu REI
Hotel

9-9 Hyogomachi, Takamatsu-shi,
KagawaD49

Hotel MyStays Premier
Hamamatsucho

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

D50

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

D51

Hotel MyStays PremierOmori

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

D52

Beppu Kamenoi Hotel

5-17 Chuo cho, Beppu-shi, Oita

D53

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

D54

Hotel MyStays
Yokohama Kannai

5-65, Onoe-cho, Naka-ku,
Yokohama-shi, Kanagawa and3 other lots

Location(Note 2)

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

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

Appraisal
Balancevalue at theAcquisition
sheet
Investment
end of theLegal form
price
carrying percentage
Appraiser
periodof asset (JPY million) value(%)(Note 7)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)Trust
beneficiary
906
871
0.2
890
B
interests
Trustbeneficiary
5,069
4,805
1.0
4,580
B
interests
Trustbeneficiary
1,170
1,088
0.2
1,240
E
interests
Trustbeneficiary
1,130
1,070
0.2
1,210
E
interests
Trustbeneficiary
3,160
3,006
0.6
2,580
B
interests
Trustbeneficiary
1,148
1,039
0.2
1,240
E
interests
Trustbeneficiary
1,128
1,001
0.2
1,120
E
interests
Trustbeneficiary
1,010
927
0.2
1,090
E
interests
Trustbeneficiary
851
771
0.2
923
E
interests
Trustbeneficiary
26,523
26,3095.3
23,900C
interests
Trustbeneficiary
20,981
19,3944.2
22,700C
interests
Trustbeneficiary
8,059
7,829
1.6
8,110
C
interests
Trustbeneficiary
7,959
7,878
1.6
6,220
C
interests
Trustbeneficiary
13,761
12,8002.7
12,800C
interests
Trustbeneficiary
2,139
2,103
0.4
2,240
E
interests
Trustbeneficiary
8,000
7,988
1.6
10,300B
interests
Trustbeneficiary
13,06812,8892.6
12,800D
interests
Trustbeneficiary
9,781
9,723
1.9
9,620
D
interests
Trustbeneficiary
8,870
8,018
1.8
8,670
D
interests
Trustbeneficiary
7,880
7,686
1.6
8,180
D
interests
Trustbeneficiary
5,326
5,174
1.1
5,250
D
interests

58

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)Trust
5-1-11, Hon-cho Joetsu-shi,
beneficiary
D55 Art Hotel Joetsu
2,772
2,661
0.6
2,670
D
Niigatainterests
Trust
1-1-2, 1-1-6, 1-1-7, 1-2-1, Omachi,
beneficiary
D56 Art Hotel Hirosaki City
2,723
2,566
0.5
2,630
D
Hirosaki-shi, Aomori
interests
Trustbeneficiary
D57 Hotel MyStays Oita
1-32, Niagemachi Oita-shi, Oita
1,604
1,509
0.3
1,560
D
interests
Trust
2-5-4, Higashigotanda
beneficiary
D58 Hotel MyStays Gotanda
4,068
4,055
0.8
3,920
D
Shinagawa-ku, Tokyo
interests
Trust
Hotel MyStays
1-8-14, Nishiki-cho Tachikawabeneficiary
D59
3,257
3,206
0.6
3,310
E
Tachikawashi, Tokyo
interests
Trust
Hotel MyStays Premier 2-17-54, Akasaka Minato-ku,
beneficiary
D60
20,691
20,413
4.1
23,200B
AkasakaTokyointerests
Trust
Hotel MyStays Premier 2-2-10, Minamikujonishi Chuobeneficiary
D61
16,731
16,268
3.3
16,100D
Sapporo Parkku, Sapporo-shi, Hokkaido
interests
Trust
Hotel MyStays Ueno
5-5-6, Higashi Ueno Taito-ku,
beneficiary
D62
5,286
5,190
1.1
5,110
D
East
Tokyo
interests
Trust
Hotel MyStays Midosuji 3-2-10, Honmachi, Chuo-ku,
beneficiary
D63
5,039
4,902
1.0
3,920
B
HonmachiOsaka-shi, Osakainterests
Trust
5-1 Nishi 4-chome, Kita 8-jo, KitaHotel MyStays Sapporo
beneficiary
D64ku, Sapporo-shi, Hokkaido, and15,543
15,3993.1
14,900D
Aspeninterests
seven other lotsTrust554-2 Nishimaji Okawa, Ishigakibeneficiary
D65 Art Hotel Ishigakijima
9,731
9,605
1.9
9,290
B
shi, Okinawa, and four other lots
interests
Trust2654 Arakura Deguchi,
Hotel MyStays Fuji
D66
Fujiyoshida-shi, Yamanashi, and beneficiary
9,405
9,104
1.9
9,750
B
Onsen Resort
interests
15 other lots
Trust
1-4-20 Ironai, Otaru-shi,
beneficiary
D67 Hotel Sonia Otaru
5,930
5,761
1.2
5,670
D
Hokkaido
interests
Trust
Hotel MyStays
10-17 Konohana-machi,
beneficiary
D68
5,682
5,645
1.1
5,410
D
Kanazawa Castle
Kanazawa-shi, Ishikawa
interests
Trust
1-1 Sasaguchi, Chuo-ku, Niigatabeneficiary
D69 Art Hotel Niigata Station
5,524
5,476
1.1
5,340
D
shi, Niigata
interests
Trust
Hotel MyStays Nagoya 3-8-21 Nishiki, Naka-ku, Nagoyabeneficiary
D70
5,197
5,138
1.0
5,110
C
Nishikishi, Aichi
interests
Trust
1-4-16 Ironai, Otaru-shi,
beneficiary
D71 Hotel Nord Otaru
4,296
4,213
0.9
4,050
D
Hokkaido
interests
Trust
Hotel MyStays
2-7 Yamanokuchi-cho,beneficiary
D72
3,445
3,390
0.7
3,390
E
Kagoshima Tenmonkan Kagoshima-shi, Kagoshima
interests
Trust
6-29-2 7-jo-dori, Asahikawa-shi,
beneficiary
D73 Art Hotel Asahikawa
3,197
3,043
0.6
3,040
D
Hokkaido
interests
Trust
Hotel MyStays
1-10-10 Otemachi, Matsuyamabeneficiary
D74
3,098
2,975
0.6
3,160
E
Matsuyamashi, Ehime
interests
Trust
1-6 Nishi 5-Chome, Minami 7-jo,
Hotel MyStays Sapporo
D75
Chuo-ku, Sapporo-shi, Hokkaido, beneficiary
3,059
3,024
0.6
2,970
C
Susukino
interests
and one other lot

59

Appraisal
Balancevalue at theAcquisition
sheet
Investment
Propertyend of the
Location
Legal form
price
carrying percentage
Appraiser
numberName of property
period(Note 2)of asset (JPY million) value(%)(Note 7)(Note 1)(JPY
(Note 3)(JPY
(Note 4)
million)million)(Note 5)
Trust
Hotel MyStays Sapporo 1-20 Nishi 1-chome, Minami 14-jo,beneficiary
D76
2,118
2,072
0.4
2,060
C
Nakajima Park
Chuo-ku, Sapporo-shi, Hokkaido
interests
Trust
Hotel MyStays Sapporo 4-3 Nishi 1-chome, Minami 11-jo,beneficiary
D77
1,584
1,552
0.3
1,520
D
Nakajima Park Annex
Chuo-ku, Sapporo-shi, Hokkaido
interests
Trust
2-72-2 Hanasaki-cho, Naka-ku,
beneficiary
D78 Flexstay Inn Sakuragicho Yokohama-shi, Kanagawa, and
1,425
1,410
0.3
1,450
E
interests
four other lot
Trust
MyCUBE by MYSTAYS
beneficiary
D79
2-6-7 Kuramae, Taito-ku, Tokyo
1,287
1,278
0.3
1,260
E
Asakusa Kuramaeinterests
Hotel MyStays
Trust
1-20 Gofuku-machi, Kagoshimabeneficiary
D80 Kagoshima Tenmonkan
1,168
1,155
0.2
1,190
E
shi, Kagoshima
Annex
interests
Trust
11 Minami 5-chome, Nishi 3-jo,beneficiary
D81 Hotel MyStays Nayoro Nayoro-shi, Hokkaido, and one
957
921
0.2
932
C
interests
other lot
Trust
Hotel MyStays Premier 40 Yokomine Oyama, Narita-shi,
beneficiary
D82
10,593
10,396
2.1
10,200D
NaritaChibainterests
Trust
D83 Art Hotel Morioka
3-3-18 Odori, Morioka-shi, Iwate beneficiary
5,643
5,533
1.1
5,400
C
interests
32,78830,061The(USD
Westin Grand Cayman(USD30620 Seven Mile Beach Road,
316,800
LeaseholdD200 Seven Mile Beach
29,476
6.0
FGrand Cayman, Cayman Islands
272,171
thousand)Resort & SPA(Note 10)thousand)(Note 11)
5,909
The
5,842
(USD
1465 Esterley Tibbetts Highway,
57,100
Leasehold (USD 52,898
D201 Sunshine Suites Resort
5,660
1.2
F
Grand Cayman, Cayman Islands
thousand)(Note 10)thousand)(Note 11)
Subtotal (85 properties)

432,763

418,57086.1

470,583-

Total (141 properties)

484,871465,55396.5

530,860-

17,845

17,856

3.5- (Note 5)

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

17,845

17,856

3.5--

Total (142 properties)

502,717

483,409

100.0

-

-

Sheraton Grande Tokyo
Bay Hotel (preferred
equity interest)-

Preferredequityinterest
issued by
specialpurposecompany(Note 12)-(Note 1)

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

(Note 2)

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

60

(Note 3)“Acquisition price” is the purchase price indicated in the real estate or trust beneficiary purchase agreement except for Sheraton
Grande Tokyo Bay Hotel (preferred equity interest), Westin Grand Cayman Seven Mile Beach Resort & SPA and Sunshine Suites
Resort. For Sheraton Grande Tokyo Bay Hotel (preferred equity interest), “Acquisition price” indicates the amount invested by
INV for the preferred equity interest, excluding investment in the specified equity interests in the Kingdom Tokutei Mokuteki
Kaisha and the acquisition price of the equity interest held by the employees in a G.K., which is a master lease company. For
Westin Grand Cayman Seven Mile Beach Resort & SPA and Sunshine Suites Resort, the book value of the Leasehold of each of the
Cayman Hotels is stated by the Cayman SPC as of May 9, 2019 (Cayman Islands local time; May 10, 2019 in Japan local time),
which is the date when INV succeeded the Leasehold from the Cayman SPC as dividend in kind in line with the agreed terminationof the TK agreement. The amounts in USD are converted into JPY as shown. Such price excludes consumption tax and othertaxes, and has been rounded down to the nearest million yen.

(Note 4)

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

(Note 5)

“Appraisal value at the end of the period” is the value appraised or determined based on research by the real estate appraiser
as of the end of the fiscal period in accordance with the Articles of Incorporation of INV and the regulations of The Investment
Trust Association, Japan. As to appraisal of Westin Grand Cayman Seven Mile Beach Resort & SPA and Sunshine Suites Resort,the local appraiser verification method (Note 6) is adopted. The appraisal value for Sunshine Suites Resort includes the unused
land adjacent to the hotel. Appraisal is entrusted to those described in (Note 7) below. For Sheraton Grande Tokyo Bay Hotel(preferred equity interest), there is no appraisal value at the end of the period due to it being preferred equity interest. An
appraisal value for the underlying asset as of the closing date of the fiscal period is as follows.
Name of property

Appraisal value

Sheraton Grande Tokyo Bay Hotel(Note 6)

JPY 97,200 million

Appraiser(Note 7)
D

Under the “local appraiser verification method,” a real estate appraiser licensed in Japan determines appraisal value based on
the understanding and analyses of basic data and information necessary for real estate appraisal, including appraisal methods
employed by local appraisers, and transaction examples and trends in local markets that are used for real estate appraisal, andby verifying the validity of decisions made in appraisal reports and appropriateness of appraisal value prepared by local
appraisers. INV appoints CBRE, Inc., a professional appraiser licensed and certified in the Cayman Islands, as a local appraiser
to engage in appraisal of the Underlying Asset and prepare a local appraisal report. INV then engages CBRE K.K., a company
appointed as a real estate appraiser in Japan, to verify the local appraisal report and then obtains a report on verification ofappraisal performed by local appraiser.

(Note 7) “Appraiser” is shown in code in the table above.

The code used to represent the appraisers is as follows:

Appraiser
A: Assets Research and Development Inc.
B: Japan Real Estate Institute
C: JLL Morii Valuation & Advisory K.K.
D: The Tanizawa Sogo Appraisal Co., Ltd.
E: Daiwa Real Estate Appraisal Co., Ltd.
F: CBRE K.K.
As to appraisal of Westin Grand Cayman Seven Mile Beach Resort & SPA and Sunshine Suites Resort, the local appraiser
verification method is adopted and CBRE K.K. has entrusted such appraisal to CBRE, Inc. The appraisal value for Sunshine
Suites Resort includes the acquisition price of the unused land adjacent to the hotel.
(Note 8)

These trust beneficiary interests were integrated into three groups with other trust beneficiary interests when INV procured funds
through debt financing backed by trust assets in July 2011. The grouping of trust beneficiary interests at the end of the Reporting
Period is as follows:
Group 1
Nisshin Palacestage Daitabashi, Growth Maison Shin-Yokohama, Belle Face Ueno-Okachimachi, Growth Maison Yoga,
Shibuya-Honmachi Mansion, and Foros Nakamurabashi
Group 2
College Square Machida, Belair Meguro, and Wacore Tsunashima I
Group 3
Suncrest Shakujii-Koen, Grand Rire Kameido, Acseeds Tower Kawaguchi-Namiki, Growth Maison Kaijin, and College Square
Machiya(Note 9)Appraisal value at the end of the period indicates appraisal value calculated deeming the owned portion and the floor expansion
portion as one.

(Note 10) The leasehold interests are the rights equivalent to long-term real estate leasehold rights for buildings and land under the laws of
the Cayman Islands (Term: 99 years; annual lease payment: USD 1 or KYD 1). INV implemented an investment structure change
regarding “Westin Grand Cayman Seven Mile Beach Resort & Spa” and “Sunshine Suites Resort” on May 9, 2019 (Cayman Islands
local time), a change from making investments based on the TK agreement to directly owning the movable assets such as leasehold
and FF&E of the Cayman Hotels (the Leasehold, etc.), which were the underlying assets of the TK.
(Note 11) Appraisal value at the end of the period are converted into JPY using the exchange rate of USD 1 = JPY 103.50, which is theexchange rate on the closing date of the fiscal period (December 31, 2020).
(Note 12) Preferred equity interest issued by special purpose company refers to 178,458 units of preferred equity interest issued by Kingdom
Special Purpose Company (equivalent to 49.0% of preferred equity interest issued and outstanding after the issuance of the said
preferred equity interest), with the Sheraton Grande Tokyo Bay Hotel as an underlying asset, and is recorded as one property.

61bCapital expenditures for assets under management(a) Schedule for capital expenditures
The schedule for the principal capital expenditures for property maintenance construction, etc., as of the endof the fiscal period ended December 31, 2020 for the real estate assets is as follows.
Estimated Cost (JPY thousand)Name of Property

Westin Grand
Cayman Seven
D200
Mile Beach Resort& SPA

LocationGrand
Cayman,CaymanIslands

PurposeScheduled Time of
Implementation

Replacement ofguest room key

Total

Payment for
Advancethe Reporting
Payments
PeriodFrom January 2021
To June 2021

30,025--

D51

Hotel MyStays
Premier Omori

Fire protection
Shinagawa-ku,
equipmentTokyorenovation work

From January 2021
To June 2021

30,000--D17

Hotel MyStays
OtemaeOsaka-shi,
Osaka

Guest room
renovation work

From January 2021
To June 2021

21,000--

D06

Hotel MyStays
Premier Dojima

Osaka-shi,
Osaka

Tenant spacerenovation work

From January 2021
To June 2021

20,000--

D56

Art Hotel Hirosaki
City

Hirosaki-shi,
Aomori

Tenant spacerenovation work

From January 2021
To June 2021

20,000--(b) Capital expenditures for the fiscal period ended December 31, 2020
The principal construction work constituting capital expenditures for the real estate assets for the fiscal
period ended December 31, 2020 is as follows. Capital expenditures for the fiscal period totaled JPY
574,116 thousand, and together with JPY 18,207 thousand in repair costs included in this fiscal period’s
expenses, construction work totaling JPY 592,323 thousand was implemented.
Payment(JPY thousand)Location

Hotel Epinard
Nasu

Nasu-gun,Tochigi

Employee dormitory
construction work

From July 2020
To December 2020

168,699

Minato-ku,
TokyoFire protection equipment
renovation work

From July 2020
To December 2020

31,916Grand
Cayman,CaymanIslands

Restaurants and kitchensrenovation work

From July 2020
To December 2020

29,129D44

Hotel MyStays
D49 Premier
Hamamatsucho
Westin Grand
Cayman Seven
D200
Mile Beach Resort& SPA

PurposeTime ofimplementation

Name of property

A47

Growth Maison
KaijinFunabashi-shi, Automatic parking lot
renovation work
Chiba

From July 2020
To December 2020

24,200D52

Beppu Kamenoi
Hotel

Beppu-shi, Oita Elevators renovation work

From July 2020
To December 2020

18,100

Other construction

302,071Total(3)

574,116

Tenant Summary

a Summary of lease conditions by property
Disclosure is omitted because the information is described in the presentation material for the 35th Fiscal
Period Ended December 2020 separately announced today.
b Occupancy trend
Disclosure is omitted because the information is described in the presentation material for the 35th Fiscal
Period Ended December 2020 separately announced today.
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