Investment
Invincible Corporation

Financial Summary
for the June 2020 Fiscal Period(from January 1, 2020 to June 30, 2020)
August 25, 2020

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: September 23, 2020

This English language notice is a translation of the Japanese-language notice released on August 25, 2020 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 June 30, 2020 (from January 1, 2020 to June 30, 2020)(1)

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

Fiscal period ended
June 30, 2020
Fiscal period ended
December 31, 2019

Operating Income%

JPY million%

JPY million%

JPY million

%

9,410

(49.4)

1,496(88.4)

424(96.4)

423(96.4)

18,587(32.0)

12,858(42.0)

11,639(45.2)

11,638(45.2)

Fiscal period ended
June 30, 2020
Fiscal period ended
December 31, 2019(2)

Net Income

JPY million

Ordinary Income /Total Assets

Net Income /Unitholders’ Equity

Net Income per Unit

(Note)

Ordinary Income

Ordinary Income /Operating Revenues

JPY

%

%

%

70

0.2

0.1

4.5

1,910

4.7

2.4

62.6

“Net Income per Unit” in the table above is calculated based on the average number of investment units during the relevant period
and is rounded to the nearest yen. Net income per unit for the fiscal period ended December 31, 2019 is JPY 1,909, if calculated
based on the number of investment units issued and outstanding at the end of fiscal period ended December 31, 2019 (6,096,840
units) and rounded down to the nearest yen.

Distributions
Distribution(Excluding excess profit distribution)

Per Unit
Fiscal period ended
June 30, 2020
Fiscal period ended
December 31, 2019

Total

Excess Profit Distribution
Per Unit

Dividend Payout
Ratio

Distribution/ Net Assets

Total

JPY

JPY million

JPY

JPY million

%

%

69

420

-

-

99.2

0.2

1,725

10,517

-

-

90.4

4.1

(Note 1) Distribution (excluding excess profit distribution) differs from net income for the fiscal period ended December 31, 2019, since
INV reserved JPY 1,121 million of net income as internal reserve for the purpose of stabilizing the distribution level for the next
and subsequent periods.
(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, 2019 is 90.4% because distribution (excluding excess profit
distribution) differs from net income due to reserving a part of net income as internal reserve, 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
June 30, 2020
Fiscal period ended
December 31, 2019
(Note)

JPY million

Net Assets / Total%
AssetsNet Assets per Unit

JPY million

Net Assets

516,663249,538

48.3

40,929522,431259,730

49.7

42,601JPY

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

Closing Balance ofCash and
Cash Equivalents

Cash Flows from
Financing
Activities

JPY million

JPY million

JPY million

JPY million

Fiscal period ended
June 30, 2020

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

16,318

Fiscal period ended
December 31, 2019

12,971(84,512)44,72928,7872.

Forecasts for the Fiscal Period ending December 31, 2020 (from July 1, 2020 to December 31, 2020)

Operating
Revenues

FiscalperiodendingDecember31, 2020(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 the
December 2020 fiscal period (from July 1 to December 31, 2020) 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

June 30, 2020

6,096,840

June 30, 2020

0

December 31, 2019 6,096,840

as of the End of the Fiscal Period (Including Treasury Units)(b) Number of Treasury Units as of the End of the Fiscal Period

December 31, 2019

(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.
301. Operating Conditions(1) Operating Conditionsa

Overview of the Fiscal Period Ended June 30, 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 June 30, 2020 (“Reporting Period”), INV acquired two hotels on January 6, 2020 andsold one residential property on January 15, 2020. As a result, INV's portfolio at the end of the Reporting Period
comprised of 148 properties (86 hotels (Note 3) (Note 4), 60 residential properties and two others) with a totalacquisition price of JPY 511,695 million (Note 5). The total acquisition price of the portfolio has significantly
grown by 7.1 times, compared to the portfolio as of May 22, 2014, which is the date immediately prior to INV’s
initial investment in hotels. Furthermore, INV’s hotel portfolio has reached 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
4

(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
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 June 30, 2020.
(b)

Operational Environment and Performance

Both the domestic and overseas hotel portfolios for the Reporting Period were heavily affected by the effects
of COVID-19 including the State of Emergency issued by the Japanese Government on the economy andtourism. On May 11, 2020, INV entered into a Memorandum of Understanding (“MOU”) to amend each
fixed-term building lease and property management agreement ("MLPM Agreement") for domestic hotels
owned by INV and operated by INV's main tenant, MyStays Hotel Management Co., Ltd. and its affiliates(“MHM Group”). Pursuant to the MOU, INV (i) waived the fixed rent during the relevant period andchanged the calculation method of the variable rent by way of amendment of the MLPM Agreement in partand (ii) bore some property management costs that would normally be borne by the MHM Group under theformer agreement and (iii) increased the amount of the management fees payable to the MHM Group (Note1). As a result, the total amount of property management costs and incremental management fees incurred
by INV from March to June 2020 totaled JPY 1,350 million, which was initially estimated to be up to JPY 1,500
million.
5

The occupancy rate of the rental housing market remained stable at a high level. The rent increase programof 60 residential properties (Note 2) continues to produce positive results, as rent has increased for both new
and renewal contracts of properties owned by INV. The average rent per tsubo per month (Note 3) for theReporting Period increased by 0.6% YoY to JPY 9,098, and the operating conditions remained firm.
For the June 2020 fiscal period, the portfolio NOI (Note 4) decreased by 72.7% or JPY 10,708 million to JPY 4,026
million compared to the same period in the previous year (the June 2019 fiscal period). The hotel portfolio
NOI decreased by JPY 9,878 million, which is equivalent to the decrease by 67.0% of the portfolio NOI. While
the residential portfolio continues to benefit from internal growth, the residential portfolio NOI (Note 5)
decreased by JPY 826 million, which is equivalent to the decrease by 5.6% of the portfolio NOI, due to asset
sales as part of INV’s asset recycling. The portfolio continued to maintain a high average occupancy rate
(Note 6) of 99.3% 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 7) owned by INV decreased by 92.5%
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 8) of 48.1% (-38.7 points YoY), ADR (Note 9)of JPY 7,229 (-28.5% YoY), and RevPAR (Note 10) of JPY 3,478 (-60.4% YoY).
Westin Grand Cayman Seven Mile Beach Resort & Spa and Sunshine Suites Resort recorded an averageoccupancy rate of 37.5% (-51.7 points YoY), ADR of USD 487 (+17.2% YoY), and RevPAR of USD 183 (-50.7%
YoY) for the Reporting Period.
Regarding the hotel sector, the domestic hotel demand significantly declined due to a sharp reduction in
inbound visitors (JNTO’s estimate for January to June 2020: -76.3% YoY) and a shift in mindset to refrain frombusiness trips and leisure travel. In the Cayman Islands, where the Cayman Hotels are located, the temporary
closure of the Owen Roberts International Airport caused a significant reduction in hotel demand and the
Cayman Hotels closure from late March through the end of October.
Regarding the residential portfolio, the average occupancy rate (Note 6) of 60 residential properties (Note 2)
for the Reporting Period was 96.2%, an increase of 0.2 points compared to the same period in the previous year.
The NOI (Note 5) of the 60 residential properties for the Reporting Period increased by 1.9% compared to thesame period in the previous year, due to internal growth through solid rent increases. For the rental
residential market, COVID-19 seems to have no impact and trends for rent at city-center residential properties
with small-type rooms 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 toreduce residential leasing costs based on a detailed market analysis of each property and unit.
In the Reporting Period, INV realized a rent increase for 52.0% (based on the number of contracts) of the newresidential lease contracts for an average rent increase of 0.7% compared to the previous rent across all newleases (Note 11). INV achieved a rent increase for 46.6% (based on the number of contracts) of contract
renewals for an average rent increase of 1.6% compared to the previous rent across all renewal leases (Note11), while maintaining a high contract renewal rate (Note 12) of 80.7%. Combined, new leases and renewal
leases were signed at 1.3% higher than the previous leases (Note 11).
The total appraisal value of 147 properties was JPY 542,336 million (1 out of the 148 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
has an unrealized gain of JPY 65,080 million (Note 13) and an unrealized gain ratio of 13.6% (Note 13). The
total appraisal value of 145 properties which were owned throughout the Reporting Period decreased by 4.8%
from JPY 553,449 million at the end of the December 2019 fiscal period to JPY 526,836 million at the end of theReporting Period.

6

Key Performance Indicators of 75 Domestic Hotel Properties (Note 7)
June 2020 fiscal period

Year-on-year change

Occupancy Rate (Note 8)

48.1%-38.7pt

ADR (JPY) (Note 9)7,229-28.5%

RevPAR (JPY) (Note 10)3,478-60.4%GOP (JPY million) (Note 14)413-96.4%Key Performance Indicators of Cayman Hotels
June 2020 fiscal period

Year-on-year change

Occupancy Rate (Note 8)

37.5%-51.7pt

ADR (USD) (Note 9)487+17.2%

RevPAR (USD) (Note 10)183-50.7%

8,502,469-68.1%GOP (USD) (Note 14)

Key Performance Indicators of 60 Residential Properties (Note 2)
June 2020 fiscal period
Occupancy Rate (Note 6)
Average Rent per Tsubo per Month(JPY) (Note 3)
NOI (JPY million) (Note 5)

Year-on-year change

96.2%+0.2pt

9,098

+0.6%

1,656

+1.9%

(Note 1) Under the MOU, the monthly total amount of property management costs and incremental
management fees incurred by INV from March to June 2020 was JPY 362 million for March, JPY 644
million for April, JPY 343 million for May and JPY 0 million for June. As a result, the domestic hotel
NOI of each month was JPY -252 million for March, JPY -642 million for April, JPY -416 million for
May and JPY -86 million for June.
(Note 2) Based on the 60 residential properties owned as of the end of June 2020.
apply.

Hereinafter the same shall(Note 3) “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 4) “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) + TK distribution + (Management Contract Revenue of the
Cayman Hotels‐Management Contract Expense)(Note 5) For the comparison of NOI for the residential properties, one-off insurance-related revenues andexpenses are excluded. Hereinafter the same shall apply.
(Note 6) “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 7) Of the 84 hotels held as of the end of the June 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 January 2019 are calculated on the assumption INV had acquired those
properties on January 1, 2019, using the actual figures provided by the sellers of such properties forthe period before the acquisition. Hereinafter the same shall apply.
7

(Note 8) “Occupancy rate” for the hotel properties is calculated in accordance with the following formula:
Occupancy rate = total number of occupied rooms during a certain period ÷ total number of rooms
available during the same period (number of rooms x number of days)
Hereinafter the same shall apply.
(Note 9) “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 10) “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 11) 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 12) 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 13) 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 14) “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
263,468 million and the Interest-Bearing Debt ratio (Note 1) and LTV (appraisal value basis) (Note 2)
were 50.8% and 46.8% respectively, as of the end of the Reporting Period, with an average interest rate
(Note 3) of 0.54%.
(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 theforward 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 (Q) (total amount borrowed: JPY 12,483 million; interest rate: variableinterest rate of 1-month JPY TIBOR plus 0.50000% (duration: five years; borrowed on March 16, 2020; by theinterest swap agreement, it is fixed, in effect, at 0.48700%), 1-month JPY TIBOR plus 0.50000% (five years; March
830, 2020) and 1-month JPY TIBOR plus 0.30000% (three years; March 30, 2020)), which was arranged by Mizuho
Bank, Ltd. in order to repay New Syndicate Loan (G) in the amount of JPY 3,250 million due on March 14, 2020
and New Syndicate Loan (F) in the amount of JPY 10,433 million due on March 30, 2020.
INV borrowed Term Loan (M) on June 15, 2020 (total amount borrowed: JPY 1,000 million; interest rate: variableinterest rate of 1-month JPY TIBOR plus 0.25000% for duration of two years), which was arranged by Citibank,
N.A. Tokyo Branch in order to repay Term Loan (C) in the amount of JPY 1,000 million due on June 15, 2020.
In addition, a portion of INV’s existing loans (New Syndicate Loan (P)) from Sumitomo Mitsui Trust Bank,
Limited of JPY 4,550 million was transferred to Momiji Bank and The Kiyo Bank in the amount of JPY 1,000 and
500 million, respectively on February 28, 2020.
(ii) Prepayment of Loan
INV’s short-term consumption tax loan (Note 1) in the New Syndicate Loan (L) (in the amount of JPY 2,686
million) was prepaid on May 29, 2020 from the consumption tax refund concerning asset acquisitions on July19, 2019 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 a property.
(iii) Issuance of Investment Corporation Bonds
INV issued its investment corporation bonds as follows for the purpose of raising a portion of funds for
repayment of existing borrowings while at the same time lowering its financing costs, lengthening the average
maturity period of its debt and further diversifying repayment dates for interest-bearing debt.
Bond Series

Issue Date

Issue
Interest Rate Redemption
AmountDate(JPY million) (annual rate)

Sixth Series Unsecured
Investment Corporation
Bonds (with pari passu
conditions among specified
corporate bonds)

March 13,
2020

March 13,
2030

1,200

0.850%

Abstract

Unsecured /Unguaranteed
Rating: A+(JCR)(d) Overview of Acquisition of Assets
INV completed the acquisition of trust beneficiary interests in two domestic hotels as follows on January 6, 2020.

Property
Number

Property Name

Appraisal
Value(JPY million)(Note 2)

SellerD82

Hotel MyStays Premier
Narita10,593

10,700Adria Tokutei Mokuteki
KaishaD83

Art Hotel Morioka

5,643

5,700

Heijo Tokutei Mokuteki
Kaisha16,236

16,400-Total(Note 1)
(Note 2)(e)Acquisition
Price(JPY million)(Note 1)

Acquisition Price does not include adjustments for property taxes, city planning taxes, or nationalor local consumption taxes. Hereinafter the same shall apply.
Appraisal Value is based on appraisal value stated in the appraisal report by The Tanizawa Sōgō
Appraisal Co., Ltd. or JLL Morii Valuation & Advisory K.K. on the valuation date of October 1,
2019.

Overview of Sale of Assets
INV completed the sale of trust beneficiary interests in one residential property, City House Tokyo
Shinbashi as follows on January 15, 2020.
9

Property
Number

A51(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(f)

Property
Name

Acquisition
Price(JPY million)

City HouseTokyo
Shinbashi

2,520Book Value
Sale Price(JPY million) (JPY million)(Note 1)
(Note 2)

2,269

4,465

Gain on Sale
(JPY million)(Note 3)

Transferee

2,046

Undisclosed(Note 4)

Book Value shows the figure as of the date of sale.
Sale Price does not include transfer related cost, adjustments for fixed asset taxes or city planningtaxes, or national or local consumption taxes.
Gain on Sale is calculated by deducting the Book Value and transfer related costs from Sale Price.
The name of the transferee is not disclosed, as the transferee’s consent has not been obtained fordisclosure.
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
9,177 million from the previous period (-49.4%) to JPY 9,410 million, net income decreased by JPY 11,215
million (-96.4%) to JPY 423 million and unappropriated retained earnings including the retained earnings
carried forward from the preceding fiscal period (JPY 12,744 million) reached JPY 13,168 million.
INV decided that distribution per unit (excluding excess profit distribution) is JPY 69 and does not makereversal of the retained earnings carried forward from the preceding fiscal period.
b

Outlook for the Fiscal Period Ending December 31, 2020

From the next fiscal period onward, the Japanese economy is expected to start to recover from an extremely
severe situation, supported by the effectiveness of various policies such as Go To Travel campaign, while
taking measures to prevent the spread of COVID-19 and gradually raising the level of economic activity.
However, since June 2020, the spread of COVID-19 seems to be again expanding domestically andinternationally, and severe conditions are expected to continue. There is also a risk that the overall economy
will deteriorate, such as a further rise in the unemployment rate. Therefore, it is necessary to closely monitor
the impacts of COVID-19 infections in Japan and overseas, variables in the financial and capital markets, andother 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 DPU for the December 2020 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’s 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 foreign visitors travel habits and their related online research, bookings andpayments, improve the process in setting hotel rates and manage overbooking through the use ofsophisticated AI algorithms, and reduce labor costs while enhancing customer service through the use ofrobotics.
In addition to pursuing synergies with SoftBank Group, INV will pay attention to safety-oriented asset
10management 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 growth and financial stability, including thefollowing 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

Diversification of funding sources and lengthening the average maturity period of its debt throughborrowings and the issuance of investment corporation bonds

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

External growth strategy
New Property Acquisitions
As its basic strategy, INV 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 presenceof 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
While INV keeps in mind safety-oriented asset management in the sluggish accommodation demand due tothe impact of COVID-19, it also considers the possibility of portfolio optimization upon consideration of theportfolio sector composition, geographic distribution and competitiveness of each property, as appropriate.

(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, MHM is taking steps to reduce hotel operating
expenses by reviewing its operational strategy. Specific measures include temporary hotel closures andthe 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. MHM is vigorously working to stimulate
demand from existing domestic customers by following up on cancelled or postponed functions andproviding corporate customers with various options including new lineup of meeting options highlighting
strict measures to reduce the spread of COVID-19. In addition, MHM is focusing on creating new
demand, including the provision of day-use telework environments to provide individuals and corporates
11with a comfortable telework space as well as accommodation demand associated 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 from Japan Credit Rating Agency, Ltd. (JCR) has been “A+” as long-term issuer rating(Outlook: Stable) as of the date of this document. As it is difficult to expect when the outbreak of COVID19 will come to an end, in the short term 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 period, diversification of loan maturity dates and financing measures.

(iv) Compliance risk management
While the executive officer of INV concurrently serves as the representative director at the Asset Manager,
two supervisory directors (an attorney and a certified public account) oversee the execution of the executive
officer’s duties via the Board of Directors of INV. In addition, the compliance officer of the Asset Manager
attends each meeting of the Board of Directors in the capacity of an observer.
The Asset Manager has a compliance officer who is responsible for compliance with laws, regulations 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.
c

Significant Subsequent Events
Not applicable.

Reference Information is described as follows.

(Reference Information)(a)Debt Financing
INV decided to borrow New Syndicate Loan (R) on July 14, 2020 in order to repay New Syndicate Loan
(E) in the amount of JPY 28,979 million due on July 16, 2020.
12

INV decided to borrow Term Loan (N) and Term Loan (O) on July 16, 2020 in order to repay Term Loan
(E) in the amount of JPY 1,600 million due on July 20, 2020.
(i)

New Syndicate Loan (R)LenderBorrowing
Date

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

Maturity
Date

Borrowing
MethodFloating
interest rates(Note 1)

July 16,
2021

Unsecured/
non guarantee

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

Maturity
Date

Borrowing
MethodFloating
interest rates(Note 1)

July 20,2022

Unsecured/
non guarantee

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

Maturity
Date

Borrowing
MethodFloating
interest rates(Note 1)

July 20,
2021

Unsecured/
non guarantee

Sumitomo Mitsui Banking
Corporation
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
Shinsei Bank, Limited
Citibank, N.A., Tokyo Branch

July 16,2020

28,979Sumitomo Mitsui Trust Bank,
LimitedResona Bank, Limited.
(Note 1) 1-month JPY TIBOR (Base Rate) + spread (0.25000%)(ii)

Term Loan (N)LenderBorrowing
Date

The Tokyo Star Bank, Limited

July 20,2020

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

Term Loan (O)LenderBorrowing
Date

Development Bank of Japan
Inc.

July 20,
2020

1,000

(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 December 2020 fiscal period (from July 1 to
December 31, 2020) remains undetermined.
December 2020
Fiscal Period(Anticipated)
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

TBD
13

(Excluding excess profit distribution)(2)

Excess Profit Distribution per Unit

TBD

Distribution per Unit
(Including excess profit distribution)

TBD

Investment Risk

In connection with the worldwide spread of COVID-19, some material changes are made as follows to certain
items contained in “Part 1 Fund Information, I. Fund Status, 3. Investment Risks” in the latest securities reportfor the fiscal period ended December 2019 (from June 1, 2019 to December 31, 2019) (available in Japanese only)
filed on March 25, 2020. Underlined parts below indicate changes or additions, while deletions are not indicated.
① General risk
(Snip)(e) Risk relating to price fluctuations of the Investment Units or Investment Corporation Bonds
The market value of the Investment Units of INV is influenced by various factors, including supply and demandconditions on the stock exchange, trends in investment in real estate-related assets, comparison with investment
in other assets, conditions in the securities market, interest rates conditions, and economic conditions.

Thebalance of supply and demand of real estate investment trusts as a whole could collapse as a result ofcomparison between investment in real estate and investment in other assets, triggered, for example, by
earthquakes or other natural disasters.

In particular, the worldwide spread of COVID-19 has caused economic

activity to stagnate, and the market prices of real estate investment trust securities, including the INV’s
Investment Units, have also been adversely affected.

On April 7, 2020, a State of Emergency was declared by

the Japanese government, the subject areas of which were the seven prefectures of Tokyo, Kanagawa, Saitama,
Chiba, Osaka, Hyogo, and Fukuoka.
areas of Japan.

On April 16, 2020, the State of Emergency was expanded to cover all

Thereafter the State of Emergency was lifted in May 2020, however, COVID-19 has been

spreading again since June 2020.

Economic activities are unlikely to recover in a short term to the same level

as prior to the spread of COVID-19.

Depending on the future developments, there may be further adverse

effects on the market prices of financial instruments including the Investment Units due to concerns that further
restraint of economic activities may occur triggered by, among other things, another declaration of State ofEmergency and related measures and requests and no one can tell when the pandemic is gone.

These adverse

effects may also be prolonged or worsened.
(Snip)③ Risk pertaining to real estate(Snip)(x) Hotel-related risk(ii) Risk related to tenant concentration
INV often leases an entire hotel building to a single lessee.

63 of the 85 hotel properties (excluding Sheraton

Grande Tokyo Bay Hotels (preferred equity interest) held as of the date of this document) are leased to MHM
as a single tenant and 18 of the remaining hotels are leased to other single tenants.

In addition, among the said

18 hotels, each of the entire buildings of 8 hotels (Hotel MyStays Premier Dojima, Art Hotel Joetsu, Art Hotel
Hirosaki City, Hotel MyStays Sapporo Aspen, Art Hotel Ishigakijima, Art Hotel Niigata Station, Art Hotel
Asahikawa and Art Hotel Morioka) is leased to one single hotel tenant and the management is outsourced to
the MHM, and for Hotel Epinard Nasu, Naqua Hotels & Resorts Management Co.,Ltd., a subsidiary of MHM,
is a single tenant.

For multi-tenant properties, income from the portion leased to the hotel lessee accounts for14

a large percentage of the total revenue of the properties.

Therefore, INV is greatly affected by the solvency ofa specific hotel lessee, the operating capability of a specific hotel operator, the withdrawal of these hotel lessees
or hotel operators, and other relevant factors.
Generally, a single tenant tends to sign a long lease term, sometimes with a non-cancelable lease term, so it isrelatively unlikely that the single tenant will vacate unexpectedly.

However, in the event of termination by asingle tenant, the vacancy period tends to be prolonged until the commencement of new lease with analternative tenant due to the large size of the rental space and the fact that there are many special specifications
for the current single hotel tenant and the limited number of potential substitute hotel tenants.

As a result, theoccupancy rate of the property may decline significantly, or the rent level may have to be lowered in order tosecure an alternative tenant, which may have a significant impact on rental revenue.
In particular, the majority of domestic hotels owned by INV as of the date of this document are leased to MHM
or its subsidiaries as described above and INV depends on MHM's or its subsidiaries' solvency and operating
capability.

Accordingly, the financial position and profit of INV may be materially adversely affected in theevent of the solvency or the operating capability of MHM or its subsidiaries being materially deteriorated, or in
the event of the cancellation of a contract with MHM or its subsidiaries for any reason.
With the spread of COVID-19 and the accompanying restriction of travel around the world, the government's
declaration of a State of Emergency, and requests from local governments to stay home and other measures, thenumber of hotel guests in Japan has recently decreased drastically, and the income of hotel operators, including
MHM and its subsidiaries, has been sharply deteriorated.

Under such circumstances, upon receipt of a request

for exemption from rent payments and change of burden of cost and expenses from MHM and its subsidiaries,in May 2020, INV entered into a Memorandum of Understanding (MOU) to amend each fixed-term building
lease and property management agreement (MLPM Agreement) for domestic hotels owned by INV andoperated by INV's main tenant, MHM and its subsidiaries.

Under the MOU, the parties have agreed as aprovisional measure until the end of June 2020, that (i) INV will waive the fixed rent during the relevant period
and change the calculation method of the variable rent, (ii) INV will bear the property management costs thatshould be borne by the MHM Group under the current agreement (provided, exclusive of generaladministrative costs, such as labor costs or operating costs incurred by the MHM Group), and (iii) INV will
increase the amount of the management fees payable to the MHM Group up to the amount to be separately
agreed upon as the amount necessary to enable MHM Group to continue hotel business operations.

Due tothe continued impact of COVID-19, it is anticipated that the rent in July 2020 and onward will also need to be
adjusted in some way, and as a result, there is a possibility that the financial position and profit of INV will be
seriously adversely affected.
(Snip)⑦ Other(Snip)(f) Risk related to COVID-19
Infection with COVID-19 is spreading worldwide, and the spread of COVID-19 itself and measures taken by
the government and local governments to prevent the outbreak have caused various impacts.

Especially forthe hotel sector, with the spread of COVID-19 and the accompanying restriction of travel around the world, thegovernment’s declaration of a State of Emergency, and requests from local governments to stay home and othermeasures, the number of hotel guests in Japan has decreased drastically and such trend is likely to continue.
Since March 2020, the performance of domestic hotels owned by INV has worsened significantly comparedwith the same period in the previous year, and although there has been a sign of improvement since June 2020,
at present, there is no prospect to recover to the level of 2019.

Owen Roberts International Airport in Grand

Cayman Island has been closed by the Government of the Cayman Islands since March 23, 2020, and the
Cayman Hotels are scheduled to be closed until the end of October 2020.
15

As a result, variable rents received by INV generating in proportion with hotel sales or profits have beensignificantly reduced.

Furthermore, as described in “③ Risk pertaining to real estate, (x) Hotel-related risk,”

INV, MHM and its subsidiaries, which operate 73 of the 83 domestic hotels owned by INV in the form ofbeneficiary interests in trust, have agreed that INV will bear certain costs in addition to waiver of fixed rent
until June 2020, having seriously affected.

Economic activities are unlikely to recover in a short term to thelevel prior to the spread of COVID-19, and there is a possibility that contractual terms with tenants/operators
will have to be changed further in the future.

In addition, various events, such as cessation of business

operation or withdrawal by tenants, may have a serious adverse impact on INV’s the financial position andfinancial results.
(g) Material events related to the going concern assumption
As described in “(f) Risk related to COVID-19” above, as a result of the spread of COVID-19 and the effects ofmeasures taken by governments in each country, the variable rents received by INV generating in proportion
with hotel sales or profits has recently decreased significantly.

In order to avoid the insolvency of the MHM

group, which is a major tenant, and to maintain the continuation of hotel operations by the MHM group, INV
and the MHM group entered into the MOU and have agreed that INV would waive fixed rent until June 2020and bear certain costs.

As a result such MOU among others, net income for the fiscal period ended June 2020

declined substantially to JPY 423 million, down 96.4% from the previous fiscal period. With respect to the
MLPM Agreement, due to the continued effect of the COVID-19, certain additional changes in terms of rent
conditions are expected to be required for the period after July 2020.

As such, there exist material events

related to the going concern assumption of INV.
However, in order to improve this situation from business management perspective, INV intends to quickly
resolve the material events by implementing various measures, such as internal growth at hotels throughreducing costs, stimulating existing demand and creating new demand by collaborating with hotel operators,
and initiatives for further internal growth at residential properties.
Furthermore, from short-term financial perspective, INV prioritizes refinancing existing borrowings trying to
restrain increase of interest payments as well as ensuring refinancing.

In July 2020, INV refinanced existing

borrowings in a total amount of JPY 30,579 million. INV has not violated any financial covenants in connection
with the existing borrowings from financial institutions during the fiscal period ended June 30, 2020 nor up to
the date of this document. With respect to the interest payment of interest-bearing debt and the payment ofoperating costs of INV, the majority of these expenses can be covered by rental income from residential
properties and commercial facilities.

In addition, as INV has certain cash-on-hand, INV is of the view that thepayment of interest-bearing debt and operating costs will not be adversely affected.
Based on the above, INV has determined that there is no material uncertainty regarding the going concern
assumption.
(3) Material Events related to the Going Concern Assumption
Please refer to “Investment Risk ⑦ Other (g) Material events related to the going concern assumption” above.

16

2. Financial Statements(1)

Balance Sheet(Unit: JPY thousand)Fiscal period ended
December 31, 2019(as of December 31, 2019)

AssetsCurrent assets:
Cash and bank deposits
Cash and bank deposits in trust
Accounts receivable
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 intrust, 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, atcost
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
17

Fiscal period ended
June 30, 2020(as of June 30, 2020)

17,924,733
10,862,669
613,5633,448,548
482,506
718,710
137,528
2,239,471
154
36,427,886

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

19,142,244(278,377)
18,863,867
5,111,514(190,462)
4,921,052-

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

1,087,303(64,425)
1,022,877
534,690
159,549,904(15,114,933)
144,434,970

1,160,530(117,632)
1,042,897
486,479
167,743,709(17,281,345)
150,462,363

33,269,242

33,693,125(8,355,624)(9,275,639)

24,913,618

24,417,485

234,012(100,967)
133,045

250,163(102,281)
147,882

2,382,539

2,766,458(763,771)(954,147)

1,618,767

1,812,311

245,771,234
3,179
442,217,302

250,271,308
129,129452,619,792

10,637,811
13,265,876
23,903,688

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

(Unit: JPY thousand)

Investment securities
Guarantee deposits
Long-term prepaid expenses
Derivatives assets
Other
Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Total deferred assets
Total assets

Fiscal period ended
December 31, 2019(as of December 31, 2019)17,856,387
803,721974,554
166,234
22,667
19,823,566
485,944,557

Fiscal period ended
June 30, 2020(as of June 30, 2020)
17,856,387
1,362,721
898,626
152,275
22,667
20,292,677
498,164,611

59,55659,556522,431,999

69,157
69,157
516,663,418

18

(Unit: JPY thousand)Fiscal period ended
December 31, 2019(as of December 31, 2019)

Fiscal period ended
June 30, 2020(as of June 30, 2020)

Liabilities
Current liabilities:
Accounts payable

443,004

142,330

2,686,000
50,130,000

880,000
57,380,000

Accounts payable-otherAccrued expenses

125,221272,659

301,280
269,814

Income taxes payable
Advances received

605
798,980605
1,000,217

Deposits received

52,12831,88954,508,599

60,006,137

7,000,000
199,358,000

8,200,000
197,008,000

1,765,094

1,749,862

37,007

128,466

Short-term loans payable
Current portion of long-term loans payable

Total current liabilities
Non-current liabilities:
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits intrust
Derivatives liabilities
Asset retirement obligations

32,53932,756

Total non-current liabilities

208,192,641

207,119,086

262,701,240

267,125,223

235,701,512

235,701,512

6,264,432

6,264,432

Total liabilities
Net assets
Unitholders’ equity:
Unitholders’ capital
Surplus:Capital surplus
Deduction of capital surplus
Allowance for temporary differences
adjustment
Other deduction of capital surplus(6,130)(6,130)(5,524,006)(5,524,006)

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

Capital surplus (net)
Retained earnings
Total surplus
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

19734,294734,294

23,261,426

13,168,294

23,995,720

13,902,588

259,697,232

249,604,100

33,525(65,906)

33,525(65,906)

259,730,758

249,538,194

522,431,999

516,663,418

(2)Statement of Income and Retained Earnings(Unit: JPY thousand)Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)

Operating revenue
Rental revenue―real estateManagement contract revenue
Gain on sale of real estate properties
Dividend income
Total operating revenue

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

14,545,826

5,838,836

1,397,621
1,970,306

890,4422,046,294

673,498

634,651

18,587,253

9,410,225

4,673,007

6,801,584
535,279

Operating expenses
Property related expenses
Management contract expenses

537,542300,000

Asset management fees
Directors’ compensation

4,800
25,518Asset custody fees
Administrative service fees
Other
Total operating expenses
Operating income
Non-operating income
Interest income
Foreign exchange gains
Interest on tax refund

300,000
4,800
26,23147,25957,444
129,956

198,092

5,728,269

7,913,247

12,858,984

1,496,977

179
40,710114-

Gain of derivatives
Miscellaneous income

289
-

7,712
47,743

2,091

1,613

Total non-operating income

43,27057,183

687,208-

702,917
31,675

15,65425,911

4,256

5,928

412,550
143,029

362,534-1

670

Non-operating expenses
Interest expenses
Foreign exchange losses
Interest expenses on investment corporationbonds
Amortization of investment corporation bondissuance costs
Loan-related costs
Investment unit issuance costs
Other
Total non-operating expenses

1,262,700

1,129,639

11,639,553

424,522

Subsidy income-

73,119Total extraordinary income-

73,119Loss on reduction entry of non-current assets-

73,119Total extraordinary losses-

73,119

Income before income taxes

11,639,553

424,522605

605

Ordinary income
Extraordinary income

Extraordinary losses

Income taxes
Total income taxes

605

605

11,638,948

423,917

Retained earnings (deficit) brought forward

11,622,477

12,744,377

Unappropriated retained earnings

23,261,426

13,168,294

Net income

20

(3)

Statement of Changes in Net Assets

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)(Unit: JPY thousand)Unitholders’ equity
SurplusCapital surplus
Unitholders’capitalDeduction of capital surplus
Capital surplus

Balance at the
beginning of theperiodChanges during theperiodIssuance of new
investment units
Reversal of
allowance
for temporary
differences
adjustment
Distributions fromsurplus211,092,540

Allowance fortemporarydifferences
adjustment

Other
deduction ofcapital surplus

Total
deduction ofcapital surplus

Capital surplus(net)(131,332)(5,398,804)(5,530,137)

734,294

125,201(125,201)－－

6,264,432

24,483,770

125,201

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

24,608,971－

125,201(125,201)－－

235,701,512

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

734,294

Valuation and translation
adjustments

Unitholders’ equity
SurplusRetainedearnings
Balance at the
beginning of theperiodChanges during theperiod21,131,966

Total
surplus21,866,261

Total
unitholders’equityDeferred
gains or losses
on hedges

Totalvaluation andtranslation
adjustments

232,958,801

87,612

87,612Issuance of new
investment units
Reversal of
allowance
for temporary
differences
adjustment
Distributions fromsurplus
Net income
Changes other thanunitholders’ equity(net)
Total changes during
the period
Balance at the end of
the period

Total
net assets

233,046,414

24,483,770

24,483,770(125,201)(125,201)－－(9,384,287)(9,384,287)(9,384,287)(9,384,287)

11,638,948

11,638,948

11,638,948

11,638,948(54,086)(54,086)(54,086)

2,129,459

2,129,459

26,738,431(54,086)(54,086)

26,684,344

23,261,426

23,995,720

259,697,232

33,52533,525

259,730,758

21

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

22

(4) Statement of Cash Distribution(Unit: JPY)
Fiscal period ended December 31, 2019(from July 1, 2019 to December 31, 2019)

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

I

Unappropriated retained
earnings

23,261,426,001

13,168,294,104

II

Distributions

10,517,049,000

420,681,960(1,725)(69)

12,744,377,001

12,747,612,144(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 10,517,049,000 out of net

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

income of JPY 11,638,948,404.

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

Moreover,INV does not make excess profit

does not make excess profit distribution set

distribution set forth in Article 17,

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

Articles of Incorporation.

23

(5)

Statement of Cash Flows(Unit: JPY thousand)Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Loss on reduction entry of non-current assets
Investment unit issuance costs
Amortization of investment corporation bond issuance costs
Loan-related costs
Interest income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) of derivatives
Increase (decrease) in allowance for doubtful accounts
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
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
Proceeds from issuance of investment units
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
24

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

11,639,553
3,757,778
143,0294,256
412,550(179)
702,863(32,090)(148)(344,338)(110,785)
31,539(2,426,511)(36,363)(2,577,357)(29,060)(92,670)(12,896)(199,247)
2,991,980(148,847)
13,673,054
179(701,225)(605)
12,971,404

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(543,104)(83,576,781)(440,504)(48,255)
67,02228,651(84,512,972)(458,135)(16,523,212)(1,387,263)(56,966)
42,113(559,000)
43,852(18,898,611)

2,686,000
61,775,000(37,061,000)
2,971,665(839,086)(9,144,041)
24,340,740
44,729,277(13)(26,812,304)
55,599,707
28,787,403

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

(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(a) Investment unit issuance costs
The full amount is recorded as expense at the time of expenditure.
(b) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the straight-line method over a period up
to 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.

25

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 June 30, 2020 is JPY 41,528 thousand.
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 trust26

(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
December 31, 2019
June 30, 2020(as of December 31, 2019)(as of June 30, 2020)
50,00050,000*2. Allowance for temporary differences adjustment
Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)
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

Sale of asset
withleaseholdrights in trust(131,332)(131,332)-

125,201(6,130)(131,332)(131,332)-

125,201(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 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.

27

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

Fiscal period ended

December 31, 2019(as of December 31, 2019)

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

Building and accompanying
facilities in trust-

73,119Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)(Unit: JPY thousand)Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)(Notes to Statement of Income and Retained Earnings)*1. Real estate rental revenues and expenses

A. Real estate rental revenues
Rental revenue-real estate
Rent/common area charges (Note)

14,306,734

5,604,840

239,092

233,996

14,545,826

5,838,836

Maintenance costs

539,778

2,452,700

Taxes and public dues

631,040

598,839

Non-life insurance expenses

17,63919,721

3,345,473

3,578,589

Other revenues
Total

B.

Real estate rental expenses

Property related expenses

Depreciation expenses

139,076

151,732

Total

Other expenses

4,673,007

6,801,584

C.

9,872,819(962,747)

5,317,963

1,246,746

Real estate rental income (A-B)(Note) Of which, revenue from variable hotel rents*2. Management contract income

Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)(Unit: JPY thousand)Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)

A. Hotel operating revenue

3,927,961

2,912,073

B.

Hotel operating expenses

2,530,339

2,021,630

C.

Management contract revenue (A-B)

1,397,621

890,442

D. Management contract expenses
Management fee

12,276

4,096

Non-life insurance expenses

111,278

109,853

Depreciation expenses

412,305

420,999

1,680

329

Total

537,542535,279E.

860,079

355,162

Other expenses
Management contract income (C-D)

28

*3. Gain on sales of properties
Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)(Unit: JPY thousand)Winbell Kagurazaka
Proceeds from sales of properties

5,135,530

Cost of sales of properties

2,992,380

Other expenses on sales of properties

172,843

Gain on sales of properties

1,970,306

Fiscal period ended June 30, 2020 (from January 1, 2020 to June 30, 2020)(Unit: JPY thousand)City House Tokyo Shinbashi
Proceeds from sales of properties

4,474,757

Cost of sales of properties

2,269,720

Other expenses on sales of properties

158,741

Gain on sales of properties

2,046,294(Notes to Statement of Changes in Net Assets)
Number of issuable investment units authorized and number of investment units issued and outstanding
Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)
Number of issuable investment units
Number of investment units issued andoutstanding

Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 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
December 31, 2019(from July 1, 2019 to
December 31, 2019)(Unit: JPY thousand)Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)

Cash and bank deposits

17,924,733

Cash and bank deposits in trust

10,862,669

6,127,902

Cash and cash equivalents

28,787,403

16,318,574

29

10,190,672

(Notes Related to Lease Transactions)Operating lease transactions (as lessee)
Unexpired lease fees
Fiscal period ended
December 31, 2019(as of December 31, 2019)(Unit: JPY thousand)Fiscal period ended
June 30, 2020(as of June 30, 2020)

Due within one year

268,487

315,287

Due after one year

7,690,291

8,822,415

Total

7,958,778

9,137,702

Operating lease transactions (as lessor)
Unexpired lease fees
Fiscal period ended
December 31, 2019(as of December 31, 2019)(Unit: JPY thousand)Fiscal period ended
June 30, 2020(as of June 30, 2020)

Due within one year

12,306,447

13,074,353

Due after one year

76,858,696

76,516,655

Total

89,165,143

89,591,008(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.

30

2.

Estimated fair value of financial instruments

Fiscal period ended December 31, 2019 (as of December 31, 2019)
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

17,924,733

17,924,733-(2) Cash and bank deposits in trust

10,862,669

10,862,669-

Total assets

28,787,403

28,787,403-(3) Short-term loans payable(2,686,000)(2,686,000)-(4) Current portion of long-term loans
payable(50,130,000)(50,130,000)-(5) Investment corporation bonds(7,000,000)(6,957,300)

42,700(6) Long-term loans payable(199,358,000)(199,358,000)-

Total liabilities(259,174,000)(259,131,300)

42,700129,227

129,227-(7) Derivatives

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(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.

31

(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, 2019(as of December 31, 2019)(as of June 30, 2020)
1,765,094
1,749,862
Tenant leasehold and security deposits in trust
17,856,387

Investment securities

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 December 31, 2019 (as of December 31, 2019)

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
17,924,733-(Unit: JPY thousand)Due after
Due after
four to five
five years
years
-

-

Cash and bank deposits in
trust

10,862,669

-

-

-

-

-

Total

28,787,403

-

-

-

-

-

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-

Cash and bank deposits intrust

6,127,902

-

-

Total

16,318,574

-

-

32

(Unit: JPY thousand)Due after
Due after
four to five
five years
years
-

-

-

-

-

-

-

-

(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 December 31, 2019 (as of December 31, 2019)

Short-term loans payable
Current portion of longterm loans payable
Investment corporation
bonds(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
2,686,000
50,130,000

-

-

-

-

-

-

-

-

3,000,000

1,000,000

3,000,000-

55,601,000

47,079,000

38,582,000

32,920,000

25,176,000

52,816,000

55,601,000

47,079,000

41,582,000

33,920,000

28,176,000

Long-term loans payable
Total

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(Notes Related to Investment Securities)

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)
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.

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.

(Notes Related to Derivative Transactions)1.

Derivative transactions to which hedge accounting is not applied
Fiscal period ended December 31, 2019 (as of December 31, 2019)
Not applicable
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.
33

(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.
2.

Derivative transactions to which hedge accounting is applied
Fiscal period ended December 31, 2019 (as of December 31, 2019)
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 ofhedge
accounting

Principle
accounting
methodDerivativetransaction type, etc.

Primary
hedged item

Interest rate swap
Receive floating
rate/pay fixed rate

Borrowings

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

Scheduledforeigncurrencydenominatedtransactions(Option fees)

Contract amount, etc. (Note 1)
Amount due
after one year
95,112,000

66,133,000

3,836,140

622,160(- 95,963)(- 13,687)

3,836,140

622,160(191,665)(38,743)

Fair value(Note 2)64,609(- 24,788)(89,405)(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.
Currency option
Indicates fair values of option fees, etc. presented by the correspondent financial
institutions.

34

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
method(Notes Related to Retirements Payments)
Not applicable(Notes Related to Asset Retirement Obligations)1.

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

2.

Calculation method for asset retirement obligations for the period
The amount of the asset retirement obligations has been calculated by estimating the period of use at 43
years, 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
December 31, 2019(from July 1, 2019 to
December 31, 2019)
32,321(Unit: JPY thousand)Fiscal period ended
June 30, 2020
(from January 1, 2020 toJune 30, 2020)
32,539--218
32,539217
32,756(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 December 31, 2019 (from July 1, 2019 to December 31, 2019)
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 area35

(1) Net sales(Unit: JPY thousand)Japan

The Cayman Islands
17,189,631(Note)

Total

1,397,621

18,587,253

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.

8,084,924

Real Estate Investment

Undisclosed (Note)

1,970,306

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.

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.

36

(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.
Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)

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

56,921,817

53,552,976(3,368,841)(2,648,900)

53,552,976

50,904,075

69,671,000

65,438,000

4,825,236

4,789,956(35,280)(51,271)4,789,956

4,738,684

6,150,000

6,120,000

326,555,836

407,240,188

80,684,352

14,373,376

407,240,188

421,613,565

482,093,260

470,778,826

388,302,890

465,583,121

77,280,230

11,673,203

465,583,121

477,256,324

557,914,260

542,336,826(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 December 31, 2019, were acquisition of hotels
and construction work related to capital expenditures, and the major factor of the decrease was sale ofresidential properties and depreciation. The major factors of increase for the Reporting Period wereacquisition of hotels and construction work related to capital expenditures, and the major factors ofdecrease were sale of residential 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. However, for the fair value of the fiscal period ended December 31, 2019, the sale price is deemed
the fair value of City House Tokyo Shinbashi, for which the purchase and sale agreement was enteredinto on December 9, 2019.
For information related to profits and losses from rental properties, please refer to “Notes to Statement of Income
and Retained Earnings.”
37

(Notes Related to Tax Accounting)
1. Significant components of deferred tax assets and liabilities(Unit: JPY thousand)Fiscal period ended
December 31, 2019

Fiscal period ended
June 30, 2020(Deferred tax assets)
Enterprise tax payable

821

731

Buildings and other (merger)

375,803

301,485

Land (merger)

695,171

693,693

Loss carried forward (Note 1)

522,444522,444

Asset retirement obligations

10,237

10,305

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

88,526

100,736472,363

469,321

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

9,301

4,762

2,174,669

2,103,480(522,444)(522,444)(1,652,225)(1,581,036)(2,174,669)(2,103,480)

-

-

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 December 31, 2019 (as of December 31, 2019)(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--

522,444

Valuation allowance--(201,976)(320,467)--(522,444)

Deferred tax assets

-

-

-

-

-

-

-

(a) Tax loss carried forward is multiplied by statutory tax rate.
Fiscal period ended June 30, 2020 (as of June 30, 2020)(Unit: JPY thousand)Due within
one yearTax loss carriedforward (a)-Valuation allowance
Deferred tax assets

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

522,444

-

-

-

-

Due after
five years

Total

-

-

-

522,444(522,444)---(522,444)

-

-

-

-

-

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

38

2. Significant difference between statutory tax rate and the effective tax rate
(Unit: %)Fiscal period ended
December 31, 2019

Fiscal period ended
June 30, 2020

Statutory tax rate

31.51

31.46

Deductible cash distributions(28.47)(8.87)

Changes in valuation allowance(3.03)(16.98)-(5.61)

Others0.00

0.15

Effective tax rate

0.01

0.14

Untaxable received dividends(Notes Related to Equity-Method Income)Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)
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 673,498 thousand

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 method39

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

(Notes Related to Transactions with Related Parties)
1. Transactions with Parent Company and Major Corporate Unitholders
Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)
Balance atClassification

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)

Purchase of
Shirahama
Tokutei
Minato-ku,
MokutekiTokyo
Kaisha (Note 3)

Investment

0.1 management--business

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

22,322,000--

15,543,000--

11,492,000--

9,731,000--

9,405,000--

8,629,000--

5,524,000--(Note 4)Purchase of
Touyako Godo
Minato-ku,
KaishaTokyo(Note 3)

Investment

0.1 management--business

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

(Note 4)Purchase of
Calvis Tokutei
Minato-ku,
MokutekiTokyo
Kaisha (Note 3)

Investment

0.1 management--business

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

(Note 4)Purchase of
Yaeyama Resort
Hotel Tokutei Minato-ku,
MokutekiTokyo
Kaisha (Note 3)
Interested
party of the
Asset
Manager

Investment

0.1 management--business

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

(Note 4)
Saturnia
Tokutei
Mokuteki
Kaisha(Note 3)

Investment

Minato-ku,
Tokyo

0.1 management

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

HL Investments
2 Tokutei
Minato-ku,
MokutekiTokyo
Kaisha(Note 3)0.1 management

Naqua Hotel &Resorts
Minato-ku,
Management
Tokyo
Co., Ltd.
(Note 3)10

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

100

Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 4)Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 4)Purchase of
Seller of
trust
trust
beneficiary
beneficiary interests ininterests in real estate
real estate(Note 2)
(Note 4)

-

-

-

-

-

-

Hotel
business--

Lessee andoperator of
hotelsRentalrevenues

1,133,572

Accounts
receivableHotelbusiness--

Lessee andoperator of
hotelsRentalrevenues

8,084,924

Accounts
receivable 2,664,336

business

Investment
business

Investment
business

195,942(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) Shirahama Tokutei Mokuteki Kaisha, Touyako Godo Kaisha, Calvis Tokutei Mokuteki Kaisha, Yaeyama Resort Hotel Tokutei
Mokuteki Kaisha, Saturnia Tokutei Mokuteki Kaisha, Kawaguchiko Tokutei Mokuteki Kaisha, HL Investments 2 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 through funds that are managed by affiliates of FIG (asubsidiary of SoftBank Group Corp., which is a parent company of the Asset Manager directly/indirectly owning 100% of its
issued shares). Accordingly, INV treats Shirahama Tokutei Mokuteki Kaisha, Touyako Godo Kaisha, Calvis Tokutei

40

Mokuteki Kaisha, Yaeyama Resort Hotel Tokutei Mokuteki Kaisha, Saturnia Tokutei Mokuteki Kaisha, Kawaguchiko Tokutei
Mokuteki Kaisha, HL Investments 2 Tokutei Mokuteki Kaisha, Naqua Hotel & Resorts Management Co., Ltd. and MyStays
Hotel Management Co., Ltd. as the equivalent 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, to which other expenses for acquisition, property taxes, city planning taxes
and consumption taxes are not included.

Property
NumberName of Property

Counterparty

D64

Hotel MyStays Sapporo Aspen

Touyako Godo Kaisha

15,543,000

D65

Art Hotel Ishigakijima

Yaeyama Resort Hotel Tokutei Mokuteki
Kaisha9,731,000

D66

Hotel MyStays Fuji Onsen Resort

Saturnia Tokutei Mokuteki Kaisha

9,405,000

D67

Hotel Sonia Otaru

Shirahama Tokutei Mokuteki Kaisha

5,930,000

D68

Hotel MyStays Kanazawa Castle

Calvis Tokutei Mokuteki Kaisha

5,682,000

D69

Art Hotel Niigata Station

HL Investments 2 Tokutei Mokuteki Kaisha

5,524,000

D70

Hotel MyStays Nagoya Nishiki

Shirahama Tokutei Mokuteki Kaisha

5,197,000

D71

Hotel Nord Otaru

Shirahama Tokutei Mokuteki Kaisha

4,296,000

D72

Hotel MyStays Kagoshima Tenmonkan

Kawaguchiko Tokutei Mokuteki Kaisha

3,445,000

D73

Art Hotel Asahikawa

Shirahama Tokutei Mokuteki Kaisha

3,197,000

D74

Hotel MyStays Matsuyama

Calvis Tokutei Mokuteki Kaisha

3,098,000

D75

Hotel MyStays Sapporo Susukino

Kawaguchiko Tokutei Mokuteki Kaisha

3,059,000

D76

Hotel MyStays Sapporo Nakajima Park

Shirahama Tokutei Mokuteki Kaisha

2,118,000

D77

Hotel MyStays Sapporo Nakajima Park Annex

Shirahama Tokutei Mokuteki Kaisha

1,584,000

D78

Flexstay Inn Sakuragicho

Calvis Tokutei Mokuteki Kaisha

1,425,000

D79

MyCUBE by MYSTAYS Asakusa Kuramae

Calvis Tokutei Mokuteki Kaisha

1,287,000

D80

Hotel MyStays Kagoshima Tenmonkan Annex

Kawaguchiko Tokutei Mokuteki Kaisha

1,168,000

D81

Hotel MyStays Nayoro

Kawaguchiko Tokutei Mokuteki Kaisha

957,000

Total

Purchase Price(JPY thousand)

82,646,000

41

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

40,124--

Rental

2,205,610 receivables 1,834,677

985,476

Accounts
payableother

93,109(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

2.

Purchase Price(JPY thousand)

16,236,000

Transactions with Affiliates
None for both the fiscal periods ended December 31, 2019 and the fiscal period ended June 30, 2020.

3.

Transactions with Companies under Common Control
None for both the fiscal periods ended December 31, 2019 and the fiscal period ended June 30, 2020.

4.

Transactions with Directors and Major Individual Unitholders

42

Fiscal period ended December 31, 2019 (from July 1, 2019 to December 31, 2019)

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)

323,669

Accruedexpenses

181,945-

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.

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.

43

(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
December 31, 2019

Fiscal period ended
June 30, 2020

Total specified assets
Total other assets

100,450,855
3,753,104

100,194,569
3,724,184

Total current liabilities
Total non-current liabilities

128,71266,280,661

79,072
66,278,918

Total net assets

37,794,586

37,560,763

Operating revenue
Income before income taxes
Net income

2,010,770
1,375,369
1,374,486

1,748,867
1,141,544
1,140,663(Notes Related to Per Unit Information)
Fiscal period ended
December 31, 2019(from July 1, 2019 to
December 31, 2019)

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

Net assets per unit

JPY 42,601

JPY 40,929

Net income per unit

JPY 1,910

JPY 70Net 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
December 31, 2019(from July 1, 2019 to
December 31, 2019)

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

44

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

11,638,948

423,917--

11,638,948

423,917

6,093,427

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.
45

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.

46

(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.

47

(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.

48

3. Reference Information(1)

Composition of INV’s Assets
Fiscal period ended December 31, 2019(as of December 31, 2019)

Type ofasset

Purpose

Geographic area

Percentage of
total assets(%)

Amount held
(JPY million)

3

0.0

2

0.0

-

-

-

-

Overseas (Note 4)

35,442

6.8

35,527

6.9

Subtotal

35,445

6.8

35,5306.9

35,445

6.8

35,5306.9

38,366

7.3

35,8806.9

15,186

2.9

15,023

2.9

53,552

10.3

50,904

9.9

-

-

-

-

4,789

0.9

4,738

0.9

4,789

0.9

4,738

0.9

161,20230.9

171,17033.1

210,59240.3

214,91241.6

371,79471.2

386,08274.7(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/Commercia
Major regional
estate inl facilities
citiestrust
Subtotal

HotelsFiscal period ended June 30, 2020(as of June 30, 2020)

Greater Tokyo
area
Major regional
citiesSubtotal(Note 2)

Percentage of
total assets(%)

Total real estate in trust

430,13782.3

441,725

85.5

Preferred equity interest (Note 5)

17,856

3.4

17,856

3.5

Deposits and other assets

38,992

7.5

21,5504.2

522,431100.0

516,663100.0(465,583)(89.1)(477,256)(92.4)

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 are theundying 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)49

Fiscal period ended December 31, 2019(as of December 31, 2019)
Percentage ofAmount (JPY million)
total assets (%)

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

Total Liabilities

262,701

50.3

267,125

51.7

Total Net Assets

259,730

49.7

249,538

48.3

Total Liabilities
and Net Assets

522,431100.0

516,663

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, 2019.

aPrice and investment percentage

Appraisa
Balancel value atAcquisition
sheet
Investment the end
Property
Location
Legal form
price
carrying percentageof theAppraiser
numberName of property(Note 2)of asset (JPY million) value(%)
period(Note 7)(Note 1)
(Note 3)(JPY
(Note 4)(JPY
million)million)(Note 5)
Trust
Nisshin Palacestage
beneficiaryA26
1-31-2 Izumi, Suginami-ku, Tokyo
1,251
1,093
0.2
1,230
A
Daitabashi
interests(Note 8)
Trust
Nisshin Palacestage
5-4-1 Nagasaki, Toshima-ku,
beneficiary
A27
1,229
1,046
0.2
1,360
A
Higashi-NagasakiTokyointerests(Note 8)Trust
2-26-6 Nishi-Gotanda,
A28 Growth Maison Gotanda
beneficiary
888
835
0.2
1,030
A
Shinagawa-ku, Tokyo
interests
Trust
Growth Maison
A29
6-58-16 Kameido, Koto-ku, Tokyo beneficiary
1,070
949
0.2
1,160
A
Kameidointerests
Trust
3-27-18 Itabashi, Itabashi-ku,
A30 Emerald House
beneficiary
1,505
1,322
0.3
1,430
A
Tokyo
interests
Trust
3-15-35 Takanodai, Nerima-ku,
beneficiary
A32 Suncrest Shakujii-Koen
1,088
1,055
0.2
1,110
A
Tokyo
interests(Note 8)Trust
Growth Maison Shin3-16-2 Shin-Yokohama, Kohoku- beneficiary
A33
1,059
932
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
921
0.2
1,090
A
Okachimachi
Tokyointerests(Note 8)Trust
beneficiary
A35 Grand Rire Kameido
3-39-12 Kameido, Koto-ku, Tokyo
906
792
0.2
1,010
A
interests(Note 8)Trust
1-15-15 Okamoto, Setagaya-ku,
beneficiary
A37 Growth Maison Yoga
795
724
0.2
784
A
Tokyo
interests(Note 8)Trust
3-7-6 Nishikicho, Tachikawa-shi,
A38 Route Tachikawa
beneficiary
676
635
0.1
674
A
Tokyo
interests

50

Appraisa
Balancel value atAcquisition
sheet
Investment the end
Property
Location
Legal form
price
carrying percentageof theAppraiser
numberName of property(Note 2)of asset (JPY million) value(%)
period(Note 7)(Note 1)
(Note 3)(JPY
(Note 4)(JPY
million)million)(Note 5)
Trust
Shibuya-Honmachi
2-35-2 Honmachi, Shibuya-ku,
beneficiary
A39
651
699
0.1
668
A
MansionTokyo
interests(Note 8)Trust
4-13-15 Kinuta, Setagaya-ku,
A40 City Heights Kinuta
beneficiary
646
649
0.1
557
A
Tokyo
interests
Trust
2-5-13 Namiki, Kawaguchi-shi,
Acseeds Tower
beneficiary
A41
620
517
0.1
769
A
Saitama
Kawaguchi-Namiki
interests(Note 8)Trust
3-4-4 Nakamachi, Machida-shi,
beneficiary
A43 College Square Machida
589
559
0.1
507
A
Tokyo
interests(Note 8)Trust
beneficiary
A44 Belair Meguro
1-2-15 Meguro, Meguro-ku, Tokyo
589
547
0.1
631
A
interests(Note 8)Trust
2-7-47 Tarumachi, Kohoku-ku,
beneficiary
A45 Wacore Tsunashima I
572
518
0.1
527
A
Yokohama-shi, Kanagawa
interests(Note 8)Trust
1-6-6 Kouyama, Nerima-ku,
beneficiary
A46 Foros Nakamurabashi
566
501
0.1
587
A
Tokyo
interests(Note 8)Trust
5-29-51 Kaijin, Funabashi-shi,
beneficiary
A47 Growth Maison Kaijin
557
506
0.1
519
A
Chiba
interests(Note 8)Trust
7-3-1 Arakawa, Arakawa-ku,
beneficiary
A48 College Square Machiya
510
437
0.1
567
A
Tokyo
interests(Note 8)
Trust
Nishiwaseda Cresent
3-18-9 Nishi-Waseda, Shinjukubeneficiary
A53
1,880
1,882
0.4
2,810
C
Mansionku, Tokyo
interests
Trust
Lexington Square
3-8 Yochomachi, Shinjuku-ku,
beneficiary
A54
1,450
1,287
0.3
1,990
D
Akebonobashi
Tokyo
interests
Trust
Towa City Coop
5-49-7 Higashi-Ikebukuro,
beneficiary
A59
866
801
0.2
1,250
B
Shinotsuka II
Toshima-ku, Tokyo
interests
Trust
1-22-7 Sekimachi-Kita, Nerima-ku,
beneficiary
A61 Bichsel Musashiseki
577
563
0.1
828
C
Tokyo
interests
Trust
Towa City Coop
4-338-2 Sengencho, Nishi-ku,
beneficiary
A63
1,110
1,008
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
675
B
Sendai-shi, Miyagi
interests
Trust
Lexington Square
1-15-16 Haginomachi,
beneficiary
A65
330
270
0.1
417
B
Haginomachi
Miyagino-ku, Sendai-shi, Miyagi
interests
Trust
2-44 Otanacho, Chikusa-ku,
beneficiary
A66 Visconti Kakuozan
255
229
0.0
286
D
Nagoya-shi, Aichi
interests
Trust
Lexington Square1-33-18 Izumi, Suginami-ku,
beneficiary
A71
977
820
0.2
1,260
D
Daitabashi
Tokyo
interests

51

Appraisa
Balancel value atAcquisition
sheet
Investment the end
Property
Location
Legal form
price
carrying percentageof theAppraiser
numberName of property(Note 2)of asset (JPY million) value(%)
period(Note 7)(Note 1)
(Note 3)(JPY
(Note 4)(JPY
million)million)(Note 5)
Trust
Lexington Square Honjo 4-20-6 Higashikomagata,beneficiary
A72
511
419
0.1
653
D
Azumabashi
Sumida-ku, Tokyo
interests
Trust
AMS TOWER Minami 6- 2-5-15 Minami 6-Jo Nishi,
beneficiary
A73
1,180
899
0.2
1,250
D
Jo
Chuo-ku, Sapporo-shi, Hokkaido
interests
TrustbeneficiaryA76 Neo Prominence
3-21-5 Shimo, Kita-ku, Tokyo
1,660
1,588
0.3
2,270
B
interests
Trust
Invoice Shin-Kobe
3-3-8 Ikutacho Chuo-ku, Kobebeneficiary
A77
1,260
1,123
0.2
1,470
B
Residence
shi, Hyogo
interests
Trust
3-12-20 Motomachidori Chuo-ku,
beneficiary
A78 Cosmo Court Motomachi
973
856
0.2
1,140
B
Kobe-shi, Hyogo
interests
Trust
2-13 Toriidori Nakamura-ku,
beneficiary
A79 Revest Honjin
674
587
0.1
843
B
Nagoya-shi, Aichi
interests
Trust
3-13-12 Matsubara Naka-ku,
beneficiary
A80 Revest Matsubara
657
576
0.1
841
B
Nagoya-shi, Aichi
interests
Trust
3-6-8 Noritake Shinmachi, Nishibeneficiary
A82 Alba Noritake Shinmachi
608
528
0.1
775
B
ku, Nagoya-shi, Aichi
interests
Trust
2-13-33 Meieki-Minami,
beneficiary
A83 Revest Meieki Minami
597
518
0.1
810
B
Nakamura-ku, Nagoya-shi, Aichi
interests
Trust
2-13-17 Heian, Kita-ku,
beneficiary
A84 Revest Heian
595
520
0.1
746
B
Nagoya-shi, Aichi
interests
Trust
A85 Vendir Hamaotsu Ekimae 1-2-15 Hamaotsu, Otsu-shi, Shiga beneficiary
581
497
0.1
795
B
interests
Trust
2-6-21 Shimanouchi Chuo-ku,
beneficiary
A86 Salvo Sala
544
480
0.1
677
B
Osaka-shi, Osakainterests
Trust128-1 Yamabukicho Shinjuku-ku,
beneficiary
A87 Excellente Kagurazaka
543
494
0.1
696
B
Tokyo, and one other parcel
interests
Trust
3-4-11 Edobori, Nishi-ku,
beneficiary
A88 Luna Court Edobori
525
466
0.1
606
B
Osaka-shi, Osakainterests
Trust
Winntage Kobe
7-2-2 Motomachidori, Chuo-ku,
beneficiary
A89
512
447
0.1
639
B
Motomachi
Kobe-shi, Hyogo
interests
Trust
A90 Queen's Court Fukuzumi 1-3-10 Fukuzumi, Koto-ku, Tokyo beneficiary
456
421
0.1
686
B
interests
380-1 Kawaranomachi,
Trust
Higashinotoindori Nijo Kudaru,
beneficiary
A91 Corp Higashinotoin
446
400
0.1
541
B
Nakagyo-ku, Kyoto-shi, Kyoto,interests
and two other parcels
Trust
5-14-17 Higashi-Oi, Shinagawabeneficiary
A92 Belair Oimachi
412
383
0.1
569
B
ku, Tokyo
interests
Trust
3-18 Minami-Tsukaguchimachi,
beneficiary
A93 Siete Minami-Tsukaguchi
374
340
0.1
464
B
Amagasaki-shi, Hyogo
interests
Trust
Prime Life Sannomiya
4-3-23 Isogamidori, Chuo-ku,
beneficiary
A94
373
334
0.1
477
B
Isogami Koen
Kobe-shi, Hyogo
interests

52

Appraisa
Balancel value atAcquisition
sheet
Investment the end
Property
Location
Legal form
price
carrying percentageof theAppraiser
numberName of property(Note 2)of asset (JPY million) value(%)
period(Note 7)(Note 1)
(Note 3)(JPY
(Note 4)(JPY
million)million)(Note 5)
Trust
HERMITAGE NANBA 4-10-3 Sakuragawa, Naniwa-ku,
beneficiary
A95
355
316
0.1
467
B
WEST
Osaka-shi, Osakainterests
Trust
Century Park Shinkawa 4-1-2 Shinkawacho, Minato-ku,
beneficiary
A96
335
309
0.1
466
B
1-bankan
Nagoya-shi, Aichi
interests
Trust
A97 West Avenue
1-5-17 Nishi, Kunitachi-shi, Tokyo beneficiary
331
308
0.1
341
B
interests
Trust
Little River
1-34 Honmachibashi, Chuo-ku,
beneficiary
A98
310
279
0.1
415
B
Honmachibashi
Osaka-shi, Osakainterests
Trust
2-25-11 Mikage Tsukamachi,
beneficiary
A99 Prime Life Mikage
297
266
0.1
345
B
Higashinada-ku, Kobe-shi, Hyogo
interests
Trust
1-6-3 Kita 1-jo Higashi, Chuo-ku,
beneficiary
A100 City Court Kitaichijo
1,782
1,690
0.3
2,160
B
Sapporo-shi, Hokkaido
interests
Trust
5-45-10 Mukojima, Sumida-ku,
beneficiary
A101 Lieto Court Mukojima
1,683
1,642
0.3
2,000
B
Tokyo
interests
Trustbeneficiary
A102 Lieto Court Nishi-Ojima 2-41-14 Ojima, Koto-ku, Tokyo
1,634
1,590
0.3
1,960
B
interests
Trust
5-38 Fudegasakicho, Tennouji-ku,
beneficiary
A103 Royal Parks Momozaka
2,910
2,699
0.6
3,230
C
Osaka-shi, Osakainterests
Trust
3-35-20 Shinden, Adachi-ku,
beneficiary
A104 Royal Parks Shinden
5,024
4,797
1.0
5,840
C
Tokyo
interests
Trust
Royal Parks Seasir
3-41-7 Minami-Senju, Arakawabeneficiary
A106
2,683
2,627
0.5
2,920
B
Minami-Senju
ku, Tokyo
interests
Subtotal (60 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

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
Hotel MyStays Kanda

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

53

55,48550,90410.8

65,438

-

3,280

3,000

0.6

3,670

C

2,320

1,737

0.5

2,450

C

5,600

4,738

1.1

6,120

-

2,851

2,921

0.6

4,920

B

2,584

2,515

0.5

4,410

B

6,024

5,770

1.2

10,500

B

4,930

4,584

1.0

7,200

B

4,870

4,699

1.0

6,770

B

Appraisa
Balancel value atAcquisition
sheet
Investment the end
Property
Location
Legal form
price
carrying percentageof theAppraiser
numberName of property(Note 2)of asset (JPY million) value(%)
period(Note 7)(Note 1)
(Note 3)(JPY
(Note 4)(JPY
million)million)(Note 5)
Trust
Hotel MyStays Premier 2-4-1 Sonezakishinchi, Kita-ku,
beneficiary
D06
3,845
3,699
0.8
6,810
B
DojimaOsaka-shi, Osakainterests
Trust
Hotel MyStays Nagoya- 2-23-22 Higashi-Sakura, Naka-ku,
beneficiary
D07
2,958
2,596
0.6
5,530
B
Sakae
Nagoya-shi, Aichi
interests
Trust
Hotel MyStays
1-4-8 Awaji-machi, Chuo-ku,
beneficiary
D08
2,514
2,340
0.5
4,220
B
Sakaisuji-Honmachi
Osaka-shi, Osakainterests
Trust
Hotel MyStays
4-81 Sueyoshicho, Naka-ku,
beneficiary
D09
2,119
2,300
0.4
3,890
B
Yokohama
Yokohama-shi, Kanagawa
interests
Trust
5-43-7 Higashi-Nippori,beneficiary
D10 Hotel MyStays Nippori
1,898
1,789
0.4
2,510
B
Arakawa-ku, Tokyo
interests
Trust
Hotel MyStays
3-14-20 Haruyoshi, Chuo-ku,
beneficiary
D11
1,570
1,458
0.3
5,570
B
Fukuoka-Tenjin-Minami Fukuoka-shi, Fukuoka
interests
Trust
3-26 Shin-Ogawamachi,
beneficiaryD12 Flexstay Inn Iidabashi
1,381
1,341
0.3
2,130
B
Shinjuku-ku, Tokyo
interests
Trust
Hotel MyStays Ueno
D13
1-5-7 Matsugaya, Taito-ku, Tokyo beneficiary
1,331
1,231
0.3
2,010
B
Inarichointerests
Trust
1-22-19 Kita-Shinagawa,beneficiaryD14 Flexstay Inn Shinagawa
1,242
1,193
0.2
1,980
B
Shinagawa-ku, Tokyo
interests
Trust
1-52-5 Tokiwadai, Itabashi-ku,
beneficiary
D15 Flexstay Inn Tokiwadai
1,242
1,197
0.2
2,140
B
Tokyo
interests
Trust
3-6-16 Sugamo, Toshima-ku,
beneficiaryD16 Flexstay Inn Sugamo
1,192
1,108
0.2
2,260
B
Tokyo
interests
Trust
1-3-2 Tokuicho, Chuo-ku,
beneficiary
D17 Hotel MyStays Otemae
1,192
1,133
0.2
2,920
B
Osaka-shi, Osakainterests
Trust
Hotel MyStays Kiyosumi
beneficiary
D18
1-12-16 Tokiwa, Koto-ku, Tokyo
749
888
0.1
1,500
B
Shirakawainterests
Trust
Flexstay Inn Nakanobu 4-27-12 Futaba, Shinagawa-ku,
beneficiary
D19
589
561
0.1
803
B
P1
Tokyo
interests
Trust
Flexstay Inn Nakanobu 4-27-8 Futaba, Shinagawa-ku,
beneficiary
D20
283
284
0.1
387
B
P2
Tokyo
interests
Trust
APA Hotel Yokohama- 3-37-2 Sumiyoshicho, Naka-ku,
beneficiary
D21
8,350
7,607
1.6
9,930
B
Kannai
Yokohama-shi, Kanagawa
interests
Trust
Hotel MyStays
26-17 Honcho, Hakodate-shi,
beneficiary
D22
2,792
2,772
0.5
3,900
B
Hakodate-Goryokaku
Hokkaido
interests
Trust
5-10-15 Shirokane, Minato-ku,
beneficiary
D23 Flexstay Inn Shirogane
2,119
2,083
0.4
2,360
B
Tokyo
interests
Trustbeneficiary
D24 Hotel MyStays Haneda 5-1-13 Haneda, Ota-ku, Tokyo
7,801
7,243
1.5
8,590
B
interests
Trust
Hotel MyStays Kameido
D25
6-32-1 Kameido, Koto-ku, Tokyo beneficiary
5,594
5,346
1.1
7,370
B
P1
interests

54

Appraisa
Balancel value atAcquisition
sheet
Investment the end
Property
Location
Legal form
price
carrying percentageof theAppraiser
numberName of property(Note 2)of asset (JPY million) value(%)
period(Note 7)(Note 1)
(Note 3)(JPY
(Note 4)(JPY
million)million)(Note 5)
Trust
Hotel MyStays Ueno
5-5-13 Higashi-Ueno, Taito-ku,
beneficiary
D26
3,821
3,666
0.7
3,760
B
IriyaguchiTokyo
interests
Trust
Hotel MyStays Kameido
beneficiaryD27
6-7-8 Kameido, Koto-ku, Tokyo
3,742
3,558
0.7
4,930
B
P2
interests
Trust
1-23 Masagocho, Shimizu-ku,
beneficiary
D28 Hotel MyStays Shimizu
2,198
2,115
0.4
2,380
B
Shizuoka-shi, Shizuoka
interests
Trust
Super Hotel Shinbashi/ 5-16-4 Shinbashi, Minato-ku,
beneficiary
D29
1,624
1,585
0.3
1,940
B
KarasumoriguchiTokyo
interests
Trustbeneficiary
D30 Flexstay Inn Higashi-Jujo 2-10-2 Nakajujo, Kita-ku, Tokyo
1,277
1,269
0.2
1,300
B
interests
Trust
Hotel MyStays
2-4-1 Higashi-Shukugo,
beneficiary
D31
1,237
1,213
0.2
2,000
B
Utsunomiya
Utsunomiya-shi, Tochigi
interests
Trust
Flexstay Inn Kawasaki- 1-13-2 Kaizuka, Kawasaki-ku,
beneficiary
D32
980
901
0.2
1,110
B
Kaizuka
Kawasaki-shi, Kanagawa
interests
Trust
1-3-2 Takara-machi, Toyama-shi,
beneficiary
D33 Comfort Hotel Toyama
979
910
0.2
1,160
B
Toyamainterests
Trust
Flexstay Inn Kawasaki- 15-9 Ogawacho, Kawasaki-ku,
beneficiary
D34
906
877
0.2
890
B
Ogawacho
Kawasaki-shi, Kanagawa
interests
Trust
D35 Flexstay Inn Ekoda
8-6 Sakaecho, Nerima-ku, Tokyo beneficiary
5,069
4,830
1.0
4,580
B
interests
Trust
Super Hotel Tokyo-JR
2-21-9 Akebonocho, Tachikawabeneficiary
D36
1,170
1,097
0.2
1,260
E
Tachikawa Kitaguchi
shi, Tokyo
interests
Trust
Super Hotel JR UenobeneficiaryD37
7-9-14 Ueno, Taito-ku, Tokyo
1,130
1,077
0.2
1,210
E
iriyaguchiinterests
Trust
Hotel MyStays
1-9-30 Nishi-Shinsaibashi,
beneficiary
D38
3,160
3,025
0.6
2,720
B
Shinsaibashi
Chuo-ku, Osaka-shi, Osakainterests
Trust
3-13-13 Kurosaki, Yahatanishi-ku,
beneficiary
D39 Comfort Hotel Kurosaki
1,148
1,051
0.2
1,250
E
Kitakyusyu-shi, Fukuoka
interests
Trust
2-18-14 Omotecho, Maebashi-shi,
beneficiary
D40 Comfort Hotel Maebashi
1,128
1,019
0.2
1,160
E
Gunma
interests
Trust
Comfort Hotel TsubamebeneficiaryD41
2-115 Sugoro, Sanjo-shi, Niigata
1,010
937
0.2
1,100
E
Sanjo
interests
Trust
3-4 Ohdori-Nishi, Kitami-shi,
beneficiary
D42 Comfort Hotel Kitami
851
782
0.2
926
E
Hokkaido
interests
Trust
Hotel MyStays Gotanda 2-6-8 Nishi-Gotanda,
beneficiaryD43
26,52326,351
5.2
23,900C
Station (Note 9)
Shinagawa-ku, Tokyo
interests
Trust
1-10 Kaidoue, Oaza-Takakuhei,
beneficiary
D44 Hotel Epinard Nasu
Nasu-machi, Nasu-gun, Tochigi
20,981
19,521
4.1
22,900C
interests(and 59 other parcels)
Trust
Hotel MyStays Fukuoka 3-5-7 Tenjin, Chuo-ku, Fukuokabeneficiary
D45
8,059
7,875
1.6
8,110
C
Tenjinshi, Fukuoka
interests

55

Property
number(Note 1)Name of property

Location(Note 2)

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

D55

Art Hotel Joetsu

5-1-11, Hon-cho Joetsu-shi,
Niigata

D56

Art Hotel Hirosaki City

1-1-2, 1-1-6, 1-1-7, 1-2-1, Omachi,
Hirosaki-shi, Aomori

D57

Hotel MyStays Oita

1-32, Niagemachi Oita-shi, Oita

D58

Hotel MyStays Gotanda

2-5-4, Higashigotanda
Shinagawa-ku, Tokyo

D59

Hotel MyStays
Tachikawa

1-8-14, Nishiki-cho Tachikawashi, Tokyo

D60

Hotel MyStays Premier
Akasaka

2-17-54, Akasaka Minato-ku,
Tokyo

D61

Hotel MyStays Premier
Sapporo Park

2-2-10, Minamikujonishi Chuoku, Sapporo-shi, Hokkaido

D62

Hotel MyStays Ueno
East

5-5-6, Higashi Ueno Taito-ku,
Tokyo

D63

Hotel MyStays Midosuji 3-2-10, Honmachi, Chuo-ku,
HonmachiOsaka-shi, Osaka

D64

Hotel MyStays Sapporo
Aspen

5-1 Nishi 4-chome, Kita 8-jo, Kitaku, Sapporo-shi, Hokkaido, andseven other lots

D65

Art Hotel Ishigakijima554-2 Nishimaji Okawa, Ishigakishi, Okinawa, and four other lots

Appraisa
Balancel value atAcquisition
sheet
Investment the end
Legal form
price
carrying percentageof theAppraiserof asset (JPY million) value(%)
period(Note 7)(Note 3)(JPY
(Note 4)(JPY
million)million)(Note 5)Trust
beneficiary
7,959
7,910
1.6
6,220
C
interests
Trustbeneficiary
13,761
12,9122.7
12,800C
interests
Trustbeneficiary
2,139
2,119
0.4
2,260
E
interests
Trustbeneficiary
8,000
7,982
1.6
10,300B
interests
Trustbeneficiary
13,06812,921
2.6
12,800D
interests
Trustbeneficiary
9,781
9,768
1.9
9,620
D
interests
Trustbeneficiary
8,870
8,143
1.7
8,670
D
interests
Trustbeneficiary
7,880
7,749
1.5
8,180
D
interests
Trustbeneficiary
5,326
5,204
1.0
5,250
D
interests
Trustbeneficiary
2,772
2,695
0.5
2,690
D
interests
Trustbeneficiary
2,723
2,607
0.5
2,660
D
interests
Trustbeneficiary
1,604
1,529
0.3
1,560
D
interests
Trustbeneficiary
4,068
4,061
0.8
3,920
D
interests
Trustbeneficiary
3,257
3,217
0.6
3,330
E
interests
Trustbeneficiary
20,691
20,4784.0
23,200B
interests
Trustbeneficiary
16,731
16,371
3.3
16,200D
interests
Trustbeneficiary
5,286
5,213
1.0
5,110
D
interests
Trustbeneficiary
5,039
4,934
1.0
4,130
B
interests
Trustbeneficiary
15,543
15,4553.0
14,900D
interests
Trustbeneficiary
9,731
9,656
1.9
9,290
B
interests

56

Appraisa
Balancel value atAcquisition
sheet
Investment the end
Property
Location
Legal form
price
carrying percentageof theAppraiser
numberName of property(Note 2)of asset (JPY million) value(%)
period(Note 7)(Note 1)
(Note 3)(JPY
(Note 4)(JPY
million)million)(Note 5)
Trust
2654 Arakura Deguchi,
Hotel MyStays Fuji
D66
Fujiyoshida-shi, Yamanashi, and beneficiary
9,405
9,215
1.8
9,750
B
Onsen Resort
interests
15 other lots
Trust
1-4-20 Ironai, Otaru-shi,
beneficiary
D67 Hotel Sonia Otaru
5,930
5,825
1.2
5,640
D
Hokkaido
interests
Trust
Hotel MyStays
10-17 Konohana-machi,
beneficiary
D68
5,682
5,663
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
5,543
1.1
5,330
D
shi, Niigata
interests
Trust
Hotel MyStays Nagoya 3-8-21 Nishiki, Naka-ku, Nagoyabeneficiary
D70
5,197
5,162
1.0
5,110
C
Nishikishi, Aichi
interests
Trust
1-4-16 Ironai, Otaru-shi,
beneficiary
D71 Hotel Nord Otaru
4,296
4,246
0.8
4,090
D
Hokkaido
interests
Trust
Hotel MyStays
2-7 Yamanokuchi-cho,beneficiary
D72
3,445
3,413
0.7
3,420
E
Kagoshima Tenmonkan Kagoshima-shi, Kagoshima
interests
Trust
6-29-2 7-jo-dori, Asahikawa-shi,
beneficiary
D73 Art Hotel Asahikawa
3,197
3,103
0.6
3,050
D
Hokkaido
interests
Trust
Hotel MyStays
1-10-10 Otemachi, Matsuyamabeneficiary
D74
3,098
3,021
0.6
3,170
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
3,038
0.6
2,970
C
Susukino
interests
and one other lot
Trust
Hotel MyStays Sapporo 1-20 Nishi 1-chome, Minami 14-jo,beneficiary
D76
2,118
2,092
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
1,566
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
1,417
0.3
1,450
E
interests
four other lots
Trust
MyCUBE by MYSTAYS
beneficiary
D79
2-6-7 Kuramae, Taito-ku, Tokyo
1,287
1,284
0.3
1,280
E
Asakusa Kuramaeinterests
Hotel MyStays
Trust
1-20 Gofuku-machi, Kagoshimabeneficiary
D80 Kagoshima Tenmonkan
1,168
1,161
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
936
0.2
932
C
interests
other lot
Trust
Hotel MyStays Premier 40 Yokomine Oyama, Narita-shi,
beneficiary
D82
10,593
10,521
2.1
10,100D
NaritaChibainterests
Trust
D83 Art Hotel Morioka
3-3-18 Odori, Morioka-shi, Iwate beneficiary
5,643
5,599
1.1
5,400
C
interests
31,15830,061The(USD
Westin Grand Cayman(USD30620 Seven Mile Beach Road,
289,200
LeaseholdD200 Seven Mile Beach
29,777
5.9
FGrand Cayman, Cayman Islands
272,171
thousand)Resort & SPA(Note 10)thousand)(Note 11)57

Property
number(Note 1)Name of property

Location(Note 2)

D201

Sunshine Suites Resort

1465 Esterley Tibbetts Highway,
Grand Cayman, Cayman Islands

Appraisa
Balancel value atAcquisition
sheet
Investment the end
Legal form
price
carrying percentageof theAppraiserof asset (JPY million) value(%)
period(Note 7)(Note 3)(JPY
(Note 4)(JPY
million)million)(Note 5)
5,462
The
5,842
(USD
50,700
Leasehold (USD 52,898
5,749
1.1
F
thousand)(Note 10)thousand)(Note 11)

Subtotal (85 properties)

432,763421,61384.6

470,778-

Total (147 properties)

493,849

477,25696.5

542,336-

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 (148 properties)

511,695

495,112

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).

(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 97,300 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:58

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, Nisshin Palacestage Higashi-Nagasaki, Growth Maison Shin-Yokohama, Belle Face UenoOkachimachi, 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 are the undying 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 107.74, which is theexchange rate on the closing date of the fiscal period (June 30, 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.

59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 June 30, 2020 for the real estate assets is as follows.
Estimated Cost (JPY thousand)Name of Property

Location

PurposeScheduled Time of
Implementation

Hotel MyStays
D49 Premier
Hamamatsucho

Minato-ku,
Tokyo

Automatic fire
alarm facility
renewal work

A47

Growth Maison
Kaijin

D71 Hotel Nord Otaru

Total

Payment for
Advancethe Reporting
Payments
PeriodFrom July 2020
To December 2020

30,750--

Funabashi-shi, Parking lot repair From July 2020
work
Chiba
To December 2020

22,000--Otaru-shi,
Hokkaido

Parking lot repair From July 2020
work
To December 2020

12,000--

B17

Lexington Plaza
HachimanSendai-shi,
Miyagi

Air conditioning
facility repair
work

From July 2020
To December 2020

11,000--D52

Beppu Kamenoi
Hotel

Beppu-shi,Oita

Elevators repair
work

From July 2020
To December 2020

8,500

-

-

(b) Capital expenditures for the fiscal period ended June 30, 2020
The principal construction work constituting capital expenditures for the real estate assets for the fiscal
period ended June 30, 2020 is as follows. Capital expenditures for the fiscal period totaled JPY 1,650,884
thousand, and together with JPY 21,467 thousand in repair costs included in this fiscal period’s expenses,
construction work totaling JPY 1,672,352 thousand was implemented.

Name of property

Location

PurposeTime ofimplementation

Payment(JPY thousand)Westin Grand
Cayman Seven
D200
Mile Beach Resort
& SPA

Grand
Cayman,CaymanIslands

Restaurants and kitchensrenovation work

From January 2020
To June 2020

369,712

D44

Hotel Epinard
Nasu

Nasu-gun,Tochigi

Energy-saving facility
introduction work

From January 2020
To June 2020

145,209

D46

Hotel MyStays
Hamamatsucho

Minato-ku,TokyoRenovation work

From January 2020
To June 2020

135,004

D69

Art Hotel Niigata
StationNiigata-shi,
Niigata

Energy-saving facility
introduction work

From January 2020
To June 2020

130,296

D45

Hotel MyStays
Fukuoka Tenjin

Fukuoka-shi,
FukuokaRenovation work

From January 2020
To June 2020

126,896

Other construction

743,765
Total(3)

1,650,884

Tenant Summary

a Summary of lease conditions by property
Disclosure is omitted because the information is described in the presentation material for the 34th Fiscal
Period Ended June 2020 separately announced today.
b Occupancy trend
Disclosure is omitted because the information is described in the presentation material for the 34th Fiscal
Period Ended June 2020 separately announced today.
60