[For Information Purpose Only]

July 25, 2017

To All Concerned Parties
Name of REIT Issuer:
Invincible Investment Corporation
Name of representative:
Naoki Fukuda, Executive Director
Roppongi Hills Mori Tower
6-10-1 Roppongi, Minato-ku, Tokyo, Japan(Securities code: 8963)
Asset manager:
Consonant Investment Management Co., Ltd.
Naoki Fukuda, CEOContact: Jun Komo
General Manager of Planning Department(Tel. +81-3-5411-2731)
Notice concerning Acquisition and Sale of Assets
Invincible Investment Corporation (“INV”) announced today the additional acquisition (the “Additional
Acquisition”) of an existing hotel (a portion not owned by INV of a property which is partially owned by INV.
Hereafter the “Additional Acquisition Property”) and sale of assets (one office building and one parking lot;
Hereafter, individually “Property to be Sold,” or collectively “Properties to be Sold”) decided by Consonant
Investment Management Co., Ltd. (“CIM”), the asset manager of INV.
INV will acquire three additional floors (49 rooms) at Hotel MyStays Gotanda Station, an existing property inits portfolio. The acquisition is accretive as it increase the hotels gross operating profit (GOP) throughacquisition of additional floors after conversion from office space to highly desirable hotel rooms and thesynergy associated with using the same front desk, elevator banks and corridors as the existing hotel without
incurring notable additional expense. INV decided to rebalance its portfolio to improve the overall portfolio
NOI yield by acquiring the hotel asset at an estimated NOI cap rate of 7.3%1 and selling an office building andparking lot at an NOI cap rate of 3.8%2.
(Note 1)

(Note 2)

Calculated by dividing the NOI of Hotel MyStays Gotanda Station to be increased after the Additional
Acquisition as estimated by INV as of today by the anticipated acquisition price, which is rounded to one
decimal place. As the anticipated acquisition price is an estimated amount as described below andsubject to change, the estimated NOI cap rate is also subject to change.
Calculated by dividing actual NOI for 2016 of the Properties to be Sold by the anticipated total sales
price, which is rounded to one decimal place.

11. Overview of Acquisition and Sale
(1)
Overview of Acquisition 1
Use

Hotel

Property
number

Property nameLocation

D43

Hotel MyStays
Gotanda Station(Additional
Acquisition
Portion)2

Shinagawaku, Tokyo(Note 1)

(Note 2)

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

Anticipatedacquisition
price3

1,880

Appraisalvalue42,600(in JPY million)
Category
Sellerof specified
asset

Undisclosed5

Trust
beneficiaryinterest

INV will succeed the status of the buyer with regard to the “Purchase and Sale Agreement of Trust
Beneficiary Interest” dated May 12, 2017 (the “PSA”), executed between the seller and Gotanda Godo
Kaisha as the buyer. INV will implement the Additional Acquisition pursuant to the PSA so succeeded.
Hotel MyStays Gotanda Station, INV’s portfolio property, comprises two buildings adjacent to each other,
the Main Building and the Annex Building, and INV currently owns the entire portion of the Main Building
and a portion of the Annex Building (the “Owned Portion”). The hotel (the “Existing Hotel Portion”) has
been operated at a portion of each of the Main Building and the Annex Building that are owned by INV.
The portion INV will acquire this time is (i) a portion of the first floor of the Annex Building and (ii) theentire of the second and third floor of the Annex Building (collectively, the “Floor Expansion Portion”),
totaling 1,385.46 m2. A conversion work (the “Conversion”) has been implemented by the seller in an aim
to add 49 hotel rooms (the “Additional 49 Rooms”). Upon the completion of the Conversion, INV will
implement the Additional Acquisition of the Floor Expansion Portion, and lease the Additional 49 Rooms
to MyStays Hotel Management Co., Ltd. (“MHM”) the tenant and operator of the Existing Hotel Portion,and thus aims to operate the Existing Hotel Portion and the Floor Expansion Portion together in an
efficient manner. Further, the Additional Acquisition will be executed with the condition precedents that
the Conversion is completed in the manner reasonably satisfactory to the buyer.
Anticipated acquisition price is the total of (i) purchase price set forth in the PSA, (ii) expenses withregard to floor conversion work, (iii) transfer price of the furniture, fixture and equipment (FF&E), andother expenses. Expenses with regard to the Conversion and transfer price of the furniture, fixture andequipment (FF&E) are the estimated amount as of today, and are subject to change. Moreover, theanticipated acquisition price does not include adjustments for fixed asset taxes or city planning taxes, aswell as national or local consumption taxes; hereinafter the same.
As the Floor Expansion Portion is under construction, the appraisal value shows the research value set
forth in the research report on the valuation date of June 30, 2017, issued by Morii Appraisal &Investment Consulting, Inc. The research value shows the difference between (i) the research value of
Existing Hotel Portion and Floor Expansion Portion combined, assuming the completion of theConversion (JPY 27,400 million) and (ii) the research value for the Existing Hotel Portion before theAdditional Acquisition (JPY24,800 million). Please refer to “4. Details of Additional Acquisition
Property and Properties to be Sold (1) Additional Acquisition Property”.
The name of the seller is not disclosed, as the seller’s consent has not been obtained for disclosure.
The Additional Acquisition falls under the forward commitment, etc. (a postdated sales contract underwhich payment and delivery shall be made at least one month after the conclusion of the contract, or
any other contract similar thereto) as stipulated in “The Comprehensive Guidelines for Supervision of
Financial Instruments Business Operators, etc.” by the Financial Services Agency. For details, pleaserefer to “”11. Matters concerning Forward Commitment, etc.”
Amounts are rounded down to the nearest million yen; hereinafter the same.

2

(2)

Overview of Sale

Use

Property
numberOfficeBuilding

B08

Parking

C01

Lot

Property
nameKindai Kagaku
Sha Building
Times KandaSudacho 4th
Total(Note 1)

(Note 2)
(Note 3)(Note 4)(Note 5)(in JPY million)
Acquisition
priceBook value(as of July
31, 2017)1

Anticipatedsales price2

Expectedgain onsale1

Transferee3

Categoryof specified
assets
Trust

1,301

1,201

1,361

159

Undisclosed

4

BeneficiaryInterest

Wastec
97

100

130

29

HOLDINGS
Co., Ltd.

1,398

1,301

1,491

Real
property

188

The difference between anticipated sales price and book value indicates estimate for reference purpose
calculated using the book values (anticipated) as of July 31, 2017; INV estimates to recognize a gain on
sales of JPY120 million (of which, JPY96 million for Kindai Kagaku Sha Building, and JPY23 million forTimes Kanda-Sudacho 4th) in the fiscal period ending December 2017.
Anticipated sales prices do not include adjustments for fixed asset taxes or city planning taxes, or
national or local consumption taxes; hereinafter the same.
For an overview of the transferee, please refer below to “5. Overview of seller and transferee.”
The name of the transferee is not disclosed, as the transferee’s consent has not been obtained fordisclosure.
The trust beneficiary interest of Kindai Kagaku Sha Building was integrated in a single trust account withother trust accounts when INV procured funds through debt financing backed by trust assets (the “Trust
Asset-Backed Borrowing”) in July 2011. In transferring the sole trust beneficiary interest of Kindai
Kagaku Sha Building by itself, INV incurred some expenses to detach from the integrated trust account.
For details of Trust Asset-Backed Borrowing and such integration of trust accounts, please refer to“Notice concerning Fund Procurement through Debt Financing Baked by Trust Assets and Repaymentof Borrowings and Change in Trustee of Trust Assets” dated July 15, 2011.

2. Reasons for Acquisitions and Sale
INV continues to proactively manage the portfolio in order to maximize returns for investors, and thetransactions will enhance the overall portfolio profitability and optimizes value for the following reasons(1)

Portfolio repositioning aimed at improving portfolio profitability
The Additional Acquisition Property is expected to add growth potential since the newly
developed/added rooms at Hotel MyStays Gotanda Station will add diversity to the room mix interms of larger room size. The 49 rooms are currently being converted from office space. Hotel
MyStays Gotanda Station has demonstrated strong and consistent performance after theacquisition by INV in March 2016, where RevPAR is 2.7% higher in the second quarter of 2017
compared to the same period in 2016.

The acquisition of the Floor Expansion Portion isaccretive due to the low acquisition price, ability to convert the office space to highly desirable
hotel rooms and the synergy associated with using the same front desk, elevator banks andcorridors as the existing hotel. INV projects that the annual incremental NOI to be created byacquisition of these Additional 49 Rooms is estimated to provide a 7.3% yield to the acquisition

3

5

price for such Additional 49 Rooms. The purchase and sales agreement stipulates that theacquisition of the additional rooms will be consummated only upon successful and satisfactorycompletion of the new rooms.
Selling the office building and parking lot, which exhibit lower upside potential at lower NOI cap
rates will enhance the overall portfolio profitability. The sale of the Properties to be Sold will becompleted at an NOI cap rate of 3.8% and the additional purchase of the Hotel MyStays Gotanda
Station will be at an NOI cap rate of 7.3%, as stated above. This portfolio rebalance is expected
to increase the annual NOI after depreciation on INV’s portfolio by JPY 82 million1 ) (JPY 21 perunit2 ).
(Note1) The amount is an estimated amount for net increase in annual NOI calculated as the estimatedamount of increase of annual NOI after depreciation by the acquisition of Additional Acquisition
Property (JPY 117 million) deducted by the amount of actual NOI after depreciation in 2016 forproperties to be Sold (JPY 34 million). Depreciation amount for the Additional Acquisition
Property is based on current estimate by CIM.
(Note 2) Assuming the number of investment units issued and outstanding as of today (3,680,824 units)
remains unchanged.

(2)

Realization of profit on sale
Reflecting the increased demand for properties located in the central Tokyo area, each of theProperties to be Sold will be sold at a price which exceeds both the book and appraisal values,
and is expected to generate a profit on sale (approximately JPY 120 million, and approximately
JPY 31 per unit1); thus it has been determined that the sale of these properties at this time is in
the interest of INV’s investors.
(Note 1) Assuming the number of investment units issued and outstanding as of today (3,680,824 units)
remains unchanged.

4(3) Focusing on core assets
In June 2014, CIM decided to position both residential properties and hotels as core investment
asset targets for INV. The portfolio repositioning referred to above is in line with INV’s investment
strategy.

(Note1) Anticipated acquisition price is an estimated amount including the estimate of expenses withregard to floor conversion work and transfer price of the furniture, fixture and equipment (FF&E),
and subject to change. The Book Value of Properties to be Sold is estimated amount as of today
for such value as of July 31, 2017, the anticipated disposition date. The Gain on Sales is also an
estimated amount to be recorded in the fiscal year ending December 2017.
(Note2) Calculated by dividing the amount of NOI to be increased through the Additional Acquisition
Property as estimated by INV as of today by the anticipated acquisition price, which is rounded to
one decimal place. As described in note 1 above, the anticipated acquisition price, and therefore,
the NOI Yield, is subject to change.
(Note3) Calculated by dividing actual NOI for 2016 of Properties to be Sold by the anticipated sales price(Note4) Net increased annual NOI calculated by subtracting the NOI after depreciation for 2016 of
Properties to be Sold (JPY 34 million) from the annualized NOI after depreciation estimated to be
increased by the acquisition of Additional Acquisition Property (JPY 117 million).

The

depreciation amount for or the Additional Acquisition Property is based on current estimate by
CIM.
(Note5) Assuming the number of investment units issued and outstanding as of today (3,680,824 units)
remains unchanged5Properties (Hotel
Properties)

Additional

Existing

Sold

Portfolio

Properties

127 (49)

2 (0)

- (-)

125 (49)

299,181

1,398

1,880

299,663363,502

1,173

2,600

364,929

6.6 %

4.5%

7.3%

6.6%

Acquisition
Property

After Sale andAcquisition

Total (Anticipated)
Acquisition Price(million yen)
Total Appraisal Value1(million yen)Appraisal NOI Yield 2(Note 1) “Total Appraisal Value” is based on appraisal value stated in the appraisal report on the valuation
date of June 30, 2017 for all existing properties (including Properties to be Sold) and Additional
Acquisition Property.
(Note 2) “Appraisal NOI Yield” is represented by the figure calculated by dividing the total NOI derived fromthe direct capitalization method stated in the appraisal reports of (Note 1) above by the total of(Anticipated) Acquisition Price, which is rounded to one decimal place. Provided, however, that,net operating income attributed to the land calculated by land residual method is used for Times
Kanda- Sudacho 4th, as there is no NOI calculated by direct capitalization method.

6

3. Execution of Lease Agreement
INV will enter into a lease agreement pertaining to the Floor Expansion Portion with MHM, the tenant andoperator of the Existing Hotel Portion. The lease agreement pertaining to the Existing Hotel Portion
provides components of both fixed and variable rents; containing a variable rent component based ongross operating profit, or GOP. The contents of the lease agreement pertaining to the Floor Expansion
Portion will be similar to that of the Existing Hotel Portion.
INV expects to take advantage of the potential growth in GOP, which could boost INV’s profits, because
the limited service hotel, which accounts for most of the INV-owned hotel properties, exhibits relatively
high profit margins compared with full-service hotel.Even in the case where GOP enters into a downward
trend, INV could limit the decrease in income through the fixed rent portion or downside floor to protect
itself from further loss.
<Overview of Tenant and Operator>

(i)

Name

MyStays Hotel Management Co., Ltd.

(ii)

Location

6-2-31, Roppongi, Minato-ku, Tokyo(iii)

Title and name ofrepresentative officer

Atsuki Asano, President and CEO(iv)

Business(v)

CapitalHotel and Ryokan (Japanese inn) operation and management
JPY 100 million (as of end of December 2016)(vi)

Date of establishment

July 8, 1999

(vii)

Relationship between INV/Asset Manager and the Tenant/Operator
While there are no capital relationships that should be noted
between INV/CIM and MHM, the parent company of MHM isindirectly owned by funds managed by affiliates of FIG, which isan affiliate of Calliope Godo Kaisha (“Calliope”). Calliope holds
Capital relationships
609,942 units of INV’s outstanding investment units (15.79%
stake) as of today. Further, as of today., Calliope is the parent
company of CIM, holding 100% of its outstanding shares.
While there are no personnel relationships that should be noted
between INV/CIM and MHM, as of today., among the directors of
INV and the officers and employees of CIM, Naoki Fukuda, who
is Executive Director of INV and CEO of CIM, is seconded from
Personnel relationships
Calliope. Further, part-time director of CIM, Christopher Reed, isseconded from Fortress Investment Group Japan Godo Kaisha,a subsidiary of FIG.
Transactional
relationships

As of today, INV has entered into lease agreements with MHM
with respect to 36 hotel properties1.

Whether the
Tenant/Operator is arelated party

MHM is not a related party of INV/CIM. Further, related persons
and affiliates of MHM are not related parties of INV/CIM.
Furthermore, MHM is not an interested party, etc. of CIM as
provided in the Act on Investment Trusts and Investment
Corporations (“Investment Trust Act”).

(Note 1) Includes agreements with MHM subsidiaries and management contract between MHM and a tenant.

7

4. Details of Additional Acquisition Property and Properties to be Sold
Details, profit and loss status and outline of appraisal report of the Additional Acquisition Property
and the Properties to be Sold are as follows:a. “Outline of Specified Assets and Properties” column:
・“Legal form of Asset” shows the type (the legal form) of real estate and other assets as
specified asset.
・“Anticipated Acquisition Date”or “Acquisition Date” shows the date when an acquisition is
executed, which is specified in the purchase and sale agreement or the trust beneficiaryinterest purchase and sale agreement.
・“Anticipated Acquisition Price” or “Acquisition Price” shows a purchase price of theAddsitional Acqusition Property or Properties to be Soldas specified in the purchase andsale agreement or the trust beneficiary interest purchase and sale agreement (anticipatedacquisition price includes amount of expenses with regard to floor conversion work and transfer price ofthe furniture, fixture and equipment (FF&E) estimated as of today); consumption tax is not included,

and the price is rounded down to the nearest million yen.
・“Appraisal Value” as to the Additional Acquisition Property shows the research value set
forth in the research report on the valuation date of June 30, 2017, issued by Morii
Appraisal & Investment Consulting, Inc. as the Floor Expansion Portion is underconstruction. The research value shows the difference between (i) the research value of
Existing Hotel Portion and Floor Expansion Portion combined, assuming the completion of
the Conversion and (ii) the research price for the Existing Hotel Portion before theAdditional Acquisition. “Appraisal Value” as to the Properties to be Sold shows reported
price by appraisal agency for Properties to be Sold on the valuation date of June 30, 2017.
・ The details in “Location” (excluding address), “Lot Area (m2)”of the “Land” and,
“Total Floor Area (m2)”, “Structure/No. of Stories,” “Purpose of Use,” and“Completion Date” of the “Building” are, unless otherwise specified, as shown in theproperty register. The “Total Floor Area” is the gross floor area (if no annotation in thecontext, an annex building would not be included), and with respect to “Purpose of Use,”the primary ones of purposes shown in the property register are listed. Further, the“Completion Date” lists the time at which the building was newly constructed, as shown in
the property register.
・ “Transport”shows the time to walk to the nearest station based on the description in theReal Estate Appraisal Report (in case there is no description of time distance in the Real
Estate Appraisal Report,“Transport”is calculated by assuming walking time on the roaddistance of 80 meters per minute in accordance with the Fair Competition Code on theReal Estate Representations (Fair Trade Commission Notification No.2 of 2003, including
subsequent revisions) (hereinafter, referred to as the “Fair Competition Code”) and theOrdinance for Enforcement of the Fair Competition Code. If unidentified, it is based on thedescription in other materials.
・ In “Zoning,” the class of zoning under the respective items of Article 8(1) of the City
Planning Act (Act No. 100 of 1968) is listed.
・ In “Building Coverage Ratio,” the ratio of a building’s area with regard to the land area
as set forth under Article 53 of the Building Standards Act (Act No. 201 of 1950, as
amended; the “Building Standards Act”) is listed.

8

・ In “Floor Area Ratio,” the ratio of a building’s total floor area with regard to the land area
as set forth under Article 52 of the Building Standards Act is listed.
・ In “Trustee,” (i) the planned trustee at the time of INV’s acquisition of the assets for
anticipated acquisition is listed as to the Additional Acquisition Property and (ii) the current
trustee as of today is listed as to the Properties to be Sold.
・ In “Trust Period,” the planned trust period at the time of INV’s acquisition of the assets
for anticipated acquisition is listed.
・ In “Master Lease/Property Management Company,” with respect to the properties forwhich a master lease agreement has been entered into, the type of lease (either apass-through master lease or a fixed rent) is indicated. “Pass-through master lease” isdefined as a lease under which, pursuant to the pass-through master lease agreement
entered into between the master lease company and INV or the trustee, the amount equal
to the rent under the sublease agreement between the master lease company and the end
tenant shall be paid to INV or the trustee. “Guaranteed rent” is defined as a lease underwhich a specified rent shall be paid to INV or the trustee, regardless of the rent under thesublease agreement between the master lease company and the end tenant.
b.

“Lease Overview” column:
・ Based on (i) the lease agreement to be entered into after the acquisition by INV as to the
Additional Acquisition Property and (ii) the lease agreement effective as of June 30, 2017as to the Properties to be Sold.
・ “Total No. of Tenant(s)” is calculated by counting a lessee who has directly concluded alease agreement for each property as one tenant, and a tenant who has rented two or
more rooms in a single property is calculated as one tenant.
・ In “Number of Guest Rooms” as to the Additional Acquisition Property, ”(S/T/D/O)”
indicates the number of guest rooms by category (Single/Twin/Double/Other).
・ In “Leasable Area,” the total leasable floor area for guest room, residential, office, retailand others for the area owned or to be owned by INV is listed.
・ In “Leased Area,” the total sum of the leased area (i) with respect to which a leaseagreement with an end-tenant has actually been entered into and which are leased to theend-tenant or (ii) to be leased to an end tenants after the acquisition by INV (the area
specified in the lease agreement) is listed.
・ In “Security Deposit/Guarantee,” the amount of the security deposit/guarantee money
after amortization pursuant to the lease agreement is listed.
・ In “Occupancy Rate,” the ratio of the leased area to the leasable area is shown, rounded
to the first decimal place.
・ In “Rental Revenue” as to the Additional Acquisition Property, in principle “GOP,” orthe gross operating profit, which is the amount remaining after deducting the personnel,
utility and advertising expenses as well as the management services fee for the hotel
operations from the hotel’s revenues, is listed.
c. “Overview of Lease Agreement” column: (Additional Acquisition Property)
・ Based on the lease agreement to be entered into with the tenant after the acquisition byINV.

9・ “Type of Agreement” is the type of rent received from the relevant operator (either afixed-rent or a fixed rent plus variable rent) is indicated. “Fixed rent” is defined as anagreement under which INV or the trustee shall receive a specified rent, regardless of theoperational results of the relevant hotel. “Fixed rent plus variable rent” is defined as anagreement under which INV or the trustee shall receive rent that varies based on the GOP(Gross Operating Profit), in addition to a fixed rent.
・ In “Determination of rent of lease agreement,” monthly rent amount is rounded down tonearest ten thousand yen, and annual rent is rounded down to the nearest million yen.
・ The “Management Services Fee” is a commission fee payable to the tenant fromlandlord in accordance with the provisions of the lease agreement as a compensation for
operational service provided by a tenant under the agreement. The management services
fee is not disclosed, as tenant’s consent has not been obtained for disclosure. However,for MHM, an amount of the management services fee to be received is, in principle thesum of (i) an amount equal to 2% of monthly sales, (ii) an amount equal to 0-6% ofmonthly sales from direct bookings made through the MHM’s marketing department or
website, and (iii) an amount equal to 4-6% of the monthly GOP (pre-fees) after deducting
the amounts of (i) and (ii) above.
・ In “Security Deposit/Guarantee Money,” the amount of the security deposit/guaranteemoney after amortization pursuant to the lease agreement is listed.

10

d. “Overview of Building Conditions Survey Report” and “Overview of Seismic Risk
Assessment Report” column: (Additional Acquisition Property)
・ For the anticipated acquisition, INV has received a report from a research company onbuilding deterioration survey, short- and long-term repair plan decision, a survey oncompliance with the Building Standards Act, a survey of hazardous substances containedin a building, and soil contamination survey, amongst others, and has provided an
overview of the report in this column. Further, a seismic risk assessment has been
conducted and reported to INV by a research company, and an overview of the report islisted in this column.
・ “Short-Term Repair Costs” indicates the repair and/or replacement costs for items which,at the time of the survey, are below minimum functional level due to deterioration or items
which are in violation of law or regulations, etc. and which can be judged as best to be
repaired or replaced within one year.
・ “Long-Term Repair Costs” consist of capital expenditures and repair costs. Capital
expenditures means, of the anticipated improvement costs necessary to maintain thebuilding at the set building functionality level, the costs to extend the use period of thebuilding’s equipment or to replace it entirely. Repair costs means, of the anticipatedimprovement costs necessary to maintain the building at the set building functionality level,
costs other than capital expenditures.
・ “Replacement Cost” means the total amount of the appropriate costs needed in theevent that the appraised building is to be rebuilt at the time of the survey.
・ “ Probable Maximum Loss (PML) ” means the probable maximum loss from anearthquake. Though there is not a strict, uniform definition for probable maximum loss
(PML), in this press release, it means to what extent damages would be borne from thelargest-scale anticipated earthquake in the anticipated planned term of use (50 years) (alarge earthquake that has a reoccurrence period of 475 years = a large earthquake with aroughly 10% chance of occurring in 50 years), as indicated by the percentage (%) of thereplacement cost for planned recovery costs from damage.
e. Descriptions in the “Area Characteristics, etc.” field:
Descriptions in the “Area Characteristics, etc.” field are an abstract or summary ofdescriptions in the Real Estate Appraisal Report on the Additional Acquisition Property or
the Properties to be Sold, prepared by appraisal agencies, or created by referring to suchdescriptions.
f.

Descriptions in the “Special Notes”:
Descriptions in the “Special Notes” fields are matters that are deemed important inconsideration of their impact on rights, appraisal value, profitability and disposability ofeach asset.

g. “Income and Expenditures, Etc.” column: (Properties to be Sold)
・ Based on the information for operating period from July 1, 2016 to December 31, 2016.
・ Amounts are rounded down to the nearest thousand yen. Therefore, the figures may notnecessarily match the total value when added together. Unless otherwise specifically
noted, the amounts do not include consumption tax, etc.
・ “Taxes and Public Dues” include property tax and city planning tax, which are generally

11

imposed on the owner on January 1 of each year.
・“Non-life Insurance Premiums” is the total amount of paid insurance premiums distributed
proportionally over the relevant period.
h. “Summary of Real Estate Research Report” and “Summary of Real Estate Appraisal Report”
column:INV has requested real estate appraisal from appraisal agency for the planned acquisition
asset(s) and Properties to be Sold based on the matters for consideration in a real estateappraisal under the Investment Trust Act, the Act on Real Estate Appraisal (Act No. 152 of
1963, as amended; the “Act on Real Estate Appraisal”) and the real estate appraisal
standards. Also INV has requested real estate value research instead of appraisal as the
Floor Expansion Portion is under construction. An appraisal value or research value of aproperty is merely an opinion of the real estate appraiser regarding the value of theappraised property at the time the appraisal was conducted in accordance with the Act on
Real Estate Appraisal and real estate appraisal standards, etc. A real estate appraisal isneither a guarantee nor a promise that an asset can be sold or purchased at suchappraisal value or research value either now or in the future.

12(1) Additional Acquisition Property1
D43 Hotel MyStays Gotanda Station
Outline of Specified Assets and Properties.
Legal Form of Asset

Trust Beneficiary Interest

Anticipated Acquisition Date2

October 31, 2017

Anticipated Acquisition Price2

JPY 1,880 million

Appraisal Value2

JPY 2,600 million

Appraisal Agency

Morii Appraisal & Investment Consulting Inc.

LocationTransport(Lot Number)

2-6-1 Nishi-Gotanda, Shinagawa-ku, Tokyo and other 3 lots

(Address)

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

2-minute walk from Gotanda Station on JR Yamanote Line and Toei Asakusa Line
3-minute walk from Gotanda Station on Tokyu Ikegami Line

Property Right

Freehold (incl.
co-ownership) / Superficies(Right of Site Holdings,
approx. 75.55%)

ZoningCommercial area

Lot Area (m2)

1,630.40 (Whole site)3

Building Coverage
Ratio/Floor Area Ratio

80%/800%, 80%/700%

Property Right

Freehold / Sectional
ownership

Purpose of Use

Hotel6

Total Floor Area (m2)

11,893.00 (Whole building)4,5 Completion Date

Structure/No. of Stories

SRC B1/14F, SRC B2/14F

Renovation Date

From: March 2015; Until: November 2015 /From: June 2017; Until October 2017 (Planned)

Land

August 1984 / March 1974

Building

Trustee

Sumitomo Mitsui Trust Bank, Limited

Trust Period

Owned Portion From: September 16, 2005; Until: March 30, 2026
Floor Expansion Portion From: May 12, 2017; Until: the end of October, 2027 (Planned)

Creation of Security Interest

None

Lease Overview (October 31, 2017) (Planned)
Number of Guest Rooms

383 rooms7(S276/T67/D22/O18)

10,137.88

Security Deposit/Guarantee

JPY 27,300 thousand

100%

Rental Revenue (per month)

JPY 79,663 thousand

Total No. of Tenant(s)1Leasable Area (m2)

10,137.88

Leased Area (m2)Occupancy Rate

Overview of Lease Agreement (October 31, 2017) (Planned)8TenantMyStays Hotel Management Co., Ltd.

Type of Agreement

Fixed rent plus variable rent

Term

From: October 31, 2017; Until: March 30, 2026

Determination of Rent of Lease
Agreement

Fixed rent (JPY 561.6 million per annum (January-June: JPY 45.45 million per month / July-December JPY 48.15
million per month)) plus variable rent based on GOP of hotel operation9.

Management Services Fee

Not disclosed, as tenant's consent has not been obtained for disclosure.

Security Deposit/Guarantee
Money

JPY 27,300 thousand

Renewal Upon Expiration

The agreement is a fixed-term lease, therefore the agreement will terminate at the expiration of the lease term.

Rent Revision

Rent cannot be revised during the lease term.

Early Termination

Termination prior to the expiration of the lease term is not permitted.

Other Special Matters―

Overview of Building Conditions Survey ReportCompany Conducting Survey
Short-Term Repair Costs(within 1 year)
Long-Term Repair Costs(in 12 years)

Tokio Marine & Nichido Risk
Consulting Co., Ltd.

Date of Report― Replacement Cost

JPY 143,614 thousand

13

February 2016 / July 2017
JPY 2,801,900 thousandOverview of Seismic Risk Assessment ReportCompany Conducting
Assessment

Tokio Marine & Nichido Risk
Consulting Co., Ltd.

Probable Maximum Loss (PML)

Date of Report

July 201710.8 % (Main: 11.7%, Annex: 9.6%)

Area Characteristics, etc.
The property is a limited service hotel located two minutes on foot from Gotanda Station on the JR Yamanote line/the Toei Asakusa Line and threeminutes on foot from Gotanda station on the Tokyu Ikegami Line. It has excellent access to the major business districts such as Tokyo Station andShinjuku Station in 15 minutes as well as convenient access to Haneda Airport in approximately 40 minutes. As it is located near Shinagawa Station,
which is Shinkansen stop and one of major terminal stations, the property can accommodate both of business demands and leisure demands. It
completed full renovation which made the property stylish and modern one in November 2015. Considering good access to popular areas among foreign
tourists such as Ikebukuro, Shinjuku, Akihabara and Asakusa, further increase of leisure demands can be expected.
Special Notes
None(Note 1) Information combined as to Owned Portion and as to Floor Expansion Portion is listed since INV plans to operate the Existing Hotel Portion andthe Floor Expansion Portion together, unless otherwise specified.
(Note 2) “Anticipated Acquisition Date”, “Anticipated Acquisition Price” and “Appraisal Value” are stated as to Floor Expansion Portion.
(Note 3) Site of the property consists of four (4) land lots and sum of the area of the four (4) land lots are stated in “Lot Area” in “Land”. INV is to acquire
quasi-co-ownership interest of superficies as right of site in three (3) lots out of the four (4) lots. INV owns ownership of one (1) land lot andco-ownerships of two (2) land lots out of the three (3) lots covered by the right of site. The Additional Acquisition will increase the proportion of
the right of site from approx. 47.04% to approx. 75.55%.
(Note 4) The property consists of the main building and the annex building, and sum of the floor area of the both buildings are stated in “Total Floor Area”
in “Building”. INV is to acquire the portion of the first floor and the entire of the second and third floor of the Annex Building, totaling 1,385.46m2(anticipated). Accordingly, INV is to own exclusive elements of 10,137.88m2, together with the Owned Portion of 8,752.42m2 acquired on
March 31, 2016. For the detail of the Owned Portion, please refer to "Notice concerning Acquisition of Assets and Entering into Leasing
Contract" announced as of March 10, 2016.
(Note 5) The area of exclusive elements to be acquired by INV (1,385.46m2) is based on the area of exclusive elements correspondent with Floor
Expansion Portion at the present moment in the property register. The register of Floor Expansion Portion may subject to changed, andaccordingly, the area of exclusive elements and total floor area may increase or decrease..
(Note 6) “Purpose of Use” of the Floor Expansion Portion is to be changed as “hotel” after the completion of the Conversion although currently registeredas “retail and office”(Note 7) “Number of Guest Rooms” shows sum of the number of the guest rooms of the Existing Hotel Portion and the Floor Expansion Portion. The
number of the guest rooms of the Floor Expansion Portion is planned to be 49 rooms (D10/T21/O18). In addition, INV plans to expand one (1)guest room (room type D) in the Existing Hotel Portion by conversion from a locker room, scheduled to be completed by the end of October 2017,
which is also included in “Number of Guest Rooms”.
(Note 8) Matters except for “Determination of Rent of Lease Agreement” and “Security Deposit/Guarantee Money” are based in the lease agreement of
the Floor Expansion Portion to be entered into, which will be similar to that of the Existing Hotel Portion. “Determination of Rent of Lease
Agreement” and “Security Deposit/Guarantee Money” shows the total amount of these in the Existing Hotel Portion and the Floor Expansion
Portion respectively.
(Note 9) Variable rent is GOP during the three-month variable rent calculation period after deducting fixed rent during the same period. However, when
the balance after deduction is zero or negative, variable rent is zero.

D43: Hotel MyStays Gotanda Station
Summary of Real Estate Research Report
Appraisal Agency
Appraisal Value (Specified Value)(Additional acquisition portion)
Time of Valuation

Morii Appraisal & Investment Consulting Inc.
JPY 2,600 million
June 30, 2017

1. Value of Profits using the Income Approach Method （After Acquistion）(1) Direct Capitalization Method(a) Room Rental Income

Contents
JPY 1,403,416 thousand(b) Common Area Maintenance Fee Income―(c) Utility Income―(d) Parking Lot Income―(e) Other Income(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)](f) Vacancy Allowance

1,957 thousand Based on historical data
1,405,373 thousand――(g) Irrecoverable Debt Losses(II) Operating Revenue = [(I) - (f) - (g)](h) Maintenance and Management Costs

Overview
Based on mid to long term stabilized rents considering
current leasing conditions

1,405,373 thousand―

14

(i) Utility Costs―(j) Repair Costs

3,590 thousand(k) Property Management Fee―(l) Tenant Solicitation Expenses―
Based on actual amount, taking into account the aged
depretiation
Based on comparable transactions (0.02% of the restoration
639 thousand
costs)
17,430 thousand(m) Taxes and Public Dues

35,934 thousand(n) Non-Life Insurance Premiums(o) Other Costs(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) + (m)+ (n) + (o)](IV) Net Operating Income = [(II) - (III)](p) Investment Gains/Losses of Deposits(q) FF&E Reserve(r) Capital Improvements and Expenses(V) Net Income = [(IV) + (p) - (q) - (r)]57,593 thousand
1,347,780 thousand
Estimated by multiplying the amount of deposit from end
268 thousand tenants adjusted based on vacancy rate by cap rate of
1.0%.
41,020 thousand
Based on estimates in the engineering report. 70% of
8,377 thousandstabilized amount
1,298,651 thousand(VI) Capitalization Yield(VII) Income Price using Direct Capitalization Method = [(V) ÷ (VI)]

4.9 %26,500,000 thousand(2) DCF Method(I) Total of Present Value of Net Income during Analysis Period(a) Sale Price(b) Sale Costs

Contents

Overview

9,922,258 thousand
29,959,627 thousand(c) Returning Price [(a) - (b)]898,849 thousand
29,060,778 thousand(II) Returning Price, Present Value

18,358,565 thousand(III) Discount Rate
(IV) Final Capitalization Yield

Based on estimates in the engineering report. 30% ofstabilized amount

4.7%(V) Income Price using DCF Method = [(I) + (II)]

5.1%
28,300,000 thousand(3) Income Price using Income Capitalization Method

27,400,000 thousand

2. Estimated Price using Cost Method
Contents(i) Land Price(ii) Building Price

Overview

JPY 7,370,000 thousand
565,000 thousand
410,000 thousand(iii) Furnishings/Appliances/Equipment/Upholstery Costs(iv) Total Price of Land, Building, and Furnishings /Appliances/
Equipment/Upholstery Costs = [(i) + (ii) + (iii)](v) Marketability Correction Ratio for Land and Building as a Whole

8,345,000 thousand(vi) Estimated Price using Cost Method = [(iv) × (v)]

12,500,000 thousand

150%

Other Points to be Noted for Appraisal by Appraisal Agency
None(2) Matters relating to Seismic Resistance etc. for the Additional Acquisition of Additional Acquisition
Property
The annex building of the Hotel Mystays Gotanda Station including the Additional Acquisition
Property was designed under the new seismic code1 and INV has obtained an opinion from athird party expert, K.K. Aki Architect, indicating that, there is no concerns over the seismic
resistance functionality at the time of acquisition of the Owned Portion in March 2016.
As a part of due diligence1 process, INV has conducted investigation on seismic risks for new
acquisitions.
(Note 1) New seismic code refers to the seismic resistance standards in regard to building design, which wasapplied in construction certification after May 31, 1981.
(Note 2) The due diligence conducted includes examination of appraisal values, building inspection, seismic
risk assessment and legal due diligence.

15

(3) Properties to be Sold
B08 Kindai Kagaku Sha Building
Outline of Specified Assets and Properties.
Legal Form of Asset
Location

Trust Beneficiary Interest

Mizuho Trust & Banking
Co,. Ltd.

Trustee(Lot Number)

2-7-15 Ichigaya-Tamachi, Shinjuku-ku, Tokyo(Address)

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

Transport

2-minute walk from Ichigaya Station on Tokyo Metro Yurakucho Line and Tokyo Metro Namboku Line
7-minute walk from Ichigaya Station on JR Chuo Line, JR Sobu Line and Toei Shinjuku Line

Acquisition Date

August 1, 2006

Income and Expenditures, Etc.
JPY 1,301 million

Acquisition Price

Land

Property Right

Freehold

ZoningCommercial area

Lot Area (m2)

Building Coverage /Ratio/Floor Area Ratio

80% / 600%

Property Right

Freehold

Purpose of Use

OfficeTotal Floor Area (m2)

Building

Operating Period

December 31, 2016

Rental revenues
468.142,136.31（JPY thousand）
July 1, 2016 ～(a)

38,162Rent Income

34,265

Other income etc.

3,897

Total expenses (b)22,362

Maintenance andmanagement expenses etc.

6,224

Taxes and Public Dues

4,523

Structure/No. of Stories

SRC B2/9F

Non-Life Insurance
Premiums

Completion Date

June 1991

Depreciation (c)10,750

Other expenses

797

Master Lease/Property
Management Company

Haseko Livenet, Inc.

Type of Agreement

67

Profit and Loss (a) – (b)15,799Pass through master lease

NOI

26,54912

TenantLeaseholdsecurity deposit(a) – (b) + (c)Outline of a Lease Contract
Total number of tenants
2

and

2

Leasable area (m )JPY 43,704 thousand

Leased area (m )1,451.54

Occupancy Trend

As of the end ofJun. 2015

As of the end of
Dec. 2015

As of the end ofJun. 2016

As of the end of
Dec. 2016

As of the end ofJun. 2017

1,451.54

100.0%

100.0%

100.0%

100.0%

100.0%

Area Characteristics, etc.

The property is an office building with retail area located a two-minute walk from Ichigaya Station on the Tokyo Metro Lines. The standard
floor plate is relatively small at around 116 m2. Stable demand from a wide range of industries can also be expected since (i) due to aconcentration of publishing and printing companies in the area, the property can expect demand from their affiliates and business partners
and (ii) the property is situated on a highly visible Sotobori-dori Avenue.
Special Notes

Part of the land is included in the city planning road project (Loop Road No. 2)..

16

B08: Kindai Kagaku Sha Building
Summary of Real Estate Appraisal Report
Appraisal Agency
Appraisal Value (Specified Value)
Time of Valuation

Assets Research and Development Inc.
JPY 1,060 million
June 30, 2017

1. Value of Profits using the Income Approach Method(1) Direct Capitalization Method(a) Rental Income

Contents

Overview

JPY 59,019 thousand Based on current leasing conditions and market(b) Common Area Maintenance Fee Income

16,644 thousand Based on current leasing conditions and market(c) Utility Income

5,816 thousand Based on current income(d) Parking Lot Income

1,440 thousand Based on current leasing conditions and market
Based on turnover reflecting current leasing conditions,
3,667 thousand
historical data and market and current income
86,587 thousand
4,650 thousand Based on historical trend and market(e) Other Income(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)](f) Vacancy Allowance―(g) Irrecoverable Debt Losses(II) Operating Revenue = [(I) - (f) - (g)]81,937 thousand(h) Maintenance and Management Costs

5,428 thousand Based on historical data and leasing conditions(i) Utility Costs

6,979 thousand Based on historical data
Based on historical data, comparable assets and estimates
1,357 thousandin the engineering report
1,454 thousand Based on historical data, leasing conditions and market
Based on turnover reflecting current leasing conditions,
614 thousand
historical data and market
8,986 thousand Actual amount
105 thousand Actual amount(j) Repair Costs(k) Property Management Fee(l) Tenant Solicitation Expenses(m) Taxes and Public Dues(n) Non-Life Insurance Premiums(o) Other Costs(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) + (m)+ (n) + (o)](IV) Net Operating Income = [(II) - (III)]―24,926 thousand
57,010 thousand(p) Investment Gains/Losses of Deposits―(q) Capital Improvements and Expenses

4,582 thousand(V) Net Income = [(IV) + (p) - (q)]52,428 thousand(VI) Capitalization Yield(VII) Income Price using Direct Capitalization Method = [(V) / (VI)]

4.7% Discount rate adjusted for volatility risk
1,120,000 thousand(Reference) NOI Yield = [(IV) / (VII)]

5.1%(2) DCF Method

Contents(I) Total of Present Value of Net Income during Analysis Period(a) Sale Price

291,478 thousand(II) Returning Price, Present Value

Overview

1,048,564 thousand(b) Sale Costs(c) Returning Price [(a) - (b)]Based on historical data and comparable assets and theestimates in the engineering report

31,456 thousand 3% of the sale price
1,017,107 thousand
742,386 thousand(V) Income Price using DCF Method = [(I) + (II)]Based on the standard rate which is risk-free rate adjusted
4.6% for real estate investment risk, liquidity and safety and asset
characteristics including building age, size and tenant profile
Based on risks such as uncertainty over future income,
5.0% building age at the end of valuation period and market
competitiveness and discount rate adjusted for volatility risk
1,030,000 thousand(3) Income Price using Income Capitalization Method

1,060,000 thousand(III) Discount Rate

(IV) Final Capitalization Yield

2. Estimated Price using Cost Method
Contents(i) Land Price

Overview

JPY 899,000 thousand(ii) Building Price

195,000 thousand(iii) Usual Incidental Costs

98,500 thousand(iv) Correction Factor for Stabilized Asset(v) Estimated Price using Cost Method = [((i) + (ii) + (iii)) x (iv)]100%
1,190,000 thousand

Other Points to be Noted for Appraisal by Appraisal Agency
Adopted the appraisal value determined using the income capitalization method, after considering recent economic environment, especially real estatemarket trend and appropriateness of using data, pricing rule, relationship between unit price and gross price, with the cost approach value as a reference17

C01 Times Kanda-Sudacho 4th
Outline of Specified Assets and Properties.
Legal Form of Asset
Location

Real estate

Trustee―(Lot Number)

1-22-7 and 1-22-15 Kanda-Sudacho, Chiyoda-ku, Tokyo(Address)―

Transport

4-minute walk from Kanda Station on JR Yamanote Line, JR Chuo Line, JR Keihin Tohoku Line and Tokyo
Metro Ginza Line

Acquisition Date

January 22, 2007

Income and Expenditures, Etc.
JPY 97 million

Acquisition PriceLand

Building

Master Lease/Property
Management Company
Type of Agreement

Property Right

Freehold

ZoningCommercial area
2

81.04

Lot Area (m )Building Coverage /Ratio/Floor Area Ratio

80% / 600%

Property Right―

July 1, 2016 ～Operating Period

Rental revenues（JPY thousand）

December 31, 2016
(a)

2,700

Rent Income

2,700

Other income etc.

-

Total expenses (b)257

Maintenance andmanagement expenses etc.

-

Purpose of Use―

Total Floor Area (m2)―

Taxes and Public Dues

Structure/No. of Stories―

Non-Life Insurance
Premiums-

Completion Date―

Depreciation (c)1Other expenses

-

―
―

256

Profit and Loss (a) - (b)

2,442

NOI

2,444

(a) - (b) + (c)Outline of a Lease Contract
Total number of tenants

Tenant Leasehold and security

1―

deposit

Leased area (m2)

81.04

Leasable area (m2)Occupancy Trend

As of the end ofJun. 2015

As of the end of
Dec 2015

As of the end ofJun. 2016

As of the end of
Dec 2016

As of the end ofJun. 2017100.0%

100.0%

100.0%

100.0%

100.0%

81.04

Area Characteristics, etc.

The property is car parking with four parking spaces, which is located 300m to the north of Kanda Station on the JR Lines and the Tokyo
Metro Ginza Line. Strong and stable demand can be expected since the property is surrounded by office buildings and hospitals.
Special Notes

None(Note) No building exists on the property

18

C01 Times Kanda-Sudacho 4th
Summary of Real Estate Appraisal Report
Appraisal Agency
Appraisal Value (Specified Value)
Time of Valuation

Assets Research and Development Inc.
JPY 113 million
June 30, 2017

1. Value of Profits using the Income Approach Method(1) Direct Capitalization Method (Land Residual Method)(a) Rental Income(b) Common Area Maintenance Fee Income(c) Utility Income

Contents

Overview
JPY13,191 per lease area tsubo per month for the first year.
JPY 16,089 thousand
Based on rent trend from second year.
JPY1,000 per lease area tsubo per month for the first year.
1,220 thousand
Based on rent trend from second year.
―(d) Parking Lot Income

1,220 thousand JPY50,000 per lot(e) Other Income―(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)]18,509 thousand(f) Vacancy Allowance

1,052 thousand Based on comparable assets―(g) Irrecoverable Debt Losses(II) Operating Revenue = [(I) - (f) - (g)]17,456 thousand(h) Maintenance and Management Costs(i) Utility Costs

767 thousand JPY500 per floor area tsubo per month
122 thousand JPY80 per floor area tsubo per month(j) Repair Costs

153 thousand JPY100 per floor area tsubo per month(k) Property Management Fee

523 thousand 3% of effective income(l) Tenant Solicitation Expenses(m) Taxes and Public Dues(n) Non-Life Insurance Premiums

268 thousand Assume 30% of turnover ratio and 1 month rent.
1,216 thousand
94 thousand(o) Other Costs―(III) Operating Costs = [(h) + (i) + (j) + (k) + (l) + (m) + (n) + (o)]3,146 thousand(IV) Net Operating Income = [(II) - (III)]

14,310 thousand
2.0% of total deposit (security deposit and guaranteemoney)
403 thousand 0.3% of replacement cost(p) Investment Gains/Losses of Deposits

51 thousand(q) Capital Improvements and Expenses(V) Net Income = [(IV) + (p) - (q)] (Net Income as Mixed Type Asset)(r) Assumed Building Cost(s) Graduated Amortization Rate

13,957 thousand
134,550 thousand
6.027%(t) Net Income Attributed to Assumed Building

8,109 thousand(u) Correction Factor

94.2%(VI) Net Income Attributed to Land = [((V) - (t)) x (u)]5,509 thousand(VII) Capitalization Yield of Land
(VIII) Income Price using Land Residual Method = [(VI) / (VII)]

4.5%
122,000 thousand(2) DCF Method (Development-and-Lease Type)

Contents(I) Development Income

294,000 thousand(II) Development Costs

154,437 thousand(III) Present Value (((I) – (II)) x Compound Present Value Rate)

118,880 thousand(IV) Price using DCF Method (Development-and-Lease Type)

119,000 thousand(3) Income Price using Income Capitalization Method

119,000 thousand

Overview

2. Estimated Price using Cost Method
Contents(I) Estimated Price using Cost Method

Overview

98,900 thousand

Other Points to be Noted for Appraisal by Appraisal Agency
Adopted the appraisal value determined using the income capitalization method, after considering recent economic environment, especially real estatemarket trend and appropriateness of using data, pricing rule, relationship between unit price and gross price, with the cost approach value as a reference195. Overview of Sellers and Transferee(1) Overview of Seller
Because consent for disclosure has not been obtained from the seller (a Japanese company) of
the Additional Acquisition Property, disclosure is not made here.
As of today, there are no capital, personnel, or transactional relationships that should be noted
between INV/CIM and the seller. Further, the seller is not a related party of INV or CIM, and asof today, the seller is not an interested person etc. as provided in the Investment Trust Act or asponsor-related person under the voluntary rules specified by CIM as countermeasures against
conflicts of interests in the management of INV’s investments.
(2) Overview of Transferee
Overview of Transferee for the Sold Properties is as follows.
B08 Kindai Kagaku Sha Building:
Because consent for disclosure has not been obtained from the transferee (a Japanesebusiness company) of the Property to be sold, disclosure is not made here.
As of today, there are no capital, personnel, or transactional relationships that should be noted
between INV/CIM and the transferee. Further, the transferee is not a related party of INV or
CIM, and as of today, the transferee is not an interested person etc. as provided in theInvestment Trust Act or a sponsor-related person under the voluntary rules specified by CIM as
countermeasures against conflicts of interests in the management of INV’s investments.

(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii
(ix)
(x)

C01 Times Kanda-Sudacho 4th:
Name
Wastec HOLDINGS Co., Ltd.
Location
A601 1-2-13 Kida Joetsu-shi, Niigata
Title and name ofCEO, Daisuke Hida
representative officer
Business
Planning, development, operation and management of realestateCapital
JPY10 million (as of July 19, 2017)
Date of establishment
October 20, 1979
Net Worth
JPY556 million (Fiscal Period ended September 2016)

Total Assets
JPY721 million (Fiscal Period ended September 2016)
Major shareholders andDaisuke Hida, 100%
shareholding ratio
Relationship between INV/Asset Manager and the Company
Capital relationships
Personnel relationships
Transactional
relationships

The Company does not have any capital relationship of notewith INV or CIM.
The Company does not have any personnel relationship of notewith INV or CIM.
The Company does not have any transactional relationship ofnote with INV or CIM.

20

Whether the
Tenant/Operator is arelated party

The Company is not a related party of INV/CIM. Further, related
persons and affiliates of the Company are not related parties of
INV/CIM. Furthermore, the Company is not an interested party,
etc. of CIM as provided in Investment Trust Act.

6. Transactions with Interested Persons etc.
INV will succeed without payment the status of the buyer with regard to the PSA from Gotanda
Godo Kaisha1, which is a Sponsor-related person2 under the voluntary rules specified by CIM as
countermeasures against conflicts of interests in the management of INV’s investments. Since INV
will succeed the status of the buyer without payment, this transaction does not fall into a transactionthat requires deliberation and resolution of the compliance committee meeting and the investmentcommittee meeting, and the approval of the boards of directors of CIM and INV. However, in view ofthe fact that INV is succeeding from a Sponsor-related person the status of the buyer of a purchaseand sale agreement pertaining to a specified asset executed by a Sponsor-related person, CIM
treats this transaction equivalent to as a transaction with a Sponsor-related person, and following
the deliberation and resolution of the compliance committee meeting and the investment committee
meeting both held on July 25, 2017, the boards of directors of CIM and INV each approved thetransaction.
MHM, the tenant/operator of the Additional Acquisition Property is not a Sponsor-related person2
under the voluntary rules specified by CIM as countermeasures against conflicts of interests in the
management of INV’s investments. However, MHM has indirectly received investments throughfunds managed by affiliates of FIG, which is an affiliate of Calliope (Calliope is CIM’s parent
company, and thus a Sponsor-related person). Therefore, CIM treats, MHM as a person equivalent
to a Sponsor-related person.
In accordance with Sponsor-Related Person Transaction Rules and Sponsor-Related Person
Transaction Management Manual of CIM, the deliberation and resolution of the compliancecommittee meeting and the investment committee meeting both to be held going forward, theboards of directors of CIM and INV will approve the lease agreement expected to be entered intowith MHM at meetings to be held going forward, subject to the conditions that hotel operating
capability of MHM being confirmed as sufficient through a third party report and other relevant
information, the rent level of the Additional Acquisition Property being reasonable considering themarket level, and management services fee amount and structure being fair compared with similar
properties.
(Note 1) In relation to succeeding the PSA, INV agreed to bear a certain expense with regard to the physical due
diligence conducted by Gotanda Godo Kaisha as an expanse with regard to the Additional Acquisition.
(Note 2) A Sponsor-related Person is (i) any person who falls under the “Interested Persons, etc.” set forth in theInvestment Trust Act and the Enforcement Order of the Investment Trust Act, (ii) all shareholders of CIM
and (iii) special purpose companies (tokubetsu mokuteki kaisha) (a) which delegate their management topersons who fall under (ii) above, or (b) which are invested by or invested in anonymous partnership(tokumei kumiai) by persons who fall under (ii) above.

21

7. Summary of Current and Previous Owners.
The seller of the Additional Acquisition Property is not fall on persons having special conflict ofinterests relationship.
8. Overview of Brokerage
Because consent for disclosure has not been obtained from the broker, disclosure is not made here.
The brokerage with regard to the all of Additional Acquisition Property and Properties to be Sold has
been conducted by the same company.
As of today, there are no capital and personnel relationships that should be noted between INV/CIM
and the broker, but there is a certain transactional relationships based on laws and regulations.
Further, the broker is not a related party of INV or CIM, and as of today, the broker is not aninterested person etc. as provided in the Investment Trust Act or a sponsor-related person under thevoluntary rules specified by CIM as countermeasures against conflicts of interests in the
management of INV’s investments.
9. Schedules(1)
Acquisition Schedule
Acquisition decision date:
Agreement execution date:July 25, 2017
October 31, 2017 or separately agreed to
between the seller and INV
Funds from cash-on-hand including saleproceeds of Properties to be Sold

Anticipated acquisition date:
Anticipated source of acquisition funds:
Anticipatedmethod:(2)acquisition

proceeds

payment

Sale Schedule
Sale decision date:
Agreement execution date:Lump-sum payment

July 25, 2017

Anticipated sales date:July 31, 2017

Anticipated sale proceeds payment method:

Lump-sum payment

10. Use of Sale Proceeds
The sale proceeds that INV will obtain through the sale of the Properties to be Sold will be allocatedto the acquisition funds for the Additional Acquisition Property.
11. Matters concerning Forward Commitment, etc.
As set forth in above “1. Overview of Acquisition and Sale (1) Overview of Acquisition (Note 6)”, INV
will succeed the status of the buyer on July 25, 2017, with regard to the PSA executed between theseller and Gotanda Godo Kaisha on May 12, 2017. INV will implement the Additional Acquisition
pursuant to the PSA, and the Additional Acquisition falls under the forward commitment, etc. as
stipulated in “The Comprehensive Guidelines for Supervision of Financial Instruments Business
Operators, etc.” set by the Financial Services Agency.

22

The PSA provides that either party may terminate the PSA if the other party has breached aprovision thereof (including breach of representations and warranties) and if the breach is not
resolved within a reasonable period regardless of the notice to cure the breach, in which case theparty may request the party in breach to pay an amount equivalent to 20% of the transaction price as
penalty charges.
The payment of the acquisition price is not subject to the condition precedent that INV’s fundprocurement is completed for the Additional Acquisition. Therefore, in the event INV cannot
consummate the fund procurement as of the anticipated date of acquisition, INV will be in breach of
the obligation set forth in the PSA and will have to pay the penalty charges. However, as described in“10. Use of Sale Proceeds,” INV intends to appropriate the sale proceeds of the Properties to be
Sold to the funds to acquire the Additional Acquisition Property, and in view of the current financial
standing of INV, INV believes that it is unlikely that INV fail to consummate the fund procurement.
Furthermore, as the amount of the penalty charge is not material, INV believes that material adverse
effect on INV’s financial standing are not likely to be caused by the payment of such penalty charge.
12. Future Outlook
The forecasts for INV’s operations and distributions for the fiscal period ending December 2017(from July 1, 2017 until December 31, 2017) will remain unchanged since the impact by the
Additional acquisition and the sale is within threshold which would prompt a required forecast
revision such as change by 5% in the amount of distributions. The December 2017 forecast will beannounced on August 22, 2017 together with its Summary of Financial Report for the 28th fiscal
period.
13. Other Matters that are Necessary for Investors to Properly Understand and Make Judgment on
Relevant Information
For risks relating to investment in the Additional Acquisition Property, please refer to the “Investment
Risks” (toshi risuku) in the securities report (yuka shoken hokokusho) of INV for the fiscal period
ended December 2016 (July 1, 2016 – December 31, 2016) (available in Japanese only), filed on
March 27, 2017.

Website of INV: http://www.invincible-inv.co.jp/eng

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(Reference)
Portfolio Composition Pre/Post the Acquisition of Additional Acquisition Property
 By Property Type1,2
Before Rebalance(As of July 25, 2017)

After Rebalance(As of October 31, 2017)

Residential
32.0%

Residential
32.1%

Hotel

Hotel

63.2%

63.5%

2

2

Others
4.8%

Others4.4%(Note 1) Based on (Anticipated) Acquisition Price.
(Note 2) “Others” include office buildings, commercial facilities, and parking lots
 By Geography1,2
After Rebalance(As of October 31, 2017)

Before Rebalance(As of July 25, 2017)(Note 1) Based on (anticipated) acquisition price.
(Note 2) Defined as follows: Greater Tokyo (ex. Tokyo 23 wards) is Tokyo (ex. Tokyo 23 Wards),
Kanagawa, Chiba and Saitama. Kansai area is Osaka, Hyogo, Kyoto, Shiga, Wakayama
and Nara. Chubu area is Aichi, Gifu, Mie, Shizuoka, Nagano, Yamanashi, Niigata, Toyama,
Ishikawa and Fukui.

24 By Rent Revenue (Normalized)

Before Rebalance(As of July 25, 2017)

After Rebalance(As of October 31, 2017)(Note 1) Include Offices, Commercial facilities and Parking lots
(Note 2) The percentages in “Before Rebalance” indicate composition of annual rent revenue (i)based on annual rent revenue based on the 2016 actual results of all of the properties
owned by INV, (ii) based on the assumption that all properties acquired in 2016 and March2017 by INV had been owned since January 1, 2016 (the actual results before acquisition
by INV are based on the data provided by the sellers) and (iii) for the property acquired in
May 2017 by INV, based on 2017 revenue forecast (January-April: Actual /May-December: Forecast), which is estimated by CIM, as the revenue in 2016 from suchproperty temporarily declined due to the renovation work during the period between
August 2016 and November 2016.
The percentages in “After Rebalance” is calculated by (i) deducting 2016 actual revenue
for the Properties to be Sold from the figures for “Before Rebalance” and (ii) adding 2018
revenue forecast for the Additional Acquisition Property, which is estimated by CIM, as
hotel operation in the Additional Acquisition Property will commencement after completionof the Conversion scheduled in the end of October 2017.
The forecast above is estimated by INV as of today and subject to be changed in the
future.
(Note 3) The percentages are rounded to one decimal place.

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