[For Information Purpose Only.
The Japanese language press release should be referred to as the original.]
June 25, 2018
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 Revision of Forecast of Financial Results and Distribution for the 30th
Fiscal Period Ending June 2018 and 31st Fiscal Period Ending December 2018
Invincible Investment Corporation (“INV”) today announced the revision of its forecast of financial
results and Distribution per Unit (“DPU”) for the fiscal period ending June 2018 (30th Fiscal Period)and fiscal period ending December 2018 (31st Fiscal Period) as announced in “Summary of
Financial Results (REIT) for the Fiscal Period Ended December 31, 2017” dated February 20,
2018.
1.

Revision of forecasts of financial results and DPU for the fiscal periods ending June 2018 (fromJanuary 1, 2018 to June 30, 2018 ) and December 2018 (from July 1, 2018 to December 31,
2018)<Fiscal Period Ending June 2018>
Operating
Revenues

Operating
IncomeOrdinary
Income

JPY million

JPY million

JPY million

JPY million

Total
Distribution
Amount
JPY million

12,784

8,081

7,370

7,369

6,628

Revised forecast (B)JPY million
12,983

JPY million
8,274

JPY million
7,560

JPY million
7,559

JPY million

Amount of Variance(B) – (A)JPY million
198

JPY million
192

JPY million
190

JPY million
190

JPY million

%

%

%

%

%

1.6

2.4

2.6

2.6

2.7

Previous forecast (A)(announced on
February 20, 2018)

Rate of variance((B) – (A)) / (A)Net Income

6,806
177

This English language notice is a translation of the Japanese-language notice released on June 25, 2018 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
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

1

Distribution
per Unit
Earnings per
Unit (Note)(Excluding
Excess Profit
Distribution per

Excess Profit
Distribution
per Unit (Note)(Including Excess
Profit Distribution
per Unit) (Note)Unit) (Note)Previous forecast (A)(announced on
February 20, 2018)

Distribution
per Unit

JPY

JPY

JPY

JPY

1,537

1,383

-

1,383

JPY

JPY

JPY

JPY

1,577

1,420

-

1,420

Amount of Variance(B) – (A)

JPY

JPY

JPY

JPY

40

37

-

37

Rate of variance((B) – (A)) / (A)

%

%

%

%

2.6

2.7

-

2.7

Revised forecast (B)(Note) The number of investment units issued and outstanding at the end of the fiscal period: 4,793,181 units<Fiscal Period Ending December 2018>
Operating
Revenues

Operating
IncomeOrdinary
Income

JPY million

JPY million

JPY million

JPY million

Total
Distribution
Amount
JPY million

12,884

8,129

7,410

7,409

7,486

Revised forecast (B)JPY million
13,091

JPY million
8,310

JPY million
7,565

JPY million
7,565

JPY million

Amount of Variance(B) – (A)JPY million
206

JPY million
180

JPY million
155

JPY million
155

JPY million

%

%

%

%

%

1.6

2.2

2.1

2.1

2.1

Previous forecast (A)(announced on
February 20, 2018)

Rate of variance((B) – (A)) / (A)Distribution
per Unit
Earnings per
Unit (Note)(Excluding
Excess Profit
Distribution per

Net Income

Excess Profit
Distribution
per Unit (Note)

Revised forecast (B)Amount of Variance(B) – (A)158

Distribution
per Unit(Including Excess
Profit Distribution
per Unit) (Note)Unit) (Note)Previous forecast (A)(announced on
February 20, 2018)

7,645

JPY

JPY

JPY

JPY

1,545

1,562

-

1,562

JPY

JPY

JPY

JPY

1,578

1,595

-

1,595

JPY

JPY

JPY

JPY

33

33

-

33

This English language notice is a translation of the Japanese-language notice released on June 25, 2018 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
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

2

Rate of variance((B) – (A)) / (A)

%

%

%

%

2.1

2.1

-

2.1

(Note) The number of investment units issued and outstanding at the end of the fiscal period: 4,793,181 units

Assumptions underlying the forecast of financial results and distributions for the fiscal periods
ending June 2018 and December 2018 are provided in Appendix 1.
Earnings per Unit and DPU for full-year 2018 based on the above forecasts are as follows.
<Full-year 2018> (Aggregate of the fiscal periods ending in June 2018 and December 2018)
Distribution
per Unit

Excess Profit
Distribution
per Unit (Note)

Distribution
per Unit

Earnings per
Unit (Note)(Excluding Excess
Profit Distribution
per Unit)(Note)

JPY

JPY

JPY

JPY

3,082

2,945

-

2,945

JPY

JPY

JPY

JPY

3,155

3,015

-

3,015

Amount of variance(B)- (A)

JPY

JPY

JPY

JPY

73

70

-

70

Rate of variance((B) – (A)) / (A)

%

%

%

%

2.4

2.4

-

2.4

Previous forecast (A)(February 20, 2018)
Revised forecast (B)(Including Excess
Profit Distribution
per Unit)(Note)(Note) The number of investment units issued and outstanding at the end of the 2018: 4,793,181 units

2.

Reasons for the revision and disclosure of forecast of financial results and distribution
As announced in the press releases “Notice concerning Acquisition of Assets” and “Noticeconcerning Debt Financing” dated today, INV plans to acquire two hotel properties (the“Properties to be Acquired”) on June 27, 2018 utilizing cash-on hand and funds through theborrowings and the issuance of investment corporation bonds. The revision of the forecast offinancial results and distribution for the fiscal periods ending June 2018 and December 2018
are based on expectations of an increase in revenue owing to the contributions from Properties
to be Acquired, as well as an updated forecast for the fiscal period ending June 2018 reflecting
the strong operating conditions to date and the forecasts for the fiscal period ending June 2018
and ending December 2018 (Appendix 2).
After the revision, operating revenues will increase by JPY 198 million (+1.6%) in the fiscal
period ending June 2018 and JPY 206 million (+1.6%) in the fiscal period ending December
2018, and more importantly, DPU will increase 2.7% and 2.1%, respectively, compared to theprevious forecast.
The increase in the June 2018 period is mostly due to the expected increase in NOI from thewhole existing portfolio of INV by JPY 255 million or 2.5% above forecast as of the beginning of
the period, which includes JPY 242 million or 3.3% outperformance compared to forecast as of
the beginning of the period by the hotel portfolio of INV. The hotel outperformance mainly camefrom the hotels INV acquired on and after October 2018 that are located in regional cities (Hotel
MyStays Sapporo Station, Beppu Kamenoi Hotel, Art Hotel Hirosaki City and Art Hotel Joetsu)

This English language notice is a translation of the Japanese-language notice released on June 25, 2018 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
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

3and hotels branded as “Mystays Premier” in Tokyo which are positioned at higher grade hotels
among Mystays brand hotels (Hotel MyStays Premier Hamamatsucho and Hotel MyStays
Premier Omori). In addition, the continued success of the residential rent increase program
helped to increase rents by 2.5% across all new leases, 2.2% across all renewal leases, and2.4% across all combined new and renewal leases for the June 2018 fiscal period (cumulative
January to May 2018), as announce in the press release “Performance Update for May 2018”
dated today The increase in the December 2018 DPU projection comes from an expected
increase by the acquisition of the Properties to be Acquired.
Website of INV: http://www.invincible-inv.co.jp/eng

This English language notice is a translation of the Japanese-language notice released on June 25, 2018 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
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

4

(Appendix 1)<Assumptions Underlying the Forecast of Financial Results and Distribution for theJune 2018, and December 2018 Fiscal Periods>

Item
Fiscal Period

Assets underManagement

Assumptions
The June 2018 fiscal period: from January 1, 2018 to June 30, 2018 (181 days)
The December 2018 fiscal period: from July 1, 2018 to December 31, 2018 (184 days)
Assets held as of the end of the June 2018 fiscal period: 125 properties and preferred equity
interests in one special purpose company
Assets held as of the end of the December 2018 fiscal period: 125 properties and preferred
equity interests in one special purpose company
INV assumes the acquisition of two hotel properties on June 27, 2018. Other than that, INV
assumes no acquisitions or dispositions of the assets through the end of the December
2018 fiscal period.
As of the end of the June 2018 fiscal period: 4,793,181 units
As of the end of the December 2018 fiscal period: 4,793,181 units

Units Outstanding
INV assumes there will be no change to the current 4,793,181 units issued and outstanding
through the end of the fiscal periods.
Balance as of the end of the June 2018 fiscal period: JPY 189,415 million(Borrowing: JPY 187,415 million, Investment corporation bonds: JPY 2,000 million)
Balance as of the end of the December 2018 fiscal period: JPY 189,415 million(Borrowing: JPY 187,415 million, Investment corporation bonds: JPY 2,000 million)
Interest-Bearing
Liabilities

INV assumes that JPY 1,500 million of new borrowing is implemented as of June 27, 2018
in the fiscal period ending June 2018, as mentioned in the press release entitled “Noticeconcerning Debt Financing” dated today. INV assumes that of the balance of JPY 189,415
million after the abovementioned borrowing. In addition, INV intends refinance long termloan of JPY 28,979 million due July 16, 2018 and short term loan of JPY 2,000 million due
October 13, 2018 in December 2018 fiscal period at a similar condition. INV assumes noother new loan or prepayment of loan through the end of the December 2018 fiscal period.

INV expects to record operating revenues for each fiscal period as follows:

Operating Revenues

・Rental revenues(of these, hotel rents)(fixed hotel rents)(variable hotel rents)
・TMK Dividend amount・Gain on sale

June 2018
Fiscal Period
JPY 11,059 mn(JPY 7,294 mn)(JPY 3,556 mn)(JPY 3,738 mn)
JPY 732 mn
JPY 1,191 mn

December 2018
Fiscal Period
JPY 12,214 mn(JPY 8,523 mn)(JPY 4,423 mn)(JPY 4,099 mn)
JPY 876 mn-

INV estimates gain on sales of JPY 796 million from sale of Harmony Ochanomizu, Growth
Maison Ikebukuro, Capital Heights Kagurazaka and Cross Square NAKANO completed on
January 31, 2018, and JPY 395 million from sale of Lexinton Plaza Nishi-Gotanda
completed on March 9, 2018 for the fiscal period ending June 2018.

This English language notice is a translation of the Japanese-language notice released on June 25, 2018 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
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

5

Item

Assumptions
Moreover, we estimate the amount of dividends on the preferred equity interests based on
the performance of the underlying asset and the assumed amount of expenses incurred by
the special purpose company.

Operating Revenues(continued)

Rental revenues in the fiscal period ending June 2018 and the fiscal period ending
December 2018 are calculated based on estimates as of June 25, 2018. In addition, INV
assumes there will be no delinquencies or non-payment of rent by tenants.
The majority of INV’s owned hotels use a variable rent scheme linked to performance of therelevant hotel. Hotel demand is affected by seasonal factors and the December ending
fiscal periods (from July to December) which include summer holiday and autumn outing
seasons tend to record higher revenue than the June ending fiscal periods (from January toJune). Accordingly, rental revenue of INV tends to be higher in the December ending fiscal
periods than in the June ending fiscal periods.
INV expects to incur property related expenses for each fiscal period as follows:
June 2018
Fiscal Period
・Facility management
fees (of these, repair
costs)
・Taxes and other publiccharges・Insurance expenses
・Depreciation
expenses・Other expenses
Total property related
expenses

Operating Expenses

December 2018
Fiscal Period

JPY 651 mn(JPY 27 mn)

JPY 666 mn(JPY 28 mn)

JPY 458 mn

JPY 538 mn

JPY 12 mn

JPY 14 mn

JPY 2,842 mn

JPY 2,891 mn

JPY 198 mn

JPY 185 mn

JPY 4,164 mn

JPY 4,295 mn(Note1) While land lease fee (June 2018 Fiscal Period: JPY 201 mn, December 2018 Fiscal
Period: JPY 203 mn) was included in other expenses in the previous forecast dated
February 20, 2018, it is included in facility management fees in the current forecast.
Therefore, facility management fee of the current forecast has increased and otherexpenses of the current forecast has decreased compared to the previous forecast, but thisis mostly attributable to such change in treatment of land lease fee, and there is nodifferences between the amount of land lease fee in the previous forecast and the current
forecast.
(Note2) Property taxes and city planning taxes on the assets acquired in 2018 are
calculated on a pro-rata basis with the previous owners and settled at the time ofacquisition, and are not recorded for the fiscal period ending December 2018 and recorded
from the fiscal period ending June 2019 as the amount equivalent to such settlement isincluded in the acquisition cost.
INV expects to incur other operating expenses than the property related expenses for eachfiscal period as follows:・Other operating
expenses(of these, asset
management fees)

June 2018
Fiscal Period

December 2018
Fiscal Period

JPY 544 mn

JPY 484 mn(JPY 275 mn)(JPY 275 mn)

This English language notice is a translation of the Japanese-language notice released on June 25, 2018 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
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

6

Item

Assumptions
INV expects to record net operating income for each fiscal period as follows:

・NOI
Net Operating Income

June 2018
Fiscal Period
JPY 10,469 mn

December 2018
Fiscal Period
JPY 11,686 mn(JPY 6,941 mn)(JPY 8,104 mn)(of these, hotel NOI)(JPY 2,522 mn)(of these, residential NOI) (JPY 2,561 mn)(of these, dividend
JPY 732 mn
JPY 876 mn
amount)NOI calculation method in the above table is as follows
・NOI＝ Rental Revenues ‐Property Related Expenses + Depreciation Expenses +Dividends on the preferred equity interests

INV expects to incur non-operating expenses for each fiscal period as follows:

Non-Operating
Expenses・Interest expense
・Finance related costs・Interest for investment
corporation bonds
・Depreciation of
investment corporation
bonds issuance
expenses
Total Non-operating
expensesJune 2018
Fiscal Period
JPY 478 mn
JPY 233 mn

December 2018
Fiscal Period
JPY 501 mn
JPY 235 mn

JPY 1 mn

JPY 6 mn

JPY 0 mn

JPY 1 mn

JPY 713 mn

JPY 744 mn

The distribution per unit is calculated in accordance with the cash distribution policy as set
forth in INV’s Articles of Incorporation.

With respect to the distribution for the fiscal period ending June 2018, INV expects todistribute an aggregate amount of JPY 6,806 million (distribution per unit: JPY 1,420) whichis the remaining amount after retaining JPY 753 million as internal reserve from Net Income
for the fiscal period ending June 2018 (JPY 7,559 million).

Distribution per Unit

With respect to the distribution for the fiscal period ending December 2018, INV expects todistribute an aggregate amount of JPY 7,645 million (distribution per unit: JPY 1,595) basedon JPY 7,563 million from Net Income for the fiscal period ending December 2018 (JPY
7,565 million) and JPY 81 million from internal reserve.
INV assumes a same amount (JPY 113 million) of deferred gain on hedge of the interest
rate swap as the valuation and conversion adjustments, etc. for the fiscal periods ending
June 2018 and December 2018. The distribution per unit is calculated based on theassumption that fluctuation of the market value of the interest rate swap does not affect the
distribution per unit.
Distribution per unit may vary due to various factors, including changes of the assets undermanagement, fluctuation of rent income associated with reasons such as change of tenants
and occurrences of unexpected repairs.

This English language notice is a translation of the Japanese-language notice released on June 25, 2018 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
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

7

Item

Assumptions
INV does not assume distributions in excess of profits from allowance for temporary
differences adjustment, based on the assumption that the market value of the interest rate
swap will remain unchanged for fiscal periods ending June 2018 and December 2018.

Excess Profit
Distribution per Unit

INV believes maintaining the stability of cash distributions over the medium term is one of
the most important factors in determining the amount of distribution for a given fiscal period,
and therefore, INV has adopted the policy to make distributions in excess of profits in orderto stabilize distributions, in cases where dilution of investment units or significant expenses
are to be recorded in connection with, among other things, the acquisition of assets or theraising of capital, leading to a temporary decrease in distribution per unit, taking into
consideration the level of distribution per unit assuming such acquisition of assets or capitalraising had contributed for a full fiscal period.
INV may also consider making distributions in excess of profits for the purpose of
decreasing the impact from corporate tax increase arising from different rules in tax andaccounting practices, such as treatment on depreciation of fixed term land lease or asset
retirement obligation.
Moreover, INV will not make distributions in excess of profits for the fiscal period ending
June 2018, as INV intends to retain a certain amount of the net income.
Further, while INV will not make distributions in excess of profits as INV will have a certain
amount of internal reserve, INV intends to distribute a certain amount from internal reservein order to cope with the discrepancy between tax and accounting treatment.

Other

INV assumes there will be no amendments to applicable laws and regulations, the taxation
system, accounting standards and other regulations that would affect the foregoing
forecasts.
In addition, INV assumes there will be no unforeseen material changes in general economic
trends, real estate market conditions and other trends and conditions.

This English language notice is a translation of the Japanese-language notice released on June 25, 2018 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
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

8

(Appendix 2)(Note 1) Based on 44 hotel properties; of the 58 hotel properties in our portfolio as of today, 9 hotels with fixed-rent leaseagreements as well as 5 hotels, which are or will be under renovation in 2018, are excluded. 5 hotels underrenovation are Hotel MyStays Kyoto-Shijo, MyStays Shin-Urayasu Conference Center, Hotel MyStays Maihama,Hotel MyStays Premier Dojima and Hotel MyStays Hakodate-Goryokaku(Note 2)

Includes the dividends from preferred equity interest of TMK that owns Sheraton Grande Tokyo Bay Hotel as theunderlying asset, assuming INV owned the preferred equity interest of TMK from the beginning of 2017

(Note 3)

Based on the 64 residential properties owned as of today. Excludes one-off insurance-related revenues andexpenses(Note 4)

Based on 2 commercial properties owned by INV as of today.

(Note 5)For all properties, the pre-acquisition period of the properties acquired between January 2017 and June 2018 isbased on actual results provided by sellers

This English language notice is a translation of the Japanese-language notice released on June 25, 2018 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
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

9