[For Information Purpose Only.
The Japanese language press release should be referred to as the original.]
July 1, 2019
To All Concerned Parties
Name of REIT Issuer:
Invincible Investment Corporation
Naoki Fukuda, Executive Director(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 for the 32nd Fiscal Period
Ended June 2019 and Revision of Forecast of Financial Results and Distribution for the 33rd
Fiscal Period Ending December 2019
Invincible Investment Corporation (“INV”) today announced the revision of its forecast of financial
results for the fiscal period ended June 2019 (32nd Fiscal Period) as announced in “Noticeconcerning Revision of Forecast of Financial Results and Distribution for the 32nd Fiscal PeriodEnding June 2019” dated May 28, 2019, and the revision of its forecast of financial results andDistribution per Unit (“DPU”) for the fiscal period ending December 2019 (33rd Fiscal Period) as
announced in “Financial Summary for the December 2018 Fiscal Period (from July 1, 2018 to
December 31, 2018)” dated February 21, 2019.
1.

Revision of the forecast of financial results for the fiscal period ended June 2019 (from January
1, 2019 to June 30, 2019) and revision of the forecast of financial results and DPU for the fiscal
period ending December 2019 (from July 1, 2019 to December 31, 2019)<Fiscal Period Ended June 2019>

Previous forecast (A)(announced on
May 28, 2019)
Revised forecast (B)Amount of Variance(B) – (A)Rate of variance((B) – (A)) / (A)Operating
Revenues

Operating
IncomeOrdinary
Income

JPY million

JPY million

JPY million

JPY million

Total
Distribution
Amount
JPY million

27,31922,124

21,21021,2099,384

JPY million

JPY million

JPY million

JPY million

JPY million

27,341

22,187

21,282

21,281

9,384

JPY million

JPY million

JPY million

JPY million

JPY million

21

63

72

72

-

%

%

%

%

%

0.1

0.3

0.3

0.3

-

Net Income

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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 1,2)

Previous forecast (A)(announced on
May 28, 2019)

Excess Profit
Distribution
per Unit (Note(Excluding
Excess Profit
Distribution perUnit) (Note 1,2)

1)

Distribution
per Unit(Including Excess
Profit Distribution
per Unit) (Note 1)

JPY

JPY

JPY

JPY

3,742

1,656

-

1,656

JPY

JPY

JPY

JPY

3,755

1,656

-

1,656

Amount of Variance(B) – (A)

JPY

JPY

JPY

JPY

13

-

-

-

Rate of variance((B) – (A)) / (A)

%

%

%

%

0.3

-

-

-

Revised forecast (B)(Note 1) The total number of investment units issued and outstanding at the end of the fiscal period: 5,666,840 units(Note 2) The difference between the Earnings per Unit and Distribution per Unit (Excluding Excess Profit Distribution per Unit) is due tointernal reserve from net income. Please refer to Appendix 1 <Assumptions Underlying the Forecast of Financial Results for
the Fiscal Period ended June 2019 and the Forecast of Financial Results and Distribution for the Fiscal Period ending
December 2019> “Distribution per unit” for details.

<Fiscal Period Ending December 2019>

Previous forecast (A)(announced on
February 21, 2019)
Revised forecast (B)Amount of Variance(B) – (A)Rate of variance((B) – (A)) / (A)Operating
Revenues

Operating
IncomeOrdinary
Income

JPY million

JPY million

JPY million

JPY million

Total
Distribution
Amount
JPY million

15,596

10,365

9,422

9,421

9,497

JPY million

JPY million

JPY million

JPY million

JPY million

18,043

12,107

10,701

10,70010,517

JPY million

JPY million

JPY million

JPY million

JPY million

2,446

1,742

1,279

1,279

1,019

%

%

%

%

%

15.7

16.8

13.6

13.6

10.7

Distribution
per Unit
Earnings per
Unit (Note 1,2)

Previous forecast (A)(announced on
February 21, 2019)
Revised forecast (B)(Excluding
Excess Profit
Distribution perUnit) (Note 1,2)

Net Income

Excess Profit
Distribution
per Unit (Note1)

Distribution
per Unit(Including Excess
Profit Distribution
per Unit) (Note 1)

JPY

JPY

JPY

JPY

1,662

1,662

14

1,676

JPY

JPY

JPY

JPY

1,755

1,725

-

1,725

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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

Amount of Variance(B) – (A)

JPY

JPY

JPY

JPY

93

63

▲14

49

Rate of variance((B) – (A)) / (A)

%

%

%

%

5.6

3.8

▲100.02.9(Note 1) The total number of investment units issued and outstanding at the end of the fiscal period: 5,666,840 units (previous forecast)and 6,096,840 units (revised forecast)(Note 2) The difference between the Earnings per Unit and Distribution per Unit (Excluding Excess Profit Distribution per Unit) is due to
distribution from internal reserve. Please refer to Appendix 1 < Assumptions Underlying the Forecast of Financial Results for
the Fiscal Period ended June 2019 and the Forecast of Financial Results and Distributions for the Fiscal Period ending
December 2019 > “Distribution per unit” for details.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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

(Reference)
Assumptions underlying the forecast of financial results for the fiscal period ended June 2019 and the forecastof financial results and distribution for the fiscal period ending December 2019 are provided in Appendix 1.
Simulated distribution per unit for the year 2019 are shown for reference purposes, which are calculated byapplying adjustments, as the DPU for the fiscal period ended June 2019 could be affected due to therefinancing (Note 1), the change of investment structure regarding overseas hotel assets (the “Overseas
Hotels”) (Note 2) and prepayment of existing loan (Note 3), as well as the sale of properties (Note 4)(collectively, the “Transactions in the Fiscal Period Ended June 2019”), and the DPU for the fiscal period
ending December 2019 will be affected due to acquisition of properties announced as of July 1, 2019 (the“Anticipated Acquisitions”) (Note 5), the issuance of new investment units through the public offering and thethird party allotment (collectively, the “Public Offering”) (Note 6) announced as of July 1, 2019 and the newborrowings (the “Borrowings”) (Note 7) announced as of July 1, 2019 (collectively, the “Transactions in the
Fiscal Period Ending December 2019”), assuming that all Transactions in the Fiscal Period Ended June 2019and Transactions in the Fiscal Period Ending December 2019 had occurred prior to the commencement of the
fiscal period ended June 2019. For details on the method for calculation and figures of simulated distribution
per unit, please refer to Appendix 2. In addition, the 2019 annual DPU sensitivity versus ADR growth basedon simulated distribution per unit for the year 2019 is also shown in Appendix 3.
(Note 1)

(Note 2)

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

Refinancing announced in the press releases entitled “Notice concerning Debt Financing (Refinance)” as of January 18,
2019 and March 27, 2019, and “Notice concerning Debt Financing (Refinance) and Execution of Interest Rate Swap
Agreement” as of June 13, 2019 and June 26, 2019, and implemented during the fiscal period ended June 2019
(collectively referred to as the “Refinancing in the Fiscal Period Ended June 2019”).
Change in investment structure in the Overseas Hotels (the “Structure Change”) implemented during the fiscal period
ended June 2019, announced in the press release entitled “Notice concerning Change of Investment Structure
regarding Overseas Assets” as of May 9, 2019.
Prepayment of loan announced in the press release entitled “Notice concerning Prepayment of Loan” as of May 31,
2019.
Sale of the properties announced in the press releases entitled “Notice concerning Sale of Domestic Trust BeneficiaryInterest” as of May 17, 2019, and May 28, 2019, and implemented during the fiscal period ended June 2019
(collectively referred to as the “Sale in the Fiscal Period Ended June 2019”).
The Anticipated Acquisitions refers to acquisition of the eighteen domestic hotel properties to be acquired announced in
the press releases entitled “Notice concerning Acquisition and Lease of Domestic Trust Beneficiary Interests” as of July
1, 2019.
The Public Offering refers to the issuance of new investment units through the public offering (the “Primary Offering”)
and the third party allotment (the “Third Party Allotment”, and the together with the Primary Offering, the “Public
Offering”) announced in the press release entitled “Notice concerning Issuance of New Investment Units andSecondary Distribution of Investment Units” as of July 1, 2019.
The Borrowings refer to the borrowings announced in the press release entitled “Notice concerning Debt Financing” as ofJuly 1, 2019.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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2. Reasons for the revision of forecast of financial results and distribution
As announced in the press releases “Notice concerning Acquisition and Lease of Domestic Trust
Beneficiary Interests”, “Notice concerning Debt Financing” and “Notice concerning Issuance of New
Investment Units and Secondary Distribution of Investment Units” as of July 1, 2019, INV expects to
conduct the Public Offering as well as Borrowings in order to acquire the Anticipated Acquisitions on
July 19, 2019.
Due to the acquisition of the properties and other transactions mentioned above, the operating revenue
for the fiscal period ending December 2019 is expected to increase by 10% or more from the previous
forecasts announced in “Financial Summary for the December 2018 Fiscal Period (from July 1, 2018 to
December 31, 2018)” dated February 21, 2019. Therefore, INV is revising the forecast of financial results
and distributions for the fiscal period ending December 2019. The revision of the forecast of financial
results for the fiscal period ended June 2019 is based on the improved performance of the existing
portfolio as of today.
3.

Excess profit distribution policy

INV believes maintaining the stability of cash distributions over the medium term is one of the mostimportant 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 order to stabilize distributions, incases where dilution of investment units or significant expenses are to be recorded in connection with,among other things, the acquisition of assets or the raising of capital, leading to a temporary decreasein distribution per unit, taking into consideration the level of distribution per unit assuming suchacquisition of assets or capital raising had contributed for a full fiscal period.
INV may also consider making distributions in excess of profits for the purpose of mitigating the impact
of corporate tax increases arising from different rules and practices in tax and accounting, such astreatment on depreciation of fixed term land lease or asset retirement obligation.
With respect to the fiscal period ended June 2019, INV will record an estimated capital gain of JPY
11,154 million (Note 1) (the “Capital Gain”), and INV plans to reserve substantially all of the CapitalGain and to apply substantially all of the sale proceeds to a part of the Anticipated Acquisitions.
Therefore, the Distribution per Unit will be lower than the Earnings per Unit for the fiscal period ended
June 2019. Mainly due to the fact that the Capital Gain will be retained by INV, the distribution payout
ratio will not be large enough to fulfill the tax conduit requirement (Note 2) of paying out at least 90% of
net distributable income as dividends. However, INV has tax-loss carry forwards in the amount of JPY
22.6 billion (mainly arising out of disposition of the assets in the fiscal period ended December 2010) a
portion of which will be applied to fully offset the expected taxable income. As a result, INV does notexpect to be required to pay any additional income taxes for the fiscal period ended June 2019.
On the other hand, with respect to the fiscal period ending December 2019, INV will record one-off
expenses in connection with the Public Offering and the Borrowings, but can expect income growthfrom the Anticipated Acquisitions and as a result, the net one-time transaction costs to DPU are
This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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expected to be limited. Moreover, INV plans to accumulate internal reserves in the amount of JPY183
million, which corresponds to the difference between net income per unit (JPY 1,755) and simulated
DPU (JPY 1,725). INV will utilize such internal reserve for the growth in the medium to long term and/or
stabilization of DPU level in the future.
Therefore, INV does not intend to make distributions in excess of profits in order to stabilize distributions for
either of the fiscal period ended June 2019 or the fiscal period ending December 2019. Furthermore, INV
does not need to make distributions in excess of profits in order to mitigate the impact of the discrepancy
between tax and accounting treatment.
The sum of the forecasted figures for the year 2019 earnings per unit, distribution per unit (excludingexcess profit distribution per unit), excess profit distribution per unit, and distribution per unit (includingexcess profit distribution per unit) and simulated distribution per unit are summarized in the table A below.
Simulated distribution per unit for the fiscal period ended June 2019 is calculated by applying theadjustments listed in 1 through 9 among the adjustments described in Appendix 2, and simulated distribution
per unit for the fiscal period ending December 2019 are calculated by applying adjustments listed in 7
through 10, respectively, among the adjustments described in Appendix 2. For the other assumptions, pleaserefer to Appendix 1.
INV will seek to utilize any available accumulated retained earnings for the purpose of stabilizing DPU in the
future as INV deems appropriate under the circumstances. In large part due to an estimated JPY 11.1 billion
capital gain from asset sales, INV projects having JPY 11.8 billion of accumulated retained earnings at theend of the June 2019 fiscal period. This JPY 11.8 billion translates to JPY 1,951 per unit based on thenumber of issued units after the Public Offering assuming the maximum number of units is issued in the
Public Offering. INV intends to maintain at least an annual dividend of JPY 3,400 per unit for 2020, which isapproximately equivalent to JPY 3,407 simulated distributions per unit for the year 2019 as indicated below,
by using accumulated retained earnings to the extent necessary.
(Note 1)
(Note 2)

Expected gain on sale is calculated by deducting the estimated transfer related cost and is an estimate as of today, andis subject to change.
Investment corporations under the J-REIT system can deduct the amount of cash distributions in calculating its taxable
income as long as they satisfy certain conditions (conduit requirements), in order to prevent double taxation between
J-REIT and unitholders.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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

<Use of Retained Earnings to Maintain Annual DPU Going Forward>
INV projects to have JPY 11.8 billion of accumulated retained earnings, largely due to an estimated JPY
11.1 billion gain from the sales of two residential properties, which is equivalent to JPY 1,951 of retained
earnings per unit after the Public Offering (Note 1). INV intends to use such retained earnings tomaintain at least an annual DPU of JPY 3,400 for 2020, and plans to continue to ensure distribution
stability thereafter.
Total Retentionof
Net Income(Forecast)¥11.8 billion

Total EstimatedProjected Units afterSale of Spacia

Sales of Royal Parks

Ebisu

Minami-Senju¥5.6 billion¥5.5 billion

Others¥0.7 billion

Retained Earnings

the Offering1

per Unit(Forecast)÷

6,096,840 units(Forecast)＝¥1,951

Annual DPU: 2018 Actual and 2019 Simulated Forecast
4,000
3,500

+9.4%
3,407

3,113

3,000
2,500



Sustain at least ￥3,400 DPU per annual
for year 2020

2,000
1,5000

2018
ActualContinue to ensure dividend stability

2019
Revised Forecast
Simulated
Forecast(Note 1)

Assuming that the over-allotment option is fully exercised(Note 2)

The above only shows INV’s current intention of how to utilize the accumulated retained earnings and is not a guaranteeof minimum DPU level. INV may not achieve JPY 3,400 annual DPU in 2020 even if INV fully applies the accumulated
retained earnings to distribution where there is a substantial decrease in income due to unforeseeable circumstances.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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

[Table A]
Distribution per
Unit (Excluding
Excess Profit
Distribution per
Unit)

Excess Profit
Distribution per
Unit

Distribution per
Unit (Including
Excess Profit
Distribution per
Unit)

Simulated
Distribution per
Unit

JPY

JPY

JPY

JPY

JPY

3,755

1,656

-

1,656

1,682

JPY

JPY

JPY

JPY

JPY

1,755

1,725

-

1,725

1,725

JPY

JPY

JPY

JPY

JPY

5,510

3,381

-

3,381

3,407

Earnings per
Unit
Forecast for the fiscal
period ended June 2019
(Note 1)
Forecast for the fiscal
period ending December
2019 (Note 2)
Forecast for the year 2019
(Note 1)
(Note 2)

(Note 3)

Based on the number of investment units issued and outstanding as of the end of the fiscal period ended June 2019 of
5,666,840 units.
It is assumed the forecasted number of investment units issued and outstanding as of the end of the fiscal period
ending December 2019 is 6,096,840 units. The earnings per unit, distribution per unit (excluding excess profit
distribution per unit), excess profit distribution per unit, distribution per unit (including excess profit distribution per unit)
and simulated distribution per unit for this fiscal period are JPY 1,761, JPY 1,731, JPY 0, JPY 1,731 and JPY 1,731,
respectively, based on the assumption that such forecasted number is 6,076,364 where no investment units are issued
through the Third Party Allotment.
Figures are rounded down to the indicated amount. Hereinafter the same.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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

4.

Reasons for Forecast Revision

The revised DPU forecast for the fiscal period ended June 2019 is JPY 1,656 (+15.8% year-on-year)
and the DPU forecast for the fiscal period ending December 2019 is JPY 1,725 (+2.5% year-on-year);the DPU for the full calendar year 2019 is forecast to be JPY 3,381 (+8.6% year-on-year) and DPU
growth is expected steady in 2019 against actual DPU in 2018.
NOI for INV’s entire portfolio as of the fiscal period ending December 2019 is expected to grow by 36.2%
due to revenue contributions from the assets to be acquired and internal growth of the existing portfolio. As
for internal growth of the hotel portfolio and the residential portfolio, NOI for the hotel portfolio (Note 1)
and residential portfolio (Note 2) for the fiscal period ending December 2019 are expected to grow by
1.1% and 1.2%, respectively, vs. NOI for the same period in the previous year, and the total NOI is
expected to grow by 1.1%. With regard to the hotel portfolio (Note 1), INV expects occupancy rate and
RevPAR (Note 3) for the fiscal period ending December 2019 to increase by 1.0pt and 0.6%, respectively,
while ADR to decline by 0.5%, resulting in GOP (Note 3) growth of 2.1%.
INV continues to cooperate with the operators of its hotels to achieve internal growth, and in particular, it isclosely working with MyStays Hotel Management Co., Ltd. (“MHM”) and moving ahead with a wide array of
initiatives. MHM has been actively improving its revenue management and overbooking strategy. In terms of
distribution, MHM now sells room inventory on the Fliggy platform (part of Alibaba, a prestigious IT company
in China invested by SoftBank Group) in China to attract additional Chinese tourists. Overall, MHM hascontinued to push its online marketing including through social media and other channels to increase its brandrecognition and direct customer base.
In addition to the operating improvements mentioned above, INV renovated or will renovate five hotels in2019 (Hotel MyStays Yokohama, Hotel MyStays Shimizu, Hotel MyStays Premier Kanazawa, Hotel MyStays
Gotanda Station and Flexstay Inn Kiyosumi Shirakawa). This resulted or will result in partial downtime from a
portion of the rooms at these five hotels, but is expected to result in higher GOP at all five hotels in the fiscal
period ending 2019.
INV expects tourism to continue to drive demand for rooms with the upcoming large events such as 2019
Rugby World Cup and the Tokyo 2020 Olympic and Paralympic Games. INV’s hotels are well positioned tobenefit as INV will own hotels in 8 prefectures out of 12 prefectures where the rugby venues are located, as
well as its unique footprint where it has 33 hotels and 5,236 rooms that surround major Tokyo Olympic andParalympic venues.
Meanwhile, with regard to internal growth of the residential portfolio, NOI for the fiscal period ending
December 2019 for 62 residential properties owned by INV as of the end of June 2019 is expected to growby 1.2% against that for the corresponding period in the previous year since the rent increase program hasbrought results. INV forecasts occupancy rate (Note 4) to increase from 96.0% to 97.1% and average rent per
tsubo (Note 4) to increase by 0.6%, from JPY 9,353 to JPY 9,407 against those for the corresponding period
in the previous year.
This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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In addition, as announced in the press releases “Notice concerning Acquisition and Lease of Domestic Trust
Beneficiary Interests” dated July 1, 2019, INV will acquire eighteen hotel properties totaling JPY 82,646
million in the fiscal period ending December 2019, and these hotels are anticipated to increase the simulated
portfolio NOI by JPY 2,746 million, or JPY 450 per unit for the fiscal period ending December 2019, based on
forecasted number of investment units issued and outstanding after the Public Offering, as of the end of the
fiscal period ending December 2019. INV seeks to maximize unitholders' value while building its portfolio withhotels and residential properties as its core assets via focusing on both growth and stability.
(Note 1)

(Note 2)
(Note 3)(Note 4)

Calculated based on 74 hotel properties; of the 84 hotel properties (including Sheraton Grande Tokyo Bay Hotel,
the underlying asset of preferred equity interest held by INV) to be owned after the anticipated acquisition, 9hotels with fixed-rent lease agreements as well as Hotel MyStays Nagoya Nishiki, which was rebranded as
MyStays and reopened in July 2018, are excluded. Such nine hotels with fixed-rent are 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 Tsubamesanjo, Comfort Hotel
Kitami, and Takamatsu Tokyu REI Hotel.
Calculated based on actual results and forecasts for the 62 residential properties owned as of the end of June
2019. Excludes one‐off insurance‐related revenues and expenses.
For definition of ADR, occupancy rate for hotel portfolio, RevPAR and GOP, please refer to “4. Reasons for
Forecast Revision (Reference)” below.
For definition of occupancy rate and average rent per tsubo, please refer to “4. Reasons for Forecast Revision(Reference)” below.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

10

(Reference)<Forecasts for Performance Indicators of Hotel Properties (74 hotels (Note 1))>
Y2019
June fiscal period(Forecast)

December fiscal period(Forecast)

Full-Year(Forecast)Occupancy Rate (Note 2)

87.7%

89.9%

88.8%

ADR (JPY) (Note 3)

11,59011,88011,738

RevPAR (JPY) (Note 4)

10,16010,676

10,420GOP (JPY million)(Note 5)(Note 6)

14,047

15,211

29,258Year-on-Year Changes
Y2019
June fiscal period(Forecast)

December fiscal period(Forecast)

Full-Year(Forecast)Occupancy Rate

+1.4pt+1.0pt+1.2pt

ADR

+4.3%

-0.5%

+1.7%

RevPAR

+5.9%

+0.6%

+3.1%

GOP

+4.8%

+2.1%

+3.4%

(Note 1) For definition of 74 hotel properties, please refer to Note 1 of “4. Reasons for Forecast Revision” above.
(Note 2) “Occupancy Rate” for hotel portfolio is calculated using the following formula: room occupancy rate = total number of rooms
occupied during the relevant period ÷ (aggregate number of rooms during the relevant period x number of days during relevant
period). Hereinafter the same.
(Note 3) “ADR,” or Average Daily Rate, is the value of the total room revenues for a certain period (excluding service fees) divided by the
total number of sold rooms for the same period. Hereinafter the same.
(Note 4) “RevPAR,” or Revenues Per Available Room, is calculated by dividing the total revenues for a certain period by the aggregate
number of rooms for the same period (rooms x number of days), and is the same figure as that of a product of ADR andoccupancy rate. Hereinafter the same.
(Note 5) “GOP,” or Gross Operating Profit, is rent revenue INV receives as a rent which is the amount remaining after deducting thepersonnel, material, water, electricity, and heating and advertising expenses as well as the management service fee for the
hotel operations (if any) from the hotel’s revenues. Hereinafter the same.
(Note 6) With respect to APA Hotel Yokohama-Kannai, we consider the rent paid to INV for this hotel as GOP of this hotel.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

11

<Forecasts for Performance Indicators of Residential Properties (62 properties (Note 1))>
Y2019
June fiscal period(Forecast)

December fiscal period(Forecast)

Full-Year(Forecast)Occupancy Rate (Note 2)
Average Rent per Tsubo
per Month (Note 3) (JPY)

96.5%
9,362

97.1%
9,407

96.8%
9,385

NOI (JPY million) (Note 4)

1,797

1,810

3,607

Year-on-Year Changes
Y2019
June fiscal period(Forecast)Occupancy Rate
Average Rent per Tsubo
per Month
NOI

December fiscal period(Forecast)

Full-Year(Forecast)+0.4pt+1.1pt+0.7pt

+0.7%

+0.6%

+0.6%

+1.6%

+1.7%

+1.6%

(Note 1) For definition of 62 residential properties, please refer to Note 2 of “4. Reasons for Forecast Revision” above.
(Note 2) “Occupancy Rate” is calculated by dividing the sum of total residential leased area by the sum of total residential leasablearea at the end of each month of each period. Hereinafter the same.
(Note 3) “Average Rent per Tsubo per Month” is calculated by dividing the total residential rental revenue including common area
charges for each month by the sum of total residential leasable area at the end of each month, indicating the average rent
per Tsubo weighted by leased area. Hereinafter the same.
(Note 4) Figures are rounded down to the indicated amount. Excludes one‐off insurance‐related revenues and expenses. Hereinafter
the same.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

12Based on the above, the forecasts of earnings per unit and distribution per unit for the full calendar year
2019 are as follows:<Full-year 2019> (Aggregate of the fiscal periods ended June 2019 (Forecast) and ending December
2019 (Forecast))

Earnings per Unit
(Note)

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

Excess Profit
Distribution per Unit
(Note)

Distribution per Unit
(Including Excess
Profit Distribution
per Unit)(Note)

JPY

JPY

JPY

JPY

5,404

3,318

14

3,332

JPY

JPY

JPY

JPY

5,510

3,381

-

3,381

Amount of variance(B)- (A)

JPY

JPY

JPY

JPY

106

63

▲14

49

Rate of variance((B) – (A)) / (A)

%

%

%

%

2.0

1.9

▲100.01.5Previous forecast (A)(announced on
February 21, 2019and May 28, 2019)
Revised forecast (B)(Note)

Assumption: the number of investment units issued and outstanding at the end of the fiscal period ended June 2019 was
5,666,840 units and the number of investment units issued and outstanding at the end of the fiscal period ending
December 2019 is 6,096,840 units.

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

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

13

(Appendix 1)<Assumptions Underlying the Forecast of Financial Results for
the Fiscal Period ended June 2019 and the Forecast of Financial Results and Distribution for the
Fiscal Period ending December 2019>
Item
Fiscal period

Assumptions
The June 2019 Fiscal Period: from January 1, 2019 to June 30, 2019 (181 days)
The December 2019 Fiscal Period: from July 1, 2019 to December 31, 2019 (184 days)
Properties held as of the end of the June 2019 Fiscal Period: 129 properties andpreferred equity interests in one TMK
Properties held as of the end of the December 2019 Fiscal Period: 147 properties andpreferred equity interests in one TMK

Assets undermanagement

In addition to the properties held as of today (129 properties and preferred equity
interests in one TMK), INV assumes that INV will newly acquire eighteen AnticipatedAcquisitions as of July 19, 2019 (Note) and that there will be no other change in theportfolio through the end of the fiscal period ending December 2019. For the financial
results for the fiscal period ended June 2019, the performance of Royal Parks Tower
Minami-Senju and Spacia Ebisu during the period is taken into account.
(Note) For details regarding the details of Anticipated Acquisitions, please refer to “Noticeconcerning Acquisition and Lease of Domestic Trust Beneficiary Interests” as of today.

As of the end of the June 2019 Fiscal Period: 5,666,840 units
As of the end of the December 2019 Fiscal Period: 6,096,840 units

Units outstanding

INV assumes that a total of 430,000 new investment units will be issued through thePrimary Offering (409,524 new investment units) and the Third Party Allotment (up to
20,476 new investment units), and that the expected number of investment units issued
and outstanding following the Offering will be 6,096,840 units, and that there will be no
additional issuance of units thereafter through the end of the December 2019 Fiscal
Period.

Balance as of the end of the fiscal period ended June 2019: JPY 228,774 million(borrowing: JPY 224,774 million, investment corporation bonds: JPY 4,000 million)
Balance as of the end of the fiscal period ending December 2019: JPY 256,174 million(borrowing: JPY 252,174 million, investment corporation bonds: JPY 4,000 million)
Interest-bearing liabilities

INV assumes that JPY 27,400 million of borrowing is implemented as of July 19, 2019,
for the fiscal period ending December 2019, as mentioned in the press release entitled“Notice concerning Debt Financing” as of today. In addition, INV intends refinance thesame amount of loan due in December 2019 Fiscal Period at a similar condition. INV
assumes no other new loan or prepayment of loan through the end of the December
2019 Fiscal Period.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

14

Item

Assumptions
INV expects to record rental revenues for each fiscal period as follows:
June 2019
Fiscal Period
JPY 12,210 million(JPY 8,562 million)(JPY 4,168 million)(JPY 4,394 million)
JPY 569 million

December 2019
Fiscal Period
JPY 15,944 million(JPY 13,201 million)(JPY 6,466 million)(JPY 6,734 million)
JPY 1,393 million

・TMK Dividend amountJPY 800 million

JPY 705 million

・TK Dividend amountJPY 2,606 million-

・Gain on sale

JPY 11,154 million-

Total operating revenues

JPY 27,341 million

JPY 18,043 million

・Rental revenues(of these, hotel rents)(fixed hotel rents)(variable hotel rents)
・Management contract revenue

INV estimates gain on sales of JPY 5,509 million from sale of Royal Parks Tower
Minami-Senju completed on June 7, 2019, and JPY 5,644 million from sale of Spacia
Ebisu completed on June 19, 2019 for the fiscal period ended June 2019.
Operating revenues
INV estimates the amount of dividends on the preferred equity interests based on theperformance of the underlying asset and the assumed amount of expenses incurred by
the special purpose company.
Due to the Structure Change, INV receives revenue from the Overseas Hotels as TK
dividend until May 9, 2019 and recognizes management contract revenue from theOverseas Hotels on and after May 10, 2019. The forecasts of TK dividend andmanagement contract revenue are based on estimated performance of the underlying
assets and the assumed amount of expenses incurred by the TK operator or the hotelmanagement company. TK dividend and management contract revenue have been
calculated based on the exchange rate of USD 1 = JPY 110.00, as the exchange rate is
fixed based on the currency put/call options covering approximately 85% of expectedcash flow.
Rental revenues in the fiscal period ended June 2019 and the fiscal period ending
December 2019 are calculated based on estimates as of today. In addition, INV
assumes there will be no delinquencies or non-payment of rent by tenants.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

15

Item

Assumptions
INV expects to incur property related expenses and management contract expenses outof operating expenses for each fiscal period as follows:・Facility management fees(of these, repair costs)
・Taxes and other public charges(Note)
・Insurance expenses
・Depreciation expenses
・Other expenses
Total property related expenses
and management contract
expenses
Operating expenses

June 2019
Fiscal Period
JPY 632 million(JPY 25 million)

December 2019
Fiscal Period
JPY 519 million(JPY 21 million)

JPY 545 million

JPY 621 million

JPY 51 million
JPY 3,198 million
JPY 193 million

JPY 145 million
JPY 3,882 million
JPY 147 million

JPY 4,621 million

JPY 5,317 million(Note) Property taxes and city planning taxes on the assets to be acquired in 2019
including anticipated acquisition of assets are calculated on a pro-rata basis with theprevious owners and settled at the time of acquisition, and are not recorded for the fiscal
period ending December 2019 and recorded from the fiscal period ending June 2020 as
the amount equivalent to such settlement is included in the acquisition cost.
For the Anticipated Acquisitions, INV expects to record the property taxes and city
planning taxes of JPY 109 million as part of the total acquisition cost, and an annual
amount of JPY 241 million of such taxes as expenses starting from the fiscal period
ending June 2020.
INV expects to incur other operating expenses than the property related expenses ormanagement contract expenses for the fiscal period ending December 2019 as follows:・Other operating expenses(of these, asset management
fees)

June 2019
Fiscal Period
JPY 532 million

December 2019
Fiscal Period
JPY 618 million(JPY 300 million)(JPY 300 million)

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

NOI

・NOI

June 2019
Fiscal Period
JPY 14,764 million

December 2019 Fiscal
PeriodJPY 16,609 million(of these, domestic hotel NOI)(of these, overseas hotel NOI)(of these, residential NOI)(JPY 8,923 million)(JPY 3,138 million)(JPY 2,517 million)(JPY 13,350 million)(JPY 1,263 million)(JPY 1,810 million)

NOI calculation method in the above table is as follows(until May 9, 2019)
・NOI＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses+
Dividend on the preferred equity interest(TMK dividend) + Dividend on TK Interest (TK
dividend)(on and after May 10, 2019)
・NOI＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses+
Dividends on the preferred equity interest (TMK dividend) + (Management Contract
Revenue‐Management Contract Expense)

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

16

Item

Assumptions
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・Other non-operating expenses(expenses relating to the issuance of
new units for the Offering)
Total Non-operating expenses

June 2019
Fiscal Period
JPY 591 million
JPY 298 million

December 2019
Fiscal Period
JPY 692 million
JPY 498 million

JPY 11 million

JPY 11 million

JPY 3 million

JPY 3 million-

JPY 200 million

JPY 905 million

JPY 1,406 million

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 ended June 2019, INV expects todistribute as profit distributions an aggregate amount of JPY 9,384 million (distribution
per unit: JPY 1,656) which is the remaining amount after retaining internal reserve (JPY
11,897), a portion of the increase in net income million due to Structure Change andsales of Royal Parks Tower Minami-Senju and Spacia Ebisu for the fiscal period ended
June 2019 (JPY 21,281 million).

Distribution per unit

With respect to the distribution for the fiscal period ending December 2019, INV expects
to distribute an aggregate amount of JPY 10,517 million (distribution per unit: JPY 1,725)
which is the remaining amount after retaining JPY 183 million for internal reserve fromnet income for the fiscal period ending December 2019 (JPY 10,700 million).
For the fiscal period ended June 2019 and fiscal period ending December 2019, INV
expects to record deferred gain on hedge of the interest rate swap and the currency
option as the valuation and conversion adjustments, etc. of JPY 108 million, which isequal to the amount for the fiscal period ended December 2018. The distribution per unit
is calculated based on the assumption that fluctuation of the market value of the interest
rate swap and the currency option does not affect the distribution per unit.
Distribution per unit may vary due to various factors, including changes of the assets
under management, fluctuation of rent income associated with reasons such as changeof tenants and occurrences of unexpected repairs.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

17

Item

Excess profit distribution
per unit

Assumptions
INV believes maintaining the stability of cash distributions over the medium term is oneof 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 order to stabilize distributions, in cases where dilution of investment units orsignificant expenses are to be recorded in connection with, among other things, theacquisition of assets or the raising 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 capital raising 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.
INV will not make distributions in excess of profits for the fiscal period ended June 2019,as INV intends to retain a certain amount of the net income.
With respect to the fiscal period ending December 2019, INV will not make distributions
in excess of profits as the impact to distribution per unit due to one off expenses inconnection with the Public Offering, Anticipated Acquisition and the Borrowings islimited with the increase in revenue from the Anticipated Acquisition. In addition, INV will
not make distributions in excess of profits in order to cope with the discrepancy between
tax and accounting treatment.

Excess profit distribution per unit

Other

June 2019
Fiscal Period-

December 2019
Fiscal Period-

INV assumes there will be no amendments to applicable laws and regulations, thetaxation system, accounting standards and other regulations that would affect theforegoing forecasts.
On April 1, 2019, an amended Act on Special Measures Concerning Taxation wasenacted in Japan that amends the requirement that “a J-REIT must not hold 50% ormore of the shares or investment in another corporation” by expanding the regulation to
include investments in anonymous associations (tokumei kumiai or TK). By
implementing the Structure Change, INV expects to comply with the tax conduit
requirement in the fiscal period ending December 2019, which commences after theeffective date of the amended Act on Special Measures Concerning Taxation
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 July 1, 2019 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.

18

(Appendix 2)<Simulated distribution per unit for full-year 2019>
Simulated distribution per unit for the year 2019 refers to sum of (i) earnings per unit calculated by first
assuming the forecast financial results for the fiscal period ended June 2019 and the forecast of financial
results for the fiscal period ending December 2019 and then, by applying the simulated adjustments below,
eliminating the effects of such factors as one-off expenses and treating the Refinancing in the Fiscal Period
Ended June 2019, the Structure Change, the Sale in the Fiscal Period Ended June 2019, the AnticipatedAcquisitions, the Public Offering and the Borrowings etc. as if they had occurred prior to the beginning of the
fiscal period ended June 2019 (except that the adjustment with respect to Sale in the Fiscal Period Ended
June 2019 described in 11 below applies only to the simulated figures *Before the Transactions*), and (ii)excess profit distribution per unit (limited to distribution in excess of profit for coping with the discrepancy
between tax accounting treatment).
Simulated adjustments used to calculate simulated distribution per unit for the year 2019 include thefollowing adjustments
1.

Elimination of one-off revenues/expenses in connection with the Transactions for the Fiscal Period2.

The figures are on the assumption that the debt refinance as announced in the press releases entitled

Ended June 2019.
“Notice concerning Debt Financing (Refinance)” as of January 18, 2019 and March 27, 2019 and “Noticeconcerning Debt Financing (Refinance) and Execution of Interest Rate Swap Agreement” as of June 13,
2019 and June 26, 2019, had been implemented from the beginning of the fiscal period ended June
2019.
3.

The figures are on the assumption that the change in recognition of revenue and expenses of theOverseas Hotels as announced in the press releases entitled “Notice concerning Change of Investment
Structure regarding Overseas Assets” as of May 9, 2019 had been reflected from the beginning of the
fiscal period ended June 2019.

4.

Elimination of gain on sales of the assets sold announced in the press releases entitled “Noticeconcerning Sale of Domestic Trust Beneficiary Interest” as of May 17, 2019 and May 28, 2019.

5.

The figures are on the assumption that the decrease in revenue attributable to the assets sold asannounced in the press releases entitled “Notice concerning Sale of Domestic Trust Beneficiary Interest”
as of May 17, 2019 and May 28, 2019 had been recorded from the beginning of the fiscal period ended
June 2019.

6.

The figures are on the assumption that the repayment of loan announced in the press release entitled“Notice concerning Prepayment of Loan” as of May 31, 2019 had been implemented from the beginningof the fiscal period ended June 2019.

7.

The figures are on the assumption that revenue contributions as well as expenses such as property
taxes and city planning taxes on the assets to be acquired announced in the press releases entitled“Notice concerning Acquisition and Lease of Domestic Trust Beneficiary Interests” as of today wererecorded from the beginning of the fiscal period ended June 2019.

8.

The figures are on the assumption that borrowings announced in the press release entitled “NoticeThis English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

19concerning Debt Financing” as of today were recorded from the beginning of the fiscal period ended
June 2019.
9.

The figures are on the assumption that a total of 430,000 units (409,524 units through the Public Offering
and up to 20,476 units through the Third Party Allotment) were issued at the beginning of the fiscal period
ended June 2019.

10. Elimination of one-off revenues/expenses in connection with the Transactions for the Fiscal PeriodEnding December 2019.
11. The figures are based on the assumption that the sale of assets as announced in the press
releases entitled “Notice concerning Sale of Domestic Trust Beneficiary Interest” as of May 17,
2019 and May 28 2019, had not occurred by the end of the fiscal period ending December
2019.
The simulated distribution per unit for the year 2019 as well as the simulated earnings per unit, simulated
distribution per unit (excluding excess profit distribution per unit) and simulated excess profit distribution perunit, for the year 2019, which are calculated by applying the same adjustments as the simulated distribution
per unit for the year 2019 are summarized in the column of “After the Transactions” of the Table A below. In
addition, to exhibit the effect of the transactions in connection to asset replacement stated in “Noticeconcerning Sale of Domestic Trust Beneficiary Interest” as of May 17, 2019 and May 28 2019, and “Noticeconcerning Acquisition of Assets and Entering into Leasing Contract”, “Notice concerning Debt Financing” and“Notice concerning Issuance of New Investment Units and Secondary Distribution of Investment Units” as ofJuly 1, 2019 (collectively, the “Transactions”), these figures before the Transactions are also included in the
Table A.
Simulated distribution per unit after the Transactions are calculated by applying all adjustments in 1 through10 listed above, while simulated distribution per unit before the Transactions are calculated by applying theadjustments listed in 1 through 4, 6 and 11 above which are related to transactions etc. implemented before
the Transactions.
The simulated distribution per unit for the year 2019 and the other figures in the Table A below are purely asimulation intended to describe the effect of the Transactions, etc. described above and are neither a forecast
nor prospect relating to INV’s earnings or distribution per unit for a given operating period. Accordingly, there
is no guarantee that the simulated distribution per unit for the year 2019 will ever be realized for any future
period, and INV is not obligated to revise any of the simulated figures regardless of any changes incircumstances that may affect the above simulation.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

20

[Table A]

Simulated
Earnings per Unit
for the year 2019
(Note)

Simulated
Distribution
per Unit(Excluding
Excess Profit
Distribution perUnit) for theyear 2019(Note)

Simulated
Excess Profit
Distribution per
Unit for the year
2019
(Note)

Simulated
Distribution per
Unit(Including
Excess Profit
Distribution perUnit) for theyear 2019(Note)

JPY

JPY

JPY

JPY

3,262

3,262

28

3,290

JPY

JPY

JPY

JPY

3,403

3,403

4

3,407

Amount of variance(B) – (A)

JPY

JPY

JPY

JPY

141

141

▲24

119

Rate of variance((B) – (A)) / (A)

%

%

%

%

4.3

4.3

▲85.7

3.6

Before the Transactions(A)
After the Transactions(B)(Note)

Assumption: the number of investment units issued and outstanding before the Transactions: 5,666,840 units; the number ofinvestment units issued and outstanding after the Transactions: 6,096,840 units.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

21

(Appendix 3)<Simulated DPU for full-year 2019 Sensitivity (vs ADR Growth) >(JPY)(Note 1) “ADR Growth” is shown as a % change from the ADR assumption for the 2019 forecast for the 73 properties that have avariable rent structure; of the 83 hotel properties (excluding the preferred equity TMK interest in Sheraton Grande Tokyo Bay
Hotel) that have a variable rent structure to be owned after the anticipated acquisition 9 hotels with fixed-rent leaseagreements as well as Hotel MyStays Nagoya Nishiki, which was rebranded as MyStays and reopened in July 2018 are
excluded.
(Note 2) “Hotel ADR” is average of ADR of the said 73 hotels (Same as Note 1).
(Note 3) “Simulated DPU Growth” is simulated data based on the simulated distribution per unit for the year 2019, on the assumptionthat all assumptions used to calculate simulated distribution per unit for the year 2019 for INV’s current assets and the assets tobe acquired remain the same, except for the ADR.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

22

(Appendix 4)<Simulated NOI of our portfolio >(Note 1)

(Note 2)

(Note 3)(Note 4)

Simulated hotel NOI and dividend income is based on the actual and simulated NOI of 74 hotel properties; of the 84
hotel properties (including Sheraton Grande Tokyo Bay Hotel, the underlying asset of preferred equity interest held by
INV) to be owned after the anticipated acquisition. 9 hotels with fixed-rent lease agreements as well as Hotel MyStays
Nagoya Nishiki, which was rebranded as MyStays and reopened in July 2018, are excluded. Assumes all properties
including overseas properties were owned since the beginning of 2018 and that the change in ownership structure of
the overseas properties had occurred prior to 2018. Includes properties that were renovated or are planned to berenovated from 2018 to 2019. The dividends from preferred equity interest of TMK that owns Sheraton Grande Tokyo
Bay Hotel is included as NOI of these properties, assuming these dividends were received for the full year 2018.
Simulated residential NOI is based on the actual and simulated NOI of the 62 residential properties to be owned by
INV after the anticipated acquisition. Excludes one-off insurance-related revenues and expenses, as well as expenses
required to detach trust beneficiary interest from an integrated trust account
Simulated NOI for Other is based on the actual and simulated NOI of 2 commercial properties to be owned by INV
after the anticipated acquisition.
For all properties, the pre-acquisition period of the properties is based on actual results provided by sellers andadjusted to reflect trust fees and insurance premiums assuming the properties had been held by INV.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

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(Appendix 5)<KPI of our current Hotel portfolio>(Note 1)For the assumptions of the actual and forecasts of ADR, occupancy, RevPAR and simulated GOP, please refer to (Note 1)of Appendix 4 above. Assumed an exchange rate of ¥110 to the US dollar to calculate income from overseas properties.

(Note 2)

In calculating the simulated GOP, the rent paid for APA Hotel Yokohama-Kannai, is regarded as GOP of the hotel. GOP for
Sheraton Grande Tokyo Bay Hotel, in which we have a 49% preferred TMK interest, is calculated as the 49% of the GOP
for the entire property.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

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(Appendix 6)<Rent Increase Initiative regarding our portfolio of the residential properties>(Note 1) Based on the residential properties owned by INV for the relevant period. The properties INV acquired / disposed during theperiod are included only for the term when owned by INV(Note 2) Occupancy is calculated by dividing the sum of total residential leased area by the sum of total residential leasable area at theend of each month of each year.
(Note 3)

Net Leasing Cost (Multiple of Monthly Rent) = Advertising Expenses (Multiple of Monthly Rent) + Free Rent (Multiple ofMonthly Rent) – Key Money (Multiple of Monthly Rent), rounded to second decimal place.

(Note 4)

Renewal rate is calculated by “Number of Renewals during the Period” ÷ “Number of Cases Targeted for Renewal during the
Period”.

(Note 5) Weighted average of monthly rent increase or decrease (%) of new or renewal contracts, or the total of both, compared withprevious contracts of properties owned at the end of period.

This English language notice is a translation of the Japanese-language notice released on July 1, 2019 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.

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