[For Information Purpose Only.
The Japanese language press release should be referred to as the original.]
July 17, 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 Acquisition and Lease of Domestic Trust Beneficiary Interests
Invincible Investment Corporation (“INV”) announced the decision to acquire trust beneficiary interests infour domestic hotel properties (the “Four Domestic Hotel Properties”) and enter into new leasing contracts
with respect to each of the Four Domestic Hotel Properties as decided on July 17, 2018 by Consonant
Investment Management Co., Ltd. (“CIM”), the asset manager of INV. Also, CIM has decided the acquisitionof a TK interest with overseas real estate as the underlying assets (the “Cayman Hotel TK Interest”). Pleaserefer to “Notice concerning Acquisition of TK Interest with Overseas Real Estate as Underlying Assets”
announced on July 17, 2018.

1.

Overview of Acquisition

Use

Property
Number

Property Name

Location

AnticipatedAcquisitionPrice(million yen)
(Note 1)

Hotel

D60

Hotel MyStays
Premier Akasaka

Minato-ku,
Tokyo20,691

Appraisal
Value(million yen)
(Note 2)

Seller (Note 3)

CategoryofSpecified
Assets

20,900

Aki Tokutei
Mokuteki Kaisha

Trust
Beneficial
Interest

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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

Use

Hotel

Property
Number

Property Name

Location

AnticipatedAcquisitionPrice(million yen)
(Note 1)

D61

Hotel MyStays
Premier Sapporo
Park

Sapporo-shi,
Hokkaido

16,731

D62

Hotel MyStays
Ueno East

Taito-ku,
Tokyo

5,286

5,340

HL Investments 2
Tokutei Mokuteki
KaishaD63

Hotel MyStays
Midosuji
HonmachiOsaka-shi,
Osaka

5,039

5,090

Dogo Tokutei
Mokuteki Kaisha

47,747

48,230-

Total

Appraisal
Value(million yen)
(Note 2)

Seller (Note 3)

16,900Raetia Tokutei
Mokuteki Kaisha

CategoryofSpecified
Assets

Trust
Beneficial
Interest(Note 1) Anticipated Acquisition Prices show purchase prices set forth in the purchase and sale agreements for the trust
beneficiary interests and do not include adjustments for property taxes, city planning taxes, or national or local
consumption taxes.
(Note 2) Appraisal Value is based on appraisal value stated in the appraisal report by the Japan Real Estate Institute or The
Tanizawa Sōgō Appraisal Co., Ltd. on the valuation date of June 1, 2018. For details, please refer to “(1) Details of theFour Domestic Hotel Properties” of “4. Details of the Four Domestic Hotel Properties” as described below.
(Note 3) For an overview of the sellers, please refer to “5. Overview of Sellers” as described below.
(Note 4) Amounts are rounded down to the nearest unit. The same shall apply hereinafter.

2.

Reasons for Acquisitions and Leasing
INV decided to acquire six domestic and overseas hotel properties (Note 1) at an average 6.5%
simulated NOI yield (Note 2) and are expected to contribute to growth and stability of revenue of theportfolio. The acquisition is from affiliates of the Sponsor, Fortress Investment Group LLC (“FIG”), by
using the funds raised through issuance of new investment units (Note 3), bank borrowings (Note 4), andINV’s own funds.
The acquisition of the Four Domestic Hotel Properties, and the acquisition of the Cayman Hotel TK
Interest (these assets are hereinafter collectively referred to as the “Assets to be Acquired”) areassociated with INV’s sixth public equity offering over the last five years, further promoting INV’s external
growth strategy to acquire assets which provide revenue growth and further stability, backed by theSponsor’s strong support. Following the acquisition of the Assets to be Acquired, INV’s AUM (Note 5) is
expected to grow to JPY 448,960 million. Based on (anticipated) acquisition prices, hotel properties are
expected to account for 78.7% of INV’s portfolio, an increase from 73.7% prior to the acquisition of theAssets to be Acquired (Note 6). The average appraisal NOI yield of the Four Domestic Hotel Properties is4.6%. As a result, the average appraisal NOI yield (Note 7) of the entire portfolio after the acquisition of
the Assets to be Acquired (129 properties) is expected to remain high at 6.3%.
The Four Domestic Hotel Properties are located in major cities, namely Tokyo, Osaka and Sapporo,and have convenient access to a traffic hub or popular tourism destinations. All of the hotel properties
This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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-

have either been built or renovated in the past few years. The hotel properties cater to both businesstravels and tourists and expected to benefit from the increasing foreign tourism. Aside from theincreasing tourism, the Four Domestic Hotel Properties are expected to benefit from Airbnb (Note 8)
delisting 53.3% of the 54,501 apartment listings they had in Japan as of May 31, 2018 (Note 9). This isespecially true in Tokyo with listings down by 11,690 units (67.4%) and in Osaka with listings down 6,425(52.4%) compared to their respective listing stock as of May 31, 2018. On the other hand, MyStays has
seen a strong increase in business purpose customers in June 2018.
The operator of these Four Domestic Hotel Properties is Mystays Hotel Management Co., Ltd.
(hereinafter “MHM”), which is owned by the Sponsor and is a hotel operator with deep expertise andexperience. Two out of these Four Domestic Hotel Properties are operated under the “Hotel MyStays
Premier” brand, which is positioned as a higher-grade hotel brand in the MyStays Hotels franchise. Hotel
MyStays Premier Akasaka, a limited service hotel newly opened in 2016, was renovated by Fortress.
Hotel MyStays Premier Sapporo Park is a full-service hotel which equipped with natural hot spring andother facilities, offering much spacious rooms among hotels located in urban areas. Hotel MyStays Ueno
East and Hotel MyStays Midosuji Honmachi are located in Tokyo (Akasaka) and Osaka (Honmachi), andis a good location to access tourism destinations. For details, please refer to “(1) Details of the Four
Domestic Hotel Properties” of “4. Details of the Four Domestic Hotel Properties” are described below.
INV will consider making additional investments in overseas hotel assets, as announced in the press
releases entitled “Notice concerning Partial Change in Investment Policy due to Revision of Internal
Rules (the Investment Guidelines) of the Asset Manager” and “Notice concerning Acquisition of TK
Interest with Overseas Real Estate as Underlying Assets” dated July 17, 2018, and conduct selective
investment to improve the performance of the hotel portfolio both in terms of revenue growth and stability,
not only in limited service hotels but also in full-service and resort hotels that are considered highly
competitive in terms of locations and specifications.
Our portfolio after the acquisition of the Assets to be Acquired will include flagship domestic andoverseas real estate properties, such as Sheraton Grande Tokyo Bay Hotel (full service hotel) as theflagship hotel asset in our existing portfolio (Note 10), The Westin Grand Cayman Seven Mile Beach
Resort & Spa (resort hotel) as the flagship overseas hotel asset, and Royal Parks Tower Minami-Senju
as the flagship residential asset in Japan. INV aims to enhance unitholder value on a continuous basis
through proactive management of its portfolio, aiming to be one of the largest portfolios in the J-REIT
market.
(Note 1) The acquisition of TK interest in Seven Mile Resort Holdings Ltd., an SPC incorporated in the British Cayman Islands,
backed by the leasehold interests in the land and buildings of “The Westin Grand Cayman Seven Mile Beach Resort &Spa” and “Sunshine Suites Resort” announced in the press release entitled “Notice concerning Acquisition of TK
Interest with Overseas Real Estate as Underlying Assets” dated July 17, 2018, (hereinafter the “Cayman Hotel TK
Interest”) is counted as two hotel properties based on the number of the underlying assets and added to the Four
Domestic Hotel Properties. “Underlying Assets” refer to the real estate related assets acquired by the TK operator of TK
interest to INV, or owned by a TMK relating to the preferred equity interest which INV owns, thus the real estate which
will be the revenue source of INV. The same shall apply hereinafter.
(Note 2) Average simulated NOI yield is calculated for reference by the following formula;
the sum of simulated NOI of the Four Domestic Hotel Properties +(sum of simulated NOI of the Underlying Asset simulated cost in the Cayman SPC) ÷ the sum of acquisition price for the Four Domestic Hotel Properties andacquisition price (the amount to be invested in) for TK investment interest.
Simulated NOI yield of the Four Domestic Hotel Properties is calculated by combining the actual monthly performancefrom January to May 2018 and anticipated monthly performance from June to December 2018 estimated by INV.
Pre-acquisition performance is based on actual results provided by sellers and adjusted to reflect trust fees andThis English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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insurance premiums assuming the properties had been held by INV through 2018. For calculation of simulated NOI
yield of the Cayman Hotel TK Interest, please refer to “Notice concerning Acquisition of TK Interest with Overseas Real
Estate as Underlying Assets.” Simulated NOI includes estimates and is different from actual NOI. INV excludes any
future foreign exchange hedging. Calculated using an exchange rate for TTS of 1USD = 110 JPY (rounded down to thenearest yen) as of June 27, 2018 announced by Mizuho Bank Ltd. The same shall apply hereinafter.
(Note 3) For issuance of new investment units, please refer to “Notice concerning Issuance of New Investment Units andSecondary Distribution of Investment Units” announced on July 17, 2018.
(Note 4) For new borrowings, please refer to “Notice concerning Debt Financing” announced on July 17, 2018.
(Note 5) Based on the (anticipated) acquisition price. The acquisition price of the preferred equity interest backed by Sheraton
Grande Tokyo Bay (the “Preferred Equity Interest”) is based on the investment amount for the preferred equity interest.
The anticipated acquisition price of JPY 37,382 million (USD 339,836 thousand) (calculated using exchange rate for
TTS of 1 USD= 110 JPY) of the Cayman Hotel TK Interest is based on an anticipated investment amount for the
Cayman Hotel TK Interest. The same shall apply hereinafter.
(Note 6) The Preferred Equity Interest and the Cayman Hotel TK Interest are categorized as hotels portfolio based on the natureof underlying assets. Unless otherwise noted, the same shall apply hereinafter.
(Note 7) The Preferred Equity Interest and the Cayman Hotel TK Interest are excluded from the calculation.
(Note 8) “Airbnb” is a company based in San Francisco in the United States that offers the service of matching the person who
wants to lease a vacant room temporarily with the person who wants to rent accommodation during trip.
(Note 9) The number of listings on Airbnb is based on the data as of May 31, 2018 and June 29, 2018, sourced from Minpaku
Databank. This is only a temporary, market snapshot immediately after new introduction of regulations and does notguarantee that number of listings will remain low in the future.
(Note 10) “Existing Portfolio” refers to the real estate, trust beneficial interest (real estate in trust) and preferred equity interest
held by INV as of today. The same shall apply hereinafter.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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

The summary of the portfolio inclusive of the Preferred Equity Interest and Cayman Hotel TK Interest
after the acquisition of Assets to be Acquired is as follows;

Number of Properties(Hotel Properties)
Total (Anticipated) Acquisition Price(million yen) (Note 2)

Existing Portfolio

Assets to be

Post-Acquisition(Note 1)

Acquired (Note 1)(Note 1)126 (60)6 (6)132 (66)

363,831

85,129448,960(Note 1) The figures described in the column of “Existing Portfolio” are inclusive of Preferred Equity Interest. The figuresdescribed in the column of “Assets to be Acquired” and “Post Acquisition” are inclusive of Preferred Equity Interests andthe Cayman Hotel TK Interest. Number of properties is based on the underlying assets, i.e. one property for Preferred
Equity Interest and two properties for the Cayman Hotel TK Interest.
(Note 2) The figures described in the row of “Total (Anticipated) Acquisition Price” are rounded to the nearest unit.

The summary of the portfolio exclusive of the Preferred Equity Interest and Cayman Hotel TK Interest
after the acquisition of Assets to be Acquired is as follows;
Existing Portfolio(Note 1)

Assets to be
Acquired(Note 1)

Post-Acquisition(Note 1)

Number of Properties (Hotel Properties)

125 (59)4 (4)129 (63)

Total (Anticipated) Acquisition Price(million yen) (Note 2)

345,985

47,747393,732

Total Appraisal Value (million yen)
(Note 2) (Note 3)

410,905

48,230459,135

Appraisal NOI Yield (Note 4)

6.5%

4.6%

6.3%

(Note 1) The figures for each item do not include the value of the Preferred Equity Interest and Cayman Hotel TK Interest.
(Note 2) The figures for “Total (Anticipated) Acquisition Price” and “Total Appraisal Value” are rounded down to the nearest units.
(Note 3) “Total Appraisal Value” is based on the appraisal value stated in the appraisal report on the valuation date of December
31, 2017 for the properties owned as of the end of December 2017, on the valuation date of January 1, 2018 for theproperties acquired on February 7, 2018, and on the valuation date of April 1, 2018 for properties acquired on June 27,2018 among Existing Portfolio (125 properties), and on the valuation date of June 1, 2018 for the Four Domestic Hotel
Properties.
(Note 4) “Appraisal NOI Yield” is calculated by dividing the total NOI derived from the direct capitalization method stated in theappraisal reports of (Note 3) above by the total of (Anticipated) Acquisition Price, and rounded to one decimal place.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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2018 Rent Revenue Composition (Normalized) (Note 1)

Existing Portfolio

Post-Acquisition(Note 1)The percentages in the above pie chart of “Existing Portfolio” indicate the composition of forecasted annual rent
revenue in 2018, which is a sum of the actual results for the period from January to May and forecasts for the period
from June to December, concerning all the properties INV owns as of today. In addition, the figures for the properties
acquired in February 2018 and June 2018 are calculated on the assumption that INV had acquired these properties
on January 1, 2018, and using the actual figures provided by the sellers of such properties for the period before theacquisition, the actual figures for the period from the acquisition to the end of May 2018 and the forecasted figures forthe period from June 2018. The percentages in the pie chart of “Post-Acquisition” are calculated by adding the
expected annual operating revenue in 2018, to be generated by Assets to be Acquired (excluding the Cayman TK
Interest) calculated by CIM to the figures of the “Existing Portfolio”. Likewise, it is based on a sum of actual results forthe period from January to May and forecasts for the period from June to December.
(Note 2) “Others” are retail properties; the same shall apply hereinafter.
(Note 3) The ratio figures are rounded to one decimal place; the same shall apply hereinafter.

Portfolio Composition by Asset Type(Note)

Existing Portfolio(Note)

Post-Acquisition

Based on the (anticipated) acquisition price.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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Portfolio Composition by Geography (Note 1) (Note 2)

Existing Portfolio

Post-Acquisition(Note 1) Calculated based on the (anticipated) acquisition price. The Preferred Equity Interest and Cayman Hotel TK Interest
are categorized into “Greater Tokyo (excluding Tokyo 23 wards)” and “Overseas” respectively based on the location of
the underlying real estate.
(Note 2) The definitions of areas used in the circle charts are as follows;
Greater Tokyo (excluding Tokyo 23 wards): Tokyo Metropolis (excluding Tokyo 23 wards), Kanagawa, Chiba andSaitamaKansai: Osaka, Hyogo, Kyoto, Shiga, Wakayama and Nara
Chubu: Aichi, Gifu, Mie, Shizuoka, Nagano, Yamanashi, Niigata, Toyama, Ishikawa and Fukui
Kyushu: Fukuoka, Kumamoto, Kagoshima, Nagasaki, Oita, Miyazaki, Saga and Okinawa

Hotel Portfolio Composition by Geography (Note)(Note)

Calculated Based on percentage of hotel appraisal values, post-Acquisition. Sheraton TMK is calculated based on theamount of preferred equity interest contribution by INV to the JV TMK.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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

3.

Execution of Lease Agreement
In regards to the Four Domestic Hotel Properties, INV will enter into lease agreements with MHM
based on the combination of fixed rents and variable rents linked to Gross Operating Profit (GOP) (Note1). Regarding to 64 domestic hotel properties in INV’s portfolio after the acquisition of the Assets to be
Acquired, 53 hotels use a variable rent scheme described above (Note 2). Among these, MHM, anexperienced hotel operator, conducts comprehensive revenue management for 52 of INV’s hotels andseeks to maximize revenue by increasing accommodation demand. These initiatives uniquely position
MyStays Hotels and therefore INV to directly benefit from an increase in revenue from hotels through thevariable rent scheme. In addition, INV will be able to reduce the negative impact of a downward trend in
GOP due to the embedded fixed-fee mechanism working as a buffer.
INV believes that the tenants for the Four Domestic Hotel Properties conform to the standard forselection of tenants described in the Report on the Management Structure and System of the Issuer ofReal Estate Investment Trust Units and Related Parties (Japanese only) filed on March 27, 2018.
(Note 1) Gross Operating Profit is a rent which is the amount remaining after deducting operating expenses such as personnel
expenses, cost of utilities, and advertising expenses, as well as management fee for operators (if any) from the hotel’srevenues.
(Note 2) Including the Sheraton Grande Tokyo Bay Hotel which is the underlying asset of the Preferred Equity Interest.

<Overview of Tenant and Operator>
An overview of the tenants and operators for the Four Domestic Hotel Properties is as follows;
The tenant and operator for Hotel MyStays Premier Akasaka, Hotel MyStays Premier Sapporo Park, Hotel
MyStays Ueno East and Hotel MyStays Midosuji Honmachi
(i)

Name

MyStays Hotel Management Co., Ltd.

(ii)

Location

Roppongi Hills North Tower 14th Floor, 6-2-31 Roppongi, Minato-ku,
Tokyo, Japan

(iii)

Title

and

name

of

President and CEO, Atsuki Asano

representative officer(iv)

Business

Hotel and Ryokan (Japanese inn) operation and management(v)

CapitalJPY 100 million (as of the end of December 2017)(vi)

Date of establishment

July 8, 1999

(vii)

Relationship between INV/CIM and the Tenant/Operator
Capital relationships

While there are no capital relationships that should be noted between
INV/CIM and MHM, the parent company of MHM is indirectly held by afund operated by affiliate of FIG. FIG is a subsidiary of SoftBank Group
Corp. (the “SoftBank Group”), which directly and indirectly holds 100% of
CIM’s outstanding shares.

Personal relationships

While there are no personnel relationships that should be noted between
INV/CIM and MHM, as of today, among the directors of INV and theofficers and employees of CIM, Naoki Fukuda, who is Executive Directorof INV and CEO of CIM, is seconded from Calliope Godo Kaisha

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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(“Calliope”) which is an affiliate of FIG. Furthermore, a part-time directorof CIM, Christopher Reed, is seconded from Fortress Investment Group
Japan GK, a subsidiary of FIG.
Transactional

As of today, INV has entered into lease agreements with MHM withrelationships

respect to 48 hotel properties (Note).

Whether the Operator

MHM is not a related party of INV/CIM. Further, related persons andis a related party

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

(Note)

4.

Agreements with MHM subsidiaries and management contracts between MHM and tenants are included.

Details of the Four Domestic Hotel Properties(1) Details of the Four Domestic Hotel Properties
Details, profit and loss status and outline of appraisal reports of the Four Domestic Hotel Properties
are as follows:<Explanation of details of the Four Domestic Hotel Properties>a.

“Outline of Specified Assets and Properties” column:
・ “Legal form of Asset” indicates the type (the legal form) of specified assets.
・ “Date of Planned Acquisition” indicates the date when an acquisition is executed, which is
specified in the purchase agreement or the trust beneficiary right sales agreement.
・ “Planned Purchase Price” indicates a purchase price of the Four Domestic Hotel Properties
which is specified in the purchase agreement or the trust beneficiary right sales agreement;
Consumption tax is not included, and rounded down to the nearest million yen.
・ “Appraisal Value” indicates reported price by appraisal agency for anticipated acquisitions.
・ The details in “Location (excluding address)”, “Lot Area” of the “Land” and, “Total Floor Area”,“Structure/No. of Stories”, “Purpose of Use”, and “Completion Date” of the “Building” are,unless otherwise specified, as shown in the property register. The “Total Floor Area” is thegross floor area (if no annotation in the context, an annex building would not be included), andwith respect to “Purpose of Use,” the primary ones of the purposes shown in the property
register is listed. Further, the “Completion Date” lists the time at which the building was newly
constructed, as shown in the property register.
・ “Transport”indicates the time to walk to the nearest station based on the description in theReal Estate Appraisal Report (in case there is no description of time distance in the Real
Estate Appraisal Report,“Transport”is calculated by assuming walking time on the roaddistance of 80 meters per minute in accordance with the Fair Competition Code on the Real
Estate Representations (Fair Trade Commission Notification No.2 of 2003, including
subsequent revisions) (hereinafter, referred to as the “Fair Competition Code”) and theOrdinance for Enforcement of the Fair Competition Code). If unidentified, it is based on thedescription in other materials.
・ In “Zoning” regarding land, the class of zoning under the respective items of Article 8(1) of theCity Planning Act (Act No.100 of 1968, as amended; the “City Planning Act”) is listed.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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 “Building Coverage Ratio” regarding land, the ratio of a building’s area with regard to theland area as set forth under Article 53 of the Building Standards Act (Act No. 201 of 1950, as
amended; the “Building Standards Act”) is listed.
・ In “Floor Area Ratio” regarding land, the ratio of a building’s floor area with regard to the landarea as set forth under Article 52 of the Building Standards Act is listed.
・ In “Trustee”, the planned trustee at the time of INV’s acquisition of the assets for anticipatedacquisitions is listed.
・ In “Trust Period”, the planned trust period at the time of INV’s acquisition of the assets for
anticipated acquisitions is listed.
b.

“Lease Overview” column:

・ Based on lease agreements with tenants effective as of May 31, 2018 or anticipated leaseagreements which will be entered into upon acquisition of the Four Domestic Hotel Properties.
・ “Total No. of Tenant(s)” is calculated by counting a lessee who has directly concluded a leaseagreement for each property as one tenant, and a tenant who has rented two or more rooms ina single property is calculated as one tenant.
・ In “Number of Guest Rooms”, indicates the number of guest rooms their tenant(s) can
sublease. “(S/T/D/O)” indicates the breakdown of the number of guest rooms categorized as(Single/Twin/Double/Other).
・ In “Leasable Area”, the total leasable floor are for guest room, residential, office, retail andothers for the area of each real property or trusted real property to be owned by INV is listed.
・ In “Leased Area”, the total sum of the leased area with respect to which a lease agreementwith end-tenant have actually been entered into and which are leased to the end-tenant or willbe leased to the end-tenant after acquisitions (the area specified in the lease agreement) islisted.
・ In “Occupancy Rate”, the ratio of the leased area to the leasable area is shown, rounded to thenearest first decimal place.
・ In “Security Deposit/Guarantee”, the security deposit and guarantee after amortization as
specified in the lease agreements executed or to be executed after the acquisition is stated.
・ “Rental Revenue (monthly amount)”, the gross operating profit, or “GOP”, which is the amountremaining after deducting the personnel, utility and advertising expenses as well as the
management service fees for the hotel operations from the hotel’s revenues of the tenant, andare recognized as the rental revenues received as rent, is listed.
c.

“Overview of Lease Agreement” column:

・ Based on the lease agreements with tenants effective as of May 31, 2018 or anticipated leaseagreements which will be entered into upon acquisition of the Four Domestic Hotel Properties.
・ “Type of Agreement” is the type of rent received from the relevant operator (either a fixed-rent
or a fixed rent plus variable rent) is indicated. “Fixed rent” is defined as an agreement underwhich INV or the trustee shall receive a specified rent, regardless of the operational results of
the relevant hotel. “Fixed rent plus variable rent” is defined as an agreement under which INVor the trustee shall receive rent that varies based on the GOP (Gross Operating Profit), in
addition to a fixed rent.
This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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・ In “Determination of rent of lease agreement,” monthly rent amount is rounded down to nearest
ten thousand yen, and annual rent is rounded down to the nearest million yen.
・ The “Management Services Fee” is a commission fee payable to the tenant from landlord inaccordance with the provisions of the lease agreement as a compensation for operational
service provided by a tenant under the agreement. The management services fee is notdisclosed, as tentative consent has not been obtained for disclosure. However, for MHM, anamount of the management services fee to be received is, in principle the sum of (i) an amountequal to 2% of monthly sales, (ii) an amount equal to 0-6% of monthly sales from directbookings made through the MHM’s marketing department or website, and (iii) an amount equal
to 4-6% of the monthly GOP (pre-fees) after deducting the amounts of (i) and (ii) above.
・ In “Security Deposit/Guarantee Money,” the amount of the security deposit/guarantee money
after amortization pursuant to the lease agreement is listed.
d.

“Overview of Building Conditions Survey Report” column:
For the Four Domestic Hotel Properties, INV has received a report from Tokio Marine & Nichido
Risk Consulting Co., Ltd. and Tokyo Bldg-Tech Center Co.,Ltd on building deterioration survey,
short- and long-term repair plan decision, a condition survey in compliance with the BuildingStandards Act, a survey of dangerous substances contained in a building, and soil survey,
amongst others, and has provided an overview of the report in this column.

・ “Replacement Price” means the total amount of the appropriate costs needed in the event thatthe appraised building is to be rebuilt at the time of the survey.
・ “Short-term Repair Costs” indicates the repair and/or replacement costs for items which, at thetime of the survey, are below minimum maintenance level due to deterioration or items which
are in violation of law or regulations, etc. and which can be judged as best to be repaired or
replaced within one year.
・ “Long-term Repair Costs” consist of capital expenditures and repair costs. Capital
expenditures means, of the anticipated improvement costs necessary to maintain the building
at the set building functionality level, the costs to extend the use period of the building’s
equipment or to replace it entirely. Repair costs means, of the anticipated improvement costs
necessary to maintain the building at the set building functionality level, costs other than capital
expenditures.
e.

About the section of “Summary of the Report on Earthquake Risk”
For the Four Domestic Hotel Properties, INV has received a seismic risk assessment from
Tokio Marine & Nichido Risk Consulting Co., Ltd. The summary of the report is described in thissection.

・ Probable Maximum Loss (PML) is a term that means the value of the largest loss that could
result from an earthquake, used for a specific property and for an overall portfolio as well. As
there is not a universal definition for PML in the strict sense, this press release uses the term
under the definition of “a loss (damage) estimate expressed as a percentage of the total
replacement cost of real property,” assuming an earthquake of the largest magnitude in the
50-year period of a property’s expected lifetime, or a mega-quake of recurrence interval (return
period) of 475 years, which translates into a probability of recurrence 10 % in 50 years.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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

f.

Descriptions in the “Area Characteristics, etc.”:
Descriptions in the “Area Characteristics, etc.” field are an abstract or summary of descriptionsin the Real Estate Appraisal Report on each real property or trusted real property, prepared byappraisal agencies or market report, or created by referring to such descriptions.

g.

Descriptions in the “Special Notes”:
Descriptions in the “Special Notes” fields are matters that are deemed important inconsideration of their impact on rights, appraisal value, profitability and disposability of eachreal property or trusted real property.

h.

“Income and Expenditures, Etc.” column:

・Based on the information provided from the sellers for each operating period from January 1,
2016 to December 31, 2017. This is not a guarantee of future income and expenditures.

・Amounts are rounded down to the nearest unit. Therefore, the figures may not necessarily
match the total value when added together. Unless otherwise specifically noted, the amounts
do not include consumption tax, etc.

・“Land Lease Fees” is based on the land lease fees applicable under a relevant leaseagreement.

・“Taxes and Public Dues,” include property tax and city planning tax, which are generally
imposed on the owner on January 1 of each year. For property tax and city planning tax thatwere borne by the previous owner or current owner at the time of acquisition of the real estate
related properties INV own or will acquire, the estimated amount is included in the acquisition
cost, and is therefore not included in “Taxes and Public Dues.”

・“Non-life Insurance Premiums” is the total amount of paid insurance premiums distributed
proportionally over the relevant period.

・“Trust Fees” is based on real estate management and trust agreements which INV will enter
into and recorded per relevant period.

・“NOI” (Net Operating Income) lists in principle the actual figures as provided by the seller. With
respect to the trust fees, administration fees, depreciation and insurance premiums, the figure
following the adjustments assuming the asset is held by INV is listed.

・“Room Income” includes room use fees and lease fees.

・“Other Income” includes items such as parking lot use fees, laundry fees, vending machinetransaction fees, etc. which do not fall under “Room Income”.

・“ADR,” or Average Daily Rate, is the value of the total room sales for a certain period(excluding service fees) divided by the total number of sold rooms for the same period.

・“RevPAR”, or Revenues Per Available Room per day, is calculated by dividing the total sales
for a certain period by the aggregate number of rooms for the same period (rooms x number ofdays), and is the same figure as that of a product of room occupancy rate and ADR.

・“Room Occupancy Rate” is calculated using the following formula:
Room Occupancy Rate = the aggregate number of days per room for which each room wasThis English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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

occupied divided by the number of available rooms (aggregate number of rooms during therelevant period x number of business days during target period) during the relevant period
・“GOP Ratio” is calculated using the following formula:
GOP ratio = GOP ÷ sales figure

・“Daily / Weekly / Monthly” is the ratio for each classification of length of stay (i.e.,
daily/weekly/monthly), and is calculated by dividing total room sales for the relevant
classification during each operational period by the aggregate room sales for the same
operational period and then multiplying the figure by 100. Daily, weekly and monthly areclassified by the number of days of stays, with daily being 1-6 nights, weekly being 7-29 nights,
and monthly being 30 or more nights.

・“Overseas Sales Amount” is the sales amount via overseas web agents, who operate abusiness managing application from abroad.

i.

“Summary of Real Estate Appraisal Report” column:
INV has requested real estate appraisal from The Tanizawa Sōgō Appraisal Co., Ltd. a Japan
Real Estate Institute for the Four Domestic Hotel Properties based on the matters forconsideration in a real estate appraisal under the Investment Trust Act, the Act on Real EstateAppraisal (Act No. 152 of 1963, as amended; the “Act on Real Estate Appraisal”) and the realestate appraisal standards.
An appraisal value of a property is merely an opinion of the real estate appraiser regarding thevalue of the appraised property at the time the appraisal was conducted in accordance with the
Act on Real Estate Appraisal and real estate appraisal standards, etc.
A real estate appraisal is neither a guarantee nor a promise that an asset can be sold orpurchased at such appraisal value either now or in the future.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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D60: Hotel MyStays Premier Akasaka
Type and Location of Specified Assets, etc.
Type of Specified Assets

Trust Beneficiary Right

Date of Planned Acquisition

August 2, 2018

Planned Purchase Price

JPY 20,691 million

Appraisal Value

JPY 20,900 million

Appraisal Agency

Japan Real Estate Institute(Lot Number)

2-1767, Akasaka, Minato-ku, Tokyo and three other lots

(Address)

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

Location

4 min walk from Akasaka Station on Tokyo Metro Chiyoda Line ,7 min walk from Tameike-Sanno Station on Tokyo
Transport
Metro Ginza Line and Nanboku Line
Form of Possession

Ownership

ZoningLot Area

2,024.64 m2

Land

Commercial area

Building Coverage
80% / 400%
Ratio/Floor Area Ratio

Form of Possession
Total Floor Area

Ownership
8,620.69 m

2

Purpose of Use

HotelConstruction Date

June 17, 2016

Structure/No. of

Building

Steel concrete structure with flat roof, 1 basement, 12 stories
StoriesRenovation Date–

Trustee

Sumitomo Mitsui Trust Bank, Limited

Trust Period

From: November 26, 2003; Until: August 31, 2028

Creation of Security Interest

None

Lease Overview
Total No. of Tenant (s)1Number of Guest Rooms

2

Leasable Area (m )8,620.69 m2

Lease Area (m2)

8,620.69 m2

327 rooms(T37・D262・O28)

Security Deposit/Guarantee
JPY 4,328 thousand
Money

Occupancy Rate

100.0%GOP (per month)

JPY 72,875 thousand

Overview of Lease Agreement
TenantMyStays Hotel Management Co., Ltd.

Type of Contract

Fixed rent plus variable rent type

Term

From: August 2, 2018 Until: August 31, 2028
Fixed rent (JPY 432.5 million per annum (January: JPY 24.5 million per month / February: JPY 34.7 million permonth / March: JPY40.0 million per month / April: JPY 52.0 million per month / May: JPY 36.8 million per month/

Determination of rent of lease
June: JPY 29.2 million per month/ July: JPY 33.0 million per month/ August: JPY 30.3 million per month/ September:contract
JPY 31.3 million per month/ October: JPY 42.6 million per month/ November: 41.5 million per month/ December:
36.6 million per month) plus variable rent based on GOP of hotel operation. (Note)
Management services fee

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

Security Deposit/Guarantee
JPY 4,328 thousand
Money
Renewal Upon Expiration

The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of the leThis English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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ase term.
Rent Revision

Rent cannot be revised during the lease term.

Early Termination

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

Other Special Matters

None

Overview of Building Conditions Survey Report
Tokio Marine & Nichido Risk Consulting
Date of ReportCompany Conducting Survey

June 2018

Co., Ltd.
Short term Repair Costs (within-

Replacement Price

JPY 2,588,500 thousand

1 year)Long term Repair Costs (in 12
JPY 149,089 thousand
years)
Overview of PML report
Tokio Marine & Nichido Risk Consulting
Company Conducting Survey

Date of Report

June 2018

Co., Ltd.
Probable Maximum Loss (PML)

3.8%

Area Characteristic

The target property is a stylish limited-service hotel located a 4-minute walk from Akasaka Station on the Tokyo Metro Chiyoda Line, one of the
major stations in Tokyo metropolitan area. This young-aged hotel opened in July 2016 is a 7-minute walk from Tameike-Sanno Station on theTokyo Metro Ginza Line and Namboku Line, which offers traffic accessibility from major destinations: 10-15 minutes from Tokyo Station andShinjuku Station, about 45 minutes from Haneda Airport and about 90 minutes from Narita Airport. This hotel is located near Roppongi Hills,
Tokyo Midtown and restaurants and commercial facilities in Akasaka. While the hotel, located at the center of Tokyo and providing good access tovarious major destinations, is expected to create stable demand from business people, it is quite possible to draw tourists to use the hotel as abase for sightseeing around Tokyo. Its 327 guest rooms address various types of customer needs, as mainly consisted of double rooms (15.6m2– 17.1m2) and twin rooms (23.1m2), all of which can serve for couple guests. Another feature of this hotel is Pepper, the humanoid robot from
SoftBank Robotics, giving hospitality to guests as a remote concierge.
Special Notes
None(Note) Variable rent is the amount of difference between (i) GOP during the three-month variable rent calculation period and (ii) the sum of fixed rent during
the same period. However, when the balance is zero or negative, variable rent will be deemed to be zero.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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

D60: Hotel MyStays Premier Akasaka
Income and Expenditures, Etc.
July 30, 2016 – December 31, 2016

Operating Period

January 1, 2017 – December 31, 2017

(Note)GOP (= (1) - (2))

JPY 364,645 thousand

JPY 828,648 thousand--

JPY 19,548 thousand

JPY 46,158 thousandc. Non-life Insurance Premiums

JPY 261 thousand

JPY 617 thousandd. Trust Fees

JPY 338 thousand

JPY 800 thousand

JPY 344,497 thousand

JPY 781,073 thousand

JPY 601,531 thousand

JPY 1,427,880 thousand

Room Income

JPY 535,483 thousand

JPY 1,337,221 thousand

Other Income

JPY 66,047 thousand

JPY 90,659 thousand

JPY 236,885 thousand

JPY 599,231 thousand

ADR

JPY 11,654

JPY 11,917

RevPAR

JPY10,565

JPY 11,204

Room Occupancy Rates

90.7%

94.0%

GOP Ratio

60.6%

58.0%

a. Land Lease Fees
b. Taxes and Public DuesNOI (= GOP - [a. + b. + c. + d.])(1) Sales(2) Operating Costs (not including a.
through d. above)(Reference)

Daily/ Weekly/ Monthly

100.0%/

0.0%/

Overseas Sales Share

0.0%
35.5%

100.0%/

0.0%/

0.0%
48.6%

(Note) Indicates data from July 30, 2016 to December 31, 2016 as the hotel newly operated on July 30, 2016

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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D60: Hotel MyStays Premier Akasaka
Summary of Real Estate Appraisal Report
Appraisal Company

Japan Real Estate Institute

Appraisal Value (Market Value)

JPY 20,900 million

Time of Valuation

June 1, 2018
(JPY thousand)

1. Value of Profits using the Profit Capitalization Method(1) Direct Capitalization Method

Contents

Overview
Room Rental Income and Common Area MaintenanceFee are estimated based on anticipated lease agreement,

919,961(a) Room Rental Income

historical data, comparable assets and project medium- tolong-term rents(b) Common Area Maintenance Fee Income-(c) Utility Income-(d) Parking Lot Income-(e) Other Income

919,961(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)](f) Vacant Room Losses-(g) Irrecoverable Debt Losses

919,961(II) Operating Revenue = [(I) - (f) - (g)](h) Maintenance and Management Costs-

Not expected since it is included in hotel operation cost(i) Utility Costs-

Not expected since it is included in hotel operation cost(j) Repair Costs

3,727

Based on comparable assets and average annual
estimate in the engineering report(k) Property Management Fee-(l) Tenant Solicitation Expenses

49,922

Based on standard taxable value as stated in the
documents relating to taxes and public dues, tax rate(m) Taxes and Public Dues

adjustments and details of renovation works

377

Based on insurance premiums of insurance policy as well(n) Non-life Insurance Premiums
as comparable assets

120(o) Other Costs(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) +54,146(m) + (n) + (o)]865,815(IV) Net Operating Income = [(II) - (III)]-(p) One Time Investment Gains

Based on comparable assets and average annual

8,697(q) Capital Improvements and Expenses

estimate in the engineering report
Based on comparable assets as well as repair and

29,701(r) FF&E Reserve

maintenance plan

827,417(V) Net Income = [(IV) + (p) - (q) – (r)]3.9%(VI) Capitalization Yield

Based on comparing multiple transaction yield in theThis English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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neighboring areas or similar areas with the same supply
and demand taking into consideration of the futurechanges in revenues(VII) Income Price using Direct Capitalization Method = [(V) ÷ (VI)]21,200,000(Reference) NOI Yield

4.1%[(IV) ÷ (VII)](2) DCF Method

Contents

Overview(I) Total of Current Value of Net Income during Analysis Period

6,822,321(a) Sale Price

20,229,951(b) Sale Costs

606,899(c) Returning Price = [(a) - (b)]19,623,052(II) Returning Price, Current Value

13,645,870

Assume 3.0% of sale price

Based on transaction yield of comparable assets and

3.7%(III) Discount Ratecharacteristics of the property
Based on transaction yield of comparable assets taking

4.1%(IV) Final Capitalization Yield

into consideration of future prediction uncertainty(V) Income Price using DCF Method = [(I) + (II)]20,500,000(3) Income Price using Income Capitalization Method

20,900,000

2. Estimated Price using Cost Method
Contents

Overview(i) Land Price

8,850,000(ii) Building Price

2,450,000(iii) Furnishings/Appliances/Equipment/

233,000
Upholstery Price(iv) Total Price of Land, Building, and11,533,000
Furnishings/Appliances/Equipment/Upholstery = [(i) + (ii) + (iii)]

150%(v) Market Revision Rate

Land lease right and building as a whole

17,300,000(vi) Income Price using Income Cost Method = [(iv) * (v) ]Other Points to be Noted for Appraisal by Apprising Organization

Judged that income approach value truly replicates the price formation process from an income perspective, is more persuasive and adopted the Income
Price, with the cost approach value as a reference.

D61: Hotel MyStays Premier Sapporo Park
Type and Location of Specified Assets, etc.
Type of Specified Assets

Trust Beneficiary Right

Date of Planned Acquisition

August 2, 2018

Planned Purchase Price

JPY 16,731 million

Appraisal Value

JPY 16,900 million

Appraisal Agency

The Tanizawa Sōgō Appraisal Co., Ltd.

Location(Lot Number)

5-8 Nishi 2-chome, Minami 9-jo, Chuo-ku, Sapporo-shi, Hokkaido and 26 other lots

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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

(Address)
Transport

2-10 Nishi 2-chome, Minami 9-jo, Chuo-ku, Sapporo-shi, Hokkaido

3-min walk from Nakajima Koen Station on the Sapporo Subway Namboku Line
Form of Possession

Ownership

Lot Area

3,451.54 m2

ZoningLand

Commercial area

Building Coverage
80% / 600%
Ratio/Floor Area Ratio

Form of Possession

Ownership
21,670.64 m

Purpose of Use

HotelConstruction Date

March 23,1998

2

Total Floor Area
(Note 1)
Building

Structure/No. of
Steel-framed steel concrete structure with flat floor, 1 basement, 26 stories (Note 2)
StoriesRenovation Date

November 2017 – April 2018

Trustee

Mitsubishi UFJ Trust and Banking Corporation

Trust Period

From: March 25, 2005; Until: August 31, 2028

Creation of Security Interest

None

Lease Overview (May31, 2018)
Total No. of Tenant (s)1Number of Guest Rooms

2

Leasable Area (m )21,670.64 m2

Lease Area (m2)

21,670.64 m2

419 rooms(T283・D112・O24)

Security Deposit/Guarantee
Money

Occupancy Rate

100.0%GOP (per month)

JPY 54,302 thousand

Overview of Lease Agreement
TenantMyStays Hotel Management Co., Ltd.

Type of Contract

Fixed rent plus variable rent type

Term

From: August 2, 2018 Until: August 31, 2028
Fixed rent (JPY 444.9 million per annum (January: JPY 22.9 million per month / February: JPY 45.1 million permonth / March: JPY12.5 million per month / April: JPY 0 million per month / May: JPY 30.9 million per month/ June:

Determination of rent of lease
JPY 60.7 million per month/ July: JPY 75.8 million per month/ August: JPY 79.5 million per month/ September: JPY
contract
52.1 million per month/ October: JPY 29.8 million per month/ November: 10.3 million per month/ December: 25.3
million per month) plus variable rent based on GOP of hotel operation. (Note 3)
Management services fee

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

Security Deposit/Guarantee
Money
The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of the le
Renewal Upon Expiration
ase term.
Rent Revision

Rent cannot be revised during the lease term.

Early Termination

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

Other Special Matters

None

Overview of Building Conditions Survey ReportCompany Conducting Survey
Short term Repair Costs (within

Tokyo Bldg-Tech Center Co.,Ltd

Date of Report－

Replacement Price

June 2018
JPY 6,751,000 thousand

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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

1 year)Long term Repair Costs (in 12
JPY 215,010 thousand
years)
Overview of PML report
Tokio Marine & Nichido Risk Consulting
Company Conducting Survey

May 2018

Date of ReportCo., Ltd.

Probable Maximum Loss (PML)

1.5%

Area Characteristic

The target property is a full-service hotel offering an ample choice of guest rooms and equipped with natural hot spring large bathing area andother facilities. The hotel, on which renovation works were completed in April 2018, is located at the center of Sapporo City and a 3-minute walkfrom Nakajima-Koen Station on the Sapporo Municipal Subway Namboku Line. This nearest station offers good traffic access to Sapporo Station(about 5 minutes) and New Chitose Airport (about 40 minutes via Sapporo Station), which means this hotel is well-positioned for both businessand leisure purposes. While stable business demand is estimated, the hotel is possible to attract leisure demand since it is surrounded by
Nakajima Park and The Toyohira River and easily accessible to famous destinations attracting tourists from home and abroad, including Odori
Park, Sapporo Garden Park, Susukino downtown district and Sapporo Clock Tower.
Special Notes
Part of the boundary between the land and adjacent land is yet to be finalized.
(Note 1) In addition, there is a parking lot building (91.83 m2) as an annex building.
(Note 2) Indicates according on registry, however it is scheduled to revise registry as the structure of the building is steel-framed and partially steel
steel-framed concrete structure indicated on the inspection certificate.
(Note 3) Variable rent is the amount of difference between (i) the GOP during the three-month variable rent calculation period and (ii) the sum of fixed rent
during the same period. However, when the balance is zero or negative, variable rent will be deemed to be zero.

Income and Expenditures, Etc.
January 1, 2017 – December 31, 2017

Operating Period

January 1, 2016 – December 31, 2016

GOP (= (1) - (2))

JPY 852,181 thousand

JPY 863,796 thousand--

JPY 56,565 thousand

JPY 56,565 thousand

JPY 1,113 thousand

JPY 1,113 thousand

JPY 800 thousand

JPY 800 thousand

JPY 793,702 thousand

JPY 805,318 thousand

JPY 2,164,032 thousand

JPY 2,150,694 thousand

Room Income

JPY 1,512,323 thousand

JPY 1,499,933 thousand

Other Income

JPY 651,709 thousand

JPY 650,761 thousand

JPY 1,311,851 thousand

JPY 1,286,897 thousand

ADR (Note 2)

JPY 11,296

JPY 11,890

RevPAR (Note 2)

JPY 9,885

JPY 9,831

Room Occupancy Rates (Note 2)

87.5%

82.7 %GOP Ratio

39.4%

40.2 %

a. Land Lease Fees
b. Taxes and Public Duesc. Non-life Insurance Premiumsd. Trust FeesNOI (= GOP - [a. + b. + c. + d.])(1) Sales(2) Operating Costs (not including a.
(Reference)

through d. above)

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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Daily/ Weekly/ Monthly (Note 3)

100.0%/

0.0%/

Overseas Sales Share

0.0%

21.3%

100.0%/

0.0%/

0.0%

23.0%

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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D61: Hotel MyStays Premier Sapporo Park

Summary of Real Estate Appraisal Report
Appraisal Company

The Tanizawa Sōgō Appraisal Co., Ltd.

Appraisal Value (Market Value)

JPY 16,900 million

Time of Valuation

June 1, 2018
(JPY thousand)

1. Value of Profits using the Profit Capitalization Method(1) Direct Capitalization Method

Contents

Overview
Room Rental Income and Common Area MaintenanceFee are estimated based on anticipated lease agreement,(a) Room Rental Income

933,251
historical data, comparable assets and project medium- tolong-term rents(b) Common Area Maintenance Fee Income-(c) Utility Income-(d) Parking Lot Income-(e) Other Income

933,251(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)](f) Vacant Room Losses-(g) Irrecoverable Debt Losses

933,251(II) Operating Revenue = [(I) - (f) - (g)](h) Maintenance and Management Costs-

Not expected since it is included in hotel operation cost(i) Utility Costs-

Not expected since it is included in hotel operation cost
Based on the allocation of the value in the ER and

6,700(j) Repair Costs

comparable assets into Repair Costs and Capital
Improvement and Expenses in a ratio of three to seven(k) Property Management Fee-(l) Tenant Solicitation Expenses

56,564

Based on actual value in 2018 as stated in provided(m) Taxes and Public Dues
documents

1,113(n) Non-life Insurance Premiums

Based on provided documents

933(o) Other Costs(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) +65,311(m) + (n) + (o)]867,940(IV) Net Operating Income = [(II) - (III)]-(p) One Time Investment Gains

Based on the allocation of the value in the ER and

13,400(q) Capital Improvements and Expenses

comparable assets into Repair Costs and Capital
Improvement and Expenses in a ratio of three to seven
Based on comparable assets as well as repair and46,129(r) FF&E Reserve

maintenance plan

808,411(V) Net Income = [(IV) + (p) - (q) – (r)]This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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Based on comparing multiple transaction yield in theneighboring areas or similar areas with the same supply

4.7%(VI) Capitalization Yield

and demand taking into consideration of the futurechanges in revenues(VII) Income Price using Direct Capitalization Method = [(V) ÷ (VI)]17,200,000(Reference) NOI Yield

5.0%[(IV) ÷ (VII)](2) DCF Method

Contents

Overview(I) Total of Current Value of Net Income during Analysis Period

6,340,000(a) Sale Price

17,200,000(b) Sale Costs

344,000(c) Returning Price = [(a) - (b)]16,856,000(II) Returning Price, Current Value

10,500,000

Assume 2.0% of sale price

Based on transaction yield of comparable assets and

4.8%(III) Discount Ratecharacteristics of the property
Based on transaction yield of comparable assets taking

4.9%(IV) Final Capitalization Yield

into consideration of future prediction uncertainty(V) Income Price using DCF Method = [(I) + (II)]16,800,000(3) Income Price using Income Capitalization Method

16,900,000

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

10,200,000(ii) Building Price

5,100,000

Overview

200,000(iii) Furnishings/Appliances/Equipment/Upholstery Price(iv) Total Price of Land, Building, and15,500,000
Furnishings/Appliances/Equipment/Upholstery = [(i) + (ii) + (iii)]

Other Points to be Noted for Appraisal by Apprising Organization
Judged that income approach value truly replicates the price formation process from an income perspective, is more persuasive and adopted the Income
Price, with the cost approach value as a reference.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

23D62: Hotel MyStays Ueno East
Type and Location of Specified Assets, etc.
Type of Specified Assets

Trust Beneficiary Right

Date of Planned Acquisition

August 2, 2018

Planned Purchase Price

JPY 5,286 million

Appraisal Value

JPY 5,340 million

Appraisal Agency

The Tanizawa Sōgō Appraisal Co., Ltd.
(Lot Number)

5-59-6, Higashi Ueno, Taito-ku, Tokyo and one other lot(Address)

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

Location

2 min walk from Inaricho Station on Tokyo Metro Ginza Line ,9 min walk from Ueno Station on JR Yamanote Line andTransport
JR Keihintohoku Line
Ownership/Leas
ZoningForm of Possession

Commercial area

ehold (Note 1)
Land

856.48 m2

Building Coverage(Note 1)

Ratio/Floor Area Ratio

Form of Possession

Ownership

Purpose of Use

Hotel

Total Floor Area (m2)

4,396.02 m2

Construction Date

September 26, 1991

Lot Area (m2)

80% / 600%

Structure/No. of

Building

Steel-framed steel structure with flat floor, 1 basement, 9 stories
StoriesRenovation Date

December 2015 – May 2016

Trustee

Mitsubishi UFJ Trust and Banking Corporation

Trust Period

From: September 22, 2005; Until: August 31, 2028

Creation of Security Interest

None

Lease Overview (May 31, 2018)
Total No. of Tenant (s)1Number of Guest Rooms

2

Leasable Area (m )4,396.02 m2

Lease Area (m2)

4,396.02 m2

150 rooms(D12・T135・O3)

Security Deposit/Guarantee
JPY 1,045 thousand
Money

Occupancy Rate

100.0%GOP (per month)

JPY 22,551 thousand

Overview of Lease Agreement
TenantMyStays Hotel Management Co., Ltd.

Type of Contract

Fixed rent plus variable rent type

Term

From: August 2, 2018 Until: August 31, 2028
Fixed rent (JPY 138.7 million per annum (January: JPY 7.9 million per month / February: JPY 10.1 million per month/ March: JPY14.0 million per month / April: JPY 17.8 million per month / May: JPY 11.4 million per month/ June: JPY

Determination of rent of lease
8.5 million per month/ July: JPY 11.2 million per month/ August: JPY 10.4 million per month/ September: JPY 9.5
contract
million per month/ October: JPY 13.8 million per month/ November: 12.7 million per month/ December: 11.4 million
per month) p plus variable rent based on GOP of hotel operation. (Note 2)
Management services fee

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

Security Deposit/Guarantee
JPY 1,045 thousand
Money
This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

24

The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of the le
Renewal Upon Expiration
ase term.
Rent Revision

Rent cannot be revised during the lease term.

Early Termination

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

Other Special Matters

None

Overview of Building Conditions Survey Report
Tokio Marine & Nichido Risk Consulting
Date of ReportCompany Conducting Survey

June 2018

Co., Ltd.
Short term Repair Costs (within-

Replacement Price

JPY 1,509,300 thousand

1 year)Long term Repair Costs (in 12
JPY 202,710 thousand
years)
Overview of PML report
Tokio Marine & Nichido Risk Consulting
Company Conducting Survey

Date of Report

June 2018

Co., Ltd.
Probable Maximum Loss (PML)

6.7%

Area Characteristic

The target property is a limited service hotel located a 2-minute walk from Inaricho Station on Tokyo Metro Ginza Line. It is located a 9-minute
walk from Ueno Station on JR and other lines, from which it takes about 18 minutes to Tokyo Station, 20 minutes to Shinjuku Station, 50 minutes
to Haneda Airport and 70 minutes to Narita Airport. The hotel, on which the full renovation works were completed in May 2016, received
Certificate of Excellence from TripAdvisor(Note 3) in 2016. The hotel functions as a base for sightseeing and leisure, with its good access to popular
tourist destinations such as Ueno Park containing Ueno Zoological Gardens, Tokyo National Museum, National Museum of Nature and Science,
The National Museum of Western Art and Tokyo Metropolitan Art Museum, as well as Ameya-yokocho shopping street. In addition, it is expected
to create stable business demand as the hotel is located in the Tokyo metropolitan area with good access to key spots for transportation. Its 150
guest rooms, ranging from 11m2 double rooms to 28m2 triple rooms, are available for couple guests and address various types of customer
needs.
Special Notes
As a part of the land is owned by a religious organization, approval from the owner or payment of fees for approval is required in the case of transfer of theleasehold in connection with the transfer of the building(Note 1) The site of hotel consists of two lots, of which INV will acquire ownership for one lot, leasehold for one lot. Total of two lot area on the registry is
indicated in the “Lot Area” column.
(Note 2) Variable rent is the amount of difference between (i) the GOP during the three-month variable rent calculation period and (ii) the sum of fixed rent
during the same period. However, when the balance is zero or negative, variable rent will be deemed to be zero.
(Note 3) “Certificate of Excellence” is awarded by TripAdvisor, Inc. using an algorithm that primarily takes into account the quality, quantity, and recency ofuser reviews, as well as the business’ tenure on the site. The qualification of the certificate are as follows (i) maintain an overall TripAdvisor rating ofat least four out of five, (ii) have a minimum number of review, (iii) have been listed on TripAdvisor for at least twelve months. A business must be
listed for the full 12-month qualifying period from April 1 to March 31 to be considered.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

25

D62: Hotel MyStays Ueno East
Income and Expenditures, Etc.
Operating Period

January 1, 2016 – December 31, 2016

January 1, 2017 – December 31, 2017

GOP (= (1) - (2))

JPY 233,700 thousand

JPY 276,217 thousanda. Land Lease Fees

JPY 10,364 thousand -JPY 10,364 thousand

JPY 9,768 thousand

JPY 9,768 thousandc. Non-life Insurance Premiums

JPY 252 thousand

JPY 252 thousandd. Trust Fees

JPY 800 thousand

JPY 800 thousand

JPY 212,514 thousand

JPY 255,031 thousand

JPY 451,290 thousand

JPY 516,730 thousand

Room Income

JPY 444,882 thousand

JPY 510,444 thousand

Other Income

JPY 6,408 thousand

JPY 6,285 thousand

JPY 217,590 thousand

JPY 240,513 thousand

ADR

JPY 9,836

JPY 9,932

RevPAR

JPY 8,104

JPY 9,323

Room Occupancy Rates

82.4%

93.9%

GOP Ratio

51.8%

53.5%

b. Taxes and Public DuesNOI (= GOP - [a. + b. + c. + d.])(1) Sales(2) Operating Costs (not including a.
through d. above)(Reference)

Daily/ Weekly/ Monthly

100%/

0.0%/

Overseas Sales Share

0.0%
64.4%

100.0%/

0.0%/

0.0%
68.6%

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

26

D62: Hotel MyStays Ueno East
Summary of Real Estate Appraisal Report
Appraisal Company

The Tanizawa Sōgō Appraisal Co., Ltd.

Appraisal Value (Market Value)

JPY 5,340 million

Time of Valuation

June 1, 2018
(JPY thousand)

1. Value of Profits using the Profit Capitalization Method(1) Direct Capitalization Method

Contents

Overview
Room Rental Income and Common Area MaintenanceFee are estimated based on anticipated lease

281,079(a) Room Rental Incomeagreement, historical data, comparable assets andproject medium- to long-term rents(b) Common Area Maintenance Fee Income-(c) Utility Income-(d) Parking Lot Income-(e) Other Income

281,079(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)](f) Vacant Room Losses-(g) Irrecoverable Debt Losses

281,079(II) Operating Revenue = [(I) - (f) - (g)](h) Maintenance and Management Costs-

Not expected since it is included in hotel operation cost(i) Utility Costs-

Not expected since it is included in hotel operation cost(j) Repair Costs

5,285

Based on the allocation of the value in the ER andcomparable assets into Repair Costs and Capital
Improvement and Expenses in a ratio of three to seven(k) Property Management Fee-(l) Tenant Solicitation Expenses

9,337

Based on actual value in 2018 as stated in the(m) Taxes and Public Dues
documents relating to taxes

252(n) Non-life Insurance Premiums(o) Other Costs

10,645(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) +25,520

Based on estimate(m) + (n) + (o)]255,558(IV) Net Operating Income = [(II) - (III)](p) One Time Investment Gains

101.0% investment yield
Based on the allocation of the value in the ER and12,835(q) Capital Improvements and Expenses

comparable assets into Repair Costs and Capital
Improvement and Expenses in a ratio of three to seven

7,738(r) FF&E Reserve

Based on comparable assets etc.

234,995(V) Net Income = [(IV) + (p) - (q) - (r)]Based on comparing multiple transaction yield in the

4.3%(VI) Capitalization Yield

neighboring areas or similar areas with the same supply
This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

27and demand taking into consideration of the land
including lease land rights(VII) Income Price using Direct Capitalization Method = [(V) ÷ (VI)]5,470,000(Reference) NOI Yield

4.7%[(IV) ÷ (VII)](2) DCF Method

Contents

Overview(I) Total of Current Value of Net Income during Analysis Period

1,900,000(a) Sale Price

5,430,000(b) Sale Costs

272,000(c) Returning Price = [(a) - (b)]5,158,000(II) Returning Price, Current Value

3,390,000

Assume 5.0% of sale price

Based on transaction yield of comparable assets and

4.3%(III) Discount Ratecharacteristics of the property
Based on transaction yield of comparable assets taking

4.5%(IV) Final Capitalization Yield

into consideration of future prediction uncertainty,
considering the land including land lease rights(V) Income Price using DCF Method = [(I) + (II)]5,290,000(3) Income Price using Income Capitalization Method

5,340,000

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

3,430,000(ii) Building Price

1,130,000

Overview

160,000(iii) Furnishings/Appliances/Equipment/Upholstery Price(iv) Total Price of Land, Building, and4,720,000
Furnishings/Appliances/Equipment/Upholstery = [(i) + (ii) + (iii)]

Other Points to be Noted for Appraisal by Apprising Organization
Judged that income approach value truly replicates the price formation process from an income perspective, is more persuasive and adopted the Income
Price, with the cost approach value as a reference.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

28

D63: Hotel MyStays Midosuji Honmachi

Type and Location of Specified Assets, etc.
Type of Specified Assets

Trust Beneficiary Right

Date of Planned Acquisition

August 2, 2018

Planned Purchase Price

JPY 5,039 million

Appraisal Value

JPY 5,090 million

Appraisal Agency

Japan Real Estate Institute(Lot Number)

3-24-1, Honmachi, Chuo-ku, Osaka-shi, Osaka and one other lot(Address)

3-2-10, Honmachi, Chuo-ku, Osaka-shi, Osaka

Location

3 min walk from Honmachi Station on Osaka Metro Midosuji Line ,4 min walk from Sakaisuji-Honmachi Station on
Transport
Osaka Metro Sakaisuji LineLand

Form of Possession

Ownership

Lot Area (m2)

398.37 m2

ZoningCommercial area

Building Coverage
80% / 800%
Ratio/Floor Area Ratio

Form of Possession

Ownership

Purpose of Use

Hotel

Total Floor Area (m2)

3,429.43 m2

Construction Date

October 24, 2017

Structure/No. of

Building

Steel structure with flat floor, 14 stories
StoriesRenovation Date–

Trustee

Sumitomo Mitsui Trust Bank, Limited

Trust Period

From: November 15, 2017; Until: August 31, 2028

Creation of Security Interest

None

Lease Overview (May 31, 2018)
Total No. of Tenant (s)1Number of Guest Rooms

2

Leasable Area (m )3,429.43 m2

Lease Area (m2)

3,429.43 m2

108 rooms(T24・D72・O12)

Security Deposit/Guarantee
Money

Occupancy Rate

100.0%GOP (per month)

JPY 14,259 thousand

Overview of Lease Agreement
TenantMyStays Hotel Management Co., Ltd.

Type of Contract

Fixed rent plus variable rent type

Term

From: August 2, 2018 Until: August 31, 2028
Fixed rent

(JPY 115.6 million per annum (January: JPY 5.6 million per month / February: JPY 9.3 million per month/ March: JPY11.4 million per month / April: JPY 11.3 million per month / May: JPY 7.0 million per month/ June: JPY
Determination of rent of lease
7.8 million per month/ July: JPY 10.2 million per month/ August: JPY 13.2 million per month/ September: JPY 7.9
contract
million per month/ October: JPY 10.9 million per month/ November: 10.6 million per month/ December: 10.4 million
per month) plus variable rent based on GOP of hotel operation by tenant. (Note)
Management services fee

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

Security Deposit/Guarantee
None
Money
This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

29

The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of theRenewal Upon Expirationlease term.
Rent Revision

Rent cannot be revised during the lease term.

Early Termination

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

Other Special Matters

None

Overview of Building Conditions Survey Report
Tokio Marine & Nichido Risk Consulting
Date of ReportCompany Conducting Survey

June 2018

Co., Ltd.
Short term Repair Costs (within-

Replacement Price

JPY 1,086,200 thousand

1 year)Long term Repair Costs (in 12
JPY 77,276 thousand
years)
Overview of PML report
Tokio Marine & Nichido Risk Consulting
Company Conducting Survey

Date of Report

June 2018

Co., Ltd.
Probable Maximum Loss (PML)

9.7%

Area Characteristic

The target property is a limited-service hotel with 108 guest rooms, located a 3-minute walk from Hommachi Station on Osaka Metro Midosuji
Line, Chuo Line and Yotsubashi Line, from which it takes about 5 minutes to Umeda Station, 10 minutes to Shin-Osaka Station, 35 minutes to
Osaka International Airport (Itami Airport) and 50 minutes to Kansai International Airport. The hotel is also within walking distance from
Sakaisuji-Honmachi Station on the Osaka Metro Sakaisuji Line, while providing good access to Nakanoshima, Osaka Castle and Kaiyukan
aquarium as it takes less than 30 minutes by train. It is expected to create stable demand from business people due to its location at central
Osaka, the hotel is well-positioned to attract leisure customers who want to use it as a base for sightseeing activities. This limited-service hotel
addresses needs of various kinds of guests for business and leisure purposes, including families, as its 108 guest rooms includes double rooms(14.5m2) and twin rooms (18m2), as well as 4-bed rooms (35m2).
Special Notes
None(Note) Variable rent is the amount of difference between (i) the GOP during the three-month variable rent calculation period and (ii) the sum of fixed rent
during the same period. However, when the balance is zero or negative, variable rent will be deemed to be zero.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

30

D63: Hotel MyStays Midosuji Honmachi
Income and Expenditures, Etc.
January 1, 2016 – December 13, 2016

Operating Period

December 13, 2017 – December 31, 20
17(Note)

GOP( = Leasing revenue) (= (1) - (2))―

JPY 17,337 thousanda. Land Lease Fees―-

b. Taxes and Public Dues―JPY 889 thousandc. Non-life Insurance Premiums―

JPY 11 thousandd. Trust Fees―

JPY 41 thousand

NOI (= GOP - [a. + b. + c. + d.])―JPY 16,395 thousand―

JPY 22,346 thousand

Room Income―

JPY 21,388 thousand

Other Income―

JPY 958 thousand―

JPY 5,009 thousand

ADR―

JPY 11,198

RevPAR―JPY 10,423

Room Occupancy Rates

―

93.1%

GOP Ratio

―

77.6%

(1) Sales(2) Operating Costs (not including a.
through d. above)(Reference)

Daily/ Weekly/ Monthly (Note2)

―

―

―

100.0%/―

Overseas Sales Share (Note2)

0.0%/

0.0%
16.6%

(Note) Indicates data from December 13, 2017 to December 31, 2017 as the hotel newly operated on December 13, 2017

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

31D63: Hotel MyStays Midosuji Honmachi
Summary of Real Estate Appraisal Report
Appraisal Company

Japan Real Estate Institute

Appraisal Value (Market Value)

JPY 5,090 million

Time of Valuation

June 1, 2018
(JPY thousand)

1. Value of Profits using the Profit Capitalization Method(1) Direct Capitalization Method

Contents

Overview
Room

RentalIncomeandCommonArea

Maintenance Fee Income are estimated based on

252,115(a) Room Rental Income

anticipatedleasecomparable

assetsagreement,
andhistoricalprojectdata,

medium-tolong-term rents(b) Common Area Maintenance Fee Income-(c) Utility Income-(d) Parking Lot Income-(e) Other Income

252,115(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)](f) Vacant Room Losses-(g) Irrecoverable Debt Losses

252,115(II) Operating Revenue = [(I) - (f) - (g)]Not expected since it is included in hotel operation-(h) Maintenance and Management Costs

cost
Not expected since it is included in hotel operation-(i) Utility Costs

cost
Based on comparable assets and average annual

1,932(j) Repair Costs

estimate in the engineering report(k) Property Management Fee-(l) Tenant Solicitation Expenses

19,334(m) Taxes and Public Dues

Based on standard taxable value as stated in the
documents relating to taxes and public dues, tax
rate adjustments and details of renovation works

157

Based on insurance premiums of insurance policy(n) Non-life Insurance Premiums
as well as comparable assets(o) Other Costs-

21,423(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) +(m) + (n) + (o)]230,692(IV) Net Operating Income = [(II) - (III)](p) One Time Investment Gains

Based on comparable assets and average annual

4,510(q) Capital Improvements and Expenses

estimate in the engineering report

8,994(r) FF&E Reserve

Based on comparable assets as well as repair andThis English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

32maintenance plan

217,188(V) Net Income (NCF) = [(IV) + (p) - (q) – (r)]Based on comparing multiple transaction yield in theneighboring areas or similar areas with the same

4.2%(VI) Capitalization Yield

supply and demand taking into consideration of the
future changes in revenues

5,170,000(VII) Income Price using Direct Capitalization Method = [(V) ÷ (VI)](Reference) NOI Yield

4.5%[(IV) ÷ (VII)](2) DCF Method

Contents

Overview(I) Total of Current Value of Net Income during Analysis Period

1,751,506(a) Sale Price

4,957,455(b) Sale Costs

148,724(c) Returning Price [(a) - (b)]4,808,731(II) Returning Price, Current Value

3,248,779

Assume 3.0 % of sale price

Based on transaction yield of comparable assets

4.0%(III) Discount Rateand characteristics of the property
Based on transaction yield of comparable assets

4.4%(IV) Final Capitalization Yield

taking

into

considerationoffutureprediction

uncertainty(V) Income Price using DCF Method = [(I) + (II)]5,000,000(3) Income Price using Income Capitalization Method

5,090,000

2. Estimated Price using Cost Method
Contents

Overview(i) Land Price

1,220,000(ii) Building Price

1,090,000
83,600(iii) Furnishings/Appliances/Equipment/Upholstery Price

2,393,600(iv) Market Revision Rate

130%(v) Income Price using Income Cost Method
(vi)

Total

Price

of

Land,

Building,

Land lease right and building as a wholeand3,110,000
Furnishings/Appliances/Equipment/Upholstery = [(i) + (ii) + (iii)]

Other Points to be Noted for Appraisal by Apprising Organization
Judged that income approach value truly replicates the price formation process from an income perspective, is more persuasive and adopted theIncome Price, with the cost approach value as a reference.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

33

(2)

Matters relating to Seismic Resistance etc. for the Four Domestic Hotel Properties
Among the Four Domestic Hotel Properties, with respect to Hotel MyStays Premier Akasaka and Hotel
MyStays Midosuji Honmachi, it is confirmed that these hotels meet the Specific Structure Calculation
Standards prescribed in Article 6-3, Paragraph 1 of the Building Standards Act, according to Structural
Calculation Conformity Assessment Notice issued by Away Building Evaluation Network Inc. andGeneral Building Research Corporation of Japan, respectively. With respect to Hotel MyStays Premier
Sapporo Park, it is confirmed that its structural design has no structurally tolerant issues according to
the assessment certificate issued by The Building Center of Japan High-rise Building Assessment
Committee. With respect to Hotel MyStays Ueno East, it has been confirmed that there is no sign ofintentional tampering of structural statement by the architect, and the structural design meets seismic
resistance standards stipulated by the Building Standards Act and relevant enforcement orders, etc. as
assessed by Tokio Marine & Nichido Risk Consulting Co., Ltd.
All Four Domestic Hotel Properties satisfy requirements under the new seismic code (Note 1).
In addition, as a part of the due diligence (Note 2) routine in connection with an acquisition, INV
conducts the investigation on seismic risks.
(Note 1) New seismic code refers to the seismic resistance standards in regard to building design, which has been applied inconstruction certificate since June 1, 1981.
(Note 2) The due diligence conducted in connection with an acquisition includes examination of appraisal values, building
inspection, seismic risk inspection and legal due diligence etc.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

34

5.

Overview of Sellers
Overview of sellers of the Four Domestic Hotel Properties is as follows;
D60 Hotel MyStays Premier Akasaka
(i)
(ii)
(iii)

Name
Location
Title and name ofrepresentative officer
Business

(iv)

(v)
(vi)
(vii)
(viii)(ix)(x)

Aki Tokutei Mokuteki Kaisha (“Aki TMK”)
C/O EP Consulting Service, 1-2-9, Nishishinbashi, Minato-ku, Tokyo
Director, Hiroyasu Nakamura
1.
2.

Asset liquidation business of specified assets.
All other business ancillary to the above-mentioned asset
liquidation of specified assets.
Capital (as of today)
Specified Capital: JPY100,000
Preferred Capital: JPY200 million
Date of establishment
January 17, 2011
Net assets
Not disclosed (Note)
Total assets
Not disclosed (Note)
Investor
Not disclosed (Note)
Relationship between INV/Asset Manager and the Seller
While there are no capital relationships that should be noted between
INV/CIM and Aki TMK, Aki TMK has indirectly received investments
through funds operated by affiliates of FIG, a subsidiary of CIM’s parent
Capital relationships
company, SoftBank Group which directly and indirectly holds 100% of
CIM’s outstanding shares.
While there are no personal relationships that should be noted between
INV/CIM and Aki TMK, as of today, among the directors of INV and theofficers and employees of CIM, Naoki Fukuda, who is Executive
Director of INV and CEO of CIM, is seconded from Calliope.
Personal relationships
Furthermore, a part-time director of CIM, Christopher Reed, isseconded from Fortress Investment Group Japan Godo Kaisha, asubsidiary of FIG.
Transactional
INV acquired “Hotel MyStays Shinsaibashi” in January 22, 2016 andrelationships
other 10 hotels from Aki TMK.
Aki TMK is not a related party of INV or CIM. Further, related persons
Whether the TMK is a
and affiliates of Aki TMK are not related parties of INV or CIM.
related party
Furthermore, Aki TMK is not an interested party, etc. of CIM as provided
in the Investment Trust Act.

(Note) Not disclosed because consent from the seller has not been obtained.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

35

D61 Hotel MyStays Premier Sapporo Park
(i)
(ii)
(iii)

Name
Location
Title and name ofrepresentative officer
Business

(iv)

(v)
(vi)
(vii)
(viii)(ix)(x)

Raetia Tokutei Mokuteki Kaisha (“Raetia TMK”)
C/O EP Consulting Service, 1-2-9, Nishishinbashi, Minato-ku, Tokyo
Director, Masayuki Meguro1.
2.

Asset liquidation business of specified assets.
All other business ancillary to the above-mentioned asset
liquidation of specified assets.
Capital (as of today)
Specified Capital: JPY100,000
Preferred Capital: JPY3,350 million
Date of establishment
September 3, 2014
Net assets
Not disclosed (Note)
Total assets
Not disclosed (Note)
Investor
Not disclosed (Note)
Relationship between INV/Asset Manager and the Seller
While there are no capital relationships that should be noted between
INV/CIM and Raetia TMK, Raetia TMK has indirectly received
Capital relationships
investments through funds operated by affiliates of FIG, a subsidiary of
CIM’s parent company, SoftBank Group which directly and indirectly
holds 100% of CIM’s outstanding shares.
While there are no personal relationships that should be noted between
INV/CIM and Raetia TMK, as of today, among the directors of INV andthe officers and employees of CIM, Naoki Fukuda, who is Executive
Director of INV and CEO of CIM, is seconded from Calliope.
Personal relationships
Furthermore, a part-time director of CIM, Christopher Reed, isseconded from Fortress Investment Group Japan Godo Kaisha, asubsidiary of FIG.
There are no transactional relationships that should be noted between
Transactional
INV/CIM and Raetia TMK. Further there are no transactional
relationships
relationships that should be noted between the related persons oraffiliates of INV/CIM and Raetia TMK or its related persons or affiliates.
Raetia TMK is not a related party of INV or CIM. Further, related
Whether the TMK is apersons and affiliates of Raetia TMK are not related parties of INV or
related party
CIM. Furthermore, Raetia TMK is not an interested party, etc. of CIM as
provided in the Investment Trust Act.

(Note) Not disclosed because consent from the seller has not been obtained.

D62 Hotel MyStays Ueno East
(i)
(ii)

Name

(iii)
(iv)

Title and name ofrepresentative officer
Business(v)

Capital (as of today)

Location

HL Investments 2 Tokutei Mokuteki Kaisha (“HL Investments 2 TMK”)
C/O Akasaka International TAX&CO., 2-10-5, Akasaka, Minato-ku,
TokyoDirector, Akio Yamazaki
1.
2.

Asset liquidation business of specified assets.
All other business ancillary to the above-mentioned asset
liquidation of specified assets.
Specified Capital: JPY100,000
Preferred Capital: JPY2,274 million

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

36

(vi)
(vii)
(viii)(ix)(x)

Date of establishment
January 23, 2015
Net assets
Not disclosed (Note)
Total assets
Not disclosed (Note)
Investor
Not disclosed (Note)
Relationship between INV/Asset Manager and the Seller
While there are no capital relationships that should be noted between
INV/CIM and HL Investments 2 TMK, HL Investments 2 TMK has
Capital relationships
indirectly received investments through funds operated by affiliates of
FIG, a subsidiary of CIM’s parent company, SoftBank Group which
directly and indirectly holds 100% of CIM’s outstanding shares.
While there are no personal relationships that should be noted between
INV/CIM and HL Investments 2 TMK, as of today, among the directorsof INV and the officers and employees of CIM, Naoki Fukuda, who is
Executive Director of INV and CEO of CIM, is seconded from Calliope.
Personal relationships
Furthermore, a part-time director of CIM, Christopher Reed, isseconded from Fortress Investment Group Japan Godo Kaisha, asubsidiary of FIG.
There are no transactional relationships that should be noted between
INV/CIM and HL Investments 2 TMK. Further there are no transactional
Transactional
relationships that should be noted between the related persons or
relationships
affiliates of INV/CIM and HL Investments 2 TMK or its related persons
or affiliates.
HL Investments 2 TMK is not a related party of INV or CIM. Further,
Whether the TMK is arelated persons and affiliates of HL Investments 2 TMK are not related
related party
parties of INV or CIM. Furthermore, HL Investments 2 TMK is not aninterested party, etc. of CIM as provided in the Investment Trust Act.

(Note) Not disclosed because consent from the seller has not been obtained.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

37

D63 Hotel MyStays Midosuji Honmachi
(i)
(ii)

Name

(iii)

Title and name ofrepresentative officer
Business

Location

(iv)

(v)
(vi)
(vii)
(viii)(ix)(x)

Dogo Tokutei Mokuteki Kaisha (“Dogo TMK”)
C/O Akasaka International TAX&CO.,2-10-5, Akasaka, Minato-ku,
TokyoDirector, Akio Yamazaki
1.
2.

Asset liquidation business of specified assets.
All other business ancillary to the above-mentioned asset
liquidation of specified assets.
Capital (as of today)
Specified Capital: JPY100,000
Preferred Capital: JPY1,569 million
Date of establishment
March 12, 2015
Net assets
Not disclosed (Note)
Total assets
Not disclosed (Note)
Investor
Not disclosed (Note)
Relationship between INV/Asset Manager and the Seller
While there are no capital relationships that should be noted between
INV/CIM and Dogo TMK, Dogo TMK has indirectly received
Capital relationships
investments through funds operated by affiliates of FIG, a subsidiary of
CIM’s parent company, SoftBank Group which directly and indirectly
holds 100% of CIM’s outstanding shares.
While there are no personal relationships that should be noted between
INV/CIM and Dogo TMK, as of today, among the directors of INV andthe officers and employees of CIM, Naoki Fukuda, who is Executive
Director of INV and CEO of CIM, is seconded from Calliope.
Personal relationships
Furthermore, a part-time director of CIM, Christopher Reed, isseconded from Fortress Investment Group Japan Godo Kaisha, asubsidiary of FIG.
There are no transactional relationships that should be noted between
Transactional
INV/CIM and Dogo TMK. Further there are no transactional
relationships
relationships that should be noted between the related persons oraffiliates of INV/CIM and Dogo TMK or its related persons or affiliates.
Dogo TMK is not a related party of INV or CIM. Further, related persons
Whether the TMK is a
and affiliates of Dogo TMK are not related parties of INV or CIM.
related party
Furthermore, Dogo TMK is not an interested party, etc. of CIM as
provided in the Investment Trust Act.

(Note) Not disclosed because consent from the seller has not been obtained.

6.

Transactions with Interested Persons etc.
The sellers of the Four Domestic Hotel Properties, namely Aki TMK, Raetia TMK, HL Investments 2 TMK
and Dogo TMK, are not Sponsor-related Persons (Note) under the voluntary rules established by CIM as
countermeasures against conflicts of interests in the management of INV’s investments. However, suchsellers have indirectly received investments through funds managed by affiliates of FIG (FIG falls under aSponsor-rerated Person as it is a subsidiary of CIM’s parent company, SoftBank Group which directly
and indirectly holds 100% of CIM’s outstanding shares). Therefore, CIM has treated the sellers as
equivalent to Sponsor-related Persons.
The acquisitions are to be acquired at prices not exceeding their appraisal value in accordance withThis English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

38

Sponsor-Related Person Transaction Rules and Sponsor-Related Person Transaction Management
Manual, which are internal rules of CIM, and after deliberation and resolution of the compliancecommittee meeting of CIM and the investment committee meeting of CIM held on July 17, 2018, theboard of directors of CIM approved the acquisitions at the meeting held on the same day and the boardof directors of INV approved the acquisitions at the meeting held on the same day.
In addition, MHM, the tenant/operator of the Four Domestic Hotel Properties is not a Sponsor-related
Person under the voluntary rules established by CIM as countermeasures against conflicts of interests inthe management of INV’s investments. However, the tenant/operator has indirectly received investments
through funds operated by affiliates of FIG. Therefore, CIM has treated MHM as equivalent to aSponsor-related Person.
In accordance with Sponsor-Related Person Transaction Rules and Sponsor-Related Person
Transaction Management Manual, which are internal rules of CIM, and following the deliberation andresolution of the compliance committee meeting and the investment committee meeting both held on
July 17, 2018, the boards of directors of CIM and INV each approved the lease agreements expected to
be entered into with MHM at meeting both held on July 17, 2018, subject to hotel operating capability of
MHM being confirmed as sufficient through a third party report and other relevant information, the rent
level of each properties being reasonable considering the market level, and management services fee
amount and structure being fair compared with similar properties.
(Note)A Sponsor-related Person is (i) any person who falls under the “Interested Persons, etc.” set
forth in the Investment Trust Act and the Orders for Enforcement of the Act on Investment Trustand Investment Corporations, (ii) all shareholders of CIM and (iii) special purpose companies(tokubetsu mokuteki kaisha) (a) which delegate their management to persons who fall under (ii)above, or (b) which are invested by or invested through anonymous partnership (tokumei
kumiai) by persons who fall under (ii) above. Hereinafter the same.

7. Summary of Current and Previous Owners
1. Name; 2. Relationship with Persons Having Special Conflict of Interests Relationships;
3. Detail/reason for Acquisition; 4. Acquisition Price and 5. Acquisition Timing
Property Name

D60 Hotel MyStays Premier Akasaka
1.
Aki TMK
Current owner/trust
2. The TMK has received investments through funds operated by affiliates of FIG,
beneficiarya subsidiary of SoftBank Group, which is the parent company of CIM.
3. Acquisition for development purposes
4. Omitted because acquired for development purposes
5. July 2011
Omitted because acquired for development purposes
Precedingowner/trust
beneficiary
Property Name

D61 Hotel MyStays Premier Sapporo Park
1.
Raetia TMK
Current owner/trust
2. The TMK has received investments through funds operated by affiliates of FIG,
beneficiarya subsidiary of SoftBank Group, which is the parent company of CIM.
3. Acquisition for investment purposes
4. Omitted because held for longer than one year
This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

39

BeforePreceding

5. December 2014
Persons having no special conflict of interests relationshipowner/trust
beneficiary
Property Name

D62 Hotel MyStays Ueno East
Current owner/trust 1. HL Investments 2 TMK
2. The TMK has received investments through funds operated by affiliates of FIG,
beneficiarya subsidiary of SoftBank Group, which is the parent company of CIM.
3. Acquisition for investment purposes
4. Omitted because held for longer than one year
5. April 2015
Persons having no special conflict of interests relationshipPrecedingowner/trust
beneficiary

Property Name

D63 Hotel MyStays Midosuji Honmachi
1.
Dogo TMK
Current owner/trust
2. The TMK has received investments through funds operated by affiliates of FIG,
beneficiarya subsidiary of SoftBank Group, which is the parent company of CIM.
3. Acquisition for development purposes
4. Omitted because acquired for development purposes
5. October 2015
Omitted because acquired for development purposes
Precedingowner/trust
beneficiary
8. Overview of Brokerage
Not applicable for the Four Domestic Hotel Properties.
9. Schedules
Acquisition decision date:
Agreement execution date:
Anticipated acquisition date:
Anticipated source of acquisition funds:

July 17, 2018
August 2, 2018 (Note 1)
Funds from issuance of new investment units
in Japan and overseas (Note 2), newborrowings (Note 3), and cash-on-handLump-sum payment (Note1)

Anticipated acquisition proceeds payment method:(Note 1) Even in the event that the funds to be raised through the issuance of new investment units and the borrowings do notreach the total anticipated acquisition price, the anticipated acquisition date will not be changed. However, it is provided
in the purchase and sale agreements for the trust beneficiary interests that upon INV’s request, INV can pay the deficit
on a later day which will be agreed upon with the sellers separately and no interest will be charged thereof, so if there
arises deficit, INV will pay the deficit after acquisition pursuant to such provision.
(Note 2) For details of the issuance of new investment units, please refer to “Notice concerning Issuance of New Investment
Units and Secondary Distribution of Investment Units” dated July 17, 2018.
(Note 3) For details of the new borrowings, please refer to “Notice concerning Debt Financing” dated July 17, 2018.

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

4010. Future Outlook
For information on the revision of INV’s forecasts for financial results and distribution for the fiscal period
ended June 2018 (from January 1 to June 30 ) and the fiscal period ending December 2018 (from July 1,
2018 to December 31, 2018) in connection with the Acquisition of the Four Domestic Hotel properties,
please refer to “Notice concerning Revision of Forecast of Financial Results and Distribution for the 30th
Fiscal Period Ended June 2018 and the 31st Fiscal Period Ending December 2018” dated July 17, 2018.
11. Other Matters that are Necessary for Investors to Properly Understand and Make Judgment on Relevant
Information
For risks relating to investments in the Four Domestic Hotel Properties, please refer to the “Investment
Risks” (toshi risuku) in the semi-annual securities report (yuka shoken hokokusho) of INV for the fiscal
period ended December 2017 (from July 1, 2017 to December 31, 2017) (available in Japanese only),
filed on March 26, 2018, as well as “Part II Reference Information, II. Supplemental Information to theReference Documents, 5. Investment Risks” in the Securities Registration Statement (available inJapanese only) filed on July 17, 2018.

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 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

41

(Appendix)
Photos and Maps of the Four Domestic Hotel Properties
D60 Hotel MyStays Premier Akasaka

D61 Hotel MyStays Premier Sapporo Park

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

42

D62 Hotel MyStays Ueno East

D63 Hotel MyStays Midosuji Honmachi

This English language notice is a translation of the Japanese-language notice released on July 17, 2018 and was prepared solely for the convenience of, and referenceby, 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 or completeness 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.

43