[For Information Purpose Only.
The Japanese language press release should be referred to as the original.]
September 21, 2017
To All Concerned Parties
Name of REIT Issuer:
Invincible Investment Corporation
Name of representative:
Naoki Fukuda, Executive Director
Roppongi Hills Mori Tower
6-10-1 Roppongi, Minato-ku, Tokyo, Japan(Securities code: 8963)
Asset manager:
Consonant Investment Management Co., Ltd.
Naoki Fukuda, CEOContact: Jun Komo
General Manager of Planning Department(Tel. +81-3-5411-2731)

Notice concerning Acquisition of Assets and Entering into Leasing Contract
Invincible Investment Corporation (“INV”) announced the decision to acquire four hotel properties (the “FourHotel Properties”) and enter into new leasing contracts with respect to each of the Four Hotel Properties as
decided today by Consonant Investment Management Co., Ltd. (“CIM”), the asset manager of INV.
1.

Overview of Acquisition

Use

Property
Number

Property
Name

Location

AnticipatedAcquisitionPrice(million yen)
(Note 1)

D50

Hotel MyStays
Shin Osaka
ConferenceCenterOsaka,
Osaka

13,068

D51

Hotel MyStays
Premier Omori

Shinagaw
a-ku,
Tokyo

9,781

9,880

Septentrio3 Tokutei
Mokuteki Kaisha

D52

Beppu
Kamenoi Hotel

Beppu,
Oita

8,870

8,960

Monza Tokutei
Mokuteki Kaisha

Hotel

Appraisal
Value(million yen)
(Note 2)

Seller (Note 3)

13,200

HL Investments
Tokutei Mokuteki
KaishaCategoryofSpecified
Assets

Trust
Beneficial
Interest

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

1

Use

Property
Number

Property
Name

Location

AnticipatedAcquisitionPrice(million yen)
(Note 1)

Hotel

D53

Hotel MyStays
SapporoStation

Sapporo,Hokkaido

7,880

7,960

39,59940,000

Total

Appraisal
Value(million yen)
(Note 2)

Seller (Note 3)

CategoryofSpecified
AssetsSuisei Tokutei
Mokuteki Kaisha

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 Tanizawa Sōgō Appraisal Co., Ltd. on
the valuation date of July 1, 2017. For details, please refer to “(1) Details of the Four Hotel Properties” of “4. Details of
the Four Hotel Properties” below.
(Note 3) For an overview of the sellers, please refer to “5. Overview of Sellers of the Four Hotel Properties” below.
(Note 4) Amounts are rounded down to the nearest unit; hereinafter the same.

2.

Reasons for Acquisitions and Leasing
INV decided to acquire the five hotel properties (Note 1) that are expected to contribute to growth andstability of revenue of the portfolio, from affiliates of the Sponsor, Fortress Investment Group LLC (“FIG”),
by using the funds raised through issuance of new investment units, bank borrowings, and INV’s own
funds.
The acquisition of the Four Hotel Properties, the additional acquisition of the portion of Hotel MyStays
Gotanda Station (Note 2) announced in the press release entitled “Notice concerning Acquisition andSale of Assets” as of July 25, 2017 and the acquisition of the Preferred Equity Interest (as defined below)(these assets are hereinafter referred to as the “Assets to be Acquired”) are associated with INV’s fifth
equity public offering over the last four years, further promoting the realization of INV’s external growthstrategy to acquire assets which provide revenue growth and further stability, backed by the Sponsor’s
strong support. Following the acquisition of the Assets to be Acquired, AUM is expected to grow to JPY
357,106 million (Note 3). Hotel properties are expected to account for 69.5% of INV’s portfolio, an
increase from 63.5% prior to the acquisition of the Assets to be Acquired (Note 4). The average appraisal
NOI yield (Note 5) of the Assets to be Acquired is 5.7%. As a result, the appraisal NOI yield (Note 5) of
the overall portfolio after the acquisition of the Assets to be Acquired (129 properties) is expected toremain high at 6.5%.
The Four Hotel Properties are located close to high traffic city center locations or popular tourism
destinations, are expected to attract a great number of leisure travelers and have good access todestinations popular among foreign tourists. The operation of these Four Hotel Properties is managed by
MyStays Hotel Management Co., Ltd. (hereinafter “MHM”), which is owned by the Sponsor, and is a hotel
operator combining deep expertise and experience.
The Assets to be Acquired and the underlying asset of the Preferred Equity Interest include “Sheraton
Grande Tokyo Bay Hotel”, a full-service hotel, and “Beppu Kamenoi Hotel”, a resort hotel. The addition ofthese two hotels helps diversify the hotel-property portfolio, however the ratio of full-service and resort
This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

2

hotels as a percentage of the overall hotel property portfolio is small. We aim to improve the performanceof the hotel portfolio from the perspective of growth and stability by carefully selecting both full-service
and resort hotels that are considered highly competitive in terms of locations and specifications that will
attract diverse hotel demand.
We also note that INV is acquiring the Hotel MyStays Sapporo Station, its first asset in Sapporo which
has had significant growth in inbound travel.
(Note 1) The acquisition of preferred equity interests in Kingdom Tokutei Mokuteki Kaisha backed by “Sheraton Grande Tokyo
Bay Hotel” announced in the press release entitled “Notice concerning Acquisition of Asset (preferred equity interest)”
as of today (hereinafter the “Preferred Equity Interest”) is counted as one hotel property and added to the Four Hotel
Properties.
(Note 2) Hotel MyStays Gotanda Station, INV’s portfolio property, comprises two buildings adjacent to each other, the Main
Building and the Annex Building, and INV currently owns the entire portion of the Main Building and a portion of theAnnex Building (the “Owned Portion”). The hotel (the “Existing Hotel Portion”) has been operated at a portion of each of
the Main Building and the Annex Building that are owned by INV. The portion INV will acquire this time is a portion of2

the first, second and third floor of the Annex Building (collectively, the “Floor Expansion Portion”), totaling 1,385.46 m .
A conversion work (the “Conversion”) has been implemented by the seller in an aim to add 49 hotel rooms.
(Note 3) Based on the (anticipated) acquisition prices. The anticipated acquisition price of the Preferred Equity Interest shows
an expected investment amount for Preferred Equity Interest. For the additional acquisition of Hotel MyStays Gotanda
Station, anticipated acquisition price is the total of (i) purchase price set forth in the purchase and sale agreement
concerning the Floor Expansion Portion, (ii) expenses with regard to the Conversion, (iii) transfer price of the furniture,
fixture and equipment (FF&E), and other expenses, and (ii) and (iii) above are the estimated amount as of today andare subject to change. Hereinafter the same.
(Note 4) The Preferred Equity Interest is categorized in the hotel portfolio in terms of use of its underlying asset.
(Note 5) The Preferred Equity Interest is excluded from the calculation.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

3

Rent Revenue Composition (Normalized) (Note 1)

Post‐Acquisition

Existing Portfolio (Note 3)(Note 1) The percentages in the above pie chart of “Existing Portfolio” indicate the composition of annual rent revenue in 2017,
which is a sum of actual results for the period from January to July and forecasts for the period from August to
December, concerning the current properties of INV. In addition, the figures for the properties acquired in March 2017
and May 2017 are calculated on the assumption INV had acquired these properties on January 1, 2017, using theactual figures provided by the sellers of such properties for the period before the acquisition, the actual figures for theperiod from the acquisition to July 2017 or the forecasts for the period from August to December 2017. The
percentages in the pie chart of “Post-Acquisition” are calculated by adding the expected annual operating revenue in2017, generated by Assets to be Acquired (excluding the Preferred Equity Interest) calculated by CIM to the figures of
the “Existing Portfolio”. Likewise, it is a sum of actual results for the period from January to July and forecasts for theperiod from August to December, except for the additional acquisition portion of Hotel MyStays Gotanda Station, forwhich the figures of actual results are unavailable and the annual forecasts for 2018 are used instead.
(Note 2) The item of “Others” consists of office properties and retail properties; the same shall apply hereinafter.
(Note 3) “Existing Portfolio” is properties and trust beneficial interest (in the property on trust) owned by INV as of today; thesame shall apply hereinafter(Note 4) The ratio figures are rounded to one decimal place.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

4Portfolio Composition by Asset Type(Note)

Post‐Acquisition

Existing Portfolio(Note)

Based on (anticipated) acquisition price. The Preferred Equity Interest is categorized in the hotel portfolio in terms ofuse of its underlying asset; unless otherwise noted, the same shall apply hereinafter.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

5

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

After Acquisition

Acquired (Note 1)(Note 1)125 (49)6 (6)130 (54)297,781

59,324357,106

Existing Portfolio
Properties (Hotel Properties)(Note 2)
Total (Anticipated) Acquisition Price(mn JPY) (Note 3)(Note 1) The figures described in the columns of “Assets to be acquired” and “After Acquisition” are inclusive of Preferred Equity
Interest.
(Note 2) In the column of Assets to be Acquired, the additional acquisition of Hotel MyStays Gotanda Station (the Floor
Expansion Portion) is counted as one property. In contrast, it is omitted in the column of After Acquisition, because it will
be managed with the Owned Portion as a part of the existing property after the acquisition. This explains why the
number of properties of “After acquisition” does not agree with the sum of the number of “Existing Portfolio” and “Assets
to be Acquired”; the same shall apply hereinafter.
(Note 3) 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 after the acquisition of Assets to
be Acquired is as follows;
Existing Portfolio

Assets to be
Acquired(Note 1)After Acquisition(Note 1)

Properties (Hotel Properties)

125 (49)5 (5)129 (53)

Total (Anticipated) Acquisition Price(mn JPY) (Note 2)

297,781

41,479339,260

Total Appraisal Value (mn JPY)
(Note 2) (Note 3)

362,329

42,600404,929

Appraisal NOI Yield (Note 4)

6.6%

5.7%

6.5%

(Note 1) The figures for the items relating to “Assets to be acquired” and “Post-Acquisition” do not include the value of Preferred
Equity 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 (including the research value
stated in the research report) on the valuation date of June 30, 2017 for the Existing Portfolio (125 properties), and on
the valuation date of July 1, 2017 for the Four Hotel Properties.
As the Floor Expansion Portion of Hotel MyStays Gotanda Station is under construction, the appraisal value for suchFloor Expansion Portion shows the research value set forth in the research report on the valuation date of June 30,
2017, issued by Morii Appraisal & Investment Consulting, Inc. The research value represents the difference between (i)the research value of the current portion owned by INV and the Floor Expansion Portion combined, valued at 27,400
million yen assuming the completion of the conversion, and (ii) the research value for the current portion owned by INV
before the additional acquisition valued at 24,800 million yen. For further information, please kindly refer to theannouncement “Notice concerning Acquisition and Sale of Assets” on July 25, 2017.
(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.
The NOI yield of Hotel MyStays Gotanda Station represents the difference between (i) the NOI of Existing owning
Portion and Floor Expansion Portion combined, assuming the completion of the Conversion, and (ii) the NOI for the
Existing owning Portion before the Additional Acquisition in the appraisal reports of (Note 3) above. As described above,
the anticipated acquisition price of Floor Expansion Portion of the Hotel MyStays Gotanda Station may change and if so,This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

6

Appraisal NOI Yield may change. For further information, please kindly refer to the announcement “Notice concerning
Acquisition and Sale of Assets” on July 25, 2017.

Portfolio Composition by Geography (Note 1) (Note 2)(Note 1) Calculated based on the (anticipated) acquisition price.
(Note 2) The definition of areas used in the circle charts is as follows;
Greater Tokyo (excluding Tokyo 23 wards): Tokyo Metropolis (excluding Tokyo 23 wards), the three surrounding
prefectures of Kanagawa, Chiba, and Saitama
Kansai：Osaka, Hyogo, Kyoto, Shiga, Wakayama, and Nara
Chubu：Aichi, Gifu, Mie, Shizuoka, Nagano, Yamanashi, Niigata, Toyama, Ishikawa, and Fukui

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof 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 Hotel Properties, INV will enter into a lease agreement with MHM based on the
combination of fixed rents and variable rents linked to Gross Operating Profit (GOP) (Note 1). Of 54
hotels in INV’s portfolio after the acquisition of the Assets to be Acquired, 43 hotels use a variable rent
scheme described above (Note 2). MHM which is a hotel operator with a wealth of experience and its
subsidiaries implement comprehensive revenue management for 41 of INV’s hotels and seek tomaximize revenue by increasing accommodation demand, continue to improve its website to promote
direct bookings, offers language support in five languages as well as enhanced marketing campaigns
with domestic and overseas entities. These initiatives, uniquely position MyStays Hotels and therefore
INV, in a position to directly benefit from an increase in revenue from hotels through the variable rent
scheme. In addition, INV will be able to reduce the negative impact of a downward trend in GOP owing to
the embedded fixed-fee mechanism working as a buffer.
INV is of the opinion that the tenants for the Four Hotel Properties match the standard for selection oftenants described in Report on the Management Structure and System of the Issuer of Real Estate
Investment Trust Units and Related Parties (Japanese only) filed on [March 27], 2017.
(Note 1) In this case, Gross Operating Profit is rent revenue INV receives as 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’s revenues.
(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 Hotel Properties is as follows;
The tenant and operator for Hotel MyStays Shin Osaka Conference Center, Hotel MyStays Premier
Omori and Hotel MyStays Sapporo Station, and the operator for Beppu Kamenoi Hotel
(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

Atsuki Asano, President and CEO

representative officer(iv)

Business

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

CapitalJPY 100 million (as of December 31, 2016)(vi)

Date of establishment

July 8, 1999

(vii)

Relationship between INV/Asset Manager 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 owned byfunds managed by affiliates of FIG, which is an affiliate of Calliope Godo
Kaisha (“Calliope”). Calliope holds 609,942 units of INV’s outstanding
investment units (15.79% stake) as of today. Further, as of today,
Calliope is the parent company of CIM, holding 100% of its outstanding
shares.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

8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. Further, part-time
director of CIM, Christopher Reed, is seconded from Fortress Investment
Group Japan Godo Kaisha, a subsidiary of FIG.

Transactional

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

respect to 36 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 contract among MHM and tenant are included.

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

“Outline of Specified Assets and Properties” column:

・ “Legal form of Asset” shows the type (the legal form) of real estate and other assets as
specified assets.
・ “Date of Planned Acquisition” shows the date when an acquisition is executed, which is
specified in the purchase agreement or the trust beneficiary right sales agreement.
・ “Planned Purchase Price” shows a purchase price of the Four 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” shows 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”shows the time to walk to the nearest station based on the description in the Real
Estate Appraisal Report (in case there is no description of time distance in the Real EstateAppraisal Report,“Transport”is calculated by assuming walking time on the road distance 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 subsequentThis English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

9revisions)(hereinafter, referred to as the “Fair Competition Code”) and the Ordinance for
Enforcement of the Fair Competition Code). If unidentified, it is based on the description inother materials.
・ In “Zoning”, the class of zoning under the respective items of Article 8(1) of the City Planning
Act (Act No.100 of 1968, as amended) is listed.
・ In “Building Coverage Ratio”, the ratio of a building’s area with regard to the land area as set
forth under Article 53 of the Building Standards Act (Act No. 201 of 1950, as amended; the“Building Standards Act”) is listed.
・ In “Floor Area Ratio”, the ratio of a building’s floor area with regard to the land area 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 July 31, 2017.
・ “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 the Four Hotel Properties 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, andis the rental revenues received as rent, is listed.
c.

“Overview of Lease Agreement” column:

・ Based on the lease agreements with tenants effective as of July 31, 2017.
・ “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 ofThis English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

10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.
・ 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 Hotel Properties, INV has received a report from Tokio Marine & Nichido Risk
Consulting Co., Ltd. on building deterioration survey, short- and long-term repair plan decision,a condition survey in compliance with the Building Standards 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 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 this section.

・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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof 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 the Four Hotel Properties, prepared by appraisal
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 theFour Hotel Properties.

h. “Income and Expenditures, Etc.” column:
・ Based on the information provided from the sellers for each operating period from January 1,
2015 to December 31, 2016. This is not a guarantee of future income and expenditures.
・ Amounts are rounded down to the nearest 1,000 yen. Therefore, the figures may notnecessarily match the total value when added together. Unless otherwise specifically noted,
the amounts do not include consumption tax, etc.
・ “Taxes and Public Dues,” include property tax and city planning tax, which are generally
imposed on the owner on January 1 of each year. For property tax and city planning tax thatwere borne by the current owner or previous owner at the time of INV’s acquisition of the Four
Hotel Properties, the estimated amount is included in the acquisition price, and is therefore notincluded in “Taxes and Public Dues.”
・ “Non-life Insurance Premiums” is the total amount of paid insurance premiums distributed
proportionally over the 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, is calculated by dividing the total sales for acertain 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 was
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 relevantThis English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

12

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 appraisal agency for the Four Hotel Properties
based on the matters for consideration in a real estate appraisal under the Investment Trust
Act, the Act on Real Estate Appraisal (Act No. 152 of 1963, as amended; the “Act on Real
Estate Appraisal”) and the real estate appraisal standards.
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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

13D50: Hotel MyStays Shin Osaka Conference Center

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

Trust Beneficiary Right

Date of Planned Acquisition

October 13, 2017

Planned Purchase Price

JPY 13,068 million

Appraisal Value

JPY 13,200 million

Appraisal Agency

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

6-2-4, Nishinakashima, Yodogawa-ku, Osaka City, Osaka and two other lots

(Address)

6-2-19, Nishinakashima, Yodogawa-ku, Osaka City, Osaka

Location
7 min walk from Shin Osaka station on JR Tokaido / Sanyo Shinkansen Line and Tokaido Line, 4 min walk from Shin

Transport

Osaka station on Osaka’s municipal subway Midosuji LineLand

Form of Possession

Ownership

Lot Area (m2)2,935.97 m2

Form of Possession
2

Total Floor Area (m )Building

Structure/No. of
StoriesRenovation Date

ZoningBuilding

Commercial area
Coverage

Ratio/Floor Area Ratio

Ownership2

13,026.99 m

80% / 800%

Purpose of Use

Hotel / Conference room

Construction Date

June 27, 1974

Steel concrete structure with flat floor, basement 1 story, 14 stories
November 2015 – March 2016

Trustee

Mitsubishi UFJ Trust & Banking Corporation

Trust Period

From: December 1, 2014; Until: October 12, 2027

Creation of Security Interest

None

Lease Overview (July 31, 2017)
Total No. of Tenant (s)12

Leasable Area (m )13,026.99 m2

Lease Area (m2)

13,026.99 m2

Occupancy Rate

100.0%

Number of Guest Rooms
Security Deposit/Guarantee
Money
GOP (per month)397 rooms(S40・T71・D286)

JPY 1,550 thousand
JPY 65,822 thousand

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

Type of Contract

Fixed rent plus variable rent type

Term

From: October 13, 2017 Until: October 12, 2027

Determination of rent of lease
contract
Management services fee
Security Deposit/Guarantee
Money
Renewal Upon Expiration

Fixed rent (JPY 399 million per annum (January – March: JPY 28.3 million per month / April – June: JPY 36.1 million
per month / July – September: JPY 32.8 million per month / October – December: JPY 35.8 million per month) plus
variable rent based on GOP of hotel operation. (Note)
Not disclosed, as tenant's consent has not been obtained for disclosure.
JPY 1,550 thousand
The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of the lease term.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

14

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

Tokio Marine & Nichido Risk Consulting
Co., Ltd.

Short term Repair Costs (within

JPY 150 thousand

1 year)Long term Repair Costs (in 12

Date of Report

Replacement Price

August 2017

JPY 5,001,200 thousand

JPY 769,239 thousand

years)
Overview of PML reportCompany Conducting Survey

Tokio Marine & Nichido Risk Consulting
Date of ReportCo., Ltd.

Probable Maximum Loss (PML)

July 2017

7.2%

Area Characteristic
The Property is a limited-service hotel with a conference hall, within 7-minute walk from Shin Osaka Station on JR Tokaido / Sanyo Shinkansen (bullet
train) Line and Tokaido Line, 4-minute walk from Shin Osaka Station or Nishinakajima-Minamigata Station on the Midosuji Subway Line, providing guests
with easy access to whole area of Osaka. Notably, the Shin Osaka station is terminal of Tokaido Shinkansen and departure of Sanyo Shinkansen, which
can be said as gateway to the Kansai region. It is the best location for both business and leisure which offers a good access to Kyoto Station (reachable in
15 minutes by Tokaido Shinkansen) and Tokyo Station (reachable in 2.5 hours by Tokaido Shinkansen). The hotel with a conference hall can be expected
to capture the demand of business use such as conference, training seminar, training session and general meeting. In addition, based on a good accessto the major sightseeing spot such as Osaka Aquarium, historic Osaka Castle and Universal Studios Japan as well as one day trip to Kyoto, it can be
expected to accommodate increasing demand of domestic and inbound tourism. The recently full renovated hotel offers sleek and modern aesthetics inflexible room configurations well-suited for various customer base.
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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

15

D50: Hotel MyStays Shin Osaka Conference Center

Income and Expenditures, Etc.
January 1, 2015 – December 31, 2015

Operating Period

January 1, 2016 – December 31, 2016

(Note 1)

(Note 1)

JPY 496,646 thousand

JPY 661,537 thousand--

JPY 25,618 thousand

JPY 25,618 thousandc. Non life Insurance Premiums

JPY 827 thousand

JPY 827 thousandd. Trust Fees

JPY 800 thousand

JPY 800 thousand

JPY 469,401 thousand

JPY 634,292 thousand

JPY 1,267,823 thousand

JPY 1,364,026 thousand

Room Income

JPY 833,533 thousand

JPY 1,043,598 thousand

Other Income

JPY 434,290 thousand

JPY 320,428 thousand

JPY 771,177 thousand

JPY 702,489 thousand

ADR

JPY 7,073

JPY 8,658

RevPAR

JPY 5,752

JPY 7,182

Room Occupancy Rates

81.3%

83.0%

GOP Ratio

39.2%

48.5%

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

Daily/ Weekly/ Monthly (Note2)－／－／

Overseas Sales Share (Note2)－

100.0%／

－

0.0%

0.0%／

41.8%

(Note 1) There is an impact from the full renovation conducted from November 1, 2015 to March 18, 2016.
(Note 2) The figure for 2015 is omitted due to a lack of breakdown data before February 2016 for daily, weekly, monthly types and for the ratio of overseas
operations is not available. The figure for 2016 is based on the data of the period from March 1, 2016 up to December 31, 2016.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

16D50: Hotel MyStays Shin Osaka Conference Center

Summary of Real Estate Appraisal Report
Appraising Organization

The Tanizawa Sōgō Appraisal Co., Ltd.

Appraisal Value (Market Value)

JPY 13,200 million

Time of Valuation

July 1, 2017

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

Contents

Overview
Room Rental Income and Common Area Maintenance(a) Room Rental Income

JPY 727,776 thousand

Fee are estimated based on anticipated lease agreement,
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－(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)]JPY 727,776 thousand(f) Vacant Room Losses－(g) Irrecoverable Debt Losses－(II) Operating Revenue = [(I) - (f) - (g)]

JPY 727,776 thousand(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 comparable assets and average annual(j) Repair Costs

JPY 15,000 thousand

estimate in the engineering report (0.3% of theReplacement Cost)(k) Property Management Fee－(l) Tenant Solicitation Expenses－
Based on standard taxable value as stated in the(m) Taxes and Public DuesJPY 25,618 thousand

documents relating to taxes and public dues, tax rateadjustments and details of renovation works(n) Non-life Insurance Premiums

JPY 827 thousand(o) Other Costs

JPY 727 thousand(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) +(m) + (n) + (o)](IV) Net Operating Income = [(II) - (III)](p) One Time Investment Gains

Based on estimates

JPY 42,173 thousand
JPY 685,603 thousand
JPY 15 thousand
Based on comparable assets and average annual(q) Capital Improvements and Expenses

JPY 35,000 thousand

estimate in the engineering report (0.7% of theReplacement Cost)(r) FF&E Reserve

JPY 24,118 thousand

Based on comparable assets as well as repair andmaintenance planThis English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

17

(V) Net Income = [(IV) + (p) - (q) – (r)]JPY 626,500 thousand
Based on comparing multiple transaction yield in the(VI) Capitalization Yield

4.7 %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)]

JPY 13,300,000
thousand(Reference) NOI Yield

5.2%[(IV) ÷ (VII)](2) DCF Method

Contents(I) Total of Current Value of Net Income

Overview
JPY 4,980,000 thousand

during Analysis Period(a) Sale Price

JPY 13,300,000 thousand(b) Sale Costs

JPY 266,000 thousand(c) Returning Price [(a) - (b)]

JPY 13,034,000 thousand(II) Returning Price, Current Value

JPY 8,160,000 thousand

Assume 2.0% of sale price

Based on transaction yield of(III) Discount Rate

4.8%

comparable assets andcharacteristics of the property
Based on transaction yield of(IV) Final Capitalization Yield

4.9%

comparable assets taking into
consideration of future prediction
uncertainty(V) Income Price using DCF Method = [(I)JPY 13,100,000 thousand+ (II)](3) Income Price using Income

JPY 13,200,000 thousand

Capitalization Method

2. Estimated Price using Cost Method
Contents

Overview(i) Land Price

JPY 10,300,000 thousand(ii) Building Price

JPY 1,400,000 thousand(iii) Furnishings/Appliances/Equipment/

JPY 300,000 thousand

Upholstery Price(iv) Total Price of Land, Building, andFurnishings/Appliances/Equipment/Uphol

JPY 12,000,000 thousand

stery = [(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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

18D51: Hotel MyStays Premier Omori

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

Trust Beneficiary Right

Date of Planned Acquisition

October 13, 2017

Planned Purchase Price

JPY 9,781 million

Appraisal ValueJPY 9,880 million

Appraisal Agency

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

6-11-2, Minami Oi, Shinagawa-ku, Tokyo and 13 other lots

(Address)

6-19-3, Minami Oi, Shinagawa-ku, Tokyo

LocationTransport

7 min walk from Omori station on JR Keihin Tohoku line, 8 min walk from Omori Kaigan station on Keihin Express line

Land

Form of Possession

Ownership

ZoningLot Area (m2)

1,775.19 m2

Form of Possession

Ownership

Purpose of Use

Total Floor Area (m2)

11,849.61 m2

Construction Date

Building Coverage Ratio/Floor
Area Ratio

Building
Structure/No. of
StoriesRenovation Date

Commercial area
80% / 500%
Hotel / Residence / Parking
Facility
February 27, 1995

Steel reinforced concrete / Steel structure with flat floor, basement 2 stories / 18 stories
August 2016 – November 2016

Trustee

Sumitomo Mitsui Trust Bank, Limited

Trust Period

From: March 1, 2016; Until: October 12, 2027

Creation of Security Interest

None

Lease Overview (July 31, 2017)
Total No. of Tenant (s)12

Leasable Area (m )11,849.61 m2

Lease Area (m2)

11,849.61 m2

Occupancy Rate

100.0%

Number of Guest Rooms
Security Deposit/Guarantee
Money
GOP (per month)

232 rooms (Note 1)(T80・D146・O6)

JPY 2,903 thousand
JPY 43,410 thousand (Note2)

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

Type of Contract

Fixed rent plus variable rent type

Term

From: October 13, 2017 Until: October 12, 2027

Determination of rent of lease
contract
Management services fee
Security Deposit/Guarantee
Money

Fixed rent (JPY 280.8 million per annum (January – March: JPY 20.4 million per month / April – June: JPY 25.6
million per month / July – September: JPY 23.3 million per month / October – December: JPY 24.3 million permonth) plus variable rent based on GOP of hotel operation. (Note3)
Not disclosed, as tenant's consent has not been obtained for disclosure.
JPY 2,903 thousand

Renewal Upon Expiration

The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of the lease term.

Rent Revision

Rent cannot be revised during the lease term.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

19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
1 year)Tokio Marine & Nichido Risk Consulting
Co., Ltd.
-Long term Repair Costs (in 12

Date of Report

Replacement Price

August 2017

JPY 3,929,500 thousand

JPY 426,511 thousand

years)
Overview of PML reportCompany Conducting Survey
Probable Maximum Loss (PML)

Tokio Marine & Nichido Risk Consulting
Date of ReportCo., Ltd.

July 2017

2.9%

Area Characteristic
The Property is a limited-service hotel with a 7-minute walk from Omori Station on the JR Keihin Tohoku Line or 8-minute walk from Omori Kaigan Stationon the Keihinkyuko Line. Omori Station is a railway network hub with good access to major terminals such as Shinagawa Station (reachable in 6 minutes
using the JR Line), Haneda Airport International Terminal (reachable in 25 minutes using a shuttle service) and Yokohama Station (reachable in 25
minutes). All of the hotel rooms have been renovated in November 2016 and are comfortable stay space with 22.5 square meters or larger in size, offeringstrong product differentiation in Tokyo and the Property is expected to attract a great number of inbound tourists and business and leisure travelers,
leading to a robust growth of revenue. The 24 rooms located on from the 15th to 18th floors are designed as serviced apartments suitable for therequirements of long-term business travelers. Restaurant provides morning and lunch.
Special Notes
None(Note 1) The figure is for the number of hotel rooms only. Besides, the Property has 24 rooms of serviced apartments.
(Note 2) The rent revenue includes the revenue from the serviced apartment business.
(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.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

20D51: Hotel MyStays Premier Omori

Income and Expenditures, Etc.
January 1, 2016 – December 31,2016

Operating Period

January 1, 2015 – December 31, 2015

GOP (= (1) - (2))

JPY 406,382 thousand

JPY 351,114 thousand--

JPY 30,698 thousand

JPY 30,698 thousandc. Non life Insurance Premiums

JPY 640 thousand

JPY 640 thousandd. Trust Fees

JPY 800 thousand

JPY 800 thousand

JPY 374,243 thousand

JPY 318,975 thousand

JPY 1,292,698 thousand

JPY 1,024,487 thousand

Room Income

JPY 861,595 thousand

JPY 754,849 thousand

Other Income

JPY 431,102 thousand

JPY 269,638 thousand

JPY 886,315 thousand

JPY 673,372 thousand

ADR (Note2)

JPY 11,529

JPY 12,563

RevPAR (Note2)

JPY 10,730

JPY 9,332

Room Occupancy Rates (Note2)

93.1%

74.3%

GOP Ratio

31.4%

34.3%

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

Daily/ Weekly/ Monthly (Note3)－／－／

Overseas Sales Share－－(Note 1)100.0%／

0.0%／

0.0%
26.1%

(Note 1) There is an impact of the full renovation conducted from August to November in 2016.
(Note 2) Calculated only in terms of hotel business, exclusive of the serviced apartment segment(Note 3) The figure for 2015 is omitted due to a lack of breakdown data for daily, weekly, monthly types in the period up to July 2016. The figure for 2016 isbased on the data in the period between August 1, 2016 and December 31, 2016.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

21D51: Hotel MyStays Premier Omori

Summary of Real Estate Appraisal Report
Appraising Organization

The Tanizawa Sōgō Appraisal Co., Ltd.

Appraisal Value (Market Value)

JPY 9,880 million

Time of Valuation

July 1, 2017

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

Contents

Overview
Room Rental Income and Common Area Maintenance(a) Room Rental Income

JPY 524,226 thousand

Fee are estimated based on anticipated lease agreement,
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(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)]JPY 151 thousand
JPY 524,378 thousand(f) Vacant Room Losses－(g) Irrecoverable Debt Losses－(II) Operating Revenue = [(I) - (f) - (g)]

JPY 524,378 thousand(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 comparable assets and average annual(j) Repair Costs

JPY 9,825 thousand

estimate in the engineering report (0.25% of theReplacement Cost)(k) Property Management Fee－(l) Tenant Solicitation Expenses－(m) Taxes and Public DuesJPY 30,698 thousand(n) Non-life Insurance Premiums

JPY 640 thousand(o) Other Costs

JPY 94 thousand(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) +(m) + (n) + (o)](IV) Net Operating Income = [(II) - (III)](p) One Time Investment Gains

Based on estimate
Based on insurance premiums of insurance policy as wellas comparable assets

JPY 41,259 thousand
JPY 483,118 thousand
JPY 42 thousand
Based on comparable assets and average annual(q) Capital Improvements and Expenses

JPY 25,545 thousand

estimate in the engineering report (0.65% of theReplacement Cost)(r) FF&E Reserve

JPY 16,453 thousand(V) Net Income = [(IV) + (p) - (q) – (r)]JPY 441,162 thousand

Based on comparable assets as well as repair andmaintenance planThis English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

22Based on comparing multiple transaction yield in the(VI) Capitalization Yield

4.4%

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)]

JPY 10,000,000
thousand(Reference) NOI Yield

4.8%[(IV) ÷ (VII)](2) DCF Method(I) Total of Current Value of Net Income during Analysis Period(a) Sale PriceContents

Overview

JPY 3,520,000 thousand
JPY 10,000,000
thousand(b) Sale Costs

JPY 200,000 thousand(c) Returning Price [(a) - (b)]JPY 9,800,000 thousand(II) Returning Price, Current ValueJPY 6,310,000 thousand(III) Discount Rate

4.5%

(IV) Final Capitalization Yield

4.6%(V) Income Price using DCF Method = [(I) + (II)]JPY 9,830,000 thousand(3) Income Price using Income Capitalization Method

JPY 9,880,000 thousand

Assume 2.0% of sale price

Based on transaction yield of comparable assets andcharacteristics of the property
Based on transaction yield of comparable assets taking
into consideration of future prediction uncertainty

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

JPY 7,750,000 thousand(ii) Building Price

JPY 1,720,000 thousand(iii) Furnishings/Appliances/Equipment/Upholstery Price(iv) Total Price of Land, Building, andFurnishings/Appliances/Equipment/Upholstery = [(i) + (ii) + (iii)]

Overview

JPY 80,000 thousand
JPY 9,550,000 thousand

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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

23D52: Beppu Kamenoi Hotel

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

Trust Beneficiary Right

Date of Planned Acquisition

October 13, 2017

Planned Purchase Price

JPY 8,870 million

Appraisal Value

JPY 8,960 million

Appraisal Agency

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

2160-1, Chuo Cho, Beppu City, Oita and 12 other lots

(Address)

5-17, Chuo Cho, Beppu City, Oita

LocationTransport

4 min walk from Beppu station on JR Nippo line, 12 min by car from Beppu IC on Oita Express way

Land

Form of Possession

Ownership

Lot Area (m2)

5,709.02 m2

Form of Possession

Ownership

ZoningBuilding Coverage Ratio/Floor
Area Ratio

Commercial area
80% / 500% or 400%

Purpose of Use

HotelConstruction Date

May 30, 19972

Total Floor Area (m2)

19,422.08 m(Note 1)

Building
Structure/No. of
StoriesRenovation Date

Steel structure with flat floor, 17 stories
May 2015 – July 2015

Trustee

Sumitomo Mitsui Trust Bank, Limited

Trust Period

From: February 6, 2007; Until: October 12, 2027

Creation of Security Interest

None

Lease Overview (July 31, 2017)
Total No. of Tenant (s)12

Leasable Area (m )19,422.08 m2

Lease Area (m2)

19,422.08 m2

Occupancy Rate

100.0%

Number of Guest Rooms

322 rooms(S28・T153・O141)

Security Deposit/Guarantee

-

Money
GOP (per month)

JPY 56,407 thousand

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

Type of Contract

Fixed rent plus variable rent type

Term

From: October 13, 2017 Until: October 12, 2027

Determination of rent of lease
contract
Management services fee
Security Deposit/Guarantee
Money

Fixed rent (JPY 391.2 million per annum (January – March: JPY 32.1 million per month / April – June: JPY 27.6
million per month / July – September: JPY 35.5 million per month / October – December: JPY 35.2 million permonth) plus variable rent based on GOP of hotel operation. (Note 2)
Not disclosed, as tenant's consent has not been obtained for disclosure.
-

Renewal Upon Expiration

The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of the lease term.

Rent Revision

Rent cannot be revised during the lease term.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

24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

Tokio Marine & Nichido Risk Consulting
Co., Ltd.

Short term Repair Costs (within-

1 year)Long term Repair Costs (in 12

Date of ReportAugust 2017

Replacement Price

JPY 7,324,200 thousand

Date of ReportAugust 2017

JPY 1,250,779 thousand

years)
Overview of PML reportCompany Conducting Survey
Probable Maximum Loss (PML)

Tokio Marine & Nichido Risk Consulting
Co., Ltd.
11.0%

Area Characteristic
The Property is a resort hotel located in Beppu, one of Japan’s most famous hot spring resort areas providing various types of hot springs to visitors,
located within a 4-minute walk from JR Beppu Station and twelve minutes by car from Beppu IC of Oita Expressway as well as fifty-one minutes by airport
limousine from Oita Airport, providing guests with easy access to Oita city and other area. The hotel has a various room types ranging from single bed
rooms to rooms for six people, which is suitable for family. The hotel can meet various kind of demands such as those of individuals, couples, families andgroups. There are three restaurants in the hotel and one of them features unique Beppu specialties. In addition, the hotel has a good access to
Takasakiyama Natural Zoo which is one of the most popular sightseeing spot in Beppu area. As inbound tourism in the Kyushu area is growing, the hotel
is expected to accommodate the increasing demand of domestic and inbound tourism.
Special Notes
None(Note 1) The Property has parking facilities of 4,519.91 square meters besides the main hotel building.
(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.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

25

D52: Beppu Kamenoi Hotel
Income and Expenditures, Etc.
January 1, 2015 – December 31, 2015

Operating Period(Note 1)

GOP (= (1) - (2))

January 1, 2016 – December 31, 2016

JPY 426,146 thousand

JPY 547,795 thousand--b. Taxes and Public DuesJPY 27,272 thousand

JPY 27,272 thousandc. Non life Insurance Premiums

JPY 1,341 thousand

JPY 1,341 thousand

JPY 800 thousand

JPY 800 thousand

JPY 396,732 thousand

JPY 518,380 thousand

JPY 1,319,797 thousand

JPY 1,378,054 thousand

Room Income

JPY 714,686 thousand

JPY 824,511 thousand

Other Income

JPY 605,111 thousand

JPY 553,543 thousand

JPY 893,650 thousand

JPY 830,259 thousand

ADR

JPY 8,522

JPY 9,048

RevPARJPY 6,019

JPY 6,996

Room Occupancy Rates

70.6%

77.3%

GOP Ratio

32.3%

39.8%

a. Land Lease Fees

d. Trust FeesNOI (= GOP - [a. + b. + c. + d.])(1) Sales(2) Operating Costs (not including a.
through d. above)(Reference)

Daily/ Weekly/ Monthly (Note2)－／－／

Overseas Sales Share (Note2)－

100.0%／

－

0.0%／

0.0%
9.9%

(Note 1) There is an impact of the renovation project conducted from May 7 to July 31 in 2015.
(Note 2) The figure for 2015 is omitted due to a lack of breakdown data for daily, weekly, monthly types and for the ratio of overseas operations in the period
up to December 2015. The figure for 2016 is based on the data in the period between January 1 and December 31, 2016.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

26

D52: Beppu Kamenoi Hotel

Summary of Real Estate Appraisal Report
Appraising Organization

The Tanizawa Sōgō Appraisal Co., Ltd.

Appraisal Value (Market Value)

JPY 8,960 million

Time of Valuation

July 1, 2017

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

Contents

Overview
Room Rental Income and Common Area Maintenance(a) Room Rental Income

JPY 700,861 thousand

Fee are estimated based on anticipated leaseagreement, 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－(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)]JPY 700,861 thousand(f) Vacant Room Losses－(g) Irrecoverable Debt Losses－(II) Operating Revenue = [(I) - (f) - (g)]

JPY 700,861 thousand(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 comparable assets and average annual(j) Repair Costs

JPY 29,240 thousand

estimate in the engineering report (0.4% of theReplacement Cost)(k) Property Management Fee－(l) Tenant Solicitation Expenses－
Based on standard taxable value as stated in the(m) Taxes and Public DuesJPY 27,272 thousand

documents relating to taxes and public dues, tax rateadjustments and details of renovation works(n) Non-life Insurance Premiums(o) Other Costs(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) +(m) + (n) + (o)](IV) Net Operating Income = [(II) - (III)]JPY 1,341 thousand

Based on estimate

JPY 700 thousand
JPY 58,554 thousand
JPY 642,306 thousand(p) One Time Investment Gains－
Based on comparable assets and average annual(q) Capital Improvements and Expenses

JPY 62,135 thousand

estimate in the engineering report (0.85% of theReplacement Cost)(r) FF&E Reserve

JPY 32,654 thousand

Based on comparable assets as well as repair andmaintenance planThis English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

27

(V) Net Income = [(IV) + (p) - (q) - (r)]JPY 547,516 thousand
Based on comparing multiple transaction yield in the(VI) Capitalization Yield

6.1%

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)]JPY 8,970,000 thousand(Reference) NOI Yield

7.2%[(IV) ÷ (VII)](2) DCF Method

Contents

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

JPY 4,050,000 thousand(a) Sale Price

JPY 9,130,000 thousand(b) Sale Costs

JPY 183,000 thousand(c) Returning Price [(a) - (b)]

JPY 8,947,000 thousand(II) Returning Price, Current Value

JPY 4,900,000 thousand(III) Discount Rate

6.2%

Assume 2.0% of sale price

Based on transaction yield of comparable assets andcharacteristics of the property
Based on transaction yield of comparable assets, future(IV) Final Capitalization Yield

6.3%

trend of investment yield, investment risk of the property,
general economic growth forecasts and trend or realestate prices and rents(V) Income Price using DCF Method = [(I) + (II)]JPY 8,950,000 thousand(3) Income Price using Income Capitalization Method

JPY 8,960,000 thousand

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

JPY 2,130,000 thousand(ii) Building Price

JPY 5,850,000 thousand(iii) Furnishings/Appliances/Equipment/Upholstery Price(iv) Total Price of Land, Building, andFurnishings/Appliances/Equipment/Upholstery = [(i) + (ii) + (iii)]

Overview

JPY 140,000 thousand
JPY 8,120,000 thousand

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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

28

D53: Hotel MyStays Sapporo Station

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

Trust Beneficiary Right

Date of Planned Acquisition

October 13, 2017

Planned Purchase Price

JPY 7,880 million

Appraisal ValueJPY 7,960 million

Appraisal Agency

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

4-15, Kita Hachijyo Nishi, Sapporo City, Hokkaido(Address)

4-15, Kita Hachijyo Nishi, Sapporo City, Hokkaido

LocationTransport

4 min walk from Sapporo Station on JR Hakodate line

Land

Form of Possession

Ownership

Lot Area (m2)

1,043.24 m2

Form of Possession
2

Total Floor Area (m )Building

Structure/No.

ofStoriesRenovation Date

ZoningCommercial area

Building Coverage Ratio/Floor
Area Ratio

Ownership
2

7,267.88 m

80% / 700%

Purpose of Use

HotelConstruction Date

October 23, 2007

Steel reinforced concrete structure with flat floor, 14 stories–

TrusteeMizuho Trust & Banking Co., Ltd.

Trust Period

From: November 30, 2007; Until: October 12, 2027

Creation of Security Interest

None

Lease Overview (July 31, 2017)
Total No. of Tenant (s)12

Leasable Area (m )7,267.88 m2

Lease Area (m2)

7,267.88 m2

Occupancy Rate

100.0%

Number of Guest Rooms
Security

Deposit/Guarantee

Money
GOP (per month)242 rooms(S58・T118・D64・O2)

JPY 3,010 thousand
JPY 66,207 thousand

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

Type of Contract

Fixed rent plus variable rent type

Term

From: October 13, 2017 Until: October 12, 2027
Fixed rent (JPY 241.9 million per annum (January – February: JPY 18.0 million per month / March: JPY 9.0 million

Determination of rent of lease

per month / April: JPY 6.0 million per month / May – October: JPY 27.0 million per month / November: JPY 9.0

contract

million per month / December: JPY 19.9 million per month) plus variable rent based on GOP of hotel operation.
(Note)

Management services fee
Security

Deposit/Guarantee

Money

Not disclosed, as tenant's consent has not been obtained for disclosure.
JPY 3,010 thousand

Renewal Upon Expiration

The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of the lease term.

Rent Revision

Rent cannot be revised during the lease term.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

29Early Termination

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

Other Special Matters-

Overview of Building Conditions Survey ReportCompany Conducting Survey

Tokio Marine & Nichido Risk Consulting
Co., Ltd.

Short term Repair Costs (within-

1 year)Long term Repair Costs (in 12

Date of Report

Replacement Price

August 2017

JPY 2,660,900 thousand

JPY 371,229 thousand

years)
Overview of PML reportCompany Conducting Survey
Probable Maximum Loss (PML)

Tokio Marine & Nichido Risk Consulting
Date of ReportCo., Ltd.

August 2017

2.5%

Area Characteristic
The Property is a limited-service hotel, located within 4-minute walk from the north exit of Sapporo Station on the JR Hakodate line, and a 5-minute walkfrom Sapporo Station on the Subway (Nanboku line, To-ho line). JR Sapporo Station is the gateway to Hokkaido, from where it takes only 37 minutes totravel to New Chitose Airport and only 32 minutes to JR Otaru Station, easy access welcomed by both tourists and business travelers. The location of theProperty is expected to help generate not only a constant flow of business travelers but also a growing demand of domestic and inbound tourists attracted
to the famous sightseeing spots such as “Odori Park” which is within walking distance and famous for the Sapporo Snow Festival and within walking
distance, “Sapporo Beer Garden”, the “Susukino” entertainment district, “Sapporo Clock Tower”, and “Moerenuma Park”.
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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

30D53: Hotel MyStays Sapporo Station

Income and Expenditures, Etc.
January 1, 2015 – December 31, 2015

January 1, 2016 – December 31, 2016

(Note 1)

(Note 1)

GOP (= (1) - (2))－

JPY 65,558 thousanda. Land Lease Fees－－

b. Taxes and Public Dues－JPY 4,132 thousandc. Non life Insurance Premiums－

JPY 76 thousandd. Trust Fees－

JPY 133 thousand

NOI (= GOP - [a. + b. + c. + d.])－JPY 61,215 thousand

JPY 880,606 thousand

JPY 935,706 thousand

Room Income

JPY 744,161 thousand

JPY 815,171 thousand

Other Income

JPY 136,444 thousand

JPY 120,535 thousand－

JPY 59,049 thousand

ADR

JPY 8,928

JPY 9,736

RevPAR

JPY 8,425

JPY 9,203

94.4%

94.5%

－

64.3%

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

Room Occupancy Rates
GOP Ratio
Daily/ Weekly/ Monthly (Note 2)－／－／

Overseas Sales Share

－

100%／

－

0%／

0%
52.0%

(Note 1) As the data for the items other than “Sales” “ADR” “RevPAR” and “Room Occupancy Rate” is not available for the period up to October 11, 2016,
only the figures for these four indicators are described in the column of 2015 of the table. As for the data of 2016, “Sales” “ADR” “RevPAR” and“Room Occupancy Rate” is calculated using the data on a full-year basis, while the remaining indicators are based on the date available from
October 12 onwards.
(Note 2) The figure for 2016 is based on the data available in the period between July 1 and December 31, 2016.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

31D53: Hotel MyStays Sapporo Station

Summary of Real Estate Appraisal Report
Appraising Organization

The Tanizawa Sōgō Appraisal Co., Ltd.

Appraisal Value (Market Value)

JPY 7,960 million

Time of Valuation

July 1, 2017

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

Contents

Overview
Room(a) Room Rental Income

JPY 454,286 thousand

RentalIncomeMaintenanceFeeanticipatedleasecomparable

assetsareandestimated

agreement,
andCommonbased

historicalproject

Area
on
data,

medium-tolong-term rents(b) Common Area Maintenance Fee Income－(c) Utility Income－(d) Parking Lot Income－(e) Other Income－(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)]JPY 454,286 thousand(f) Vacant Room Losses－(g) Irrecoverable Debt Losses－(II) Operating Revenue = [(I) - (f) - (g)]

JPY 454,286 thousand
Not expected since it is included in hotel operation(h) Maintenance and Management Costs－(i) Utility Costs－

cost
Not expected since it is included in hotel operation
cost
Based on comparable assets and average annual(j) Repair Costs

JPY 9,310 thousand

estimate in the engineering report (0.35% of theReplacement Cost)(k) Property Management Fee－(l) Tenant Solicitation Expenses－
Based on standard taxable value as stated in the(m) Taxes and Public DuesJPY 24,795 thousand

documents relating to taxes and public dues, tax
rate adjustments and details of renovation works(n) Non-life Insurance Premiums

JPY 458 thousand(o) Other Costs

JPY 454 thousand(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) +(m) + (n) + (o)](IV) Net Operating Income = [(II) - (III)](p) One Time Investment Gains(q) Capital Improvements and Expenses

Based on estimate

JPY 35,018 thousand
JPY 419,267 thousand
JPY 30 thousand
JPY 21,280 thousand

Based on comparable assets and average annual
estimate in the engineering report (0.8% of theThis English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

32

Replacement Cost)(r) FF&E Reserve

JPY 17,697 thousand(V) Net Income = [(IV) + (p) - (q) – (r)]JPY 380,320 thousand

Based on comparable assets as well as repair andmaintenance plan

Based on comparing multiple transaction yield in the(VI) Capitalization Yield

4.7%

neighboring areas or similar areas with the same
supply and demand taking into consideration of the
future changes in revenues(VII) Income Price using Direct Capitalization Method = [(V) ÷ (VI)]JPY 8,090,000 thousand(Reference) NOI Yield

5.2%[(IV) ÷ (VII)](2) DCF Method

Contents

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

JPY 2,950,000 thousand(a) Sale Price

JPY 8,080,000 thousand(b) Sale Costs

JPY 162,000 thousand(c) Returning Price [(a) - (b)]JPY 7,918,000 thousand(II) Returning Price, Current Value

JPY 4,950,000 thousand(III) Discount Rate

4.8%(IV) Final Capitalization Yield

4.9%

Assume 2.0% of sale price

Based on transaction yield of comparable assets
and characteristics of the property
Based on transaction yield of comparable assets
taking

into

considerationoffutureprediction

uncertainty(V) Income Price using DCF Method = [(I) + (II)]JPY 7,900,000 thousand(3) Income Price using Income Capitalization Method

JPY 7,960,000 thousand

2. Estimated Price using Cost Method
Contents

Overview(i) Land Price

JPY 3,040,000 thousand(ii) Building Price

JPY 2,440,000 thousand(iii) Furnishings/Appliances/Equipment/Upholstery Price
(iv)

Total

Price

of

Land,

Building,

JPY 80,000 thousand
andFurnishings/Appliances/Equipment/Upholstery = [(i) + (ii) + (iii)]

JPY 5,560,000 thousand

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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof 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 Hotel Properties
With respect to D50 “Hotel MyStays Shin Osaka Conference Center,” one of the Four Hotel Properties,
it was designed under the old seismic code (Note 1). However, seismic reinforcement construction wascompleted on such property in August 2009 and the report on the results of seismic diagnosis was
issued in November 2014 indicating that, there is a low risk of being destroyed or collapsed due toshaking and impact caused by earthquake. INV has obtained an opinion on such report from a third
party expert, Tokio Marine & Nichido Risk Consulting Co., Ltd., indicating that, there is no suspicion offalsification of structural calculation sheets by willful intent of the person in charge of seismic diagnosis,
and that the seismic diagnosis was made by the methods in accordance with the standards describedin such report. With respect to D51 “Hotel MyStays Premier Omori” and D52 “Beppu Kamenoi Hotel,” ofthe Four Hotel Properties INV has confirmed based on the evaluation report issued by a third party
expert, The Building Center of Japan, that structural design has satisfied requirements under the
Building Standard Act. With respect to D53 “Hotel MyStays Sapporo Station”, of the Four Hotel
Properties INV has obtained an opinion from a third party expert, Tokyo Bldg-Tech Center Co., Ltd.,
indicating that, there is no willful falsification of structural calculation sheets, etc., and that allowablestress design (first design) and possession horizontal proof stress calculation (second design) havesatisfied the prescribed safety factor.
As a part of due diligence (Note 2) routine, INV conducts investigation on seismic risks for new
acquisitions.
(Note 1) New seismic code refers to the seismic resistance standards in regard to building design, which was applied inconstruction certificate before May 31, 1981.
(Note 2) The due diligence conducted in connection with the acquisition includes examination of appraisal values, building
inspection, seismic risk inspection and legal due diligence.

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof 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 Hotel properties are as follows;
D50 Hotel MyStays Shin Osaka Conference Center
(i)
(ii)
(iii)

Name
Location
Title and name ofrepresentative officer
Business

(iv)

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

HL Investments Tokutei Mokuteki Kaisha (“HL Investments TMK”)
2-10-5, Akasaka, Minato-ku, Tokyo
Akio Yamazaki, Director
1.

Operations relating to the assignment of specified assets, Asset
Liquidation Plan under the Act on Securitization of Assets, and the
management and disposition thereof.
2. All other operations ancillary to the operations relating toliquidation of specified assets
Capital (as of today)
Specified Capital: JPY100,000
Preferred Capital: JPY2,350 million
Date of establishment
July 18, 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 HL Investments TMK, HL Investments TMK has indirectly
received investments through funds operated by affiliates of FIG, an
Capital relationships
affiliate of Calliope. As of today, Calliope holds 609,942 investment
units issued by INV (15.79% stake). Further, as of today, Calliope is theparent company of CIM, holding 100% of its outstanding shares.
While there are no personal relationships that should be noted between
INV/CIM and HL Investments TMK, as of today, among the directors of
INV and the officers and employees of CIM, Naoki Fukuda, who is the
Personal relationships
Executive Director of INV and CEO of CIM, is seconded from Calliope.
Further, part-time director of CIM, Christopher Reed, is seconded from
Fortress Investment Group Japan Godo Kaisha, a subsidiary of FIG.
There are no transactional relationships that should be noted between
INV/CIM and HL Investments 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 TMK or its related persons oraffiliates.
HL TMK is not a related party of INV or CIM. Further, related persons
Whether the TMK is a
and affiliates of HL Investments TMK are not related parties of INV or
related party
CIM. Furthermore, HL Investments 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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

35

D51 Hotel MyStays Premier Omori
(i)
(ii)
(iii)

Name
Location
Title and name ofrepresentative officer
Business

(iv)

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

Septentrio 3 Tokutei Mokuteki Kaisha(“Septentrio 3 TMK”)
1-2-9, Nishi-Shinbashi, Minato-ku, Tokyo
Masayuki Meguro, Director
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: JPY1,300 million
Date of establishment
February 5, 2016
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 Septentrio 3 TMK, Septentrio 3 TMK has indirectly
received investments through funds operated by affiliates of FIG, an
Capital relationships
affiliate of Calliope. As of today, Calliope holds 609,942 investment
units issued by INV (15.79% stake). Further, as of today, Calliope is theparent company of CIM, holding 100% of its outstanding shares.
While there are no personal relationships that should be noted between
INV/CIM and Septentrio 3 TMK, as of today, among the directors of INV
and the officers and employees of CIM, Naoki Fukuda, who is
Personal relationships
Executive Director of INV and CEO of CIM, is seconded from Calliope.
Further, part-time director of CIM, Christopher Reed, is seconded from
Fortress Investment Group Japan Godo Kaisha, a subsidiary of FIG.
Transactional
INV acquired “Hotel Epinard Nasu” in March 2016 from Septentrio 3
relationships
TMK.
Septentrio 3 TMK is not a related party of INV or CIM. Further, related
Whether the TMK is apersons and affiliates of Septentrio 3 TMK are not related parties of INV
related party
or CIM. Furthermore, Septentrio 3 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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

36

D52 Beppu Kamenoi Hotel
(i)
(ii)
(iii)

Name
Location
Title and name ofrepresentative officer
Business

(iv)

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

Monza Tokutei Mokuteki Kaisha (“Monza TMK”)
5-1-4, Toranomon, Minato-ku, Tokyo
Takaaki Fukunaga, Director
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: JPY3,224 million
Date of establishment
April 2, 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 Monza TMK, Monza TMK has indirectly received
investments through funds operated by affiliates of FIG, an affiliate of
Capital relationships
Calliope. As of today, Calliope holds 609,942 investment units issued
by INV (15.79% stake). Further, as of today, Calliope is the parent
company of CIM, holding 100% of its outstanding shares.
While there are no personal relationships that should be noted between
INV/CIM and Monza TMK, as of today, among the directors of INV andthe officers and employees of CIM, Naoki Fukuda, who is Executive
Personal relationships
Director of INV and CEO of CIM, is seconded from Calliope. Further,
part-time director of CIM, Christopher Reed, is seconded from Fortress
Investment Group Japan Godo Kaisha, a subsidiary of FIG.
There are no transactional relationships that should be noted between
Transactional
INV/CIM and Monza TMK. Further there are no transactional
relationships
relationships that should be noted between the related persons oraffiliates of INV/CIM and Monza TMK or its related persons or affiliates.
Monza TMK is not a related party of INV or CIM. Further, related
Whether the TMK is apersons and affiliates of Monza TMK are not related parties of INV or
related party
CIM. Furthermore, Monza 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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

37

D53 Hotel MyStays Sapporo Station
(i)
(ii)
(iii)

Name
Location
Title and name ofrepresentative officer
Business

(iv)

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

Suisei Tokutei Mokuteki Kaisha (“Suisei TMK”)
1-2-9, Nishi-Shinbashi, Minato-ku, Tokyo
Masayuki Meguro, Director
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: JPY2,010 million
Date of establishment
December 11, 2013
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 Suisei TMK, Suisei TMK has indirectly received
investments through funds operated by affiliates of FIG, an affiliate of
Capital relationships
Calliope. As of today, Calliope holds 609,942 investment units issued
by INV (15.79% stake). Further, as of today, Calliope is the parent
company of CIM, holding 100% of its outstanding shares.
While there are no personal relationships that should be noted between
INV/CIM and Suisei TMK, as of today, among the directors of INV andthe officers and employees of CIM, Naoki Fukuda, who is Executive
Personal relationships
Director of INV and CEO of CIM, is seconded from Calliope. Further,
part-time director of CIM, Christopher Reed, is seconded from Fortress
Investment Group Japan Godo Kaisha, a subsidiary of FIG.
Transactional
INV acquired “Super Hotel Shinbashi / Karasumoriguchi” and “Comfort
relationships
Hotel Toyama Ekimae” as of July 2015 from Suisei TMK.
Suisei TMK is not a related party of INV or CIM. Further, related
Whether the TMK is apersons and affiliates of Suisei TMK are not related parties of INV or
related party
CIM. Furthermore, Suisei 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 September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

38

6.

Transactions with Interested Persons etc.
The sellers of the Four Hotel Properties, namely HL Investments TMK, Septentrio3 TMK, Monza TMK
and Suisei TMK, are not Sponsor-related Persons (Note) under the voluntary rules specified 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, an affiliate ofCalliope, CIM’s parent company, and thus a Sponsor-related Person. Therefore, CIM treats the sellers as
persons equivalent to Sponsor-related Persons.
The Acquisitions are to be acquired at prices not exceeding their appraisal value in accordance withSponsor-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 September 21, 2017,
the board of directors of CIM approved the acquisitions at the meeting held on the same day and theboard of directors of INV approved the acquisitions at the meeting held on the same day.
In addition, MHM, the tenant/operator of the Four Hotel Properties is not a Sponsor-related Person underthe voluntary rules specified by CIM as countermeasures against conflicts of interests in the
management of INV’s investments. However, each tenant is an affiliate of FIG, which is an affiliate ofCalliope (Calliope is CIM’s parent company, and thus a Sponsor-related Person). Therefore, CIM treats
MHM as a person equivalent to a Sponsor-related Person.
In accordance with Sponsor-Related Person Transaction Rules and Sponsor-Related Person
Transaction Management Manual of CIM and following the deliberation and resolution of the compliancecommittee meeting and the investment committee meeting both held on September 21, 2017, the boardsof directors of CIM and INV each approved the lease agreements expected to be entered into with MHM
at meeting both held September 21, 2017, 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 Enforcement Order of the Investment Trust Act, (ii) all
shareholders of CIM and (iii) special purpose companies (tokubetsu mokuteki kaisha) (a) which
delegate their management to persons who fall under (ii) above, or (b) which are invested by orinvested in anonymous partnership (tokumei kumiai) by persons who fall under (ii) above.

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

D50 Hotel MyStays Shin Osaka Conference Center
Current owner/trust 1. HL Investments TMK
2. The TMK has received tokumei kumiai contributions through funds, etc.
beneficiary
operated by affiliates of FIG, an affiliate of Calliope.
3. Acquisition for investment purposes
4. Omitted because held for longer than one year
5. December 2014
Persons having no special conflict of interests relationshipPrecedingThis English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

39

owner/trust
beneficiary
Property Name

D51 Hotel MyStays Premier Omori
Current owner/trust 1. Septentrio3 TMK
2. The TMK has received tokumei kumiai contributions through funds, etc.
beneficiary
operated by affiliates of FIG, an affiliate of Calliope.
3. Acquisition for investment purposes
4. Omitted because held for longer than one year
5. March 2016
1. Boreas Tokutei Mokuteki Kaisha
Preceding
2. The TMK has received tokumei kumiai contributions through funds, etc.
owner/trust
operated by affiliates of FIG, an affiliate of Calliope.
beneficiary
3. Acquisition for investment purposes
4. Omitted because held for longer than one year
5. June 2011
Before the Preceding Persons having no special conflict of interests relationshipowner/trust
beneficiary
Property Name

D52 Beppu Kamenoi Hotel
Current owner/trust 1. Monza TMK
2. The TMK has received tokumei kumiai contributions through funds, etc.
beneficiary
operated by affiliates of FIG, an affiliate of Calliope.
3. Acquisition for investment purposes
4. Omitted because held for longer than one year
5. October 2014
Persons having no special conflict of interests relationshipPrecedingowner/trust
beneficiary
Property Name

D53 Hotel MyStays Sapporo Station
Current owner/trust 1. Suisei TMK
2. The TMK has received tokumei kumiai contributions through funds, etc.
beneficiary
operated by affiliates of FIG, an affiliate of Calliope.
3. Acquisition for investment purposes
4. Omitted because held for longer than one year
5. April 2014
Persons having no special conflict of interests relationshipPrecedingowner/trust
beneficiary
8. Overview of Brokerage
Not applicable for the Four Hotel Properties.
9. Schedules
Acquisition decision date:
Agreement execution date:

September 21, 2017

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

40Anticipated acquisition date:
Anticipated source of acquisition funds:

October 13, 2017 (Note 1)
Funds from issuance of new investment units
in Japan and overseas (Note 2), borrowings(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. The real estatetransfer agreement of Hotel MyStays Shin Osaka Conference Center, Hotel MyStays PREMIER Omori and Beppu
Kamenoi Hotel stipulates that INV can defer, based on INV’s request, the payment of the amount of the shortfall as
stipulated in the real estate transfer agreement to a date agreeable for both parties following the execution of thetransaction, and that INV is not required to pay any interests for the deferred payment. If there should occur any
shortage in the fund raising for the acquisition of the Property, INV will pay the remaining portion after the execution
date based on the stipulation.
(Note 2) For details of the issuance of new investment units, please refer to today’s release “Notice concerning Issuance of New
Investment Units and Secondary Distribution of Investment Units”.
(Note 3) For details of the borrowings, please refer to today’s release “Notice concerning Debt Financing”.

10. Future Outlook
For information on the revision of INV’s forecasts for financial results and distribution for the fiscal period
ending December 2017 (July 1, 2017 to December 31, 2017) in connection with the Acquisition of theFour Hotel properties, please refer to “Notice concerning Revision of Forecast of Financial Results andDistribution for the 29th Fiscal Period Ending December 2017” dated as of today.
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 Hotel Properties, please refer to the “Investment Risks” (toshi
risuku) in the securities report (yuka shoken hokokusho) of INV for the fiscal period ended June 2017(from January 1, 2017 to June 30, 2017) (available in Japanese only), filed as of today, as well as “Part II
Reference Information, II. Supplemental Information to the Reference Documents, 5. Investment Risks” in
the Securities Registration Statement (available in Japanese only) filed today.

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

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

41

(Appendix)
Photos and Maps of the Four Hotel Properties
D50 Hotel MyStays Shin Osaka Conference Center

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

42

D51 Hotel MyStays Premier Omori

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

43

O52 Beppu Kamenoi HotelThis English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

44

D54 Hotel MyStays Sapporo Station

This English language notice is a translation of the Japanese-language notice released on September 21, 2017 and was prepared solely for the convenience of, andreference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on
their own investigation and responsibility. This translation of the original Japanese-language notice is provided for informational purposes only, and no warranties orassurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the eventof any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

45