[For Information Purpose Only]
January 20, 2016
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: Masayuki Inagaki,
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 acquisition of assets (five hotel properties and one
residential property, hereinafter respectively the “Five Hotel Properties” and the “Residential Property”, andcollectively the “Six Properties”) today as decided by Consonant Investment Management Co., Ltd. (“CIM”),
the asset manager of INV. In connection with the acquisition of the Six Properties, INV will enter into newlease contracts with the current tenants for each of the Six Properties
1.

Overview of Acquisition
Use

Property
Number

Property Name

Location

AnticipatedAcquisition Price(million yen)
(Note 1)

D38

Hotel MyStays
Shinsaibashi

Osaka,Osaka

D39

Comfort Hotel
Kurosaki

Kitakyushu,
Fukuoka

D40

Comfort Hotel
Maebashi

Maebashi,
Gunma

D41

Comfort Hotel
Tsubame-Sanjyo

Sanjyo,Niigata

Appraisal
Value(millionyen)

Seller(Note 2)

3,190

Aki Tokutei
Mokuteki Kaisha

1,160

Navaro Tokutei
Mokuteki Kaisha

1,128

1,140

Navaro Tokutei
Mokuteki Kaisha

1,010

1,020

Navaro Tokutei
Mokuteki Kaisha

3,160

1,148

CategoryofSpecified
Assets

Trust
Beneficial
Interest

Hotel

1

Use

Property
Number

Property Name

Location

AnticipatedAcquisition Price(million yen)
(Note 1)

Comfort Hotel
Kitami

D42

Kitami,
Hokkaido

Subtotal

Appraisal
Value(million
yen)

851

860

7,297

7,370

SellerCategoryofSpecified
Assets(Note 2)

Navaro Tokutei
Mokuteki Kaisha

Trust
Residence

Royal Parks
Momozaka

A103

Osaka,
Osaka

2,910

2,940

Momo Tokutei
Mokuteki Kaisha

Beneficial
Interest

Subtotal

2,910

2,940

Total

10,207

10,310・Purchase and sale agreement execution date

: January 20, 2016

・Anticipated acquisition date

: January 22, 2016
: New loan (Note 3), a part of the excess
cash-on-hand obtained from the public offering
implemented in July 2015 and the third-party
allotment implemented in August 2015
: Lump-sum payment at time of delivery

・Acquisition funds

・Settlement method(Note 1)

Anticipated acquisition prices do not include adjustments for property taxes, city planning taxes,
national or local consumption taxes; hereinafter the same.

(Note 2)

2.

For an overview of the sellers, please refer to “5. Overview of Sellers” below.

(Note 3)For details of the new loan, please refer to the “Notice concerning Debt Financing” dated as of today.

(Note 4)

Amounts are rounded down to the nearest million yen; hereinafter the same.

Reasons for Acquisition
INV positions hotels and residential properties as core portfolio assets and pursues both portfolio
revenue growth and stability in a well-balanced manner through the implementation of its active internaland external growth strategy.
INV today decided to acquire these five limited-service hotels and one residential property without
issuing new equity and through the new bank borrowings and use of a part of the excess cash-on-handobtained from the public offering implemented in July 2015 and the third-party allotment implemented inAugust 2015.
Hotel MyStays Shinsaibashi is a limited-service hotel located in Shinsaibashi, Osaka.

Osaka issecond only to Tokyo in terms of the number of cumulative inbound visitor guest nights and benefits fromthe expansion of low cost carriers (LCC’s) at the Kansai International Airport. Shinsaibashi is the largest
shopping area in Osaka, home to many boutiques and specialty stores, attracting local people and2visitors. The hotel underwent a major renovation completed in March 2015, and boasts high occupancy
rates and customer satisfaction. The rent structure provides a variable rent scheme linked to the grossoperating profit (GOP) in addition to a minimum fixed rent, which enables INV to directly capture theupside from GOP growth. This property will be operated by MyStays Hotel Management Co., Ltd.
(“MHM”), a limited-service/extended stay hotel operator that is owned by funds managed by affiliates of
the Sponsor, providing extensive expertise and experience in hotel management. MHM will continue to
implement sophisticated revenue management techniques as it does at all the hotels it manages for INV,
to maximize rent revenue while at the same time maintaining its low-cost operation.
“Comfort Hotel” is a well-known hotel chain brand worldwide, with 50 hotels (Note 1) undermanagement in Japan. The 4 hotels to be acquired by INV exhibit strong competitiveness in theirrespective sub-markets, underpinned by consistent business demand. These hotels are generally themost recently built hotels in their respective sub-markets helping to position themselves well against
other properties. Similar to its portfolio asset “Comfort Hotel Toyama”, INV plans to utilize a fixed rent
scheme for each of the 4 hotels to secure stable portfolio revenue. The properties have attractive
estimated GOP to rent ratios.
“Royal Parks Momozaka” is a relatively new, high quality multi-family apartment located in a
redeveloped area in Uehonmachi, Osaka. The property is conveniently located and surrounded by aconcentration of commercial, cultural and educational facilities accessible by multiple train lines (Kintetsu
Line, JR Line and Osaka Municipal Subway Line). INV plans to secure stable revenue by concluding a
sublease agreement with regard to the residential portion of the property between Daiwa Living Co., Ltd.,a 100% subsidiary of Daiwa House Co., Ltd.
All of the 5 limited-service hotels will be acquired from the list of properties covered in the
Memorandum of Understanding (MOU) dated June 25, 2015. In conjunction with this transaction, INV
and the Sponsor updated the MOU today to consist of 25 hotels with 6,769 rooms and 9 apartmentbuildings with 743 units helping to additional potential external growth opportunities (note2) (note3).
One of the most noteworthy additions is the 1,016 room Sheraton Grande Tokyo Bay Hotel next to Tokyo
Disney Resort.
(Note 1)

Data source is HOTERES, published in January 2015

(Note 2)Pease refer to [Reference] “2. Sponsor’s Pipeline” below.

(Note 3)

There is no guarantee that INV will be offered an opportunity for considering acquisition of theproperties or be able to acquire the properties.

3

3.

Execution of Lease Contracts
In regards to Hotel MyStays Shinsaibashi, among the Five Hotel Properties, INV will enter into a leaseagreement with MHM, which has a strong track record in hotel operations. Regarding the Comfort Hotel
Kurosaki, Comfort Hotel Maebashi, Comfort Hotel Tsubame-Sanjyo and Comfort Hotel Kitami(hereinafter collectively, the “Four Comfort Properties”), INV will enter into lease agreement with GreensCo., Ltd. (Note)
Regarding Hotel MyStays Shinsaibashi, INV will receive a variable rent based on the operating
revenue of hotel operation by the tenant in addition to a fixed rent. In accordance with the contract, INV
receives, through the tenant and then the trustee, revenues from the hotel operation by the tenant after
deducting costs, and a certain amount reserved by the tenant. Therefore, when such hotel’s operating
revenues increase, INV will be able to directly and immediately receive such result of increase. On theother hand, even when the operating revenues decrease, INV will be able to receive at least the fixed
rent determined by the contract.
INV considers the tenants for the Six Properties to meet its standard for selection of tenants describedin Report on the Management Structure and System of the Issuer of Real Estate Investment Trust Units
and Related Parties filed on September 18, 2015.
(Note) For Hotel MyStays Shinsaibashi, INV will apply a variable rent scheme (Type of contract: Fixed rent plus
variable rent type) and for the Four Comfort Properties, INV will apply a fixed rent scheme. Please refer to “4.
Detail of Assets to be Acquired” for details.

<Overview of Tenant and Operator>
An overview of the tenants and operators for the Five Hotel Properties is as follows:
Both Tenant and Operator of “ Hotel MyStays Shinsaibashi”
(i)

Name

MyStays Hotel Management Co., Ltd.

(ii)

Location

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

(iii)
(iv)
(v)

(vi)
(vii)

Title and name ofrepresentative officer
Business

Atsuki Asano, President and CEO

Capital(as of the date of thisnotice)Date of establishment

JPY 100 million

Hotel and Ryokan (Japanese Inn) operation and management

July 8, 1999

Relationship between INV/Asset Manager and the Tenant/Operator
While there are no capital relationships that should be noted between
Capital relationships
INV/CIM and the tenant/operator, the parent company of thetenant/operator is indirectly owned by funds managed by affiliates ofFortress Investment Group LLC (“FIG”), which is an affiliate of Calliope
Godo Kaisha (“Calliope”). Calliope holds 609,942 units of INV’s
outstanding investment units (investment unit holding ratio: 19.09%) as ofDecember 31, 2015. Further, as of the date of this notice, Calliope is
the parent company of CIM, holding 100% of its outstanding shares.
Personal relationships As of the date of this notice, among the employees of CIM, one employee
is seconded from the tenant/operator.

4

Transactional
relationships
Whether the Tenant/Operator is a relatedparty

INV has entered into lease contracts with the tenant/operator withrespect to 29 hotel properties acquired on May 23, 2014, July 17, 2014,
February 6, 2015, July 16, 2015 and August 28, 2015.
The tenant/operator is not a related party of INV or CIM. Further, related
persons and affiliates of the tenant/operator are not related parties of INV
or CIM. Furthermore, the tenant/operator is not an interested party, etc.
of CIM as provided in the Act on Investment Trusts and Investment
Corporations (“Investment Trust Act”).

Both Tenant and Operator of “Comfort Hotel Kurosaki”, “Comfort Hotel Maebashi”, “Comfort Hotel
Tsubame-Sanjyo” and “Comfort Hotel Kitami”
(i)

Name

Greens Co., Ltd.

(ii)

Location
Title and name ofrepresentative officer
Business

5-3 Hamada-cho, Yokkaichi, Mie, Japan

(iii)
(iv)
(v)

(vi)
(vii)

Capital(as of the date of thisnotice)Date of establishment

Toshio Muraki, Chairman and Representative Director
Hotels and restaurants, Convention, Real estate management business
and Consultation on hotel management
JPY 50 million

January 8, 1964

Relationship between INV/Asset Manager and the Tenant/Operator
As of today, there is no capital relationship that should be noted between
Capital relationships
INV/CIM and the tenant/operator.
Personal relationships

As of today, there is no personal relationship that should be noted
between INV/CIM and the tenant/operator.

Transactional

INV has entered into a lease contract with the tenant/operator withrespect to “Comfort Hotel Toyama-Ekimae” acquired as of July 16, 2015.

relationships
Whether the Tenant/Operator is a related
party

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

5

4.

Details of Assets to be Acquired(1)

Details of the Six Properties

The specific details and overview of the status of income and expenses and real estate appraisal of the Six
Properties are as follows:<Explanation relating to details of the Six Properties>a.

“Type and Location of Specified Assets, etc.” column:In “(Planned) Purchase Price,” consumption tax is not included, and rounded down to the nearest“Appraisal Value” shows reported price by appraisal agency for anticipated acquisition.



The details in “Location” (excluding address), “Lot Area,” “Structure/No. of Stories,” “Total Floor Area,”

million yen.

“Purpose of Use,” and “Construction Date” are as shown in the property registry. The “Total Floor
Area” is the gross floor area, and with respect to “Purpose of Use,” the primary class shown in theproperty registry is listed. Further, the “Construction Date” lists the time at which it was newly
constructed, as shown in the property register.
“Transportation” 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 Estate Appraisal
Report, “Transportation” 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 subsequent revisions)(hereinafter, referred to as the“Fair Competition Code”) and the Ordinance for Enforcement of the Fair Competition Code.

In “Zoning,” the class of zoning under Article 8(1)(i) of the City Planning Act 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 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 is listed.

In “Trust Period,” the planned trust period at the time of INV’s acquisition of the assets is listed.

b.

“Lease Overview” column:The last day of November 2015 is used as the basis.

“Total No. of Tenants” 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 in asingle property is calculated as one tenant. In case of subleasing of property in which a lessee
subleased rooms to end tenants and the seller, may be the owner, INV, or the trustee concluded the“pass-through” form of lease contract without rent guarantee, total No. of tenants is the total numberof end tenants.

In “Number of Guest Rooms,” the number of guest rooms that can be sub-leased by tenants is listed.

In “Leasable Area,” which means the total leasable floor area for each building, the leasable area
listed in the lease contract and diagram for the property, excluding the leasable area of the land (levelparking lot), is listed.

In “Lease Area,” which means the total leased floor area for each building out of the total leasable

6

floor area, the leased area into which a leasing agreement has actually been enter into and has beenleased to an end-tenant, those listed in the lease contract, excluding the leased area of the land, islisted.
In “Occupancy Rate,” the ratio of the leased area to the leasable area is shown, rounded to the firstdecimal place.

“GOP,” or the gross operating profit, is the amount remaining after deducting costs of hotel operations(the personnel, material, water, electricity and heating and advertising expenses and other expenses)
and the management services fee to operators (if any) from the hotel’s revenues.

c.

“Overview of Lease Agreement” column:

Based on the lease contract entered into with the tenant.

In “Determination of rent of lease contract,” monthly rent amount is rounded down to nearest tenThe “management services fee” is a commission fee payable to the tenant in accordance with thethousand yen, and annual rent is rounded down to nearest one million yen.
provisions of the leasing contract as a compensation for operational service provided by a tenant
under the agreement. The management services fee is not disclosed, as tenant’s consent has notbeen obtained for disclosure. However, for the hotels operated by MHM, an amount of the
management services fee to be received is generally (i) an amount equal to 2% of monthly sales, (ii)
an amount equal to 0-6% of monthly sales from direct bookings made through the MHM’s marketing
department or website, and (iii) an amount equal to 4-6% of the monthly GOP after deducting theamounts of (i) and (ii) above.
In “Security Deposit/Guarantee Money,” the amount of the security deposit/guarantee money after
amortization pursuant to the lease contract is listed.

d.

“Overview of Building Conditions Survey Report” column:

For the planned acquisition assets, INV has received a report from Tokio Marine & Nichido Risk
Consulting Co., Ltd. on building conditions survey, building deterioration survey, short- and long-term
repair plan decision, a condition survey in compliance with the Building Standards Act, a survey ofdangerous substances contained in a building, and soil survey, amongst others, and has provided an
overview of the report in this column.

Further, an earthquake risk analysis has been conducted and reported to INV by Tokio Marine &Nichido Risk Consulting Co., Ltd., and an overview of the report is listed in this column.

“Probable Maximum Loss (PML)” means the probable maximum loss from an earthquake. There is
probable maximum loss (PML) for individual properties and for portfolios as a whole. Though there
is not a strict, uniform definition for probable maximum loss (PML), in this press release, it means towhat extent damages would be borne from the largest-scale anticipated earthquake in the anticipatedplanned term of use (50 years) (a large earthquake that has a reoccurrence period of 475 years = alarge earthquake with a roughly 10% chance of occurring in 50 years), as indicated by the percentage(%) of the replacement price for planned recovery costs from damage.

“Replacement Price” means the total amount of the appropriate costs needed in the event that theappraised 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 the time ofthe survey, are below minimum maintenance level due to deterioration or items which are in violation7

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 expendituresmeans, 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 cost necessary to maintain the building
at the set building functionality level, costs other than capital expenditures.

e.

Descriptions in the “Area Characteristics, etc.” field
Descriptions in the “Area Characteristics, etc.” field are an abstract or summary of descriptions in theReal Estate Appraisal Report on each real estate in trust, prepared by appraisal agencies, or createdby referring to such descriptions.

f.

Descriptions in the “Special Matters”
Descriptions in the “Special Matters” fields are matters that are deemed important in consideration of
their impact on rights, appraisal value, profitability and disposability of each asset anticipated to beacquired.
<Explanation relating to overview of the status of income and expenses and real estate appraisal of theSix Properties>a.
“Income and Expenditures, Etc.” column:
Based on the information provided from the sellers for each operating period from January 1, 2014 toNovember 30, 2015. This is not a guarantee of future income and expenditures.

Amounts are rounded down to the nearest 1,000 yen. Therefore, the figures may not necessarily
match the total value when added together. Unless otherwise specifically noted, the amounts do notinclude consumption tax, etc.

“Taxes and Public Dues,” which include property tax and city planning tax, are generally imposed on
the owner on January 1 of each year. For property tax and city planning tax that were borne by thecurrent owner or previous owner at the time of INV’s acquisition of the assets, the estimated amountis included in the acquisition price, and is therefore not included in “Taxes and Public Dues.”“Non-life Insurance Premiums” is the total amount of paid insurance premiums distributed
proportionally over the relevant period.

“NOI” (Net Operating Income) lists the actual figures as provided by the seller (following theadjustments for the trust fees, administration fees and insurance premiums when held by INV).

“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 a certain
period by the aggregate number of rooms for the same period (rooms x number of days), and is thesame figure as that of a product of room occupancy rate and ADR.

“Room Occupancy Rate” is calculated using the following formula:8room occupancy rate = total number of rooms occupied during the relevant period ÷ (aggregate
number of rooms during the relevant period x number of business days during target period)“GOP Ratio” is calculated using the following formula:“Daily / Weekly / Monthly” is the ratio for each classification of length of stay (i.e.,

GOP ratio = GOP ÷ sales figure
daily/weekly/monthly), and is calculated by dividing total room sales for the relevant classification
during each operational period by the aggregate room sales for the same operational period and thenmultiplying the figure by 100. Daily, weekly and monthly are classified 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.
b.

“Summary of Real Estate Appraisal Report” column:
INV has requested real estate appraisal from Japan Real Estate Institute for the planned acquisition
assets 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 EstateAppraisal”) and the real estate appraisal standards. An appraisal value of a property is merely an
opinion of the real estate appraiser regarding the value of the appraised property at the time theappraisal was conducted in accordance with the Act on Real Estate Appraisal and real estateappraisal standards. A real estate appraisal is neither a guarantee nor a promise that an asset canbe sold or purchased at such appraisal value either now or in the future.

9

D38 ：Hotel MyStays Shinsaibashi
Type and Location of Specified Assets, etc.
Type of Specified Assets
Trust Beneficiary Right
Date of (Planned) Acquisition January 22, 2016
(Planned) Purchase Price
JPY 3,160 million
Appraisal Value
JPY 3,190 million
Appraisal Agency
Japan Real Estate Institute
1-24, Nishi-Shinsaibashi, Chuo-ku, Osaka City, Osaka(Lot Number)
Location
1-9-30, Nishi-Shinsaibashi, Chuo-Ku, Osaka City, Osaka(Address)
Transport

Land

2 min from Subway Midosuji Line, Shinsaibashi station
Form of Possession

Ownership

Lot Area (m2)Form of Possession

Zoning413.96㎡

Ownership

Commercial Area

Building Coverage
Ratio/Floor Area Ratio
Purpose of Use

80％/500％

Hotel

1,942.01㎡ Constrcution Date
September 10, 1984
Total Floor Area (m2)Structure /Steel frame and reinforced concrete structure with flat roof, 10 stories with basem
No. of Stories
From: January 2015 Until: March 2015
Renovation Date
Trustee
Sumitomo Mitsui Trust Bank, Limited
Trust Period
From: November 26, 2003 Until: January 21, 2026
Creation of Security Interest None
Lease Overview（November 30, 2015）
1 Number of Guest Rooms
Total No. of Tenant(s)54
1,942.01㎡(S8・D28・T8・O10)
Leasable Area (m2)
100% Lease Area (m2)
1,942.01㎡
Occupancy Rate
Security Deposit /JPY 3,650 thousand Rent (per month)
JPY 15,508 thousand
Guarantee Money
Overview of Lease Agreement
MyStays Hotel Management Co., Ltd.
TenantFixed rent plus variable rent typeType of Contract
From: January 22, 2016 Until: January 21, 2026
Term
Building

Determination of rent oflease contract

Fixed rent (JPY 85.2million per annum (January – June: JPY 6.2million per month / July – December: JPY
8million 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.
－

The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of thelease term unless a new contract is executed.
Rent cannot be revised during the lease term.
Rent Revision
Termination prior to the expiration of the lease term is not permitted.
Early Termination
None
Other Special Matters
Overview of Building Conditions Survey Report
Tokio Marine & Nichido Risk Consulting Co.,
January 2016
Company Conducting Survey
Date of Report
Ltd.
Renewal Upon Expiration

Probable Maximum Loss (PML)

Replacement Price

14.7%
JPY 457,500 thousand

Short - term Repair
Costs (within 1 year)
Long - term Repair Costs（in 12 years)－
JPY 63,521 thousand

Area Characteristic
The property is a business hotel, located two minute walk from Shinsaibashi Station on the Osaka Municipal Subway Midosuji Line andfour minute walk from Yotsubashi Station on the same subway network. The property has excellent access to many areas from
Shinsaibashi Station by train. For example, it takes 13 minutes on the Midosuji Line to Shin-Osaka Station of the Tokaido-Sanyo
Shinkansen, and seven minutes on the same line to Umeda (Osaka) Station, and approximately one hour by the Nankai Limited Express
Rapi:t to the Kansai International Airport Station, making the property’s location optimal for both business and leisure. Shinsaibashi-suji
Shopping Center and large-scale home appliance mass merchandise stores, etc., are located in the surrounding area, and there is strong
leisure-related demand. The area is also popular among foreign tourists. The property underwent a full renovation in April 2015 and was
rebranded from “Flexstay Inn” to “MyStays”.
Special Instructions
None(Note) Variable rent is the amount of the tenant’s aggregate monthly gross revenue during the three-month variable rent calculation period after deducting the sum of (i)aggregate gross reimbursements, (ii) management services fee and (iii) fixed rent during the same period. However, when the balance after deduction is zero or negative,
variable rent is zero.

10

D38 ： Hotel MyStays Shinsaibashi
Income and Expenditures, etc.
Operating Period
GOP (=(1) - (2))

1/1/2014 - 12/31/2014
58,135 thousandb. Taxes and Public Duesc. Non‐life Insurance Premiums－

4,962 thousand
167 thousand

4,962 thousand
167 thousand

800 thousand

800 thousand

52,205 thousand
132,670 thousand

111,675 thousand
221,359 thousand

118,764 thousand
13,905 thousand

209,386 thousand
11,973 thousandd. Trust FeesNOI (=GOP－[a. + b. + c. + d.]）(1) Sales

1/1/2015 - 11/30/2015
117,605 thousand－a. Land Lease Fees

(
R
e
f
e
r
e
n
c
e

Room Income
Other Income

74,535 thousand
7,000

103,754 thousand
12,987

RevPAR (Unit: JPY)

6,026

10,623

Room Occupancy Rates
GOP Ratio

86.1%
43.8%

81.8%
53.1%

(2) Operating Costs (not including a. through d. above)
ADR (Unit: JPY)

Daily / Weekly / Monthly

89.9%／

7.3%／

2.8%

99.4%／

0.5%／

0.2%

)

Overseas Sales Share

13.8%

55.3%

Summary of Real Estate Appraisal Report
Appraising Organization

Japan Real Estate Inctitute

Appraisal Value (Specified Value)
Time of Valuation

3,190 million
20 November, 2015

1. Value of Profits using the Profit Capitalization Method(1) Direct Capitalization Method(Unit: JPY)
Contents

Overview

204,806 thousand(a) Room Rental Income(b) Common Area Maintenance Fee Income－(c) Utility Income－(d) Parking Lot Income－

Recognized rental income by assessing rent from a mid- to long-term
perspective, with reference to hotel business earnings during the past year
and business earnings of similar hotels, on the assumption of the scheduled
fixed term building lease and management business entrustment contract.

－(e) Other Income(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)]204,806 thousand－(f) Vacant Room Losses－(g) Irrecoverable Debt Losses(II) Operating Revenue = [(I) ‐ (f) ‐ (g)]204,806 thousand(h) Maintenance and Management Costs－(i) Utility Costs－(j) Repair Costs

1,588 thousand

Recognized by considering the future management and operation plan, thelevel of expenses of similar real properties, average annual repairs andrenovations expenses in the engineering report and others with reference tothe results in the preceding years.

－(k) Property Management Fee－(l) Tenant Solicitation Expenses(m) Taxes and Public Dues

4,962 thousand Recognized based on the actual amounts for fiscal year 2015.
Recognized by taking into the insurance premium based on the current
111 thousand insurance contract, the insurance premium rates for similar buildings andothers.
－(n) Non‐life Insurance Premiums(o) Other Costs

6,661 thousand(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) + (m) + (n) + (o)](IV) Net Operating Income = [(II) - (III)]

198,145 thousand－ There was no receipt of security deposit/guarantee money.

(p) One‐Time Investment Gains(q) Capital Improvements and Expenses

The renovation cost that is required to maintain building functionality is
actually incurred on an irregular basis. However, in this case, assessed bytaking into consideration the level of capital improvement and expenses at
3,705 thousand
similar real properties, building age, and average annual repair andrenovation expenses contained in the engineering report, assuming that
presumed average expenditures will be accumulated every period.

(r) FF&E Reserve

The renovation cost that is required to maintain FF&E functionality is actually
incurred on an irregular basis. However, in this case, recognized by making
5,182 thousand assessments with reference to the level of FF&E reserves at similar real
properties adjusted for any repair and renovation plans and other matters,
assuming that presumed average costs will be accumulated every period.

(V) Net Income = [(IV) + (p) - (q) - (r)]189,258 thousand
Assessed taking into consideration the site condition of the property, building
grade, age, equipment level, the tenant’s capacity to pay rent, relation of
5.9% right, condition of contract and others with adjusting spread, considering thecap rate of similar real properties located in the area with the lowest risk as astandard.

(VI) Capitalization Yield(VII) Income Price using Direct Capitalization Method = [(V) ÷ (VI)]3,210,000 thousand
6.2%(Reference) Base Yield of Net Operating Income (NOI) ((IV) NOI ÷ (VII) Income Price)(2) DCF Method(I) Total of Current Value of Net Income during Analysis Period(a) Sale PriceContents
3,210,136 thousand(b) Sale Costs(c) Returning Price [(a) - (b)](II) Returning Price, Current Value

Overview

1,334,920 thousand
96,304 thousand Assumed to be 2% of the sales price
3,113,832 thousand
1,822,837 thousand(III) Discount Rate

5.5%

Assessed by comparing with discount rate relating transactions of similar
real properties and cap rate of other financial instruments and others.

(IV) Final Capitalization Yield

5.9%

Assessed by considering the marketability of the property at the time of
expiration of period for analyzing capitalization rate and others.

(V) Income Price using DCF Method = [(I) + (2)]3,160,000 thousand(3) Income Price using Income Capitalization Method

3,190,000 thousand

2. Estimated Price using Cost Method
Contents

Overview(i) Land Price

584,000 thousand(ii) Building Price

240,000 thousand
26,700 thousand(iii) Furnishings/Appliances/Equipment/Upholstery Price(iv) Total Price of Land, Building, and Furnishings/Appliances/
Equipment / Upholstery = [(i) + (ii) + (iii)]

850,700 thousand
150.0%(v) Maketability Correction Ratio for Land and Building as a Whole(vi) Estimated Price using Cost Method = [(iv) × (v)]

1,280,000 thousand

Other Points to be Noted for Appraisal by Apprising Organization
Judged that a value based on the direct capitalization method, which truly replicates the price formation process from an income perspective, is more persuasive and adopted the appraisal value
determined using the direct capitalization method, with the cost approach value as a reference

11D39 ：Comfort Hotel Kurosaki
Type and Location of Specified Assets, etc.
Type of Specified Assets
Trust Beneficiary Right
Date of (Planned) Acquisition January 22, 2016
(Planned) Purchase Price
JPY 1,148 million
Appraisal Value
JPY 1,160 million
Appraisal Agency
Daiwa Real Estate Appraisal Co., LTD.
3-144-4 etc., Kurosaki, Yahatanishi-Ku, Kitakyusyu City, Fukuoka(Lot Number)
Location
3-13-13, Kurosaki, Yahatanishi-Ku, Kitakyusyu City, Fukuoka(Address)
Transport

Land

3 min from JR Kagoshima Main Line, Kurosaki station
Form of Possession

Ownership

Lot Area (m2)Form of Possession

Zoning826.45㎡

Ownership

Commercial Area

Building Coverage
Ratio/Floor Area Ratio
Purpose of Use

80%/400%

Hotel

3,207.60㎡ Constrcution Date
Total Floor Area (m2)Structure /Reinforced concrete structure with flat roof, 10 stories
No. of Stories－
Renovation Date
Trustee
Sumitomo Mitsui Trust Bank, Limited
Trust Period
From: November 26, 2003 Until: January 21, 2026
Creation of Security Interest None
Lease Overview（November 30, 2015）
1 Number of Guest Rooms
Total No. of Tenant(s)3,207.60㎡
Leasable Area (m2)100.0% Lease Area (m2)Occupancy Rate
Security Deposit /JPY 37,894 thousand Rent (per month)
Guarantee Money
Overview of Lease Agreement
Greens Co., Ltd.
TenantFixed rent
Type of Contract
From: June 30, 2009 Until: June 29, 2029
Term
Building

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

February 19, 2009151
(S132・T19)
3,207.60㎡
JPY 6,315 thousand

Fixed rent (JPY 75million per annum (January – December: JPY6.3million per month)）
JPY 37,894 thousand

The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of thelease term unless a new contract is executed.
Rent cannot be revised during the lease term.
Rent Revision
In case of the termination prior to the expiration of the lease term, the lessor must notice at least six months
Early Termination
prior to the date and tenants must notice at least six months prior to the date and pay for penalty.
None
Other Special Matters
Overview of Building Conditions Survey Report
Tokio Marine & Nichido Risk Consulting Co.,
January 2016
Company Conducting Survey
Date of Report
Ltd.
Renewal Upon Expiration

Probable Maximum Loss (PML)

Replacement Price

1.7%
JPY 661,100 thousand

Short - term Repair
Costs (within 1 year)
Long - term Repair Costs（in 12 years)－
JPY 42,262 thousand

Area Characteristic
The property is a business hotel located three minute walk from Kurosaki Station on the JR Line. Kitakyushu industrial zone, one of thefour largest industrial zones in Japan, is located near the property, and a steady business demand is expected. In addition, the StateOwned Yawata Steel Works was listed as a World Heritage site, and an increase in leisure-related customers is expected. The property
was built in 2009, which is newer than its competing hotels, and it has been highly appreciated by guests because of its services, such as
free breakfast service.
Special Instructions
None

12

D39 ： Comfort Hotel Kurosaki
Income and Expenditures, etc.
Operating Period
GOP (=(1) - (2))

1/1/2014 - 12/31/2014

Rent

(

Fixed rent
a. Land Lease Fees
b. Taxes and Public Duesc. Non‐life Insurance Premiumsd. Trust Feese. OtherNOI (= GOP ‐ [a. + b. + c. + d.])(1) Sales
Room IncomeReOther Incomef(2) Operating Costs (not including a. through d. above)e
ADR (Unit: JPY)r
RevPAR (Unit: JPY)
e
n
c
e
)
（注）

Room Occupancy Rates
GOP Ratio
Daily / Weekly / Monthly
Overseas Sales Share－／

1/1/2015 - 11/30/2015－
75,789 thousand
75,789 thousand－
6,874 thousand
174 thousand
800 thousand
1,800 thousand
66,140 thousand
241,660 thousand
241,660 thousand－
75,789 thousand
75,789 thousand－
6,874 thousand
174 thousand
800 thousand
1,800 thousand
66,140 thousand
227,586 thousand
227,586 thousand－
129,287 thousand
5,070
4,385
86.5%
46.5%

－
129,575 thousand
5,178
4,129
79.8%
43.1%

－／

－

－／

－／

－

－

－

Their leases have only fixed rent.

Summary of Real Estate Appraisal Report
Appraising Organization
Appraisal Value (Specified Value)
Time of Valuation

Daiwa Real Estate Appraisal Co., Ltd.
1,160 million
20 November, 2015

1. Value of Profits using the Profit Capitalization Method(1) Direct Capitalization Method(Unit: JPY)
Contents

Overview
75,789 thousand(a) Room Rental Income(b) Common Area Maintenance Fee Income－(c) Utility Income－(d) Parking Lot Income－

Current rent was adopted considering the contents of the lease contract andthe transition of sales amount during the past year.

－(e) Other Income(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)]75,789 thousand－(f) Vacant Room Losses－(g) Irrecoverable Debt Losses(II) Operating Revenue = [(I) ‐ (f) ‐ (g)]75,789 thousand－(h) Maintenance and Management Costs(i) Utility Costs－(j) Repair Costs

1,618 thousand(k) Property Management Fee

1,800 thousand Current contract was adopted as appropriate.
－(l) Tenant Solicitation Expenses(m) Taxes and Public Dues

6,874 thousand Recognized based on the actual amounts for fiscal year 2015.
Recognized by assessing the amount equivalent to 0.01% of the repurchase
264 thousand price of the building, with reference to the insurance premiums of similar real
properties.
－(n) Non‐life Insurance Premiums(o) Other Costs(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) + (m) + (n) + (o)]10,556 thousand(IV) Net Operating Income = [(II) ‐ (III)]

65,232 thousand(p) One‐Time Investment Gains

757 thousand

Assessed based on assuming investment yield is 2.0%, by conducting acomprehensive assessment from the perspective of both the operational andprocurement aspects regarding the actual management condition, etc. of
one-time investment gains.

Recognized based on judging the average annual renovation costs for 12
2,009 thousand years, which is contained in the engineering report, to be appropriate, after
taking into account the construction management fee.

(q) Capital Improvements and Expenses－(r) FF&E Reserve(V) Net Income = [(IV) + (p) ‐ (q) ‐ (r)]63,980 thousand
Assessed taking into consideration the site condition of the property, building
grade, age, equipment level, the tenant’s capacity to pay rent, relation of
5.5% right, condition of contract and others with adjusting spread, considering thecap rate of similar real properties located in the area with the lowest risk as astandard.

(VI) Capitalization Yield(VII) Income Price using Direct Capitalization Method = [(V) ÷ (VI)]1,160,000 thousand
5.6%(Reference) Base Yield of Net Operating Income (NOI) ((IV) NOI ÷ (VII) Income Price)(2) DCF Method

Recognized based on judging the average amount of repair costs for 12
years, which is contained in the engineering report, to be appropriate.

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

Overview

490,645 thousand(a) Sale Price

1,141,478 thousand
22,829 thousand Assumed to be 2% of the sales price(b) Sale Costs(c) Returning Price [(a) ‐ (b)]1,118,648 thousand(II) Returning Price, Current Value

667,436 thousand(III) Discount Rate
(IV) Final Capitalization Yield

5.3%

Assessed by comparing with discount rate relating transactions of similar real
properties and cap rate of other financial instruments and others.

5.7%

Assessed by considering the marketability of the property at the time of
expiration of period for analyzing capitalization rate and others.

(V) Income Price using DCF Method = [(I) + (2)]1,160,000 thousand(3) Income Price using Income Capitalization Method

1,160,000 thousand

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

123,144 thousand(ii) Building Price(iii) Total Price of Land and Building = [(i) + (ii) ]496,560 thousand
619,704 thousand(iv) Ancillary Costs

132,450 thousand(v) Estimated Price using Cost Method = [ (iii) + (iv) ]752,000 thousand

Overview

Other Points to be Noted for Appraisal by Apprising Organization
Judged that a value based on the direct capitalization method, which truly replicates the price formation process from an income perspective, is more persuasive and adopted the appraisal value
determined using the direct capitalization method, with the cost approach value as a reference

13D40 ：Comfort Hotel Maebashi
Type and Location of Specified Assets, etc.
Type of Specified Assets
Trust Beneficiary Right
Date of (Planned) Acquisition January 22, 2016
(Planned) Purchase Price
JPY 1,128 million
Appraisal Value
JPY 1,140 million
Appraisal Agency
Daiwa Real Estate Appraisal Co., LTD.
2-18-5, Omote-Cho, Maebashi City, Gunma(Lot Number)
Location
2-18-14, Omote-Cho, Maebashi City, Gunma(Address)
Transport

Land

3 min from JR Ryomou Line, Maebashi station
Form of Possession

Leasehold

Lot Area (m2)Form of Possession

Zoning874.39㎡

Ownership

Commercial Area

Building Coverage
Ratio/Floor Area Ratio
Purpose of Use

80%/600%

Hotel

3,660.96㎡ Constrcution Date
Total Floor Area (m2)Structure /Steel frame with flat roof, 10 stories
No. of Stories－
Renovation Date
Trustee
Mitsubishi UFJ Trust and Banking
Trust Period
From: June 3, 2009 Until: January 31, 2026
Creation of Security Interest None
Lease Overview（November 30, 2015）
2 Number of Guest Rooms
Total No. of Tenant(s)3,660.96㎡
Leasable Area (m2)100.0% Lease Area (m2)Occupancy Rate
Security Deposit /JPY 49,628 thousand Rent (per month)
Hotel
Guarantee Money
RetailOverview of Major Lease Agreement (Hotel)
Greens Co., Ltd.
TenantFixed rent
Type of Contract
From: June 3, 2009 Until: June 2, 2029
Term
Building

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

March 10, 2009

153
(S144・T8・O1)
3,660.96㎡
JPY 6,332 thousand
JPY 969 thousand

Fixed rent (JPY 75million per annum (January – December: JPY6.3million per month)）
JPY 37,993 thousand

The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of the lease term
unless a new contract is executed.
Rent cannot be revised during the lease term.
Rent Revision
In case of the termination prior to the expiration of the lease term, the lessor must notice at least six months prior to the
Early Termination
date and tenants must notice at least six months prior to the date and pay for penalty.
None
Other Special Matters
Overview of Building Conditions Survey Report
Tokio Marine & Nichido Risk Consulting Co.,
January 2016
Company Conducting Survey
Date of Report
Ltd.
Renewal Upon Expiration

Probable Maximum Loss (PML)

Replacement Price

0.8%
JPY 819,900 thousand

Short - term Repair
Costs (within 1 year)
Long - term Repair Costs（in 12 years)－
JPY 31,746 thousand

Area Characteristic
The property is a business hotel located three minute walk from Maebashi Station on the JR Line. Maebashi City, where the property is located, is amajor urban area in Gunma prefecture and is the prefectural capital. In addition, 17 industrial parks, such as Maebashi First Industrial Park, have been
established in various places in the city, and demand from businesses and public offices is expected. The property was built in 2009, which is newer
than its competing hotels, and it has been highly appreciated by guests because of its services, such as free breakfast service.

Special Instructions
Type of leasehold: General fixed term leasehold-Purpose: Ownership of building-Land Rent: JPY 10million (JPY844thousand per month)-Lease Period: From June 3, 2007 until June 2, 2047
The Property is a leased property, and the permission of the land owner will be required at the time of the transfer of the building accompanying thetransfer of the leasehold rights.
14

D40 ： Comfort Hotel Maebashi
Income and Expenditures, etc.
Operating Period
GOP (=(1) - (2))

1/1/2014 - 12/31/2014

Rent
Fixed rent
a. Land Lease Fees
b. Taxes and Public Dues

1/1/2015 - 11/30/2015－
87,622 thousand－
87,622 thousand

87,622 thousand

87,622 thousand

10,138 thousand
6,707 thousand

10,138 thousand
6,707 thousand

214 thousandc. Non‐life Insurance Premiumsd. Trust Fees

800 thousand
1,800 thousand
67,962 thousand

279,220 thousand

272,214 thousand

279,220 thousand－

272,214 thousand－

133,714 thousand

138,108 thousand

5,952
5,000

5,978
4,874

(

NOI (= GOP ‐ [a. + b. + c. + d.])(1) Sales

214 thousand

800 thousand
1,800 thousand
67,962 thousande. Other

R
e
f
e
r
e
n
c
e
)
（注）

Room Income
Other Income(2) Operating Costs (not including a. through d. above)
ADR (Unit: JPY)
RevPAR (Unit: JPY)

84.0%

Room Occupancy Rates
GOP Ratio
Daily / Weekly / Monthly

81.5%

52.1%
－／

－／

－

49.3%
－／

－

Overseas Sales Share

－／

－
－

Their leases have only fixed rent.

Summary of Real Estate Appraisal Report
Appraising Organization
Appraisal Value (Specified Value)

Daiwa Real Estate Appraisal Co., Ltd.
1,140 million

Time of Valuation

20 November, 2015

1. Value of Profits using the Profit Capitalization Method(1) Direct Capitalization Method(Unit: JPY)
Contents

Overview
Current rent was adopted considering the contents of the lease contract
87,622 thousand
and the transition of sales amount during the past year.

(a) Room Rental Income(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)]87,622 thousand(f) Vacant Room Losses

349 thousand－(g) Irrecoverable Debt Losses(II) Operating Revenue = [(I) ‐ (f) ‐ (g)]87,273 thousand－(h) Maintenance and Management Costs(i) Utility Costs－(j) Repair Costs

1,673 thousand(k) Property Management Fee

1,800 thousand Current contract was adopted as appropriate.

Recognized based on judging the average amount of repair costs for 12
years, which is contained in the engineering report, to be appropriate.

Recognized by assessing tenant solicitation expenses regarding the retail
47 thousand section as being equivalent to a month’s rent for a new tenant, withreference to the tenant solicitation expenses of similar real properties.

(l) Tenant Solicitation Expenses(m) Taxes and Public Dues

(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) + (m) + (n) + (o)]6,707 thousand Recognized based on the actual amounts for fiscal year 2015.
Recognized by assessing the amount equivalent to 0.01% of the
214 thousand repurchase price of the building, with reference to the insurance premiumsof similar real properties.
Recognized the actual amounts annually paid, based on the land lease
10,138 thousand
agreement.
20,579 thousand(IV) Net Operating Income = [(II) ‐ (III)]66,693 thousand(p) One‐Time Investment Gains

985 thousand(n) Non‐life Insurance Premiums(o) Other Costs(q) Guarantee Deposits Loss

Not recognised there was no receipt of gurantee money.
1,704 thousand(r) Capital Improvements and Expenses

Recognized based on judging the average annual renovation costs for 12
65,973 thousand years, which is contained in the engineering report, to be appropriate, after
taking into account the construction management fee.

(V) Net Income = [(IV) + (p) ‐ (q) ‐ (r)]Assessed taking into consideration the site condition of the property,
building grade, age, equipment level, the tenant’s capacity to pay rent,
5.1% relation of right, condition of contract and others with adjusting spread,considering the cap rate of similar real properties located in the area withthe lowest risk as a standard.

(VI) Discount Rate

Assessed taking into consideration the remaining period of the current
lease contract and demolition period.
Assumed the land price JPY0 because the land owner is obligated to
0 restitute at the expiration of the contract according to the fixed term landlease contract.

(VII) Revenue Period

43 years(VIII) Land Price after Revenue Period(IX) Building Removal cost

55,044 thousand Assessed based on assuming building removal cost is JPY15,000/sqm.

(X) Income Price using Direct Capitalization Method

1,130,000 thousand
5.9%(Reference) Base Yield of Net Operating Income (NOI) ((IV) NOI ÷ (VII) Income Price)(2) DCF Method

Assessed based on assuming investment yield is 2.0%, by conducting acomprehensive assessment from the perspective of both the operational
and procurement aspects regarding the actual management condition, etc.
of one-time investment gains.

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

Overview

518,776 thousand(a) Sale Price

1,049,089 thousand
20,981 thousand(b) Sale Costs(c) Returning Price [(a) ‐ (b)](II) Returning Price, Current Value

1,028,108 thousand
625,189 thousand(III) Discount Rate

5.1%

Assessed by comparing with discount rate relating transactions of similar
real properties and cap rate of other financial instruments and others.

(IV) Final Capitalization Yield

5.1%

Assessed by considering the marketability of the property at the time of
expiration of period for analyzing capitalization rate and others.

(V) Income Price using DCF Method = [(I) + (2)]1,140,000 thousand(3) Income Price using Income Capitalization Method

1,140,000 thousand

2. Estimated Price using Cost Method
Contents

Overview(i) Leasehold Price

32,527 thousand(ii) Building Price

615,836 thousand(iii) Total Price of Land and Building = [(i) + (ii) ]648,363 thousand(iv) Ancillary Costs

143,965 thousand(v) Estimated Price using Cost Method = [ (iii) + (iv) ]792,000 thousand

Other Points to be Noted for Appraisal by Apprising Organization
Judged that a value based on the direct capitalization method, which truly replicates the price formation process from an income perspective, is more persuasive and adopted the appraisal value
determined using the direct capitalization method, with the cost approach value as a reference15

D41 ：Comfort Hotel Tsubamesanjo
Type and Location of Specified Assets, etc.
Type of Specified Assets
Trust Beneficiary Right
Date of (Planned) Acquisition January 22, 2016
(Planned) Purchase Price
JPY 1,010 million
Appraisal Value
JPY 1,020 million
Appraisal Agency
Daiwa Real Estate Appraisal Co., LTD.
2-115-1 etc., Sugoro, Sanjyo City, Niigata(Lot Number)
Location
2-115, Sugoro, Sanjyo City, Niigata(Address)
Transport

Land

3 min from JR Jyoetsu Shinkansen, Tsubamesanjyo station
Form of Possession
Lot Area (m2)Form of Possession

Ownership

Zoning

1,936.96㎡

Ownership

Commercial Area

Building Coverage
Ratio/Floor Area Ratio
Purpose of Use

80%/400%

Hotel/Retail3,099.90㎡ Constrcution Date
Total Floor Area (m2)Structure /Steel frame with flat roof, 8 stories
No. of Stories－
Renovation Date
TrusteeMizuho Trust and Banking Co., Ltd.
Trust Period
From: March 27, 2008 Until: January 31, 2026
Creation of Security Interest None
Lease Overview（November 30, 2015）
2 Number of Guest Rooms
Total No. of Tenant(s)3,099.90㎡
Leasable Area (m2)100.0% Lease Area (m2)Occupancy Rate
Security Deposit /JPY 51,732 thousand Rent (per month)
Hotel
Guarantee Money
RetailOverview of Major Lease Agreement (Hotel)
Greens Co., Ltd.
TenantFixed rent
Type of Contract
From: July 1, 2007 Until: June 30, 2027
Term
Building

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

June 22, 2007

132
(S119・T13)
3,099.90㎡
JPY 5,340 thousand
JPY 484 thousand

Fixed rent (JPY 64million per annum (January – December: JPY5.3million per month)）
JPY 49,291 thousand

The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of the lease term
unless a new contract is executed.
It may be revised upon mutual consultation every three years.
Rent Revision
In case of the termination prior to the expiration of the lease term, the lessor must notice at least six months prior to the
Early Termination
date and tenants must notice at least six months prior to the date and pay for penalty.
None
Other Special Matters
Overview of Building Conditions Survey Report
Tokio Marine & Nichido Risk Consulting Co.,
January 2016
Company Conducting Survey
Date of Report
Ltd.
Renewal Upon Expiration

Probable Maximum Loss (PML)

Replacement Price

7.4%
JPY 682,900 thousand

Short - term Repair
Costs (within 1 year)
Long - term Repair Costs（in 12 years)－
JPY 64,880 thousand

Area Characteristic
The property is a business hotel, located three minute walk from Tsubamesanjo Station on the JR line. Tsubamesanjo Station, at which the Joetsu
Shinkansen stops, is accessible to various regions. In Sanjo City, in which the property is located, the manufacturing industry, such as ironworks isprosperous and stable demand from businesses is expected. The property was built in 2007, which is newer than its competing hotels, and it has beenhighly appreciated by guests because of its services, such as free breakfast service.

Special Instructions
None

16

D41 ： Comfort Hotel Tsubamesanjo
Income and Expenditures, etc.
Operating Period
GOP (=(1) - (2))

1/1/2014 - 12/31/2014

Rent

(

Fixed rent
a. Land Lease Fees
b. Taxes and Public Duesc. Non‐life Insurance Premiumsd. Trust Feese. OtherNOI (= GOP ‐ [a. + b. + c. + d.])(1) Sales
Room IncomeReOther Incomef(2) Operating Costs (not including a. through d. above)e
ADR (Unit: JPY)r
RevPAR (Unit: JPY)
e
n
c
e
)
（注）

Room Occupancy Rates
GOP Ratio
Daily / Weekly / Monthly
Overseas Sales Share

1/1/2015 - 11/30/2015－
69,898 thousand
69,898 thousand－
7,673 thousand
209 thousand
800 thousand
852 thousand
60,363 thousand
221,876 thousand
216,091 thousand
5,785 thousand
129,676 thousand
5,058
4,485
88.7%
41.6%
－／

－／

－

－
69,898 thousand
69,898 thousand－
7,673 thousand
209 thousand
800 thousand
852 thousand
60,363 thousand
228,198 thousand
222,974 thousand
5,224 thousand
131,544 thousand
5,287
4,628
87.5%
42.4%
－／

－／

－

－

－

Their leases have only fixed rent.

Summary of Real Estate Appraisal Report
Appraising Organization
Appraisal Value (Specified Value)
Time of Valuation

Daiwa Real Estate Appraisal Co., Ltd.
1,020 million
20 November, 2015

1. Value of Profits using the Profit Capitalization Method(1) Direct Capitalization Method(Unit: JPY)
Contents

Overview
65,723 thousand(a) Room Rental Income

Current rent was adopted considering the contents of the lease contract andthe transition of sales amount during the past year.

－(b) Common Area Maintenance Fee Income－(c) Utility Income

4,176 thousand(d) Parking Lot Income－(e) Other Income(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)]69,899 thousand(f) Vacant Room Losses

146 thousand－(g) Irrecoverable Debt Losses(II) Operating Revenue = [(I) ‐ (f) ‐ (g)]69,753 thousand(h) Maintenance and Management Costs

252 thousand(i) Utility Costs－(j) Repair Costs

2,922 thousand

Recognized based on judging the average amount of repair costs for 12
years, which is contained in the engineering report, to be appropriate.

(k) Property Management Fee

600 thousand Current contract was adopted as appropriate.

(l) Tenant Solicitation Expenses

Recognized by assessing tenant solicitation expenses regarding the retail
19 thousand section as being equivalent to a month’s rent for a new tenant, with reference
to the tenant solicitation expenses of similar real properties.

(m) Taxes and Public Dues

7,674 thousand Recognized based on the actual amounts for fiscal year 2015.
Recognized by assessing the amount equivalent to 0.01% of the repurchase
209 thousand price of the building, with reference to the insurance premiums of similar real
properties.
－(n) Non‐life Insurance Premiums(o) Other Costs(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) + (m) + (n) + (o)]11,677 thousand(IV) Net Operating Income = [(II) ‐ (III)]58,076 thousand(p) One‐Time Investment Gains

673 thousand

Recognized based on judging the average annual renovation costs for 12
2,646 thousand years, which is contained in the engineering report, to be appropriate, after
taking into account the construction management fee.

(q) Capital Improvements and Expenses－(r) FF&E Reserve(V) Net Income = [(IV) + (p) ‐ (q) ‐ (r)]56,102 thousand
Assessed taking into consideration the site condition of the property, building
grade, age, equipment level, the tenant’s capacity to pay rent, relation of
5.5% right, condition of contract and others with adjusting spread, considering thecap rate of similar real properties located in the area with the lowest risk as astandard.

(VI) Capitalization Yield(VII) Income Price using Direct Capitalization Method = [(V) ÷ (VI)]1,020,000 thousand
5.7%(Reference) Base Yield of Net Operating Income (NOI) ((IV) NOI ÷ (VII) Income Price)(2) DCF Method

Assessed based on assuming investment yield is 2.0%, by conducting acomprehensive assessment from the perspective of both the operational andprocurement aspects regarding the actual management condition, etc. of
one-time investment gains.

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

Overview

433,754 thousand(a) Sale Price

1,011,167 thousand(b) Sale Costs

20,223 thousand Assumed to be 2% of the sales price(c) Returning Price [(a) ‐ (b)]990,944 thousand(II) Returning Price, Current Value

591,242 thousand(III) Discount Rate

5.3%

Assessed by comparing with discount rate relating transactions of similar real
properties and cap rate of other financial instruments and others.

(IV) Final Capitalization Yield

5.7%

Assessed by considering the marketability of the property at the time of
expiration of period for analyzing capitalization rate and others.

(V) Income Price using DCF Method = [(I) + (2)]1,020,000 thousand(3) Income Price using Income Capitalization Method

1,020,000 thousand

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

209,192 thousand(ii) Building Price(iii) Total Price of Land and Building = [(i) + (ii) ]488,653 thousand
697,845 thousand(iv) Ancillary Costs

146,699 thousand(v) Estimated Price using Cost Method = [ (iii) + (iv) ]845,000 thousand

Overview

Other Points to be Noted for Appraisal by Apprising Organization
Judged that a value based on the direct capitalization method, which truly replicates the price formation process from an income perspective, is more persuasive and adopted the appraisal value
determined using the direct capitalization method, with the cost approach value as a reference17D42 ：Comfort Hotel Kitami
Type and Location of Specified Assets, etc.
Type of Specified Assets
Trust Beneficiary Right
Date of (Planned) Acquisition January 22, 2016
(Planned) Purchase Price
JPY 851 million
Appraisal Value
JPY 860 million
Appraisal Agency
Daiwa Real Estate Appraisal Co., LTD.
3-4-1 etc., Ohdori-Nishi, Kitami City, Hokkaido(Lot Number)
Location
3-4, Ohdori-Nishi, Kitami City, Hokkaido(Address)
Transport

Land

3 min from JR Sekihoku Main Line, Kitami station
Form of Possession

Ownership

Lot Area (m2)Form of Possession

Zoning926.30㎡

Ownership

Commercial Area

Building Coverage
Ratio/Floor Area Ratio
Purpose of Use

80%/600%

Hotel

3,009.50㎡ Constrcution Date
March 03, 2008
Total Floor Area (m2)Structure /Reinforced concrete structure with flat roof, 9 stories with basement
No. of Stories－
Renovation Date
Trustee
Mitsubishi UFJ Trust and Banking
Trust Period
From: March 25, 2008 Until: January 31, 2026
Creation of Security Interest None
Lease Overview（November 30, 2015）
1 Number of Guest Rooms
Total No. of Tenant(s)127
3,009.50㎡(S111・T16)
Leasable Area (m2)100.0% Lease Area (m2)3,009.50㎡
Occupancy Rate
Security Deposit /JPY 30,300 thousand Rent (per month)
JPY 5,050 thousand
Guarantee Money
Overview of Lease Agreement
Greens Co., Ltd.
TenantFixed rent
Type of Contract
From: March 25, 2008 Until: March 24, 2028
Term
Building

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

Fixed rent (JPY 60million per annum (January – December: JPY5.0million per month)）
JPY 30,300 thousand

The contract is a Fixed Term Building Lease, therefore the contract will terminate at the expiration of thelease term unless a new contract is executed.
Rent cannot be revised during the lease term.
Rent Revision
In case of the termination prior to the expiration of the lease term, the lessor must notice at least six months
Early Termination
prior to the date and tenants must notice at least six months prior to the date and pay for penalty.
None
Other Special Matters
Overview of Building Conditions Survey Report
Tokio Marine & Nichido Risk Consulting Co.,
January 2016
Company Conducting Survey
Date of Report
Ltd.
Renewal Upon Expiration

Probable Maximum Loss (PML)

Replacement Price

1.0%
JPY 647,000 thousand

Short - term Repair
Costs (within 1 year)
Long - term Repair Costs（in 12 years)－
JPY 42,514 thousand

Area Characteristic
The property is a business hotel, located three minute walk from Kitami Station on the JR line. Kitami City, in which the property is located,is the central city of the Okhotsk area and it has plenty of medical facilities and demand from business guests, mainly engaging inmedical/pharmaceutical businesses, is expected. The property was built in 2008, which is newer than its competing hotels, and it has beenhighly appreciated by guests because of its services, such as free breakfast service.

Special Instructions
None

18

D42 ： Comfort Hotel Kitami
Income and Expenditures, etc.
Operating Period
GOP (=(1) - (2))

1/1/2014 - 12/31/2014

Rent

(

Fixed rent
a. Land Lease Fees
b. Taxes and Public Duesc. Non‐life Insurance Premiumsd. Trust Feese. OtherNOI (= GOP ‐ [a. + b. + c. + d.])(1) Sales
Room IncomeReOther Incomef(2) Operating Costs (not including a. through d. above)e
ADR (Unit: JPY)r
RevPAR (Unit: JPY)
e
n
c
e
)
（注）

Room Occupancy Rates
GOP Ratio
Daily / Weekly / Monthly
Overseas Sales Share－／

1/1/2015 - 11/30/2015－
60,600 thousand
60,600 thousand－
6,587 thousand
169 thousand
800 thousand
1,800 thousand
51,243 thousand
211,475 thousand
211,475 thousand－
60,600 thousand
60,600 thousand－
6,587 thousand
169 thousand
800 thousand
1,800 thousand
51,243 thousand
215,293 thousand
215,293 thousand－
123,326 thousand
5,393
4,562
84.6%
41.7%

－
128,859 thousand
5,656
4,632
81.9%
40.1%

－／

－

－／

－／

－

－

－

Their leases have only fixed rent.

Summary of Real Estate Appraisal Report
Appraising Organization
Appraisal Value (Specified Value)
Time of Valuation

Daiwa Real Estate Appraisal Co., Ltd.
860 million
20 November, 2015

1. Value of Profits using the Profit Capitalization Method(1) Direct Capitalization Method(Unit: JPY)
Contents

Overview
60,600 thousand(a) Room Rental Income(b) Common Area Maintenance Fee Income－(c) Utility Income－(d) Parking Lot Income－

Current rent was adopted considering the contents of the lease contract andthe transition of sales amount during the past year.

－(e) Other Income(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)]60,600 thousand－(f) Vacant Room Losses－(g) Irrecoverable Debt Losses(II) Operating Revenue = [(I) ‐ (f) ‐ (g)]60,600 thousand－(h) Maintenance and Management Costs(i) Utility Costs－(j) Repair Costs

2,122 thousand(k) Property Management Fee

1,800 thousand Current contract was adopted as appropriate.
－(l) Tenant Solicitation Expenses(m) Taxes and Public Dues

6,587 thousand Recognized based on the actual amounts for fiscal year 2015.
Recognized by assessing the amount equivalent to 0.01% of the repurchase
169 thousand price of the building, with reference to the insurance premiums of similar real
properties.
30 thousand Recognized by assessing charges for the use of road and other expenses, wit(n) Non‐life Insurance Premiums(o) Other Costs(III) Operating Costs (Expense Rate) = [(h) + (i) + (j) + (k) + (l) + (m) + (n) + (o)]10,709 thousand(IV) Net Operating Income = [(II) ‐ (III)]49,891 thousand(p) One‐Time Investment Gains

606 thousand

Assessed based on assuming investment yield is 2.0%, by conducting acomprehensive assessment from the perspective of both the operational andprocurement aspects regarding the actual management condition, etc. of
one-time investment gains.

Recognized based on judging the average annual renovation costs for 12
1,526 thousand years, which is contained in the engineering report, to be appropriate, after
taking into account the construction management fee.

(q) Capital Improvements and Expenses－(r) FF&E Reserve(V) Net Income = [(IV) + (p) ‐ (q) ‐ (r)]48,970 thousand
Assessed taking into consideration the site condition of the property, building
grade, age, equipment level, the tenant’s capacity to pay rent, relation of
5.7% right, condition of contract and others with adjusting spread, considering thecap rate of similar real properties located in the area with the lowest risk as astandard.

(VI) Capitalization Yield(VII) Income Price using Direct Capitalization Method = [(V) ÷ (VI)]859,000 thousand
5.8%(Reference) Base Yield of Net Operating Income (NOI) ((IV) NOI ÷ (VII) Income Price)(2) DCF Method

Recognized based on judging the average amount of repair costs for 12
years, which is contained in the engineering report, to be appropriate.

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

Overview

372,985 thousand(a) Sale Price

849,313 thousand
16,986 thousand Assumed to be 2% of the sales price(b) Sale Costs(c) Returning Price [(a) ‐ (b)]832,326 thousand(II) Returning Price, Current Value

487,269 thousand(III) Discount Rate
(IV) Final Capitalization Yield

5.5%

Assessed by comparing with discount rate relating transactions of similar real
properties and cap rate of other financial instruments and others.

5.9%

Assessed by considering the marketability of the property at the time of
expiration of period for analyzing capitalization rate and others.

(V) Income Price using DCF Method = [(I) + (2)]860,000 thousand(3) Income Price using Income Capitalization Method

860,000 thousand

2. Estimated Price using Cost Method
Contents

Overview(i) Land Price

84,386 thousand(ii) Building Price(iii) Total Price of Land and Building = [(i) + (ii) ]462,964 thousand
547,350 thousand(iv) Ancillary Costs

120,272 thousand(v) Estimated Price using Cost Method = [ (iii) + (iv) ]668,000 thousand

Other Points to be Noted for Appraisal by Apprising Organization
Judged that a value based on the direct capitalization method, which truly replicates the price formation process from an income perspective, is more persuasive and adopted the appraisal value
determined using the direct capitalization method, with the cost approach value as a reference

19

A103

Royal Parks Momozaka

Type and Location of Specified Assets, etc.
Type of Specified Assets
Trust Beneficiary Right
January 22, 2016
Date of (Planned) Acquisition(Planned) Purchase PriceAppraisal Value
Appraisal Agency
LocationTransport
Land

JPY 2,910 million
JPY 2,940 million
Morii Appraisal & Investment Consulting, Inc.
50-18, Fudegasaki-Chou, Tennouji-Ku, Osaka City, Okasa(Lot Number)
5-38, Fudegasaki-Chou, Tennouji-Ku, Osaka City, Osaka(Address)
6 min from Kintetsu Nara/Osaka Line, Osaka-Uehonmachi station
Form of Possession

Leasehold

ZoningCategory 2 Residential District

Building Coverage
80%/300%
Ratio/Floor Area Ratio
Form of Possession
Ownership
Purpose of Use
Residential/Parking
10,257.72㎡ Constrcution Date
June 15, 2007
Total Floor Area (m2)
Building
Steel frame and reinforced concrete structure with flat roof, 14 stories with
Structure /basement
No. of Stories－
Renovation Date
Trustee
Sumitomo Mitsui Trust Bank, Limited
From: September 21, 2007 Until: September 30, 2022
Trust Period
Creation of Security Interest
None
Lease Overview（November 30, 2015）
Total No. of Tenant(s)4 Rentable Units
147
2
2
8,776.26㎡
8,776.26㎡
Leasable Area (m )Lease Area (m )Occupancy Rate
100.0% Rent
JPY 21,579 thousand－
Security Deposit/Guarantee Money
Master Lease/Property Management Company
Daiwa Living Co., Ltd.
Company
Fixed rent (Residential) / Pass-through (Retail)Type of contract
Lot Area (m2)

3,043.89㎡

Overview of Building Conditions Survey ReportCompany Conducting Survey

Tokio Marine & Nichido Risk Consulting Co.,Ltd.

January 201610.0%

Short - term Repair Costs(within 1 year)－

JPY 2,451,700 thousand

Long - term Repair Costs（in 12 years)

JPY 75,589 thousand

Probable Maximum Loss (PML)
Replacement Price

Date of Report

Area Characteristic
The property is located six minute walk from Osaka-Uehonmachi Station on the Kintetsu Nara/Osaka Line, eight minute walk from Tanimachi
Kyuchome Station on the Osaka Municipal Subway Tanimachi Line/Sennichimae Line and eight minute walk from Tsuruhashi Station on the JR
Osaka Kanjo Line, and the property is well accessible to each of the nearest stations. The property has excellent access to areas such as Nanba,
Tennoji, Umeda, and Shin-Osaka. Mainly condominiums and rented apartments are located in the surrounding area and , it is convenient withfacilities such as supermarkets and general hospitals in adjacent areas. The property is a 14-floors-above-ground rental apartment with retail storesand consists of a total 147 units with studios, with room area ranging from 37.07 m2 to 82.84 m2, one-bedroom type, with room area ranging from37.07 m2 to 74.86 m2, two-bedroom type, with room area ranging from 59.94 m2 to 153.51 m2, and three-bedroom type, with room area ranging from82.84 m2 to 198.97 m2, as well as retail units on the ground floor (three units). Demand is expected from single persons who commute to businessareas around Osaka Station, small families (so-called “double-income-no-kids (DINKS)”, etc.) and families with children. The property has various
types of rooms, with a good location and high quality services, such as services provided by concierges; therefore, stable demand from various
tenants is expected.
The property was awarded the “1st Osaka Sustainable Building Award” in 2007 and it was highly appreciated with respect to environmental
performance because “as a rental housing located in a block that was developed in the course of the redevelopment of the city center, both theinterior and the exterior of the property were made based on finely-tuned innovations and efforts to ensure harmony between the environment andhuman beings, and the property contributes to the formation of a good housing environment; therefore, it can be a model as to how to constructhousing in an eco-friendly manner”
Special Instructions
Type of Land Leasehold Right: General fixed term leasehold- Purpose: Ownership of building for leasing contract- Land Rent: JPY 73million (JPY6 million per month)- Lease Period: From May 27, 2005 to November 2, 2057
The Property is a leased property and the permission of the land owner will be required at the time of the transfer of the building accompanying thetransfer of leasehold rights.

20

A103 ： Royal Parks Momozaka
Income and Expeditures, Etc.
Operating Perioda.Total Revenues
Rent Income
Other Incomeb. Total Expenses
Maintenance and management expenses etc.
Tax and duties
Non-life Insurance Premiumsc. Depreciation
Other expenses
Profit on lease （a.－b.）
NOI （a.－b.＋c.）

Summary of Real Estate Appraisal Report
Appraising Organization
Appraisal Value (Specified Value)
Time of Valuation

1/1/2014 - 12/31/2014
282,814 thousand
260,664 thousand
22,150 thousand
118,872 thousand
6,988 thousand
16,138 thousand
637 thousand
94,308 thousand
800 thousand
163,942 thousand
258,250 thousand

1/1/2015 - 11/30/2015
256,762 thousand
237,376 thousand
19,386 thousand
112,713 thousand
5,002 thousand
11,965 thousand
637 thousand
94,308 thousand
800 thousand
144,048 thousand
238,356 thousand

Morii Appraisal & Investment Consulting, Inc.
2,940 million
20 November, 2015

1. Value of Profits using the Profit Capitalization Method(1) Direct Capitalization Method(Unit: JPY)
Contents

Overview
258,956 thousand Terms of the current contract was adopted as appropriate.

(a) Room Rental Income(b) Common Area Maintenance Fee Income－(c) Utility Income－

25,920 thousand(d) Parking Lot Income

With respect to the portion of the contract that will be continued, the current
terms were adopted as appropriate. The portion of the contract that will be
continued was assessed based on the cases where similar real propertiesare rented.

3,104 thousand(e) Other Income(I) Total Potential Revenue = [(a) + (b) + (c) + (d) + (e)]287,980 thousand(f) Vacant Room Losses

7,526 thousand(g) Irrecoverable Debt Losses－(II)Operating Revenue ＝［(I)－(f)－(g)]280,454 thousand(h) Maintenance and Management Costs

3,044 thousand

The level of the actual maintenance and management costs were adopted
as appropriate, with reference to the level of similar real properties.

(i) Utility Costs－

Included in the current maintenance and management costs under thecontract.

(j) Repair Costs

1,890 thousand

Judging the engineering report estimates to be appropriate, recognized
30% of the amount of stabilized repair costs.

(k) Restitution Cost

4,858 thousand

Assessed by taking into consideration the results of restitution cost and themove-out rates, with reference to the level of similar real properties.

(l) Property Management Fee

886 thousand

The content of the current contract was adopted as appropriate, withreference to the level of similar real properties.

(m) Land Rent

73,908 thousand Assessed by considering the variability rate, based on the results.

(n) Taxes and Public Dues

13,940 thousand Assessed by considering age depreciation, based on the results.

(o) Non-life Insurance Premiums

638 thousand Assessed with reference to the level of similar real properties.
－(p) Other Costs(III) Operating Costs (Expense Rate)＝［(h)＋(i)＋(j)＋(k)＋(l)＋(m)＋(n)＋(o)+(p)](IV) Net Operating Income ＝［②－③]99,164 thousand
181,290 thousand－(q) One Time Investment Gains(r) Guarantee Deposits Loss

4,020 thousand Assessed by multiplying the amount of lease deposits by a 2.0% yield.

(s) Capital Improvements and Expens

4,409 thousand(V) Net Income ＝［④＋(q)－(r)－(s)]172,861 thousand(i) Compound Present Value Rate of Compound Interest Annuity at the End of
Rental Income Period

17.53732 Discount rate is 4.9% and the rental income period is 41 years.

(ii) Building Demolition Cost at the Expiration of the Fixed Term Leasehold forBusiness274,242 thousand Assessed by multiplying the demolition cost by the building area.

(iii) Compound Present Value Rate

0.1341(VII) Income Price using Direct Capitalization Method = [(V) ÷ (VI)]

Discount rate is 4.9% and the remaining period of the fixed term landleasehold is 42 years.

2,990,000 thousand
6.1%(Reference) Base Yield of Net Operating Income (NOI) ((IV) NOI ÷ (VII) Income Price)(2) DCF Method

Judging the engineering report estimates to be appropriate, recognized
70% of the stabilized amount of capital improvements and expenses.

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

Overview

1,344,853 thousand(a) Sale Price

2,610,000 thousand(b) Sale Costs

78,360 thousand Recognized “sale price × 3.0% + JPY 60 thousand”(c) Returning Price [(a) - (b)]2,531,640 thousand(II) Returning Price, Current Value

1,599,313 thousand(III)
Within 10 years
Discount
Rate After 10 years

4.7% Assessed by taking into consideration the various risks and the difference
5.1% rate, based on the standard yield.

(i) Compound Present Value Rate ofCompound Interest Annuity

15.41271 Discount rate is 5.1% and the rental income period is 31 years.

(ii) Building Demolition Cost at the Sale

55,827 thousand Assessed by multiplying the demolition cost by the building area.

(V) Income Price using DCF Method = [(I) + (2)]2,940,000 thousand(3) Income Price using Income Capitalization Method

2,940,000 thousand

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

Overview

698,000 thousand(ii) Building Price

1,310,000 thousand(iii) Total Price of Land and Building = [(i) + (ii)]2,008,000 thousand(iv) Ancillary Costs

521,000 thousand(v) Estimated Price using Cost Method ＝［(iv＋(v)]2,530,000 thousand

Other Points to be Noted for Appraisal by Apprising Organization
Judged that a value based on the direct capitalization method, which truly replicates the price formation process from an income perspective, is more persuasive and adopted the appraisal value
determined using the direct capitalization method, with the cost approach value as a reference.

21

(2)

Matters relating to Seismic Resistance, etc., for the Six Properties
Of the Six Properties, with respect to the building D38 “Hotel MyStays Shinsaibashi”, INV has obtained
an opinion from a third party expert, Tokio Marine & Nichido Risk Consulting Co., Ltd., indicating that
there seems to be no problem regarding seismic resistance, etc., and the building was appropriately
constructed. Of the Six Properties, with respect to the buildings D41 “Comfort Hotel Tsubame-Sanjo”,
and D42 “Comfort Hotel Kitami”, INV has obtained an opinion from the said third party, indicating that
there is no suspicion of falsification of structural calculation sheets through willful misconduct of thedesigners, and that the structural design is judged to be in general conformance with provisions
regarding seismic resistance under the Building Standards Act and its Enforcement Order. Of the Six
Properties, with respect to the buildings D39 “Comfort Hotel Kurosaki” and D40 “Comfort Hotel
Maebashi”, INV has obtained an opinion from Kabushiki Kaisha Best-Design, indicating that noproblematic and improper act is found in design specifications and there is consistency in figures, andthe design specifications are appropriate. Of the Six Properties, with respect to the building A103
“Royal Parks Momozaka”, INV has obtained an opinion from HI International Consultant Co., LTD.,
indicating that it satisfies the requirements regarding seismic resistance under the Building Standards
Act at the time when it was designed.
Further, as part of INV’s due diligence (Note) in acquiring the properties, INV has investigated seismic
risk.
(Note)

5.

The due diligence conducted in acquiring the properties includes examination of appraisal
values, building inspection, seismic risk inspection and legal due diligence.

Overview of Sellers of the Six Properties

The overview of the sellers of the Six Properties is as follows:
D38 “Hotel MyStays Shinsaibashi”
(i)
(ii)
(iii)

Name
Location
Title and name ofrepresentative officer

Aki Tokutei Mokuteki Kaisha (“Aki TMK”)
c/o EP Consulting Services Corporation, 1-2-9, Nishi-Shimbashi,
Minato-ku, Tokyo
Hiroyasu Nakamura, Director(iv)

Business(a)(b)

Operations relating to the liquidation of the specified assets.
All other operations ancillary to the operations relating toliquidation of the specified assets stated above.

(v)

Specified Capital: JPY100,000(vi)

Capital(as of the date of thisnotice)Date of establishment

January 17, 2011

(vii)

Net Assets

Undisclosed (Note)(viii)

Total Assets

Undisclosed (Note)(ix)

Investor

Undisclosed (Note)(x)

Relationship between INV/Asset Manager and the TMK

Preferred Capital: JPY2.9 billion

22Capital relationships

Personnel
relationships

Transactional
relationships

Whether the TMK is arelated party

While there are no capital relationships that should be noted between
INV/CIM and the TMK, the parent company of the TMK has received
tokumei kumiai contributions through funds operated by affiliates ofFortress Investment Group LLC (“FIG”), an affiliate of Calliope Godo
Kaisha (“Calliope”). As of December 31, 2015, Calliope holds 609,942
investment units issued by INV (19.09% stake). Further, as of the dateof this notice, Calliope is the parent company of CIM, holding 100% of
its outstanding shares.
While there are no personnel relationships that should be noted
between INV and the TMK, as of the date of this notice, among theofficers and employees of CIM, representative director and president
Naoki Fukuda is seconded from Calliope. Further, part-time director
Christopher Reed was seconded from Fortress Investment Group
Japan Godo Kaisha, a subsidiary of FIG.
INV acquired eight properties in total in and after July 2015, from the
TMK.
The TMK is not a related party of INV or CIM. Further, related persons
and affiliates of the TMK are not related parties of INV or CIM. The
TMK is not an interested party, etc. of CIM as provided in theInvestment Trust Act.

(Note) Not disclosed, as the consent has not been obtained for disclosure.
D39 “Comfort Hotel Kurosaki”, D40 “Comfort Hotel Maebashi”, D41 “Comfort Hotel Tsubame-Sanjo” andD42 “Comfort Hotel Kitami”
(i)

Name

Navaro Tokutei Mokuteki Kaisha (“Navaro TMK”)(ii)

Location

2-10-5, Aakasaka, Minato-ku, Tokyo(iii)

Title and name ofrepresentative officer[Akio Yamazaki], Director(iv)

Business(a) Operations relating to the liquidation of the specified assets.
(b) All other operations ancillary to the operations relating toliquidation of the specified assets stated above.

(v)

Specified Capital: JPY100,000(vi)

Capital(as of the date of thisnotice)Date of establishment

April 2, 2014

(vii)

Net Assets

Undisclosed (Note)(viii)

Total Assets

Undisclosed (Note)(ix)

Investor

Undisclosed (Note)(x)

Relationship between INV/Asset Manager and the TMK
While there are no capital relationships that should be noted between
INV/CIM and the TMK, the parent company of the TMK has received
tokumei kumiai contributions through funds operated by affiliates of FIG,
Capital relationships
an affiliate of Calliope. As of December31, 2015, Calliope holds
609,942 investment units issued by INV (19.09% stake). Further, as ofthe date of this notice, Calliope is the parent company of CIM, holding
100% of the outstanding shares.

Preferred Capital: JPY3,530 million

23

Personnel
relationships

Transactional
relationships

While there are no personnel relationships that should be noted
between INV and the TMK, as of the date of this notice, among theofficers and employees of CIM, Mr. Naoki Fukuda, representative
director and president, is seconded from Calliope. Further, Mr.
Christopher Reed, part-time director, was 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 the TMK.

The TMK is not a related party of INV or CIM. Further, related persons
and affiliates of the TMK are not related parties of INV or CIM. The
TMK is not an interested party, etc., of CIM as provided in therelated party
Investment Trust Act.
(Note) Not disclosed, as the consent has not been obtained for disclosure.
Whether the TMK is a

A103 “Royal Parks Momozaka”
(i)
(ii)
(iii)

Name
Location
Title and name ofrepresentative officer

Momo Tokutei Mokuteki Kaisha (“Momo TMK”)
c/o EP Consulting Services Corporation, 1-2-9, Nishi-Shimbashi,
Minato-ku, Tokyo
Masayuki Meguro(iv)

Business(a) Operations relating to the assignment of specified assets inaccordance with the Specified Asset Liquidation Plan under the Act
on Securitization of Assets, and the management and disposition
thereof.
(b) All other operations ancillary to the operations relating to liquidationof the specified assets stated above.

(v)

Specified Capital: JPY100,000(vi)

Capital(as of the date of thisnotice)Date of establishment

March 13, 2014

(vii)

Net Assets

Undisclosed (Note)(viii)

Total Assets

Undisclosed (Note)(ix)

Investor

Undisclosed (Note)(x)

Relationship between INV/Asset Manager and the TMK
While there are no capital relationships that should be noted between
INV/CIM and the TMK, the parent company of the TMK has received
tokumei kumiai contributions through funds operated by affiliates of FIG,
Capital relationships
an affiliate of Calliope. As of December 31, 2015, Calliope holds
609,942 investment units issued by INV (19.09% stake). Further, as ofthe date of this notice, Calliope is the parent company of CIM, holding
100% of the outstanding shares.
While there are no personnel relationships that should be noted
between INV and the TMK, as of the date of this notice, among the
Personnel
officers and employees of CIM, Mr. Naoki Fukuda, representative
director and president, is seconded from the Calliope. Further, Mr.
relationships
Christopher Reed, part-time director, was 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 the TMK.

Preferred Capital: JPY3,740 million

24relationships
The TMK is not a related party of INV or CIM. Further, related persons
and affiliates of the TMK are not related parties of INV or CIM. The
TMK is not an interested party, etc., of CIM as provided in therelated party
Investment Trust Act.
(Note) Not disclosed, as the consent has not been obtained for disclosure.
Whether the TMK is a6.

Transactions with Interested Persons, etc.
The sellers of the Six Properties, namely Aki TMK, Navaro TMK and Momo TMK, are notsponsor-related persons (Note) under the voluntary rules specified by CIM as countermeasures against
conflicts of interests in the management of INV’s investments. However, each of such seller has received
tokumei kumiai contributions through funds managed by affiliates of FIG, an affiliate of Calliope, CIM’s
parent company, and thus a sponsor-related person. Therefore, CIM treats each of such sellers as aperson equivalent to a sponsor-related person.
Six Properties 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 held on January 20, 2016 and the investment committee meeting held on the sameday, the board of directors of CIM approved the acquisitions at the meeting held on January 20, 2016,
and the board of directors of INV approved the acquisitions at the meeting held on January 20, 2016.
In addition, MHM, the tenant/operator of “Hotel MyStays Shinsaibashi” among the Six Properties, is not asponsor-related person (Note) under the voluntary rules specified by CIM as countermeasures against
conflicts of interests in the management of INV’s investments. However, such tenant/operator indirectly
receives funds from an affiliate of FIG, an affiliate of Calliope (Calliope is CIM’s parent company, and thus
a sponsor-related person). Therefore, CIM treats such tenant/operator as a person equivalent to asponsor-related person.
With respect to the lease agreement expected to be entered into with MHM, the tenant/operator, in
accordance with Sponsor-Related Person Transaction Rules and Sponsor-Related Person Transaction
Management Manual, which are internal rules of CIM, subject to MHM’s hotel operating capability being
confirmed as sufficient through a third party report and other relevant information, the rent level being
reasonable considering the market level, and management services fee amount and structure being faircompared with similar properties, following deliberation and resolution of the compliance committee
meeting held on January 20, 2016 and the investment committee meeting held on the same day, theboard of directors of CIM approved the agreement at a meeting held on January 20, 2016, and the boardof directors of INV approved the agreement at the meeting held on January 20, 2016.
Hence, INV considers MHM to meet its standard for selection of tenants described in Report on theManagement Structure and System of the Issuer of Real Estate Investment Trust Units and Related
Parties filed on September 18, 2015.
(Note) A sponsor-related Person is (i) any person who falls under the “Interested Persons, etc.” set forthin 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

25

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 Interest Relationships; 3. Detail/reason
for Acquisition; 4. Acquisition Price, and 5. Acquisition Timing
Property Name

Current owner/trust beneficiaryD38
1. Aki TMK
MyStays Shinsaibashi 2. The TMK has received tokumei
kumiai contributions through funds,
etc. operated by affiliates of FIG, anaffiliate of Calliope.
3. Acquisition for investment purposes
4. Omitted because held for longer
than one year
5. July 2011
D39
1. Navaro TMK
Comfort Hotel
2. The TMK has received tokumei
Kurosakikumiai contributions through funds,
etc. operated by affiliates of FIG, anaffiliate of Calliope.
3. Acquisition for investment purposes
4. Omitted because held for longer
than one year
5. November 2014
D40
1. Navaro TMK
Comfort Hotel
2. The TMK has received tokumei
Maebashikumiai contributions through funds,
etc. operated by affiliates of FIG, anaffiliate of Calliope.
3. Acquisition for investment purposes
4. Omitted because held for longer
than one year
5. November 2014
D41
1. Navaro TMK
Comfort Hotel
2. The TMK has received tokumei
Tsubame-Sanjo
kumiai contributions through funds,
etc. operated by affiliates of FIG, anaffiliate of Calliope.
3. Acquisition for investment purposes
4. Omitted because held for longer
than one year
5. July 2014
D42
1. Navaro TMK
Comfort Hotel Kitami 2. The TMK has received tokumei
kumiai contributions through funds,
etc. operated by affiliates of FIG, anaffiliate of Calliope.
3. Acquisition for investment purposes
4. Omitted because held for longer
than one year
5. November 201426

Preceding owner/trust
beneficiary
Persons having no
special conflict ofinterest relationship

Persons having no
special conflict ofinterest relationship

Persons having no
special conflict ofinterest relationship

Persons having no
special conflict ofinterest relationship

Persons having no
special conflict ofinterest relationshipProperty Name
A103
Royal Parks
Momozaka

Current owner/trust beneficiary
1. Momo TMK
2. The TMK has received tokumei
kumiai contributions through funds,
etc. operated by affiliates of FIG, anaffiliate of Calliope.
3. Acquisition for investment purposes
4. Omitted because held for longer
than one year
5. July 2014

Preceding owner/trust
beneficiary
Persons having no
special conflict ofinterest relationship8. Overview of Brokerage
No broker was involved in the acquisition of the Six Properties.

9. Schedules
Acquisition decision date

January 20, 2016

Agreement execution date
Anticipated acquisition proceeds payment date
Anticipated acquisition date

January 22, 2016

10. Future Outlook
The transaction stated in this notice does not affect INV’s forecasts for financial results and distribution for
the fiscal period ended December 2015 (July 1, 2015 to December 31, 2015). For information on INV’s
forecasts for financial results and distribution for the fiscal period ending June 2016 (January 1, 2016 toJune 30, 2016) and the fiscal period ending December 2016 (July 1, 2016 to December 31, 2016) inconnection with the above, please refer to “Notice concerning Revision of Forecast of Financial Resultsand Distribution for the 25th Fiscal Period Ended December 2015, the 26th Fiscal Period Ending June
2016 and the 27th Fiscal Period Ending December 2016” dated as of today.
11. Other Matters that are Necessary for Investors to Properly Understand and Make Judgment on Relevant
Information
With respect to the risks relating to investments in the Six Properties, there will be no change that
substantially affects the matters stated in the “Investment Risks” (toshi risuku) in the semi-annual
securities report (yuka shoken hokokusho) of INV for the fiscal period ended June 2015 (January 1, 2015
– June 30, 2015) (available in Japanese only), filed by INV on September 28, 2015.
[End of document]27

[Reference]
1. Portfolio List after the Acquisition
Property
Number

Property Name

Type

Area

Acquisition Priceor AnticipatedAcquisition Price(mn JPY) (Note 1)

Investment
Ratio (%)
(Note 2)

A26

Nisshin Palacestage
Daitabashi

Residential

Greater Tokyo Area

1,251

0.7

A27

Nisshin Palacestage
Higashi-Nagasaki

Residential

Greater Tokyo Area

1,229

0.7

A28

Growth Maison Gotanda

Residential

Greater Tokyo Area

888

0.5

A29

Growth Maison Kameido

Residential

Greater Tokyo Area

1,070

0.6

A30

Emerald House

Residential

Greater Tokyo Area

1,505

0.8

A31

Harmonie Ochanomizu

Residential

Greater Tokyo Area

1,428

0.8

A32

Suncrest Shakujii-Koen

Residential

Greater Tokyo Area

1,088

0.6

A33

Growth Maison ShinYokohama

Residential

Greater Tokyo Area

1,059

0.6

A34

Belle Face
Ueno-Okachimachi

Residential

Greater Tokyo Area

1,023

0.6

A35

Grand Rire Kameido

Residential

Greater Tokyo Area

906

0.5

A36

Growth Maison
Ikebukuro

Residential

Greater Tokyo Area

825

0.4

A37

Growth Maison Yoga

Residential

Greater Tokyo Area

795

0.4

A38

Route Tachikawa

Residential

Greater Tokyo Area

676

0.4

A39

Shibuya-Honmachi
MansionResidential

Greater Tokyo Area

651

0.4

A40

City Heights Kinuta

Residential

Greater Tokyo Area

646

0.4

A41

Acseeds Tower
Kawaguchi

Residential

Greater Tokyo Area

620

0.3

A42

Capital Heights
Kagurazaka

Residential

Greater Tokyo Area

604

0.3

A43

College Square Machida

Residential

Greater Tokyo Area

589

0.3

A44

Belair Meguro

Residential

Greater Tokyo Area

589

0.3

A45

Wacore Tsunashima I

Residential

Greater Tokyo Area

572

0.3

28

Property
Number

Property Name

Type

Area

Acquisition Priceor AnticipatedAcquisition Price(mn JPY) (Note 1)

Investment
Ratio (%)
(Note 2)

A46

Foros Nakamurabashi

Residential

Greater Tokyo Area

566

0.3

A47

Growth Maison Kaijin

Residential

Greater Tokyo Area

557

0.3

A48

College Square Machiya

Residential

Greater Tokyo Area

510

0.3

A51

City House Tokyo
Shinbashi

Residential

Greater Tokyo Area

2,520

1.4

A52

Winbell Kagurazaka

Residential

Greater Tokyo Area

3,260

1.8

A53

Nishiwaseda Cresent
MansionResidential

Greater Tokyo Area

1,880

1.0

A54

Lexington Square
Akebonobashi

Residential

Greater Tokyo Area

1,450

0.8

A56

Casa Eremitaggio

Residential

Greater Tokyo Area

1,070

0.6

A59

Towa City Coop
Shinotsuka II

Residential

Greater Tokyo Area

866

0.5

A61

Bichsel Musashiseki

Residential

Greater Tokyo Area

577

0.3

A62

Lexel Mansion Ueno
Matsugaya

Residential

Greater Tokyo Area

970

0.5

A63

Towa City Coop
Sengencho

Residential

Greater Tokyo Area

1,110

0.6

A64

Royal Park Omachi

Residential

Other

415

0.2

A65

Lexington Square
Haginomachi

Residential

Other

330

0.2

A66

Visconti Kakuozan

Residential

Other

255

0.1

A71

Lexington Square
Daitabashi

Residential

Greater Tokyo Area

977

0.5

A72

Lexington Square Honjo
Azumabashi

Residential

Greater Tokyo Area

511

0.3

A73

AMS TOWER
Minami 6-Jo

Residential

Other

1,180

0.6

A75

Spacia Ebisu

Residential

Greater Tokyo Area

7,010

3.8

A76

Neo Prominence

Residential

Greater Tokyo Area

1,660

0.9

A77

Invoice Shin-Kobe
Residence

Residential

Other

1,260

0.7

A78

Cosmo Court Motomachi

Residential

Other

973

0.5

29

Property
Number

Property Name

Type

Area

Acquisition Priceor AnticipatedAcquisition Price(mn JPY) (Note 1)

Investment
Ratio (%)
(Note 2)

A79

Revest Honjin

Residential

Other

674

0.4

A80

Revest Matsubara

Residential

Other

657

0.4

A81

Sun Terrace Minami
Ikebukuro

Residential

Greater Tokyo Area

625

0.3

A82

Alba Noritake Shinmachi

Residential

Other

608

0.3

A83

Revest Meieki Minami

Residential

Other

597

0.3

A84

Revest HeianResidential

Other

595

0.3

A85

Vendir Hamaotsu Ekimae

Residential

Other

581

0.3

A86

Salvo Sala

Residential

Other

544

0.3

A87

Excellente Kagurazaka

Residential

Greater Tokyo Area

543

0.3

A88

Luna Court Edobori

Residential

Other

525

0.3

A89

Winntage Kobe
Motomachi

Residential

Other

512

0.3

A90

Queen’s Court Fukuzumi

Residential

Greater Tokyo Area

456

0.2

A91

Corp Higashinotoin

Residential

Other

446

0.2

A92

Belair Oimachi

Residential

Greater Tokyo Area

412

0.2

A93

Siete Minami-Tsukaguchi

Residential

Other

374

0.2

A94

Prime Life Sannomiya
Isogami Koen

Residential

Other

373

0.2

A95

HERMITAGE NANBA
WEST

Residential

Other

355

0.2

A96

Century Park Shinkawa
1-bankan

Residential

Other

335

0.2

A97

West Avenue

Residential

Greater Tokyo Area

331

0.2

A98

Little River
Honmachibashi

Residential

Other

310

0.2

A99

Prime Life Mikage

Residential

Other

297

0.2

A100

City Court Kitaichijo

Residential

Other

1,782

1.0

30

Property
Number

Property Name

A101

Acquisition Priceor AnticipatedAcquisition Price(mn JPY) (Note 1)

Investment
Ratio (%)
(Note 2)

Type

Area

Lieto Court Mukojima

Residential

Greater Tokyo Area

1,683

0.9

A102

Lieto Court Nishi-Ojima

Residential

Greater Tokyo Area

1,634

0.9

A103

Royal Parks Momozaka

Residential

Other

2,910

1.6

66,09235.9

Subtotal of Residential Properties (67 properties)
B8

Kindai Kagakusha
Building

OfficeGreater Tokyo Area

1,301

0.7

B9

Shinjuku Island

OfficeGreater Tokyo Area

715

0.4

B14

Lexington Plaza
Nishigotanda

OfficeGreater Tokyo Area

4,880

2.7

B15

Cross Square NAKANO

OfficeGreater Tokyo Area

1,060

0.6

B16

Ohki Aoba Building

Office

Other

816

0.4

B17

Lexington Plaza
Hachiman

Retail

Other

3,280

1.8

B18

AEON TOWN Sukagawa

Retail

Other

2,320

1.3

Subtotal of Office Buildings and Retail Properties (7 properties)

14,372

7.8

97

0.1

97

0.1

C1

Times Kanda-Sudacho
4thParking

Greater Tokyo Area

Subtotal of Parking Facility (1 property)
D1

Hotel MyStays Kanda

Hotel

Greater Tokyo Area

2,851

1.5

D2

Hotel MyStays Asakusa

HotelGreater Tokyo Area

2,584

1.4

D3

Hotel MyStays
Kyoto-Shijo

Hotel

Other

6,024

3.3

D4

MyStays Shin-Urayasu
Conference Center

HotelGreater Tokyo Area

4,930

2.7

D5

Hotel MyStays Maihama

HotelGreater Tokyo Area

4,870

2.6

D6

Hotel Vista Premio
Dojima

Hotel

Other

3,845

2.1

D7

Hotel MyStays
Nagoya-Sakae

Hotel

Other

2,958

1.6

D8

Hotel MyStays
Sakaisuji-Honmachi

Hotel

Other

2,514

1.4

31

Property
Number

Property Name

Type

Area

Acquisition Priceor AnticipatedAcquisition Price(mn JPY) (Note 1)

Investment
Ratio (%)
(Note 2)

D9

Hotel MyStays
Yokohama

HotelGreater Tokyo Area

2,119

1.2

D10

Hotel MyStays Nippori

HotelGreater Tokyo Area

1,898

1.0

D11

Hotel MyStays
Fukuoka-Tenjin-Minami

Hotel

Other

1,570

0.9

D12

Flexstay Inn Iidabashi

HotelGreater Tokyo Area

1,381

0.8

D13

Hotel MyStays Ueno
Inaricho

HotelGreater Tokyo Area

1,331

0.7

D14

Flexstay Inn Shinagawa

HotelGreater Tokyo Area

1,242

0.7

D15

Flexstay Inn Tokiwadai

HotelGreater Tokyo Area

1,242

0.7

D16

Flexstay Inn Sugamo

HotelGreater Tokyo Area

1,192

0.6

D17

Hotel MyStays Otemae

HotelGreater Tokyo Area

1,192

0.6

D18

Flexstay Inn
Kiyosumi-Shirakawa

HotelGreater Tokyo Area

749

0.4

D19

Flexstay Inn
Nakanobu P1

HotelGreater Tokyo Area

589

0.3

D20

Flexstay Inn
Nakanobu P2

HotelGreater Tokyo Area

283

0.2

D21

APA Hotel
Yokohama-Kannai

HotelGreater Tokyo Area

8,350

4.5

D22

Hotel Nets Hakodate

Hotel

Other

2,792

1.5

D23

Flexstay Inn Shitokane

HotelGreater Tokyo Area

2,119

1.2

D24

Hotel MyStays Haneda

HotelGreater Tokyo Area

7,801

4.2

D25

Hotel MyStays Kameido
P1

Hotel

Greater Tokyo Area

5,594

3.0

D26

Hotel MyStays
Iriyaguchi

HotelGreater Tokyo Area

3,821

2.1

D27

Hotel MyStays Kameido
P2

Hotel

Greater Tokyo Area

3,742

2.0

D28

Hotel Vista Shimizu

Hotel

Other

2,198

1.2

D29

Super Hotel Shinbashi/
Karasumoriguchi

HotelGreater Tokyo Area

1,624

0.9

Hotel

Greater Tokyo Area

1,277

0.7

D30

Ueno

Flexstay Inn Higashi-Jujo

32

Property
Number

Property Name

Type

Area

Acquisition Priceor AnticipatedAcquisition Price(mn JPY) (Note 1)

Investment
Ratio (%)
(Note 2)

D31

Hotel MyStays
Utsunomiya

Hotel

Other

1,237

0.7

D32

Flexstay Inn KawasakiKaizuka

HotelGreater Tokyo Area

980

0.5

D33

Comfort Hotel Toyama

Hotel

Other

979

0.5

D34

Flexstay Inn KawasakiOgawacho

HotelGreater Tokyo Area

906

0.5

D35

Flexstay Inn Ekoda

HotelGreater Tokyo Area

5,069

2.8

D36

Super Hotel Tokyo-JR
Tachikawa Kitaguchi

HotelGreater Tokyo Area

1,170

0.6

D37

Super Hotel JR Uenoiriyaguchi

HotelGreater Tokyo Area

1,130

0.6

D38

Hotel MyStays
Shinsaibashi

Hotel

Other

3,160

1.7

D39

Comfort Hotel Kurosaki

Hotel

Other

1,148

0.6

D40

Comfort Hotel Maebashi

Hotel

Other

1,128

0.6

D41

Comfort Hotel
Tsubamesanjo

Hotel

Other

1,010

0.5

D42

Comfort Hotel Kitami

Hotel

Other

851

0.5

Subtotal of Hotels (42 properties)

103,459

56.2

Total Portfolio (117properties)

184,022100.0(Note 1)

(Note 2)Acquisition price is as set forth in the relevant purchase agreement or trust beneficiary transfer agreement
as applicable, does not include expenses such as consumption taxes, and is rounded down to the nearest
million.
Investment ratio is calculated as a percentage of the aggregate total acquisition price of our anticipatedportfolio after giving effect to our anticipated acquisitions, and rounded to one decimal place.

2. Sponsor’s Pipeline
The Fortress Group manages four dedicated Japanese real estate funds, including the Fortress
Japan Opportunity Funds I and II. The equity commitment amount for such funds is over JPY 300 billion
in total and the number of properties in Japan in which such funds have invested exceeds 1,400. In
order to ensure future opportunities for portfolio growth, INV entered into the Memorandum ofUnderstanding with the Fortress Group (the “MOU”) that provides preferential negotiation rights withrespect to the acquisition of 21 hotels and nine residential properties as of June 25, 2015. Taking into
consideration of the acquisition of “Flexstay Inn Ekoda” on August 28, 2015 and anticipated acquisitionof the 5 Hotels on January 22, 2016 from MOU properties, INV decided to renew the MOU to add 10
new hotels. The updated MOU comprises 25 hotels and nine residential properties (see the table33

below. Newly added properties are highlighted in blue).

No.

Asset Name

Asset Type

Location

No. ofRooms

1

Hotel MyStays Gotanda Station (Note 1)

Limited Service Hotel

Shinagawa-ku, Tokyo333

2

Hotel MyStays Akasaka (Note 2)

Limited Service Hotel

Minato-ku,Tokyo

327

3

Hotel MyStays Kanazawa

Limited Service Hotel

Kanazawa,Ishikawa

244

4Hotel MyStays Fukuoka-Tenjin

Limited Service Hotel

Fukuoka, Fukuoka

217

5

Hotel MyStays Yokohama -Kannai (Note 3)

Limited Service Hotel

Yokohama, Kanagawa

166

6

Hotel MyStays Hamamatsucho

Limited Service Hotel

Minato-ku, Tokyo

105

7

Rihga Royal Hotel Kyoto (Note 4)

Full Service Hotel

Kyoto, Kyoto

489

8

Narita Excel Hotel Tokyu

Full Service Hotel

Narita, Chiba

706

9

Art Hotels Sapporo

Full Service Hotel

Sapporo, Hokkaido

418

10 Best Western Hotel Fino Sapporo

Limited Service Hotel

Sapporo, Hokkaido

242

11 Best Western Hotel Fino Oita

Limited Service HotelOita, Oita

145

12 Takamatsu Tokyu REI Hotel

Limited Service Hotel

Takamatsu, Kagawa

191

13 Hotel Naqua City Hirosaki

Full Service Hotel

Hirosaki, Aomori

134

14 Beppu Kamenoi Hotel

Resort Hotel

Beppu, Oita

322

15 Fusaki Resort Village

Resort Hotel

Ishigaki, Okinawa

195

Full Service Hotel

Urayasu, Chiba

1,016

Limited Service Hotel

Osaka, Osaka

397

18 Art Hotels Asahikawa

Full Service Hotel

Asahikawa, Hokkaido

265

19 Castle Inn Kanazawa

Limited Service Hotel

Kanazawa, Ishikawa

206

Full Service Hotel

Matsuyama, Ehime

161

Limited Service Hotel

Taito-ku, Tokyo

150

Limited Service Hotel

Osaka, Osaka

120

23 KITA HOTEL

Limited Service Hotel

Sapporo, Hokkaido

86

24 Flexstay Inn Sakuragicho

Limited Service Hotel

Yokohama, Kanagawa

70

25 (Tentative) Hotel MyStays Kuramae (Note 7)

Limited Service Hotel

Taito-ku, Tokyo

64

16 Sheraton Grande Tokyo Bay Hotel (Note 5)17 Hotel Shin-Osaka Conference Center

20 Hotel JAL City Matsuyama
21 Hotel Ueno East
22

(Tentative) Hotel Mystays Honmachi 3-chome(Osaka) (Note 6)

26 Gran Charm Hiroo
27 Plestay Win Kinshicho

Hotel Subtotal
Residential/Small Type
(Note 7)

Residential/Small Type
(Note 7)34

6,769
Shibuya-ku, Tokyo

121

Sumida-ku, Tokyo

92

No.

Asset Name

28 Gran Charm Kichijoji
29 Green Patio Noda
30 Dainichi F-45
31 Gran Charm Urayasu
32 Gran Charm Urayasu 5
33 Gran Charm Minami Gyotoku I
34 Gran Charm Minami Gyotoku II

Asset Type
Residential/Small Type
(Note 8)Residential/Small Type
(Note 8)Residential/Small Type
(Note 8)Residential/Small Type
(Note 8)Residential/Small Type
(Note 8)Residential/Small Type
(Note 8)Residential/Small Type
(Note8)Residential Property Subtotal(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)Location

No. ofRooms

Musashino-shi, Tokyo28

Noda-shi, Chiba

240

Urayasu-shi, Chiba

54

Urayasu-shi, Chiba

54

Ichikawa-shi, Chiba

54

Ichikawa-shi, Chiba

52

Ichikawa-shi, Chiba

48
743

Hotel Gotanda-Ekimae reopened partially on August 24, 2015 after renovation and reopened fully on
November 25, 2015.
Hotel MyStays Akasaka is scheduled to be completed in August 2016.
Hotel MyStays Yokohama Kannai is scheduled to be completed in August 2016.
Rihga Royal Hotel Kyoto is scheduled to reopen partially on September 1, 2016 after renovation and fullyon November 1, 2016.
Sheraton Grande Tokyo Bay Hotel is scheduled to reopen partially on September 1, 2016 after renovationand fully on November 1, 2016.
(Tentative) Hotel Mystays Honmachi 3-chome (Osaka) is scheduled to be completed in October 2017 andopened December 2017.
(Tentative) Hotel MyStays Kuramae is scheduled to be completed April 2016.
“Small Type” means a residential property in which the majority of dwelling units have space of less than
30 m2 each.
The memorandum of understanding is effective from January 20, 2016 (the date of the execution) to
January 19, 2017.
Regarding the properties listed above, there is no guarantee that INV will be offered an opportunity forconsidering acquisition of the properties or be able to acquire the properties.

35

2. Picture and Map
D38
Hotel MyStays Shinsaibashi

D39

Comfort Hotel Kurosaki

D40

Comfort Hotel Maebashi

36

D41

Comfort Hotel Tsubamesanjo

D42

Comfort Hotel Kitami

A103

Royal Parks Momozaka37