Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

Investment
Invincible Corporation

Financial Summary
for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)
August 26, 2024

Name
Representative
Stock Listing
Securities CodeURL
Contact

:
:
:
:
:
:

Invincible Investment Corporation (“INV”)
Naoki Fukuda, Executive Director
Tokyo Stock Exchange8963
https://www.invincible-inv.co.jp/en/
Consonant Investment Management Co., Ltd.
(Asset Manager of INV)
Jun Komo, General Manager of Planning Department
Tel. +81-3-5411-2731

Start date fordividend distribution: September 24, 2024

This English language notice is a translation of the Japanese-language notice released on August 26, 2024 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japaneselanguage notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completenessof this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between thistranslation and the Japanese original, the latter shall prevail in all respects.

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)1.

(Figures are rounded down to the nearest JPY million)
Financial Results for the Fiscal Period ended June 30, 2024 (from January 1, 2024 to June 30, 2024)(1)

Operating Results(Percentages indicate percentage change from the preceding period)
Operating Revenues
JPY million

Fiscal period ended
June 30, 2024
Fiscal period ended
December 31, 2023

Ordinary Income

Net Income%

JPY million%

JPY million%

JPY million%

21,136

12.3

14,635

16.3

12,901

16.9

12,90016.9

18,81918.2

12,58821.6

11,03323.8

11,032

23.8

Ordinary Income /Total Assets

Ordinary Income /Operating Revenues

Net Income per Unit

Net Income /Unitholders’ Equity

JPY

%

%

%

1,914

4.4

2.3

61.0

1,639

4.1

2.1

58.6

Fiscal period ended
June 30, 2024
Fiscal period ended
December 31, 2023
(2)

Operating Income

Distributions
Distribution(Excluding excess profit distribution)

Per Unit
Fiscal period ended
June 30, 2024
Fiscal period ended
December 31, 2023

Total

Excess Profit Distribution
Per Unit

Dividend Payout
Ratio

Distribution/ Net Assets

Total

JPY

JPY million

JPY

JPY million

%

%

1,917

12,915

-

-

100.1

4.4

1,640

11,048

-

-

100.1

3.9

(Note 1) Dividend Payout Ratio is calculated in accordance with the following formula and is rounded to the nearest one decimal place:
Dividend Payout Ratio = Distribution Amount (Excluding excess profit distribution) ÷ Net Income × 100(Note 2) Distribution / Net Assets is calculated based on the figures excluding excess profit distribution.

(3)

Financial Position
Total Assets

Fiscal period ended
June 30, 2024
Fiscal period ended
December 31, 2023
(Note)(4)

JPY million

Net Assets / Total%
AssetsNet Assets per Unit

JPY million

Net Assets

569,016

292,766

51.5

43,455563,393

290,305

51.5

43,090JPY

Net Assets per Unit is calculated based on the number of investment units issued and outstanding at the end of each fiscal
period.

Cash Flows
Cash Flows fromOperating
Activities

Cash Flows from
Investment
Activities

Cash Flows from
Financing
Activities

Closing Balance ofCash and
Cash Equivalents

JPY million

JPY million

JPY million

JPY million

Fiscal period ended
June 30, 2024

20,325(2,754)(9,902)

42,560Fiscal period ended
December 31, 2023

12,773(58,442)

52,52034,8922

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

2.

Forecasts for the Fiscal Period ending December 31, 2024 (from July 1, 2024 to December 31, 2024) and the Fiscal
Period ending June 30, 2025 (from January 1, 2025 to June 30, 2025)

Operating
Revenues
JPY
millionFiscal period
ending23,720December 31, 2024
Fiscal period
ending24,247
June 30, 2025

Operating
IncomeJPY
million%JPY
million

%

JPY

JPY

12.2 16,235

10.9 13,719

6.3

13,718

6.3

1,797

-

2.2

2.9

5.5 14,467

5.5

1,895

-

%

JPY
million(Percentages indicate percentage change from the preceding period)
Distribution per Excess Profit
Ordinary
Unit (excluding
Distribution per
Net Income
excess profit
IncomeUnit
distribution)

16,704%

14,468(Reference) Estimated net income per unit for the fiscal periods ending December 31, 2024 and the fiscal periods ending June 30, 2025 are
JPY 1,794 and JPY 1,892.

※Others(1) Changes in Accounting Policies, Accounting Estimates or Restatements(a) Changes in Accounting Policies due to Revisions to
Accounting Standards and Other Regulations

None(b) Changes in Accounting Policies due to Other Reasons

None(c) Changes in Accounting Estimates

None(d) Restatements

None(2) Number of Investment Units Issued and Outstanding(a) Number of Units Issued and Outstanding

June 30, 2024

6,737,121 December 31, 6,737,121
2023

June 30, 2024

0 December 31,
2023

as of the End of the Fiscal Period (Including Treasury Units)(b) Number of Treasury Units as of the End of the Fiscal Period(Note) Please refer to “Notes Related to Per Unit Information” regarding the number of investment units which is the basis for the
calculation of net income per unit.

・ Financial Summary report is not subject to audit procedure by certified public accountants or audit corporations.
・ Special Consideration
The forward-looking statements contained in this financial summary report are based on the information
currently available to us and certain assumptions which we believe are reasonable. Actual operating performance
may differ significantly due to factors we cannot predict as of the date of this document, including gains or losses
from the disposition of properties, repayment of borrowings, decreases in rents and changes in operating
conditions. Unless otherwise specified herein, amounts less than JPY 1 are rounded down, and ratios are rounded
to the nearest one decimal place.

30Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

1. Operating Conditions(1) Operating Conditionsa

Overview of the Fiscal Period Ended June 30, 2024(a)

Main Trends of INV

INV was established in January 2002 in accordance with the Investment Trust and Investment Corporation Act(Act No. 198 of 1951, as amended). In May 2004, INV was listed on the Osaka Securities Exchange (application
for delisting was made in August 2007), and in August 2006 was listed on the Real Estate Investment and Trust
Securities Section of the Tokyo Stock Exchange (Ticker Code: 8963).
After the absorption-type merger with LCP Investment Corporation (“LCP”) was implemented on February 1,
2010, INV issued new investment units through a third-party allotment on July 29, 2011 and refinanced its debt.
Calliope Godo Kaisha (“Calliope”), an affiliate of the Fortress Investment Group LLC (“FIG” and together with
Calliope and other affiliates of FIG, collectively the “Fortress Group”) was the main allottee, and the sponsor
changed to the Fortress Group.
Ever since the commencement of sponsorship from the Fortress Group (Note 1), INV has been focusing its efforts
on improving the profitability of its portfolio and establishing a revenue base in order to secure stable
distributions, and has strengthened the lender formation through new borrowings and the refinancing of existingbank borrowings, thereby creating a financial base for external growth. With this platform as a base, in June
2014, Consonant Investment Management Co., Ltd., the asset manager to which INV entrusts the managementof its assets (“CIM”) revised the Investment Guidelines for INV, positioned hotels as a core asset class alongsideresidential properties with a view towards expanding investments in the hotel sector in which demand isforecasted to rise going forward, and has expanded its portfolio.
INV's portfolio at the end of the Reporting Period comprised of 134 properties (92 hotels (Note 2) (Note 3), 41
residential properties and one retail facility) with a total acquisition price of JPY 548,646 million (Note 4).
Furthermore, INV’s hotel portfolio has the largest asset size (Note 5) of JPY 507,861 million (92 properties, 16,624
rooms) among all J-REITs (real estate investment corporations which are listed on the Tokyo Stock Exchange Real
Estate Investment Trust Securities Market, hereinafter the same shall apply) hotel portfolios including Hotel JREITs (Note 6) .
(Note 1) Calliope transferred 80.0% of issued shares to Fortress CIM Holdings L.P., a subsidiary of SoftBank
Group and 20.0% to SoftBank Group Corp. (“SoftBank Group”) on March 29, 2018, but the SoftBank
Group transferred its issued shares of CIM to Fortress CIM Holdings L.P on May 23, 2023. Further, on
May 15, 2024, the SoftBank Group transferred its interest in the indirect parent company of Fortress CIM
Holdings L.P. to Mubadala Capital, a wholly-owned subsidiary of Mubadala Investment Company, an
Abu Dhabi sovereign wealth fund. As a result, the SoftBank Group no longer falls under the parent
company and specified related corporation of CIM.
(Note 2) The preferred equity interest held by INV is counted as one property. Such preferred equity interest
issued by a special purpose company (tokutei mokuteki kaisha) refers to 178,458 units of the preferred
equity interest issued by Kingdom Special Purpose Company (equivalent to 49.0% of the outstanding
preferred equity interest), which owns the trust beneficiary interest of the Sheraton Grande Tokyo
Bay Hotel as an underlying asset. The property is classified as a hotel, based on the use of Sheraton
Grande Tokyo Bay Hotel, the underlying asset of the preferred equity interest, and INV’s investment
amount of the preferred equity interest is used as the acquisition price of the preferred equity interest,
unless otherwise stated. The “underlying asset” refers to the real estate or the real estate related
assets owned by a TK operator of TK interest or a TMK relating to the preferred equity interest which
INV owns, thus the real estate or the real estate related assets which will be the revenue source of
INV. Hereinafter the same shall apply.
(Note 3) From September 28, 2018 (Cayman Island local time; September 29, 2018 in Japan local time), INV
owned 100% of the TK interest in Seven Mile Resort Holdings Ltd. (the “Cayman SPC”), a Cayman
Islands special purpose company that holds leasehold interests in Westin Grand Cayman Seven Mile
Beach Resort & Spa and Sunshine Suites Resort (collectively, the “Cayman Hotels”) and ancillary assets
as underlying assets. However, INV implemented the investment structure change (the “Structure4

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

Change” in some cases hereinafter) regarding the Cayman Hotels on May 9, 2019 (Cayman Island
local time; May 10, 2019 in Japan local time) and has directly held the Leasehold Interests, etc. of the
Cayman Hotels thereafter. Both TK interest and the Cayman Hotels are counted as two properties
before and after the Structure Change. In addition, the “Leasehold Interests, etc.” means leaseholdinterests (rights equivalent to long-term real estate leases on land and buildings under the British
Cayman laws) and furniture, fixtures, equipment, ornaments, kitchen instrument, and other assets
required for hotel operations. Hereinafter the same shall apply.
(Note 4) Due to the Structure Change, the book value of the leasehold interests of the Cayman Hotels recordedby the Cayman SPC as of May 9, 2019 (Cayman Island local time; May 10, 2019 in Japan local time),
when INV succeeded the leasehold interests of the Cayman Hotels from the Cayman SPC via
distribution in kind in connection with the termination of TK agreement, is deemed as the acquisition
price of the Cayman Hotels. The book value is converted into JPY amount via exchange rate of USD
1=JPY 110.45 based on the foreign exchange forward contracts executed on July 26, 2018 andimplemented on September 26, 2018 in connection with the investment in the TK interest by INV.
Hereinafter the same shall apply.
(Note 5) Hotel J-REIT is defined as the J-REIT whose majority part of portfolio consists of hotel assets.
(Note 6) “The largest asset size … among all J-REIT hotel portfolios” refers to the total acquisition price of 92
hotels owned by INV as compared with the total acquisition price of hotels (including inns and otheraccommodation facilities) owned by listed investment corporations other than INV as of June 30, 2024.
(b)

Operational Performance

The portfolio NOI (Note 1) increased by 35.2% or JPY 5,110 million compared to the same period in the previous
year (the June 2023 fiscal period) to JPY 19,634 million. Of which, the hotel portfolio NOI increased by JPY
5,096 million and the residential and retail portfolio NOI increased by JPY 14 million. Compared to the June2019 fiscal period prior to the COVID-19 pandemic, the portfolio NOI increased by 33.2% or JPY 4,899 million,of which the hotel portfolio NOI increased by JPY 6,352 million and the residential and retail portfolio NOI
decreased by JPY 1,453 million due to asset sales.
Commentary on hotel and residential performance is as described below.
Domestic hotel portfolio recovered to a level exceeding that of 2019, prior to the COVID-19 pandemic. Even
with the end of the "National Travel Discount Campaign" program, the government’s travel subsidy program,
there has been no significant decline in demand due to the reaction from the elimination of the program.
Coupled with the recovery of inbound demand with the help of the weak yen, each performance metric of thedomestic hotel portfolio significantly exceeded the results of the same period last year. While occupancy rates(Note 2) were slightly below the 2019 levels, ADR (Note 3) and RevPAR (Note4) were above the 2019 levels.
The GOP (Note 5) for the Reporting Period of the 81 domestic hotels (Note 6) owned by INV increased by
17.2% compared to the same period in the previous year (figures exclude nine domestic hotels with fixed-rentlease agreements among the 90 domestic hotels owned by INV as of the end of the Reporting Period, including
Sheraton Grande Tokyo Bay Hotel, the underlying asset of the preferred equity interest of TMK owned by
INV). The 81 domestic hotels recorded an occupancy rate of 80.7%, ADR of JPY 12,787, and RevPAR of JPY
10,314. Compared to the June 2019 fiscal period prior to the COVID-19 pandemic, the GOP increased by
15.6%, the occupancy rate decreased by 5.7pt, ADR increased by 24.7%, and RevPAR increased by 16.5%.
The Cayman Hotels recorded an average occupancy rate of 79.0%, ADR of USD 564, and RevPAR of USD 446
for the Reporting Period and the figures significantly exceeded the same period in the previous year.
Compared to the June 2019 fiscal period prior to the COVID-19 pandemic, the occupancy rate decreased by
10.3pt, ADR increased by 35.8%, and RevPAR increased by 20.1%. Occupancy has not returned to 2019 levels
as the number of commercial flights between the Cayman Islands and the U.S. have not recovered to 2019
levels, but ADR has grown significantly due to high demand, and RevPAR has remained above 2019 levels.
Regarding the residential portfolio (Note 7), the occupancy rate (Note 8) of 41 residential properties slightly
increased from 95.9% at the end of the previous fiscal period to 96.9% at the end of the Reporting Period. The
average occupancy rate (Note 8) increased by 0.2 points YoY to 96.7%. The NOI (Note 9) for the Reporting
Period increased by 1.2% YoY.
In the Reporting Period, INV realized a rent increase for 41.8% (based on the number of contracts) of the new5

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

residential lease contracts, and the new rent increased by 0.1% compared to the previous rent across all newleases (Note 10). INV achieved a rent increase for 38.7% (based on the number of contracts) of contract
renewals with an average rent increase of 1.1% compared to the previous rent across all renewal leases, while
maintaining a high contract renewal rate (Note 11) of 76.8%. Combined, new lease and renewal lease rents
were signed at 0.7% higher than the previous leases. The average rent per tsubo per month (Note 12) for theReporting Period increased by 0.5% YoY to JPY 9,235.
The total appraisal value of 133 properties was JPY 657,902 million (one out of the 134 properties owned by
INV at the end of the Reporting Period is excluded from the appraisal calculation: Sheraton Grande Tokyo Bay
Hotel (preferred equity interest) for which the appraisal value of such interest is not available). The portfolio
has an unrealized gain of JPY 164,661 million (Note 13) and an unrealized gain ratio of 33.4% (Note 13). The
total appraisal value of 133 properties which were owned throughout the Reporting Period increased by 4.6%
from JPY 629,041 million at the end of the December 2023 fiscal period to JPY 657,902 million at the end of theReporting Period.
Key Performance Indicators of 81 Domestic Hotel Properties (Note 6)
June 2024
fiscal period

Year-on-year change

vs 1H 2019

Occupancy Rate (Note 2)

80.7%+0.2pt-5.7ptADR (JPY) (Note 3)

12,787+10.8%+24.7%

RevPAR (JPY) (Note 4)

10,314+11.0%+16.5%GOP (JPY million) (Note 5)

13,729+17.2%+15.6%Key Performance Indicators of Cayman Hotels
June 2024
fiscal period

Year-on-year change

vs 1H 2019

Occupancy Rate (Note 2)

79.0%+1.7pt-10.3pt

ADR (USD) (Note 3)

564

+5.1%

+35.8%

RevPAR (USD) (Note 4)

446

+7.4%

+20.1%

31,586,150+8.2%+18.4%GOP (USD) (Note 5)

Key Performance Indicators of 41 Residential Properties (Note 7)
June 2024
fiscal period
Average Occupancy Rate (Note 8)
Average Rent per Tsubo per Month(JPY) (Note 12)
NOI (JPY million) (Note 9)

Year-on-year change
96.7%+0.2pt

9,235

+0.5%

1,140

+1.2%

(Note 1) “NOI” for the hotel properties is calculated in accordance with the following formula:
NOI＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses + Dividend on thepreferred equity interest (TMK dividend) + (Management Contract Revenue of the Cayman Hotels‐Management Contract Expense)(Note 2) “Occupancy rate” for the hotel properties is calculated in accordance with the following formula:
Occupancy rate = total number of occupied rooms during a certain period ÷ total number of rooms
available during the same period (number of rooms x number of days)
Hereinafter the same shall apply.
(Note 3) “ADR” means average daily rate, and is calculated by dividing total room sales (excluding service
fees) for a certain period by the total number of days per room for which each room was occupied
during the same period. Hereinafter the same shall apply.
(Note 4) “RevPAR” means revenues per available room per day, and is calculated by dividing total room sales
for a certain period by total number of rooms available (number of rooms x number of days) during
the same period, and is the same as the figure obtained by multiplying ADR by occupancy rates.
6

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

Hereinafter the same shall apply.
(Note 5) “GOP” means the gross operating profit, and is the amount remaining after deducting costs of hotel
operations (the personnel, utility and advertising expenses and other expenses) and the management
services fee to operators (if any) from the hotel’s revenues. In addition, GOP for the Sheraton
Grande Tokyo Bay Hotel has been multiplied by 49%, or INV’s ownership ratio of the preferred
equity interest. Hereinafter the same shall apply.
(Note 6) Of the 90 hotels held as of the end of June 2024 (including the Sheraton Grande Tokyo Bay Hotel, theunderlying asset of the preferred equity interest of TMK owned by INV), the following nine hotels
with fixed-rent lease agreements etc. are excluded: Super Hotel Shinbashi/Karasumoriguchi, Comfort
Hotel Toyama, Super Hotel Tokyo-JR Tachikawa Kitaguchi, Super Hotel JR Ueno-iriyaguchi, Comfort
Hotel Kurosaki, Comfort Hotel Maebashi, Comfort Hotel Tsubame-Sanjo, Comfort Hotel Kitami and
Takamatsu Tokyu REI Hotel. In addition, the figures for the properties acquired after January 2019are calculated on the assumption INV had acquired those properties on January 1, 2019, using theactual figures provided by the sellers of such properties for the period before the acquisition. "D48
Takamatsu Tokyu REI Hotel" changed its contract with its major tenant, TOKYU HOTELS &RESORTS CO., LTD., to fixed-rent with variable rent lease from April 25, 2023. However, in view of
the comparison with the same fiscal period in 2023, this hotel will continue to be excluded. Hereinafter
the same shall apply.
(Note 7) Based on the 41 residential properties owned as of the end of June 2024. Hereinafter the same shallapply.
(Note 8) “Occupancy Rate” and “Average Occupancy Rate” for the portfolio or the residential properties arecalculated by dividing the sum of total leased area by the sum of total leasable area at the end of eachmonth during the relevant period. Hereinafter the same shall apply.
(Note 9) For the comparison of NOI for the residential properties, one-off insurance-related revenues andexpenses are excluded. Hereinafter the same shall apply.
(Note 10) Increase or decrease in the sum of monthly rents on new or renewal contracts, or the total of both,compared with the sum of previous rents. Hereinafter the same shall apply.
(Note 11) Renewal rate is calculated by the number of renewed contracts during the relevant period divided by
the number of contracts due up for renewal during the relevant period.
(Note 12) “Average Rent per Tsubo per Month” is calculated by dividing the total rental revenue (includingcommon area charges) for each month by the sum of total leased area (tsubo) at the end of each month
during the relevant period.
(Note 13) The unrealized gain is calculated using the following formula: the appraisal value as of the end of theReporting Period – book value as of the end of the Reporting Period.
The unrealized gain ratio is calculated using the following formula: the unrealized gain ÷ book value
as of the end of the Reporting Period.
(c)Overview of Fund Raising
As a result of the measures described below, INV’s interest-bearing debt outstanding balance was JPY
271,154 million and the Interest-Bearing Debt ratio (Note 1) and LTV (appraisal value basis) (Note 2) were
47.7% and 41.9% respectively, as of the end of the Reporting Period, with an average interest rate (Note3) of 0.85%.
(Note 1) Interest-Bearing Debt ratio uses the calculation formula below:
Interest-Bearing Debt ratio = total outstanding interest-bearing debt (excluding short-term
consumption tax loan) / total assets x 100
Short-term consumption tax loan is a loan which is to be repaid before maturity date withrefund of consumption taxes and regional consumption taxes on an acquisition of a property.
(Note 2) LTV (appraisal value basis) uses the calculation formula below:
LTV = total outstanding interest-bearing debt (excluding short-term consumption tax loan)/ total appraisal value (*) x 100(*) Since appraisal value for Sheraton Grande Tokyo Bay Hotel (preferred equity interest) is notavailable, the acquisition price of the preferred equity interest (JPY 17,845 million) is deemed
as appraisal value of Sheraton Grande Tokyo Bay Hotel (preferred equity interest). For
appraisal value of the Cayman Hotels, USD is converted into JPY amount via the forward
7

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

exchange rate of USD 1=JPY 110.45 based on the foreign exchange forward contract enteredinto on July 26, 2018 and executed on September 26, 2018.
(Note 3) The average interest rate (annual rate) is calculated by the weighted average based on theoutstanding balance of borrowings and rounded to two decimal places.
(i)

Borrowing of Funds

INV borrowed New Syndicate Loan (012) (total amount borrowed: JPY 31,303 million; interest rate: floatinginterest rate of 3-month JPY TIBOR plus 0.60000% for a duration of six years, floating interest rate of 3-month
JPY TIBOR plus 0.50000% for a duration of five years, floating interest rate of 3-month JPY TIBOR plus 0.50000%
for a duration of five years, floating interest rate of 3-month JPY TIBOR plus 0.40000% (by the interest swap
agreement on June 4, 2024, it is fixed, in effect, at 1.26500%) for a duration of four years, floating interest rate of
3-month JPY TIBOR plus 0.40000% (by the interest swap agreement on June 4, 2024, it is fixed, in effect, at
1.26500%) for a duration of four years, floating interest rate of 3-month JPY TIBOR plus 0.30000% for a durationof three years, floating interest rate of 1-month JPY TIBOR plus 0.20000% for a duration of one year), which wasarranged by Mizuho Bank, Ltd. and Term Loan (019) (total amount borrowed: JPY 2,440 million; interest rate:
floating interest rate of 3-month JPY TIBOR plus 0.50000% for a duration of five years) which was arranged by
The Tokyo Star Bank, Limited, on January 16, 2024 and on January 24, 2024 in order to repay a tranche of New
Syndicate Loan (M) in the amount of JPY 5,796 million, a tranche of New Syndicate Loan (L) in the amount of
JPY 4,805 million, New Syndicate Loan (N) in the amount of JPY 3,544 million, New Syndicate Loan (006) in theamount of JPY 10,408 million due on July 16, 2024 and Term Loan (010) in the amount of JPY 1,550 million, Term
Loan (011) in the amount of JPY 1,700 million and Term Loan (012) in the amount of JPY 6,800 million due on
January 24, 2024.
INV borrowed New Syndicate Loan (013) on March 14, 2024 and March 29, 2024 (total amount borrowed: JPY
7,114 million; interest rate: floating interest rate of 3-month JPY TIBOR plus 0.60000% for a duration of six years,
floating interest rate of 3-month JPY TIBOR plus 0.50000% for a duration of five years and floating interest rateof 3-month JPY TIBOR plus 0.50000% for a duration of five years, floating interest rate of 3-month JPY TIBOR
plus 0.40000% for a duration of four years, floating interest rate of 3-month JPY TIBOR plus 0.30000% for aduration of three years, floating interest rate of 3-month JPY TIBOR plus 0.30000% for a duration of three years
and floating interest rate of 3-month JPY TIBOR plus 0.20000% for a duration of two years), which was arranged
by Mizuho Bank, Ltd. in order to repay a part of New Syndicate Loan (007) in the amount of JPY 4,713 million
due on March 14, 2024 and a tranche of New Syndicate Loan (K) in the amount of JPY 2,401 million due on
March 29, 2024.
Moreover, INV borrowed Term Loan (020) on April 15, 2024 (total amount borrowed: JPY 1,700 million; interest
rate: floating interest rate of 3-month JPY TIBOR plus 0.60000% for a duration of six years), which was arranged
by San ju San Bank,Ltd. in order to repay a tranche of New Syndicate Loan (O) in the amount of JPY 1,700 million
due on April 15, 2024.
Furthermore, INV borrowed Term Loan (021) on June 27, 2024 (total amount borrowed: JPY 1,000 million;interest rate: floating interest rate of 3-month JPY TIBOR plus 0.50000% for a duration of five years), which wasarranged by SBI Shinsei Bank, Limited in order to repay Term Loan (015) in the amount of JPY 1,000 million due
on June 27, 2024.
(ii)

Prepayment of Loan

INV's Short-term consumption tax loan of New Syndicate Loan (010) (in the amount of JPY 3,086 million) was
prepaid on April 30, 2024 with refund of consumption taxes and regional consumption taxes on properties
acquired on August 1, 2023 and cash on hand.
(iii)

Issuance of Investment Corporation Bonds

INV issued investment corporation bonds as follows for the purpose of raising a portion of funds for repaymentof existing borrowings while at the same time lengthening the average maturity period of its debt and further
diversifying repayment dates for interest-bearing debt.
8

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

Bond Series

Issue Date

Issue
Interest Rate Redemption
AmountDate(JPY million) (annual rate)

Eleventh Series Unsecured
Investment Corporation Bonds(with pari passu conditions among
investment corporate bonds)(nickname : INV Hotel Bonds)

February
9, 2024

February 9,
2029

(d)

6,000

1.470%

Abstract
Unsecured /Unguaranteed
Rating: A+(JCR)Overview of Results of Operations and Distributions

As a result of the operations mentioned above, operating revenues for the Reporting Period increased by
JPY 2,316 million from the previous period (+12.3 %) to JPY 21,136 million, resulting in a net income of JPY
12,900 million, an increase of JPY 1,867 million from the previous period (+16.9%). Unappropriatedretained earnings including the retained earnings carried forward from the preceding fiscal period (JPY
8,641 million) is JPY 21,542 million. INV has decided to set the distribution per unit (excluding excess
profit distribution) of JPY 1,917, which is the net income per unit (JPY 1,914) plus the reversal of retained
earnings (JPY 3 per unit).
b

Outlook for the Fiscal Period Ending December 31, 2024

The Japanese economy is considered to be levelling off with negative growth due to the suspension of
production and shipments by some automakers. However, it is expected to return to a growth trajectory
driven by domestic demand as those production and shipments have resumed. Furthermore, householdincome is expected to improve, and personal consumption is expected to pick up, reflecting the wage hikesof more than 5% logged in the spring labor negotiations (Shunto). Moreover, companies are estimated tomaintain a strong investment appetite in line with improved business performance, and capital investment
is expected to remain solid. In addition to this recovery in domestic demand, the decline in the risk of aslowdown in the overseas economy, particularly in the United States, and the continuous increase in inbounddemand are expected to be tailwinds for the economy. On the other hand, if concerns about a recession in
the U.S. economy emerge and the yen rises and stock prices fall rapidly, it could affect the Bank of Japan's
monetary policy and become a strong headwind for the Japanese economy as a whole, including personal
consumption.
In the hotel market, demand in both the domestic/inbound and leisure/business segments is expected toremain stable.
In the rental housing market, the population outflow trend from urban areas caused by the impact of the
COVID-19 pandemic has recently turned to a trend of population inflow again, which is expected to lead tohigher occupancy rates and higher unit rents in the future.

(a)

Future operational policy and issues to be addressed

Since July 2011, INV has focused on improving the profitability of its portfolio and strengthening its financialbase in order to enhance unitholder value with the Fortress Group as its sponsor. In addition to access to
Fortress’ global real estate expertise, INV will actively promote efforts to acquire new demand under theenvironment of "Post-Corona" and flexibly respond to changes in the external environment whileemphasizing customer safety and security. Going forward, INV will continue to implement various
strategies for further growth and financial stability, including the following measures.
Further external growth utilizing sponsor supportAsset recycling: property acquisitions using the proceeds from salesInternal growth at hotels through reducing costs, stimulating existing demand and creating new
demand by collaborating with hotel operators

Further internal growth at residential properties

Response to the risk of rising interest rates

9

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

Details of the future growth strategy are as follows.
(i)

External growth strategy
New Property Acquisitions
As its basic strategy, INV had moved forward with the acquisition of new properties focusing on hotels,
where continued growth in portfolio revenues would be anticipated, and residential properties, especiallywhere rental growth could be achieved, to build a portfolio with a good balance between growth andstability.
In regard to hotels, INV will take into consideration demands of business and leisure customers in nearby
areas, and leasing contract types when making investment decisions, with the aim of acquiring properties
where growth and stability of GOP and rental revenue are forecasted to increase.
In regard to residential properties, INV will analyze occupancy rates, rental market trends, the presenceof competing properties among other factors, and consider acquiring properties with strong
competitiveness, in which it believes it can achieve increases in rent.
Properties Acquired from affiliates of the Fortress Group (as of the date of this document)
Year

Properties acquired

Total acquisition price2012

24 residential properties (Note 1)

JPY 14,043 million (Note 1)

2014

20 hotels
14 hotels andthree residential properties (Note 2)

JPY 45,373 million

2015

JPY 45,238 million (Note 2)

2016

11 hotels andtwo residential properties

JPY 92,804 million

2017

six hotels andtwo residential properties (Note 3)

JPY 90,006 million (Note 3)

2018
2019

12 hotels (Note 4)
18 hotels

JPY 104,280 million (Note 4)
JPY 82,646 million

2020
2023

Two hotels
Six hotels

JPY 16,236 million
JPY 57,230 million

2024(Note 1)
(Note 2)
(Note 3)(Note 4)12 hotels
JPY 104,420 million
132 properties
JPY 652,278 million
Total(of which 101 are hotels and 31 are(of which hotels: JPY 600,640 million;
residential properties)
residential: JPY 51,638 million)
Of the properties acquired from affiliates of the Fortress Group, 15 residential properties have beensold.
Of the properties acquired from affiliates of the Fortress Group, one residential property has beensold.
Of the properties acquired from affiliates of the Fortress Group, one residential property has beensold. Sheraton Grande Tokyo Bay Hotel was acquired through a special purpose company, of which
INV owns the preferred equity interest, and is counted as one property and INV’s investment amountof the preferred equity interest is counted as the acquisition price of the preferred equity interest.
The Cayman Hotels acquired by the Cayman SPC, of which INV owns the TK interest, are counted
as two properties and INV’s investment amount of the TK interest is used as the acquisition price of
the TK interest. After the Structure Change, INV currently has direct ownership of the Leasehold of
the Cayman Hotels.

Property Sales
INV considers the possibility of portfolio optimization upon consideration of the portfolio sector composition,
geographic distribution, and competitiveness of each property as appropriate.

10

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)(ii)

Strategy for internal growth(Hotels)
Of the 90 domestic hotels (Note 1) owned by INV as of the end of the Reporting Period, 82 hotels use avariable rent scheme. In the variable rent scheme, in principle, INV receives all of the gross operating
profit (GOP) after deducting payment of management fees for the hotel operator as rents. For 79 hotelsof the 82 hotels, MHM and subsidiaries of MHM have implemented sophisticated revenue management
initiatives seeking to maximize revenue through effectively capturing accommodation demand. As aresult, INV can directly enjoy the hotel revenue upside through this variable rent scheme.
In response to the reduction in hotel demand, the MHM Group is taking steps to reduce hotel operating
expenses and recover revenues by reviewing its operational strategy. INV will strive to minimize theimpact of rising costs such as utility costs and foodstuffs by means of a thorough review of staffing andwork shifts, continuous efforts to reduce fixed costs, and strategies to maximize GOPPAR (GOP per thenumber of rooms available for sale).
The MHM Group vigorously worked to stimulate demand from domestic customers by providing
corporate customers with diverse options including a new lineup of meeting options highlighting strictmeasures to reduce the spread of COVID-19 and various options including educational tours andemployee training while grasping changes in customer demand under the “Post-Corona” environment.
In addition, the MHM Group is focusing on creating demand, including continuation of delivery and takeout services and the development of new menus through directly managed restaurants in the hotel.
For hotels, renovation of rooms and replacement of fixtures and fittings are indispensable to maintain andincrease revenues and operate stably in a planned manner.
(Note 1) Including Sheraton Grande Tokyo Bay Hotel (the preferred equity interest).

(Residential properties and others)
INV will continue to strengthen its collaborative ties with property managers and brokers to further boost
occupancy rates and earning capabilities of its properties. With respect to INV’s residential properties,
INV will focus on increasing the occupancy rates and rents for both new lease contracts and lease renewals
for all its properties as well as formulating net leasing cost reduction policies in order to continue
maximizing profits.
Further, the implementation of appropriate maintenance and repair plans is of the utmost importance inmaintaining and enhancing the competitiveness and market value of the properties as well as ensuringhigh tenant satisfaction. Therefore, INV will continue to monitor current strategic plans with flexible
implementation as it sees fit.
(iii) Financial strategy
INV will continue to extend the average interest-bearing debt repayment periods, diversify the loan
maturity dates and diversify financing measures while paying attention to fund procurement costs, as wellas maintaining an appropriate fixed interest rate ratio to mitigate the risk of rising interest rates.
By implementing these measures, INV will seek to improve the credit rating (the long-term issuer rating“A+” (Outlook: Stable)) obtained from Japan Credit Rating Agency, Ltd. (JCR).
(iv)

Compliance risk management
While the executive director of INV concurrently serves as the representative director at CIM, two
supervisory directors (an external attorney and an external certified public account) oversee the execution of
the executive director’s duties via the Board of Directors of INV.
CIM has a compliance officer who is responsible for compliance with laws, regulations and other relevant
matters as well as overall management of transactions with sponsor related parties. Moreover, it has inplace a compliance committee which, chaired by such compliance officer, is in charge of deliberating on
compliance with laws, regulations and other relevant matters as well as transactions with sponsor related
11

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

parties. Compliance committee meetings are attended by an outside expert (an attorney) who, sitting in as
a compliance committee member, conducts rigorous deliberations on the existence of conflicts of interest intransactions with sponsor related parties as well as strict examinations with respect to INV’s compliancewith laws and regulations. No resolution will be adopted unless the outside expert agrees.
When INV conducts certain transactions such as an asset acquisition from sponsor related parties, priorapprovals by the Board of Directors of INV are required to ensure objectivity in deliberation regarding
conflicts of interests. In such agenda, only two supervisory directors (a lawyer and a certified public
accountant) will participate in the vote, and the executive director who concurrently serves as therepresentative director of CIM will not participate in the vote as he is a special interested party.
INV intends to continually take steps to strengthen its compliance structure.
(v)

Initiatives for Sustainability
INV and CIM recognize the importance of environmental, social, and governance (ESG) considerations
in real estate investment management from the viewpoint of sustainability such as economic and social
development and contributing to global environmental conservation, and regard improvement ofsustainability as an important management issue. INV and CIM believe that the incorporation of ESG
considerations into the real estate investment management business, which is our primary business, isessential to maximizing unitholder value over the medium to long term and contributes to maximizing
INV's investment returns.
Thus, INV and CIM have established a “Sustainability Policy” to set basic policies for sustainability andput them into practice in our daily operations.
Under this policy, CIM has formulated the “Energy Conservation Policy”, the “Greenhouse Gas
Emissions Reduction Policy”, the “Water Saving Policy” and the “Waste Management Policy” which
stipulate efforts to reduce environmental impact as initiatives for environment. In addition, CIM has
established the “Sustainable Procurement Policy” in order to promote initiatives for ESG throughout thevalue chain of INV's real estate portfolio and concluded the “Green Lease” contract with tenants tocollaborate with tenants on measures related to the environmental consideration of real estate, such asproactive introductions of energy-saving equipment such as LED lighting.
Furthermore, as of the date of this document, INV acquired CASBEE Certification for Buildings (Existing
Buildings) for five hotels, and Certification for CASBEE for Real Estate for three residential properties.
CASBEE is a method that comprehensively assesses the quality of a building, and evaluates features suchas interior comfort and scenic aesthetics, in consideration of environment practices including use ofmaterials and equipment that save energy or achieve smaller environmental loads. Also, as of the dateof this document, 19 hotels owned by INV acquired the certification of Building-Housing Energyefficiency Labeling System (“BELS”). In particular, Hotel MyStays Premier Akasaka, Hotel MyStays
Fukuoka Tenjin, Hotel MyStays Yokohama Kannai, Hotel MyStays Oita, Hotel MyStays Haneda andHotel MyStays Matsuyama have been rated five stars “★★★★★” due to high energy conservation
performance.
Following the acquisition of environmental certifications for its properties, INV issued green bonds in
September 2023 and December 2023 to further promote its sustainability initiatives and to strengthen its
fund-raising base by expanding the investor base interested in ESG investment. Furthermore, INV
executed refinancing with green loans in January 2024 and March 2024.
As initiatives for society, CIM is working on various measures for tenants and CIM’s officers andemployees. CIM conducts the “Tenant Satisfaction Survey” for residents of INV’s residential properties
to collect opinions and requests of residents and utilize them for asset management, and provides
sustainability-focused training for all officers and employees at least once a year to help officers andemployees acquire knowledge and raise awareness of sustainability considerations in line with businesspractices. Moreover, as initiatives for CIM’s employees, CIM conducts an employee satisfaction survey
once every three years with the aim of improving its working environment, and gives full subsidy for acomprehensive medical checkup without age restrictions.

12Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

As a result of other sustainability promotion activities, INV received a "3-Star" rating in the 2023 GRESBReal Estate Assessment, an international benchmark assessment that measures ESG integration of realestate companies and funds on a five-level rating scale, and an "A level" in the GRESB Public Disclosure
assessment, the highest rating.
INV will continue to recognize its social responsibility to the environment and local communities as a JREIT with hotels and residences as our core assets, and will proactively implement ESG-friendly
investment management and sustainability initiatives that take advantage of asset characteristics andcarry out social contribution activities.
c

Significant Subsequent Events(a)Issuance of New Investment Units
INV resolved at its meetings of the Board of Directors held on July 18, 2024 and July 24, 2024 respectively
to conduct the issuance of new investment units and secondary offering of investment units.
for the issuance of new investment units was completed on July 30, 2024.

Payment

Payment for the third-party

allotment in connection with overallotment will be completed on August 27, 2024.

As a result, theunitholders’ capital of INV is going to be JPY 326,079 million and the total number of issued investment
units is going to be 7,646,453 units when the payment for 14,332 units subscribed for the third-party
allotment is completed.

(i) Issuance of new investment units through Public Offering
Number of investment units to be offered:

Amount to be paid (issue value)
Total amount to be paid (total issue value)
Issue price (offer price)
Total issue price (total offer price)
Payment date

:
:
:
:

895,000 investment units
Domestic public offering: 472,113 investment units
Overseas offering: 422,887 investment units
JPY 61,560 per unit
JPY 55,096,200,000
JPY 63,602 per unit
JPY 56,923,790,000
July 30, 2024(ii) Issuance of new investment units through third-party allotment
Number of investment units to be offered
Amount to be paid (issue value)
Total amount to be paid (total issue value)
Payment date
Allottee
(b)

:
:
:
:
:

14,332 investment units
JPY 61,560 per unit
JPY 882,277,920
August 27, 2024
Mizuho Securities Co., Ltd.

Debt Financing
In order to fund a portion of the acquisition price for 12 hotel properties (domestic real estate trust
beneficiary interests) acquired on July 31, 2024, INV resolved the following debt financing at a meetingof the Board of Directors held on July 18, 2024, and entered into a loan agreement on the same day.

13

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

New Syndicate Loan (015)
Borrowing

LenderDate

Outstanding
Balance(JPY million)

Interest Rate

Maturity

Borrowing(annual rate)

Date

MethodMizuho Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation

Floating
July 31, 2024

3,425 interest rate
(Note 1)

Sumitomo Mitsui Trust

July 31,

Unsecured/2025

non guarantee

Bank, Limited
Floating
Mizuho Bank, Ltd.

July 31, 2024

1,500 interest rate
(Note 1)

July 31,

Unsecured/2025

non guarantee

SBI Shinsei Bank, Limited
The Bank of Fukuoka, Ltd.
The Chiba Bank, Ltd.
The Chukyo Bank, Ltd.

Floating
July 31, 2024

6,500 interest rate July 16, 2029

The Kiyo Bank, Ltd.

(Note 2)

Unsecured/
non guarantee

The San-In Godo Bank, Ltd.
Suruga Bank Ltd.
MUFG Bank, Ltd.

July 31, 2024

1,500

1.59750％

July 16, 2030

Unsecured/
non guarantee

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited

Floating
July 31, 2024

20,733 interest rate July 16, 2030

Development Bank of(Note 3)

Unsecured/
non guarantee

Japan, Inc.
San ju San Bank, Ltd.
The Chiba Bank, Ltd.
The Kiyo Bank, Ltd.
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust
Bank, Limited
Development Bank ofJapan, Inc.
The Yamaguchi Bank Ltd.
The Tochigi Bank Ltd.

Floating
July 31, 2024

23,067 interest rate July 16, 2031
(Note 4)

The Kagawa Bank Ltd.
Total Debt

56,725(Note 1) 1-month JPY TIBOR (Base Rate) + spread (0.20000%)(Note 2) 3-month JPY TIBOR (Base Rate) + spread (0.50000%)(Note 3) 3-month JPY TIBOR (Base Rate) + spread (0.60000%)(Note 4) 3-month JPY TIBOR (Base Rate) + spread (0.70000%)

14

Unsecured/
non guarantee

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)(c)

Acquisition of Assets (Properties)
The Asset Manager decided to acquire 12 hotels as follows on July 18, 2024, and the acquisition of assets
has been completed on July 31, 2024.

Property
Number

Property Name

AcquisitionPrice(million yen)Appraisal
Value(million yen)
(Note 1)

Seller

D90

Art Hotel Osaka Bay Tower &Solaniwa Onsen

31,18531,500Ganges Tokutei Mokuteki Kaisha

D91

Hakodate Kokusai Hotel

16,83017,000

Hakodate Tokutei Mokuteki Kaisha

D92

Art Hotel Nippori Lungwood

16,335

16,500

Nippori Tokutei Mokuteki Kaisha

D93

Hotel MyStays Kumamoto
Riverside

6,831

6,900

Rishiri Tokutei Mokuteki Kaisha

D94

Art Hotel Aomori

5,672

5,730

Shiretoko Tokutei Mokuteki Kaisha

D95

Kamenoi Hotel Izukogen

5,563

5,620

Yakushima Tokutei Mokuteki Kaisha

D96

Art Hotel Oita

5,484

5,540

Shiretoko Tokutei Mokuteki Kaisha

D97

Art Hotel Kokura New Tagawa

4,672

4,720

Kawaguchiko Tokutei Mokuteki Kaisha

D98

Art Hotel Miyazaki Sky Tower

3,821

3,860

Rishiri Tokutei Mokuteki Kaisha

D99

Art Hotel Kagoshima

3,395

3,430

Shiretoko Tokutei Mokuteki Kaisha

D100

Kamenoi Hotel Hikone

2,603

2,630

Yakushima Tokutei Mokuteki Kaisha

D101

Kamenoi Hotel Nara

2,029

2,050

Yakushima Tokutei Mokuteki Kaisha

104,420

105,480

Total(Note 1) Appraisal Value is based on appraisal value stated in the appraisal report by the Japan Real Estate Institute., JLL Morii
Valuation & Advisory K.K., The Tanizawa Sōgō Appraisal Co., Ltd. or Daiwa Real Estate Appraisal Co., Ltd. on the valuation dateof June 1, 2024.

15

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)(Reference Information)(a)Debt Financing
INV decided to borrow New Syndicate Loan (014) on July 11, 2024 and borrowed on July 16, 2024 in orderto repay a tranche of New Syndicate Loan (L) in the amount of JPY 4,943 million, a tranche of New
Syndicate Loan (M) in the amount of JPY 5,796 million, two tranches of New Syndicate Loan (009) in theamount of JPY 7,958 million, and Term Loan (W) in the amount of JPY 1,582 million due on July 16, 2024.

(i) New Syndicate Loan (014)
Borrowing
Date

Lender
SBI Shinsei Bank, Limited

BorrowingAmount(JPY million)

July 16,
2024

3,300

July 16,
2024

4,692

Mizuho Bank, Ltd.
SBI Shinsei Bank, Limited
MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Aozora Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedJuly 16,
2024

2,791

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,
LimitedDevelopment Bank of Japan,
Inc.

July 16,
2024

5,079

The Bank of Fukuoka, Ltd.

Interest Rate(annual rate)
Floating
interest rates(Note 1)Maturity
Date

Borrowing
MethodJuly 14,2028

Unsecured/
non guarantee

July 16,
2029

Unsecured/
non guarantee

July 16,2030

Unsecured/
non guarantee

July 16,
2031

Unsecured/
non guarantee

Mizuho Bank, Ltd.,SBI Shinsei Bank, Limited
MUFG Bank, Ltd.,
Sumitomo Mitsui Banking
Corporation,
Sumitomo Mitsui Trust Bank,
LimitedFloating
interest rates(Note 2)The Nomura Trust andBanking Co., Ltd.

Floating
interest rates(Note 3)

Floating
interest rates(Note 4)

Total

15,862(Note 1) 3-month JPY TIBOR (Base Rate) + spread (0.40000%)(Note 2) 3-month JPY TIBOR (Base Rate) + spread (0.50000%)(Note 3) 3-month JPY TIBOR (Base Rate) + spread (0.60000%)(Note 4) 3-month JPY TIBOR (Base Rate) + spread (0.70000%)16

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)d

Operational Outlook

The forecasts of financial results for the fiscal periods ending December 31, 2024 (from July 1, 2024 to December
31, 2024) and June 30, 2025 (from January 1, 2025 to June 30, 2025) are as follows.
December 2024
Fiscal Period(Anticipated)(Anticipated)

Operating Revenues

JPY 23,720 million

JPY 24,247 million

Operating Income

JPY 16,235 million

JPY 16,704 million

Ordinary Income

JPY 13,719 million

JPY 14,468 million

Net Income

JPY 13,718 million

JPY 14,467 million

Total Distribution Amount(Including excess profit distribution)

JPY 13,740 million

JPY 14,490 million

Net Income per Unit

JPY 1,794

JPY 1,892

Distribution per Unit
(Excluding excess profit distribution)

JPY 1,797

JPY 1,895--

JPY 1,797

JPY 1,895

Excess Profit Distribution per Unit
Distribution per Unit
(Including excess profit distribution)

June 2025
Fiscal Period

For the assumptions underlying the operational outlook for the fiscal periods ending December 31, 2024 andJune 30, 2025, please see “Assumptions Underlying the Forecast of Financial Results and Distribution for the
Fiscal Periods ending December 31, 2024 and June 30, 2025” as follows.
(Cautionary Note regarding Forward Looking Statements)
Forward looking statements such as the forecasts set forth herein are based on information currently available
and certain assumptions that are deemed reasonable. Actual operating performance may vary significantly
due to factors not foreseen as of the date of this document, such as the occurrence of gains and losses associatedwith the sale of properties, repayment of borrowings and a decrease in rent received. Also, this forecast is
not a guarantee of distribution amounts.

17

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)<Assumptions Underlying the Forecast of Financial Results and Distribution for the Fiscal Periods
ending December 31, 2024 and June 30, 2025 >Item

Assumptions

The December 2024 Fiscal Period: from July 1, 2024 to December 31, 2024 (184 days)
Fiscal period

The June 2025 Fiscal Period: from January 1, 2025 to June 30, 2025 (181 days)
Properties held as of the end of the December 2024 Fiscal Period: 145 properties and preferred
equity interests in one TMK

Assets undermanagement

Properties held as of the end of the June 2025 Fiscal Period: 145 properties and preferred equity
interests in one TMK
Based on the properties held as of today (145 properties and preferred equity interests in one TMK),
and INV assumes that there will be no change in the portfolio through the end of the fiscal period
ending June 2025.
As of the end of the December 2024 Fiscal Period: 7,646,453 units
As of the end of the June 2025 Fiscal Period: 7,646,453 units

Units outstanding

INV assumes that in addition to the total number of investment units issued and outstanding of
7,632,121 units as of today, 14,332 new investment units will be issued through a third party
allotment on August 27, 2024 and that the expected number of investment units issued andoutstanding will be 7,646,453 units. INV assumes that there will be no additional issuance of units
thereafter through the end of the June 2025 Fiscal Period.
Balance as of the end of the December 2024 Fiscal Period: JPY 321,497 million (borrowing: JPY
300,597 million, investment corporation bonds: JPY 20,900 million)

Interest-bearing
liabilities

Balance as of the end of the June 2025 Fiscal Period: JPY 321,497 million (borrowing: JPY 300,597
million, investment corporation bonds: JPY 20,900 million)
INV intends to refinance or issue investment corporation bonds of the same amount of loan andinvestment corporation bonds due from August 2024 to the end of June 2025 Fiscal Period. INV
assumes no other new loan, issuance of investment corporation bonds or prepayment of loan
through the end of the June 2025 Fiscal Period.

18

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

INV expects to record rental revenues for the fiscal periods as follows:
As for the demand for hotels in Japan, INV conservatively assumes that the domestic demand
would slightly decrease compared to the demand in 2023, when the government was implementing
support for the tourism industry. At the same time, a temporary demand increase for hotels inOsaka due to “World EXPO 2025 in Osaka” starting in April 2025 is assumed and included in theforecast.
As for the demand from inbound travelers, it has been growing and the number of inbound visitors
in 2024 is estimated to exceed that in 2019 prior to COVID-19, due to growth in demand fromcountries except for China, while the number of Chinese tourists visiting Japan is expected to beslightly less than that in 2019, prior to COVID-19. Further, although the increase in demand in 2025
from inbound visitors due to “EXPO 2025 in Osaka” is assumed, it is assumed that the demand in
2025 would exceed that in 2024 even if the demand from “EXPO 2025 in Osaka” is absent.
In addition to the demand forecasts above, INV has taken into account various factors including
scheduled conferences, concerts and other events in the vicinity of each hotel, situations ofcompetitors and price trends, etc., to forecast hotel rents for the period ending December 31, 2024
and thereafter. The reservations for the period from July to August 2024 already made as of theforecast are also taken into account.
December 2024
June 2025
Fiscal Period
Fiscal Period
JPY 21,011 million
JPY 18,674 million(JPY 19,228 million)(JPY 16,842 million)(JPY 8,440 million)(JPY 6,594 million)(JPY 10,788 million)(JPY 10,247 million)
JPY 2,020 million
JPY 4,630 million(USD 12,943 thousand) (USD 31,042 thousand)JPY 687 million
JPY 942 million
JPY 23,720 million
JPY 24,247 million

・Rental revenues(of these, hotel rents)(Fixed hotel rents)(Variable hotel rents)
・Management contract revenue
・TMK dividend amount
Total operating revenues

Operating revenues

INV estimates the amount of dividend income from preferred equity interests based on theperformance the underlying asset backing the cash flows and the assumed amount of expenses
incurred by the TMK. Also, as for the Fiscal Period ended June 2024, the amount of dividend
income received was equivalent to the amount of dividend income for 12 months (calculation
period: April 2023-March 2024). This is due to the temporary adjustment of financial period of the
TMK which was caused by the COVID-19-related decrease of revenue from the underlying asset,
SGTB (in which INV owns a preferred equity interest), resulting in the TMK recording cumulative
losses. However, INV expects to receive dividends with the amount for 6 months as usual in the
Fiscal Period ending December 2024 and the Fiscal Period ending June 2025 as the cumulative
losses were eliminated and the TMK returned to a six-month financial period from April 2024.
Further, the potential sale of SGTB, the underlying asset of TMK which INV owns its preferred
equity, is under consideration (including the scheme of selling beneficiary right of the TMK), and
it is possible that INV could conclude a contract to sell this property in the near future. If such
event occurred, a considerable amount of profit from the sale would be recorded and distributedin the fiscal period when the sale concluded (or the fiscal period when the INV receives thedividend reflecting the amount of the profit from the sale from the TMK). After such fiscal period,
INV’s profit would be affected by not receiving the income related to the TMK owning SGTB.
Please note that, as of the date of this document, no determination has been made regarding thesale, including the timing and terms and conditions in the case of any sale, and there is no
guarantee or assurance that the property will ultimately be sold. Thus, the potential effect fromthe sale is not included in the forecasts until Fiscal Period ending June 2025.
INV receives revenue and recognizes management contract revenues from Overseas Hotels. The
forecast of management contract revenues is based on estimated performance of the underlying
assets and the assumed amount of expenses incurred by the hotel management company. Also,
as for the management contract revenue, a large portion is hedged with foreign exchange forward
based on USD. For more details, please refer to the press releases “Notice concerning Executionof Foreign Exchange Forward” dated on March 10, 2023 and May 31, 2024.
As for the management contract revenue for the Fiscal Period ended June 2024, it has been
calculated based on the monthly average exchange rate of each month, and management contract
revenue for Fiscal Period ending December 2024 and Fiscal Period ending June 2025 is based on (i)the rate of foreign exchange reserves for the hedged portion, (ii) the exchange rate of USD 1 = JPY
150 for the non-hedged portion.
In addition, INV plans to implement renovation work at Sunshine Suites Resort, and we expect a
decline in revenue in the fiscal period ending December 2024, the fiscal period ending June 2025,
and after that period (August 2024-November 2024 and May 2025-August 2025 (scheduled)), due
to partial sales stoppage during such renovation. While INV is considering the expansion andrenovation of Westin Grand Cayman Seven Miles Beach & Resort, details are yet to be determined.
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Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

Therefore, INV does not anticipate or incorporate any particular impact of the expansion andrenovation for the purpose of this forecast through the end of the fiscal year ending June 2025.
Rental revenues in the fiscal period ending December 2024 and the fiscal period ending June 2025
are calculated based on estimates as of today. In addition, INV assumes there will be nodelinquencies or non-payment of rent by other tenants.
INV expects to incur property related expenses out of operating expenses for the fiscal periods asfollows:

・Facility management fees(of these, repair costs)
・Taxes and other public charges (Note 1)
・Insurance expenses
・Depreciation expenses
・Other expenses
Total property related expenses andmanagement contract expenses
Operating expenses

December 2024
Fiscal Period
JPY 604 million(JPY 47 million)
JPY 832 million
JPY 300 million
JPY 4,991 million
JPY 141 million

June 2025
Fiscal Period
JPY 589 million(JPY 20 million)
JPY 752 million
JPY 300 million
JPY 5,161 million
JPY 159 million

JPY 6,871 million

JPY 6,963 million(Note 1) Property taxes and city planning taxes on the assets acquired in 2024 are calculated on a pro-rata basiswith the previous owners and settled at the time of acquisition, and are not recorded for the fiscal period
ending December in the year of acquisition of assets and recorded from the fiscal period ending Junein the following year of acquisition of assets as the amount equivalent to such settlement is included in
the acquisition cost. For the 12 hotels acquired on July 31, 2024, INV expects to record the property
taxes and city planning taxes of JPY 180 million as part of the total acquisition cost, and an annual
amount of JPY 427 million of such taxes as expenses starting from the fiscal period ending June 2025.

INV expects to incur other operating expenses than the property related expenses or management
contract expenses for the fiscal periods as follows:・Other operating expenses

December 2024
Fiscal Period
JPY 613 million

June 2025
Fiscal Period
JPY 580 million(of these, asset management fees)(JPY 450 million)(JPY 450 million)

INV expects to record net operating income for the fiscal periods as follows:

NOI

December 2024
Fiscal Period

June 2025
Fiscal Period・NOI

JPY 21,840 million

JPY 22,445 million(of these, domestic hotel NOI)(of these, overseas hotel NOI)(of these, residential NOI)(JPY 18,925 million)(JPY 1,715 million)(JPY 1,122 million)(JPY 16,893 million)(JPY 4,328 million)(JPY 1,146 million)

NOI calculation method in the above table is as follows
・NOI ＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses + Dividends
on the preferred equity interest (TMK dividend) + (Management Contract Revenue ‐Management Contract Expense)
INV expects to incur non-operating expenses for the fiscal periods as follows:

Non-operating
expenses・Interest expense
・Finance related costs・Interest for investment corporation bonds
・Depreciation of investment corporation
bonds issuance expenses
・Other non-operating expenses (expenses
relating to the issuance of new units for
the Public Offering)
Total non-operating expenses

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December 2024
Fiscal Period
JPY 1,432 million
JPY 745 million
JPY 121 million

June 2025
Fiscal Period
JPY 1,478 million
JPY 618 million
JPY 122 million

JPY 16 million

JPY 16 million

JPY 200 million-

JPY 2,516 million

JPY 2,235 million

Financial Summary for the June 2024 Fiscal Period(from January 1, 2024 to June 30, 2024)

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

Distribution perunitWith respect to the distribution for the fiscal period ending December 2024, INV expects todistribute an aggregate amount of JPY 13,740 million (distribution per unit: JPY 1,797) from the net
income for the fiscal period ending December 2024 (JPY 13,718 million) including the JPY 22 millionof reversal of retained earnings (internal reserve).
With respect to the distribution for the fiscal period ending June 2025, INV expects to distribute anaggregate amount of JPY 14,490 million (distribution per unit: JPY 1,895) from the net income forthe fiscal period ending June 2025 (JPY 14,467 million) including the JPY 22 million of reversal ofretained earnings (internal reserve).
Distribution per unit may vary due to various factors, including changes in the assets undermanagement, fluctuation of rent income associated with reasons such as change of tenants andoccurrences of unexpected repairs.
INV believes maintaining the stability of cash distributions over the medium term is an importantfactor in determining the amount of distribution for a given fiscal period, and therefore, INV has
adopted the policy to make distributions in excess of profits or reversal of retained earnings(“distributions in excess of profits, etc.” together with distributions in excess of profits hereinafter)in order to stabilize distributions, in cases where a dilution of investment units or significant
expenses are to be recorded in connection with, among other things, the acquisition of assets or theraising of capital, leading to a temporary decrease in distribution per unit, taking into consideration
the level of distribution per unit assuming such acquisition of assets or capital raising had
contributed for a full fiscal period.

Excess profit
distribution per unit

INV may also consider making distributions in excess of profits for the purpose of reducing theimpact from a corporate tax increase arising from different rules in tax and accounting practices,such as treatment on depreciation of fixed term land lease or asset retirement obligation.
With respect to the fiscal period ending December 2024, INV plans to distribute the reversal ofretained earnings (internal reserve) (JPY 3 per unit) as “distributions in excess of profit for thedifference arising from the difference between tax and accounting treatment.”
With respect to the fiscal period ending June 2025, INV plans to distribute reversal of retained
earnings (internal reserve) (JPY 3 per unit) as “distributions in excess of profit for the difference
arising from the difference between tax and accounting treatment.”
December 2024
Fiscal Period
Excess profit distribution per unit

June 2025
Fiscal Period--

INV assumes there will be no amendments to applicable laws and regulations, the taxation system,
accounting standards and other regulations that would affect the foregoing forecasts.
Other

(2)

In addition, INV assumes there will be no unforeseen material changes in general economic trends,
real estate market conditions and other trends and conditions.

Investment Risk

Disclosure is omitted because there have been no material changes in the “Investment Risk” section of the latest
securities registration statement (filed on July 18, 2024).

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