This is an English language summary of the original Japanese Asset Management Report available on our
Website. However, no assurance or warranties are given with respect to the accuracy or completeness of
this English language summary. The Japanese original shall prevail in the case of any discrepancies
between this summary and the Japanese original.

Invincible Investment Corporation
Asset Management Report
Fiscal Period ended June 30, 2017 (January 1, 2017 to June 30, 2017)
Contents
Greetings from Naoki Fukuda, Executive Director of Invincible Investment Corporation
and President & CEO of Consonant Investment Management Co., Ltd.
Summary of Financial Results
Performance and Forecast of Core Assets
Initiatives in 2017 YTD (As of August 31, 2017)
Sponsor Pipeline
MyStays Hotel Management

I.
II.
III.
IV.
V.
VI.
VII.
VIII.

Asset Management Report
Balance Sheet
Statement of Income
Statement of Unitholders’ Equity
Notes
Statement of Cash Distribution
Audited ReportStatement of Cash Flows (Reference Information)

Portfolio Map
Portfolio Overview
Financial Conditions

Overview of Unitholders/Investment Units
Information for Unitholders

1Greetings from Naoki Fukuda, Executive Director of Invincible Investment Corporation andPresident & CEO of Consonant Investment Management Co., Ltd.
I would like to take this opportunity to express my sincere gratitude to all unitholders of Invincible
Investment Corporation (“INV”) for your continued support.
We hereby provide you with a report on INV’s asset management and financial results for the 28th fiscal
period (covering the period from January 1, 2017 to June 30, 2017; the “Reporting Period”).
INV positions hotels and residential properties as its core assets and proactively conducts management
activities to maximize growth and stability of the portfolio.
During the Reporting Period, INV acquired two residential properties with proceeds from the March 2017
public offering along with new borrowings. Royal Parks Tower Minami-Senju, one of the properties
acquired, is a 39 story high-rise apartment with 555 residential units. It serves as the flagship residential
property in the portfolio as it is the largest residential property by acquisition value and is also the second
largest property in the entire portfolio (by acquisition value). Following the acquisition of these twohigh-quality residential properties, INV acquired Hotel MyStays Premier Hamamatsucho in May 2017 withnew borrowings and cash on hand without issuing new equity. The hotel is one of five MyStays branded
hotels with the “Premier” distinction in its name. Hotel MyStays Premier Hamamatsucho has 120 recently
renovated guest rooms and boasts a large room size of 28.5 m2, capable of accommodating three to fiveguests and offers excellent access to Haneda Airport and nearby connections to the Shinkansen (bullet
train), making the property an attractive destination for both domestic and foreign guests. Thesetransactions are a continuation of INV’s efforts to provide steady external growth in its core asset classes ofhotels and residential properties.
INV benefits from an abundant pipeline of assets from affiliates of Fortress Group based on the
Memorandum of Understanding (MOU). The MOU provides INV with preferential negotiation rights toacquire both hotels and residential properties, and consists of 30 properties as of the end of the Reporting
Period (21 hotels with 6,007 rooms and 9 residential properties with 743 units).
In regards to the hotel portfolio, INV continues to work closely with MyStays Hotel Management Co., Ltd.
(“MHM”), a hotel operator in the sponsor group, and recently implemented the conversion of smoking
rooms to non-smoking rooms to reflect changes in customer preferences in order to achieve higher dailyrates, a strategic increase in the overbooking ratio to reduce last-minute cancellations and improve guest
room daily rates. At the same time, INV continues to focus on maximizing revenue by capturing a large
percentage of inbound guests by capitalizing on the strong increase in foreign visitors to Japan bypromoting MHM hotels via tie-ups with Asian airline companies/credit card companies, and by improving
the booking website.
As for the residential portfolio, INV conducts proactive asset management to further improve property
performance and streamline operational management, and has been working to consolidate master lessees
and property managers (the “ML/PM”). Since the end of last year, INV changed the ML/PM at 20
properties, further improving rates of rent increases as well as reducing operational costs including PM fees
which all contribute to higher net operating income.
As a result, operating revenues reached JPY 9,260 million, operating income JPY 5,344 million and net
income JPY 4,702 million, with a distribution per unit (DPU) of JPY 1,264, an increase of 6.6%
year-on-year(1).
INV will continue to implement its basic policy to “increase DPU,” and will ensure the implementation of
measures to maximize unitholder value.

2

Your continued support is highly appreciated.
Naoki Fukuda
Executive Director, Invincible Investment Corporation
President & CEO, Consonant Investment Management Co., Ltd.

(1) Comparison with the fiscal period ended June 2016. In order to eliminate seasonal factors of hotel
variable rents, which is one of the major revenues of INV, in the comparison, the comparison is madewith the same period in the previous year and not with the previous fiscal period (ended December
2016)
Distribution per unit for the 28th fiscal period(the fiscal period ended June 2017)(Note)

JPY 1,264

The forward-looking statements, forecasts and goals described in this report are based on available information,
assumptions and estimates as of August 31, 2017. These assumptions and estimates are unavoidably uncertain, andcould be affected by various risks and factors beyond INV’s control. Thus, no guarantee can be made regarding therealization of such future forecasts and targets, and actual results may vary significantly3Summary of Financial Results
Period from
July 1, 2015 to
December 31, 2015

Period fromJanuary 1, 2016 toJune 30, 2016

Period from
July 1, 2016 to
December 31, 2016

Period fromJanuary 1, 2017 toJune 30, 2017

Operating Revenues(JPY million)

6,863

8,158

9,511

9,260

Ordinary Income(JPY million)

2,953

4,364

5,431

4,702

Net Income(JPY million)

2,952

4,363

5,431

4,702

Net Assets(JPY million)

91,758130,005

131,455

139,062

Total Assets(JPY million)

185,918

284,106

277,361

306,421

Net Assets per Unit
(JPY)

28,73135,36835,76236,019Net Assets/Total Assets
(%)

49.4

45.8

47.4

45.4

Distribution per Unit
(JPY)

1,187

1,186

1,477

1,264

Number of Units Issued(Unit)

3,193,686

3,675,824

3,675,824

3,860,824(Note) Figures are rounded down to the indicated unit and percentages are rounded off to one decimal place.
However, “Net Assets per Unit” have been rounded off to the nearest specified unit.

4

Performance and Forecast of Core Assets

Positioning hotels and residential properties as core assets, INV aims for steady growth ofassets under management and securing stable revenues
Hotel

For the full year of 2017, INV estimates year-on-year growth for all KPI.

(Note 1)

(Note 2)

Calculated based on results and forecasts for 40 hotel properties out of the 49 hotel properties in our portfolio asof June 30, 2017 (excluding 9 hotels with fixed rent lease agreements). For properties INV acquired between
January 2016 and June 2017, the results prior to the acquisition are calculated based on the results provided by therespective sellers.
In calculating the GOP, the rent received by INV for APA Hotel Yokohama-Kannai is regarded as GOP of thehotel.

5

Residence
A rent increase program systematically applied since 2014 has created a foundation for sustained NOI
growth(Note 1)

(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)

Calculated based on the results and forecasts for the 70 residential properties owned as of June 30, 2017. For
properties INV acquired between January 2016 and June 2017, the results prior to the acquisition are calculated
based on the results provided by the respective sellers while for properties INV acquired in 2015, the results arecalculated based on figures upon acquisition assumed by the asset manager.
Excludes one-off insurance-related revenues and expenses
Average Rent per Tsubo per Month is calculated by dividing the total residential rental revenue includingcommon area charges for each month by the sum of total residential leased area at the end of each month,indicating the average rent per Tsubo weighted by leased area
Occupancy is calculated by dividing the sum of total residential leased area by the sum of total residential
leasable area at the end of each month of each year
Based on the residential properties owned in relevant year excluding the performance for the properties during the
pre-acquisition period. The number of properties at the end of each year is as follows: 63 properties for 2013, 63
properties for 2014, 66 properties for 2015 and 68 properties for 2016. The number is 70 properties as of July 31,
2017.
Increase or decrease (%) in the sum of monthly rents on new or renewal contracts, or the total of both, comparedwith the sum of previous rents for properties owned at the end of each month during relevant year

6

Initiatives in 2017 YTD (As of August 31, 2017)
1. New Property Acquisition (1 Hotel, 2 Residential Properties)
Hotel MyStays Premier Hamamatsucho
Acquisition date

May 29, 2017

Acquisition price

JPY 8,000 million

Appraisal Value

JPY 8,090 million

NOI yield (1)4.6%

Location

1-8-5 Hamamatsu-cho,Minato-ku, Tokyo

Access5-minute walk from
Hamamatsucho Station on JR
Lines and Tokyo Monorail
5-minute walk from Daimon
Station on Toei Subway Lines

Completion

1994

Number of Guest

Hotel: 120 rooms

Rooms

Serviced apartments: 14 units

Leasable Area

6,151.93m2

Site Area

1,070.53m2(Note 1) Calculated by dividing the annual NOI in 2017
obtained by combining actual monthly NOI fromJanuary to June 2017 and the Asset Manager’s
anticipated monthly NOI from July to December
2017, by acquisition price.

7

Royal Parks Tower Minami-Senju
Acquisition date

March 14, 2017

Acquisition price

JPY 21,879 million

Appraisal Value

JPY 22,100 million

NOI yield (1)5.1%

Location

Minami-Senju 4-chome,
Arakawa-ku, Tokyo

Leasable Unit

557 units(residential units: 555 units,
nursing home: 1 unit and shop
1unit)(Note 1) Calculated by dividing the annual NOI in 2017 obtainedby combining actual monthly NOI from January to June2017 and the Asset Manager’s anticipated monthly NOI
from July to December 2017, by acquisition price.
(Note 2) The nursing home and the shop are each counted as 1
unit for the counting of the number of units.

Royal Parks Seasir Minami-Senju
Acquisition date

March 14, 2017

Acquisition price

JPY 2,683 million

Appraisal Value

JPY 2,710 million

NOI yield (1)5.4%

Location

Minami-Senju 3-chome,
Arakawa-ku, Tokyo

Leasable Unit

113 units(Note 1) Calculated by dividing the annual NOI in 2017 obtainedby combining actual monthly NOI from January to June2017 and the Asset Manager’s anticipated monthly NOI
from July to December 2017, by acquisition price.

82. Change in ML/PM for 4 Properties in Royal Parks Series
INV was able to reduce the property management fees at Royal Parks Tower Minami-Senju, INV’s flagshipproperty, from 2.7% to 1.5%, as well as improve profitability at Royal Parks Seasir Minami‐Senju andRoyal Parks Momozaka by changing the master lease structure.

Royal Parks

Royal Parks Tower

Royal Parks Seasir

Momozaka

Minami-Senju

Minami-Senju

July 1, 2017

August 1, 2017

December 1, 2017

December 1, 2017

Royal Parks Shinden

Property

Date of change
Type of Master

BeforeRent Guarantee

Rent Guarantee

Pass-throughRent Guarantee

Lease (1)After

Rent Guarantee

Pass-throughPass-throughPass-throughPM fee (% ofBefore

-

-

2.7％

-

rental revenue)

After

-

1.5%

1.5%

1.5%

+JPY 1.7 million+JPY 6.0 million+JPY 18.4 million+JPY 12.9 million

NOI Increase Per Year
(Simulated) (2)(Note 1)

(Note 2)

“Pass-through master lease” is defined as a lease under which, pursuant to the pass-through master leaseagreement entered into between the master lease company and INV or the trustee, the amount equal to the rent
under the sublease agreement between the master lease company and the end tenant shall be paid to INV or thetrustee. “Fixed rent” is defined as a lease under which a specified rent shall be paid to INV or the trustee,
regardless of the rent under the sublease agreement between the master lease company and the end tenant.
Simulated NOI increase for 2017 is indicated assuming their ML/PM were changed at the beginning of 2017.

9

3. Portfolio Rebalance Transaction
Portfolio rebalance, acquiring new addition of Hotel MyStays Gotanda Station at an estimated 7.3%(1) NOI
cap rate and selling two non-core assets at a 3.8%(2) NOI cap rate, was implemented aiming to improve theoverall NOI yield of the portfolio.

Acquisition

Disposition

Additional acquisition portion

2 properties total

Anticipated acquisition date

October 31, 2017

Sales dateJuly 31, 2017

¥1,880 million

Sales price¥1,491 million

Appraisal value¥2,600 million

Book value (as of Jul. 31, 2017)(3)¥1,301 million

Simulated NOI Increase(2018 forecast)Gain on sales¥120 million¥137 million
NOI (2016 actual)¥56 million

NOI yield (1)7.3%

NOI yield (1)3.8%Antidipated acquisition price(3)

 Willacquire
North
(in
Annex
1F-3F
additiontooriginal
March 2016 acquisitionof part of annex).

Hotel MyStays Gotanda

 49 rooms (15m2 ~ 43m2)*Under expansion

Kindai Kagaku Sha Building Times Kanda-Sudacho 4th

Station(Note 1)
(Note 2)
(Note 3)Calculated by dividing the simulated NOI increase (annualized) from the acquisition by the anticipatedacquisition price.
Calculated by dividing actual NOI for 2016 by the sales price, and rounded off to one decimal place.
Acquisition price, book value and gain on sales are planned or estimated as of the date of this document, and are
subject to change.

10

Sponsor Pipeline▪ Robust pipeline of 30 properties provides stable growth opportunity.

Properties Covered by the MOU(1)(2) (as of August 31, 2017)

No. of Hotel Rooms
6,007
No. of Apartment Units
743(Note 1) MOU providing preferential negotiation rights. INV is granted an opportunity to consider the acquisition in priority
to a third party when any property covered by the MOU is to be sold.
(Note 2) We do not intend to acquire any of the properties listed above as of the date of this material and there is no assurance
that we will acquire any of these properties in the future.
(Note 3) Each “Asset Type” above is as follows:“Limited” refers to a limited service hotel focusing on revenues from room stay and offer limited services regarding
food and beverage, banquet, spa or gymnasium facilities.
“Full” refers to a full-service hotel having sections of stay, food and beverage, and banquet.
“Resort” refers to a resort hotel located at tourist destinations or recreational lots, having sections of stay, food andbeverage, and incidental facilities.

11

Major Sponsor Pipeline Properties(Note) We do not intend to acquire any of the properties listed above as of August 31, 2017 and there is no assurance that wewill acquire any of these properties in the future.

12

MyStays Hotel Management
MyStays Hotel Management (MHM), the primary operator of hotels owned by INV, hassignificantly improved its website and social media capabilities to increase its customer
base and direct booking ratio■ MHM Overview▪ MHM manages 77 hotels in Japan (12,072 rooms) (as of February 1, 2017) (1)▪ MHM was founded in 1999 and acquired in 2012 by Fortress Group▪ MHM has 2,095 employees (as of December 31, 2016) (1)▪ Converted 575 rooms to non- smoking to better adapt to updated customer preferences
Key Initiatives▪ Increased overbooking ratios and continue to monitor in order to maximize occupancy andoffset increased cancelations▪ Reduced linen and cleaning costs by renegotiating the contracts■ Other Initiatives⃝ Improved website with easier booking navigation and posted ratings from TrustYou(2)Reinforcement of
websitecommunication, etc.

⃝ Streamlined information architecture and rewrote all copyright in order to have better
user experience and SEO(3); updated pictures and content for each hotel and region⃝ Aimed to increase direct bookings, reduce agent commissions and gain repeat
customers by promoting 5% membership discount campaign⃝ MyStays website and guest relations offered services in 5 languages (Japanese,

MyStays Website

English, Chinese (Simplified and Traditional), and Korean)⃝ In the past six months, MyStays has expanded its distribution channels to include new
relationships with 12 travel agents, airlines and OTAs in China, Hong Kong, Taiwan

Reinforcement ofmarketing channels

and Korea⃝ Launched affiliate marketing program with CTBC Bank Co., Ltd. (largest credit card
issuer in Taiwan) in 4Q 2016

⃝ Recently started affiliated marketing programs with Hong Kong Airlines, ANA andUnion Pay

Initiatives for guests
from greater China⃝ Hired additional Chinese speaking staff⃝ 24-hour support in Chinese via online chat and phone hotline

the CTBC campaign

Union Pay

⃝ Increased presence on C-Trip(4), 6 hotels with Silver Medal status and 30 ‘China
Friendly’ hotels⃝ Conveniently accepts Union Pay at all hotel locations

Chinese breakfast at MHM
hotels(Note 1)
(Note 2)

Includes hotels managed by MHM subsidiary Naqua Hotels and Resorts Management Co., Ltd.
TrustYou analyzes hundreds of millions of travel reviews and considers itself the world’s largest guest feedback
platform.

13

(Note 3)(Note 4)

SEO (search engine optimization) is a methodology of strategies, techniques and tactics used to increase thenumber of visitors to a website by obtaining a high-ranking placement in the search results page of a searchengine.
C-trip is the largest online travel site in China and provides certification marks for Chinese traveler-friendly hotels.
Each requirement are as follows;
China Friendly: Electric kettle, Free Wi-Fi, CUP card, Tea bag, Chinese breakfast, Chinese notation of hotel
facilities, 3.8 or more for reviews, Full-day Front Chinese.
Gold Medal status: Lowest price, C-trip has price advantage over other OTA, provided more than 2 rooms per day
to C-trip (or use unified management software), 4 points or more for reviews.
Silver Medal status: Provided same rates and number of rooms by all OTAs, Benefits for C-trip, provided morethan 2 rooms per day to C-trip (or use unified management software), 4 points or more for reviews.

14

I.

Asset Management Report

Overview of Asset Management
1

Trends in Investment Corporation’s Operating Results
24th

25th

26th

27th

28th

fiscal period

fiscal period

fiscal period

fiscal period

fiscal period

Jan. 1, 2015 toJul. 1, 2015 toJan. 1, 2016 toJul. 1, 2016 toJan. 1, 2017 toJun. 30, 2015

Dec 31, 2015

Jun. 30, 2016

Dec 31, 2016

Jun. 30, 2017

(Note 1) (JPY thousand)

4,974,760

6,863,775

8,158,220

9,511,466

9,260,917(Rental revenue – real estate)(JPY thousand)

4,974,760

6,863,775

8,158,220

9,511,466

9,260,917

Operating expenses(JPY thousand)

2,163,828

2,494,667

3,084,315

3,577,255

3,916,456(Property related expenses)(JPY thousand)

1,834,039

2,178,165

2,697,986

3,162,067

3,518,684

Operating income(JPY thousand)

2,810,931

4,369,108

5,073,905

5,934,211

5,344,461

Ordinary income(JPY thousand)

2,295,909

2,953,293

4,364,025

5,431,608

4,702,678

Net income(JPY thousand)

2,295,304

2,952,688

4,363,420

5,431,003

4,702,073

Total assets(a) (JPY thousand)

136,299,746

185,918,871

284,106,133

277,361,874

306,421,050

(%)

4.5

36.4

52.8

(2.4)

10.5

(JPY thousand)

72,301,000

91,699,000

141,917,000

142,419,000

163,990,000(b) (JPY thousand)

61,731,550

91,758,194

130,005,009

131,455,278

139,062,593

(%)

0.6

48.6

41.7

1.1

5.8

Unitholders’ capital(JPY thousand)

53,096,413

82,465,438

120,367,271

120,367,271

128,984,946

Total distributions(c) (JPY thousand)

2,295,069

3,790,905

4,359,527

5,429,192

4,880,081(Note 2) (%)

100.0

102.5

94.8

100.0

102.1

(d) (Units)

2,668,686

3,193,686

3,675,824

3,675,824

3,860,824(Note 3)23,132

28,73135,36835,76236,019By Period

Reporting period

Operating revenue

Operating Results(change from last period)
AssetsInterest-bearing debt
Net assets(change from last period)

Dividend

Dividend payout ratio
Number of investment units

Information per Unit

issued and outstanding
Net assets per unit
Distributions per unit(b) / (d) (JPY)(c) / (d) (JPY)

860

1,187

1,186

1,477

1,264

(Distributions of earnings per unit)

(JPY)

860

948

1,125

1,477

1,243

(Distributions in excess of retained

(JPY)

-

239

61

-

21

1.7

1.8

1.9

1.9

1.6

3.5

3.6

3.7

3.8

3.2

3.7

3.8

3.9

4.2

3.5

7.5

7.6

7.9

8.2

7.0

(b) / (a) (Note 4) (%)

45.3

49.4

45.8

47.4

45.4

(%)

(1.8)

4.1

(3.6)

1.6

(2.0)

(Note 4) (JPY thousand)

4,127,486

5,961,324

7,136,971

8,414,465

8,023,607

earnings per unit)
Return on assets(change over year)
Financial Measures

Return on equity(change over year)
Capital ratio(change from last period)(Note 4) (%)(Note 4) (%)

NOI(Net Operating Income)(Note 1) Consumption taxes etc. are not included in the items including operating revenues.
(Note 2) The “Dividend payout ratio” is calculated in accordance with the following formula:
Dividend payout ratio = Distribution amount (Excluding distributions in excess of retained earnings) ÷ Net income × 100“Dividend payout ratio” is rounded to one decimal place.
(Note 3) Distributions per unit are rounded to the nearest unit.
(Note 4) Financial measures above are calculated as below, and ratios are rounded to one decimal place.

15

Return on assets = Ordinary income / (Total assets at start of reporting period + Total assets at end of reporting
period) / 2) x 100.
Return on equity = Net income for period ended June 30, 2017 / (Net assets at start of reporting period + Net assets
at end of reporting period) / 2) x 100.
Capital ratio = Net assets at end of reporting period / Total assets at end of reporting period x 100.
Rental NOI = Rental revenue – Leasing costs + Depreciation for period ended June 30, 2017.

16

2

Operating Conditions(1)

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; the “Investment Trust Act”). In May 2004, INV was listed on the
Osaka Securities Exchange (application for delisting was made in August 2007), and in August 2006 waslisted 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, as specified in Article 147 of the Investment Trust Act, with LCP as the absorbed corporation, 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 thesponsor changed to the Fortress Group.
Ever since the commencement of sponsorship from the Fortress Group, 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 ofexisting bank borrowings, thereby creating a financial base for external growth. With this platform as abase, in June 2014, Consonant Investment Management Co., Ltd., the asset manager to which INV entrusts
the management of its assets (the “Asset Manager”) revised the Investment Guidelines for INV, andpositioned hotels as a core asset class alongside residential properties with a view towards expanding
investments in the hotel sector in which demand is forecasted to rise going forward. As a result of theexternal growth efforts, INV's portfolio at the end of the previous period ended December 2016 comprisedof 124 properties (48 hotels, 68 residential properties and eight others) with a total acquisition price of JPY
266,619 million. The acquisition price of the portfolio has increased a significant 3.7x, compared to theperiod as of May 22, 2014, which is the period immediately prior to INV’s initial investment in hotels.
In the Reporting Period, INV determined an issuance of new investment units (the “Public Offering”) andsecondary offering on February 22, 2017 in order to acquire two residential properties on March 14, 2017with funds raised through the Public Offering and new borrowings. One of the two residential properties,
Royal Parks Tower Minami-Senju, is now the largest residential asset and second largest asset in theportfolio. INV believes that Royal Parks Tower Minami-Senju has upside in NOI growth through INV’srent increase program, which has the steady recent track record, and that the transaction added bothstability and upside to the portfolio.
In addition, INV acquired Hotel MyStays Premier Hamamatsucho utilizing cash on hand and a new loan on
May 29, 2017. The hotel is one of MyStays’ five Premier hotels (Note 1) and has 120 large rooms with aroom size of 28.5 m2 to comfortably accommodate three to five guests, as well as 14 serviced apartment
units. As a result, INV's portfolio comprised of 127 properties (49 hotels, 70 residential properties and eight
others) with a total acquisition price of JPY 299,181 million at the end of the Reporting Period.
Moreover, after the Reporting Period, INV announced a portfolio rebalance, including the futureacquisition of additional 49 rooms at Hotel MyStays Gotanda Station at an estimated 7.3% NOI
cap rate and the sale of two non-core assets at a 3.8% NOI cap rate, which improves the overall
NOI yield of the portfolio (see “2 (2) b Outlook for the Fiscal Period Ending December 31, 2017”and “c. Significant Subsequent Events” below for the detail of the portfolio rebalance.)
The sale of the two non-core assets closed on July 31, 2017 and the acquisition of the additional rooms is expected
to be completed on October 31, 2017 after the satisfactory completion of office space to hotel room conversion.

17

INV has signed a Memorandum of Understanding (the “MOU”) with affiliates of Fortress Group withrespect to preferential negotiating rights regarding the acquisition of hotels and residential properties,
which will continue to provide INV with considerable opportunities for external growth. As of the end of
the Reporting Period, there are 21 hotels (6,007 rooms) and nine residential properties (743 units) in the
MOU.
(Note 1)

(2)

Five Premier hotels are Hotel MyStays Premier Akasaka, Hotel MyStays Premier Omori, Hotel MyStays
Premier Sapporo Park, Hotel MyStays Premier Kanazawa and Hotel MyStays Premier Hamamatsucho, of
which INV owns Hotel MyStays Premier Kanazawa and Hotel MyStays Premier Hamamatsucho.

Operational Environment and Performance

For the June 2017 period, the portfolio NOI increased by 12.4% or JPY 886 million to JPY 8,023 million
compared to the same period in the previous year (the June 2016 period), with a 5.4% increase from thehotel portfolio and a 6.8% increase from the residential portfolio.
In addition, the portfolio maintained a high average occupancy rate (Note 1) of 97.9%. Commentary on
hotel and residential performance in the first half of 2017 is described below.
The NOI at the 40 hotels owned by INV (Note 2) increased by 1.8% for the period compared to the same
period in the previous year, with a strong showing for the second quarter (from April 2017 to June 2017).
The NOI for the second quarter rebounded, gaining 5.0% compared to the same period in the previous year,
after declining 1.8% in the first quarter (from January 2017 to March 2017). The 40 hotels recorded an
occupancy rate (Note 3) of 89.0% (-0.8 points YoY), ADR (Note 4) of JPY 9,345 (+0.7% YoY), and
RevPAR (Note 5) of JPY 8,320 (-0.2% YoY). The overseas sales ratio (Note 6) at the 38 hotels (Note 7)
increased to 33.1% (+4.9 points YoY). Of the total hotel revenue, fixed rents accounted for 47.1% (JPY
2,613 million) and variable rents accounted for 52.9% JPY 2,932 million at the 49 hotels.
Inbound visitors reached a record high of 24.0 million (+21.8% YoY) in 2016 and the increasing trend
continues in 2017 (+17.4% YoY as of June, 2017) while government targets are 40 million in 2020 and 60
million in 2030. Japan’s GDP has achieved continuous growth with positive signs in consumer confidence,
improvement of domestic employment, as well as wage increase. The hotel segment has been impacted byan increase in supply, however the continued growth in inbound visitors to Japan is much higher than the
supply in new hotel rooms. Cancelations of hotel rooms are also a concern, but MyStays HotelManagement Co., Ltd. (“MHM”), a hotel operator in the sponsor group, has increased the level ofoverbookings to help mitigate this issue. Under these circumstances, INV is working closely with theoperators of the hotels, primarily MHM, to proactively address the issues at hand. Specifically, MHM istaking various actions based on extensive operational analysis and customer feedback through TrustYou(Note 8) Analytics to improve the customer experience. MHM expects to increase direct bookings andmaximize revenue at time of high demand through promotional campaigns, an improved website andenhanced revenue management analytics. MHM is also focused on the following initiatives such asincreasing overbooking ratios strategically in order to offset cancelations, converting a select number ofsmoking rooms to non-smoking to generate higher ADRs for non-smoking rooms, saving cost for linen andcleaning, increasing services for Chinese speaking guests, and strengthening relations with travel agents,
airlines and OTAs (online travel agents) based in China, Hong Kong, Taiwan and Korea to diversify andimprove distribution channel. INV believes that these initiatives, along with the continued growth ininbound visitors to Japan will help increase portfolio NOI.
In addition, INV decided to change the hotel operator for one hotel (Note 9) on June 26, 2017.
The NOI (Note 10) of the 70 residential properties (Note 11) increased 2.4% compared to the same period18

in the previous year, and the average occupancy rate achieved a stable 95.2%, a decrease of 0.9 points
compared to the same period in the previous year.
As a continued focus on proactive asset management INV changed the master lessee (“ML”) and property manager (“PM”)
for one residential property on April 27, 2017 (Note 12) in order to further improve its operational efficiency and property
performance. In addition, INV decided on June 26, 2017 to change ML/PM for four residential properties (Note 13) aiming toincrease NOI by JPY 39 million per year on an estimated basis. The change of ML/PM at the four residential properties wasdetermined after the acquisition of Royal Parks Tower Minami-Senju, a flagship residential asset where the role of theproperty manager is highly sought after. INV was therefore able to negotiate this assignment to reduce the rate of property
management fees at the property from 2.7% to 1.5% for Royal Parks Tower Minami-Senju, as well as improve the economics
at Royal Parks Seasir Minami-Senju and Royal Parks Momozaka. As a result, the number of ML/PM was consolidated from10 to nine for 70 residential portfolio.

Trends for rent at city-center residential properties with small-type rooms maintain a moderate increase.
Under the positive circumstances in the macro environment, INV continues to focus on its rent increaseprogram for new leases and renewals as well as initiatives to reduce residential leasing costs based on amarket analysis of each unit and property. In the Reporting Period, INV realized a rent increase for 61.6%(based on the number of contracts) of the new residential lease contracts for an average rent increase of
3.2% compared to the previous rent across all new leases (Note 14). Specifically, at Royal Parks Tower
Minami-Senju, which was acquired during the Reporting Period, INV achieved strong results with a rent
increase for 97.6% (based on the number of contracts) of the new lease contracts with an average rent
increase of 12.7% compared to the previous rent across all new leases (Note 14).
INV achieved a rent increase for 51.2% (based on the number of contracts) of contract renewals for an
average rent increase of 2.1% compared to the previous rent across all renewal leases (Note 14), while
maintaining a high contract renewal rate of 81.0% (Note 15). There was a notable increase in rent in the
Sendai, Saitama, Kyoto, Osaka and Hyogo areas, which achieved a rent increase for 47.6% (based on thenumber of contracts) of renewal contracts for an average rent increase of 1.9% compared to the previous
rent (Note 14) across all renewal leases in these areas, even though these areas did not achieve rent
increases for contract renewals in the previous year. These areas particularly benefited from the change of
ML/PM for 16 residential properties in December 2016 and one residential property in January 2017.
The total appraisal value of 127 properties at the end of the Reporting Period was JPY 363,502 million. The
portfolio has an unrealized gain of JPY 70,964 million (Note 16) and an unrealized gain ratio of 24.3%(Note 16). Due to the internal growth and trends in the real estate investment and rental market, the total
appraisal value of 124 properties, which were owned as of the end of December 2016 period, increased by
0.6% from JPY 328,192 million at the end of December 2016 period to JPY 330,102 million at the end of
the Reporting Period.

19Key Performance Indicators of 40 Hotel Properties (Note 2)
Occupancy Rate
ADR (JPY)
RevPAR (JPY)GOP (JPY million) (Note 17)

June 2017 fiscal period
89.0%
9,345
8,320
5,365

Year-on-year change-0.8pt
+0.7%
-0.2%
+1.6%

Key Performance Indicators of 70 Residential Properties (Note 11)
Occupancy Rate (Note 1)
Average Rent per Tsubo per Month(JPY) (Note 18)
NOI (JPY million) (Note 10)

June 2017 fiscal period
95.2%

Year-on-year change-0.9pt

9,595

+1.6%

2,597

+2.4%

(Note 1)

“Occupancy Rate” for the entire portfolio and for the residential properties is calculated by dividing the sumof total leased area by the sum of total leasable area at the end of each month during the relevant period.

(Note 2)Of the 49 acquired hotels, the following nine hotels with fixed-rent lease agreements 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. The figures assume that all
properties acquired in and after 2016 by INV had been owned since January 1, 2016. The actual results
before acquisition by INV are based on the data provided by the sellers.

(Note 3)

“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 4)“ADR” means average daily rate, and is calculated by dividing total room sales (excluding service fees) fora 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 5)

“RevPAR” means revenues per available room per day, and is calculated by dividing total room sales for acertain 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. Hereinafter the same
shall apply.

(Note 6)

“Overseas sales ratio” is the ratio of sales amount through overseas web agents to revenues.

(Note 7)Of the 49 acquired hotels, 11 hotels, APA Hotel Yokohama-Kannai, 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, the tenants of which do not disclose the overseas
sales ratio; and Hotel MyStays Kanda, which was not fully operating from May 20, 2016 through August 22,
2016 due to renovation in 2016, are excluded. The figures assume that all hotels acquired in and after 2016
by INV had been owned since January 1, 2016. The actual results before acquisition by INV are based on
the data provided by the sellers.

(Note 8)“TrustYou” analyzes hundreds of millions of travel reviews and is one of the world’s largest guest feedback
platforms.

20

(Note 9)

The operator of Hotel Vista Premio Dojima was changed to MHM on August 1, 2017. In connection withthe change, the property name was changed from Hotel Vista Premio Dojima to Hotel MyStays Dojima.

(Note 10) For the comparison of NOI of the 70 properties, insurance income and related repair expenses, which aretemporary items, are excluded.
(Note 11) The figures assume that all residential properties acquired in and after 2016 by INV had been owned since
January 1, 2016. The actual results before acquisition by INV are based on the data provided by the sellers.
(Note 12) ML and PM for Belle Face Ueno-Okachimachi were changed on May 1, 2017.
(Note 13) ML and PM for Royal Parks Shinden and Royal Parks Momozaka were changed on July 1, 2017 and August
1, 2017 respectively, and will be changed for both Royal Parks Tower Minami-Senju and Royal Parks Seasir
Minami-Senju on December 1, 2017.
(Note 14) Increase or decrease in the sum of monthly rents on new or renewal contracts, or the total of both, comparedwith the sum of previous rents.
(Note 15) 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 16) 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 ofthe end of the Reporting Period.
(Note 17) “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. Hereinafter the same shall apply.
(Note 18) “Average Rent per Tsubo per Month” is calculated by dividing the total rental revenue including common
area charges for each month by the sum of total leased area at the end of each month during the relevant
period.

21

(3)Overview of Fund Raising

As a result of the measures described below, INV’s interest-bearing debt outstanding balance was JPY
163,990 million and the Interest-Bearing Debt ratio (Note 1) and LTV (Note 2) were 53.5% and 45.1%
respectively, as of the end of the Reporting Period, with an average interest rate (Note 3) of 0.50%.
(i)Equity Finance

INV executed a Public Offering which closed on March 13, 2017 (number of new investment units issued:
185,000; total issue value: JPY 8,393 million) in order to procure part of the funds for the acquisition of
two residential properties.
(ii)

Debt FinanceIn tandem with the equity finance as described in (i) above, INV borrowed a new loan, New Syndicate
Loan (G) (amount borrowed: JPY 11,250 million; interest rate: variable interest rate of 1-month JPY
TIBOR plus 0.4%, 0.5% and 0.6% for durations of three, four and five years), which was arranged by
Mizuho Bank, Ltd., and Term Loan (F) (amount borrowed: JPY 3,000 million; interest rate: variableinterest rate of 1-month JPY TIBOR plus 0.45% for duration of three and a half years) on March 14, 2017
in order to pay a portion of the acquisition price and related expenses for the acquisition of two residential
properties.
As a result of New Syndicate Loan (G), the number of INV’s lenders increased to 22, with The Towa Bank,
Ltd., The Dai-ichi Life Insurance Company, Limited and The Gunma Bank, Ltd. added to the bankformation.
INV also borrowed a new loan, Term Loan (G) (amount borrowed: JPY 7,321 million; interest rate:variable interest rate of 1-month JPY TIBOR plus 0.55% for duration of four and a half years) from Mizuho
Bank, Ltd. on May 29, 2017 in order to pay a portion of the acquisition price and related expenses for theacquisition of one hotel.
(Note 1)

Interest-Bearing Debt ratio uses the calculation formula below:
Interest-Bearing Debt ratio = total outstanding interest-bearing debt/total assets x 100.

(Note 2)

LTV uses the calculation formula below:
LTV = total outstanding interest-bearing debt/total appraisal value x 100.

(Note 3)

The average interest rate (annual rate) is calculated by the weighted average based on the outstandingbalance of borrowings and rounded to two decimal places.

22

(4)

Overview of Acquisition of Assets

The overview of two residential properties acquired on March 14, 2017 is as follows:

Use

Location

Acquisition
price(JPY million)(Note 1)

Appraisal
value(JPY million)(Note 2)

SellerRoyal Parks Tower
Minami-Senju

Arakawa-ku,
Tokyo

21,87922,100

Sakura Tokutei
Mokuteki Kaisha

Royal Parks Seasir
Minami-Senju

Arakawa-ku,
Tokyo

2,683

2,710

Momo Tokutei
Mokuteki Kaisha

24,562

24,810Property
number

Property name

A105

A106

Residential

Total

Categoryof specified
asset

Trust
beneficiaryinterest(Note 1)

Acquisition price does not include property taxes, city planning taxes, national or local consumption taxes;
hereinafter the same.

(Note 2)

The appraisal value is as of December 1, 2016 based on the appraisal reports by Japan Real Estate Institute.

The overview of one hotel acquired on May 29, 2017 is as follows:

Use

Property
number

Property name

Hotel

D49

Hotel MyStays
Premier
Hamamatsucho(Note 1)

Location

Acquisition
price(JPY million)

Appraisal
value(JPY million)(Note 1)

SellerCategoryof specified
asset

Minato-ku,
Tokyo

8,000

8,090

Septentrio 2
Tokutei Mokuteki
KaishaTrustbeneficiaryinterest

The appraisal value is as of April 30, 2017 based on the appraisal report by Japan Real Estate Institute.

23

(5)

Overview of Results of Operations and Distributions

As a result of the operations mentioned above, operating revenues for the Reporting Period decreased by
JPY 250 million from the previous period (-2.6%) to JPY 9,260 million, and net income decreased by JPY
728 million from the previous period (-13.4%) to JPY 4,702 million. The distribution per unit (“DPU”) for
the Reporting Period was JPY 1,264, a decrease of JPY 213 (-14.4%) compared to the previous period.
The majority of INV’s owned hotels use a variable rent scheme linked to performance of the relevant hotel.
Hotel demand is affected by seasonal factors and the December ending fiscal periods (from July to
December) which include summer holiday and autumn outing seasons tend to record higher revenue thanthe June ending fiscal periods (from January to June). Accordingly, INV’s rental revenues tend to be higher
in the December ending fiscal periods than in the June ending fiscal periods.
INV aims to include maximum profit distributions (excluding excess profit distribution) in deductible
expenses in accordance with Section 1 of Article 67-15 of the Act on Special Taxation Measures Law (ActNo. 26 of 1957; as amended), and decided to distribute almost all of the profit as defined in Article 136,
Paragraph 1 of the Investment Trust Act, except for fractional distribution per unit less than JPY 1.
INV believes maintaining the stability of cash distributions over the medium term is one of the mostimportant factors in determining the amount of distribution for a given fiscal period, and therefore, INV has
adopted the policy to make distributions in excess of profits in order to stabilize distributions, in cases
where dilution of investment units or significant expenses are to be recorded in connection with, among
other things, the acquisition of assets or the raising of capital, leading to a temporary decrease in
distribution, taking into consideration the level of distribution per unit assuming such acquisition of assets
or capital raising had contributed for a full fiscal period. INV may also consider making distributions inexcess of profits for the purpose of mitigating the impact of corporate tax increase arising from different
rules and practices in tax and accounting, such as treatment on depreciation of fixed term land lease or asset
retirement obligation.
With respect to the June 2017 period, INV intends to make distributions in excess of profits for JPY 46
million (JPY 12 per unit) in order to cope with the discrepancy between tax and accounting treatment for
the June 2017 period. INV also intends to make distributions in excess of profits for JPY 34 million (JPY 9
per unit) in order to stabilize distributions since net income per unit decreases temporarily due to one-off
expenses in connection with the Public Offering and borrowings in March 2017. As a result, the DPU(including excess profit distribution) for the June 2017 period is JPY 1,264.

24

3Changes in Total Number of Investment Units Issued and Outstanding

Changes in the number of investment units issued and outstanding and unitholders’ capital from the date ofestablishment to the end of the Reporting Period are as follows.
Date

Type of issue

Total number of investment
units issued and outstanding

Unitholders’ capital (JPY)

Increase

Increase

Total

Total

Reference

January 18, 2002

Private placement
for incorporation

400

400

200,000,000

200,000,000(Note 1)

December 26, 2003

Private placement

2,700

3,100

1,012,500,000

1,212,500,000(Note 2)January 9, 2004

Private placement

1,350

4,450

506,250,000

1,718,750,000(Note 2)January 21, 2004

Private placement

1,333

5,783

499,875,000

2,218,625,000(Note 2)January 27, 2004

Private placement

267

6,050

100,125,000

2,318,750,000(Note 2)January 28, 2004

Private placement

800

6,850

300,000,000

2,618,750,000(Note 2)January 31, 2004

Private placement

266

7,116

99,750,000

2,718,500,000(Note 2)February 5, 2004

Private placement

800

7,916

300,000,000

3,018,500,000(Note 2)February 7, 2004

Private placement

1,333

9,249

499,875,000

3,518,375,000(Note 2)

May 17, 2004

Public offering

9,000

18,2493,377,250,000

6,895,625,000(Note 3)February 7, 2005

Public offering

10,65028,8993,937,667,100

10,833,292,100(Note 4)

July 31, 2006

Public offering

25,00053,8998,301,125,000

19,134,417,100(Note 5)February 1, 2010

Unit split

215,596

269,495-

19,134,417,100(Note 6)

February 1, 2010

Merger367,200

636,695-

19,134,417,100(Note 7)

711,597

1,348,292

6,999,979,689

26,134,396,789(Note 8)224,887

1,573,179

2,999,992,580

29,134,389,369(Note 9)July 29, 2011
December 20, 2013

Third-party
allotment
Third-party
allotment

July 16, 2014

Public offering

1,040,000

2,613,179

22,747,920,000

51,882,309,369(Note 10)

August 13, 2014

Third-party
allotment

55,5072,668,686

1,214,104,611

53,096,413,980(Note 11)

July 15, 2015

Public offering

500,000

3,168,686

27,970,500,000

81,066,913,980(Note 12)

August 12, 2015

Third-party
allotment

25,0003,193,686

1,398,525,000

82,465,438,980(Note 13)

March 30, 2016

Public offering

459,5123,653,198

36,123,157,344

118,588,596,324(Note 14)

22,626

3,675,824

1,778,675,112

120,367,271,436(Note 15)-

3,675,824

224,225,264

120,591,496,700(Note 16)

185,000

3,860,824

8,393,450,000

128,984,946,700(Note 17)

April 27, 2016

February 22, 2017

March 13, 2017

Third-party
allotment
Reversal of
allowance fortemporarydifferences
adjustment
Public offering

25

(Note 1)

INV was incorporated through a private placement at a price of JPY 500,000 per unit.

(Note 2)

New investment units were issued in a private placement at a price of JPY 375,000 per unit to raise funds for theacquisition of new properties.

(Note 3)New investment units were issued in a public offering at a price of JPY 395,000 per unit (JPY 375,250 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.

(Note 4)

New investment units were issued in a public offering at a price of JPY 385,140 per unit (JPY 369,734 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.

(Note 5)New investment units were issued in a public offering at a price of JPY 348,740 per unit (JPY 332,045 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.

(Note 6)

An investment unit split of five units per one unit was conducted.

(Note 7)A merger by absorption pursuant to Article 147 of the Act on Investment Trusts and Investment Corporations
was conducted with LCP, with INV as the surviving entity. As a result of the merger by absorption, four
investment units of INV (after the investment unit split) were allotted for each LCP investment unit. The
number of LCP investment units issued as of the time of the merger by absorption was 91,800 units.

(Note 8)New investment units were issued in a third party allotment at a price of JPY 9,837 per unit to make repaymentof existing loan, etc.

(Note 9)New investment units were issued in a third party allotment at a price of JPY 13,340 per unit to make repaymentof existing loan, etc.

(Note 10) New investment units were issued in a public offering at a price of JPY 22,688 per unit (JPY 21,873 after
deducting the underwriters’ discount) to raise funds for the acquisition of new properties.
(Note 11) New investment units were issued in a third-party allotment at a price of JPY 21,873 per unit for the purpose of
cash reserve to appropriate to repayment in future borrowings.
(Note 12) New investment units were issued in a public offering at a price of JPY 57,817 per unit (JPY 55,941 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 13) New investment units were issued in a third-party allotment at a price of JPY 55,941 per unit for the purpose of
allocation to cash reserves to be used as part of the funds for future acquisition of properties.
(Note 14) New investment units were issued in a public offering at a price of JPY 81,217 per unit (JPY 78,612 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 15) New investment units were issued in a third-party allotment at a price of JPY 78,612 per unit for the purpose of
allocation to cash reserves to be used as a part of the funds for future acquisition of properties.
(Note 16) INV has decided on Board of Directors' Meeting held on February 22, 2017, the reversal of allowance fortemporary difference adjustments for incorporation into unitholders' capital.
(Note 17) New investment units were issued in a public offering at a price of JPY 46,897 per unit (JPY 45,370 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.

Trends in Trading Prices of Investment Securities
The highest and lowest prices (trading prices) in the Real Estate Investment and Trust Securities Section of
the Tokyo Securities Exchange on which the investment securities of INV are listed are as follow.
Real Estate Investment and Trust Securities Section, Tokyo Securities Exchange
PeriodClosingmonth
HighestLowest24th fiscal
periodJune
201566,40044,50025th fiscal
periodDecember
2015
76,40057,90026th fiscal
periodJune
201688,40061,10026

27th fiscal
periodDecember
2016
70,30049,600(Unit: JPY)
28th fiscal
periodJune
201754,80041,5004Distribution PerformanceWith respect to profit distributions for the Reporting Period, INV decided to distribute almost all of its
profit as defined in Article 136, Paragraph 1 of the Investment Trust Act, other than fractional amount perunit less than JPY 1, aiming to include the maximum amount of profit distributions in deductible expenses
in accordance with Article 67-15, Paragraph 1 of the Act on Special Taxation Measures (Act No. 26, 1957).
In addition, in accordance with the cash distribution policy as set forth in Article 17, Item 4 of the Articles
of Incorporation, INV makes distributions of cash in excess of earnings of the amount that it determines(the “Excess Profit Distribution”). For the Reporting Period, INV decided to make Excess Profit
Distribution of JPY 46 million (JPY 12 per unit) as distribution from the allowance for temporary
differences adjustment in order to cope with the discrepancy between tax and accounting treatment, and
JPY 34 million (JPY 9 per unit) as refund of investment in order to level total distributions because theamount of profit distributions decreases temporarily due to the incurrence of one-off expenses associatedwith expenses from the issuance of new investment units and borrowings. As a result, distribution(including Excess Profit Distribution) is JPY 1,264 per unit.
PeriodCalculated Period
Unappropriatedretained earnings(JPY thousand)Reserved profit(JPY thousand)Total cash distribution(JPY thousand)(Distribution per unit)(JPY)
Total profit
distribution(JPY thousand)(Profit distribution per
unit)
(JPY)
Total refund ofinvestment(JPY thousand)(Refund of investment
per unit )(JPY)
Total distribution fromthe allowance fortemporary differences
adjustment out of total
refund of investment(JPY thousand)24th fiscal
periodJan. 1, 2015
to Jun. 30,
2015

25th fiscal
periodJul. 1, 2015
to Dec. 31,
2015

26th fiscal
periodJan. 1, 2016
to Jun. 30,
2016

27th fiscal
periodJul. 1, 2016
to Dec. 31,
2016

28th fiscal
periodJan. 1, 2017
to Jun. 30,
20172,370,704

3,028,323

4,363,420

5,659,831

4,708,487

75,634-

228,8276,414(90,516)

2,295,069

3,790,905

4,359,527

5,429,192

4,880,081

860

1,187

1,186

1,477

1,264

2,295,069

3,027,614

4,135,302

5,429,192

4,799,004

860

948

1,125

1,477

1,243

-

763,290

224,225-

81,077

-

239

61

-

21

-

-

224,225-

46,32927

Period
Calculated Period

24th fiscal
periodJan. 1, 2015
to Jun. 30,
2015(Distribution from theallowance fortemporary differences
adjustment per unit outof refund ofinvestment per unit)(JPY)
Total distribution fromunitholders’ equity
under the tax laws outof the total refund ofinvestment(JPY thousand)Distribution fromunitholders’ equity
under the tax laws outof refund ofinvestment per unit
(JPY)
5

25th fiscal
periodJul. 1, 2015
to Dec. 31,
2015

26th fiscal
periodJan. 1, 2016
to Jun. 30,
2016

27th fiscal
periodJul. 1, 2016
to Dec. 31,
2016

28th fiscal
periodJan. 1, 2017
to Jun. 30,
2017

-

-

61

-

12

-

763,290--

34,747

-

239

-

-

9

Future Operational Policy and Issues to be Addressed

Outlook for the Fiscal Period Ending December 31, 2017
The DPU (including excess profit distribution) for the December 2017 period is forecast to be JPY 1,545(+4.6% YoY); the full year DPU (including excess profit distribution) for calendar year 2017 is forecast to
provide steady growth of JPY 2,809 (+5.5% YoY).
Future operational policy and issues to be addressed
Since July 2011, INV has enhanced unitholder value by significantly increasing DPU and financial stability
with the Fortress Group as its sponsor. Going forward, INV will continue to implement various strategies tomaintain further growth and financial stability, including the following measures.
• Continuous acquisition of properties from large pipeline provided by the sponsor and third parties• Further internal growth at hotel and residential properties• Diversification of financing measures including the issuance of investment corporation bonds andextension and diversification of loan maturities
Details of the future growth strategy are as follows.
(i)

External growth strategy

New Property Acquisitions
As its basic strategy, INV will move forward with the acquisition of new properties focusing on hotels,
where continued growth in portfolio revenues is anticipated, and residential properties especially where28rental growth can be achieved. Rent revenue from residential assets and other assets as well as the fixed
rent portion from hotels will also contribute to more stable revenue, which was 69.7% of total revenue(Note 1). This acquisition strategy will enable INV to build a portfolio with a good balance between growthand stability.
In regards to hotels, INV will take into consideration the trends in foreign travelers visiting Japan, demandsof 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 areforecasted to increase. On July 25, 2017, INV decided to acquire a portion ((i) a portion of the first floorand (ii) the entire of the second and third floor) of the annex building of Hotel MyStays Gotanda Station,
after considering its attractive yield which is expected to improve the profitability of overall portfolio as
well as the Hotel MyStays Gotanda Station. The acquisition of the 49 additional rooms at Hotel MyStays
Gotanda Station is to be made on condition precedent that the conversion work from office space to newhotel rooms is completed, with the anticipated closing date of October 31, 2017.
In regards to residential properties, INV will analyze occupancy rates, rental market trends, the presence ofcompeting properties among other factors, and consider acquiring properties that have mainly small-typerooms with strong competitiveness in large cities, in which it believes it can achieve increases in rent.
INV has achieved steady external growth via the sponsor pipeline from the Fortress Group, as follows.
Properties acquired from affiliates of the Fortress Group (as of the date of this document)
Date
September 2012
May 2014
July 2014
February 2015
July 2015
August 2015
January 2016
March 2016
June 2016
March 2017
May 2017
Total

Properties acquired
24 residential properties
Two hotels
18 hotels
Two hotels
11 hotels andthree residential properties
One hotel
Five hotels andone residential property
Four hotels andone residential property
Two hotels
Two residential properties
One hotel
77 properties(of which 46 are hotels and
31 are residential properties)

Total acquisition price
JPY 14,043 million
JPY 5,435 million
JPY 39,938 million
JPY 4,911 million
JPY 35,258 million
JPY 5,069 million
JPY 10,207 million
JPY 66,697 million
JPY 15,900 million
JPY 24,562 million
JPY 8,000 million
JPY 230,020 million(of which hotels: JPY 178,382 million;
residential: JPY 51,638 million)

The Fortress Group manages four dedicated Japanese real estate funds, including the Fortress Japan
Opportunity Funds I, II, and III. The Fortress Group’s committed equity is over JPY 300 billion and thenumber of properties that the Fortress Group is invested in exceeds 1,400. In order to ensure future growth
options for the portfolio, INV entered into an updated MOU with affiliates of the Fortress Group thatprovides preferential negotiation rights with respect to the acquisition of 21 hotels and nine residential
properties (see the table below) (Note 2). In addition, by utilizing the property transaction information
available through the Fortress Group and INV’s own network, INV will continuously consider andimplement the acquisitions of properties from third parties that will contribute to stability and growth inrevenue and cash flow and an increase in DPU.

29

Asset type (Note 3)

Location

No. of rooms

1

Hotel MyStays Premier Akasaka

Asset name

Limited Service Hotel

Minato-ku, Tokyo

327

2

Hotel MyStays Yokohama Kannai

Limited Service Hotel

Yokohama-shi, Kanagawa

165

3

RIHGA Royal Hotel Kyoto

Full Service Hotel

Kyoto-shi, Kyoto

489

4

Narita Excel Hotel Tokyu

Full Service Hotel

Narita-shi, Chiba

706

5

Hotel MyStays Premier Sapporo Park

Full Service Hotel

Sapporo-shi, Hokkaido

418

6

Hotel MyStays Sapporo Station

Limited Service Hotel

Sapporo-shi, Hokkaido

242

7

Hotel MyStays Oita

Limited Service Hotel

Oita-shi, Oita

145

8

Art Hotel Hirosaki City

Full Service Hotel

Hirosaki-shi, Aomori

134

9

Beppu Kamenoi Hotel

Resort Hotel

Beppu-shi, Oita

322

10 Fusaki Resort Village

Resort Hotel

Ishigaki-shi, Okinawa

195

11 Sheraton Grande Tokyo Bay Hotel

Full Service Hotel

Urayasu-shi, Chiba

1,016

Hotel MyStays Shin Osaka
Conference Center

Limited Service Hotel

Osaka-shi, Osaka

397

Full Service Hotel

Asahikawa-shi, Hokkaido

265

No.

12

13 Art Hotel Asahikawa
14 Hotel MyStays Kanazawa Castle

Limited Service Hotel

Kanazawa-shi, Ishikawa

206

15 Hotel MyStays Matsuyama

Full Service Hotel

Matsuyama-shi, Ehime161

16 Hotel MyStays Ueno East

Limited Service Hotel

Taito-ku, Tokyo

150

17

(Tentative) Hotel MyStays Honmachi
3-chome (Note 4)

Limited Service Hotel

Osaka-shi, Osaka

120

18

Hotel MyStays Sapporo Nakajima
Park

Limited Service Hotel

Sapporo-shi, Hokkaido

86

19 Flexstay Inn Sakuragicho

Limited Service Hotel

Yokohama-shi, Kanagawa

70

MyCUBE by MYSTAYS Asakusa
20
Kuramae

Limited Service Hotel

Taito-ku, Tokyo

161

21 Hotel MyStays Premier Omori

Limited Service Hotel

Shinagawa-ku, Tokyo

232

Hotel subtotal

6,007

22 Gran Charm Hiroo

Residential/Small TypeShibuya-ku, Tokyo

121

23 Plestay Win Kinshicho

Residential/Small Type

Sumida-ku, Tokyo92

24 Gran Charm Kichijoji

Residential/Small TypeMusashino-shi, Tokyo28

25 Green Patio Noda

Residential/Small Type

Noda-shi, Chiba

240

26 Dainichi F-45

Residential/Small Type

Urayasu-shi, Chiba

54

27 Gran Charm Urayasu

Residential/Small Type

Urayasu-shi, Chiba

54

28 Gran Charm Urayasu 5

Residential/Small Type

Urayasu-shi, Chiba

54

29 Gran Charm Minami Gyotoku I

Residential/Small Type

Ichikawa-shi, Chiba

52

30 Gran Charm Minami Gyotoku II

Residential/Small Type

Ichikawa-shi, Chiba

48

Residential property subtotal(Note 1)

743

The percentage indicates composition of annual rent revenue based on the 2016 actual results of annual rent
revenue for all of the properties owned by INV and on the assumption that all properties acquired in andafter 2016 by INV had been owned since January 1, 2016. The actual results before acquisition by INV are
based on the data provided by the sellers. With regard to Hotel MyStays Premier Hamamatsucho, the 2017
revenue forecast (January-April: Actual / May-December: Forecast) estimated by INV is used, as the30

revenue in 2016 temporarily declined due to the renovation work from August 2016 to November 2016.
(Note 2)The term of validity of the MOU is from December 22, 2016, the date of execution of the updated MOU, to
December 21, 2017. Regarding the 30 properties listed above, there is no guarantee that INV will be granted
an opportunity for considering acquisition of the properties or be able to acquire the properties.

(Note 3)

Each “Asset Type” above is as follows:“Limited Service Hotel” refers to a hotel focusing on revenues from room stay and offer limited service
regarding foods and beverages, banquet, spa or gymnasium facilities.
“Full Service Hotel” refers to a hotel having segments of stay, foods and beverages, and banquet.
“Resort Hotel” refers to a hotel located at tourist destinations or recreational lots, having segments of stay,foods and beverages, and incidental facilities.
“Small Type” refers to a residential property in which the majority of dwelling units are less than 30 m2.

(Note 4)

(Tentative) Hotel MyStays Honmachi 3-chome is scheduled to be completed in November 2017 and open in
December 2017.

Property Sales
While INV places priority on increasing unitholders’ value through external growth by taking into accountthe increased level of activity in the real estate trading market, it also considers the possibility of portfolio
optimization upon consideration of the portfolio sector composition, geographic distribution andcompetitiveness of each property, as appropriate.
On July 25, 2017, INV decided to sell one office building (Kindai Kagaku Sha Building) and one parking
lot (Times Kanda-Sudacho 4th). The portfolio rebalance, whereby acquiring the an additional portion ofHotel MyStays Gotanda Station at an estimated NOI cap rate of 7.3% (Note 1) and selling two non-core
assets at a 3.8% NOI cap rate, is expected to improve the overall NOI yield for the portfolio. The sale of thetwo non-core assets, which were sold at prices exceeding both the book and appraisal values, wascompleted on July 31, 2017, and the acquisition of an additional portion of Hotel MyStays Gotanda Station
as described above, is expected to be closed on October 31, 2017.
(Note 1)

Calculated by dividing the NOI of Hotel MyStays Gotanda Station to be increased after the additional
acquisition as estimated by INV as of the time of acquisition decision by the anticipated acquisition price,which is rounded to one decimal place. As the anticipated acquisition price may change as described below
in “6 Significant Subsequent Events,” the estimated NOI cap may vary.

(ii) Strategy for internal growth(Hotels)
Of the 49 hotels owned by INV as of the end of the Reporting Period, 40 hotels use a variable rent scheme.
In the variable rent scheme, in principle, INV receives all of gross operating profit (GOP) after deducting
management fees for the hotel operator as rents, and as a result INV can directly enjoy the hotel revenue
upside. In the case where GOP enters into a downward trend, INV could take advantage from the fixed rent
portion or downside floor to protect itself from further loss. For 35 hotels (Note 1), MHM has implemented
sophisticated revenue management seeking to maximize revenue. INV will continue to accurately ascertain
and analyze operating conditions of its hotels, the conditions of nearby hotels, market trends and otherfactors through operation meetings and other contact with hotel operators and will focus on operations thatmaximize rent income.

31

(Residential properties and others)
INV will continue to strengthen its collaborative ties with PM and brokers to further boost occupancy rates
and earning capabilities of its properties. With respect to INV’s residential properties, while keeping in
mind the off-season in the residential rental market that occurs during the December 2017 period, INV will
focus on increasing the occupancy rate and rent for both new lease contracts and lease renewals for each ofits 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 ensuring
stable operations and high tenant satisfaction. Therefore, INV will continue to monitor current strategicplans with flexible implementation as it sees fit. Especially for hotels, INV will carefully execute the plans
for renovations and replacement of fixtures and fittings in order to maintain and increase revenues.
(Note 1)

Hotel MyStays Dojima (former Hotel Vista Premio Dojima), whose operator was changed effective on
August 1, 2017, is included(iii) Financial strategy
In the Reporting Period, INV has added new lenders and strengthened its relationship with existing lenders
through the Public Offering and new borrowings in March 2017, in order to further stabilize its financialbase. Going forward, INV will work on diversifying financing measures including issuing investment
corporation bonds. Also, INV seeks to maximize unitholders’ value by way of extension of loan tenor,
diversification of loan maturity dates, further reduction of borrowing costs and improvement of its credit
rating.
(iv) Compliance risk management
While the executive officer of INV concurrently serves as the representative director at the Asset Manager,
two supervisory directors (an attorney and a certified public account) oversee the execution of the executive
officer’s duties via the Board of Directors of INV. In addition, the compliance officer of the Asset Manager
attends each meeting of the Board of Directors in the capacity of an observer.
The Asset Manager has a compliance officer who is responsible for compliance with laws, regulations andother relevant matters as well as overall management of transactions with sponsor related parties. Moreover,it has in place a compliance committee which, chaired by such compliance officer, is in charge ofdeliberating on compliance with laws, regulations and other relevant matters as well as transactions withsponsor related 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 in transactions with sponsor related parties as well as strict examinations with respect to
INV’s compliance with laws and regulations.
INV intends to continually take steps to strengthen its compliance structure.

32

6Significant Subsequent Events

On July 25, 2017, INV decided to sell one office building and one parking lot (the “Sale of Assets”) and toacquire a portion ((i) a portion of the first floor and (ii) the entire of the second and third floor) of the annex
building of Hotel MyStays Gotanda Station (the “Additional Acquisition”) with cash on hand including thesale proceeds from the Sale of Assets. The Additional Acquisition will add 49 hotel rooms to Hotel
MyStays Gotanda after the completion of the conversion work from office space to new hotel rooms. The
Sale of Assets closed on July 31, 2017. As a result, INV’s portfolio comprises of 125 properties (49 hotels,
70 residential properties and six others) with a total acquisition price of JPY 297,781 million as of the dateof this document. The total acquisition price is expected to increase to JPY 299,661 million after the
Additional Acquisition which is expected to close on October 31, 2017.
(a) Property Sales
The Asset Manager decided to sell one office building and one parking lot, and Sales of Assets has beenclosed on July 31, 2017 as follows:

Acquisition
price(JPY million)

Book value(JPY million)(Note 1)

Sales price(JPY million)(Note 2)Difference
b/w sales
price andbook value(Note 1)

Transferee

Categoryof specified
asset
Trust
BeneficiaryInterest(Note 4)
Real
Property

Property
number

Property name

OfficeBuilding

B08

Kindai
Kagaku Sha
Building

1,301

1,201

1,361

159

Undisclosed(Note 3)Parking
Lot

C01

Times
Kanda-Sudacho
4th

97

100

130

29

WastecHOLDINGS
Co., Ltd.

1,398

1,301

1,491

188

Use

Total
(Note 1)The book values are anticipated amount as of July 31, 2017. The difference between sales price and bookvalue is provided for reference purpose. INV estimates to recognize a gain on sales of JPY 120 million (ofwhich, JPY 96 million for Kindai Kagaku Sha Building, and JPY 23 million for Times Kanda-Sudacho 4th)
in the December 2017 period, after deducting sales-related expenses.

(Note 2)

Sales prices do not include adjustments for fixed asset taxes or city planning taxes, or national or local
consumption taxes.

(Note 3)The name of the transferee is not disclosed, as the transferee’s consent has not been obtained for disclosure.

(Note 4)

The trust beneficiary interest of Kindai Kagaku Sha Building was integrated in a single trust account withother trust accounts when INV procured funds through debt financing backed by trust assets in July 2011. Intransferring the sole trust beneficiary interest of Kindai Kagaku Sha Building by itself, INV incurred some
expenses to detach the asset from the integrated trust account.

33

(b) Property Acquisition
The Asset Manager decided to acquire an additional portion of a hotel (Note 1) with the anticipated closing
date of October 31, 2017 as follows:

Use

Hotel

Property
numberD43

Property nameLocation

Hotel MyStays Gotanda
Station (Additional
Shinagawa-ku,
Acquisition Portion)
Tokyo(Note 2)

Anticipatedacquisition price(JPY million)(Note 3)

Appraisal
value(JPY million)(Note 4)

SellerCategoryof specified
asset

1,880

2,600

Undisclosed(Note 5)Trust
beneficiaryinterest(Note 1)

INV will conduct Additional Acquisition by assuming the buyer’s position in the “Purchase and Sale
Agreement of Trust Beneficiary Interest” dated May 12, 2017 (the “PSA”), between the seller above andGotanda Godo Kaisha, the original buyer.

(Note 2)

Hotel MyStays Gotanda Station, INV’s portfolio property, comprises two buildings adjacent to each other,
the Main Building and the Annex Building, and INV currently owns the entire portion of the Main Building
and a portion of the Annex Building. The hotel (the “Existing Hotel Portion”) has been operated as a portionof each of the Main Building and the Annex Building that are owned by INV. The portion INV will acquire
this time is (i) a portion of the first floor of the Annex Building and (ii) the entire second and third floor of
the Annex Building (collectively, the “Floor Expansion Portion”), totaling 1,385.46 m2. Conversion work toconvert office space to hotel rooms (the “Conversion”) has been implemented by the seller in an aim to add
49 hotel rooms. Upon the completion of the Conversion, INV will complete the Additional Acquisition andthus aims to operate the Existing Hotel Portion and the Floor Expansion Portion together in an efficientmanner.

(Note 3)

Anticipated acquisition price is the total of (i) purchase price set forth in the PSA, (ii) expenses with regard
to the Conversion, (iii) transfer price of the furniture, fixture and equipment (FF&E), and other expenses.
Expenses with regard to the Conversion and transfer price of the furniture, fixture and equipment (FF&E)
are estimated amount as of July 25, 2017, and are subject to change. Moreover, the anticipated acquisition
price does not include adjustments for fixed asset taxes or city planning taxes, as well as national or local
consumption taxes.

(Note 4)As the Floor Expansion Portion is under construction, the appraisal value shows the research value set forthin the research report on the valuation date of June 30, 2017, issued by Morii Appraisal & Investment
Consulting, Inc. The research value shows the difference between (i) the research value of Existing HotelPortion and Floor Expansion Portion combined, assuming the completion of the Conversion (JPY 27,400
million) and (ii) the research value for the Existing Hotel Portion before the Additional Acquisition(JPY24,800 million).

(Note 5)The name of the seller is not disclosed, as the seller’s consent has not been obtained for disclosure.

34

Overview of the Investment Corporation
1

Overview of Investment
By Period
Results Dates

24th fiscal
periodAs of Jun. 30,
2015

25th fiscal
periodAs of Dec. 31,
2015

26th fiscal
periodAs of Jun. 30,
2016

27th fiscal
periodAs of Dec. 31,
2016

28th fiscal
periodAs of Jun. 30,
2017

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000

2,668,686

3,193,686

3,675,824

3,675,824

3,860,824

53,09682,465

120,367

120,367

128,984

10,731

10,587

12,135

15,634

17,493

Number of issuable
investment units(Unit)
Number ofinvestment units
issued andoutstanding(Unit)
Unitholders’ capital(JPY million)
Number of total
unitholders
2

Notes regarding Unitholders

Major unitholders at the end of the reporting period are as below.
Name

Number of units held

% of total number of investment
units issued and outstanding

Calliope Godo Kaisha
The Master Trust Bank of Japan, Ltd.
(trust account)
Japan Trustee Services Bank, Ltd.
(trust account)
Trust & Custody Services Bank, Ltd.
(securities investment trust account)
Rayo Godo Kaisha
The Nomura Trust and Banking Co.,
Ltd. (investment trust account)
THE BANK OF NEW YORK 133970
THE BANK OF NEW YORKMELLON SA/NV 10
STATE STREET BANK AND TRUSTCOMPANY 505012
JP MORGAN CHASE BANK 385628

609,94215.79

393,16110.18

381,808

9.88

347,515

9.00

149,925

3.88

131,026

3.39

76,487

1.98

62,156

1.60

50,9391.31

47,626

1.23

Total

2,250,585

58.29(Note) Percentages are rounded down to two decimal places.

353Notes regarding Directors

Directors at the end of the reporting period are as below.

Position

Name

Executive Director

Naoki Fukuda

Primary responsibilities

Takashi Takahashi
Supervisory Director
Hiroyuki Fujimoto

Auditor(Note)

Directors’ remunerationfor operating period(JPY thousand)President and CEO,
Consonant Investment
Management Co., Ltd.
Attorney,
Ocean General Law Office
Tax accountant,
CPA Fujimoto OfficeOutside Auditor,
BRYCEN Co., Ltd.
(current position)

Ernst & Young
ShinNihon LLC

-

2,400

2,400

16,200Executive and supervisory directors do not hold INV’s units either in their names or in the names of third parties.
In addition, while they may be directors of organizations not listed above, those organizations as well as thoselisted above have no conflicts of interest with INV.

Determination policy for dismissal or non-reappointment of Auditor
The auditing agreement with the auditor is renewed every accounting period. Dismissals are made inaccordance with the Investment Trust Act, and in addition, non-reappointments are considered by the boardof directors of INV by comprehensively taking into account the auditing quality, auditor remuneration, andother various circumstances.
Matters related to parties that have received a business suspension order within the past two years
The Auditor of INV received business suspension order from the Financial Services Agency on December
22, 2015 to suspend accepting new engagements for 3 months (from January 1, 2016, to March 31, 2016).

36

4Asset Management Company, Asset Custody Companies, and General Administrative AgentsThe asset management company, asset custody companies, and general administrative agents at the end of
the Reporting Period are as below.
Delegation category
Asset management company
Asset custody company
General administrative agent (institutional operations(Note 1) administration of unitholders’ registry, etc.)
General administrative agent (institutional operations(Note 2))
General administrative agent (accounting operations,
etc.)

Name
Consonant Investment Management Co., Ltd.
Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Trust Bank, Limited
Consonant Investment Management Co., Ltd.
EP Consulting Services Corporation
Mitsubishi UFJ Trust and Banking Corporation
Limited (Note 3) / Sumitomo Mitsui Trust
Bank, Limited (Note 4)

Special account management company(Note 1) Of the administrative tasks for the INV’s institutional operations, tasks related to the mailing of general unitholders’meetings and the receipt and counting of voting forms are delegated.
(Note 2) (i) Tasks related to the running of general unitholders’ meetings for INV (excluding tasks related to the mailing ofgeneral unitholders’ meetings and the receipt and counting of voting forms), (ii) Tasks related to the running of themeetings of the Board of Directors of INV, and (iii) the aforementioned in (i) or tasks incidental or related to (ii)are delegated.
(Note 3) Conducts administrative tasks related to the creation, maintenance, and disposition of transfer savings accountregisters for special accounts of unitholders of the INV before the merger (former Tokyo Growth REIT Investment
Inc.) as well as tasks related to other transfer savings account registers.
(Note 4) Conducts administrative tasks related to the creation, maintenance, and disposition of transfer savings accountregisters for special accounts of unitholders of the former LCP as well as tasks related to other transfer savings
account registers.

37

Status of Investment Corporation’s Assets under Management
1

Composition of INV’s Assets
Fiscal period ended December 31, 2016(as of December 31, 2016)

Type of

Purpose

Geographic area

asset

(Note 1)

Percentage of
total assets(%)

Amount held
(JPY million)(Note 2)

Greater Tokyo
area
Major regional
Residences
citiesSubtotal
Greater Tokyo
area
Offices/Commercial Major regional
Facilities
citiesSubtotalRealestateGreater Tokyo
area
Major regional
Parking lots, etc.
citiesSubtotal
Greater Tokyo
area
Major regional
HotelscitiesSubtotal
Total real estate
Greater Tokyo
area
Major regional
Residences
citiesSubtotal
Greater Tokyo
area
Offices/Commercial Major regional
Facilities
citiesReal
Subtotalestate inGreater Tokyo
trust
area
Major regional
Parking lots, etc.
citiesSubtotal
Greater Tokyo
area
Major regional
HotelscitiesSubtotal

Fiscal period ended June 30, 2017(as of June 30, 2017)
Percentage of
total assets(%)

Amount held
(JPY million)(Note 2)

-

-

-

-

-

-

-

-

-

-

-

-

704

0.3

703

0.2

-

-

-

-

704

0.3

703

0.2

100

0.0

100

0.0

-

-

-

-

100

0.0

100

0.0

-

-

2

0.0

-

-

-

-

805

0.3

2
806

0.0
0.3

51,61018.6

77,07325.2

16,225

5.8

16,0395.2

67,83524.5

93,113

30.4

7,002

2.5

6,990

2.3

5,782

2.1

5,732

1.9

12,785

4.6

12,722

4.2

-

-

-

-

-

-

-

-

-

-

-

-

102,29736.8

109,90735.9

76,21427.5

75,98824.8

178,51164.4

185,895

60.7

Total real estate in trust

259,133

93.4

291,731

95.2

Deposits and other assets

17,423

6.3

13,883

4.5

Total assets (Note 3)

277,361

100.0

306,421100.0(259,938)(93.7)(292,537)(95.5)

38

(Note 1)(Note 2)
(Note 3)

2

“Greater Tokyo area” refers to Tokyo, Kanagawa, Chiba and Saitama.
“Amount held” is from the balance sheet as of the end of the reporting period and is calculated by deducting
accumulated depreciation from the acquisition price (including acquisition related costs).
The figures indicated in parenthesis under “Total assets” show the amounts related to owned real estate.

Major Properties

The overview of the Investment Corporation’s major properties (top 10 properties by book value) at the endof the Reporting Period is as below.

Name of property

D43

Hotel MyStays Gotanda Station

A105 Royal Parks Tower Minami-Senju

Book value

Leasable area

Leased area

(JPY million)22

Occupancy rate

Ratio of(%)

rental revenue

Main use

(m )

(m )

24,626

8,752.42

8,752.42

100.0

4.4

Hotel

22,933

39,113.46

36,257.39

92.7

4.6

Residence(Note 1) (Note 2) (%) (Note 2)

D44

Hotel Epinard Nasu

20,74437,702.33

37,702.33

100.0

5.9

Hotel

D47

Hotel MyStays Premier Kanazawa

13,561

13,250.03

13,250.03

100.0

3.1

Hotel

D21

APA Hotel Yokohama-Kannai

8,041

6,568.51

6,568.51

100.0

2.5

Hotel

D49

Hotel MyStays Premier Hamamatsucho

8,016

6,151.93

6,151.93

100.0

0.5

Hotel

D45

Hotel MyStays Fukuoka Tenjin

7,989

5,083.06

5,083.06

100.0

2.1

Hotel

D46

Hotel MyStays Hamamatsucho

7,916

1,951.90

1,951.90

100.0

1.2

Hotel

D24

Hotel MyStays Haneda

7,585

5,400.16

5,400.16

100.0

2.0

Hotel

A75

Spacia Ebisu

6,517

7,794.91

7,420.04

95.2

2.3

Residence

127,932

131,768.71

128,537.77

97.5

28.7

-

Total

(Note 1) “Occupancy rate” is computed by dividing the leased area by leasable area.
(Note 2) “Occupancy rate” and “Ratio of rental revenue” are rounded to one decimal place.

39

3

Asset Portfolio of Real Estate, etc.

The portfolio of the properties (real estate and trust beneficiary interest in real estate) held by theInvestment Corporation at the end of the Reporting Period is as below.

Name of property

Location(Note 1)

Legal form of Leasable area
asset
(m2)

Appraisal value
as of June 30, Book value
2017
(JPY
(JPY million)
million)(Note 2)

1-31-2 Izumi, Suginami-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

1,771.13

1,180

1,118

2,681.94

1,290

1,084

A26

Nisshin Palacestage
Daitabashi

A27

Nisshin Palacestage HigashiNagasaki

5-4-1 Nagasaki, Toshima-ku, Tokyo

Trust
beneficiaryinterest(Note 3)Growth Maison Gotanda

2-26-6 Nishi-Gotanda, Shinagawa-ku,
Tokyo

Trust
beneficiaryinterest(Note 3)

1,051.50

1,020

825

6-58-16 Kameido, Koto-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

1,367.96

1,130

978

3-27-18 Itabashi, Itabashi-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

2,152.31

1,410

1,366

2-5-5 Yushima, Bunkyo-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

1,748.24

1,400

1,351

3,029.16

1,090

1,086

A28

A29

A30

A31

Growth Maison Kameido

Emerald House

Harmonie Ochanomizu

A32

Suncrest Shakujii-Koen

3-15-35 Takanodai, Nerima-ku, Tokyo

Trust
beneficiaryinterest(Note 3)A33

Growth Maison
Shin-Yokohama

3-16-2 Shin-Yokohama, Kohoku-ku,
Yokohama-shi, Kanagawa

Trustbeneficiaryinterest(Note 3)

1,858.44

1,180

960

A34

Belle Face
Ueno-Okachimachi

1-27-5 Higashi-Ueno, Taito-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

1,351.11

1,050

950

3-39-12 Kameido, Koto-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

1,562.26

999

824

A35

Grand Rire Kameido

40Name of property

A36

A37

A38

A39

Location(Note 1)

Legal form of Leasable area
asset
(m2)

Appraisal value
as of June 30, Book value
2017
(JPY
(JPY million)
million)(Note 2)

3-31-14 Nishi-Ikebukuro, Toshima-ku,
Tokyo

Trust
beneficiaryinterest(Note 3)952.89910

746

Growth Maison Yoga

1-15-15 Okamoto, Setagaya-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

1,015.34

722

746

Route Tachikawa

3-7-6 Nishikicho, Tachikawa-shi,
Tokyo

Trust
beneficiaryinterest(Note 3)

1,368.57657

642

2-35-2 Honmachi, Shibuya-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

1,167.50633

655

1,235.93

498

652

Growth Maison Ikebukuro

Shibuya-Honmachi Mansion

A40

City Heights Kinuta

4-13-15 Kinuta, Setagaya-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

A41

Acseeds Tower
Kawaguchi- Namiki

2-5-13 Namiki, Kawaguchi-shi,
SaitamaTrustbeneficiaryinterest(Note 3)

1,210.74725

541

71-1 Enokicho, Shinjuku-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

1,126.65

587

626

3-4-4 Nakamachi, Machida-shi, Tokyo

Trust
beneficiaryinterest(Note 3)

1,047.75

534

560

Belair Meguro

1-2-15 Meguro, Meguro-ku, Tokyo

Trust
beneficiaryinterest(Note 3)557.05

607

559

Wacore Tsunashima I

2-7-47 Tarumachi, Kohoku-ku,
Yokohama-shi, Kanagawa

Trustbeneficiaryinterest(Note 3)907.46515

527

1-6-6 Kouyama, Nerima-ku, Tokyo

Trust
beneficiaryinterest(Note 3)815.77569

521

5-29-51 Kaijin, Funabashi-shi, Chiba

Trustbeneficiaryinterest(Note 3)2,040.27

465

520

A42

A43

A44

A45

A46

A47

Capital Heights Kagurazaka

College Square Machida

Foros Nakamurabashi

Growth Maison Kaijin

41

Location(Note 1)Name of property

Legal form of Leasable area
asset
(m2)

Appraisal value
as of June 30, Book value
2017
(JPY
(JPY million)
million)(Note 2)

A48

College Square Machiya

7-3-1 Arakawa, Arakawa-ku, Tokyo

Trust
beneficiaryinterest(Note 3)

A51

City House Tokyo Shinbashi

6-19-1 Shinbashi, Minato-ku, Tokyo

Trust
beneficiaryinterest

3,364.00

3,250

2,329

A52

Winbell Kagurazaka

6-15 Shin-Ogawacho, Shinjuku-ku, Tokyo

Trust
beneficiaryinterest

4,032.70

3,940

3,052

A53

Nishiwaseda Cresent
Mansion3-18-9 Nishi-Waseda, Shinjuku-ku, Tokyo

Trust
beneficiaryinterest

4,310.77

2,480

1,883

A54

Lexington Square
Akebonobashi

3-8 Yochomachi, Shinjuku-ku, Tokyo

Trust
beneficiaryinterest

1,987.88

1,820

1,329

A56

Casa Eremitaggio

1-14-15 Nakane, Meguro-ku, Tokyo

Trust
beneficiaryinterest

1,197.19

1,110

953

A59

Towa City Coop ShinotsukaII

5-49-7 Higashi-Ikebukuro, Toshima-ku,

Trustbeneficiaryinterest

1,627.13

1,070

822

A61

Bichsel Musashiseki

1-22-7 Sekimachi-Kita, Nerima-ku, Tokyo

Trust
beneficiaryinterest

1,220.24

713

555

A62

Lexel Mansion Ueno
Matsugaya

3-10-2 Matsugaya, Taito-ku, Tokyo

Trust
beneficiaryinterest

1,969.45

1,200

859

A63

Towa City Coop Sengencho

Trustbeneficiaryinterest

3,426.36

1,350

1,019

A64

Royal Park Omachi

Trustbeneficiaryinterest

1,929.59

559

393

A65

Lexington Square
Haginomachi

Trustbeneficiaryinterest

1,528.58

450

285

A66

Visconti Kakuozan

Trustbeneficiaryinterest

705.75

271

231

A71

Lexington Square Daitabashi

1-33-18 Izumi, Suginami-ku, Tokyo

Trust
beneficiaryinterest

1,430.64

1,170

859

A72

Lexington Square Honjo
Azumabashi

4-20-6 Higashi-Komagata, Sumida-ku,

Trustbeneficiaryinterest

784.74

605

441

A73

AMS TOWER Minami 6-Jo

Trust
beneficiaryinterest

4,460.56

1,250

973

Tokyo

4-338-2 Sengencho, Nishi-ku,
Yokohama-shi, Kanagawa
2-11-10 Omachi, Aoba-ku, Sendai-shi,
Miyagi1-15-16 Haginomachi, Miyagino-ku,
Sendai-shi, Miyagi
2-44 Otanacho, Chikusa-ku, Nagoya-shi,
Aichi

Tokyo
2-5-15 Minami 6-Jo Nishi, Chuo-ku,
Sapporo-shi, Hokkaido

42871.35547

456

Location(Note 1)Name of property

Legal form of Leasable area
asset
(m2)

Appraisal value
as of June 30, Book value
2017
(JPY
(JPY million)
million)(Note 2)

A75

Spacia Ebisu

3-6-22 Higashi, Shibuya-ku, Tokyo

Trust
beneficiaryinterest

7,794.91

8,010

6,517

A76

Neo Prominence

3-21-5 Shimo, Kita-ku, Tokyo

Trust
beneficiaryinterest

3,574.70

1,980

1,614

A77

Invoice Shin-Kobe
Residence

3-3-8 Ikutacho, Chuo-ku, Kobe-shi,

Trustbeneficiaryinterest

2,773.71

1,420

1,182

A78

Cosmo Court Motomachi

Trustbeneficiaryinterest

2,310.49

1,080

908

A79

Revest Honjin

Trustbeneficiaryinterest

1,933.80

809

628

A80

Revest Matsubara

Trustbeneficiaryinterest

1,955.40

793

616

A81

Sun Terrace Minami
Ikebukuro

Trustbeneficiaryinterest

898.70

755

595

A82

Alba Noritake Shinmachi

Trustbeneficiaryinterest

1,731.68

733

566

A83

Revest Meieki Minami

Trustbeneficiaryinterest

1,634.60

746

557

A84

Revest Heian

Trust
beneficiaryinterest

1,554.03

693

555

A85

Vendir Hamaotsu Ekimae

Trustbeneficiaryinterest

2,670.66

726

535

A86

Salvo Sala

Trust
beneficiaryinterest

1,428.12

642

510

A87

Excellente Kagurazaka

Trustbeneficiaryinterest

701.92

635

517

A88

Luna Court Edobori

Trustbeneficiaryinterest

1,185.50

570

492

A89

Winntage Kobe Motomachi

Trustbeneficiaryinterest

1,433.35

606

475

A90

Queen's Court Fukuzumi

Trustbeneficiaryinterest

765.18

603

436

Hyogo
3-12-20 Motomachidori, Chuo-ku,
Kobe-shi, Hyogo
2-13 Toriidori, Nakamura-ku, Nagoya-shi,
Aichi
3-13-12 Matsubara, Naka-ku, Nagoya-shi,
Aichi
2-22-6 Minami-Ikebukuro, Toshima-ku,
Tokyo
3-6-8 Noritake Shinmachi, Nishi-ku,
Nagoya-shi, Aichi
2-13-33 Meieki-Minami, Nakamura-ku,
Nagoya-shi, Aichi
2-13-17 Heian, Kita-ku, Nagoya-shi,
Aichi

1-2-15 Hamaotsu, Otsu-shi, Shiga

2-6-21 Shimanouchi, Chuo-ku, Osaka-shi,Osaka128-1 Yamabukicho, Shinjuku-ku, Tokyo,
and other one parcel
3-4-11 Edobori, Nishi-ku, Osaka-shi,Osaka
7-2-2 Motomachidori, Chuo-ku,
Kobe-shi, Hyogo

1-3-10 Fukuzumi, Koto-ku, Tokyo

43

Location(Note 1)Name of property

380-1 Kawaranomachi, Higashinotoindori

A91

Corp Higashinotoin

Nijo Kudaru, Nakagyo-ku, Kyoto-shi,
Kyoto, and other two parcels

5-14-17 Higashi-Oi, Shinagawa-ku,
Tokyo

Legal form of Leasable area
asset
(m2)

Appraisal value
as of June 30, Book value
2017
(JPY
(JPY million)
million)(Note 2)Trust
beneficiaryinterest

1,029.05

514

421

Trust
beneficiaryinterest

530.60

505

395

Trust
beneficiaryinterest

1,020.86

446

354

Trust
beneficiaryinterest

789.12

434

350

Trust
beneficiaryinterest

992.76

433

336

Trust
beneficiaryinterest

1,477.62

428

324

Trust
beneficiaryinterest

794.80

323

313

Trust
beneficiaryinterest

974.81

395

295

Trust
beneficiaryinterest

761.18

337

279

Trust
beneficiaryinterest

5,230.18

1,930

1,813

A92

Belair Oimachi

A93

Siete Minami-Tsukaguchi

A94

Prime Life Sannomiya
Isogami Koen

A95

HERMITAGE NANBA
WEST

A96

Century Park Shinkawa
1-bankan

Nagoya-shi, Aichi

A97

West Avenue

1-5-17 Nishi, Kunitachi-shi, Tokyo

A98

Little River Honmachibashi

A99

Prime Life Mikage

A100

City Court Kitaichijo

A101

Lieto Court Mukojima

5-45-10 Mukojima, Sumida-ku, Tokyo

Trust
beneficiaryinterest

2,940.20

1,730

1,718

A102

Lieto Court Nishi-Ojima

2-41-14 Ojima, Koto-ku, Tokyo

Trust
beneficiaryinterest

2,048.28

1,720

1,661

A103

Royal Parks Momozaka

5-38 Fudegasakicho, Tennouji-ku,
Osaka-shi, Osaka

Trust
beneficiaryinterest

8,776.26

3,050

2,951

A104

Royal Parks Shinden

3-35-20 Shinden, Adachi-ku, Tokyo

Trust
beneficiaryinterest

15,797.29

5,440

5,133

A105

Royal Parks Tower
Minami-Senju

4-7-3 Minami-Senju, Arakawa-ku,
Tokyo

Trust
beneficiaryinterest

39,113.46

22,60022,933

A106

Royal Parks Seasir
Minami-Senju

3-41-7 Minami-Senju, Arakawa-ku,
Tokyo

Trust
beneficiaryinterest

6,496.86

2,710

2,825

3-18 Minami-Tsukaguchimachi,
Amagasaki-shi, Hyogo
4-3-23 Isogamidori, Chuo-ku, Kobe-shi,Hyogo
4-10-3 Sakuragawa, Naniwa-ku,
Osaka-shi, Osaka
4-1-2 Shinkawacho, Minato-ku,

1-34 Honmachibashi, Chuo-ku,
Osaka-shi, Osaka
2-25-11 Mikage Tsukamachi,
Higashinada-ku, Kobe-shi, Hyogo
1-6-3 Kita 1-jo Higashi, Chuo-ku,
Sapporo-shi, Hokkaido

44

Location(Note 1)Name of property

Legal form of Leasable area
asset
(m2)

Subtotal

Appraisal value
as of June 30, Book value
2017
(JPY
(JPY million)
million)(Note 2)

189,986.98

104,752

93,113

B08

Kindai Kagaku Sha Building

2-7-15 Ichigaya-Tamachi, Shinjuku-ku,
Tokyo

Trust
beneficiaryinterest

1,451.54

1,060

1,197

B09

Shinjuku Island

6-5-1 Nishi-Shinjuku, Shinjuku-ku,
TokyoReal estate526.43

545

703

B14

Lexington Plaza
Nishigotanda

5-2-4 Nishi-Gotanda, Shinagawa-ku,
Tokyo

Trust
beneficiaryinterest

6,033.58

4,250

4,662

B15

Cross Square NAKANO

5-24-18 Nakano, Nakano-ku, Tokyo

Trust
beneficiaryinterest

2,145.00

1,090

1,129

B16

Ohki Aoba Building

9-7 Futsukamachi, Aoba-ku,
Sendai-shi, Miyagi

Trustbeneficiaryinterest

2,178.37

691

731

B17

Lexington Plaza Hachiman

3-1-50 Hachiman, Aoba-ku,
Sendai-shi, Miyagi

Trustbeneficiaryinterest

8,419.15

3,610

3,086

B18

AEON TOWN Sukagawa

105 Furukawa, Sukagawa-shi,
Fukushima

Trust
beneficiaryinterest

18,440.58

2,370

1,914

39,194.65

13,616

13,426

81.04

113

100

81.04

113

100

Subtotal
C01

Times Kanda-Sudacho 4th

1-22-7, 1-22-15 Kanda sudacho,
Chiyoda-ku, Tokyo

Real estate

Subtotal

D01

Hotel MyStays Kanda

1-2-2 Iwamotocho, Chiyoda-ku, Tokyo

Trust
beneficiaryinterest

2,585.72

5,260

3,043

D02

Hotel MyStays Asakusa

1-21-11 Honjo, Sumida-ku, Tokyo

Trust
beneficiaryinterest

3,327.38

5,340

2,568

D03

Hotel MyStays Kyoto-Shijo

52 Kasabokocho, Higashiiru,
Aburanokoji, Shijyodori,Shimogyo-ku, Kyoto-shi, Kyoto

Trustbeneficiaryinterest

7,241.51

15,6005,799

D04

MyStays Shin-Urayasu
Conference Center

2-1-4 Akemi, Urayasu-shi, Chiba

Trustbeneficiaryinterest

6,232.30

7,140

4,740

D05

Hotel MyStays Maihama

3-5-1 Tekkodori, Urayasu-shi, Chiba

Trustbeneficiaryinterest

2,456.36

6,690

4,697

D06

Hotel Vista Premio Dojima(Note 4)2-4-1 Sonezakishinchi, Kita-ku, Osaka

Trust
beneficiaryinterest

9,445.32

7,370

3,677

D07

Hotel MyStays
Nagoya-Sakae

2-23-22 Higashi-Sakura, Naka-ku,
Nagoya-shi, Aichi

Trust
beneficiaryinterest

9,064.71

5,850

2,756

45

Name of property

Location(Note 1)

Legal form of Leasable area
asset
(m2)

Appraisal value
as of June 30, Book value
2017
(JPY
(JPY million)
million)(Note 2)

D08

Hotel MyStays
Sakaisuji-Honmachi

1-4-8 Awaji-machi, Chuo-ku,
Osaka-shi, Osaka

Trust
beneficiaryinterest

4,188.83

8,430

2,445

D09

Hotel MyStays Yokohama

4-81 Sueyoshicho, Naka-ku,
Yokohama-shi, Kanagawa

Trustbeneficiaryinterest

7,379.43

3,500

2,031

D10

Hotel MyStays Nippori

5-43-7 Higashi-Nippori, Arakawa-ku,
Tokyo

Trust
beneficiaryinterest

1,719.29

3,450

1,834

D11

Hotel MyStays
Fukuoka-Tenjin-Minami

3-14-20 Haruyoshi, Chuo-ku,
Fukuoka-shi, Fukuoka

Trustbeneficiaryinterest

3,412.71

4,720

1,530

D12

Flexstay Inn Iidabashi

3-26 Shin-Ogawamachi, Shinjuku-ku,
Tokyo

Trust
beneficiaryinterest

2,953.38

2,130

1,362

D13

Hotel MyStays Ueno
Inaricho

1-5-7 Matsugaya, Taito-ku, Tokyo

Trust
beneficiaryinterest

1,150.76

2,480

1,279

D14

Flexstay Inn Shinagawa

1-22-19 Kita-Shinagawa,Shinagawa-ku, Tokyo

Trust
beneficiaryinterest

1,134.52

2,130

1,216

D15

Flexstay Inn Tokiwadai

1-52-5 Tokiwadai, Itabashi-ku, Tokyo

Trust
beneficiaryinterest

2,539.75

2,260

1,224

D16

Flexstay Inn Sugamo

3-6-16 Sugamo, Toshima-ku, Tokyo

Trust
beneficiaryinterest

2,089.86

2,170

1,151

D17

Hotel MyStays Otemae

1-3-2 Tokuicho, Chuo-ku, Osaka-shi,
Osaka

Trust
beneficiaryinterest

4,956.66

4,710

1,163

D18

Flexstay Inn Kiyosumi
Shirakawa

1-12-16 Tokiwa, Koto-ku, Tokyo

Trust
beneficiaryinterest

2,673.64

1,320

733

D19

Flexstay Inn Nakanobu P1

4-27-12 Futaba, Shinagawa-ku, Tokyo

Trust
beneficiaryinterest

770.56

837

575

D20

Flexstay Inn Nakanobu P2

4-27-8 Futaba, Shinagawa-ku, Tokyo

Trust
beneficiaryinterest

391.49

403

283

D21

APA Hotel
Yokohama-Kannai

3-37-2 Sumiyoshicho, Naka-ku,
Yokohama-shi, Kanagawa

Trustbeneficiaryinterest

6,568.51

9,650

8,041

D22

Hotel Nets Hakodate

26-17 Honcho, Hakodate-shi,
Hokkaido

Trustbeneficiaryinterest

7,961.26

3,720

2,682

D23

Flexstay Inn Shirogane

5-10-15 Shirokane, Minato-ku, Tokyo

Trust
beneficiaryinterest

1,754.06

2,310

2,104

46

Name of property

Location(Note 1)

Legal form of Leasable area
asset
(m2)

Appraisal value
as of June 30, Book value
2017
(JPY
(JPY million)
million)(Note 2)

D24

Hotel MyStays Haneda

5-1-13 Haneda, Ota-ku, Tokyo

Trust
beneficiaryinterest

5,400.16

8,490

7,585

D25

Hotel MyStays Kameido P1

6-32-1 Kameido, Koto-ku, Tokyo

Trust
beneficiaryinterest

4,349.67

7,140

5,490

D26

Hotel MyStays Ueno
Iriyaguchi

5-5-13 Higashi-Ueno, Taito-ku, Tokyo

Trust
beneficiaryinterest

2,247.92

4,370

3,760

D27

Hotel MyStays Kameido P2

6-7-8 Kameido, Koto-ku, Tokyo

Trust
beneficiaryinterest

2,793.99

4,840

3,660

D28

Hotel Vista Shimizu

1-23 Masagocho, Shimizu-ku,
Shizuoka-shi, Shizuoka

Trustbeneficiaryinterest

3,559.81

2,450

2,124

D29

Super Hotel Shinbashi/
Karasumoriguchi

5-16-4 Shinbashi, Minato-ku, Tokyo

Trust
beneficiaryinterest

1,403.89

1,790

1,613

D30

Flexstay Inn Higashi-Jujo

2-10-2 Nakajujo, Kita-ku, Tokyo

Trust
beneficiaryinterest

1,714.53

1,430

1,271

D31

Hotel MyStays Utsunomiya

2-4-1 Higashi-Shukugo,
Utsunomiya-shi, Tochigi

Trustbeneficiaryinterest

11,733.23

1,380

1,235

D32

Flexstay Inn
Kawasaki-Kaizuka

1-13-2 Kaizuka, Kawasaki-ku,
Kawasaki-shi, Kanagawa

Trustbeneficiaryinterest

1,190.57

1,180

953

D33

Comfort Hotel Toyama

1-3-2 Takara-machi, Toyama-shi,ToyamaTrustbeneficiaryinterest

3,305.64

1,090

956

D34

Flexstay Inn
Kawasaki-Ogawacho

15-9 Ogawacho, Kawasaki-ku,
Kawasaki-shi, Kanagawa

Trustbeneficiaryinterest

725.60

1,060

891

D35

Flexstay Inn Ekoda

8-6 Sakaecho, Nerima-ku, Tokyo

Trust
beneficiaryinterest

3,932.93

5,030

4,971

D36

Super Hotel Tokyo-JR
Tachikawa Kitaguchi

2-21-9 Akebonocho, Tachikawa-shi,
Tokyo

Trust
beneficiaryinterest

1,832.97

1,230

1,148

D37

Super Hotel JR
Ueno-iriyaguchi

7-9-14 Ueno, Taito-ku, Tokyo

Trust
beneficiaryinterest

1,279.16

1,220

1,115

D38

Hotel MyStays Shinsaibashi

1-9-30 Nishi-Shinsaibashi, Chuo-ku,
Osaka-shi, Osaka

Trust
beneficiaryinterest

1,942.01

3,410

3,124

D39

Comfort Hotel Kurosaki

3-13-13 Kurosaki, Yahatanishi-ku,
Kitakyusyu-shi, Fukuoka

Trustbeneficiaryinterest

3,207.60

1,210

1,121

47

Location(Note 1)Name of property

Legal form of Leasable area
asset
(m2)

Appraisal value
as of June 30, Book value
2017
(JPY
(JPY million)
million)(Note 2)

D40

Comfort Hotel Maebashi

2-18-14 Omotecho, Maebashi-shi,
Gunma

Trust
beneficiaryinterest

3,660.96

1,170

1,119

D41

Comfort Hotel
Tsubame-Sanjo

2-115 Sugoro, Sanjo-shi, Niigata

Trustbeneficiaryinterest

3,099.90

1,060

995

D42

Comfort Hotel Kitami

3-4 Ohdori-Nishi, Kitami-shi,
Hokkaido

Trustbeneficiaryinterest

3,009.50

901

832

D43

Hotel MyStays Gotanda
Station

2-6-8 Nishi-Gotanda, Shinagawa-ku,
Tokyo

Trust
beneficiaryinterest

8,752.42

24,80024,626

D44

Hotel Epinard Nasu

1-10 Kaidoue (and 59 other landparcels), Oaza-Takakuhei,
Nasu-machi, Nasu-gun, Tochigi

Trustbeneficiaryinterest

37,702.33

22,00020,744

D45

Hotel MyStays Fukuoka
Tenjin3-5-7 Tenjin, Chuo-ku, Fukuoka-shi,
FukuokaTrustbeneficiaryinterest

5,083.06

8,280

7,989

D46

Hotel MyStays
Hamamatsucho

1-18-14 Hamamatsucho, Minato-ku,
Tokyo

Trust
beneficiaryinterest

1,951.90

7,760

7,916

D47

Hotel MyStays PremierKanazawa

2-13-1 Hirooka, Kanazawa-shi,Ishikawa

Trustbeneficiaryinterest

13,250.03

14,00013,561

D48

Takamatsu Tokyu REI Hotel

9-9 Hyogomachi, Takamatsu-shi,
KagawaTrustbeneficiaryinterest

7,148.17

2,170

2,126

D49

Hotel MyStays Premier
Hamamatsucho

1-8-5 Hamamatsucho, Minato-ku,
Tokyo

Trust
beneficiaryinterest

6,151.93

8,090

8,016

Subtotal

232,427.89

245,021

185,897

Total

461,690.56

363,502292,537(Note 1) “Location” is, in principle, based on the indicated address (jyukyohyoji), except that if the jyukyohyoji system has notbeen implemented for such property, the location is based on the land number (chiban).
(Note 2) “Appraisal value” is the value appraised or researched as of the end of the fiscal period in accordance with the Articles
of Incorporation of INV and the regulations of The Investment Trusts Association, Japan by Asset Research andDevelopment Inc., Japan Real Estate Institute, Morii Appraisal & Investment Consulting Inc., The Tanizawa Sogo
Appraisal Co., Ltd. or Daiwa Real Estate Appraisal Co., Ltd.
(Note 3) Individual trust beneficiary interests were integrated into three groups with other trust beneficiary interests when INV
procured funds through debt financing backed by trust assets in July 2011. The grouping of trust beneficiary interests at
the end of the fiscal period ended June 30, 2017 is as follows:
Group 1
Nisshin Palacestage Daitabashi, Nisshin Palacestage Higashi-Nagasaki, Growth Maison Shin-Yokohama,
Belle Face Ueno-Okachimachi, Growth Maison Yoga, Shibuya-Honmachi Mansion, City Heights Kinuta, andForos Nakamurabashi.

48

Group 2
Growth Maison Gotanda, Growth Maison Kameido, Emerald House, Growth Maison Ikebukuro,
Route Tachikawa, College Square Machida, Belair Meguro, and Wacore Tsunashima I.
Group 3Harmonie Ochanomizu, Suncrest Shakujii-Koen, Grand Rire Kameido, Acseeds Tower Kawaguchi-Namiki,
Capital Heights Kagurazaka, Growth Maison Kaijin, and College Square Machiya.
(Note 4) With change of the operator, the property name was changed to Hotel MyStays Dojima on August 1, 2017. The same
shall apply hereinafter in this document.

49Trends for the leasing operations of the properties owned by INV are as below.

Name of property

27th fiscal period(July 1, 2016 to December 31, 2016)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)

A26

Nisshin Palacestage
Daitabashi

1

98.0

39,494

0.4

1

89.8

39,1870.4

A27

Nisshin Palacestage
Higashi- Nagasaki

1

96.5

43,857

0.5

1

93.6

46,5980.5

A28Growth Maison Gotanda

1

100.0

27,345

0.3

1

100.0

27,3390.3

A29

Growth Maison Kameido

1

92.4

33,416

0.4

1

92.4

33,0240.4

A30

Emerald House

1

96.9

43,288

0.5

1

98.9

49,146

0.5

A31

Harmonie Ochanomizu

1

100.0

41,703

0.4

1

97.5

41,9380.5

A32

Suncrest Shakujii-Koen

1

94.0

34,586

0.4

1

94.7

39,0740.4

A33

Growth Maison
Shin-Yokohama

1

94.2

34,347

0.4

1

97.1

35,7520.4

A34

Belle Face
Ueno-Okachimachi

1

95.2

30,471

0.3

1

90.6

33,733

0.4

A35Grand Rire Kameido

1

100.0

26,619

0.3

1

100.0

26,6190.3

A36Growth Maison Ikebukuro

1

100.0

26,733

0.3

1

95.2

26,8720.3

A37Growth Maison Yoga

1

94.8

22,092

0.2

1

92.4

22,0800.2

A38

Route Tachikawa

1

100.0

20,282

0.2

1

89.8

21,6180.2

A39

Shibuya-Honmachi Mansion

1

91.9

19,621

0.2

1

100.0

20,0420.2

A40City Heights Kinuta

1

94.6

16,158

0.2

1

89.2

17,1460.2

A41

Acseeds Tower KawaguchiNamiki

1

89.4

24,556

0.3

1

98.3

25,1100.3

A42Capital Heights Kagurazaka

1

97.2

18,565

0.2

1

83.4

19,8850.2

A43

College Square Machida

1

100.0

17,484

0.2

1

100.0

17,4840.2

A44

Belair Meguro

1

92.1

16,259

0.2

1

92.0

16,0650.2

A45

Wacore Tsunashima I

1

89.9

18,690

0.2

1

92.1

17,9170.2

A46

Foros Nakamurabashi

1

91.2

17,597

0.2

1

97.5

18,4250.2

A47

Growth Maison Kaijin

1

97.4

22,145

0.2

1

100.0

22,6990.2

A48

College Square Machiya

1

100.0

14,706

0.2

1

100.0

14,7060.2

A51City House Tokyo Shinbashi

1

93.3

92,285

1.0

1

92.8

90,9961.0

50

Name of property

27th fiscal period(July 1, 2016 to December 31, 2016)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)

A52

Winbell Kagurazaka

1

95.5

101,878

1.1

1

98.4

105,442

1.1

A53

Nishiwaseda Cresent
Mansion1

95.8

73,724

0.8

1

100.0

74,3380.8

A54

Lexington Square
Akebonobashi

1

96.7

49,405

0.5

1

96.6

52,492

0.6

A56

Casa Eremitaggio

1

96.7

34,594

0.4

1

94.0

32,586

0.4

A59

Towa City Coop Shinotsuka II

1

96.3

35,150

0.4

1

91.4

33,8650.4

A61

Bichsel Musashiseki

1

91.5

22,918

0.2

1

95.7

23,2330.3

A62

Lexel Mansion Ueno
Matsugaya

1

96.4

34,740

0.4

1

92.7

35,106

0.4

A63

Towa City Coop Sengencho

1

89.7

56,386

0.6

1

83.8

55,627

0.6

A64Royal Park Omachi

1

92.8

25,432

0.3

1

98.3

26,332

0.3

A65

Lexington Square
Haginomachi

1

92.1

17,590

0.2

1

89.5

17,161

0.2

A66

Visconti Kakuozan

1

83.8

11,857

0.1

1

88.6

10,730

0.1

A71

Lexington Square Daitabashi

1

92.9

32,254

0.3

1

92.2

31,574

0.3

A72

Lexington Square Honjo
Azumabashi

1

96.9

19,035

0.2

1

94.0

17,8070.2

A73

AMS TOWER Minami 6-Jo

1

86.1

45,686

0.5

1

79.7

44,9050.5A75

Spacia Ebisu

1

94.0

205,456

2.2

1

95.2

214,592

2.3

A76

Neo Prominence

1

95.0

64,271

0.7

1

91.2

62,852

0.7

A77

Invoice Shin-Kobe Residence

1

81.5

46,782

0.5

1

91.7

45,5380.5

A78

Cosmo Court Motomachi

1

86.5

35,528

0.4

1

95.3

35,227

0.4

A79

Revest Honjin

1

95.0

31,699

0.3

1

92.5

32,201

0.3

A80

Revest Matsubara

1

91.8

28,164

0.3

1

93.1

29,2300.3

A81

Sun Terrace Minami
Ikebukuro1

97.4

23,830

0.3

1

86.8

22,564

0.2

A82

Alba Noritake Shinmachi

1

91.0

25,917

0.3

1

87.5

25,262

0.3

A83

Revest Meieki Minami

1

93.6

25,956

0.3

1

95.4

26,2890.3

A84

Revest Heian

1

88.7

23,023

0.2

1

100.0

23,7120.3

A85

Vendir Hamaotsu Ekimae

1

93.4

32,640

0.3

1

98.5

33,1780.4

A86

Salvo Sala

1

96.7

24,657

0.3

1

95.9

25,1130.3

51

Name of property

27th fiscal period(July 1, 2016 to December 31, 2016)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)

A87

Excellente Kagurazaka

1

88.3

18,252

0.2

1

94.1

18,7750.2

A88

Luna Court Edobori

1

98.0

21,451

0.2

1

94.0

20,5480.2

A89

Winntage Kobe Motomachi

1

80.7

19,673

0.2

1

85.9

20,0800.2

A90

Queen's Court Fukuzumi

1

96.6

16,843

0.2

1

95.9

17,3500.2

A91

Corp Higashinotoin

1

95.2

17,203

0.2

1

97.6

18,2920.2

A92

Belair Oimachi

1

92.9

14,448

0.2

1

96.1

15,291

0.2

A93

Siete Minami-Tsukaguchi

1

97.5

16,605

0.2

1

95.0

17,2060.2

A94

Prime Life Sannomiya
Isogami Koen

1

87.5

13,769

0.1

1

96.9

14,0250.2

A95

HERMITAGE NANBA
WEST

1

88.0

15,516

0.2

1

100.0

15,5490.2

A96

Century Park Shinkawa
1-bankan1

90.9

17,409

0.2

1

88.7

17,6880.2

A97West Avenue

1

87.5

12,254

0.1

1

85.0

12,1750.1

A98

Little River Honmachibashi

1

96.9

13,795

0.1

1

87.7

13,4590.1

A99

Prime Life Mikage

1

86.8

11,566

0.1

1

96.6

12,6630.1

A100 City Court Kitaichijo

1

94.8

65,467

0.7

1

93.8

65,411

0.7

A101 Lieto Court Mukojima

1

95.3

53,665

0.6

1

97.0

54,123

0.6

A102 Lieto Court Nishi-Ojima

1

96.8

48,105

0.5

1

99.0

48,437

0.5

A103 Royal Parks Momozaka

4

100.0

139,988

1.5

4

100.0

140,320

1.5

A104 Royal Parks Shinden

4

100.0

215,643

2.3

4

100.0

214,749

2.3

A105Royal Parks Tower
Minami-Senju

－

－

－

－

1

92.7

426,286

4.6

A106Royal Parks Seasir
Minami-Senju

－

－

－

－

1

100.0

55,9580.6

Subtotal

74

94.7

2,562,556

26.9

76

94.6

3,078,836

33.2

B08

Kindai Kagaku Sha Building

1

100.0

38,162

0.4

1

100.0

36,913

0.4

B09

Shinjuku Island

1

100.0

(Note 4)(Note 4)1100.0(Note 4)(Note 4)

B14

Lexington Plaza Nishigotanda

7

91.8

140,640

1.5

8

100.0

144,100

1.6

B15

Cross Square NAKANO

1

89.1

44,623

0.5

1

87.3

43,431

0.5

B16

Ohki Aoba Building

1

83.6

34,522

0.4

1

88.7

34,8440.452

Name of property

27th fiscal period(July 1, 2016 to December 31, 2016)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)

B17

Lexington Plaza Hachiman

1

100.0

163,789

1.7

1

100.0

161,712

1.7

B18

AEON TOWN Sukagawa

1

100.0

142,027

1.5

1

100.0

141,715

1.5

13

97.2

580,963

6.1

14

98.7

580,870

6.3

1

100.0

2,700

0.0

1

100.0

2,700

0.0

Subtotal

1

100.0

2,700

0.0

1

100.0

2,700

0.0

D01

Hotel MyStays Kanda

1

100.0

95,222

1.0

1

100.0

105,509

1.1

D02

Hotel MyStays Asakusa

1

100.0

115,200

1.2

1

100.0

116,739

1.3

D03

Hotel MyStays Kyoto-Shijo

1

100.0

367,441

3.9

1

100.0

321,887

3.5

D04

MyStays Shin-Urayasu
Conference Center

1

100.0

212,187

2.2

1

100.0

175,921

1.9

D05

Hotel MyStays Maihama

1

100.0

183,694

1.9

1

100.0

134,694

1.5

D06

Hotel Vista Premio Dojima

1

100.0

215,896

2.3

1

100.0

202,987

2.2

D07

Hotel MyStays
Nagoya-Sakae

1

100.0

197,906

2.1

1

100.0

188,852

2.0

D08

Hotel MyStays
Sakaisuji-Honmachi

1

100.0

201,529

2.1

1

100.0

161,661

1.7

D09

Hotel MyStays Yokohama

1

100.0

118,878

1.2

1

100.0

108,321

1.2

D10

Hotel MyStays Nippori

1

100.0

65,615

0.7

1

100.0

59,9540.6

D11

Hotel MyStays
Fukuoka-Tenjin-Minami

1

100.0

137,361

1.4

1

100.0

133,097

1.4

D12

Flexstay Inn Iidabashi

1

100.0

52,029

0.5

1

100.0

50,7020.5

D13Hotel MyStays
Ueno Inaricho

1

100.0

51,818

0.5

1

100.0

55,0960.6

D14

Flexstay Inn Shinagawa

1

100.0

50,600

0.5

1

100.0

47,7950.5

D15

Flexstay Inn Tokiwadai

1

100.0

60,368

0.6

1

100.0

59,2970.6

D16

Flexstay Inn Sugamo

1

100.0

54,852

0.6

1

100.0

56,6540.6

D17Hotel MyStays Otemae

1

100.0

144,286

1.5

1

100.0

124,567

1.3

D18

Flexstay Inn Kiyosumi
Shirakawa

1

100.0

39,669

0.4

1

100.0

40,6340.4

D19

Flexstay Inn Nakanobu P1

1

100.0

21,653

0.2

1

100.0

20,7950.2

D20

Flexstay Inn Nakanobu P2

1

100.0

11,371

0.1

1

100.0

11,1680.1

Subtotal
C01

Times Kanda-Sudacho 4th53Name of property

27th fiscal period(July 1, 2016 to December 31, 2016)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)D21

APA Hotel
Yokohama-Kannai

1

100.0

234,973

2.5

1

100.0

230,016

2.5

D22

Hotel Nets Hakodate

1

100.0

160,872

1.7

1

100.0

112,960

1.2

D23

Flexstay Inn Shirogane

1

100.0

54,444

0.6

1

100.0

59,7400.6

D24

Hotel MyStays Haneda

1

100.0

178,271

1.9

1

100.0

182,340

2.0

D25

Hotel MyStays Kameido P1

1

100.0

186,026

2.0

1

100.0

174,873

1.9

D26

Hotel MyStays Ueno
Iriyaguchi

1

100.0

98,762

1.0

1

100.0

95,3151.0

D27

Hotel MyStays Kameido P2

1

100.0

130,259

1.4

1

100.0

118,142

1.3

D28

Hotel Vista Shimizu

1

100.0

83,319

0.9

1

100.0

76,066

0.8

D29Super Hotel
Shinbashi/Karasumoriguchi

1

100.0

39,426

0.4

1

100.0

39,4260.4

D30

Flexstay Inn Higashi-Jujo

1

100.0

40,126

0.4

1

100.0

40,4580.4

D31Hotel MyStays Utsunomiya

1

100.0

64,742

0.7

1

100.0

89,4781.0

D32

Flexstay Inn
Kawasaki-Kaizuka

1

100.0

32,535

0.3

1

100.0

32,054

0.3

D33

Comfort Hotel Toyama

1

100.0

35,928

0.4

1

100.0

35,9280.4

D34

Flexstay Inn
Kawasaki-Ogawacho

1

100.0

28,421

0.3

1

100.0

25,8770.3

D35

Flexstay Inn Ekoda

1

100.0

110,022

1.2

1

100.0

115,682

1.2

D36Super Hotel Tokyo-JR
Tachikawa Kitaguchi

1

100.0

31,787

0.3

1

100.0

31,7870.3

D37Super Hotel JR
Ueno-iriyaguchi

1

100.0

27,275

0.3

1

100.0

27,2750.3

D38

Hotel MyStays Shinsaibashi

1

100.0

90,819

1.0

1

100.0

82,4840.9

D39

Comfort Hotel Kurosaki

1

100.0

37,894

0.4

1

100.0

37,894

0.4

D40

Comfort Hotel Maebashi

2

100.0

43,811

0.5

2

100.0

43,811

0.5

D41

Comfort Hotel
Tsubame-Sanjo

2

100.0

34,949

0.4

2

100.0

34,9490.4

D42

Comfort Hotel Kitami

1

100.0

30,300

0.3

1

100.0

30,3000.3

D43

Hotel MyStays Gotanda
Station1

100.0

396,612

4.2

1

100.0

408,173

4.4

D44

Hotel Epinard Nasu

1

100.0

1,040,790

10.9

1

100.0

549,169

5.9

D45

Hotel MyStays Fukuoka
Tenjin1

100.0

190,416

2.0

1

100.0

192,325

2.1

54

Name of property

27th fiscal period(July 1, 2016 to December 31, 2016)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)28th fiscal period(January 1, 2017 to June 30, 2017)
Occupancy
RentalNumber ofrate
revenue
Ratio oftenants(at end of(during
rental(at end of
period)period)revenueperiod)
(%)
(JPY
(%)
(unit)(Note 1)
thousand)(Note 3)(Note 3)(Note 2)

D46

Hotel MyStays
Hamamatsucho

1

100.0

115,208

1.2

1

100.0

114,650

1.2

D47

Hotel MyStays Kanazawa

1

100.0

343,391

3.6

1

100.0

285,925

3.1

D48

Takamatsu Tokyu REI Hotel

3

100.0

106,269

1.1

3

100.0

104,257

1.1

D49

Hotel MyStays Premier
Hamamatsucho

―

―

―

―

1

100.0

50,8000.5

Subtotal

52

100.0

6,365,246

66.9

53

100.0

5,598,510

60.5

Total

140

97.9

9,511,466

100.0

144

97.7

9,260,917

100.0(Note 1) “Occupancy rate” is calculated by dividing the leased area by leasable area.
(Note 2) “Rental revenue (during period)” indicates each property’s leasing operation revenues during the fiscal period, andhas been rounded down to the nearest thousand yen.
(Note 3) “Occupancy rate” and “Ratio of rental revenue” are rounded off to one decimal place.
(Note 4) Not disclosed because the consent of the tenant was not obtained.

55

4

Asset Portfolio of Facilities Generating Renewable Energy, etc.

Not applicable
5

Asset Portfolio Including Rights to Operate Public Facilities, etc.

Not applicable
6

Status of Contract Amount and Fair Value of Specified Transaction

As of June 30, 2017, the contract amount and fair value of the outstanding transaction under the specified
transaction account of INV are as follows.
(Unit: JPY thousand)Contract amount(Note 1)
Amounts due after
one year

Category

Transaction type, etc.

Non-market
transaction

Interest rate swap
Receive floating rate/pay fixed rate

99,119,000

99,119,000

Fair value(Note 2)

92,243(Note 1) The contract amount is stated based on a notional principal(Note 2) The fair value is estimated based on the price, etc. presented by the correspondent financial institutions

7

Status of Other Assets

Real estate and trust beneficiary interests in real estate are listed together in “3 Asset Portfolio of Real
Estate, etc.” above. As of the end of this Reporting Period, there are no investments in specified assets thatare significant investment targets for INV outside of 3 above.
8

Asset Owned Outside of Japan or the Region

There are no relevant items outside of Japan or the region.

56

Capital Expenditures for Properties Held by INV

1Schedule for Capital Expenditures

The schedule for the principal capital expenditures for property maintenance construction, etc., as of theend of the Reporting Period for the real estate assets owned by INV is as follows.
Estimated cost (JPY thousand)Name of property

Purpose

Total

Payment for
the fiscal
Advanceperiod ended
payments
June 30,
2017

A53

Nishiwaseda Cresent Shinjuku-ku,
TokyoMansionOuter wall repair
work

From July 2017
To December 201785,000――

A54

Lexington Square
Akebonobashi

Shinjuku-ku,
Tokyo

Outer wall repair
work

From July 2017
To December 201749,300――

D44 Hotel Epinard Nasu

Nasu-gun,Tochigi

Annex tower guest
room repair andmaintenance

From July 2017
To December 201737,500――Hotel MyStays
Nagoya-Sakae

Nagoya-shi,
Aichi

Boiler equipment
replacement

From July 2017
To December 2017

32,000――D35 Flexstay Inn Ekoda

Nerima-ku,
Tokyo

Conversion of guest
rooms tonon-smoking

From July 2017
To December 2017

31,000

―

―

D07

2

Location

Scheduled time of
implementation

Capital Expenditures for the Fiscal Period Ended June 30, 2017

The principal construction work constituting capital expenditures for the real estate assets for the fiscal
period ended June 30, 2017 is as follows. Capital expenditures for the fiscal period totaled JPY 898,213
thousand, and together with JPY 22,022 thousand in repair costs included in this fiscal period’s expenses,
construction work totaling JPY 920,236 thousand was implemented.
Name of property

Location

PurposeTime ofimplementation

Payment(JPY thousand)

D44 Hotel Epinard Nasu

Nasu-gun,Tochigi

Renovation work

From January 2017
To June 2017

406,088

D02

Hotel MyStays
Asakusa

Sumida-ku,
Tokyo

Conversion of guest rooms to
non-smoking

From January 2017
To June 2017

20,072

B15

Cross Square
NAKANO

Nakano-ku,
TokyoParking lot repair work

From January 2017
To June 201715,900D03

Hotel MyStays
Kyoto-Shijo

Kyoto-shi,
Kyoto

Conversion of guest rooms to
non-smoking

From January 2017
To June 201713,212

D08

Hotel MyStays
Sakaisuji-Honmachi

Osaka-shi,
Osaka

Conversion of guest rooms to
non-smoking

From January 2017
To June 2017

10,906

Other construction

432,033
Total

898,21357

3

Reserved Funds for Long-Term Maintenance Plan (repair reserves)

INV has reserved funds from the cash flow of the fiscal period, as shown below, towards large-scale
maintenance repairs in the medium- to long-term in accordance with the long-term maintenance plan foreach property.

Fiscal period

Reserved funds at beginningof period
Amount reserved(Note)
Amount reversed(Note)
Amount carried over for
next fiscal period(Unit: JPY thousand)
24th
25th
26th
27th
28th
fiscal period
fiscal period
fiscal period
fiscal period
fiscal period
From January 1, From July 1, 2015 From January 1, From July 1, 2016 From January 1,
2015 to June 30, to December 31, 2016 to June 30, to December 31, 2017 to June 30,
2015
2015
2016
2016
2017
738,365

852,699

982,750

1,303,685

1,397,286

283,147

352,490543,275

446,066

468,145

168,813

222,439

222,339

352,464

468,189852,699

982,750

1,303,685

1,397,286

1,397,243(Note) The amount reserved for the relevant fiscal period includes the reserves for acquired properties, and the amountreversed includes the reserves for disposed properties.

58

Overview of Expenses and Liabilities

1

Statement of Operating Expenses(JPY thousand)28th fiscal period
January 1, 2017 to June 30, 201727th fiscal period
July 1, 2016 to December 31, 2016

Item(a) Asset management fees

250,000

250,000(b) Asset custody fees

14,026

13,594(c) Administrative services fees

27,89029,983(d) Directors’ compensation

4,800

4,800

118,471

99,393415,187

397,771(e) Other
Total

2

Borrowing Conditions

Borrowing conditions by financial institution at the end of the Reporting Period are as below.
Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)

Sumitomo Mitsui Banking
Corporation

5,992,000

5,992,000

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

5,992,000

5,992,000

Mizuho Bank, Ltd.

5,992,000

5,992,000

3,330,000

3,330,000

Shinsei Bank, Limited

Jul. 16,2015

3,000,000

3,000,000

Sumitomo Mitsui Trust Bank,
Limited

2,670,000

2,670,000

Resona Bank, Limited

1,335,000

1,335,000

Mitsubishi UFJ Trust andBanking Corporation

668,000

668,000

5,992,000

5,992,000

5,992,000

5,992,000

5,992,000

5,992,000

3,330,000

3,330,000

3,000,000

3,000,000

Sumitomo Mitsui Trust Bank,
Limited

2,670,000

2,670,000

Resona Bank, Limited

1,335,000

1,335,000

Mitsubishi UFJ Trust andBanking Corporation

668,000

668,000

Citibank Japan Ltd.

Long-term
Sumitomo Mitsui Banking
loans
Corporation
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Mizuho Bank, Ltd.
Shinsei Bank, Limited
Citibank Japan Ltd.

Jul. 16,
2015

59

Repayment Payment Purpose
date
method

Notes

0.375

Jul. 16,2018(Note 3) (Note 2)

Unsecured /with noguarantee

0.480

Jul. 16,2019(Note 3) (Note 2)

Unsecured /with noguarantee

Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)

Sumitomo Mitsui Banking
Corporation

5,992,000

5,992,000

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

5,992,000

5,992,000

Mizuho Bank, Ltd.

5,992,000

5,992,000

3,330,000

3,330,000

Shinsei Bank, Limited

Jul. 16,
2015

Citibank Japan Ltd.

3,000,000

3,000,000

Sumitomo Mitsui Trust Bank,
Limited

2,670,000

2,670,000

Resona Bank, Limited

1,335,000

1,335,000

Mitsubishi UFJ Trust andBanking Corporation

668,000

668,000

3,682,000

3,682,000

3,400,000

3,400,000

Mizuho Bank, Ltd
Long-term Sumitomo Mitsui Trust Bank,
loans
LimitedMitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Trust Bank,
LimitedMitsubishi UFJ Trust andBanking Corporation

Aug. 28,
2015

Jan. 22,
2016

Jan. 22,2016

850,000

850,000

3,400,000

3,400,000

850,000

850,000

465,000

465,000

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

1,125,000

1,125,000

Sumitomo Mitsui Trust Bank,
Limited2,181,000

2,181,000

Shinsei Bank, Limited

570,000

570,000

Resona Bank, Limited

570,000

570,000

Mitsubishi UFJ Trust andBanking Corporation

650,000

650,000

2,000,000

2,000,000

Development Bank of Japan,
Inc.

1,000,000

1,000,000

The Bank of Fukuoka, Ltd.

333,000

333,000

The Shizuoka Bank, Ltd.

1,270,000

1,270,000

The Daishi Bank, Ltd.

1,000,000

1,000,000

The Nomura Trust andBanking Co., Limited

270,000

270,000

Mizuho Bank, Ltd

Japan Post Bank Co., Ltd.

Mar. 31,
2016

60

Repayment Payment Purpose
date
method

Notes

0.590

Jul. 16,
2020(Note 3) (Note 2)

Unsecured /with noguarantee

0.480

Aug. 28,2019(Note 3) (Note 2)

Unsecured /with noguarantee

0.343

Jan. 22,2019(Note 3) (Note 2)

Unsecured /with noguarantee

0.600

Jan. 22,2021(Note 3) (Note 2)

Unsecured /with noguarantee

0.430Mar. 30,
2019(Note 3) (Note 2)

Unsecured /with noguarantee

Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)
965,000

965,000

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

1,125,000

1,125,000

Sumitomo Mitsui Trust Bank,
Limited

2,180,000

2,180,000

Shinsei Bank, Limited

570,000

570,000

Resona Bank, Limited

570,000

570,000

Mitsubishi UFJ Trust andBanking Corporation

650,000

650,000

2,000,000

2,000,000

333,000

333,000

The Shizuoka Bank, Ltd.

270,000

270,000

The Kagawa Bank, Ltd.

500,000

500,000

The Hyakugo Bank, Ltd.

1,000,000

1,000,000

The Nomura Trust andBanking Co., Limited

270,000

270,000

Mizuho Bank, Ltd.

1,965,000

1,965,000

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.

1,125,000

1,125,000

Sumitomo Mitsui Trust Bank,
Limited

2,180,000

2,180,000

Shinsei Bank, Limited.

570,000

570,000

Resona Bank, Limited

570,000

570,000

650,000

650,000

The Bank of Fukuoka, Ltd.

1,333,000

1,333,000

The Shizuoka Bank, Ltd.

270,000

270,000

The Kagawa Bank, Ltd.

500,000

500,000

The Hiroshima Bank, Ltd.

1,000,000

1,000,000

270,000

270,000

1,000,000

1,000,000

Mizuho Bank, Ltd

Japan Post Bank Co., Ltd.
Long-term
The Bank of Fukuoka, Ltd.
loans

Mitsubishi UFJ Trust andBanking Corporation

Mar. 31,2016

Mar. 31,2016

The Nomura Trust andBanking Co., Limited
Citibank Japan Ltd.

Jun. 15,
2016

61

Repayment Payment Purpose
date
method

Notes

0.530

Mar. 30,
2020(Note 3) (Note 2)

Unsecured /with noguarantee

0.630

Mar. 30,2021(Note 3) (Note 2)

Unsecured /with noguarantee

0.430

Jun. 15,2019(Note 3) (Note 2)

Unsecured /with noguarantee

Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)

Repayment Payment Purpose
date
methodNotes

Unsecured /with noguarantee
Unsecured /(Note 3) (Note 2) with noguarantee
Unsecured /(Note 3) (Note 2) with noguarantee
Unsecured /(Note 3) (Note 2) with noguarantee
Unsecured /(Note 3) (Note 2) with noguarantee
Unsecured /(Note 3) (Note 2) with noguarantee
Unsecured /(Note 3) (Note 2) with noguarantee

Citibank Japan Ltd.

Jun. 15,2016

1,000,000

1,000,000

0.530

Jun. 15,
2020

Citibank Japan Ltd.

Jun. 15,2016

1,000,000

1,000,000

0.630

Jun. 15,2021

Development Bank of Japan,
Inc.

Jun. 30,2016

1,000,000

1,000,000

0.430

Jun. 30,
2019

AEON Bank, Ltd.

Jun. 30,2016

3,000,000

3,000,000

0.630

Jun. 30,
2021

Tokyo Star Bank, Limited

Jul. 20,2016

700,000

700,000

0.430

Jul. 20,
2019Tokyo Star Bank, Limited

Jul. 20,2016

1,600,000

1,600,000

0.530

Jul. 20,
2020

Tokyo Star Bank, Limited

Jul. 20,2016

1,700,000

1,700,000

0.630

Jul. 20,2021―

634,000

Development Bank of Japan,
Inc.

―

1,000,000

Resona Bank, Limited―

333,000―

333,000
0.430(Note 3) (Note 2)―

Mar. 14,2020

333,000

Unsecured /with noguarantee

The Towa Bank, Ltd.

―

252,000

The Shizuoka Bank, Ltd.

―

200,000

The Gunma Bank, Ltd.

―

165,000

Mizuho Bank, Ltd.

―1,633,000

Resona Bank, Limited―

333,000

The Bank of Fukuoka, Ltd.

―

333,000―

333,000

0.530

Mar. 14,2021(Note 3) (Note 2)

Unsecured /with noguarantee

The Towa Bank, Ltd.

―

253,000

The Shizuoka Bank, Ltd.

―

200,000

The Gunma Bank, Ltd.

―

165,000

Long-term
Mizuho Bank, Ltd.
loans

The Bank of Fukuoka, Ltd.
The Nomura Trust andBanking Co., Limited

The Nomura Trust andBanking Co., Limited

Mar. 14,2017

Mar. 14,2017

62(Note 3) (Note 2)

Type

LenderBalance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)

Mizuho Bank, Ltd.

―1,733,000

Resona Bank, Limited―

333,000

The Bank of Fukuoka, Ltd.

―

333,000

The Nomura Trust andBanking Co., Limited―

333,000―

900,000

The Towa Bank, Ltd.

―

253,000

The Shizuoka Bank, Ltd.

―

200,000

The Daiichi Life InsuranceCo., Ltd.

―

500,000

The Gunma Bank, Ltd.

―

165,000

Long-term
AEON Bank, Ltd.
loans

Mar. 14,2017

Repayment Payment Purpose
date
method0.630

Mar. 14,2022(Note 3) (Note 2)(Note 3) (Note 2)

Sumitomo Mitsui Banking
Corporation

Mar. 14,2017―

3,000,000

0.480

Sept. 14,2020

Mizuho Bank, Ltd.

May 29,2017―

7,321,000

0.580

Nov. 29,
2021

Subtotal

142,419,000

163,990,000

Total

142,419,000

163,990,000

Notes

Unsecured /with noguarantee

Unsecured /with noguarantee
Unsecured /(Note 3) (Note 2) with noguarantee(Note 1) Average interest rate is the daily weighted average number of the period according to the number of days, and isrounded to three decimal places. In regards to borrowings which interest rate swap transactions are entered into forthe purpose of avoiding risk from interest rate fluctuation, interest rates reflecting the interest rate swap are shown(Note 2) The funds raised through borrowings are mainly used to acquire trust beneficiary interests in real estate and toprepay the borrowings(Note 3) The balance at the end of the period will be repaid in full on the repayment date3

Investment Corporation Bonds

Not applicable
4

Short-Term Investment Corporation Bonds

Not applicable
5

Investment Unit Options

Not applicable63

Acquisitions and Sales for the Fiscal Period Ended June 30, 20171

Acquisitions and Sales of Real Estate, Asset-Backed Securities, Infrastructure Assets andInfrastructure Related-Assets
Acquisition

Name of property

Acquisition date

Acquisition price (JPY thousand)

A105

Royal Parks Tower Minami-Senju

March 14, 2017

A106

Royal Parks Seasir Minami-Senju

March 14, 2017

21,879,000
2,683,000

D49

Hotel MyStays Premier Hamamatsucho

May 29, 2017

8,000,000

Total

32,562,000(Note 1) Acquisition price does not include various costs (brokerage commissions, taxes and other public dues) required for
acquisition of the property, and is the purchase price indicated in the trust beneficiary purchase agreement

2

Acquisitions and Sales of Other Assets

Assets other than those described above were mostly bank deposits or bank deposits in trust.
3

Transaction Price Verifications

Real Estate Transactions
Acquisitionor saleName of property

A105Royal Parks Tower
Minami-Senju

Royal Parks Seasir
Acquisition A106
Minami-Senju
D49

Category of Transaction
specified asset
date

Trust
beneficiaryinterest

March 14,2017

Hotel MyStays Premier
Hamamatsucho

May 29,2017

Acquisition orAppraisal value
sales price(JPY thousand)(JPY thousand)
21,879,000

Appraiser

22,100,000

2,683,000

2,710,000

8,000,000

8,090,000

Japan Real Estate
Institute

Appraisal
date

December 1,
2016April 30,
2017

(Note 1) Acquisition price does not include various costs (brokerage commissions, taxes and other public dues) required for
acquisition of the property, and is the purchase price indicated in the trust beneficiary purchase agreement(Note 2) The real estate appraisal described above is conducted by applying “Section 3: appraisals concerning prices of realestate subject to securitization” of “Real Estate Appraisal Standard”

4

Transactions with Interested Parties(1) Transactions
Not applicable(2) Commissions Paid
Not applicable
5

Transactions between the Asset Manager and Its Other Businesses

As the Asset Manager (Consonant Investment Management Co., Ltd.) does not engage in any otherbusiness, such as the type I financial instruments business and the type II financial instruments business,the building lots and buildings transaction business, or the real estate specified joint enterprise, there are no
applicable transactions.

64

Financial Condition
1

Assets, Liabilities, Principal, and Profit and Loss

Please refer to “II. Balance Sheet,” “III. Statement of Income and Retained Earnings,” “IV. Statement of
Changes in Net Assets,” “V. Notes” and “VI. Statement of Cash Distribution”.
2

Changes in the Calculation Method of Depreciation

Not applicable
3

Changes in the Evaluation Method of Real Estate and Infrastructure Assets, etc.

Not applicable4

Beneficiary Certificates of Investment Trusts, etc. Set Up by the Company

Not applicable
Other
1

NoticeBoard of Directors of Investment Corporation
Of the execution and amendment of the principal agreement approved by INV’s Board of Directors in theReporting Period, principal summary is as follows.
Approval date

Item

Summary

February 22, 2017Conclusion of theunderwriting agreement
related to the issuance of
new investment units, etc.

The Board of Directors of INV approved that INV would
entrust underwriters (Note) with the service related to theissuance of new investment units through public offeringand secondary offering of investment units, which wereapproved at the meeting of the Board of Directors of INV
held on February 22, 2017.

(Note)

2

The underwriters are Mizuho Securities Co., Ltd., SMBC Nikko Securities Inc., and Nomura Securities Co., Ltd.

Disclosure of Companies Owning Real Estate Overseas

Not applicable
3

Disclosure of Real Estate Owned by Companies Owning Real Estate Overseas

Not applicable65

4 Risk Factors
An investment in our units involves significant risks. The principal risks with respect to investment in
Invincible Investment Corporation are as follows.
Property and Business Risks• Any adverse conditions in the Japanese economy could adversely affect our properties.
• We may not be able to acquire properties to execute our growth and investment strategy in amanner that is accretive to earnings.
• Our reliance on Fortress Group could have a material adverse effect on our business.
• As a large portion of our hotels are subject to a variable rent structure, our results of operations are
inherently more volatile than the results of properties with fixed-lease arrangemments, and we may
not be able to effectively manage our hotel portfolio due to our relatively limited operating history
in owning full service hotels, resort hotels and other non-limited service hotels that we may decideto acquire in greater numbers in the future.
• Increases in prevailing market interest rates, particularly following the Bank of Japan’s
announcement of a major new policy for monetary easing, would increase our interest expense andmay result in a decline in the market price of our units.
• The high geographic concentration of our real estate portfolio in the greater Tokyo area and othermajor cities could have a material adverse effect on our business.
• Competition for tenants and hotel guests may adversely affect our ability to retain our current
tenants and find new tenants, and to maintain occupancy rates and revenue.
• Our hotels are subject to the operating risks common to the hospitality industry, which have a
direct effect on the variable rent component of our portfolio’s revenue.
• The cyclical and seasonal nature of the hospitality industry may cause fluctuations in our operating
performance, which could have a material adverse effect on us and our variable rent revenues.
• We may incur unexpected expenses, expenditure or other losses for repair or maintenance of ourproperties, and our hotels require periodic capital reinvestment for renovation.
• The majority of our hotels are leased to MyStays Hotel Management, which is owned by FortressGroup-managed funds, and subject to the risk of default under its hotel lease agreements.
• Our focus on residential properties could have a material adverse effect on our business.
• We may lose rental revenues in the event of defaults by end-tenants under their lease agreementsfor properties other than hotels.
• Master leases may give rise to certain risks.
• We may suffer large losses if any of our properties incur damage from a natural or man-madedisaster or acts of violence.
• We may be strictly liable for an unforeseen loss, damage or injury suffered by a third party at our
properties.
• Because most of our operating expenses are largely fixed, we may suffer adverse consequences if
our rental revenues decline.
• We may not be able to promptly acquire suitable properties or sell those in our portfolio on
acceptable terms in response to changing economic, financial or investment conditions.
• Defects relating to our properties may adversely affect our financial condition and results ofoperations.
• We rely on expert appraisals and engineering, environmental and seismic reports, which are subject
to significant uncertainties.
• The environmental assessments of our properties made prior to our ownership may not haveuncovered all environmental liabilities, and Japanese laws subject property owners to strict
environmental liabilities.
• Decreases in tenant leasehold and/or security deposits would increase our funding costs.
• Any inability to obtain financing for future acquisitions, or any restrictions on our activities under

66

•
•
•
•
•
•

our financing arrangements, could adversely affect us.
A high LTV ratio may increase our exposure to changes in interest rates and have a material
adverse effect on our results of operations.
We may suffer impairment losses relating to our properties and may also suffer adverse tax effects
upon recognizing impairments.
The performance of Fortress Group is not an indicator or guarantee of our future results.
Our financial statements are prepared in accordance with Japanese GAAP, which differs in certain
material respects from IFRS, U.S. GAAP and generally accepted accounting principles andfinancial reporting standards in other jurisdictions.
We rely on industry and market data that are subject to significant uncertainties.
We may be exposed to risks relating to investments in the operators or master lessees of ourproperties.

Management and Governance Risks• Our success depends on the performances of service providers to which we are required to assign
various key functions.
• There are potential conflicts of interest between us and certain Fortress Group affiliates or FortressGroup-related companies including the Asset Manager, MyStays Hotel Management.
• We depend on the efforts of our executive director and key personnel of the Asset Manager.
• Unitholders have limited control over our policies.
• The Japanese regulatory authorities have tightened regulatory supervision of J-REITs and theirasset managers and their corporate governance.
• If unitholders do not exercise their voting rights, we may count their votes in favor of proposals at
a general meeting of unitholders.
• The shareholder benefit plan that we intend to introduce may be cancelled, changed or abolished.
Taxation Risks• Our failure to satisfy a complex series of requirements pursuant to Japanese tax regulations would
disqualify us from certain taxation benefits and significantly reduce our distributions to ourunitholders.
• If the Japanese tax authorities disagree with the interpretations we used for prior periods, we may
be forced to pay additional taxes for those periods.
• We may not be able to benefit from reductions in certain real estate taxes enjoyed by qualified
J-REITs.
• Changes in Japanese tax laws may significantly increase our tax burden.
• We expect to be treated as a “passive foreign investment company” for U.S. federal income tax
purposes.
• Unitholders may be subject to U.S. Foreign Account Tax Compliance Act (FATCA) withholding
tax after 2018.
Legal and Regulatory Risks• Our ownership rights in some of our properties may be declared invalid or limited.
• We may lose our rights in a property we own if the purchase of the property is recharacterized as asecured financing.
• Acquisition of properties for which third parties hold leasehold interests in the land and own thebuildings may subject us to various risks.
• Our leasehold interests may be terminated or may not be asserted against a third party in somecases, or our leases with our tenants could be modified.
• We may hold interests in some properties through preferred equities of a TMK (tokutei mokuteki
kaisha), and illiquidity in the market for such equities may limit our ability to sell our interests, and

67

•
•
•
•
•
•
•
•

5

we may be exposed to risks unique to this investments structure.
We currently hold several properties in the form of compartmentalized ownership interests (kubun
shoyu-ken) and our rights relating to such properties may be affected by the intentions of otherowners
We may acquire properties in the form of co-ownership (kyoyu) and our rights relating to suchproperties may be affected by the intentions of other owners.
Tax increases or adverse changes in applicable laws may affect our potential liabilities relating toour properties and operations.
Compliance with energy conservation regulations in Japan may adversely affect our financial
results.
Our costs of complying with regulations applicable to our properties could adversely affect our
results of operations.
We own a substantial portion of our properties through trust beneficiary interests and may suffer
losses as a trust beneficiary.
The Alternative Investment Fund Managers Directive may negatively affect our ability to market
our units in the EEA and increase our compliance costs associated with the marketing of our units
in the EEA.
Our units may be deemed to constitute “plan assets” for ERISA purposes, which may lead to therescission of certain transactions, tax or fiduciary liability and our being held in violation of ERISA
requirements.

Other

Unless there are specific statements to the contrary, monetary figures are rounded down to the nearest yen
and percentages are rounded off for unspecified values.

68II. Balance Sheet

AssetsCurrent assets:
Cash and bank deposits
Cash and bank deposits in trust
Accounts receivable
Rental receivables
Prepaid expenses
Consumption taxes receivable
Other
Allowance for doubtful accounts
Total current assets
Non-current assets:
Property and equipment
Buildings, at cost
Accumulated depreciation
Buildings, net
Buildings and accompanying facilities, at cost
Accumulated depreciation
Buildings and accompanying facilities, net
Structures, at cost
Accumulated depreciation
Structures, net
Tools, furniture and fixtures, at cost
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Buildings in trust, at cost
Accumulated depreciation
Buildings in trust, net
Buildings and accompanying facilities in trust, at cost

Accumulated depreciation
Buildings and accompanying facilities in trust, net

Structures in trust, at cost
Accumulated depreciation
Structures in trust, net
Tools, furniture and fixtures in trust, at cost
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Total property and equipment, net
Intangible assets
Leasehold rights in trust
Total intangible assets
Investment and other assets
Guarantee deposits
Long-term prepaid expenses
Derivatives assets
OthersTotal investments and other assets
Total non-current assets
Total assets

69

Fiscal period ended
December 31, 2016 (Reference)(as of December 31, 2016)(Unit: JPY thousand)Fiscal period ended
June 30, 2017(as of June 30, 2017)

8,714,907
5,499,826
19
1,398,433
387,328
32(1,334)
15,999,214

3,532,405
6,065,755
8,204
1,420,192
445,116
20,8230(33)
11,492,465

85,914(10,489)
75,42438,862(22,150)
16,712
2,779(1,467)
1,311
711,834
102,029,376(6,800,686)
95,228,689
23,379,828(4,312,055)
19,067,773
340,005(158,426)
181,579
651,007(221,184)
429,823
135,384,518
251,097,667

85,914(11,031)
74,88338,862(22,925)
15,9372,779(1,533)
1,245
2,395
(67)
2,327
711,834
118,192,822(8,155,443)
110,037,378
26,991,646(5,092,225)
21,899,421
345,467(169,049)
176,417
898,892(273,748)
625,143
142,046,411
275,591,001

8,840,627
8,840,627

16,946,974
16,946,974

613,914616,340
151,259
42,851
1,424,366
261,362,660
277,361,874

1,651,565
601,737
92,24345,0622,390,608
294,928,585
306,421,050

Fiscal period ended
December 31, 2016 (Reference)(as of December 31, 2016)(Unit: JPY thousand)Fiscal period ended
June 30, 2017(as of June 30, 2017)

182,601

170,911

Liabilities
Current liabilities:
Accounts payable
Accounts payable-other

51,825

175,062

Accrued expenses

166,066

164,764

605

605

Income taxes payable
Accrued consumption taxes

460,521-

Advances received

522,072

540,675

Deposits received
Total current liabilities

13,583

15,932

1,397,276

1,067,951

142,419,000

163,990,000

Non-current liabilities:
Long-term loans payable
Tenant leasehold and security deposits in trust

2,030,396

2,240,373

Tenant leasehold and security deposits

28,663

28,663

Asset retirement obligations

31,26031,468

Total non-current liabilities

144,509,319

166,290,505

145,906,596

167,358,457

120,367,271

128,984,946

6,264,432

6,264,432*3 (224,225)*3 -Total liabilities
Net assets
Unitholders’ equity:
Unitholders’ capital
Surplus:Capital surplus
Deduction of unitholders' capital surplus
Allowance for temporary differences adjustment
Other deduction of capital surplus(763,290)(987,516)

Total deduction of unitholders' capital surplus(987,516)(987,516)

Capital surplus (net)5,276,915

5,276,915

Retained earnings

5,659,831

4,708,487

Total surplus
Total unitholders’ equity

10,936,747

9,985,403

131,304,019

138,970,350

151,259

92,243

Valuation and translation adjustments:
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

70

151,259

92,243*2 131,455,278*2 139,062,593

277,361,874

306,421,050

III.

Statement of Income and Retained Earnings

Fiscal period ended
December 31, 2016 (Reference)(from July 1, 2016 to
December 31, 2016)(Unit: JPY thousand)Fiscal period ended
June 30, 2017(from January 1, 2017 toJune 30, 2017)

Operating revenue
Rental revenue – real estate*1 9,511,466*1 9,260,917

Total operating revenue

9,511,466

9,260,917

Operating expenses
Property related expenses*1 3,162,067*1 3,518,684

Asset management fees
Directors’ compensation

250,000
4,800

250,000
4,800

Asset custody fees
Administrative service fees

14,02627,89013,59429,983

Provision of allowance for doubtful accounts
Other

1,123
117,347

33
99,3603,577,255

3,916,456

5,934,211

5,344,461

Interest income
Interest on tax refund

129
6,722

70
150

Refund of consumption taxes
Other35,949385

1,077

Total non-operating income

43,186

1,297

Total operating expenses
Operating income
Non-operating income

Non-operating expenses
Interest expenses

359,540

377,451

Loan-related costs
Investment unit issuance costs

186,249-

223,228
42,401

Total non-operating expenses

545,789

643,080

Ordinary income

5,431,608

4,702,678

Income before income taxes

5,431,608

4,702,678

Income taxes

605

605

Total income taxes

605

605

Net income

5,431,003

4,702,073

Retained earnings brought forward

228,827

6,414

Unappropriated retained earnings

5,659,831

4,708,487

71

IV. Statement of Changes in Net Assets

Fiscal period ended December 31, 2016 (Reference) (from July 1, 2016 to December 31, 2016)(Unit: JPY thousand)Unitholders’capitalBalance at the beginningof the period
Changes during theperiodReversal of reserve fortemporary differences
adjustment
Distributions
fromsurplusDistributions in excess
of retained earnings
from allowance fortemporary differences
adjustment

Unitholders’ equity
SurplusCapital surplus
Deduction of capital surplus
Allowance
Other
CapitalDeduction of
for temporary deduction of
surplus (net)capitaldifferences
capitalsurplusadjustment
surplusCapitalsurplus120,367,271

6,264,432-(763,290)(224,225)(763,290)

5,501,141(224,225)(224,225)

Voluntary reserve
Reserve fortemporarydifferences
adjustment

Voluntary
reserve

708

708

(708)

(708)

Net income
Changes other thanunitholders’equity(net)
Total changes during theperiodBalance at the end of theperiod--(224,225)-(224,225)(224,225)

(708)

(708)

120,367,271

6,264,432(224,225)(763,290)(987,516)

5,276,915--

Valuation and translation
adjustments

Unitholders’ equity
SurplusRetainedearnings
Balance at the beginningof the period
ChangesduringtheperiodReversal of reserve fortemporary differences
adjustment
Distributions
fromsurplusDistributions in excess
of retained earnings
from allowance fortemporary differences
adjustment
Net income
Changes other thanunitholders’equity(net)
Total changes during theperiodBalance at the end of theperiodTotalunitholders’
Total surplus
equityDeferred
gains orlosses onhedgesTotalvaluation andtranslation
adjustments

Total net
assets(227,532)(227,532)

130,005,009

4,363,420

9,865,270

130,232,542

708

-

-

-

(4,135,302)(4,135,302)(4,135,302)(4,135,302)(224,225)(224,225)(224,225)

5,431,003

5,431,003

5,431,003

5,431,003

378,792

378,792

378,792

1,296,410

1,071,476

1,071,476

378,792

378,792

1,450,268

5,659,831

10,936,747

131,304,019

151,259

151,259

131,455,278

72

Fiscal period ended June 30, 2017 (from January 1, 2017 to June 30, 2017)(Unit: JPY thousand)Unitholders’ equity
SurplusCapital surplus
Unitholders’capitalDeduction of capital surplus
Capital surplus

Balance at the beginningof the period
Changes during theperiodIssuance of new
investment units
Reversal of allowancefor temporary
differences adjustment
Distributions fromsurplus120,367,271

6,264,432

Allowance fortemporarydifferences
adjustment

Other
deduction ofcapital surplus

Total
deduction ofcapital surplus

Capital surplus(net)(224,225)(763,290)(987,516)

5,276,915

224,225(224,225)－－

8,393,450
224,225

Net income
Changes other thanunitholders’ equity(net)
Total changes during theperiodBalance at the end of theperiod8,617,675－

224,225(224,225)－－

128,984,946

6,264,432-(987,516)(987,516)

5,276,915

Unitholders’ equity

Valuation and translation adjustments

SurplusRetainedearnings
Balance at the beginningof the period
Changes during theperiodIssuance of new
investment units
Reversal of allowancefor temporary
differences adjustment
Distributions fromsurplus
Net income
Changes other thanunitholders’ equity(net)
Total changes during theperiodBalance at the end of theperiod5,659,831

Total
unitholders’equityTotal
surplus10,936,747

131,304,019

Deferred
gains or losses
on hedges

Totalvaluation andtranslation
adjustments

151,259

151,259

Total
net assets

131,455,278

8,393,450

8,393,450(224,225)(224,225)－－(5,429,192)(5,429,192)(5,429,192)(5,429,192)

4,702,073

4,702,073

4,702,073

4,702,073(59,016)(59,016)(59,016)(951,344)(951,344)

7,666,331(59,016)(59,016)

7,607,315

4,708,487

9,985,403

138,970,350

92,24392,243139,062,593

73

V.

Notes

[Notes Concerning Significant Accounting Policies]

By Period
Item
1. Method of depreciationof non-current assets

2. Method of calculatingallowances

3. Revenue and expense
recognition

Fiscal period ended
Fiscal period ended
December 31, 2016 (Reference)
June 30, 2017(from July 1, 2016 to(from January 1, 2017 to
December 31, 2016)
June 30, 2017)(a) Property and equipment(a) Property and equipment
The straight-line method is used.
The straight-line method is used.
The useful lives of major property, plant
The useful lives of major property, plantand equipment are as follows.
and equipment are as follows.
Buildings
77 years
Buildings
77 years
Buildings and accompanying facilities
Buildings and accompanying facilities
8-24 years
8-24 years
Structures
7-18 years
Structures
7-18 years
Buildings in trust
2-67 years
Tools, furniture and fixtures
8 years
Buildings and accompanying facilities in
Buildings in trust
5-67 years
trust
2-33 years
Buildings and accompanying facilities in
Structures in trust
3-55 years
trust
2-33 years
Tools, furniture and fixtures in trust
Structures in trust
3-55 years
2-19 years
Tools, furniture and fixtures in trust
2-19 years(b) Intangible assets(b) Intangible assets
The straight-line method is used. For
The straight-line method is used. For
leasehold interests (fixed-term land lease
leasehold interests (fixed-term land leasefor business purposes), the straight-line
for business purposes), the straight-line
method based on the lease period is used.
method based on the lease period is used.
(c) Long-term prepaid expenses(c) Long-term prepaid expenses
The straight-line method is used.
The straight-line method is used.
Allowance for doubtful accounts
Allowance for doubtful accounts
To reserve for losses on doubtful accounts, To reserve for losses on doubtful accounts,
allowances are provided for normal allowances are provided for normal
receivables using a rate determined based on receivables using a rate determined based on
past bad debt experiences, and specific past bad debt experiences, and specificallowances are provided for accounts with a allowances are provided for accounts with apossibility of default based on the estimated possibility of default based on the estimatedamounts considered to be uncollectible by amounts considered to be uncollectible byconsidering the collectability of accounts on considering the collectability of accounts on
an individual basis.
an individual basis.
Accounting treatment of property taxes and Accounting treatment of property taxes andother taxes
other taxes
With respect to property taxes, city planning With respect to property taxes, city planningtaxes and depreciable asset taxes, of the tax taxes and depreciable asset taxes, of the tax
amount assessed and determined, the amount amount assessed and determined, the amountcorresponding to the relevant fiscal period is corresponding to the relevant fiscal period is
accounted for as property related expenses.
accounted for as property related expenses.
Of the amounts paid to the seller for Of the amounts paid to the seller for
acquisitions of real estate, the amount acquisitions of real estate, the amountequivalent to property taxes is capitalized as equivalent to property taxes is capitalized aspart of the acquisition cost of the real estate or part of the acquisition cost of the real estate ortrust beneficiary interests in real estate instead trust beneficiary interests in real estate insteadof being charged as expense. There is no of being charged as expense. The amountamount equivalent to property taxes included equivalent to property taxes that was included
as part of the acquisition of real estate during as part of the acquisition of real estate during
the fiscal period ended December 31, 2016.
the fiscal period ended June 30, 2017 is JPY
78,074 thousand.

74

By Period
Item
4. Method of hedge
accounting

Fiscal period ended
December 31, 2016 (Reference)(from July 1, 2016 to
December 31, 2016)(a) Method of hedge accounting
Deferred hedge accounting is used.

Fiscal period ended
June 30, 2017(from January 1, 2017 toJune 30, 2017)(a) Method of hedge accounting
Deferred hedge accounting is used.

(b) Hedging instrument and hedged item
Hedging instrument: interest rate swap
Hedged item: interest on borrowings(b) Hedging instrument and hedged item
Hedging instrument: interest rate swap
Hedged item: interest on borrowings(c) Hedge policy
INV enters into derivatives transactions forthe purpose of hedging against the risks set
forth in INV’s Articles of Incorporation inaccordance with its risk management
policy.

(c) Hedge policy
INV enters into derivatives transactions forthe purpose of hedging against the risks set
forth in INV’s Articles of Incorporation inaccordance with its risk management
policy.

(d) Method of evaluating hedge effectiveness(d) Method of evaluating hedge effectivenessHedge effectiveness is evaluated byHedge effectiveness is evaluated bycomparing the cumulative amount ofcomparing the cumulative amount ofchanges in cash flows of the hedging
changes in cash flows of the hedging
instrument and the cumulative amount of
instrument and the cumulative amount ofchanges in cash flows of the hedged itemchanges in cash flows of the hedged item
and verifying the difference in the amounts
and verifying the difference in the amountsof change of both the hedged item and theof change of both the hedged item and thehedging instrument.
hedging instrument.
5. Other significant(1) Accounting treatment policy of trust (1) Accounting treatment policy of trust
matters which constitutebeneficiary interests in real estate
beneficiary interests in real estate
the basis for preparation
As to trust beneficiary interests in real
As to trust beneficiary interests in realof financial statements
estate, all accounts of assets and liabilities
estate, all accounts of assets and liabilities
within assets in trust, as well as all income
within assets in trust, as well as all income
generated and expenses incurred fromgenerated and expenses incurred fromassets in trust, are recorded in the relevant
assets in trust, are recorded in the relevantbalance sheets and income statementbalance sheets and income statement
accounts. Of such items, the following
accounts. Of such items, the following
significant trust assets and liabilities are
significant trust assets and liabilities areshown separately on the balance sheet.
shown separately on the balance sheet.
(a) Cash and bank deposits in trust(a) Cash and bank deposits in trust(b) Buildings in trust(b) Buildings in trust
Buildings and accompanying facilities
Buildings and accompanying facilities
in trust
in trust
Structures in trust
Structures in trust
Tools, furniture and fixtures in trust
Tools, furniture and fixtures in trust
Land in trust
Land in trust(c) Leasehold rights in trust(c) Leasehold rights in trust(d) Tenant leasehold and security deposits(d) Tenant leasehold and security deposits
in trust
in trust(2) Accounting treatment of deferred assets
Investment unit issuance costs
The full amount is recorded as expense at
the time of expenditure.

(2) Accounting treatment of deferred assets
Investment unit issuance costs
The full amount is recorded as expense at
the time of expenditure.

(3) Accounting treatment of consumption taxes
Transactions subject to consumption taxes
are recorded at amounts exclusive ofconsumption taxes.

(3) Accounting treatment of consumption taxes
Transactions subject to consumption taxes
are recorded at amounts exclusive ofconsumption taxes.

75

[Notes to the Balance Sheet]

Fiscal period ended December 31, 2016 (Reference)(as of December 31, 2016)

Fiscal period ended June 30, 2017(as of June 30, 2017)*1. Matters concerning treatment of reversal of reserve for*1. Matters concerning treatment of reversal of reserve fortemporary differences adjustment.
temporary differences adjustment.
INV reversed all of the reserve for temporary differences
Not applicable.
adjustment in the amount of JPY 708 thousand, and use thefunds as part of the profit distributions.
*2. Minimum net assets as required by Article 67, Paragraph
4 of the Act on Investment Trusts and Investment
Corporations
JPY 50,000 thousand*3. Allowance for temporary differences adjustment*2. Minimum net assets as required by Article 67, Paragraph
4 of the Act on Investment Trusts and Investment
Corporations
JPY 50,000 thousand

Fiscal period ended December 31, 2016 (from July 1, 2016 to December 31, 2016) (Reference)
1. Reasons, related assets and amounts
Balance atthe end of
previous
period(Unit: JPY thousand)
Balance atReversalthe end of
duringcurrent
periodperiodAllowance
set aside
duringperiodRelatedassets, etc.

ReasonInitialamountDeferred
gains orlosses onhedgesLoss oninterest-rate
swaps
recognized(224,225)-(224,225)-(224,225)(224,225)-(224,225)-(224,225)

Total

2. Method of reversal(1) Deferred gains or losses on hedges
Based on changes in the fair value of derivatives used as hedging instruments, the corresponding amount is scheduled to bereversed.
Fiscal period ended June 30, 2017 (from January 1, 2017 to June 30, 2017)
1. Reasons, related assets and amounts(Unit: JPY thousand)
Balance atReversalthe end of
duringcurrent
periodperiodRelatedassets, etc.

ReasonInitialamountBalance atthe end of
previous
periodDeferred
gains orlosses onhedgesChanges infair value ofderivatives(224,225)(224,225)-

224,225-(224,225)(224,225)-

224,225-

Total

Allowance
set aside
duringperiod

2. Method of reversal(1) Deferred gains or losses on hedges
Based on changes in the fair value of derivatives used as hedging instruments, the corresponding amount is reversed.

76

[Notes to Statement of Income and Retained Earnings]

Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)*1. Real estate rental revenues and expenses(Unit: JPY thousand)
A. Real estate rental revenues*1. Real estate rental revenues and expenses(Unit: JPY thousand)
A. Real estate rental revenues

Rental revenue – real estate(Rent/common area charges)

Rental revenue – real estate
9,237,784(Other revenues)
Total

273,682
9,511,466(Rent/common area charges)

8,927,781(Other revenues)

333,135

Total

9,260,917

B. Real estate rental expenses

B. Real estate rental expenses

Property related expenses

Property related expenses(Maintenance costs)

580,896(Maintenance costs)

646,226(Taxes and public dues)

356,372(Taxes and public dues)

390,797(Insurance expenses)

11,807(Insurance expenses)

10,195(Depreciation expenses)

2,065,066(Depreciation expenses)

2,281,374(Other expenses)
Total

147,924
3,162,067

190,0903,518,684

Total
C. Real estate rental income

C. Real estate rental income(A-B)(Other expenses)

6,349,399(A-B)

5,742,232[Notes to Statement of Changes in Net Assets]

Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)

Number of issuable investment units and number of investment Number of issuable investment units and number of investment
units issued and outstanding
units issued and outstanding
Number of investment units authorized

10,000,000 units

Number of investment units authorized

10,000,000 units

Number of investment units issued andoutstanding

3,675,824 units

Number of investment units issued andoutstanding

3,860,824 units

77

[Notes Related to Tax Accounting]

Fiscal period ended December 31, 2016 (Reference)(as of December 31, 2016)

Fiscal period ended June 30, 2017(as of June 30, 2017)

1. Significant components of deferred tax assets and liabilities 1. Significant components of deferred tax assets and liabilities(Unit: JPY thousand)(Unit: JPY thousand)(Deferred tax assets - current assets)(Deferred tax assets - current assets)
Enterprise tax payable
661 Enterprise tax payable
996
Allowance for doubtful accounts

423

Allowance for doubtful accounts

10

Subtotal

1,084

Subtotal

1,006

Valuation allowance

1,084

Valuation allowance

1,006

Total

-

Total

-

(Deferred tax assets - current)(Deferred tax assets - non-current assets)
Buildings and other (merger)-(Deferred tax assets - current)(Deferred tax assets - non-current assets)
Buildings and other (merger)-

700,210689,159

Land (merger)

2,092,087

Land (merger)

2,092,087

Loss carried forward

7,200,289

Loss carried forward

7,200,289

Asset retirement obligations

9,921

Asset retirement obligations

9,987

Amortization of leasehold right

16,248

Amortization of leasehold right

42,149Subtotal(Deferred tax liabilities –non-current liabilities)
Removal expenses included in asset
retirement obligations
Deferred gains or losses on hedges
Subtotal
Valuation allowance

10,018,757

48,009Subtotal(Deferred tax liabilities –non-current liabilities)
Removal expenses included in asset
retirement obligations
Deferred gains or losses on hedges

57,807

Subtotal

9,797

9,960,950

Valuation allowance

10,033,674

9,797
29,27839,075
9,994,598

Total

-

Total

-

(Deferred tax assets - non-current)-(Deferred tax assets - non-current)-

2. Significant difference between statutory tax rate and theeffective tax rate
31.74%
Statutory tax rate

2. Significant difference between statutory tax rate and theeffective tax rate
Statutory tax rate
31.74%

Deductible cash distributions(31.71)%

Deductible cash distributions(32.06)%

Changes in valuation allowance(0.09)%

Changes in valuation allowance(0.32)%

Others0.08%

Others0.65%

Effective tax rate

0.01%

Effective tax rate

0.01%

78

[Notes Related to Financial Instruments]

Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)

1. Status of financial instruments

1. Status of financial instruments(1)Policy for financial instruments(1)Policy for financial instruments

INV principally conducts its operations throughinvestments in real estate and other specified assets to seek
to ensure stable income in the medium to long term.
The policy for raising funds is principally through issuing
new investment units or borrowing loans.
Derivative transactions are to be entered into for the
purpose of hedging against the risk of future interest rateincreases, etc. and not for speculation.
Surplus funds are managed after carefully taking into
account safety, liquidity, the interest rate environment andfinancing.

INV principally conducts its operations throughinvestments in real estate and other specified assets to seek
to ensure stable income in the medium to long term.
The policy for raising funds is principally through issuing
new investment units or borrowing loans.
Derivative transactions are to be entered into for the
purpose of hedging against the risk of future interest rateincreases, etc. and not for speculation.
Surplus funds are managed after carefully taking into
account safety, liquidity, the interest rate environment andfinancing.

(2)Nature and extent of risks arising from financial
instruments and risk management.

(2)Nature and extent of risks arising from financial
instruments and risk management.

The funds raised through borrowings are mainly used toacquire real estate properties or trust beneficiary interest inreal estate (including related acquisition costs) and for therefinancing of existing loan. Liquidity risks relating to loan
are managed by the finance department of the AssetManager by preparing and updating plans for funds, andmonitoring the covenants set forth in loan agreements.

The funds raised through borrowings are mainly used toacquire real estate properties or trust beneficiary interest inreal estate (including related acquisition costs) and for therefinancing of existing loan. Liquidity risks relating to loan
are managed by the finance department of the AssetManager by preparing and updating plans for funds, andmonitoring the covenants set forth in loan agreements.

(3)Supplemental information regarding market value, etc. forfinancial instruments.

(3)Supplemental information regarding market value, etc. forfinancial instruments.

The fair value of financial instruments is based on quoted
market prices if available. When quoted market prices are
not available, fair value is determined through a reasonableestimate. Since certain assumptions, etc. are used inestimating the fair value, different assumptions, etc. may
result in the variance of such value.

The fair value of financial instruments is based on quoted
market prices if available. When quoted market prices are
not available, fair value is determined through a reasonableestimate. Since certain assumptions, etc. are used inestimating the fair value, different assumptions, etc. may
result in the variance of such value.

2. Estimated fair value of financial instruments.
Book value, fair value and the difference between value asof December 31, 2016 are as follows.
(Unit: JPY thousand)2. Estimated fair value of financial instruments.
Book value, fair value and the difference between value asof June 30, 2017 are as follows.
(Unit: JPY thousand)Book ValueBook Value

Fair Value

Difference

3,532,405

3,532,405-

6,065,755

6,065,755-

Fair Value(1) Cash and bankdeposits(2) Cash and bankdeposits in trust
Total assets

14,214,734

14,214,734(3) Long-term loans(142,419,000)(142,419,000)

Difference

8,714,907

8,714,907-

5,499,826

5,499,826-

Total liabilities(142,419,000) (142,419,000)(4) Derivatives
151,259
151,259(*1) Items recorded in the Liabilities Section are shown inparenthesis.
(*2) Receivables and payables arising from derivativetransactions are recorded in net amounts, and if thetotal net amount is a negative amount, such amount isshown in parenthesis.

79(1) Cash and bankdeposits(2) Cash and bankdeposits in trust
Total assets(163,990,000) (163,990,000)
Total liabilities
92,24392,243(4) Derivatives(*1) Items recorded in the Liabilities Section are shown inparenthesis.
(*2) Receivables and payables arising from derivativetransactions are recorded in net amounts, and if thetotal net amount is a negative amount, such amount isshown in parenthesis.
(3) Long-term loans

9,598,161

9,598,161(163,990,000)(163,990,000)

Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)(Note 1) Methods to calculate fair value of financial (Note 1) Methods to calculate fair value of financial
instruments.
instruments.
(1) Cash and bank deposits (2) Cash and bank deposits in trust (1) Cash and bank deposits (2) Cash and bank deposits in trust
Due to the short maturities, the book value of these instruments Due to the short maturities, the book value of these instruments
is deemed a reasonable approximation of the fair value, and is deemed a reasonable approximation of the fair value, andtherefore, the book value is used as the fair value.
therefore, the book value is used as the fair value.
(3) Long-term loans
Long-term loans with floating interest rates reflecting changes
in market rates within a short-term period is stated at theirbook value as their book value approximate their fair value.

(3) Long-term loans
Long-term loans with floating interest rates reflecting changes
in market rates within a short-term period is stated at theirbook value as their book value approximate their fair value.

(4) Derivatives(a) Derivatives transactions to which hedge accounting
was is applied
Not applicable(b) Derivatives transactions to which hedge accounting isappliedThe contract amount as of the closing date undereach hedge-accounting method and the amountequivalent to the notional principal prescribed in thecontracts are as shown below.

(4) Derivatives(a) Derivatives transactions to which hedge accounting
was is applied
Not applicable(b) Derivatives transactions to which hedge accounting isappliedThe contract amount as of the closing date undereach hedge-accounting method and the amountequivalent to the notional principal prescribed in thecontracts are as shown below.

(Unit: JPY thousand)
Method of Derivative Primary
hedge transaction hedged
accounting type, etc.
item
Interest
rate swap
Principle
Receiveaccounting
floating
methodrate/pay
fixed rate

Longterm
loans

Contract amount, etc.
(Note 1)

Fair value(Note 2)

Amount due
after
one year

99,119,000

99,119,000

151,259(Unit: JPY thousand)
Method of Derivative Primary
hedge transaction hedged
accounting type, etc.
item
Interest
rate swap
Principle
Receiveaccounting
floating
methodrate/pay
fixed rate

Longterm
loans

Contract amount, etc.
(Note 1)

Fair value(Note 2)

Amount due
after
one year

99,119,000

99,119,000

92,243(*1) The contract amount, etc. is stated based on a notional
principal.
(*2) The fair value is estimated based on the price, etc.
presented by the correspondent financial institutions.

(*1) The contract amount, etc. is stated based on a notional
principal.
(*2) The fair value is estimated based on the price, etc.
presented by the correspondent financial institutions.

(Note 2) Financial instruments for which fair value isextremely difficult to value.
(Unit: JPY thousand)Category
Book value
Tenant leasehold and28,663security deposits
Tenant leasehold and2,030,396
security deposits in trust
Tenant leasehold and security deposits and tenantleasehold and security deposits in trust have no observable
market price, and it is impracticable to estimate reasonably
their future cash flows because the repayment dates of
those deposits and the timing of the lessee’s exit from theproperty are not certain. Thus, their fair value is notdisclosed.

(Note 2) Financial instruments for which fair value isextremely difficult to value.
(Unit: JPY thousand)Category
Book value
Tenant leasehold and28,663security deposits
Tenant leasehold and2,240,373
security deposits in trust
Tenant leasehold and security deposits and tenantleasehold and security deposits in trust have no observable
market price, and it is impracticable to estimate reasonably
their future cash flows because the repayment dates of
those deposits and the timing of the lessee’s exit from theproperty are not certain. Thus, their fair value is notdisclosed.

(Note 3) Remaining schedule of monetary claims after the(Note 3) Remaining schedule of monetary claims after the80

Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)closing date of the fiscal period

closing date of the fiscal period

As of December 31, 2016

As of June 30, 2017
(Unit: JPY thousand)Due within
one year

Due after one Due after two
to two years to three years

Cash and bank deposits

8,714,907--

Cash and bank deposits intrust

5,499,826

-

Total

14,214,734-(Unit: JPY thousand)Due within
one year

Due after one Due after two
to two years to three years

Cash and bank deposits

3,532,405---

Cash and bank deposits intrust

6,065,755

-

-

-

Total

9,598,161--

Due after three Due after four Due after five
to four years to five years
years

Due after three Due after four Due after five
to four years to five years
years

Cash and bank deposits

-

-

-

Cash and bank deposits

-

-

-

Cash and bank deposits in
trust

-

-

-

Cash and bank deposits in
trust

-

-

-

Total

-

-

-

Total

-

-

-

(Note 4) Repayment schedule of long-term loans and otherinterest-bearing debts after the closing date of the
fiscal period(Note 4) Repayment schedule of long-term loans and otherinterest-bearing debts after the closing date of the
fiscal period

As of December 31, 2016

As of June 30, 2017
(Unit: JPY thousand)Due within
one year(Unit: JPY thousand)Due after one Due after two
to two years to three years

Due within
one year

Due after one Due after two
to two years to three years

Long-term loans-

28,979,000

51,045,000

Long-term loans-

46,663,000

48,044,000

Total

-

28,979,000

51,045,000

Total

-

46,663,000

48,044,000

Due after three Due after four Due after five
to four years to five years
years

Due after three Due after four Due after five
to four years to five years
years

Long-term loans

42,012,000

20,383,000-

Long-term loans

55,512,000

13,771,000

-

Total

42,012,000

20,383,000

-

Total

55,512,000

13,771,000-81[Notes Related to Asset Retirement Obligations]Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)

1. Summary of the asset retirement obligations for the period
INV has recorded asset retirement obligations in regard to
its obligation to restore the land to its original condition
related to the fixed-term land lease agreement of Comfort
Hotel Maebashi held by INV.
2. Calculation method for asset retirement obligations for theperiodThe amount of the asset retirement obligations has been
calculated by fixing the estimated period of use at 43 years,
based on the period until the expiration of the fixed-term
land lease agreement, and by using a discount rate of
1.342%.
3. Increase/decrease in the total amount of asset retirement
obligations for the current fiscal period(Unit: JPY thousand)

1. Summary of the asset retirement obligations for the period
INV has recorded asset retirement obligations in regard to
its obligation to restore the land to its original condition
related to the fixed-term land lease agreement of Comfort
Hotel Maebashi held by INV.
2. Calculation method for asset retirement obligations for theperiodThe amount of the asset retirement obligations has been
calculated by fixing the estimated period of use at 43 years,
based on the period until the expiration of the fixed-term
land lease agreement, and by using a discount rate of
1.342%.
3. Increase/decrease in the total amount of asset retirement
obligations for the current fiscal period(Unit: JPY thousand)

Balance at the beginning of the period

31,050

Increase due to the acquisition of properties
Accretion expense
Balance at the end of the period

209
31,26082

Balance at the beginning of the period
Increase due to the acquisition of properties
Accretion expense
Balance at the end of the period

31,260208
31,468

[Notes Related to Rental Properties]

Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)

INV owns residential properties and hotels as core assets aswell as other various properties including offices andcommercial facilities principally in the Tokyo area andmajor regional cities in order to establish a portfolio which
focuses on both stability and growth potential. The bookvalue changed during the period and balance at the end of
the period are as follows.
(Unit: JPY thousand)

INV owns residential properties and hotels as core assets aswell as other various properties including offices andcommercial facilities principally in the Tokyo area andmajor regional cities in order to establish a portfolio which
focuses on both stability and growth potential. The bookvalue changed during the period and balance at the end of
the period are as follows.
(Unit: JPY thousand)Book value

Use

Fair value atBalance at theBalance at the the end of the
Change during
periodbeginning of
end of thethe period
the period
periodBook value

Use

Fair value atBalance at theBalance at the the end of the
Change during
periodbeginning of
end of thethe period
the period
periodResidences

67,835,839

25,277,356

93,113,195

104,752,000

7,406,000

Offices

8,440,981(16,247)

8,424,734

7,636,000

5,049,226(47,956)

5,001,269

5,980,000

100,819(1)

100,818

113,000

Residences

68,274,496(438,657)

67,835,839

77,843,000

Offices

8,470,387(29,405)8,440,981

Commercial
facilities

5,087,525(38,298)

5,049,226

5,890,000

Commercial
facilities

Parking lot

100,820(1)

100,819

113,000

Parking lot

Hotels179,537,920(1,026,493)

178,511,427

236,940,000

Hotels178,511,427

7,386,530

185,897,957

245,021,000

Total

261,471,150(1,532,855)

259,938,294

328,192,000

Total

259,938,294

32,599,681

292,537,976

363,502,000(Note 1) Book value is the figure calculated by subtracting
amount of accumulated depreciation from acquisition
price (including acquisition-related costs).
(Note 2) The major factors for the increase for the fiscal period
ended December 31, 2016 was capital expenditures
related to construction work.
(Note 3) The major factor for the decrease was depreciation(Note 4) The fair value as of the end of the reporting period isdetermined based on the appraisal value provided by
Asset Research and Development Inc., Japan Real
Estate Institute, Morii Appraisal & Investment
Consulting Inc., The Tanizawa Sogo Appraisal Co.,
Ltd., and Daiwa Real Estate Appraisal Co., Ltd.

(Note 1) Book value is the figure calculated by subtracting
amount of accumulated depreciation from acquisition
price (including acquisition-related costs).
(Note 2) The major factors for the increase for the fiscal period
ended June 30, 2017 were new acquisition ofresidential properties and hotel, and capital
expenditures related to construction work.
(Note 3) The major factor for the decrease was depreciation(Note 4) The fair value as of the end of the reporting period isdetermined based on the appraisal value provided by
Asset Research and Development Inc., Japan Real
Estate Institute, Morii Appraisal & Investment
Consulting Inc., The Tanizawa Sogo Appraisal Co.,
Ltd., and Daiwa Real Estate Appraisal Co., Ltd.

For information related to profits and losses from rental
properties in the fiscal period ended December 31, 2016,
please refer to “Notes to Statement of Income and Retained
Earnings.”

For information related to profits and losses from rental
properties in the fiscal period ended June 30, 2017, pleaserefer to “Notes to Statement of Income and Retained
Earnings.”[Notes Related to Restriction on Asset Management]

Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)
Not applicable.

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)
Not applicable.

83

[Notes Related to Transactions with Related Parties]
Fiscal period ended December 31, 2016 (from July 1, 2016 to December 31, 2016) (Reference)
1

Interested parties of the Asset Manager

Name

Business or
occupation

Percentage ofvoting rights
owned
(%)

Type of transaction

Transaction
amount(JPY thousand)Account

Balance at theend of the period(JPY thousand)Ginga Tokutei
Mokuteki Kaisha

Investment
managementbusiness-

Payments foraccounts payable

8,800,548

Accounts
payable-Naqua Hotel &Interested party ofResorts Management Hotel businessthe Asset Manager
Co., Ltd.

-

Rental revenues

1,040,790

Accounts
receivable

92,474-

Rental revenues

4,043,845

Accounts
receivable

1,146,414

Classification

MyStays HotelManagement
Co., Ltd.

Hotel business(Note 1) Consumption taxes, etc., are not included in transaction amount, but are included in the balance at the end of the period.
(Note 2) Ginga Tokutei Mokuteki Kaisha, Naqua Hotel & Resorts Management Co., Ltd., and MyStays Hotel Management
Co., Ltd. have no capital relationship to be disclosed with the Asset Manager. The tenant and operator have received
an anonymous partnership investment or investment through funds that are managed by affiliates of Fortress
Investment Group LLC (“FIG”), an affiliate of Calliope. Accordingly, INV treats Ginga Tokutei Mokuteki Kaisha,
Naqua Hotel & Resorts Management Co., Ltd., and MyStays Hotel Management Co., Ltd. as the equivalent tointerested parties.
(Note 3) Calliope holds 609,942 units (holding percentage: 16.6%) of the issued investment units of INV.

2

Asset Custody Company
Classification

Asset CustodyCompany

Name

Sumitomo Mitsui
Trust Bank,
LimitedBusiness or
occupation

Percentage ofvoting rights
owned
(%)

Type of transaction
Borrowing forlong-term loan
Repayment ofshort-term loan

Banking andtrust businessTransaction
amount(JPY thousand)
1,186,000-

Long-termloans payable
Short-termloans payable

Balance at theend of the period(JPY thousand)
21,351,000-

Prepaid expenses

48,328Long-term
prepaid expenses

92,85658,014 Accrued expenses

620

Finance related fees

Interest expenses

Account-(Note 1) Consumption taxes are not included in transaction amount, but are included in the balance at the end of the period.
(Note 2) The terms and conditions have been determined based on actual market conditions.

84

Fiscal period ended June 30, 2017 (from January 1, 2017 to June 30, 2017)
1

Interested parties of the Asset Manager
Classification

Business or
occupation

Name
Sakura Tokutei
Mokuteki Kaisha
Momo Tokutei
Mokuteki Kaisha

Interested party of Septentrio 2 Tokutei
Mokuteki Kaisha
the Asset Manager
Naqua Hotel &Resorts Management
Co., Ltd.
MyStays HotelManagement
Co., Ltd.

Percentage ofvoting rights
owned
(%)

Investment
managementbusiness
Investment
managementbusiness
Investment
managementbusiness

Type of transaction
Purchase oftrust beneficiary interests
in real estate
Purchase oftrust beneficiary interests
in real estate
Purchase oftrust beneficiary interests
in real estate-Transaction
amount(JPY thousand)Account

Balance at theend of the period(JPY thousand)

21,879,000--

2,683,000--

8,000,000

-

-

Hotel
business-

Rental revenues

549,169

Accounts
receivable

198,247

Hotelbusiness-

Rental revenues

3,852,826

Accounts
receivable

1,043,190(Note 1) Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period.
(Note 2) The terms and conditions have been determined based on the Asset Manager’s internal rules and manual regardingtransactions with the sponsor company.
(Note 3) Sakura Tokutei Mokuteki Kaisha, Momo Tokutei Mokuteki Kaisha, Septentrio 2 Tokutei Mokuteki Kaisha, Naqua
Hotel & Resorts Management Co., Ltd., and MyStays Hotel Management Co., Ltd. have no capital relationship to bedisclosed with the Asset Manager. The tenant and operator have received an anonymous partnership investment orinvestment through funds that are managed by affiliates of Fortress Investment Group LLC (“FIG”), an affiliate ofCalliope. Accordingly, INV treats Sakura Tokutei Mokuteki Kaisha, Momo Tokutei Mokuteki Kaisha, Septentrio 2
Tokutei Mokuteki Kaisha, Naqua Hotel & Resorts Management Co., Ltd., and MyStays Hotel Management Co., Ltd.
as the equivalent to interested parties.
(Note 4) Calliope holds 609,942 units (holding percentage: 15.8%) of the issued investment units of INV.
(Note 5) The purchase of trust beneficiary interests pertains to the following properties. The transaction amount is thepurchase price stated in the trust beneficiary purchase agreement, to which other expenses for acquisition, property
taxes, city planning taxes and consumption taxes are not included.
Purchase price(JPY thousand)

Property number

Name of property

Counterparty

A105

Royal Parks Tower Minami-Senju

Sakura Tokutei Mokuteki Kaisha

21,879,000A106Royal Parks Seasir Minami-Senju

Momo Tokutei Mokuteki Kaisha

2,683,000

D49

Hotel MyStays Premier Hamamatsucho Septentrio 2 Tokutei Mokuteki Kaisha

8,000,000

Total

2

32,562,000

Asset Custody Company
Classification

Asset CustodyCompany

Name

Sumitomo Mitsui
Trust Bank,
LimitedBusiness or
occupation

Banking andtrust business

Percentage ofvoting rights
owned
(%)

-

Type of transaction

Transaction
amount(JPY thousand)Borrowing forlong-term loan-

Finance related fees-

Interest expenses

Account

Balance at theend of the period(JPY thousand)Long-termloans payable

21,351,000

Prepaid expenses

48,328Long-term
prepaid expenses

68,891

56,424 Accrued expenses

310(Note 1) Consumption taxes, etc., are not included in transaction amounts, but are included in the balance at the end of the period(Note 2) The terms and conditions have been determined based on actual market conditions.

85

[Notes Related to Per Unit Information]

Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)

Net assets per unit

JPY 35,762

Net income per unit

JPY 1,477

Net income per unit is calculated by dividing net income forthe period by the daily weighted average number ofinvestment units issued and outstanding. Diluted net income
per unit is not stated, as there are no diluted units.

Net assets
JPY 35,368
per unit

JPY 28,731

JPY 36,019

Net income
JPY 1,270
per unit

JPY 937

JPY 1,241

Net income per unit is calculated by dividing net income forthe period by the daily weighted average number ofinvestment units issued and outstanding. Diluted net income
per unit is not stated, as there are no diluted units.

(Note) The basis for calculating net income per unit is as follows.
Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)
Net income for the fiscal period (JPY thousand)Amounts not attributable to common unitholders(JPY thousand)Net income attributable to common units(JPY thousand)Average number of investment units during theperiod (units)

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)

5,431,003
5,431,003
3,675,824

86

4,363,420
Net income for
2,952,688
the fiscal period (JPY thousand)Amounts not attributable to common unitholders(JPY thousand)Net income attributable to common units
4,363,420 2,952,688(JPY thousand)Average number of investment units during the3,436,572 3,149,936
period (units)

4,702,073
4,702,073
3,788,254

[Notes Related to Significant Subsequent Events]

Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)

1. Issuance of new investment units
INV decided on the issuance of new investment units andsecondary offering of investment units at its board of
directors’ meeting on February 22, 2017. Issue price perunit and other details are scheduled to be determined atfuture board of directors’ meeting.
(1) Issuance of new investment units through Public
Offering
Number of Investment Units to be offered: 185,000
investment units(2) Secondary offering of investment units(by way of overallotment)
Number of investment units to be offered: 9,250
investment units

1. Sale of Assets
INV decided on July 25, 2017 to sell the following two
properties, and completed sale of all two properties on July
31, 2017.

2. Borrowing of funds
In order to raise a part of the funds to be used for theacquisition of trust beneficiary interests for the two
residential properties to be acquired on March 14, 2017(see “3. Acquisition of Assets” below), INV decided on theimplementation of the following borrowings at its board of
directors’ meeting held on February 22, 2017.
New Syndicate Loan (G)LenderBorrowing amountInterest rate, etc.

Interest payment datePrincipal repayment
methodBorrowing method
Borrowing date
Maturity dateSyndicate formed by
Mizuho Bank, Ltd.
JPY11,250 million
Base Rate (1-month JPY
TIBOR) + 0.40%, 0.50%,
0.60%(1) The last Japanesebusiness day of each month
before the principal
maturity date, beginningwith March 31, 2017, and(2) the principal maturity
date

Property Number: B08
Property Name: Kindai Kagaku Sha Building
Sale dateJuly 31, 2017

Location

Shinjuku-ku, Tokyo

Book value (Note 1)

JPY 1,201 million

Sales price (Note 2)

JPY 1,361 million

Expected gain on sales(Note 3)

JPY 96 million

Transferee

Not disclosed (Note 4)

Legal form of asset

Trust beneficiary interest

Property Number: C01
Property Name: Times Kanda-Sudacho 4th
Sale dateJuly 31, 2017

Location

Chiyoda-ku, Tokyo

Book value (Note 1)

JPY 100 million

Sales price (Note 2)

JPY 130 million

Expected gain on sales(Note 3)

JPY 23 million

Transferee

Wastec HOLDINGS Co., Ltd.

Legal form of asset

Real estate(Note 1)
(Note 2)Lump-sum repayment(Note 3)

Unsecured / with noguarantee
March 14, 2017
September 14, 2020

(Note 4)(Note 5)87

Book value is the book value as of the sale dateJuly 31, 2017.
Sales price does not include sales-related
expenses, adjustments for property taxes or city
planning taxes, or national or local consumption
taxes.
The amount of difference between sales priceand book value, and after deducting expectedsales-related expenses.
The name of the transferee is not disclosed, as
the transferee’s consent has not been obtainedfor disclosure.
For details of the sales assets, please refer to “I.
Asset Management Report; Overview of AssetManagement; 3 Asset Portfolio of Real Estate,etc.” earlier in this document.

Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)
Term Loan (F)LenderBorrowing amountInterest rate, etc.
Interest payment datePrincipal repayment
methodBorrowing method
Borrowing date
Maturity dateFiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)

Sumitomo Mitsui Banking
Corporation.
JPY3,000 million
Base Rate (1-month JPY
TIBOR) + 0.45%(1) The last Japanesebusiness day of each month
before the principal
maturity date, beginningwith March 31, 2017, and(2) the principal maturity
date
Lump-sum repayment
Unsecured / with noguarantee
March 14, 2017
September 14, 2020

3. Acquisition of assets
INV decided to acquire the following two properties (totalacquisition price of JPY 24,562 million) on February 22,
2017.
Property number: A105
Property name: Royal Parks Tower Minami-Senju
Acquisition date
March 14, 2017
Acquisition price
JPY 21,879 million(Note)
Location
Minami-Senju 4-chome,
Arakawa-ku, Tokyo
Completion date
May 2008
Legal form of asset
Trust beneficiary interest
Seller
Sakura Tokutei Mokuteki
KaishaTotal floor area
47,424.89m2
Leasable area
39,133.46 m2

2. Acquisition of Assets
On July 25, 2017, INV resolved on additional acquisitionof the exclusive elements it has yet to acquire of one hotel
property that is already in its portfolio, using the proceedsfrom the sales outlined in “1. Sale of Assets” to fund partof the acquisition.
Property Number: D43
Property Name: Hotel MyStays Gotanda Station

Property number: A106
Property name: Royal Parks Seasir Minami-Senju
Acquisition date
March 14, 2017
Acquisition price
JPY 2,683 million(Note)
Location
Minami-Senju 3-chome,
Arakawa-ku, Tokyo
Completion dateAugust 2006
Legal form of asset
Trust beneficiary interest
SellerMomo Tokutei Mokuteki
KaishaTotal floor area
7,248.10m2
Leasable area
6,496.86m2(Note) Acquisition price is based on the purchase priceindicated in the relevant purchase agreement anddoes not include acquisition costs, property taxes,
city planning taxes and consumption taxes.

88

Anticipated acquisition date

October 31, 2017

Anticipated acquisition price(Note 1)

JPY 1,880 million

Location

Shinagawa-ku, Tokyo

Completion dateAugust 29, 1984 (Note 2)

Legal form of asset

Trust beneficiary interest

SellerNot disclosed (Note 3)

Area of additional
acquisition portion

1,385.46m2(Note 1)

(Note 2)
(Note 3)

Anticipated acquisition price is the total of (i)purchase price set forth in the purchase and saleagreement, (ii) expenses with regard to theconversion work to convert to hotel rooms, (iii)transfer price of the furniture, fixture andequipment (FF&E), and other expenses.
Anticipated acquisition price does not include
adjustments for property taxes or city planningtaxes, or national or local consumption taxes.
The completion date of the building of theadditional acquisition portion.
The name of the seller is not disclosed, as theseller’s consent has not been obtained fordisclosure.

[Notes Related to Provision and Reversal of Allowance for Temporary Differences Adjustment]

Fiscal period ended December 31, 2016 (Reference)(from July 1, 2016 to December 31, 2016)

Fiscal period ended June 30, 2017(from January 1, 2017 to June 30, 2017)

In the Statement of Cash Distribution, INV reversed JPY
224,225 thousand of allowance for temporary differences
adjustment corresponding to the change in the fair value ofinterest-rate swaps.

The following provision was made in the Statement of CashDistribution:
1. Reasons, related assets and amounts

Related assets, etc.

ReasonLeasehold rights
in trust

Depreciation ofleasehold rights(Unit: JPY thousand)Allowance fortemporary differences
adjustment
46,3292. Method of reversal

89

Related assets, etc.

Method of reversal

Leasehold rights
in trust

The corresponding amount is scheduled
to be reversed upon sale, etc.

VI. Statement of Cash Distribution

Fiscal period ended
December 31, 2016 (Reference)(from July 1, 2016 to
December 31, 2016)
I.

Unappropriated retained
earnings
II. Incorporation into
unitholders’ capital
Of which, reversal of
allowance for temporary
differences adjustment
III. Distribution in excess ofretained earnings
Allowance for temporary
differences adjustment
Other deduction ofcapital surplus
IV. Distributions(Distribution per unit)
Of which,
distribution of earnings(Distribution of earnings
per unit)
Of which,allowance for temporary
differences adjustment(Distribution in excess ofretained earnings per unit
(Allowance for temporary
differences adjustment))
Of which,other distribution in excess
of retained earnings(Distribution in excess ofretained earnings per unit
(Other distribution in excess
of retained earnings))
V. Retained earnings (deficit)
carried forward

90

Fiscal period ended
June 30, 2017(from January 1, 2017 toJune 30, 2017)

JPY 5,659,831,868

JPY 4,708,487,837

JPY 224,225,264--

JPY 46,329,888-

JPY 34,747,416

JPY 5,429,192,048(JPY 1,477)

JPY 4,880,081,536(JPY 1,264)

JPY 5,429,192,048

JPY 4,799,004,232(JPY 1,477)(JPY 1,243)-

JPY 46,329,888-(JPY 12)-JPY 34,747,416-(JPY 9)JPY 6,414,556(JPY 90,516,395)

Calculation method of
distribution amountAs shown above, the distribution perunit for the period is JPY 1,477.
With respect to profit distributions (notincluding Excess Profit Distribution),
INV decided to distribute almost all of
its profit as defined in Article 136,
Paragraph 1 of the Investment Trust
Act, remaining after deducting thereversal of allowance for temporary
differences adjustments, other thanfractional amount per unit less than JPY
1, aiming to include the maximum
amount of profit distributions indeductible expenses in accordance with
Article 67-15, Paragraph 1 of the Act
on Special Taxation Measures (Act No.
26, 1957). As a result, the distributionof earnings per unit (not including
Excess Profit Distribution per unit) is
JPY 1,477.
Furthermore, INV has decided not tomake Distribution in excess of profit.

91

As shown above, the distribution perunit for the Reporting Period is JPY
1,264.
With respect to profit distributions(notincluding
ExcessProfitDistribution), INV decided to
distribute almost all of its profit as
defined in Article 136, Paragraph 1 ofthe Investment Trust Act, other thanfractional amount per unit less than
JPY 1, aiming to include themaximum
amountofprofitdistributions in deductible expenses
in accordance with Article 67-15,
Paragraph 1 of the Act on Special
Taxation Measures (Act No. 26,
1957). As a result, the distribution of
earnings per unit (not including
Excess Profit Distribution per unit) is
JPY 1,243.
In addition, in accordance with the
distribution policy as set forth in the
Articles of Incorporation, INV makes
distributions in excess of earnings ofthe amount that it determines (the“Excess Profit Distribution”). For theReporting Period, INV decided tomake Excess Profit Distribution of
JPY 46 million in order to cope withthe discrepancy between tax andaccounting treatment, making Excess
ProfitDistribution
fromtheallowance for temporary differences
adjustment of JPY 12 per unit. INV
decided to also make Excess Profit
Distribution of JPY 34 million as
refund of investment in order to level
distributions, making other Excess
Profit Distribution of JPY 9 per unit.
For the Reporting Period, there arosedeferred gain on hedges of JPY 92
million, which is regarded as profit as
stipulated in Article 136, Paragraph 1of the Investment Trust Act, and INV
decided to distribute almost the entire
amount of profit stipulated in Article
136, Paragraph 1 of the Investment
Trust Act. As a result, INV recorded
deferred loss on hedges of JPY 90
million for the next fiscal period.

NoteAccompanying English financial information, comprising Balance Sheet, Statement of Income andRetained Earnings, Statement of Changes in Net Assets, Notes to financial statements and Statement of
Cash Distribution, have been translated from the Japanese financial statements of the Investment
Corporation prepared in accordance with the Act on Investment Trusts and Investment Corporations ofJapan.
Under Article 130 of the Act on Investment Trusts and Investment Corporations of Japan, the Japanesefinancial statements for the six months ended June 30, 2017 have been audited by Ernst & Young
ShinNihon LLC, in accordance with auditing standards generally accepted in Japan. However, English
translation of the Japanese language report of independent auditors is not attached herein since theaccompanying English translation of Balance Sheet, Statement of Income and Retained Earnings,
Statements of Changes in Net Assets, Notes to financial statements and Statement of Cash Distribution are
unaudited.
Regarding the English audited financial statements, please refer to the “Audited Financial Statements” on
the website of Invincible Investment Corporation: http://www.invincible-inv.co.jp/eng/cms/doc.html

92VII. Statement of Cash Flows (Reference Information)

Fiscal period ended
December 31, 2016 (Reference)(from July 1, 2016 to
December 31, 2016)(Unit: JPY thousand)Fiscal period ended
June 30, 2017(from January 1, 2017 toJune 30, 2017)

5,431,608
2,065,066
186,249(129)
359,540(1,430)(22,587)
2,672,787(66,883)
460,521(881,047)(5,946)
14,936(23,418)(12,451)
10,176,817
129(358,219)(605)
9,818,122

4,702,678
2,281,374
42,401
223,228(70)
377,451(1,301)(21,759)(20,823)
81,748(460,521)
25,473444
18,602(21,461)(17,577)
7,209,888
70(379,198)(605)
6,830,155(8,449,701)-(2,395)(26,684,589)(8,187,950)

Cash flows from operating activities
Net income before taxes
Depreciation and amortization
Investment unit issuance costs
Loan-related costs
Interest income
Interest expenses
Increase (decrease) in allowance for doubtful accounts
Decrease (increase) in rental receivable
Decrease (increase) in consumption taxes receivable
Increase (decrease) in accounts payable
Increase (decrease) in consumption taxes payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Increase (decrease) in deposits received
Others, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Purchases of property and equipment
Purchases of property and equipment in trust
Purchases of leasehold rights in trust
Proceeds from tenant leasehold and security
deposits in trust
Repayments of tenant leasehold and security
deposits in trust
Payments of tenant leasehold and security deposits
Other, net
Net cash used in investing activities
Cash flows from financing activities
Repayment of short-term loans payable
Proceeds from long-term loans payable
Payments for loan-related costs
Payment of distributions of earnings
Payment of distributions in excess of retained earnings
from allowance for temporary differences adjustment
Proceeds from issuance of investment units
Other
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period *1

93(53,815)(79,334)

48,371

290,004(2,211)(8,457,356)(1,037,651)(2,211)(35,704,126)(3,498,000)
4,000,000(53,775)(4,118,229)

21,571,000(257,922)(5,406,728)(224,225)-(15,879)(3,910,109)(2,549,344)
16,764,078
14,214,734

8,351,048
24,257,397(4,616,573)
14,214,734
9,598,161

[Notes Concerning Significant Accounting Policies (Reference Information)]
By Period
Item
Cash and cash equivalents as statedin Statement of Cash Flows

Fiscal period ended
December 31, 2016 (Reference)(from July 1, 2016 to
December 31, 2016)
Cash and cash equivalents as statedin the Statement of Cash Flows
consist of cash on hand and cash intrust, floating deposits, deposits intrust and short-term investments thatare very liquid and realizable with amaturity of three months or lesswhen purchased and that are subject
to insignificant risks of changes invalue.

Fiscal period ended
June 30, 2017(from January 1, 2017 toJune 30, 2017)
Cash and cash equivalents as statedin the Statement of Cash Flows
consist of cash on hand and cash intrust, floating deposits, deposits intrust and short-term investments thatare very liquid and realizable with amaturity of three months or lesswhen purchased and that are subject
to insignificant risks of changes invalue.

[Notes to Statement of Cash Flows (Reference Information)]
By Period
Item*1. Relationship between cash andcash equivalents in Statement of
Cash Flows and amounts inaccompanying balance sheet

Fiscal period ended
December 31, 2016 (Reference)(from July 1, 2016 to
December 31, 2016)(As of December 31, 2016)(Unit: JPY thousand)Cash and bank8,714,907
deposits
Cash and bank5,499,826
deposits in trust
Cash and cash
14,214,734
equivalents

94

Fiscal period ended
June 30, 2017(from January 1, 2017 toJune 30, 2017)(As of June 30, 2017)(Unit: JPY thousand)Cash and bank3,532,405
deposits
Cash and bank6,065,755
deposits in trust
Cash and cash
9,598,161
equivalents

“My Number” informed by municipalities is necessary for taxation procedure on investment units.
Thus, it is necessary for unitholders to notify your “My Number” to your brokerage, etc.
Usage of “My Number” in investment units related affairs“My Number” is recorded on the payment record and the payment record is filed with the relevant
tax authority pursuant to laws and regulations.
Major payment record *Payment record regarding cash distribution
Usage of “My Number” includes taxation related procedures on investment units. It is necessary for
unitholders to notify your “My Number” to your brokerage, etc.
Inquiries regarding notifying “My Number”Unitholders whose investment units are managed in brokerage accounts
Each brokerage
Unitholders who have no brokerage accountTransfer Agent Department, Sumitomo Mitsui Trust Bank, Limited
Toll-free Telephone Number 0120-782-031

95

Portfolio Map

No. of Properties

No. of Hotels

No. ofHotel Rooms

No. ofApartment Units

125

49

7,147

4,778

(Note 1) as of July 31, 2017.
(Note 2) For properties corresponding to the number and overview, please refer to pages 94-97.

96

97

Portfolio Overview(as of July 31, 2017)
Use

Property
NumberName of Property(Note 1)

A26
A27

Location

Nisshin Palacestage
Suginami-ku, Tokyo
Daitabashi
Nisshin Palacestage HigashiToshima-ku, Tokyo
NagasakiLeasable Area(m2)
(Note 5)

Rentable
Units(Note 4)(Note 5)Acquisition
Price(JPY mn)

Investment
Ratio
(%)

Occupancy
Rate(%)(Note 2)

(Note 3)(Note 5)

1,771.13

98

1,251

0.4

89.8

2,681.94

60

1,229

0.4

93.6

A28

Growth Maison Gotanda

Shinagawa-ku, Tokyo

1,051.50

48

888

0.3

100.0

A29

Growth Maison Kameido

Koto-ku, Tokyo

1,367.96

66

1,070

0.4

92.4

A30

Emerald House

Itabashi-ku, Tokyo

2,152.31

96

1,505

0.5

98.9

A31

Harmonie Ochanomizu

Bunkyo-ku, Tokyo

1,748.24

65

1,428

0.5

97.5

A32

Suncrest Shakujii-Koen

Nerima-ku, Tokyo

3,029.16

29

1,088

0.4

94.7

Yokohama-shi, Kanagawa

1,858.44

68

1,059

0.4

97.1

Taito-ku, Tokyo

1,351.11

64

1,023

0.3

90.6

A33
A34

Growth Maison ShinYokohama
Belle Face UenoOkachimachi

Residential

A35

Grand Rire Kameido

Koto-ku, Tokyo

1,562.26

72

906

0.3

100.0

A36

Growth Maison Ikebukuro

Toshima-ku, Tokyo

952.89

42

825

0.3

95.2

A37

Growth Maison Yoga

Setagaya-ku, Tokyo

1,015.34

39

795

0.3

92.4

A38

Route Tachikawa

Tachikawa-shi, Tokyo

1,368.57

24

676

0.2

89.8

A39

Shibuya-Honmachi Mansion Shibuya-ku, Tokyo

1,167.50

25

651

0.2

100.0

A40

City Heights Kinuta

Setagaya-ku, Tokyo

1,235.93

19

646

0.2

89.2

A41

Acseeds Tower KawaguchiNamiki

Kawaguchi-shi, Saitama

1,210.74

57

620

0.2

98.3

A42

Capital Heights Kagurazaka Shinjuku-ku, Tokyo

1,126.65

26

604

0.2

83.4

A43

College Square Machida

Machida-shi, Tokyo

1,047.75

62

589

0.2

100.0

A44

Belair Meguro

Meguro-ku, Tokyo

557.05

25

589

0.2

92.0

A45

Wacore Tsunashima I

Yokohama-shi, Kanagawa

907.46

50

572

0.2

92.1

A46

Foros Nakamurabashi

Nerima-ku, Tokyo

815.77

37

566

0.2

97.5

A47

Growth Maison Kaijin

Funabashi-shi, Chiba

2,040.27

34

557

0.2

100.0

A48

College Square Machiya

Arakawa-ku, Tokyo

871.35

43

510

0.2

100.0

A51

City House Tokyo Shinbashi Minato-ku, Tokyo

3,364.00

86

2,520

0.8

92.8

A52

Winbell Kagurazaka

Shinjuku-ku, Tokyo

4,032.70

118

3,260

1.1

98.4

Shinjuku-ku, Tokyo

4,310.77

69

1,880

0.6

100.0

Shinjuku-ku, Tokyo

1,987.88

88

1,450

0.5

96.6

A53
A54

Nishiwaseda Cresent
MansionLexington Square
Akebonobashi

A56

Casa Eremitaggio

Meguro-ku, Tokyo

1,197.19

17

1,070

0.4

94.0

A59

Towa City Coop Shinotsuka
Toshima-ku, TokyoII

1,627.13

58

866

0.3

91.4

A61

Bichsel Musashiseki

Nerima-ku, Tokyo

1,220.24

70

577

0.2

95.7

A62

Lexel Mansion Ueno
Matsugaya

Taito-ku, Tokyo

1,969.45

29

970

0.3

92.7

A63

Towa City Coop Sengencho Yokohama-shi, Kanagawa

3,426.36

154

1,110

0.4

83.8

A64

Royal Park Omachi

Sendai-shi, Miyagi

1,929.59

51

415

0.1

98.3

A65

Lexington Square
Haginomachi

Sendai-shi, Miyagi

1,528.58

39

330

0.1

89.5

A66

Visconti Kakuozan

Nagoya-shi, Aichi

A71

Lexington Square Daitabashi Suginami-ku, Tokyo

A72

Lexington Square Honjo
Azumabashi

784.74

A73

AMS TOWER Minami 6-Jo Sapporo-shi, Hokkaido

4,460.56

A75

Spacia Ebisu

Shibuya-ku, Tokyo

7,794.91

A76

Neo Prominence

Kita-ku, Tokyo

A77

Invoice Shin-Kobe Residence Kobe-shi, Hyogo

A78

Cosmo Court Motomachi

A79

Revest Honjin

705.75

8

255

0.1

88.6

1,430.64

43

977

0.3

92.2

33

511

0.2

94.0

120

1,180

0.4

79.7

109

7,010

2.4

95.2

3,574.70

52

1,660

0.6

91.2

2,773.71

81

1,260

0.4

91.7

Kobe-shi, Hyogo

2,310.49

82

973

0.3

95.3

Nagoya-shi, Aichi

1,933.80

80

674

0.2

92.5

Sumida-ku, Tokyo

98

Purpose

Property
NumberName of Property(Note 1)

Location

Leasable Area(m2)
(Note 5)

Rentable
Units(Note 4)(Note 5)Acquisition
Price(JPY mn)

Investment
Ratio
(%)

Occupancy
Rate(%)(Note 2)

(Note 3)(Note 5)Residential

A80

Revest Matsubara

Nagoya-shi, Aichi

1,955.40

70

657

0.2

93.1

A81

Sun Terrace Minami
Ikebukuro

Toshima-ku, Tokyo

898.70

38

625

0.2

86.8

A82

Alba Noritake Shinmachi

Nagoya-shi, Aichi

1,731.68

64

608

0.2

87.5

A83

Revest Meieki Minami

Nagoya-shi, Aichi

1,634.60

61

597

0.2

95.4

A84

Revest Heian

Nagoya-shi, Aichi

1,554.03

40

595

0.2

100.0

A85

Vendir Hamaotsu Ekimae

Otsu-shi, Shiga

2,670.66

81

581

0.2

98.5

A86

Salvo Sala

Osaka-shi, Osaka

1,428.12

54

544

0.2

95.9

A87

Excellente Kagurazaka

Shinjuku-ku, Tokyo

701.92

33

543

0.2

94.1

A88

Luna Court Edobori

Osaka-shi, Osaka

1,185.50

50

525

0.2

94.0

A89

Winntage Kobe Motomachi

Kobe-shi, Hyogo

1,433.35

57

512

0.2

85.9

A90

Queen's Court Fukuzumi

Koto-ku, Tokyo

765.18

25

456

0.2

95.9

A91

Corp Higashinotoin

Kyoto-shi, Kyoto

1,029.05

42

446

0.1

97.6

A92

Belair Oimachi

Shinagawa-ku, Tokyo

530.60

26

412

0.1

96.1

A93

Siete Minami-Tsukaguchi

Amagasaki-shi, Hyogo

1,020.86

40

374

0.1

95.0

A94

Prime Life Sannomiya
Isogami Koen

Kobe-shi, Hyogo

789.12

32

373

0.1

96.9

A95

HERMITAGE NANBA WEST

Osaka-shi, Osaka

992.76

21

355

0.1

100.0

A96

Century Park Shinkawa
1-bankan

Nagoya-shi, Aichi

1,477.62

44

335

0.1

88.7

A97

West Avenue

Kunitachi-shi, Tokyo

794.80

40

331

0.1

85.0

A98

Little River Honmachibashi

Osaka-shi, Osaka

974.81

31

310

0.1

87.7

A99

Prime Life Mikage

Kobe-shi, Hyogo

761.18

28

297

0.1

96.6

A100 City Court Kitaichijo

Sapporo-shi, Hokkaido

5,230.18

127

1,782

0.6

93.8

A101 Lieto Court Mukojima

Sumida-ku, Tokyo

2,940.20

82

1,683

0.6

97.0

A102 Lieto Court Nishi-Ojima

Koto-ku, Tokyo

2,048.28

91

1,634

0.5

99.0

A103 Royal Parks Momozaka

Osaka-shi, Osaka

8,776.26

147

2,910

1.0

100.0

A104 Royal Parks Shinden

Adachi-ku, Tokyo

15,797.29

248

5,024

1.7

100.0

A105 Royal Park Tower Minami-Senju

Arakawa-ku, Tokyo

39,113.46

557

21,8797.3

92.7

A106 Royal Parks Seasir Minami-Senju

Arakawa-ku, Tokyo

100.0

Subtotal

6,496.86

113

2,683

0.9

189,986.98

4,778

95,678

32.1

94.6

Office Buildings /Commercial Facilities

B09

Shinjuku Island

Shinjuku-ku, Tokyo

526.43

1

715

0.2

100.0

B14

Lexington Plaza Nishigotanda

Shinagawa-ku, Tokyo

6,033.58

11

4,880

1.6

100.0

B15

Cross Square NAKANO

Nakano-ku, Tokyo

2,145.00

45

1,060

0.4

87.3

B16

Ohki Aoba Building

Sendai-shi, Miyagi

2,178.37

13

816

0.3

88.7

B17

Lexington Plaza Hachiman

Sendai-shi, Miyagi

8,419.15

18

3,280

1.1

100.0

AEON TOWN Sukagawa

Sukagawa-shi,
Fukushima

18,440.58

1

2,320

0.8

100.0

37,743.11

89

13,071

4.4

98.6

B18

Subtotal

HotelsD01

Hotel MyStays Kanda

Chiyoda-ku, Tokyo

2,585.72

126

2,851

1.0

100.0

D02

Hotel MyStays Asakusa

Sumida-ku, Tokyo

3,327.38

161

2,584

0.9

100.0

D03

Hotel MyStays Kyoto-Shijo

Kyoto-shi, Kyoto

7,241.51

225

6,024

2.0

100.0

D04

MyStays Shin-Urayasu
Conference Center

Urayasu-shi, Chiba

6,232.30

175

4,930

1.7

100.0

D05

Hotel MyStays Maihama

Urayasu-shi, Chiba

2,456.36

90

4,870

1.6

100.0

D06

Hotel Vista Premio Dojima(Note 6)

Osaka-shi, Osaka

9,445.32

153

3,845

1.3

100.0

99

Purpose

Property
NumberName of Property(Note 1)

Location

Leasable Area(m2)
(Note 5)

Rentable
Units(Note 4)(Note 5)Acquisition
Price(JPY mn)

Investment
Ratio
(%)

Occupancy
Rate(%)(Note 2)

(Note 3)(Note 5)

HotelsD07

Hotel MyStays Nagoya-Sakae

Nagoya-shi, Aichi

9,064.71

279

2,958

1.0

100.0

D08

Hotel MyStays
Sakaisuji-Honmachi

Osaka-shi, Osaka

4,188.83

191

2,514

0.8

100.0

D09

Hotel MyStays Yokohama

Yokohama-shi,
Kanagawa

7,379.43

190

2,119

0.7

100.0

D10

Hotel MyStays Nippori

Arakawa-ku , Tokyo

1,719.29

93

1,898

0.6

100.0

D11

Hotel MyStays
Fukuoka-Tenjin-Minami

Fukuoka-shi, Fukuoka

3,412.71

177

1,570

0.5

100.0

D12

Flexstay Inn Iidabashi

Shinjuku-ku, Tokyo

2,953.38

62

1,381

0.5

100.0

D13

Hotel MyStays Ueno Inaricho

Taito-ku, Tokyo

1,150.76

72

1,331

0.4

100.0

D14

Flexstay Inn Shinagawa

Shinagawa-ku, Tokyo

1,134.52

55

1,242

0.4

100.0

D15

Flexstay Inn Tokiwadai

Itabashi-ku, Tokyo

2,539.75

130

1,242

0.4

100.0

D16

Flexstay Inn Sugamo

Toshima-ku, Tokyo

2,089.86

105

1,192

0.4

100.0

D17

Hotel MyStays Otemae

Osaka-shi, Osaka

4,956.66

111

1,192

0.4

100.0

D18

Flexstay Inn
Kiyosumi Shirakawa

Koto-ku, Tokyo

2,673.64

56

749

0.3

100.0

D19

Flexstay Inn Nakanobu P1

Shinagawa-ku, Tokyo

770.56

39

589

0.2

100.0

D20

Flexstay Inn Nakanobu P2

Shinagawa-ku, Tokyo

391.49

22

283

0.1

100.0

D21

APA Hotel Yokohama-Kannai

Yokohama-shi,
Kanagawa

6,568.51

452

8,350

2.8

100.0

D22

Hotel Nets Hakodate

Hakodate-shi, Hokkaido

7,961.26

205

2,792

0.9

100.0

D23

Flexstay Inn Shirogane

Minato-ku, Tokyo

1,754.06

84

2,119

0.7

100.0

D24

Hotel MyStays Haneda

Ota-ku, Tokyo

5,400.16

174

7,801

2.6

100.0

D25

Hotel MyStays Kameido P1

Koto-ku, Tokyo

4,349.67

266

5,594

1.9

100.0

D26

Hotel MyStays Ueno Iriyaguchi Taito-ku, Tokyo

2,247.92

97

3,821

1.3

100.0

D27

Hotel MyStays Kameido P2

Koto-ku, Tokyo

2,793.99

177

3,742

1.3

100.0

D28

Hotel Vista Shimizu

Shizuoka-shi, Shizuoka

3,559.81

152

2,198

0.7

100.0

D29

Super Hotel Shinbashi/
Karasumoriguchi

Minato-ku, Tokyo

1,403.89

74

1,624

0.5

100.0

D30

Flexstay Inn Higashi-Jujo

Kita-ku, Tokyo

1,714.53

89

1,277

0.4

100.0

D31

Hotel MyStays Utsunomiya

Utsunomiya-shi, Tochigi

11,733.23

126

1,237

0.4

100.0

D32

Flexstay Inn Kawasaki-Kaizuka Kawasaki-shi, Kanagawa

1,190.57

64

980

0.3

100.0

D33

Comfort Hotel Toyama

Toyama-shi, Toyama

3,305.64

150

979

0.3

100.0

D34

Flexstay Inn
Kawasaki-Ogawacho

Kawasaki-shi, Kanagawa

725.60

62

906

0.3

100.0

D35

Flexstay Inn Ekoda

Nerima-ku, Tokyo

3,932.93

210

5,069

1.7

100.0

D36

Super Hotel Tokyo-JR
Tachikawa Kitaguchi

Tachikawa-shi, Tokyo

1,832.97

96

1,170

0.4

100.0

D37

Super Hotel JR Ueno-iriyaguchi Taito-ku, Tokyo

1,279.16

69

1,130

0.4

100.0

D38

Hotel MyStays Shinsaibashi

Osaka-shi, Osaka

1,942.01

57

3,160

1.1

100.0

D39

Comfort Hotel Kurosaki

Kitakyushu-shi, Fukuoka

3,207.60

151

1,148

0.4

100.0

D40

Comfort Hotel Maebashi

Maebashi-shi, Gunma

3,660.96

154

1,128

0.4

100.0

D41

Comfort Hotel
Tsubame-Sanjo

Sanjo-shi, Niigata

3,099.90

133

1,010

0.3

100.0

D42

Comfort Hotel Kitami

Kitami-shi, Hokkaido

3,009.50

127

851

0.3

100.0

D43

Hotel MyStays Gotanda Station Shinagawa-ku, Tokyo

8,752.42

335

24,674

8.3

100.0

D44

Hotel Epinard Nasu

Nasu-gun, Tochigi

37,702.33

310

20,981

7.0

100.0

D45

Hotel MyStays Fukuoka Tenjin

Fukuoka-shi, Fukuoka

5,083.06

217

8,059

2.7

100.0

D46

Hotel MyStays Hamamatsucho

Minato-ku, Tokyo

1,951.90

105

7,959

2.7

100.0

D47

Hotel MyStays PremierKanazawa

Kanazawa-shi, Ishikawa

13,250.03

261

13,761

4.6

100.0

D48

Takamatsu Tokyu REI Hotel

Takamatsu-shi, Kagawa

7,148.17

193

2,139

0.7

100.0

D49

Hotel MyStays Premier
Hamamatsucho

Minato-ku, Tokyo

6,151.93

134

8,000

2.7

100.0

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Purpose

Property
NumberLeasable Area(m2)
(Note 5)

Rentable
Units(Note 4)(Note 5)Acquisition
Price(JPY mn)

Investment
Ratio
(%)

Occupancy
Rate(%)(Note 2)

(Note 3)(Note 5)

Subtotal

232,427.89

7,236

189,032

63.5

100.0

Total

460,157.98

12,103297,781

100.0

97.7

Name of Property(Note 1)

Location(Note 1)

“Property number” refers to the asset owned by INV, classifying the residential asset as A, the office / commercial
facility as B, the parking lot as C, the hotel as D according to the use of each property. The numbers with A, B, C, andD indicate the order of acquisition dates and properties with the same acquisition date are arranged in the order ofacquisition price.

(Note 2)“Acquisition price” is the purchase price indicated in the real estate or trust beneficiary purchase agreement. Such
price excludes consumption tax and other taxes, and has been rounded down to the nearest million yen.

(Note 3)

“Investment ratio” is the ratio of the acquisition price to the aggregate acquisition price of INV’s portfolio, and has
been rounded to the first decimal place.

(Note 4)

“Rentable Units” is including shop, office and nursing home portions, which are counted as one unit each.

(Note 5)

“Leasable Area,” “Rentable Units,” “Leased Area” and “Occupancy Rate” are as of the end of June 2017.

(Note 6)

With change of the operator, the property name was changed to Hotel MyStays Dojima on August 1, 2017.

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Financial Conditions■ The lender formation has been further reinforced by the addition of three new lenders via new
borrowing (number of lenders now stands at 22).

Lender Formation (as of June 30, 2017)

Rating (as of September 27, 2016)
Rating Agency

Rating Object

RatingOutlookJapan Credit Rating
Agency, Ltd.

Long-term
Issuer Rating

A

Positive(Note 1)

LTV (Appraisal Value Base) is calculated by the following formula: (Interest-bearing debts at the end of therelevant fiscal period) / (Total appraisal value as of the end of the same period).

(Note 2)Average interest rate is calculated by the following formula: [Sum total of (Each loan’s loan amount outstandingat the end of the fiscal period multiplied by applicable interest rate at the end of the fiscal period)] / (Total loan
amount outstanding at the end of the fiscal period).

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(Note 3)

DSCR is calculated by dividing operating income, as adjusted for depreciation expenses from property rental
business and any loss (gain) on sales of property by scheduled prepayments of loans payable and interest expense
for the relevant period.

(Note 4)DSCR (excluding hotel variable rent) is in the same manner as DSCR, except for excluding hotel variable rent
from operating income.

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Overview of Unitholders/Investment Units■ Historical Unit Price(Note) Unit prices indicate the closing price on the TSE market. TSE REIT Index has been indexed, assuming the closing
price of TSE REIT Index as of January 4, 2013 was the same as the closing price of INV unit on the same day.
.

■ Distribution of Unitholders

Annual Schedule104

Information for Unitholders
For Unitholders
Investors’ Registry
Administrator
Special Account Management
Institution

Correspondence(Telephone Assistance)

Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo<Unitholders of the former Tokyo Growth REIT Investment Inc.>
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku, Tokyo<Unitholders of the former LCP Investment Corporation>
Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo
Transfer Agent Department, Sumitomo Mitsui Trust Bank,
Limited
2-8-4, Izumi, Suginami-ku, Tokyo, 168-0063
Toll-free Telephone Number 0120-782-031
Administrative services are available at the main and branch
offices throughout Japan of Sumitomo Mitsui Trust Bank,
LimitedNotification Process for Address Changes
Please notify your brokerage (financial instruments business operator) regarding changes to addresses,
names, registered seals, and the like. Unitholders who have special accounts instead of brokerage accounts
should contact the transfer account management institution (financial instruments business operator) below.
Unitholders of the pre-merger Investment Corporation (former Tokyo Growth REIT Investment Inc.)
Mitsubishi UFJ Trust and Banking Corporation Toll-free Number: 0120-255-100
Unitholders of the former LCP Investment Corporation
Sumitomo Mitsui Trust Bank, Limited Toll-free Number: 0120-782-031
Dividends
Unitholders may collect “dividends” by submitting the “Dividends Receipt” at your local Japan Post Bankor at the deposit teller of a post office. In the case that the collection period is past, please specify thecollection method on the back of the “Dividends Receipt,” and either mail the receipt to the Transfer Agent
Department of the Sumitomo Mitsui Trust Bank, Limited or collect from a branch teller.

(Bank Transfers)
Should you desire to specify bank transfers for future dividends, please notify your brokerage(financial instruments business operator).
(Note)

Please collect dividends within 3 years of distribution. Please note that payments cannot be made after 3 years dueto the rules and regulations of the Articles of Incorporation of the Investment Corporation.

105

Notification(Notice of Dividend Payment)
The 2008 amendment of the Special Taxation Measures Law (Act No. 23 of April 30, 2008) mandated thesending to unitholders a “Notice of Dividend Payment” stating the dividend amount, amount of taxes
withheld, and the like. If you collect dividends via a “Dividends Receipt,” please view the “Notice ofDividend Payment” sent alongside it. If you have specified a wire transfer, the “Dividend Statement”
delivered with the dividend payment is the “Notice of Dividend Payment.” Both documents may be used as
supporting documents when filing income tax returns.
(Characters for Addresses and Names of Unitholders)With the digitization of investment securities, if there are Chinese characters in your address or names that
the Japan Securities Depository Center (JASDEC) has not included in the transfer system, please list in theInvestors’ Registry by converting part or all of the characters to those that JASDEC has included in thetransfer system or to katakana. Please be aware that correspondence may be addressed using characters that
JASDEC has included in the transfer system. Please inquire with your brokerage regarding charactersregistered for your address and name.
Inquiries
For inquiries regarding INV: Consonant Investment Management Co., Ltd.
TEL: 03-5411-2731 (Main)
Weekdays 9:30-17:30

106