Invincible Investment Corporation
Asset Management Report
Fiscal Period ended December 31, 2018 (July 1, 2018 to December 31, 2018)
Content
Greetings from Naoto Ichiki, Chairman and Director of Consonant Investment Management Co., Ltd. andNaoki Fukuda, Executive Director of Invincible Investment Corporation and President & CEO of
Consonant Investment Management Co., Ltd.
Increase in Asset Size and Diversification of Portfolio
Unitholder Benefit Program
Asset Management Report
Audited Financial Statements for the Fiscal Period ended December 31, 2018 (July 1, 2018 to December 31,
2018)
Domestic Portfolio Map (As of December 31, 2018)
Sponsor Pipeline (As of February 28, 2019)
Financial Conditions

Overview of Unitholders/Investment Units
Information for Unitholders

Greetings from Naoto Ichiki, Chairman and Director of Consonant Investment Management Co.,
Ltd. and Naoki Fukuda, Executive Director of Invincible Investment Corporation and President &CEO of Consonant Investment Management Co., Ltd.
We would like to take this opportunity to express our 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 31st fiscal
period (covering the period from July 1, 2018 to December 31, 2018; the “Reporting Period”).
INV positions hotels and residential properties as its core assets and conducts management activities tomaximize growth potential and stability of the portfolio.
During the Reporting Period, INV conducted a global public offering of new investment units for the fifth
consecutive year to acquire four hotels in Tokyo, Osaka and Sapporo, including two hotels under the Hotel
MyStays “Premier” brand, and acquired the TK interest in two overseas hotels (Westin Grand Cayman
Seven Mile Beach Resort & Spa and Sunshine Suites Resort) as underlying assets, becoming the first
J-REIT to do so. As a result, the number of portfolio properties as of the end of the Reporting Period
reached 132 with a total acquisition price of JPY 448,362 million, of which hotel assets account for
approximately 80% (1). With regard to the hotel sector, the number of inbound visitors reached a newhigh of 31,191,000 (up 8.7% from the previous year) in 2018, steadily increasing towards the government
targets of 40 million in 2020 and 60 million in 2030. In the Reporting Period, although hotel demand
temporarily dropped due to the natural disasters in Western Japan and Hokkaido, INV was able to reach its
hotel revenue target with the expansion of hotel demand mainly from the aforementioned inbound visitors
as well as the positive effect of INV’s portfolio diversification and other factors.
With the Rugby World Cup scheduled in 2019 and Tokyo Olympic and Paralympic Games in 2020, Japan
expects to see a further increase in the number of inbound visitors from the next fiscal period onward as aresult of increasing international recognition of the country. Therefore, continuous growth of the hotel
market and a better supply-demand situation can be expected.
Regarding residential properties, the rent increase program that has been implemented by INV resulted in
an increase in rent per tsubo for both new and renewal contracts, achieving an increase in revenues
compared with the previous year and versus the budget.
As a result of the initiatives and factors mentioned above, operating revenues reached JPY 14,451 million,
operating income JPY 9,514 million, and net income JPY 8,384 million. INV decided on a distribution
per unit of JPY 1,683, an increase of 7.6% year on year (2).
Ever since the commencement of sponsorship from the Fortress Group in 2011, INV has been focusing its
efforts on establishing and strengthening a revenue base in order to improve the profitability of its portfolio
and ensure stable distributions. Particularly during the three public offerings conducted in the past two
years, INV has worked to enhance portfolio quality and increase distributions under the strong support ofthe sponsor, by acquiring prime properties including flagship hotels and residential properties from thesponsor pipeline and such. Such efforts have resulted in a steady increase of distribution per unit, and thefull year distribution per unit for 2018 increased around eightfold compared to that for 2011.
Furthermore, INV established a medium-term plan “Vision 2022” in the Reporting Period and set the targetof raising distribution per unit to JPY 3,700 by 2022 (3). INV will continue to implement its basic policy
to “increase distribution per unit” to achieve such target, and will ensure the implementation of measures tomaximize unitholder value.

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

(1) For details, please refer to notes on pages 10 and 11.
(2) Comparison with the fiscal period ended December 2017. In order to eliminate the seasonal effects
of hotel variable rent, which is one of the major revenues of INV, in the comparison, the comparison ismade with the same period in the previous year and not with the previous fiscal period (ended June2018).
(3) This is a target based on various assumptions and conditions, and there is no guarantee that INV canachieve this target in 2022 or later.
Distribution per unit for the 31st fiscal period(the fiscal period ended December 2018)

JPY 1,683(Note) The forward-looking statements, forecasts and goals described in this report are based on available information,
assumptions and estimates as of February28, 2019. 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 significantly.

Increase in Asset Size and Diversification of Portfolio
Change in DPU

Change in Asset Size

No. ofproperties (Note 2)
HotelsResidential
Others

78

91

111

124

126

132

0
63
15

20
63
8

37
66
8

48
68
8

54
67
5

66
64
2

Properties acquired in2018 (10 domestic hotels, 2 overseas hotels)(Fiscal period ended December 2018)

The Westin Grand Cayman
Seven Mile Beach Resort & Spa

Sunshine Suites
ResortHotel MyStays Premier
Akasaka

Hotel MyStays Premier
SapporoHotel MyStays
Ueno East

Hotel MyStays
Midosuji Honmachi(Fiscal period ended June 2018)

Hotel MyStays Yokohama
KannaiArt Hotel
JoetsuArt Hotel
Hirosaki City

Hotel MyStays
Oita

Hotel MyStays
GotandaHotel MyStays Tachikawa(Note 1) “AUM” indicates the total acquisition price of assets owned as of the end of each year; and “Price of new acquisitions” indicates the totalacquisition price of assets newly acquired out of AUM in the respective year. As to preferred equity securities in the TMK which holds
Sheraton Grande Tokyo Bay Hotel and the TK interests which hold the two overseas real estate properties, investment amounts in thepreferred equity securities and TK interests by INV (for TK interests, exchange rate of 1US$=JPY110.45 based on exchange contract on
July 26, 2018 is used for calculation, reflecting partial refund of investment for TK interests on December 10, 2018) are deemed asacquisition prices.
(Note 2) As to preferred equity securities in the TMK which holds Sheraton Grande Tokyo Bay Hotel and the TK interests which hold the twooverseas real estate properties, the hotels, which are the underlying real estate properties, are counted in the number of properties and are
categorized based on the use of each underlying real estate property.

Portfolio Composition (Based on acquisition prices (Note 3))

TOPICS

Implementation of unit buyback
INV repurchased its own investment units using cash on hand in the fiscal period ended December 2018 in order toimprove unitholder value
Total number of investment units repurchased
Total amount of investment units repurchased
Repurchase period
Repurchase fund81,341 units (Note 5)(1.4% of the total number of investment units issued andoutstanding)
JPY 3,999,980,400
From December 13, 2018 to December 18, 2018 (based on
execution date)Cash on handContributing to the increase of DPU (forecast for 2019)(Note 3) Figures are as of December 31, 2018. As to preferred equity securities in the TMK which holds Sheraton Grande Tokyo Bay Hotel and the TK
interests which hold the two overseas properties, the hotels, which are the underlying real estate properties, are counted in the number ofproperties; and investment amounts in the preferred equity securities and TK interests by INV (for TK interests, exchange rate of
1US$=JPY110.45 based on exchange contract on July 26, 2018 is used for calculation, reflecting partial refund of investment for TK interests on
December 10, 2018) are deemed as acquisition prices and are categorized based on the use and location of each underlying real estate property.
(Note 4) Each area is defined as follows.
Greater Tokyo: Tokyo, Kanagawa, Chiba and Saitama / Greater Tokyo (excluding Tokyo 23 wards): Tokyo (excluding Tokyo 23 wards),
Kanagawa, Chiba and Saitama / Kansai area: Osaka, Hyogo, Kyoto, Shiga, Wakayama and Nara / Chubu area: Aichi, Gifu, Mie, Shizuoka,
Nagano, Yamanashi, Niigata, Toyama, Ishikawa and Fukui(Note 5) All investment units repurchased were retired during the fiscal period ended December 2018.
(Note 6) In the forecast of distribution for the fiscal period ending June 2019 and the fiscal period ending December 2019 announced on February 21,
2019, the forecast figures (excluding other figures) are indicated using the number of investment units assuming that the above unit buyback was
not implemented.

Would you like to virtually experience
Westin Grand Cayman Seven Mile Beach
Resort & Spa?
The official website of Westin Grand Cayman Seven Mile Beach Resort & Spa offers an online VR (virtual
reality) tour. We introduce part of it here in our report.

Front page of the official website ofWestin Grand Cayman Seven Mile Beach
Resort & Spa

Click here!

https://www.westingrandcayman.com/

1

Entrance

Welcome! This spacious lobby will welcome you upon
your arrival. Enjoy a welcome cocktail watching thebeach through the window.

2

Pool deck

This is the largest freshwater pool on the Grand Cayman.
A hot tub, courtyard café on the poolside and pool bar are
all there for you to enjoy. A welcome reception is held
here and it is also the best spot to take photos of thebeautiful Cayman sunset.

3

Private beachWestin owns a private beach stretching for around 200 m
on Seven Mile Beach, which boasts its status as one of
the most popular resorts in the world. It provides guests
with various services to make their stay at the beach mostenjoyable.

Continue tothe next page

4

Guestrooms

They offer various types of luxurious guestrooms. Guests
can enjoy the relaxing private space while viewing thescenery of Seven Mile Beach.

5

Meeting room

A large meeting room that can accommodate a wide rangeof functions including weddings, company meetings andevents is available.

6

Spa

There are 13 treatment rooms andtwo saunas. With treatment for
both the mind and body, they
ensure the most satisfying service
for the guests.

Continue tothe next page

7

Restaurant

This upscale yet casual restaurant facing Seven Mile Beachoffers dishes from the Caribbean, the Mediterranean and
Asia.

8

Terrace

The terrace offering a wonderful view of Seven Mile Beachis located next to the restaurant. Furniture such as
comfortable chairs and tables and tropical flora have createda space with an open feeling.

1

Entrance2

Pool deck3

Private beach4

Guestrooms

5

Meeting room

6

Spa

7

Restaurant

8

Terracecxc

Unitholder Benefit Program
INV has introduced the unitholder benefit program to improve the satisfaction of its unitholders and expand
the unitholder base. Eligible unitholders can stay at Sheraton Grande Tokyo Bay Hotel and all MyStays
hotels at special discount rates.
*Detailed information is sent to eligible unitholders along with this report.

Overview of the Unitholder Benefit Program(1)Applicable Hotels
Eligible Unitholders

 Sheraton Grande Tokyo Bay Hotel All MyStays hotels(2)Unitholders who hold 10 or more Invincible units and whose names are recordedon Invincible’s Unitholders’ Registry as of the relevant record dates:

Record Date

The last day of every fiscal period (June 30 and December 31 of each year)

Program Details

Stay with unitholder special discount rates at the above applicable hotels

Hotel Reservation
Available Period (3)Reservation via designated website posting accommodation plans for theunitholder benefit program
From April 1 to September 30 (eligible unitholders as of December 31)
From October 1 to March 31 (eligible unitholders as of June 30)

Sheraton Grande Tokyo Bay Hotel

Fusaki Resort Village(Note 1)
(Note 2)
(Note 3)

Hotel Epinard Nasu

Hotel MyStays Premier Akasaka

The details of the unitholder benefit program described above are as planned by Invincible as of March 20, 2019, and the program
may be changed or abolished even after it is has been introduced.
Refers to all hotels under MyStays brand managed by MHM, and hotels shown on the MyStays Hotel Group’s official website(https://www.mystays.com/en-us/) will be applicable.
Available Period represents a period during which you can lodge by using the unitholder benefit program. To enjoy the unitholder
benefit program, you actually need to lodge during the availability period.

Asset Management Report
Overview of Asset Management
1

Trends in Investment Corporation’s Operating Results
27th

28th

29th

30th

31st

fiscal period

fiscal period

fiscal period

fiscal period

fiscal period

Jul. 1, 2016 toJan. 1, 2017 toJul. 1, 2017 toJan. 1, 2018 toJul. 1, 2018 to

Dec. 31, 2016

Jun. 30, 2017

Dec. 31, 2017

Jun. 30, 2018

Dec. 31, 2018

(Note 1) (JPY thousand)

9,511,466

9,260,917

12,647,270

13,104,841

14,451,005(Rental revenue – real estate)(JPY thousand)

9,511,466

9,260,917

11,403,236

11,122,481

13,604,224

Operating expenses(JPY thousand)

3,577,255

3,916,456

4,423,618

4,671,320

4,936,248(Property related expenses)(JPY thousand)

3,162,067

3,518,684

3,962,183

4,136,619

4,450,676

Operating income(JPY thousand)

5,934,211

5,344,461

8,223,652

8,433,520

9,514,756

Ordinary income(JPY thousand)

5,431,608

4,702,678

7,303,702

7,722,553

8,384,676

Net income(JPY thousand)

5,431,003

4,702,073

7,303,097

7,721,948

8,384,071

Total assets(a) (JPY thousand)(%)

277,361,874(2.4)

306,421,050
10.5

371,758,254
21.3

374,512,988
0.7

455,362,796
21.6(JPY thousand)

142,419,000

163,990,000

186,983,000

189,415,000

229,873,000(b) (JPY thousand)(%)

131,455,278
1.1

139,062,593
5.8

181,320,466
30.4

181,523,263
0.1

221,364,900
21.9

Unitholders’ capital(JPY thousand)

120,367,271

128,984,946

168,798,455

168,798,455

211,092,540

Total distributions(c) (JPY thousand)

5,429,192

4,880,081

7,496,535

6,854,248

9,537,291(Note 2) (%)

100.0

102.1

100.3

88.8

110.3

(d) (Units)

3,675,824

3,860,824

4,793,181

4,793,181

5,666,840(b) / (d) (JPY) (Note 3)

35,76236,01937,82937,87139,063

1,564
1,528
36

1,430
1,430
-

1,683
1,632
51

By Period

Reporting period

Operating revenue

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

Dividend
StatusDividend payout ratio
Number of investment units

Information per Unit

issued and outstanding
Net assets per unit
Distributions per unit(c) / (d) (JPY)(Distributions of earnings per unit)(JPY)(Distributions in excess of retained(JPY)

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

Return on equity(change over year)
Capital ratio(change from last period)
NOI(Net Operating Income)

1,477
1,477
-

1,264
1,243
21

(Note 4) (%)

1.9
3.8

1.6
3.2

2.2
4.3

2.1
4.2

2.0
4.0

(Note 4) (%)

4.2
8.2

3.5
7.0

4.6
9.0

4.3
8.6

4.2
8.3

(%)

47.4
1.6

45.4
(2.0)

48.8
3.4

48.5
(0.3)

48.6
0.1

(Note 4) (JPY thousand)

8,414,465

8,023,607

10,008,268

9,758,373

12,192,581(b) / (a) (Note 4) (%)(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.
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 December 31, 2018 / (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 December 31, 2018.

2

Overview of Asset Management for the Fiscal Period Ended December 2018(a)Main Trends of INV

INV was established in January 2002 in accordance with the Investment Trust and Investment Corporation Act (Act No.
198 of 1951, as amended; 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 was listed on the Real Estate Investment andTrust Securities Section of the Tokyo Stock Exchange (Ticker Code: 8963).
After the absorption-type merger with LCP Investment Corporation (“LCP”) was implemented on February 1, 2010 INV
issued new investment units through a third-party allotment on July 29, 2011 and refinanced its debt. Calliope Godo
Kaisha (“Calliope”), an affiliate of the Fortress Investment Group LLC (“FIG” and together with Calliope and otheraffiliates of FIG, collectively the “Fortress Group”) was the main allottee, and the sponsor changed to the Fortress Group.
FIG became a subsidiary of Softbank Group Corp. (“SoftBank Group”), after SoftBank Group acquired FIG effective on
December 27, 2017 (Note 1). Calliope, an affiliate of FIG, who owned 100% of the issued shares of Consonant
Investment Management Co., Ltd., the asset manager to which INV entrusts the management of its assets (the “AssetManager”), transferred 80.0% of issued shares of the Asset Manager to Fortress CIM Holdings L.P., a subsidiary of
SoftBank Group, and 20.0% to SoftBank Group on March 29, 2018, pursuant to the basic agreement which was enteredinto as of September 7, 2017. Although FIG is no longer an indirect parent company of the Asset Manager, FIG
continues to support INV as the sponsor.
Ever since the commencement of sponsorship from the Fortress Group (Note 2), INV has been focusing its efforts on
improving the profitability of its portfolio and establishing a revenue base in order to secure stable distributions, and has
strengthened the lender formation through new borrowings and the refinancing of existing bank borrowings, thereby
creating a financial base for external growth. With this platform as a base, in June 2014, the Asset Manager revised theInvestment Guidelines for INV, and positioned 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 ofsuch external growth efforts, INV's portfolio as at the end of the previous fiscal period ended June 2018 comprised of 126
properties (60 hotels (Note 3), 64 residential properties and two others) with a total acquisition price of JPY 363,831
million. The total acquisition price of the portfolio has significantly grown by 5.0 times, compared to May 22, 2014,
which is the date immediately prior to INV’s initial investment in hotels.
In the Fiscal Period ended December 31, 2018 (“Reporting Period”), INV implemented a global offering of new
investment units for the fifth consecutive year to acquire four domestic hotels including two hotels operated under the“Hotel MyStays Premier” brand, as well as TK (Japanese anonymous association (tokumei kumiai)) interest in two
overseas hotels as underlying assets for the first time ever in J-REIT history. As a result, INV's portfolio at the endof Reporting Period comprised of 132 properties (66 hotels (Note 3) (Note 4), 64 residential properties and two others)with a total acquisition price of JPY 448,362 million (Note 5).
The Asset Manager revised the Investment Guidelines as of July 17, 2018 to allow the acquisition of overseas real estate
assets as a new investment policy, and changed its investment policy regarding domestic hotels. Please refer to “(e)Amendment to the Investment Guidelines” for more details.
On July 17, 2018, INV amended and renewed the Memorandum of Understanding (the “MOU") entered into withaffiliates of Fortress Group with respect to preferential negotiating rights regarding the acquisition of hotels andresidential properties, which will continue to provide INV with considerable opportunities for external growth. As of
February 28, 2019, there are 19 hotels and eight residential properties subject to the preferential negotiating rights under
the MOU.

(Note 1)

US Eastern Standard Time

(Note 2)As of July 2011, Calliope owned 97.35% of issued shares of the Asset Manager and the investment ratio
reached 100% in October 2013. Calliope transferred 80.0% of issued shares to Fortress CIM Holdings L.P., asubsidiary of SoftBank Group and 20.0% to SoftBank Group on March 29, 2018. As of the date of thisdocument, SoftBank Group owns 100% of issued shares of the Asset Manager directly and indirectly.

(Note 3)The preferred equity interest is counted as a hotel property, based on the use of Sheraton Grande Tokyo Bay
Hotel, the underlying asset of the preferred equity interest. Such preferred equity interest issued by aspecial purpose company (tokutei mokuteki kaisha) refers to 178,458 units of preferred equity interest issued
by Kingdom Special Purpose Company (the “TMK”) (equivalent to 49.0% of the total issued andoutstanding preferred equity interest), which owns the trust beneficiary interest of the Sheraton GrandeTokyo Bay Hotel as an underlying asset. Moreover, INV’s investment amount of the preferred equity
interest is used as the acquisition price of the preferred equity interest, unless otherwise stated. The“underlying asset” refers to the real estate or the real estate related assets to be acquired or owned by a TK
operator of TK interest or a TMK relating to the preferred equity interest which INV owns, thus the realestate or the real estate related assets which will be the revenue source of INV. Hereinafter the same shallapply.

(Note 4)The TK interest is counted as two properties, based on the number of the underlying assets (two hotels) of
the TK interest. The TK interest is an interest in Seven Mile Resort Holdings Ltd. (the “Cayman SPC”), a
Cayman Islands special purpose company that holds leasehold interests in “Westin Grand Cayman Seven
Mile Beach Resort & SPA” and “Sunshine Suites Resort” as underlying assets. The TK interest is classified
as a hotel property, based on the use of the underlying assets of the TK interest, and INV’s investment
amount for the TK interest is used as the acquisition price of the TK interest, unless otherwise stated. The
acquisition price is rounded down to the nearest JPY million.

(Note 5)In investing in the Cayman SPC, INV initially funded USD 339,836 thousand (JPY 37,534 million), which
was an amount which was reasonably estimated to enable the Cayman SPC to acquire the underlying assets.
However, based on the closing settlement, the Cayman SPC did not need as much capital as anticipated.
Therefore, INV received a refund of the TK investment in the amount of USD 6.8 million on December 10,
2018 (Cayman Island local time) from the Cayman SPC. INV’s investment amount to the TK interest is
calculated based on the amount reflecting such partial refund (i.e., USD 333,036 thousand).

(b)

Operational Environment and Performance

For the December 2018 period, the portfolio NOI increased by 21.8% or JPY 2,184 million to JPY 12,192 million
compared to the same period in the previous year (the December 2017 period). The hotel portfolio NOI increased by
JPY 2,419 million, which is equivalent to the increase by 24.2% of the portfolio NOI, due to a combination of internaland external growth. While the residential portfolio is also benefitting from strong rental growth, NOI for the
residential portfolio declined by JPY 55 million, which is equivalent to the decrease by 0.6% of the portfolio NOI, due
to asset sales as part of INV’s asset recycling program. Other portfolio assets also experienced a decline in NOI of
JPY 179 million, which is equivalent to the decrease by 1.9% of the portfolio NOI, due to the sale of assets. The
portfolio continued to maintain a high average occupancy rate (Note 1) of 98.5% for the period.
Commentary on hotel and residential performance in the Reporting Period is described below.

The NOI (Note 2) for the Reporting Period of the 51 hotels (Note 3) owned by INV increased by 2.6% compared tothe same period in the previous year (figures exclude nine hotels with fixed-rent lease agreements of the 60 hotels
owned by INV at the beginning of the December 2018 Fiscal Period). The 51 hotels recorded an occupancy rate
(Note 4) of 90.7% (+0.1 points YoY), ADR (Note 5) of JPY 11,148 (+2.5% YoY), and RevPAR (Note 6) of JPY
10,106 (+2.6% YoY). Fixed rent revenues accounted for 49.8% (JPY 4,909 million) of total hotel revenue andvariable rent revenues accounted for 50.2% (JPY 4,953 million) of total hotel revenue (figures based on the 63
domestic owned hotels as of the end of the December 2018 Fiscal Period, and excludes Sheraton Grande Tokyo Bay
Hotel, the underlying asset of the preferred equity interest of the TMK owned by INV).
Inbound visitors reached a record high of 31.19 million (+8.7% YoY) in 2018, while government targets continued
growth of 40 million visitors in 2020 and 60 million visitors in 2030. Japan will host the Rugby World Cup in 2019and Tokyo Olympics Games in 2020, and these world-class events are anticipated to further increase attention to
Japan and more inbound tourists to Japan.
The NOI (Note 7) of the 64 residential properties (Note 8) for the Reporting Period increased by 5.0% compared tothe same period in the previous year, and the average occupancy rate achieved 95.4%, an increase of 0.6 points
compared to the same period in the previous year.
Trends for rent at city-center residential properties with small-type rooms maintained a moderate increase. Due tothe positive circumstances in the macro environment, INV continues to focus on its rent increase program for new
leases and renewals as well as initiatives to reduce residential leasing costs based on a detailed market analysis of each
property and unit.
In the Reporting Period, INV realized a rent increase for 53.4% (based on the number of contracts) of the newresidential lease contracts for an average rent increase of 2.9% compared to the previous rent across all new leases(Note 9).
INV achieved a rent increase for 52.8% (based on the number of contracts) of contract renewals for an average rent
increase of 4.6% compared to the previous rent across all renewal leases (Note 9), while maintaining a high contract
renewal rate (Note 10) of 79.1%. Combined, new leases and renewal leases were signed at 3.8% higher than theprevious leases (Note 9).
Specifically, at Royal Parks Tower Minami-Senju, INV’s flagship residential property, INV achieved strong resultswith rent increases for 90.4% (based on the number of contracts) of the new lease contracts and 94.9% (based on thenumber of contracts) of contract renewals, with an average rent increase of 9.8% compared to the previous rent acrossall new leases and renewal leases (Note 9).
The total appraisal value of 129 properties was JPY 462,580 million (3 out of the 132 properties owned by INV at theend of the Reporting Period are excluded from the appraisal calculation: Sheraton Grande Tokyo Bay Hotel (preferred
equity), Westin Grand Cayman Seven Mile Beach Resort & Spa and Sunshine Suites Resort (TK interest) for whichappraisal values of such securities is not applicable). The portfolio has an unrealized gain of JPY 79,930 million(Note 11) and an unrealized gain ratio of 20.9% (Note 11). The total appraisal value of 125 properties which were
owned throughout the Reporting Period increased by 0.5% from JPY 411,542 million at the end of June 2018 period
to JPY 413,720 million at the end of the Reporting Period.
Key Performance Indicators of 51 Hotel Properties (Note 2)

Occupancy Rate (Note 4)
ADR (JPY) (Note 5)
RevPAR (JPY) (Note 6)

December 2018 fiscal
period90.7%
11,148
10,106Year-on-year change+0.1pt+2.5%+2.6%

GOP (JPY million) (Note 12)
Key Performance Indicators of 64 Residential Properties (Note 7)
Occupancy Rate (Note 1)
Average Rent per Tsubo per Month(JPY) (Note 13)
NOI (JPY million) (Note 8)

9,707

+2.1%

December 2018 fiscal period
95.4%

Year-on-year change+0.6pt

9,832

+2.2%

2,566

+5.0%

(Note 1)

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

(Note 2)Of the 60 hotels held as of the beginning of the December 2018 Fiscal Period (including the Sheraton
Grande Tokyo Bay Hotel, the underlying asset of the preferred equity interest of TMK owned by INV), thefollowing 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 after July 2017 by INV had been owned since July 1, 2017. The actual results before
acquisition by INV are based on the data provided by the sellers.

(Note 3) NOI includes a simulated amount of dividend income from Kingdom Special Purpose Company that owns
Sheraton Grande Tokyo Bay Hotel as an underlying asset. The fiscal periods of the TMK are semi-annual
periods from April 1 to September 30 and from October 1 to March 31 every year, and INV will receive thedividend within three months from the end of each semi-annual fiscal period of the TMK. Since INV does
not receive a dividend from the TMK on a monthly basis, the amount of dividend INV receives from the
TMK for each month is a simulated figure, which is calculated by deducting (i) simulated expenses such as
operating expense of the TMK and the interest of debt (calculated by dividing the budget of the TMK for the
fiscal period that includes the relevant month by the number of months in such fiscal period) from (ii) NOI
based on the performance of Sheraton Grande Tokyo Bay Hotel in the month which is three months before
the target month for this performance disclosure and multiplied by INV’s ownership ratio of the preferred
equity interest in the TMK (49.0%). However, NOI excludes a simulated amount of dividend income from
TK interest the underlying assets of which are Westin Grand Cayman Seven Mile Beach Resort & Spa andSunshine Suites Resort, which were acquired by INV in September 2018.
(Note 4) “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 5)“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 6)

“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 thesame shall apply.

(Note 7) Based on the 64 residential properties owned as of the beginning of December 2018 Fiscal Period. In
addition, the figures for the properties acquired after July 2017 are calculated on the assumption INV had
acquired those properties on July 1, 2017, using the actual figures provided by the sellers of such properties
for the period before the acquisition, for the purpose of comparison with previous year.
(Note 8)For the comparison of NOI, insurance income and related repair expenses, which are temporary items, aswell as expenses required to detach trust beneficiary interest from an integrated trust account are excluded.

(Note 9) 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 10) 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 11) 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 12) “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. Moreover, GOP for
the Sheraton Grande Tokyo Bay Hotel has been multiplied by 49%, or INV’s ownership ratio of thepreferred equity interest. Hereinafter the same shall apply.
(Note 13) “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 (tsubo) at the end of each month during therelevant period.

(c)Overview of Fund Raising
As a result of the measures described below, INV’s interest-bearing debt outstanding balance was JPY 229,873
million and the Interest-Bearing Debt ratio (Note 1) and LTV (appraisal value basis) (Note 2) were 50.2% and44.2% respectively, as of the end of the Reporting Period, with an average interest rate (Note 3) of 0.53%.
(Note 1) Interest-Bearing Debt ratio uses the calculation formula below:
Interest-Bearing Debt ratio = total outstanding interest (excluding short-term consumption tax loan)-bearing debt/total assets x 100(Note 2) LTV (appraisal value basis) uses the calculation formula below:
LTV = total outstanding interest (excluding short-term consumption tax loan) -bearing debt/total
appraisal value (*) x 100(*) Since appraisal value for Sheraton Grande Tokyo Bay Hotel (preferred equity interest) is notavailable, the acquisition price of the preferred equity interest (JPY 17,845 million) is deemed asappraisal value of Sheraton Grande Tokyo Bay Hotel (preferred equity interest). Also, for the
TK interest with two overseas real estate as underlying assets, the acquisition price (which is the
INV’s TK investment amount after a partial refund: INV originally funded an amount which wasreasonably estimated to enable the Cayman SPC to acquire the underlying assets, however, basedon the closing settlement, the Cayman SPC did not need as much capital as anticipated, therefore
INV received a refund of the TK investment from the Cayman SPC) of such TK interest, USD

333,036 thousand (JPY 36,783 million, converted into JPY amount via exchange rate of USD
1=JPY 110.45 based on the foreign exchange forward contract executed on July 26, 2018 andimplemented on September 26, 2018), is deemed as the appraisal value and included.
(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.

(i) Equity Financing
INV implemented a global public offering which closed on August 1, 2018 (the number of new investment units
issued: 909,524; total issue value: JPY 40,280 million) and a third party allotment which closed on August 21,
2018 (the number of new investment units issued: 45,476; total issue value: JPY 2,013 million) in order to procure
part of the funds for the acquisition of four domestic hotels and the TK interest with two overseas hotels as
underlying assets described in “(d) Overview of Acquisition of Assets”.
(ii) Debt Financinga.

Borrowing of Funds
INV borrowed New Syndicate Loan (I) on July 17, 2018 (total amount borrowed: JPY 28,979 million; interest
rate: variable interest rate of 1-month JPY TIBOR plus 0.50%, 0.40% and 0.30% for durations of five, four andthree years), which was arranged by Mizuho Bank, Ltd. as the arranger in order to repay New Syndicate Loan
(E) in the amount of JPY 28,979 million which was due on July 17, 2018.
In tandem with the public offering as described in (i) above, INV borrowed New Syndicate Loan (J) on August
2, 2018 and September 26, 2018 (total amount borrowed: JPY 40,458 million; interest rate: variable interest rateof 1-month JPY TIBOR plus 0.50%, 0.40%, 0.30%, and 0.20% for durations of five, four and three years andone year), which was arranged by Mizuho Bank, Ltd. as the arranger in order to pay a portion of the acquisition
price and related expenses for the acquisition of the four domestic hotels and the TK interest with two overseas
hotels as underlying assets described in “(d) Overview of Acquisition of Assets”.

b.

Issuance of Investment Corporation Bonds
INV issued its Third Series of investment corporation bonds for the purpose of raising funds for repaying
existing borrowings, as these bonds helped to diversify the financing sources for INV, while at the same time
lowering its financing costs and lengthening the average maturity period of its debt.

Bond Series

Issue Date

Issue AmountInterest Rate

Redemption

Security/(JPY million)(annual rate)

Date

Guaranty

2,000

0.550%

October 12,
2023

Unsecured /Unguaranteed
Rating: A (JCR)

Third Series Unsecured Investment
Corporation Bonds(with pari passu conditions among

October 12,
2018

specified corporate bonds)(d)Overview of Acquisition of Assets(i) Acquisition of four domestic hotel properties

The Asset Manager decided on the acquisition of four domestic hotels as follows on July 17, 2018, andacquisition of the assets has been closed on August 2, 2018.

Property
Number

Use

D60
D61
Hotel

D62
D63

(Note 1)

Property Name

Location

Hotel MyStays Premier
Akasaka
Hotel MyStays Premier
Sapporo Park

Minato-ku,
Tokyo
Sapporo,Hokkaido

Hotel MyStays Ueno
East

Taito-ku,Tokyo

Hotel MyStays Midosuji
Osaka, Osaka
Honmachi
Total

AcquisitionPrice(million yen)
(Note 1)

Appraisal
Value(million yen)
(Note 2)

20,691

20,90016,731

16,900

5,286

5,340

5,039

5,090

47,747

48,230

SellerCategory ofSpecified Assets

Aki Tokutei
Mokuteki Kaisha
Raetia Tokutei
Mokuteki Kaisha
Trust Beneficial
HL Investments 2Interest
Tokutei Mokuteki
KaishaDogo Tokutei
Mokuteki Kaisha-

Acquisition Prices do not include adjustments for property taxes, city planning taxes, or national or local consumption taxes;
the same shall apply hereinafter.

(Note 2)

Appraisal Value is based on appraisal value stated in the appraisal report by the Japan Real Estate Institute or The Tanizawa
Sōgō Appraisal Co., Ltd. on the valuation date of June 1, 2018.

(ii) Acquisition of TK Interest with two Overseas Real Estate as Underlying Assets
The Asset Manager decided on acquisition of TK interest as follows on July 17, 2018 and acquisition of asset has
been closed on September 28, 2018 (Cayman Island local time; September 29, 2018 in Japan local time).
Asset acquired

Acquisition date

TK interest in a Cayman Islands special purpose company that holds 99-year
Leasehold Interests (Note 1) (with a lease payment of USD 1 or KYD 1 per year) inoverseas real estate as underlying assets (the “Cayman Hotel TK Interest”)
USD 333,036 thousand (JPY 36,783 million) (Note 2) (Note 3) for 100.0% of the
Cayman Hotel TK Interest
Westin Grand Cayman Seven Mile Beach Resort & Spa and Sunshine Suites Resort(each an “Underlying Asset”, and collectively the “Underlying Assets”, or the “TwoOverseas Hotel Assets”)
September 28, 2018 (Cayman Island local time)

TK operator

Seven Mile Resort Holdings Ltd.

Acquisition price
Name of underlying asset(Note 1)

(Note 2)

(Note 3)Rights equivalent to long-term real estate leasehold rights in Japan (hereinafter referred to collectively as
the “Leasehold”). The TK operator also acquired some movables including FF&E pertaining to hotel
operations. “FF&E” is an abbreviation for furniture, fixtures and equipment, which are the assets
necessary for hotel operation, such as furniture, fixtures, equipment and kitchen equipment.
The investment amount is fixed by the foreign exchange forward contract executed on July 26, 2018 in
Japanese Yen denomination which were calculated using an exchange rate of USD 1 = JPY 110.45.
Hereinafter the same.
The acquisition price is INV’s investment amount for the Cayman Hotel TK Interest. In investing in the
Cayman SPC, INV initially funded USD 339,836 thousand (JPY 37,534 million), which is an amount which
was reasonably estimated to enable the Cayman SPC to acquire the underlying assets. However, based on
the closing settlement, the Cayman SPC did not need as much capital as anticipated. Therefore INV
received a refund of the TK investment in the amount of USD 6.8 million on December 10, 2018 (Cayman
Island local time) from the Cayman SPC. INV’s investment amount to the TK interest is calculated based

(Note 4)(e)on the amount reflecting such partial refund. The acquisition price is rounded down to the nearest JPY
million.
Seven Mile Resort Management Ltd. (the “Hotel Operating SPC”), a special purpose company establishedseparately from the Cayman SPC under the laws of the Cayman Islands, has been entrusted with all aspectsof the hotel operations pursuant to a hotel management agreement with the Cayman SPC for each of theWestin Grand Cayman Seven Mile Beach Resort & Spa and the Sunshine Resort (collectively, the “HotelManagement Agreement”). Each of the common shares issued by the Cayman SPC and the Hotel
Operating SPC is 100% owned by a general incorporated association (ippan shadan hojin) establishedaccording to the Act on General Incorporated Associations and General Incorporated Foundations in Japan.
The ippan shadan hojin by its nature will not receive any cash distributions from the hotel operations. The
outline of the Hotel Management Agreement concluded between the Hotel Operating SPC and the Cayman
SPC is as follows:
Hotel Management Assignor

Seven Mile Resort Holdings Ltd.

Hotel Management Trustee

Seven Mile Resort Management Ltd.

Term of Agreement

The agreement term shall last ten years from the Hotel management
assignor’s acquisition of the Two Overseas Hotel Assets and renew
automatically every five year unless the hotel management assignor andthe hotel management trustee mutually agree to terminate the agreement
75 days prior to the end of the term.

Remuneration

Equivalent to actual costs

Other Special Matters

Both the hotel management assignor and the hotel management trustee
may cancel the Hotel Management Agreement for any reason by
60-days’ prior written notice.

Amendment to the Investment Guidelines

The Asset Manager revised the Investment Guidelines as of July 17, 2018. Such revision is intended to establish an
investment policy and asset management structure regarding investments in overseas assets, and also to change theinvestment policy regarding domestic hotels to focus on (i) Limited service hotels, which feature relatively higher profit
margins and potential for revenue growth backed by increasing demand for accommodations, and (ii) Full-service andResort hotels, which have a variety of revenue sources, including rooms, food and beverage and banquet facilities, thatare expected to achieve stable growth in overall hotel revenues. Please refer to the latest securities report for the fiscal
period ended June 2018 (from January 1, 2018 to June 30, 2018) (available in Japanese only) filed on September 25,
2018 for details of the revised investment policy.
(f)Overview of Results of Operations and Distributions

As a result of the operations mentioned above, operating revenues for the Reporting Period increased by JPY 1,346
million from the previous period (+10.3%) to JPY 14,451 million, net income increased by JPY 662 million (+8.6%)
to JPY 8,384 million and unappropriated retained earnings including the retained earnings carried forward (JPY 756
million) reached JPY 9,140 million.

INV believes that maintaining the stability of cash distributions over the medium term is one of the most importantfactors in determining the amount of distribution for a given fiscal period. With respect to the Reporting Period,
due to i) one-off expenses in connection with the public offering, the asset acquisition and the borrowings, ii)
the revenues of the four domestic hotels acquired during the December 2018 fiscal period will contribute for
only a part of the period, and iii) distributions from the TK interest will start from the fiscal period ending June
2019, earnings per unit decreased. Therefore, from the perspective of maintaining stable distributions, INV intends
to make distributions in excess of profits in the amount of JPY 204 million (JPY 36 per unit) within the scope of the
expected shortfall between actual earnings per unit and the simulated earnings per unit after the transactions includingi) the asset acquisitions and dispositions in the fiscal period ended June 2018, ii) asset acquisitions completed or to becompleted, in the fiscal period ended December 2018, and iii) refinancing, issuance of new investment units by public
offering and third-party allotment, and new borrowing. Further, INV intends to make distribution in excess of profits
in the amount of JPY 85 million (JPY 15 per unit) in order to cope with the discrepancy between tax and accounting
treatment on depreciation. As a result, distribution per unit (including excess profit distribution) is JPY 1,683.
Moreover, in the Reporting Period, deferred gain on hedging of JPY 108 million has arisen. Deferred gain on
hedging is included in profit as defined in Article 136, Paragraph 1 of the Investment Trust and Investment
Corporation Act, and INV has decided to distribute almost all of the profit as defined in Article 136, Paragraph 1 ofthe Investment Trust and Investment Corporation Act. As a result, retained deficit carried forward of JPY 107
million is recorded.
Furthermore, INV conducted a unit buyback in December in order to increase unitholder value after taking acomprehensive review of performance indicators, including NAV per investment unit and dividend yield, concludingthat the investment units were undervalued. INV entered into a discretionary transaction agreement with asecurities company to acquire units from the market (Tokyo Stock Exchange) for an acquisition period of December
13, 2018 through February 28, 2019. All the acquired own investment units were acquired by December 18, 2018
and were retired on December 28, 2018. The total number of investment units acquired and retired in theReporting Period was 81,341 units (representing 1.4% of the total number of issued and outstanding units before
such acquisition and retirement of own investment units), and the amount of investment units acquired was JPY
3,999 million.

3

Changes in Total Number of Investment Units Issued and Outstanding

Changes in the number of investment units issued and outstanding and unitholders’ capital for the past 10
years up to the end of the Reporting Period are as follows.
Total number of investment units
issued and outstanding (units)

Unitholders’ capital (JPY)

DateType of issue

February 1, 2010

Unit split

215,596

269,495-

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

Merger367,200

636,695-

19,134,417,100(Note 2)

711,597

1,348,292

6,999,979,689

26,134,396,789(Note 3)

224,887

1,573,179

2,999,992,580

29,134,389,369(Note 4)

July 29, 2011
December 20, 2013

Third-party
allotment
Third-party
allotment

Increase

Total

Increase

Total

Reference

July 16, 2014

Public offering

1,040,000

2,613,179

22,747,920,000

51,882,309,369(Note 5)

August 13, 2014

Third-party
allotment

55,5072,668,686

1,214,104,611

53,096,413,980(Note 6)

July 15, 2015

Public offering

500,000

3,168,686

27,970,500,000

81,066,913,980(Note 7)

August 12, 2015

Third-party
allotment

25,0003,193,686

1,398,525,000

82,465,438,980(Note 8)March 30, 2016

Public offering

459,5123,653,198

36,123,157,344

118,588,596,324(Note 9)22,626

3,675,824

1,778,675,112

120,367,271,436(Note 10)-

3,675,824

224,225,264

120,591,496,700(Note 11)

April 27, 2016

February 22, 2017

Third-party
allotment
Reversal of
allowance fortemporarydifferences
adjustment

March 13, 2017

Public offering

185,000

3,860,824

8,393,450,000

128,984,946,700(Note 12)October 12, 2017

Public offering

887,959

4,748,783

37,917,625,218

166,902,571,918(Note 13)44,3984,793,181

1,895,883,396

168,798,455,314(Note 14)909,524

5,702,705

40,280,089,388

209,078,544,702(Note 15)45,476

5,748,181

2,013,995,612

211,092,540,314(Note 16)

(81,341)

5,666,840-

211,092,540,314(Note 17)

November 1, 2017
August 1, 2018
August 21, 2018
December 28, 2018

Third-party
allotment
Public offering
Third-party
allotment
Retirement(Note 1)An investment unit split of five units per one unit was conducted.

(Note 2)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 3)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 4)

New investment units were issued in a third-party allotment at a price of JPY 13,340 per unit to makerepayment of existing loan, etc.

(Note 5)

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 6)

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 7)

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 8)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 9)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 10) 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 specified assets.
(Note 11) INV decided at the Board of Directors' Meeting held on February 22, 2017, the reversal of allowance fortemporary difference adjustments for incorporation into unitholders' capital.
(Note 12) 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.
(Note 13) New investment units were issued in a public offering at a price of JPY 44,118 per unit (JPY 42,702 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 14) New investment units were issued in a third party allotment at a price of JPY 42,702 per unit for the purposeof allocation to cash reserves to be used as part of the funds for future acquisition of specified assets.
(Note 15) New investment units were issued in a public offering at a price of JPY 45,776 per unit (JPY 44,287 after
deducting the underwriters’ discount) to raise a part of the funds for the acquisition of new properties.
(Note 16) New investment units were issued in a third-party allotment at a price of JPY 44,287 per unit for the purposeof raising a part of the funds for the acquisition of new properties.
(Note 17) INV acquired own investment units from December 13, 2018 to December 18, 2018 (on a trade date basis)through the market purchase at Tokyo Stock Exchange based on a discretionary transaction contract with asecurities company.
INV resolved the retirement of all the acquired own investment units at the Board of Directors' Meeting held
on December 25, 2018 and the acquired own investment units were retired on December 28, 2018.
The acquisition of own investment units was conducted using capital surplus, and thus there is no change tounitholders’ capital.

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
HighestLowest27th fiscal
periodDecember
2016
70,30049,60028th fiscal
periodJune
201754,80041,50029th fiscal
periodDecember
2017
50,20044,45030th fiscal
periodJune
201853,00046,650(Unit: JPY)
31st fiscal
periodDecember
2018
51,00044,800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 85 million (JPY 15 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 204 million (JPY 36 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 1,683 per unit.
PeriodCalculated Period
Unappropriated retained
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 of investment(JPY thousand)(Refund of investment per
unit)
(JPY)
Total distribution from theallowance for temporary
differences adjustment outof total refund ofinvestment (JPY thousand)(Distribution from theallowance for temporary
differences adjustment perunit out of refund ofinvestment per unit) (JPY)
Total distribution fromunitholders’ equity under
the tax laws out of the total
refund of investment(JPY thousand)27th fiscal
periodJul. 1, 2016
to Dec. 31,
2016

28th fiscal
periodJan. 1, 2017
to Jun. 30,
201729th fiscal
periodJul. 1, 2017
to Dec. 31,
2017

30th fiscal
periodJan. 1, 2018
to Jun. 30,
2018

31st fiscal
periodJul. 1, 2018
to Dec. 31,
20185,659,831

4,708,487

7,212,580

7,610,548

9,140,372

6,414

4,880,081-111,399

756,300

5,429,192-90,516

7,496,535

6,854,248-107,910

9,537,291(1,477)(1,264)(1,564)(1,430)(1,683)5,429,192

4,799,004

7,323,980

6,854,248

9,248,282(1,477)(1,243)(1,528)(1,430)(1,632)-

81,077

172,554-

289,008

(-)

(21)

(36)

(-)

(51)

-

46,329--85,002

(-)

(12)

(-)

(-)

(15)

-

34,747

172,554-204,006

Period
Calculated Period
Distribution fromunitholders’ equity under
the tax laws out of refundof investment per unit
(JPY)

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

28th fiscal
periodJan. 1, 2017
to Jun. 30,
201729th fiscal
periodJul. 1, 2017
to Dec. 31,
2017

30th fiscal
periodJan. 1, 2018
to Jun. 30,
2018

31st fiscal
periodJul. 1, 2018
to Dec. 31,
2018

(-)

(9)

(36)

(-)

(36)

5

Future operational policy and issues to be addressed
Outlook for the Fiscal Periods Ending June 30, 2019 and December 31, 2019
The DPU for the June 2019 fiscal period and December 2019 fiscal period are forecast to be JPY 1,582 (+10.6%
YoY) and JPY 1,676 (-0.4% YoY). The full year DPU for calendar year 2019 is forecast to be JPY 3,258 (+4.7%
YoY), providing steady growth.
aFuture operational policy and issues to be addressed
Since July 2011, INV has enhanced unitholder value by significantly increasing DPU and financial stability with theFortress Group as its sponsor. Since Fortress Group joined under the umbrella of SoftBank Group in December
2017 and SoftBank Group owns 100% of issued shares of the Asset Manager directly and indirectly as of March 29,
2018, in addition to continued access to Fortress’s global real estate expertise, INV will seek to leverage theresources that are expected to become available through SoftBank Group. SoftBank Group has market-leading
expertise in technology fields such as digital marketing for both mobile and desktop, online payment systems, searchengine optimization, AI and robotics. INV believes that deployment of technology into INV’s real estate assets,
especially its hotels, will enhance the ongoing initiatives to improve its digital marketing, minimize labor costs andincrease customer engagement. For example, INV plans to pursue opportunities to better manage the increased
number of foreign visitors and their related online research, bookings and payments, improve the process in setting
hotel rates and manage overbooking through the use of sophisticated AI algorithms, and reduce labor costs while
enhancing customer service through the use of robotics.
In addition to pursuing synergies with SoftBank Group, going forward, INV will continue to implement various
strategies to maintain further growth and financial stability, including the following measures.

Further external growth utilizing sponsor supportProperty acquisition from third parties with the aim of expanding the AUM

Asset recycling and property acquisitions using the proceeds from sales



Further internal growth at hotel and residential properties

Diversification of funding sources and lengthening the average maturity period of its
interest-bearing debt through borrowings and the issuance of investment corporation bonds

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, wherecontinued growth in portfolio revenues is anticipated, and residential properties especially where rental growth
can be achieved. Rent revenue from residential assets and other assets as well as the fixed rent portion fromhotels will also contribute to more stable revenue, which was 63.5% of total revenue (Note 1). This acquisition
strategy will enable INV to build a portfolio with a good balance between growth and stability.
In regards to hotels, INV will take into consideration the trends in foreign travelers visiting Japan, demands ofbusiness and leisure customers in nearby areas, and leasing contract types when making investment decisions,with the aim of acquiring properties where growth and stability of GOP and rental revenue are forecasted toincrease.
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-type rooms
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

Properties acquired

Total acquisition price

September 201224 residential properties

JPY 14,043 million

May 2014
July 2014

Two hotels
18 hotels

JPY 5,435 million
JPY 39,938 million

February 2015

Two hotels
11 hotels andthree residential properties

JPY 4,911 million

July 2015
August 2015

JPY 35,258 million

June 2016

One hotel
Five hotels andone residential property
Four hotels andone residential property
Two hotels

March 2017
May 2017

Two residential properties
One hotel

JPY 24,562 million
JPY 8,000 million

October 2017
February 2018

Five hotels (Note 2)
Four hotels

JPY 57,444 million (Note 2)
JPY 12,425 million

June 2018
August 2018

Two hotels
Four hotels

JPY 7,325 million
JPY 47,747 million

September 2018

Two hotels (Note 3)
94 properties(of which 63 are hotels and 31 areresidential properties)

JPY 36,783 million (Note 3)
JPY 391,745 million(of which hotels: JPY 340,107 million;
residential: JPY 51,638 million)

January 2016
March 2016

Total

JPY 5,069 million
JPY 10,207 million
JPY 66,697 million
JPY 15,900 million

The Fortress Group manages five dedicated Japanese real estate funds, including the Fortress Japan Opportunity
Funds I, II, III and IV. The Fortress Group’s committed equity is over JPY 300 billion and the number ofproperties that the Fortress Group has invested in exceeds 3,500. In order to ensure future growth options forthe portfolio, INV entered into an updated MOU with affiliates of the Fortress Group that provides preferential
negotiation rights with respect to the acquisition of 19 hotels and eight residential properties (as of February 28,
2019; see the table below) (Note 4). In addition, by utilizing the property transaction information available
through the Fortress Group and the Asset Manager’s own network, INV will continuously consider andimplement the acquisitions of properties from third parties that will contribute to stability and growth in revenue
and cash flow and an increase in DPU.

No.

Asset name

Asset type (Note 5)

Location

No. of rooms

1

Rihga Royal Hotel Kyoto

Full Service Hotel

Kyoto, Kyoto

489

2

Hotel MyStays Premier Narita

Full Service Hotel

Narita, Chiba

711

3

Fusaki Beach Resort Hotel & Villas

Resort Service Hotel

Ishigaki, Okinawa

188

4

Art Hotel Asahikawa

Full Service Hotel

Asahikawa, Hokkaido

265

5

Hotel MyStays Kanazawa Castle

Limited Service Hotel

Kanazawa, Ishikawa

206

6

Hotel MyStays Matsuyama

Full Service Hotel

Matsuyama, Ehime

162

7

Hotel MyStays Sapporo Nakajima Park

Limited Service Hotel

Sapporo, Hokkaido

868

Flexstay Inn Sakuragicho

Limited Service Hotel

Yokohama, Kanagawa

70

9

MyCUBE
Kuramae

Limited Service Hotel

Taito-ku, Tokyo

161

Resort HotelFujiyoshida, Yamanashi

159

11 Hotel Nord Otaru

Limited Service Hotel

Otaru, Hokkaido

98

12 Hotel Sonia Otaru

Limited Service Hotel

Otaru, Hokkaido

149

13 Art Hotel Niigata Station

Full Service Hotel

Niigata, Niigata

304

14 Art Hotel Ishigakijima

Resort Hotel

Ishigaki, Okinawa

245

by

MYSTAYS

Asakusa

10 Hotel MyStays Fuji Onsen Resort

15 Hotel MyStays Shinsaibashi East

Limited Service Hotel

Osaka, Osaka85

16 Hotel MyStays Sapporo Aspen

Limited Service Hotel

Sapporo, Hokkaido

305

Limited Service Hotel

Sapporo, Hokkaido

80

Limited Service Hotel

Sapporo, Hokkaido

104

Limited Service Hotel

Nayoro, Hokkaido

17

Hotel MyStays Sapporo Nakajima ParkAnnex

18 Hotel MyStays Sapporo Susukino
19 Hotel MyStays Nayoro

Hotel subtotal

70
3,937

20 Gran Charm Hiroo

Residential/Small TypeShibuya-ku, Tokyo121

21 Gran Charm Kichijoji

Residential/Small TypeMusashino, Tokyo28

22 Green Patio Noda

Residential/Small Type

Noda, Chiba

240

23 Dainichi F‐45

Residential/Small Type

Urayasu, Chiba

54

24 Gran Charm Urayasu

Residential/Small Type

Urayasu, Chiba

54

25 Gran Charm Urayasu 5

Residential/Small Type

Urayasu, Chiba

54

26 Gran Charm Minami Gyotoku I

Residential/Small Type

Ichikawa, Chiba

52

27 Gran Charm Minami Gyotoku II

Residential/Small Type

Ichikawa, Chiba

48

Residential property subtotal

651

Total

4,588

(Note 1)The percentage indicates composition of rent revenue based on the actual results for the fiscal period ended
December 2018. Sheraton Grande Tokyo Bay Hotel (preferred equity interest) is excluded.

(Note 2)

Sheraton Grande Tokyo Bay Hotel acquired by a special purpose company, of which INV owns thepreferred equity interest, is counted as one property and the INV’s investment amount to the preferred
equity interest is counted as the acquisition price of the preferred equity interest.

(Note 3)

The Westin Grand Cayman Seven Mile Beach Resort & Spa and Sunshine Suites Resort acquired by the
Cayman SPC, of which INV owns the TK interest, are counted as two properties and the INV’s investment
amount to the TK interest is used as the acquisition price of the TK interest. In investing in the Cayman
SPC, INV initially funded USD 339,836 thousand (JPY 37,534 million), which was an amount which wasreasonably estimated to enable the Cayman SPC to acquire the underlying assets. However, based on theclosing settlement, the Cayman SPC did not need as much capital as anticipated. Therefore INV receiveda refund of the TK investment in the amount of USD 6.8 million from the Cayman SPC. INV’s
investment amount to the TK interest is after such partial refund (USD 333,036 thousand). USD isconverted into JPY amount via exchange rate of USD 1=JPY 110.45 based on the foreign exchange forward
executed on July 26, 2018 and implemented on September 26, 2018.

(Note 4)

The term of validity of the MOU is from July 17, 2018, the date of execution of the updated MOU, to July16, 2019. However, regarding the 28 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.
Nineteen hotels and nine residential properties were subject to preferential negotiation rights as of theamendment date of the MOU. However, INV has waived the preferential negotiation right for one
residential property on February 26, 2019.

(Note 5)

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 ofstay, 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.

Property Sales
While INV places priority on increasing unitholders’ value through external growth by taking into account theincreased 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 and competitiveness of each property,
as appropriate and previously detailed in the Asset Recycling Program.
(ii)

Strategy for internal growth(Hotels)
Of the 64 domestic hotels (Note 1) owned by INV as of the end of the Reporting Period, 55 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 hotelrevenue 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 52 hotels, MHM and subsidiaries of MHM
have implemented sophisticated revenue management initiatives seeking to maximize revenue. INV willcontinue to accurately ascertain and analyze operating conditions of its hotels, the conditions of nearby hotels,
market trends and other factors through operation meetings and other contact with hotel operators and will focus
on operations that maximize rent income.
For hotels, renovation of rooms and replacement of fixtures and fittings are indispensable to maintainand increase revenues and operate stably in a planned manner.

(Residential properties and others)
INV will continue to strengthen its collaborative ties with PM and brokers to further boost occupancy rates andearning capabilities of its properties. With respect to INV’s residential properties, while keeping in mind thehigh-season in the residential rental market that occurs during the June 2019 period, INV will focus on
increasing the occupancy rates and rents for both new lease contracts and lease renewals for all of its properties
as well as formulating net leasing cost reduction policies in order to continue maximizing profits.
Further, the implementation of appropriate maintenance and repair plans is of the utmost importance inmaintaining and enhancing the competitiveness and market value of the properties as well as ensuring hightenant satisfaction.
Therefore, INV will continue to monitor current strategic plans with flexible
implementation as it sees fit.
(Note 1)

Including Sheraton Grande Tokyo Bay Hotel (the preferred equity interest).

(iii) Financial strategy
In the Reporting Period, INV issued the investment corporation bonds for the purpose of raising funds fromrepaying existing borrowings, as described in “2 Overview of Asset Management for the Fiscal Period Ended
December 2018 (c) Overview of Fund Raising (ii) Debt Financing b. Issuance of Investment Corporation Bonds”
and lowered its financing costs while at the same time lengthened the average maturity period of its debt anddiversified the maturity date of its debt and funding sources. Going forward, INV seeks to maximize
unitholders’ value by way of further reduction of borrowing costs, diversification of loan maturity dates andfinancing measures, 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 accountant) 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 eachmeeting 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 and otherrelevant matters as well as overall management of transactions with sponsor related parties. Moreover, it has in placea compliance committee which, chaired by such compliance officer, is in charge of deliberating on compliance withlaws, regulations and other relevant matters as well as transactions with sponsor related parties. Compliancecommittee 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 relatedparties 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.

6

Significant Subsequent Events
Not applicable. Reference information is stated below.

(Reference Information)(a)Overview of Fund Raising
INV has decided to implement new borrowings (Term Loan (I)) on January 18, 2019, in order to repay Term Loan (B) in
the amount of JPY 4,250 million which was due on January 22, 2019.
Overview of Term Loan (I)LenderBorrowing
Date

Outstanding
Amount(JPY million)

Interest Rate(annual rate)

Maturity
Date

Borrowing
MethodMUFG Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedJanuary 22,
2019

4,250

0.37250%（Note 1）January 22,2022

Unsecured/nonguarantee(Note 1)This borrowing has a floating interest rate, but the interest rate is fixed through an interest rate swap
agreement as of January 18, 2019. Therefore, the interest rate stated is fixed in consideration of the swap.

Overview of the Investment Corporation
1

Overview of Investment
By Period
Results Dates

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

27th fiscal
periodAs of Dec. 31,
2016

28th fiscal
periodAs of Jun. 30,
201729th fiscal
periodAs of Dec. 31,
2017

30th fiscal
periodAs of Jun. 30,
2018

31st fiscal
periodAs of Dec. 31,
2018

10,000,000

10,000,000

10,000,000

10,000,000

10,000,000

3,675,824

3,860,824

4,793,181

4,793,181

5,666,840

120,367

128,984

168,798

168,798

211,092

15,634

17,493

26,761

27,96035,228Notes regarding Unitholders

Major unitholders at the end of the Reporting Period are as below.
Name

Number of units held

The Master Trust Bank of Japan, Ltd.
(trust account)
Japan Trustee Services Bank, Ltd.
(trust account)
JP MORGAN CHASE BANK 385628
The Nomura Trust and Banking Co.,
Ltd. (investment trust account)
Trust & Custody Services Bank, Ltd.
(securities investment trust account)
BNYM AS AGT/CLTS 10 PERCENT% of total number of investment
units issued and outstanding

768,650

13.56

565,175

9.97

263,576

4.65

197,578

3.48

196,571

3.46

146,718

2.58

Mizuho Trust & Banking Co., Ltd.

131,076

2.31

GCAS BANA LONDON US CLIENTSSBTC CLIENT OMNIBUS
ACCOUNTSTATE STREET BANK AND TRUSTCOMPANY 505001
Total

123,245

2.17

117,003

2.06

90,313

1.59

2,599,905

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

3

Notes regarding Directors

Directors at the end of the Reporting Period are as below.
Position

Executive Director

Name

Naoki Fukuda

Takashi Takahashi

Supervisory Director

Hiroyuki Fujimoto

Yoshihiro Tamura(Note 1)

AuditorErnst & Young
ShinNihon LLC(Note 2) (Note 3)

Primary responsibilities
President and CEO,
Consonant Investment
Management Co., Ltd.
(current position)
Attorney,
Ocean General Law Office(current position)
Tax accountant,
CPA Fujimoto OfficeOutside Auditor,
BRYCEN Co., Ltd.
(current position)
Attorney,
Shiba-Daimon Law Office
Statutory Auditor,
BEQONE PARTNERS, Inc.
(current position)-

Directors’ remunerationfor operating period(JPY thousand)
-

2,400

2,400

400

37,200(Note 1) Takashi Takahashi, the former supervisory director, resigned on December 12, 2018, and Yoshihiro Tamura
assumed the office of supervisory director on the same day.
(Note 2) The Japanese name of Ernst & Young ShinNihon LLC was changed on July 1, 2018. (The English name remains
unchanged.) Hereinafter the same shall apply.
(Note 3) The remuneration for the auditor includes fees for preparing comfort letters (JPY 20,400 thousand).
(Note 4) Executive 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.

4
Asset 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.)
Special account management company
General administrative agent(Fiscal agent pertaining to investment corporation
bonds, 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)
Mizuho Bank, Ltd. / Sumitomo Mitsui Banking
Corporation(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.

Status of Investment Corporation’s Assets under Management
1

Composition of INV’s Assets
Fiscal period ended June 30, 2018(as of June 30, 2018)

Type ofasset

Purpose

Geographic area
(Note 1)

Percentage of
total assets(%)

Amount held
(JPY million)(Note 2)

Greater Tokyo
Area (Note 3)
Real
Major regional
HotelsestatecitiesSubtotal
Total real estate
Greater Tokyo
area
Major regional
Residences
citiesSubtotal
Greater Tokyo
area
Real
Offices/Commercial Major regional
estate in
Facilities
citiestrust
Subtotal
Greater Tokyo
area
Major regional
HotelscitiesSubtotal

Fiscal period ended December 31, 2018(as of December 31, 2018)
Percentage of
total assets(%)

Amount held
(JPY million)(Note 2)

2

0.0

2

0.0

-

-

-

-

2
2

0.0
0.0

2
2

0.0
0.0

70,87718.9

70,386

15.5

15,691

4.2

15,521

3.4

86,56923.1

85,908

18.9

-

-

-

-

4,912

1.3

4,866

1.1

4,912

1.3

4,866

1.1

133,64035.7

159,13634.9

111,80929.9

132,735

29.1

245,45065.5

291,872

64.1

Total real estate in trust

336,932

90.0

382,647

84.0

Preferred equity interest (Note 4)

17,856

4.8

17,856

3.9--

36,783

8.1

TK interest (Note 5)
Deposits and other assets
Total assets (Note 6)

19,721

5.3

18,072

4.0

374,512100.0

455,362100.0(336,934)(90.0)(382,649)(84.0)(Note 1)“Greater Tokyo area” refers to Tokyo, Kanagawa, Chiba and Saitama.

(Note 2)

“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).

(Note 3)

Part of Hotel MyStays Haneda falls under this category.

(Note 4)Preferred equity interest issued by Kingdom Special Purpose Company, with the Sheraton Grande Tokyo Bay
Hotel as an underlying asset (asset in trust of trust beneficiary interest acquired by Kingdom Special Purpose
Company, which is the real estate that serves as the main source of revenue for Kingdom Special Purpose
Company).
TK interests of INV in the SPC in Cayman Islands which holds The Westin Grand Cayman Seven Mile Beach
Resort & Spa and Sunshine Suites Resort as underlying assets.
The figures indicated in parenthesis under “Total assets” show the amounts related to owned real estate(excluding the amount of preferred equity securities and TK interest owned).

(Note 5)(Note 6)

2

Major Properties

The overview of INV’s major properties (top 10 properties by book value) (Note 1) at the end of theReporting Period is as below.

Name of property

Book value

Leasable area

Leased area

(JPY million)22

Occupancy rate

Ratio of(%)

rental revenue

Main use

(m )

(m )

26,436

10,137.88

10,137.88

100.0

3.6

Hotel

A105 Royal Parks Tower Minami-Senju

22,13039,113.46

36,734.68

93.9

5.8

Residence

D60

Hotel MyStays Premier Akasaka

20,6688,620.69

8,620.69

100.0

3.4

Hotel

D44

Hotel Epinard Nasu

19,91137,702.33

37,702.33

100.0

8.2

Hotel

D61

Hotel MyStays Premier Sapporo Park

16,682

21,670.64

21,670.64

100.0

3.2

Hotel

D47

Hotel MyStays Premier Kanazawa

13,227

13,250.03

13,250.03

100.0

2.8

Hotel

13,00913,026.99

13,026.99

100.0

2.9

Hotel

D43

D50

Hotel MyStays Gotanda Station

Hotel MyStays Shin Osaka ConferenceCenter(Note 2) (Note 3) (%) (Note 3)

D51

Hotel MyStays Premier Omori

9,746

11,849.61

11,849.61

100.0

2.2

Hotel

D52

Beppu Kamenoi Hotel

8,553

19,422.08

19,422.08

100.0

3.1

Hotel

D49

Hotel MyStays Premier Hamamatsucho

8,017

6,151.93

6,151.93

100.0

1.9

Hotel

158,384

180,945.64

178,566.86

98.7

37.1

Total

(Note 1) Securities described in “6 Asset Portfolio of Securities” later in this document are excluded.
(Note 2) “Occupancy rate” is computed by dividing the leased area by leasable area.
(Note 3) “Occupancy rate” and “Ratio of rental revenue” are rounded to one decimal place.

3

Asset Portfolio of Real Estate, etc.

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

Name of property

Location(Note 1)

A26

Nisshin Palacestage
Daitabashi

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

A27

Nisshin Palacestage HigashiNagasaki

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

A28

Growth Maison Gotanda

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

A29

Growth Maison Kameido

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

A30

Emerald House

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

A32

Suncrest Shakujii-Koen

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

A33

Growth Maison
Shin-Yokohama

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

A34

Belle Face
Ueno-Okachimachi

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

A35

Grand Rire Kameido

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

A37

Growth Maison Yoga

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

A38

Route Tachikawa

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

A39

Shibuya-Honmachi Mansion

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

A40

City Heights Kinuta

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

A41

Acseeds Tower
Kawaguchi- Namiki

2-5-13 Namiki, Kawaguchi-shi,
Saitama

A43

College Square Machida

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

Legal form of Leasable area
asset
(m2)
Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest
Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest
Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest(Note 3)

Appraisal value
as of December Book value
31, 2018(JPY(JPY million)
million)(Note 2)

1,771.13

1,210

1,104

2,681.94

1,330

1,065

1,051.50

1,030

844

1,367.96

1,140

963

2,152.31

1,430

1,344

3,029.16

1,090

1,064

1,858.44

1,180

948

1,351.11

1,090

935

1,562.26

1,010

808

1,015.34

770

736

1,368.57

669

640

1,167.50

638

698

1,235.93499

652

1,210.74755

527

1,047.75

535

556

Name of property

Location(Note 1)

A44

Belair Meguro

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

A45

Wacore Tsunashima I

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

A46

Foros Nakamurabashi

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

A47

Growth Maison Kaijin

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

A48

College Square Machiya

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

A51

City House Tokyo Shinbashi

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

A52

Winbell Kagurazaka

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

A53

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

A54

Lexington Square
Akebonobashi

3-8 Yochomachi, Shinjuku-ku, Tokyo

A59

Towa City Coop ShinotsukaII

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

A61

Bichsel Musashiseki

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

A63

Towa City Coop Sengencho

4-338-2 Sengencho, Nishi-ku,
Yokohama-shi, Kanagawa

A64Royal Park Omachi

2-11-10 Omachi, Aoba-ku, Sendai-shi,
Miyagi

A65

Lexington Square
Haginomachi

1-15-16 Haginomachi, Miyagino-ku,
Sendai-shi, Miyagi

A66

Visconti Kakuozan

2-44 Otanacho, Chikusa-ku, Nagoya-shi,
Aichi

A71

Lexington Square Daitabashi

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

A72

Lexington Square Honjo
Azumabashi

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

A73

AMS TOWER Minami 6-Jo

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

A75

Spacia Ebisu

3-6-22 Higashi, Shibuya-ku, TokyoA76

Neo Prominence

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

Legal form of Leasable area
asset
(m2)
Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest(Note 3)Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest

Appraisal value
as of December Book value
31, 2018(JPY(JPY million)
million)(Note 2)557.05621

553

907.46515

520

815.77573

510

2,040.27

497

515

871.35554

446

3,364.00

3,360

2,293

4,032.70

4,280

3,017

4,310.77

2,650

1,885

1,987.88

1,950

1,306

1,627.13

1,130

813

1,220.24740

550

3,426.36

1,390

1,008

1,929.59

588

383

1,528.58453

277

705.75281

230

1,430.64

1,260

838

784.74650

432

4,460.56

1,290

937

7,794.91

8,280

6,446

3,574.70

2,100

1,603

Name of property

Location(Note 1)

A77

Invoice Shin-Kobe
Residence

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

A78

Cosmo Court Motomachi

3-12-20 Motomachidori, Chuo-ku,
Kobe-shi, Hyogo

A79

Revest Honjin

2-13 Toriidori, Nakamura-ku, Nagoya-shi,
Aichi

A80

Revest Matsubara

3-13-12 Matsubara, Naka-ku, Nagoya-shi,
Aichi

A82

Alba Noritake Shinmachi

3-6-8 Noritake Shinmachi, Nishi-ku,
Nagoya-shi, Aichi

A83

Revest Meieki Minami

2-13-33 Meieki-Minami, Nakamura-ku,
Nagoya-shi, Aichi

A84

Revest Heian

2-13-17 Heian, Kita-ku, Nagoya-shi,
Aichi

A85

Vendir Hamaotsu Ekimae

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

A86

Salvo Sala

2-6-21 Shimanouchi, Chuo-ku, Osaka-shi,
Osaka

A87

Excellente Kagurazaka

128-1 Yamabukicho, Shinjuku-ku, Tokyo,
and other one parcel

A88

Luna Court Edobori

3-4-11 Edobori, Nishi-ku, Osaka-shi,
Osaka

A89

Winntage Kobe Motomachi

7-2-2 Motomachidori, Chuo-ku,
Kobe-shi, Hyogo

A90

Queen's Court Fukuzumi

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

A91

Corp Higashinotoin

380-1 Kawaranomachi, Higashinotoindori
Nijo Kudaru, Nakagyo-ku, Kyoto-shi,
Kyoto, and other two parcels

A92

Belair Oimachi

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

A93

Siete Minami-Tsukaguchi

3-18 Minami-Tsukaguchimachi,
Amagasaki-shi, Hyogo

A94

Prime Life Sannomiya
Isogami Koen

4-3-23 Isogamidori, Chuo-ku, Kobe-shi,
Hyogo

A95

HERMITAGE NANBA
WEST

4-10-3 Sakuragawa, Naniwa-ku,
Osaka-shi, Osaka

A96

Century Park Shinkawa
1-bankan

4-1-2 Shinkawacho, Minato-ku,
Nagoya-shi, Aichi

A97

West Avenue

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

A98

Little River Honmachibashi

1-34 Honmachibashi, Chuo-ku,
Osaka-shi, Osaka

A99

Prime Life Mikage

2-25-11 Mikage Tsukamachi,
Higashinada-ku, Kobe-shi, Hyogo

Legal form of Leasable area
asset
(m2)
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest

Appraisal value
as of December Book value
31, 2018(JPY(JPY million)
million)(Note 2)2,773.71

1,430

1,152

2,310.49

1,110

881

1,933.80

831

607

1,955.40

815

596

1,731.68752

547

1,634.60

769

537

1,554.03

727

537

2,670.66

736

516

1,428.12652

494

701.92650

506

1,185.50584

478

1,433.35

626

461

765.18642

426

1,029.05

540

411

530.60541

388

1,020.86

446

348

789.12457

341

992.76447

326

1,477.62452

318

794.80328

312

974.81389

287

761.18332

271

Location(Note 1)Name of property

A100

City Court Kitaichijo

1-6-3 Kita 1-jo Higashi, Chuo-ku,
Sapporo-shi, Hokkaido

A101

Lieto Court Mukojima

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

A102

Lieto Court Nishi-Ojima

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

A103

Royal Parks Momozaka

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

A104

Royal Parks Shinden

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

A105

Royal Parks Tower
Minami-Senju

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

A106

Royal Parks Seasir
Minami-Senju

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

Legal form of Leasable area
asset
(m2)
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest

Subtotal
B17

Lexington Plaza Hachiman

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

B18

AEON TOWN Sukagawa

105 Furukawa, Sukagawa-shi,
Fukushima

Trust
beneficiaryinterest
Trust
beneficiaryinterest

Subtotal
D01

Hotel MyStays Kanda

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

D02

Hotel MyStays Asakusa

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

D03

Hotel MyStays Kyoto-Shijo

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

D04

MyStays Shin-Urayasu
Conference Center

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

D05

Hotel MyStays Maihama

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

D06

Hotel MyStays Premier
Dojima2-4-1 Sonezakishinchi, Kita-ku, Osaka

D07

Hotel MyStays
Nagoya-Sakae

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

D08

Hotel MyStays
Sakaisuji-Honmachi

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

D09

Hotel MyStays Yokohama

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

D10

Hotel MyStays Nippori

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

D11

Hotel MyStays
Fukuoka-Tenjin-Minami

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

Trustbeneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest

Appraisal value
as of December Book value
31, 2018(JPY(JPY million)
million)(Note 2)5,230.18

2,040

1,749

2,940.20

1,810

1,680

2,048.28

1,820

1,624

8,776.26

3,130

2,825

15,797.29

5,560

4,951

39,113.46

23,10022,1306,496.86

2,790

2,727

182,093.86

102,044

85,9088,419.15

3,720

3,040

18,440.58

2,450

1,826

26,859.73

6,170

4,866

2,585.72

4,930

2,982

3,327.38

4,620

2,543

7,241.51

14,3005,922

6,232.30

7,280

4,704

2,456.36

6,710

4,821

9,445.32

7,490

3,812

9,064.71

6,410

2,692

4,188.83

6,940

2,398

7,379.43

3,560

1,983

1,719.29

2,870

1,816

3,412.71

5,700

1,497

Name of property

Location(Note 1)

D12

Flexstay Inn Iidabashi

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

D13

Hotel MyStays Ueno
Inaricho

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

D14

Flexstay Inn Shinagawa

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

D15

Flexstay Inn Tokiwadai

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

D16

Flexstay Inn Sugamo

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

D17

Hotel MyStays Otemae

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

D18

Flexstay Inn Kiyosumi
Shirakawa

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

D19

Flexstay Inn Nakanobu P1

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

D20

Flexstay Inn Nakanobu P2

4-27-8 Futaba, Shinagawa-ku, TokyoD21

APA Hotel
Yokohama-Kannai

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

D22

Hotel MyStays
Hakodate-Goryokaku

26-17 Honcho, Hakodate-shi,
Hokkaido

D23

Flexstay Inn Shirogane

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

D24

Hotel MyStays Haneda

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

D25

Hotel MyStays Kameido P1

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

D26

Hotel MyStays Ueno
Iriyaguchi

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

D27

Hotel MyStays Kameido P2

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

D28

Hotel Vista Shimizu

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

D29

Super Hotel Shinbashi/
Karasumoriguchi

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

D30

Flexstay Inn Higashi-Jujo

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

D31

Hotel MyStays Utsunomiya

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

D32

Flexstay Inn
Kawasaki-Kaizuka

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

D33

Comfort Hotel Toyama

1-3-2 Takara-machi, Toyama-shi,ToyamaLegal form of Leasable area
asset
(m2)
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest

Appraisal value
as of December Book value
31, 2018(JPY(JPY million)
million)(Note 2)

2,953.38

1,980

1,364

1,150.76

2,190

1,254

1,134.52

1,960

1,206

2,539.75

2,100

1,214

2,089.86

2,050

1,131

4,956.66

4,300

1,147

2,673.64

1,250

723

770.56769

571

391.49370

289

6,568.51

9,720

7,821

7,961.26

3,700

2,830

1,754.06

2,220

2,100

5,400.16

8,160

7,412

4,349.67

7,170

5,427

2,247.92

3,850

3,712

2,793.99

4,770

3,626

3,559.81

2,340

2,062

1,403.89

1,840

1,599

1,714.53

1,340

1,269

11,733.23

1,610

1,232

1,190.57

1,150

928

3,305.64

1,110

935

Name of property

Location(Note 1)

D34

Flexstay Inn
Kawasaki-Ogawacho

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

D35

Flexstay Inn Ekoda

8-6 Sakaecho, Nerima-ku, Tokyo

D36

Super Hotel Tokyo-JR
Tachikawa Kitaguchi

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

D37

Super Hotel JR
Ueno-iriyaguchi

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

D38

Hotel MyStays Shinsaibashi

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

D39

Comfort Hotel Kurosaki

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

D40

Comfort Hotel Maebashi

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

D41

Comfort Hotel
Tsubame-Sanjo

2-115 Sugoro, Sanjo-shi, Niigata

D42

Comfort Hotel Kitami

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

D43

Hotel MyStays Gotanda
Station (Note 4)

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

D44

Hotel Epinard Nasu

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

D45

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

D46

Hotel MyStays
Hamamatsucho

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

D47

Hotel MyStays PremierKanazawa

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

D48

Takamatsu Tokyu REI Hotel

9-9 Hyogomachi, Takamatsu-shi,
KagawaD49

Hotel MyStays Premier
Hamamatsucho

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

D50

Hotel MyStays Shin Osaka
Conference Center

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

D51

Hotel MyStays PremierOmori

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

D52

Beppu Kamenoi Hotel

2160-1 Chuocho, Beppu-shi, Oita and12 other lots

D53

Hotel MyStays Sapporo
Station4-15 Kita Hachijyo Nishi, Sapporo-shi,
Hokkaido

D54

Hotel MyStays Yokohama
Kannai

5-65, Onoe-cho, Naka-ku,
Yokohama-shi, Kanagawa and 3 other
lots

D55

Art Hotel Joetsu

5-1-11, Hon-cho Joetsu-shi, Niigata

Legal form of Leasable area
asset
(m2)
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest

Appraisal value
as of December Book value
31, 2018(JPY(JPY million)
million)(Note 2)725.601,030

884

3,932.93

4,820

4,914

1,832.97

1,230

1,122

1,279.16

1,220

1,096

1,942.01

3,050

3,077

3,207.60

1,220

1,085

3,660.96

1,160

1,068

3,099.90

1,070

965

3,009.50906

804

10,137.88

26,60026,43637,702.33

23,10019,911

5,083.06

8,740

7,876

1,951.90

7,040

7,843

13,250.03

14,50013,227

7,148.17

2,220

2,117

6,151.93

9,800

8,017

13,026.99

13,50013,00911,849.61

10,1009,746

19,422.08

9,010

8,553

7,267.88

8,300

7,765

4,501.18

5,490

5,293

7,563.60

2,810

2,750

Location(Note 1)Name of property

D56

Art Hotel Hirosaki City

1-1-2, 1-6, 1-7, 2-1, Omachi,
Hirosaki-shi, Aomori

D57

Hotel MyStays Oita

1-32, Niagemachi Oita-shi, Oita

D58

Hotel MyStays Gotanda

2-5-4, Higashigotanda Shinagawa-ku,
Tokyo

D59

Hotel MyStays Tachikawa

1-8-14, Nishiki-cho Tachikawa-shi,
Tokyo

D60

Hotel MyStays Premier
Akasaka

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

D61

Hotel MyStays Premier
Sapporo Park

2-2-10, Minamikujo Nishi, Chuo-ku,
Sapporo-shi, Hokkaido

D62

Hotel MyStays Ueno East

5-5-6, Higashi UenoTaito-ku, Tokyo

D63

Hotel MyStays Midosuji
Honmachi

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

Legal form of Leasable area
asset
(m2)
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest
Trust
beneficiaryinterest

Appraisal value
as of December Book value
31, 2018(JPY(JPY million)
million)(Note 2)

14,826.30

2,760

2,698

3,254.69

1,640

1,581

1,839.77

4,140

4,073

3,844.64

3,290

3,256

8,620.69

21,40020,66821,670.64

17,00016,682

4,396.02

5,370

5,277

3,429.43

5,090

5,026

Subtotal

359,326.87

354,366

291,874

Total

568,280.46

462,580

382,649(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, JLL Morii Valuation & Advisory K.K., 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. As a result of disposition of assets anddetachment of trust beneficiary interest from an integrated trust account thereafter, the grouping of trust beneficiaryinterests at the end of the Reporting Period 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, and Foros Nakamurabashi.
Group 2
College Square Machida, Belair Meguro, and Wacore Tsunashima I.
Group 3
Suncrest Shakujii-Koen, Grand Rire Kameido, Acseeds Tower Kawaguchi-Namiki, Growth Maison Kaijin, andCollege Square Machiya.
(Note 4) Appraisal value at the end of the period indicates appraisal value calculated deeming the Owned Portion and the
Floor Expansion Portion as one.

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

Name of property

30th fiscal period(January 1, 2018 to June 30, 2018)
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)31st fiscal period(July 1, 2018 to December 31, 2018)
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

95.1

38,880

0.3

1

93.0

39,2670.3

A27

Nisshin Palacestage
Higashi- Nagasaki

1

100.0

47,087

0.4

1

100.0

47,0280.3

A28Growth Maison Gotanda

1

100.0

27,485

0.2

1

100.0

27,5100.2

A29

Growth Maison Kameido

1

95.4

35,011

0.3

1

92.4

33,9230.2

A30

Emerald House

1

100.0

49,218

0.4

1

96.9

43,591

0.3

A31

Harmonie Ochanomizu(Note 4)

-

-

6,624

0.1

-

-

-

-

A32

Suncrest Shakujii-Koen

1

97.1

37,634

0.3

1

100.0

37,4260.3

A33

Growth Maison
Shin-Yokohama

1

98.5

36,661

0.3

1

97.1

37,0680.3

A34

Belle Face
Ueno-Okachimachi

1

96.9

33,499

0.3

1

93.7

31,321

0.2

A35Grand Rire Kameido

1

100.0

26,619

0.2

1

100.0

26,6690.2

A36

Growth Maison Ikebukuro(Note 4)

-

-

4,168

0.0

-

-

-

-

A37

Growth Maison Yoga

1

97.4

22,616

0.2

1

100.0

22,841

0.2

A38

Route Tachikawa

1

100.0

21,540

0.2

1

96.6

22,0050.2

A39

Shibuya-Honmachi Mansion

1

92.2

19,472

0.2

1

100.0

19,3200.1

A40City Heights Kinuta

1

100.0

18,102

0.2

1

83.8

17,3540.1

A41

Acseeds Tower KawaguchiNamiki

1

98.2

24,754

0.2

1

94.7

25,6890.2

A42Capital Heights Kagurazaka(Note 4)

-

-

3,226

0.0

-

-

-

-

A43

College Square Machida

1

100.0

17,484

0.2

1

100.0

17,4840.1

A44

Belair Meguro

1

96.1

16,143

0.1

1

84.2

16,5780.1

A45

Wacore Tsunashima I

1

96.0

18,127

0.2

1

91.8

19,2140.1

A46

Foros Nakamurabashi

1

95.1

18,716

0.2

1

94.3

18,0500.1

A47

Growth Maison Kaijin

1

93.5

22,200

0.2

1

91.9

22,451

0.2

A48

College Square Machiya

1

100.0

14,706

0.1

1

100.0

14,7060.1

A51City House Tokyo Shinbashi

1

98.0

92,985

0.8

1

95.4

95,901

0.7

Name of property

30th fiscal period(January 1, 2018 to June 30, 2018)
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)31st fiscal period(July 1, 2018 to December 31, 2018)
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

98.2

109,221

1.0

1

97.5

107,082

0.8

A53

Nishiwaseda Cresent
Mansion1

98.4

74,348

0.7

1

98.4

75,120

0.6

A54

Lexington Square
Akebonobashi

1

99.0

51,097

0.5

1

95.4

51,094

0.4

A59

Towa City Coop Shinotsuka II

1

96.1

35,917

0.3

1

98.7

36,5150.3

A61

Bichsel Musashiseki

1

98.5

24,762

0.2

1

95.7

23,412

0.2

A63

Towa City Coop Sengencho

1

93.1

54,977

0.5

1

94.9

60,1580.4

A64Royal Park Omachi

1

96.4

27,001

0.2

1

89.8

26,3330.2

A65

Lexington Square
Haginomachi

1

97.4

18,145

0.2

1

86.9

17,4730.1

A66

Visconti Kakuozan

1

100.0

11,157

0.1

1

87.3

11,4990.1

A71

Lexington Square Daitabashi

1

97.9

33,079

0.3

1

92.2

32,332

0.2

A72

Lexington Square Honjo
Azumabashi

1

100.0

18,426

0.2

1

93.9

18,341

0.1

A73

AMS TOWER Minami 6-Jo

1

82.9

42,761

0.4

1

79.7

42,5470.3

A75

Spacia Ebisu

1

95.6

208,597

1.9

1

96.9

216,468

1.6

A76

Neo Prominence

1

98.3

67,322

0.6

1

98.4

68,104

0.5

A77

Invoice Shin-Kobe Residence

1

99.1

50,828

0.5

1

96.8

50,2840.4

A78

Cosmo Court Motomachi

1

98.7

38,268

0.3

1

100.0

36,911

0.3

A79

Revest Honjin

1

93.7

31,286

0.3

1

97.5

31,8630.2

A80

Revest Matsubara

1

98.1

30,439

0.3

1

89.4

28,231

0.2

A82

Alba Noritake Shinmachi

1

95.1

28,107

0.3

1

95.8

26,537

0.2

A83

Revest Meieki Minami

1

90.5

25,584

0.2

1

92.4

26,0830.2

A84

Revest Heian

1

96.8

23,865

0.2

1

96.8

23,7080.2

A85

Vendir Hamaotsu Ekimae

1

91.2

33,886

0.3

1

88.9

32,4370.2

A86

Salvo Sala

1

92.6

25,210

0.2

1

96.7

24,6900.2

A87

Excellente Kagurazaka

1

94.1

19,969

0.2

1

94.1

19,3040.1

A88

Luna Court Edobori

1

96.0

21,320

0.2

1

91.9

20,9350.2

A89

Winntage Kobe Motomachi

1

98.3

22,778

0.2

1

91.4

21,0240.2

Name of property

30th fiscal period(January 1, 2018 to June 30, 2018)
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)31st fiscal period(July 1, 2018 to December 31, 2018)
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)

A90

Queen's Court Fukuzumi

1

100.0

18,525

0.2

1

90.3

17,471

0.1

A91

Corp Higashinotoin

1

100.0

19,154

0.2

1

100.0

19,061

0.1

A92

Belair Oimachi

1

100.0

15,490

0.1

1

100.0

16,2560.1

A93

Siete Minami-Tsukaguchi

1

100.0

17,437

0.2

1

100.0

17,4750.1

A94

Prime Life Sannomiya
Isogami Koen

1

100.0

15,488

0.1

1

100.0

15,351

0.1

A95

HERMITAGE NANBA
WEST

1

100.0

16,083

0.1

1

100.0

15,9170.1

A96

Century Park Shinkawa
1-bankan

1

88.6

20,955

0.2

1

95.4

18,3350.1

A97West Avenue

1

97.5

12,185

0.1

1

82.5

12,191

0.1

A98

Little River Honmachibashi

1

100.0

14,005

0.1

1

90.7

14,2760.1

A99

Prime Life Mikage

1

100.0

12,672

0.1

1

100.0

12,806

0.1

A100 City Court Kitaichijo

1

98.4

66,770

0.6

1

97.1

67,3590.5

A101 Lieto Court Mukojima

1

99.0

55,654

0.5

1

99.0

55,585

0.4

A102 Lieto Court Nishi-Ojima

1

99.0

48,968

0.4

1

98.8

49,5280.4

A103 Royal Parks Momozaka

4

90.0

155,151

1.4

1

92.4

151,765

1.1

A104 Royal Parks Shinden

4

100.0

217,076

2.0

1

100.0

219,286

1.6

A105Royal Parks Tower
Minami-Senju

1

93.1

763,803

6.9

1

93.9

782,653

5.8

A106Royal Parks Seasir
Minami-Senju

1

96.9

113,119

1.0

1

96.2

115,307

0.8

Subtotal

70

95.8

3,363,873

30.2

64

95.2

3,364,532

24.7

B14

Lexington Plaza Nishigotanda(Note 4)--59,893

0.5

-

-

-

-

B15

Cross Square NAKANO(Note 4)

-

-

7,963

0.1

-

-

-

-

B16

Ohki Aoba Building(Note 4)

-

-

6,862

0.1

-

-

-

-

B17

Lexington Plaza Hachiman

1

100.0

164,195

1.5

1

100.0

167,590

1.2

B18

AEON TOWN Sukagawa

1

100.0

141,593

1.3

1

100.0

141,782

1.0

Subtotal

2

100.0

380,507

3.4

2

100.0

309,373

2.3

Hotel MyStays Kanda

1

100.0

111,338

1.0

1

100.0

123,768

0.9

D01

Name of property

30th fiscal period(January 1, 2018 to June 30, 2018)
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)31st fiscal period(July 1, 2018 to December 31, 2018)
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)

D02

Hotel MyStays Asakusa

1

100.0

106,530

1.0

1

100.0

121,636

0.9

D03

Hotel MyStays Kyoto-Shijo

1

100.0

190,995

1.7

1

100.0

227,490

1.7

D04

MyStays Shin-Urayasu
Conference Center

1

100.0

170,174

1.5

1

100.0

205,900

1.5

D05

Hotel MyStays Maihama

1

100.0

110,898

1.0

1

100.0

189,291

1.4

D06

Hotel MyStays Premier
Dojima1

100.0

180,563

1.6

1

100.0

216,347

1.6

D07

Hotel MyStays
Nagoya-Sakae

1

100.0

189,920

1.7

1

100.0

197,973

1.5

D08

Hotel MyStays
Sakaisuji-Honmachi

1

100.0

134,391

1.2

1

100.0

132,868

1.0

D09

Hotel MyStays Yokohama

1

100.0

118,488

1.1

1

100.0

130,202

1.0

D10

Hotel MyStays Nippori

1

100.0

61,962

0.6

1

100.0

65,9020.5

D11Hotel MyStays
Fukuoka-Tenjin-Minami

1

100.0

145,371

1.3

1

100.0

159,191

1.2

D12

Flexstay Inn Iidabashi

1

100.0

53,416

0.5

1

100.0

56,3930.4

D13Hotel MyStays
Ueno Inaricho

1

100.0

49,251

0.4

1

100.0

51,4690.4

D14

Flexstay Inn Shinagawa

1

100.0

43,770

0.4

1

100.0

49,7540.4

D15

Flexstay Inn Tokiwadai

1

100.0

55,215

0.5

1

100.0

64,4840.5

D16

Flexstay Inn Sugamo

1

100.0

55,232

0.5

1

100.0

57,8280.4

D17Hotel MyStays Otemae

1

100.0

94,122

0.8

1

100.0

78,8490.6

D18

Flexstay Inn Kiyosumi
Shirakawa

1

100.0

36,792

0.3

1

100.0

37,4780.3

D19

Flexstay Inn Nakanobu P1

1

100.0

22,984

0.2

1

100.0

23,371

0.2

D20

Flexstay Inn Nakanobu P2

1

100.0

11,873

0.1

1

100.0

10,9410.1

D21

APA Hotel
Yokohama-Kannai

1

100.0

229,000

2.1

1

100.0

235,819

1.7

D22

Hotel MyStays
Hakodate-Goryokaku

1

100.0

76,850

0.7

1

100.0

152,700

1.1

D23

Flexstay Inn Shirogane

1

100.0

55,163

0.5

1

100.0

58,2400.4

D24

Hotel MyStays Haneda

1

100.0

183,749

1.7

1

100.0

196,075

1.4

D25

Hotel MyStays Kameido P1

1

100.0

183,133

1.6

1

100.0

196,939

1.4

D26

Hotel MyStays Ueno
Iriyaguchi

1

100.0

95,011

0.9

1

100.0

97,4820.7

Name of property

30th fiscal period(January 1, 2018 to June 30, 2018)
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)31st fiscal period(July 1, 2018 to December 31, 2018)
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)

D27

Hotel MyStays Kameido P2

1

100.0

120,229

1.1

1

100.0

130,200

1.0

D28

Hotel Vista Shimizu

1

100.0

61,652

0.6

1

100.0

67,0720.5

D29Super Hotel
Shinbashi/Karasumoriguchi

1

100.0

39,426

0.4

1

100.0

39,4260.3

D30

Flexstay Inn Higashi-Jujo

1

100.0

38,349

0.3

1

100.0

40,7950.3

D31

Hotel MyStays Utsunomiya

1

100.0

99,599

0.9

1

100.0

93,0220.7

D32

Flexstay Inn
Kawasaki-Kaizuka

1

100.0

32,101

0.3

1

100.0

33,1690.2

D33

Comfort Hotel Toyama

1

100.0

35,928

0.3

1

100.0

35,9280.3

D34

Flexstay Inn
Kawasaki-Ogawacho

1

100.0

25,463

0.2

1

100.0

24,8120.2

D35

Flexstay Inn Ekoda

1

100.0

115,864

1.0

1

100.0

117,226

0.9

D36Super Hotel Tokyo-JR
Tachikawa Kitaguchi

1

100.0

31,787

0.3

1

100.0

31,7870.2

D37Super Hotel JR
Ueno-iriyaguchi

1

100.0

27,275

0.2

1

100.0

27,2750.2

D38

Hotel MyStays Shinsaibashi

1

100.0

67,682

0.6

1

100.0

63,1480.5

D39

Comfort Hotel Kurosaki

1

100.0

37,894

0.3

1

100.0

37,894

0.3

D40

Comfort Hotel Maebashi

2

100.0

43,811

0.4

2

100.0

43,811

0.3

D41

Comfort Hotel
Tsubame-Sanjo

2

100.0

34,949

0.3

2

100.0

34,9490.3

D42

Comfort Hotel Kitami

1

100.0

30,300

0.3

1

100.0

30,3000.2

D43

Hotel MyStays Gotanda
Station1

100.0

482,750

4.3

1

100.0

490,844

3.6

D44

Hotel Epinard Nasu

1

100.0

576,941

5.2

1

100.0

1,112,683

8.2

D45

Hotel MyStays Fukuoka
Tenjin1

100.0

218,700

2.0

1

100.0

230,688

1.7

D46

Hotel MyStays
Hamamatsucho

1

100.0

112,104

1.0

1

100.0

123,9020.9

D47

Hotel MyStays Kanazawa

1

100.0

306,064

2.8

1

100.0

376,887

2.8

D48

Takamatsu Tokyu REI Hotel

3

100.0

105,549

0.9

3

100.0

111,564

0.8

D49

Hotel MyStays Premier
Hamamatsucho

1

100.0

223,983

2.0

1

100.0

257,330

1.9

D50

Hotel MyStays Shin Osaka
Conference Center

1

100.0

393,186

3.5

1

100.0

388,013

2.9

Name of property

30th fiscal period(January 1, 2018 to June 30, 2018)
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)31st fiscal period(July 1, 2018 to December 31, 2018)
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)

D51

Hotel MyStays Premier
Omori

1

100.0

273,325

2.5

1

100.0

303,088

2.2

D52

Beppu Kamenoi Hotel

1

100.0

347,901

3.1

1

100.0

419,762

3.1

D53

Hotel MyStays Sapporo
Station1

100.0

221,703

2.0

1

100.0

272,140

2.0

D54

Hotel MyStays Yokohama
Kannai1

100.0

133,413

1.2

1

100.0

152,128

1.1

D55

Art Hotel Joetsu

1

100.0

145,193

1.3

1

100.0

117,197

0.9

D56

Art Hotel Hirosaki City

1

100.0

152,005

1.4

1

100.0

139,786

1.0

D57

Hotel MyStays Oita

1

100.0

69,444

0.6

1

100.0

60,7230.4

D58

Hotel MyStays Gotanda

1

100.0

3,843

0.0

1

100.0

128,296

0.9

D59

Hotel MyStays Tachikawa

1

100.0

3,472

0.0

1

100.0

111,170

0.8

-

-

-

-

1

100.0

468,926

3.4

-

-

-

-

1

100.0

441,019

3.2

D60
D61

Hotel MyStays Premier
Akasaka
Hotel MyStays Premier
Sapporo Park

D62

Hotel MyStays Ueno East

-

-

-

-

1

100.0

143,237

1.1

D63

Hotel MyStays Midosuji
Honmachi

-

-

-

-

1

100.0

91,7000.7

Subtotal

63

100.0

7,378,100

66.3

67

100.0

9,930,318

73.0

Total

135

98.6

11,122,481

100.0

133

98.5

13,604,224

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) Harmonie Ochanomizu, Growth Maison Ikebukuro, Capital Heights Kagurazaka, Cross Square NAKANO andOhki Aoba Building were sold on January 31, 2018; and Lexington Plaza Nishi-Gotanda was sold on March 9,
2018.

4

Asset Portfolio of Facilities Generating Renewable Energy, etc.

Not applicable
5

Asset Portfolio Including Rights to Operate Public Facilities, etc.

Not applicable
6 Asset Portfolio of Securities
The portfolio of the securities held by INV at the end of the Reporting Period is as below.

Name

Type

Preferred equity
securities in
Kingdom Special
Purpose Company
TK interest in Seven
Mile Resort Holdings
Ltd
Total

Quantity Book value (JPY million)(units)Unit priceAmountNotes-

17,856-

17,8561)- (Note(Note 2)--36,783-36,783

1)- (Note(Note 3)--54,640-54,640-Preferred equity 178,458
securities

TK interest

Fair value (JPY million) Valuation gainor loss
Unit priceAmount (JPY million)(Note 1) Fair value of the preferred equity securities and TK interest indicate the acquisition cost.
(Note 2) INV owns 178,458 units of preferred equity securities issued by Kingdom Special Purpose Company (equivalent
to 49.0% of preferred equity securities issued and outstanding after the issuance of the said preferred equity
securities), with the Sheraton Grande Tokyo Bay Hotel as an underlying asset.
(Note 3) INV owns TK interest (100.0%) in a special purpose company (Seven Mile Resort Holdings Ltd.) in the Cayman
Islands which holds Westin Grand Cayman Seven Mile Beach Resort & Spa and Sunshine Suites Resort asunderlying assets.

7

Status of Contract Amount and Fair Value of Specified Transaction

As of December 31, 2018, the contract amount and fair value of the outstanding transaction under the
specified transaction account of INV are as follows.
(Unit: JPY thousand)Category

Transaction type, etc.

Contract amount(Note 1)
Amounts due after
one year

Fair value(Note 2)

Interest rate swap
71,640,000
34,729,000
48,781
Receive floating rate/pay fixed rate
Currency option transaction
4,444,000
1,903,000
USD/CallNon-market(Optionfees)(124,943)(53,157)(87,318)transaction
Currency option transaction
4,444,000
1,903,000
USD/Put(Option fees)(140,288)(88,792)(162,566)(Note 1) The contract amount, etc. for interest rate swap are stated based on a notional principal.
(Note 2) Estimation method for fair value
Interest rate swap
Estimated based on the price, etc. presented by the correspondent financial institutions.
Currency option
Indicates fair values of option fees, etc. presented by the correspondent financial
institutions.

8

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 assetsthat are significant investment targets for INV outside of 3 and 6 above.
9

Assets Owned Outside of Japan or the Region

Assets owned outside of Japan or the region held by INV at the end of the Reporting Period is as below.

Country nameAmount held
(JPY million)(Note 1)

Appraisal value
as of December 31,
2018 (JPY million) (Note 2)
Percentage of
total assets (%)

No. ofproperties(properties)

Japan

400,506

480,43692.9

130

The Cayman Islands

36,78336,783

7.1

2

Total

437,290

517,220

100.0

132

(Note 1)

(Note 2)

“Amount held” is from the balance sheet (book value after depreciation for real estate and trust beneficiaryinterest in real estate; and book value for preferred equity securities with real estate as underlying assets) as ofDecember 31, 2018. The amount for the Cayman Islands includes the amount of investment in the TK
interest.
“Appraisal value as of December 31, 2018” indicates the real estate appraisal value as of December 31, 2018 or
the research value stated in the real estate research report and the appraisal value of investment securities.
“Appraisal value as of December 31, 2018” for preferred equity securities which INV holds in Japan indicatesacquisition cost since their fair value is deemed extremely difficult to value. “Appraisal value as of December
31, 2018” for the amount of investment in the TK interest which INV holds in the Cayman Islands indicatesacquisition cost (converted to JPY using the exchange rate of 1US$=JPY 110.45 based on exchange contract,rounded down to two decimal places) since its fair value is deemed extremely difficult to value

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 related assets owned by INV is as follows.
Estimated cost (JPY thousand)Name of property

D44 Hotel Epinard Nasu
D09

Hotel MyStays
Yokohama

D28 Hotel Vista Shimizu

2

Total

Payment for
the fiscal
Advanceperiod ended
payments
December 31,
2018

From January 2019
To June 2019

329,652--

Yokohama-shi,
Renovation work
Kanagawa

From January 2019
To June 2019

250,000--

Shizuoka-shi,
Shizuoka

From January 2019
To June 2019

120,000--

Location

PurposeScheduled time of
implementation

Nasu-gun,Tochigi

Introduction ofenergy-saving
equipment

Renovation work

D48

Takamatsu Tokyu
REI Hotel

Replacement of
Takamatsu-shi,
automatic fire alarm
KagawasystemFrom January 2019
To June 201920,500--

D56

Art Hotel Hirosaki
City

Hirosaki-shi,
Aomori

From January 2019
To June 201918,500--Interior work (hotel
3rd floor, etc.)

Capital Expenditures for the Fiscal Period Ended December 31, 2018

The principal construction work constituting capital expenditures for the real estate assets for the fiscal
period ended December 31, 2018 is as follows. Capital expenditures for the fiscal period totaled JPY
910,527 thousand, and together with JPY 26,602 thousand in repair costs included in this fiscal period’s
expenses, construction work totaling JPY 937,129 thousand was implemented.
Location

PurposeHotel MyStays
Kyoto-Shijo

Kyoto-shi,
Kyoto

Renovation work

From July 2018
To December 2018

150,396

Hotel MyStays
D49 Premier
Hamamatsucho

Minato-ku,
TokyoHot-and-chilled-water
generator replacement

From July 2018
To December 2018

39,000

D06

Hotel MyStays
Premier Dojima

Osaka-shi,
Osaka

Renovation work

From July 2018
To December 2018

37,429

A39

Shibuya-Honmachi
MansionShibuya-ku,
TokyoRenovation work

From July 2018
To December 2018

30,315

D48

Takamatsu Tokyu REI
Hotel

Takamatsu-shi, Disaster prevention
switchboard replacement
KagawaFrom July 2018
To December 2018

21,800D03Time of implementation

Payment(JPY thousand)Name of property

631,585

Other construction
Total

910,527

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)
27th
28th
29th
30th
31st
fiscal period
fiscal period
fiscal period
fiscal period
fiscal period
From July 1, 2016 From January 1, From July 1, 2017 From January 1, From July 1, 2018
to December 31, 2017 to June 30, to December 31, 2018 to June 30, to December 31,
2016
2017
2017
2018
2018
1,303,685

1,397,286

1,397,243

1,566,108

1,611,828

446,066

468,145

697,444468,448

618,404

352,464

468,189

528,579

422,728

415,718

1,397,286

1,397,243

1,566,108

1,611,828

1,814,515(Note) The amount reserved for the relevant fiscal period includes the reserves for acquired properties, and the amountreversed includes the reserves for disposed properties.

Overview of Expenses and Liabilities
1

Statement of Operating Expenses
30th fiscal period
January 1, 2018 to June 30, 2018

Item

(JPY thousand)
31st fiscal period
July 1, 2018 to December 31, 2018(a) Asset management fees

275,000

275,000(b) Asset custody fees

18,162

18,645(c) Administrative services fees

39,69752,607(d) Directors’ compensation

4,800

5,200

197,041

134,119534,701

485,572(e) Other
Total

2

Borrowing Conditions

Borrowing conditions by financial institution at the end of the Reporting Period are as below.
Type
LenderMizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedSumitomo Mitsui Banking
Short-term
Corporation
loans
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
MUFG Bank, Ltd.
Subtotal
Sumitomo Mitsui Banking
Corporation
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
Shinsei Bank, Limited
Citibank, N.A., Tokyo Branch
Sumitomo Mitsui Trust Bank,
LimitedLong-term Resona Bank, Limited
MUFG Bank, Ltd.
loans
(Note 4) Sumitomo Mitsui Banking
Corporation
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
Shinsei Bank, Limited
Citibank, N.A., Tokyo Branch
Sumitomo Mitsui Trust Bank,
LimitedResona Bank, Limited

Balance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)
667,000
Oct. 13,2017

Aug. 2,
2018

Jul. 16,
2015

Jul. 16,
2015

666,000-

667,000--

366,500-

366,500

2,000,000

366,000
1,099,000

5,992,000-

5,992,000
5,992,000
3,330,000
3,000,000-

2,670,000-

1,335,000
668,000-

5,992,000

5,992,000

5,992,000
5,992,000
3,330,000
3,000,000

5,992,000
5,992,000
3,330,000
3,000,000

2,670,000

2,670,000

1,335,000

1,335,000

Repayment Repayment Purpose
date
method

Notes

0.263

Oct. 13,2018(Note 3) (Note 2)

Unsecured /with noguarantee

0.263

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

Unsecured /with noguarantee

0.375Jul. 16,2018(Note 3) (Note 2)

Unsecured /with noguarantee

0.480

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

Unsecured /with noguarantee

Type
Lender
MUFG Bank, Ltd.

Balance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
PeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)
668,000
668,000

Sumitomo Mitsui Banking

5,992,000

5,992,000

MUFG Bank, Ltd.

5,992,000

5,992,000

Mizuho Bank, Ltd.

5,992,000

5,992,000

Corporation

Shinsei Bank, Limited

Jul. 16,

3,330,000

3,330,000

Citibank, N.A., Tokyo Branch

2015

3,000,000

3,000,000

2,670,000

2,670,000

1,335,000

1,335,000

668,000

668,000

3,682,000

3,682,000

3,400,000

3,400,000

850,000

850,000

3,400,000

3,400,000

850,000

850,000

Sumitomo Mitsui Trust Bank,
LimitedResona Bank, Limited
MUFG Bank, Ltd.
Mizuho Bank, Ltd
Sumitomo Mitsui Trust Bank,
Limited
MUFG Bank, Ltd.
Sumitomo Mitsui Trust Bank,
Limited
MUFG Bank, Ltd.

Aug. 28,
2015
Jan. 22,
2016
Jan. 22,2016

Mizuho Bank, Ltd

465,000

465,000

MUFG Bank, Ltd.

1,125,000

1,125,000

2,181,000

2,181,000

570,000

570,000

570,000

570,000

650,000

650,000

2,000,000

2,000,000

1,000,000

1,000,000

Sumitomo Mitsui Trust Bank,
Long-term Limitedloans
Shinsei Bank, Limited(Note 4)
Resona Bank, Limited
MUFG Bank, Ltd.
Japan Post Bank Co., Ltd.
Development Bank of Japan,

Mar. 31,
2016

Inc.
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

270,000

270,000

The Nomura Trust andBanking Co., Limited
Mizuho Bank, Ltd

965,000

965,000

MUFG Bank, Ltd.

1,125,000

1,125,000

2,180,000

2,180,000

570,000

570,000

570,000

570,000

Sumitomo Mitsui Trust Bank,
LimitedShinsei Bank, Limited
Resona Bank, Limited

Mar. 31,

MUFG Bank, Ltd.

2016

650,000

650,000

Japan Post Bank Co., Ltd.

2,000,000

2,000,000

The Bank of Fukuoka, Ltd.

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

Repayment Repayment 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

0.463

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

Unsecured /with noguarantee

0.563

Mar. 30,
2020(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)

The Nomura Trust and

270,000

270,000

Mizuho Bank, Ltd.

1,965,000

1,965,000

MUFG Bank, Ltd.

1,125,000

1,125,000

2,180,000

2,180,000

Shinsei Bank, Limited.

570,000

570,000

Resona Bank, Limited

570,000

570,000

650,000

650,000

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

Banking Co., Limited

Sumitomo Mitsui Trust Bank,
Limited

MUFG Bank, Ltd.
The Bank of Fukuoka, Ltd.

Mar. 31,2016

The Nomura Trust andBanking Co., Limited
Citibank, N.A., Tokyo Branch

Citibank, N.A., Tokyo Branch

Citibank, N.A., Tokyo BranchLong-termloans(Note 4) Development Bank of Japan,
Inc.

AEON Bank, Ltd.

Tokyo Star Bank, Limited

Tokyo Star Bank, Limited

Tokyo Star Bank, Limited

Jun. 15,2016
Jun. 15,2016
Jun. 15,2016
Jun. 30,
2016
Jun. 30,
2016
Jul. 20,
2016
Jul. 20,
2016
Jul. 20,
2016

Mizuho Bank, Ltd.
Development Bank of Japan,
Inc.
Resona Bank, Limited
The Bank of Fukuoka, Ltd.
The Nomura Trust andBanking Co., Limited

Mar. 14,2017

1,000,000

1,000,000

1,000,000

3,000,000

700,000

1,600,000

1,000,000

1,000,000

1,000,000

3,000,000

700,000

1,600,000

1,700,000

1,700,000

634,000

634,000

1,000,000

1,000,000

333,000

333,000

333,000

333,000

333,000

333,000

0.663

0.463

0.563

0.663

0.463

0.663

0.463

0.563

0.663

0.463

Repayment Repayment Purpose
date
methodMar. 30,
2021

Jun. 15,2019
Jun. 15,
2020
Jun. 15,2021
Jun. 30,
2019
Jun. 30,
2021
Jul. 20,
2019
Jul. 20,
2020
Jul. 20,2021

Mar. 14,
2020

Notes

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
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

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

The Towa Bank, Ltd.

252,000

252,000

The Shizuoka Bank, Ltd.

200,000

200,000

The Gunma Bank, Ltd.

165,000

165,000

1,633,000
333,000
333,000

1,633,000
333,000
333,000

333,000

333,000

253,000
200,000
165,000
1,733,000
333,000
333,000

253,000
200,000
165,000
1,733,000
333,000
333,000

333,000

333,000

900,000
253,000
200,000

900,000
253,000
200,000

500,000

500,000

165,000

165,000

3,000,000

3,000,000

4,321,000

4,321,000

Mizuho Bank, Ltd.
Resona Bank, Limited
The Bank of Fukuoka, Ltd.
The Nomura Trust andBanking Co., Limited
The Towa Bank, Ltd.
The Shizuoka Bank, Ltd.
The Gunma Bank, Ltd.
Mizuho Bank, Ltd.
Resona Bank, Limited
The Bank of Fukuoka, Ltd.
The Nomura Trust andBanking Co., Limited
AEON Bank, Ltd.
The Towa Bank, Ltd.
The Shizuoka Bank, Ltd.
The Daiichi Life InsuranceCo., Ltd.
The Gunma Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
Long-term Mizuho Bank, Ltd.
The Daiichi Life Insurance
loans(Note 4) Co., Ltd.
Shinsei Bank, Limited
Citibank, N.A., Tokyo Branch
Resona Bank, Limited
The Bank of Fukuoka, Ltd.
AEON Bank, Ltd.
The Nomura Trust andBanking Co., Limited
The Hiroshima Bank, Ltd.
Shinsei Bank, Limited
Citibank, N.A., Tokyo Branch
Resona Bank, Limited
The Bank of Fukuoka, Ltd.
AEON Bank, Ltd.
The Nomura Trust andBanking Co., Limited
The Hiroshima Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedSumitomo Mitsui Banking
Corporation
Shinsei Bank, Limited

Mar. 14,2017

Mar. 14,2017

Mar. 14,2017
May 29,2017

Oct. 13,2017

Oct. 13,2017

Oct. 13,2017

3,000,000

3,000,000

355,000
355,000
334,000
300,000
190,000

355,000
355,000
334,000
300,000
190,000

167,000

167,000

167,000
355,000
355,000
333,000
300,000
190,000

167,000
355,000
355,000
333,000
300,000
190,000

167,000

167,000

167,000
500,000

167,000
500,000

500,000

500,000

500,000

500,000

355,000

355,000

0.563

Repayment Repayment Purpose
date
methodMar. 14,2021(Note 3) (Note 2)

Notes

Unsecured /with noguarantee
Unsecured /with noguarantee

0.663

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

Unsecured /with noguarantee

0.513

Sept. 14,2020

(Note 3) (Note 2)

Unsecured /with noguarantee

0.613

Nov. 29,2021(Note 3) (Note 2)

Unsecured /with noguarantee

0.363

Oct. 132020(Note 3) (Note 2)

Unsecured /with noguarantee

0.463

Oct. 132021(Note 3) (Note 2)

Unsecured /with noguarantee

0.663

Oct. 132022(Note 3) (Note 2)

Unsecured /with noguarantee

Balance atBalance at
AverageBorrowing beginning of
end ofinterestdate
Reporting
Reportingrate
LenderPeriodPeriod(%)(JPY thousand) (JPY thousand) (Note 1)
Citibank, N.A., Tokyo Branch
355,000
355,000
Resona Bank, Limited
333,000
333,000
Development Bank of Japan,
1,500,000
1,500,000
Inc.
Type

The Bank of Fukuoka, Ltd.

300,000

300,000

AEON Bank, Ltd.

190,000

190,000

166,000

166,000

166,000

166,000

500,000

500,000

1,250,000

1,250,000

1,065,000

1,065,000

The Nomura Trust andBanking Co., Limited
The Hiroshima Bank, Ltd.

Oct. 13,2017

The Daiichi Life InsuranceCo., Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedSumitomo Mitsui Banking

Oct. 13,2017

Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedSumitomo Mitsui Banking

Oct. 13,

Sumitomo Mitsui Banking

1,250,000

1,250,000

1,250,000

1,060,000

1,060,000

2017

Corporation
Mizuho Bank, Ltd.

1,250,000

Oct. 13,2017

1,250,000

1,250,000

1,850,000

1,850,000

1,850,000

1,850,000

1,000,000

1,000,000

500,000

500,000

Mizuho Bank, Ltd.

-2,442,000

MUFG Bank, Ltd.

-2,220,000-

1,998,000

Corporation

Long-term Shinsei Bank, Limited
loans(Note 4) MUFG Bank, Ltd.

Jun. 27,2018

Sumitomo Mitsui Banking
Corporation

Jul. 17,

Shinsei Bank, Limited

2018

-

1,110,000-

1,000,000-

890,000

Mizuho Bank, Ltd.

-2,443,000

MUFG Bank, Ltd.

-2,220,000-

1,997,000

Citibank, N.A., Tokyo Branch
Sumitomo Mitsui Trust Bank,
LimitedSumitomo Mitsui Banking
Corporation

Jul. 17,

Shinsei Bank, Limited

2018

Citibank, N.A., Tokyo Branch
Sumitomo Mitsui Trust Bank,
LimitedMizuho Bank, Ltd.
MUFG Bank, Ltd.

Jul. 14,

Sumitomo Mitsui Banking

2018

Corporation-

1,110,000-

1,000,000-

890,000-

2,442,000-

2,220,000-

1,997,000

0.663

0.763

0.863

0.313

0.750

0.363

0.463

0.563

Repayment Repayment Purpose
date
methodOct. 132022

Oct. 132023

Oct. 112024

Oct. 132019
Jun. 27
2023

Jul. 17,2021

Jul. 17,2022

Jul. 14,2023(Note 3) (Note 2)

Notes

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

Unsecured /(Note 3) (Note 2)

with noguarantee

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

Shinsei Bank, Limited-

1,110,000

Citibank, N.A., Tokyo Branch-

1,000,000-

890,000-

766,000-

766,000-

467,000
150,000
120,000-

30,000-60,0002,521,500-

2,521,500-

2,133,000-

1,000,000-

684,000
546,000-

500,000-

445,000-

137,000-

273,000
3,287,000-

3,287,000-

2,600,000-

1,000,000-

833,000
667,000-

500,000-

445,000-

167,000-

334,000
3,287,500-

3,287,500-

2,600,000-

1,000,000-

833,000
667,000-

500,000-

445,000

Sumitomo Mitsui Trust Bank,

Long-termloans(Note 4)

LimitedMizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
MUFG Bank, Ltd.
Shinsei Bank, Limited
Citibank, N.A., Tokyo Branch
The Nomura Trust andBanking Co., Limited
AEON Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedShinsei Bank, Limited
Citibank, N.A., Tokyo Branch
Development Bank of Japan,
Inc.
Resona Bank, Limited
The Nomura Trust andBanking Co., Limited
AEON Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedShinsei Bank, Limited
Citibank, N.A., Tokyo Branch
Development Bank of Japan,
Inc.
Resona Bank, Limited
The Nomura Trust andBanking Co., Limited
AEON Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedShinsei Bank, Limited
Citibank, N.A., Tokyo Branch
Development Bank of Japan,
Inc.
Resona Bank, Limited

Aug. 2,
2018

Sep. 26,
2018

Sep. 26,
2018

Sep. 26,
2018

Repayment Repayment Purpose
date
method

Notes

0.363

Aug 2,
2021(Note 3) (Note 2)

Unsecured /with noguarantee

0.363

Sep. 26,
2021(Note 3) (Note 2)

Unsecured /with noguarantee

0.463

Sep. 26,
2022(Note 3) (Note 2)

Unsecured /with noguarantee

0.563

Sep. 26,
2023(Note 3) (Note 2)

Unsecured /with noguarantee

Type
Lender
The Nomura Trust andBanking Co., Limited
AEON Bank, Ltd.
Subtotal
Total

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

166,000

185,415,000
187,415,000

333,000
224,774,000
225,873,000

Repayment Repayment Purpose
date
methodNotes

(Note 1) Average interest rate shows the interest rate for each loan agreement as of the end of the Reporting Period, rounded
to three decimal places. In regards to borrowings which interest rate swap transactions are entered into for the
purpose of avoiding risk from interest rate fluctuation, interest rates reflecting the interest rate swap are shown. In
regards to borrowings repaid during the Reporting Period, the interest rate for each loan agreement as of therepayment date rounded to three decimal places is 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 date.
(Note 4) Long-term loans includes current portion of long-term loans payable.

3

Investment Corporation Bonds
Status of investment corporation bonds as of the end of the Reporting Period is as follows.
Bond Series

Issue DateFirst Series Unsecured
Investment
May 25, 2018
Corporation Bonds(Note 1)
Second Series
Unsecured Investment
May 25, 2018
Corporation Bonds(Note 1)
Third Series
Unsecured Investment
October 12, 2018
Corporation Bonds(Note 1)

Balance at theBalance at the Interest Rate
beginning of the
Redemption Use of
end of the period
Redemption Date(%)
periodfunds
method(JPY thousand)(JPY thousand)
1,000,000

1,000,000

0.400

May 25, 2023

(Note 2)

Security/
Guaranty(Note 3)
Unsecured /Unguaranteed

1,000,000

1,000,000

0.800

May 25, 2028

(Note 2)

(Note 3)－2,000,000

0.550

October 12, 2023

(Note 2)

(Note 4)

Unsecured /Unguaranteed

Total
2,000,000
4,000,000－－－－－(Note 1) This is with pari passu conditions among specified corporate bonds.
(Note 2) The Investment Corporation Bonds may be purchased and cancelled at any time after the payment date, except for the case where the laws
and regulations or the Depository otherwise stipulates.
(Note 3) The funds will be used to acquire trust beneficiary interest in real estate.
(Note 4) The funds will be used to repay borrowings.

4

Short-Term Investment Corporation Bonds

Not applicable
5

Investment Unit Options

Not applicableAcquisitions and Sales for the Fiscal Period Ended December 31, 20181

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

Type of asset

Name of property

Trustbeneficiaryinterest

D60

Hotel MyStays Premier
Akasaka (Note 3)

August 2,
2018

Trust
beneficiaryinterest

D61

Hotel MyStays Premier
Sapporo Park (Note 3)

August 2,

Trustbeneficiaryinterest

D62

Hotel MyStays Ueno East
(Note 3)

August 2,

Trustbeneficiaryinterest

D63

Hotel MyStays Midosuji
Honmachi (Note 3)

August 2,-

TK Interest with Westin Grand
Cayman Seven Mile Beach
September
28, 2018
Resort & Spa and Sunshine(Note 4)
Suites Resort as underlying
assetsTK interest

Sale

Acquisition
Sales priceGain/loss on
Acquisition
priceBook value
Sales date (JPY million)
sales
date
(JPY million)(JPY million)(Note 2)(JPY million)(Note 1)

2018

2018

Total

2018

20,691----

16,731

-

-

-

-

5,286

-

-

-

-

5,039

-

-

-

-

36,783(Note 5)

-

-

-

-

84,530----(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 interest purchase agreement.
(Note 2) Sales price does not include various costs (brokerage commissions, taxes and other public dues) required for sale ofthe property, and is the sales price indicated in the trust beneficiary interest purchase agreement.
(Note 3) Acquired as trust beneficiary interest in real estate with the real estate as trust asset.
(Note 4) The date is in accordance with the Cayman Island local time. It is September 29, 2018 Japan time.
(Note 5) INV initially funded USD 339,836 thousand (JPY 37,534 million), which was an amount which was reasonably
estimated to enable the Cayman SPC to acquire the underlying assets. However, based on the closing settlement,
the Cayman SPC did not need as much capital as anticipated. Therefore, INV received a refund of the TK
investment in the amount of USD 6.8 million on December 10, 2018 (Cayman Island local time) from the Cayman
SPC. INV’s investment amount to the TK interest is calculated based on the amount reflecting such partial refund(i.e., USD 333,036 thousand).

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 of Specified Assets

Real Estate Transactions
Acquisitionor saleName of property

D60

Hotel MyStays Premier
Akasaka

D61

Hotel MyStays Premier
Sapporo Park

Acquisition

D62 Hotel MyStays Ueno East
D63

Hotel MyStays Midosuji
HonmachiAcquisition orCategory ofTransaction
sales price Appraisal value
specified
date(JPY million)(JPY million)
asset(Note 1)

Real estate
Trustbeneficiaryinterest

August 2,
2018

Appraiser

Appraisaldate

20,691

20,900Japan Real Estate
InstituteJune 1,
2018

16,731

16,900The Tanizawa Sogo
Appraisal Co., Ltd

June 1,
2018

5,286

5,340

The Tanizawa Sogo
Appraisal Co., Ltd

June 1,
2018

5,039

5,090

Japan Real Estate
InstituteJune 1,
2018(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 interest 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.”

Investment Securities
With regard to TK interest transactions from July 1, 2018 to December 31, 2018, INV has entrusted
Akasaka Audit LLC with investigation on comparable prices based on the Article 201, Paragraph 2 of theInvestment Trust Act, transaction types (acquisition, sale or other), transaction dates, matters concerning
corporate assets for TK agreement, issues, transaction prices and other transaction details, and has received
the investigation report.
Other
Other transactions for which INV entrusted investigation are 12 currency option transactions from July 1,
2018 to December 31, 2018. With regard to these transactions, INV has entrusted Akasaka Audit LLC
with investigation on comparable prices based on the Article 201, Paragraph 2 of the Investment Trust Act,
transaction dates, names of counterparties in the transactions, issues, agreed numerical values, type offinancial instruments or monetary indicators, category of put or call, strike price, exercise periods,
transaction periods and details of other over-the-counter derivative transactions, and has received theinvestigation report.

4Transactions 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.

Financial Condition
1

Assets, Liabilities, Principal, and Profit and Loss

Please refer to Audited Financial Statements for the Fiscal Period ended December 31, 2018 (July1, 2018 to
December 2018, 2018).
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

Notice(1) General Meeting of Unitholders
INV’s General Meeting of Unitholders was held on December 12, 2018.
The summary of the matters approved at the General Meeting of Unitholders are as follows.
AgendaProposal No. 1

Partial Amendment
Articles ofIncorporation

Summaryto

1. In order to clarify that the definition of “distributable amount”
to be generated by the operation of the assets by INV is
identical to the “profits” stipulated in the Investment Trust
Act, INV added certain words necessary for such clarification
to the relevant article.
2. In view of growing importance of the roles and responsibilitiesof the independent auditor, and taking into consideration thefact that the volume of audit work is increasing due toexpansion of INV’s asset size resulting from its internal andexternal growth and other factors, INV amended the maximum
amount of remuneration payable to its independent auditor sothat INV may pay a reasonable amount of remuneration to its
independent auditor based on the volume of the audit work
requested by INV to its independent auditor.
3. With the consent of the asset management company, the asset
management fees for the period from January 2013 to
December 2018 had been reduced. INV has further obtained
the consent of the asset management company to reduce theamount of asset management fees for the period from January
2019 to December 2019 to an amount which is lower than theamount that would be applicable if such reduction were notmade but higher than the amount that was applied in 2018.
Accordingly, INV amended the standards concerning theamount and payment of the asset management fees for theperiod from January 2019 to December 2019, effective January
1, 2019.

4. In addition, necessary revision and clarification of expressions,and other changes in the wording and such were made.
Proposal No. 2
Proposal No. 3
Proposal No. 4

Appointment of One (1)Executive Director
Appointment of One (1)SubstituteExecutive
Director
Appointment of Two (2)Supervisory Directors

Naoki Fukuda was appointed.
Christopher Reed was appointed.
Hiroyuki Fujimoto and Yoshihiro Tamura were appointed.

(2) Board 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

The Board of Directors of INV approved that INV would entrust
underwriters (Note) with the service related to the issuance of new
investment units through public offering and secondary offering ofJuly 17, 2018
investment units, which were approved at the meeting of the Board of
Directors of INV held on July 17, 2018.
(Note) The underwriters for the domestic public offering are Mizuho Securities Co., Ltd., SMBC Nikko Securities Inc.,
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Nomura Securities Co., Ltd. and Citigroup Global Markets
Japan Inc. The underwriters for the global offering mainly in the U.S., Europe and Asia are SMBC Nikko CapitalMarkets Limited, Morgan Stanley & Co. International plc, Mizuho International plc, Citigroup Global Markets
Limited and Nomura International plc.
Conclusion of theunderwriting agreement
related to the issuance of new
investment units, etc.

2Disclosure of Companies Owning Real Estate Overseas

Not applicable
3

Disclosure of Real Estate Owned by Companies Owning Real Estate Overseas

Not applicable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

•
•
•
•
•
•

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

•
•
•
•
•
•
•
•

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.

INVINCIBLE INVESTMENT CORPORATIONBALANCE SHEETAs of December 31, 2018
As ofDecember 31,
2018

June 30,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
ASSETS
Current assets:
Cash and bank deposits (Notes 6 and 17) ···················· ¥Cash and bank deposits in trust (Notes 6 and 17) ······
Accounts receivable ·····························································
Rental receivables ·································································
Prepaid expenses ··································································
Income taxes receivable························································
Consumption taxes receivable ·········································
Other ·························································································
Allowance for doubtful accounts ····································
Total current assets ·····························································
Non-current assets:
Property and equipment (Notes 7 and 8):
Tools, furniture and fixtures, at cost ·································
Buildings in trust, at cost ····················································
Buildings and accompanying
facilities in trust, at cost ·······················································
Structures in trust, at cost ···················································
Tools, furniture and fixtures in trust, at cost ················
Land in trust ···········································································
Subtotal ···················································································
Less: Accumulated depreciation ··································
Total property and equipment, net ································
Intangible assets:
Leasehold rights in trust ·····················································
Total intangible assets ·······················································
Investments and other assets:
Investment securities (Note 18 and 22)····························
Guarantee deposits ····························································
Long-term prepaid expenses ············································
Derivatives assets (Note 19) ··············································
Other ·························································································
Total investments and other assets ·······························
Total non-current assets ····················································
Deferred assets:
Investment corporation bond issuance costs ················
Total deferred assets ·····························································TOTAL ASSETS ····································································· ¥8,505,792
6,566,761
6,483
1,826,596
428,536
149,632
0(89)
17,483,714¥

3,985,335
7,079,268
583,0122,591,368
539,442
172,912434,3260(86)
15,385,582$

35,903
63,777
5,252
23,345
4,859
1,557
3,912
0
0
138,608

3,192
133,579,099

3,192
144,380,745

28
1,300,727

28,918,145

32,567,092

293,397

225,353
1,395,339
173,298,062
337,419,193(17,196,907)
320,222,285

228,964
1,690,363
203,881,464
382,751,823(20,117,593)
362,634,229

2,062
15,228
1,836,769
3,448,214(181,239)
3,266,975

16,712,637
16,712,637

20,015,700
20,015,700

180,321
180,32117,856,387
1,681,565
426,222
92,561
12,667
20,069,404
357,004,327

54,640,213
1,700,670
708,191
216,555
22,66757,288,298
439,938,228

492,254
15,321
6,380
1,950
204
516,110
3,963,407

24,29524,29538,98538,985351
351

374,512,988¥

455,362,796$

4,102,367

As ofDecember 31,
2018

June 30,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
LIABILITIESCurrent liabilities:
Accounts payable ·····························································¥
Short-term loans payable (Note 10) ······························
Current portion of long-term loans payable(Note 10) ················································································
Accounts payable-other ·················································
Accrued expenses ····························································
Income taxes payable ······················································
Consumption taxes payable ···········································
Advances received ···························································
Deposits received ·····························································
Total current liabilities ··················································
Non-current liabilities:
Investment corporation bonds (Note 9) ····················
Long-term loans payable (Notes 10 and 17) ············
Tenant leasehold and security deposits in trust(Note 17) ··············································································
Tenant leasehold and security deposits (Note 17) ···Asset retirement obligations (Note 20) ························
Total non-current liabilities ·········································TOTAL LIABILITIES ·······················································NET ASSETS (Note 11)
Unitholders’ equity:
Unitholders’ capital ·························································
Surplus:Capital surplus ·································································
Allowance for temporary differences
Adjustment (Note 4) ······················································
Other deduction of capital surplus ···························
Total deduction of capital surplus ·····························
Capital surplus (net)·························································
Voluntary reserve
Retained earnings ····························································
Total surplus ········································································
Total unitholders’ equity ··············································
Valuation and translation adjustments:
Deferred gains or losses on hedges ······························
Total valuation and translation adjustments ·······TOTAL NET ASSETS ······················································TOTAL LIABILITIES AND NET ASSETS ···············¥

598,870
2,000,000¥

431,891
1,099,000

$

3,890
9,900

46,663,000

54,745,000

493,198

131,783
195,481605
14,902551,506
21,69750,177,846

651,992
200,203605
571,668
134,085
57,834,445

5,873
1,803
5
5,150
1,207
521,0312,000,000
138,752,000

4,000,000
170,029,000

36,036
1,531,792

2,026,400

2,009,816

18,106

1,586
31,891
142,811,878
192,989,724

92,525
32,107
176,163,449
233,997,895

833
289
1,587,058
2,108,089

168,798,455

211,092,540

1,901,734

6,264,432

6,264,432

56,436(46,329)(46,329)(417)(1,194,818)(1,241,148)
5,023,283(5,194,798)(5,241,128)
1,023,303(46,799)(47,217)9,218

7,610,548
12,633,832
181,432,288

9,140,372
10,163,675
221,256,215

82,34591,564
1,993,299

90,97590,975
181,523,263
374,512,988

108,684
108,684
221,364,900
455,362,796

979
979
1,994,278
4,102,367¥

The accompanying notes are an integral part of these financial statements.

$

INVINCIBLE INVESTMENT CORPORATIONSTATEMENT OF INCOME AND RETAINED EARNINGSFor the six months ended December 31, 2018
For the six months ended
December 31,
2018

June 30,2018(in thousands of yen)
Operating revenue
Rental revenue－real estate (Note 13) ······································· ¥Gain on sales of properties (Note 14) ··········································
Dividend income···············································································
Total operating revenue ································································
Operating expenses
Property related expenses (Note 13) ·········································
Asset management fees ································································
Directors’ compensation ·······························································
Asset custody fees ···········································································
Administrative service fees ··························································
Provision of allowance for doubtful accounts ························
Other ···································································································
Total operating expenses ······························································
Operating income ··············································································
Non-operating income
Interest income ················································································
Foreign exchange gains ··································································
Interest on tax refund ······································································
Other ··································································································
Total non-operating income ·······················································
Non-operating expenses
Interest expenses ·············································································
Interest expenses on investment corporation bonds
Amortization of investment corporation bond issuancecosts
Loan-related costs ··········································································

11,122,481
1,249,645
732,714
13,104,714

13,604,224
846,780
14,451,005$

122,560
7,628
130,189

4,136,619
275,000
4,800
18,162
39,697
2
197,039
4,671,320
8,433,520

4,450,676
275,000
5,200
18,64552,60786
134,032
4,936,248
9,514,756

40,096
2,477
46
167
473
0
1,207
44,47085,718

78
3,086
1,181
4,347

82
34,46872
906
35,528

0
310
0
8
320

479,456
1,216

555,811
8,490

5,007
76

379

2,625

23

234,197

407,683

3,672

186,997

1,684

Investment unit issuance costs ···················································-

Other-non-operating expenses ····················································

64

Total non-operating expenses ····················································
Ordinary income ···············································································
Income before income taxes ··························································
Income taxes (Note 15):
Current ····························································································
Total income taxes ······································································Net income ···························································································
Retained earnings / losses brought forward ·······················Unappropriated retained earnings / losses (Note 12)·············· ¥¥December 31,
2018(in thousands of U.S.
dollars)

36

715,314
7,722,553
7,722,553

3,999
1,165,608
8,384,676
8,384,676

10,50075,53775,537605
605
7,721,948(111,399)
7,610,548

605
605
8,384,071
756,300
9,140,372

5
575,532
6,813
82,345¥The accompanying notes are an integral part of these financial statements.

$

INVINCIBLE INVESTMENT CORPORATIONSTATEMENT OF CHANGES IN NET ASSETSFor the six months ended December 31, 2018
Unitholders' equity
SurplusCapital surplus
Deduction of capital surplus

Unitholders'
capitalCapital surplus

Allowance fortemporarydifferences
adjustment¥¥

Other deduction ofcapital surplus

Capital surplus (net)

Deduction ofcapital surplus(in thousands of yen)
Balance as of January 1, 2018 ························································ ¥168,798,455

6,264,432(46,329)¥(1,022,263)¥(1,068,593)¥

5,195,838

Changes during the period ··························································
Distributions from surplus ·························································
Other distributions in excess of retained earnings ·················(172,554)(172,554)(172,554)

Net income ·······················································································
Changes other than unitholders’ equity(net) ·························
Total changes during the period ················································-

Balance as of June 30, 2018 ··························································· ¥168,798,455¥-

6,264,432¥(46,329)(172,554)¥(1,194,818)(172,554)¥(172,554)(1,241,148)¥

5,023,283

Changes during the period ··························································
Issuance of new investment units ··············································

42,294,085

Distributions from surplus·····························································
Acquisition of own investment units··········································
Cancellation of own investment units········································(3,999,980)(3,999,980)(3,999,980)

Net income ·······················································································
Changes other than unitholders’ equity(net) ·························
Total changes during the period ················································

42,294,085

Balance as of December 31, 2018 ··············································· ¥211,092,540¥-

6,264,432¥(46,329)(3,999,980)¥(5,194,798)

Retainedearnings

Own
investment
units

Total surplus(3,999,980)(5,241,128)¥

1,023,303

Valuation and translation adjustments

Unitholders' equity
Surplus(3,999,980)¥

Total unitholders'equityDeferred gains
or losses onhedgesTotal valuationand translation
adjustments

Total net assets

¥

¥

¥

(in thousands of yen)
Balance as of January 1, 2018················································¥

7,212,580¥

12,408,419

¥

-

¥

181,206,874

113,592

113,592

181,320,466

Changes during the period ················································
Distributions from surplus ···············································(7,323,980)(7,323,980)(7,323,980)(172,554)(172,554)(172,554)

7,721,948

7,721,948

7,721,948

7,721,948

397,968

225,413

Other distributions in excess of retained earnings ·····Net income ·············································································(7,323,980)

Changes other than unitholders’ equity(net) ···············
Total changes during the period ······································
Balance as of June 30, 2018 ··················································¥

7,610,548¥

12,633,832¥-

225,413¥

181,432,288¥(22,616)(22,616)(22,616)(22,616)

90,975¥90,975(22,616)
202,796¥

181,523,263

Changes during the period ················································
Issuance of new investment units ····································
Distributions from surplus ···················································(6,854,248)

Acquisition of own investment units ·······························
Cancellation of own investment units······························(3,999,980)

Net income ·············································································

42,294,085

42,294,085(6,854,248)(6,854,248)(3,999,980)(3,999,980)(3,999,980)

3,999,980--

8,384,071

8,384,071(6,854,248)

8,384,071

8,384,071

1,529,823(2,470,157)

Changes other than unitholders’ equity(net) ···············
Total changes during the period ······································
Balance as of December 31, 2018 ······································¥

9,140,372¥

10,163,675¥-

39,823,927¥

221,256,215¥

17,70917,70917,70917,70917,70939,841,636

108,684¥

108,684¥

221,364,900

Unitholders' equity
SurplusCapital surplus
Deduction of capital surplus

Unitholders'
capitalCapital surplus

Allowance fortemporarydifferences
adjustment$$

Other deduction ofcapital surplus

Capital surplus (net)

Deduction ofcapital surplus(in thousands of U.S dollars)
Balance as of July 1, 2018 ································································ $1,520,706

56,436(417)$(10,764)$(11,181)$

45,254

Changes during the period ··························································
Issuance of new investment units ··············································

381,027

Distributions from surplus·····························································
Acquisition of own investment units··········································
Cancellation of own investment units········································(36,035)(36,035)(36,035)

Net income ·······················································································
Changes other than unitholders’ equity(net) ························
Total changes during the period ················································

381,027

Balance as of December 31, 2018 ················································ $1,901,734$-

56,436$(417)(36,035)$(46,799)

Unitholders' equity
SurplusRetainedearnings(36,035)(47,217)$

9,218

Valuation and translation adjustments
Own
investment
units

Total surplus(36,035)$

Total
unitholders'equityDeferred gains
or losses onhedgesTotal valuationand translation
adjustments

Total net assets

$

$

$

(in thousands of U.S dollars)
Balance as of July 1, 2018 ·····················································$

68,563$

113,818$-$

1,634,525

819

819

1,635,344

Changes during the period ················································
Issuance of new investment units ···································
Distributions from surplus ···················································(61,749)

Acquisition of own investment units ·······························(36,035)

Cancellation of own investment units ·····························Net income ·············································································

381,027

381,027(61,749)(61,749)(36,035)(36,035)(36,035)

36,035-(61,749)

75,53275,532

13,782(22,253)-

75,53275,532

Changes other than unitholders’ equity(net) ··············
Total changes during the period ······································
Balance as of December 31, 2018 ······································$

82,345$91,564$-

358,774$

1,993,299$

The accompanying notes are an integral part of these financial statements.

159

159

159

159

159

358,933

979

$

979

$

1,994,278

INVINCIBLE INVESTMENT CORPORATIONSTATEMENT OF CASH FLOWSFor the six months ended December 31, 2018
For the six months ended
June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Cash flows from operating activities:
Income before income taxes ···································································································· ¥Depreciation and amortization ······························································································
Investment unit issuance costs ·································································································
Amortization of investment corporation bond issuance costs······································
Loan-related costs ·······················································································································
Interest income ····························································································································
Interest expenses ·························································································································
Changes in assets and liabilities
Foreign exchange losses (gains) ·····························································································
Increase (decrease) in allowance for doubtful accounts ················································
Decrease (increase) in rental receivables ·············································································
Decrease (increase) in receivable income taxes···································································

7,722,553
2,772,510
379
234,197(78)
480,672¥

8,384,676
3,039,033
186,997
2,625
407,683(82)
564,302$75,537
27,378
1,684
23
3,672
0
5,083

0
158,132(149,624)(7,261)(3)(764,772)(23,292)(65)
0(6,889)(209)

Decrease (increase) in consumption taxes receivable ·····················································

661,287(434,326)(3,912)

Increase (decrease) in accounts payable ··············································································

39,752(32,970)(297)

Increase (decrease) in consumption taxes payable ··························································(32,819)(14,902)(134)

Increase (decrease) in accounts payable-other ··································································
Increase (decrease) in accrued expenses ·············································································
Increase (decrease) in advances received ············································································
Increase (decrease) in deposits received ··············································································
Decrease in property and equipment, due to sale in trust··············································
Other, net ·······································································································································
Subtotal ·····································································································································
Interest income received ···········································································································
Interest expenses paid ···············································································································
Income taxes paid ·······················································································································

49,627(75,177)(49,246)(47,348)
9,181,866
20,177
20,966,865
78(483,261)(605)(49,755)(2,611)
20,161(75,818)
9,283
11,208,966
82(553,985)
(605)

(448)
(23)
181
(683)
83
100,981
0(4,990)(5)

Net cash provided by operating activities ····································································

20,483,077

10,654,458

95,986

Cash flows from investing activities:
Purchases of property and equipment in trust ································································
Purchases of leasehold rights in trust·····················································································
Purchases of investment securities··························································································
Repayments of tenant leasehold and security deposits in trust····································
Proceeds from tenant leasehold and security deposits in trust················· ···················
Payments of tenant leasehold and security deposits ···································· ···················
Payments of TK investment·················································································· ···················
Proceeds from withdrawal of TK investment ····································································
Other, net ·······································································································································(20,847,991)(1,927)(320,542)
132,593(30,000)
47,201(45,485,560)(3,421,194)(64,862)
49,032(19,105)(37,534,886)
751,060(12,784)(409,779)(30,821)
(584)
441
(172)
(338,152)
6,766
(115)

Net cash used in investing activities ················································································(21,020,665)(85,738,300)(772,417)

Cash flows from financing activities:
Proceeds from short-term loans payable ············································································
Repayments of short-term loans payable·············································································
Proceeds from long-term loans payable ·············································································
Repayments of long-term loans payable··············································································
Proceeds from issuance of investment corporation bonds·············································
Payments for loan-related costs ·····························································································
Payments for Acquisition of Own investment units ························································
Payments of distributions of earnings ···················································································
Payments of other distributions in excess of retained earnings ····································
Proceeds from issuance of investment units ·····································································(1,068,000)
1,500,000
1,977,436(40,494)(7,280,040)(172,554)-

1,099,000(2,000,000)
68,338,000(28,979,000)
1,980,352(804,736)(3,999,980)(6,664,830)
42,107,087

9,900(18,018)
615,657(261,072)
17,841(7,249)(36,035)(60,043)
379,343

Net cash provided by (used in) financing activities ···················································(5,083,652)

71,075,892

640,323

Net increase (decrease) in cash and cash equivalents ·····················································Cash and cash equivalents at beginning of period ··························································Cash and cash equivalents at end of period (Note 6) ······················································ ¥(5,621,240)
20,693,794
15,072,553(4,007,949)
15,072,553
11,064,604(36,107)
135,788
99,681¥

The accompanying notes are an integral part of these financial statements.

$

INVINCIBLE INVESTMENT CORPORATIONNOTES TO FINANCIAL STATEMENTS
As of and for the six months ended December 31, 2018

1. Organization
Invincible Investment Corporation (the“Company”), a real estate investment corporation, was incorporated on January 18, 2002, underthe Act on Investment Trusts and Investment Corporations of Japan (the“Investment Trust Act”) with initial capital of ¥200 million.
The Company is externally managed by a registered asset management company, Consonant Investment Management Co., Ltd. (the“Asset Manager”). The Asset Manager is currently owned 100% by Calliope Godo Kaisha (Calliope). The Company was formed toinvest primarily in properties in Japan.
On May 17, 2004, the Company raised ¥3,377,250 thousand through an initial public offering of 9,000 investment units. As a“comprehensive investment REIT focusing on the Tokyo metropolitan area and on residential properties,” the Company was listed on
the Osaka Securities Exchange in May 2004.
On February 7, 2005, the Company completed its second public offering of 10,650 investment units at a price of ¥369,734 per unit inconnection with a public offering in Japan.
On July 31, 2006, the Company completed its third public offering of 25,000 investment units at a price of ¥332,045 per unit in connection
with a public offering in Japan. The Company was listed on the J-REIT market of the Tokyo Stock Exchange in August 2006 (in order tofocus trading on one securities exchange and reduce administrative tasks and costs accompanying a duplicate listing, the Company
delisted from the Osaka Securities Exchange on October 6, 2007).
Effective on February 1, 2010, the Company executed a five-to-one unit split and 215,596 investment units were issued in connection
with the unit split. Effective on the same day, the Company also merged with LCP Investment Corporation (LCP) and allocated 367,200
investment units at a ratio of 4 units (post-unit split) of the Company per one investment unit of LCP. As a result, investment units issued
and outstanding were 636,695 units as of February 1, 2010.
On July 29, 2011, the Company completed a third party allotment of 711,597 investment units at a price of ¥9,837 per unit.
On December 20, 2013, the Company completed a third party allotment of 224,887 investment units at a price of ¥13,340 per unit.
On July 16, 2014, the Company completed its fourth public offering totaling 1,040,000 new investment units at a price of ¥21,873 per unit.
527,322 of such units were issued in connection with a Domestic Public Offering, and the remaining 512,678 units were issued inconnection with an International Offering pursuant to Rule 144A and Regulation S under the U.S. Securities Act of 1933. On August 13,
2014, the Company issued 55,507 investment units domestically in connection with the exercise of an over-allotment option. Net
proceeds of approximately ¥23.9 billion were used to repay the Company’s outstanding short term borrowings and in connection withthe acquisition of 18 properties during this fiscal period.
On July 15, 2015, the Company completed its fifth public offering totaling 500,000 new investment units at a price of ¥57,817 per unit.
211,250 of such units were issued in connection with a Domestic Public Offering, and the remaining 288,750 units were issued inconnection with an International Offering pursuant to Rule 144A and Regulation S under the U.S. Securities Act of 1933. On August 12,
2015, the Company issued 25,000 investment units domestically in connection with the exercise of an over-allotment option. Net
proceeds of approximately ¥29.3 billion were used to repay the Company’s outstanding long term borrowings and in connection withthe acquisition of 14 properties during this fiscal period.
On March 30, 2016, the Company completed its sixth public offering totaling 459,512 new investment units at a price ¥81,217 per unit.
194,144 of such units were issued in connection with a Domestic Public Offering, and the remaining 265,368 units were issued inconnection with an International Offering pursuant Rule 144A and Regulation S under the U.S. Securities Act of 1933. On April 27, 2016,
the Company issued 22,626 investment units domestically in connection with the exercise of an over-allotment option. Net proceeds ofapproximately ¥37.9 billion were used to repay the Company’s outstanding long term borrowing and in connection with the acquisitionof 6 properties during this fiscal period.
On March 13, 2017, the Company completed its seventh public offering totaling 185,000 new investment units at a price ¥46,897 per unit
in connection with Japanese Primary Offering.

On October 12, 2017, the Company completed its eighth public offering totaling 887,959 new investment units at a price ¥44,118 per unit.
515,017 of such units were issued in connection with a Domestic Public Offering, and the remaining 372,942 units were issued inconnection with an International Offering pursuant Rule 144A and Regulation S under the U.S. Securities Act of 1933. On November 1,
2017, the Company issued 44,398 investment units domestically in connection with the exercise of an over-allotment option. Net
proceeds of approximately ¥39.8 billion were used to repay the Company’s outstanding long term borrowing and in connection with theacquisition of 4 properties and 1 preferred security during this fiscal period.
On August 1, 2018, the Company completed its ninth public offering totaling 909,524 new investment units at a price ¥45,776 per unit.
432,024 of such units were issued in connection with a Domestic Public Offering, and the remaining 477,500 units were issued inconnection with an International Offering pursuant Rule 144A and Regulation S under the U.S. Securities Act of 1933. On August 21,
2018, the Company issued 45,476 investment units domestically in connection with the exercise of an over-allotment option. Net
proceeds of approximately ¥42.2 billion were used to repay the Company’s outstanding long term borrowing and in connection with theacquisition of 4 properties and 1 TK investment during this fiscal period.

2. Summary of Significant Accounting Policies(a) Basis of Presentation
The Company maintains its accounts and records in conformity with accounting principles and practices generally accepted in Japan(“Japanese GAAP”), including provisions set forth in the Investment Trust Act, the Companies Act of Japan, the Financial Instruments
and Exchange Act of Japan, and other related regulations, which are different in certain respects from the application and disclosure
requirements of International Financial Reporting Standards or accounting principles generally accepted in the United States of America.
The financial statements are prepared based on the Japanese audited financial statements of the Company, which were prepared inaccordance with Japanese GAAP and filed with the Kanto Local Finance Bureau as required by the Financial Instruments and Exchange
Act of Japan. In preparing the accompanying financial statements, certain information in the notes has been added and certain
reclassifications have been made from the financial statements issued domestically for the convenience of the readers outside Japan.
The financial statements are not intended to present the financial position and the results of operations in accordance with accounting
principles and practices generally accepted in countries and jurisdictions other than Japan.
The Company’s fiscal period is a six-month period, which ends at the end of June and December of each year.

Amounts less than ¥1 thousand and US$1 thousand have been rounded down. As a result, the totals shown in the financial statements
and notes thereto do not necessarily agree with the sum of the individual amounts.
The Company does not prepare consolidated financial statements as it has no subsidiaries.
(b) Cash and Cash Equivalents
Cash and cash equivalents consist of cash, demand deposits, and short-term investments which are highly liquid and readily convertible
to cash, have a low risk of price fluctuation, and mature within three months from the date of acquisition.
(c)

Valuation standard and method for securities

Other securities without fair market value are recorded at cost being determined by the moving average method.
(d) Property and Equipment
Property and equipment are recorded at cost. Depreciation of property and equipment, except for land, is calculated on a straight-line
basis over the estimated useful lives of the assets as stated below:
For the six months ended
December 31, 2018

Tools, furniture and fixtures ························································

4-8

Buildings in trust ···················································································

5-67

Buildings and accompanying facilities in trust ···························

2-33

Structures in trust ··················································································

3-55

Tools, furniture and fixtures in trust ···············································

2-19

(e) Intangible Assets
Intangible assets are amortized on a straight-line basis. Amortization of a term leasehold interest for business use is calculated by thestraight-line method over the lease term.
(f)Long-term Prepaid Expenses

Long-term prepaid expenses are amortized on a straight-line basis.
(g) Investment Unit Issuance Costs
Investment unit issuance costs are recorded as expenses when incurred.
(h) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the straight-line method over the period through the redemption of thebonds.
(i)

Allowance for Doubtful Accounts

Allowance for doubtful accounts is provided based on past experience for normal receivables and on a valuation of any receivables fromcompanies and individuals with financial difficulties.
(j)

Conversion of assets and liabilities in foreign currency into Japanese yen

Receivables and payables denominated in foreign currencies are translated into yen at the exchange rate in effect at the balance sheet
date, and differences arising from the translation are included in the statements of income.
(k) Impairment of Fixed Assets
An assessment for impairment is carried out on an asset or group of assets, such as fixed assets, intangible assets and investments,
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the asset or group of assets isdeemed to be impaired, an impairment loss is recognized for the difference between the carrying amount and the recoverable value ofthe asset or group of assets using the discounted cash flow model.
(l)

Accounting Treatment of Trust Beneficiary Interests in Real Estate Trusts

For trust beneficiary interests in real estate trusts, which are commonly utilized to obtain ownership in investment properties in Japanand through which the Company holds all of its real estate, all assets and liabilities with respect to assets in trust, as well as all income
generated and expenses incurred with respect to assets in trust, are recorded in the relevant accounts of the balance sheet and statementof income and retained earnings of the Company in proportion to the percentage that such trust beneficiary interest represents. Certain
material accounts with respect to assets and liabilities in trust are presented separately from other accounts in the balance sheets of theCompany.
(m) Income Taxes
Deferred tax assets and liabilities are computed based on the temporary differences between the financial statement and income tax
basis of assets and liabilities using the applicable statutory tax rate.
(n) Consumption Taxes
Consumption taxes withheld and consumption taxes paid are not included in the statement of income and retained earnings.
Consumption taxes paid are generally offset against the balance of consumption taxes withheld. As such, the excess of payments overamounts withheld are included in current assets and the excess of amounts withheld over payments are included in current liabilities as
the case may be.
(o) Taxes on Property and Equipment
Property and equipment are subject to various taxes, such as property taxes and urban planning taxes on an annual basis. An owner of aproperty is registered in the record maintained by the local government in each jurisdiction, and such taxes are imposed on the ownerregistered in the record as of January 1 of each year based on the assessment made by the local government.
Under the above tax rules, a seller of a property at the time of disposal is liable for these taxes on the property from the date of disposal tothe end of the calendar year in which the property is disposed. The seller, however, is reimbursed by the purchaser for these accrued tax
liabilities and the amount of settlement reflects this adjustment. For the purchaser, a portion of such taxes calculated from the acquisition

date to the end of the calendar year is capitalized as a cost of the property in accordance with Japanese GAAP. In subsequent calendar
years, half of such taxes on property and equipment for each calendar year are charged as operating expenses in each fiscal period.
Tax on property and equipment capitalized as part of the acquisition cost of properties amounted to ¥54,754 (US$493) thousand for thesix months ended December 31, 2018.

3. U.S. Dollar Amounts
The Company maintains its accounting records in Japanese yen. The U.S. dollar amounts included in the accompanying financial
statements and notes thereto represent the arithmetical result of translating Japanese yen into U.S. dollars at the rate of ¥111 = US$1, theeffective rate of exchange prevailing at December 31, 2018. The inclusion of such U.S. dollar amounts associated with the fiscal six
months ended December 31, 2018 is solely for the convenience of readers outside Japan. Such translations should not be construed as
representations that the Japanese yen amounts represent, or have been, or could be converted into, U.S. dollars at that or any other rate.

4. Allowance for temporary differences adjustment
For the six months ended June 30, 2018
On the Balance Sheet, there are the increase and decrease of allowance for temporary differences adjustment.
1. Reason, related assets and amounts(in thousands of yen)
Allowance
Related assets,
etc.

Leaseholdrights in trust

Reason for
occurrence

InitialamountBeginningbalance¥ (46,329)¥ (46,329)-¥ (46,329)¥ (46,329)-

set aside
duringperiodReversalEndingbalance

Reason for reversal-¥ (46,329)--¥ (46,329)

duringperiodAmortization ofleasehold rights in
trust

Total

2. Method of reversal(1) Leasehold rights in trust
Upon the sale of the relevant properties, the corresponding amount is scheduled to be reversed.

For the six months ended December 31, 2018
On the Balance Sheet, there are the increase and decrease of allowance for temporary differences adjustment.
1. Reason, related assets and amounts(in thousands of yen)
Allowance
Related assets,
etc.

Leaseholdrights in trust

Reason for
occurrence

InitialamountBeginningbalance¥ (46,329)¥ (46,329)-¥ (46,329)¥ (46,329)-

set aside
duringperiodReversalEndingbalance

Reason for reversal-¥ (46,329)--¥ (46,329)

duringperiodAmortization ofleasehold rights in
trust

Total

(in thousands of U.S dollars)
Allowance
Related assets,
etc.

Leaseholdrights in trust

Reason for
occurrence

InitialamountBeginningbalanceset aside
duringperiodReversalEndingbalanceduringperiodReason for reversal

Amortization ofleasehold rights in
trust

Total

$ (417)$ (417)--$ (417)$ (417)$ (417)--$ (417)-

2. Method of reversal(1) Leasehold rights in trust
Upon the sale of the relevant properties, the corresponding amount is scheduled to be reversed.

5. Status of cancellation of own investment units
As ofJune 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Total number of investment units cancelled ················································
Total amount cancelled ·······················································································

¥

-

¥

81,341
3,999,980$

36,035

6. Cash and Cash Equivalents
Cash and cash equivalents shown in the statements of cash flows consist of the following balance sheet items.
As ofJune 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Cash and bank deposits ··························· ¥Cash and bank deposits in trust ············

8,505,792
6,566,761¥

3,985,335
7,079,268$

35,903
63,777

Cash and cash equivalents ······················ ¥15,702,553¥

11,064,604$

99,681

7. Property and Equipment
The following tables show the summary of movement in property and equipment for the six months ended December 31, 2018.
At costBeginningbalance

Increase

Endingbalance

Decrease

Accumulated
depreciation

Depreciation forthe period

Net property andequipment(in thousands of yen)Tools, furniture and fixtures ···························¥

3,192

Buildings in trust ··············································

133,579,099

10,801,646-

144,380,745

12,260,835

1,781,308

132,119,910

28,918,145

3,648,947-

32,567,092

7,258,920

1,021,068

25,308,172

Buildings and accompanying facilities
in trust ··································································
Structures in trust ·············································

¥

-

¥

-

¥

3,192

¥

669

¥

225

¥

2,522

225,353

3,611-

228,964

92,586

6,087

136,377

Tools, furniture and fixtures in trust ··········

1,395,339

295,023-

1,690,363

504,581112,2111,185,781

Land in trust ······················································

173,298,062

30,583,402-

203,881,464--

203,881,464

Leasehold rights in trust ································

17,079,771

3,421,194-

20,500,965

485,264

118,131

Total ······································································¥

354,489,964¥

48,753,824

¥

-

¥

403,252,788¥

20,602,858¥

20,015,700

3,039,033¥

382,649,930

At costBeginningbalance

Increase

Endingbalance

Decrease

Accumulated
depreciation

Depreciation forthe period

Net property andequipment(in thousands of U.S dollars)
Tools, furniture and fixtures ···························$

28$

Buildings in trust ··············································
Buildings and accompanying facilities
in trust ··································································
Structures in trust ·············································

1,203,415

97,312

260,523

32,873

2,030

32

-

2,062

834

54

1,228

Tools, furniture and fixtures in trust ··········

12,5702,657-

15,228

4,545

1,010

10,682Land in trust ······················································

1,561,243

275,526-

1,836,769--

1,836,769

Leasehold rights in trust ································

153,871

30,821-

184,693

4,371

1,064

Total ······································································$

3,193,684$-

439,223

$

-

$

-

$

-

$

28

$

6

$

2

$

22

1,300,727

110,457

16,047

1,190,269

293,397

65,395

9,198

228,001

3,632,908$

185,611$

27,378180,321$3,447,296

Increases in the net book values are mainly due to the acquisition of 4 properties(¥47,747,000thousand) as shown below and capitalized expenditures.
Property name

Property No.

Acquisition cost(in thousands of yen)

Acquisition cost(in thousands ofU.S. dollars)

D60

Hotel MyStays Premier Akasaka

20,691,000

186,405

D61

Hotel MyStays Premier Sapporo Park

16,731,000

150,729

D62

Hotel MyStays Ueno East

5,286,000

47,621

D63

Hotel MyStays Midosuji Honmachi

5,039,000

45,39647,747,000

430,153

Total

8.Fair Value of Investment and Rental Properties
The following tables show the net book value and the fair value of the investment and rental properties in the aggregate for the six
months ended June 30, 2018 and December 31, 2018.
Residential
As of / For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Net book value
Balance at the beginning of period ··············· ¥89,949,664

Net increase (decrease) during period ········
Balance at the end of period ····························(3,380,554)
86,569,109

Fair value ···································································· ¥100,387,000¥

86,569,109$

779,901(660,828)
85,908,280¥

102,440,000(5,953)773,948$919,315

OfficeAs of / For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Net book value
Balance at the beginning of period ··············· ¥6,474,931

Net increase (decrease) during period ········
Balance at the end of period ····························(6,474,931)-

Fair value ···································································· ¥

-

¥

-

$

-

¥

-

$

-

Retail facilities
As of / For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Net book value
Balance at the beginning of period ··············· ¥4,957,292

Net increase (decrease) during period ········
Balance at the end of period ····························(44,824)
4,912,468

Fair value ···································································· ¥6,170,000¥

4,912,468$

44,256(45,728)
4,866,739¥

6,170,000(411)
43,844$55,585Hotel
As of / For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of yen)(in thousands of
U.S. dollars)

Balance at the beginning of period ··············· ¥226,328,017$

Net increase (decrease) during period ········
Balance at the end of period ····························

19,125,328
245,453,345

Fair value ···································································· ¥304,985,000

Net book value¥

245,453,345
46,421,563
291,874,909¥

354,366,000

2,211,291
418,2122,629,503$

3,192,486

TotalAs of / For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of yen)(in thousands of
U.S. dollars)

Balance at the beginning of period ··············· ¥327,709,905$

Net increase (decrease) during period ········
Balance at the end of period ····························

9,225,018
336,934,923

Fair value ···································································· ¥411,542,000

Net book value¥

336,934,923

3,035,449

45,715,006
382,649,930¥

411,8463,447,296

462,580,000$

4,167,387

Notes:
1.Fair value has been determined based on the appraisals or research provided by independent real estate appraisers.
2.For rental revenues and expenses for the six months ended June 30, 2018 and December 31, 2018, please refer to “Note 13: Rent Revenues－Real Estate and Expenses Related toProperty Rental Business“

9.Investment corporation bonds
The following table shows the details of investment corporation bonds for the six months ended December 31, 2018.
For the six months ended December 31, 2018
Beginning

EndingBeginning

EndingInterestbalancebalancebalancebalancerate (%)(in thousands of yen)
1st unsecured investment corporation bond(Issued on May 25, 2018 and due on May 25, 2023)(1)(2)
2nd unsecured investment corporation bond(Issued on May 25, 2018 and due on May 25, 2028) (1)(2)(in thousands of U.S. dollars)

1,000,000

1,000,000

9,009

9,009

1,000,000

1,000,000

9,009

9,009

3rd unsecured investment corporation bond-

2,000,000-

18,0182,000,000

4,000,000

18,01836,036(1)(3)
Total investment corporation bonds
Notes:(1)

The bonds were issued with pari passu conditions among specified investment corporation bonds.

(2)

The funds are mainly used to acquire properties in trust.

(3)

The funds are mainly used to repay existing borrowing.

(4)

Repayment schedule of investment corporation bonds for the next five years after each balance sheet date are as follows:

As of
December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
¥

0.800
0.550

(Issued on October 12, 2018 and due on October 12, 2023)

Within 1 year······················································

0.400

-

$

-

1-2 years·······························································--

2-3 years····································································--

3-4 years····································································--

4-5 years····································································

3,000,000

27,027

10. Loans Payable
The following table shows the details of loans payable for the six months ended December 31, 2018.
For the six months ended December 31, 2018

Classification

Short-termloans payable

Long-termloans payable

Long-termloans payable

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance

Increase(in thousands of yen)Endingbalance

Decrease(in thousands of U.S. dollars)

MizuhoBank, Ltd.

667,000-

667,000

Sumitomo
MitsuiTrust Bank,
Limited

666,000-

666,000

Sumitomo
Mitsui
Banking
Corporation

667,000-

MizuhoBank, Ltd.

-

Sumitomo
Mitsui
Banking
Corporation-

Averageinterest
rate (%)(1)

Maturity
date

6,009

-

6,009

-

0.263

13-Oct-18

-

6,000

-

6,000

-

0.263

13-Oct-18

667,000

-

6,009

-

6,009

-

0.263

13-Oct-18

366,500-

366,500

-

3,301

-

3,301

0.263

02-Aug-19-

366,500-

366,500

-

3,301

-

3,301

0.263

02-Aug-19

MUFG
Bank, Ltd.

-366,000-

366,000

-

3,297

-

3,297

0.263

02-Aug-19

Total
Short-termloanspayable2,000,000

1,099,000

2,000,000

1,099,000

18,0189,900

18,0189,900

MizuhoBank, Ltd.

5,992,000-

5,992,000-

53,981-

53,981-

0.375

16-Jul-18

MUFG
Bank, Ltd.

5,992,000-

5,992,000-

53,981-

53,981-

0.375

16-Jul-18

Sumitomo
Mitsui
Banking
Corporation

5,992,000-

5,992,000-

53,981-

53,981-

0.375

16-Jul-18

ShinseiBank,
Limited.

3,330,000-

3,330,000-

30,000-30,000-0.375

16-Jul-18

Citibank,
N.A., Japan
Branches.

3,000,000-

3,000,000-

27,027-27,027-0.375

16-Jul-18

Sumitomo
MitsuiTrust Bank,
Limited

2,670,000-

2,670,000-

24,054-24,054-0.375

16-Jul-18

ResonaBank,
Limited.

1,335,000-

1,335,000-

12,027-

12,027-0.375

16-Jul-18

MUFG
Bank, Ltd.

668,000-

668,000

-

6,018

-

6,018

-

0.375

16-Jul-18

MizuhoBank, Ltd.

5,992,000--

5,992,000

53,981--

53,981

0.480

16-Jul-19

MUFG
Bank, Ltd.

5,992,000--

5,992,000

53,981--

53,981

0.480

16-Jul-19

Sumitomo
Mitsui
Banking
Corporation

5,992,000--

5,992,000

53,981--

53,981

0.480

16-Jul-19

Use ofproceeds

Remarks(2)

Unsecured andunguaranteed(2)

Unsecured andunguaranteed(2)

Unsecured andunguaranteed(2)

Unsecured andunguaranteedClassification

Long-termloans payable

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Increase

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturitydate

ShinseiBank,
Limited.

3,330,000--

3,330,000

30,000--30,0000.480

16-Jul-19

Citibank,
N.A., Japan
Branches.

3,000,000--

3,000,000

27,027--27,0270.480

16-Jul-19

Sumitomo
MitsuiTrust Bank,
Limited

2,670,000--

2,670,000

24,054--24,0540.480

16-Jul-19

ResonaBank,
Limited.

1,335,000--

1,335,000

12,027--

12,0270.480

16-Jul-19

MUFG
Bank, Ltd.

668,000--

668,000

6,018

-

-

6,018

0.480

16-Jul-19

MizuhoBank, Ltd.

5,992,000--

5,992,000

53,981--

53,9810.590

16-Jul-20

MUFG
Bank, Ltd.

5,992,000--

5,992,000

53,981--

53,9810.590

16-Jul-20

Sumitomo
Mitsui
Banking
Corporation

5,992,000--

5,992,000

53,981--

53,9810.590

16-Jul-20

ShinseiBank,
Limited.

3,330,000--

3,330,000

30,000--30,0000.590

16-Jul-20

Citibank,
N.A., Japan
Branches.

3,000,000--

3,000,000

27,027--27,0270.590

16-Jul-20

Sumitomo
MitsuiTrust Bank,
Limited

2,670,000--

2,670,000

24,054--24,0540.590

16-Jul-20

ResonaBank,
Limited.

1,335,000--

1,335,000

12,027--

12,0270.590

16-Jul-20

MUFG
Bank, Ltd.

668,000--

668,000

6,018

-

-

6,018

0.590

16-Jul-20

MizuhoBank, Ltd.

3,682,000--

3,682,000

33,171--33,171

0.480

28-Aug-19

Sumitomo
MitsuiTrust Bank,
Limited

3,400,000--

3,400,000

30,630--30,6300.343

22-Jan-19

MUFG
Bank, Ltd.

850,000--

850,000

7,657

-

-

7,657

0.343

22-Jan-19

Sumitomo
MitsuiTrust Bank,
Limited

3,400,000--

3,400,000

30,630--30,6300.600

22-Jan-21

MUFG
Bank, Ltd.

850,000--

850,000

7,657

-

-

7,657

0.600

22-Jan-21

MizuhoBank, Ltd.

465,000--

465,000

4,189

-

-

4,189

0.463

30-Mar-19

MUFG
Bank, Ltd.

1,125,000--

1,125,000

10,135--

10,1350.463

30-Mar-19

Use ofproceeds

Remarks(2)

Unsecured andunguaranteedClassification

Long-termloans payable

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Increase

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturity
date

Sumitomo
MitsuiTrust Bank,
Limited2,181,000--

2,181,000

19,648--19,6480.463

30-Mar-19

ShinseiBank,
Limited.

570,000--

570,000

5,135

-

-

5,135

0.463

30-Mar-19

ResonaBank,
Limited.

570,000--

570,000

5,135

-

-

5,135

0.463

30-Mar-19

MUFG
Bank, Ltd.

650,000--

650,000

5,855

-

-

5,855

0.463

30-Mar-19

Japan Post
Bank Co.,Ltd.

2,000,000--

2,000,000

18,018--18,0180.463

30-Mar-19

Developme
nt Bank ofJapan Inc.

1,000,000--

1,000,000

9,009

-

-

9,009

0.463

30-Mar-19

The Bank ofFukuoka,Ltd.

333,000--

333,000

3,000

-

-

3,000

0.463

30-Mar-19

The
Shizuoka
Bank, Ltd.

1,270,000--

1,270,000

11,441--

11,4410.463

30-Mar-19

The Daishi
Bank, Ltd.

1,000,000--

1,000,000

9,009

-

-

9,009

0.463

30-Mar-19

The
NomuraTrust andBankingCo., Ltd.

270,000--

270,000

2,432

-

-

2,432

0.463

30-Mar-19

MizuhoBank, Ltd.

965,000--

965,000

8,693

-

-

8,693

0.563

30-Mar-20

MUFG
Bank, Ltd.

1,125,000--

1,125,000

10,135--

10,1350.563

30-Mar-20

Sumitomo
MitsuiTrust Bank,
Limited

2,180,000--

2,180,000

19,639--19,6390.563

30-Mar-20

ShinseiBank,
Limited.

570,000--

570,000

5,135

-

-

5,135

0.563

30-Mar-20

ResonaBank,
Limited.

570,000--

570,000

5,135

-

-

5,135

0.563

30-Mar-20

MUFG
Bank, Ltd.
(5)650,000--

650,000

5,855

-

-

5,855

0.563

30-Mar-20

Japan Post
Bank Co.,Ltd.

2,000,000--

2,000,000

18,018--18,0180.563

30-Mar-20

The Bank ofFukuoka,Ltd.

333,000--

333,000

3,000

-

-

3,000

0.563

30-Mar-20

The
Shizuoka
Bank, Ltd.

270,000--

270,000

2,432

-

-

2,432

0.563

30-Mar-20

The
KagawaBank, Ltd.

500,000--

500,000

4,504

-

-

4,504

0.563

30-Mar-20

Use ofproceeds

Remarks(2)

Unsecured andunguaranteedClassification

Long-termloans payable

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Increase

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturitydate

TheHyakugo
Bank, Ltd.

1,000,000--

1,000,000

9,009

-

-

9,009

0.563

30-Mar-20

The
NomuraTrust andBankingCo., Ltd.

270,000--

270,000

2,432

-

-

2,432

0.563

30-Mar-20

MizuhoBank, Ltd.

1,965,000--

1,965,000

17,702--

17,7020.663

30-Mar-21

MUFG
Bank, Ltd.

1,125,000--

1,125,000

10,135--

10,1350.663

30-Mar-21

Sumitomo
MitsuiTrust Bank,
Limited

2,180,000--

2,180,000

19,639--19,6390.663

30-Mar-21

ShinseiBank,
Limited.

570,000--

570,000

5,135

-

-

5,135

0.663

30-Mar-21

ResonaBank,
Limited.

570,000--

570,000

5,135

-

-

5,135

0.663

30-Mar-21

MUFG
Bank, Ltd.

650,000--

650,000

5,855

-

-

5,855

0.663

30-Mar-21

The Bank ofFukuoka,Ltd.

1,333,000--

1,333,000

12,009--12,0090.663

30-Mar-21

The
Shizuoka
Bank, Ltd.

270,000--

270,000

2,432

-

-

2,432

0.663

30-Mar-21

The
KagawaBank, Ltd.

500,000--

500,000

4,504

-

-

4,504

0.663

30-Mar-21

The
Hiroshima
Bank, Ltd.

1,000,000--

1,000,000

9,009

-

-

9,009

0.663

30-Mar-21

The
NomuraTrust andBankingCo., Ltd.

270,000--

270,000

2,432

-

-

2,432

0.663

30-Mar-21

Citibank,
N.A., Japan
Branches.

1,000,000--

1,000,000

9,009

-

-

9,009

0.463

15-Jun-19

Citibank,
N.A., Japan
Branches.

1,000,000--

1,000,000

9,009

-

-

9,009

0.563

15-Jun-20

Citibank,
N.A., Japan
Branches.

1,000,000--

1,000,000

9,009

-

-

9,009

0.663

15-Jun-21

Developme
nt Bank ofJapan Inc.

1,000,000--

1,000,000

9,009

-

-

9,009

0.463

30-Jun-19

AEON
Bank, Ltd.

3,000,000--

3,000,000

27,027--27,0270.663

30-Jun-21

The Tokyo
Star Bank,
Limited

700,000--

700,000

6,306

-

-

6,306

0.463

20-Jul-19

The Tokyo
Star Bank,
Limited

1,600,000--

1,600,000

14,414--

14,4140.563

20-Jul-20

Use ofproceeds

Remarks(2)

Unsecured andunguaranteedClassification

Long-termloans payable

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Increase

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturitydate

The Tokyo
Star Bank,
Limited

1,700,000--

1,700,000

15,315--

15,3150.663

20-Jul-21

MizuhoBank, Ltd.

634,000--

634,000

5,711

-

-

5,711

0.463

14-Mar-20

Developme
nt Bank ofJapan Inc.

1,000,000--

1,000,000

9,009

-

-

9,009

0.463

14-Mar-20

ResonaBank,
Limited.

333,000--

333,000

3,000

-

-

3,000

0.463

14-Mar-20

The Bank ofFukuoka,Ltd.

333,000--

333,000

3,000

-

-

3,000

0.463

14-Mar-20

The
NomuraTrust andBankingCo., Ltd.

333,000--

333,000

3,000

-

-

3,000

0.463

14-Mar-20

The Towa
Bank, Ltd.

252,000--

252,000

2,270

-

-

2,270

0.463

14-Mar-20

The
Shizuoka
Bank, Ltd.

200,000--

200,000

1,801

-

-

1,801

0.463

14-Mar-20

The
Gunma
Bank, Ltd.

165,000--

165,000

1,486

-

-

1,486

0.463

14-Mar-20

MizuhoBank, Ltd.

1,633,000--

1,633,000

14,711--

14,711

0.563

14-Mar-21

ResonaBank,
Limited.

333,000--

333,000

3,000

-

-

3,000

0.563

14-Mar-21

The Bank ofFukuoka,Ltd.

333,000--

333,000

3,000

-

-

3,000

0.563

14-Mar-21

The
NomuraTrust andBankingCo., Ltd.

333,000--

333,000

3,000

-

-

3,000

0.563

14-Mar-21

The Towa
Bank, Ltd.

253,000--

253,000

2,279

-

-

2,279

0.563

14-Mar-21

The
Shizuoka
Bank, Ltd.

200,000--

200,000

1,801

-

-

1,801

0.563

14-Mar-21

The
Gunma
Bank, Ltd.

165,000--

165,000

1,486

-

-

1,486

0.563

14-Mar-21

MizuhoBank, Ltd.

1,733,000--

1,733,000

15,612--

15,6120.663

14-Mar-22

ResonaBank,
Limited.

333,000--

333,000

3,000

-

-

3,000

0.663

14-Mar-22

The Bank ofFukuoka,Ltd.

333,000--

333,000

3,000

-

-

3,000

0.663

14-Mar-22

The
NomuraTrust andBankingCo., Ltd.

333,000--

333,000

3,000

-

-

3,000

0.663

14-Mar-22

Use ofproceeds

Remarks(2)

Unsecured andunguaranteedClassification

Long-termloans payable

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Increase

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturitydate

AEON
Bank, Ltd.

900,000--

900,000

8,108

-

-

8,108

0.663

14-Mar-22

The Towa
Bank, Ltd.

253,000--

253,000

2,279

-

-

2,279

0.663

14-Mar-22

The
Shizuoka
Bank, Ltd.

200,000--

200,000

1,801

-

-

1,801

0.663

14-Mar-22

The
Dai-ichi Life
Insurancecompany,
Limited

500,000--

500,000

4,504

-

-

4,504

0.663

14-Mar-22

The
Gunma
Bank, Ltd.

165,000--

165,000

1,486

-

-

1,486

0.663

14-Mar-22

Sumitomo
Mitsui
Banking
Corporation

3,000,000--

3,000,000

27,027--27,0270.513

14-Sep-20

MizuhoBank, Ltd.

4,321,000--

4,321,000

38,927--38,9270.613

29-Nov-21

The
Dai-ichi Life
Insurancecompany,
Limited3,000,000--

3,000,000

27,027--27,0270.613

29-Nov-21

ShinseiBank,
Limited.

355,000--

355,000

3,198

-

-

3,198

0.363

13-Oct-20

Citibank,
N.A., Japan
Branches

355,000--

355,000

3,198

-

-

3,198

0.363

13-Oct-20

ResonaBank,
Limited.

334,000--

334,000

3,009

-

-

3,009

0.363

13-Oct-20

The Bank ofFukuoka,Ltd.

300,000--

300,000

2,702

-

-

2,702

0.363

13-Oct-20

AEON
Bank, Ltd.

190,000--

190,000

1,711

-

-

1,711

0.363

13-Oct-20

The
NomuraTrust andBankingCo., Ltd.

167,000--

167,000

1,504

-

-

1,504

0.363

13-Oct-20

The
Hiroshima
Bank, Ltd.

167,000--

167,000

1,504

-

-

1,504

0.363

13-Oct-20

ShinseiBank,
Limited.

355,000--

355,000

3,198

-

-

3,198

0.463

13-Oct-21

Citibank,
N.A., Japan
Branches

355,000--

355,000

3,198

-

-

3,198

0.463

13-Oct-21

ResonaBank,
Limited.

333,000--

333,000

3,000

-

-

3,000

0.463

13-Oct-21

The Bank ofFukuoka,Ltd.

300,000--

300,000

2,702

-

-

2,702

0.463

13-Oct-21

AEON
Bank, Ltd.

190,000--

190,000

1,711

-

-

1,711

0.463

13-Oct-21

Use ofproceeds

Remarks(2)

Unsecured andunguaranteedClassification

Long-termloans payable

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance(in thousands of yen)

Increase

Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturity
date

The
NomuraTrust andBankingCo., Ltd.

167,000--

167,000

1,504

-

-

1,504

0.463

13-Oct-21

The
Hiroshima
Bank, Ltd.

167,000--

167,000

1,504

-

-

1,504

0.463

13-Oct-21

MizuhoBank, Ltd.

500,000--

500,000

4,504

-

-

4,504

0.663

13-Oct-22

Sumitomo
MitsuiTrust Bank,
Limited

500,000--

500,000

4,504

-

-

4,504

0.663

13-Oct-22

Sumitomo
Mitsui
Banking
Corporation

500,000--

500,000

4,504

-

-

4,504

0.663

13-Oct-22

ShinseiBank,
Limited.

355,000--

355,000

3,198

-

-

3,198

0.663

13-Oct-22

Citibank,
N.A., Japan
Branches

355,000--

355,000

3,198

-

-

3,198

0.663

13-Oct-22

ResonaBank,
Limited.

333,000--

333,000

3,000

-

-

3,000

0.663

13-Oct-22

Developme
nt Bank ofJapan Inc.

1,500,000--

1,500,000

13,513--

13,5130.663

13-Oct-22

The Bank ofFukuoka,Ltd.

300,000--

300,000

2,702

-

-

2,702

0.663

13-Oct-22

AEON
Bank, Ltd.

190,000--

190,000

1,711

-

-

1,711

0.663

13-Oct-22

The
NomuraTrust andBankingCo., Ltd.

166,000--

166,000

1,495

-

-

1,495

0.663

13-Oct-22

The
Hiroshima
Bank, Ltd.

166,000--

166,000

1,495

-

-

1,495

0.663

13-Oct-22

The
Dai-ichi Life
Insurancecompany,
Limited

500,000--

500,000

4,504

-

-

4,504

0.663

13-Oct-22

MizuhoBank, Ltd.

1,250,000--

1,250,000

11,261--

11,261

0.763

13-Oct-23

Sumitomo
MitsuiTrust Bank,
Limited

1,065,000--

1,065,000

9,594

-

-

9,594

0.763

13-Oct-23

Sumitomo
Mitsui
Banking
Corporation

1,250,000--

1,250,000

11,261--

11,261

0.763

13-Oct-23

MizuhoBank, Ltd.

1,250,000--

1,250,000

11,261--

11,261

0.863

11-Oct-24

Sumitomo
MitsuiTrust Bank,
Limited

1,060,000--

1,060,000

9,549

-

-

9,549

0.863

11-Oct-24

Sumitomo
Mitsui
Banking
Corporation

1,250,000--

1,250,000

11,261--

11,261

0.863

11-Oct-24

Use ofproceeds

Remarks(2)

Unsecured andunguaranteedClassification

Long-termloans payable

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance

Increase(in thousands of yen)Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturitydate

MizuhoBank, Ltd.

1,850,000--

1,850,000

16,666--

16,6660.313

13-Oct-19

Sumitomo
Mitsui
Banking
Corporation

1,850,000--

1,850,000

16,666--

16,6660.313

13-Oct-19

ShinseiBank,
Limited.

1,000,000--

1,000,000

9,009

-

-

9,009

0.750

27-Oct-23

MUFG
Bank, Ltd.

500,000--

500,000

4,504

-

-

4,504

0.750

27-Oct-23

MizuhoBank, Ltd.

-2,442,000-

2,442,000-

22,000-22,0000.363

17-jul-21

MUFG
Bank, Ltd.

-2,220,000-

2,220,000-

20,000-20,0000.363

17-jul-21

Sumitomo
Mitsui
Banking
Corporation-

1,998,000-

1,998,000-

18,000-18,0000.363

17-jul-21

ShinseiBank,
Limited.

-1,110,000-

1,110,000-

10,000-10,0000.363

17-jul-21

Citibank,
N.A., Japan
Branches-

1,000,000-

1,000,000

-

9,009

-

9,009

0.363

17-jul-21

Sumitomo
MitsuiTrust Bank,
Limited

-890,000-

890,000

-

8,018

-

8,018

0.363

17-jul-21

MizuhoBank, Ltd.

-2,443,000-

2,443,000-

22,009-22,0090.463

17-jul-22

MUFG
Bank, Ltd.

-2,220,000-

2,220,000-

20,000-20,0000.463

17-jul-22

Sumitomo
Mitsui
Banking
Corporation-

1,997,000-

1,997,000-

17,990-17,9900.463

17-jul-22

ShinseiBank,
Limited.

-1,110,000-

1,110,000-

10,000-10,0000.463

17-jul-22

Citibank,
N.A., Japan
Branches-

1,000,000-

1,000,000

-

9,009

-

9,009

0.463

17-jul-22

Sumitomo
MitsuiTrust Bank,
Limited

-890,000-

890,000

-

8,018

-

8,018

0.463

17-Jul-22

MizuhoBank, Ltd.

-2,442,000-

2,442,000-

22,000-22,0000.563

14-Jul-23

MUFG
Bank, Ltd.

-2,220,000-

2,220,000-

20,000-20,0000.563

14-Jul-23

Sumitomo
Mitsui
Banking
Corporation-

1,997,000-

1,997,000-

17,990-17,9900.563

14-Jul-23

ShinseiBank,
Limited.

-1,110,000-

1,110,000-

10,000-10,0000.563

14-Jul-23

Use ofproceeds

Remarks(2)

Unsecured andunguaranteedClassification

Long-termloans payable

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance

Increase(in thousands of yen)Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturity
date

Citibank,
N.A., Japan
Branches-

1,000,000-

1,000,000

-

9,009

-

9,009

0.563

14-Jul-23

Sumitomo
MitsuiTrust Bank,
Limited

-890,000-

890,000

-

8,018

-

8,018

0.563

14-Jul-23

MizuhoBank, Ltd.

-766,000-

766,000

-

6,900

-

6,900

0.363

02-Augl-21

Sumitomo
Mitsui
Banking
Corporation-

766,000-

766,000

-

6,900

-

6,900

0.363

02-Augl-21

MUFG
Bank, Ltd.

-

467,000-

467,000

-

4,207

-

4,207

0.363

02-Augl-21

ShinseiBank,
Limited.

-150,000-

150,000

-

1,351

-

1,351

0.363

02-Augl-21

Citibank,
N.A., Japan
Branches-

120,000-

120,000

-

1,081

-

1,081

0.363

02-Augl-21

The
NomuraTrust andBankingCo., Ltd.

-

30,000-30,000

-

270

-

270

0.363

02-Augl-21

AEON
Bank, Ltd.

-

60,000-60,000

-

540

-

540

0.363

02-Augl-21

MizuhoBank, Ltd.

-2,521,500-

2,521,500-

22,716-22,716

0.363

26-Augl-21

Sumitomo
Mitsui
Banking
Corporation-

2,521,500-

2,521,500-

22,716-22,716

0.363

26-Augl-21

MUFG
Bank, Ltd.

-2,133,000-

2,133,000-

19,216-

19,216

0.363

26-Augl-21

Sumitomo
MitsuiTrust Bank,
Limited-1,000,000-

1,000,000

-

9,009

-

9,009

0.363

26-Augl-21

ShinseiBank,
Limited.

-684,000-

684,000

-

6,162

-

6,162

0.363

26-Augl-21

Citibank,
N.A., Japan
Branches-

546,000-

546,000

-

4,918

-

4,918

0.363

26-Augl-21

Developme
nt Bank ofJapan Inc.

-

500,000-

500,000

-

4,504

-

4,504

0.363

26-Sep-21

ResonaBank,
Limited.

-445,000-

445,000

-

4,009

-

4,009

0.363

26-Sep-21

The
NomuraTrust andBankingCo., Ltd.

-

137,000-

137,000

-

1,234

-

1,234

0.363

26-Sep-21

AEON
Bank, Ltd.

-273,000-

273,000

-

2,459

-

2,459

0.363

26-Sep-21

MizuhoBank, Ltd.

-3,287,000-

3,287,000-

29,612-

29,612

0.463

26-Sep-22

Use ofproceeds

Remarks(2)

Unsecured andunguaranteedClassification

Long-termloans payable

Name oflender

Beginningbalance

Increase

Endingbalance

Decrease

Beginningbalance

Increase(in thousands of yen)Endingbalance

Decrease(in thousands of U.S. dollars)

Averageinterest
rate (%)(1)

Maturity
date

Sumitomo
Mitsui
Banking
Corporation-

3,287,000-

3,287,000-

29,612-

29,612

0.463

26-Sep-22

MUFG
Bank, Ltd.

-2,600,000-

2,600,000-

23,423-23,423

0.463

26-Sep-22

Sumitomo
MitsuiTrust Bank,
Limited-1,000,000-

1,000,000

-

9,009

-

9,009

0.463

26-Sep-22

ShinseiBank,
Limited.

-833,000-

833,000

-

7,504

-

7,504

0.463

26-Sep-22

Citibank,
N.A., Japan
Branches-

667,000-

667,000

-

6,009

-

6,009

0.463

26-Sep-22

Developme
nt Bank ofJapan Inc.

-

500,000-

500,000

-

4,504

-

4,504

0.463

26-Sep-22

ResonaBank,
Limited.

-445,000-

445,000

-

4,009

-

4,009

0.463

26-Sep-22

The
NomuraTrust andBankingCo., Ltd.

-

167,000-

167,000

-

1,504

-

1,504

0.463

26-Sep-22

AEON
Bank, Ltd.

-334,000-

334,000

-

3,009

-

3,009

0.463

26-Sep-22

MizuhoBank, Ltd.

-3,287,500-

3,287,500-

29,617-

29,6170.563

26-Sep-23

Sumitomo
Mitsui
Banking
Corporation-

3,287,500-

3,287,500-

29,617-

29,6170.563

26-Sep-23

MUFG
Bank, Ltd.

-2,600,000-

2,600,000-

23,423-23,423

0.563

26-Sep-23

Sumitomo
MitsuiTrust Bank,
Limited-1,000,000-

1,000,000

-

9,009

-

9,009

0.563

26-Sep-23

ShinseiBank,
Limited.

-833,000-

833,000

-

7,504

-

7,504

0.563

26-Sep-23

Citibank,
N.A., Japan
Branches-

667,000-

667,000

-

6,009

-

6,009

0.563

26-Sep-23

Developme
nt Bank ofJapan Inc.

-

500,000-

500,000

-

4,504

-

4,504

0.563

26-Sep-23

ResonaBank,
Limited.

-445,000-

445,000

-

4,009

-

4,009

0.563

26-Sep-23

The
NomuraTrust andBankingCo., Ltd.

-

166,000-

166,000

-

1,495

-

1,495

0.563

26-Sep-23

AEON
Bank, Ltd.

-

333,000-

333,000

-

3,000

-

3,000

0.563

26-Sep-23

Total
Long-term
loans
payable185,415,000

68,338,000

28,979,000

224,774,000

1,670,405

615,657

261,072

2,024,990--

Use ofproceeds

Remarks(2)

Unsecured andunguaranteedClassification

Name oflenderTotal loans payable

Beginningbalance

Increase

Decrease

Endingbalance

Beginningbalance

Increase(in thousands of yen)

187,415,000

69,437,000

Decrease

Endingbalance(in thousands of U.S. dollars)

30,979,000

225,873,000

1,688,423

625,558

279,0902,034,891

Averageinterest
rate (%)(1)

Maturitydate

Use ofproceeds

Remarks

-

-

-

-

Notes:(1)

The average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to three decimal places.

(2)

The funds are mainly used to acquire properties in trust and for repayment of loans payable.

(3)Long-term loans payable include current portion.

(4)

Repayment schedule of long-term loans payable (except for the current portion) for the next five years after each balance sheet date are as follows:

As of
December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
1-2 years·······························································¥

50,130,000$

451,6212-3 years····································································

55,601,000

500,909

3-4 years····································································

32,895,000

296,351

4-5 years····································································

27,843,000

250,837

11. Net Assets
The Company issues only non-par value units in accordance with the Investment Trust Act, and the entire amount of the issue price of
new investment units is allocated to unitholders’ capital within net assets. The Company is required to maintain net assets of at least¥50,000 thousand (US$450 thousand) as required by Article 67-4 of the Investment Trust Act.
The number of investment units authorized was 10,000,000 units as of June 30, 2018 and December 31, 2018.
The number of investment units issued and outstanding were 4,793,181 as of June 30, 2018 and 5,666,840 as of December 31, 2018
respectively.

12.Appropriation of Retained Earnings
In accordance with the distribution policy in Article 17, Paragraph 1, of the Company’s articles of incorporation which stipulates making
distributions in excess of 90% of distributable profit as defined in Article 67-15, Paragraph 1 of the Special Taxation Measures Act of Japanfor the fiscal period.
The following table shows the appropriation of retained earnings for the six months ended June 30, 2018 and December 31, 2018.
For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Unappropriated retained earnings ····································································· ¥7,610,548¥

9,140,372$

82,345Distributions in excess of retained earnings ·····················································
Allowance for temporary differences adjustment········································-(85,002)(765)

Deduction from unitholders capital surplus ················································-(204,006)(1,837)

Distributions ···············································································································(6,854,248)(9,537,291)(85,921)

Of which, distributions of earnings · ·································································(6,854,248)(9,248,282)(83,317

Of which, allowance for adjustment of temporary differences················-(85,002)(765)

Of which, deduction from unitholders capital surplus ····························-

Retained earnings / losses carried forward························································· ¥756,300(204,006)¥(107,910)(1,837)$(972)

The distribution in respect of the six months ended December 31, 2018 of ¥1,683 (US$15.1) per investment unit, amounting to a total
distribution of ¥9,537,291thousand (US$85,921 thousand) was proposed and approved at the Board of Directors meeting on February 21,
2019. These financial statements do not reflect these distributions payable.

Cash distributions per investment unit were ¥1,430and ¥1,683 (US$15.1) for the six months ended June 30, 2018, and December 31, 2018,
respectively.
Notes related to provision and reversal of allowance for temporary differences adjustment is below.
For the six months ended June 30, 2018
Not Applicable.
For the six months ended December 31, 2018
In this table, the Company recorded allowance for temporary differences adjustment below.
(a) Reasons, related assets and allowance(in thousands of yen)
Related assets, etc.

Leasehold rights in trust

Allowance for temporary difference adjustments

Reason for occurrenceOccurrence of amortization of leasehold rights in trust

85,002(in thousands of U.S dollars)

Related assets, etc.

Leasehold rights in trust

Allowance for temporary difference adjustments

Reason for occurrenceOccurrence of amortization of leasehold rights in trust765(b) Method of reversal
Method of reversal

Related assets, etc.

Leasehold rights in trust

Upon sale, the corresponding amount is scheduled to be reversed.

13. Rent Revenues － Real Estate and Expenses Related to Property Rental Business
Rent revenue – real estate and expenses related to property rental business for the six months ended June 30, 2018 and December 31,
2018 consist of the following:
For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Rental revenue – real estate:
Rental revenue and common area charges (*)················································ ¥Other ·························································································································
Total rental revenue – real estate ······································································ ¥10,769,777
352,704
11,122,481¥

Expenses related to property rental business:
Facility management fees ··················································································· ¥Property related taxes ··························································································
Insurance expense ································································································
Depreciation ···········································································································
Other ·························································································································
Total expenses related to property rental business ····································· ¥Operating income from property leasing activities······································ ¥665,093
470,692
12,8452,772,510
215,476
4,136,619
6,985,862¥(*)Variable rental revenue of hotels····································································· ¥3,789,484

13,258,939
345,284
13,604,224

$

$

¥
¥

667,393547,232
13,8173,039,033
183,199
4,450,676
9,153,548

$
$

6,012
4,930
124
27,3781,650
40,09682,464¥

4,953,767$

44,628¥$

119,449
3,110
122,560

14. Breakdown of Gain on sales of Properties
For the six months ended June 30, 2018
Harmonie
Ochanomizu
Revenue from sales of properties ····································································
Cost of properties sold ·························································································
Other sale-related costs ·······················································································
Gain or loss on sales of properties ···································································¥

1,606,646
1,346,372
38,843
221,430¥

Cross Square
NAKANO
Revenue from sales of properties ····································································
Cost of properties sold ·························································································
Other sale-related costs ·······················································································
Gain or loss on sales of properties ···································································¥

1,357,090
1,125,668
23,268208,153¥

Growth Maison
Ikebukuro(in thousands of yen)¥
1,059,850
743,659
26,625¥289,565
Ohki Aoba
Building(in thousands of yen)¥
728,446
709,604
11,439¥
7,402

Capital Heights
Kagurazaka¥

734,817623,867
20,817
90,132¥

Lexington Plaza
Nishi-Gotanda¥

5,180,003
4,632,693
114,348432,961¥

For the six months ended December 31, 2018
Not Applicable.

15. Income Taxes
The Company is subject to corporate income taxes in Japan. The Company may deduct from its taxable income the amounts distributed
to its unitholders, provided the requirements are met under the Special Taxation Measures Act of Japan. Under this act, the Company
must meet a number of tax requirements, including a requirement to distribute in excess of 90% of distributable profit for the fiscal
period in order to be able to deduct such amounts. If the Company does not satisfy all of the requirements, the entire taxable income of
the Company will be subject to regular corporate income taxes in Japan.
The Company has a policy of making distributions in excess of 90% of its distributable profit for the fiscal period to qualify for conditions
set forth in the Special Taxation Measures Act of Japan to achieve a deduction of distributions for income tax purpose and it distributes
approximately 100% of distributable profit. Hence, the Company has treated the distributions as a tax allowable deduction as defined in
the Special Taxation Measures Act of Japan.
(a) Reconciliations of the Company’s effective tax rates and statutory tax rates are as follows:
For the six months ended

June 30,
2018

December 31,
2018(Rate)

Statutory tax rates ·························································
Deductible cash distributions ··································
Increase (decrease) in valuation allowance ··········
Other ················································································

31.74 %
(22.95)(8.79)
0.01

31.51 %
(31.84)(0.35)
0.69

Effective tax rates ··························································

0.01 %

0.01 %(b) Deferred tax assets and liabilities consist of the following:
As ofJune 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Deferred tax assets:
Enterprise tax payable
Allowance for doubtful accounts ·····················
Buildings and other (merger) ······························
Land (merger)···························································

¥

1,325
28
561,751
1,374,216

¥

1,294
27
549,474
1,367,722

$

11
0
4,950
12,321Net loss carried forward(*) ·································
Asset retirement obligations ······························
Fixed-term leasehold ············································

7,200,289
10,122
116,528

7,153,149
10,142
153,295

64,44291
1,381

Subtotal - deferred tax assets ··································
Valuation allowance for tax loss carried forward
Valuation allowance for the sum of deductible temporary differences

9,264,262-

9,235,105(7,153,149)(2,037,871)

83,199(64,442)(18,359)

Subtotal - valuation allowance ·······························(9,225,589)(9,191,020)(82,801)

Total - deferred tax assets···········································

38,67344,084

397

Deferred tax liabilities:
Asset retirement obligations ······························
Deferred gains or losses on hedges····················

9,797
28,875

9,751
34,33387309

Total - deferred tax liabilities

38,673Net deferred tax assets ·············································¥-

44,084
¥

-

397
$

-

(*)The amounts of tax loss carried forward and the deferred tax assets are indicated by carry-forward period.
For the six month ended December 31, 2018

Within 1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years

Total(in thousands of yen)Tax loss carried forward (a)5,164,678

1,317,493-

349,185

321,791-

Valuation allowance ··················(5,164,678)(1,317,493)-(349,185)(321,791)-

7,153,149(7,153,149)

Deferred tax assets ························

-

-

-

-

-

-

-

Within 1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years

Total(in thousands of U.S. dollars)
Tax loss carried forward (a)46,528

11,869

-

3,145

2,899

-

Valuation allowance ··················(46,528)(11,869)-(3,145)(2,899)-64,442(64,442)

Deferred tax assets ························

-

-

-

-

-

-

-

(a)Tax loss carried forward shown in the above table is after multiplying the statutory tax rate.

16. Leases(a) Lease rental revenues
The future minimum rental revenues pursuant to existing rental contracts as of June 30, 2018 and December 31, 2018 scheduled to bereceived are summarized as follows:
As ofJune 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Due within one year ···········¥
Due over one year ···············

8,623,053
58,058,083¥

9,754,753
63,134,893$

87,880568,782

Total ··········································¥

66,681,137¥

72,889,647$

656,663

(b) Lease rental expenses
The future minimum rental expenses pursuant to existing rental contracts as of June 30, 2018 and December 31, 2018 scheduled to be
paid are summarized as follows:
As ofJune 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Due within one year ···········¥
Due over one year ···············

312,959
10,090,556¥

312,959
9,934,076$

2,819
89,496

Total ··········································¥

10,403,515¥

10,247,035$

92,315

17. Financial Instruments(a) Qualitative information for financial instruments(i) Policy for financial instrument transactions
The Company raises funds through loans payable , investment corporation bonds, and the issuance of investment units toacquire real estate properties, pay property maintenance expenses and/or repay existing loans payable. Surplus funds aremanaged carefully through investments in financial instruments taking into account liquidity and safety in light of the current
financial market conditions. Derivative instruments are used only for hedging purposes and not for speculation.
(ii) Nature and extent of risks arising from financial instruments and risk management
The funds raised through loans payable and investment corporation bonds are mainly used to acquire real estate properties orproperties in trust and for the repayment of existing loans payable. Liquidity risks relating to loans payable are managed by thefinance department of the Asset Manager by preparing monthly plans for funds, and monitoring the covenants defined in loan
agreements.
(iii) Supplemental information for financial instruments
The fair value of financial instruments is based on quoted market prices if available. When quoted market prices are notavailable, fair value is estimated using valuation techniques which contain various assumptions. If other valuation models orassumptions were used, the estimated value may differ.
(b) Quantitative information for financial instruments
The following table shows the carrying amounts, fair values and valuation differences of financial instruments for which fairvalue is available as of June 30, 2018 and December 31, 2018.
As ofJune 30,
2018
Carrying
amounts

December 31,
2018

Fair value

Carrying
amounts

Difference

December 31,
2018

Fair value

Carrying
amounts

Difference(in thousands of yen)

Fair value

Difference(in thousands of U.S. dollars)

Assets:Current:(1) Cash and bank deposits ······················ ¥8,505,792(2) Cash and bank deposits in trust. ·····

6,566,761

Total assets ······················································ ¥15,072,553¥

8,505,792¥

6,566,761¥

15,072,553

-

¥

¥

-

3,985,335¥

7,079,268¥

11,064,604

3,985,335¥

7,079,268¥

11,064,604

-

$

¥

-

35,903$

63,777$

99,68135,903$

63,777$

99,681-$-

Liabilities:(3)Short-term loans payable ····················

2,000,000

2,000,000-

1,099,000

1,099,000

-

9,900

9,900

-

(4) Current portion of long-term loans
payable ····························································

46,663,000

46,663,000-

54,745,000

54,745,000-

493,198

493,198(31)(5) Investment corporation bonds ·········

2,000,000

1,998,500(1,500)4,000,000

3,996,500(3,500)36,03636,004(6) Long-term loans payable······················

138,752,000

138,752,000-

170,029,000

170,029,000-

1,531,792

1,531,792

Total liabilities ················································ ¥189,415,000¥

189,413,500¥(1,500)¥229,873,000¥

229,869,500¥(3,500)$2,070,927$

2,070,896$(31)(7)Derivatives ·················································· ¥90,975¥90,975¥-¥

124,029¥

124,029

¥

-

$

1,117

$

1,117

$

-

Notes

-

(i)The methods and assumptions used to estimate fair value are as follows:(1)Cash and bank deposits and(2)Cash and bank deposits in trust(3)Short-term loans payable
Because of their short maturities, the carrying amounts approximate their fair value.
(4)Current portion of long-term loans payable(6)Long-term loans payable
Long-term loans payable with floating interest rates reflecting changes in market rates within a short term period are stated at their carrying amounts as their carrying
amounts approximate their fair values.
(5)Investment corporation bonds
The fair values of investment corporate bonds are determined based on the present value of contractual cash flows discounted at current market interest rates which would
be applicable to new investment corporate bonds under the same conditions and terms.
(7)Derivatives
Please refer to the “19. Derivatives” below.

(ii) Financial instruments for which fair value is difficult to determine are as follows:
As ofJune 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Tenant leasehold and security deposits in trust ···········¥

2,026,400¥

2,009,816$

18,106

Investment securities ····························································¥

17,856,387¥

54,640,213$

492,254

Tenant leasehold and security deposits are not publicly traded, and it is difficult to determine their fair value based on estimated future cash flows because the repayment datesof those deposits are not certain. Therefore, these financial instruments are not included in the above quantitative information.
Fair values of preferred securities and TK interest are not subject to disclosure of fair value as they have no market value and their fair values are extremely difficult to recognize.

(iii) Cash flow schedule of financial assets after the balance sheet dateWithin 1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years(in thousands of yen)
As of June 30, 2018:
Cash and bank deposits ·········································¥Cash and bank deposits in trust ··························

8,505,792
6,566,761

¥

-

¥

-

¥

-

¥

-

¥

-

Total ··············································································¥

15,072,553

¥

-

¥

-

¥

-

¥

-

¥

-

As of December 31, 2018:
Cash and bank deposits ·········································¥Cash and bank deposits in trust ··························

3,985,335
7,079,268

¥

-

¥

-

¥

-

¥

-

¥

-

Total ··············································································¥

11,064,604

¥

-

¥

-

¥

-

¥

-

¥

-

Within 1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years(in thousands of U.S. dollars)
As of December 31, 2018:
Cash and bank deposits ·········································$Cash and bank deposits in trust ··························

35,903
63,777

$

-

$

-

$

-

$

-

$

-

Total ··············································································$

99,681

$

-

$

-

$

-

$

-

$

-

(iv) Cash flow schedule of financial liabilities after the balance sheet dateWithin 1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years(in thousands of yen)
As of June 30, 2018:
Short-term loans payable ······································
Current portion of long-term loans payable ···Investment corporation bonds ······························
Long-term loans payable ·······································

2,000,000
46,663,000-

Total ··············································································¥

48,663,000

As of December 31, 2018:

51,744,000¥

51,744,000

57,380,000¥

57,380,000

15,638,000¥

15,638,000

1,000,000
6,865,000¥

7,865,000

1,000,000
7,125,000¥

8,125,000

Short-term loans payable ······································

1,099,000---

Current portion of long-term loans payable ···54,745,000

-

-

-

-

-

Investment corporation bonds ······························

-

-

-

-

3,000,000

1,000,000

Long-term loans payable ·······································-

Total ··············································································¥

55,844,000

50,130,000¥

Within 1 year

50,130,000

55,601,000¥

1-2 years

55,601,000-

27,843,000

32,895,000¥

2-3 years

32,895,000-¥

3-4 years

30,843,000

3,560,000¥

4-5 years

4,560,000

Over 5 years(in thousands of U.S. dollars)
As of December 31, 2018:
Short-term loans payable ······································

9,900

-

-

-

-

-

Current portion of long-term loans payable ···493,198

-

-

-

-

-

Investment corporation bonds ······························

-

-

-

-

27,027

9,009

Long-term loans payable ·······································-

451,621500,909296,351

250,837

32,072

Total ··············································································$

503,099$451,621$500,909$296,351$

277,864$

41,081

18. Investment securities
As of June 30, 2018
Fair values of preferred securities recorded on the Balance Sheet at ¥17,856,387 thousand are not subject to disclosure of fair value as they
have no market value and their fair values are extremely difficult to recognize.
As of December 31, 2018
Fair values of preferred securities recorded on the Balance Sheet at ¥17,856,387 thousand (US$160,868 thousand) and TK interest
recorded on the Balance Sheet at ¥36,783,826 thousand (US$331,385 thousand) are not subject to disclosure of fair value as they have nomarket value and their fair values are extremely difficult to recognize.

19. Derivatives
Information on derivative transactions undertaken by the Company as of June 30, 2018 and December 31, 2018 is as follows. Derivative
instruments are used for hedging purposes only and are subject to hedge accounting.
As of June 30, 2018:
Contract amount(*1)
Method ofhedge
accounting

Type ofderivativetransactionMainhedged
item

Total

Fair
Value
(*2)

Over 1 year

(in thousands of yen)

Principle
accounting
methodInterest rate
swap
transaction
floating ratereceivable andFixed rate
payableLong-term
borrowings¥(*1) The contract amount is based on the notional principal amount.
(*2) The fair value is provided by the financial institution.

100,619,000¥

67,390,000¥

90,975

As of December 31, 2018:
Contract amount(*1)
Method ofhedge
accounting

Type ofderivativetransaction

Main hedged
item

Contract amount(*1)
Fair
Value
(*2)

Over 1year

Total(in thousands of yen)Interest rate
swap
transaction
floating ratereceivable
and Fixed
rate payable
Principle
accounting
methodPrinciple
accounting
methodCurrency
options
Sell –USD Call(Optionpremium)
Currency
options
Buy –USD Put
Optionpremium

Long-term
borrowings

Futuretransactions
denominatedina foreign
currency

Fair
Value
(*2)

Over 1year

Total(in thousands of U.S. dollars)¥

71,640,000¥ 34,729,000¥¥

4,444,000¥

1,903,000¥¥(124,943)¥(53,157)¥¥

4,444,000¥

1,903,000¥¥

140,288¥

88,792¥

48,781(87,318)

162,566$

645,405$

312,873$$

40,036$17,144$$(1,125)

$

(478)

$

$

40,036$17,144

$

$

1,263

$

799

$

(*1) The interest rate swap contract amount is based on the notional principal amount.
(*2) Calculation of fair value is based on information provided by financial institutions.

20. Asset Retirement Obligations
The Company has an obligation under a fixed-term leasehold agreement to restore its leased land, which represents the land where
COMFORT HOTEL MAEBASHI, owned by the Company, is located upon the termination of agreement. The estimated period of useof property is estimated at 43 years based on the lease period per the agreement. The assets retirement obligation for the restoration isrecognized as a liability using discount rate at 1.342%.
Movements of asset retirement obligations for the six month ended June 30, 2018 and December 31, 2018 are as follows.

For the six month ended

June 30,
2018

December 31,
2018

December 31,
2018(in thousands of
U.S. dollars)(in thousands of yen)
Balance at the beginning of the period ······································· ¥31,680¥31,891$287

Liabilities incurred due to the acquisition of properties ·······

-

-

-

Accretion expense ·············································································

210

215

1

Balance at the end of the period ··················································· ¥31,891¥

32,107$289

21. Segment Information
Segment information for the six months ended June 30, 2018 and December 31, 2018 is as follows:(a) Operating Segment Information
Disclosure is omitted as the Company is comprised of a single reportable segment engaged in the property rental business.
(b) Enterprise-wide Disclosures(i) Information about Products and Services
Disclosure is not required as revenues from external customers for the single segment are in excess of 90% of total revenues.
(ii) Information about Geographic Areas(1) Revenues from Overseas Customers:

439

(786)

1,464

Disclosure is not required as revenues from external customers located in Japan are in excess of 90% of total revenues.
(2)Tangible Fixed Assets:
Disclosure is not required as tangible fixed assets located in Japan are in excess of 90% of total tangible fixed assets.
(c) Information about Major Customers
Information about major clients for the six-month periods ended June 30, 2018 and December 31, 2018 were as follows:
For the six months ended June 30, 2018
Name of client

Operating Revenues(in thousands of yen)

Mystays Hotel Management Co.,Ltd.

¥5,324,738

Related segment

Real estate investing business

For the six months ended December 31, 2018
Name of client

Operating Revenues(in thousands of yen)

Mystays Hotel Management Co.,Ltd.

Operating Revenues(in thousands of U.S. dollars)¥7,297,799$65,745

Related segment

Real estate investing business

22. Profit or Loss from Equity Method, etc
For the six months ended June 30, 2018
(in thousands of yen)
Investments in affiliates

17,856,387

Investments, if equity method was adopted

17,845,800

Investment gains (losses), if equity method was adopted

722,127

For the six months ended December 31, 2018
(in thousands of yen)(in thousands of US dollars)

Investments in affiliates

54,640,213

492,254

Investments, if equity method was adopted

54,640,213

492,254846,780

7,628

Investment gains (losses), if equity method was adopted

23. Related-Party Transactions(a) Parent Company and Major Corporate Unitholders
For the six months ended June 30, 2018
Share capital
Type ofrelated-party

Interested
party of the
Asset
Manager

Transactions for the period

Votinginterest intheCompany

Relationshipwith theCompany¥ 0.1-

Seller of real estate
trust beneficiaryrightsAcquisition of real estate trust
beneficiary rights(2)(4)

Investment
managementbusiness¥ 0.1-

Seller of real estate
trust beneficiaryrightsMinato-ku,
Tokyo

Investment
managementbusiness¥ 0.1-

Suisei TMK(3)Minato-ku,
Tokyo

Investment
managementbusiness¥ 0.1

Calvis TMK(3)Minato-ku,
Tokyo

Investment
managementbusiness

Naqua Hotel &Resorts
Management
Co., Ltd.(3)Minato-ku,
Tokyo

Mystays HotelManagement
Co., Ltd.(3)Minato-ku,
TokyoCompany
nameLocation

Ginga TMK(3)Minato-ku,
Tokyo

Investment
managementbusiness

HL nvestments
TMK(3)

Minato-ku,
Tokyo

Monza TMK(3)Balance at the end of period

Amounts (1)Amounts(1)Balancesheet
account(in thousands ofyen)¥ 5,326,000--

Acquisition of real estate trust
beneficiary rights(2)(4)¥ 2,772,000--

Seller of real estate
trust beneficiaryrightsAcquisition of real estate trust
beneficiary rights(2)(4)¥ 2,723,000

-

-

-

Seller of real estate
trust beneficiaryrightsAcquisition of real estate trust
beneficiary rights(2)(4)¥ 1,604,000

-

-

¥ 0.1

-

Seller of real estate
trust beneficiaryrightsAcquisition of real estate trust
beneficiary rights(2)(4)¥ 7,325,000

-

-

Hotel
managementbusiness¥ 10-

Lease holder andoperator of hotel

Rental Revenues¥ 576,941

Rentalreceivables¥ 221,582

Hotelmanagementbusiness¥ 100-

Lease holder andoperator of hotel

Rental Revenues¥ 5,324,738

Rentalreceivables¥ 1,387,974

Business(in millions ofyen)Type of transactions(in thousands ofyen)

Notes:(1)

Consumption taxes are not included in the transaction amount, but are included in the balance at the end of periods.

(2)

Terms and conditions are decided pursuant to the Asset Manager's Regulations on Transactions with Sponsor-related Persons and the Management Manual regarding
Transactions with Sponsor-related Persons.

(3)

The seller, Ginga TMK, HL Investments TMK, Monza TMK, Suisei TMK, Calvis TMK, Naqua Hotel & Management Resorts Management Co. Ltd, and Mystays HotelManagement, Co. Ltd has no relationship to be stated, but （i）Ginga TMK, HL Investments TMK, Monza TMK, and Suisei TMK used to receive investment through funds
that are managed by FIG, an affiliate of Calliope; a parent company of the asset manager directly owning 100% of issued shares, (ii) Calvis TMK used to receive investment
through funds that are managed by FIG, a subsidiary of Softbank Group; a parent company of the asset manager directly and indirectly owning 100% of issued shares, (iii)
Naqua Hotel & Management Resorts Management Co. Ltd and Mystays Hotel Management, Co. Ltd receive investment through funds that are managed by FIG, an affiliate
of Calliope; a parent company of the asset manager directly owning 100% of issued shares until March 29, 2018, a subsidiary of Softbank Group; a parent company of the asset
manager directly and indirectly owning 100% of issued shares after March 29, 2018.Accordingly, we treat Ginga TMK, HL Investments TMK, Monza TMK, Suisei TMK,
Calvis TMK, Naqua Hotel & Management Resorts Management Co. Ltd, and Mystays Hotel Management, Co. Ltd as a related party.

(4)

The transaction amount exclude adjusted amount of real property tax and city planning tax, as well as consumption tax and local consumption tax.

For the six months ended December 31, 2018
Share capital
Type ofrelated-party

Interested
party of the
Asset
Manager

Transactions for the period(inthousandsof U.S.
dollars)

Votinginterest intheCompany

Relationshipwith theCompany

Company
nameLocation

Business

Aki TMK(3)Minato-ku,
Tokyo

Investment
managementbusiness

¥ 0.1

$0

-

Seller of real estate
trust beneficiaryrightsRaetiaTMK(3)

Minato-ku,
Tokyo

Investment
managementbusiness

¥ 0.1

$0

-

Seller of real estate
trust beneficiaryrightsHL
Investments
2 TMK(3)Minato-ku,
Tokyo

Investment
managementbusiness

¥ 0.1

$0

-

Seller of real estate
trust beneficiaryrightsDogo
TMK(3)

Minato-ku,
Tokyo

Investment
managementbusiness

¥ 0.1

$0

-

Seller of real estate
trust beneficiaryrightsNaqua Hotel& Resorts
Management
Co., Ltd.(3)Minato-ku,
Tokyo

Hotel
managementbusiness

¥ 10

$ 90

-

Lease holder andoperator of hotel(inmillionsof yen)Balance at the end of period

Amounts (1)Type oftransactions
Acquisition ofreal estate
trust
beneficiaryrights(2)(4)Acquisition ofreal estate
trust
beneficiaryrights(2)(4)Acquisition ofreal estate
trust
beneficiaryrights(2)(4)Acquisition ofreal estate
trust
beneficiaryrights(2)(4)RentalRevenues(inthousandsof yen)(inthousandsof U.S.
dollars)

Balancesheet
account¥ 20,691,000$ 186,405¥ 16,731,000

Amounts(1)(inthousandsof yen)(in thousandsof U.S.
dollars)---$ 150,729---¥ 5,286,000$ 47,621---¥ 5,039,000$ 45,396---¥ 1,112,683$ 10,024

Rentalreceivables¥141,119$ 1,271

Mystays
Hotel
Management
Co., Ltd.(3)Minato-ku,
Tokyo

Hotel
managementbusiness

¥ 100

$ 900

-

Lease holder andoperator of hotel

RentalRevenues¥ 7,297,799$ 65,745

Rentalreceivables¥ 2,264,664$ 20,402

Notes:
Consumption taxes are not included in the transaction amount, but are included in the balance at the end of periods.

(1)

Terms and conditions are decided pursuant to the Asset Manager's Regulations on Transactions with Sponsor-related Persons and the Management Manual regarding(2)

Transactions with Sponsor-related Persons.
The seller, Aki TMK,Raetia TMK, HL Investments 2 TMK, Dogo TMK, Naqua Hotel & Management Resorts Management Co. Ltd, and Mystays Hotel Management, Co.

(3)

Ltd has no relationship to be stated, they receive investment through funds that are managed by FIG, a subsidiary of Softbank Group; a parent company of the asset manager
directly and indirectly owning 100% of issued shares. Accordingly, we treat Aki TMK,Raetia TMK, HL Investments 2 TMK, Dogo TMK, Naqua Hotel & Management
Resorts Management Co. Ltd, and Mystays Hotel Management, Co. Ltd as a related party.
The transaction amount exclude adjusted amount of real property tax and city planning tax, as well as consumption tax and local consumption tax.

(4)

Acquisition of real estate trust beneficiary rights are relating to below
Acquisition cost(in thousands of yen)

Acquisition cost(in thousands of US dollars)

Property No.

Property nameSeller

D60

Hotel MyStays Premier Akasaka
Hotel MyStays
Premier Sapporo Park

Aki TMK

20,691,000

186,405

Raetia TMK

16,731,000

150,729

HL Investments 2 TMK

5,286,000

47,621

Dogo TMK

5,039,000

45,39647,747,000

430,153

D61
D62

Hotel MyStays Ueno East
Hotel MyStays
Midosuji Honmach

D63

Total

(b) Affiliates
For the six months ended June 30, 2018
Not Applicable.
For the six months ended December 31, 2018
Share capital
Type ofrelated-party

Company
nameLocation

Affiliates

Seven Mile
ResortHoldings
Ltd.

Grand
Cayman,CaymanIslands

Business

Investment
manageme
nt businessTransactions for the period(inmillionsof yen)(inthousandsof U.S.
dollars)

Investmen
t ratio

Relationshipwith theCompany¥ 36,783$ 331,385

100.0%

TK investment

Balance at the end of period

Amounts (1)(2)Type oftransactions

Investmentin theTK(2)(3)Amounts(1)(2)(in millionsof yen)(inthousandsof U.S.
dollars)

Balancesheet
account(in millionsof yen)(in thousandsof U.S.
dollars)¥ 36,783$ 331,385

-

-

-

(1)

Investment amount in USD is converted to yen using the exchange rate fixed by foreign exchange forward (USD 1=JPY 110.45 (rounded down to two decimal places)).

(2)

INV initially funded USD 339,836 thousand (JPY 37,534 million). However, based on the closing settlement, the Cayman SPC did not need as much capital as anticipated.
Therefore, INV received a refund of the TK investment in the amount of USD 6.8 million on December 10, 2018 (Cayman Island local time) from the Cayman SPC. Thus, theamounts indicated are those after the partial refund.

(3)

Investment was made based on a TK agreement.

(4)

The TK is a TK with Seven Mile Resort Holdings Ltd. as an operator.

(c)

Board of Directors and Major Individual Unitholders

For the six months ended June 30, 2018
Type ofrelated-party

Directors
and close
relatives

Name

Naoki
FukudaBusiness / Occupation

Executive officer of theCompany andmanagement director ofConsonant Investment
Management Co., Ltd.

Votinginterest intheCompany-

Transactions for the period
Type of transactions

Balance at the end of period
Amounts(3)(in thousands of yen)

Payment of the assets management
fee to Consonant Investment
Management Co., Ltd.(1)Payment of institution
management fee to Consonant
Investment Management Co.,
Ltd.(2)

Balance sheet
account

Amounts(3)(in thousands ofyen)¥ 308,849

Accruedexpenses¥ 149,291¥ 600

Accruedexpenses¥ 324

Notes:(1)

Naoki Fukuda serves as a representative of the Asset Manager and the asset management fee is established in the Articles of Incorporation of the Company.

(2)

Naoki Fukuda serves as a representative of Asset Manager and the fee is established in the “Administrative Agency Agreement for Organizational Management” which was(3)Consumption taxes are not included in the transaction amount, but are included in the balance at the end of period.

agreed between the Asset Manager and the Company.

For the six months ended December 31, 2018
Transactions for the period
Type ofrelated-party

Directors
and close
relatives

Name

Business /Occupation

Naoki
FukudaExecutive officer of
the Company andmanagement
director ofConsonantInvestment
Management Co.,Ltd.

Votinginterest intheCompany-

Balance at the end of period

Amounts(3)Type of transactions

Payment of the assets
management fee to Consonant
Investment Management Co.,
Ltd.(1)
Payment of institution
management fee to Consonant
Investment Management Co.,
Ltd.(2)

Amounts(3)(inthousandsof yen)(inthousandsof U.S.
dollars)¥ 279,774$ 2,520¥ 1,100$9(inthousandsof yen)(inthousandsof U.S.
dollars)

Accruedexpenses¥ 148,500$ 1,337

Accruedexpenses

¥ 864

$7

Balance sheet
account

Notes:(1)

Naoki Fukuda serves as a representative of the Asset Manager and the asset management fee is established in the Articles of Incorporation of the Company.

(2)

Naoki Fukuda serves as a representative of Asset Manager and the fee is established in the “Administrative Agency Agreement for Organizational Management” which was(3)Consumption taxes are not included in the transaction amount, but are included in the balance at the end of period.

agreed between the Asset Manager and the Company.

24. Parent company and/or significant affiliates(a) Information on the parent company
Not Applicable.

(b) Summary of financial statements of the significant affiliates
The significant affiliates in the year ended December 31, 2018 is Kingdom TMK. Summary of financial statements are as follows:
Kingdom TMK
As of / For the six months ended
June 30, 2018

December 31, 2018

December 31, 2018

(in thousands of yen)
Total specified assets(in thousands of US dollars)

100,422,370

100,856,568

908,617

Total other assets

5,409,900

3,784,525

34,094

Total current liabilities

1,436,173

212,208

1,911

Total non-current liabilities

66,480,660

66,280,661

597,123

Total net assets

37,915,436

38,148,224

343,677

Operating revenue

1,957,744

2,350,784

21,178

Income before income taxes

1,496,394

1,729,001

15,576

Net income

1,495,336

1,728,124

15,56825. Per Unit Information
The following table shows net asset value per unit as of June 30, 2018 and December 31, 2018 and net income per unit for the six months
then ended. Net income per unit is calculated by dividing the net income attributable to unitholders by the weighted average number ofunits outstanding. The Company has no potentially dilutive units.
As of / For the six months ended

June 30,
2018

December 31,
2018

December 31,
2018

(Yen)

(U.S. dollars)

Net asset value per unit ··································································· ¥37,871¥39,063$351

Net income per unit ········································································· ¥

1,611

¥

1,504

$

13

Weighted average number of units ············································

4,793,181

5,575,457-

26．Subsequent Events
Not Applicable.

Domestic Portfolio Map (As of December 31, 2018)

No. of Properties

No. ofHotelsNo. ofResidential
Properties

Others

130

64

64

2

(Note) For properties corresponding to the number and overview, please refer to pages 24-26.

Sponsor Pipeline (As of February 28, 2019)
Strong pipeline of 27 assets continue to provide stable growth opportunities.
 Properties Covered by the MOU (1)HotelsNo.

Property name

Type (2)Location# of Rooms

Status1

Rihga Royal Hotel Kyoto

Kyoto, Kyoto

Full

489

In operation

2

Hotel MyStays Premier Narita

Narita, Chiba

Full

711

In operation

3

Fusaki Resort Village

Ishigaki, Okinawa

Resort188

In operation

4

Art Hotel Asahikawa

Asahikawa, Hokkaido

Full

265

In operation

5

Hotel MyStays Kanazawa Castle

Kanazawa, Ishikawa

Limited206

In operation

6

Hotel MyStays Matsuyama

Matsuyama, Ehime

Full

162

In operation

7

Hotel Mystays Sapporo Nakajima Park

Sapporo, Hokkaido

Limited86

In operation

8

Flexstay Inn Sakuragicho

Yokohama, Kanagawa

Limited70

In operation

9

MyCUBE by MYSTAYS Asakusa Kuramae

Taito-ku, Tokyo

Limited161

In operation

10 Hotel MyStays Fuji Onsen Resort

Fujiyoshida, Yamanashi

Resort159

In operation

11 Hotel Nord Otaru

Otaru, Hokkaido

Limited98

In operation

12 Hotel Sonia Otaru

Otaru, Hokkaido

Limited

149

In operation

13 Art Hotel Niigata Station

Niigata, Niigata

Full

304

In operation

14 Art Hotel Ishigakijima

Ishigaki, Okinawa

Resort245

In operation

15 Hotel MyStays Shinsaibashi East

Osaka, Osaka

Limited85

In operation

16 Hotel MyStays Sapporo Aspen

Sapporo, Hokkaido

Limited305

In operation

17 Hotel MyStays Sapporo Nakajima Park Annex

Sapporo, Hokkaido

Limited80

In operation

18 Hotel MyStays Sapporo Susukino

Sapporo, Hokkaido

Limited104

In operation

19 Hotel MyStays Nayoro

Nayoro, Hokkaido

Limited70

In operation

Residential properties
No.

Property nameLocation# of Rooms

20 Gran Charm Hiroo

Shibuya-ku, Tokyo121

21 Gran Charm Kichijoji

Musashino, Tokyo28

22 Green Patio Noda

Noda, Chiba

240

23 Dainichi F-45

Urayasu, Chiba

54

24 Gran Charm Urayasu

Urayasu, Chiba

54

25 Gran Charm Urayasu 5

Urayasu, Chiba

54

26 Gran Charm Minami Gyotoku I

Ichikawa, Chiba

52

27 Gran Charm Minami Gyotoku II

Ichikawa, Chiba

48

No. of Hotel Rooms

3,937(Note 1)

(Note 2)

No. of Apartment Units

651

The above is a list of properties for which INV shallbe granted an opportunity to consider theacquisition in priority to a third party when affiliatesof Fortress Group intend to sell any of theproperties. Regarding the properties in the list, thesaid affiliates do not intend to sell any of theproperties and INV does not intend to acquire anyof the properties as of February 28, 2019.
Therefore, there is no assurance that INV will be
granted an opportunity for considering acquisitionof the properties or be able to acquire the properties.
INV does not hold preferential negotiation rights toacquire any overseas properties.
Each “Type” above is as follows: “Limited Service”
refers to a hotel focusing on revenues from room
stay and offer limited service regarding foods andbeverages, banquet, spa or gymnasium facilities.
“Full Service” refers to a hotel having segments ofstay, foods and beverages, and banquet. “Resort”
refers to a hotel located at tourist destinations orrecreational lots, having segments of stay, foods andbeverages, and incidental facilities.

Rihga Royal Hotel Kyoto

Hotel MyStays Fuji Onsen Resort

Fusaki Resort Village

Hotel MyStays Sapporo Aspen

Hotel Nord Otaru

Hotel MyStays Premier Narita

(NoteFinancial
4)
Conditions

Issued INVʹs third Investment Corporation Bonds to diversify the financing sources of INV, while
maintaining its sound financial base and good relationship with its lenders.
 Investment Corporation Bonds
Date ofissuance
First Series Unsecured
May 25,Investment Corporation Bonds
2018
Second Series Unsecured
May 25,Investment Corporation Bonds
2018
Third Series Unsecured
October 12,
Investment Corporation Bonds
2018
Bond Series

Total/Average

TermTotal issue amount Interest rate
(JPY million)(per annum)

Rating

5 years

1,000

0.40%

A (JCR)

10 years

1,000

0.80%

A (JCR)

5 years

2,000

0.55%

A (JCR)

4,000

 Lender Formation (as of February 28, 2019)(Note 1) LTV (Appraisal Value Base) is calculated by the following formula: (Interest-bearing debt at the end of the relevant fiscal period, excluding
short-term consumption tax loan) / (Total appraisal value as of the end of the same period). As to preferred equity securities in the TMK
which holds Sheraton Grande Tokyo Bay Hotel as an underlying asset and the TK interests which hold overseas properties, since no appraisal
value is available, LTV after the acquisition is calculated using INV’s acquisition prices of the preferred equity securities and TK interests asappraisal values. For the TK interests, the acquisition price (INV’s TK investment amount) of such TK interest, which is converted into
JPY amount via the forward exchange rate of USD 1=JPY 110.45 based on the foreign exchange forward contract (implemented as of
September 26, 2018) entered into on July 26, 2018, is deemed as the appraisal value and included. The amount of TK investment haschanged from the initial amount due to a partial refund of the TK investment on December 10, 2018. (Using exchange rate above, theinitial investment amount in Japanese Yen denomination was JPY 37,534 million, while the investment amount after the refund was JPY
36,783 million.) LTV (based on appraisal value)(1) and Weighted Average Interest Rate(2) DSCR Rating

Rating Agency

Rating Object

RatingOutlookJapan Credit Rating
Agency, Ltd.

Long-term
Issuer Rating

A

Positive(Note 2)
(Note 3)(Note 4)

Average interest rate is calculated by the following formula: [Sum total of (Each loan’s loan amount outstanding at 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).
DSCR is calculated by dividing (i) by (ii) for the relevant period; (i) operating income, as adjusted for depreciation expenses fromproperty rental business and any gain (loss) on sales of property (ii) scheduled repayments of loans payable, interest expense, theamount of redemption of bond and bond interest.
DSCR (excluding hotel variable rent) is in the same manner as DSCR, except for excluding hotel variable rent from operating income.

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 priceof INV unit on the same day.
.

Distribution of Unitholders(Note) Percentage figures are rounded to one decimal place.

Annual Schedule

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, J the collection
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 due to the rules and regulations of the Articles of Incorporation of the Investment Corporation.

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 for dividends payable in and after January 2009. If you collect dividends via a“Dividends Receipt,” please view the “Notice of Dividend Payment” sent alongside it. If you havespecified a wire transfer, the “Dividend Statement” delivered with the dividend payment is the “Notice ofDividend 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, JASDEC
registers them in the Investors’ Registry by converting part or all of the characters to those that JASDEC
has included in the transfer system or to katakana. Please be aware that correspondence may be addressedusing characters that JASDEC has included in the transfer system. Please inquire with your brokerageregarding characters registered 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