This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.

REIT Financial Report for the 2nd Fiscal Period
July 20, 2017
REIT Issuer:
Ooedo Onsen Reit Investment Corporation
Securities Code: 3472
Representative: Fuminori Imanishi, Executive Director
Asset Manager:
Representative:
Inquiries to:

Stock Exchange Listing: TSE
URL: http://oom-reit.com

Ooedo Onsen Asset Management Co. Ltd.
Fuminori Imanishi, Chief Executive Officer
Shinya Ito, Chief Manager, Planning and Coordination Department+81-3-6262-5200

Scheduled date of submission of periodic securities report (yuka shoken hokokusho):Scheduled date of start of distribution payments:

August 24, 2017
August 15, 2017

Preparing supplementary explanatory materials on financial results:
Holding of brief session on financial results:

Yes
Yes (for institutional investors and analysts)[Amounts are rounded down to the nearest million yen, except for per unit figures]
1. Status of Management and Assets for the 2nd Fiscal Period
2nd Fiscal Period: Fiscal period ended May 2017 (from December 1, 2016 to May 31, 2017)(1) Management Status
Fiscalperiod2nd
1st

Operatingrevenuemillion yen
1,021
507

FiscalperiodProfitper unit

%
101.2
-

[% figures show the period-on-period increase (decrease)]
Ordinary
Profitprofit% million yen% million yen
%
105.6
446
564.5
445
576.1
67
65
-

Operatingprofitmillion yen
547
266

Ratio of ordinary profit to
Ratio of ordinary profit tototal assets
operating revenue
yen
%
%
%
2nd
2,526
2.8
1.5
43.7
1st
974
0.4
0.2
13.2
(Note 1) The calculation period for the fiscal period ended November 30, 2016 of the Investment Corporation is a period of 247 days
from March 29, 2016 to November 30, 2016, but the actual asset management period is a period of 91 days from September
1, 2016 to November 30, 2016.
(Note 2) Profit per unit for the fiscal period ended November 30, 2016 is calculated by dividing profit by the daily weighted average
number of investment units (67,589 units). Furthermore, with the actual asset management period commencement date
September 1, 2016 deemed as the beginning of the period, profit per unit calculated by dividing by the daily weighted average
number of investment units (176,200 units) is 373 yen.
(Note 3) Ratio of profit to unitholders’ equity and ratio of ordinary profit to total assets for the fiscal period ended November 30,
2016 are calculated based on the weighted average unitholders’ equity and total assets, respectively, with the actual asset
management period commencement date September 1, 2016 deemed as the beginning of the period.
(Note 4) ”%” in operating revenue, operating profit, ordinary profit and profit indicates the percentage in comparison with the previous
fiscal period. However, no figures are available as the fiscal period ended November 2016 is the first fiscal period.

(2)

Ratio of profit tounitholders’ equity

Distribution Status

Fiscal period

Distribution
per unit

Total
distribution(excludingexcess cash
distribution)(excludingexcess cash
distribution)

Excess cash
distribution
per unit

Total excess
cash
distribution

Distribution
per unit

Total
distribution(includingexcess cash
distribution)(includingexcess cash
distribution)

Dividend
Payoutratio

Ratio ofdistribution to
net assetsyenyenmillion yen
yenmillion yen
million yen
%
%
2,533
2nd
2,526
445
7
1
446
100.0
2.8
376
66
1st
373
65
3
0
99.8
0.4
(Note 1) The entire amount of total excess cash distribution is the allowance for temporary difference adjustment.
(Note 2) Dividend payout ratio is rounded down to the first decimal place. Dividend payout ratio for the fiscal period ended November
2016 is calculated using the following formula since issuance of new investment units was conducted during the period.
Dividend payout ratio = Total distribution amount (excluding excess cash distribution) / Profit × 100(Note 3) Ratio of distribution to net assets for the fiscal period ended November 30, 2016 is calculated based on the weighted average
net assets per unit with the actual asset management period commencement date September 1, 2016 deemed as the beginningof the period, using the following formula.
Ratio of distribution to net assets = Distribution per unit (excluding excess cash distribution) / {(net assets per unit at period
commencement date + net assets per unit at period end} / 2}×100.

1

(3) Financial Position
Fiscalperiodmillion yen
29,44030,732

million yen
16,197
15,818Unitholders’ equity to total
assets%55.0
51.5

Net cashprovided by (used in)operating activities
million yen
2,273(1,030)Net cashprovided by (used in)investing activities
million yen(47)(27,306)

Net cashprovided by (used in)financing activities
million yen(1,854)29,004

Total assets

2nd
1st

Net assets

Net assets
per unityen
91,92589,775(4) Cash Flow Status
Fiscalperiod2nd
1st

Cash andcash equivalents
at end of period
million yen
1,039
668

2. Management Status Forecasts for the 3rd Fiscal Period and the 4th Fiscal Period
3rd Fiscal Period: Fiscal period ending November 2017 (from June 1, 2017 to November 30, 2017)
4th Fiscal Period: Fiscal period ending May 2018 (from December 1, 2017 to May 31, 2018)

FiscalperiodOperatingrevenue

Operatingprofit[% figures show the period-on-period increase (decrease)]
Distribution
Distribution
Excess cash
per unit
per
unit
Profitdistribution(including(excluding excess
excess cash
per unit
cash distribution)

Ordinary
profitdistribution)

millionmillionmillionmillion
%
%
%
%
yen
yen
yen
yen
yen
3rd
1,027
0.6
513 (6.3)
415 (6.9)
414 (6.9)
2,352
4th
1,027
0.0
506 (1.3)
409 (1.5)408 (1.5)
2,316(Reference) Estimated profit per unit for the 3rd Fiscal Period: 2,351 yen; 4th Fiscal Period: 2,316 yen

yen

yen

7
7

2,359
2,323

* Other(1) Changes in Accounting Policies, Changes in Accounting Estimates and Retrospective Restatement(i) Changes in accounting policies accompanying amendments to accounting standards, etc.:
None(ii) Changes in accounting policies other than (i):None(iii) Changes in accounting estimates:None(iv) Retrospective restatement:
None(2) Total Number of Investment Units Issued and Outstanding(i) Total number of investment units issued and outstanding(including own investment units) at end of period:(ii) Number of own investment units at end of period:

1st176,200 units

2nd176,200 units

1st

0 units

2nd

0 units* Presentation of the status of implementation of audit procedures
At the time of disclosure of this financial report (kessan tanshin), the audit procedures pursuant to the Financial Instruments andExchange Act have not been completed.
* Explanation of the appropriate use of the management status forecasts, and other matters of special note
The management status outlook and other forward-looking statements contained in this document are based on information thatare currently available and certain assumptions that are deemed reasonable by the Investment Corporation. Accordingly, the actual
management status, etc. may differ materially due to various factors. In addition, the forecast is not a guarantee of the amount ofcash distribution. For the assumptions for the management status forecasts, please refer to “Assumptions Underlying Forecasts of
the Financial Results for the Fiscal Periods Ending November 2017 and May 2018” on page 7.

2

1. Affiliated Juridical Persons of the Investment Corporation
Disclosure is omitted because there is no significant change from “Structure of the Investment Corporation” inthe most recent periodic securities report (yuka shoken hokokusho) (submitted on February 24, 2017).
2.Management Policy and Management Status
2.1. Management Policy
Disclosure is omitted because there are no significant changes from the “Investment Policy,” “Investment
Targets” and “Distribution Policy” in the most recent periodic securities report (yuka shoken hokokusho)(submitted on February 24, 2017).
2.2. Management Status(1) Overview of the Fiscal Period under Review
a. Brief History of the Investment Corporation
Ooedo Onsen Reit Investment Corporation (the “Investment Corporation”) was established on March 29,
2016 (capital: 200 million yen, issued investment units: 2,000 units) by Ooedo Onsen Asset Management Co.,
Ltd. (the “Asset Manager”) as the founder under the Act on Investment Trusts and Investment Corporations(Act No. 198 of 1951, as amended) (the “Investment Trust Act”) and with Ooedo-Onsen Monogatari Co., Ltd.
(“Ooedo-Onsen Monogatari”) as the sponsor. Registration with the Kanto Local Finance Bureau was completed
on May 13, 2016 (registration number 119, filed with the Director of the Kanto Local Finance Bureau).
Subsequently, the Investment Corporation issued new investment units through public offering (174,200
units) with August 30, 2016 as the payment date and listed on the Real Estate Investment Trust Securities Marketof Tokyo Stock Exchange, Inc. (“Tokyo Stock Exchange”) (Securities Code: 3472) on August 31, 2016.
Furthermore, the Investment Corporation acquired 9 onsen and spa-related facilities (Note 1) (totalacquisition price (Note 2): 26,844 million yen) during the previous fiscal period (the fiscal period ended
November 2016). The total number of investment units issued and outstanding of the Investment Corporation
as of the end of the fiscal period under review (May 31, 2017) stands at 176,200 units.
(Note 1) “Onsen and spa-related facilities” refers to facilities which provide as a primary function onsen or hot baths, andinclude baths (public bathing facilities which employ onsen or other similar facilities; the same hereinafter), ryokan(lodging of which main structure and facilities are Japanese style), hotels (lodging of which main structure and facilities
are Western style), resort facilities (facilities to provide opportunities for sports or recreational activities during leisuretime), amusement parks, or other leisure facilities (including multi-use facilities that contain the foregoing) that include
baths as part of their core facilities. Onsen and spa-related facilities also refers to facilities as a whole, including not
only buildings with onsen or hot baths, but also the buildings and sites that are adjacent to such buildings or operated
as one facility. The same applies hereinafter.
(Note 2) “Acquisition price” indicates the purchase prices of properties stated in the sale and purchase agreements (notincluding expenses, such as consumption tax, local consumption tax, or sale and purchase fees), rounded down to thenearest million yen.

b. Investment Environment and Management Performance
The Japanese economy during the fiscal period under review showed an aspect of recovery trends with a
1.0% increase (the second preliminary estimates) in real GDP growth rate (after seasonal adjustment,
comparison with the previous fiscal period) for January 2017 to March 2017, an improving trend in jobs-toapplicants ratio and such. On the other hand, however, personal consumption remained weak partly due tostagnating actual wages. Concerning the world economy, we should also continue to carefully watch thechanges in the environment, including the U.S. with the new administration, trends of political measures inmajor European nations, uncertainty of the future of the Chinese economy and mounting geopolitical risks
around the world.
Under such circumstances, according to the Onsen Use Survey by the Nature Conservation Bureau of the
Ministry of the Environment, the total number of annual guests of accommodation facilities throughout a fiscal
year has continued to increase since fiscal year 2013, albeit a continuing mild decline in the number ofaccommodation facilities, assuring stable demand for onsen.
Under such environment, the occupancy rate (Note 1) of the 9 onsen and spa-related facilities the Investment
Corporation acquired (total acquisition price: 26,844 million yen) in the previous fiscal period was 100% as ofthe end of the fiscal period under review. In addition, the guestroom occupancy rate for the 9 properties owned
remained high at 88.8% on average for the fiscal period under review, resulting in cumulative totals of ADR(Note 3), RevPAR (Note 4) and sales surpassing the actual results of the same period of the previous year
before acquisition by the Investment Corporation. As to unrealized gain/loss (Note 5) of the entire portfolio asof the end of the fiscal period under review, unrealized gain of 1,024 million yen was recorded as a result of adecline of the appraisal cap rate in comparison with the previous appraisal obtained at the end of the previous
fiscal period (November 30, 2016), decline of book value due to depreciation and other factors.
－

3 －Furthermore, concerning management of properties owned, the Investment Corporation did not acquire any
new facilities. However, the Investment Corporation drew up plans for repairs and capital expenditures thattake into account the status, features, etc. of the owned properties and implemented necessary repairs andcapital expenditures, under trust-based collaboration with Ooedo-Onsen Monogatari Group (Note 6), theoperator-cum-tenant.
(Note 1) Occupancy rate refers to the ratio of leased area to leasable area.
(Note 2) Guestroom occupancy rate is calculated using the following formula.
Guestroom occupancy rate = number of guestrooms sold during relevant period / number of rooms available for saleduring relevant period ×100 (%)(Note 3) Average daily rate (ADR) is calculated for a given time period by dividing total room revenue by total rooms sold(Note 4) Revenue per available room (RevPAR) is calculated for a given time period by dividing total room revenue by totalrooms available.
(Note 5) Unrealized gain/loss is calculated using the following formula.
Unrealized gain/loss = Total appraisal value of owned assets as of the end of the fiscal period under review – Totalbalance sheet amount (including equipment attached to buildings and leasehold right)(Note 6) Ooedo-Onsen Monogatari Group is comprised of Ooedo-Onsen Monogatari Co., Ltd., the sponsor of the Investment
Corporation, and its consolidated subsidiaries.

c. Overview of Capital Procurement
During the fiscal period under review, the Investment Corporation conducted an early repayment of the entire
amount of short-term borrowings (1,400 million yen) on March 31, 2017 upon receiving the refund of
consumption tax for the assets acquired, etc. In addition, the Investment Corporation made borrowings of 500
million yen as part of fund to repay short-term borrowings of 777 million yen due on May 31, 2017. As a resultof the above efforts, the total amount of interest-bearing debt stood at 11,735 million yen and the ratio of interestbearing liabilities to total assets (LTV) at 39.9% as of the end of the fiscal period under review.
Since there was no issuance of new investment units during the fiscal period under review, unitholders’ capital
stands at 15,752 million yen and the total number of investment units issued and outstanding at 176,200 units.
d. Overview of Financial Performance and Distributions
As a result of the operations described above, business performance in the fiscal period under review
generated operating revenue of 1,021 million yen, operating profit of 547 million yen, ordinary profit of 446
million yen and profit of 445 million yen.
Concerning cash distribution for the fiscal period under review, pursuant to the cash distribution policies
provided in the Investment Corporation’s articles of incorporation, the amount of distribution was to be in excess
of an amount equivalent to 90% of the Investment Corporation’s earnings available for distribution as definedin Article 67-15, Paragraph 1 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957, as
amended; the “Special Measures Concerning Taxation Act”). Accordingly, the Investment Corporation decided
to distribute 2,526 yen per unit (excluding excess cash distribution).
Furthermore, in accordance with the policy for “distribution of cash in excess of profit” as stated in theInvestment Corporation’s articles of incorporation, the Investment Corporation made a distribution for the
1,233,400 yen allowance for temporary difference adjustment (as defined in Article 2, Paragraph 2, item 30 of
the Ordinance on Accountings of Investment Corporations (Cabinet Office Ordinance No. 47 of 2006, as
amended; the “Investment Corporations Accountings Ordinance”) for the purpose of reflecting the effect on
distributions of the difference between accounting and tax treatment of earnings in association with therecording of interest expenses of asset retirement obligation and recording of depreciation of building bookvalue corresponding to asset retirement obligation (as defined in Article 2, Paragraph 2, item 30 (b) of theInvestment Corporations Accountings Ordinance). This resulted in excess distribution per unit of 3 yen.
As a result, distribution per unit for the fiscal period under review was 2,533 yen (of which, excess distribution
per unit was 7 yen).
(2) Outlook for the Next Fiscal Perioda. Management Environment in the Next Fiscal Period
The management environment in the next fiscal period and onward is expected to continue having a sense of
uncertainty in the world economy, particularly the political movements of the U.S. and the raising of interest
rates, trends in the Chinese economy among other factors. As to the environment in Japan, although trends ofactual wages, employment situation, etc. and their impact on personal consumption continue to require attention,
demand for onsen, which is deeply rooted in Japanese culture, has not only continued to be stable but also been
expected to expand backed by an increase in inbound tourists in line with the progress in the tourism-oriented
country policy promoted by the government as well as by the presence of a large senior age group arising fromthe aging of society and their families. For these reasons, business results of the facilities owned by theInvestment Corporation are expected to remain stable.
－

4 －b. Future Management Policy and Challenges to Address(a) External Growth Strategy
Overlooking the supply aspect of onsen and spa-related facilities, the number of inquiries for potential deal
information to the Ooedo-Onsen Monogatari Group is expected to increase as more ryokans decide to cease
operation and more hotels are put in the market for sale for various reasons such as a lack of successors, declining
competitiveness due to aging properties and announcement of results of quake-resistance inspections based on
the revised Act on Promotion of Seismic Retrofitting of Buildings taking place in some municipalities.
In the fiscal year 2016 and the period up to June 31, 2017, the Ooedo-Onsen Monogatari Group acquired atotal of 7 onsen and spa-related facilities (2 facilities in Naruko onsen in Miyagi Prefecture in May 2016, 1
facility each in a tourist area in Nagasaki City, Nagasaki Prefecture and Beppu onsen in Oita Prefecture inAugust 2016, 1 facility in Atami onsen in Shizuoka Prefecture in September 2016, 1 facility in Gero onsen in
Gifu Prefecture in April 2017 and 1 facility in Kushimotocho in Wakayama Prefecture (Note 1) in June 2017).
These onsen and spa-related facilities are expected to fulfill acquisition criteria of the Investment Corporation
through revitalization such as renovation (Note 2).
Furthermore, in accordance with the sponsor support agreement concluded with Ooedo-Onsen MonogatariCo., Ltd. on July 29, 2016, the Investment Corporation will be granted with preferential negotiating rights foracquisition of facilities owned by the Ooedo-Onsen Monogatari Group and preferentially provided with thirdparty property sales information acquired by the Ooedo-Onsen Monogatari Group. The Investment Corporation
intends to continuously acquire mainly onsen and spa-related facilities with the Ooedo business model (Note3) owned and operated by Onsen Monogatari Group, on a negotiation basis avoiding excessive competition by
utilizing the above support. Also, the Investment Corporation plans to consider acquisition of facilities ownedby third parties other than the Ooedo-Onsen Monogatari Group that can expect high earnings and stable
operation, through the acquisition channels unique to the Asset Manager. The Investment Corporation believes
this will facilitate improvement of liquidity of the asset class with the acquisition of diversified onsen and sparelated facilities, etc.
(Note 1) The Investment Corporation acquired shares of Kushimoto Onsen Hotel Co., Ltd., which owns the facility.
(Note 2) It is not guaranteed the Investment Corporation will be able to acquire these properties in the future.
(Note 3) ”Ooedo onsen model” is business expertise introduced in facilities operated by Ooedo-Onsen Monogatari Groupcapable of maintaining high profitability and stable occupancy, which is possessed by Ooedo-Onsen Monogatari Groupand is believed to be highly competitive.

(b) Internal Growth Strategy
The Investment Corporation adopts a rent system which is comprised of primary rent (fixed rent combinedwith GOP-linked variable rent) with an addition of secondary rent (amount equivalent to real estate operation
costs of respective facility) in the long-term lease contracts concluded with the Ooedo-Onsen MonogatariGroup companies which are the tenants of the owned assets (Note). This allows the Investment Corporation to
pursue benefits from upside of GOP-linked rent income when facilities are generating favorable operating
results while securing stability of cash flow over the long-term. Variable rent will arise in the fiscal period
ending May 2017 and the amount of variable rent will be the fixed amount set forth in each lease contract foreach facility for the fiscal period ending May 2017. However, in the fiscal period ending November 2017
onward, variable rent that the Investment Corporation receives may decrease depending on the operating resultsof the owned facilities or may not arise at all (excluding Ooedo-Onsen Monogatari Reoma Resort). (Note: For
details of GOP and variable rent, please refer to “Assumptions Underlying Forecasts of the Financial Results
for the Fiscal Periods Ending November 2017 and May 2018” on page 7.)
The Investment Corporation agreed on June 29, 2017 with Reoma Unity Co., Ltd., the lessee, on applying
fixed amount for the variable rent portion of Ooedo-Onsen Monogatari Reoma Resort it owns for a certain
period. Specifically, the Investment Corporation concluded a rent system revision agreement to apply fixedamount for the variable rent portion until May 31, 2019. This is expected to further strengthen stability of theshort-term distribution level by taking the Investment Corporation’s current portfolio scale into account, whilebasically maintaining a rent system that includes variable rent to receive the benefit from upsides in rent of
Reoma Resort over the medium to long term.
Particularly with implementation of strategic capital expenditure, the Investment Corporation will aim forstabilization and improvement of rent revenue over the medium to long term by collaborating with the OoedoOnsen Monogatari Group, which possesses know-how on creating added value for onsen and spa-related
facilities, to enhance the value of owned facilities. For instance, the Ooedo-Onsen Monogatari Group haschanged the use of buildings, increased the number of guestrooms by constructing additional buildings invacant sites, updated facilities at outdoor baths, onsen and spa-related facilities through renewal, expansion,etc. in order to enhance capability to attract more guests.
－

5 －(Note)The rent system has been adopted in the lease agreements for the currently owned assets. However, this does notguarantee the same rent system will be adopted in the lease agreements for the facilities that the Investment Corporationacquires in the future.

(c) Financial Strategy
The Investment Corporation will consider flexible equity finance giving consideration to the enhancement ofinvestment units value over the medium to long term as well as the dilution of distribution per unit with theaims of steadily growing the Investment Corporation’s assets under management. In addition, the Investment
Corporation will implement LTV control that is conservative but also emphasizes agility, while considering
stable debt financing comprehensively taking into account conditions including the borrowing period anddiversification of lenders.
(3) Significant Subsequent Events
Not applicable.

－

6 －Assumptions Underlying Forecasts of the Financial Results
for the Fiscal Periods Ending November 2017 and May 2018
Item

Assumption

Calculation
period・ Fiscal period ending November 2017 (3rd fiscal period: from June 1, 2017, to November
30, 2017) (183 days)
・ Fiscal period ending May 2018 (4th fiscal period: from December 1, 2017, to May 31,2018) (182 days)
・ It is assumed there will be no change (acquisition or disposition of assets) to the 9properties owned by the Investment Corporation as of the date of this document throughto the end of the fiscal period ending May 2018.
・ The managed assets may actually change due to acquisition of assets other than the owned
properties above, the disposition of assets under management, etc.
・ Lease operations revenue from the owned assets is calculated based on the leaseagreements effective as of the date of this document, taking into consideration market
trends and other factors. It is assumed that no rent payments will be behind or declined bytenants.
・ Rent is calculated based on the following assumptions:Managed Assets

Operatingrevenue[Ooedo-Onsen Monogatari Reoma Resort]
Fixed rent: 62,456,896 yen monthly
Variable rent: 5,181,730 yen monthly; and will be calculated using the following
calculation method after June 2019(1) Modified GOP (Note 1) for the most recent one-year period × 5.0% (yearly; themonthly amount is 1/12th thereof)(2) Only if 64.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
With regard to Ooedo-Onsen Monogatari Reoma Resort, a fixed-term land leaseagreement has been executed with the tenant, and the Investment Corporation receives
a separate monthly land rent of 89,100 yen based on the fixed-term land lease agreement.
[Ooedo-Onsen Monogatari Ise-shima]
Fixed rent: 18,009,399 yen monthly
Variable rent: 962,993 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 4.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 77.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ito Hotel New Okabe]
Fixed rent: 12,296,799 yen monthly
Variable rent: 1,471,251 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 5.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 52.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.

－

7 －Operating
revenue[Ooedo-Onsen Monogatari Atami]
Fixed rent: 15,619,380 yen monthly
Variable rent: 939,716 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 4.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 74.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Toi Marine Hotel]
Fixed rent: 9,098,235 yen monthly
Variable rent: 1,016,579 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 7.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 72.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Awara]
Fixed rent: 10,963,033 yen monthly
Variable rent: 608,360 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 3.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 62.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Kamoshika-so]
Fixed rent: 5,953,916 yen monthly
Variable rent: 655,836 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 6.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 62.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Ikaho]
Fixed rent: 6,126,558 yen monthly
Variable rent: 708,097 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 7.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 67.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Kimitsu-no-mori]Fixed rent: 4,098,412 yen monthly
Variable rent: 436,860 yen monthly from December 2016; and will be revised every six
months and calculated as follows:(1) Modified GOP for the most recent one-year period × 5.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 52.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.

－

8 －Fiscal Period Ending November 2017 (3rd fiscal period)(Millions of yen)Primary rent (Note 2)
Fixed
Variablerent
rent(Note 3)(Note 4)375
31
(Note 6)

Property name
Ooedo-Onsen Monogatari
Reoma Resort
Ooedo-Onsen MonogatariIse-shima

Total(Note 7)

34

440

108

7

3

119

73

10

9

92

93

7

4

105

54

6

1

63

65

4

9

79

35

4

6

46

36

5

5

48

24

3

4

31

868

80

78

1,027

Ito Hotel New Okabe
Ooedo-Onsen Monogatari
Atami
Ooedo-Onsen Monogatari
Toi Marine Hotel
Ooedo-Onsen Monogatari
Awara
Ooedo-Onsen Monogatari
Kamoshika-so
Ooedo-Onsen Monogatari
Ikaho
Ooedo-Onsen Monogatari
Kimitsu-no-moriTotal (Note 7)

Secondary
rent(Note 5)

Fiscal Period Ending May 2018 (4th fiscal period)(Millions of yen)Primary rent (Note 2)
Property name
Ooedo-Onsen Monogatari
Reoma Resort
Ooedo-Onsen MonogatariIse-shima

Secondary
rent(Note 5)

Total
(Note 7)

31

34

440

108

7

3

119

73

10

9

92

93

7

4

105

54

6

1

63

65

4

9

79

35

4

6

46

36

5

5

48

24

3

4

31

868

80

78

1,027

Fixed
rent
(Note 3)375
(Note 6)

Variablerent(Note 4)

Ito Hotel New Okabe
Ooedo-Onsen Monogatari
Atami
Ooedo-Onsen Monogatari
Toi Marine Hotel
Ooedo-Onsen Monogatari
Awara
Ooedo-Onsen Monogatari
Kamoshika-so
Ooedo-Onsen Monogatari
Ikaho
Ooedo-Onsen Monogatari
Kimitsu-no-moriTotal (Note 7)(Note 1) “GOP” refers to gross operating profit, which is the amount remaining after deducting
expenses arising directly from managing each facility, such as labor expenses and generaland administrative expenses, from each facility’s sales. “Modified GOP” is the amountremaining after deducting real estate-related expenses for the property to be borne by thetenant (including, but not limited to, taxes and public charges, non-life insurance
premiums and land and house rent, but excluding an amount equivalent to Secondary－

9 －rent (defined below in Note 5)) from the GOP of each facility for the Modified GOP
Calculation Period (defined below in Note 4). The same applies hereinafter.
(Note 2) “Primary rent” refers to the sum of the fixed rent and the variable rent. The same applies
hereinafter(Note 3) “Fixed rent” refers to the monthly amount provided for in each facility’s lease agreement.
The same applies hereinafter.
(Note 4) “Variable rent" refers to the amount obtained by multiplying each facility’s modified GOP
for the most recent one-year period (for the six months starting from December of eachyear, this means the one-year period from March of that year to February of the following
year; for the six months starting from June of each year, this means the one-year period
from September of the previous year to August of that year) (these one-year periods arereferred to as “modified GOP Calculation Periods”) regarding each facility by the
specific rate provided for in each lease agreement (yearly; the monthly amount is 1/12th
thereof). The same applies hereinafter. For Ooedo-Onsen Monogatari Reoma Resort, it
will be 31 million yen until May 2019 and the amount obtained by the above calculation
method for June 2019 onward.
(Note 5) “Secondary rent” refers to an amount equivalent to the total amount of taxes, publiccharges, nonlife insurance premiums, and other expenses (real estate operational
expenses) to be borne by the Investment Corporation for each facility owned by theInvestment Corporation. The same applies hereinafter.
(Note 6) Land rent based on the fixed-term land lease agreement is included in the fixed rent.
(Note 7) Rents of properties are rounded down to the nearest million yen. Therefore, the total ofeach property’s rent, the total of fixed rents, the total of variable rents and the total of
secondary rents may not add up to the figure indicated in the Total column.

OperatingexpensesNon-operating
expenses
Borrowings

Outstanding
Investment Units

Distribution perunit(Excludingexcess cash
distribution)
Excess cash
distribution per
unit

・ Of the expenses related to leasing activities, which are a major component of operating
expenses, the expenses related to leasing activities other than the depreciation arecalculated based on past actual figures and by reflecting factors that cause expenses tofluctuate.
・ As to taxes and public charges, 69 million yen is recorded as expenses in the fiscal period
ending November 2017 and 69 million yen in the fiscal period ending May 2018.
・ Depreciation, which is calculated using the straight-line method inclusive of incidental
expenses and additional capital expenditure in the future, is assumed to be 270 million
yen for the fiscal period ending November 2017, and 272 million yen for the fiscal period
ending May 2018.
・ The total amount of interest expenses and other borrowing-related expenses is expected
to be 98 million yen for the fiscal period ending November 2017, and 97 million yen for
the fiscal period ending May 2018.
・ The balance of loans outstanding as of May 31, 2017 is 11,735 million yen.
・ In the fiscal period ending November 2017 and the fiscal period ending May 2018, it isassumed that scheduled repayment of 111 million yen will be conducted separately.
・ In the fiscal period ending May 2018, current portion of long-terms loans (500 million
yen) will be due for repayment on May 31, 2018, but it is assumed that they will be
refinanced for the same amount.
・ The assumed number of investment units issued and outstanding as of the date of thisdocument is 176,200, and it is assumed that the number of investment units will notchange due to any additional issuance of new investment units or another reason before
May 31, 2018.
・ Distribution per unit is calculated based on the expected number of investment units
issued and outstanding as of the end of the fiscal periods ending November 2017 andending May 2018 (176,200 units).
・ Distribution per unit (excluding excess cash distribution) is calculated based on the policy
for cash distributions provided for in the Investment Corporation’s articles ofincorporation.
・ Distribution per unit (excluding excess cash distribution) may change due to various
factors, including changes of portfolio, changes in rent revenue due to a relocation oftenant, etc., the occurrence of unexpected capital expenditures, and other reasons.
・ Recording of allowance for adjustment of temporary difference of 1,233,400 yen is
expected concerning the difference in accounts for tax and accounting purposes associatedwith recording of asset retirement obligation.
－

10 －Other・ Regarding conducting excess cash distribution, the Investment Corporation will have abasic policy of conducting excess cash distribution of which amount will be equivalent to
the increased amount of allowance for adjustment of temporary difference. Pursuant to
the policy, it is assumed that 7 yen of excess distribution per unit will be conducted ineach of the fiscal periods ending November 2017 and ending May 2018.
・ It is assumed that revisions that affect the above forecast figures will not be made to laws
or ordinances, tax systems, accounting standards, listing regulations, or rules or the likeset by The Investment Trusts Association, Japan.
・ It is assumed that unforeseen material changes in general economic trends, in real estatemarket conditions, or in any other factors will not occur.

2.3. Investment Risks
Disclosure is omitted because there are no significant changes from “Investment Risks” set out in the mostrecent periodic securities report (yuka shoken hokokusho) (submitted on February 24, 2017).

－

11 －

3. Financial Statements
3.1. Balance Sheets(Thousands of yen)
As of November 30, 2016
AssetsCurrent assets
Cash and deposits
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Deferred tax assets
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Land
Total property, plant and equipment
Intangible assets
Leasehold right
SoftwareTotal intangible assets
Investments and other assets
Long-term prepaid expenses
Lease and guarantee deposits
Total investments and other assets
Total non-current assets
Total assets

－

12 －

As of May 31, 2017

1,599,405
326
118,600
1,431,892
24－
3,150,250

1,970,733－
106,728－15
1,105
2,078,582

18,079,683(131,368)
17,948,314－－－
9,264,018
27,212,332

18,169,276(394,939)
17,774,336
1,259
(7)
1,251
9,264,041
27,039,629

157,802
6,191
163,993

157,802
6,963
164,765

196,129
10,000206,129
27,582,456
30,732,706

147,310
10,000157,31027,361,706
29,440,289

(Thousands of yen)
2nd Fiscal Period
1st Fiscal Period(from December 1,(from March 29, 20162016
to November 30, 2016)
to May 31, 2017)
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Tenant leasehold and security deposits
Asset retirement obligations
Total non-current liabilities
Total liabilities
Net assets
Unitholders' equity
Unitholders' capital
Deduction from unitholders' capital
Allowance for temporary difference adjustment
Total deduction from unitholders' capital
Unitholders' capital, net
Surplus
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders' equity
Total net assets
Total liabilities and net assets

－

14 －

1,159
2,177,000
223,000
261,251
7,580
1,321
－
183,256105
2,854,675

90,263－723,000
226,007
8,212
915
61,072
184,050
1,211
1,294,733

11,124,250
868,270
67,10012,059,620
14,914,295

11,012,750
868,270
67,248
11,948,269
13,243,002

15,752,576

15,752,576－－
15,752,576

(528)
(528)
15,752,047

65,834
65,834
15,818,410
15,818,410
30,732,706

445,238
445,238
16,197,286
16,197,286
29,440,289

3.2. Statements of Income
1st Fiscal Period(from March 29, 2016
to November 30, 2016)
Operating revenue
Lease business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors' compensations
Other operating expenses
Total operating expenses
Operating profit
Non-operating income
Interest income
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Organization expenses
Investment unit issuance expenses
Borrowing related expenses
Total non-operating expenses
Ordinary profit
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitRetained earnings brought forward
Unappropriated retained earnings (undisposed loss)

－

15 －

(Thousands of yen)
2nd Fiscal Period(from December 1, 2016
to May 31, 2017)507,696507,696

1,021,730
1,021,730

140,191
47,979
1,662
8,323
5,400
37,600241,157
266,538

318,123
114,178
1,367
12,892
3,600
23,598473,760
547,969

0
－
0

8
2,267
2,275

24,22273,02073,82828,336
199,408
67,131
67,131
1,321
(24)
1,296
65,834－
65,83447,403－－56,788104,191
446,053446,053916
9926
445,127111
445,238

3.3. Statements of Unitholders’ Equity
1st Fiscal Period (from March 29, 2016 to November 30, 2016)(Thousands of yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of current
periodUnappropriatedretained earnings(undisposed loss)-

Total unitholders’equityTotal
surplus

-

-

Total
net assets--

15,752,576

15,752,576

Changes of items during period
Issuance of new investment
units

15,752,576
65,834

65,834

65,834

65,83415,752,576

65,834

65,834

15,818,410

15,818,410

15,752,576

65,834

65,834

15,818,410

15,818,410

ProfitTotal changes of items during
periodBalance at end of current period*１

2nd Fiscal Period (from December 1, 2016 to May 31, 2017)(Thousands of yen)
Unitholders’ equity
Unitholders’ capital

Balance at beginning ofcurrent period
Changes of items during
periodSurplus

Deduction fromunitholders' capital
Allowance
Total
Unitholders’
Unitholders’fordeduction
capitalcapitaltemporaryfromdifference unitholders'adjustment capital

Unappropriatedretainedearnings(undispo
sed loss)

Total
surplus-65,834

65,834 15,818,410 15,818,410(65,722)(65,722)

15,752,576- 15,752,576

Distribution of surplus
Excess cash distribution
from allowance fortemporary difference
adjustment

(528)

(528)

(528)

ProfitTotal changes of items during
periodBalance at end of current period*１15,752,576(65,722)(65,722)

(528)

(528)

445,127

445,127

445,127

378,876

378,876

(528)

(528)

379,404

379,404

(528)

(528)

15,752,047

445,238

445,238

16 －

Total
net assets

445,127
(528)

－

Total
unitholders’equity16,197,286 16,197,286

3.4. Statements of Cash Distributions(Yen)
1st Fiscal Period(from March 29, 2016
to November 30, 2016)

Item
I. Unappropriated retained earnings
II. Addition of excess distribution
Of which, allowance for temporary difference adjustment
III. Distribution amount[Distribution amount per unit]
Of which,
Distribution amount from earnings[Of which, excess cash distribution per unit]
Allowance for temporary difference adjustment[Of which, excess cash distribution per unit
(pertaining to allowance for temporary difference
adjustment)]
IV. Retained earnings carried forward

Method of calculating distribution amount2nd Fiscal Period(from December 1, 2016
to May 31, 2017)

65,834,175
528,600
528,600
66,251,200[376]

445,238,882
1,233,400
1,233,400
446,314,600[2,533]65,722,600[373]
528,600

445,081,200[2,526]
1,233,400

[3]

[7]

111,575
As described above, distribution perunit for the fiscal period underreview is 376 yen.
Concerning cash distribution(excluding excess cash distribution),in order to ensure that the maximum
amount of cash distribution of
earnings would be included indeductible expenses based on
application of special provisions fortaxation on investment corporations(Article 67-15, Paragraph 1 of theSpecial Measures Concerning
Taxation Act), the Investment
Corporation decided to distributealmost the entire amount of theearnings provided in Article 136,
Paragraph 1 of the Act on Investment
Trusts and Investment Corporations,excluding the portion where cash
distribution per investment unit
would be less than JPY1. As a result,the Investment Corporation declareda cash distribution per investment
unit (excluding excess cash
distribution) of 373 yen.
In addition, pursuant to the policy
for “distribution of money in excess
of profits” as stated in its articles ofincorporation,
theInvestment
Corporation decided to make a
distribution for the 528,600 yen
allowance for adjustment of
temporary difference for the purposeof reflecting the effect on
distributions of the difference inaccounts for tax and accounting
purposes in association withexpenses related to asset retirement
obligations (as defined in Article 2,
Paragraph 2, item 30 (b) of theInvestment
Corporations
Accountings Ordinance). This
resulted in distribution of allowancefor temporary difference adjustmentof 3 yen per investment unit.

157,682
As described above, distribution perunit for the fiscal period underreview is 2,533 yen.
Concerning cash distribution(excluding excess cash distribution),in order to ensure that the maximum
amount of cash distribution of
earnings would be included indeductible expenses based on
application of special provisions fortaxation on investment corporations(Article 67-15, Paragraph 1 of theSpecial Measures Concerning
Taxation Act), the Investment
Corporation decided to distributealmost the entire amount of theearnings provided in Article 136,
Paragraph 1 of the Act on Investment
Trusts and Investment Corporations,excluding the portion where cash
distribution per investment unit
would be less than JPY1. As a result,the Investment Corporation declareda cash distribution per investment
unit (excluding excess cash
distribution) of 2,526 yen.
In addition, pursuant to the policy
for “distribution of money in excess
of profits” as stated in its articles ofincorporation,
theInvestment
Corporation decided to make a
distribution for the 1,233,400 yen
allowance for adjustment of
temporary difference for the purposeof reflecting the effect on
distributions of the difference inaccounts for tax and accounting
purposes in association withexpenses related to asset retirement
obligations (as defined in Article 2,
Paragraph 2, item 30 (b) of theInvestment
Corporations
Accountings Ordinance). This
resulted in distribution of allowancefor temporary difference adjustmentof 7 yen per investment unit.

－

17 －

3.5.

Statements of Cash Flows
1st Fiscal Period(from March 29, 2016
to November 30, 2016)

Cash flows from operating activities
Profit before income taxes
Depreciation
Investment unit issuance expenses
Borrowing related expenses
Interest income
Interest expenses
Decrease (increase) in operating accounts
receivable
Increase (decrease) in operating accounts
payableDecrease (increase) in consumption taxes refund
receivable
Increase (decrease) in accrued consumption taxes
Decrease (increase) in prepaid expenses
Decrease (increase) in long-term prepaid expenses
Increase (decrease) in accounts payable - other
Increase (decrease) in advances received
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating
activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from tenant leasehold and security
deposits
Payments for restricted bank deposits
Net cash provided by (used in) investing
activities
Cash flows from financing activities
Increase in short-term loans payable
Proceeds from long-term loans payable
Decrease in short-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment units
Dividends paid
Net cash provided by (used in) financing
activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

－

18 －

(Thousands of yen)
2nd Fiscal Period(from December 1, 2016
to May 31, 2017)

67,131
131,677
73,82828,336(0)24,222(326)

446,053
264,329—56,788(8)47,403
326

15

(15)

(1,431,892)

1,431,892—(18,358)(126,708)
65,268183,256(9,820)(1,013,370)
0(16,641)(0)(1,030,011)

61,072
3,902
—
8,760
793
148
2,321,448
8(46,770)(1,322)
2,273,362(27,080,087)(163,762)(45,760)(1,523)

868,270—(930,770)(27,306,349)—(47,284)

2,177,000
11,205,000—(55,750)
15,678,747—
29,004,997—
500,000(2,177,000)(111,500)—(66,251)(1,854,751)

668,635

371,327—
668,635

668,635
1,039,962