[Translation for reference purposes only]
August 24, 2023

Report on the Management Structure and System of the Real Estate Investment Trust Securities Issuer and Related Parties
Real Estate Investment Trust Securities Issuer
Ooedo Onsen Reit Investment Corporation
Representative: Takeshi Kirihara, Executive Director(Securities Code: 3472)
Asset Manager

Ooedo Onsen Asset Management Co., Ltd.
Representative: Takeshi Kirihara, Chief Executive Officer
Inquiries: TEL. +81-3-6262-5456
1.

Basic Information(1)
Basic Policy Regarding Compliance
For Ooedo Onsen Asset Management Co., Ltd. (the “Asset Manager”), “compliance” means not only strictly complying with all laws, ordinances, regulations, internal rules, andmarket rules related to the business of the Asset Manager, but also conducting sound and corporate activities with integrity while bearing social norms in mind. The Asset Manager has
established its Compliance Regulations to ensure sound corporate management based on self-discipline, strictly complying with all laws, ordinances, and rules relating to its business, andperforming sound and honest corporate activities by setting forth the basic matters regarding its compliance structure. An overview of the Compliance Regulations is as follows:
・ The Asset Manager fully recognizes that a lack of thorough compliance may undermine the corporate management base of the Asset Manager; therefore, the Asset Manager’s basic
policy is to position thorough compliance as a key task of corporate management.
・ The Asset Manager recognizes that, as a company engaged in the financial instruments business, it is responsible for endeavoring to realize the business value of the Asset Manager
that is required by society and will actively and continuously strive to ensure compliance in order to improve the quality and quantity of its business value by earning the trust of
its customers.
・ The Asset Manager has established (i) the Board of Directors, (ii) the Compliance Officer, and (iii) the Compliance Committee as its framework for compliance within the AssetManager and has set forth the role of each organization as follows:1(i) Role of the Board of Directors
The Board of Directors decides on the establishment and amendment of the Compliance Regulations and other necessary internal rules as the decision-making organization for thebasic policy regarding promotion of compliance and other basic matters.
The Board of Directors may request the Compliance Officer to report the progress of compliance promotion as appropriate.
(ii) Role of the Compliance Officer
The Compliance Officer organizes, plans, and promotes overall compliance as the department responsible for overseeing compliance. If the Compliance Officer determines that
an issue in terms of compliance has arisen or is likely to arise, the Compliance Officer may give related departments necessary opinions or instructions. In addition, with respect tocompliance, the Compliance Officer reports the progress of compliance promotion and other matters relating to the compliance of the Asset Manager’s business to the Board of
Directors at least once every three months.
(iii) Role of the Compliance Committee
The Compliance Committee deliberates and resolves matters relating to compliance and compliance systems as set forth in the Compliance Regulations, the Regulations of theCompliance Committee, and the Compliance Program.
・ The Asset Manager recognizes that guidance and training on compliance fulfill an important function in ensuring thorough compliance and assigns the planning and implementationof such guidance and training to the Compliance Officer.
・ Officers and employees must immediately report to the Compliance Officer if they become aware of any issues relating to compliance, such as the occurrence or possible occurrenceof (A) any act in violation of laws and ordinances provided for in Article 199 (vii) of the Cabinet Office Ordinance on Financial Instruments Business, etc. (Cabinet Office Ordinance
No. 52 of 2007, as amended; the same hereinafter), (B) any criminal complaint or accusation against the Asset Manager or its officers or employees, (C) any act that hinders or is
likely to hinder sound and proper operation of the business of the Asset Manager and any other act similar thereto, and (D) any act that violates or is likely to violate other laws,
ordinances, or regulations.

2

(2)

Unitholders(As of May 31, 2023)
Relationship with the Investment Corporation,
the Asset Manager or the sponsor; background to contribution

Name
The Master Trust Bank of Japan, Ltd.
(Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)
Ooedo-Onsen Mongatari Co., Ltd.

Japan Securities Finance Co.,LTD

Number of
units

Ratio
(%) (Note)

N/A

25,246

10.72

N/A

23,64010.04

N/A

10,393

4.41

9,246

3.92

3,157

1.34

Ooedo-Onsen Monogatari Co., Ltd. is a sponsor of Ooedo Onsen Reit Investment
Corporation (the “Investment Corporation”) and the parent company that whollyowns the Asset Manager.
On November 1, 2017, Ooedo-Onsen Monogatari Co., Ltd. entered into a sponsor
support agreement (as amended) with the Investment Corporation, the AssetManager and Ooedo-Onsen Monogatari Group Co., Ltd.
N/A

N/A
YONEZAWA SHINKIN BANKDFAINTERNATIONAL
REAL
ESTATE
N/A
SECURITIES PORTFOLIO
N/AFuji-Izu Japan Agricultural Cooperatives

2,500

1.06

2,305

0.97

2,230

0.94

osaka shoko shinkin bank

N/A

2,000

0.84

Yukio Tanaka

N/A

1,950

0.82

82,667

35.12

Total of the top 10 unitholders(Note) “Ratio” is the ratio of the number of investments units held to the total number of investment units issued and outstanding, rounded to the second decimal place.

3

(3)

Major Shareholders of Asset Manager(As of May 31, 2023)
Name

Ooedo-Onsen Monogatari Co., Ltd.

Relationship with the Investment Corporation,
the Asset Manager or the sponsor; background to contribution
Please refer to “(2) Unitholders” above.
Total held by one company

Number of shares

Ratio(%) (Note)

200

100.0

200

100.0

(Note) “Ratio” is the ratio of the number of shares held to the number of shares issued and outstanding.

(4)

Investment Policy and Investment Targets
Please refer to “Chapter 1. Fund Information, Section 1. Situation of the Fund, 2. Investment Policy, (1) Investment Policy” of the semi-annual securities report for the 14th fiscal
period (from December 1, 2022 to May 31, 2023) of the Investment Corporation submitted today.

(5)

Matters concerning Investment in Overseas Real Estate
The Investment Corporation permits investment in overseas real estate in its articles of incorporation, and the Asset Manager has established rules pertaining to the acquisition ofoverseas real estate and the like; however, there are no specific plans to invest in overseas real estate as of the submission date of this report.

(6)
Matters concerning the Sponsor(i) Business Description of Ooedo-Onsen Monogatari Group
Ooedo-Onsen Monogatari Group (Note 1) was established in November 2001, opened Odaiba Tokyo Ooedo-Onsen Monogatari in Odaiba (Note 2), Tokyo in 2003, and since thenhas been advancing its business of operating Onsen and Spa-related facilities (Note 3). Since 2007, Ooedo-Onsen Monogatari Group has been developing the business of revitalizing
Onsen and Spa-related facilities associated with leisure facilities, such as theme parks, focusing on onsen ryokan throughout Japan by utilizing its expertise in operating such facilities,
and as of the submission date of this report, it operates 37 Onsen and Spa-related facilities (Note 4).
The Ooedo-Onsen Monogatari Group was acquired by Lone Star Funds (Note 5) on February 28, 2022, and since then, a corporation that belongs to the Fund has been operating
as a parent company of the Asset Manager (Note 6).
As of the date of submission of this report, the Ooedo-Onsen Monogatari Group consists of seven companies in total, including Ooedo-Onsen Monogatari Hotels & Resorts Co.,
Ltd., Ooedo-Onsen Monogatari Co., Ltd. and consolidated subsidiaries including the Asset Manager. The Onsen and Spa-related facilities under ownership and operation of the
Ooedo-Onsen Monogatari Group are owned and operated by Ooedo-Onsen Monogatari Hotels & Resorts Co., Ltd., although some of them are actually owned and operated by its
subsidiaries (Note 7).

4(Note 1) “The Ooedo-Onsen Monogatari Group” consists of Ooedo-Onsen Monogatari Hotels & Resorts Co., Ltd., which is the Investment Corporation’s sponsor, and Ooedo-Onsen Monogatari Co., Ltd.
(hereinafter occasionally referred to as “Sponsor”) and its consolidated subsidiaries (meaning subsidiaries provided for in Article 8, Paragraph 3 of the Ordinance on Terminology, Forms, andPreparation Methods of Financial Statements (Ordinance of the Ministry of Finance No. 59 of 1963, as amended), including the Asset Manager). The same applies hereinafter.
(Note 2) With the termination of the fixed-term business-use land lease agreement under which the Tokyo Metropolitan government is the landowner, the facilities were closed following the end of theiroperation on September 5, 2021.
(Note 3) “Onsen and spa-related facilities” refers to hot bath facilities (public bathing facilities which employ hot springs (onsen) (meaning hot water, mineral water, steam and other gases (not including
natural gas mainly composed of hydrocarbons) that flow out from the ground; the same hereinafter) or other similar facilities; the same hereinafter) or other similar facilities; the same hereinafter)or ryokan (lodging of which main structure and facilities are Japanese style; the same hereinafter), hotels (lodging of which main structure and facilities are Western style; the same hereinafter),resort facilities (facilities to provide opportunities for sports or recreational activities during leisure time), amusement parks, or other leisure facilities (including multi-use facilities that contain theforegoing) that include onsen or hot 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, butalso the buildings and sites that are adjacent to such buildings or operated as one facility. The same applies hereinafter. From the perspective of diversifying risks while ensuring portfolio returns,
the Investment Corporation invests in rental housing and other accommodation facilities for residential purposes, in addition to the investments in hot spring, bathing and other related facilities, andother leisure facilities. The Investment Corporation has not owned accommodation facilities or made a resolution to acquire accommodation facilities for residential purposes (meaning rental
housing, student apartments, company dormitories, serviced apartments, shared houses, elderly facilities and houses, and other facilities that are or can be used for residential purposes; the same
hereinafter), as of the date of this document.
(Note 4) Of the facilities operated by the Ooedo-Onsen Monogatari Group, Ooedo-Onsen Monogatari Reoma Resort, as well as Ooedo-Onsen Monogatari Minoh Kanko Hotel and Minoh Onsen Spa
Garden, which are not assets owned by the Investment Corporation, are classified as one integrated facility. The same applies hereinafter.
(Note 5) "Lone Star Funds" refers to Lone Star Global Acquisitions, Ltd. (registered as an investment advisor with the U.S. SEC), its subsidiaries/affiliates, and the funds for which they provide investment
advice.
(Note 6) “OOM Investments, LLC, which belongs to Lone Star Funds, acquired all shares in BCJ-29 Co., Ltd., a parent company of the Asset Manager, on February 28, 2022 and became a parent companyof the Asset Manager. Moreover, equity interests in OOM Investments, LLC held by its employees are entirely owned by LSREF VI Hot Spring Designated Activity Company, an Ireland-based
corporation established by Lone Star Funds, which also falls into a category of a parent company of the Asset Manager. OOM Investments, LLC implemented an organizational change on May 27,
2022 to increase social credibility and became OOM Investments Co., Ltd. Afterwards BCJ-29 Co., Ltd., a wholly owned subsidiary of OOM Investments Co., Ltd., and OOM Investments Co.,
Ltd. executed an absorption-type merger in which. OOM Investments Co., Ltd. becomes a company surviving the absorption-type merger and BCJ-29 Co., Ltd. becomes a company absorbed in
the absorption-type merger, with an effective date of July 1, 2022.
(Note 7) Among the facilities owned and operated by Ooedo-Onsen Monogatari Group, Ooedo-Onsen Monogatari Reoma Resort, which is an asset owned by the Investment Corporation, is operated by
Reoma Unity Co., Ltd.; Ooedo-Onsen Monogatari Minoh Kanko Hotel and Minoh Onsen Spa Garden are owned and operated by Ooedo-Onsen Monogatari Hotels & Resorts Co., Ltd.; Yamashiro
Onsen Yamashitaya is owned and operated by Yamashitaya Co., Ltd.; and Ooedo-Onsen Monogatari Nagayama is owned and operated by Katayamazu Ooedo-Onsen Monogatari Co., Ltd.
Furthermore, Ooedo-Onsen Rainbow Co., Ltd. manages Onsen-related facilities. All the companies described above are consolidated subsidiaries of Ooedo-Onsen Monogatari Group.

5Trade name< Overview of Ooedo-Onsen Monogatari Hotels & Resorts Co., Ltd. >Ooedo-Onsen Monogatari Hotels & Resorts Co., Ltd.

Head office address

7-16-21 Ginza, Chuo-ku, Tokyo

Representative

Mitsumasa Morita, Representative Director (Note 1)

Establishment

December 5, 2017 (founded in November 2001)

Capital

100 million yen (as of February 28, 2023)

Business details

Management and other operations of ryokan and hotels

Number of employees (Note 2)

1,202 (Note 3) (consolidated basis)

Performance and finances (Note 2)(fiscal period ended February 2023)

Consolidated net revenue of wholly owning parent company: 36,875 million yen
Consolidated total assets of wholly owning parent company: 93,371 million yen
Consolidated net assets of wholly owning parent company: 31,879 million yen(Note 1) It has been resolved that Representative Director Mitsumasa Morita will be retire on August 31, 2023, and Keita Hashimoto, as its successor will be appointed as its new Representative Director on
September 1, 2023, at its board of directors meeting on August 4, 2023.
(Note 2) Because the consolidated financial statements of Ooedo-Onsen Monogatari Hotels & Resorts Co., Ltd. for the fiscal year ending February 2023 has not been prepared, the figures for the fiscal year
ending February 2023 related to the consolidated financial statements of OOM Investments Co., Ltd., which is a wholly owning parent company of Ooedo-Onsen Monogatari Hotels & Resorts Co., Ltd.
and essentially a special purpose company whose purpose is to hold only the shares of Ooedo-Onsen Monogatari Hotels & Resorts Co., Ltd., are listed. The consolidated financial statements of OOM
Investments Co., Ltd., have been audited in accordance with item (i) of paragraph (2) of Article 436 in the Companies Act by PricewaterhouseCoopers Aarata LLC. However, they have not undergone
any audit conducted by a certified public accountant or auditing firm as required under the Financial Instruments and Exchange Act (Act No. 25 of 1948, as amended) and under the Companies Act
because these laws do not require any such audit for these statements. The same applies hereinafter.
(Note 3) The figure is correct as of the end of February 2023, excluding non-regular employees, such as part-time workers.

6Organization chart of Ooedo-Onsen Monogatari Group

Ooedo-Onsen Monogatari Hotels & Resorts Co., Ltd.

Ooedo-Onsen Monogatari Co., Ltd.

56%
Ooedo-Onsen
Rainbow Co., Ltd.

Yamashitaya
Co., Ltd.

53%
Katayamazu
Ooedo-Onsen
Monogatari Co., Ltd.

(Note) Corporations for which an investment ratio is not included are wholly owned by their parent companies.

7

Reoma Unity
Co., Ltd.

Ooedo Onsen
Asset Management
Co., Ltd.

(ii) Agreements on the Supply of Properties and Provision of Information with the Sponsor Company GroupThe Investment Corporation and the Asset Manager have executed the Sponsor Support Agreement with the Sponsors dated November 1, 2017.
An overview of the Sponsor Support Agreement is as follows.
Overview of Sponsor Support Agreementi.

Preferential provisionof information onproperty owned by
Ooedo-Onsen
Monogatari Group andgranting of preferential
negotiation rights

・If the Sponsors intend to sell real estate (meaning that provided for in the Investment Corporation’s articles of incorporation) located in Japan, owned ordeveloped by Ooedo-Onsen Monogatari Group, and mainly used for ryokan, hotels, baths, resort facilities, amusement parks, or other leisure facilities(including multi-use facilities that contain the foregoing; the same applies in this overview of Sponsor Support Agreement) (including real estate that
does not fit the Investment Corporation’s investment criteria; referred to in this overview of Sponsor Support Agreement as “Investment-grade Real
Estate”), the Sponsors will, ahead of any third party, preferentially provide information on the Investment-grade Real Estate to the Investment
Corporation and the Asset Manager, grant the Investment Corporation and the Asset Manager the right to preferentially negotiate for purchase and sale(referred to in this overview of Sponsor Support Agreement as “Preferential Negotiation Right”), or cause any other entity of the Ooedo-Onsen
Monogatari Group that owns the Investment-grade Real Estate to grant the Investment Corporation and the Asset Manager Preferential Negotiation
Rights. The Sponsors will not negotiate with any third party on the sale of the Investment-grade Real Estate and will not cause any other entity of the
Ooedo-Onsen Monogatari Group that owns the Investment-grade Real Estate to negotiate on the sale of the Investment-grade Real Estate until
Preferential Negotiation Rights extinguish as set out below in “Overview of Preferential Negotiation Rights.”
Overview of Preferential Negotiation Rights
・If Preferential Negotiation Rights are granted to the Investment Corporation and the Asset Manager in accordance with the provisions of the Sponsor
Support Agreement, the Investment Corporation or the Asset Manager will reply to the person who granted Preferential Negotiation Rights (referred toin this overview of Sponsor Support Agreement as the “Grantor of Preferential Negotiation Rights”) within 10 banking business days (referred to inthis overview of Sponsor Support Agreement as the “Preferential Consideration Term”) from the day of receiving information as stated above (notincluding the day of receipt) on whether it will acquire the Investment-grade Real Estate or not. If an extended period is separately agreed between the
Grantor of Preferential Negotiation Rights and the Investment Corporation or the Asset Manager, the Preferential Consideration Term may be extended
for the agreed period.
・If the Grantor of Preferential Negotiation Rights receives a reply from the Investment Corporation or the Asset Manager within the Preferential
Consideration Term that it intends to acquire the Investment-grade Real Estate, the Grantor of Preferential Negotiation Rights will consult with theInvestment Corporation or the Asset Manager in good faith regarding the conditions of sale for the Investment-grade Real Estate. If an agreement isreached, the Grantor of Preferential Negotiation Rights will sell the Investment-grade Real Estate to the Investment Corporation.
・Preferential Negotiation Rights will extinguish in the event that the Investment Corporation or the Asset Manager (i) does not reply to the Grantor ofPreferential Negotiation Rights within the Preferential Consideration Term that it intends to make an acquisition, (ii) replies to the Grantor of Preferential
Negotiation Rights that it does not intend to make an acquisition, or (iii) replies to the Grantor of Preferential Negotiation Rights that it intends to makean acquisition, but an agreement is not reached on the conditions of sale within 10 banking business days from the day the Grantor of Preferential
Negotiation Rights receives the reply (not including the day of receipt) or within the extended period separately agreed between the Grantor of Preferential
Negotiation Rights and the Investment Corporation or the Asset Manager.

8

Exemptions
Preferential Negotiation Rights will not be granted in any of the following events:
・When Investment-grade Real Estate is transferred within the Ooedo-Onsen Monogatari Group due to corporate restructuring or for any other reason;
・When Investment-grade Real Estate is transferred to a fund in whose formation Ooedo-Onsen Monogatari Group was involved or to which OoedoOnsen Monogatari Group makes a silent partnership contribution, preferred equity investment, or other investment (in this case, Preferential Negotiation
Rights will be granted to the fund by deeming the fund to be part of the Ooedo-Onsen Monogatari Group);
・When Ooedo-Onsen Monogatari Group disposes of Investment-grade Real Estate pursuant to a request by an administrative agency;
・When Ooedo-Onsen Monogatari Group has commenced discussions with a third party on the sale of Investment-grade Real Estate before acquiring theInvestment-grade Real Estate;
・When Ooedo-Onsen Monogatari Group grants Preferential Negotiation Rights to a third party based on an agreement with the third party that has been
executed before the execution of the Sponsor Support Agreement;
・In the event that Ooedo-Onsen Monogatari Group shares or has unit ownership of Investment-grade Real Estate with a third party, when Ooedo-Onsen
Monogatari Group has agreed in advance to assign the Investment-grade Real Estate to the third party or to grant Preferential Negotiation Rights to thethird party, or when it has not obtained the consent of the third party regarding the provision of information to the Investment Corporation or the AssetManager;
・In the event that Ooedo-Onsen Monogatari Group conducts joint ventures or joint development for Investment-grade Real Estate with a third party, when
Ooedo-Onsen Monogatari Group has agreed in advance to assign the Investment-grade Real Estate to the third party or to grant Preferential Negotiation
Rights to the third party, or when it has not obtained the consent of the third party regarding the provision of information to the Investment Corporationor the Asset Manager; or・When there is any other unavoidable reason.
ii.

Mutual provision of
information on property
owned by a third party

・If the Sponsors become aware that the owner of Investment-grade Real Estate that is owned, developed, or managed by a third party is considering thesale of such real estate, they will, at their discretion, provide information on such Investment-grade Real Estate to the Investment Corporation and theAsset Manager on the condition that it obtains the prior approval of the seller, owner, and other relevant parties, and they will not provide the information
to a third party (excluding the lenders and advisors of the Sponsors) until the information has been provided to the Investment Corporation and the AssetManager. Further, if the Sponsors have been granted Preferential Negotiation Rights under an agreement with a third party that was executed before
or after the execution of the Sponsor Support Agreement, and a third party designated by the Sponsors is able to obtain such rights, the Sponsors will
endeavor to grant Preferential Negotiation Rights to the Investment Corporation. However, if the Investment-grade Real Estate conforms to theSponsors’ investment criteria, the Sponsors may consider the acquisition of the Investment-grade Real Estate ahead of the Investment Corporation and
the Asset Manager.
・If the Asset Manager becomes independently aware that the owner of real estate that is owned, developed, or managed by a third party is considering
the sale of such real estate, and the real estate conforms to the Sponsors’ investment criteria, the Asset Manager will endeavor to provide information on
the real estate to the Sponsors ahead of any third party. Further, if the Investment Corporation or the Asset Manager has been granted Preferential
Negotiation Rights under an agreement with a third party executed after the execution of the Sponsor Support Agreement, and a third party designatedby itself, the Investment Corporation or the Asset Manager may be granted Preferential Negotiation Rights, the Investment Corporation or the AssetManager will endeavor to grant Preferential Negotiation Rights to the Sponsors. However, if the real estate constitutes Investment-grade Real Estate,
the Investment Corporation and the Asset Manager may consider the acquisition of the real estate ahead of the Sponsors.

9

iii. Provision of
warehousing functions

・The Investment Corporation and the Asset Manager may request the Sponsors to, for the purpose of the future acquisition of Investment-grade Real
Estate by the Investment Corporation, acquire and temporarily own (referred to in this overview of Sponsor Support Agreement as “Warehousing”)
Investment-grade Real Estate owned by a third party after presenting to the Sponsors the expected acquisition date and the expected acquisition price or
method of determining the acquisition price. In this case, the Sponsors will consider the request in good faith and reply to the Investment Corporationand the Asset Manager within 10 banking business days from the day of receiving the request (not including the day of receipt) on whether it will accept
the request or not.
・If the Sponsors provide notice of their intention to accept the request for Warehousing as set out above, the Sponsors, the Investment Corporation, and
the Asset Manager will consult on details concerning the acquisition, ownership, and sale to the Investment Corporation associated with Warehousing.
In accordance with the terms agreed upon through the consultation and, if necessary, upon obtaining the consent of the lender and other relevant persons,the Sponsors will implement Warehousing, acquire and own the Investment-grade Real Estate on their own accord, or endeavor to cause a special
purpose company to which any other entity or sponsor of the Sponsors’ group makes a silent partnership contribution, preferred equity investment, orother investment (referred to in this overview of Sponsor Support Agreement as “Warehousing SPC”) to acquire and own the Investment-grade Real
Estate. While owning Investment-grade Real Estate for Warehousing, the Sponsors will take full advantage of their business expertise and exert theirbest efforts to enhance the appeal of the Investment-grade Real Estate as agreed between the Investment Corporation and the Asset Manager.
・If the Sponsors or any other entity of the Ooedo-Onsen Monogatari Group or Warehousing SPC acquire the Investment-grade Real Estate as set out
above, the Sponsors may not, without obtaining the prior written consent of the Investment Corporation and the Asset Manager, propose the sale or any
other manner of disposition of the Investment-grade Real Estate to a third party other than the Investment Corporation, cause any other entity of the
Ooedo-Onsen Monogatari Group or Warehousing SPC to propose the sale or any other manner of disposition of the Investment-grade Real Estate,negotiate with a third party on the sale of the Investment-grade Real Estate, or cause any other entity of the Ooedo-Onsen Monogatari Group or
Warehousing SPC that owns the Investment-grade Real Estate to negotiate on the sale of the Investment-grade Real Estate until the expected acquisition
date presented by the Investment Corporation and the Asset Manager has passed. Further, if the Investment Corporation and the Asset Manager propose
to acquire the Investment-grade Real Estate during such period, the Sponsors will sell the Investment-grade Real Estate to the Investment Corporation
after the details of the sale of the real estate to be acquired are agreed upon among the Sponsors, the Investment Corporation, and the Asset Manager.
・If it becomes difficult to acquire the real estate to be acquired at the expected acquisition date presented by the Investment Corporation and AssetManagement Corporation, the Investment Corporation and the Asset Manager may notify the Sponsors of that fact and the desired acquisition date after
extension. In this case, the Sponsors will not unreasonably refuse the extension of the expected acquisition date.

iv. Consultation regarding
execution of leaseagreements

・If the Asset Manager deems it necessary, the Asset Manager may propose the execution of a fixed-rent lease agreement or other type of lease agreement
to the Sponsors, and the Sponsors will earnestly consider executing such lease agreement on their own accord or through another company of the OoedoOnsen Monogatari Group.

v.

・If the Sponsors are so requested by the Asset Manager (not including requests for cooperation that constitute investment management services orinvestment advisory and agency services), the Sponsors will, to the extent reasonable and not in violation of applicable laws and ordinances, provide (i)advice related to investment strategy by providing knowledge and information regarding ryokan, hotels, baths, resort facilities, amusement parks, otherleisure facilities, lodgings, and the leisure industry and (ii) support related to the acquisition and management of Investment-grade Real Estate to theInvestment Corporation and the Asset Manager. However, this section v. does not mean that the Asset Manager will grant all or part of its authority
pertaining to asset management to the Sponsors.

Cooperation related toinvestment strategy andproperty acquisition10

vi. Cooperation related to・Ooedo-Onsen Monogatari Group will endeavor to the extent reasonable to secure the human resources that become necessary due to the growth of theAsset Manager and the Investment Corporation through such measures as seconding necessary human resources from Ooedo-Onsen Monogatari Groupto the Asset Manager in order to transfer and develop the expertise in real estate administration and management necessary for the performance of theasset management services entrusted by the Investment Corporation, while respecting the identity of the Asset Manager.

vii. Unitholders’ special

・Following the execution date of the Sponsor Support Agreement, the Investment Corporation, the Asset Manager, and the Sponsors will consult about
matters such as whether to introduce a unitholders’ special benefits plan (referred to in this section vii. as the “Special Benefits Plan”) for the purposeof providing unitholders with opportunities to experience the characteristics of the ryokan, hotels, baths, resort facilities, amusement parks, and otherleisure facilities owned by the Investment Corporation or Ooedo-Onsen Monogatari Group and to enrich their understanding thereof, and about thedetails of the plan if it is introduced.
・If, as part of the Special Benefits Plan, the Investment Corporation and the Asset Manager give preferential treatment to unitholders in order to allow
them to widely use ryokan, hotels, baths, resort facilities, amusement parks, and other leisure facilities managed and operated by the Sponsors throughsuch methods as giving them coupons that offer discounts of a certain amount or ratio off the accommodation charges when they stay at those facilities,
then the Sponsors will cooperate through such means as issuing those coupons as agreed through consultation in good faith with the Investment
Corporation and the Asset Manager.
・The sharing of the expenses and the like arising from the introduction of the Special Benefits Plan will be determined upon separate agreement.

viii. Acquisition and・If the Sponsors acquire investment units of the Investment Corporation, the Sponsors will endeavor to continue to hold those investment units of theInvestment Corporation to the Invest Corporation and the Asset Manager.
・If the Sponsors intend to sell all or part of the investment units of the Investment Corporation, the Sponsors will notify the Investment Corporation and
the Asset Manager to that effect and consult in good faith.
・Regarding the trademarks held by the Sponsors (including but not limited to registration no. 5694250; if registration of renewal of the duration of
trademark rights was made, including registered trademarks after that registration of renewal; referred to in this section ix. as the “Trademarks”), theSponsors will grant the Investment Corporation and the Asset Manager a non-exclusive license to use the Trademarks within the extent of the designatedservices thereof.
・The Sponsors acknowledge that the Investment Corporation and the Asset Manager may state or include the Trademarks as statements of informationor the like pertaining to the investment policy of the Investment Corporation or to the properties owned by the Investment Corporation that are named
using the Trademarks in disclosure documents such as prospectuses, securities registration statements, and asset management reports and in IR media
such as press releases, materials from presentations for analysts, and websites.
・If it is discovered that a trademark similar to the Trademarks has been used and the trademark rights pertaining to the Trademarks have been infringed,
the Sponsors will eliminate such infringement at their responsibility and cost, and the Investment Corporation and the Asset Manager will cooperate
therein as requested by the Sponsors.
・If the Sponsor Support Agreement terminates, the parties to the Sponsor Support Agreement will consult in good faith and determine upon agreement
the handling of goods, assets, and the like that bear the Trademarks after the termination of the Sponsor Support Agreement. Furthermore, upon suchconsultation, the Sponsors will provide the Investment Corporation and the Asset Manager with a reasonable transition period necessary for ceasing theuse of the Trademarks.

securing humanresources

benefits plan (Note)holding of investment
unitsix. License to use
trademarks

11

x.

Other support

・If the Sponsors are so requested by the Investment Corporation and the Asset Manager (not including requests that constitute investment management
services or investment advisory and agency services), the Sponsors will provide training for officers and employees of the Asset Manager and othernecessary support to the Asset Manager to the extent reasonable and not in violation of applicable laws and ordinances. However, this section x. does
not mean that the Asset Manager will grant all or part of its authority pertaining to asset management to the Sponsors.

xi. Remuneration

・The Investment Corporation, the Asset Manager, and the Sponsors will not pay remuneration to each other for the services provided for in sections i. to
x. above unless otherwise agreed by the parties to the Sponsor Support Agreement.

(Note) The unitholders’special benefits plan was abolished from the 11th fiscal period ended November 30, 2021, with the last delivery of coupons that offer discounts related to the use of relevant facilities
to the unitholders as listed or recorded on the unitholders registry as of May 31, 2021.

(iii) Division or Overlapping of the Investments of the Sponsor Company Group and the Investment Corporation
Ooedo-Onsen Monogatari Group, the sponsor of the Investment Corporation, operates Onsen and Spa-related facilities as its major business. However, as part of that business,
Ooedo-Onsen Monogatari Group holds ryokan, hotels, baths, resort facilities, amusement parks, and other leisure facilities (including multi-use facilities that contain the foregoing)
directly or through its subsidiaries, on which point it overlaps with the investment and asset management of the Investment Corporation.
However, among the facilities operated by Ooedo-Onsen Monogatari Group, such as ryokan, hotels, baths, resort facilities, amusement parks, and other leisure facilities, OoedoOnsen Monogatari Group’s policy will be to, as appropriate, sell those that meet the acquisition criteria of the Investment Corporation to the Investment Corporation, operate thosefacilities in principle, and endeavor to expand the acquisition of facilities for which enhanced added value as Onsen and Spa-related facilities can be expected.
Through this type of relationship, the Investment Corporation considers that the Investment Corporation, the Asset Manager, and Ooedo-Onsen Monogatari Group will be able todivide their respective roles, complement each other, and create a cooperative environment where each company contributes to enhancing the value of the others in terms of “holding”
and “operation.”2.

Management Structure, etc., of the Investment Corporation and of the Asset Manager(1)
Investment Corporation(i) Officers of the Investment Corporation (as of the submission date of this report)
Please refer to “Chapter 2. Detailed Information on the Investment Corporation, Section 1. Additional Information on the Investment Corporation, 2. Officers” of the semi-annual
securities report for the 14th fiscal period (from December 1, 2022 to May 31, 2023) of the Investment Corporation submitted today.
(ii) Reason for Election, Reason for Concurrently Holding Another Position and Measures for Relationships Involving a Conflict of Interests of Officers of the Investment Corporation
Who Concurrently Hold the Position of Officer or Employee at the Asset Manager

12

Name

Title at the
Asset
Manager

Reason for Election and Reason for Concurrently Holding
Another Position

Measures for Relationships Involving a Conflict of Interest

Mr. Takeshi Kirihara is selected as candidate for Executive

In the transactional relationship between the Investment Corporation and the Asset

Director because he has experience in investment management

Manager, only the delegation of asset management services is planned.

operations as a person responsible for portfolio assets

amendment,termination, etc., of an asset management agreement must be

amounting to 1.2 trillion yen at Nomura Real Estate

approved by a board of directors meeting or at a general meeting of unitholders in

Development Co., Ltd. and its group companies, andaccordance with the provisions of the Act on Investment Trusts and Investment

experience leading investment management of assets

Corporations (Act No. 198 of 1951, as amended; the “Investment Trusts Act”)

amounting to 180 billion yen at Star Asia Investment

or of the asset management agreement. Also, the regulations of the Investment

Management Co., Ltd.

Corporation’s board of directors states that a director with special interests is not

He is also in a position with in-depth knowledge of the status

entitled to vote on a resolution of a board of directors meeting. External attorneysof asset management as Representative Director of the Assetand certified public accountants assume the office of supervisory director of theManager with which the Investment Corporation entrusts asset

Investment Corporation and supervise the directors’ execution of business.

management.

Further, regulations for preventing a conflict of interest under the Companies Act

andBecause Mr. Takeshi Kirihara is in a position to fully

apply to the Asset Manager, and the Asset Manager establishes, as internal rules,

Chiefunderstand the Investment Corporation’s asset management

regulations on trade with interested persons, etc., to prevent a conflict of interest

Executive

situation as the representative and as a chief executive officer

regarding trade between an interested person, etc., and the Investment Corporation.

Officerof the Asset Manager, by having him concurrently hold theEach transaction between the Investment Corporation and an interested person,

position of president and representative director of the Assetetc., of the Asset Manager needs to be examined by the compliance officer andManager and executive director of the Investment Corporation,needs to be deliberated and resolved by the Investment Committee and thecooperation with the Investment Corporation will be further

Compliance Committee, each with a third party attending as an external member

strengthened and flexible decision making at the Investment

without an interest in the Asset Manager. Attendance by an external member is

Corporation will be possible. Further, we believe that throughrequired for each of the Investment Committee and the Compliance Committee,

this concurrent holding of positions, appropriate andand these committees are each structured such that proposals cannot be approved

reasonable management will be possible, because information

without an external member’s approval.

will be shared between the Investment Corporation and theresolution by the board of directors, the transaction is reported to the Investment

Asset Manager and the Asset Manager will be able to promptly

Corporation’s board of directors meeting, and certain transactions are presented

report to the meeting of the Investment Corporation’s board offor approval to the Investment Corporation’s board of directors.

Representative
Takeshi Kirihara

directors.

13

An

In addition, after deliberation and(iii) Existence of a Relationship Involving a Conflict of Interest Due to Another Position Concurrently Held by an Officer of the Investment Corporation and Similar Matters (excluding
the details stated in (ii) above)
Not applicable.
Although Mr. Kentaro Suzuki, a supervisory director of the Investment Corporation, also serves as a supervisory director of Marubeni Private Reit Inc. and concurrently holds a
positions related to another investment corporations, after comprehensively taking into consideration his legal and actual roles and functions, we judged that a concern about apotential conflict of interest will likely not arise.

14

(2)
Asset Manager(i) Officers of the Asset Manager (as of the submission date of this report)
Please refer to “Chapter 2. Detailed Information on the Investment Corporation, Section 4. Related Corporations, 1. Overview of the Asset Manager, (4) Officers” of the semiannual securities report for the 14th fiscal period (from December 1, 2022 to May 31, 2023) of the Investment Corporation submitted today.
(ii) Employees of the Asset Manager (as of the submission date of this report)
Number of employees

Concurrent posts at seconding company (if any)

Total number of secondees

-

None

Non-secondees

9-

Total number of employees of the Asset Manager (Note)

9

None

(Note)In the “total number of employees of the Asset Manager,” the directors stated in “(i) Officers of the Asset Manager (as of the submission date of this report)” above are not included. And Temporary
employees are not included in the total number of employees of the Asset Manager.

15

(iii) Management Structure of the Investment Corporation and Asset Manager(A) Management Structure of the Asset Manager
a. Organizational Structure of Business Operations
The organizational structure of business operations of the Asset Manager is as follows.

General Meeting of
Shareholders
Statutory Auditors
Board of Directors

Investment Committee

Compliance Committee
President andRepresentative Director
Compliance Officer

Investment Management
Department

Finance Department

16

Planning andManagement Department

b.

Structure of Division of Duties among Each Organization of the Asset Manager
The structure of the division of duties among each organization related to the asset management of the Investment Corporation is as follows.
Organization name

Outline of duties

Board of Directors

1. Deliberation and resolution of matters related to corporate management of the Asset Manager
2. Deliberation and resolution of matters related to operation and asset management of the Investment Corporation
a. Deliberation and resolution of matters submitted after being resolved by the Investment Committeeb. Deliberation and resolution of matters submitted after being resolved by the Compliance Committeec. Deliberation and resolution of any other matters related to operation and asset management of the Investment
Corporation

Investment Management
Department

1. Duties related to formulation of investment policy, management policy, and investment criteria of investment assets of theInvestment Corporation
2. Duties related to planning of the investment management plan of the Investment Corporation
3. Duties related to asset acquisition of the Investment Corporation
4. Duties related to transfer of assets owned by the Investment Corporation
5. Duties related to lease of assets owned by the Investment Corporation
6. Duties related to operation and management of assets owned by the Investment Corporation
7. Duties related to insurance agreements pertaining to assets owned by the Investment Corporation
8. Duties related to reporting of management status of assets owned by the Investment Corporation
9. Any other duties incidental to any of the preceding items

Finance Department

1.
2.
3.
4.
5.
6.

Duties related to formulation of the financing plan of the Investment Corporation
Duties related to issuance of investment units of the Investment Corporation
Duties related to borrowing or any other financing of the Investment Corporation
Duties related to response to the unitholders or the like of the Investment Corporation
Duties related to management of surplus funds of the Investment Corporation
Duties related to timely disclosure to stock exchanges by the Investment Corporation and voluntary disclosure by theInvestment Corporation
7. Any other duties incidental to any of the preceding items

17

Planning and Management
Department

1. Duties related to formulation of the management strategy, investment policy and management policy of the Investment
Corporation
2. Duties related to formulation of the asset management plan
3. Duties related to budget planning and execution management of the Investment Corporation
4. Duties related to organizational management of the Investment Corporation
5. Duties related to statutory disclosure by the Investment Corporation
6. Duties related to accounting of the Investment Corporation
7. Duties related to account settlement and taxation of the Investment Corporation
8. Duties related to information systems and information security of the Asset Manager
9. Duties related to accounting of the Asset Manager
10. Duties related to organizational management of the Asset Manager
11. Duties related to business management such as general affairs and personnel affairs of the Asset Manager
12. Duties related to handling of complaints or the like against the Asset Manager
13. Any other duties incidental to any of the preceding items

Compliance Officer

1. Planning and amendment or abolishment of the internal rules of the Asset Manager, various decision-making pertaining
to asset management operations, compliance with laws and regulations pertaining to the overall business process, or any
other confirmation, monitoring and instruction from the viewpoint of compliance
2. Duties related to advance examination of the matters to be put before the various deliberative bodies of the Asset Manager
3. Duties related to advance examination of various written approvals of the Asset Manager
4. Planning and management of the compliance program of the Asset Manager
5. Supervisory duties related to risk management of the Asset Manager
6. Duties related to internal audit of the Asset Manager
7. Any other duties incidental to any of the preceding items

18

Additionally, overviews of the Investment Committee and the Compliance Committee are as follows.
c.

Investment Committee
Committee members

The Representative and Chief Executive Officer, the Directors, the Chief Compliance Officer, the manager of each department, andone or more external members (elected by the Board of Directors from among real estate appraisers who do not have interests in the
Asset Manager) (note)

Matters fordeliberation andresolution

1.
2.
3.

Deliberation andresolution method(Note)

Deliberation and resolution of important matters regarding the management policy of the Asset Manager
Deliberation and resolution of matters regarding the acquisition, disposition, and management of assets related to the financial
instruments business conducted by the Asset Manager (limited to the matters determined by the Investment Committee)
Deliberation and resolution regarding the amendment or abolition of the Regulations of the Investment Committee of the AssetManager・ A meeting of the Investment Committee is convened when a majority of members of the Investment Committee with voting rights
are present; provided, however, that a meeting of the Investment Committee cannot be convened if the Chief Compliance Officer
and an external member of the Investment Committee are not present.
・ Notwithstanding the foregoing, a meeting of the Investment Committee may be convened if, in an urgent and unavoidable situation,material damage may occur to the Asset Manager or its customers unless a meeting is immediately convened.
・ Resolutions of the Investment Committee are adopted by a majority of the members of the Investment Committee present at themeeting (including approval by external members); provided, however, that any member of the Investment Committee who has a
special interest in the matter subject to such resolution cannot participate in the vote.

As of the date on which this report is issued, one real estate appraiser who does not have an interest in the Asset Manager is elected as an external member of the Investment Committee.

19

d.

Compliance Committee
Committee members

The Representative and Chief Executive Officer, the Directors, the Chief Compliance Officer, the manager of each department, andone or more external members (elected by the Board of Directors from among attorneys and certified public accountants who do nothave interests in the Asset Manager) (note)

Matters fordeliberation andresolution

1.
2.
3.
4.
5.

Deliberation andresolution method(Note)

Deliberation and resolution of matters regarding transactions with interested persons, etc. set forth in the regulations on trade withinterested persons, etc. which the Asset Manager has established as its internal rules
Deliberation and resolution of important matters regarding the risk management of the Asset Manager
Deliberation and resolution of matters regarding the amendment or abolition of the Compliance Regulations or the Regulationsof the Compliance Committee of the Asset Manager
Deliberation and resolution of important matters regarding the handling of complaints, etc. against the Asset Manager.
Deliberation and resolution of matters regarding which the Chief Compliance Officer requests deliberation or resolution.

・ A meeting of the Compliance Committee is convened when a majority of members of the Compliance Committee; provided,
however, that a meeting of the Compliance Committee cannot be convened if the Chief Compliance Officer and an external memberof the Compliance Committee are not present.
・ Notwithstanding the foregoing, a meeting of the Compliance Committee may be convened if, in an urgent and unavoidable situation,material damage may occur to the Asset Manager or its customers unless a meeting is immediately convened.
・ Resolutions of the Compliance Committee are adopted by a majority of the members of the Compliance Committee present at themeeting (including approval by the Chief Compliance Officer and external members); provided, however, that any member of theCompliance Committee who has a special interest in the matter subject to such resolution cannot participate in the vote.

As of the date on which this report is issued, one attorney-at-law who does not have an interest in the Asset Manager is elected as an external member of the Investment Committee.

20

(3)

Approaches, etc., to Transactions Involving a Conflict of Interest
The Asset Manager has set out an outline of rules for transactions conducted with itself or with an Interested Person, Etc., (defined in item (ii) below) when conducting a transaction
relating to asset management services (these rules, the Rules On Transactions With Interested Persons, Etc.) as follows:(i) General Principles
When outsourcing the acquisition, disposition, lease, or intermediation of sale and purchase of managed assets; when outsourcing of property management services; or whenoutsourcing repair work, construction work, etc., for real estate or any other managed asset (collectively, in this section (3), “Transactions With Interested Persons, Etc.”) to an
Interested Person, Etc., the provisions of the Financial Instruments and Exchange Act; the Investment Trusts Act; the Order for Enforcement of the Act on Investment Trusts andInvestment Corporations (Cabinet Order No. 180 of 2000, as amended; the “Investment Trusts Act Enforcement Order”); the Ordinance for Enforcement of the Act on Investment
Trusts and Investment Corporations (Ordinance of the Prime Minister’s Office No. 129 of 2000, as amended; the “Investment Trusts Act Enforcement Ordinance”); and theregulations on transactions with Interested Persons, Etc., must be complied with. In addition, the Compliance Officer must, in advance, examine compliance with the Financial
Instruments And Exchange Act; the Investment Trusts Act; the Building Lots and Buildings Transaction Business Act (Act No. 176 of 1952, as amended; the “Building Lots And
Buildings Transaction Business Act”); other applicable laws and regulations; the rules of the Investment Trusts Association, Japan; the Articles of Incorporation and the Operational
Guidelines of the Investment Corporation, and the Management Practical Guidelines of the Asset Manager; and all other internal regulations, etc., of the Asset Manager, as well as
examine risk management and compliance-related issues.

(ii) Scope of Interested Persons, Etc.
An Interested Party, Etc., means a person falling under an item between (A) through (E) below:(A) a parent juridical person, etc., of the Investment Corporation set out in Article 31-4 (3) of the Financial Instruments and Exchange Act or the subsidiary juridical person, etc.,
set out in Article 31-4 (4) of the Financial Instruments and Exchange Act(B) a shareholder of the Asset Manager(C) an Interested Person, Etc., set out in Article 201(1) of the Investment Trusts Act, Article 123 of the Investment Trusts Act Enforcement Order, or Article 244-3 of the Investment
Trusts Act Enforcement Ordinance(D) a special purpose company, etc., (in this section (3), an “SPC”) with whom a person falling under an item between (A) through (C) above has entered into a discretionary investment
contract set out in Article 2(8)(xii)(b) of the Financial Instruments and Exchange Act (including a special purpose company set out in the Asset Securitization Act and a stockcompany and a limited liability company set out in the Companies Act)(E) an SPC, etc., for which the aggregate amount invested by a person falling under item (A) or (B) above constitutes a majority of the total amount invested in that SPC

21

(iii) Criteria for Transactions With Interested Persons, Etc.
(A) Acquisition of Managed Assets
a. When acquiring real estate, leasehold rights in real estate, surface rights, or beneficial interests in trust the principal of which is ownership of real estate, leasehold rights in realestate, or surface rights (collectively “Target Assets” in this item (A) and item (B) below) from an Interested Person, Etc., the acquisition price is not permitted to exceed theappraisal value based on an appraisal conducted by a real property appraiser (includes juridical persons; the same hereinafter) that does not constitute an Interested Person, Etc.
However, an acquisition price of up to 110% of the appraisal value is permissible if there are reasonable grounds for acquiring that Target Asset at a price higher than the appraisal
value. In such case, the appropriateness of acquiring that Target Asset at a price higher than the appraisal value must be explained to the Investment Committee, Compliance
Committee and Board of Directors of the Asset Manager and the board of directors of the Investment Corporation, and a resolution obtained. Note that the appraisal value is forthe price of the Target Asset itself, and does not include taxes, acquisition expenses, trust establishment costs, reserve funds of the trust account, trust income, the pro-rated portionof fixed asset taxes, and other such costs.
b. Furthermore, when acquiring specified assets other than Target Assets from Interested Persons, Etc., the current market value will be used where possible; otherwise, the price will
be determined in accordance with the preceding item a.
c. If the acquisition of specified assets from an Interested Person, Etc. under item a. or b. above is determined, it must be disclosed immediately through registration on the “Timely
Disclosure network” (simply, “TDnet”) operated by Tokyo Stock Exchange, Inc. (“Tokyo Stock Exchange”) in accordance with the Rules on Timely Disclosure that have been
separately established.
(B) Disposition of Managed Assets
a. When disposing a Target Asset to an Interested Person, Etc., the disposition price is not permitted to fall below the appraisal value based on an appraisal conducted by a real
property appraiser that does not constitute an Interested Person, Etc. However, a disposition price at the minimum of 90% of the appraisal value is permissible if there arereasonable grounds for transferring that Target Asset at a price lower than the appraisal value. In such case, the appropriateness of disposition that Target Asset at a price lower
than the appraisal value must be explained to the Investment Committee, Compliance Committee and Board of Directors of the Asset Manager and the board of directors of theInvestment Corporation, and a resolution obtained. Note that the appraisal value is for the price of the Target Asset itself, and does not include taxes, expenses required for thesale, trust establishment costs, reserve funds of the trust account, trust income, the pro-rated portion of fixed asset taxes, and other such costs.
b. When disposing specified assets other than Target Assets to Interested Persons, Etc., the current market value will be used where possible; otherwise, the price will be determinedin accordance with the preceding Item a. above.
c. If the disposition of specified assets to an Interested Person, Etc. under item a. or b. above is determined, it must be disclosed immediately through registration on TDnet inaccordance with the Rules on Timely Disclosure that have been separately established.

22

(C) Lease of Managed Assets
a. When leasing real estate or other managed assets to or from an Interested Person, Etc. (including when newly leasing the same in connection with the acquisition of real estate,leasehold rights in real estate, surface rights, or beneficial interests in trust the principal of which is ownership of real estate, leasehold rights in real estate, or surface rights; orwhen succeeding a lease agreement), such lease must be conducted on the terms and conditions determined to be appropriate after investigating the market prices, the prices inthe surrounding areas, and other similar matters.
b. If the lease of real estates or other managed assets to or from an Interested Person, Etc. under item a. above is determined, it must be disclosed immediately through registration
on TDnet in accordance with the Rules on Timely Disclosure that have been separately established.
(D) Outsourcing Intermediation of Sale, Purchase, or Leasea. When outsourcing the intermediation of the sale or purchase of specified assets to an Interested Person, Etc., the remuneration must be within the range of remuneration set out
in the Building Lots And Buildings Transaction Business Act and must be determined in consideration of the sales price level, the difficulty of the relevant intermediation services,and other similar matters.
b. When outsourcing the intermediation of the lease of specified assets to an Interested Person, Etc., the remuneration must be within the range of remuneration set out in the
Building Lots And Buildings Transaction Business Act and must be determined in consideration of the rent level, the difficulty of the relevant intermediation services, and othersimilar matters.
c. If the intermediation of the sale, purchase, or lease of specified assets to an Interested Person, Etc. under item a. or b. above is determined, it must be disclosed immediately
through registration on TDnet in accordance with the Rules on Timely Disclosure that have been separately established.
(E) Outsourcing Property Management Services, etc.
a. When outsourcing property management services, etc. to an Interested Person, Etc., that Interested Person, Etc.’s track record, trustworthiness, and other similar matters must be
investigated, and the service fee must be determined in consideration of the market level, the details and total volume of the services to be provided, and other similar matters.
b. When acquiring a property for which property management services are already being provided by an Interested Person, Etc., the property management services after theacquisition can also be provided by the Interested Person, Etc. on an outsourcing basis. In this case, however, the service fee must be negotiated and determined in considerationof the matters similar to those set out in item a. above.
c. If the outsourcing of property management services, etc. to an Interested Person, Etc. under item a. or b. above is determined, it must be disclosed immediately through registration
on TDnet in accordance with the Rules on Timely Disclosure that have been separately established.
(F)
Outsourcing Repair or Construction Work, etc. on Real Estate or Other Managed Assets
a. When outsourcing construction work, etc. to an Interested Person, Etc., such outsourcing must be conducted on the terms and conditions determined to be appropriate after
comparing and considering the estimated prices and details, etc. provided by a third party. However, such comparison and consideration will not be necessary in the case of atransaction of less than 1 million yen or an ongoing transaction of less than 5 million yen per year.
b. When outsourcing construction work to an Interested Person, Etc. based on item a. above, each instance of construction work must be disclosed in the asset management reportfor each fiscal period.

23

(iv) Decision-Making Structure concerning the Investment Management
The Investment Management Department’s manager and the Investment Management Department’s officers and employees that handle the acquisition, disposition, other operations
concerning, and administration of the Investment Corporation’s assets under the leadership of the Investment Management Department’s manager (“Investment Management
Staff”) must, in acquiring assets for the Investment Corporation, select investment grade assets by conducting due diligence for each transaction as set out in the Management
Practical Guidelines. After conducting the selection, the acquisition of assets is determined in accordance with the below procedures. The below procedures apply mutatis
mutandis to determining a disposition of assets.
(A) Each proposal for acquiring assets is drafted after mutual consultation and in accordance with laws, ordinances, regulations, and the like; the Management Practical
Guidelines; the asset management plan; and other regulations by the Investment Management Staff; the Planning and Supervision Department’s manager; and the Planningand Supervision Department’s officers and employees that handle budget proposals, executive supervision, and other operations for the Investment Corporation under theleadership of the Planning and Supervision Department’s manager.
(B) The drafting department presents each drafted proposal for acquiring assets to the compliance officer, and the compliance officer examines the proposal to check whether
there is a breach of laws, ordinances, regulations, or the like and whether there is any other compliance-related issue.
(C) Once a proposal for acquiring assets has been approved by the compliance officer, it is presented to the Investment Committee.
(D) If a proposal for acquiring assets approved by a resolution of the Investment Committee applies to a Transaction With Interested Parties, Etc., it is presented to the Compliance
Committee.
(E) Each proposal for acquiring assets approved by a resolution of the Compliance Committee that applies to a Transaction With Interested Parties, Etc. and each proposal for
acquiring assets approved by a resolution of the Investment Committee that does not apply to a Transaction With Interested Parties, Etc. is presented to the Board of Directors.
(F) If a proposal for acquiring assets approved by a resolution of the Board of Directors applies to a Transaction With Interested Parties, Etc., it is presented to the Investment
Corporation’s board of directors meeting.
(G) If a proposal for acquiring assets approved by a resolution of the Board of Directors does not apply to a Transaction With Interested Parties, Etc., the Investment Management
Staff shall, without delay, make a report to that effect to the officers of the Investment Corporation at the Investment Corporation’s board of directors meeting.
(H) Each proposal that is not approved by the compliance officer and each proposal that is rejected at the Investment Corporation’s board of directors meeting or by the AssetManager’s Board of Directors, Compliance Committee, or Investment Committee is returned to the drafting department.
(Note)

If a proposal for acquiring assets applies to a Transaction With Interested Parties, Etc. set out in Article 201-2 of the Investment Trusts Act, then the consent of the Investment Corporationthat has obtained the approval of the Investment Corporation’s board of directors is required in advance.

24

Decision-making process concerning the acquisition and disposition of assets
Drafting Departments
Drafting

Compliance Officer

Return

Review and approval
Rejection

Deliberation and resolution

Attendance and approval of external
committee members required.

Compliance Committee(including external committee members)
Deliberation and resolution

Rejection

Attendance and approval of external
committee members required

Board of Directors

Rejection

Deliberation and resolution

Board of Directors of the Investment Corporation

Transactions not constituting
Transactions With Interested
Parties, Etc.

Rejection

Transactions constituting
Transactions With
Interested Parties, Etc.

25

(v) Reason for Adopting the Management Structure(A) Role Played by the Board of Directors of the Asset Manager with respect to Transactions involving Conflicts of Interest
Of the three directors who constitute the Board of Directors, one concurrently holds a post at Ooedo-Onsen Monogatari Hotels & Resorts Co., Ltd., which is the sponsor of
the Asset Manager. Therefore, considering it necessary to ensure fairness and transparency in transactions between Interested Parties, Etc. of the Asset Manager and theInvestment Corporation, the Asset Manager has established the Rules On Transactions With Interested Parties, Etc., which are voluntary rules, stipulating that for certain
Transactions With Interested Parties, Etc., (i) the Compliance Officer will examine whether there are any issues regarding compliance beforehand, (ii) the price will be subject
to certain conditions, and (iii) the Investment Corporation will disclose the transaction.
Furthermore, approval of the Compliance Committee and the Board of Directors is required for the revision of the rules.
(B)a.

External Members of the Committees
Investment Committee
Mr. Katsumi Oochi, a real property appraiser, holds a post as an external member who does not have an interest in the Asset Manager. Mr. Oochi is expected to participate in
the committee and offer a broad perspective based on his knowledge and experience as a real estate expert, and he is expected to contribute to the enhancement of governanceby exerting an influence on decision-making as a third party who can carry out checks and balances.

Title, full-time / part-timeMember of Investment
Committee

Name
Katsumi Oochi

Brief career profile
September 1998
April 2002
April 2005
April 2013

April 2014
April 2017

Concurrent posts

Opened Oochi Real Estate Appraisal Office
Kabushiki Kaisha Oochi Real EstateTokyo Summary Court, member of civil conciliation committee
Appraisal Office, Representative(current post)
Director
Land Appraisal Committee of the Ministry of Land, Infrastructure
and Transport, Tokyo’s 23 wards, executive secretary (current post)
Established Kabushiki Kaisha Oochi Real Estate Appraisal Office
Japan Association of Real Estate Appraisers, land price survey
committee, vice chairman (current post)
Director of Meguro Tax Office, National Tax Agency (current post)
Executive Director of Appraisal Committee, Tokyo Regional Court(current post)

26

b.

Compliance Committee
Ms. Kana Takahashi, an attorney, holds a post as an external member who does not have an interest in the Asset Manager. With his knowledge and experience as an attorney-atlaw, Mr. Dai is expected to confirm the appropriateness of prices in transactions with interested parties based on the Rules On Transactions With Interested Parties, Etc. in relation
to the Investment Corporation’s acquisition, disposition, and management of managed assets, and he is expected to contribute to the enhancement of governance by exerting an
influence on decision-making as a third party who can carry out checks and balances.

Title, full-time / part-time

NameMember of Compliance
Committee

Kana Takahashi

Brief career profile
September 2007
January 2011
May 2014
May 2016
August 2016
November 2018

(C)

Attorney at law admitted in JapanEntered Mori Hamada & Matsumoto (Law Office)Went on loan to Mitsui Fudosan Investment Advisors, Inc.
Completed New York University School of Law (LL.M)
Attorney at law admitted in New York StateEntered Chugai Pharmaceutical Co., Ltd.
Entered HIFUMI Law (current post)

Concurrent posts
HIFUMI Law, counsel attorney
matsuri technologies Inc., external
statutory auditor

Chief Compliance Officer
The Chief Compliance Officer is responsible for overseeing compliance-related matters and supervises such tasks as organizing, planning, and promoting overall complianceand developing an internal compliance structure.

Title, full-time / part-time

Name

Chief Compliance Officer(Full-time)

Shuichi Kato

Brief career profile
September 2007
December 2008
December 2018
March 2020
January 2022
May 2023

Concurrent posts

Not applicable
Attorney at law admitted in JapanEntered Takeo Hasegawa Law OfficeEntered Karikura Law OfficeEntered Nippon Angels Investment Co., Ltd.
Nippon Angels Investment Co., Ltd., General Manager ofCompliance Department
Entered Yokohama Office of Law Office S
Entered Ooedo Onsen Asset Management Co., Ltd.
Chief Compliance Officer (current post)

27

3.

Transactions with Sponsor Companies(1)
Transactions with Interested Parties, Etc.
(i) Type of Transactions: Acquisition of Assets, Etc.
The status of the transactions with Interested Parties, Etc. (Note) during the 14th fiscal period (from December 1, 2022 to May 31, 2023) is as follows.
Sales and purchase amount, etc.
Category
Purchase amount, etc.
Sales amount, etc.
Total amount- 1,767,808 thousand yen (100%)
Breakdown of the status of the transactions with Interested Parties, Etc.
Ooedo-Onsen Monogatari Hotels & Resots Co., Ltd.
- 1,767,808 thousand yen (100%)Sum- 1,767,808 thousand yen (100%)(Note) Interested Parties, Etc., provided for in Article 123 of the Investment Trusts Act Enforcement Order and in Article 26 and 27 of the Rules on Investment Reports, etc. for Investment Trusts and Investment
Corporations of the Investment Trsuts Association, Japan, is the Interested Parties, Etc. of the Asset Manager with which the Investment Corporation has concluded an asset management agreement. The
same applies hereinafter.

28

(ii) Type of Transactions: Lease Transaction
A summary of the transactions pertaining to leases with Interested Parties, Etc. during the 14th fiscal period (from December 1, 2022 to May 31, 2023) is as follows.
Name of lessee

Total rent revenue(yen in thousands)

Property name

Ratio out of total transaction amount(%)

Ooedo-Onsen Monogatari
Hotels & Resorts Co., Ltd.

Ooedo-Onsen Monogatari Ise-shima
Ito Hotel New Okabe
Ooedo-Onsen Monogatari Atami
Ooedo-Onsen Monogatari Toi Marine Hotel
Ooedo-Onsen Monogatari Awara
Ooedo-Onsen Monogatari Ikaho
Ooedo-Onsen Monogatari Kimitsu-no-moriOoedo-Onsen Monogatari Kounkaku
Kinugawa Kanko Hotel
Ooedo-Onsen Monogatari Kinosaki
Ooedo-Onsen Monogatari Higashiyama Grand Hotel

633,588

70.3

Reoma Unity Co., Ltd.

Ooedo-Onsen Monogatari Reoma Resort

267,623

29.7

Ooedo-Onsen Monogatari Co., Ltd.

Ooedo-Onsen Monogatari Higashiyama Grand Hotel

275

0.0

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(iii) Type of Transactions: Delegation of Property Management Services, etc.
A summary of the transactions pertaining to the delegation of property management services or the like with Interested Parties, etc. for the 14th fiscal period (from December 1,
2022 to May 31, 2023) is as follows.
Property nameMain delegated services

Service fee(yen in thousands)

Ratio out of totaltransaction amount (%)

Ooedo-Onsen Monogatari
Hotels & Resorts Co., Ltd.

Ooedo-Onsen Monogatari Ise-shima
Ito Hotel New Okabe
Ooedo-Onsen Monogatari Atami
Ooedo-Onsen Monogatari Toi Marine Hotel
Ooedo-Onsen Monogatari Awara
Ooedo-Onsen Monogatari Ikaho
Ooedo-Onsen Monogatari Kimitsu-no-moriOoedo-Onsen Monogatari Kounkaku
Kinugawa Kanko Hotel
Ooedo-Onsen Monogatari Kinosaki
Ooedo-Onsen Monogatari Higashiyama Grand Hotel

Property management
services

10,347

83.8

Reoma Unity Co., Ltd.

Ooedo-Onsen Monogatari Reoma Resort

Property management
services

2,000

16.2

Name of delegatee

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(2)

Status of Property Acquisition, Etc.
The status of acquisition and the like of properties from Interested Parties, Etc., special purpose companies (or subsidiaries) whose decision-making bodies are controlled by Interested
Parties, Etc., and any persons otherwise having a special relationship to the Investment Corporation (“Persons With Special Interests”) during the 14th fiscal period (from December
1, 2022 to May 31, 2022) of the Investment Corporation is as follows. In the below tables, the company name or name is indicated next to (i); the relationship with Persons With
Special Interests is indicated next to (ii); and the transfer background, reason for the transfer, and similar information are indicated next to (iii).
(Transfer of Property)

Property name(location)

Ooedo-Onsen
Monogatari
Kinosaki(Toyooka-shi,
Hyogo)(70% coownershipinterest)

Investment Corporation

Transferee(iii) In the midst of the prolonged Corona disaster, the Investment Corporation conducted transfer
activities of owned properties as a definitive measure for increasing cash on hand, for the purpose of
reducing the risk of refinancing for borrowings which the Investment Corporation considers as an
immediate issue, restoring flexibility in loan-to-value ratio (LTV), achieving improvements in the terms
and conditions for funding, and promoting portfolio diversification and risk dispersion through the(i) Ooedo-Onsen
acquisition of new properties from sellers other than the Sponsor in tandem with the reduction of said
MonogatariHoterisk.
ls & Resorts Co.,
Consequently, the Investment Corporation decided to transfer the property on the left, after considering that the asset
Ltd.
disposal scale corresponds to refinancing in the future, that there is a certain degree of unrealized gains for securing
distributions, and that they are scheduled to be renovated which will require the handling of the down period and a fair(ii) Parent
amount of capital expenditure.
company of the
Ooedo-Onsen Monogatari Kinosaki were acquired by the Investment Corporation in December 2017. As of the valuation
Asset Manager
date (May 31, 2022), its appraisal value was 2,650,000,000 yen. Although the transfer price of Ooedo-Onsen Monogatari
Kinosaki is below the appraisal value, the Investment Corporation determined the transfer price at the said level because
the transaction is in conformance with the Rules On Transactions With Interested Parties, Etc. of the Asset Manager,
because the transfer price is higher than the purchase price presented by a third party who has no interests in the relevant
parties and because the Asset Manager evaluated the transfer price as appropriate.

Transfer
Price

Transfer
Time

1,762,250
thousandyen(Note)

February
2023(Note) In the transaction involving the said property, 30% co-ownership interest was transferred as of November 30, 2022, and 70% co-ownership interest was transferred as of as of February 28, 2023. The
transfer price stated in this document is the amount equivalent to 70% of the sale price specified in the sales contract for the said property.

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4.

Others(1)
Selection Policy for and Overview of Real Estate Appraisal Agencies(i) Selection Policy
The real estate appraisal agencies are selected from among agencies recognized to have strong appraisal capabilities, such as those with proven track records in appraisal in the JREIT market, comprehensively taking into consideration suitability, reliability, independence, appropriateness of costs, transparency, number of real estate appraisers, and otherfactors for each individual case.
(ii) Overview
An overview of the real estate appraisal agencies for the owned assets as of May 31, 2023, is as follows.
Overview of real estate appraisal agencies
Property name

Name

Address

Number of realestateappraisers

Reason for selection

Ooedo-Onsen Monogatari Ise-shima
Ooedo-Onsen Monogatari Kimitsu-no-moriOoedo-Onsen Monogatari Kounkaku
Kinugawa Kanko Hotel
Ooedo-Onsen Monogatari Higashiyama Grand Hotel

Japan Real Estate
InstituteTOKYO
TORANOMONGLOBAL SQUARE,
1-3-1 Toranomon,
Minato-ku, Tokyo

271

This agency was selected in consideration of
being a major agency in the industry as well asother factors, such as its proven track record inproviding appraisal services in the J-REIT
market, staff, fee level, internal review systems,
and appraisal value reliability.

Ooedo-Onsen Monogatari Reoma Resort
Ito Hotel New Okabe
Ooedo-Onsen Monogatari Atami
Ooedo-Onsen Monogatari Toi Marine Hotel
Ooedo-Onsen Monogatari Awara
Ooedo-Onsen Monogatari Ikaho

Rich Appraisal
Institute Co., Ltd.

Prairie-Ginza Building,
1-14-4, Ginza, Chuo-ku,
Tokyo

13

This agency was selected in consideration of
being a major agency in the industry as well asother factors, such as its proven track record inproviding appraisal services in the J-REIT
market, staff, fee level, internal review systems,
and appraisal value reliability.

(2)
Selection Policy for and Overview of Engineering Report Preparation Agency(i) Selection Policy
The engineering report preparation agencies are selected from among agencies recognized to have strong capabilities in preparing engineering reports, such as those with proven trackrecords in preparing engineering reports in the J-REIT market, comprehensively taking into consideration suitability, reliability, independence, appropriateness of costs, ability to meetdeadlines, and other factors for each individual case.

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(ii) Overview
An overview of the engineering report preparation agencies for the owned assets as of May 31, 2023, is as follows.
Overview of engineering report preparation agencies
Property name
Name
Address
Description of business
Reason for selection
Ooedo-Onsen Monogatari Ise-shima
Deloitte Tohmatsu
Shin-Tokyo Building, Preparing engineering
This agency was selected in view of its
Ito Hotel New Okabe
Property Risk
3-3-1, Marunouchi,
reports, structural design
knowledge, experience, reliability, track record
Solution Co., Ltd.
Chiyoda-ku, Tokyo
consulting, and the likein providing appraisal services, and otherfactors, such as its track records of services in
the J-REIT market, its knowledge of the hotel
and ryokan industry, and its track record ofaccepting reports.
Ooedo-Onsen Monogatari Reoma Resort
JAIC
Shibuya Takugin
Engineering reports, legal
This agency was selected in view of its
Ooedo-Onsen Monogatari Atami
Buidling 5F, 1-13-9,
compliance investigations, knowledge, experience, reliability, track record
Ooedo-Onsen Monogatari Toi Marine Hotel
Shibuya, Shibuya-ku, seismic capacity
in providing appraisal services, and other
Ooedo-Onsen Monogatari Awara
Tokyo
evaluations, and building
factors, such as its track records of services in
Ooedo-Onsen Monogatari Ikaho
confirmation for additions
the J-REIT market, its knowledge of the hotel
Ooedo-Onsen Monogatari Kimitsu-no-moriand repairs
and ryokan industry, and its track record ofaccepting reports.
Daiwa Real Estate
Orix Honmachi
Real estate appraisal, first- This agency was selected in view of its
Kinugawa Kanko Hotel
Appraisal Co. Ltd.
Building 11F, 1-4-1class architect office,knowledge, experience, reliability, track record
Nishihonmachi,compensation consultant,in providing appraisal services, and otherNishi-ku, Osakasoil contamination
factors, such as its track records of services ininvestigation, and the likethe J-REIT market, its knowledge of the hotel
and ryokan industry, and its track record ofaccepting reports.
Tokio Marine dR
Otemachi First Square Comprehensive riskThis agency was selected in view of its
Ooedo-Onsen Monogatari Kounkaku
Co.,
Ltd.
West
Tower
23F,
1-5management,
realestateknowledge, experience, reliability, track record
Ooedo-Onsen Monogatari Higashiyama
1 Otemachi, Chiyoda- due diligence, soil
in providing appraisal services, and otherGrand Hotelku, Tokyo
contamination
factors, such as its track records of services ininvestigation, structural
the J-REIT market, its knowledge of the hotel
calculation sheet review.
and ryokan industry, and its track record of
And the like
accepting reports.

33

(3)

Other Transactions Involving Potential Conflicts of Interests
Not applicable.

(4)
Status of IR-Related Activities(i) IR Schedule
The IR schedule of the Investment Corporation is as follows.
- Last month of accounting period:
May and November- Publication of financial results (Kessan-Tanshin): July and January- Financial results briefing:
July and January- Dispatch of asset management report:
August and February
The Kessan-Tanshin, as well as materials for financial results briefings, asset management reports, securities reports, and other reports, are published on the Investment Corporation’s
website as appropriate.
Furthermore, in addition to disclosure on its website, the Investment Corporation will endeavor to broaden its investor base by holding meetings (such as in-person visits andconferences) and property tours for institutional investors, and for individual investors, by actively disclosing information through activities such as IR seminars or IR fairs aimed at
individual investors.
(ii) Information Disclosure Structure
Regarding the asset management of the Investment Corporation, the Asset Manager will disclose information to its investors promptly, accurately, and fairly, always from theviewpoint of investors, and will establish and maintain a system for collecting information that should be disclosed to investors. Regarding information related to the AssetManager, the Investment Corporation, and the management of the Investment Corporation, the Asset Manager has established its Rules on Timely Disclosure that provide formatters related to timely information disclosure in case such information arises or is decided with the aim of disclosing that information to investors in a timely and appropriatemanner.
The Finance Department is responsible for the timely disclosure of the Asset Manager, and the Chief Financial Officer is the person responsible for handling information related totimely disclosure. Furthermore, the Chief Compliance Officer is responsible for checking the contents of timely disclosure and other compliance-related matters. In addition, inmaking timely disclosure, the person responsible for handling information and the Chief Compliance Officer will seek advice from law firms, accounting firms, and the like asnecessary and give full consideration to legal compliance.

34

(iii) Information Disclosure Process
The process for timely disclosure in the Asset Manager is as follows.
(A) If an officer or employee anticipates that a matter constituting grounds for timely disclosure will arise or be decided, they will immediately consult with the person responsible
for handling information and receive his or her instructions.
(B) If the person responsible for handling information is consulted with as described in (A) above or anticipates that a matter constituting grounds for timely disclosure will arise or
be decided, that person will immediately draft materials for timely disclosure as necessary and make disclosure in accordance with the Regulations on Division of Duties andthe Timely Disclosure Manual established separately. Furthermore, the person responsible for handling information may assign preparation of drafts of materials for timely
disclosure to each department’s officers and employees as necessary.
Timely disclosure will be made by registration on TDnet. Furthermore, after confirming disclosure on TDnet, materials for timely disclosure will be published on the Investment
Corporation’s website without delay. The disclosure of information not constituting causes for which timely disclosure is required under the Securities Listing Regulations
established by Tokyo Stock Exchange and other rules will also be made appropriately in accordance with the purpose of the timely disclosure. In addition, the decision of whether
to post the disclosure materials to the press club of the Tokyo Stock Exchange (Kabuto Club), the press club of the Ministry of Land, Infrastructure, Transport and Tourism, and thepress club for construction trade publications of the Ministry of Land, Infrastructure, Transport and Tourism will be made at the judgement of the person responsible for handlinginformation.
(5)

Development of Structure for Exclusion of Antisocial Forces
The Asset Manager has established approaches for the exclusion of antisocial forces in its Rules on Countermeasures to Antisocial Forces based on the basic policy of the Compliance
Regulations and takes a firm stance as an entire organization against antisocial forces.
When departments responsible for each task or business conduct a new transaction, they will confirm beforehand that the transaction partner does not constitute an antisocial force
in accordance with the credit investigation guidelines pertaining to the exclusion of antisocial forces; for existing transaction partners, if questionable conduct or transactions are
expected directly or indirectly, the Asset Manager will report to its President and Representative Director and the Chief Compliance Officer and decide whether to continue transactions
after fully taking social risks into consideration.
End.

35