Ooedo Onsen Reit Investment Corporation
Results of 1st Fiscal Period ended November 30, 2016

Presentation Material
January 25, 2017
（Asset Manager）Ooedo Onsen Asset Management Co., Ltd.

Table of Contents
Ⅰ. Operating Highlights for the 1st Fiscal Period ended
November 2016

Ⅳ. Appendix

Financial Results for the 1st Fiscal Period ended November 20163

Overview of Offering and Variation of Unit Price since Listing

33

Forecast for the 2nd Fiscal Period ending May 2017

4

Appraisal Value

34

Forecast for the 3rd Fiscal Period ending November 2017

5

Introduction of Properties

35

Operating Results for the Entire Portfolio

6

Financial Indices38

Overall Picture of Ooedo Onsen Reit Investment Corporation

7

Balance Sheet

39

Portfolio Data

8

Statement of Income

40

Financial Status10

Debt Status

41

Ooedo-Onsen Monogatari Group

42

Unitholders Breakdown

45

Efforts for IR Activities

46

Governance Structure

47

Overview of Investment Corporation

48

Overview of Asset Manager

49

Ⅱ. Operating Results of Individual Properties
Operating Results of Individual Properties

12

Ⅲ. Characteristics of Ooedo Onsen Reit and FutureManagement Strategy
Features of Ooedo Onsen Reit Investment Corporation

23

Market Environment

24

Differentiation Strategy of Ooedo Onsen Reit Investment
Corporation (Ooedo Business Model)

26

External Growth Strategy

27

Internal Growth Strategy

29

Financial Strategy

31

Ooedo Onsen Reit Investment Corporation 1

Ⅰ. Operating Highlights for the 1st Fiscal
Period ended November 2016

Ooedo Onsen Reit Investment Corporation 2

Financial Results for the 1st Fiscal Period ended November 2016
Distribution per unit: 376 yen, +23 yen from the initial forecast (+6.5%)(thousand yen)

Main factors for increase/decrease

1st period
Item

1st period（Forecast as ofOperating revenue

Component
ratio

Primary rent・Decrease in secondary rent due to decrease in

Difference（Actual）

September 5, 2016）

fixed asset taxes and city planning taxes, etc.

511,026

Component
ratio

468,143

507,696-3,329468,411+267

Fixed rent

100.0%

468,143100.0%

468,411+267

Variable rent

0.0%

-

0.0%

-

-

42,882

38,985-3,897

-

300

+300

Secondary rent

(thousand yen)

OthersLease operations
revenue/losses
Operating income

372,590

367,504-5,085296,107

266,538-29,568

Ordinary income

62,196

67,131

Net income

62,196

・Increase in depreciation due to finalized
acquisition costs

Lease operations revenue/loss
・Increase in administrative service fees
・Increase in other operating expenses (item transfer
of investment unit issuance expenses, etc.)

Operating income-3,897-1,637-5,085-2,293-22,227-29,568

・Decrease in interest expenses+1,673+4,934・Decrease in borrowing related fees

+1,02565,834+3,637・Increase in deferred organization expenses

-

528

+528

62,196

66,251+4,054

176,200 units

176,200 units

-

353

376

+23

-

3

+3

1,089

1,119

+30

Depreciation

129,731

131,368+1,637

NOI

502,322498,873

2,700

12,665

Excess cash distribution
Total distribution
Total units outstanding
DPU (yen)（Excess cash distribution
per unit)

FFO per unit (yen)

CAPEX(item transfer, etc.)
・Decrease in investment unit issuance expenses(item transfer, etc.)

Ordinary income

Main financial indicators-18,021+49,825+4,934(million yen)

Total assets

30,732

Interest-bearing debt

13,524

Total liabilities

14,914-3,448

Total net assets

15,818+9,965

LTV (book value basis) (%)(Note) Unless otherwise specified in this document, amounts below the specified unit are rounded down and percentage
figures are rounded to the first decimal place. The same applies hereinafter.

NAV per unit (yen)44.0
94,207

Ooedo Onsen Reit Investment Corporation 3

Forecast for the 2nd Fiscal Period ending May 2017
Distribution per unit: 2,514 yen, +1 yen from the initial forecast(thousand yen)

2nd period
Item

2nd period（Forcast as of
September 5, 2016）

Operating revenue

Component
ratio

Primary rent

1,025,853

Component
ratio

939,624

Main factors for increase/decrease

Difference（Revised forecast）

・Decrease in secondary rent due to decrease in

1,018,130-7,723fixed asset taxes and city planning taxes, etc.

940,158+534

・Decrease in fixed asset taxes and city planning

Fixed rent

92.3%

867,735

92.4%

868,270+534

Variable rent

7.7%

71,888

7.6%

71,888-0Secondary rent

86,22977,971-8,258

Lease operations
revenue/losses
Operating income

709,973

700,499-9,473551,867

546,664-5,202

Ordinary income

442,774

442,412-362

Net income

442,774

441,807

-967

-

1,057

+1,057

Total distribution

442,774442,966+192

Total units outstanding

176,200

176,200

-

2,513

2,514

+1

-

6

+6

3,985

4,013

+28

Depreciation

259,481

265,351+5,870NOI

969,454965,850-3,603

CAPEX

70,975108,000+37,025

Excess cash distribution

DPU (yen)（Excess cash distribution
per unit)

FFO per unit (yen)taxes, etc.
・Increase in depreciation due to finalized
acquisition costs

Lease operations revenue/loss
・Decrease in other operating expenses

Operating income(thousand yen)

-8,258+4,118-5,870-9,473+4,940-5,202

・Decrease in interest expenses+3,421

・Decrease in borrowing related fees

+1,419Ordinary income

Main financial indicators-362(million yen)

Total assets

29,380Interest-bearing debt

12,012

Total liabilities

13,187

Total net assets

16,193

LTV (book value basis) (%)

40.9

Ooedo Onsen Reit Investment Corporation 4

Forecast for the 3rd Fiscal Period ending November 2017
Distribution per unit: 2,353 yen, unchanged from the initial forecast(thousand yen)

3rd period
Item

3rd period（Forcast as of
September 5, 2016）

Operating revenue

Component
ratio

Primary rent

1,027,452

Component
ratio

941,260

Main factors for increase/decrease

Difference（Revised forecast）

・Increase in variable rent due to improvement

1,021,972-5,479944,001+2,741

・Decrease in secondary rent due to decrease in
fixed asset taxes and city planning taxes, etc.

Fixed rent

92.2%

867,73592.0%

868,270+534

Variable rent

7.8%

73,5248.0%

75,730+2,206

Secondary rent

86,192

77,970-8,221

Lease operations
revenue/losses
Operating income

672,220665,557-6,663518,002513,228-4,773

Ordinary income

414,669

414,313-356

Net income

414,669

413,708

-961

-

1,057

+1,057

Total distribution

414,598

414,598-

Total units outstanding

176,200

176,200

-

2,353

2,353

-

-

6

+6

3,830

3,877

+47

Excess cash distribution

DPU (yen)（Excess cash distribution
per unit)

FFO per unit (yen)Depreciation

260,185

269,569+9,383

NOI

932,406

935,126+2,720CAPEX

70,975

118,000+47,025of forecast GOP

・Decrease in fixed asset taxes and city planningtaxes, etc.
・Increase in depreciation due to finalized
acquisition costs

Lease operations revenue/loss
・Decrease in other operating expenses

Operating income(thousand yen)

+2,206-8,221+8,236-9,383-6,663+2,425-4,773

・Decrease in interest expenses+2,109・Decrease in borrowing related fees

+2,307

Ordinary income

Main financial indicators-356(million yen)

Total assets

29,194

Interest-bearing debt

11,901

Total liabilities

13,029Total net assets

16,165

LTV (book value basis) (%)

40.8

Ooedo Onsen Reit Investment Corporation 5

Operating Results for the Entire Portfolio
RevPAR and sales surpassing actual results of the previous year for all properties due to high room
occupancy rates＜Cumulative comparison of 1st Period and the same period of the previous year＞

Room occupancy rate：
82.6％

91.6％

Portfolio operating results
2016

2015

Cumulativ e
total

1st period
cumulativ e
Total

Previous
corresponding
periodcumulative total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

88.4%

79.6%

85.0%

92.6%

86.2%

82.2%

78.8%

89.2%

97.4%

88.7%

90.5%

95.6%

87.9%

91.6%

82.6%

＋8.9%

ADR (yen)

30,42230,045

26,69730,081

28,37429,08925,27330,67942,421

26,91427,87427,902

29,841

27,577

27,707-130

RevPAR (yen)26,89523,913

22,682

27,852

24,46023,91819,90927,35641,31723,86625,215

26,665

26,21925,24822,897＋2,351

823

730

655

856

728

744

608

845

1,252

724

800

826

9,590

2,350

2,131

＋219

Sales (million yen)

(Note 1) The above indicates actual results over the past one year. However, the investment corporation acquired the properties on September 1, 2016.
(Note 2) The sales figures are rounded to the nearest million yen. The ADR and RevPAR figures are rounded to the nearest whole number and the guest room occupancy rate figures are rounded to the first decimal place.
The same applies to operating results of individual properties.
(Note 3) Ooedo-Onsen Monogatari Toi Marine Hotel was closed from October 1, 2016 through October 23, 2016 for earthquake resistance improvements.
(Note 4) 16 rooms were not available at Ooedo-Onsen Monogatari Awara from September 1, 2015 to November 20, 2015 due to earthquake resistance improvements.

Ooedo Onsen Reit Investment Corporation 6

The Overall Picture of Ooedo Onsen Reit Investment Corporation
System to stably generate distributions with stable earning structure

Asset

Debt

9 (properties)
Total acquisition price:
26.8bn yen
Unrealized capital gain:
780mn yen
Average room occupancy rate:
91.6%
Average NOI yield:
6.9%
Onsen and spa-related facilities:

Unsecured borrowings:
LTV:
Long term debt ratio:

Use of stable debt

Equity(Based on actual results/after normalization for
fixed asset taxes and city planning taxes)

Period of master lease:
Portfolio PML:

20 years
3.9%

13.5bn yen
44.0%
83.9%

DPU

376 yen
2 fiscal period: 2,514 yen
3 fiscal period: 2,353 yen
1st fiscal period:ndrdCreation of stable rental revenue

Provision of stable distributions
Ooedo Onsen Reit Investment Corporation 7

Portfolio Data (1)Portfolio summary(as of November 30, 2016)

Total acquisition priceTotal appraised value

Average NOI yield

Average after
depreciation NOI yield

Average room
occupancy rate

Portfolio PML

26.8 yen

28.1bn yen

6.9％

5.0％

91.6％

3.9％

bn

List of assets
Property
No.

Property nameLocation

Building
age(years)Number of
rooms

Room
occupancy rate(%)

Acquisition
price(million yen)Appraisalvalue(million yen)

1st period
actual NOI(million yen)

NOI yield
(%)

After
depreciation
NOI yield (%)

PML
（％）

Onsen and spa-related facilities
S-1
S-2
S-3
S-4
S-5
S-6
S-7
S-8
S-9

Ooedo-Onsen Monogatari

Reoma Resort
Ooedo-Onsen MonogatariIse-shima
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/Average

Marugame City,
Kagawa Prefecture
Shima City,
Mie Prefecture
Ito City,
Shizuoaka Prefecture
Atami City,
Shizuoaka Prefecture
Izu City,
Shizuoaka Prefecture
Awara City,
Fukui Prefecture
Nasushiobara City,
Tochigi Prefecture
Shibukawa City,
Gunma Prefecture
Kimitsu City,
Chiba Prefecture

25.4
25.7

241

90.9

10,37910,900

217

7.8

6.3

1.9
1.6

36.8

83

97.6

3,656

3,820

58

6.2

3.4

14.2

26.1

73

90.3

2,657

2,810

44

6.1

4.2

12.0

42.9

76

96.4

2,997

3,160

50

6.5

4.4

12.6

42.2

64

81.5

1,910

1,980

30

6.2

3.4

14.9

35.3

95

87.2

1,901

1,980

37

7.2

5.1

14.9

20.8

60

90.9

1,222

1,270

22

6.3

4.3

3.0

33.1

40

98.8

1,299

1,370

21

6.1

4.2

1.0

20.7

41

96.9

819

861

15

6.4

4.7

4.8

31.0

773

91.6

26,84428,151

498

6.9

5.0

3.9

(Note 1) 1st period actual NOI indicates figures after adjustment for fixed asset taxes and city planning taxes, NOI yield and After depreciation NOI yield indicate annualized figures.
(Note 2) The upper Building age of Ooedo-Onsen Monogatari Reoma Resort indicates that of Hotel Reoma no Mori and the lower indicates that of New Reoma World.
(Note 3) The Number of guest rooms for Ito Hotel New Okabe indicates that for Sagamitei owned by the investment corporation. The same applies hereinafter.

Ooedo Onsen Reit Investment Corporation 8

Portfolio Data (2)Diversified portfolio attracting guests from metropolitan areas
Investment ratio by region(acquisition price basis)(Hotel Reoma no Mori)(New Reoma World)

Ooedo-Onsen Monogatari
Reoma Resort

Ooedo-Onsen Monogatari Ikaho

Ooedo-Onsen Monogatari
Kamoshika-so

Ooedo-Onsen Monogatari
Awara

Ooedo-Onsen Monogatari
Kimitsu-no-moriInvestment ratio by facility(acquisition price basis)

Hokuriku
regionKanto
regionChugoku region

Shikoku region

Kinki
regionChubu
regionOoedo-Onsen MonogatariIse-shima■Characteristics of main guests
Main flow of guests
Kinki and Chugoku regions ・・Reoma Resort
Chubu and Kinki regions ・・・Ise-shima
Kinki and Hokuriku regions・・ Awara
Kanto and Tokai regions・・・ Atami, New Okabe, Toi
Kanto region・・・・・・・・ Kimitsu, Kamoshika, Ikaho

TokairegionOoedo-Onsen Monogatari
Atami
Ito Hotel New Okabe

Ooedo-Onsen Monogatari
Toi Marine Hotel

Ooedo Onsen Reit Investment Corporation 9

Financial Status
Many lenders, diversified repayment due dates, and conservative LTV control
LTV

Breakdown of lenders

(%)
45.0

Ratio of long-term borrowings
(%)
100.0

44.0 %

44.0

100.0 %

100.0 %

2nd
(Forecast)May 2017

3rd(Forecast)
November 2017

95.0

43.0
90.0

42.0

40.9 %

41.0

40.8 %

85.0
80.0

40.0

1st
(Actual)November2016

2nd (Note)(Forecast)May 2017

83.9 %

3rd(Forecast)
November2017

1st(Actual)November 2016

(Note) If the borrower receives a refund of consumption tax, the borrower
shall make an early repayment of the refunded amount to the lenderon the interest payment date immediately after the day on which theborrower receives the refund

Overview of maturity
Long-term borrowings（million yen）

7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

Short-term borrowings

Avg. remaining duration
2.6 years

2nd
May-17

3rd
Nov-174th
May-185th
Nov-186th
May-197th
Nov-198th
May-209th
Nov-2010th
May-21

11th
Nov-21

12th
May-2213th
Nov-22

14th
May-23

Ooedo Onsen Reit Investment Corporation 10

Ⅱ. Operating Results of Individual Properties

Ooedo Onsen Reit Investment Corporation 11

S-1：Ooedo-Onsen Monogatari Reoma Resort 〈Hotel Reoma-no-mori〉
An onsen and spa-related facility set in a lush natural environment with a half of the customers comingfrom the Kinki and Chugoku regions＜Cumulative comparison of 1st period and the same period of the previous year＞

Room occupancy rate：
85.5％

Location

Marugame City, Kagawa Prefecture

No. of rooms

241

90.9％

Portfolio operating results
2016

2015

Cumulativ e
total

1st period
cumulativ e
Total

Previous
corresponding
periodcumulative total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

92.9%

79.5%

87.5%

96.2%

90.5%

84.9%

75.0%

83.6%

99.1%

88.0%

90.0%

94.9%

88.5%

90.9%

85.5%

＋5.5%

ADR (yen)

30,187

29,61825,98530,38827,75028,302

22,66332,60445,904

24,772

26,11826,83429,55125,93526,757-822

RevPAR (yen)28,04623,54522,73929,237

25,11724,042

17,002

27,26645,49921,79423,50025,46826,164

23,58722,868

＋719

275

227

209

276

232

236

164

268

437

205

235

253

3,016

693

664

＋29

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 12

S-1：Ooedo-Onsen Monogatari Reoma Resort 〈New Reoma World〉
The biggest theme park in the Chugoku and Shikoku regions and one of the biggest in western Japan
under unified operation with Hotel Reoma no Mori＜Year-on-Year comparison of number of guests and sales＞
1st fiscal period(million yen)
The number of visitors andsales for the 1st fiscal period
decreased year-on-year due
to inconvenient holiday
schedule and rainy weather.

＜Reference＞

From Mar. to Nov. 2016
Cumulative total

Previous corresponding
period cumulative total

1,928

Sales (million yen)

Change＋6

1,922

Portfolio operating results
2016

2015

Cumulativ e
total

1st period
cumulativ e
Total

Previous
corresponding
period cumulative
total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Number of guests

68,11438,71630,65346,36844,363

61,632

21,78058,895

133,904

30,16436,081

37,696608,366

103,941

134,715-30,774

Sales (million yen)

245

153

114

196

182

247

84

235

588

118

139

138

2,440

395

529

-134

(Note 1) Number of guests is the total number of people using New Reoma World during the period.
(Note 2) “Current fiscal year” in the above graph refers to FY2016 (March 2016 to February 2017) and “Previous fiscal year” to FY2015 (March 2015 to February 2016). The graph is prepared to correspond with thefiscal year of the lessee, Ooedo-Onsen Monogatari Co., Ltd.

Ooedo Onsen Reit Investment Corporation 13

S-2：Ooedo-Onsen Monogatari Ise-shima
An onsen and spa-related facility located in the Ise-shima area that enjoys tourism resources and is capableof attracting customers from two major consumer markets of the Chubu and Kinki regions＜Cumulative comparison of 1st period and the same period of the previous year＞

Room occupancy rate：
94.4％

Location

Shima City, Mie Prefecture

No. of rooms

83

97.6％

Portfolio operating results
2016

2015

Cumulativ e
total

1st period
cumulativ e
Total

Previous
corresponding
periodcumulative total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

89.8%

89.5%

95.2%

95.4%

82.4%

71.2%

84.6%

92.3%

93.0%

96.6%

97.6%

98.6%

90.5%

97.6%

94.4%

＋3.2%

ADR (yen)

34,43834,14330,047

34,37430,62232,02927,81033,78647,17733,25331,79331,701

33,551

32,23931,363＋876

RevPAR (yen)30,93230,56028,61132,78425,22322,80523,53331,18643,87732,132

31,03931,25530,362

31,471

29,602＋1,868

91

90

80

97

74

68

71

94

129

100

98

95

1,089

293

271

＋22

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 14

S-3：Ito Hotel New Okabe
An onsen and spa-related facility with good views. Located at Ito Onsen, the area bustles with swimming
activities in the sea and fireworks in the summer＜Cumulative comparison of 1st period and the same period of the previous year＞

Room occupancy rate：
82.3％

Location

Ito City, Shizuoka Prefecture

No. of rooms

73

90.3％

Portfolio operating results
2016

2015

Cumulativ e
total

1st period
cumulativ e
Total

Previous
corresponding
periodcumulative total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

90.5%

86.7%

81.5%

93.0%

85.4%

76.7%

74.5%

90.9%

95.2%

86.4%

88.0%

96.7%

87.2%

90.3%

82.3%

＋8.0%

ADR (yen)

32,19630,567

27,95331,544

30,11931,27526,01328,92442,331

26,672

28,074

27,69430,45527,49828,365-867

RevPAR (yen)29,12826,48722,78829,35025,71623,981

19,38626,27940,28923,034

24,693

26,771

26,542

24,831

23,350＋1,482

116

106

86

119

100

98

79

104

153

90

102

107

1,259

299

283

＋16

Sales (million yen)

(Note) The Ito Hotel New Okabe consists of two buildings, the Sagamitei facility and the Surugatei facility. The part belonging to the Investment Corporation is the Sagamitei facility, but as they are operated as one
unit, the Surugatei facility is included in operating performance data.
The number of rooms indicated is for the Sagamitei facility, which is owned by the Investment Corporation.

Ooedo Onsen Reit Investment Corporation 15

S-4：Ooedo-Onsen Monogatari Atami
An onsen and spa-related facility within walking distance from Atami Station.
It is very accessible from central Tokyo.
＜Cumulative comparison of 1st period and the same period of the previous year＞

Room occupancy rate：
91.9％

Location

Atami City, Shizuoka Prefecture

No. of rooms

76

96.4％

Portfolio operating results
2016

2015

Cumulativ e
total

1st period
cumulativ e
Total

Previous
corresponding
periodcumulative total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

97.7%

90.0%

94.5%

92.5%

97.9%

96.1%

93.2%

95.3%

97.9%

98.1%

96.0%

95.2%

95.4%

96.4%

91.9%

＋4.5%

ADR (yen)

31,19030,19527,90432,94931,54832,26029,16332,93046,07030,031

31,39531,05532,35530,827

28,693＋2,134

RevPAR (yen)30,485

27,162

26,36430,48830,89730,98627,19331,392

45,112

29,45230,12929,57030,86529,721

26,378＋3,344

76

68

61

83

81

84

72

85

121

78

83

79

972

240

201

＋39

Sales (million yen)

(Note) Ooedo-Onsen Monogatari Atami increased the number of guest rooms by 6 in March 2016.

Ooedo Onsen Reit Investment Corporation 16

S-5：Ooedo-Onsen Monogatari Toi Marine HotelAn onsen and spa-related facility facing the beach where the Suruga Bay sunset can be enjoyed.
It is located in the Toi Onsen area, the oldest onsen district in the western Izu region.
＜Cumulative comparison of 1st period and the same period of the previous year＞
Closed for 23 days from Oct. 1, 2015 due toearthquake resistance improvements

Room occupancy rate：
53.0％

Location

Izu City, Shizuoka Prefecture

No. of rooms

64

81.5％

Portfolio operating results
2016

2015

Cumulativ e
total

1st period
cumulativ e
Total

Previous
corresponding
periodcumulative total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

88.2%

88.1%

93.5%

98.3%

80.2%

76.1%

69.1%

84.8%

95.2%

75.8%

76.1%

92.9%

84.9%

81.5%

53.0%

＋28.5%ADR (yen)

27,33827,64025,096

26,211

26,04027,35324,871

31,401

42,467

24,97725,17523,81527,92324,604

24,830-227

RevPAR (yen)24,11424,352

23,46025,77520,87220,804

17,19026,62140,43318,928

19,16022,116

23,696

20,058

13,161＋6,897

54

54

49

58

45

46

38

59

90

41

44

49

628

134

86

＋48

Sales (million yen)

(Note) Ooedo-Onsen Monogatari Toi Marine Hotel was closed from October 1, 2016 through October 23, 2016 for earthquake resistance improvements.

Ooedo Onsen Reit Investment Corporation 17

S-6：Ooedo-Onsen Monogatari Awara
An onsen and spa-related facility with complete entertainment facilities. It is located at Awara Onsen,
which is known as the “Okuzashiki” (“back parlor”) of the Kansai region.
＜Cumulative comparison of 1st period and the same period of the previous year＞
16 rooms were not available from Sep. 1, 2015 to Nov.
20, 2015 due to earthquake resistance improvements

Room occupancy rate：
73.2％

Location

Awara City, Fukui Prefecture

No. of rooms

95

87.2％

Portfolio operating results
2015

2016
Cumulativ e
total

1st period
cumulativ e
Total

Previous
corresponding
periodcumulative total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

74.1%

59.7%

74.6%

86.7%

79.2%

78.5%

76.8%

89.8%

99.0%

83.9%

84.6%

93.2%

81.7%

87.2%

73.2%

＋14.0%ADR (yen)

30,51831,95527,562

29,45828,03927,80825,85929,26038,28726,32528,03928,60029,452

27,693

28,232-539

RevPAR (yen)22,621

19,075

20,54925,547

22,205

21,821

19,871

26,29037,92322,08523,716

26,651

24,06324,146

20,668＋3,478

84

71

73

95

78

80

74

98

138

82

91

100

1,066

274

245

＋29

Sales (million yen)

(Note) 16 rooms were not available at Ooedo-Onsen Monogatari Awara from September 1, 2015 to November 20, 2015 due to earthquake resistance improvements.

Ooedo Onsen Reit Investment Corporation 18

S-7：Ooedo-Onsen Monogatari Kamoshika-so
An onsen and spa-related facility in a rich natural environment. It is located in the Shiobara Hot Springs
Area, which has over 1,200 years of history.
＜Cumulative comparison of 1st period and the same period of the previous year＞

Room occupancy rate：
79.0％

Location

Nasushiobara City, Tochigi Prefecture

No. of rooms

60

90.9％

Portfolio operating results
2016

2015

Cumulativ e
total

1st period
cumulativ e
Total

Previous
corresponding
periodcumulative total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

68.8%

59.9%

62.6%

70.2%

64.2%

74.9%

75.6%

89.4%

98.7%

81.8%

94.5%

96.3%

78.1%

90.9%

79.0%

＋11.9%ADR (yen)

29,68329,65324,98627,45527,29727,554

24,23025,952

34,70826,08327,14927,04427,78926,796

27,643-847

RevPAR (yen)20,427

17,776

15,63819,27817,515

20,63618,307

23,20334,241

21,33025,661

26,052

21,71524,362

21,836＋2,526

44

38

32

43

37

45

39

50

74

44

57

56

559

157

142

＋15

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 19

S-8：Ooedo-Onsen Monogatari Ikaho
An onsen and spa-related facility where two kinds of hot spring water can be enjoyed. It is located in
Ikaho, which is even mentioned in the Manyoshu, Japan’s oldest collection of poetry.
＜Cumulative comparison of 1st period and the same period of the previous year＞

Room occupancy rate：
95.6％

Location

Shibukawa City, Gunma Prefecture

No. of rooms

40

98.8％

Portfolio operating results
2016

2015

Cumulativ e
total

1st period
cumulativ e
Total

Previous
corresponding
periodcumulative total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

94.3%

79.2%

81.4%

95.6%

98.8%

97.9%

95.3%

98.7%

98.5%

98.3%

99.5%

98.4%

94.7%

98.8%

95.6%

＋3.2%

ADR (yen)

28,98029,57025,31428,075

28,10828,94026,72929,32437,45928,03430,01630,251

29,32829,44228,285＋1,157

RevPAR (yen)27,321

23,417

20,60026,852

27,78028,33325,482

28,94536,88527,56629,87029,762

27,77429,07527,034＋2,041

38

33

27

38

38

40

35

41

52

39

44

42

466

125

114

＋11

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 20

S-9：Ooedo-Onsen Monogatari Kimitsu-no-moriAn onsen and spa-related facility located in the interior of the Boso Peninsula. It is accessible from theTokyo metropolitan area via the Tokyo Bay Aqualine Expressway, etc.
＜Cumulative comparison of 1st period and the same period of the previous year＞

Room occupancy rate：
88.1％

Location

Kimitsu City, Chiba Prefecture

No. of rooms

41

96.9％

Portfolio operating results
2016

2015

Cumulativ e
total

1st period
cumulativ e
Total

Previous
corresponding
periodcumulative total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

94.0%

85.5%

89.2%

99.0%

94.7%

91.3%

81.6%

95.0%

97.8%

97.2%

96.5%

96.9%

93.3%

96.9%

88.1%

＋8.8%

ADR (yen)

24,662

23,63522,25623,20822,72424,49723,02524,87931,86723,75324,361

24,50824,51824,20822,966＋1,242

RevPAR (yen)23,187

20,213

19,841

22,97021,523

22,377

18,794

23,64531,16523,096

23,51823,751

22,86823,456

20,233＋3,222

45

43

38

46

42

47

36

45

58

44

46

45

536

135

127

＋9

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 21

Ⅲ. Characteristics of Ooedo Onsen Reit
and Future Management Strategy

Ooedo Onsen Reit Investment Corporation 22

Features of Ooedo Onsen Reit Investment Corporation
Enhancement of unitholder value through key investments in onsen and spa-related facilities

Key investments: onsen and spa-related facilities*”Onsen and spa-related facilities” mean facilities that provide onsen (hot springs), or onyoku (hot baths) as one of their primary functions.

Japanese style
hotel

HotelsResortfacilities

Leisurefacilities

Others

+

+

+

+

+

RyokanOnsen andspa-related
facilities

Day spa
facilities

Stable demand for onsen
The Ooedo business model: Securing stable
operation and continual growth

Stable distributions supported bywell-run facilities

Maximum use of Ooedo-Onsen MonogatariGroup’s support
Extensive pipeline

High potential for external growth

Continuous and steady enhancement of unitholder value
Ooedo Onsen Reit Investment Corporation 23

Market Environment (1)Consumers’ needs for onsen is at the top and onsen trips accompanying overnight stays is stable
Trends in number of accommodation facilities
and FY total number of guests
FY
total no. of guests
年度延宿泊利用人員（右軸）(right axis)(thousands)
140,000(thousands)
10,000120,000

8,000

Seniors

Families
女性
Female男性
Male

100,000
80,0006,000

60,0004,000

40,000Source: Onsen Use (2010 – 2014), Nature Conservation Bureau, Ministry of the Environment

Type of trip desired in the next 1-2 years(multiple responses)
Onsen
温泉旅行
Sightseeing,
nature
自然観光
Gourmetグルメ
Theme park
テーマパーク
Sightseeing,
history/culture
歴史・文化観光On

Seashore
resort海浜リゾートSightseeing,
city
都市観光

90
or over
90歳以上

85～89

80～84

75～79

70～74

65～69

60～64

55～59

50～54

45～49

40～44

35～39

0
30～34

FY20142014年度25～29

FY20132013年度

20～24

FY2012
2012年度

15～19

FY2011
2011年度

10～14

0
FY20102010年度2,000
5～9

20,0000～4
0～4歳(facilities)
16,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

No. of accommodation
宿泊施設(左軸）
facilities (left axis)

Demographics (2016)

Source: “Annual Report on the Population Estimates” (2016)
Statistic Bureau, Ministry of Internal Affairs and Communications

・The number of accommodation facilities‘ guests has
been stable since FY2010 according to the Onsen Use
Survey by the Ministry of the Environment
・Taking in families and senior age groups as guests,
which represent the two largest demographic groups

Walkingin town
町並み散策
Zoo/aquarium
動物園・水族館
Tour of world
heritage sites
世界遺産巡りHighland resort
高原リゾートRyokan (Japanese-style
hotel)
和風旅館
0%
20% 40% 60% 80%
Source: “Annual Report on the Tourism Trends Survey 2016”
Public Interest Incorporated Foundations, Japan Travel Bureau Foundation (July 2015-June 2016)

・”Onsen” collected the largest percentage among typesof trip desired according to the Annual Report on the
Tourism Trends Survey
Ooedo Onsen Reit Investment Corporation 24

Market Environment (2)Many day spa facilities are relatively new and are an attractive segment
National spa facilities data
＜Number of facilities opened or renovated per 10 years＞(facilities)

706
1,120

(billion)
8,000
800

700
600
500
400
300
200
100
0
1990'sPrivate facilities

Trends in amusement park and theme park
net sales and visitor numbers

2000's2010's

Net sales
売上高（左軸）(left axis)(million)
10,000100

No. of guests
入場者数（右軸）(right axis)

6,000
600

9,000
90

4,000
400

8,000
80

2,000
200

70
7,000

Public facilities
0000
Source: (Supplement) National facilities directory (Spa Business White Paper 2015)(Note) Number of facilities opened or renovated per 10 years tallied only private facilities of which opening/
renovated dates can be identified. Tally for 2010’s includes the numbers from 2010 to 2014.

2010

2011

2012

2013

2014

2015

Source: Minister of Economy, Trade and Industry(A survey on specific service industries kinetic statistics)

・There are more than 1,000 private day spa facilities nationwide, and most of them were opened or renovated in
2000’s or after.
・Amusement park and theme park net sales and visitor numbers have been solid since 2011.

Ooedo Onsen Reit Investment Corporation 25

Differentiation Strategy of Ooedo Onsen Reit Investment Corporation(Ooedo Business Model)
Taking in stable demand from senior age group/families with Ooedo-Onsen Monogatari Group’s businessexpertise

Services from a customer perspectiveWell-thought-out onsen facilities and merchandising facilities
Buffet-style meal service that earns high customer satisfaction
 Comprehensive in-facility entertainment(including popular theater shows)

Ongoing support from a wideranging customer base centeredon the senior age group

High-quality service+
Affordable priceIntroducing a unique chain operation(Ooedo business model)
in onsen and spa-related facilities

Efficient operation
Centralized purchasing system for foodstuffs,
fixings and amenities Finely tuned cost control(cost management) Efficient staff placement

Marketing to maximize
customer reachMarketing through in-house channels including
reservation centers Marketing strategy led by Ooedo-Onsen
Monogatari Group headquarters
Ooedo Onsen Reit Investment Corporation 26

External Growth Strategy (1)Growth utilizing the sponsor support agreement and unique channels

１．External growth through sponsor pipeline
Priority negotiating rights on all properties held and to be acquired by Ooedo-Onsen Monogatari Group(Main properties listed below)

Hotel New Shiobara(Nasushiobara City,
Tochigi Prefecture)

Ooedo-Onsen
Monogatari Kinosaki(Toyooka City,
Hyogo Prefecture)

Ooedo-Onsen-Monogatari
Minoh Kanko Hotel/MinohOnsen Spa Garden

Hotel Kinugawa Gyoen(Nikko City,
Tochigi Prefecture)(Minoh City, Osaka Prefecture)

Ooedo-Onsen Monogatari
Naruko-onsen Kounkaku

Ooedo-Onsen Monogatari Ooedo-Onsen Monogatari Higashiyama GrandHotel
Nikko Kirifuri
Naruko-onsen Masuya(Osaki City, Miyagi Prefecture)(Osaki City, Miyagi Prefecture)(Nikko City, Tochigi Prefecture)(Nikko City,
Tochigi Prefecture)

２．Acquisition from the market through channels
unique to the asset management company
Targeting diverse onsen and spa-related facilities[Use] Lodging type, day-trip type, specific-purpose type, etc.
[Location] Urban, suburban, regional (onsen sites), etc.
- Use of Ooedo-Onsen Monogatari Group’s operational know-how and knowledge

Ooedo-Onsen
Monogatari Nagayama

Kinugawa Kanko Hotel(Nikko City, Tochigi Prefecture)(Kaga City,
Ishikawa Prefecture)

Yamashiro Onsen
Yamashitaya(Kaga City,
Ishikawa Prefecture)

Tokyo Odaiba
Ooedo-Onsen Monogatari(Fixed term land lease right forbusiness purpose)(Koto-ku, Tokyo)

Number of inquiries for potential deal
information in 1st period

29
Ooedo Onsen Reit Investment Corporation 27

External Growth Strategy (2)Continuous expansion of portfolio centering on sponsor pipeline, combined with acquisition throughunique channels

AUM of￥100 billion

Asset acquisition atlisting: 9 properties

Pursue continuous
external growth

AUM of￥70 billion

AUM of￥26.8 billion

At listing(End of Aug. 2016)

After 3 years
7th period(Ending Nov. 2019)

After 5 years
11th period(Ending Nov. 2021)
Ooedo Onsen Reit Investment Corporation 28

Internal Growth Strategy (1)Rental system that captures upside of rental income while securing stable cash flow
- Improved cash flow stability due to substantive triple net leases

Contract period:

20 years

Modified GOP (Note)

Non-cancellation period:

5-7 years
Rent revision:every

3 years

Amount equivalent toreal estate related
expenses of each facility

Variablerent
component

Fixed rent component

Approximately 90％
Structure of primary rent, which is mainlycomposed of the fixed rent component

Secondary rent

Primary rent

Approximately 10％

Mechanism for variable rent generation
based on concept of
win-win with tenant

Calculation formulas for variable rent
Secondary rent = The total of taxes and public dues that it is liable for the Investment Corporation +Calculation periods for variable rent
Jul.
Jun.
May
Apr.
Mar.
Feb.
Jan.
Dec.
Nov.
Oct.
Sep.
Aug.
Jul.
Jun.
May
Apr.
Mar.
Feb.
Jan.
Dec.
Nov.
Oct.
Sep.
Aug.

Variable rent = Modified GOP for each facility × the fixed rate stipulated by each lease agreement

Secondary rent underpins
stable cash flow

Modified GOP

nonlife insurance premiums + other expenses (real estate expenses)
Variable rent
Modified GOP(Note) Modified GOP is a sum calculated by deducting from the individual facility’s GOP arising during the modified GOP calculation
period the property-related costs borne by the tenant (including, but not limited to, taxes and public charges, non-life insurance
premiums, and land rent; however, the sum corresponding to the secondary rent is not included).

Variable rent

Ooedo Onsen Reit Investment Corporation 29

Internal Growth Strategy (2)Planned repairs and capital expenditures to maintain and enhance medium-to long-term earnings

Repair costs are, in principle, borne by the tenant
The investment corporation holds only the land and building itself and main equipment, all other equipment is owned by the tenant

Respond to deterioration over time through planned capital expenditures such as for partial
rebuilding
Carry out strategic value-increasing investments through cooperation with sponsor groups＜Example of increased value at Ooedo-Onsen Monogatari Atami＞
Increasecompetitiveness

Increasein saleConversion of existing multi-level parking garage

Increase the number of open-air onsen

Ooedo Onsen Reit Investment Corporation 30

Financial Strategy
Conservative LTV control and proper cash management

Basic policy
LTV control
・Will conduct conservative management although the LTV ceiling is set
at 60% as a rule taking account of ensuring available funds

Proper cash management
Concept of free cash

Debt finance・Compare and determine borrowing conditions based on negotiations
with qualified institutional investors that are potential lenders while
reducing the impact of fluctuations in the fund procurement environment.

Cash management
・Will retain the required amount for unexpected expenditure and flexible
acquisition of assets and prioritize repayment of debt without reserving
funds in excess of requirements.

Excess cash distribution policy
・Assumes conducting, as necessary, excess cash distribution
equivalent to the increase amount of the allowance for adjustment of
temporary difference considering income taxes arising in line with thedifferences in accounts for tax and accounting purposes.

Capitalexpenditure
Depreciation

Scheduled
repayment
Free cash Unexpected expenditure Flexible acquisition of assets
 Excess cash distribution

Ooedo Onsen Reit Investment Corporation 31

Ⅳ. Appendix

Ooedo Onsen Reit Investment Corporation 32

Overview of Offering and Variation of Unit Price since Listing
Overview of Offering
Issuing investment corporation

Ooedo Onsen Reit Investment Corporation (code: 3472)

Offering form

Domestic offering

Number of investment units issued (before offering)

2,000 units

Number of new units to be offered/amounts

174,200 units

16,200 million yen

7,246 units

673 million yen(No. specified for sale to Ooedo-Onsen Monogatari Co., Ltd.)

Paid-in amount (issue amount)(4.16% of units of public offering)

89,280 yen

Lock-upInvestment Company: 90 days,
Ooedo-Onsen Monogatari Co., Ltd.: 180 days

Date of resolution of the issuance

July 29, 2016 (Friday)

Date of determination of tentative terms and conditions

August 15, 2016 (Monday)

Date of determination of public offering priceAugust 22, 2016 (Monday)

Payment dateAugust 30, 2016 (Tuesday)

Listing dateAugust 31, 2016 (Wednesday)

Lead manager

Nomura Securities/SMBC Nikko Securities

Investment Unit Price since Listing(yen)

Listing dateAugust 31

Joined TSE
REIT Index
September 29

94,000Bank of Japan
Announces framework of new
financial policy (qualitative andquantitative monetary easing withyield curve control

TSE REIT Index(left axis)

投資口価格（左軸）(right axis)

東証REIT指数（左軸）(100 units)

The U.S.
election

350
300
250
200
150
100
50
0

November 8

September 30

90,000Price(left axis)

Volume
出来高（右軸）86,00082,00078,00074,000
08/31

09/06

09/12

09/16

09/26

09/30

10/06

10/13

10/19

10/25

10/31

11/07

11/11

11/17

11/24

11/30

12/06

Source: Graph prepared by the Asset Management Company based on the data from Tokyo Stock Exchange, Inc.
Note: The TSE REIT Index numbers are shown assuming that the final TSE REIT Index and this REIT’s value were the same on August 31, 2016

12/12

12/16

12/22

12/29

01/06

01/13

01/19

Ooedo Onsen Reit Investment Corporation 33

Appraisal Value

Direct capitalization m ethod
Appraisal value (m illion yen)
Property
No.

Property nam e

Acquisition
Book valuePrice(m illion yen)(m illion
yen)

IPO

1st
periodApr. 1,
2016

Nov. 30,
2016

ChangeUnrealized
profits andlosses(m illion
yen)

Discounted cash flow m ethod

Direct Cap Rate

Discount Rate

IPO

1st
periodIPO

1stperiodApr. 1,
2016

Nov. 30,
2016

Apr. 1,
2016

Nov. 30,2016

valuation

Term inal Cap Ratevaluation

IPO

1stperiodApr. 1,
2016

Nov. 30,2016

valuation

S-1

Ooedo-Onsen Monogatari
Reoma Resort

10,37910,627

10,70010,900

+200

+272

6.3%

6.2%

-0.1%

6.1%

6.0%

-0.1%

6.5%

6.4%

-0.1%

S-2

Ooedo-Onsen MonogatariIse-shima

3,656

3,675

3,770

3,820

+50

+144

5.7%

5.6%

-0.1%

5.5%

5.4%

-0.1%

5.9%

5.8%

-0.1%

S-3

Ito Hotel New Okabe

2,657

2,702

2,740

2,810

+70

+107

5.3%

5.2%

-0.1%

5.1%

5.0%

-0.1%

5.5%

5.4%

-0.1%

S-4

Ooedo-Onsen Monogatari
Atami

2,997

3,026

3,090

3,160

+70

+133

5.3%

5.2%

-0.1%

5.1%

5.0%

-0.1%

5.5%

5.4%

-0.1%

S-5

Ooedo-Onsen Monogatari
Toi Marine Hotel

1,910

1,941

1,970

1,980

+10

+38

5.8%

5.7%

-0.1%

5.6%

5.5%

-0.1%

6.0%

5.9%

-0.1%

S-6

Ooedo-Onsen Monogatari
Awara

1,901

1,970

1,960

1,980

+20

+9

6.1%

6.0%

-0.1%

5.9%

5.8%

-0.1%

6.3%

6.2%

-0.1%

S-7

Ooedo-Onsen Monogatari
Kamoshika-so

1,222

1,250

1,260

1,270

+10

+19

5.2%

5.1%

-0.1%

5.0%

4.9%

-0.1%

5.4%

5.3%

-0.1%

S-8

Ooedo-Onsen Monogatari
Ikaho

1,299

1,324

1,340

1,370

+30

+45

5.5%

5.4%

-0.1%

5.3%

5.2%

-0.1%

5.7%

5.6%

-0.1%

S-9

Ooedo-Onsen Monogatari
Kimitsu-no-mori

819

851

845

861

+16

+9

5.3%

5.2%

-0.1%

5.1%

5.0%

-0.1%

5.5%

5.4%

-0.1%

26,84427,37027,67528,151

+476

+780

－

－

－

－

－

－

－

－

－

Total

Ooedo Onsen Reit Investment Corporation 34

Introduction of Properties (1)S-1

Ooedo-Onsen Monogatari
Reoma Resort

Location:
Date ofconstruction:

Marugame City,
Kagawa Prefecture
July, 1991 (Hotel Reoma no mori)March, 1991(New Reoma World)

S-2

Ooedo-Onsen MonogatariIse-shima

Location:
Date of construction:

Shima City,
Mie Prefecture
February, 1973

Area characteristics
Area characteristics


Marugame City, where this facility is located, is in the Seisanarea (West Sanuki). Many tourist spots are within easy
access, including Marugame Castle, Kotohira-gu Shrine andthe Seto-ohashi Bridge, etc., meaning local sightseeing andleisure can be enjoyed together with the facility.



Shima City is a large sightseeing spot in the Ise-Shima area.
It includes Ise-jingu Shrine and a rias-style coastline.
Ago-wan bay, where this facility is located, features many
resort hotels and onsen ryokans that back onto themountains and face the coast where the waves lap gently.

S-3

Ito Hotel New Okabe

Location:
Date of construction:

Ito City,
Shizuoka Prefecture
November, 1990

Area characteristics
 Ito City, which is designated a City of International Tourism and

Hot Springs Culture, bustles with the Izu Kogen Sakura Festival
and the Anjinsai Festival. The Umi no Hanabi Taikai fireworks
display on the last day of the Anjinsai Festival attracts crowds ofaround 170,000 people.
 Ito Onsen, where this facility is located, was founded in the

Heian Era and is regarded as one of Japan’s premier onsensightseeing spots.

Ooedo Onsen Reit Investment Corporation 35

Introduction of Properties (2)S-4

Ooedo-Onsen Monogatari
Atami

Location:

Atami City,
Shizuoka Prefecture

Date of construction:

February, 1959

S-5

Location:
Date of construction:

Atami City is located at the base of the Izu Peninsula and has
been designated a City of International Tourism and Hot Springs
Culture with its many tourist attractions, including Sun Beach(famous for the Atami Kaijo Hanabi Taikai fireworks display) andthe Omiya no Matsu pine tree statue, etc. In recent years, it has
been in the limelight again as an onsen resort that is low-cost,close and quick to get to from the Tokyo metropolitan area.
Atami Onsen, where this facility is located, is said to have beenfounded in the Nara Era and is full of history and onsen
atmosphere. It is counted as one of Japan’s premier onsensightseeing spots.

S-6

Ooedo-Onsen Monogatari
Awara

Izu City,
Shizuoka Prefecture

Location:

October, 1974

Awara City,
Fukui Prefecture

Date of construction:

October, 1972

Area characteristics

Area characteristics


Ooedo-Onsen Monogatari
Toi Marine Hotel

Izu City is the Izu Peninsula’s largest city located in the westof the central part of the peninsula. Facing Suruga Bay to thewest and surrounded by the Mount Amagi range to the south,
it is rich in natural, historical, and onsen tourist attractions.



Toi Onsen, where this facility is located, is situated on thewest coast of the Izu Peninsula and is the oldest onsen
district in the western Izu district, where hotels and ryokans
line the coast. During the Edo era, the region flourishedbecause of the Toi Gold Mine, and the tunnels are now a
tourist attraction.

Area characteristicsAwara City is a scenic area facing the Japan Sea, surroundedby abundant nature. The Mikuni fishing port, which is wellknown for Echizen crab ,Tojinbo, a tourist attraction that isfamous throughout Japan, and Eihei-ji Temple are close by,
and the tourist industry centered on Awara Onsen isflourishing.

Awara Onsen, where this facility is located, was founded in
1884, and together with Kaga Onsen Village, which includes
Yamashiro Onsen, Yamanaka Onsen and Katayamazu Onsen,
located in nearby Kaga City, it is known as the “back parlor” of
the Kansai region.

Ooedo Onsen Reit Investment Corporation 36

Introduction of Properties (3)S-7

Ooedo-Onsen Monogatari
Kamoshika-so

Location:
Date of construction:

Nasushiobara City,
Tochigi Prefecture
February, 1996

S-8

Location:
Date of construction:

Since ancient times, many onsen villages have taken shapein the mountains and valleys around Nasushiobara City,
including the Shiobara Hot Springs Area, Itamuro Onsen, etc.
Hunter Mountain Shiobara, where meadows, skiing andautumnal leaves can be enjoyed, is nearby.

The Shiobara Hot Springs Area, where this facility is located,
has over 1,200 years of history and gained popularity due tothe six different types of hot spring water.

Shibukawa City,
Gunma Prefecture
November, 1983

S-9

Shibukawa City is a regional city located in the center ofGunma Prefecture and it has long prospered as atransportation hub. Nature and onsen tourism is also a majorindustry.

Ikaho, where this facility is located, is a well-known onsenwith a long history. It is an iconic onsen area of northern
Kanto, the “back parlor” of Tokyo metropolitan area, and has
Kogane no yu (golden hot water), famed for being muddy,
and Shirogane no yu (silver hot water), which is colorless andtransparent.

Ooedo-Onsen Monogatari
Kimitsu-no-mori

Location:
Date of construction:

Area characteristics

Area characteristics


Ooedo-Onsen Monogatari
Ikaho

Kimitsu City,
Chiba Prefecture
March, 1996

Area characteristics


Kimitsu City is located in the middle of Chiba Prefecture, andwith significantly improvements in access by car from Chiba,
Tokyo and Yokohama in the past few years due to thecompletion of the Tateyama Expressway and the Tokyo Bay
Aqualine, an influx of visitors is expected.



The interior of the Boso Peninsula, where this facility is
located, has popular nearby sightseeing spots (Country FarmTokyo German Village, Mother Farm, Nokogiri Yama
Ropeway, and swimming beaches), so it is an area where
tourist demand can be expected.

Ooedo Onsen Reit Investment Corporation 37

Financial Indices

Indices

1st period(Nov. 30, 2016)

Indices

Calculation formula

1st period(Nov. 30, 2016)

Calculation formula
Unit price as of end of period/Net income per unit
(average during the periods, annualized)

Ordinary income

67 mn yen

PER

53.0x

Net income

65 mn yen

PBR

0.9x Unit price as of end of period/Net assets per unit

Depreciation

131 mn yen

ROA

0.2% Ordinary income/Average of total assets during the period

CAPEX

12 mn yen

Total assets

30,732 mn yen

Total net assets

15,818 mn yen

Annualized
ROE
Annualized

0.9%
0.4% Net income/Average of total net assets during the period
1.7%
Total net assets + Total appraisal value - Total book value- Total liabilities

BPS (Total net assets/unit)

89,775 yen

Unit price (as of Nov. 30, 2016)

79,400 yen

NAV per unit

176,200 units

NAV multiple

66 mn yenInterest-bearing debt

376 yenLTV (book value basis)

44.0% Interest-bearing debt/Total assets

LTV (appraisal value basis)

42.9%

Operating days

91daysTotal units outstanding
Total distribution
DPU
Distribution yield
FFO
FFO per unit
FFO multiple

NAV

1.9% DPU (annualized)/Unit price as of end of period
Net income + Depreciation

197 mn yen －profit or loss on sale of real estate

16,599 mn yen
94,207 yen

0.8x Unit price as of end of period/NAV per unit
13,524 mn yen

Interest-bearing debt/(Total assets + Total appraisal value - Total book value)

1,121 yen17.7x Unit price as of end of period/FFO per unit (annualized)

Ooedo Onsen Reit Investment Corporation 38

Balance Sheet(thousand yen)
1st period

1st period(period ended Nov. 30, 2016)(period ended Nov. 30, 2016)

Liabilities

AssetsCurrent liabilities

Current assets
Cash and deposits
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Deferred tax assets
Total current assets

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

Accumulated depreciation

Current portion of long-term loans payable

223,000

Accounts payable - other261,251

Accrued expenses

7,580

Income taxes payable

1,321
183,256

Other

Property, plant and equipment
18,079,683-131,368

1,159
2,177,000

Short-term loans payable

Advances received

Non-current assets

Buildings

Operating accounts payable

105

Total current liabilities

2,854,675

Non-current liabilities

17,948,314

Long-term loans payableLand9,264,018

Tenant leasehold and security deposits

868,270

Total property, plant and equipment

27,212,332

Asset retirement obligations

67,100

Buildings, net

Total non-current liabilities

Intangible assets
Leasehold right
SoftwareTotal intangible assets

11,124,250

157,802
6,191
163,993

12,059,620

Total liabilities

14,914,295

Net assets
Unitholders' equity
Unitholders' capital

Investments and other assets

15,752,576

Surplus

Long-term prepaid expenses

196,129

Lease and guarantee deposits

10,000

Unappropriated retained earnings(undisposed loss)

65,834

Total investments and other assets

206,129

Total surplus

65,834

Total non-current assets
Total assets

27,582,456
30,732,706

Total unitholders' equity
Total net assets
Total liabilities and net assets

15,818,410
15,818,410
30,732,706

Ooedo Onsen Reit Investment Corporation 39

Statement of Income(thousand yen)
1st period(from March 29, 2016
to November 30, 2016)

Operating revenue
Lease business revenue

507,696

Total operating revenue

507,696

Operating expenses
Expenses related to rent business

140,191

Asset management fee

47,979Asset custody fee

1,662

Administrative service fees

8,323

Directors' compensations

5,400

Other operating expenses

37,600Total operating expenses

241,157

Operating income

266,538

Non-operating expenses
Interest expenses

24,222

Organization expenses

73,020Investment unit issuance expenses

73,828Borrowing related expenses

28,336

Total non-operating expenses

199,408

Ordinary income

67,131

Profit before income taxes

67,131

Income taxes - current

1,321

Income taxes - deferred-24

Total income taxes

1,296

Net income

65,834

Unappropriated retained earnings(undisposed loss)

65,834

Ooedo Onsen Reit Investment Corporation 40

Debt Status

List of lenders(as of November 30, 2016)

Short termLong term

LenderBalance(mn yen)Interest rate(%)

Drawdown date

Repayment date

Security

Notes

Sumitomo Mitsui Banking Corporation

1,400

Base rate (JBA 1 month Yen TIBOR) ＋0.35%

September 1, 2016

May 31, 2017

Unsecured andunguaranteed(Note 1)

Sumitomo Mitsui Banking Corporation

777

Base rate (JBA 1 month Yen TIBOR) ＋0.35%

September 1, 2016

May 31, 2017

Unsecured andunguaranteed

Sumitomo Mitsui Banking Corporation
ORIX Bank Corporation
Sumitomo Mitsui Trust Bank, Limited
The Mie Bank, Ltd.
THE IYO BANK, Ltd.
THE BANK OF FUKUOKA, LTD.
The Nomura Trust and Banking Co., Ltd.
The Shinwa Bank, Ltd.

7,018

Base rate (JBA 3 months Yen TIBOR) ＋0.65%

September 1, 2016

May 31, 2019

Unsecured andunguaranteed(Note 2)

Sumitomo Mitsui Banking Corporation
ORIX Bank Corporation
Sumitomo Mitsui Trust Bank, Limited
The Mie Bank, Ltd.

3,831

Base rate (JBA 3 months Yen TIBOR) ＋0.80%

September 1, 2016

May 29, 2020

Unsecured andunguaranteed(Note 3)

Sumitomo Mitsui Banking Corporation

497

Base rate (JBA 3 months Yen TIBOR) ＋1.25%

September 1, 2016

May 31, 2023

Unsecured andunguaranteed(Note 4)

Total

13,524(Note 1) If the borrower receives a consumption tax refund, the amount of the relevant refund will be returned before the interest-payment date, immediately after the refund is received (hereinafter referred
to as “Refund Acceptance Date”). (However, if the refund is received within 10 days of the repayment date, then the repayment will be made at the following interest payment date)(Note 2) With the first payment on the last day of October 2016, and subsequent payments on the last day of each subsequent quarter, 34,250,000 yen will be divided proportionally according to the amountof unpaid principal of each lender and the amount repaid, with the remainder being paid on the principal return date.
(Note 3) With the first payment on the last day of October 2016, and subsequent payments on the last day of each subsequent quarter, 18,750,000 yen will be divided proportionally according to the amountof unpaid principal of each lender and the amount repaid, with the remainder being paid on the principal return date.
(Note 4) With the first payment on the last day of October 2016, and subsequent payments on the last day of each subsequent quarter, 2,750,000 yen will be divided proportionally according to the amountof unpaid principal of each lender and the amount repaid, with the remainder being paid on the principal return date.
(Note 5) Please refer to the website of the General Incorporated Association JBA TIBOR Administration for information about the Japanese Bankers Association Japanese yen TIBOR.

Ooedo Onsen Reit Investment Corporation 41

Ooedo-Onsen Monogatari Group (1)“At any time, lightheartedly, repeatedly, onsen with a festive atmosphere and filled with smiles,” is the catchphrase Ooedo-Onsen Monogatari Group uses in its
business operations. The group aims to revitalize the onsen ryokan industry by continuously acquiring onsen and spa-related facilities throughout the country
and rolling out the Ooedo business model to provide customers with high-quality services at an affordable price, and to help them enjoy the sense of openness
and festivity of onsen.

Overview
Company Name

Ooedo-Onsen Monogatari Co., Ltd.

Trends in net sales, number of rooms and number of facilities operated
by the Ooedo-Onsen Monogatari Group(billion yen)

Address

1-9-4 Nihonbashi-honcho, Chuo-ku, Tokyo

Representative

Representative Director
Mitsumasa Morita

Establishment

September 26, 2014 (founded in November 2001)

40(rooms)

30
20

30.5

Rooms (left axis)

3,000

Net sales

32.2

35.3

38.2

Facilities in operation (right axis)

2,500

1,000

10

314

500
0

Capital

100 million yen (as of end of February 2016)

No. of
Employees

910 (consolidated, as of end of February 2016)

Financial
Results(Feb./2016)

Consolidated Net Sales: 38,221 million yen
Consolidated Total Assets: 64,478 million yen
Net Assets: 15,532 million yen Reinvigorating onsen ryokan, hotels, spa-related

Sept.
2012

Sept.
2013

Feb.
2014

Feb.
2015

Feb.
2016

2,325

25

25

End ofSept.
2012

End of
Sept.
2013

1,508

1,500

25.7

2,321
1,942

2,000

746

471

7

9

12

End ofSept.
2007

End ofSept.
2008

End of
Sept.
2009

0

20

17
End of
Sept.
2010

End ofSept.
2011(number)
50
45
40
35
30
25
27
27
27
20
15
10
5
0
End of
End of
End ofFeb. 2014 Feb. 2015 Feb. 2016

2,601

2,671

2003

2007

2009

2010

2013

Opened OoedoOnsen Monogatariin Odaiba, Tokyo

Acquired facilities, including Aizu,
Ikaho, Nikko Kirifuri, andKamoshika-so, etc.

Acquired Urayasu
Mangekyo

Acquired Hotel New Okabe, Hotel
New Shiobara, Kinugawa Kanko
Hotel, and Reoma Resort

Opened Minoh
Kanko Hotel and
Minoh Onsen
Minoh Spa Garden

facilities, theme parks around the country
Businesses

2,614 We started with the onsen theme park, “Ooedo-

Onsen Monogatari,“ which has an Edo culture
theme. As of November 30, 2016, we operate
32 onsen and spa-related facilities
OdaibaOoedo-Onsen
Monogatari(Tokyo)Ooedo-Onsen
Monogatari
Aizu

Ooedo-Onsen
Monogatari
Nikko Kirifuri

Ooedo-Onsen
Monogatari
Ikaho

Ooedo-Onsen
Monogatari
Kamoshika-so

Ooedo-Onsen
Monogatari
Urayasu Mangekyo

Kinugawa Kanko Hotel

Hotel New Shiobara

Ooedo-Onsen
Monogatari
Minoh Kanko Hotel

Ooedo-Onsen
Monogatari
Reoma Resort(Reoma no Mori)

Ooedo-Onsen
Monogatari
Reoma Resort(New Reoma World)

Minoh Onsen
Minoh Spa Garden

Ooedo Onsen Reit Investment Corporation 42

Ooedo-Onsen Monogatari Group (2)The total number of hotel guests at onsen and spa-related facilities operated by Ooedo-Onsen Monogatari Group has increased
steadily since FY 2012. In addition, the Group is proactively expanding the portfolio by acquiring 5 facilities in 2016.

Onsen and spa-related facilities operated
by the Ooedo-Onsen Monogatari Group

Trend in total number of hotel guests at
Ooedo-Onsen Monogatari Group facilities(thousands)
3,000

2,456

Facilities acquired in 2016
by the Ooedo-Onsen Monogatari GroupREIT acquired assets

2,565

1,976

Ooedo-Onsen Monogatari

1,566

Kakeyu Fujikan Sakurakan

1,500

Naruko-onsen Kouunkaku
Naruko-onsen Masuya

Ooedo-Onsen Monogatari

Nagayama

0
FY2012
平成24年度FY2013
平成25年度FY2014
平成26年度Ooedo-Onsen Monogatari

FY2015平成27年度Sendai Korona-no-yu

Aizu
Ooedo-Onsen Monogatari

Higashiyama Grand Hotel

Awara
Ooedo-Onsen Monogatari

KinosakiOoedo-Onsen Monogatari
Yamashiro Onsen

Yamashitaya
Ooedo-Onsen Monogatari

Gero
Nagasaki Hotel Seifu

Nikko Kirifuri(Spa-related facilities for day visits)

Hotel New Shiobara
Hotel Kinugawa Gyoen
Ooedo-Onsen Monogatari

Kamoshika-so
Kinugawa Kanko Hotel

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Ikaho

Urayasu Mangekyo(Onsen theme park)
Tokyo Odaiba

Hotel Shinko
Ooedo-Onsen Monogatari
Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Hotel Sohkan
Ooedo-Onsen Monogatari

Ooedo-Onsen MonogatariIse-shima(Onsen theme park)
Ooedo-Onsen Monogatari

Reoma Resort

Kimitsu-no-mori

Beppu

Ooedo-Onsen Monogatari
Ooedo-Onsen Monogatari

Minoh Onsen Minoh Spa Garden(Onsen theme park)／
Ooedo-Onsen Monogatari

Minoh Kanko Hotel

Tenka-taihei-no-yu
Sumpu Yume Hiroba(Onsen theme park )Atami-Izuyama Hotel Suiyotei
Ooedo-Onsen Monogatari Atami
Ito Hotel New Okabe
Ooedo-Onsen Monogatari

Toi Marine Hotel

Ooedo Onsen Reit Investment Corporation 43

Ooedo-Onsen Monogatari Group (3)The average annual occupancy rates of the onsen and spa-related facilities operated by the Ooedo-Onsen Monogatari Group remain at higher
levels compared to other accommodation facility types through introduction of the Ooedo business model.

Trends in average annual occupancy rates foreach type of accommodation facility

Change in the “Iifuro membership”(10 thousand)

(%)
90.0%

84.4%
80.2%

80.2%

80.0%

79.9%
73.6%

77.3%
75.7%

70.0%

72.1%
54.8%

69.5%
55.2%

60.5%
57.4%
57.3%

50.0%

52.3%

54.0%

January 2013

Hotel guest questionnaire– Satisfaction survey/intention for repeated use (FY2015)
Satisfaction survey

48.0%
40.0%

100

75.1%

72.5%
67.3%

60.0%

Over around 1.5 million
membership at present

Intention for repeated use

37.8%
35.5%

33.4%

35.2%

2.2%
13.5%

30.0%
2012

2013

2014

大江戸温泉物語グループ
Ooedo-Onsen Monogatari Group
ビジネスホテルBusiness hotels
旅館
Ryokans (Japanese style hotels)

0.7%

4.3%

2015
シティホテルCity hotels
リゾートホテル
Resort hotels
全体All

Source: Data on city hotels, business hotels, resort hotels, ryokans and all based on
White Paper on Tourism FY2015, Ministry of Land, Infrastructure, Transport andTourism, data on Ooedo-Onsen Monogatari Group from Ooedo-Onsen
Monogatari Co., Ltd.

33.5%

満足
SatisfiedSomewhat
やや不満
unsatisfied

50.1%

83.6%

Somewhat
やや満足
satisfied不満
Unsatisfied

ふつう
Fair

95.7%

はい
Yes

いいえ
No

Ooedo Onsen Reit Investment Corporation 44

Unitholders Breakdown
Top 10 unitholders

Ratio by number of unitholders
Financial
institutions

Foreign corporations
and individuals

Raito by number of investment units

Rank

Number ofunits held

Name

Ratio

1

Japan Trustee Services Bank, Ltd. (Trust Account)

11,668

6.6%2

Ooedo-Onsen Mongatari Co., Ltd.

9,246

5.2%

3

Trust & Custody Services Bank, Ltd. (Securities Investment Trust Account)

8,398

4.8%

4

The Master Trust Bank of Japan, Ltd. (Trust Account)

6,852

3.9%

5

The Nomura Trust and Banking Co., Ltd. (Investment Trust Account)

5,065

2.9%

6

Individual

2,200

1.2%

7

SBI SECURITIES Co., Ltd.

1,450

0.8%

8

JF Kyosai Suiren

1,333

0.8%

9

Sekai Shidokyo

1,080

0.6%

10

Hida Shinkin Bank

1,000

0.6%

10

Aoki Shinkin Bank

1,000

0.6%

10

General Incorporated Association Seiikai

1,000

0.6%

50,292

28.5%

Total

Ooedo Onsen Reit Investment Corporation 45

Efforts for IR Activities

IR activities
Fairs for private investors＜Main IR activities＞
IR activities for domestic institutional investors
・Conducting IR activities for central/regional investors
・Holding individual meetings, etc.

・Fair for private investors sponsored by a securities company(held on October 30, 2016)
・Fair for private investors co-sponsored by ARES and TSE(held on November 26, 2016)

IR activities for overseas institutional investors
・Participating in global conferences in Japan
・Holding individual meeting in Japan, etc.
IR activities for private investors
・Holding seminars for private investors
・Participating in fairs for private investors, etc.

Seminars for private investors sponsoredby securities companies

PR activities
Receiving interviews from trade publications, etc.
・Real Estate Fund Review (September 25, 2016 issue)
・Monthly Leisure Industry Data (November 2016 issue)
・Monthly Property Management (November 2016 issue)

・Branch office seminars(Toyonaka branch office, Ueno branch office)・Online IR seminars

Ooedo Onsen Reit Investment Corporation 46

Governance Structure
Introduction of performance-linked element in asset management fee structure
Remuneration paid by the Investment Corporation to the asset manager consists of management fee I, management fee II, acquisition fee, anddisposition fee.
Management fee I

Total assets at end of previous accounting period(Note1) × 1.0% per annum (ceiling)

Management fee II

Management fee II for previous accounting period × (DPU before deduction of current period management fee II/DPU before
deduction of previous period management fee II) × management fee II revised ratio

Acquisition fee(Note 2)

Acquisition price × 1.0% (ceiling) (transaction with related party: 0.5% (ceiling))

Disposition fee

Disposition price × 1.0% (ceiling) (transaction with related party: 0.5% (ceiling))(Note 1) Subject to adjustment for asset acquisitions and asset dispositions during the relevant calculation period. As for the 1st fiscal period, the amount will be the acquisition price of the acquired
assets revised in accordance with the actual number of days of management.
(Note 2) Where the sum calculated for an acquired asset is less than 5 million yen, the acquisition fee is set at 5 million yen.
(Note 3) The sum of management fee I and the first fiscal period’s management fee II is set to be within the limit of roughly 1% of total assets at the end of the relevant business period.

Flow of decision making for transactions with related parties in acquisition and disposition of assets
Review andapproval

Propose
Proposingdepartment

Complianceofficer

ReturnInvestment
Committee(includes outsidecommittee
members)

Review anddecision

Review andReview andCompliancedecision
decision
Committee
Board of(includes outside
Directors
committee
members)
Attendance andAttendance andReject approval of outside
Reject approval of outside
Rejectmembers essential
members essential

Investment
Corporation
Board Meeting

RejectOoedo Onsen Reit Investment Corporation 47

Overview of Investment Corporation

Parent Company of Asset Manager
Sponsor

Ooedo-Onsen Monogatari Co., Ltd.

⑤⑥

Investment Corporation④
Ooedo Onsen Reit Investment
Corporation

Subsidiary

General Unitholders’ Meeting

Asset Manager

Ooedo Onsen
Asset Management Co., Ltd.

①②

Asset Custodian
Unitholders’ Registry Administrator
General Administrator(agency management)

Sumitomo Mitsui Trust Bank,
LimitedBoard of Directors
Executive Director
Fuminori Imanishi

Subsidiary of Parent Company
of Asset Manager⑤

Kagawa Prefecture Tourism
Development Ltd.

Supervisory Director
Kentaro Suzuki
Supervisory Director
Takayuki Hongyo③

Accounting and Tax Administrator

Heiseikaikeisha Tax Corporation

Independent Auditor
Subsidiary of Parent Company
of Asset Manager

Reoma Unity Co., Ltd.

⑥

PricewaterhouseCoopers
Aarata LLC① Asset Management Agreement② Asset Custodian Contract / Contract for Unitholders’Registry and Other Administrative Services /Contract for General Administrative Services(agency management)③ Accounting Services Contract④ Sponsor Support Contract⑤ Asset Purchase and Sales Contract⑥ Asset Lease Contract

Ooedo Onsen Reit Investment Corporation 48

Overview of Asset Manager

Name：Ooedo Onsen Asset Management Co., Ltd.

Address：3-3-4, Nihonbashi-Honcho, Chuo-Ku, Tokyo

Discretionary transaction agent, Minister of Land,
Transport and Tourism License No. 102

Established：April 24, 2015

Financial instruments business, Director of Kanto Local
Finance Bureau (Kinsho) No. 2906

Capitalization：50 million yen

Member of the Investment Trusts Association, Japan

Representative：Fuminori Imanishi

Shareholder：Ooedo-Onsen Monogatari Co., Ltd. 100％

Registrationsand Licenses

Employees：Real estate brokerage, Governor of Tokyo (1) No. 98032：10 (as of November 30, 2016)

Structure
General Shareholders’ Meeting

Auditors
Board of Directors
Investment Committee

Compliance Committee
President and CEO
Compliance Officer

Investment Management Department

Finance Department

Planning and Coordination
Department

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Disclaimer

This material is for informational purposes only and is not intended for the public offering, solicitation, sales, etc. ofparticular financial instruments. To purchase investment units of Ooedo Onsen Reit Investment Corporation (hereinafterreferred to as “The Investment Corporation”), please contact a securities company.
Unless otherwise noted, the information presented in this material is not a requirement of the Financial Instruments andExchange Act, laws related to investment trusts and investment corporations or Cabinet Order, Cabinet Office
Ordinance, regulations related to these or Securities Listing Regulations of the Tokyo Stock Exchange or various otherrelated regulations. Also, this information is not the same as that required for disclosure or asset management reports
prepared according to related laws and regulations, etc.
This material contains forward-looking statements regarding business results, but these statements were made basedon information available at the time these materials were prepared and according to certain conditions and decisions, sothey contain unknown risk and uncertainty. Accordingly, information concerning the future are not guarantees of future
results of The Investment Corporation and actual results may differ significantly.
The information presented in this material has been prepared with all care. However, there is no guarantee of theinformation’s accuracy and completeness. Also, reported details may be modified or discontinued without notice.
Duplication or use for other purposes of these materials without prior permission is prohibited.

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