Ooedo Onsen Reit Investment Corporation
Results of 3rd Fiscal Period ended November 30, 2017

Presentation Material
January 23, 2018
（Asset Manager）Ooedo Onsen Asset Management Co., Ltd.

Table of Contents
Ⅰ. Operating Highlights

External Growth Strategy

33

Public Offering and Property Acquisition

3

Internal Growth Strategy

36

Overview of Newly Acquired Properties

6

Financial Strategy

38

Ⅱ. Financial Highlights

Ⅴ. Appendix

Financial Results for the 3rd Fiscal Period ended November 20179

Appraisal Value

40

Forecast for the 4th Fiscal Period ending May 201810

Introduction of Properties

41

Forecast for the 5th Fiscal Period ending November 201811

Financial Indices46

Major Factors for Increase/Decrease in Distribution per Unit

12

Balance Sheet

47

Operating Results for the Entire Portfolio

13

Statement of Income

48

Portfolio Data

14

Debt Status

49

Financial Status

15

Ooedo-Onsen Monogatari Group

50

Unitholders Breakdown

52

Unitholder Benefit Program

53

Profile of IR Activities

54

Track Record of Investment Unit Price55

Governance Structure56

Ⅲ. Operating Results of Individual Properties
Operating Results of Individual Properties

17

Ⅳ. Characteristics of Ooedo Onsen Reit andFuture Management Strategy
Uniqueness of Ooedo Onsen Reit’s Major Investing Targets

28

Overview of Investment Corporation

57

Market Environment 〜 Stable Demand for Onsen

29

Overview of Asset Manager

58

Investment Opportunity of Ooedo Onsen Reit

30

“Ooedo Business Model” with Stable Operations and Sustainable
Growth31

Ooedo Onsen Reit Investment Corporation 1

Ⅰ. Operating Highlights

Ooedo Onsen Reit Investment Corporation 2

Public Offering and Property Acquisition (1)Steady improvement of main indicators due to new property acquisition using proceedsfrom public offering paid in at the beginning of the 4th fiscal period
2nd period

3rd period

4th period

5th period(May 2017)(November 2017)(May 2018)(November 2018)

ActualActualForecast

Forecast

NAV per unit

97,740 yen

98,576 yen

103,049 yen

103,073 yen+4.6％

FFO per unit

4,022 yen

3,903 yen

4,133 yen

4,199 yen

+7.6％

DPU per unit

2,533 yen

2,392 yen

2,370 yen

2,407 yen

39.9％

39.8％

42.3％

41.2％

[Cruising basis］※

LTV(book value basis)［2,359 yen］

Publicoffering・Propertyacquisition

Change(3rd vs. 5th)

+0.6％［+2.0％］+1.4％(Note 1) 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.
(Note 2) Figures for the 4th and 5th periods of NAV per unit are calculated based on figures obtained by adding the acquisition price or appraisal value of newly acquired properties to the actual results of the 3rd period.
※ On a normal basis after deducting temporary insurance revenue

Overview of public offering

Number of investment units
59,147 units
newly offered
Number of investment units
235,347 units
after public offering

Offering method

Domestic offering

Launching dateNovember 9, 2017

Pricing dateNovember 20, 2017

Offering price

85,937 yen per unit

Payment date

December 1, 2017

Issuing price82,852 yen per unit

Number of investment units
before public offering

176,200 units

Total issue amount

4,900,447,244 yen(including third-party allotment)

Ooedo Onsen Reit Investment Corporation 3

Public Offering and Property Acquisition (2)Strengthening portfolio foundation through progress of diversification
by region and by facility
Investment ratio by region (acquisition price basis)

Investment ratio by facility (acquisition price basis)
Share oftop 3 properties

63.5％

Share oftop 3 properties

48.8％

Ooedo Onsen Reit Investment Corporation 4

Public Offering and Property Acquisition (3)Achieving diversification of investment area assuming customer attraction from urban areas

Properties held at the end of 3rd fiscal period
Newly acquired properties

Ooedo-Onsen Monogatari

Kounkaku

Ooedo-Onsen Monogatari

Higashiyama Grand Hotel
Ooedo-Onsen Monogatari
Ooedo-Onsen Monogatari

Awara

KinosakiOoedo-Onsen Monogatari

Ikaho

Ooedo-Onsen Monogatari

Kamoshika-so

Kinugawa
Kanko Hotel

Ooedo-Onsen Monogatari

Nagasaki Hotel Seifu

Ooedo-Onsen Monogatari

Reoma Resort

Ooedo-Onsen Monogatari
Ooedo-Onsen MonogatariIse-shima

Kimitsu-no-moriOoedo-Onsen Monogatari

Atami

Ito Hotel New Okabe
Ooedo-Onsen Monogatari

Toi Marine Hotel

Ooedo Onsen Reit Investment Corporation 5

Overview of Newly Acquired Properties (1)Realized acquisitions of facilities with high occupancy rates at a discount of 16.2% against appraisal value
Number of properties:

Total acquisition price:

Total appraisal value:

5 properties

9,861mn yen

11,770mn yen

Ratio against appraisal value:

Average appraisal NOI yield:

83.8%

After depreciation appraisal NOI yield:

7.8%

4.7%

S-10

S-11

Ooedo-Onsen Monogatari Nagasaki Hotel Seifu
Room occupancy rate:

ADR︓

99.7%

31,677 yen

RevPAR︓

Sales︓

31,581 yen

663mn yen

2017

Cumulativ e
total

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

100%

100%

100%

100%

98.3%

100%

99.7%

ADR (yen)

30,686

28,66033,83527,48535,57333,78931,677

RevPAR (yen)Sales (million yen)

ダミー（6月から11月）
30,686
28,66033,83527,48534,96833,789
109

103

116

95

122

116

31,581
663

Ooedo-Onsen Monogatari Kounkaku
Room occupancy rate:

ADR︓

91.3%

26,065 yen

RevPAR︓

Sales︓

23,797 yen

516mn yen

2017

Cumulativ e
total

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

91.9%

89.1%

91.2%

91.1%

92.3%

92.0%

91.3%

ADR (yen)

22,87623,86930,07023,58827,827

27,972

26,065

RevPAR (yen)21,023

21,26727,423

21,48825,68425,73423,797

77

78

95

75

94

95

516

Sales (million yen)

(Note) Sales, ADR, and RevPAR are rounded down to the nearest specified units and percentage rates is rounded to the second decimal place. The same applies hereinafter.

Ooedo Onsen Reit Investment Corporation 6

Overview of Newly Acquired Properties (2)

S-12

S-13

S-14

Kinugawa Kanko Hotel
Room occupancy rate:

ADR︓

94.0%

31,050 yen

RevPAR︓

Sales︓

29,187 yen

1,212mn yen

2017

Cumulativ e
total

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

87.3%

89.2%

98.7%

94.7%

96.9%

97.3%

94.0%

ADR (yen)

25,90429,27939,39527,197

31,466

31,91931,050

RevPAR (yen)22,614

26,11638,88225,75530,49031,057

29,187

160

179

250

173

225

222

1,212

Sales (million yen)

Ooedo-Onsen Monogatari Kinosaki
Room occupancy rate:

ADR︓

90.3%

29,901 yen

RevPAR︓

Sales︓

27,000 yen

622mn yen

2017

Cumulativ e
total

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

79.6%

91.0%

96.3%

93.3%

85.2%

96.5%

90.3%

ADR (yen)

24,72029,32140,03026,01927,42130,311

29,901

RevPAR (yen)19,677

26,68238,54824,27523,362

29,25027,000

76

102

147

90

93

112

622

Sales (million yen)

Ooedo-Onsen Monogatari Higashiyama Grand Hotel
Room occupancy rate:

ADR︓

87.8%

27,248 yen

RevPAR︓

Sales︓

23,923 yen

659mn yen

2017

Cumulativ e
total

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

87.5%

80.1%

95.5%

83.9%

93.6%

86.3%

87.8%

ADR (yen)

25,70426,09430,46825,47327,65927,501

27,248

RevPAR (yen)22,491

20,901

29,096

21,371

25,88823,73323,923

102

97

128

96

122

111

659

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 7

Ⅱ. Financial Highlights

Ooedo Onsen Reit Investment Corporation 8

Financial Results for the 3rd Fiscal Period ended November 2017
Increase in revenue, profit, and distribution per unit from initial forecast attributed to insurance revenue, etc.
(thousand yen)
Item

Operating revenue

2nd period

3rd period（Actual ）（Actual ）Component
ratio

Primary rent

1,021,730

Component
ratio

940,158

3rd period(Forecast)Difference

1,032,755
948,497+11,025+8,338Difference

1,027,460
948,904+5,295-407

Fixed rent

92.4%

868,270

91.5%

868,270-868,270-

Variable rent

7.6%

71,8888.5%

80,227+8,33880,634-407

Main factors for increase/decrease from forecast(thousand yen)・Insurance revenue (Ito, Ikaho)+5,826

Lease operations revenue gain/loss+8,006・ Increase in other operating expenses-1,777

Operating income
・Decrease in finance-related expenses+5,618+110

Secondary rent

78,11878,431+313

78,555-124

Others

3,452

5,826

+2,374-+5,826

Lease operations
revenue gain/loss

703,606

677,205-26,401

669,199+8,006Main factors for increase/decrease
from previous fiscal period+8,338

Ordinaly income+5,739(thousand yen)

Operating income

547,969

519,092-28,877

513,473+5,618・ Increase in variable rent of owned facilities(excluding Reoma)

Ordinary income

446,053

421,047-25,006

415,307+5,739・ Increase in insurance revenue+2,374

Net income

445,127

420,172-24,954414,307+5,865・ Recorded burden of fixed asset taxes and city planning taxes
for full year

-31,177

1,233

1,233

-

1,233

-

Total distribution

446,314421,470-24,844415,655+5,814

Total units outstanding

176,200

176,200-

176,200

-

2,533

2,392

-141

2,359

+33

7

7

-

7

-

4,022

3,903

-119

3,888

+15

・ Increase in depreciation (capital expenditure)

Excess cash distribution

DPU (yen)（Excess cash distribution
per unit)

FFO per unit (yen)Depreciation

263,577

267,580+4,003

270,831-3,250NOI

967,184

944,786-22,397940,030+4,755

CAPEX

90,70595,012+4,307

94,638+374-4,003

Lease operations revenue gain/loss-26,401

・Decrease in AM fee
・Increase in other operating expenses+3,687

Operating income
・Decrease in finance-related expenses

Ordinaly income

Main financial indicators-6,084-28,877+6,135-25,006(million yen)

Total assets

29,208Interest-bearing debt

11,624

Total liabilities

13,037

Total net assets

16,171

LTV (book value basis)
NAV per unit (yen)(Note) As for the signs for each item, “＋” indicates those that lead to the increase in distribution per unit and “-” indicates those that lead to the decrease in distribution per unit.

39.8%
98,567 yen

Ooedo Onsen Reit Investment Corporation 9

Forecast for the 4th Fiscal Period ending May 2018
Upward revision to distribution per unit from forecast at the time of launch of public offering due to
finalized public offering costs(thousand yen)
Item

Operating revenue

3rd period

4th period（Actual）（Forecast）

Component
ratio

Primary rent

1,032,755

Component
ratio

948,497

Difference

4th period(Forecast as of
Nov. 9, 2017)(thousand yen)

Difference

Lease operations revenue gain/loss
・Increase in other operating expenses

1,444,521+411,765

1,444,664-143

1,328,913+380,415

1,328,913-

Fixed rent

91.5%

868,27093.9%

1,248,278+380,008

1,248,278-

Variable rent

8.5%

80,227

6.1%

80,634+407

80,634-

Secondary rent

78,431

115,337+36,906

115,480-143

Others5,826

270-5,556270-

Lease operations
revenue gain/loss

677,205

914,053+236,847

914,196-143

Operating income

519,092

725,247+206,154

726,476-1,229Ordinary income

421,047

556,011+134,964

553,515+2,496

Net income

420,172

555,011+134,839

552,515+2,496

1,233

2,824

+1,5902,897-73

Total distribution

421,470

557,772+136,301

555,418+2,353

Total units outstanding

176,200

235,347+59,147

235,347

-

2,392

2,370

-22

2,360

+10

Excess cash distribution

DPU (yen)（Excess cash distribution
per unit)

FFO per unit (yen)Main factors for increase/decrease from forecast

7

12

+5

12

-

3,903

4,133

+230

4,122

+11

Depreciation

267,580

417,691+150,111

417,691-NOI

944,786

1,331,744+386,958

1,331,888

-143

CAPEX

95,012

178,512+83,499

178,512-

Operating income
・ Increase due to finalized investment unit issuance
expenses
・Increase in other non-operating expenses

Ordinaly income

Main factors for increase/decrease
from previous fiscal period

-143
-800

-1,229+5,170-2,500+2,496(thousand yen)・ Increase in fixed rent (from new acquisition of 5 properties)
・ Increase in secondary rent (from new acquisition of 5
properties)
・ Absence of insurance revenue (Ito, Ikaho)+380,008

・ Increase in depreciation (5 newly acquired properties, etc.)-150,111

Lease operations revenue gain/loss+36,906-5,826+236,847

・ Increase in AM fee (from new acquisition of 5 properties)-15,030

・ Temporary increase in expenses for General
Unitholders’ Meeting-6,900・ Increase in other operating expenses(public offering/property acquisition)-6,768Operating income
・ Increase in finance-related expenses (new borrowings)
・ Investment unit issuance expenses (public offering)+206,154-39,904-28,774

Ordinaly income+134,964

Main financial indicators(million yen)

Total assets

39,864

Interest-bearing debt

16,857

Total liabilities

18,659Total net assets

21,205

LTV (book value basis)42.3%

Ooedo Onsen Reit Investment Corporation 10

Forecast for the 5th Fiscal Period ending November 2018
Increase in rental income from the previous fiscal period due to full-year contribution of newly acquired
properties; increase in net income due to absence of investment unit issuance expenses despite decreasein operating income from recording burden of fixed asset taxes and city planning taxes for full year, etc.
(thousand yen)
Item

Operating revenue

4th period

5th period（Forcast）（Forecast）

Component
ratio

Primary rent

1,444,521

Component
ratio

1,328,913

5th period(Forecast as of
Nov. 9, 2017)

Difference

1,451,513+6,992

1,451,513

Difference

Main factors for increase/decrease from forecast(thousand yen)-

1,335,282+6,368

1,335,282-

Fixed rent

93.9%

1,248,278

92.1%

1,230,449-17,829

1,230,449-

Variable rent

6.1%

80,6347.9%

104,832+24,197

104,832-

115,337

115,956+618

115,956

-

270

275

+4

275

-

Secondary rent
Others・ Increase in other operating expenses

Operating income
・ Decrease in finance-related expenses(partial repayment of short-term borrowings)

Ordinaly income-2,700-1,887+1,963+76

Main factors for increase/decrease
from previous fiscal period(thousand yen)・ Increase in primary rent due to full-year contribution of new
properties

Lease operations
revenue gain/loss

914,053

Operating income

725,247

703,213-22,034

705,100-1,887

Ordinary income

556,011564,591+8,579564,514+76

Net income

555,011563,591+8,579563,514+76

Lease operations revenue gain/loss-16,925

2,824

2,824

-

2,904

-80

-3,515

Total distribution

557,772

566,480+8,707566,480-

・ Increase in AM fee
・ Increase in transfer agent fee(increase in the number of unitholders)

Total units outstanding

235,347

235,347-

235,347

-

2,370

2,407

+37

2,407

-

Excess cash distribution

DPU (yen)（Excess cash distribution
per unit)

FFO per unit (yen)Depreciation
NOI
CAPEX

897,127-16,925

897,127

-

12

12

-

12

-

4,133

4,199

+66

4,198

-

417,691
1,331,744
178,512424,636
1,321,764
178,512+6,944-9,980-424,636
1,321,764
178,512-+6,368*Transfer from fixed rent in line with the start of variable rent for new properties:
23,799 thousand yen (fixed → variable)

・ Recorded burden of fixed asset taxes and city planning taxes
for full year (5 new properties)
・ Increase in depreciation (capital expenditure)・ Decrease in other operating expenses

Operating income
・Absence of investment unit issuance expenses

Ordinaly income

Main financial indicators-16,834-6,944-3,240+1,700-22,034+28,774+8,579(million yen)

Total assets

39,100Interest-bearing debt

16,091

Total liabilities

17,890Total net assets

21,210LTV (book value basis)

41.2%

Ooedo Onsen Reit Investment Corporation 11

Major Factors for Increase/Decrease in Distribution per Unit
Achieved external growth with capital increase through a public offering,
realizing an increase in distribution per unit on normal operations
Increase in AM fee-63
Temporary increase in expenses
for General Unitholders’ Meeting-29
Increase in other operating expenses -28
Increase in fixed rent (new properties)+1,614
Increase in secondary rent (new properties)+156
Increase in depreciation (new properties)-637

Investment unit issuance expenses (public offering)-122
Increase in finance-related expenses (new borrowings) -169-

Temporary profit increase
due to insurance revenue +33-

Dilution due to public offering

Increase in rent due to full-year contribution of new properties+27
Recording burden of fixed asset taxes and city planning taxes for full year
(new properties)-71
Increase in depreciation (capital expenditure)
-29

-568

Cursing basis(after PO)

Cruising basis(before PO)

-

-

+2.0％
(Cursing basis)

Increase in AM fee-14
Increase in transfer agent fee(increase in the number ofunitholders)-13

Absence of investment unit
issuance expenses (public offering) +122~~
0

3rd fiscal period

ended November 2017

4th fiscal period
ending May 2018

5th fiscal period

ending November 2018

Ooedo Onsen Reit Investment Corporation 12

Operating Results for the Entire Portfolio
Major KPI maintained at a high level, remaining almost unchanged year-on-year＜Cumulative comparison of 3rd period and the same period of the previous year＞

Room occupancy rate︓
90.0%

89.6%

Portfolio operating results
2016

2017

Cumulativ e
total

Previous
corresponding
periodcumulative total

3rd period
cumulativ e
Total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

92.5%

82.4%

90.5%

96.5%

86.5%

84.3%

81.5%

89.8%

97.6%

87.4%

85.8%

95.2%

89.2%

90.0%

89.6%

-0.4%

ADR (yen)

30,67830,41727,08331,18528,05730,10325,47730,52642,495

26,662

27,39528,07530,04430,48630,429-57

RevPAR (yen)28,37725,06324,51030,09324,26925,376

20,763

27,412

41,47523,302

23,504

26,727

26,79927,43727,264

-173

882

783

707

944

742

801

643

840

1,275

709

752

839

9,924

5,054

5,060

+6

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 13

Portfolio Data (After Acquisition of New Properties)
Unrealized capital gain (appraisal value – book value) increased by 174mn yen to 1,198mn yen
from the end of the previous fiscal period; portfolio PML also lowered

Newly acquired properties Properties held at the end of 3rd fiscal period

Property
No.

Property name

S-1

Ooedo-Onsen Monogatari Reoma Resort

S-2

Ooedo-Onsen Monogatari Ise-shima

S-3

Location(Note 1)

Kagawa Prefecture

Building age(years)Number ofrooms(Note 3)Roomoccupancyrate

Acquisition
Appraisal
NOI
price
value
(Note 4)(million yen) (million yen) (million yen)Afterdepreciation
NOI yield

NOI
yield
(Note 4)PML

(Note 4)26.4／ 26.7

241

86.6%

10,37910,900

402

7.7%

6.2%

1.9／ 1.6％

Mie Prefecture

37.8

83

94.8%

3,656

3,840

116

6.4%

3.6%

14.2%

Ito Hotel New Okabe

Shizuoaka Prefecture

27.1

73

84.5%

2,657

2,820

83

6.3%

4.4%

12.0%

S-4

Ooedo-Onsen Monogatari Atami

Shizuoaka Prefecture

43.9

76

96.3%

2,997

3,180

100

6.7%

4.5%

12.6%

S-5

Ooedo-Onsen Monogatari Toi Marine Hotel (Note 2)

Shizuoaka Prefecture

43.2

64

83.4%

1,910

1,990

60

6.3%

3.4%

14.9%

S-6

Ooedo-Onsen Monogatari Awara

Fukui Prefecture

36.3

95

88.4%

1,901

1,980

69

7.2%

5.1%

14.9%

S-7

Ooedo-Onsen Monogatari Kamoshika-so

Tochigi Prefecture

21.8

60

93.4%

1,222

1,270

39

6.4%

4.3%

3.0%

S-8

Ooedo-Onsen Monogatari Ikaho

Gunma Prefecture

34.1

40

98.3%

1,299

1,380

45

7.0%

5.0%

1.0%

S-9

Ooedo-Onsen Monogatari Kimitsu-no-moriChiba Prefecture

21.7

41

96.3%

819

862

26

6.5%

4.8%

4.8%

32.0

773

89.6%

26,84428,222

944

7.0%

5.0%

3.9%

Mie Prefecture

35.4

100

99.7%

1,637

1,930

60

7.4%

5.0%

6.4%

Subtotal
S-10

Ooedo-Onsen Monogatari Nagasaki Hotel Seifu

S-11

Ooedo-Onsen Monogatari Kounkaku

Shizuoaka Prefecture

52.0

98

91.3%

1,040

1,250

45

8.8%

4.7%

3.9%

S-12

Kinugawa Kanko Hotel

Shizuoaka Prefecture

36.3

172

94.0%

3,870

4,620

139

7.2%

4.1%

2.1%

S-13

Ooedo-Onsen Monogatari Kinosaki

Shizuoaka Prefecture

49.1

103

90.3%

2,084

2,490

79

7.6%

5.7%

11.8%

S-14

Ooedo-Onsen Monogatari Higashiyama Grand Hotel

Fukui Prefecture

53.2

123

87.8%

1,230

1,480

56

9.3%

5.0%

4.6%

Subtotal

42.6

596

92.6%

9,861

11,770

382

7.8%

4.8%

-

Total/Average

36.0

1,369

90.9%

36,70539,992

-

-

-

2.7%

(Note 1) As for Building age and PML of Ooedo-Onsen Monogatari Reoma Resort, figures on the left indicate those of Hotel Reoma no Mori while figures on the right indicate those of New Reoma World.
(Note 2) Number of rooms for Ito Hotel New Okabe indicates the number for the Sagamitei facility, which is owned by the Investment Corporation. The room occupancy rate indicates that of the entire building which
includes the area owned by third party.
(Note 3) Room occupancy rate is for the 3rd period of the Investment Corporation (June 2017 to November 2017).
(Note 4) 3rd period actual NOI is indicated for properties held at the end of 3rd fiscal period and appraisal NOI for six months is indicated for newly acquired properties.
In addition, (average) NOI yield and (average) after depreciation NOI yield indicate annualized figures.

Ooedo Onsen Reit Investment Corporation 14

Financial Status (After Acquisition of New Properties)
Maintained conservative LTV level and diversified lenders and repayment due dates
Breakdown of lenders

LTV

Ratio of long-term borrowings

Number of syndicate lenders: 13

Overview of maturity（million yen）

Long-term borrowings

7,000

Short-term borrowings

6,000

Avg. remaining duration
2.3 years

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

4th
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 15

Ⅲ. Operating Results of Individual Properties

Ooedo Onsen Reit Investment Corporation 16

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 number of the customers
coming from the Kinki and Chugoku regions＜Cumulative comparison of 3rd period and the same period of the previous year＞

Room occupancy rate︓
88.5%

Location

Marugame City, Kagawa Prefecture

No. of rooms

241

86.6%

Portfolio operating results
2016

2017

Cumulativ e
total

Previous
corresponding
periodcumulative total

3rd period
cumulativ e
Total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

95.5%

79.7%

89.3%

98.4%

82.6%

82.1%

75.2%

85.1%

98.7%

82.2%

83.0%

94.8%

87.2%

88.5%

86.6%

-1.9%

ADR (yen)

31,051

29,71425,63930,624

27,38528,45423,05831,78343,35825,20925,557

26,747

29,38430,337

29,836-501

RevPAR (yen)29,653

23,682

22,89530,134

22,62023,36017,33927,04742,794

20,721

21,21225,35625,622

26,84825,837-1,011

289

235

215

301

222

237

176

257

430

198

219

260

3,045

1,561

1,543

-18

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 17

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＞
3rd fiscal period
ended November 2017

Portfolio operating results
2017

2016

Cumulativ e
total

Previous
corresponding
periodcumulative total

3rd period
cumulativ e
Total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Number of guests

65,60335,69327,82153,054

43,52268,501

26,67961,424

136,147

31,89730,35440,007620,702

318,520

326,508+7,988

Sales (million yen)

241

139

101

213

182

277

97

248

615

130

116

151

2,516

1,302

1,359

+57

(Note 1) Number of guests is the total number of people using New Reoma World during the period.
(Note 2) “Current year” in the above graph refers to the period from December 2016 to November 2017 and “Previous year” to the period from December 2015 to November 2016.

Ooedo Onsen Reit Investment Corporation 18

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 3rd period and the same period of the previous year＞

Room occupancy rate︓
93.8%

Location

Shima City, Mie Prefecture

No. of rooms

83

94.8%

Portfolio operating results
2017

2016

Cumulativ e
total

Previous
corresponding
periodcumulative total

3rd period
cumulativ e
Total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

94.6%

91.2%

97.9%

95.6%

92.6%

87.9%

87.8%

93.0%

95.3%

99.5%

93.5%

99.6%

94.0%

93.8%

94.8%

+1.0%

ADR (yen)

33,93533,25931,66138,754

31,83634,14730,201

34,11846,137

31,52330,88931,984

34,10334,35034,217-133

RevPAR (yen)32,10230,33230,99637,04829,48030,01526,516

31,72943,96831,36528,881

31,85632,05632,22032,437

+217

98

92

87

111

88

93

81

96

129

97

92

98

1,165

587

594

+6

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 19

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 3rd period and the same period of the previous year＞

Room occupancy rate︓
88.6%

Location

Ito City, Shizuoka Prefecture

No. of rooms

73

84.5%

Portfolio operating results
2017

2016

Cumulativ e
total

Previous
corresponding
periodcumulative total

3rd period
cumulativ e
Total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

95.4%

90.1%

98.6%

99.3%

84.8%

75.0%

76.3%

89.9%

96.2%

78.5%

77.4%

88.5%

87.5%

88.6%

84.5%

-4.1%

ADR (yen)

30,21030,481

27,43931,47427,97831,972

25,46027,69442,43926,71628,48028,85830,14830,23930,379+140

RevPAR (yen)28,82027,46327,054

31,25323,72523,97919,42524,89640,826

20,972

22,04325,53926,37926,791

25,670-1,121

117

110

100

125

94

96

77

100

156

82

89

102

1,254

634

609

-25

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 20

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 3rd period and the same period of the previous year＞

Room occupancy rate︓
96.0%

Location

Atami City, Shizuoka Prefecture

No. of rooms

76

96.3%

Portfolio operating results
2017

2016

Cumulativ e
total

Previous
corresponding
periodcumulative total

3rd period
cumulativ e
Total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

96.0%

96.6%

98.9%

99.2%

98.6%

97.7%

95.1%

93.9%

98.4%

97.9%

94.9%

97.8%

97.1%

96.0%

96.3%

+0.3%

ADR (yen)

34,20533,33031,24934,68031,02832,481

29,09833,53647,89429,75329,911

30,69333,22533,55033,595+45

RevPAR (yen)32,83632,19630,90534,40230,59331,73327,672

31,49047,127

29,12828,38530,01732,261

32,20832,351

+143

88

87

77

95

81

87

74

86

126

78

79

81

1,044

519

527

+8

Sales (million yen)

(Note) Ooedo-Onsen Monogatari Atami suspended sales for a total of 20 rooms from September 20 to 29, 2016 due to renovation work for some guestrooms.

Ooedo Onsen Reit Investment Corporation 21

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 3rd period and the same period of the previous year＞

Room occupancy rate︓
82.4%

Location

Izu City, Shizuoka Prefecture

No. of rooms

64

83.4%

Portfolio operating results
2017

2016

Cumulativ e
total

Previous
corresponding
periodcumulative total

3rd period
cumulativ e
Total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

91.1%

89.7%

98.1%

99.1%

85.4%

78.6%

78.1%

85.8%

96.2%

78.3%

70.3%

91.5%

86.8%

82.4%

83.4%

+1.0%

ADR (yen)

26,284

26,95324,42628,29625,02527,843

23,61732,38645,42524,85425,561

24,93028,23829,32330,111+788

RevPAR (yen)23,944

24,17623,961

28,041

21,371

21,884

18,44427,787

43,69819,46017,96922,81024,51024,162

25,112

+950

53

54

48

63

47

48

41

61

96

41

40

50

648

320

332

+11

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 22

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 3rd period and the same period of the previous year＞

Room occupancy rate︓
88.0%

Location

Awara City, Fukui Prefecture

No. of rooms

95

88.4%

Portfolio operating results
2017

2016

Cumulativ e
total

Previous
corresponding
periodcumulative total

3rd period
cumulativ e
Total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

84.5%

61.8%

74.1%

88.9%

78.0%

79.4%

79.4%

88.5%

96.6%

83.2%

85.0%

97.8%

83.1%

88.0%

88.4%

+0.4%

ADR (yen)

31,12032,90128,80730,381

27,617

29,66525,42930,42739,307

26,641

27,10427,07629,81029,722

29,603-119

RevPAR (yen)26,296

20,332

21,34527,00821,541

23,554

20,19026,92737,97022,16523,03826,48024,772

26,155

26,169

+14

98

77

75

102

79

88

75

98

138

80

88

100

1,106

583

582

-0

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 23

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 3rd period and the same period of the previous year＞

Room occupancy rate︓
89.5%

Location

Nasushiobara City, Tochigi Prefecture

No. of rooms

60

93.4%

Portfolio operating results
2017

2016

Cumulativ e
total

Previous
corresponding
periodcumulative total

3rd period
cumulativ e
Total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

76.3%

63.4%

75.3%

89.0%

81.0%

83.9%

81.4%

96.8%

99.2%

95.1%

92.1%

95.3%

85.8%

89.5%

93.4%

+3.9%

ADR (yen)

27,57629,07523,24927,194

26,31529,07625,20024,95136,44022,744

27,14628,00727,36527,776

27,564-212

RevPAR (yen)21,04018,433

17,50624,202

21,31524,394

20,512

24,15236,14821,62925,001

26,69023,47924,85925,744

+885

45

40

35

53

45

53

43

52

77

46

55

57

608

320

333

+13

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 24

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 3rd period and the same period of the previous year＞

Room occupancy rate︓
98.1%

Location

Shibukawa City, Gunma Prefecture

No. of rooms

40

98.3%

Portfolio operating results
2017

2016

Cumulativ e
total

Previous
corresponding
periodcumulative total

3rd period
cumulativ e
Total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

95.3%

87.5%

87.1%

97.7%

98.1%

99.3%

96.7%

96.9%

99.0%

99.7%

98.5%

98.8%

96.3%

98.1%

98.3%

+0.2%

ADR (yen)

30,56829,66625,05929,92829,76931,247

26,21628,891

40,56928,01829,19830,57630,08830,352

30,637+285

RevPAR (yen)29,131

25,957

21,82629,23929,20331,02825,35027,99540,16327,93328,76030,20928,97429,77530,116

+341

40

36

27

41

39

43

34

39

56

38

41

42

483

252

253

+1

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 25

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 3rd period and the same period of the previous year＞

Room occupancy rate︓
94.2%

Location

Kimitsu City, Chiba Prefecture

No. of rooms

41

96.3%

Portfolio operating results
2017

2016

Cumulativ e
total

Previous
corresponding
periodcumulative total

3rd period
cumulativ e
Total

Change

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Room occupancy rate

98.1%

93.8%

97.1%

99.1%

96.6%

96.7%

89.9%

96.1%

99.2%

97.6%

97.2%

97.6%

96.6%

94.2%

96.3%

+2.1%

ADR (yen)

26,12226,007

23,97825,04624,10626,441

23,17825,98434,07624,49424,19425,37325,81025,501

26,312+811

RevPAR (yen)25,62524,39423,282

24,82023,28625,56820,837

24,97033,80323,906

23,516

24,76424,932

24,021

25,338+1,317

49

48

39

49

44

52

37

47

64

43

44

45

567

274

283

+8

Sales (million yen)

(Note) Ooedo-Onsen Monogatari Kimitsu-no-mori suspended sales for a total of 101 rooms due to renovation work for some guestrooms in February 2016 and was closed on June 21, 2016.

Ooedo Onsen Reit Investment Corporation 26

Ⅳ. Characteristics of Ooedo Onsen Reit
and Future Management Strategy

Ooedo Onsen Reit Investment Corporation 27

Uniqueness of Ooedo Onsen Reit’s Major Investing Targets
Key investment targets include multi-use facilities with various services for consumers
while centering on onsen and spa

Accommodation

H&BC（Health &Beauty Care）

Entertainment

Other
services

SportsOnsen/spa
Amusements

Shopping
Dininganddrinking

Theme park

Ooedo Onsen Reit Investment Corporation 28

Market Environment ~ Stable Demand for Onsen
Consumersʼ 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(thousands)
140000No. of accommodation facilities (left axis)
FY total no. of guests (right axis)(facilities)
16,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

Ratio of visits to onsen and spa facilities by age
Families

Seniors

120000100000
80000
60000
40000
20000
0
FY2010FY2011FY2012FY2013

FY2014FY2015

Source: Onsen Use (2010 – 2015), Nature Conservation Bureau, Ministry of the Environment

Type of trip desired in the next 1-2 years(multiple responses)
Onsen
Sightseeing, nature
Gourmet
Theme park
Sightseeing, history/culture

Source: “White Paper of Leisure 2017”by Japan Productivity Center

・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

Seashore resort
Sightseeing, city
Walking in town
Zoo/aquarium
Tour of world heritage sites
High land resort
Ryokan (Japanese-stlye hotel)
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 29

Investment Opportunity of Ooedo Onsen Reit

Operation

Investing in categories with strong stability and growth potential having large market volume,
starting from onsen and spa
Life scene

Facilities used in “daily life”

Facilities used in “extension of daily life”

Facilities used on special
occasions

Trade zone

Living area

Same region as living area

GlobalPurpose ofuse

Emphasizing
convenience/functionality

Emphasizing business category

Purpose-driven typeSpa, restaurant, cinema and game arcade

Natural onsen, relaxation,
experience-type entertainment and party

Tourism, culture, privacy, luxury spa andhigh-end gourmet

Highly competitive with large supply

Relatively mild competition with many obsolete facilities

Performing well by differentiating themselveswith clear concept

Competition
environment

Added value

Ooedo-Onsen
Investment field of
Ooedo Onsen Reit
Investment
Corporation

Day spa

Creation of new“experiential
consumption”

Spafacilities,
etc. attouristresorts

Luxuryspa resort

Luxuryhotelswith
spa

Bargain
Affordability

Business
hotelswith spa

Lacking

Mixed-usecommercial
facilities
with spa

Obsolete facilities(subject to removal)

Investment

Price
TargetMany

Acquisition
environment

Selective investment necessary withattention to competition environment

Slightly severe

Potentially many
Favorable and advantageous
Unique approach on the premise of renewal

LimitedFavorable
Securement of acquisition opportunities byengaging in development projects

Ooedo Onsen Reit Investment Corporation 30

“Ooedo Business Model” with Stable Operations and Sustainable Growth (1)Ooedo business model achieving both high quality and reasonable priceServices 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 reachMarketing through in-house channels including
reservation centers Marketing strategy led by Ooedo-Onsen
Monogatari Group headquartersOoedo Onsen Reit Investment Corporation 31

“Ooedo Business Model” with Stable Operations and Sustainable Growth (2)High customer satisfaction and high room occupancy rates surpassing all other business categories

Ooedo-Onsen Monogatari Group hotel guest questionnaire(conducted from June 1, 2017 to November 30, 2017)＜Overall satisfaction ＞＜Meal (breakfast and dinner)＞

Trends in average annual occupancy rates foreach type of accommodation facility
（％）

90.0%

84.4%
80.2%

80.2%

79.2%

78.7%

74.2%

74.4%

60.3%

60.0%

56.0%

57.3%

80.0%
73.6%
70.0%

72.5%
67.3%

60.0%

54.8%

50.0%

＜Onsen＞＜Type of services inside the facility＞

75.7%

77.3%
72.1%

69.5%
55.2%

52.3%

57.4%

54.0%

48.0%
40.0%

35.5%

33.4%

86.5%

37.0%

35.2%

37.9%

30.0%
2012

Very satisfied

SatisfiedUnsatisfied

Very unsatisfied

Fair

2013

2014

2015

Ooedo-Onsen Monogatari Group

City hotels

Business hotels

Resort hotels

Ryokans (Japanese style hotels)

All

2016

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.
Note: Figures for 2016 are preliminary figures

Ooedo Onsen Reit Investment Corporation 32

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 by Ooedo-Onsen Monogatari Group (Main properties listed below)

Ooedo-Onsen Monogatari Ooedo-Onsen MonogatariTokyo Odaiba
Urayasu Mangekyo
Ooedo-Onsen Monogatari Nikko Kirifuri(Fixed term land lease right forbusiness purpose)(Koto-ku, Tokyo)(Nikko City, Tochigi Prefecture)

Ooedo-Onsen
Monogatari Nagayama

Yamashiro Onsen
Yamashitaya(Kaga City,
Ishikawa Prefecture)(Kaga City,
Ishikawa Prefecture)(Fixed term land lease right forbusiness purpose)(Urayasu City, Chiba Prefecture)

Ooedo-Onsen Monogatari
Naruko-onsen Masuya(Osaki City, Miyagi Prefecture)

Hotel New Shiobara(Nasushiobara City,
Tochigi Prefecture)

Ooedo-Onsen-Monogatari Hotel Kinugawa Gyoen
Minoh Kanko Hotel/Minoh (Nikko City, Tochigi Prefecture)
Onsen Spa Garden(Minoh City, Osaka Prefecture)

Ooedo-Onsen Monogatari Ooedo-Onsen Monogatari Ooedo-Onsen Monogatari
Gero Shin-kan
Beppu Seifu
Hotel Suiyotei(Beppu City, Ooita Prefecture)(Atami City, Shizuoka Prefecture) (Gero City, Gifu Prefecture)⇒ In addition to the above, properties newly acquired by the sponsor are subject topreferential negotiation to form a new pipeline
Ooedo Onsen Reit Investment Corporation 33

External Growth Strategy (2)Considered acquisition in synch with the revitalization process of the Ooedo-Onsen Monogatari Group
Revitalization process of the Ooedo-Onsen Monogatari Group and collaboration with the asset management company

Acquisition

Discussion/planning

Sourcing

Phase to conduct renovation

Introduction of Ooedo
business model
Renovation of facilities toincrease value

Phase to aim for stable operation

Maintenance of high room
occupancy rate

Fulfilment ofinvestment criteria
Information sharing/opinion exchange

Discussion of acquisition
feasibility by Ooedo Onsen
Reit Investment Corporation
and requirements

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

DiscussionofacquisitionDue
diligence

Property acquisition by Ooedo Onsen Reit

Asset managementcompany

Ooedo-Onsen
Monogatari Group

Phase to discuss acquisition

Number of inquiries for potential deal
information in 3rd fiscal period

48
Ooedo Onsen Reit Investment Corporation 34

External Growth Strategy (3)Continuous expansion of portfolio centering on sponsor pipeline, combined with acquisition
through unique channels

Pursue continuous
external growth
AUM of￥100 billion
Asset: 14 properties
Asset acquisition atlisting: 9 properties

AUM of￥26.8 billion

At listing(End of Aug. 2016)

AUM of￥70 billion

AUM of￥36.7 billion

After acquisition of
new properties(December 2017)

7th period(Ending Nov. 2019)11th period(Ending Nov. 2021)
Ooedo Onsen Reit Investment Corporation 35

Internal Growth Strategy (1)Rental system that captures upsides of rental income while placing top priority on 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

Primary rent
Fixed rent component

Approximately 95％

Secondary rent
Amount equivalent toreal estate related
expenses of each facility

Variablerent
component

Approximately 5％*Variable rent component will beapproximately 8% by including the variable
rent of Ooedo-Onsen Monogatari Reoma
Resort that was fixed Primary rent = Fixed rent component (monthly amount stipulated by each lease agreement of each facility)+ variable rent component(Variable rent = Modified GOP for each facility × the fixed rate stipulated by each lease agreement) Secondary rent = The total of taxes and public dues that it is liable for the Investment Corporation+ nonlife insurance premiums + other expenses
 Repair costs are, in principle, borne by the tenant The Investment Corporation holds only the land and building itself and main equipment; and responds to deterioration
over time through planned partial rebuilding and such
(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).

Ooedo Onsen Reit Investment Corporation 36

Internal Growth Strategy (2)Seeking increase in rental income over the medium to long term through strategic capital expenditure Pursuit of upsides through value-increasing investment, such as increasing the number of rooms and open-air onsen,
against the background of high occupancy
1. Gaining additional rent revenue from the investment
2. Increasing variable rent through expansion of tenants’ revenue

 Increase in revenue through full utilization of non-operated buildings or unused land within facilities(Ooedo-Onsen Monogatari Reoma Resort, etc.)
Discussion and implementation of value-increasing investment in collaboration with the sponsor,
Ooedo-Onsen Monogatari Group (=tenant)
Example aiming to discuss medium- to long-term value-increasing measures while securing current stability of rent.

〜Ooedo-Onsen Monogatari Reoma Resort〜

Applied fixed amount forvariable rent until May 2019

Eliminated impact from short-term
fluctuations in revenue and expenditureof the theme-park portion derived byclimate and other factors＋

Discussed value-increasing measuresfrom a medium- and long-term
perspective assuming securement of
stable revenue and expenditure for thetime being

Ooedo Onsen Reit Investment Corporation 37

Financial Strategy
Implementation of flexible financial strategies while emphasizing establishment of a conservative
financial base

Basic policy
LTV control

Will target around 40% for the time being and maintain a conservative level on a normal basis.

Debt financeWill aim to reduce financing cost while at the same time diversifying financing sources. Will also diversify/level
repayment dates in order to reduce refinancing risks.

Proper cash management
Concept of free cash

・Unexpected expenditure・Flexible acquisition of assets/LTV control
・Excess cash distribution

Capitalexpenditure
Depreciation

Excess cash distribution policy

Scheduled
repayment
Free cash

Assumes conducting, as necessary, excess cash distribution
equivalent to the increase amount of the allowance for adjustmentof temporary difference considering income taxes arising in line withthe differences in accounts for tax and accounting purposes.

Ooedo Onsen Reit Investment Corporation 38

Ⅳ. Appendix

Ooedo Onsen Reit Investment Corporation 39

Appraisal Value

Newly acquired properties

Properties held at the end of 3rd fiscal period

Property
No.

Property nam e

AcquisitionPrice(m illionyen)

Direct capitalization m ethod
Discounted cash flow m ethod
Unrealized
Appraisal value (m illion yen)Book value
profits andDirect Cap Rate
Discount Rate
Term inal Cap Rate(m illion
losses
2nd period 3rd period
2nd period 3rd period
2nd period 3rd period
2nd period 3rd periodyen)(m illion
Changevaluation May 31,
valuation
May 31,
Nov. 30,
May 31,
Nov. 30, valuation
May 31,
Nov. 30,
Nov. 30,
yen)
2017
2017
2017
2017
2017
2017
2017
2017

S-1

Ooedo-Onsen Monogatari Reoma Resort

10,37910,558

10,90010,900

-

+341

6.1%

6.1%

-

5.9%

5.9%

-

6.3%

6.3%

-

S-2

Ooedo-Onsen Monogatari Ise-shima

3,656

3,576

3,840

3,840

-

+263

5.6%

5.6%

-

5.4%

5.4%

-

5.8%

5.8%

-

S-3

Ito Hotel New Okabe

2,657

2,675

2,820

2,820

-

+144

5.2%

5.2%

-

5.0%

5.0%

-

5.4%

5.4%

-

S-4

Ooedo-Onsen Monogatari Atami

2,997

2,978

3,180

3,180

-

+201

5.2%

5.2%

-

5.0%

5.0%

-

5.4%

5.4%

-

S-5

Ooedo-Onsen Monogatari Toi Marine Hotel

1,910

1,894

1,990

1,990

-

+95

5.7%

5.7%

-

5.5%

5.5%

-

5.9%

5.9%

-

S-6

Ooedo-Onsen Monogatari Awara

1,901

1,940

1,980

1,980

-

+39

6.0%

6.0%

-

5.8%

5.8%

-

6.2%

6.2%

-

S-7

Ooedo-Onsen Monogatari Kamoshika-so

1,222

1,239

1,270

1,270

-

+30

5.3%

5.3%

-

5.1%

5.1%

-

5.5%

5.5%

-

S-8

Ooedo-Onsen Monogatari Ikaho

1,299

1,316

1,380

1,380

-

+63

5.4%

5.4%

-

5.2%

5.2%

-

5.6%

5.6%

-

S-9

Ooedo-Onsen Monogatari Kimitsu-no-mori

819

841

862

862

-

+20

5.3%

5.3%

-

5.1%

5.1%

-

5.5%

5.5%

-

Subtotal

26,84427,02328,222

28,222-+1,198

-

-

-

-

-

-

-

-

-

S-10

Ooedo-Onsen Monogatari Nagasaki Hotel Seifu

1,637

-

-

1,930

-

-

-

5.2%

-

-

5.0%

-

-

5.4%

-

S-11

Ooedo-Onsen Monogatari Kounkaku

1,040

-

-

1,250

-

-

-

5.5%

-

-

5.3%

-

-

5.7%

-

S-12

Kinugawa Kanko Hotel

3,870

-

-

4,620

-

-

-

5.2%

-

-

5.0%

-

-

5.4%

-

S-13

Ooedo-Onsen Monogatari Kinosaki

2,084

-

-

2,490

-

-

-

5.4%

-

-

5.2%

-

-

5.6%

-

S-14

Ooedo-Onsen Monogatari Higashiyama Grand Hotel

1,230

-

-

1,480

-

-

-

5.9%

-

-

5.7%

-

-

6.1%

-

Subtotal

9,861

-

-

11,770

-

-

-

-

-

-

-

-

-

-

-

Total

36,705--39,992

-

-

-

-

-

-

-

-

-

-

-

(Note) Appraisal date for the newly acquired properties is October 1, 2017.

Ooedo Onsen Reit Investment Corporation 40

Introduction of Properties (1)S-1

Ooedo-Onsen Monogatari
Reoma Resort

S-2

S-3

Ito Hotel New Okabe

Location:

Marugame City,
Kagawa Prefecture

Location:

Shima City,
Mie Prefecture

Location:

Ito City,
Shizuoka Prefecture

Site area:

665,403㎡
63,896㎡

Site area:

9,637㎡
9,782㎡

Site area:

2,945㎡
10,211㎡

Total floor area:

Total floor area:

Area characteristics

Area characteristics


Ooedo-Onsen MonogatariIse-shima

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.

Total floor area:

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.

Ooedo Onsen Reit Investment Corporation 41

Introduction of Properties (2)S-4

Ooedo-Onsen Monogatari
Atami

Ooedo-Onsen Monogatari
Toi Marine Hotel

S-6

Ooedo-Onsen Monogatari
Awara

Location:

Atami City,
Shizuoka Prefecture

Location:

Izu City,
Shizuoka Prefecture

Location:

Awara City,
Fukui Prefecture

Site area:

2,053㎡
8,469㎡

Site area:

2,800㎡
6,125㎡

Site area:

13,263㎡
14,132㎡

Total floor area:

Total floor area:

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.

Total floor area:

Area characteristics

Area characteristics


S-5



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.

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.

Ooedo Onsen Reit Investment Corporation 42

Introduction of Properties (3)S-7

Ooedo-Onsen Monogatari
Kamoshika-so

S-8

Ooedo-Onsen Monogatari
Ikaho

S-9

Ooedo-Onsen Monogatari
Kimitsu-no-mori

Location:

Nasushiobara City,
Tochigi Prefecture

Location:

Shibukawa City,
Gunma Prefecture

Location:

Kimitsu City,
Chiba Prefecture

Site area:

7,734㎡
5,947㎡

Site area:

6,805㎡
5,177㎡

Site area:

57,069㎡
8,660㎡

Total floor area:

Total floor area:

Area characteristics

Area characteristics


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.

Total floor area: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.

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.

Ooedo Onsen Reit Investment Corporation 43

Introduction of Properties (4)S-11

Location:

Nagasaki City,
Nagasaki Prefecture

Location:

Osaki City,
Miyagi Prefecture

Location:

Nikko City,
Tochigi Prefecture

Site area:

4,970㎡
11,035㎡

Site area:

11,829㎡
10,836㎡

Site area:

6,701㎡
22,402㎡

Total floor area:

Area characteristics

Area characteristics



Kinugawa Kanko Hotel

Ooedo-Onsen Monogatari
Nagasaki Hotel Seifu

Total floor area:

Ooedo-Onsen Monogatari
Kounkaku

S-10

Nagasaki City is a tourist city with abundant tourism resources
such as having been registered in the World Heritage List as“Sites of Japan’s Meiji Industrial Revolution: Iron and Steel,
Shipbuilding and Coal Mining” in 2015.
The Inasayama where the facility stands is famous for nightviews and has been certified by General incorporated association
YAKEI Convention & Visitors Bureau as one of the three new
greatest night view spots along with Monaco and Hong Kong.



Narukoonsenkyo where the facility is located has 400 springsources, with 9 types of spring water out of only 11 found inJapan. It is a hot spring site boasting ample volume of water.
Temporary bus services (“Momiji-go”) are operated during
every autumn color season from Naruko Onsen Station to
Nakayamadaira-Onsen Station via Naruko Valley.

S-12

Total floor area:

Area characteristics
 Nikko City is located northwest of Tochigi Prefecture and is a hot

spring tourist destination with tourism resources including
domestically and internationally well-known Nikko Toshogu
Shrine and Lake Chuzenji.
 Kinugawa

Onsen where the facility is located is a hot spring
resort around Tokyo which was rapidly developed during andafter the period of high economic growth.

Ooedo Onsen Reit Investment Corporation 44

Introduction of Properties (5)S-13 Ooedo-Onsen Monogatari

S-14

KinosakiOoedo-Onsen Monogatari
Higashiyama Grand Hotel

Location:

Toyooka City,
Hyogo Prefecture

Location:

Aizuwakamatsu City,
Fukushima Prefecture

Site area:

11,350㎡
10,602㎡

Site area:

12,451㎡ (Note)
16,665㎡ (Note)

Total floor area:

Total floor area:

Area characteristics

Area characteristics
Kinosaki Onsen represented by stone bridges over a small riverand streets lined with willow trees is one of Japan’s most
famous onsen resorts, where guests can enjoy seven public hot
springs.

The facility is located a little more than 10 minutes on foot from
JR Kinosaki Onsen Station and bus services (public hot spring
tour bus) to the hot spring quarter are available after 5 p.m.



Aizuwakamatsu City is located in the west of Fukushima
Prefecture with scenic natural landscape surrounded by Mt.
Bandai, Lake Inawashiro and such.

Tour bus services going around major tourist spots such as
Higashiyama Onsen and Tsurugajo Castle are operated fromthe JR Aizuwakamatsu Station.
(Note) The areas include leasing sections.

Ooedo Onsen Reit Investment Corporation 45

Financial Indices
Indices

2nd period(May 31, 2017)

3rd period(Nov. 30, 2017)

Ordinary income

446 mn yen

421 mn yen

Net income

445 mn yen

420 mn yen

Depreciation

264 mn yen

268 mn yen

CAPEX

90 mn yen

90 mn yen

Total assets

29,440 mn yen

29,208 mn yen

Total net assets
BPS (Total net assets/unit)

16,197 mn yen

16,171 mn yen

91,925 yen

91,777 yen

Unit price (End of each period)
Total units outstanding
Total distribution
DPU
Distribution yield
FFO
FFO per unit
FFO multiple

88,600 yen

86,500 yen

176,200 units

176,200 units

446 mn yen

421 mn yen

2,533 yen

2,392 yen

5.7%
708 mn yen
4,022 yenCalculation formula

5.5% DPU (annualized)/Unit price as of end of period
687 mn yen Net income + Depreciation－profit or loss on sale of real estate
3,903 yen

11.0x

11.1x Unit price as of end of period/FFO per unit (annualized)

PER

17.5x

18.1x Unit price as of end of period/Net income per unit (average during the periods, annualized)

PBR

1.0x

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

ROA

1.5%

1.4% Ordinary income/Average of total assets during the period

3.0%

2.9%

Annualized
ROE
Annualized
NAV
NAV per unit
NAV multiple
Interest-bearing debt

2.8%

2.6% Net income/Average of total net assets during the period

5.6%

5.2%

17,221 mn yen
97,740 yen
0.9x
11,735 mn yen

17,369 mn yen Total net assets + Total appraisal value - Total book value - Total liabilities
98,576 yen
0.9x Unit price as of end of period/NAV per unit
11,624 mn yen

LTV (book value basis)

39.9%

39.8% Interest-bearing debt/Total assets

LTV (appraisal value basis)

38.5%

38.2% Interest-bearing debt/(Total assets + Total appraisal value - Total book value)

Operating days

182 days

183 days

Ooedo Onsen Reit Investment Corporation 46

Balance Sheet(thousand yen)
2nd period

3rd period(period ended May 31, 2017) (period ended Nov. 30, 2017)

Assets

2nd period

3rd period(period ended May 31, 2017)(period ended Nov. 30, 2017)

Liabilities

Current assets

Current liabilities

Cash and deposits

1,970,733

1,949,727

Prepaid expenses

106,728

116,674

Deferred tax assets
Other
Total current assets

15

13

1,105

3,625

2,078,582

2,070,040

Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures

18,169,276

18,263,856-394,939-662,458

17,774,336

17,601,397

1,259

1,259

-7

-51

1,251

Operating accounts payable

90,26363,196

Current portion of long-term loans payable

723,000

723,000

Accounts payable - other

226,007

197,098

8,212

7,508

Accrued expenses
Income taxes payable

915

870

Accured consumption taxes

61,072

20,086

Advances received

184,050

185,105

Other
Total current liabilities

1,211

3,731

1,294,733

1,200,597

Non-current liabilities
11,012,750

10,901,250

Tenant leasehold and security deposits

868,270868,270

1,207

Asset retirement obligations

67,24867,397－

255

Total non-current liabilities

11,948,269

11,836,917

Accumulated depreciation－-17

13,243,002

13,037,515

Tools, furniture and fixtures, net－

237

9,264,041

9,263,321

27,039,629

26,866,164

15,752,576

15,752,576-528-1,762-528-1,762

15,752,047

15,750,814

445,238

420,330

445,238

420,330

16,197,286

16,171,144

Accumulated depreciation
Structures, net
Tools, furniture and fixtures

Land
Total property, plant andequipment
Intangible assets
Leasehold right
SoftwareTotal intangible assets

157,802

157,802

6,963

6,161

164,765

163,963

Net assets
Unitholders' equity
Unitholders' capital

Allowance for temporary difference
adjustment
Total deduction from unitholders'
capitalUnitholders' capital, net
Surplus

Long-term prepaid expenses

147,310

98,491

Lease and guarantee deposits

10,00010,000Total investments and otherassets157,310

108,491

27,361,706

27,138,619

29,440,289

29,208,659

Total non-current assets

Total liabilities

Deduction from unitholders' capital

Investments and other assets

Total assets

Long-term loans payable

Unappropriated retained earnings(undisposed loss)
Total surplus
Total unitholders' equity
Total net assets
Total liabilities and net assets

16,197,286

16,171,144

29,440,289

29,208,659

Ooedo Onsen Reit Investment Corporation 47

Statement of Income(thousand yen)

Operating revenue
Lease business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors' compensations
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings(undisposed loss)

2nd period

3rd period(from December 1, 2016
to May 31, 2017)(from June 1, 2017
to November 30, 2017)

1,021,730
1,021,730

1,032,755
1,032,755

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

355,550
110,490
1,315
12,3973,600
30,309513,663
519,092

8
2,267
2,275

10
10

47,40356,788104,191
446,053446,053916
9926
445,127
111

45,04453,011
98,056
421,047
421,047872
2
874
420,172157

445,238

420,330

Ooedo Onsen Reit Investment Corporation 48

Debt Status (After Acquisition of New Properties)
List of lenders(as of December 4, 2017)

Long term

Short term

LenderBalance(mn yen)Interest rate(%)

Drawdown date

Repayment date

Base rate (JBA 1-month yen TIBOR)＋0.35％

December 4, 2017

November 30, 2018

Security
Unsecured
Unguaranteed
Unsecured
Unguaranteed

Sumitomo Mitsui Banking Corporation

580

Sumitomo Mitsui Banking Corporation(Note)

Base rate (JBA 1-month yen TIBOR)＋0.35％

December 4, 2017

November 30, 2018

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.

6,881

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

September 1, 2016

May 31, 2019

Unsecured andunguaranteed

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

3,756

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

September 1, 2016

May 29, 2020

Unsecured andunguaranteed

Sumitomo Mitsui Banking Corporation

486

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

September 1, 2016

May 31, 2023

Unsecured andunguaranteed

Sumitomo Mitsui Banking Corporation

500

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

May 31, 2017

May 31, 2018

Unsecured andunguaranteed

Sumitomo Mitsui Banking Corporation
The Toho Bank, Ltd.
The Nomura Trust and Banking Co., Ltd.
The Bank of Fukuoka, Ltd.
The Shinwa Bank, Ltd.

2,340

Base rate (JBA 3-month yen TIBOR)＋0.65％

December 4, 2017

November 30, 2020

Unsecured andunguaranteed

The Mie Bank, Ltd.
The Tochigi Bank, Ltd.
The First Bank of Toyama, Ltd.
Fukoku Mutual Life Insurance Company
The Bank of Kochi, Ltd.
The Bank of Fukuoka, Ltd.
The Shinwa Bank, Ltd.

2,500

Base rate (JBA 3-month yen TIBOR)＋0.80％

December 4, 2017

November 30, 2021

Unsecured andunguaranteed

Total

230

17,274(Note) It is planned to be made an early repayment on January 31, 2018.

Ooedo Onsen Reit Investment Corporation 49

Ooedo-Onsen Monogatari Group (1)“At any time, lightheartedly, repeatedly, onsen with a festive atmosphere and filled with smiles,” is the catchphrase Ooedo-Onsen MonogatariGroup 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.

Trends in net sales

Overview
Company Name

Ooedo‐Onsen Monogatari Group Co., Ltd.

Capital18 million yen (as of Sep. 21, 2017)

Address

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

Establishment

June 29, 2017 (founded in Nov. 2001)

No. of Employees

1,104 (consolidated, as of end of Feb. 2017)

Representative

Representative Director
Mitsumasa Morita

Financial Results(Feb. 2017)(billion yen)
50

Consolidated Net Sales: 41,834 million yen
Consolidated Total Assets: 62,570 million yen
Net Assets: 10,879 million yen

40 Reinvigorating onsen ryokan, hotels, spa-related

facilities, theme parks around the country
Businesses We started with the onsen theme park, “Ooedo-

Onsen Monogatari,“ which has an Edo culture
theme. As of Nov. 30, 2017, we operate 34
onsen and spa-related facilities

Net sales

30
20

25.7

32.2

30.5

35.3

38.2

Feb.
2015

Feb.
2016

41.8

10
0

Sept. Sept. Feb.
2012 2013 2014

Feb.
2017

Trends in number of rooms and number of facilities
2003

2007

2009

2010

Opened OoedoOnsen Monogatariin Odaiba, Tokyo

Opened Aizu, Ikaho, Nikko
Kirifuri, and Kamoshika-so,
etc.

Opened Urayasu
MangekyoOpened Hotel New Okabe, Hotel
New Shiobara, Kinugawa Kanko
Hotel, and Reoma Resort

OdaibaOoedo-Onsen
Monogatari

Ooedo-Onsen
Monogatari
Aizu

Ooedo-Onsen
Monogatari
Urayasu Mangekyo

Hotel New
Shiobara

Ooedo-Onsen
Monogatari
Reoma Resort

Ooedo-Onsen
Monogatari
Minoh Kanko Hotel

2017

2016

2013

Opened Minoh Kanko Hotel and
Minoh Onsen Minoh Spa Garden

Opened Kounkaku, Masuya
And Nagasaki Hotel Seifu

Opened Hotel Suiyotei, Beppu
Seifu and Gero Shin-kan

Ooedo-Onsen
Monogatari
Gero Shin-kan

Ooedo-Onsen
Monogatari Masuya

Minoh Onsen
Minoh Spa Garden

Ooedo-Onsen
Monogatari
Hotel Suiyotei(No. offacilities)(Rooms)

3,000
2,500
2,000
1,500
1,000
500
0

Rooms (left axis)

Facilities in operation (right axis)

1,942

2,321

2,325

2,601

2,614

2,671

1,508
746

314

471

7

9

12

End ofSep. 2007

End ofSep. 2008

End ofSep. 200917
End ofSep. 201020
End ofSep. 2011(Note) This does not include number of rooms of facilities where renovations have not been completed.

25

25

End ofSep. 2012

End ofSep. 2013

27

27

27

2,749

50

(Note)

40

32

30
20
10

End ofFeb. 2014

End ofFeb. 2015

End of Feb.
2016

End ofFeb. 20170

Ooedo Onsen Reit Investment Corporation 50

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 7 facilities in and after 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

2,565

2,709

Facilities acquired after 2016

REIT acquired assets

1,976
1,566

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Kakeyu Fujikan Sakurakan

1,500

Kounkaku

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari
FY2012FY2013

FY2014FY2015

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

FY2016

Sendai Korona-no-yu

Aizu

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari
Ooedo-Onsen Monogatari

KinosakiHigashiyama Grand Hotel

Awara

Yamashiro Onsen

Yamashitaya
Ooedo-Onsen Monogatari

Gero Shin-kan

Ooedo-Onsen Monogatari

Nagasaki Hotel Seifu

Ooedo-Onsen Monogatari
Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Hotel Sohkan

MasuyaNagayama

0

Ooedo-Onsen Monogatari

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

Ikaho
Hotel Shinko

Ooedo-Onsen Monogatari

Urayasu Mangekyo(Onsen theme park)
Tokyo Odaiba

Ooedo-Onsen MonogatariIse-shima

Reoma Resort

Ooedo-Onsen Monogatari(Onsen theme park)

Kimitsu-no-mori

Beppu

Ooedo-Onsen Monogatari
Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Tenka-taihei-no-yu
Sumpu Yume Hiroba

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

Minoh Kanko Hotel(Onsen theme park )Ooedo-Onsen Monogatari

Nanki-kushimoto

Hotel Suiyotei

Ooedo-Onsen Monogatari Atami

Ito Hotel New Okabe
Ooedo-Onsen Monogatari

Toi Marine Hotel

Ooedo Onsen Reit Investment Corporation 51

Unitholders Breakdown
Top 10 unitholders

Ratio by number of unitholders＜End of 2nd fiscal period＞＜End of 3rd fiscal period＞

12,912 unitholders

13,336 unitholders

Financial
institutions

Foreigncorporations
and individuals

Financial
institutions

Foreigncorporations
and individuals

Raito by number of investment units

Rank

Name

Ratio

1

Japan Trustee Services Bank, Ltd. (Trust Account)

25,09014.2%

2

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

20,168

11.4%

3

Ooedo-Onsen Mongatari Co., Ltd.

9,246

5.2%

4

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

4,040

2.3%

5

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

3,928

2.2%

6

Sekai Shidokyo

1,552

0.9%

7

BNYM SA/NV FOR BNYM FOR BNY GCM CLIENT
ACCOUNTS M LSCB RD

1,500

0.9%

8

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

1,034

0.6%

9

Hida Shinkin Bank

1,000

0.6%

9

General Incorporated Association Seiikai

1,000

0.6%

68,558

38.9%

Total
Individuals
Financial institutions(Incl. securities companies)

Number ofunits held

Other domestic corporations
Foreign corporations and individuals

Ooedo Onsen Reit Investment Corporation 52

Unitholder Benefit Program
Provide unitholders opportunity to experience facilities held by the Investment Corporation and to deepen
unitholders’ understanding of those facilities.
Commencement
period and target
unitholders

Targets unitholders listed or recorded on Unitholders’ Registry
as of November 30, 2017 (record date), end of 3rd fiscal period.

Eligible persons

The program is also available for those other than unitholders
with coupons transferred from unit holders (not registered)
Coupons offering discounts of 1,000 yen per coupon from the accommodation fee
for applicable facilities on weekdays (excluding specified dates) will be sent

Benefits① Unitholders holding 5 units or more and less than 10 units② Unitholders holding 10 units or more

1 coupon
Equivalent to 1,000 yen
2 coupons Equivalent to 2,000 yen

Coupons can be used together with other discount coupons, etc. provided by Ooedo-Onsen Monogatari Group
Onsen and spa-related facilities that are owned by the Investment Corporation in each fiscal period
and leased by Ooedo-Onsen Monogatari Group
Applicablefacilities

Schedule ofsending andperiod of validity<Facilities applicable at time of commencement>
Ooedo-Onsen Monogatari Reoma Resort, 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 Kamoshika-so, Ooedo-Onsen Monogatari Ikaho, Ooedo-Onsen Monogatari Kimitsu-no-mori<9 facilities in total>
Coupons will be sent each year in mid-February for fiscal periods
ended in November and in mid-August for fiscal periods ended in May① When coupons are sent in mid-February: Valid for 1 year from March 1st to the last day of the following February② When coupons are sent in mid-August: Valid for 1 year from September 1st to the last day of the following August

Ooedo Onsen Reit Investment Corporation 53

Profile 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.

・Nikkei IR/Investment Fair 2017 (held on August 25, 2017)
・J-REIT Caravan (held on September 14, 2017)
・Joint IR information session for private investors: Nagoya(held on September 30, 2017)
・J-REIT Fair 2017 for private investors (held on October 28, 2017)

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.

Event co-hosted with “Kinyu Joshi” to learn about“hot spring x investment”
Held two events for private investors collaborating with “Kinyu Joshi” on August 24 and
September 23, 2017.

Seminars for private investors sponsoredby securities companies
・Branch office seminars (Numazu, Yamagata)・Online IR seminars

The first event was held in a workshop style and the second one took participants on abackyard tour of “Odaiba Tokyo Ooedo-Onsen Monogatari” operated by the sponsor.

(Note) “Kinyu Joshi” is a community for women in their 20’s and 30’s for sharing financial information
at all-female get-togethers.

Ooedo Onsen Reit Investment Corporation 54

Track Record of Investment Unit Price
Change in investment unit price and trading volume(yen)(units)August2016

October
2016

December
2016

February
2017
VolumeApril
2017
Stock price

June
2017

August2017

October
2017

June
2017

August2017

October
2017

Relative comparison of investment unit price and TSE REIT index(yen)August2016

October
2016

December
2016

February2017
Stock price

April
2017
TSE REIT Index(Note) TSE REIT Index is indexed based on the listed date (August 31, 2016) and indicates relative performance with investment unit price.

Ooedo Onsen Reit Investment Corporation 55

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.
(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.

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 56

Overview of Investment Corporation
Parent Company of Asset Manager
Sponsor

Ooedo-Onsen Monogatari Group Co., Ltd.
(100% ownership)

Ooedo-Onsen Monogatari Co., Ltd.

Investment Corporation⑥⑤

Ooedo Onsen Reit Investment
Corporation④

General Unitholders’ Meeting②(100% ownership)

Sumitomo Mitsui Trust Bank,
LimitedBoard of Directors
Asset Manager①

Ooedo Onsen
Asset Management Co., Ltd.
Subsidiary of Parent Company
of Asset Manager

Reoma Unity Co., Ltd.

③

Accounting and Tax Administrator

Heiseikaikeisha Tax Corporation⑤

Independent Auditor

Kagawa Prefecture Tourism
Development Ltd.
Subsidiary of Parent Company
of Asset Manager

Executive Director
Fuminori Imanishi
Supervisory Director
Kentaro Suzuki
Supervisory Director
Takayuki Hongyo

Asset Custodian
Unitholders’ Registry Administrator
General Administrator(agency management)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 57

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, 2017)

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

Ooedo Onsen Reit Investment Corporation 58

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.

Ooedo Onsen Reit Investment Corporation 59