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

REIT Financial Report for the 1st Fiscal Period
January 24, 2017
REIT Issuer:
Ooedo Onsen Reit Investment Corporation
Securities Code: 3472
Representative: Fuminori Imanishi, Executive Director
Asset Manager:
Representative:
Inquiries to:

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

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

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

February 24, 2017
February 15, 2017

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

Yes
Yes (for institutional investors and analysts)[Amounts are rounded down to the nearest million yen, except for per unit figures]
1. Status of Management and Assets for the 1st Fiscal Period
1st Fiscal Period: Fiscal period ended November 2016 (from March 29, 2016 to November 30, 2016)(1) Management Status
Fiscalperiod
1st
FiscalperiodOperatingrevenues
million yen
507

%
-

[% figures show the period-on-period increase (decrease)]
Ordinary
Net
incomeincomemillion yen% million yen
%
67
65
-

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

(2)

Net income
per unit%-

Operatingincomemillion yen
266
Ratio of net income tounitholders’ equity

Distribution Status

Distribution
Total
Distribution
Total
per unit
distribution
Excessper unit
distribution
Total(excluding(excluding(including(including
Dividend
Ratio ofdistribution
ExcessFiscalto
ExcessExcessExcessExcessPayoutdistribution
Excessdistribution
periodnet assets
distribution distribution distribution
distribution
distribution
ratio
excessexcessexcessexcessexcessper unit
distribution
distribution) distribution)
distribution)
distribution)yen
yen million yen
yen million yen
million yen
%
%
376
66
1st
373
65
3
0
99.8
0.4
(Note 1) The entire amount of total Excess distribution excess distribution is the allowance for temporary difference adjustment.
(Note 2) Dividend payout ratio is rounded down to the first decimal place. Dividend payout ratio for the fiscal period ended
November 2016 is calculated using the following formula since issuance of new investment units was conducted during theperiod.
Dividend payout ratio = Total distribution amount (excluding Excess distribution excess distribution) / Net income × 100(Note 3) Ratio of distribution to net assets is calculated based on the weighted average net assets per unit with the actual asset
management period commencement date September 1, 2016 deemed as the beginning of the period, using the following
formula.
Ratio of distribution to net assets = Distribution per unit (excluding Excess distribution excess distribution) / {(net assets
per unit at period commencement date + net assets per unit at period end} / 2}×100.

1

(3) Financial Position
FiscalperiodTotal assets

Net assets

million yen
30,732

million yen
15,818Net cashprovided by (used in)operating activities
million yen(1,030)Net cashprovided by (used in)investing activities
million yen(27,306)

1st

Unitholders’ equity to total
assets%51.5

Net assets
per unityen
89,775(4) Cash Flow Status
Fiscalperiod
1st

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

Cash andcash equivalents
at end of period
million yen
668

2. Management Status Forecasts for the 2nd Fiscal Period and the 3rd Fiscal Period
2nd Fiscal Period: Fiscal period ending May 2017 (from December 1, 2016 to May 31, 2017)
3rd Fiscal Period: Fiscal period ending November 2017 (from June 1, 2017 to November 30, 2017)[% figures show the period-on-period increase (decrease)]
Distribution
Excessper unit
Distribution per(including
distribution
unit
OperatingOperating
Fiscal period
Ordinary income Net income (excluding Excess
Excessexcessrevenues
incomedistribution excess distribution
distribution
distribution)
excessper unit
distribution)
millionmillionmillionmillion
%
%
%
%
yen
yen
yen
yen
yen
yen
yen
2,514
2nd
1,018 100.5
546 105.1
442 559.0
441 571.1
2,508
6
2,353
3rd
1,021
0.4
513 (6.1)
414 (6.4)
413 (6.4)
2,347
6(Reference) Estimated net income per unit for the 2nd Fiscal Period: 2,507 yen; 3rd Fiscal Period: 2,348 yen* Other(1) Changes in Accounting Policies, Changes in Accounting Estimates and Retrospective Restatement(i) Changes in accounting policies accompanying amendments to accounting standards, etc.:
None(ii) Changes in accounting policies other than (i):None(iii) Changes in accounting estimates:None(iv) Retrospective restatement:
None(2) Total Number of Investment Units Issued and Outstanding(i) Total number of investment units issued and outstanding(including own investment units) at end of period:(ii) Number of own investment units at end of period:

1st Fiscal Period

176,200 units

1st Fiscal Period

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

2

1. Affiliated Juridical Persons of the Investment Corporation
Disclosure is omitted because there is no significant change from “Structure of the Investment Corporation” inthe securities registration statement (submitted on July 29, 2016, as amended). As administrative work foroffering pertaining to issuance of new investment units has ended, the following are the affiliated juridical
persons of the Investment Corporation as of the date of this document.

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

Investment Corporation②
Ooedo Onsen Reit
Investment Corporation
General Unitholders'
M eeting

Sumitomo M itsui Trust Bank, Limited

Accounting and Tax Administrator③
Heiseikaikeisha Tax Corporation

Board of Directors⑤

Parent Company of Asset M anager
Sponsor⑥④

Ooedo-Onsen M onogatari Co., Ltd.

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

Subsidiary
Asset M anager
Independent Auditor
Ooedo Onsen
Asset M anagement
Co., Ltd.

①

Subsidiary of Parent
Company of Asset M anager

PricewaterhouseCoopers
Aarata LLC⑤

Kagawa Prefecture Tourism
Development Ltd.

Subsidiary of Parent Company
of Asset M anager⑥

Reoma Unity Co., Ltd.

(1) Asset management agreement(2) Asset custodian agreement / General administrator of unitholders’ registry agreement / Generaladministration (administrative work for organizational operation) agreement(3) General administrator of accounting agreement(4) Sponsor support agreement(5) Asset sale and purchase agreement(6) Asset lease agreement－

3 －2. Management Policy and Management Status
2.1. Management Policy
Disclosure is omitted because there are no significant changes from the “Investment Policy,” “Investment
Targets” and “Distribution Policy” in the securities report (submitted on July 29, 2016, as amended).
2.2. Management Status(1) Overview of the Fiscal Period under Review
a. Brief History of the Investment Corporation
Ooedo Onsen Reit Investment Corporation (the “Investment Corporation”) was established on March 29,
2016 (capital: 200 million yen, issued investment units: 2,000 units) by Ooedo Onsen Asset Management Co.,
Ltd. (the “Asset Manager”) as the founder under the Act on Investment Trusts and Investment Corporations(Act No. 198 of 1951, as amended) (the “Investment Trust Act”) and with Ooedo-Onsen Monogatari Co., Ltd.
(“Ooedo-Onsen Monogatari”) as the sponsor. Registration with the Kanto Local Finance Bureau wascompleted on May 13, 2016 (registration number 119, filed with the Director of the Kanto Local Finance
Bureau).
Subsequently, the Investment Corporation issued new investment units through public offering (174,200
units) with August 30, 2016 as the payment date and listed on the Real Estate Investment Trust Securities
Market (may be referred to as the “J-REIT market”) of Tokyo Stock Exchange, Inc. (“Tokyo Stock
Exchange”) (Securities Code: 3472) on August 31, 2016.
As a result of these, the total number of investment units issued and outstanding of the Investment
Corporation as of the end of the fiscal period under review (November 30, 2016) stands at 176,200 units.
Furthermore, the Investment Corporation acquired 9 Onsen and spa-related facilities (Note 1) (totalacquisition price (Note 2): 26,844 million yen) during the fiscal period under review (the fiscal period ended
November 2016).
(Note 1) “Onsen and spa-related facilities” mean facilities that provide onsen or hot baths as one of their primary functions
such as baths (public bathing facilities which employ onsen or other similar facilities; the same hereinafter) andryokan (meaning lodgings whose main structure and facilities are Japanese style; the same hereinafter), hotels(meaning lodgings whose main structure and facilities are Western style; the same hereinafter), resort facilities(facilities to provide opportunities for sports or recreation activities during leisure time; the same hereinafter),amusement parks, or other leisure facilities (including multi-use facilities that contain the foregoing) that include
baths as part of their core facilities. Onsen and Spa-related Facilities also mean facilities as a whole, including not
only the buildings with onsen or hot baths, but also the buildings and sites that are adjacent to such buildings oroperated as one facility.
(Note 2) The “acquisition price” indicates the purchase prices of properties stated in the sale and purchase agreements (notincluding expenses, such as consumption tax, local consumption tax, or sale and purchase fees), rounded down to thenearest million yen.

b. Investment Environment and Management Performance
The Japanese economy during the fiscal period under review saw the Tokyo Stock Exchange REIT Index
slightly weaken due to the continued uncertainties of emerging economies including concern over economic
slowdown in China as well as the unstable environment following the U.K.’s decision to leave the EU.
However, after the victory of Donald Trump in the U.S. presidential election in November, the Nikkei
average turned around for a stronger upward trend with the rise of the U.S. long-term interest rates anddepreciation of yen against the dollar while the J-REIT market has also shown relatively strong movements
recently.
According to the Onsen Use Survey by the Nature Conservation Bureau of the Ministry of the Environment,
the total number of annual guests of accommodation facilities has been stable since fiscal year 2010, albeit aslight decrease in the number of accommodation facilities, assuring stable demand for onsen.
Under such environment, the Investment Corporation acquired 9 onsen and spa-related facilities (totalacquisition price: 26,844 million yen) on September 1, 2016 with proceeds from the issuance of new
investment units through public offering and borrowings, and started their asset management. The occupancy
rate (Note 1) of the facilities as of the end of the fiscal period under review is 100%, and their operating
results during the fiscal period under review after the commencement of asset management has shown highguestroom occupancy rates (Note 2). Furthermore, all of the assets held have maintained RevPAR (Note 3)
and sales of which cumulative totals are surpassing the actual results of the same period the previous year
before acquisition by the Investment Corporation. As to unrealized gain/loss (Note 4) of the entire portfolio
as of the end of the fiscal period under review, unrealized gain of 780 million yen was recorded as a result ofa decline of the appraisal cap rate in comparison with the previous appraisal obtained upon listing, decline ofbook value due to depreciation and other factors.
(Note 1) Occupancy rate refers to the ratio of leased area to leasable area.
(Note 2) Guestroom occupancy rate is calculated using the following formula.

－

4 －Guestroom occupancy rate = number of guestrooms sold during relevant period / number of rooms available for saleduring relevant period ×100 (%)(Note 3) Revenue per available room (RevPAR) is calculated for a given time period by dividing total room revenue by totalrooms available.
(Note 4) Unrealized gain/loss is calculated using the following formula.
Unrealized gain/loss = Total appraisal value of owned assets as of the end of the fiscal period under review – Totalbalance sheet amount (including equipment attached to buildings and leasehold right)

c. Overview of Capital Procurement
The Investment Corporation issued new investment units through public offering (174,200 units) with
August 30, 2016 as the payment date and listed on the Real Estate Investment Trust Securities Market ofTokyo Stock Exchange on August 31, 2016. As a result, unitholders’ capital as of November 30, 2016 stands
at 15,752 million yen and the total number of investment units issued and outstanding of the Investment
Corporation at 176,200 units.
In addition, in order to allocate funds for acquisition of specified assets and related expenses, theInvestment Corporation made borrowings of 13,580 million yen on September 1, 2016 and made a partial
scheduled repayment (55 million yen). As a result, as of November 30, 2016, the balance of loans outstanding
was 13,524 million yen and the ratio of interest-bearing liabilities to total assets (LTV) was 44.0%.
d. Overview of Financial Performance and Distributions
As a result of the operations described above, business performance in the fiscal period under review
generated operating revenues of 507 million yen, operating income of 266 million yen, ordinary income of 67
million yen and net income of 65 million yen.
Concerning cash distribution for the fiscal period under review, pursuant to the cash distribution policies
provided in the Investment Corporation’s articles of incorporation, the amount of distribution was to be inexcess of an amount equivalent to 90% of the Investment Corporation’s earnings available for distribution as
defined in Article 67-15, Paragraph 1 of the Act on Special Measures Concerning Taxation (Act No. 26 of
1957, as amended; the “Special Measures Concerning Taxation Act”). Accordingly, the Investment
Corporation decided to distribute 373 yen per unit (excluding Excess distribution excess distribution).
Furthermore, in accordance with the policy for “distribution of cash in excess of profit” as stated in theInvestment Corporation’s articles of incorporation, the Investment Corporation made a distribution for the
528,600 yen allowance for temporary difference adjustment (as defined in Article 2, Paragraph 2, item 30 of
the Ordinance on Accountings of Investment Corporations (Cabinet Office Ordinance No. 47 of 2006, as
amended; the “Investment Corporations Accountings Ordinance”) for the purpose of reflecting the effect on
distributions of the difference between accounting and tax treatment of earnings in association with therecording of interest expenses of asset retirement obligation and recording of depreciation of building bookvalue corresponding to asset retirement obligation (as defined in Article 2, Paragraph 2, item 30 (b) of theInvestment Corporations Accountings Ordinance). This resulted in excess distribution per unit of 3 yen.
As a result, distribution per unit for the fiscal period under review was 376 yen (of which, excess
distribution per unit was 3 yen).
(2) Outlook for the Next Fiscal Perioda. Management Environment in the Next Fiscal Period
The Japanese economy in the next fiscal period own is expected to continue to see a moderate recovery trend
in Japan for the time being due to correction of strong yen and stable crude oil prices since last fall as well as
the ongoing monetary easing policy by Bank of Japan. On the other hand, overseas economies are expected tocontinue to have a sense of uncertainty due to highly unpredictable policies by the new U.S. President Trump
and the possible slowdown of the Chinese economy among other reasons, thus future economic policies areclosely watched to read the trend of personal consumption.
b. Future Management Policy and Challenges to Address(a) External Growth Strategy
Under such an environment, demand for onsen, which is deeply rooted in Japanese culture, has not only
continued to be stable but also been expected to expand backed by an increase in inbound tourists in line withthe progress in the tourism-oriented country policy promoted by the government as well as by theadvancement of the aging of society. For these reasons, business results of the facilities owned by theInvestment Corporation are expected to remain stable.
On the other hand, the number of inquiries for potential deal information to the Ooedo-Onsen MonogatariGroup is expected to increase as more ryokans decide to cease operation and more hotels are put in themarket for sale for various reasons such as a lack of successors, declining competitiveness due to aging－

5 －properties and the announced results of quake-resistance inspections based on the revised Act on Promotionof Seismic Retrofitting of Buildings.
During the fiscal year 2016, the Ooedo-Onsen Monogatari Group acquired a total of 5 onsen and sparelated facilities (2 facilities in Naruko onsen in Miyagi Prefecture in May 2016, 1 facility each in a tourist
area in Nagasaki City, Nagasaki Prefecture and Beppu onsen in Oita Prefecture in August 2016, and 1 facility
in Atami onsen in Shizuoka Prefecture in September 2016). These onsen and spa-related facilities are
expected to fulfill acquisition criteria of the Investment Corporation through revitalization such as renovation(Note).
Furthermore, the Investment Corporation intends to continuously make new acquisitions centering on
properties such as aforementioned facilities in addition to onsen and spa-related facilities that have been
owned and operated by the Ooedo-Onsen Monogatari Group, by utilizing the sponsor support agreement
concluded with Ooedo-Onsen Monogatari Co., Ltd. on July 29, 2016. Also, the Investment Corporation plans
to consider acquisition of facilities owned by third parties other than the Ooedo-Onsen Monogatari Group
that can expect high earnings and stable operation, through the acquisition channels unique to the AssetManager. The Investment Corporation believes this will facilitate improvement of liquidity of the asset classwith the acquisition of diversified onsen and spa-related facilities, etc.
(Note)

It is not guaranteed the Investment Corporation will be able to acquire these properties in the future.

(b) Internal Growth Strategy
The Investment Corporation adopts a rent system which is comprised of primary rent (fixed rent combinedwith GOP-linked variable rent) with an addition of secondary rent (amount equivalent to real estate operation
costs of respective facility) in the long-term lease contracts concluded with the Ooedo-Onsen MonogatariGroup companies which are the tenants of the owned assets (Note). This allows the Investment Corporation
to pursue benefits from upside of GOP-linked rent income when facilities are generating favorable operating
results while securing stability of cash flow over the long-term. Variable rent will arise in the fiscal period
ending May 2017 and the amount of variable rent will be the fixed amount set forth in each lease contract foreach facility for the fiscal period ending May 2017. However, in the fiscal period ending November 2017
onward, variable rent that the Investment Corporation receives may decrease depending on the operating
results of the owned facilities or may not arise at all. (Note: For details of GOP and variable rent, please refer
to “Assumptions Underlying Forecasts of the Financial Results for the Fiscal Periods Ending May 2017 andNovember 2017” on page 7.)
Particularly with implementation of strategic capital expenditure, the Investment Corporation will aim forstabilization and improvement of rent revenue over the medium to long term by collaborating with the
Ooedo-Onsen Monogatari Group, which possesses know-how on creating added value for onsen and sparelated facilities, to enhance the value of owned facilities. For instance, the Ooedo-Onsen Monogatari Grouphas changed the use of buildings, increased the number of guestrooms by constructing additional buildings invacant sites, updated facilities at outdoor baths, onsen and spa-related facilities through renewal, expansion,etc. in order to enhance capability to attract more guests.
(Note)The rent system has been adopted in the lease agreements for the currently owned assets. However, this does notguarantee the same rent system will be adopted in the lease agreements for the facilities that the Investment
Corporation acquires in the future.

(c) Financial Strategy
The Investment Corporation will consider flexible equity finance giving consideration to the dilution of
investment units with the aims of steadily growing the Investment Corporation’s assets under management.
In addition, the Investment Corporation will implement LTV control that is conservative but also emphasizes
agility, while considering stable debt financing comprehensively taking into account conditions including theborrowing period and diversification of lenders.
(3) Significant Subsequent Events
Not applicable.

－

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

Assumption

Calculation
period・ Fiscal period ending May 2017 (2nd fiscal period: from December 1, 2016, to May 31,2017) (182 days)
・ Fiscal period ending November 2017 (3rd fiscal period: from June 1, 2017, to November
30, 2017) (183 days)
・ It is assumed there will be no change (acquisition of new properties or sale of owned
properties) to the 9 properties owned by the Investment Corporation as of the date of thisdocument through to the end of the fiscal period ending November 2017.
・ The managed assets may actually change due to acquisition of assets other than theowned properties above, the disposition of assets under management, etc.
・ Lease operations revenue from the owned assets is calculated based on the leaseagreements effective as of the date of this document, taking into consideration market
trends and other factors. It is assumed that no rent payments will be behind or declinedby tenants.

Managed Assets

Operatingrevenue・ Rent is calculated based on the following assumptions:[Ooedo-Onsen Monogatari Reoma Resort]
Fixed rent: 62,456,896 yen monthly (however, 67,479,294 yen monthly until November
2016)
Variable rent: 0 yen until November 2016 and 5,181,730 yen monthly from December
2016; and will be revised every six months and calculated as follows:(1) Modified GOP (Note 1) for the most recent one-year period × 5.0% (yearly; themonthly amount is 1/12th thereof)(2) Only if 64.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
With regard to Ooedo-Onsen Monogatari Reoma Resort, a fixed-term land leaseagreement has been executed with the tenant, and the Investment Corporation receives
a separate monthly land rent of 89,100 yen based on the fixed-term land leaseagreement.
[Ooedo-Onsen Monogatari Ise-shima]
Fixed rent: 18,009,399 yen monthly (however, 18,948,490 yen monthly until November
2016)
Variable rent: 0 yen until November 2016 and 962,993 yen monthly from December
2016; and will be revised every six months and calculated as follows:(1) Modified GOP for the most recent one-year period × 4.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 77.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ito Hotel New Okabe]
Fixed rent: 12,296,799 yen monthly (however, 13,644,591 yen monthly until November
2016)
Variable rent: 0 yen until November 2016 and 1,471,251 yen monthly from December
2016; and will be revised every six months and calculated as follows:(1) Modified GOP for the most recent one-year period × 5.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 52.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.

－

7 －Operating
revenue[Ooedo-Onsen Monogatari Atami]
Fixed rent: 15,619,380 yen monthly (however, 16,432,681 yen monthly until November
2016)
Variable rent: 0 yen until November 2016 and 939,716 yen monthly from December
2016; and will be revised every six months and calculated as follows:(1) Modified GOP for the most recent one-year period × 4.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 74.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Toi Marine Hotel]
Fixed rent: 9,098,235 yen monthly (however, 10,090,632 yen monthly until November
2016)
Variable rent: 0 yen until November 2016 and 1,016,579 yen monthly from December
2016; and will be revised every six months and calculated as follows:(1) Modified GOP for the most recent one-year period × 7.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 72.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Awara]
Fixed rent: 10,963,033 yen monthly (however, 11,531,263 yen monthly until November
2016)
Variable rent: 0 yen until November 2016 and 608,360 yen monthly from December
2016; and will be revised every six months and calculated as follows:(1) Modified GOP for the most recent one-year period × 3.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 62.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Kamoshika-so]
Fixed rent: 5,953,916 yen monthly (however, 6,596,944 yen monthly until November
2016)
Variable rent: 0 yen until November 2016 and 655,836 yen monthly from December
2016; and will be revised every six months and calculated as follows:(1) Modified GOP for the most recent one-year period × 6.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 62.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Ikaho]
Fixed rent: 6,126,558 yen monthly (however, 6,788,768 yen monthly until November
2016)
Variable rent: 0 yen until November 2016 and 708,097 yen monthly from December
2016; and will be revised every six months and calculated as follows:(1) Modified GOP for the most recent one-year period × 7.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 67.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
[Ooedo-Onsen Monogatari Kimitsu-no-mori]Fixed rent: 4,098,412 yen monthly (however, 4,535,272 yen monthly until November
2016)
Variable rent: 0 yen until November 2016 and 436,860 yen monthly from December
2016; and will be revised every six months and calculated as follows:(1) Modified GOP for the most recent one-year period × 5.0% (yearly; the monthly
amount is 1/12th thereof)(2) Only if 52.0% of the modified GOP exceeds one year’s fixed rent, variable rent
will apply.
－

8 －Fiscal Period Ending May 2017 (2nd fiscal period)(Millions of yen)Primary rent (Note 2)
Variable
Fixed rent
rent
(Note 3)(Note 4)375
31
(Note 6)

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

Total(Note 7)

34

440

108

5

3

117

73

8

9

91

93

5

4

103

54

6

1

62

65

3

9

78

35

3

5

45

36

4

4

45

24

2

5

32

868

71

77

1,018

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

Secondary
rent(Note 5)

Fiscal Period Ending November 2017 (3rd fiscal period)(Millions of yen)Primary rent (Note 2)
Property name
Ooedo-Onsen Monogatari
Reoma Resort
Ooedo-Onsen MonogatariIse-shima

Total(Note 7)

Fixed rent
(Note 3)375
(Note 6)

29

34

439

108

6

3

118

73

9

9

92

93

7

4

105

54

5

1

62

65

4

9

79

35

4

5

45

36

5

4

45

24

2

5

32

868

75

77

1,021

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

Secondary
rent(Note 5)

Variablerent(Note 4)(Note 1) “GOP” means gross operating profit, which is the amount remaining after deducting
expenses arising directly from managing each facility, such as labor expenses andgeneral and administrative expenses, from each facility’s sales. “Modified GOP” is theamount remaining after deducting expenses related to real estate to be borne by thetenant (including, but not limited to, taxes and public charges, non-life insurance
premiums and land and house rent, but excluding an amount equivalent to Secondary
rent (defined below in Note 5)) from the GOP of each facility for the Modified GOP
Calculation Period (defined below in Note 4). The same applies hereinafter.

－

9 －(Note 2) “Primary rent” means the sum of the fixed rent and the variable rent. The same applies
hereinafter(Note 3) “Fixed rent” means the monthly amount provided for in each facility’s lease agreement.
The same applies hereinafter.
(Note 4) Variable rent will not accrue for the 1st fiscal period, and the variable rent for the 2nd
fiscal period will be the fixed amount provided for in each facility’s lease agreement.
Further, the variable rent from the 3rd fiscal period onward will be the amount obtainedby multiplying each facility’s modified GOP for the most recent one-year period (forthe six months starting from December of each year, this means the one-year period
from March of that year to February of the following year; for the six months startingfrom June of each year, this means the one-year period from September of the previous
year to August of that year) (these one-year periods are referred to as “modified GOP
Calculation Periods”) regarding each facility by the specific rate provided for in eachlease agreement (yearly; the monthly amount is 1/12th thereof). The same applies
hereinafter.
(Note 5) “Secondary rent” means an amount equivalent to the total amount of taxes, publiccharges, nonlife insurance premiums, and other expenses (real estate operational
expenses) to be borne by the Investment Corporation for each facility owned by theInvestment Corporation. The same applies hereinafter.
(Note 6) Land rent based on the fixed-term land lease agreement is included in the fixed rent.
(Note 7) Rents of properties are rounded down to the nearest million yen. Therefore, the total ofeach property’s rent, the total of fixed rents, the total of variable rents and the total of
secondary rents may not add up to the figure indicated in the Total column.

OperatingexpensesNon-operating
expenses
Borrowings

Outstanding
Investment Units

Distribution per
Unit (Excludingexcessdistribution)
Excessdistribution per
Unit・ Of the expenses related to leasing activities, which are a major component of operating
expenses, the expenses related to leasing activities other than the depreciation arecalculated based on past actual figures and by reflecting factors that cause expenses tofluctuate.
・ As to taxes and public charges, 34 million yen is recorded as expenses in the fiscal
period ending May 2017 and 69 million yen in the fiscal period ending November 2017.
・ Depreciation, which is calculated using the straight-line method inclusive of incidental
expenses and additional capital expenditure in the future, is assumed to be 265 million
yen for the fiscal period ending May 2017, and 269 million yen for the fiscal period
ending November 2017.
・ The total amount of interest expenses and other borrowing-related expenses is expected
to be 104 million yen for the fiscal period ending May 2017, and 98 million yen for the
fiscal period ending November 2017.
・ The balance of loans outstanding as of November 30, 2016 is 13,524 million yen.
・ In the fiscal period ending May 2017, it is assumed that the 777 million yen out of 2,177
million yen of loans due for repayment will be refinanced for the same amount and the
1,400 million yen will be repaid using the expected refund of consumption tax forproperty acquisition. In addition, it is assumed that scheduled repayment of 111 million
yen will be conducted separately.
・ It is assumed that scheduled repayment of 111 million yen will be conducted in thefiscal period ending November 2017.
・ The assumed number of investment units issued and outstanding as of the date of thisdocument is 176,200, and it is assumed that the number of investment units will notchange due to any additional issuance of new investment units or another reason before
November 30, 2017.
・ Distribution per unit is calculated based on the expected number of investment units
issued and outstanding as of the end of the fiscal periods ending May 2017 and ending
November 2017 (176,200 units).
・ Distribution per unit (excluding excess distribution) is calculated based on the policy forcash distributions provided for in the Investment Corporation’s articles of incorporation.
・ Distribution per unit (excluding excess distribution) may change due to various factors,
including changes of portfolio, changes in rent revenue due to a relocation of tenant, etc.,
the occurrence of unexpected capital expenditures, and other reasons.
・ Recording of allowance for adjustment of temporary difference is expected concerning
the difference in accounts for tax and accounting purposes associated with recording ofasset retirement obligation.
－

10 －Other・ Regarding conducting excess distribution, the Investment Corporation will have a basic
policy of conducting excess distribution of which amount will be equivalent to theincreased amount of allowance for adjustment of temporary difference. Pursuant to thepolicy, it is assumed that 6 yen of excess distribution per unit will be conducted in eachof the fiscal periods ending May 2017 and ending November 2017.
・ It is assumed that revisions that affect the above forecast figures will not be made to laws
or ordinances, tax systems, accounting standards, listing regulations, or rules or the likeset by The Investment Trusts Association, Japan.
・ It is assumed that unforeseen material changes in general economic trends, in real estatemarket conditions, or in any other factors will not occur.

2.3. Investment Risks
Disclosure is omitted because there are no significant changes from “Investment Risks” set out in the mostrecent periodic securities report (yuka shoken hokokusho) (submitted on July 29, 2016, as amended).

－

11 －

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

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

18,079,683(131,368)
17,948,314
9,264,018
27,212,332
157,802
6,191
163,993
196,129
10,000206,129
27,582,456
30,732,706

－

12 －

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

1,159
2,177,000
223,000
261,251
7,580
1,321
183,256105
2,854,675
11,124,250
868,270
67,10012,059,620
14,914,295

15,752,576
65,834
65,834
15,818,410※１ 15,818,410
30,732,706

－

14 －

3.2. Statements of Income(Thousands of yen)
1st Fiscal Period(from March 29, 2016
to November 30, 2016)
Operating revenue
Lease business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors' compensations
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Total non-operating income
Non-operating expenses
Interest expenses
Organization expenses
Investment unit issuance 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
Unappropriated retained earnings (undisposed
loss)

※１

507,696507,696

140,191
47,979
1,662
8,323
5,400
※２ 37,600
241,157
266,538※１,※２

0
0
24,22273,02073,82828,336
199,408
67,131
67,131
1,321
(24)
1,296
65,834
65,834－15 －3.3. Statements of Unitholders’ Equity
1st Fiscal Period (from March 29, 2016 to November 30, 2016)(Thousands of yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of current
periodUnappropriatedretained earnings(undisposed loss)

Total unitholders’equityTotal
surplusTotal
net assets

-

-

-

-

-

15,752,576--

15,752,576

15,752,576-

65,834

65,834

65,834

65,83415,752,576

65,834

65,834

15,818,410

15,818,410

15,752,576

65,834

65,834

15,818,410

15,818,410

Changes of items during period
Issuance of new investment
units
Net income
Total changes of items during
periodBalance at end of current period

*１

－

16 －

3.4. Statements of Cash Distributions(Thousands of yen)
1st Fiscal Period(From: Mar. 29, 2016
To: Nov. 30, 2016)

Item
I.

Unappropriated retained earnings

65,834,175

II. Addition of excess distribution
Of which, allowance for temporary difference
adjustment
III. Distribution amount

528,600
528,600
66,251,200[Distribution amount per unit][376]

Of which,
Distribution amount from earnings

65,722,600[Of which, excess distribution per unit]
Allowance for temporary difference adjustment[Of which, excess distribution per unit (pertaining
to allowance for temporary difference adjustment)]
IV. Retained earnings carried forward

Method of calculating distribution amount[373]
528,600[3]
111,575
As described above, distribution per unit for
the fiscal period under review is 376 yen.
Concerning cash distribution (excludingexcess distribution), in order to ensure that the
maximum amount of cash distribution of
earnings would be included in deductible
expenses based on application of special
provisions for taxation on investment
corporations (Article 67-15, Paragraph 1 of theSpecial Measures Concerning Taxation Act),the Investment Corporation decided to distributealmost the entire amount of the earnings
provided in Article 136, Paragraph 1 of the Act
on Investment Trusts and Investment
Corporations, excluding the portion where cash
distribution per investment unit would be lessthan JPY1. As a result, the Investment
Corporation declared a cash distribution perinvestment unit (excluding excess distribution)of 373 yen.
In addition, pursuant to the policy for“distribution of money in excess of profits” asstated in its articles of incorporation, theInvestment Corporation decided to make a
distribution for the 528,600 yen allowance foradjustment of temporary difference for the
purpose of reflecting the effect on distributionsof the difference in accounts for tax andaccounting purposes in association withexpenses related to asset retirement obligations(as defined in Article 2, Paragraph 2, item 30(b) of the Investment Corporations Accountings
Ordinance). This resulted in distribution ofallowance for temporary difference adjustmentof 3 yen per investment unit.

－

17 －

3.5.

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

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

67,131
131,677
73,82828,336(0)24,222(326)
15(1,431,892)(18,358)(126,708)
65,268183,256(9,820)(1,013,370)
0(16,641)(0)(1,030,011)(27,080,087)(163,762)
868,270(930,770)(27,306,349)
2,177,000
11,205,000(55,750)
15,678,747
29,004,997
668,635※１ 668,635

18 －