Ooedo Onsen Reit Investment Corporation
Results of 2nd Fiscal Period ended May 31, 2017

Presentation Material
July 21, 2017
（Asset Manager）Ooedo Onsen Asset Management Co., Ltd.

Table of Contents
Ⅰ. Operating Highlights for the 2nd Fiscal Period ended
May 2017

External Growth Strategy

32

Financial Results for the 2nd Fiscal Period ended May 2017

3

Internal Growth Strategy

34

Forecast for the 3rd Fiscal Period ending November 2017

4

Financial Strategy

36

Forecast for the 4th Fiscal Period ending May 2018

5

Factors for Increase/Decrease in Distribution per Unit

6

Topics for the 2nd Fiscal Period ended May 20177

Appraisal Value

38

Operating Results for the Entire Portfolio

9Introduction of Properties

39

The Overall Picture of Ooedo Onsen Reit Investment Corporation

10

Financial Indices42

Portfolio Data

11

Balance Sheet

43

Financial Status

13

Statement of Income

44

Debt Status

45

Ooedo-Onsen Monogatari Group46

Unitholders Breakdown

48

Efforts for IR Activities

49

Change in Investment Unit Price50

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

15

Ⅲ. Characteristics of Ooedo Onsen Reit and FutureManagement Strategy

Ⅳ. Appendix

Features of Ooedo Onsen Reit Investment Corporation

26

Governance Structure

51

Market Environment

27

Overview of Investment Corporation

52

Differentiation Strategy of Ooedo Onsen Reit Investment
Corporation

29

Overview of Asset Manager

53

Ooedo Onsen Reit Investment Corporation 1

Ⅰ. Operating Highlights for the 2nd Fiscal
Period ended May 2017

Ooedo Onsen Reit Investment Corporation 2

Financial Results for the 2nd Fiscal Period ended May 2017
Increase in revenue and profit attributed to insurance revenue, etc.,
increase in distribution per unit from initial forecast(thousand yen)
Item

Operating revenue

1st period

2nd period（Actual）（Actual）

Component
ratio

Primary rent

507,696

Component
ratio

468,411

2nd period(Forecast)Difference

Difference

1,021,730+514,033

1,018,130+3,600940,158+471,747

940,158-

468,41192.4%

868,270+399,859

868,270-

Variable rent

0.0%

-

7.6%

71,888+71,888

71,888-38,985

78,118+39,132

77,971

+147

300

3,452

+3,152-+3,452

Lease operations
revenue gain/loss

367,504

703,606+336,101

700,499+3,107

Operating income

266,538

547,969+281,430

546,664+1,305

Ordinary income

67,131

446,053+378,922

442,412+3,641

Net income

65,834

・Leveling of payment period of fixed asset taxes

Lease operations revenue/loss

100.0%

Others(thousand yen)・Insurance revenue of Awara
and city planning taxes (Ise-shima)・Decrease in depreciation

Fixed rent

Secondary rent

Main factors for increase/decrease from forecast

445,127+379,293

441,807+3,320・Increase in commission on securities
transactions (increase in number of unitholders)Operating income
・Interest on refund of consumption tax

Ordinaly income

Lease operations revenue gain/loss+336,101

・Recorded AM fee for full year calendar year

Total distribution

66,251

446,314+380,063

442,966+3,347

Total units outstanding

176,200

176,200-

176,200

-

376

2,533

+2,157

2,514

+19

3

7

+4

6

+1

Ordinaly income

1,119

4,022

+2,9034,013+9Main financial indicators

131,368

263,577+132,208

265,351-1,773+3,641-36,532+176

Depreciation+2,267-132,208

1,057

FFO per unit (yen)+1,305・Recorded depreciation for full year+704

per unit)-2,335(thousand yen)

1,233

（Excess cash distribution+1,773+3,107・Expensing of fixed asset taxes and city planning528

DPU (yen)-1,786Main factors for increase/decrease
from previous fiscal period

・Decrease in other operating expenses

Excess cash distribution+3,452

Operating income-66,198+18,529+281,430

・Interest on refund of consumption tax+2,267・Recorded finance-related expenses for full year

-51,633

・Absence of founding expenses+73,020

・Absence of investment unit issuance expenses+73,828+378,922(million yen)

Total assets

29,440Interest-bearing debt

11,735

NOI

498,873

967,184+468,310

965,850+1,333

Total liabilities

13,243

CAPEX

12,66590,705+78,040

108,000-17,294

Total net assets

16,197(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) Actual management period for the 1st Fiscal Period is from September 1, 2016 to November 30, 2016

LTV (book value basis)

39.9%

NAV per unit (yen)97,740Ooedo Onsen Reit Investment Corporation 3

Forecast for the 3rd Fiscal Period ending November 2017
Increase in revenue and profit from initial forecast attributed to increase in variable rent
and application of fixed rent to Reoma Resort, increase in distribution per unit from initial forecast(thousand yen)Item

2nd period

3rd period（Actual）（Forecast）(thousand yen)

3rd period(Forecast)Difference

Main factors for increase/decrease from forecast
・Increase in variable rent by applying

Difference

fixed amount (Reoma)

Operating revenue

Component
ratio

Primary rent

1,021,730

Component
ratio

940,158

1,027,460+5,7301,021,972+5,488・Increase in variable rent of owned facilities

948,904+8,745944,001+4,903(excluding Reoma)
・Increase in depreciation

Fixed rent

92.4%

868,270

91.5%

868,270-868,270-

Variable rent

7.6%

71,8888.5%

80,634+8,74575,730+4,903

Lease operations revenue gain/loss
・Increase in commission on securities
transactions (increase in number of unitholders)

Secondary rent

78,11878,555+437

77,970+584

Others3,452--3,452--

Lease operations
revenue gain/loss

703,606

669,199-34,407665,557+3,642

Operating income

547,969

513,473-34,495

513,228+245

Ordinary income

446,053

415,307-30,746

414,313+994

Main factors for increase/decrease
from previous fiscal period

Net income

445,127

414,307-30,820

413,708+599

・Recorded burden of fixed asset taxes

1,233

1,233

-

1,057

+176

and city planning taxes for full year

Total distribution

446,314415,655-30,658

414,598+1,057

Total units outstanding

176,200

176,200-

176,200

-

2,533

2,359

-174

2,353

+6

Operating income
・Decrease in finance-related expenses

Ordinaly income+1,232+3,671-1,261+3,642-1,800

+245
+748

+994

(thousand yen)

Excess cash distribution

DPU (yen)（Excess cash distribution

7

7

-

6

+1

4,022

3,888

-134

3,877

+11

Depreciation

263,577

270,831+7,253

269,569+1,261

NOI

967,184

940,030-27,153

935,126

CAPEX

90,705

94,638+3,932

118,000

per unit)

FFO per unit (yen)Lease operations revenue gain/loss-32,992-34,407

・Decrease in AM fee+3,786

・Increase in other operating expenses-4,306

Operating income
・Decrease in finance-related expenses

Ordinaly income

Main financial indicators-34,495+6,024-30,746(million yen)

Total assets

29,156+4,903

Interest-bearing debt

11,624-23,361

Total liabilities

12,989Total net assets

13,166

LTV (book value basis)

39.9%

Ooedo Onsen Reit Investment Corporation 4

Forecast for the 4th Fiscal Period ending May 2018
Decrease in profit attributed to assumption of expenses for General Unitholders’ Meeting
although revenue remained flat, decrease in distribution per unit from previous fiscal period(thousand yen)
Item

Operating revenue

3rd period

4th period（Forcast）（Forecast）

Component
ratio

Primary rent

1,027,460

Component
ratio

948,904

Difference

1,027,460-

948,904-

Fixed rent

91.5%

868,270

91.5%

868,270-

Variable rent

8.5%

80,634

8.5%

80,634-78,555-

Secondary rent

78,555

Lease operations
revenue gain/loss

669,199

667,841-1,358Operating income

513,473506,626-6,847

Ordinary income

415,307409,145-6,162

Net income

414,307408,145-6,162

1,233

1,233

-

415,655

409,312-6,343

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

176,200

176,200

-

2,323

-36

7

7

-

3,888

3,861

-27

Depreciation

270,831

272,189+1,358NOI

940,030

940,030+0CAPEX

94,638100,000+5,361

per unit)

FFO per unit (yen)(thousand yen)・Increase in depreciation

Lease operations revenue gain/loss-1,358-1,358・Decrease in AM fee+1,660・Assumption of expenses for General Unitholders’ Meeting-6,900Operating income

2,359（Excess cash distribution

Main factors for increase/decrease from forecast-6,847

・Decrease in finance-related expenses

Ordinaly income+685-6,162Main financial indicators(million yen)

Total assets

29,038Interest-bearing debt

11,512

Total liabilities

12,878

Total net assets

16,160LTV (book value basis)

39.6%

Ooedo Onsen Reit Investment Corporation 5

Factors for Increase/Decrease in Distribution per Unit
Distribution level will be normalized from the 3rd Fiscal Period,
excluding expenses for General Unitholders’ Meeting+

Decrease in AM fee
Assumption of expenses
for General Unitholders’ Meeting

+34
-13

-

+

-

Increase in depreciation
Increase in variable rent
Absence of insurance revenue
Recorded burden of
fixed asset taxes andcity planning taxes for full year
Increase in depreciation

2nd period
Distribution(Actual)Lease
operation
revenue

Sales andgeneraladministrative
expenses++9-39
GeneralUnitholders’ Meeting

Cruising basis distribution△ -Decrease in finance-related expenses
Absence of interest on
refund of consumption tax

-7

+50
-20
Decrease in finance-related expenses

+3

-186
-41

Non-operating
profit and loss

3rd period
Distribution(Forecast)

Lease
Operation
revenue

Sales andgeneraladministrative
expensesNon-operating
profit and loss

4th period
Distribution(Forecast)(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.

Ooedo Onsen Reit Investment Corporation 6

Topics for the 2nd Fiscal Period ended May 2017 (1)Measures for further stabilization of distribution
Applying fixed amount for the variable rent of Ooedo-Onsen Monogatari Reoma Resort＜Short-term perspective＞＜Mechanism of primary rent of Ooedo-Onsen Monogatari Reoma Resort＞

Subject to short-term fluctuations
in revenue and expenditure derived byclimate and other factors due tothe characteristics of its business type

December
2016

June
2017

June
2018

June
2019

Beforechange+＜Medium-term perspective＞

62 million yen per month

Fixed

Aim to maintain a rent systemthat includes variable rent to capture
benefits from upsides

VariableAfterchangeApplying fixed amount for variable
rent in the coming two-year period

Fixed
Variable

Stabilizing short-term
distribution level andcapturing medium term upsides

5 million yen
per month

Modified GOP×5.0% (revised every six months)

Applying fixed amount in the
coming two-year period

62 million yen per month
5 million yen per month

Modified GOP×5.0%(revised every six months)*There will be no changes to the rent system for the secondary rent

Ooedo Onsen Reit Investment Corporation 7

Topics for the 2nd Fiscal Period ended May 2017 (2)Introduction of unitholder benefit program
The Investment Corporation agreed with the sponsor to introduce a unitholder benefit program with an aim to provide an opportunity tounitholders to experience the characteristics of onsen and spa-related facilities in which it invests and to deepen unitholders’ understandingof 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＜3rd Fiscal Period ending November 2017) (Scheduled)＞
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 inMay① 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 8

Operating Results for the Entire Portfolio
RevPAR and sales surpassing actual results of the previous year for all properties due to high room
occupancy rates＜Cumulative comparison of 2nd Period and the same period of the previous year＞

Room occupancy rate：
85.7％

88.8％

Portfolio operating results
2016

2017
Cumulativ e
total

Previous
corresponding
periodcumulative total

2nd period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

78.8%

89.2%

97.4%

88.7%

90.5%

95.6%

92.5%

82.4%

90.5%

96.5%

86.5%

84.3%

89.4%

85.7%

88.8%

＋3.1%

ADR (yen)

25,27330,67942,421

26,91427,87427,90230,67830,41827,08331,18528,05730,10330,074

29,16029,653＋493

RevPAR (yen)19,90927,35641,31723,86625,215

26,66528,381

25,076

24,51430,107

24,25625,38526,891

24,982

26,327＋1,345

608

845

1,252

724

800

826

883

783

707

945

743

802

9,918

4,536

4,863

＋327

Sales (million yen)

(Note 1) The above indicates actual results over the past one year. However, the investment corporation acquired the properties on September 1, 2016.
(Note 2) The sales figures are rounded to the nearest million yen. The ADR and RevPAR figures are rounded to the nearest whole number and the guest room occupancy rate figures are rounded to the first decimal place.
The same applies to operating results of individual properties.

Ooedo Onsen Reit Investment Corporation 9

The Overall Picture of Ooedo Onsen Reit Investment Corporation
Stable generation of distributions with stable revenue structureAsset

9 (properties)
Total acquisition price:
26.8bn yen
Unrealized capital gain:
1.0bn yen
Average room occupancy rate:
88.8%
Average NOI yield:
7.0%
Period of master lease:
20 years
Portfolio PML:
3.9%

Debt
Unsecured borrowings:

Onsen and spa-related facilities:

LTV:
Long term debt ratio:

11.7bn yen
39.9%
100%

Use of stable debt

EquityDPU2,533 yen
3 fiscal period: 2,359 yen
4 fiscal period: 2,323 yen
2nd fiscal period:rdthCreation of stable rental revenue

Provision of stable distributions
Ooedo Onsen Reit Investment Corporation 10

Portfolio Data (1)Unrealized capital gain (appraisal value – acquisition price) increased by 240 million yen year-on-year
due to increase in appraisal value
Portfolio summary(as of May 31, 2017)

Total acquisition priceTotal appraised value

Unrealized profits
and losses

Average NOI yield

Average after
depreciation NOI yield

26.8 yen

28.2bn yen

1.0 bn yen

7.0％

5.0％

bn

Portfolio PML

3.9％

List of assets
Property
No.

Property nameLocation

Building age(years)Number of
rooms

Room
occupancy
rate (%)

Acquisition
price(million yen)Appraisalvalue(million yen)

2nd period
actual NOI(million yen)

NOI yield
(%)

After
depreciation
NOI yield (%)

PML
（％）

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

Ooedo-Onsen Monogatari

Reoma Resort
Ooedo-Onsen MonogatariIse-shima
Ito Hotel New Okabe
Ooedo-Onsen Monogatari

Atami
Ooedo-Onsen Monogatari

Toi Marine Hotel
Ooedo-Onsen Monogatari

Awara
Ooedo-Onsen Monogatari

Kamoshika-so
Ooedo-Onsen Monogatari

Ikaho
Ooedo-Onsen Monogatari

Kimitsu-no-moriTotal/Average

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

25.9
26.2

241

87.9

10,37910,900

420

7.8

6.3

1.9
1.6

37.3

83

93.2

3,656

3,840

112

6.2

3.4

14.2

26.6

73

90.4

2,657

2,820

85

6.2

4.3

12.0

43.4

76

97.8

2,997

3,180

100

6.6

4.4

12.6

42.7

64

90.2

1,910

1,990

60

6.3

3.4

14.9

35.8

95

77.8

1,901

1,980

75

7.6

5.5

14.9

21.3

60

78.2

1,222

1,270

41

6.3

4.3

3.0

33.6

40

94.3

1,299

1,380

42

6.2

4.2

1.0

21.2

41

96.9

819

862

28

6.4

4.7

4.8

31.5

773

88.8

26,84428,222

967

7.0

5.0

3.9

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

Ooedo Onsen Reit Investment Corporation 11

Portfolio Data (2)Achieving both diversification of investment areas and customer attraction from metropolitan areas
Investment ratio by region(acquisition price basis)

Attracting customers
from Kinki and Hokuriku regions
Ooedo-Onsen Monogatari Awara

Investment ratio by facility(acquisition price basis)

Attracting customers
from Kinki and Chugoku regions
Ooedo-Onsen Monogatari Reoma Resort

Kanto
regionHokuriku
regionAttracting customers
from Kanto region

Chugoku region

Shikoku region

Kinki
regionAttracting customers
from Chubu and Kinki regions
Ooedo-Onsen Monogatari Ise-shima

Tokai
Chubu region
regionOoedo-Onsen Monogatari Kamoshika-so
Ooedo-Onsen Monogatari Kimitsu-no-moriOoedo-Onsen Monogatari Ikaho

Attracting customers
from Kanto and Tokai regions
Ooedo-Onsen Monogatari Atami
Ito Hotel New Okabe
Ooedo-Onsen Monogatari Toi Marine Hotel

Main flow of guests

Ooedo Onsen Reit Investment Corporation 12

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

LTV

Ratio of long-term borrowings

(%)
42.0

(%)
100

41.0

100

100

100

2nd
(Actual)May 2017

3rd(Forecast)
November
2017

4th(Forecast)May 2018

95

39.9
40.0

39.9

39.6

90

39.0

85

38.0

2nd
(Actual)May 2017

3rd(Forecast)
November
2017

80

4th
(Forecast)May 2018

Overview of maturity（million yen）

Long-term borrowings

7,000

Short-term borrowings

6,000
5,000

Avg. remaining duration
2.5 years

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

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

11th
Nov-21

12th
May-2213th
Nov-22

14th
May-23

Ooedo Onsen Reit Investment Corporation 13

Ⅱ. Operating Results of Individual Properties

Ooedo Onsen Reit Investment Corporation 14

S-1：Ooedo-Onsen Monogatari Reoma Resort 〈Hotel Reoma-no-mori〉
An onsen and spa-related facility set in a lush natural environment with a half of the customers comingfrom the Kinki and Chugoku regions＜Cumulative comparison of 2nd Period and the same period of the previous year＞

Room occupancy rate：
88.6％

Location

Marugame City, Kagawa Prefecture

No. of rooms

241

87.9％

Portfolio operating results
2016

2017
Cumulativ e
total

Previous
corresponding
periodcumulative total

2nd period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

75.0%

83.6%

99.1%

88.0%

90.0%

94.9%

95.5%

79.7%

89.3%

98.4%

82.6%

82.1%

88.2%

88.6%

87.9%

-0.7%

ADR (yen)

22,66332,60445,904

24,772

26,11826,83431,051

29,71525,63930,624

27,38628,45429,642

28,76628,938172

RevPAR (yen)17,002

27,26645,49921,79423,50025,46829,667

23,67722,90730,12022,61023,357

26,14625,48625,446

-40

164

268

437

205

235

253

290

235

216

302

222

238

3,064

1,454

1,502

48

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 15

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＞

2nd fiscal period(May 2017)

Portfolio operating results
2016

2017
Cumulativ e
total

Previous
corresponding
periodcumulative total

2nd period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Number of guests

21,78058,895

133,904

30,16436,081

37,69665,60335,69327,82153,054

43,52268,501

612,714289,846

294,194＋4,348

Sales (million yen)

84

235

588

118

139

138

242

139

102

214

182

278

2,459

1,137

1,157

＋19

(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 May 2017, “Previous year” to the period from December 2015 to November 2016 and “The year before the previous year”
to the period from May to November 2015.

Ooedo Onsen Reit Investment Corporation 16

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 2nd Period and the same period of the previous year＞

Room occupancy rate：
87.2％

Location

Shima City, Mie Prefecture

No. of rooms

83

93.2％

Portfolio operating results
2016

2017
Cumulativ e
total

Previous
corresponding
periodcumulative total

2nd period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

84.6%

92.3%

93.0%

96.6%

97.6%

98.6%

94.6%

91.2%

97.9%

95.6%

92.6%

87.9%

93.5%

87.2%

93.2%

＋6.0%

ADR (yen)

27,81033,78647,17733,25331,79331,70133,93633,25931,66238,75531,83734,14834,17032,691

33,988＋1,297

RevPAR (yen)23,53331,18643,87732,132

31,03931,255

32,10230,33231,00837,05329,48230,007

31,95528,502

31,687＋3,184

71

94

129

100

98

95

99

93

88

111

88

93

1,159

501

572

＋70

Sales (million yen)

(Note) Due to the holding of the Ise-Shima Summit last year, normal sales activities of Ooedo-Onsen Monogatari Ise-Shima were temporarily suspended.

Ooedo Onsen Reit Investment Corporation 17

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 2nd Period and the same period of the previous year＞

Room occupancy rate：
85.7％

Location

Ito City, Shizuoka Prefecture

No. of rooms

73

90.4％

Portfolio operating results
2016

2017
Cumulativ e
total

Previous
corresponding
periodcumulative total

2nd period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

74.5%

90.9%

95.2%

86.4%

88.0%

96.7%

95.4%

90.1%

98.6%

99.3%

84.8%

75.0%

89.5%

85.7%

90.4% ＋4.8%

ADR (yen)

26,01328,92442,331

26,672

28,074

27,69430,21030,481

27,43931,47527,97831,97230,08430,67829,932-746

RevPAR (yen)19,38626,27940,28923,034

24,693

26,77128,80627,45927,04431,261

23,73523,977

26,933

26,282

27,065

＋783

79

104

153

90

102

107

118

110

100

126

94

97

1,279

625

645

＋20

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. In addition, sales for a total of
923 rooms were suspended due to renovation work for some guestrooms in both buildings between January and April 2016.

Ooedo Onsen Reit Investment Corporation 18

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 2nd Period and the same period of the previous year＞

Room occupancy rate：
94.8％

Location

Atami City, Shizuoka Prefecture

No. of rooms

76

97.8％

Portfolio operating results
2016

2017
Cumulativ e
total

Previous
corresponding
periodcumulative total

2nd period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

93.2%

95.3%

97.9%

98.1%

96.0%

95.2%

96.0%

96.6%

98.9%

99.2%

98.6%

97.7%

96.9%

94.8%

97.8%

＋3.0%

ADR (yen)

29,16332,93046,07030,031

31,39531,05534,20533,331

31,25034,681

31,02832,482

33,20331,09632,859＋1,763

RevPAR (yen)27,19331,392

45,112

29,45230,12929,57032,82632,18530,89734,41630,59331,74932,16829,47932,139＋2,661

72

85

121

78

83

79

88

87

77

95

82

87

1,036

453

517

＋64

Sales (million yen)

(Note) Ooedo-Onsen Monogatari Atami suspended sales for a total of 451 rooms due to extension work and renovation work for some guestrooms.

Ooedo Onsen Reit Investment Corporation 19

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 2nd Period and the same period of the previous year＞

Room occupancy rate：
87.4％

Location

Izu City, Shizuoka Prefecture

No. of rooms

64

90.2％

Portfolio operating results
2016

2017
Cumulativ e
total

Previous
corresponding
periodcumulative total

2nd period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

69.1%

84.8%

95.2%

75.8%

76.1%

92.9%

91.1%

89.7%

98.1%

99.1%

85.4%

78.6%

86.3%

87.4%

90.2%

＋2.9%

ADR (yen)

24,871

31,401

42,467

24,97725,17523,81526,285

26,95324,42628,29625,02527,84427,85026,601

26,498-103

RevPAR (yen)17,19026,62140,43318,928

19,16022,11623,95324,182

23,96328,03921,376

21,89324,03323,24023,914

＋674

38

59

90

41

44

49

54

54

48

64

47

49

637

307

316

＋9

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 20

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 2nd Period and the same period of the previous year＞

Room occupancy rate：
75.5％

Location

Awara City, Fukui Prefecture

No. of rooms

95

77.8％

Portfolio operating results
2016

2017
Cumulativ e
total

Previous
corresponding
periodcumulative total

2nd period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

76.8%

89.8%

99.0%

83.9%

84.6%

93.2%

84.5%

61.8%

74.1%

88.9%

78.0%

79.4%

82.9%

75.5%

77.8%

＋2.4%

ADR (yen)

25,85929,26038,28726,32528,03928,60031,121

32,90128,80830,382

27,61829,66529,875

29,13730,048＋911

RevPAR (yen)19,871

26,29037,92322,08523,716

26,651

26,302

20,333

21,357

26,99821,532

23,541

24,76821,984

23,386＋1,403

74

98

138

82

91

100

99

78

76

103

79

89

1,107

483

523

＋41

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 21

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 2nd Period and the same period of the previous year＞

Room occupancy rate：
66.8％

Location

Nasushiobara City, Tochigi Prefecture

No. of rooms

60

78.2％

Portfolio operating results
2016

2017
Cumulativ e
total

Previous
corresponding
periodcumulative total

2nd period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

75.6%

89.4%

98.7%

81.8%

94.5%

96.3%

76.3%

63.4%

75.3%

89.0%

81.0%

83.9%

83.8%

66.8%

78.2% ＋11.4%

ADR (yen)

24,23025,952

34,70826,08327,14927,04427,57629,07623,25027,194

26,31629,07727,47427,80527,127-678

RevPAR (yen)18,307

23,20334,241

21,33025,661

26,052

21,053

18,43017,50624,212

21,316

24,40323,035

18,582

21,213＋2,630

39

50

74

44

57

56

46

41

35

53

46

54

595

239

275

＋36

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 22

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 2nd Period and the same period of the previous year＞

Room occupancy rate：
91.3％

Location

Shibukawa City, Gunma Prefecture

No. of rooms

40

94.3％

Portfolio operating results
2016

2017
Cumulativ e
total

Previous
corresponding
periodcumulative total

2nd period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

95.3%

98.7%

98.5%

98.3%

99.5%

98.4%

95.3%

87.5%

87.1%

97.7%

98.1%

99.3%

96.2%

91.3%

94.3%

＋3.0%

ADR (yen)

26,72929,32437,45928,03430,01630,251

30,56829,66725,06029,92829,77031,24729,94328,226

29,514＋1,288

RevPAR (yen)25,482

28,94536,88527,56629,87029,762

29,13825,95821,83829,252

29,19931,02028,80825,762

27,824＋2,062

35

41

52

39

44

42

41

36

28

42

40

44

482

213

230

＋16

Sales (million yen)

(Note) Ooedo-Onsen Monogatari Ikaho was closed from February 1 to February 5, 2016 due to renovation work.

Ooedo Onsen Reit Investment Corporation 23

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 2nd Period and the same period of the previous year＞

Room occupancy rate：
92.3％

Location

Kimitsu City, Chiba Prefecture

No. of rooms

41

96.9％

Portfolio operating results
2016

2017
Cumulativ e
total

Previous
corresponding
periodcumulative total

2nd period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

81.6%

95.0%

97.8%

97.2%

96.5%

96.9%

98.1%

93.8%

97.1%

99.1%

96.6%

96.7%

95.6%

92.3%

96.9%

＋4.6%

ADR (yen)

23,02524,87931,86723,75324,361

24,50826,12226,00823,97925,04624,10626,442

25,404

23,51525,308＋1,794

RevPAR (yen)18,794

23,64531,16523,096

23,51823,751

25,62924,391

23,28924,81023,28325,56824,27521,706

24,522＋2,815

36

45

58

44

46

45

49

49

39

50

45

52

559

261

284

＋23

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 24

Ⅲ. Characteristics of Ooedo Onsen Reit
and Future Management Strategy

Ooedo Onsen Reit Investment Corporation 25

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

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

Japanese style
hotel

HotelsResortfacilities

Leisurefacilities

Others

+

+

+

+

+

RyokanOnsen andspa-related
facilities

Day spa
facilities

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

Stable distributions supported bywell-run facilities

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

High potential for external growth

Continuous and steady enhancement of unitholder value
Ooedo Onsen Reit Investment Corporation 26

Market Environment (1)Consumers’ needs for onsen is at the top and onsen trips accompanying overnight stays is stable(thousands)
140000(thousands)
12,00012000010,000100000

8,000

80000

6,000

60000

4,000

40000

2,000

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
Gourmet90 or over

85～89

80～84

75～79

70～74

65～69

60～64

55～59

50～54

45～49

FY201540～44

FY201435～39

FY201330～34

FY201225～29

FY2011

020～24

FY2010Seniors

Male

15～19

0

Female

10～14

20000

Families

0～4

No. 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

Demographics

5～9

Trends in number of accommodation facilities
and FY total number of guests

Source: “Population Estimates” (June 2017) Statistic Bureau, Ministry of Internal Affairs
and Communications

・The number of accommodation facilities‘ guests has
been stable since FY2010 according to the Onsen Use
Survey by the Ministry of the Environment

Theme park
Sightseeing, history/culture

・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

・”Onsen” collected the largest percentage among typesof trip desired according to the Annual Report on the
Tourism Trends Survey

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)

Ooedo Onsen Reit Investment Corporation 27

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

706
1,120

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

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

2000's

Net sales (left axis)

No. of guests (right axis)(million)
100

600

90

400

80

200

70

2010'sPublic facilities
0

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

60
FY2010FY2011FY2012FY2013

FY2014FY2015FY2016

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

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

Ooedo Onsen Reit Investment Corporation 28

Differentiation Strategy of Ooedo Onsen Reit Investment Corporation (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 reachMarketing through in-house channels including
reservation centers Marketing strategy led by Ooedo-Onsen
Monogatari Group headquarters
Ooedo Onsen Reit Investment Corporation 29

Differentiation Strategy of Ooedo Onsen Reit Investment Corporation (2)Investing in highly stable categories with large market volume starting from onsen and spa
Life scene

Facilities used in daily life

Extension of daily life

Special occasions

Distance

Living area

Same region

Outside the area

Added value

PurposeEmphasizing convenience

Emphasizing business category

Purpose type

Game arcade, cinema, spa andrestaurant

Experience-type entertainment, relaxation, natural onsen,
banquet and party

Tourism, culture, privacy, luxury spa
and gourmet

BargainDay spa

Investment targetof Ooedo Onsen
Reit Investment
CorporationSpafacilities,
etc. attouristresorts

Ooedo-Onsen
Business
hotelswith spa

Creation of new“experiential
consumption”

LuxuryRyokanLuxuryhotelswith spa

Affordability

Lacking

Mixed-usecommercial
facilities
with spa

Obsolete facilities(subject to removal)

PriceDomestic market
volumeDemand andsupplyenvironment

Large
Mostly in urban area

Slightly severe
Supply is also large

Large
Attracting customers from metropolitan cities
in the same region

Small
Selected wealthy individuals

Advantageous

Good

Large number of facilities with room forreconstruction and revitalization

Many new constructions
by developers

Ooedo Onsen Reit Investment Corporation 30

Differentiation Strategy of Ooedo Onsen Reit Investment Corporation (3)High customer satisfaction and high room occupancy rates surpassing all other business categories

Ooedo-Onsen Monogatari Group hotel guest questionnaire(conducted from October 1, 2016 to May 31, 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%

77.3%
75.7%

70.0%

72.5%
67.3%

60.0%

54.8%

50.0%

＜Type of services inside the facility＞＜Onsen＞

72.1%
69.5%
55.2%

52.3%

57.4%

54.0%

48.0%
40.0%

35.5%

86.5%

33.4%

37.0%

35.2%

37.9%

30.0%
2012

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
Very satisfied

SatisfiedUnsatisfied

Very unsatisfied

Fair

Ooedo Onsen Reit Investment Corporation 31

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

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

Hotel New Shiobara(Nasushiobara City,
Tochigi Prefecture)

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

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

Ooedo-Onsen Monogatari
Naruko-onsen Kounkaku

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

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

Ooedo-Onsen
Monogatari Nagayama

Ooedo-Onsen Monogatari
Nagasaki Hotel Seifu(Kaga City,
Ishikawa Prefecture)(Nagasaki City,
Nagasaki Prefecture)

Yamashiro Onsen
Yamashitaya

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

Number of inquiries for potential deal
information in 2nd fiscal period (ended May 2017)70(Reference: 29 in 1st fiscal period)
Ooedo Onsen Reit Investment Corporation 32

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

AUM of￥100 billion

Asset acquisition atlisting: 9 properties

Pursue continuous
external growth

AUM of￥70 billion

AUM of￥26.8 billion

At listing(End of Aug. 2016)

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

After 5 years
11th period(Ending Nov. 2021)
Ooedo Onsen Reit Investment Corporation 33

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

Contract period:

20 years

Modified GOP (Note)

Non-cancellation period:

5-7 years
Rent revision:every

3 years

Amount equivalent toreal estate related
expenses of each facility

Variablerent
component

Fixed rent component

Approximately 95％
Structure of primary rent, which is mainlycomposed of the fixed rent component

Secondary rent

Primary rent

Approximately 5％

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

Calculation formulas for variable rent
Secondary rent = The total of taxes and public dues that it is liable for the Investment Corporation +Secondary rent underpins
stable cash flow

Calculation periods for variable rent
Jul.
Jun.
May
Apr.
Mar.
Feb.
Jan.
Dec.
Nov.
Oct.
Sep.
Aug.
Jul.
Jun.
May
Apr.
Mar.
Feb.
Jan.
Dec.
Nov.
Oct.
Sep.
Aug.

Variable rent = Modified GOP for each facility × the fixed rate stipulated by each lease agreement*Variable rent component will beapproximately 8% by including the variable
rent of Ooedo-Onsen Monogatari Reoma
Resort that was fixed

Modified GOP

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

Variable rent

Ooedo Onsen Reit Investment Corporation 34

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

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

Respond to deterioration over time through planned capital expenditures such as for partial
rebuilding

Carry out strategic value-increasing investments through cooperation with sponsor groups＜Example of increased value at Ooedo-Onsen Monogatari Atami＞
Increasecompetitiveness

Increasein saleConversion of existing multi-level parking garage

Increase the number of open-air onsen

Ooedo Onsen Reit Investment Corporation 35

Financial Strategy
Conservative LTV control and proper cash management

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

Proper cash management
Concept of free cash

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

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

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

Capitalexpenditure
Depreciation

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

Ooedo Onsen Reit Investment Corporation 36

Ⅳ. Appendix

Ooedo Onsen Reit Investment Corporation 37

Appraisal Value

Property
No.

Property nam e

Direct capitalization m ethod
Discounted cash flow m ethod
Unrealized
Appraisal value (m illion yen)
Acquisition
profits andDirect Cap Rate
Discount Rate
Term inal Cap Rate
PriceBook value
losses(m illion(m illion yen) 1st period 2nd period
1st period 2nd period
1st period 2nd period
1st period 2nd period(m illion
Changevaluation Nov. 30,
valuationyen)
Nov. 30,
May 31,
Nov. 30,
May 31, valuation
Nov. 30,
May 31,
May 31,
yen)
2016
2017
2016
2017
2016
2017
2016
2017

S-1

Ooedo-Onsen Monogatari
Reoma Resort

10,37910,578

10,90010,900

+0

+321

6.2%

6.1%

-0.1%

6.0%

5.9%

-0.1%

6.4%

6.3%

-0.1%

S-2

Ooedo-Onsen MonogatariIse-shima

3,656

3,627

3,820

3,840

+20

+212

5.6%

5.6%

0.0%

5.4%

5.4%

0.0%

5.8%

5.8%

0.0%

S-3

Ito Hotel New Okabe

2,657

2,702

2,810

2,820

+10

+117

5.2%

5.2%

0.0%

5.0%

5.0%

0.0%

5.4%

5.4%

0.0%

S-4

Ooedo-Onsen Monogatari
Atami

2,997

2,997

3,160

3,180

+20

未更新

+182

5.2%

5.2%

0.0%

5.0%

5.0%

0.0%

5.4%

5.4%

0.0%

S-5

Ooedo-Onsen Monogatari
Toi Marine Hotel

1,910

1,921

1,980

1,990

+10

+68

5.7%

5.7%

0.0%

5.5%

5.5%

0.0%

5.9%

5.9%

0.0%

S-6

Ooedo-Onsen Monogatari
Awara

1,901

1,961

1,980

1,980

+0

+18

6.0%

6.0%

0.0%

5.8%

5.8%

0.0%

6.2%

6.2%

0.0%

S-7

Ooedo-Onsen Monogatari
Kamoshika-so

1,222

1,242

1,270

1,270

+0

+27

5.1%

5.3%

0.2%

4.9%

5.1%

0.2%

5.3%

5.5%

0.2%

S-8

Ooedo-Onsen Monogatari
Ikaho

1,299

1,317

1,370

1,380

+10

+62

5.4%

5.4%

0.0%

5.2%

5.2%

0.0%

5.6%

5.6%

0.0%

S-9

Ooedo-Onsen Monogatari
Kimitsu-no-mori

819

848

861

862

+1

+13

5.2%

5.3%

0.1%

5.0%

5.1%

0.1%

5.4%

5.5%

0.1%

26,84427,19728,151

28,222+71+1,024

－

－

－

－

－

－

－

－

－

Total

Ooedo Onsen Reit Investment Corporation 38

Introduction of Properties (1)S-1

Ooedo-Onsen Monogatari
Reoma Resort

Location:
Date ofconstruction:

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

S-2

Ooedo-Onsen MonogatariIse-shima

Location:
Date of construction:

Shima City,
Mie Prefecture
February, 1973

Area characteristics
Area characteristics


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



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

S-3

Ito Hotel New Okabe

Location:
Date of construction:

Ito City,
Shizuoka Prefecture
November, 1990

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

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

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

Ooedo Onsen Reit Investment Corporation 39

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

Date of construction:

February, 1959

Date of construction:

October, 1974

Date of construction:

October, 1972

Area characteristics


S-5

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

Area characteristics

Izu City is the Izu Peninsula’s largest city located in the westof the central part of the peninsula. Facing Suruga Bay to thewest and surrounded by the Mount Amagi range to the south,
it is rich in natural, historical, and onsen tourist attractions.
Toi Onsen, where this facility is located, is situated on thewest coast of the Izu Peninsula and is the oldest onsen
district in the western Izu district, where hotels and ryokans
line the coast. During the Edo era, the region flourishedbecause of the Toi Gold Mine, and the tunnels are now a
tourist attraction.

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

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

Ooedo Onsen Reit Investment Corporation 40

Introduction of Properties (3)S-7

Ooedo-Onsen Monogatari
Kamoshika-so

Location:
Date of construction:

Nasushiobara City,
Tochigi Prefecture
February, 1996

S-8

Location:
Date of construction:

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

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

Shibukawa City,
Gunma Prefecture
November, 1983

S-9

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

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

Ooedo-Onsen Monogatari
Kimitsu-no-mori

Location:
Date of construction:

Area characteristics

Area characteristics


Ooedo-Onsen Monogatari
Ikaho

Kimitsu City,
Chiba Prefecture
March, 1996

Area characteristics


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



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

Ooedo Onsen Reit Investment Corporation 41

Financial Indices
Indices
Ordinary income

1st period(Nov. 30, 2016)

2nd period(May 31, 2017)

67 mn yen

446 mn yen

Net income

65 mn yen

445 mn yen

Depreciation

131 mn yen

264 mn yen

CAPEX

12 mn yen

90 mn yen

Total assets

30,732 mn yen

29,440 mn yen

Total net assets
BPS (Total net assets/unit)

15,818 mn yen

16,197 mn yen

89,775 yen

91,925 yen

Unit price (End of each period)

79,400 yen

88,600 yen

176,200 units

176,200 units

66 mn yen

446 mn yen

376 yen2,533 yen

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

1.9%
197 mn yen
1,119 yenCalculation formula

5.7% DPU (annualized)/Unit price as of end of period
708 mn yen Net income + Depreciation－profit or loss on sale of real estate
4,022 yen

17.7x

11.0x Unit price as of end of period/FFO per unit (annualized)

PER

53.0x

17.5x Unit price as of end of period/Net income per unit (average during the periods, annualized)

PBR

0.9x

1.0x Unit price as of end of period/Net assets per unit

ROA

0.2%

1.5% Ordinary income/Average of total assets during the period

0.9%

3.0%

0.4%

2.8% Net income/Average of total net assets during the period

1.7%

5.6%

Annualized
ROE
Annualized
NAV
NAV per unit
NAV multiple
Interest-bearing debt
LTV (book value basis)

16,599 mn yen
94,207 yen
0.8x
13,524 mn yen
44.0%

LTV (appraisal value basis)

42.9%

Operating days

91days17,221 mn yen Total net assets + Total appraisal value - Total book value - Total liabilities
97,740 yen
0.9x Unit price as of end of period/NAV per unit
11,735 mn yen
39.9% Interest-bearing debt/Total assets
38.5% Interest-bearing debt/(Total assets + Total appraisal value - Total book value)
182days

Ooedo Onsen Reit Investment Corporation 42

Balance Sheet(thousand yen)
1st period

1st period

2nd period

2nd period(period ended Nov. 30, 2016) (period ended May 31, 2017)(period ended Nov. 30, 2016) (period ended May 31, 2017)

Liabilities

AssetsCurrent liabilities

Current assets
Cash and deposits
Operating accounts receivable
Prepaid expenses

1,599,405

1,970,733

326－

118,600

106,728

Operating accounts payable

1,159

90,263

2,177,000－

Current portion of long-term loans payable

223,000

723,000

Short-term loans payable

1,431,892－

Accounts payable - other261,251

226,007

Deferred tax assets

24

15

Accrued expenses

7,580

8,212

Other

－

Income taxes payable

1,321

915

－

61,072

183,256

184,050

Consumption taxes receivable

Total current assets

3,150,250

1,105
2,078,582

Advances received

Non-current assets

Other

Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net

18,079,683

18,169,276-131,368-394,939

17,948,314

17,774,336

－

1,259

Accumulated depreciation－-7

Structures, net

－

1,251

9,264,018

9,264,041

27,212,332

27,039,629

Structures

Land
Total property, plant andequipment
Intangible assets
Leasehold right
SoftwareAccured consumption taxes

105

1,211

2,854,675

1,294,733

11,124,250

11,012,750

Tenant leasehold and security deposits

868,270868,270

Asset retirement obligations

67,10067,24812,059,620

11,948,269

14,914,295

13,243,002

15,752,576

15,752,576

－

-528

－

-528

15,752,576

15,752,047

65,834445,238

Total current liabilities
Non-current liabilities
Long-term loans payable

Total non-current liabilities
Total liabilities
Net assets
Unitholders' equity

157,802

157,802

6,191

6,963

163,993

164,765

Unitholders' capital
Deduction from unitholders' capital
Allowance for temporary difference

Total intangible assets

adjustment
Total deduction from unitholders'

Investments and other assets
Long-term prepaid expenses
Lease and guarantee deposits
Total investments and otherassetsTotal non-current assets
Total assets

capital196,129

147,310Unitholders' capital, net

10,00010,000206,129

157,310

27,582,456

27,361,706

Surplus
Unappropriated retained earnings(undisposed loss)
Total surplus

30,732,706

29,440,289

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

65,834445,238

15,818,410

16,197,286

15,818,410

16,197,286

30,732,706

29,440,289

Ooedo Onsen Reit Investment Corporation 43

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
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
Retained earnings brought forward
Unappropriated retained earnings(undisposed loss)

1st period

2nd period(from March 29, 2016
to November 30, 2016)(from December 1, 2016
to May 31, 2017)507,696507,696

1,021,730
1,021,730

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

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

0
0

8
2,267
2,275

24,22273,02073,82828,336
199,408
67,131
67,131
1,321
-24
1,296
65,834-47,40356,788104,191
446,053446,053916-24
926
445,127
111

65,834445,238

Ooedo Onsen Reit Investment Corporation 44

Debt Status

List of lenders(as of May 31, 2017)

Long term

LenderBalance(mn yen)Interest rate(%)

Drawdown date

Repayment date

Security

Notes

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.

6,950

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

September 1, 2016

May 31, 2019

Unsecured andunguaranteed(Note 1)

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

3,793

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

September 1, 2016

May 29, 2020

Unsecured andunguaranteed(Note 2)

Sumitomo Mitsui Banking Corporation

491

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

September 1, 2016

May 31, 2023

Unsecured andunguaranteed(Note 3)

Sumitomo Mitsui Banking Corporation

500

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

May 31, 2017

May 31, 2018

Unsecured andunguaranteed

Total

11,735(Note 1) With the first payment on the last day of October 2016, and subsequent payments on the last day of each subsequent quarter, 34,250,000 yen will be divided proportionally according to the amountof unpaid principal of each lender and the amount repaid, with the remainder being paid on the principal return date.
(Note 2) With the first payment on the last day of October 2016, and subsequent payments on the last day of each subsequent quarter, 18,750,000 yen will be divided proportionally according to the amountof unpaid principal of each lender and the amount repaid, with the remainder being paid on the principal return date.
(Note 3) With the first payment on the last day of October 2016, and subsequent payments on the last day of each subsequent quarter, 2,750,000 yen will be divided proportionally according to the amountof unpaid principal of each lender and the amount repaid, with the remainder being paid on the principal return date.
(Note 4) Please refer to the website of the General Incorporated Association JBA TIBOR Administration for information about the Japanese Bankers Association Japanese yen TIBOR.

Ooedo Onsen Reit Investment Corporation 45

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

Overview
Company Name

Ooedo-Onsen Monogatari Co., Ltd.

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

Address
Representative
Establishment

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

50

Representative Director
Mitsumasa Morita

40

September 26, 2014 (founded in November 2001)

20(rooms)

30

25.7

30.5

32.2

35.3

38.2

41.8

No. of
Employees

1,104 (consolidated, as of end of February 2017)

Financial
Results(Feb. 2017)

Consolidated Net Sales: 41,834 million yen
Consolidated Total Assets: 62,570 million yen
Net Assets: 10,879 million yen Reinvigorating onsen ryokan, hotels, spa-related

Sept.
2013

Feb.
2014

Feb.
2015

2003

Feb.
2016

Feb.
2017

2007

2,325

25

25

End ofSept.
2012

End of
Sept.
2013

2,601

2,614

27

27

27

End ofFeb.
2014

End ofFeb.
2015

End of
Feb.
2016

1,508

1,000

471

314

746

7

9

12

End ofSept.
2007

End ofSept.
2008

End of
Sept.
2009

0

2009

Opened OoedoAcquired facilities, including Acquired
Onsen Monogatari Aizu, Ikaho, Nikko Kirifuri,
Urayasuin Odaiba, Tokyo and Kamoshika-so, etc.
Mangekyofacilities, theme parks around the country
Businesses

2,000

500
Sept.
2012

2,321

2,671

2,749

1,942

1,500

0

112 million yen (as of end of February 2017)

Facilities in operation (right axis)

2,500

10

CapitalRooms (left axis)

3,000

Net sales

20

17
End of
Sept.
2010

End of
Sept.
2011

2010

2013

Acquired Hotel New Okabe,
Opened Minoh
Hotel New Shiobara, Kinugawa Kanko Hotel andKanko Hotel, and Reoma Resort Minoh Onsen
Minoh Spa Garden

32(number)
50
45
40
35
30
25
20
15
10
5
0

End of
Feb.
2017

2016

2017

Opened Kouunkaku,
Masuya andNagasaki Hotel Seifu

OpenedHotel Suiyotei,
Gero Shin-kan
and Beppu Seifu

Ooedo-Onsen
Monogatari
Kouunkaku

Ooedo-Onsen
Monogatari
Hotel Suiyotei

Ooedo-Onsen
Monogatari Masuya

Ooedo-Onsen
Monogatari
Gero Shin-kan

Ooedo-Onsen
Monogatari Nagasaki
Hotel Seifu

Ooedo-Onsen
Monogatari
Beppu Seifu

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

Onsen Monogatari,“ which has an Edo culture
theme. As of May 31, 2017, we operate 34
onsen and spa-related facilities

OdaibaOoedo-Onsen
Monogatari

Ooedo-Onsen
Monogatari
Aizu

Ooedo-Onsen
Ooedo-Onsen
Monogatari
Monogatari
Nikko Kirifuri Urayasu Mangekyo

Ooedo-Onsen
Monogatari
Ikaho

Ooedo-Onsen
Monogatari
Kamoshika-so

Kinugawa
Kanko Hotel

Hotel New
Shiobara

Ooedo-Onsen
Monogatari
Minoh Kanko Hotel

Minoh Onsen
Ooedo-Onsen
Ooedo-Onsen
Minoh Spa Garden
Monogatari
Monogatari
Reoma Resort
Reoma Resort(Reoma no Mori) (New Reoma World)

Ooedo Onsen Reit Investment Corporation 46

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

Kouunkaku
Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari
0
FY2012FY2013

FY2014FY2015

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

FY2016

Sendai Korona-no-yu

Aizu
Ooedo-Onsen Monogatari

Higashiyama Grand Hotel

Awara
Ooedo-Onsen Monogatari

KinosakiOoedo-Onsen Monogatari

Yamashiro Onsen

Nikko Kirifuri

Yamashitaya

Nagasaki Hotel Seifu

Ooedo-Onsen Monogatari

Kamoshika-so
Kinugawa Kanko Hotel

Ikaho
Hotel Shinko

Gero Shin-kan

Ooedo-Onsen Monogatari(Spa-related facilities for day visits)

Hotel New Shiobara
Hotel Kinugawa Gyoen

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Urayasu Mangekyo(Onsen theme park)
Tokyo Odaiba

Ooedo-Onsen Monogatari
Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Hotel Sohkan

MasuyaNagayama

Ooedo-Onsen MonogatariIse-shima

Reoma Resort

Ooedo-Onsen Monogatari(Onsen theme park)

Kimitsu-no-mori

Beppu

Ooedo-Onsen Monogatari
Ooedo-Onsen Monogatari

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

Ooedo-Onsen Monogatari

Tenka-taihei-no-yu
Sumpu Yume Hiroba(Onsen theme park )Minoh Kanko Hotel

Hotel Suiyotei
Ooedo-Onsen Monogatari Atami

Ito Hotel New Okabe
Ooedo-Onsen Monogatari(Former) Urashima Harbor Hotel**Acquired stake in company owning the facility

Toi Marine Hotel

Ooedo Onsen Reit Investment Corporation 47

Unitholders Breakdown
Top 10 unitholders

Ratio by number of unitholders＜1st fiscal period＞＜2nd fiscal period＞
Rank

Financial
institutions

0.4%

1.8%

Foreigncorporations
and individuals

Financial
institutions

Foreigncorporations
and individuals

Name

Number ofunits held

Ratio

1

Japan Trustee Services Bank, Ltd. (Trust Account)

24,37813.8%

2

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

10,491

6.0%

3

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

9,523

5.4%

4

Ooedo-Onsen Mongatari Co., Ltd.

9,246

5.2%

5

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

4,466

2.5%

6

Individual

2,200

1.2%

7

JF Kyosai Suiren

1,939

1.1%

8

Individual

1,300

0.7%

9

Hida Shinkin Bank

1,000

0.6%

9

General Incorporated Association Seiikai

1,000

0.6%

65,543

37.2%

0.2%

97.5%

Individuals
Financial institutions (Incl. securities companies)
Other domestic corporations
Foreign corporations and individuals

Raito by number of investment units
1.4%
13.5%

25.3%

59.8%

Individuals
Financial institutions (Incl. securities companies)
Other domestic corporations
Foreign corporations and individuals

Total

Ooedo Onsen Reit Investment Corporation 48

Efforts for IR Activities

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

・TSE IR Festa J-REIT corner (held on January 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.

Launch of website for individual investors

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

Ooedo Onsen Reit Investment Corporation 49

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

September
2016

October
2016

November
2016

December
2016
VolumeJanuary2017

February
2017

March
2017

April
2017

May
2017

February
2017

March
2017

April
2017

May
2017

Stock price

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

September
2016

October
2016

November
2016

December
2016
Stock price

January
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 50

Governance Structure

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

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

Management fee II

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

Acquisition fee(Note 2)

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

Disposition fee

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

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

Propose
Proposingdepartment

Complianceofficer

ReturnInvestment
Committee(includes outsidecommittee
members)

Review anddecision

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

Investment
Corporation
Board Meeting

RejectOoedo Onsen Reit Investment Corporation 51

Overview of Investment Corporation

Parent Company of Asset Manager
Sponsor

Ooedo-Onsen Monogatari Co., Ltd.

⑤⑥

Investment Corporation④
Ooedo Onsen Reit Investment
Corporation

Subsidiary

General Unitholders’ Meeting

Asset Manager②

Sumitomo Mitsui Trust Bank,
Limited①

Board of Directors

Ooedo Onsen
Asset Management Co., Ltd.

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

Executive Director
Fuminori Imanishi
Subsidiary of Parent Company
of Asset Manager⑤

Kagawa Prefecture Tourism
Development Ltd.

Supervisory Director
Kentaro Suzuki
Supervisory Director
Takayuki Hongyo③

Accounting and Tax Administrator

Heiseikaikeisha Tax Corporation

Independent Auditor
Subsidiary of Parent Company
of Asset Manager

Reoma Unity Co., Ltd.

⑥

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

Ooedo Onsen Reit Investment Corporation 52

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 May 31, 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 53

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 54