Ooedo Onsen Reit Investment Corporation
Results of 4th Fiscal Period ended May 31, 2018

Presentation Material
July 20, 2018
（Asset Manager）Ooedo Onsen Asset Management Co., Ltd.

Table of Contents
Ⅰ. Investment Highlights of 4th Period

External Growth Strategy

28

Operating Results of 5 Newly Acquired Properties

3

Internal Growth Strategy

31

Operating Results for the Entire Portfolio

7

Financial Strategy

33

Changes in Key Indices8

Major Factors for Increase/Decrease in Distribution per Unit

9

Ⅱ. Financial Highlights

Ⅴ. Appendix
Appraisal Value

35

Introduction of Properties

36

Financial Results for the 4th Fiscal Period ended May 201811

Financial Indices46

Forecast for the 5th Fiscal Period ending November 201812

Balance Sheet

47

Forecast for the 6th Fiscal Period ending May 201913

Statement of Income

48

Portfolio Data

14

Debt Status

49

Financial Status

16

Ooedo-Onsen Monogatari Group

50

Revitalization Process of the Ooedo-Onsen Monogatari Group andCollaboration with the Asset Manager

52

Unitholders Breakdown

53

Unitholder Benefit Program

54

Profile of IR Activities

55

Track Record of Investment Unit Price

56

Ⅲ. Operating Results of 9 Properties Held
Since Before the 3rd Fiscal Period
Operating Results of 9 Properties Held Since Before the 3rd Fiscal
Period18

Ⅳ. Ooedo Onsen Reit’s Investment Areas
and Future Investment Strategies
Uniqueness of Ooedo Onsen Reit’s Investing Targets

24

Governance Structure

57

Market Environment 〜 Stable Demand for Onsen

25

Overview of Investment Corporation

58“Ooedo Business Model” with Stable Operations and Sustainable
Growth26

Overview of Asset Manager

59* The photo on the front cover is a panoramic view from Tenbo-no-Yu at Ooedo-Onsen Monogatari Nagasaki Hotel Seifu.

Ooedo Onsen Reit Investment Corporation 1

Ⅰ. Investment Highlights of 4th Period

Ooedo Onsen Reit Investment Corporation 2

Operating Results of 5 Newly Acquired Properties (1)The overall KPIs remained generally steady, and sales increased from the same period of the previous year,
although indicators varied with individual properties due to the effect of new opening or the impact of therepair work period
Total of 5 newly acquired properties＜Cumulative comparison of 4th period and the same period of the previous year＞

Room occupancy rate︓
85.0%

83.3%

Portfolio operating results
2017

2018

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

88.9%

89.4%

96.6%

92.5%

93.7%

94.5%

82.0%

73.6%

82.4%

93.9%

86.1%

81.9%

88.0%

85.0%

83.3%

-1.7%

ADR (yen)

26,06827,69535,271

26,13730,17830,502

31,66630,62728,02530,10228,60130,841

29,691

28,82829,994+1,166

RevPAR (yen)23,17424,75934,071

24,17628,27628,82425,96622,541

23,092

28,265

24,62525,25826,12824,50324,985

+482

526

561

738

531

658

658

615

527

484

636

544

565

7,048

2,728

3,373

+645

Sales (million yen)

(Note 1) Sales, ADR, and RevPAR are rounded down to the nearest specified units and percentage rates is rounded to the second decimal place. The same applies hereinafter.
(Note 2) The comparison with the same period of the previous year is calculated by excluding from the number of available rooms those rooms that were closed or for which sales were suspended due to seismic
retrofitting or large-scale renovation work. The same applies hereinafter.

Ooedo Onsen Reit Investment Corporation 3

Operating Results of 5 Newly Acquired Properties (2)S-10︓Ooedo-Onsen Monogatari Nagasaki Hotel Seifu

S-11︓Ooedo-Onsen Monogatari Kounkaku＜Cumulative comparison of 4th period and the same period of the previous year＞＜Cumulative comparison of 4th period and the same period of the previous year＞

Room occupancy rate︓
74.8%

93.9%

Room occupancy rate︓
93.7%

76.3%

(Note 1) Sales were suspended for total 11,700 rooms at Ooedo-Onsen Monogatari Nagasaki Hotel Seifu due to renovations carried out from December 15, 2016 through April 29, 2017.
(Note 2) Sales were suspended for total 4,900 rooms at Ooedo-Onsen Monogatari Kounkaku due to earthquake-resistant construction work carried out from January 10, 2017 through February 28, 2017.
Also, operating results for Ooedo-Onsen Monogatari Kounkaku include the annex that started business from March 17, 2018, which the investment corporation does not own.

Ooedo Onsen Reit Investment Corporation 4

Operating Results of 5 Newly Acquired Properties (3)S-12︓Kinugawa Kanko Hotel

S-13︓Ooedo-Onsen Monogatari Kinosaki＜Cumulative comparison of 4th period and the same period of the previous year＞＜Cumulative comparison of 4th period and the same period of the previous year＞

Room occupancy rate︓
91.3%

88.8%

Room occupancy rate︓
87.8%

86.5%

(Note 1) Sales were suspended for total 1,835 rooms at Kinugawa Kanko Hotel due to earthquake-resistant construction work carried out from January 9, 2017 through February 19, 2017.
(Note 2) Sales were suspended for total 1,654 rooms at Ooedo-Onsen Monogatari Kinosaki due toearthquake-resistant construction work carried out until December 17, 2016.

Ooedo Onsen Reit Investment Corporation 5

Operating Results of 5 Newly Acquired Properties (4)S-14︓Ooedo-Onsen Monogatari Higashiyama Grand Hotel
Memo＜Cumulative comparison of 4th period and the same period of the previous year＞

Room occupancy rate︓
72.3%

70.3%

Ooedo Onsen Reit Investment Corporation 6

Operating Results for the Entire Portfolio
RevPAR decreased slightly but remained almost unchanged from the previous fiscal period,and ADR improved with partial price increases and sales initiatives＜Cumulative comparison of 4th period and the same period of the previous year＞

Room occupancy rate︓
87.3%

85.3%

Portfolio operating results
2017

2018

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

84.6%

89.7%

97.2%

89.6%

89.2%

94.9%

86.3%

75.4%

84.8%

95.4%

86.9%

83.1%

88.1%

87.3%

85.3%

-2.0%

ADR (yen)

25,74029,32839,44926,432

28,63629,10031,47830,87327,80630,76328,72629,942

29,982

29,352

29,972+620

RevPAR (yen)21,77626,30738,344

23,68325,543

27,615

27,16523,27823,57929,347

24,962

24,881

26,41425,62425,566-58

Sales (million yen)

1,169

1,402

2,014

1,240

1,411

1,498

1,496

1,280

1,171

1,583

1,325

1,355

16,949

7,591

8,213

+622

Ooedo Onsen Reit Investment Corporation 7

Changes in Key IndicesDistributions are expected to remain stable, with DPU staying at the 2,400 yen level after PO last year,
and FFO per unit at the 4,200 yen level. The unrealized capital gain on newly acquired properties willcontribute to NAV, and LTV will fall moderately
4th period

5th period

6th period(November 2017)(May 2018)(November 2018)(May 2019)

ActualForecast

Forecast

Forecast

DPU per unit

2,392 yen

2,435 yen

2,435 yen

2,410 yen

FFO per unit

3,903 yen

4,185 yen

4,218 yen

4,216 yen

42.2％

40.9％

40.6％

3rd period

LTV(book value basis)

LTV

39.8％

Publicoffering・Propertyacquisition(appraisal value basis)

38.2％

39.1％

37.7％

37.2％

NAV per unit

98,576 yen

103,391 yen

104,284 yen

105,313 yen

Ooedo Onsen Reit Investment Corporation 8

Major Factors for Increase/Decrease in Distribution per Unit
Distribution per unit will be at the level of normal operations targeted after public offering last year
4th period(May 2018)

(yen)
2,700

2,500

＋26

＋14

＋23

5th period

6th period(November 2018)(May 2019)

－51

－47

－54

＋99

＋16

＋12

2,300

2,100

2,435

2,370

2,435

2,410

〜
〜

1,900
0

4th period
Forecast

Lease
operations
revenuegain/loss

Selling,
general andadministrative
expenses

Nonoperating
income/expenses

Lease
operations
revenuegain/loss

Selling,
general andadministrative
expenses

Nonoperating
income/expenses

5th period
Forecast

4th period (actual) – 5th period (forecast)

4th period (forecast) – 4th period (actual)
Lease operations revenue gain/loss

4th period
Actual+23-13
・Decrease in primary rent
・Increase in other revenue (insurance revenue, etc.) +4+24・Reduced burden due to the review of valuation
amount of fixed asset taxes and city planning taxes(Difference with secondary rent)・Decrease in depreciation+12

Selling, general and administrative expenses +14

・Increase in other operating expenses＋13

Non-operating income/expenses+26

・Decrease due to finalized investment unit issuance +26
expenses

Lease operations revenue gain/loss

・Increase in AM fee
・Increase in transfer agent fee(increase in the number of unitholders)・Increase in the shipping cost, etc.
(increase in the number of unitholders)

Non-operating income/expenses

・Absence of investment unit issuance expenses
・Increase in finance-related expenses

Selling,
general andadministrative
expenses

Nonoperating
income/expenses

6th period
Forecast

5th period (forecast) – 6th period (forecast)-51

・Increase in primary rent due to the full period＋26
contribution of new properties
・Recorded burden of fixed asset taxes and city planning -46
taxes for the full period (5 newly acquired properties), etc.
・Increase in depreciation (due to capital expenditure)-33

Selling, general and administrative expenses

Lease
operations
revenuegain/loss

-47
-15
-18
-17

Lease operations revenue gain/loss

・Increase in variable rent
(5 newly acquired properties and others)
・Decrease in secondary rent reflecting the reviewof the valuation amount of fixed asset taxes andcity planning taxes
・Increase in depreciation

-54

＋18
-49
-23

Selling, general and administrative expenses +16

・Decrease in AM fee＋12

Non-operating income/expenses+12・Decrease in finance-related expenses

＋14

+99
＋95
-6

(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 9

Ⅱ. Financial Highlights

Ooedo Onsen Reit Investment Corporation 10

Financial Results for the 4th Fiscal Period ended May 2018
Revenue and income increased from the previous fiscal period due to the acquisition of new properties
following a capital increase via a public offering(thousand yen)
Item

Operating revenue

3rd period

4th period（Actual ）（Actual ）Component
ratio

Primary rent

1,032,755

Component
ratio

948,497

Difference

4th period(Forecast as ofJan. 22, 2018)

Main factors for increase/decrease from forecast(thousand yen)・ Decrease in fixed asset taxes and city planning taxes
due to the review of valuation amount・ Decrease in variable rent (Ito and others)

Difference

1,442,676+409,920

1,444,521-1,845

1,325,793+377,295

1,328,913-3,120

Fixed rent

91.5%

868,270

94.2%

1,248,415+380,145

1,248,278+136

Variable rent

8.5%

80,227

5.8%

77,377-2,84980,634-3,256

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

Operating income
・ Decrease due to finalized investment unit issuance expenses

Ordinaly income

Main factors for increase/decrease
from previous fiscal period+5,830-3,256+5,630+3,231+9,058+6,317+15,213

Secondary rent

78,431

115,540+37,109

115,337+203

Others

5,826

1,342

-4,484270+1,071

Lease operations
revenue gain/loss

・ Increase in primary rent (5 newly acquired properties)
・ Increase in secondary rent (5 newly acquired properties)

677,205

919,683+242,477

914,053+5,630・ Increase in fixed asset taxes and city planning taxes(5 newly acquired properties)-12,770

Operating income

519,092

734,305+215,213

725,247+9,058・ Increase in depreciation (5 newly acquired properties, etc.)-147,121

Ordinary income

421,047

571,225+150,178

556,011+15,213

Net income

420,172

570,273+150,100555,011+15,261

1,233

2,824

+1,5902,824-

Total distribution

421,470573,069+151,599

557,772+15,297

Total units outstanding

176,200

235,347+59,147

235,347

-

2,392

2,435

+43

2,370

+65

7

12

+5

12

-

3,903

4,185

+282

4,133

+52

Excess cash distribution

DPU (yen)（Excess cash distribution
per unit)

FFO per unit (yen)NOI944,786

1,334,384+389,598

1,331,744+2,639Lease operations revenue gain/loss(thousand yen)

+377,295+37,109+242,477

・ Decrease in IR-related expenses
・ Increase in AM fee (5 newly acquired properties)-15,115・ Increase in administrative service fees

-1,312・ Temporary increase in expenses for General Unitholders’Meeting-5,547

Operating income
・ Increase in finance-related expenses (new borrowings)
・ Investment unit issuance expenses (public offering)+1,533+215,213-40,077-22,456

Ordinaly income+150,178

Main financial indicators(million yen)

Total assets

39,875Interest-bearing debt

16,807

Total liabilities

18,655
21,220Depreciation

267,580

414,701+147,121

417,691-2,990Total net assets

CAPEX

95,012

141,112+46,100

178,512-37,399

NAV per unit (yen)LTV (book value basis)

42.2%
103,391 yen

Ooedo Onsen Reit Investment Corporation 11

Forecast for the 5th Fiscal Period ending November 2018
While revenue will increase due to the full contribution of new properties, operating income will reducefrom the previous period due to the full period burden of fixed asset taxes of new properties
Main factors for increase/decrease from forecast
Net income will remain flat due to the absence of investment unit
(thousand yen)issuance expenses
・ Decrease in fixed asset taxes and city planning taxes due to(thousand yen)
+11,667
Item

Operating revenue

4th period

5th period（Actual）（Forecast）

Component
ratio

Primary rent

1,442,676

Component
ratio

1,325,793

5th period(Forecast as ofJan. 22, 2018)

Difference

the review of valuation amount

Difference

1,448,367+5,691

1,451,513-3,146

1,331,964+6,1701,335,282-3,318Fixed rent

94.2%

1,248,415

92.4%

1,230,449-17,966

1,230,449-

Variable rent

5.8%

77,377

7.6%

101,514+24,136

104,832-3,318116,128+587

115,956+171

Secondary rent

115,540

Others

1,342

275-1,066275+0Lease operations
revenue gain/loss

919,683

907,670-12,012897,127+10,542

Operating income

734,305

711,033-23,271

703,213+7,820Ordinary income

571,225571,260+35

564,591+6,669Net income

570,273

570,260-12

563,591+6,669

2,824

2,824

-

2,824

Total distribution

573,069

573,069-

Total units outstanding

235,347

235,347

2,435

Excess cash distribution

DPU (yen)（Excess cash distribution
per unit)

FFO per unit (yen)NOI・ Decrease in variable rent (Ito and others)-3,318

Lease operations revenue gain/loss+10,542

・ Increase in the shipping cost, etc.
(increase in the number of unitholders)-2,540Operating income
・ Increase in finance-related expenses

Ordinaly income

Main factors for increase/decrease
from previous fiscal period
・ Increase in primary rent due to the full period contribution of
5 newly acquired properties+7,820-1,151+6,669(thousand yen)

+6,170*Transfer from fixed rent in line with the start of variable rent for new properties:
24,197 thousand yen (fixedvariable)

・ Recorded burden of fixed asset taxes and city planning taxes
for the full period (5 newly acquired properties)
・ Increase in depreciation (capital expenditure)-10,997-7,785

Lease operations revenue gain/loss-12,012-3,613-・ Increase in AM fee
・ Increase in transfer agent fee(increase in the number of unitholders)

566,480+6,589・ Increase in the shipping cost, etc.
(increase in the number of unitholders)-

235,347

-

2,435

-

2,407

+28

12

12

-

12

-

4,185

4,218

+33

4,199

+19

1,334,384

1,330,157-4,227

1,321,764+8,393

Depreciation

414,701

422,487+7,785

424,636-2,149CAPEX

141,112

212,408+71,295

178,512+33,896

Operating income
・Absence of investment unit issuance expenses
・Increase in finance-related expenses

Ordinaly income

Main financial indicators-4,312-4,071-23,271+22,456-1,639+35(million yen)

Total assets

39,135Interest-bearing debt

15,991

Total liabilities

17,915

Total net assets

21,220LTV (book value basis)

40.9%

Ooedo Onsen Reit Investment Corporation 12

Forecast for the 6th Fiscal Period ending May 2019
Revenue will decline from the previous fiscal period mainly due to a decline in secondary rent (reflecting thedecrease in fixed asset taxes due to the review of valuation amount), and DPU will remain at the level ofnormal operations due to the reduction in financial costs, etc., albeit slightly declining from the previous
fiscal period(thousand yen)
Item

Operating revenue

5th period

6th period（Forcast）（Forecast）

Component
ratio

Primary rent
Fixed rent
Variable rent
Secondary rent
OthersLease operations
revenue gain/loss
Operating income

1,448,367

Component
ratio

1,331,964
92.4%
7.6%

1,230,449

92.1%

Difference

1,441,160-7,207

1,336,329+4,3651,230,449-

105,879+4,365・ Increase in variable rent
(5 newly acquired properties and others)

116,128

104,556-11,572

・ Decrease in secondary rent reflecting the review of thevaluation amount of fixed asset taxes and city planning taxes

275

275

-

101,514907,670711,033

7.9%

894,839702,198-12,831-8,835

Ordinary income

571,260

565,252-6,008Net income

570,260

564,252-6,008

Excess cash distribution
Total distribution
Total units outstanding

2,824
573,0692,824
567,186-5,883

235,347

235,347

-

2,435

2,410

-25

12

12

-

4,218

4,216

-2

1,330,157

1,322,972-7,184

Depreciation

422,487

428,133+5,646

CAPEX

212,408

180,000-32,408

DPU (yen)（Excess cash distribution
per unit)

FFO per unit (yen)NOI

Main factors for increase/decrease
from previous fiscal period

・ Increase in depreciation (capital expenditure)

Lease operations revenue gain/loss
・Decrease in AM fee

Operating income
・Decrease in finance-related expenses

Ordinaly income

Main financial indicators(thousand yen)

+4,365-11,572-5,646-12,831+2,993-8,835+3,327-6,008(million yen)

Total assets

38,882

Interest-bearing debt

15,804

Total liabilities

17,667

Total net assets

21,214

LTV (book value basis)

40.6%

Ooedo Onsen Reit Investment Corporation 13

Portfolio Data (1)Appraisal value remained almost flat, and unrealized capital gain (appraisal value – book value) increased
to 3.1 bn yen due to the acquisition of properties in the 4th fiscal period
Property
No.

Property name

S-1

Ooedo-Onsen Monogatari Reoma Resort

S-2

Ooedo-Onsen Monogatari Ise-shima

S-3

Location

Number of
rooms

Room
occupancy
rate(Note 1)

Appraisal
Acquisition
NOI
value
price
(million yen)(million yen) (million yen)

NOI
yield
(Note 2)After
depreciation
NOI yield

PML(Note 2)

26.9／ 27.2

241

88.4%

10,37910,900

405

7.8%

6.3%

1.9／ 1.6％

Mie Prefecture

38.2

83

95.3%

3,656

3,840

114

6.3%

3.5%

14.2%

Ito Hotel New Okabe

Shizuoaka Prefecture

27.6

73

81.2%

2,657

2,790

81

6.1%

4.2%

12.0%

S-4

Ooedo-Onsen Monogatari Atami

Shizuoaka Prefecture

44.4

76

96.8%

2,997

3,180

100

6.7%

4.5%

12.6%

S-5

Ooedo-Onsen Monogatari Toi Marine Hotel

Shizuoaka Prefecture

43.7

64

84.8%

1,910

1,990

60

6.3%

3.4%

14.9%

S-6

Ooedo-Onsen Monogatari Awara

Fukui Prefecture

36.8

95

75.6%

1,901

1,980

68

7.3%

5.1%

14.9%

S-7

Ooedo-Onsen Monogatari Kamoshika-so

Tochigi Prefecture

22.3

60

76.2%

1,222

1,270

39

6.5%

4.3%

3.0%

S-8

Ooedo-Onsen Monogatari Ikaho

Gunma Prefecture

34.6

40

92.5%

1,299

1,380

40

6.3%

4.2%

1.0%

S-9

Ooedo-Onsen Monogatari Kimitsu-no-moriChiba Prefecture

22.2

41

94.9%

819

862

26

6.5%

4.7%

4.8%

S-10

Ooedo-Onsen Monogatari Nagasaki Hotel Seifu

Nagasaki Prefecture

35.9

100

93.9%

1,637

1,930

64

8.0%

5.6%

6.4%

S-11

Ooedo-Onsen Monogatari Kounkaku

Miyagi Prefecture

52.5

98

76.3%

1,040

1,250

48

9.5%

5.6%

3.9%

S-12

Kinugawa Kanko Hotel

Tochigi Prefecture

36.8

172

88.8%

3,870

4,620

144

7.6%

4.4%

2.1%

S-13

Ooedo-Onsen Monogatari Kinosaki

Hyogo Prefecture

49.6

103

86.5%

2,084

2,490

79

7.8%

5.8%

11.8%

S-14

Ooedo-Onsen Monogatari Higashiyama Grand Hotel Fukushima Prefecture

53.7

123

70.3%

1,230

1,480

60

10.1%

5.9%

4.6%

36.5

1,369

85.3%

36,70539,962

1,334

7.3%

5.0%

2.7%

Total/Average

Kagawa Prefecture

Building age(years)(Note 3)(Note 4)(Note 5)(Note 1) Room occupancy rate is for the 4th period of the investment corporation (from December 2017 to May 2018).
(Note 2) (Average) NOI yield and (average) after depreciation NOI yield indicate annualized figures.
(Note 3) As for Building age and PML of Ooedo-Onsen Monogatari Reoma Resort, figures on the left indicate those of Hotel Reoma no Mori while figures on the right indicate those of New Reoma World.
(Note 4) The room occupancy rate of Ito Hotel New Okabe is a comprehensive figure including the rate of Surugatei, a property not owned by the investment corporation.
(Note 5) The room occupancy rate of Ooedo-Onsen Monogatari Kounkaku is a comprehensive figure including the rate of the Annex, a property not owned by the investment corporation.

Ooedo Onsen Reit Investment Corporation 14

Portfolio Data (2)Diversification of the investment area was achieved keeping the location policy attracting customers
from urban areas
Investment ratio by region (acquisition price basis)

Ooedo-Onsen Monogatari

Kounkaku
Ooedo-Onsen Monogatari

Ooedo-Onsen
Monogatari
Ooedo-Onsen Monogatari

Awara

Higashiyama Grand Hotel
Ooedo-Onsen
Monogatari

Kinosaki

Ikaho

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

48.8％

Ooedo-Onsen Monogatari

Nagasaki Hotel Seifu

Kamoshika-so
Kinugawa
Kanko Hotel
Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Reoma Resort

Ooedo-Onsen
Monogatari

Kimitsu-no-moriOoedo-Onsen MonogatariIse-shima

Ooedo-Onsen Monogatari

Atami
Ito Hotel New Okabe
Ooedo-Onsen Monogatari

Toi Marine Hotel

Ooedo Onsen Reit Investment Corporation 15

Financial Status
Maintained conservative LTV level and diversified lenders and repayment due dates
Breakdown of lenders

LTV

Ratio of long-term borrowings

Number of syndicate lenders: 13

Overview of maturity（million yen）
8,000

Long-term borrowings

Short-term borrowings

Avg. remaining duration
1.8 years

6,000
4,000
2,000
0

5th
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 16

Ⅲ. Operating Results of 9 Properties Held
Since Before the 3rd Fiscal Period

Ooedo Onsen Reit Investment Corporation 17

Operating Results of 9 Properties Held Since Before the 3rd Fiscal Period (1)S-1︓Ooedo-Onsen Monogatari Reoma Resort 〈Hotel Reoma-no-mori・New Reoma World〉＜Cumulative comparison of 4th period and the same period of the previous year＞

Room occupancy rate︓
87.9%

88.4%

＜Year-on-Year comparison of number of guests (Note 1) and sales＞
4th period ended May 2018
Guests︓284,304
Sales︓1,121mn yen

4th fiscal period
ended May 2018

(Note 1) The number of guests is the total number of people using New Reoma World during the period.
(Note 2) “2018” in the above graph refers to the period from December 2017 to May 2018, “2017” to the period from December 2016 to November 2017 and “2016” to the period from May 2016 to November 2016.

Ooedo Onsen Reit Investment Corporation 18

Operating Results of 9 Properties Held Since Before the 3rd Fiscal Period (2)S-2︓Ooedo-Onsen Monogatari Ise-shima

S-3︓Ito Hotel New Okabe＜Cumulative comparison of 4th period and the same period of the previous year＞＜Cumulative comparison of 4th period and the same period of the previous year＞

Room occupancy rate︓
93.2%

Room occupancy rate︓
90.4%

95.3%

81.2%

(Note) 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.

Ooedo Onsen Reit Investment Corporation 19

Operating Results of 9 Properties Held Since Before the 3rd Fiscal Period (3)S-4︓Ooedo-Onsen Monogatari Atami

S-5︓Ooedo-Onsen Monogatari Toi Marine Hotel＜Cumulative comparison of 4th period and the same period of the previous year＞＜Cumulative comparison of 4th period and the same period of the previous year＞

Room occupancy rate︓
97.8%

Room occupancy rate︓
90.2%

96.8%

84.8%

Ooedo Onsen Reit Investment Corporation 20

Operating Results of 9 Properties Held Since Before the 3rd Fiscal Period (4)S-6︓Ooedo-Onsen Awara

S-7︓Ooedo-Onsen Monogatari Kamoshika-so＜Cumulative comparison of 4th period and the same period of the previous year＞＜Cumulative comparison of 4th period and the same period of the previous year＞

Room occupancy rate︓
77.8%

Room occupancy rate︓
78.2%

75.6%

76.2%

Ooedo Onsen Reit Investment Corporation 21

Operating Results of 9 Properties Held Since Before the 3rd Fiscal Period (5)S-8︓Ooedo-Onsen Ikaho

S-9︓Ooedo-Onsen Monogatari Kimitsu-no-mori＜Cumulative comparison of 4th period and the same period of the previous year＞＜Cumulative comparison of 4th period and the same period of the previous year＞

Room occupancy rate︓
94.3%

Room occupancy rate︓
96.9%

92.5%

94.9%

Ooedo Onsen Reit Investment Corporation 22

Ⅳ. Ooedo Onsen Reit’s Investment Areas
and Future Investment Strategies

Ooedo Onsen Reit Investment Corporation 23

Uniqueness of Ooedo Onsen Reit’s Investing Targets
Investment targets are facilities used for enjoying leisure time in a variety of ways with priority investments
targeting multi-use facilities (related to onsen and spa) that provide services for different types of guests,
centered on onsen and spa
 Investment targets are facilities for utilizing leisure time to provide people
with a fulfilling experience of time consumption based on the trend ofembracing services rather than goods.

Shopping
Entertainment

H&BC

Accommodation

 Investments are made in business-use properties represented by thefacilities of the Ooedo-Onsen Monogatari Group, whose markets havebeen stable due to efforts to capture contemporary consumer needs andthe trend of consumption for services (experience-type).

Dininganddrinking（Health &Beauty Care）

 The core facility is an onsen/spa that not only responds to stabletradition-based demand but also attracts diverse new customers.

Onsen/spa
Theme park

Trends in the consumption of services(%)

SportsAmusements＋αOtherservices

Source: Implementation of Consumer Policies in 2016 by the Consumer Affairs Agency

Ooedo Onsen Reit Investment Corporation 24

Market Environment ~ Stable Demand for Onsen
Consumersʼ needs for onsen is at the top and onsen trips accompanying overnight stays is stable
Trends in number of accommodation facilities
and FY total number of guests(thousands)
140000No. of accommodation facilities (left axis)
FY total no. of guests (right axis)(facilities)
16,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

Ratio of visits to onsen and spa facilities by age
Families

Seniors

120000100000
80000
60000
40000
20000
0
FY2010FY2011FY2012FY2013

FY2014FY2015

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

Type of trip desired in the next 1-2 years(multiple responses)
Onsen

51.2%

Sightseeing, nature

50.4%

Sightseeing, history/culture

41.9%

Gourmet39.8%

Theme park
Seashore resort

31.4%
24.9%

Walking in town

23.0%

Zoo/aquarium

20.1%

Tour of world heritage sites

19.8%

Long Stay

19.3%

Shopping

19.0%
0%

20%

Source: “Annual Report on the Tourism Trends Survey 2017”40%

・The number of accommodation facilities‘ guests has
been stable since FY2010 according to the Onsen Use
Survey by the Ministry of the Environment
・Families and the elderly, which represent the twolargest demographic groups, create customers
consistently

34.2%

Sightseeing, city

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

60%

・”Onsen” collected the largest percentage among typesof trip desired according to the Annual Report on the
Tourism Trends Survey
Ooedo Onsen Reit Investment Corporation 25

“Ooedo Business Model” with Stable Operations and Sustainable Growth (1)Ooedo business model achieving both high quality and reasonable price
Provision of services that lead tothe creation of repeat customers
Services created from a customer perspective
Well-thought-out onsen facilities and merchandising facilities
 Buffet-style restaurants that offer more than 100 different
dishes in total every morning and evening
 Continuous efforts to attract more guests with in-facility
entertainment (including popular theater shows, etc.)Application of a unique corporate-owned
chain operation (Ooedo business model)

Efficient operation
Adoption of a centralized purchasing system for foodstuffs,
fixings and amenities Detailed programs for cost management
 Efficient placement of staff members

Highquality
service＋

Ongoing support froma wide-ranging customer
base centered on
the senior age group

Affordable
price

Marketing programs to maximize
customer reach
Measures to attract more customers led by the headquartersof the Ooedo-Onsen Monogatari Group Efforts to attract more customers by utilizing in-house facilities
such as reservation centersOoedo Onsen Reit Investment Corporation 26

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

Ooedo-Onsen Monogatari Group hotel guest questionnaire(conducted from December 1, 2017 to May 31, 2018)＜Overall satisfaction ＞＜Meal (breakfast and dinner)＞

Trends in average monthly occupancy rates foreach type of accommodation facility(%)
100.0%

95.4%

90.0%
80.8%
80.0%
75.7%

70.0%

60.7%
60.0%
59.8%
50.0%

＜Onsen＞＜Type of services inside the facility＞

38.0%

40.0%
30.0%
20.0%

2016/92017/1
Ooedo Onsen REIT
Resort hotels

Very satisfied

SatisfiedUnsatisfied

Very unsatisfied

Fair

2017/5City hotels
Ryokans

2017/92018/1Business hotels
Total

Source: Data on city hotels, business hotels, resort hotels, ryokan and all types ofaccommodation are compiled by the asset manager based on a statisticalsurvey on trips with accommodation conducted by the Ministry of Land,
Infrastructure, Transport and Tourism.

Ooedo Onsen Reit Investment Corporation 27

External Growth Strategy (1)Constant supply of properties on a long-term basis by leveraging the sponsor pipeline
Priority negotiating rights on all properties held by Ooedo-Onsen Monogatari Group (Main properties listed below)

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

Ooedo-Onsen
Monogatari Nagayama(Kaga City,
Ishikawa Prefecture)

Ooedo-Onsen Monogatari
Nikko Kirifuri

Ooedo-Onsen Monogatari
Urayasu Mangekyo

Minoh Onsen Spa Garden

Hotel Kinugawa Gyoen(Nikko City, Tochigi Prefecture)

Ooedo-Onsen-Monogatari
Minoh Kanko Hotel(Fixed term land lease right for (Minoh City, Osaka Prefecture)business purpose)(Urayasu City, Chiba Prefecture)(Minoh City, Osaka Prefecture)(Nikko City, Tochigi Prefecture)

Yamashiro Onsen
Yamashitaya

Hotel New Shiobara

Ooedo-Onsen Monogatari
KakeyuOoedo-Onsen Monogatari
Aizu

Ooedo-Onsen Monogatari
Taiheinoyu Sumpu Yumehiroba(Aizu Wakamatsu City,
Fukushima Prefecture)(Shizuoka City, Shizuoka Prefecture)(Kaga City,
Ishikawa Prefecture)(Nasushiobara City,
Tochigi Prefecture)(Ueda City, Nagano Prefecture)

Properties acquired by the Ooedo Onsen Monogatari Group after the establishment of the investment corporation
October 2016 -April 2017 -July 2017 -July 2017 -April 2018 -August 2018 (plan) -Ooedo-Onsen Monogatari
Naruko-onsen Masuya

Ooedo-Onsen Monogatari
Hotel Suiyotei

Ooedo-Onsen Monogatari
Beppu Seifu

Ooedo-Onsen Monogatari
Gero Shin-kan

Ooedo-Onsen Monogatari
Nanki Kushimoto

Ooedo-Onsen Monogatari
Hotel Kisoji(Higashi Muro County,
Wakayama Prefecture)(Kiso County, Nagano Prefecture)(Osaki City, Miyagi Prefecture)(Atami City, Shizuoka Prefecture) (Beppu City, Ooita Prefecture)(Gero City, Gifu Prefecture)⇒ In addition to the above, properties that will be newly acquired by sponsors going forward are coveredby the preferential negotiating rights, forming a new pipeline
Ooedo Onsen Reit Investment Corporation 28

External Growth Strategy (2)Acquisition from the market based on information obtained by the asset manager’s own sources
as well as from sponsors
Investment targets (quoted from the articles of incorporation)

Number of inquiries raised forpotential deals in the 4th fiscal
period ended May 2018

Investment in facilities
aimed at utilizing leisure time

Ryokans, Hotels, Spa facilities, Resort facilities,
Amusements and Other leisure facilities

135

Property information other than in the sponsor pipeline＜by source＞＜by type＞
Ordinance-designated cities

Core citiesof whichexamined

Otherof whichexamined

Totalof whichexaminedof whichexamined

Lodging

0

0

2

1

31

7

33

8

Other
(day trips, etc.)

0

0

1

1

2

0

3

1

Other lodgings

29

12

8

1

50

10

87

23

Entertainment, Amusement

1

0

4

3

3

2

8

5

Sports, beauty,
health promotion facilities

1

1

1

1

2

2

4

4

31

13

16

7

88

21

135

41

Onsen/Spa

Total

Ooedo Onsen Reit Investment Corporation 29

External Growth Strategy (3)Exploiting opportunities for external growth as leisure facility focused REIT with the core of onsen/spa~Transformation from a small-scale REIT into a med-to-large REIT~

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

AUM of￥26.8 billion

At listing(End of Aug. 2016)

AUM of￥70 billion

AUM of￥36.7 billion
Achieving AUM of ¥70 to ¥100 billion
for the time being

After acquisition of
new properties(December 2017)

5 years after listing

Ooedo Onsen Reit Investment Corporation 30

Internal Growth Strategy (1)The basic policy is to introduce variable rents for some properties for which an upside can be expected,
while leasing with priority to securing a stable distribution level is the first choice
Lease conditions for properties master-leased to the Ooedo-Onsen Monogatari Group as of May 31, 2018
Contract period:

20 years

Modified GOP (Note)

Non-cancellation period:

5-7 years
Rent revision:every

3 years

Primary rent
Fixed rent component

Approximately 95％

Secondary rent
50% to 60% of the modified GOP

Variablerent
component

Amount equivalent to real estate
related expenses of each facility

Approximately 5％*Variable rent component will beapproximately 8% by including the variable
rent of Ooedo-Onsen Monogatari Reoma
Resort that was fixed Primary rent = Fixed rent component (monthly amount stipulated by each lease agreement of each facility)+ variable rent component(Variable rent = Modified GOP for each facility × the fixed rate stipulated by each lease agreement) Secondary rent = The total of taxes and public dues that is liable for the Investment Corporation+ nonlife insurance premiums + other expenses
 Repair costs are, in principle, borne by the tenant The Investment Corporation holds only the land and building itself and main equipment; and responds to deterioration
over time through planned partial rebuilding and such
(Note) Modified GOP is a sum calculated by deducting from the individual facility’s GOP arising during the modified GOP calculation period the property-related costs borne by the tenant(including, but not limited to, taxes and public charges, non-life insurance premiums, and land rent; however, the sum corresponding to the secondary rent is not included).

Ooedo Onsen Reit Investment Corporation 31

Internal Growth Strategy (2)Investment opportunities for increased value on a medium- to long-term basis

1. Enhance revenue raising capabilities through additional investments Increase in capacity based on high room occupancy rates in existing facilities owned(increase in the number of rooms, etc.)
 Increase in revenues through the effective use of buildings and land that have not been operated or used in
facilities (Ooedo-Onsen Monogatari Reoma Resort, etc.)

2. Increase variable rents by enhancing competitiveness The addition of service menus and functions, etc. that will attract customers, in cooperation with tenants
 Response to new customers, including properties other than those of the sponsor that are to be acquiredin the future (inbound tourists that will trend higher, etc.)
Particularly for facilities operated by the Ooedo-Onsen Monogatari Group (tenant),
which is the sponsor, an opportunity for value-increasing investment based on information sharing
and collaboration will be considered and provided＜Value-increasing efforts in collaboration with the sponsor group＞

BeforeAfter
Installation of a counter for alcoholic drinks(Ito Hotel New Okabe)

Improvement of customer flows on the floor
used for a buffet-style restaurant(Ooedo-Onsen Monogatari Kimitsu-no-mori)

Expansion of the garden with approximately 100,000 roses(May 12 – July 11)(Ooedo-Onsen Monogatari Reoma Resort<New Reoma World>)

Ooedo Onsen Reit Investment Corporation 32

Financial Strategy
Implementation of flexible financial strategies while attaching importance to the establishmentof a conservative financial base

Basic policy
LTV control

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

Debt financeWill seek to reduce financial costs through the further diversification of risks in the portfolio and financing
sources. In addition, it will make repayment periods more diversified and even to reduce refinancing risk.

Proper cash management
Concept of free cash

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

Capitalexpenditure
Depreciation

Excess cash distribution policy

Scheduled
repayment
Free cash

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

Ooedo Onsen Reit Investment Corporation 33

Ⅴ. Appendix

Ooedo Onsen Reit Investment Corporation 34

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
3rd period 4th period
3rd period 4th period
3rd period 4th period(m illion(m illion yen) 3rd period 4th period(m illion
Changevaluation Nov. 30,
valuationyen)
Nov. 30,
May 31,
Nov. 30,
May 31, valuation
Nov. 30,
May 31,
May 31,
yen)
2017
2018
2017
2018
2017
2018
2017
2018

S-1

Ooedo-Onsen Monogatari
Reoma Resort

10,37910,466

10,90010,900

-

+433

6.1%

6.1%

-

5.9%

5.9%

-

6.3%

6.3%

-

S-2

Ooedo-Onsen MonogatariIse-shima

3,656

3,526

3,840

3,840

-

+313

5.6%

5.6%

-

5.4%

5.4%

-

5.8%

5.8%

-

S-3

Ito Hotel New Okabe

2,657

2,686

2,820

2,790

-30

+103

5.2%

5.2%

-

5.0%

5.0%

-

5.4%

5.4%

-

S-4

Ooedo-Onsen Monogatari
Atami

2,997

2,946

3,180

3,180

-

+233

5.2%

5.2%

-

5.0%

5.0%

-

5.4%

5.4%

-

S-5

Ooedo-Onsen Monogatari
Toi Marine Hotel

1,910

1,872

1,990

1,990

-

+117

5.7%

5.7%

-

5.5%

5.5%

-

5.9%

5.9%

-

S-6

Ooedo-Onsen Monogatari
Awara

1,901

1,925

1,980

1,980

-

+54

6.0%

6.0%

-

5.8%

5.8%

-

6.2%

6.2%

-

S-7

Ooedo-Onsen Monogatari
Kamoshika-so

1,222

1,230

1,270

1,270

-

+39

5.3%

5.3%

-

5.1%

5.1%

-

5.5%

5.5%

-

S-8

Ooedo-Onsen Monogatari
Ikaho

1,299

1,308

1,380

1,380

-

+71

5.4%

5.4%

-

5.2%

5.2%

-

5.6%

5.6%

-

S-9

Ooedo-Onsen Monogatari
Kimitsu-no-mori

819

843

862

862

-

+18

5.3%

5.3%

-

5.1%

5.1%

-

5.5%

5.5%

-

S-10

Ooedo-Onsen Monogatari
Nagasaki Hotel Seifu

1,637

1,670

1,930

1,930

-

+259

5.2%

5.2%

-

5.0%

5.0%

-

5.4%

5.4%

-

S-11

Ooedo-Onsen Monogatari
Kounkaku

1,040

1,056

1,250

1,250

-

+193

5.5%

5.5%

-

5.3%

5.3%

-

5.7%

5.7%

-

S-12

Kinugawa Kanko Hotel

3,870

3,869

4,620

4,620

-

+750

5.2%

5.2%

-

5.0%

5.0%

-

5.4%

5.4%

-

S-13

Ooedo-Onsen Monogatari
Kinosaki

2,084

2,171

2,490

2,490

-

+318

5.4%

5.4%

-

5.2%

5.2%

-

5.6%

5.6%

-

S-14

Ooedo-Onsen Monogatari
Higashiyama Grand Hotel

1,230

1,275

1,480

1,480

-

+204

5.9%

5.9%

-

5.7%

5.7%

-

6.1%

6.1%

-

36,70536,84939,992

39,962

-30

3,112

－

－

－

－

－

－

Total

－

－

－

Ooedo Onsen Reit Investment Corporation 35

Introduction of Properties (1)S-1

Ooedo-Onsen Monogatari
Reoma Resort

S-2

S-3

Ito Hotel New Okabe

Location:

Marugame City,
Kagawa Prefecture

Location:

Shima City,
Mie Prefecture

Location:

Ito City,
Shizuoka Prefecture

Site area:

665,403㎡
63,896㎡

Site area:

9,637㎡
9,782㎡

Site area:

2,945㎡
10,211㎡

Total floor area:

Total floor area:

Area characteristics

Area characteristics (Note)

Ooedo-Onsen MonogatariIse-shima

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



Shima City is a large sightseeing spot in the Ise-Shima area.
It includes Ise-jingu Shrine and a rias-style coastline.



Ago-wan bay, where this facility is located, features many
resort hotels and onsen ryokans that back onto themountains and face the coast where the waves lap gently.

(Note) The description of the area characteristics is the excerpt from the Japanese version. The same applies hereinafter.

Total floor area:

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

Hot Springs Culture, bustles with the Izu Kogen Sakura Festival
and the Anjinsai Festival. The Umi no Hanabi Taikai fireworks
display on the last day of the Anjinsai Festival attracts crowds ofaround 170,000 people.

Ooedo Onsen Reit Investment Corporation 36

Introduction of Properties (2)S-1︓Ooedo-Onsen Monogatari Reoma Resort 〈Hotel Reoma-no-mori〉
2017

2018

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

75.2%

85.1%

98.7%

82.2%

83.0%

94.8%

95.3%

77.2%

91.8%

97.6%

84.9%

84.0%

87.5%

87.9%

88.4%

+0.5%

ADR (yen)

23,05831,78343,35825,20925,557

26,74731,56930,75825,90031,17828,92828,69529,71028,93729,587+650

RevPAR (yen)17,33927,04742,794

20,721

21,21225,35630,08523,74523,77630,42924,55924,10325,99625,435

26,154

+719

176

257

430

198

219

260

299

244

223

307

244

254

3,117

1,502

1,573

+71

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

ChangeSales (million yen)

S-2︓Ooedo-Onsen Monogatari Ise-shima
2017

2018

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

87.8%

93.0%

95.3%

99.5%

93.5%

99.6%

97.3%

93.4%

97.1%

99.0%

94.7%

90.6%

95.1%

93.2%

95.3%

+2.1%

ADR (yen)

30,201

34,11846,137

31,52330,88931,98434,37633,13931,04038,54332,04532,40633,95033,98733,683-304

RevPAR (yen)26,516

31,72943,96831,36528,881

31,85633,44730,95130,13938,15730,34629,35932,286

31,67532,099

+424

81

96

129

97

92

98

103

94

84

114

93

91

1,176

571

582

+11

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

ChangeSales (million yen)

S-3︓Ito Hotel New Okabe
2017

2018

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

76.3%

89.9%

96.2%

78.5%

77.4%

88.5%

84.6%

67.8%

86.0%

99.2%

83.1%

67.1%

82.9%

90.4%

81.2%

-9.2%

ADR (yen)

25,46027,69442,43926,71628,48028,85831,53332,36929,20030,941

28,09630,37430,39229,93130,406+475

RevPAR (yen)19,42524,89640,826

20,972

22,04325,53926,676

21,94625,112

30,693

23,347

20,38025,19427,057

24,689-2,368

77

100

156

82

89

102

109

88

89

123

92

81

1,195

644

586

-58

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 37

Introduction of Properties (3)S-4Ooedo-Onsen Monogatari
Atami

Ooedo-Onsen Monogatari
Toi Marine Hotel

S-6

Ooedo-Onsen Monogatari
Awara

Location:

Atami City,
Shizuoka Prefecture

Location:

Izu City,
Shizuoka Prefecture

Location:

Awara City,
Fukui Prefecture

Site area:

2,053㎡
8,469㎡

Site area:

2,800㎡
6,125㎡

Site area:

13,263㎡
14,132㎡

Total floor area:

Total floor area:

Atami City is located at the base of the Izu Peninsula and has
been designated a City of International Tourism and Hot Springs
Culture with its many tourist attractions, including Sun Beach(famous for the Atami Kaijo Hanabi Taikai fireworks display) andthe Omiya no Matsu pine tree statue, etc. In recent years, it has
been in the limelight again as an onsen resort that is low-cost,close and quick to get to from the Tokyo metropolitan area.

Total floor area:

Area characteristics

Area characteristics


S-5



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

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

Ooedo Onsen Reit Investment Corporation 38

Introduction of Properties (4)S-4︓Ooedo-Onsen Monogatari Atami
2017

2018

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

95.1%

93.9%

98.4%

97.9%

94.9%

97.8%

91.4%

95.4%

99.0%

99.8%

98.1%

97.4%

96.6%

97.8%

96.8%

-1.0%

ADR (yen)

29,09833,53647,89429,75329,911

30,69334,052

31,126

31,061

34,134

31,82031,23532,92232,85932,249-610

RevPAR (yen)27,672

31,49047,127

29,12828,38530,017

31,12329,69430,75034,06531,21530,42231,802

32,136

31,217

-919

74

86

126

78

79

81

84

82

76

95

84

85

1,036

516

509

-7

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

ChangeSales (million yen)

S-5︓Ooedo-Onsen Monogatari Toi Marine Hotel
2017

2018

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

78.1%

85.8%

96.2%

78.3%

70.3%

91.5%

78.6%

80.2%

92.9%

99.0%

84.3%

74.5%

84.1%

90.2%

84.8%

-5.4%

ADR (yen)

23,61732,38645,42524,85425,561

24,93028,792

27,777

26,162

28,771

26,212

27,94728,864

26,49827,632+1,134

RevPAR (yen)18,44427,787

43,69819,46017,96922,81022,63022,27724,30428,48322,096

20,82024,27423,901

23,431

-470

41

61

96

41

40

50

50

49

49

64

48

46

642

316

310

-6

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

ChangeSales (million yen)

S-6︓Ooedo-Onsen Monogatari Awara
2017

2018

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

79.4%

88.5%

96.6%

83.2%

85.0%

97.8%

83.9%

55.9%

60.0%

89.0%

82.7%

80.9%

82.0%

77.8%

75.6%

-2.2%

ADR (yen)

25,42930,42739,307

26,641

27,10427,07630,65333,536

26,451

29,50428,091

28,44029,51330,047

29,407-640

RevPAR (yen)20,19026,92737,97022,16523,03826,48025,717

18,746

15,87026,25823,231

23,007

24,20023,37622,231-1,145

75

98

138

80

88

100

96

71

55

100

86

87

1,081

523

499

-24

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 39

Introduction of Properties (5)S-7

Ooedo-Onsen Monogatari
Kamoshika-so

S-8

Ooedo-Onsen Monogatari
Ikaho

S-9

Ooedo-Onsen Monogatari
Kimitsu-no-mori

Location:

Nasushiobara City,
Tochigi Prefecture

Location:

Shibukawa City,
Gunma Prefecture

Location:

Kimitsu City,
Chiba Prefecture

Site area:

7,734㎡
5,947㎡

Site area:

6,805㎡
5,177㎡

Site area:

57,069㎡
8,660㎡

Total floor area:

Total floor area:

Area characteristics

Area characteristics


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

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

Area characteristics


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

Ooedo Onsen Reit Investment Corporation 40

Introduction of Properties (6)S-7︓Ooedo-Onsen Monogatari Kamoshika-so
2017

2018

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

81.4%

96.8%

99.2%

95.1%

92.1%

95.3%

74.2%

61.1%

65.7%

86.3%

80.8%

88.0%

84.8%

78.2%

76.2%

-2.0%

ADR (yen)

25,20024,95136,44022,744

27,14628,00728,17031,60728,05827,21925,151

27,28727,64327,127

27,740+613

RevPAR (yen)20,512

24,15236,14821,62925,001

26,69020,902

19,311

18,43423,48920,32224,012

23,441

21,213

21,137

-76

43

52

77

46

55

57

46

42

38

51

43

52

608

274

274

+0

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

ChangeSales (million yen)

S-8︓Ooedo-Onsen Monogatari Ikaho
2017

2018

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

96.7%

96.9%

99.0%

99.7%

98.5%

98.8%

94.5%

81.7%

86.7%

97.7%

98.4%

95.6%

95.4%

94.3%

92.5%

-1.8%

ADR (yen)

26,21628,891

40,56928,01829,19830,576

31,10229,54825,73829,52429,42329,57529,96529,51429,248-266

RevPAR (yen)25,35027,99540,16327,93328,76030,20929,391

24,14022,314

28,84428,952

28,27328,586

27,831

27,054

-777

34

39

56

38

41

42

41

33

28

40

39

40

479

229

225

-4

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

ChangeSales (million yen)

S-9︓Ooedo-Onsen Monogatari Kimitsu-no-mori
2017

2018

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

89.9%

96.1%

99.2%

97.6%

97.2%

97.6%

96.1%

88.4%

94.6%

98.9%

95.5%

95.7%

95.6%

96.9%

94.9%

-2.0%

ADR (yen)

23,17825,98434,07624,49424,19425,37327,222

26,98125,60926,444

26,692

26,404

26,44025,30826,570+1,262

RevPAR (yen)20,837

24,97033,80323,906

23,516

24,764

26,16023,851

24,22626,15325,49025,26825,276

24,52325,214

+691

37

47

64

43

44

45

48

46

40

48

46

48

563

284

279

-5

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 41

Introduction of Properties (7)S-11

Location:

Nagasaki City,
Nagasaki Prefecture

Location:

Osaki City,
Miyagi Prefecture

Location:

Nikko City,
Tochigi Prefecture

Site area:

4,970㎡
11,114㎡

Site area:

11,829㎡
10,836㎡

Site area:

6,701㎡
22,402㎡

Total floor area:

Area characteristics

Area characteristics



Kinugawa Kanko Hotel

Ooedo-Onsen Monogatari
Nagasaki Hotel Seifu

Total floor area:

Ooedo-Onsen Monogatari
Kounkaku

S-10

Nagasaki City is a tourist city with abundant tourism resources
such as having been registered in the World Heritage List as“Sites of Japan’s Meiji Industrial Revolution: Iron and Steel,
Shipbuilding and Coal Mining” in 2015.

The Inasayama where the facility stands is famous for nightviews and has been certified by General incorporated association
YAKEI Convention & Visitors Bureau as one of the three new
greatest night view spots along with Monaco and Hong Kong.



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

S-12

Total floor area:

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

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

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

Ooedo Onsen Reit Investment Corporation 42

Introduction of Properties (8)S-10︓Ooedo-Onsen Monogatari Nagasaki Hotel Seifu
2017

2018

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

100%

100%

100%

100%

98.3%

100%

93.6%

83.5%

95.3%

99.3%

91.8%

99.8%

96.8%

74.8%

93.9%

+19.1%ADR (yen)

30,686

28,66033,83527,48535,57333,78932,172

29,74329,93933,62532,97636,94732,17732,432

32,711+279

RevPAR (yen)30,686

28,66033,83527,48534,96833,78930,112

24,83528,531

33,38930,27136,87331,147

24,25930,715+6,456

109

103

116

95

122

116

105

88

90

117

104

127

1,298

178

634

+456

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

ChangeSales (million yen)

S-11︓Ooedo-Onsen Monogatari Kounkaku
2017

2018

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

91.9%

89.1%

91.2%

91.1%

92.3%

92.0%

82.8%

64.9%

71.2%

89.5%

76.6%

72.2%

83.7%

93.7%

76.3%

-17.4%ADR (yen)

22,87623,86930,07023,58827,827

27,972

29,94628,35827,49826,30424,03725,482

26,446

26,392

26,893+501

RevPAR (yen)21,023

21,26727,423

21,48825,68425,734

24,795

18,404

19,57823,542

18,412

18,39822,13524,72920,519-4,210

77

78

95

75

94

95

93

66

65

88

68

70

969

385

452

+67

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

ChangeSales (million yen)

S-12︓Kinugawa Kanko Hotel
2017

2018

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

87.3%

89.2%

98.7%

94.7%

96.9%

97.3%

81.2%

83.9%

92.3%

99.4%

91.6%

84.5%

91.4%

91.3%

88.8%

-2.5%

ADR (yen)

25,90429,27939,39527,197

31,466

31,91931,95330,921

25,71528,63928,38731,18330,26328,45429,425+971

RevPAR (yen)22,614

26,11638,88225,75530,49031,05725,94525,942

23,73428,46726,002

26,34927,66025,97826,129

+151

160

179

250

173

225

222

191

188

159

195

171

178

2,297

1,020

1,084

+64

Sales (million yen)

Ooedo Onsen Reit Investment Corporation 43

Introduction of Properties (9)S-13 Ooedo-Onsen Monogatari

S-14

KinosakiOoedo-Onsen Monogatari
Higashiyama Grand Hotel

Location:

Toyooka City,
Hyogo Prefecture

Location:

Aizuwakamatsu City,
Fukushima Prefecture

Site area:

11,350㎡
10,602㎡

Site area:

12,451㎡ (Note)
16,665㎡ (Note)

Total floor area:

Total floor area:

Area characteristics

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

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



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

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

Ooedo Onsen Reit Investment Corporation 44

Introduction of Properties (10)S-13︓Kinugawa Kanko Hotel
2017

2018

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

Change

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

79.6%

91.0%

96.3%

93.3%

85.2%

96.5%

88.4%

73.0%

86.5%

99.7%

87.7%

83.4%

88.4%

87.8%

86.5%

-1.3%

ADR (yen)

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

32,88633,87230,74834,93230,42329,31530,974

31,241

32,102+861

RevPAR (yen)19,677

26,68238,54824,27523,362

29,25029,071

24,726

26,597

34,827

26,68024,44827,381

27,42927,768

+339

76

102

147

90

93

112

113

97

93

133

101

96

1,257

574

635

+61

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

ChangeSales (million yen)

S-14︓Ooedo-Onsen Monogatari Kinosaki
2017

2018

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Room occupancy rate

87.5%

80.1%

95.5%

83.9%

93.6%

86.3%

67.8%

58.6%

63.5%

80.5%

80.2%

70.6%

79.1%

72.3%

70.3%

-2.0%

ADR (yen)

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

30,95529,67927,74627,547

26,88829,38527,85927,951

28,628+677

RevPAR (yen)22,491

20,901

29,096

21,371

25,88823,733

20,987

17,391

17,61822,175

21,564

20,74522,036

20,20820,125

-83

102

97

128

96

122

111

110

85

75

101

99

93

1,225

569

566

-3

Cumulativ e
total

Previous
corresponding
periodcumulative total

4th period
cumulativ e
Total

ChangeSales (million yen)

S-1︓Ooedo-Onsen Monogatari Reoma Resort 〈New Reoma Resort〉
2017

2018

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Number of guests

26,67961,424

136,147

31,89730,35440,007

61,19737,09625,141

45,983

48,411

66,476

610,812294,194

284,304-9,890

Sales (million yen)

97

248

615

130

116

151

223

149

97

195

198

257

2,481

1,156

1,121

-35

Ooedo Onsen Reit Investment Corporation 45

Financial Indices
Indices

3rd period(Nov. 30, 2017)

4th period(May 31, 2018)

Ordinary income

421 mn yen

571 mn yen

Net income

420 mn yen

570 mn yen

Depreciation

268 mn yen

415 mn yen

CAPEX

90 mn yen

141 mn yen

Total assets

29,208 mn yen

39,875 mn yen

Total net assets
BPS (Total net assets/unit)

16,171 mn yen

21,220 mn yen

91,777 yen

90,166 yen

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

86,500 yen

86,300 yen

176,200 units

235,347 units

421 mn yen

573 mn yen

2,392 yen

2,435 yen

5.5%
687 mn yen
3,903 yenCalculation formula

5.7% DPU (annualized)/Unit price as of end of period
984 mn yen Net income + Depreciation－profit or loss on sale of real estate
4,185 yen

11.1x

10.3x Unit price as of end of period/FFO per unit (annualized)

PER

18.1x

17.8x 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

1.4%

1.7% Ordinary income/Average of total assets during the period

2.9%

3.3%

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

2.6%

3.1% Net income/Average of total net assets during the period

5.2%

6.1%

17,369 mn yen
98,576 yen
0.9x
11,624 mn yen

24,332 mn yen Total net assets + Total appraisal value - Total book value - Total liabilities
103,391 yen
0.8x Unit price as of end of period/NAV per unit
16,807 mn yen

LTV (book value basis)

39.8%

42.2% Interest-bearing debt/Total assets

LTV (appraisal value basis)

38.2%

39.1% Interest-bearing debt/(Total assets + Total appraisal value - Total book value)

Operating days

183 days

182 days

Ooedo Onsen Reit Investment Corporation 46

Balance Sheet(thousand yen)
4th period

3rd period(period ended Nov. 30, 2017) (period ended May 31, 2018)

Assets(thousand yen)
4th period

3rd period(period ended Nov. 30, 2017)(period ended May 31, 2018)

Liabilities

Current assets

Current liabilities

Cash and deposits

1,949,727

2,169,076

Operating accounts payable

Prepaid expenses

116,674

148,184

Short-term loans payable

Consumption taxes receivable－

547,941

Deferred tax assets

13

16

3,625

4,777

2,070,040

2,869,997

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

20,086－

Advances received

185,105

261,678

24,700,827
1,259

-51

-95

1,207

1,163

Asset retirement obligations－

600

Total non-current liabilities

1,005

-17

-49

Tools, furniture and fixtures, net

237

956

9,263,321

11,988,130

26,866,164

36,691,669

157,802

157,802

6,161

5,359

163,963

163,161

Intangible assets

Investments and other assets
98,491141,063

Lease and guarantee deposits

10,00010,089108,491

151,153

27,138,619

37,005,984

29,208,659

39,875,981

3,731

4,882

1,200,597

8,559,406

Non-current liabilities
Long-term loans payable
Tenant leasehold and security deposits

Total liabilities

10,901,250

8,728,500

868,270

1,230,724

67,397

136,955

11,836,917

10,096,180

13,037,515

18,655,586

15,752,576

20,653,023-1,762-2,995-1,762-2,99515,750,814

20,650,027

420,330

570,366

Net assets
Unitholders' equity
Unitholders' capital
Deduction from unitholders' capital
Allowance for temporary difference
Total deduction from unitholders'
capitalUnitholders' capital, net
Surplus
Unappropriated retained earnings(undisposed loss)
Total surplus
Total unitholders' equity

Long-term prepaid expenses

Total assets

954

Accured consumption taxes

1,259

255

Total investments and other assets

12,056870

Income taxes payable

17,601,397

Accumulated depreciation

Total non-current assets

145,330

7,508

Accrued expenses

Total current liabilities-8

Total intangible assets

7,499,250

197,098

Other

591

Software723,000

Accounts payable - other-1,077,075－

Leasehold right

Current portion of long-term loans payable

25,777,902－

Total property, plant and equipment

580,000-662,458

Machinery and equipment, net

Land55,254－

18,263,856

Accumulated depreciation
Tools, furniture and fixtures

63,196

Total net assets
Total liabilities and net assets

420,330

570,366

16,171,144

21,220,394

16,171,144

21,220,394

29,208,659

39,875,981

Ooedo Onsen Reit Investment Corporation 47

Statement of Income(thousand yen)

Operating revenue
Lease business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors' compensations
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Total non-operating income
Non-operating expenses
Interest expenses
Investment unit issuance expenses
Borrowing related expenses
Other
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)

3rd period

4th period(from June 1, 2017
to November 30, 2017)(from December 1, 2017
to May 31, 2018)

1,032,755
1,032,755

1,442,676
1,442,676

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

522,992
125,606
1,715
14,9333,600
39,522
708,370
734,305

10
10

9
9

45,04453,011
98,056
421,047
421,047872
2
874
420,172
157

64,81822,45673,3142,500
163,090571,225571,225955-3
951
570,27393

420,330

570,366

Ooedo Onsen Reit Investment Corporation 48

Debt Status
List of lenders(as of May 31, 2018)

Long term

Short term

LenderBalance(mn yen)Interest rate(%)

Drawdown date

Repayment date

Security

Sumitomo Mitsui Banking Corporation

580

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

December 4, 2017

November 30, 2018

Unsecured
Unguaranteed

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.

6,813

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

September 1, 2016

May 31, 2019

Unsecured andunguaranteed

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

3,718

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

September 1, 2016

May 29, 2020

Unsecured andunguaranteed

Sumitomo Mitsui Banking Corporation

480

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

September 1, 2016

May 31, 2023

Unsecured andunguaranteed

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

2,303

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

December 4, 2017

November 30, 2020

Unsecured andunguaranteed

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

2,461

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

December 4, 2017

November 30, 2021

Unsecured andunguaranteed

Sumitomo Mitsui Banking Corporation

450

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

May 31, 2018

May 31, 2019

Unsecured andunguaranteed

Total

16,807

Ooedo Onsen Reit Investment Corporation 49

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

Overview
Company Name

Ooedo‐Onsen Monogatari Group Co., Ltd.

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

Address

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

Financial Results(Feb. 2018)

 Reinvigorating onsen ryokan, hotels, spa-related facilities, theme parks around the country

Businesses

Establishment

June 29, 2017 (founded in Nov. 2001)

No. of Employees

1,213 (consolidated, as of end of Feb. 2018)

Representative

Representative Director Mitsumasa Morita

2003

2007

(Note) In consideration of the restructuring that the Ooedo-Onsen Group undertook in 2017, the figures for the fiscal year
ended February 28, 2018 are presented based on those in the consolidated financial statements covering the period
from June 29, 2017, when the Ooedo-Onsen Monogatari Group was established, until February 28, 2018, the closing
date.

2010

2013

2016

2017

2018

Opened Hotel New Shiobara,
Kinugawa Kanko Hotel andReoma Resort, etc.

Opened Minoh Kanko Hotel,
Minoh Onsen Minoh Spa Garden
and Toi Marine Hotel

Opened Kounkaku, Masuya
and Nagasaki Hotel Seifu

Opened Hotel Suiyotei, Beppu
and Gero Shin-kan

Opened Nanki-kushimoto andplanned to be opened Kisoji

2009

Opened Aizu,
Ikaho and Nikko
Kirifuri, etc.

Opened Urayasu
Mangekyo andYamashitaya

OdaibaOoedo-Onsen
Monogatari

Ooedo-Onsen
Monogatari
Aizu

Ooedo-Onsen
Monogatari
Urayasu Mangekyo

 We started with the onsen theme park, “Ooedo-Onsen Monogatari,“ which has an Edo culture

theme. As of Feb. 28, 2018, we operate 32 onsen and spa-related facilities

Trends in number of facilities
Opened OoedoOnsen Monogatariin Odaiba, Tokyo

Consolidated Net Sales: 18,884 million yen
Consolidated Total Assets: 54,283 million yen
Net Assets: 10,319 million yen

Ooedo-Onsen
Monogatari
Minoh Kanko Hotel

Hotel New
Shiobara

Minoh Onsen
Minoh Spa Garden

Ooedo-Onsen
Monogatari
Gero Shin-kan

Ooedo-Onsen
Monogatari Masuya

Ooedo-Onsen
Monogatari
Hotel Suiyotei

40
30
20
10

6

9

12

18

20

24

25

27

End ofSep. 2012

End ofSep. 2013

End ofFeb. 201427

27

End ofFeb. 2015

End of Feb.
2016

30

Ooedo-Onsen
Monogatari
Nanki-kushimoto

Ooedo-Onsen
Monogatari
Kushimoto32

0
End ofSep. 2007

End ofSep. 2008

End ofSep. 2009

End ofSep. 2010

End ofSep. 2011

End ofFeb. 2017

End ofFeb. 2018

Ooedo Onsen Reit Investment Corporation 50

Ooedo-Onsen Monogatari Group (2)The total number of guests staying at onsen/spa facilities operated by the Ooedo-Onsen Monogatari Group is steadily increasing year by year.
In addition, the Investment corporation is expanding its business scale actively through a range of initiatives such as the acquisition of ninefacilities (Note) since 2016 when the investment corporation was established.

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)
3,500

2,500

2,456

2,565

2,766

2,709

Facilities acquired after 2016

REIT acquired assets

3,126

Ooedo-Onsen Monogatari

Kakeyu Fujikan Sakurakan

Ooedo-Onsen Monogatari

Kounkaku

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Hotel Kisoji

1,500
FY2014FY2015FY2016FY2017FY2018

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Higashiyama Grand Hotel

Awara

Yamashiro Onsen

Yamashitaya
Ooedo-Onsen Monogatari

Gero Shin-kan

Ooedo-Onsen Monogatari

Nagasaki Hotel Seifu

Ooedo-Onsen Monogatari
Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Nikko Kirifuri

Ooedo-Onsen Monogatari

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

Minoh Kanko Hotel
Ooedo-Onsen Monogatari

Nanki-kushimoto(Note) Includes facilities that will be acquired.

Ooedo-Onsen Monogatari

Kamoshika-so
Kinugawa Kanko Hotel

Ooedo-Onsen Monogatari(Onsen theme park)
Tokyo Odaiba

Ooedo-Onsen Monogatari
Ooedo-Onsen Monogatari

Tenka-taihei-no-yu
Sumpu Yume Hiroba(Onsen theme park )Thalassa Shima
Hotel & Resorts

Ooedo-Onsen Monogatari

Urayasu Mangekyo

Ise-shima

Ooedo-Onsen Monogatari

Beppu(Spa-related facilities for day visits)

Hotel New Shiobara
Hotel Kinugawa Gyoen

Ikaho
Hotel Shinko

Reoma Resort

Ooedo-Onsen Monogatari

Sendai Korona-no-yu

Aizu

Nagayama

KinosakiOoedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Ooedo-Onsen Monogatari

Hotel Sohkan

Masuya(Onsen theme park)

Kimitsu-no-moriOoedo-Onsen Monogatari

Hotel Suiyotei

Ooedo-Onsen Monogatari Atami

Ito Hotel New Okabe
Ooedo-Onsen Monogatari

Toi Marine Hotel

Ooedo Onsen Reit Investment Corporation 51

Revitalization Process of the Ooedo-Onsen Monogatari Group andCollaboration with the Asset Manager
Considered acquisition in synch with the revitalization process of the Ooedo-Onsen Monogatari Group

Phase to conduct renovation

Phase to aim for stable operation

Introduction of Ooedo
business model
Maintenance of high room
occupancy rate
Renovation of facilities toincrease value

Asset manager

Fulfilment ofinvestment criteria

Information sharing/opinion exchange

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

DiscussionofacquisitionDue
diligence

Property acquisition by Ooedo Onsen Reit

Acquisition

Discussion/planning

Sourcing

Ooedo-Onsen
Monogatari Group

Phase to discuss acquisition

Ooedo Onsen Reit Investment Corporation 52

Unitholders Breakdown
Top 10 unitholders

Ratio by number of unitholders＜End of 3rd fiscal period＞＜End of 4th fiscal period＞

13,336 unitholders

18,263 unitholders

Financial
institutions

Foreigncorporations
and individuals

Financial
institutions

Foreigncorporations
and individuals

Rank

Name

Number ofunits held

Ratio

1

Japan Trustee Services Bank, Ltd. (Trust Account)

28,397

12.1%

2

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

25,648

10.9%

3

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

9,266

3.9%

4

Ooedo-Onsen Mongatari Co., Ltd.

9,246

3.9%

5

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

5,073

2.2%

6

Sekai Shidokyo

2,090

0.9%

7

BNY FOR GCM CLIENT ACCOUNTS (E) BD

1,295

0.6%

8

BBH FOR VANGUARD GLOBAL EX-U.S.
REAL ESTATE INDEX FUND

1,250

0.5%

9

General Incorporated Association UYPartners

1,114

0.5%

10

Individual Investor

1,086

0.5%

84,465

35.9%

Raito by number of investment units

Total
Individuals
Financial institutions(Incl. securities companies)

Other domestic corporations
Foreign corporations and individuals

Ooedo Onsen Reit Investment Corporation 53

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

Targets unitholders listed or recorded on Unitholders’ Registry
as of May 31, 2018 (record date), end of 4th 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<Facilities applicable>
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,Ooedo-Onsen Monogatari Nagasaki Hotel Seifu, Ooedo-Onsen Monogatari Kounkaku, Kinugawa Kanko Hotel,
Ooedo-Onsen Monogatari Kinosaki and Ooedo-Onsen Monogatari Higashiyama Grand Hotel <14 facilities in total>(Note) Red text is additional facilities in the 4th fiscal period ended May 31, 2018

Schedule ofsending andperiod of validity

Coupons will be sent each year in mid-February for fiscal periods
ended in November and in mid-August for fiscal periods ended in May① When coupons are sent in mid-February: Valid for 1 year from March 1st to the last day of the following February② When coupons are sent in mid-August: Valid for 1 year from September 1st to the last day of the following August

Ooedo Onsen Reit Investment Corporation 0

Profile for IR Activities

IR activities＜Main IR activities＞
IR activities for domestic institutional investors
・Conducting IR activities for central/regional investors
・Holding individual meetings, etc.
IR activities for overseas institutional investors
・Participating in global conferences in Japan
・Holding individual meeting in Japan, etc.

Event co-hosted with “Kinyu Joshi 。” to learn about“hot spring x investment”
Held two events for retail investors collaborating with “Kinyu Joshi 。” on May 24
and June 10, 2018.
The first event was held in a workshop style and the second one took
participants on a facility tour of Ito Hotel New Okabe for two days and one night,
which is owned by Ooedo Onsen Reit.

〈1st event: Café Salvador Business Salon (Chuo-ku, Tokyo)〉IR activities for retail investors
・Holding seminars for private investors
・Participating in fairs for retail investors, etc.

Seminars for retail investors sponsoredby securities companies〈2nd event: Ito Hotel New Okabe (Ito City, Shizuoka)〉・Branch office seminars (Matsuyama, Gifu, Tennoji)・Nationwide caravan to popularize J-REIT (Tottori)
・Other locally-held seminars(Niigata, Ogaki, Sendai and Fukuoka)

Fairs for retail investors

・New Year’s SMBC Nikko J-REIT Fair (January 2018)
・TSE IR Festival 2018 J-REIT Corner (March 2018)(Note) “Kinyu Joshi 。” is a community for women in their 20’s and 30’s for sharing financial
information at all-female get-togethers.

Ooedo Onsen Reit Investment Corporation 55

Track Record of Investment Unit Price
Change in investment unit price and trading volume(yen)
100,000(units)35,00028,00090,00021,00080,00014,00070,00060,000August2016年8⽉
2016

7,000
November
2016年11⽉
2016

February
2017年2⽉
2017May
2017年5⽉2017
出来⾼VolumeAugust2017年8⽉
2017
Stock price
投資⼝価格

November
2017年11⽉
2017

February
2018年2⽉2018

0May
2018年5⽉
2018

Relative comparison of investment unit price and TSE REIT index(yen)
100,000

90,00080,00070,00060,000August2016年8⽉
2016

November
2016年11⽉
2016

February
2017年2⽉
2017May
2017年5⽉
2017
Stock
price
投資⼝価格

August2017年8⽉
2017
TSE
REIT
Index
東証リート指数

November
2017年11⽉
2017

February
2018年2⽉
2018May
2018年5⽉
2018(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 56

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

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

Management fee II

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

Acquisition fee(Note 2)

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

Disposition fee

Disposition price × 1.0% (ceiling) (transaction with related party: 0.5% (ceiling))(Note 1) Subject to adjustment for asset acquisitions and asset dispositions during the relevant calculation period.
(Note 2) Where the sum calculated for an acquired asset is less than 5 million yen, the acquisition fee is set at 5 million yen.

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

Propose
Proposingdepartment

Complianceofficer

ReturnInvestment
Committee(includes outsidecommittee
members)

Review anddecision

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

Investment
Corporation
Board Meeting
RejectOoedo Onsen Reit Investment Corporation 57

Overview of Investment Corporation
Parent Company of Asset Manager
Sponsor

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

Ooedo-Onsen Monogatari Co., Ltd.

Investment Corporation⑥⑤

Ooedo Onsen Reit Investment
Corporation④

General Unitholders’ Meeting②(100% ownership)

Sumitomo Mitsui Trust Bank,
LimitedBoard of Directors
Asset Manager①

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

Reoma Unity Co., Ltd.

③

Accounting and Tax Administrator

Heiseikaikeisha Tax Corporation⑤

Independent Auditor

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

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

Asset Custodian
Unitholders’ Registry Administrator
General Administrator(agency management)⑥

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

Ooedo Onsen Reit Investment Corporation 58

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

︓11 (as of May 31, 2018)

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 59

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 60