[Translation for reference purposes only] September 1

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Note: This press release was prepared to make an announcement to the public concerning the Investment Corporation completing an acquisition of real estate in Japan, and it has not been prepared to solicit investment.

[Translation for reference purposes only]

September 1, 2016

To all concerned parties:

Real Estate Investment Trust Securities Issuer: Ooedo Onsen Reit Investment Corporation Representative: Fuminori Imanishi,

Executive Director (Securities Code: 3472) Asset Manager: Ooedo Onsen Asset Management Co., Ltd. Representative: Fuminori Imanishi,

Chief Executive Officer Inquiries: Tomohiro Honda,

Chief Financial Officer (TEL:03-6262-5200)

Notice Concerning Completion of Acquiring Real Estate in Japan

The Ooedo Onsen Reit Investment Corporation (the “Investment Corporation”) hereby announces that the acquisition of the assets to be acquired, which are the nine properties stated in the Investment Corporation’s prospectus for new unit issuance and secondary distribution of investment units (July 2016), (these assets, the “Acquired Assets”) was completed today. Each of Kagawa Prefecture Sightseeing LLC., which is a seller of an Acquired Asset, and Ooedo-Onsen Monogatari Co., Ltd., which is a seller of Acquired Assets, constitute an Interested Parties, Etc., under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 2014, as amended; the “Investment Act”), so Ooedo Onsen Asset Management Co., Ltd., which is the asset manager (the “Asset Manager”), has, in accordance with Article 201-2 of the Investment Act, obtained the consent of the Investment Corporation based on the approval of it’s board of directors meeting held on July 29, 2016. Further, each of Kagawa Prefecture Sightseeing LLC. and Ooedo-Onsen Monogatari Co., Ltd. constitute an Interested Party, Etc., stipulated in the Rules on Transactions with Interested Parties, Etc., which are internal rules of the Asset manager, so the Asset manager has finished all necessary procedures under it’s internal rules.

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1. Overview of acquisition

Note 1: Please refer to section “(a) of (1) Overview of Acquired Assets” in “2. Details of Acquired Assets”, which is below, for details on the “property number”.

Note 2: The “acquisition price” indicates the purchase price of real estate in the sale and purchase agreement regarding each of the Acquired Asset (not including expenses, such as consumption tax, local consumption tax, or sale and purchase fees) (the “Purchase Agreements”), rounded down to the nearest million yen. Accordingly, the total of the Acquisition Price for each of the properties might differ from the figure stated in the total row.

(1) Date made decision of Acquisition: July 29, 2016

(2) Execution date of Purchase Agreements: July 29, 2016

(3) Acquisition date: September 1, 2016 (delivery settlement day)

(4) Seller: Refer to “(2) Overview of previous owners” in “2. Details of Acquired Assets”, which is below.

(5) Acquisition financing: Proceeds through issuance of new investment units was resolved at the Investment Corporation’s board of directors meetings held on July 29, 2016 and on August 22, 2016, and borrowing (see note below).

(6) Settlement method: Payment in full at time of delivery

Note: Please refer to “Notice Concerning Borrowing of Funds” dated today for details of the concerned borrowing.

2. Details of Acquired Assets

(1) Overview of Acquired Assets

The tables below provide overviews of each individual asset of the Acquired Assets and the leases pertaining thereto.

Explanations regarding the matters stated in each item of the tables are as follows.

(a) Explanations regarding the “specified asset overview” section

・ For “property number,” each asset for investment by the Investment Corporation has been classified as either “Onsen and Spa-related Facilities” or “facilities for other uses” in accordance with its use and given a letter based on use and a number. The letter “S” is used for “Onsen and Spa-related Facilities.”

・ “Property name” indicates the name of each Acquired Asset.

・ “Use” indicates whether each asset for investment by the Investment Corporation is classified as “Onsen and Spa-related Facilities” or “facilities for other uses” in

Property number (Note 1)

Property name Acquisition price (yen in millions)

(Note 2)

Seller

S-1 Ooedo-Onsen Monogatari Reoma Resort 10,379 Kagawa Prefecture Sightseeing LLC.

S-2 Ooedo-Onsen Monogatari Iseshima 3,656

Ooedo-Onsen Monogatari Co., Ltd.

S-3 Ito Hotel New Okabe 2,657 S-4 Ooedo-Onsen Monogatari Atami 2,997 S-5 Ooedo-Onsen Monogatari Toi Marine Hotel 1,910 S-6 Ooedo-Onsen Monogatari Awara 1,901 S-7 Ooedo-Onsen Monogatari Kamoshika-so 1,222 S-8 Ooedo-Onsen Monogatari Ikaho 1,299 S-9 Ooedo-Onsen Monogatari Kimitsu-no-mori 819

Total 26,844

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accordance with its use. The use indicated in this item is a classification for the purpose of understanding the overall characteristics of each facility in consideration of the investment policy of the Investment Corporation and does not necessarily match the use stated in the real estate registries of the individual buildings comprising each facility.

・ “Acquisition date” indicates the closing date of each Acquired Asset stated in the Purchase Agreement.

・ “Specified asset type” indicates the type of asset, categorized under “real estate and other assets”(fudosan tou shisan), as the specified assets.

・ “Acquisition price” indicates the purchase price of real estate in the Purchase agreement regarding each of the Acquired Asset (not including expenses, such as consumption tax, local consumption tax, or sale and purchase fees).

・ “Appraisal value” indicates the appraisal value stated in the real estate appraisal reports obtained from Japan Valuers Co., Ltd. or Rich Appraisal Institute Co., Ltd. for each Acquired Asset.

・ “Location (residence indication)” indicates, as a general rule, the residence indication. For properties for which residence indications have not been implemented or that otherwise do not have a residence indication, the building location (or one location if there is more than one) stated in the real estate registry is indicated along with the prefecture.

・ “Access” is based on the real estate appraisal reports obtained from Japan Valuers Co., Ltd. or Rich Appraisal Institute Co., Ltd. for each Acquired Asset and on other sources.

・ For the land, “land number” indicates the land location (or one location if there is more than one) stated in the real estate registry

・ For the land, “building coverage ratio,” which is the ratio of the building area of the buildings to the site area as set forth in Article 53 of the Building Standards Act (Act No. 201 of 1950, as amended; the “Building Standards Act”), indicates as a general rule the maximum building coverage ratio set forth in city plans in accordance with use district, etc. (the designated building coverage ratio; if there is more than one, then each ratio). The designated building coverage ratio may be modified, increased, or decreased due to reasons such as having a fire-resistant building in a fire protection district and therefore may differ from the building coverage ratio actually applied.

・ For the land, “floor area ratio,” which is the ratio of the total area of the buildings to the site area as set forth in Article 52 of the Building Standards Act, indicates the maximum floor area ratio set forth in city plans in accordance with use district, etc. (the designated floor area ratio; if there is more than one, then each ratio). The designated floor area ratio may be modified, increased, or decreased due to reasons such as the width of roads connecting to the site and therefore may differ from the floor area ratio actually applied.

・ For the land, “use district” indicates the type of use district set forth in Article 8, Paragraph 1, Item 1 of the City Planning Act (Act No. 100 of 1968, as amended; the “City Planning Act”) or the type of area classification set forth in Article 7 of the City Planning Act. Land that is designated as a city planning area but is not a classified area in Article 7 of the City Planning Act is indicated as a “non-classified city planning area,” and land that is not designated as a city planning area is indicated as a “non-city-planning area.”

・ For the land, “site area” is based on the real estate registry (including the area of leased land, if any) and may differ from the current conditions.

・ For the land and the buildings, “form of ownership” indicates the type of right held by the Investment Corporation.

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・ For the buildings, “construction date” indicates the initial construction date of the principal building in the real estate registry. If the initial construction date is unknown, the date of the most recent addition is indicated.

・ For the buildings, “structure, number of floors” is based on the real estate registry for the principal building in the real estate registry.

・ For the buildings, “total floor area” is based on the real estate registry and includes the floor area of annex buildings.

・ For the buildings, “designer” and “builder” indicate the companies as they were named at the time of the design and construction of the principal building in the real estate registry.

・ “Leasable area” indicates the area of the portion of the property considered leasable based on building blueprints or under the fixed-term building lease agreement with conditions precedent and building management service agreement of the Investment Corporation effective as of today pertaining to each Acquired Asset.

・ “Occupancy rate” indicates the property’s occupancy rate (the ratio of leased area to leasable area) as of today rounded to the first decimal place.

・ “Main tenant” indicates the lessee with the largest leased area among the lessees leasing the Investment Corporation’s property from the Investment Corporation under the fixed-term building lease agreement with conditions precedent and building management service agreement effective as of today pertaining to each Acquired Asset.

・ “Number of tenants” indicates the number of lessees leasing the Investment Corporation’s property from the Investment Corporation under the fixed-term building lease agreement with conditions precedent and building management service agreement effective as of today pertaining to each Acquired Asset.

・ “Number of guest rooms” indicates the number of guest rooms that are usable for lodging as of today.

・ “Number of subtenants” indicates the number of sublessees subleasing the Investment Corporation’s property from the lessees leasing the property from the Investment Corporation under the fixed-term building lease agreement with conditions precedent and building management service agreement effective as of today pertaining to each Acquired Asset.

・ “Property management company” indicates the company engaged to property management and other related services for the buildings on the property as of today.

・ “Special notes” state any matters that as of today are considered material in regard to the rights, use and related matters of each Acquired Asset as well as any matters considered material in light of their impact on the valuation, profitability, and liquidity of each Acquired Asset and other such considerations.

(b) Explanations regarding the “lease overview” section

・ “Tenant,” “lease type,” “lease period,” “leased area,” “rent,” “lease deposit, security deposit,” “regarding renewal upon expiration of term,” “regarding revision of rent,” “regarding early termination,” “penalty,” and “agreement novation method” indicate the content of the lease agreements effective as of today pertaining to each Acquired Asset.

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Property number Ooedo-Onsen Monogatari Reoma Resort Use Onsen and Spa-related

facilities S-1

Specified asset overview Acquisition date September 1, 2016 Specified asset type Real estate

Acquisition price 10,379,000,000 yen Appraisal value (Note 1)

(Valuation date)

10,700,000,000 yen

(April 1, 2016)

Location (residence indication) (Note 2)

2312-22, Kuniyoshi, Okadakami-aza, Ayauta-cho, Marugame-shi, Kagawa Prefecture

Access Approximately 15km from Marugame Station on the JR Yosan Line; approximately 7.5km from Kotohira Station on the JR Dosan Line; approximately 2.7km from Kurikuma Station on the Takamatsu-Kotohira Electric Railroad Kotohira Line

Land Land number 2312-22, Kuniyoshi, Okadakami-aza, Ayauta-cho, Marugame-shi and other 464 parcels

Build- ings

Construction date

Hotel Reoma no Mori: July 10, 1991 (Note 3)

New Reoma World: March 30, 1991 (Note 4)

Building coverage ratio

70% Structure, number of floors

Hotel Reoma no Mori: steel-framed reinforced concrete, roofing, 11 floors

New Reoma World: steel framed, steel plate roof, 2 floors

Floor area ratio

200% Total floor area (Note 1)

Hotel Reoma no Mori: 23,200.95m2

New Reoma World: 40,573.63m2

Use district Non-classified city planning area Designer (Note 5)

Hotel Reoma no Mori:

Initial construction: AAA Inc.

Addition (Mori no Okage Onsen): Plus Plan Design Co., Ltd.

New Reoma World:

Initial construction: Kohri Build Co., Ltd. First-class Registered Architects Office

Addition: Kohri Build Co., Ltd. First-class Registered Architects Office

Site area 665,403.01m2 Builder (Note 5)

Hotel Reoma no Mori:

Initial construction: Shimizu Corporation, Shikoku Branch

Addition (Mori no Okage Onsen): Shimizu Corporation, Shikoku Branch

New Reoma World:

Initial construction: Kohri Build Co., Ltd.

Addition: Kohri Build Co., Ltd.

Form of ownership

Ownership right Form of ownership

Ownership right

Leasable area Hotel Reoma no Mori: 23,200.95m2 Occupancy rate 100%

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(Note 1) (Note 6) New Reoma World: 40,573.63m2

Main tenant Reoma Unity Co., Ltd. Number of tenants 1

Number of guest rooms

241 Number of subtenants 0

Property management company

Reoma Unity Co., Ltd.

Special notes:

・There has been no boundary confirmation in person and in writing regarding some of the boundaries between the land and its adjoining lands; however, as of today, there are no disputes or the like with the owners of the adjoining lands.

・Part of the land (an area of 244,326m2, currently forest) falls under the classification of privately-owned forest subject to regional forestry planning.

・Regarding the buildings, some of the verification completion certificates and inspection completion certificates regarding construction verification procedures and completion inspection procedures under the Building Standards Act upon initial construction is not confirmed; however, a Building Standards Act compliance status investigation report has been obtained from the J Architecture Inspection Center (JAIC) confirming that there are no issues.

・As of today, the Freezing Sea building (in which the Adventure Ship ride, currently not in operation, is installed; total floor area of 5,188.85m2) is not used on a daily basis.

Note 1: Partial additional construction at the seller’s expense has already been performed for the principal building of Hotel Reoma no Mori and is planned to be performed for one of the annex buildings of New Reoma World in Ooedo-Onsen Monogatari Reoma Resort. The additional portion will be owned by the Investment Corporation but is not included in the appraisal value, total floor area, or leasable area; appraisal value indicates the information as of the stated valuation date, and total floor area and leasable area indicate the information as of July 29, 2016.

Note 2: Residence indications have not been implemented for the location of the property.

Note 3: Pursuant to the real estate registry, additional construction was carried out in 2004.

Note 4: Pursuant to the real estate registry, additional construction was carried out in 1991.

Note 5: Under “New Reoma World,” only information regarding the principal building in the real estate registry of New Reoma World is indicated.

Note 6: Only the leasable area of the buildings on the property is indicated; land area is not included.

Lease overview Tenant Reoma Unity Co., Ltd.

Lease type Fixed-term building lease agreement

Lease period From the date on which the Investment Corporation acquires the property until the earlier of either the date on which 20 years have passed from the acquisition date or the date on which the lease agreement pertaining to the property (referred to as this “Agreement” in this lease overview) is cancelled or otherwise ends

Leased area Hotel Reoma no Mori: 23,200.95m2

New Reoma World: 40,573.63m2

Rent 1. The rent to be paid by the tenant to the Investment Corporation under this Agreement is the total of the rent to be paid under item 2 below (referred to as “Primary rent” in this lease overview) and the rent to be paid under item 3 below (referred to as “Secondary rent” in this lease overview).

2. Primary rent is the total of fixed rent and variable rent for each month, and the amount of fixed rent and variable rent (both excluding consumption tax, etc.) for each month is as follows.

(1) Fixed rent

Fixed rent is 62,456,896 yen monthly (however, 67,479,294 yen monthly until November 2016).

(2) Variable rent

(i) Until (and including) November 2016, 0 yen.

(ii) From (and including) December 2016, 5,181,730 yen monthly, to be revised every six months and calculated as follows.

(a) Adjusted GOP for the most recent one-year period (for the six months starting from December of each year (referred to as the “First Term” in this lease overview), this means the one-year period from March of that year to February of the following year; for the six months starting

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from June of each year (referred to as the “Second Term” in this lease overview), this means the one-year period from September of the previous year to August of that year) (these one-year periods are referred to as “Adjusted GOP Calculation Periods” in this lease overview) × 5.0% (yearly; the monthly amount is 1/12th thereof)

(b) If 64.0% of the adjusted GOP (referred to as the “Variable Rent Applicability Criteria Amount” in this lease overview) exceeds one year’s fixed rent, variable rent will apply.

(iii) The amount obtained by multiplying the adjusted GOP for either September of the previous year to August of that year (for each month of the First Term) or March of the previous year to February of that year (for each month of the Second Term) by the variable rent rate (yearly; the monthly amount is 1/12th thereof; however, this amount will be zero if the Variable Rent Applicability Criteria Amount for that Adjusted GOP Calculation Period is less than one year’s fixed rent; referred to as the “Provisional Variable Rent Amount” in this lease overview) will be provisionally paid, and in the final month of each of the First Term and the Second Term, the difference between that Provisional Variable Rent Amount and the variable rent amount for the First Term or the Second Term will be settled.

(iv) If the accounting methods of the tenant change due to a change in the accounting standards applicable to the tenant or other reason, and the adjusted GOP becomes substantially different from that as of the execution of this Agreement, the Investment Corporation and the tenant will change the calculation method of the variable rent and the Variable Rent Applicability Criteria Amount through a written agreement between the Investment Corporation and the tenant so that the adjusted GOP becomes substantially the same as the adjusted GOP as of the execution of this Agreement.

3. Secondary rent is the total amount of taxes, public charges, and nonlife insurance premiums pertaining to the property and the possessions of the Investment Corporation located on or within the property to be borne by the Investment Corporation in relation to the property under this Agreement and other such fees for each month. To determine the amount of Secondary rent, on December 1 of each year during the lease term, the necessary amount for each month in the following one-year period will be calculated reasonably and objectively by the Investment Corporation based on tax notices for fixed asset taxes and city planning taxes, billed insurance premiums, and land rent (the amount of rent paid monthly at such time), each as of the immediately preceding October 31; the amount of Secondary rent will be revised annually.

Lease deposit, security deposit

374,741,376 yen (six months’ fixed rent)

Regarding renewal upon expiration of term

This Agreement will end upon the expiration of the lease term and will not be renewed. However, the Investment Corporation and the tenant may, upon mutual consultation, execute a new fixed-term building lease agreement that commences on the date immediately following the date on which the lease term of this Agreement expires.

Regarding revision of rent

The Investment Corporation and the tenant may not revise the rent for three years following the commencement date of the lease. After three years have passed following the commencement date of the lease term, the Investment Corporation and the tenant will consult every three years regarding the revision of the rent (the first consultation regarding rent revision will be held if three years have passed from the commencement date of the lease term) and may revise the rent if both parties so agree upon changes in economic conditions, changes in the consumer price index (CPI), or increases in taxes or public charges imposed on land or buildings or in other such burdens, or other unavoidable circumstances have arisen.

Regarding early termination

The tenant may not terminate this Agreement during the lease term without the prior written consent of the Investment Corporation. However, the tenant may cause this Agreement to end on the date immediately following the date on which seven years have passed following the commencement of the lease term (referred to as the “Termination Date” in this lease overview). In this case, the tenant must, at least 12 months before the Termination Date, notice to terminate this Agreement on the Termination Date in writing to the Investment Corporation.

Penalty If this Agreement is cancelled due to stipulated reasons, or if this Agreement is terminated due to the notice of the tenant with the consent of the Investment Corporation, then the tenant will pay the Investment Corporation the higher of either an amount equal to the rent from the date of cancellation or termination until the last day of the termination prohibition period or an amount equal to 12 months’ rent as a penalty (when calculating the rent, the average monthly amount of rent for the prior 12 months beginning from the month immediately preceding the month in which this Agreement ends will be used; however, if the lease term was less than 12 months, the average monthly amount for that lease term will be used). However, if during the period from the date of cancellation or termination to the last day of the termination prohibition period or (if the date of cancellation or termination is less than 12 months before the last day of the termination prohibition period) until 12 months have passed from the date of cancellation or termination, the Investment Corporation has leased the buildings and other properties to a third party and received rent for that period, then an amount equal to one half of the total of that rent will be deducted from the penalty, and if the tenant has already paid the penalty to the Investment Corporation without deducting that amount, the Investment Corporation will

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return that amount to the tenant.

Agreement novation method

There are no matters applicable hereto.

Lease overview (Note 1) (Note 2) Tenant Reoma Unity Co., Ltd.

Lease type Fixed-term land lease agreement

Lease period Fifty years from the date on which the Investment Corporation acquires the property (Note 3)

Leased area 71,790.51m2

Rent 89,100 yen monthly


534,600 yen


1. This agreement will not be renewed (including renewal due to request and due to continued use of land), and the lease term will not be extended due to the construction of buildings.

2. Upon the expiration of the lease term, if the tenant requests to continue using the land, the Investment Corporation and the tenant will consult in good faith, and if an agreement is reached, the Investment Corporation and the tenant will execute a new fixed-term land lease right establishment agreement for the land.


1. Each basic year (meaning the one-year period beginning from December 1 of each year; referred to as a “Basic Year” in this lease overview), the amount of rent from December 1 of that Basic Year will be revised to the amount calculated using the following formula. The calculated amount rounded to the nearest thousand yen will be the monthly rent for each month from December of each year to October of the following year, and the rent for November of that following year will be the remainder of the revised yearly rent.

Revised amount of rent (monthly) = ((A - B) + B’) ÷ 12

A: The amount of rent (yearly) at that time

B: The amount of fixed asset taxes and other taxes and public charges imposed on the land, calculated based on tax notices as of the October 30 immediately prior to the commencement date of the immediately preceding Basic Year (when first revising the rent after the first day of the lease term of the land, the amount of fixed asset taxes and other taxes and public charges imposed on the land as of the first day of the lease term of the land)

B’: The amount of fixed asset taxes and other taxes and public charges imposed on the land, calculated based on tax notices as of the October 30 immediately prior to the commencement date of that Basic Year

2. If there is an increase or decrease in the amount of fixed asset taxes or other taxes or public charges imposed on the land on or after the commencement date of each Basic Year, the amount of rent for the immediately following Basic Year will be changed in accordance with the amount of that increase or decrease.


The tenant may not terminate this agreement during the lease term.

Penalty 1. If this agreement is cancelled due to stipulated reasons and ends before the date on which the lease term expires, the tenant must pay the Investment Corporation an amount equal to 12 months’ rent (calculated based on the rent amount at the time of cancellation) as a penalty on the date on which this agreement ends.

2. The tenant’s payment of the penalty under the preceding paragraph does not preclude the Investment Corporation from claiming compensation for damage, etc. that it incurred due to the cancellation of this agreement, such as due to a delay in the tenant vacating and returning the land.



Note 1: There is a closed zoo on the land leased under this agreement (referred to as the “Leased Land” in this lease overview), and the tenant keeps and manages the animals on the Leased Land at its own expense and responsibility; the Investment Corporation leases that land to the tenant at an amount equivalent to the costs necessary in holding that land.

Note 2: Because there are buildings on the Leased Land owned by Kagawa Prefecture Sightseeing LLC. (the seller), when this agreement ends, the Investment Corporation, the tenant and Kagawa Prefecture Sightseeing LLC. will consult in good faith and determine whether the tenant has an obligation to remove the buildings, structures and other facilities on the Leased Land upon vacating and returning the Leased Land, the extent of the obligation, and the party to perform that removal.

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Note 3: Even before the expiration of the lease term, this agreement will end if it is confirmed that the animals have been completely removed from the Leased Land.

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Property number Ooedo-Onsen Monogatari Iseshima Use Onsen and Spa-related facilities

S-2


Acquisition price 3,656,900,000 yen Appraisal value

(Valuation date)

3,770,000,000 yen

(April 1, 2016)

Location (residence indication)

1035, Hamajima, Hamajima-cho, Shima-shi, Mie Prefecture

Access Approximately 10km / 20 minutes by car from Ugata Station on the Kintetsu Shima Line; approximately 30km / one hour by car from the Tamaki Interchange on the Ise Expressway

Land Land number 1036, Komukai, Hamajima-aza, Hamajima-cho, Shima-shi and other 15 parfcels

Build- ings

Construction date (Note 1)

Main building: February 13, 1973 (Note 2)

North building: February 28, 1979

South building: August 16, 1984


70% Structure, number of floors (Note 1)

Main building: reinforced concrete, flat roof, 8 floors

North building: reinforced concrete, flat roof, 2 basements, 6 floors

South building: reinforced concrete, flat roof, 1 basement, 6 floors

Floor area ratio

200% Total floor area

9,782.37m2

Use district Non-classified city planning area; no specified use district

Designer (Note 3)

Initial construction, addition 1, addition 3, addition 4: Shimizu Corporation, Nagoya Branch, First-class Registered Architects Office

Addition 2: Yugen Kaisha Hayashi First-class Registered Architects Office

Addition 5, addition 8, addition 10, addition 11, addition 12: Yugen Kaisha Matsumori Architectural Design Office

Addition 7, addition 13: Kabushiki Kaisha Hoshi Architectural Design Office

Addition 14: Taishin Structure Engineering Co., Ltd.

Site area (Note 4)

9,637.99m2 Builder (Note 3)

Initial construction, addition 1, addition 3, addition 4: Shimizu Corporation, Nagoya Branch

Addition 2: Yugen Kaisha Hayashi First-class Registered Architects Office

Addition 5, addition 8, addition 10, addition 11, addition 12, addition 13: Unknown

Addition 7: Asanuma Corporation, Nagoya Branch

Addition 14: Yugen Kaisha Soukyou

Form of ownership


Ownership right

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Leasable area 9,782.37m2 Occupancy rate 100%

Main tenant Ooedo-Onsen Monogatari Co., Ltd. Number of tenants 1





Special notes:

・There has been no boundary confirmation in writing regarding the boundaries between the land and its adjoining lands; however, a national land survey has been completed. As of today, there are no disputes or the like with the owners of the adjoining lands.

・Parts of the buildings were designed and built in accordance with the earthquake resistance standards prior to their revision in 1981 (known as the “old earthquake resistance standards”); however, Kabushiki Kaisha Regenerative Architecture Research Institute and Taishin Structure Engineering Co., Ltd. have visually inspected the exterior of the buildings and have provided written statements to the effect that no noteworthy fractures or cracks were found, that the state of deterioration is thought to be consistent with the age of the buildings, and that, in consideration of matters such as the past history of the use and repair of the buildings as well as the state of day-to-day inspections, maintenance, and management, there is judged to be no issue in the safety of the buildings as lodging facilities.

・Regarding the retaining walls located on the land, there are no verification completion certificates or inspection completion certificates regarding construction verification procedures or completion inspection procedures under the Building Standards Act; however, Kabushiki Kaisha Regenerative Architecture Research Institute and Taishin Structure Engineering Co., Ltd. have provided written statements to the effect that there is judged to be no noteworthy issue regarding the current state of natural deterioration to the extent observed and that it is necessary to continue regular inspections and, as appropriate, to conduct maintenance and other repairs.

・Notifications regarding the state of the storage of transformers containing trace amounts of PCBs have been filed with the relevant government agencies in accordance with law, and such transformers are appropriately stored.

Note 1: Building consolidation registration procedures have been completed for the property, but the construction date, structure, and number of floors stated here are based on the real estate registry pertaining to each building before the consolidation procedures were completed.

Note 2: Pursuant to the real estate registry, additional construction was carried out in 1979, 1984 and 1989.

Note 3: Addition 6 and addition 9 were stopped before construction was completed and are therefore not included here.

Note 4: The site area includes an area of approximately 7.5m2 (setback area) deemed to be road under Article 42, Paragraph 2 of the Building Standards Act.

Lease overview

Tenant Ooedo-Onsen Monogatari Co., Ltd.






(1) Fixed rent


(2) Variable rent


(ii) From (and including) December 2016, 962,993 yen monthly, to be revised every six months and calculated as follows.

(a) Adjusted GOP for the most recent one-year period (for the six months starting from December of each year (referred to as the “First Term” in this lease overview), this means the one-year period from March of that year to February of the following year; for the six

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months starting from June of each year (referred to as the “Second Term” in this lease overview), this means the one-year period from September of the previous year to August of that year) (these one-year periods are referred to as “Adjusted GOP Calculation Periods” in this lease overview) × 4.0% (yearly; the monthly amount is 1/12th thereof)










The Investment Corporation and the tenant may not revise the rent for three years following the commencement date of the lease. After three years have passed following the commencement date of the lease term, the Investment Corporation and the tenant will consult every three years regarding the revision of the rent (the first consultation regarding rent revision will be held if three years have passed from the commencement date of the lease term) and may revise the rent if both parties so agree and if there have been changes in economic conditions, changes in the consumer price index (CPI), or increases in taxes or public charges imposed on land or buildings or in other such burdens, or other unavoidable circumstances have arisen.



Penalty If this Agreement is cancelled due to stipulated reasons, or if this Agreement is terminated due to the notice of the tenant with the consent of the Investment Corporation, then the tenant will pay the Investment Corporation the higher of either an amount equal to the rent from the date of cancellation or termination until the last day of the termination prohibition period or an amount equal to 12 months’ rent as a penalty (when calculating the rent, the average monthly amount of rent for the prior 12 months beginning from the month immediately preceding the month in which this Agreement ends will be used; however, if the lease term was less than 12 months, the average monthly amount for that lease term will be used). However, if during the period from the date of cancellation or termination to the last day of the termination prohibition period or (if the date of cancellation or termination is less than 12 months before the last day of the termination prohibition period) until 12 months have passed from the date of cancellation or termination, the Investment Corporation has leased the buildings and other properties to a third party and received rent for that period, then an amount equal to one half of the total of that rent will be deducted from the penalty, and if the tenant

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has already paid the penalty to the Investment Corporation without deducting that amount, the Investment Corporation will return that amount to the tenant.



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Property number Ito Hotel New Okabe Use Onsen and Spa-related

facilities S-3



(Valuation date)

2,740,000,000 yen

(April 1, 2016)


2-1-1, Sakuragi-cho, Ito-shi, Shizuoka Prefecture

Access Approximately 1.2km / five minutes by car / 15 minutes on foot from Ito Station on the JR Ito Line and the Izu Kyuko Line

Land Land number 2-663-1, Sakuragi-cho, Ito-shi and other 9 parcels

Build-ings

Construction date

November 8, 1990 (Note 1)



Steel-framed reinforced concrete, flat roof, 9 floors with 1 basement

Floor area ratio


10,211.46m2

Use district Neighborhood commercial district Designer Initial construction: Ishii Sekkei Inc.

Addition: Miyamoto Architects First-class Registered Architects Office

Site area 2,945.87m2 Builder Initial construction: Kajima Corporation, Yokohama Branch

Addition: Kabushiki Kaisha Shinto Kensetsu

Form of ownership


Ownership right




73 (Note 2) Number of subtenants 0



Special notes:

・Sagamitei (one of the properties) is connected with Surugatei, which is not an Acquired Asset, by a connecting passage, and Ooedo-Onsen Monogatari Co., Ltd. will operate both Sagamitei (leased from the Investment Corporation) and Surugatei as a single unit after leasing Surugatei from its owner. Furthermore, a revolving mortgage for which the debtor is the owner of Surugatei is created on Surugatei.

・A waterway crosses between the building and the adjoining Surugatei, and there is a connecting passage (a connecting walkway that connects the building and Surugatei on the first and second floors) and the like above the waterway; however, permission for occupancy of river has been obtained.

Note 1: Pursuant to the real estate registry, additional construction was carried out on an unknown date and in 1992.

Note 2: The total number of guest rooms on the property including the number of Surugatei, which is not an Acquired Asset, is 109.

Lease overview



Lease period From the date on which the Investment Corporation acquires the property until the earlier of either the date

15


on which 20 years have passed from the acquisition date or the date on which the lease agreement pertaining to the property (referred to as this “Agreement” in this lease overview) is cancelled or otherwise ends




(1) Fixed rent


(2) Variable rent


(ii) From (and including) December 2016, 1,471,251 yen monthly, to be revised every six months and calculated as follows. (Note)

(a) Adjusted GOP for the most recent one-year period (for the six months starting from December of each year (referred to as the “First Term” in this lease overview), this means the one-year period from March of that year to February of the following year; for the six months starting from June of each year (referred to as the “Second Term” in this lease overview), this means the one-year period from September of the previous year to August of that year) (these one-year periods are referred to as “Adjusted GOP Calculation Periods” in this lease overview) × 5.0% (yearly; the monthly amount is 1/12th thereof)










The Investment Corporation and the tenant may not revise the rent for three years following the commencement date of the lease. After three years have passed following the commencement date of the lease term, the Investment Corporation and the tenant will consult every three years regarding the revision of the rent (the first consultation regarding rent revision will be held if three years have passed from the commencement date of the lease term) and may revise the rent if both parties so agree and if there have been

16


changes in economic conditions, changes in the consumer price index (CPI), or increases in taxes or public charges imposed on land or buildings or in other such burdens, or other unavoidable circumstances have arisen.



Penalty If this Agreement is cancelled due to stipulated reasons, or if this Agreement is terminated due to the notice of the tenant with the consent of the Investment Corporation, then the tenant will pay the Investment Corporation the higher of either an amount equal to the rent from the date of cancellation or termination until the last day of the termination prohibition period or an amount equal to 12 months’ rent as a penalty (when calculating the rent, the average monthly amount of rent for the prior 12 months beginning from the month immediately preceding the month in which this Agreement ends will be used; however, if the lease term was less than 12 months, the average monthly amount for that lease term will be used). However, if during the period from the date of cancellation or termination to the last day of the termination prohibition period or (if the date of cancellation or termination is less than 12 months before the last day of the termination prohibition period) until 12 months have passed from the date of cancellation or termination, the Investment Corporation has leased the buildings and other properties to a third party and received rent for that period, then an amount equal to one half of the total of that rent will be deducted from the penalty, and if the tenant has already paid the penalty to the Investment Corporation without deducting that amount, the Investment Corporation will return that amount to the tenant.



Note: The variable rent amount and the Provisional Variable Rent Amount will be calculated based on the adjusted GOP including Surugatei, which is not an Acquired Asset.

17


Property number Ooedo-Onsen Monogatari Atami Use Onsen and Spa-related

facilities S-4



(Valuation date)

3,090,000,000 yen

(April 1, 2016)


8-3, Sakimi-cho, Atami-shi, Shizuoka Prefecture

Access Approximately 600m / seven minutes on foot from Atami Station on the JR Tokaido Shinkansen Line and the JR Tokaido Main Line

Land Land number 255-2, Higashikaigan-cho, Atami-shi and 245-20, Sakimi-cho, Atami-shi, and other 12 parcels

Build-ings

Construction date

February 27, 1959 (Note)



Reinforced concrete, steel-framed flat roof, galvanized steel sheet roofing, 12 floors

Floor area ratio


8,469.22m2

Use district Commercial district Designer Main building: unknown

Annex building, second annex building, large bathhouse building addition: Kabushiki Kaisha Inaba Choji Design Office

Site area 2,053.32m2 Builder Main building and large bathhouse building addition: unknown

Annex building: Sato Kogyo Co., Ltd., Yokohama Branch

Second annex building: Shimizu Corporation, Nagoya Branch

Form of ownership


Ownership right







Special notes:

・There has been no boundary confirmation in writing regarding the boundaries between the land and a part of its adjoining lands; however, as of today, there are no disputes or the like with the owners of the adjoining lands.

・Parts of the buildings were designed and built in accordance with the earthquake resistance standards prior to their revision in 1981 (known as the “old earthquake resistance standards”); however, Taishin Structure Engineering Co., Ltd. has visually inspected the exterior of the buildings and has provided written statements to the effect that no noteworthy fractures or cracks were found, that the state of deterioration is thought to be consistent with the age of the buildings, and that, in consideration of matters such as the past history of the use and repair of the buildings as well as the state of day-to-day inspections, maintenance, and management, there is inferred to be no issue in the safety of the buildings as lodging facilities.

・Part of the land (2.00m2) is leased for use to Atami-shi for the purpose of setting up a stone monument. When the Investment Corporation intends to sell the land, the Investment Corporation needs to obtain prior consent from Atami-shi, and if Atami-shi desires to acquire the land, the Investment Corporation will give preference to Atami-shi in selling the land.

18


・Asbestos-containing sprayed materials are used for the ceiling slab and beams on the 10th floor of the property; however, regarding these construction materials, Earth-Appraisal Co., Ltd. has provided inspection results to the effect that, to the extent visually inspected, no significant damage was found and the condition is generally good. The condition of these sprayed materials is stable; the Investment Corporation considers there to be no particular issue in their current use, but it will conduct regular inspections on the condition of the sprayed materials and continue to manage them appropriately even after the acquisition.

Note: Pursuant to the real estate registry, additional construction was carried out in 1977, 1981, 1989, 1997 and 2016.

Lease overview







(1) Fixed rent


(2) Variable rent





(iii) The amount obtained by multiplying the adjusted GOP for each Adjusted GOP Period for either September of the previous year to August of that year (for each month of the First Term) or March of the previous year to February of that year (for each month of the Second Term) by the variable rent rate (yearly; the monthly amount is 1/12th thereof; however, this amount will be zero if the Variable Rent Applicability Criteria Amount for that Adjusted GOP Calculation Period is less than one year’s fixed rent; referred to as the “Provisional Variable Rent Amount” in this lease overview) will be provisionally paid, and in the final month of each of the First Term and the Second Term, the difference between that Provisional Variable Rent Amount and the variable rent amount for the First Term or the Second Term will be settled.


3. Secondary rent is the total amount of taxes, public charges, and nonlife insurance premiums pertaining to the property and the possessions of the Investment Corporation located on or within the property to be borne by the Investment Corporation in relation to the property under this Agreement and other such fees for each month. To determine the amount of Secondary rent, on December 1 of each year during the lease term, the necessary amount for each month in the following one-year period will be calculated

19


reasonably and objectively by the Investment Corporation based on tax notices for fixed asset taxes and city planning taxes, billed insurance premiums, and land rent (the amount of rent paid monthly at such time), each as of the immediately preceding October 31; the amount of Secondary rent will be revised annually.












20


Property number Ooedo-Onsen Monogatari Toi Marine

Hotel Use Onsen and Spa-related facilities

S-5



(Valuation date)

1,970,000,000 yen

(April 1, 2016)


2791-4, Toi, Izu-shi, Shizuoka Prefecture

Access Approximately 27.3km / one hour by car from Shuzenji Station on the Izuhakone Railway Sunzu Line

Land Land number 2791-2, Kitayakata, Toi-aza, Izu-shi and other 6 parcels

Build-ings

Construction date

October 4, 1974 (Note)


－ Structure, number of floors

Steel-framed reinforced concrete, flat roof, galvanized steel sheet roofing, 12 floors

Floor area ratio

－ Total floor area

6,125.84m2

Use district Non-city-planning area Designer Initial construction in 1974: Ishii Architect & Associates

Addition in 1987, addition in 1990, addition in 2005: unknown

Site area 2,800.83m2 Builder Initial construction in 1974: Hazama Corporation, Nagoya Branch

Addition in 1987, addition in 1990, addition in 2005: unknown

Form of ownership


Ownership right







Special notes:

・There has been no boundary confirmation in person or in writing regarding the boundaries between the land and its adjoining lands; however, a national land survey has been completed. As of today, there are no disputes or the like with the owners of the adjoining lands.

・Asbestos-containing sprayed materials are used for the ceiling slab and beams on the second floor of the property; however, regarding these construction materials, Earth-Appraisal Co., Ltd. has provided inspection results to the effect that, to the extent visually inspected, no significant damage or the like was found and the condition is generally good. The condition of these sprayed materials is stable; the Investment Corporation considers there to be no particular issue in their current use, but it will conduct regular inspections on the condition of the sprayed materials and continue to manage them appropriately even after the acquisition.

Note: Pursuant to the real estate registry, additional construction was carried out in 2005.

Lease overview



21






(1) Fixed rent


(2) Variable rent


(ii) From (and including) December 2016, 1,016,579 yen monthly, to be revised every six months and calculated as follows.











The Investment Corporation and the tenant may not revise the rent for three years following the commencement date of the lease. After three years have passed following the commencement date of the lease term, the Investment Corporation and the tenant will consult every three years regarding the revision of

22


the rent (the first consultation regarding rent revision will be held if three years have passed from the commencement date of the lease term) and may revise the rent if both parties so agree and if there have been changes in economic conditions, changes in the consumer price index (CPI), or increases in taxes or public charges imposed on land or buildings or in other such burdens, or other unavoidable circumstances have arisen.


The tenant may not terminate this Agreement during the lease term without the prior written consent of the Investment Corporation. However, the tenant may cause this Agreement to end on the date immediately following the date on which five years have passed following the commencement of the lease term (referred to as the “Termination Date” in this lease overview). In this case, the tenant must, at least 12 months before the Termination Date, notice to terminate this Agreement on the Termination Date in writing to the Investment Corporation.




23


Property number Ooedo-Onsen Monogatari Awara Use Hot Springs and Related

facilities S-6



(Valuation date)

1,960,000,000 yen

(April 1, 2016)


48-10, Futaomote, Awara-shi, Fukui Prefecture

Access Approximately 4.5km / 15 minutes by car from Awaraonsen Station on the JR Hokuriku Line; approximately 1.0km / 15 minutes on foot from Awarayunomachi Station on the Echizen Railway Mikuni Awara Line

Land Land number 11, Kasada, 48-aza, Futaomote, Awara-shi and other 42 parcels

Build-ings

Construction date (Note 1)

Miyakotei: September 23, 1984

South building: October 5, 1972

East building: October 25, 1980


80% and 60% Structure, number of floors (Note 1)

Miyakotei: steel-framed reinforced concrete, flat roof, 8 floors

South building: reinforced concrete, flat roof, 5 floors

East building: reinforced concrete, steel-framed flat roof, steel sheet roofing, 6 floors

Floor area ratio

400% and 200% Total floor area

14,132.27m2

Use district Non-classified city planning area and commercial district; non-classified city planning area and Category 1 residential district

Designer East building: Initial construction in 1980: Kabushiki Kaisha Kamiya Architectural Office Addition in 1984: unknown

Miyakotei and Ryokufuen: Kabushiki Kaisha Kamiya Architectural Office

South building: Initial construction and addition in 1972: unknown

Site area 13,263.72m2 (Note 2) Builder East building: Initial construction in 1980, addition in 1984: unknown

Miyakotei: Asanuma Corporation

South building: Initial construction and addition in 1972: unknown

Ryokufuen: unknown

Form of ownership

Ownership right and land lease right Form of ownership

Ownership right







24


Special notes:

・There has been no boundary confirmation in person or in writing regarding the boundaries between the land and its adjoining lands; however, as of today, there are no disputes or the like with the owners of the adjoining lands.

・As some parts of the buildings and parking lots are on leased land, the Investment Corporation has executed lease agreements with several landowners. If the Investment Corporation transfers the property to a third party, the consent of the landowners (lessors) is needed.

・The tenant has been using areas shown on the cadastral map as waterways and old local roads that cross the land as parking lots. The tenant has obtained permission for occupancy of those areas and intends to maintain the permission in the future.

・The fixed-term building lease agreement with conditions precedent executed between the Investment Corporation and the tenant allows for the tenant’s employees or the like to pass through the land without charge and for relevant persons such as landowners of surrounding areas to pass through the land without charge to the extent necessary in order to go in and out of the building (dormitory) owned by the tenant adjoining the property.

・These buildings were designed and built in accordance with the earthquake resistance standards prior to their revision in 1981 (known as the “old earthquake resistance standards”); however, Kabushiki Kaisha Regenerative Architecture Research Institute and Taishin Structure Engineering Co., Ltd. have visually inspected the exterior of the buildings and have provided written statements to the effect that no noteworthy fractures or cracks were found, that the state of deterioration is thought to be consistent with the age of the buildings, and that, in consideration of matters such as the past history of the use and repair of the buildings as well as the state of day-to-day inspections, maintenance, and management, there is judged to be no issue in the safety of the buildings as lodging facilities.

・Notifications regarding the state of the storage of transformers and oil drums containing trace amounts of PCBs have been filed with the relevant government agencies in accordance with law, and such transformers and oil drums are appropriately stored.

・Asbestos-containing sprayed vermiculite is used for the ceilings in the staircases, etc. from the first floor to the fourth floor of the annex building of the property; however, regarding this construction material, Earth-Appraisal Co., Ltd. has provided inspection results to the effect that, to the extent visually inspected, no significant deterioration, damage, or the like was found and the condition is generally good. The condition of this sprayed vermiculite is stable; the Investment Corporation considers there to be no particular issue in its current use, but it will conduct regular inspections on the condition of the sprayed vermiculite and continue to manage it appropriately even after the acquisition.

Note 1: Building consolidation registration procedures have been completed for the property, but the construction date, structure, and number of floors stated here are based on the real estate registry pertaining to each building before the consolidation procedures were completed.

Note 2: The seller leases part of the land (an area of 5,641.90m2) from a third party.

Lease overview







(1) Fixed rent


(2) Variable rent



(a) Adjusted GOP for the most recent one-year period (for the six months starting from December of each year (referred to as the “First Term” in this lease overview), this means the one-year period from March of that year to February of the following year; for the six

25


months starting from June of each year (referred to as the “Second Term” in this lease overview), this means the one-year period from September of the previous year to August of that year) (these one-year periods are referred to as “Adjusted GOP Calculation Periods” in this lease overview) × 3.0% (yearly; the monthly amount is 1/12th thereof)













Penalty If this Agreement is cancelled due to stipulated reasons, or if this Agreement is terminated due to the notice of the tenant with the consent of the Investment Corporation, then the tenant will pay the Investment Corporation the higher of either an amount equal to the rent from the date of cancellation or termination until the last day of the termination prohibition period or an amount equal to 12 months’ rent as a penalty (when calculating the rent, the average monthly amount of rent for the prior 12 months beginning from the month immediately preceding the month in which this Agreement ends will be used; however, if the lease term was less than 12 months, the average monthly amount for that lease term will be used). However, if during the period from the date of cancellation or termination to the last day of the termination prohibition period or (if the date of cancellation or termination is less than 12 months before the last day of the termination prohibition period) until 12 months have passed from the date of cancellation or termination, the Investment Corporation has leased the buildings and other properties to a third party and received rent for that period, then an amount equal to one half of the total of that rent will be deducted from the penalty, and if the tenant

26


has already paid the penalty to the Investment Corporation without deducting that amount, the Investment Corporation will return that amount to the tenant.



27


Property number Ooedo-Onsen Monogatari Kamoshika-so Use Onsen and Spa-related

facilities S-7



(Valuation date)

1,260,000,000 yen

(April 1, 2016)


1256, Shiobara, Nasushiobara-shi, Tochigi Prefecture

Access Approximately 20km / 35 minutes by car from Nishi-Nasuno Station on the JR Utsunomiya Line; approximately 24km / 40 minutes by car from Nasushiobara Station on the JR Tohoku Shinkansen Line; approximately 14km / 20 minutes by car from the Nishi Nasuno Shiobara Interchange on the Tohoku Expressway

Land Land number 1256-4, Maeyama, Shiobara-aza, Nasushiobara-shi

Build-ings

Construction date

February 29, 1996



Reinforced concrete, stainless steel sheet roofing, 4 floors

Floor area ratio


5,947.80m2

Use district Non-classified city planning area, and Category 1 residential district

Designer FuketaSekkei Co., Ltd.

Site area 7,734.61m2 Builder Tokyu and Hamaya Specific Construction Work Joint Venture

Form of ownership


Ownership right







Special notes:


・The fixed-term building lease agreement with conditions precedent executed between the Investment Corporation and the tenant allows the tenant’s employees or the like to pass through the land without charge in order to go in and out of the building (dormitory) owned by the tenant adjoining the property.

・Some parts of the land are located in a sediment disaster prone area (an area where it is recognized that there is a risk of danger to the lives or physical safety of residents and the like if a steep slope failure or the like occurs) under the Act on Sediment Disaster Countermeasures for Sediment Disaster Prone Areas (Act No. 57 of 2000, as amended).

Lease overview




28





(1) Fixed rent


(2) Variable rent













The Investment Corporation and the tenant may not revise the rent for three years following the commencement date of the lease. After three years have passed following the commencement date of the lease term, the Investment Corporation and the tenant will consult every three years regarding the revision of the rent (the first consultation regarding rent revision will be held if three years have passed from the commencement date of the lease term) and may revise the rent if both parties so agree and if there have been changes in economic conditions, changes in the consumer price index (CPI), or increases in taxes or public charges imposed on land or buildings or in other such burdens, or other unavoidable circumstances have

29


arisen.






30


Property number Ooedo-Onsen Monogatari Ikaho Use Hot Springs and Related

Facilities S-8



(Valuation date)

1,340,000,000 yen

(April 1, 2016)


592-1, Ikaho, Ikahomachi, Shibukawa-shi, Gunma Prefecture

Access Approximately 9.7km / 30 minutes by car from Shibukawa Station on the JR Joetsu Line and Agatsuma Line

Land Land number 592-1, Nishizawa, Ikaho-aza, Ikahomachi, Shibukawa-shi and other 7 parcels

Build-ings

Construction date

November 1, 1983 (Note)



Reinforced concrete, galvanized steel sheet roofing, flat roof, 7 floors

Floor area ratio


5,177.18m2

Use district Non-city-planning area Designer Main building: unknown

Bath building: Minamisawa Kensetsu First-class Registered Architects Office

Annex building: Initial construction: Minamisawa Kensetsu First-class Registered Architects Office Addition: Kabushiki Kaisha Regenerative Architecture Research Institute

Site area 6,805.12m2 Builder Main building, bath building: Minamisawa Co., Ltd.

Annex building: Initial construction: Minamisawa Co., Ltd. Addition: unknown

Form of ownership


Ownership right







Special notes:


・Some parts of the land (1,835.00m2) are designated as protected forest under the Forest Act (Act No. 249 of 1951, as amended). The current condition of the land as of today is forest, and it is not entered into on a daily basis.

・Regarding the retaining walls located on the land, it is unknown whether there are verification completion certificates or inspection completion certificates regarding construction verification procedures or completion inspection procedures under the Building Standards Act at the time of construction; however, Kabushiki Kaisha Regenerative Architecture Research Institute and

31


Taishin Structure Engineering Co., Ltd. have provided written statements to the effect that there is judged to be no noteworthy issue regarding the current state of natural deterioration to the extent observed and that it is necessary to continue regular inspections and, as appropriate, to conduct maintenance and other repairs.

・Asbestos-containing sprayed vermiculite is used for the ceilings and the rear sides of stairs in the staircases from the first floor to the fourth floor of the property; however, regarding this construction material, Earth-Appraisal Co., Ltd. has provided inspection results to the effect that, to the extent visually inspected, no significant deterioration, damage, or the like was found and the condition is generally good. The condition of this sprayed vermiculite is stable; the Investment Corporation considers there to be no particular issue in its current use, but it will conduct regular inspections on the condition of the sprayed vermiculite and continue to manage it appropriately even after the acquisition.

Note: Pursuant to the real estate registry, additional construction was carried out in 1994.

Lease overview







(1) Fixed rent


(2) Variable rent







3. Secondary rent is the total amount of taxes, public charges, and nonlife insurance premiums pertaining to the property and the possessions of the Investment Corporation located on or within the property to be

32


borne by the Investment Corporation in relation to the property under this Agreement and other such fees for each month. To determine the amount of Secondary rent, on December 1 of each year during the lease term, the necessary amount for each month in the following one-year period will be calculated reasonably and objectively by the Investment Corporation based on tax notices for fixed asset taxes and city planning taxes, billed insurance premiums, and land rent (the amount of rent paid monthly at such time), each as of the immediately preceding October 31; the amount of Secondary rent will be revised annually.












33


Property number Ooedo-Onsen Monogatari

Kimitsu-no-mori Use Hot Springs and Related Facilities

S-9


Acquisition price 819,650,000 yen Appraisal value

(Valuation date)

845,000,000 yen

(April 1, 2016)


(Note 1)

384-119, Hougi-no, Hougi-aza, Kimitsu-shi, Chiba Prefecture

Access Approximately 15km / 30 minutes by car from Kimitsu Station on the JR Uchibo Line; approximately 10km / 16 minutes by car from the Kimitsu Interchange on the Tateyama Expressway

Land Land number 384-119, Hougi-no, Hougi-aza, Kimitsu-shi and other 1 parcel (Note 2)

Build-ings

Construction date

March 21, 1996


－ Structure, number of floors

Reinforced concrete, galvanized steel sheet roofing, 4 floors

Floor area ratio

－ Total floor area

8,660.20m2

Use district Non-city-planning area Designer JFE Engineering Corporation

Site area 56,000.38m2 (Note 2) Builder Nippon Steel & Sumitomo Metal, Tokyu and Shirai Construction Work Joint Venture

Form of ownership


Ownership right







Special notes:

・Since there is land owned by Kimitsu-shi between the land and the public road around the approach to the property, permission for occupancy of that land has been obtained in order to connect the property to the public road. Regarding the land owned by Kimitsu-shi (area: approximately 1,071m2) including the road-use land, as of today, it is currently undergoing sale procedures at the seller’s responsibility and expense, and the ownership right of the land will be transferred to the Investment Corporation without charge after Kimitsu-shi sells the land to the seller.

・The property consists of the central building, the arena building, and the detached building; however, as of today, the arena building is not used on a daily basis.

Note 1: Residence indications have not been implemented for the location of the property.

Note 2: The land number and site area show the information for before the acquisition of the land that the Investment Corporation intends to acquire after Kimitsu-shi sells it to the seller.

Lease overview



Lease period From the date on which the Investment Corporation acquires the property until the earlier of either the date on which 20 years have passed from the acquisition date or the date on which the lease agreement pertaining

34


to the property (referred to as this “Agreement” in this lease overview) is cancelled or otherwise ends




(1) Fixed rent


(2) Variable rent













The Investment Corporation and the tenant may not revise the rent for three years following the commencement date of the lease. After three years have passed following the commencement date of the lease term, the Investment Corporation and the tenant will consult every three years regarding the revision of the rent (the first consultation regarding rent revision will be held if three years have passed from the commencement date of the lease term) and may revise the rent if both parties so agree and if there have been changes in economic conditions, changes in the consumer price index (CPI), or increases in taxes or public

35


charges imposed on land or buildings or in other such burdens, or other unavoidable circumstances have arisen.






(2) Overview of sellers

S-1 Ooedo-Onsen Monogatari Reoma Resort Trade name Kagawa Prefecture Sightseeing LLC. Head office address 40-1, Kurikumanishi, Ayauta-cho, Marugame-shi, Kagawa Prefecture Representative Representative member: Ooedo-Onsen Monogatari Co., Ltd.

Isamu Fujioka, Executive Officer Date of incorporation July 1, 1986 Capital 10,000,000 yen (as of the last day of February 2016) Business details Operating amusement parks, etc. Number of employees Not disclosed, as the previous owner’s consent was not obtained. Performance; finances Not disclosed, as the previous owner’s consent was not obtained. Investor and investment ratio Ooedo-Onsen Monogatari Co., Ltd.; 100% (as of the last day of February 2016) Relationships between the investment corporation or the asset manager and the concerned company Capital relationship The concerned company is a subsidiary (investment ratio 100%) of the parent

company of the Asset manager, and it constitutes an Interested Party, Etc., stipulated in the Investment Act.

Personnel relationship There is no personnel relationship between the Investment Corporation and the concerned company or the Asset manager and the concerned company.

Transactional relationship A real estate purchase agreement related to the Acquired Assets has been executed with the Investment Corporation.

Related-party status The concerned company is one of the Asset manager’s group companies and constitutes a related party. Further, as is stated above, the concerned company constitutes an Interested Party, Etc., stipulated in the Investment Act. In addition, the concerned company constitutes an Interested Party, Etc., under the Rules on Transactions with Interested Parties, Etc., which are internal rules of the Asset manager, so, in executing the asset acquisition transactions, the Asset manager has performed the decision-making procedures stipulated in the Rules on Transactions with Interested Parties, Etc.

36


S-2 Ooedo-Onsen Monogatari Iseshima; S-3 Ito Hotel New Okabe; S-4 Ooedo-Onsen Monogatari Atami; S-5 Ooedo-Onsen Monogatari Toi Marine Hotel; S-6 Ooedo-Onsen Monogatari Awara; S-7 Ooedo-Onsen Monogatari Kamoshika-so; S-8 Ooedo-Onsen Monogatari Ikaho; S-9 Ooedo-Onsen Monogatari Kimitsu-no-mori

Trade name Ooedo-Onsen Monogatari Co., Ltd. Head office address 1-9-4, Nihonbashi-honmachi, Chuo-ku, Tokyo Representative Mitsumasa Morita, Representative Director Date of incorporation September 26, 2014 (founded November 2001) Capital 100,000,000 yen (as of the last day of February 2016) Business details Expansion of rejuvenation businesses across Japan: onsen inns, hotels, onsen

facilities, and theme parks As of today, operating 31 Onsen and Spa-related Facilities (including Ooedo-Onsen Monogatari onsen theme parks, which have an Edo period’s culture motif)

Number of employees 910 (see note) (as of the last day of February 2016; consolidated basis) Performance; finances (period ended February 2016)

Consolidated net revenue: 38,221 million yen Consolidated total assets: 64,478 million yen Net assets: 15,532 million yen

Major shareholder; shareholding ratio

K.K. Ooedo Onsen Holdings Japan: 100% (as of the last day of February 2016)

Relationships between the investment corporation or the asset manager and the concerned company Capital relationship The concerned company is a unitholder (investment ratio of 5.2%) of the Investment

Corporation. The Investment Corporation is the parent company of the Asset manager (investment ratio of 100%), and it constitutes an Interested Party, Etc., under the Investment Act.

Personnel relationship Five officers and employees of the Asset manager were seconded from the concerned company. There is no personnel relationship between the Investment Corporation and the concerned company.

Transactional relationship The Investment Corporation entered into a sponsor support agreement with the Asset manager and the concerned company. Further, the concerned company executed, in relation to Acquired Assets other than Ooedo-Onsen Monogatari Reoma Resort, a real estate purchase agreement, a fixed-term building lease agreement with conditions precedent, and a building management service agreement.

Related-party status The concerned company constitutes an affiliate company of the Investment Corporation. Further, the concerned company is one of the Asset manager’s group companies and constitutes a related party. In addition, as is stated above, the concerned company constitutes an Interested Party, Etc., stipulated in the Investment Act. Further again, the concerned company constitutes an Interested Party, Etc., under the Rules on Transactions with Interested Parties, Etc., which are internal rules of the Asset manager, so, in executing the asset acquisition transactions, the Asset manager has performed the decision-making procedures stipulated in the Rules on Transactions with Interested Parties, Etc.

Note: Excluding non-regular employees, such as part-time workers

(3) Transactions with Interested Parties, Etc.

Each of the previous owner and the lessee of each Acquired Asset constitute an Interested Party, Etc., stipulated in the Investment Act and an Interested Party, Etc., stipulated in the Rules on Transactions with Interested Parties, Etc., which are internal rules of the Asset manager, so matters will be conducted through the deliberations and resolutions required under the Investment Act; the Rules on Transactions with Interested Parties, Etc.; and other internal rules.

3. Status of property owners and other matters

In the below tables, the company name or personal name is indicated next to (1); the relationship with persons with a special interest is indicated next to (2); and the acquisition background, reason for the acquisition, and similar information are indicated next to (3).

37


Property name (location)

Investment corporation Previous owner Second previous

owner Third previous

owner

(3) Acquisition

(transfer) price (Note 1)

Acquisition (transfer) date

(1), (2), (3) Acquisition (transfer)

price Acquisition (transfer)

date

(1), (2), (3) Acquisition (transfer)

price Acquisition (transfer)

date

(1), (2), (3) Acquisition

(transfer) price Acquisition

(transfer) date

Ooedo-Onsen Monogatari Reoma Resort (Marugame-shi, Kagawa Prefecture)

This property was acquired, because it met the Investment Corporation’s investment criteria and was judged to be a property for which profitability can be secured over the medium to long term. The acquisition price is an amount that is less than the appraisal value and was judged to be reasonable.

(1) Kagawa Prefecture Sightseeing LLC.

(2) Subsidiary of the asset manager’s parent company

(3) Acquisition by purchasing with the aim of business expansion

Not a person with special interests

10,379 million yen (Note 2) September 1, 2016 May 29, 1989

(Note 3)

Ooedo-Onsen Monogatari Iseshima (Shimashi-shi, Mie Prefecture)


(1) Ooedo-Onsen Monogatari Co., Ltd. (succeeded by merging the status of Ooedo-Onsen Monogatari Co., Ltd. at the time of acquisition (Note 4)) (Note 5)

(2) Parent company of asset manager



3,656 million yen (Note 2) September 1, 2016 December 9, 2011

Ito Hotel New Okabe (Itou-shi, Shizuoka Prefecture)


(1) Ooedo-Onsen Monogatari Co., Ltd. (succeeded by merging the status of Shin Ito Hotel New Okabe, Co., Ltd. at the time of acquisition (Note 6))



(1) Hotel New Shiobara, Co., Ltd.

(2) Interested person (Note 7)

(3) Acquisition with aim of developing (acquisition by, amongst other means, new construction of buildings and merging land)


2,657 million yen (Note 2)

38


September 1, 2016 July 1, 2009 New construction of building: November 8, 1990 Acquisition of land: September 1, 1989 (Note 3)

Ooedo-Onsen Monogatari Atami (Atami-shi, Shizuoka Prefecture)






2,997 million yen (Note 2) September 1, 2016 October 13, 2011

Ooedo-Onsen Monogatari Toi Marine Hotel (Izu-shi, Shizuoka Prefecture)


(1) Ooedo-Onsen Monogatari Co., Ltd.(succeeded by merging the status of Toi Marine Hotel, Co., Ltd. at the time of acquisition (Note 4))


(3) Acquisition by a company split with the aim of business expansion


1,910 million yen (Note 2) September 1, 2016 June 1, 2007

Ooedo-Onsen Monogatari Awara (Awara-shi, Fukui Prefecture)






1,901 million yen (Note 2) September 1, 2016 September 28, 2011

(Note 3)

39


Ooedo-Onsen Monogatari Kamoshika-so (Nasushiobara-shi, Tochigi Prefecture)


(1) Ooedo-Onsen Monogatari Co., Ltd. (succeeded by merging the status of Ooedo Real Estate Management, Co., Ltd. at the time of acquisition (Note 4))



(1) Kyoden Area Net, Co., Ltd.




1,222 million yen (Note 2) September 1, 2016 December 2, 2013 November 1, 2007

Ooedo-Onsen Monogatari Ikaho (Shibukawa-shi, Gunma Prefecture)


(1) Ooedo-Onsen Monogatari Co., Ltd. (succeeded by merging the status of Kusakari Resort Services, Co., Ltd. at the time of acquisition (Note 6))




1,299 million yen (Note 2) September 1, 2016 November 30, 2004

Ooedo-Onsen Monogatari Kimitsu-no-mori (Kimisu-shi, Chiba Prefecture)


(1) Ooedo-Onsen Monogatari Co., Ltd. (succeeded by merging the status of Ooedo Real Estate Management, Co., Ltd. at the time of acquisition (Note 4))



(1) Kyoden Area Net, Co., Ltd.




819 million yen (Note 2) September 1, 2016 December 2, 2013 February 28, 2007

Note 1: “Acquisition (transfer) price” indicates the purchase price of each real estate in the Purchase Agreement (not including expenses, such as consumption tax, local consumption tax, or sale and purchase fees) rounded down to the nearest million yen.

Note 2: The previous owner owned it for more than one year (including the period in which the non-surviving company, which was absorbed in a merger conducted by the previous owner, owned it), so this entry was omitted.

Note 3: Of the Acquired Assets, only the acquisition date is stated of main land and buildings is stated.

Note 4: Ooedo-Onsen Monogatari Co., Ltd., which is the previous owner, succeeded the concerned status through an absorption-type merger of Ooedo Onsen Holdings Japan, Co., Ltd., which is the company that merged through absorption with the original owner of the Acquired Assets stated in the parentheses.

40


Note 5: Ooedo-Onsen Monogatari Co., Ltd., which is stated in the parentheses, was incorporated on November 16, 2001, and had its main offices in Aomi, Koto City, Tokyo, but it was subject to an absorption-type merger conducted by Ooedo Onsen Holdings Japan, Co., Ltd. on October 1, 2015, and Ooedo-Onsen Monogatari Co., Ltd. has already been dissolved. On the other hand, Ooedo-Onsen Monogatari Co., Ltd., which is the previous owner, was incorporated on September 26, 2014, and is a stock company with its main offices in Nihonbashi-honmachi, Chuo City, Tokyo; the trade name of each of them is the same, but they are different corporations.

Note 6: Ooedo-Onsen Monogatari Co., Ltd., which is the previous owner, succeeded the concerned status through an absorption-type merger of Ooedo Onsen Holdings Japan, Co., Ltd., which is the company that merged through absorption with Ooedo-Onsen Co., Ltd. after Ooedo-Onsen Co., Ltd. merged through absorption with the original owner of the Acquired Assets stated in the parentheses.

Note 7: Regarding Hotel New Shiobara, Co., Ltd. and Kyoden Area Net, Co., Ltd., assuming that there was a capital relationship when the concerned property was acquired, these companies became a related company of the Asset manager’s parent company (including companies that were succeeded through merger; the same applies below in this Note 7), and, from the perspective of the Asset manager’s parent company, they each fell into a person with special interests, so “Interested Party” is stated here.

4. Overview of intermediary

There is no intermediary involved in the transaction of the above acquisition of assets.

5. Future outlook

For an outlook of the future management status of the Investment Corporation, refer to “Notice Concerning Forecasts of the Financial Results for the Fiscal Periods Ending November 2016, May 2017, and November 2017”, which was published on August 31, 2016.

6. Overview of appraisal reports

The information in the tables titled “Real Estate Appraisal Report” is based on the real estate appraisal reports for the Acquired Assets acquired from Japan Valuers Co., Ltd. or Rich Appraisal Institute Co., Ltd.

41


Overview of real estate appraisal report Property name Ooedo-Onsen Monogatari Reoma Resort Appraisal value 10,700 million yen Appraisal firm Rich Appraisal Institute Co., Ltd. Valuation date April 1, 2016

Item Details Overview, etc.

Indicated value 10,700,000,000 yen Indicated value by direct

capitalization method 10,800,000,000 yen

(1) Operating revenue 887,218,525 yen (i) - (ii)

(i) Gross potential income 887,218,525 yen

Appraisal of rent income that is conducted based on the fixed-term building lease agreement and building management service agreement (draft) and that considers past revenue and expenditure records, future revenue and expenditure forecasts, and the like

(ii) Vacancy loss, etc. 0 yen Not recorded in this matter after taking into account the current-use status, the details of agreements, and the like

(2) Operating expenses 73,366,769 yen Total of a. through h.

a. Maintenance and management fee 0 yen Not recorded, because it is judged that the tenant bears this

b. Utilities expenses 0 yen Not recorded, because it is judged that the tenant bears this c. Repair expenses 0 yen Not recorded, because it is judged that the tenant bears this

d. Property management fee 4,000,000 yen Recorded based on fixed-term building lease agreement and building management service agreement (draft)

e. Tenant leasing cost, etc. 0 yen Judgment made to not record after taking into account the lease type

f. Taxes and public charges 65,185,849 yen

Land: Recorded based on material related to land taxes, etc., for fiscal 2015 Building: Recorded based on material related to building taxes, etc., for fiscal 2015 Depreciable assets: Not applicable in this matter

g. Insurance premium 4,180,920 yen Recorded the estimated amount based on presented material (recorded fire insurance, liability insurance, and profit insurance)

h. Other expenses 0 yen Not recorded, because it is judged that the tenant bears this (3) Net operating income 813,851,756 yen (1) - (2)

(4) Financial interests on refundable deposits 7,494,820 yen Recorded an appraisal amount of 2% for investment return

(5) Capital expenditures 138,273,000 yen Recorded the annual average for renewal expenses stated in the building engineering report

Net cash flow 683,073,576 yen (3)+(4) - (5)

Capitalization rate 6.3%

Appraised the capitalization rate of the subject real estate after referencing the investment return level based on The Japanese Real Estate Investor Survey; taking into account the capitalization rate required in the method based on the investment-return cases, factors specific to the subject real estate, and the like; and considering the uncertainty, etc., of revenue prospects in the future based on discount rate

Indicated value by DCF method 10,600,000,000 yen

Discount rate 6.1%

Appraised the discount rate after taking into account the investment return required in the method based on the summation formula and in the method based on investment return cases with factors specific to the subject real state and the like

Terminal capitalization rate 6.5%

Appraised by taking the capitalization rate, and adjusting it in consideration of risks, etc., based on future building deterioration, economic trends after the end of the holding period, net rent fluctuation projection, and net cash flow uncertainties.

Indicated value by cost approach 7,100,000,000 yen Ratio of land 42.6%

Ratio of building 57.4% Other matters noted by the appraisal firm in preparing the appraisal report Nothing in particular

Note: At the seller’s expense, partial additional construction has been completed for the principal building of Hotel Reoma no Mori, which is one of the properties, and will be conducted on one of New Reoma World’s annex buildings, which is also one of the properties. The Investment Corporation will own the additionally constructed parts, however the figures in the table are the figures as of the stated valuation date.

42


Overview of real estate appraisal report Property name Ooedo-Onsen Monogatari Iseshima Appraisal value 3,770 million yen Appraisal firm Japan Valuers Co., Ltd. Valuation date April 1, 2016


Indicated value 3,770,000,000 yen

Indicated value by direct capitalization method 3,810,000,000 yen Appraised based on actual agreement


(i) Gross potential income 238,974,600 yen (ii) Vacancy loss, etc. 0 yen

(2) Operating expenses 12,126,576 yen Total of a. through h.

a. Maintenance and management fee 0 yen

b. Utilities expenses 0 yen c. Repair expenses 0 yen Not recorded, because it is judged that the tenant bears this d. Property management fee 2,000,000 yen Amount stated in presented material e. Tenant leasing cost, etc. 0 yen f. Taxes and public charges 9,360,700 yen Appraised based on actual amounts g. Non-life insurance premium 765,876 yen Appraised based on actual amounts

h. Other expenses 0 yen (3) Net operating income 226,848,024 yen (1) - (2)

(4) Financial interests on refundable deposits 2,161,128 yen Recorded an appraisal amount of 2.0% for investment return

(5) Capital expenditures 11,880,000 yen 12-year average for repair and renewal expenses stated in the building engineering report

Net cash flow 217,129,152 yen (3) + (4) - (5)


With the assumption that the discount rate is analyzed with the DCF method, the capitalization rate is appraised by taking into account the outlook for net cash flow not incorporated into the discount rate and the fluctuation prospects of the sale price and, further, by referencing investment-return cases in similar real-estate cases.

Indicated value By DCF method 3,730,000,000 yen

Discount rate 5.50% Appraised by reflecting actual market conditions and adjusting by taking into account factors specific to the subject real estate


Appraisal was conducted by judging from the characteristics of the real estate market, the potential of the subject real estate, and the like; comparing the current revenue prospects with the revenue prospects at and after the end of the holding period used in the capitalization rate comparison; and determining risks that are even more uncertain

Indicated value by cost approach 637,000,000 yen

Ratio of land 24.0% Ratio of building 76.0%

Other matters noted by the appraisal firm in preparing the appraisal report Nothing in particular

43


Overview of real estate appraisal report Property name Ito Hotel New Okabe Appraisal value 2,740 million yen Appraisal firm Rich Appraisal Institute Co., Ltd. Valuation date April 1, 2016



Indicated value by direct capitalization method 2,790,000,000 yen




(ii) Vacancy loss, etc. 0 yen (2) Operating expense 20,238,609 yen Total of a. through h.

a. Maintenance and management fee 0 yen Not recorded, because borne by tenant

b. Utilities expenses 0 yen Not recorded, because borne by tenant c. Repair expenses 0 yen Not recorded, because borne by tenant





g. Non-life insurance premium 1,046,750 yen Recorded the estimated amount based on presented material

(recorded fire insurance, liability insurance, and profit insurance) h. Other expenses 0 yen

(3) Net operating income 163,270,584 yen (1) - (2)


(5) Capital expenditures 17,046,000 yen Recorded the annual average for renewal expenses stated in the building engineering report

Net cash flow 147,700,204 yen (3) + (4) - (5)


Appraised the capitalization rate of the subject real estate after referencing the investment return level in The Japanese Real Estate Investor Survey; taking into account the capitalization rate required in the method based on the investment-return cases, factors specific to the subject real estate, and the like; and considering the uncertainty, etc., of revenue prospects in the future based on discount rate


Discount rate 5.1%



Appraised by taking the capitalization rate and adjusting it in consideration of risks, etc., based on future building deterioration, economic trends after the end of the holding period, net rent fluctuation projection, and net cash flow uncertainties

Indicated value by cost approach 1,420,000,000 yen



Note: Sagamitei (one of the properties) is connected with Surugatei, which is not an Acquired Asset, by a connecting passage, and the property (Sagamitei) and Surugatei are operated as a single unit. Each figure in the table relates only to the property (Sagamitei).

44


Overview of real estate appraisal report Property name Ooedo-Onsen Monogatari Atami Appraisal value 3,090 million yen Appraisal firm Rich Appraisal Institute Co., Ltd. Valuation date April 1, 2016








(2) Operating expense 9,712,419 yen Total of a. through h.







g. Non-life insurance premium 745,000 yen Recorded the estimated amount based on presented material




(5) Capital expenditures 33,632,504 yen Recorded by adding the reserve for asset retirement expenses to the annual average of renewal expenses stated in the building engineering report

Net cash flow 167,202,876 yen (3) + (4) - (5)




Discount rate 5.1%







45


Overview of real estate appraisal report Property name Ooedo-Onsen Monogatari Toi Marine Hotel Appraisal value 1,970 million yen Appraisal firm Rich Appraisal Institute Co., Ltd. Valuation date April 1, 2016



















Net cash flow 115,752,596 yen (3) + (4) - (5)




Discount rate 5.6%



Appraised by taking the capitalization rate and adjusting it in consideration of risks, etc., based on future building deterioration, economic trends after the end of the holding period, net rent fluctuation projection, and net cash flow uncertainties.




46


Overview of real estate appraisal report Property name Ooedo-Onsen Monogatari Awara Appraisal value 1,960 million yen Appraisal firm Rich Appraisal Institute Co., Ltd. Valuation date April 1, 2016















g. Non-life insurance premium 1,219,480 yen Recorded the estimated amount based on presented material

(recorded fire insurance, liability insurance, and profit insurance) h. Other expenses 5,176,680 yen Recorded the payment for land rent




Net cash flow 121,110,952 yen (3) + (4) - (5)




Discount rate 5.9%







47


Overview of real estate appraisal report Property name Ooedo-Onsen Monogatari Kamoshika-so Appraisal value 1,260 million yen Appraisal firm Japan Valuers Co., Ltd. Valuation date April 1, 2016





(i) Gross potential income 91,735,100 yen Appraised based on actual agreement (ii) Vacancy loss, etc. 0 yen


a. Maintenance and management fee 0 yen

b. Utilities expenses 0 yen c. Repair expenses 0 yen Not recorded, because it is judged that the tenant bears this d. Property management fee 2,000,000 yen Amount stated in presented material e. Tenant leasing cost, etc. 0 yen f. Taxes and public charges 11,715,097 yen Appraised based on actual amounts g. Non-life insurance premium 520,992 yen Appraised based on actual amounts


(4) Financial interests on refundable deposits 714,470 yen Recorded an appraisal amount of 2.0% for investment return


Net cash flow 66,131,481 yen (3) + (4) - (5)


With the assumption that the discount rate is analyzed with the DCF method, the capitalization rate is appraised by taking into account the outlook for net cash flow not incorporated into the discount rate and the fluctuation prospects of the sale price and, further, by referencing investment-return cases in similar real-estate cases


Discount rate 5.00% Appraised by reflecting actual market conditions and adjusting by taking into account factors specific to the subject real estate.






48


Overview of real estate appraisal report Property name Ooedo-Onsen Monogatari Ikaho Appraisal value 1,340 million yen Appraisal firm Rich Appraisal Institute Co., Ltd. Valuation date April 1, 2016

















(4) Financial interests on refundable deposits 735,180 yen Recorded an appraisal amount of 2% for investment return


Net cash flow 75,153,884 yen (3) + (4) - (5)


Appraised the capitalization rate of the subject real estate after referencing the investment return level in The Japanese Real Estate Investor Survey; taking into account the capitalization rate required in the method based on the investment-return cases, factors specific to the subject real estate, and the like; and considering the uncertainty, etc., of revenue prospects in the future based on discount rate


Discount rate 5.3%







49


Overview of real estate appraisal report Property name Ooedo-Onsen Monogatari Kimitsu-no-mori Appraisal value 845 million yen Appraisal firm Japan Valuers Co., Ltd. Valuation date April 1, 2016


Indicated value 845,000,000 yen

Indicated value by direct capitalization method 855,000,000 yen


(i) Gross potential income 65,098,600 yen Appraised based on actual agreement (ii) Vacancy loss, etc. 0 yen


a. Maintenance and management fee 0 yen b. Utilities expenses 0 yen c. Repair expenses 0 yen Not recorded, because it is judged that the tenant bears this d. Property management fee 2,000,000 yen Amount stated in presented material e. Tenant leasing cost, etc. 0 yen f. Taxes and public charges 10,204,570 yen Appraised based on actual amounts g. Non-life insurance premium 605,040 yen Appraised based on actual amounts


(4) Financial interests on refundable deposits 491,809 yen Recorded an appraisal amount of 2.0% for investment return


Net cash flow 45,326,632 yen (3) + (4) - (5)


With the assumption that the discount rate is analyzed with the DCF method, the capitalization rate is appraised by taking into account the outlook for net cash flow not incorporated into the discount rate and the fluctuation prospects of the sale price and, further, by referencing investment-return cases in similar real-estate cases.

Indicated value By DCF method 834,000,000 yen

Discount rate 5.1% Appraised by reflecting actual market conditions and adjusting by taking into account factors specific to the subject real estate

Terminal capitalization rate

5.5%



Ratio of land 35.4% Ratio of building 64.6% Other matters noted by the appraisal firm in preparing the appraisal report Nothing in particular

Note: Kimitsu-shi owns land (area: approximately 1,071m2) including the road-use land that lies between the land and the public road around the approach to the property; and the Investment Corporation is planning to acquire this land owned by Kimitsu-shi after Kimitsu-shi has sold it to the seller. However, figures related to the land subject to the sale are included in the figures in the table.

*The Investment Corporation’s website: http://oom-reit.com/en/

http://oom-reit.com/en/

50


Attachments

Reference Material 1 Summary of Appraisal Reports

Reference Material 2 Overview of Building Condition Assessment Reports and Earthquake Risk Assessment Reports

Reference Material 3 Area Maps and Exterior Photographs

Reference Material 4 Portfolio List

Reference Material 5 Status of Security Interests

51


Reference Material 1 Summary of Appraisal Reports

Property number Property name Appraisal firm

Appraisal value

(million yen)

(Note 1)

Indicated value Appraisal

NOI

(million yen)

(Note 2)

Indicated value by direct

capitalization method

(million yen)

Capital- ization

rate (%)

Indicated value by

DCF method (million

yen)

Discount rate

(%)

Terminal capitalization

rate (%)

S-1 Ooedo-Onsen Monogatari Reoma Resort

Rich Appraisal Institute Co., Ltd.

10,700 (Note 3)

10,800 6.3 10,600 6.1 6.5 814

S-2 Ooedo-Onsen Monogatari Iseshima

Japan Valuers Co., Ltd. 3,770 3,810 5.7 3,730 5.5 5.9 227

S-3 Ito Hotel New Okabe (Note 4)


2,740 2,790 5.3 2,720 5.1 5.5 163

S-4 Ooedo-Onsen Monogatari Atami


3,090 3,150 5.3 3,070 5.1 5.5 199

S-5 Ooedo-Onsen Monogatari Toi Marine Hotel


1,970 2,000 5.8 1,950 5.6 6.0 121

S-6 Ooedo-Onsen Monogatari Awara


1,960 1,990 6.1 1,940 5.9 6.3 139

S-7 Ooedo-Onsen Monogatari Kamoshika-so

Japan Valuers Co., Ltd. 1,260 1,270 5.2 1,240 5.0 5.4 77

S-8 Ooedo-Onsen Monogatari Ikaho


1,340 1,370 5.5 1,330 5.3 5.7 81

S-9

Ooedo-Onsen Monogatari Kimitsu-no-mori (Note 5)

Japan Valuers Co., Ltd. 845 855 5.3 834 5.1 5.5 52

Total 27,675 28,035 - 27,414 - - 1,874

Note 1: “Appraisal value” is the appraisal value stated in each real estate appraisal report as of the valuation date of April 1, 2016, prepared by Japan Valuers Co., Ltd. or Rich Appraisal Institute Co., Ltd. Furthermore, “appraisal value” is rounded to the nearest million yen. Accordingly, the total of the appraisal values stated for each property may differ from the figure stated in the total row. The same applies hereinafter.

Note 2: “Appraisal NOI” refers to the net operating income, obtained by deducting the operating expenses from the operating revenue stated in the appraisal report, and is the income before deducting depreciation expenses. It is different from the NCF (net cash flow) obtained by deducting investment returns, such as the lease deposit, and capital expenditure from NOI. The abovementioned NOI is indicated by the direct capitalization method. Furthermore, “Appraisal NOI” is rounded to the nearest million yen. Accordingly, the total of the appraisal NOI figures stated for each property may differ from the figure stated in the total row.

Note 3: Partial additional construction at the seller’s expense has already been performed for the principal building of Hotel Reoma no Mori and is planned to be performed for one of the annex buildings of New Reoma World in Ooedo-Onsen Monogatari Reoma Resort. The additional portion will be owned by the Investment Corporation but is not included in the appraisal value, which indicates the information as of April 1, 2016, the valuation date.

Note 4: Sagamitei (one of the properties) is connected with Surugatei, which is not an Acquired Asset, by a connecting passage, and the property (Sagamitei) and Surugatei are operated as a single unit. Each figure in the table relates only to the property (Sagamitei).

Note 5: Kimitsu-shi owns land (area: approximately 1,071m2) including the road-use land that lies between the land and the public road around the approach to the property, and the Investment Corporation is planning to acquire this land owned by Kimitsu-shi after Kimitsu-shi has sold it to the seller. However, figures related to the land subject to the sale are included in the figures in the table.

52


Reference Material 2 Overview of Building Condition Assessment Reports and Earthquake Risk Assessment Reports

Property number Property name Inspector Inspection

date

Emergency and

short-term repair

expenses

(thousand yen)

(Note 1)

(Note 2)

Medium to long-term repair expenses (annual average)

(thousand yen)

(Note 1) (Note 3)

PML value

(probable maximum

loss)

(%)

(Note 5)

PML appraisal

firm

(Note 6)

Repair expenses

Renewal expenses Subtotal

S-1

Ooedo- Onsen Monogatari Reoma Resort (Note 7)

Hotel Reoma no Mori

KD&Partners Inc.

June 30, 2016 - 35,940 68,681 104,621 4.7 (1)

New Reoma World

KD&Partners Inc.

June 30, 2016 - 80,835 69,592 150,427 9.1 (2)

S-2 Ooedo-Onsen Monogatari Iseshima

Deloitte Tohmatsu Property Risk Solution Co., Ltd.

June 30, 2016 - 9,327 11,880 21,207 16.5 (3)

S-3 Ito Hotel New Okabe (Note 4) (Note 8)

Deloitte Tohmatsu Property Risk Solution Co., Ltd.

June 30, 2016 - 5,279 16,363 21,642 14.3 (3)

S-4 Ooedo-Onsen Monogatari Atami

KD&Partners Inc.

June 30, 2016 - 15,613 33,176 48,789 10.1 (2)


KD&Partners Inc.

June 30, 2016 - 13,316 5,359 18,676 14.3 (2)


KD&Partners Inc.

June 30, 2016 - 34,599 17,731 52,330 8.5 (2)


JAIC June 30, 2016 - 3,624 12,082 15,706 3.97 (4)

S-8 Ooedo-Onsen Monogatari Ikaho JAIC June 30,

2016 - 2,850 6,867 9,717 0.88 (4)

S-9

Ooedo-Onsen Monogatari Kimitsu-no-mori (Note 9)

JAIC June 30, 2016 - 4,308 7,454 11,763 9.64 (4)

Total - 205,691 249,185 454,876

Note 1: “Emergency and short-term repair expenses” and “medium to long-term repair expenses” are based on the statements in the building condition assessment reports.

Note 2: “Emergency and short-term repair expenses” are the total amounts of the estimated emergency and short-term repair expenses (the repair and renewal expenses required when defects that need repairing with higher priority than daily maintenance are repaired and renewed) required within one year from the date of the building condition assessment reports.

Note 3: The figure in the total column of “medium to long-term repair expenses” is the total amount of the repair and renewal expenses for maintaining functions and operating safely despite deterioration over time that are required within 12 years from the date of the building condition assessment reports, converted into an annual average amount by the Asset manager and rounded to the nearest thousand yen. Accordingly, the total of the medium to long-term repair expenses stated for each property may differ from the figure stated in the total row. Furthermore, in the fixed-term building lease agreement with conditions precedent and building management service agreement of the Investment Corporation effective as of today pertaining to each Acquired Asset, the Investment Corporation agrees with the seller that the repair expenses shall be borne by the seller and the renewal expenses shall be borne by the Investment Corporation.

53


Note 4: Sagamitei (one of the properties) is connected with Surugatei, which is not an Acquired Asset, by a connecting passage, and the property (Sagamitei) and Surugatei are operated as a single unit. The emergency and short-term repair expenses and the medium to long-term repair expenses in the table are for the property (Sagamitei).

Note 5: “PML value (probable maximum loss)” is the same figure as stated in the building condition assessment reports and other reports provided by each PML appraisal firm.

Note 6: Regarding the numbers stated in “PML appraisal firm,” (1) represents OYO RMS Corporation, (2) represents KD&Partners Inc., (3) represents Deloitte Tohmatsu Property Risk Solution Co., Ltd., and (4) represents Sompo Japan Nipponkoa Risk Management Inc.

Note 7: Regarding the Ooedo-Onsen Monogatari Reoma Resort, although Hotel Reoma no Mori consists of two buildings (the hotel building and the additional part), figures evaluating only the hotel building are stated as the PML value of the property. Additionally, although New Reoma World consists of 64 buildings in total, figures evaluating only the world plaza building and 11 other buildings are stated as the PML value of the property.

Note 8: Sagamitei (one of the properties) is connected with Surugatei, which is not an Acquired Asset, by a connecting passage, and the property (Sagamitei) and Surugatei are operated as a single unit. The PML value in the table is for the property (Sagamitei). Furthermore, the PML value for Surugatei is 15.8%, and 14.8% for the entire building combining Sagamitei and Surugatei.

Note 9: Although “Kimitsu-no-mori” consists of the central building, the arena building, and the detached building, figures evaluating only the central building and the arena building are stated as the PML value of the property.

54


Reference Material 3 Area Maps and Exterior Photographs

S-1 Ooedo-Onsen Monogatari Reoma Resort

S-2 Ooedo-Onsen Monogatari Iseshima S-3 Ito Hotel New Okabe

55


S-4 Ooedo-Onsen Monogatari Atami S-5 Ooedo-Onsen Monogatari Toi Marine Hotel


56


S-7 Ooedo-Onsen Monogatari Kamoshika-so S-8 Ooedo-Onsen Monogatari Ikaho

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

Note: These photographs of the Acquired Assets show the condition of the Acquired Assets at a specific time; they may

differ from the current condition due to reasons such as changes over time after the photographs were taken.

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Reference Material 4 Portfolio List

Property number

Property name Acquisition price

(million yen) (Note 1)

Investment ratio (%) (Note 2)

Appraisal value (million yen)

Ratio against appraisal value (%) (Note 3)

Acquisition date

S-1 Ooedo-Onsen Monogatari Reoma Resort (Note 4)

10,379 38.7 10,700 97.0 September 1, 2016

S-2 Ooedo-Onsen Monogatari Iseshima 3,656 13.6 3,770 97.0 September 1, 2016

S-3 Ito Hotel New Okabe (Note 5) 2,657 9.9 2,740 97.0 September 1, 2016

S-4 Ooedo-Onsen Monogatari Atami 2,997 11.2 3,090 97.0 September 1, 2016


1,910 7.1 1,970 97.0 September 1, 2016

S-6 Ooedo-Onsen Monogatari Awara 1,901 7.1 1,960 97.0 September 1, 2016


1,222 4.6 1,260 97.0 September 1, 2016

S-8 Ooedo-Onsen Monogatari Ikaho 1,299 4.8 1,340 97.0 September 1, 2016

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

819 3.1 845 97.0 September 1, 2016

Total / Average 26,844 100 27,675 97.0 -

Note 1: “Acquisition price” is the purchase price of real estate in the Purchase agreement regarding each of the Acquired Asset (not including expenses, such as consumption tax, local consumption tax, or sale and purchase fees), and rounded down to the nearest million yen. Accordingly, the total of the acquisition prices stated for each property may differ from the figure stated in the total row.

Note 2: “Investment ratio” is the ratio of each property’s acquisition price out of the total acquisition price, rounded to one decimal place. Accordingly, the total of the share of portfolio figures stated for each property may differ from the figure stated in the total row.

Note 3: “Ratio against appraisal value” is the figure obtained by dividing each property’s acquisition price by the appraisal value, rounded to one decimal place. Furthermore, the figure in the total row of “ratio against appraisal value” is obtained by dividing the total acquisition price by the total appraisal value, and rounded to one decimal place.

Note 4: Partial additional construction at the seller’s expense has already been performed for the principal building of Hotel Reoma no Mori and is planned to be performed for one of the annex buildings of New Reoma World in Ooedo-Onsen Monogatari Reoma Resort. The additional portion will be owned by the Investment Corporation but is not included in the appraisal value, which indicates the information as of April 1, 2016, the valuation date.

Note 5: Sagamitei (one of the properties) is connected with Surugatei, which is not an Acquired Asset, by a connecting passage, and the property (Sagamitei) and Surugatei are operated as a single unit. Each figure in the table is related only to the property (Sagamitei).

Reference Material 5 Status of Security Interests

No security interests are planned to be created on the Acquired Assets after the acquisition by the Investment Corporation.

Documents

[Translation for reference purposes only] September 1