Invincible Investment

Corporation

Financial Summary

for the December 2021 Fiscal Period

(from July 1, 2021 to December 31, 2021)

February 24, 2022

Name

: Invincible Investment Corporation ("INV")

Representative

: Naoki Fukuda, Executive Director

Stock Listing

:

Tokyo Stock Exchange

Securities Code

:

8963

URL

:https://www.invincible-inv.co.jp/en/

Contact

: Consonant Investment Management Co., Ltd.

(Asset Manager of INV)

Jun Komo, General Manager of Planning Department

Tel. +81-3-5411-2731

Start date for

dividend distribution

:

March 22, 2022

This English language notice is a translation of the Japanese-language notice released on February 24, 2022 and was prepared solely for the convenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution readers to undertake investment decisions based on their own investigation and responsibility. This translation of the original Japanese- language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy or completeness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy between this translation and the Japanese original, the latter shall prevail in all respects.

(Figures are rounded down to the nearest JPY million)

1. Financial Results for the Fiscal Period ended December 31, 2021 (from July 1, 2021 to December 31, 2021)

  1. Operating Results

(Percentages indicate percentage change from the preceding period)

Operating Revenues

Operating Income

Ordinary Income

Net Income

JPY million

%

JPY million

%

JPY million

%

JPY million

%

Fiscal period ended

8,406

120.9

2,292

-

1,014

-

1,014

-

December 31, 2021

Fiscal period ended

3,806

(54.5)

(2,341)

-

(3,599)

-

(3,599)

-

June 30, 2021

Net Income per Unit

Net Income /

Ordinary Income /

Ordinary Income /

Unitholders' Equity

Total Assets

Operating Revenues

JPY

%

%

%

Fiscal period ended

166

0.4

0.2

12.1

December 31, 2021

Fiscal period ended

(590)

(1.5)

(0.7)

(94.6)

June 30, 2021

(2) Distributions

Distribution

Excess Profit Distribution

(Excluding excess profit distribution)

Dividend Payout

Distribution

Ratio

/ Net Assets

Per Unit

Total

Per Unit

Total

JPY

JPY million

JPY

JPY million

%

%

Fiscal period ended

166

1,012

-

-

99.8

0.4

December 31, 2021

Fiscal period ended

15

91

-

-

-

0.0

June 30, 2021

(Note 1) The full amount of distribution (excluding excess profit distribution) for the fiscal period ended June 30, 2021 was made by reversing retained earnings.

(Note 2) Dividend Payout Ratio is calculated in accordance with the following formula and is rounded to the nearest one decimal place: Dividend Payout Ratio = Distribution Amount (Excluding excess profit distribution) ÷ Net Income × 100

(Note 3) Distribution / Net Assets is calculated based on the figures excluding excess profit distribution.

  1. Financial Position

Total Assets

Net Assets

Net Assets / Total

Net Assets per Unit

JPY million

JPY million

%

JPY

Fiscal period ended

494,819

246,130

49.7

40,370

December 31, 2021

Fiscal period ended

497,899

245,113

49.2

40,203

June 30, 2021

(Note)

Net Assets per Unit is calculated based on the number of investment units issued and outstanding at the end of each fiscal

period and is rounded to the nearest yen.

2

(4) Cash Flows

Cash Flows from

Cash Flows from

Cash Flows from

Closing Balance of

Operating

Investment

Financing

Cash and

Activities

Activities

Activities

Cash Equivalents

JPY million

JPY million

JPY million

JPY million

Fiscal period ended

12,320

(1,561)

(4,873)

16,726

December 31, 2021

Fiscal period ended

503

(1,192)

(14,647)

10,840

June 30, 2021

2. Forecasts for the Fiscal Period ending June 30, 2022 (from January 1, 2022 to June 30, 2022)

(Percentages indicate percentage change from the preceding period)

Distribution per

Excess Profit

Operating

Operating

Ordinary

Unit (excluding

Net Income

Distribution per

Income

Income

Revenues

excess profit

Unit

distribution)

JPY

JPY

JPY

JPY

million

%

million

%

million

%

million

%

JPY

JPY

Fiscal period

ending June 30,

TBD

(-)

TBD

(-)

TBD

(-)

TBD

(-)

TBD

TBD

2022

(Note)

The worldwide spread of COVID-19 has had a significant impact on hotel revenues.

At this point in time, it remains difficult to predict

the spread of COVID-19 and its impact on the hotel industry and operators. Therefore, the forecast of financial results and DPU for the

June 2022 fiscal period (from January 1 to June 30, 2022) remains undetermined.

※Others

(1) Changes in Accounting Policies, Accounting Estimates or Restatements

(a)

Changes in Accounting Policies due to Revisions to

Accounting Standards and Other Regulations

Yes

(b)

Changes in Accounting Policies due to Other Reasons

None

(c)

Changes in Accounting Estimates

None

(d) Restatements

None

(Note) Please refer to "Notes on Changes in Accounting Policies" regarding the detail.

(2) Number of Investment Units Issued and Outstanding

(a) Number of Units Issued and Outstanding

December 31, 2021

6,096,840

June 30, 2021

6,096,840

as of the End of the Fiscal Period (Including Treasury Units)

(b) Number of Treasury Units as of the End of the Fiscal Period

December 31, 2021

0

June 30, 2020

0

(Note) Please refer to "Notes Related to Per Unit Information" regarding the number of investment units which is the basis for the

calculation of net income per unit.

  • Financial Summary report is not subject to audit procedure by certified public accountants or audit corporations.
  • Special Consideration
    The forward-looking statements contained in this financial summary report are based on the information currently available to us and certain assumptions which we believe are reasonable. Actual operating performance may differ significantly due to factors we cannot predict as of the date of this document, including gains or losses from the disposition of properties, repayment of borrowings, decreases in rents and changes in operating conditions. Unless otherwise specified herein, amounts less than JPY 1 are rounded down, and ratios are rounded to the nearest one decimal place.

3

1. Operating Conditions

  1. Operating Conditions

a Overview of the Fiscal Period Ended December 31, 2021

  1. Main Trends of INV

INV was established in January 2002 in accordance with the Investment Trust and Investment Corporation Act (Act No. 198 of 1951, as amended; the "Investment Trust Act"). In May 2004, INV was listed on the Osaka Securities Exchange (application for delisting was made in August 2007), and in August 2006 was listed on the Real Estate Investment and Trust Securities Section of the Tokyo Stock Exchange (Ticker Code: 8963).

After the absorption-type merger with LCP Investment Corporation ("LCP") was implemented on February 1, 2010, INV issued new investment units through a third-party allotment on July 29, 2011 and refinanced its debt. Calliope Godo Kaisha ("Calliope"), an affiliate of the Fortress Investment Group LLC ("FIG" and together with Calliope and other affiliates of FIG, collectively the "Fortress Group") was the main allottee, and the sponsor changed to the Fortress Group.

FIG became a subsidiary of SoftBank Group Corp. ("SoftBank Group"), after SoftBank Group acquired FIG effective on December 27, 2017 (Note 1). Calliope, an affiliate of FIG, who owned 100% of the issued shares of Consonant Investment Management Co., Ltd., the asset manager to which INV entrusts the management of its assets ("CIM"), transferred 80.0% of issued shares of CIM to Fortress CIM Holdings L.P., a subsidiary of SoftBank Group, and 20.0% to SoftBank Group on March 29, 2018, pursuant to the basic agreement which was entered into as of September 7, 2017. Although FIG is no longer an indirect parent company of CIM, FIG continues to support INV as the sponsor.

Ever since the commencement of sponsorship from the Fortress Group (Note 2), INV has been focusing its efforts on improving the profitability of its portfolio and establishing a revenue base in order to secure stable distributions, and has strengthened the lender formation through new borrowings and the refinancing of existing bank borrowings, thereby creating a financial base for external growth. With this platform as a base, in June 2014, CIM revised the Investment Guidelines for INV, positioned hotels as a core asset class alongside residential properties with a view towards expanding investments in the hotel sector in which demand is forecasted to rise going forward, and has expanded its portfolio.

Moreover, CIM revised the Investment Guidelines as of July 17, 2018. Such revision was intended to establish an investment policy and asset management structure regarding investments in overseas assets, and also to change the investment policy regarding domestic hotels to focus on (i) Limited service hotels, which feature relatively higher profit margins and potential for revenue growth backed by increasing demand for accommodations, and (ii) Full-service and Resort hotels, which have a variety of revenue sources, including lodging, dining and sales of goods, that are expected to achieve stable growth in overall hotel revenues. Based on such change in investment policy, in July 2018, INV decided on the acquisition of TK (Japanese anonymous association (tokumei kumiai)) interest in two overseas hotels, "Westin Grand Cayman Seven Mile Beach Resort

  • Spa" and "Sunshine Suites Resort" (collectively, the "Cayman Hotels") as underlying assets for the first time ever in J-REIT history. In September 2018, INV implemented the investment in the Cayman Hotels via a global offering of new investment units and borrowing of funds. INV intends to improve both the profitability and stability of the portfolio through such investments, including investment in the Cayman
    Hotels, which is expected to even out the effects of seasonality in INV's portfolio.

In the Fiscal Period ended December 31, 2021 ("Reporting Period"), INV sold one retail facility on July 2, 2021. In addition, INV decided to sell 13 residential properties on December 8, 2021, seven of which were sold on December 22, 2021. As a result, INV's portfolio at the end of the Reporting Period comprised of 134 properties (86 hotels (Note 3) (Note 4), 47 residential properties and one retail facility) with a total acquisition price of JPY 494,766 million (Note 5). Furthermore, INV's hotel portfolio has the largest asset size (Note 6) of JPY 450,609 million (86 properties, 15,597 rooms) among all J-REIT hotel portfolios including hotel-and-inn-specific type investment corporations.

(Note 1) US Eastern Standard Time.

(Note 2) As of July 2011, Calliope owned 97.35% of issued shares of CIM and the investment ratio reached 100%

4

in October 2013. Calliope transferred 80.0% of issued shares to Fortress CIM Holdings L.P., a subsidiary of SoftBank Group and 20.0% to SoftBank Group on March 29, 2018. As of the date of this document, SoftBank Group owns 100% of issued shares of CIM directly and indirectly.

(Note 3) The preferred equity interest held by INV is counted as one property. Such preferred equity interest issued by a special purpose company (tokutei mokuteki kaisha) refers to 178,458 units of the preferred equity interest issued by Kingdom Special Purpose Company (the "TMK") (equivalent to 49.0% of the total issued and outstanding preferred equity interest), which owns the trust beneficiary interest of the Sheraton Grande Tokyo Bay Hotel as an underlying asset. The property is classified as a hotel, based on the use of Sheraton Grande Tokyo Bay Hotel, the underlying asset of the preferred equity interest, and INV's investment amount of the preferred equity interest is used as the acquisition price of the preferred equity interest, unless otherwise stated. The "underlying asset" refers to the real estate or the real estate related assets owned by a TK operator of TK interest or a TMK relating to the preferred equity interest which INV owns, thus the real estate or the real estate related assets which will be the revenue source of INV. Hereinafter the same shall apply.

(Note 4) From September 28, 2018 (Cayman Island local time; September 29, 2018 in Japan local time), INV owned 100% of the TK interest in Seven Mile Resort Holdings Ltd. (the "Cayman SPC"), a Cayman Islands special purpose company that holds leasehold interests in the Cayman Hotels and ancillary assets as underlying assets. However, INV implemented the investment structure change (the "Structure Change" in some cases hereinafter) regarding the Cayman Hotels on May 9, 2019 (Cayman Island local time; May 10, 2019 in Japan local time) and has directly held the Leasehold Interests, etc. of the Cayman Hotels thereafter. Both of the TK interest and the Cayman Hotels are counted as two properties before and after the Structure Change. In addition, the "Leasehold Interests, etc." means leasehold interests (rights equivalent to long-term real estate leases on land and buildings under the British Cayman laws) and furniture, fixtures, equipment, ornaments, kitchen instrument, and other assets required for hotel operations. Hereinafter the same shall apply.

(Note 5) Due to the Structure Change, the book value of the leasehold interests of the Cayman Hotels recorded by the Cayman SPC as of May 9, 2019 (Cayman Island local time; May 10, 2019 in Japan local time), when INV succeeded the leasehold interests of the Cayman Hotels from the Cayman SPC via distribution in kind in connection with the termination of TK agreement, is deemed as the acquisition price of the Cayman Hotels. The book value is converted into JPY amount via exchange rate of USD 1=JPY 110.45 based on the foreign exchange forward contracts executed on July 26, 2018 and implemented on September 26, 2018 in connection with the investment in the TK interest by INV. Hereinafter the same shall apply.

(Note 6) "The largest asset size … among all J-REIT hotel portfolios" refers to the total acquisition price of 86 hotels owned by INV as compared with the total acquisition price of hotels (including inns and other accommodation facilities) owned by listed investment corporations other than INV as of December 31, 2021.

  1. Operational Environment and Performance

Given the enormous impact of COVID-19 on the economy as a whole, especially in the hotel sector, on September 10, 2021 and December 8, 2021, INV entered into Memorandum of Understandings (collectively the "MOU") to amend each fixed-term building lease and property management agreement ("MLPM Agreements") pertaining to the rent conditions for the periods from July 1, 2021 to September 30, 2021 and from October 1, 2021 to December 31, 2021 for domestic hotels owned by INV and operated by INV's main tenant, MyStays Hotel Management Co., Ltd. ("MHM") and its affiliates (collectively the "MHM Group" along with MHM). Pursuant to the MOU, we have changed the rent payment conditions of MLPM Agreements in terms of the amount of fixed rent payment, the variable rent calculation method, payment method of rent and payment date.

For the December 2021 fiscal period, the portfolio NOI (Note 1) increased by 13.5% or JPY 498 million compared to the same period in the previous year (the December 2020 fiscal period) to JPY 4,201 million. The hotel portfolio NOI increased by JPY 872 million. The residential and retail portfolio NOI decreased by JPY 373 million due to asset sales. Compared to the December 2019 fiscal period prior to the COVID-19pandemic,

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Invincible Investment Corporation published this content on 24 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 February 2022 06:11:07 UTC.