Invincible Investment : Financial Results (140120250226582572)

Invincible Investment Corporation

December 2024 Fiscal Period Results

(July 1, 2024 to December 31, 2024)

TSE Code : 8963

February 26, 2025

Table of Contents

Ⅰ . Executive Summary

Ⅱ. Summary of December 2024 FP Results, June 2025 FP Forecasts, and December 2025 FP Forecasts

Ⅱ-1. Financial Highlights for December 2024 FP

Ⅱ-2. Operating Revenue Composition

Ⅱ-3. Summary of June 2025 FP Forecast

Ⅱ-4. Summary of December 2025 FP Forecast

3 - 4	Ⅴ. Status of Residential Operations
	V-1.	Performance of Residential Properties	33
6	V-2.	Changes of Residential Rents	34
7	Ⅵ. Financial Condition	36

8 Ⅶ. ESG Initiatives

9

Ⅶ-1.

ESG Initiatives by INV and CIM

38

Ⅱ-5.

Ⅱ-6.

Ⅱ-7.

Ⅱ-8.

Revenue and GOP of MHM 91 Properties

Past Performance and Forecasts for June 2025 FP and December 2025 FP

93 Domestic Hotels KPIs

Past Performance and Forecasts for June 2025 FP and December 2025 FP

MHM 91 Properties KPIs

Past Performance and Forecasts for June 2025 FP and December 2025 FP

Cayman Hotel KPIs

Past Performance and Forecasts for June 2025 FP and December 2025 FP

10	Ⅶ-2.	ESG Initiatives by MHM	39
11	Appendix (1)
12	1.	Unitholder Benefit Program for Invincible Unitholders	41
	2.	Inbound Market: Inbound Visitors to Japan by Country	42
13	3.	Average Number of Overnight Stays by Inbound Travelers	43

Ⅱ-9. Capital Expenditures and Depreciation

Ⅱ-10. Case Study: Strategic CAPEX at Hotel MyStays Nippori and Art Hotel Niigata Station

Ⅲ. Summary of Properties Acquired in July 2024

Ⅲ-1. Summary of Properties Acquired in July 2024

Ⅲ-2. Change in Hotel Portfolio

Ⅳ. Status of Hotel Operations and Market

Ⅳ-1. Overall Accommodation Market: 2024 Result and 2025 Outlook

Ⅳ-2. Impact of the World Expo 2025 in Osaka

Ⅳ-3. Inbound Market: Full Year Comparison: 2019 vs. 2024

Ⅳ-4. Inbound Market: Inbound Repeat Visitors and International Flights at Regional Airports

Ⅳ-5. Inbound Market: Influence of Foreign Exchange (FX) Rate

Ⅳ-6. Initiatives by MHM

Ⅳ-7. MHM: Future Outlook and Strategy

Ⅳ-8. Initiatives by Sheraton Grande Tokyo Bay Hotel (SGTB)

Ⅳ-9. Trial Calculation: Business vs. Leisure Demand

Ⅳ-10. Update of the Status of the Cayman Islands

Ⅳ-11. Status of Overseas Travel

Ⅳ-12. New Hotel Development in Japan and Increase of Construction / Labor Costs

14	4.	Domestic Portfolio Map	44
15	5.	Track Record of External Growth	45
	6.	Sponsor Pipeline	46
17	7.	Summary of Appraisal Value and NAV per Unit	47
18	8.	Financial Impact of Foreign Exchange Fluctuation (vs. Jun. 2025 FP Forecast)	48
	9.	Financial Impact of Foreign Exchange Fluctuation (vs. Dec. 2025 FP Forecast)	49

20 Appendix (2) - Financial and Operational Data

21	1.	Key Operational Data for Variable Rent Hotels	51 - 53
22	2.	Financial Metrics	54
23	3.	Income Statement	55
24	4.	Balance Sheet	56 - 57
25	5.	Cash Flow Statement and Dividend Distribution	58
26	6.	Property Income	59 - 62
27	7.	Appraisal Value	63 - 67
28	8.	Portfolio Properties	68 - 71
29	9.	Borrowings and Investment Corporation Bonds	72 - 79
30	10.	Overview of Unitholders	80
31	11.	Unit Price Information	81

1

Ⅰ . Executive Summary

Ⅰ . Executive Summary (1)

	◼	Sales and profits increased significantly this period due to robust hotel performance and revenues from hotels newly acquired.
		Operating revenue increased by 20.9% compared to the previous fiscal period ("previous period"), or by 35.8% compared to the
		December 2023 FP, to JPY 25,555 million
	◼	Net income increased by 17.3% compared to the previous period, or by 37.2% compared to the December 2023 FP, to JPY 15,138 million.
Results of		Distribution per unit ("DPU") also increased by 3.4% compared to the previous period, or by 20.9% compared to the December 2023 FP,
December 2024		to JPY 1,982. Annual DPU for 2024 was JPY 3,899, achieving an annual DPU target of JPY 3,700 set in "Vision 2022 (Medium term Plan)"
Fiscal Period
	despite the setback caused by the COVID-19 pandemic. This annual DPU of JPY 3,899 is also the highest annual DPU achieved since
(FP)
		February 2010 when the corporate name changed to Invincible Investment Corporation
	◼	DPU increased by JPY 193 or 10.8% compared to the forecast announced at the time of public offering on July 18, 2024
	◼	The total appraisal value of the 133 properties held at the beginning of the December 2024 FP was JPY 661,382 million, an increase of JPY
		3,479 million (or a 0.5% increase) from the end of the June 2024 appraisal
	◼	Acquired 12 domestic hotels for a total acquisition price of JPY 104.4 billion at an average NOI appraisal yield of 6.0% NOI (after
		depreciation: NOI 4.8% yield)
Summary of	◼	Expanded investments centered on domestic full service hotels, including hotels in regional areas, further growing the largest hotel
Properties		portfolio among J-REITs to JPY 612.2 billion
Acquired in July
2024	◼	Aim to capture non-room revenue demand from banquets, meetings, and restaurants as well as inbound demand in regional areas
	◼	Regarding the potential sponsor pipeline, the sponsor manages 70 hotels, approximately 7,300 rooms, most of which are operated by
		MyStays Hotel Management ("MHM")
	◼	For the 93 domestic hotels1 owned by INV, all KPIs for this period exceeded those of the same period in 2023, with a 13.7% increase in
		RevPAR and a 15.3% increase in GOP
	◼	For this period, Food & Beverage revenue2, including revenue from banquets, meetings, and restaurants, increased by 6.9% compared to
Domestic		the December 2023 FP for the 91 domestic hotels managed by the major tenant, MHM or its subsidiary ("91 MHM properties3"). GOP
Portfolio		margin of the 91 MHM properties was 38.9%, up 1.6 points from the December 2023 FP, through continued strategies to maximize
		GOPPAR (GOP Per Available Room), which continues to be successful despite cost increases
	◼	NOI of 41 residential properties for this period was JPY 1,140 million, up 1.9% from the same period in 2023, due to successful efforts to
		increase rents and occupancy rate

(Note 1)	Refers to 93 of the 102 domestic hotel properties (including Sheraton Grande Tokyo Bay Hotel, asset-backed by preferred securities) owned as of the ending of the December 2024 FP, excluding nine properties with fixed rents	3
(Note 2)	Food and beverage revenue refers to revenue from banquets, meetings, weddings, and restaurants
(Note 3)	Refers to 91 hotels operated by MHM or its subsidiary in INV portfolio as of the ending of the December 2024 FP

Ⅰ . Executive Summary (2)

	◼	RevPAR for the two Cayman hotels for this period was USD 231, down 15.6% from the same period in 2023, due to a decrease in
		Occupancy rate stemming from several factors such as the large-scale renovation at Sunshine Suites Resort
Cayman Hotel	◼	USD based Management Contract Revenue this period decreased by 26.9% compared to the same period in 2023
Portfolio	◼	The two Cayman hotels' performance is expected to be in a recovery trend from autumn 2025, once the large-scale renovation mentioned
		above is completed. In addition, a further recovery in air traffic to the Cayman Islands, which was reduced due to the COVID-19
		pandemic, is expected to increase Occupancy to the 2019 level, leading to an increase in revenues
	◼	INV borrowed JPY 56.7 billion with a weighted average loan term of 5.9 years for the acquisition of 12 hotels in July 2024, lengthening the
		average remaining duration of interest-bearing-debt from 2.7 years (as of the end of the previous period) to 3.4 years (as of February 26,
Financial		2025), diversifying the repayment dates
Condition	◼	Further hedged the risk of interest rate fluctuation with interest rate swaps and borrowing with fixed interest rate. The fixed interest rate
		ratio of INV's overall interest-bearing debt increased from 48.7% (as of the date of borrowing associated with the property acquisition in
		July 2024) to 62.7% (as of February 26, 2025)
	◼	DPU is expected to be JPY 1,895 for the June 2025 FP and JPY 2,056 for the December 2025 FP, aiming for the highest annual DPU
Forecasts for		achieved since February 2010 when the corporate name changed to Invincible Investment Corporation
June 2025 Fiscal
Period (FP) and	◼	The forecast factors in an increase in domestic demand due to the World Expo 2025 in Osaka. As for inbound demand in 2025, the
December 2025		number of inbound travelers is expected to reach approximately 39 million, up approximately 5% from 2024, or up approximately 22%
Fiscal Period
	from 2019, before the COVID-19 pandemic
(FP)
	◼	The portfolio of 41 residential properties and one commercial property is expected to maintain stable returns

4

Ⅱ. Summary of December 2024 FP Results, June 2025 FP Forecasts, and December 2025 FP Forecasts

Ⅱ-1. Financial Highlights for December 2024 FP

• Operating revenue increased by 20.9% to JPY 25,555 million from the previous period due to the robust performance of the existing domestic hotels and property acquisition in July 2024, although management contract revenue decreased due to seasonal factors and the partial closure of rooms in connection with the large-scale renovation at Sunshine Suites Resort
• Net income increased by 17.3% to JPY 15,138 million from the previous period, and DPU increased by 3.4% to JPY 1,982. This DPU of JPY 1,982 is 10.8% higher compared to the forecast announced on July 18, 2024

										Major Causes for Variance （JPY million）
			Jun. 2024 FP	Dec. 2024 FP	Variance			Operating revenue
			Amount		（％）		•	Increase in revenue from hotels acquired in Jul. 2024: +3,806
Operating revenue	21,136	25,555	4,419		20.9%		•	Increase/decrease in revenue from existing properties: +4,465
			- Hotels: +4,466 / Residential: -1
	Real estate rental revenues	14,933	23,205	8,271		55.4%		•
		Hotel Rents (Variable rent)	7,074	12,525	5,451		77.1%		Decrease in management contract revenue: -3,116
					- 65.3% decrease in JPY basis and 66.2% decrease in USD basis
		Hotel Rents (Fixed rent)	5,853	8,440	2,586		44.2%			（FX rate of 2024 2H: USD 1= JPY 155.2, 2.7% higher than 2024 1H）
		Residential Rents	1,402	1,413	11		0.8%		•	Decrease in TMK Dividend amount: -735 (due to the reason written
										in "II-3. Summary of June 2025 FP Forecast")
	Management contract revenue	4,774	1,657	-3,116		-65.3%
	TMK Dividend amount	1,428	692	-735		-51.5%		Operating expenses
			•
	Gain on sale of properties	-	-	-		-		Increase in expenses for hotels acquired in Jul. 2024: +933
				- Increase in depreciation expenses: +567
Operating expenses	6,500	7,803	1,303		20.0%
		• Increase in expenses for existing properties:+284
	Real estate rental expenses	5,107	6,325	1,218		23.9%
				- Increase in depreciation expenses: +71, Increase in taxes
	Taxes and other public charges	623	830	206		33.1%			and other public charges: +206
	Depreciation expenses	3,889	4,529	639		16.4%		•	Increase in management contract expenses: +32
	Management contract expenses	736	768	32		4.4%
			Non-operating income
	Depreciation expenses	451	461	9		2.2%
			• Decrease in foreign exchange gains: -423
NOI	19,634	23,451	3,817		19.4%
		Non-operating expenses
NOI after depreciation	15,292	18,461	3,168		20.7%
		• Increase in loan-related costs: +135
Operating income	14,635	17,751	3,115		21.3%
		• Increase in interest expenses: +505
Non-operating income	427	3	-424		-99.2%
		• Increase in interest expenses on investment corporation bonds: +26
Non-operating expenses	2,162	2,616	454		21.0%
		• Increase in foreign exchange losses: +167
Ordinary income	12,901	15,138	2,237		17.3%		•	Decrease in derivative losses: -552
Net income	12,900	15,138	2,237		17.3%		•	Increase in investment unit issuance costs: +170
Distribution per Unit (JPY)	1,917	1,982	65		3.4%		Distribution per Unit (JPY)	6
Operating Days	182	184	-		-		•	Increase from the previous period: +65

Ⅱ-2. Operating Revenue Composition

For the December 2024 FP, operating revenue increased by 35.8% compared to the December 2023 FP due to the robust performance of existing hotels in Japan and an increase in rent from new properties acquired in July 2024

Management

Contract Revenue

(Cayman hotels)

TMK Dividend

Amount (SGTB)

Variable Rent Hotel

(variable)

Variable Rent Hotel

(fixed)

Fixed Rent Hotel
Residential
Commercial
properties
（JPY million）	2019		2023年		2024年
December FP	June FP	December FP	June FP	December FP
June FP

Management Contract Revenue2	3,240	20.0%	1,397	8.4%	3,914	24.6%	2,123	11.3%	4,774	22.6%	1,657	6.5%
(Cayman hotels)
TMK Dividend Amount	827	5.1%	673	4.1%	-	-%	-	-%	1,428	6.8%	692	2.7%
(SGTB)
	Variable Rent Hotel	4,307	26.6%	5,332	32.1%	4,807	30.2%	7,576	40.3%	7,398	35.0%	13,084	51.2%
	(variable)
Hotel	Variable Rent Hotel	3,834	23.6%	6,144	37.0%	5,194	32.6%	7,198	38.3%	5,582	26.4%	8,169	32.0%
(fixed)
	Fixed Rent Hotel	388	2.4%	386	2.3%	341	2.1%	281	1.5%	281	1.3%	281	1.1%
Residential	3,316	20.4%	2,374	14.3%	1,516	9.5%	1,497	8.0%	1,529	7.2%	1,528	6.0%
Commercial properties	306	1.9%	307	1.9%	141	0.9%	141	0.8%	141	0.7%	141	0.6%
	Total	16,221	100.0%	16,616	100.0%	15,914	100.0%	18,819	100.0%	21,136	100.0%	25,555	100.0%

7

(Note 1) Based on the properties owned by INV during each fiscal period respectively. The gain on sale is excluded

(Note 2) The figure for the June 2019 FP includes the amount of TK dividends INV received for the fiscal period before INV owned Cayman hotels directly

Ⅱ-3. Summary of June 2025 FP Forecast

• For the June 2025 FP, revenue and income are expected to increase YoY due to the increase in revenue from hotels acquired in July 2024 and the robust performance of existing hotels despite a decrease in the TMK dividend amount (TMK dividend amount for the June 2024 FP was for 12 months while that of the June 2025 FP is for 6 months), and the decrease in management contract revenue due to the partial closure of rooms in connection with the large-scale renovation at Sunshine Suites Resort. Operating revenue is expected to increase by 16.2% YoY to JPY 24,570 million and net income is expected to increase by 7.1% YoY to JPY 13,818 million
• DPU for the June 2025 FP is expected to be JPY 1,895, which is 1.1% lower than the June 2024 FP actual figure, and 1.8% higher than the June 2024 FP simulated figure (JPY 1,861) assuming the TMK Dividend amount of June 2024 FP was for a normal six-moth period

			June 2024 FP	June 2025 FP	Variance
			Amount	（％）
Operating revenue	21,136	24,570	3,434	16.2%
	Real estate rental revenues	14,933	19,438	4,505	30.2%
		Hotel Rents (Variable rent)	7,074	10,668	3,593	50.8%
		Hotel Rents (Fixed rent)	5,853	6,594	741	12.7%
		Residential Rents	1,402	1,423	21	1.5%
	Management contract revenue	4,774	4,100	-673	-14.1%
	TMK Dividend amount	1,428	1,031	-397	-27.8%
	Gain on sale of properties	-	-	-	-
Operating expenses	6,500	8,233	1,733	26.7%
	Real estate rental expenses	5,107	6,593	1,486	29.1%
		Taxes and other public charges	623	754	130	20.9%
		Depreciation expenses	3,889	4,713	823	21.2%
	Management contract expenses	736	793	57	7.8%
		Depreciation expenses	451	506	54	12.1%
NOI	19,634	22,402	2,768	14.1%
NOI after depreciation	15,292	17,182	1,890	12.4%
Operating income	14,635	16,336	1,700	11.6%
Non-operating income	427	-	-427	-100.0%
Non-operating expenses	2,162	2,517	355	16.4%
Ordinary income	12,901	13,819	918	7.1%
Net income	12,900	13,818	918	7.1%
Distribution per Unit (JPY)	1,917	1,895	-22	-1.1%
Operating Days	182	181	-	-

Major Causes for Variance	（JPY million）

Operating revenue

• Increase in rents from existing hotels (variable rent and fixed rent): +1,279
• Increase in rents from hotels acquired in July 2024 (variable rent and fixed rent in total): +3,055
• Increase in residential rents: +21
• Decrease in management contract revenue: -673
• • 12.0% decrease in USD basis (Forecasted FX rate of 2025 1H: USD 1= JPY 147.6, compared to 151.2 for 2024 1H)
• Decrease in TMK Dividend amount: -397

Operating expenses/Non-operating expenses

• Increase in real estate rental expenses : +1,486
• • Increase from hotels acquired in July 2024: +1,245
  • Increase in depreciation expenses from existing hotels: +149
  • Increase in maintenance expenses from existing hotels: +77
• Increase in management contract expenses : +57
• • Increase in insurance premiums, etc : +2
  • Increase in depreciation expenses: +54
• Increase in non-operating expenses : +355
• • Increase in interest expenses : +857
  • Increase in interest expenses on investment corporation bonds: +33
  • Increase in loan-related costs: +21
  • Decrease in derivative losses: -560

Non-operating income

• Decrease in non-operating income: -427

- Decrease in foreign exchange gains: -423

8

Ⅱ-4. Summary of December 2025 FP Forecast

• For the December 2025 FP, operating revenue is expected to increase by 6.1% YoY to JPY 27,103 million due to an increase in hotel rents resulting from the growth in performance of existing domestic hotels and the full-period contribution from hotels newly acquired in July 2024, as well as an increase in management contract revenue reflecting the completion of the large-scale renovation at Sunshine Suites Resort
• Net income is expected to increase by 3.7% YoY to JPY 15,704 million, and DPU is also expected to increase by 3.7% to JPY 2,056

			Dec. 2024 FP	Dec. 2025 FP	Variance
			Amount	（％）
Operating revenue	25,555	27,103	1,548	6.1%
	Real estate rental revenues	23,205	24,369	1,164	5.0%
		Hotel Rents (Variable rent)	12,525	13,668	1,142	9.1%
		Hotel Rents (Fixed rent)	8,440	8,543	103	1.2%
		Residential Rents	1,413	1,425	11	0.8%
	Management contract revenue	1,657	2,003	346	20.9%
	TMK Dividend amount	692	730	37	5.5%
	Gain on sale of properties	-	-	-	-
Operating expenses	7,803	8,710	907	11.6%
	Real estate rental expenses	6,325	7,042	717	11.3%
		Taxes and other public charges	830	1,077	247	29.8%
		Depreciation expenses	4,529	4,916	387	8.6%
	Management contract expenses	768	827	58	7.6%
		Depreciation expenses	461	547	85	18.5%
NOI	23,451	24,697	1,245	5.3%
NOI after depreciation	18,461	19,233	772	4.2%
Operating income	17,751	18,393	641	3.6%
Non-operating income	3	-	-3	-100.0%
Non-operating expenses	2,616	2,687	71	2.7%
Ordinary income	15,138	15,705	566	3.7%
Net income	15,138	15,704	566	3.7%
Distribution per Unit (JPY)	1,982	2,056	74	3.7%
Operating Days	184	184	-	-

Major Causes for Variance	（JPY million）

Operating revenue

• Increase in rents from existing hotels (variable rent and fixed rent): +805
• Increase in rents from full-period contribution from hotels acquired in July 2024 (variable rent and fixed rent in total): +440
• Increase in residential rents: +11
• Increase in management contract revenue:+346
• • 31.4% increase in USD basis (Forecasted FX rate of 2025 2H: USD 1= JPY 142.8 compared to 155.2 for 2024 2H)
• Increase in TMK Dividend amount: +37

Operating expenses/Non-operating expenses

• Increase in real estate rental expenses : +717
• • Increase from hotels acquired in July 2024: +422
  • Increase in depreciation expenses from existing properties: +280
• Increase in management contract expenses : +58
• • Decrease in insurance premiums, etc : -27
  • Increase in depreciation expenses: +85
• Increase in non-operating expenses : + 71
• • Increase in interest expenses : + 527
  • Increase in interest expenses on investment corporation bonds: +9
  • Decrease in loan-related costs: -120
  • Decrease in foreign exchange losses: -167
  • Decrease in derivative losses: -8
  • Decrease in investment unit issuance costs: -170

9