Invincible Investment : MOU to Amend the Fixed-term Building Lease and Property Management Agreement pertaining to the rent conditions for Jan to Jun, 2022 with Major Tenant

[For Information Purpose Only.

The Japanese language press release should be referred to as the original.]

March 11, 2022

To All Concerned Parties

Name of REIT Issuer:

Invincible Investment Corporation

Naoki Fukuda, Executive Director

(Securities code: 8963)

Asset manager:

Consonant Investment Management Co., Ltd. Naoki Fukuda, President & CEO

Contact: Jun Komo

General Manager of Planning Department (Tel. [phone])

Notice concerning Conclusion of Memorandum of Understanding to Amend the Fixed-term Building Lease and Property Management Agreement pertaining to the rent conditions for the period from January to June, 2022 with Major Tenant

Invincible Investment Corporation ("INV") announced the decision to enter into a Memorandum of Understanding (the "MOU") to amend each fixed-term building lease and property management agreement ("MLPM Agreements") pertaining to the rent conditions for the period from January 1, 2022 to June 30, 2022 for domestic hotels owned by INV with INV's main tenant, MyStays Hotel Management Co., Ltd. ("MHM") and its affiliates (the "MHM Group"), who operate the hotels, as decided today by Consonant Investment Management Co., Ltd. ("CIM"), the asset manager of INV.

The MHM Group has received investments through funds managed by affiliates of the Sponsor, Fortress Investment Group LLC ("FIG"). Therefore, CIM has treated the MHM Group as equivalent to Sponsor-related Persons. As such, CIM and INV have sincerely deliberated, discussed, and resolved to enter into the MOU in accordance with the internal rules of CIM to handle the related party transactions.

1. Outline of the MOU

Since the spread of the new coronavirus (COVID-19) began to have a tremendous impact on the hotel sector, INV entered into an MOU with the MHM Group to amend each MLPM Agreement six times in total starting from May 11, 2020 (collectively referred to as the "Executed MOU"). For details of the previously Executed MOU, please refer to each press release described in "6. Reference Press Release List" below.

These Executed MOU were agreed as a tentative measure with respect to the 73 domestic hotels leased through the trustees to the MHM Group (the "Subject Properties") for the period from March 1, 2020 to December 31, 2021. Thus, unless otherwise agreed, from January 2022 onward, the terms and conditions under the MLPM Agreements prior to the amendment by each MOU (hereinafter referred to as the

This English language notice is a translation of the Japanese-language notice released on March 11, 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.

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"Original Leasing Terms and Conditions") will be applied. On the other hand, the impact of the spread of COVID-19 on the hotel sector remains enormous. As of today, while the sixth wave that started from the beginning of the year seems to have peaked out, the daily number of new COVID-19 cases in Japan remains high. Domestic hotel demand remains sluggish partly due to the quasi-state of emergency declarations widely applied across the country, and it remains impossible for the MHM Group to pay the full amount of the fixed rent under the Original Leasing Terms and Conditions. In order to continue the operation of the Subject Properties by the MHM Group, a certain amount of rent reduction is unavoidable during the period from January 2022 onward as well.

Under such circumstances, INV has concluded that INV must accept to amend a part of the MLPM Agreement as an additional tentative measure in order to continue the operation of the Subject Properties, upon giving due consideration to INV's interests to the fullest extent as well as its financial conditions.

Consequently, as a result of discussions and negotiations with the MHM Group, INV and CIM determined to enter into the MOU with the MHM Group and change the Original Leasing Terms and Conditions as described below as a tentative measure for the period from January 1, 2022 to June 30, 2022 (the "First Half of 2022") with respect to the Subject Properties. The period to be covered by the temporary reduction measures will be six months, the same as the MOU to amend MLPM Contract concluded on March 11, 2021 (hereinafter referred to as the "March 2021 MOU"), and different from the three months for the MOU to amend MLPM Contract concluded on December 8, 2021. In calculating the variable rent, in summary, if the total GOP of all Subject Properties (73 properties) is positive after deducting the management services fees and the total fixed rent on a six-month basis, INV will receive the positive amount as variable rent.

This English language notice is a translation of the Japanese-language notice released on March 11, 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.

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Items subject to

Original Leasing Terms

Tentative Measures

(For Reference)

Tentative Measures

Change

and Conditions

(First Half of 2022)

(First Half of 2021)

Fixed rent (Total

Approx. JPY 4,971 million

JPY 900 million (Approx. 18% of the

JPY

1,000

million

rent for 6 months

amount under the Original Leasing

(Approx.

20%

of

the

for 73 properties)

Terms and Conditions)

amount

under

the

Original Leasing Terms

and Conditions)

Variable rent

Calculated on a 3-month

Calculated by summing up the rent of

Same as in the column

basis for each hotel.

all 73 properties for six months as

to the left.

described below.

The

amount

obtained by

deducting

(i)

the

total

The amount obtained by deducting

amount

of

expenses,

(i) the above total fixed rent (the total

management

services

rent for six months for 73 properties)

fees, and fixed rents of the

from (ii) the aggregate of the amount

hotel property from (ii) the

for six

months

for

73 properties,

total monthly

sales of the

which

amount

is

obtained by

hotel

property (if

the

deducting the management services

calculation

results

are

fees for the hotel for each month from

negative, the amount shall

the monthly GOP (operating gross

be JPY 0).

profit) for each hotel for the same

month (if the calculation results are

negative, the amount shall be JPY

0).

Payment

Paid on a hotel-by- hotel

Paid on a total basis of 73 hotel

Same as in the

method of rent

basis.

properties.

column to the left.

Payment date

The due date is the 11th of

On August 10, 2022, the sum of the

On

August 11,

2021,

the month which is two

total fixed rent and the total variable

the sum of the total

months from the month in

rent must be paid.

fixed rent and the total

which the last day of the

variable

rent shall

be

calculation period falls (for

paid.

the

fixed

rent,

every

month,

and

for

the

variable

rent,

every three

months).

The total fixed rent (for 73 properties for six months in aggregate) of JPY 900 million after the amendment above is less than the total fixed rent (for 73 properties for six months in aggregate) of JPY 1,000 million in the First Half of 2021, but is determined in view of (i) the fact that the GOP for Subject Properties in the First

This English language notice is a translation of the Japanese-language notice released on March 11, 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.

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Half of 2021 did not reach JPY 1,000 million, and (ii) the level that MHM Group is highly likely to be capable to pay despite the current severe operating conditions. If the GOP for the Subject Properties (after deducting the management services fees) for the First Half of 2022 performs well, and thereby the actual result exceeds the total amount of the fixed rent (for 73 properties for six months in aggregate), INV will receive the amount of such excess amount as variable rent.

Contrary to the MOU to amend the MLPM Contract concluded on May 11, 2020, INV will not bear the property management costs nor increase the amount of the management fees payable to the MHM Group under the provisional measure by the MOU.

For the list of the Subject Properties, please refer to the Appendix. For an overview of the current lease agreements, including the terms and conditions of rent for each Subject Property, please refer to "Part I Fund Information / 1 Status of Fund / 5 Management Status / (2) Investment Assets" of the Securities Report for the 36th fiscal period (from January 1, 2021 to June 30, 2021) filed by INV on September 24, 2021 (available in Japanese only).

The outlook for the future status of the spread of COVID-19 infections and its impact on the demand for hotels is still inevitably uncertain. Therefore, INV plans to make this change a provisional measure for the period up to the end of June 2022, and, if necessary, to discuss the details of the changes in the leasing terms and conditions after such period based on the future situation.

2. Background and Reasons for Conclusion of the MOU and its Impact on INV

1. Background and Reasons
   The Japanese economy has deteriorated rapidly since late February 2020 due to the effects of COVID- 19. On April 7, 2020, the Japanese government declared a state of emergency. In addition, the number of foreign tourists visiting Japan declined by 99.9% (year-over-year) for each month from April to July because of global travel restrictions. Also, the demand for inbound travel has not recovered due to the
   Japanese government's strengthened quarantine measures and restrictions on travel by other countries. COVID-19 has repeatedly spread and subsided periodically. As a result, the recovery in domestic demand for travel has been stagnant which has had a serious impact on Japan's overall economy, especially on the hotel sector.

The measures under the Executed MOU were tentative ones only applicable for the period from March 1, 2020 to the end of December 2021, and as a result, the MHM Group was able to continue to operate the Subject Properties to date, and avoid a short-term loss for INV due to a potential bankruptcy of the MHM Group (i.e., complete loss of rent income, cost burden associated with rebranding, etc.) and a medium- to long-term loss due to a change of operators (i.e., deterioration of the rent level from the Original Leasing Terms and Conditions, increase in the management services fees, etc.), which INV and CIM were most concerned about.

INV and CIM have closely monitored the performance of the hotel GOP for the Subject Properties and continue to request that the MHM Group maximize its cost-cutting efforts, while closely reviewing its

This English language notice is a translation of the Japanese-language notice released on March 11, 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.

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financial condition. However, if INV and CIM claim payment of the rent to the MHM Group in the same rent structure for January 2022 and thereafter as stated in the Original Leasing Terms and Conditions, the MHM Group will inevitably default on its obligations, which INV has determined in turn would most likely impair its medium- to long-term profits. On the other hand, INV and CIM have continued to consider all options, including the replacement of the tenant, but in light of the current market environment, it remains extremely difficult to find a successor tenant that can operate all of the Subject Properties under the conditions equivalent to the Original Leasing Terms and Conditions.

Under such circumstances, INV has entered into the MOU after deciding to continue certain tentative measures as above for the First Half of 2022 to the extent that there is no significant adverse effect on INV's cash flow, upon giving due consideration to the fullest scope of INV's interests.

1. MOU's impact on INV
   Given the amendment under the MOU, the timing of the next rent payment by the MHM Group will be postponed to August 10, 2022. The amount of INV's cash reserves as of the end of January 2022 was approximately JPY 17.1 billion, and the amount of INV's cash reserves are expected to be approximately
   JPY 12.1 billion as of the end of July 2022 after considering the reduction of rent from January to June 2022 under the MOU. The estimated amount of (i) payment of operation costs (approximately JPY 0.6 billion), (ii) interest payments for the time being (the total amount of interest for INV's interest-bearing debt due during the period from February 2022 to July 2022 is approximately JPY 0.6 billion), and debt repayment in the amount of JPY 3.6 billion as announced in "Notice concerning Debt Financing (Refinance)" dated March 10, 2022. Therefore, there is no concern about INV's operation and cash position.

3. Outline of MHM

(i)	Name	MyStays Hotel Management Co., Ltd.
(ii)	Location	Roppongi Hills North Tower 14th Floor, 6-2-31, Roppongi, Minato-ku,
	Tokyo, Japan
(iii)	Title and name of	President and CEO, Ryoichi Shirota
	representative officer
(iv)	Business	Hotel and Ryokan (Japanese inn) operation and management
(v)	Capital	JPY 100 million (as of end of February 2022)
(vi)	Date of establishment	July 8, 1999
(vii)	Relationship between INV/Asset Manager and the Tenant/Operator
		While there are no capital relationships that should be noted between
		INV/CIM and MHM, the parent company of MHM is owned by a fund
	Capital relationships	operated by affiliates of FIG. FIG is a subsidiary of SoftBank Group
		Corp., which directly and indirectly holds 100% of CIM's outstanding
		shares.
		As of today, among the directors of INV and the officers and
		employees of CIM, Naoki Fukuda, who is Executive Director of INV
	Personnel relationships	and CEO of CIM, Naoto Ichiki, who is Chairman and Director of CIM,
	and Christopher Reed, who is a part-time director of CIM, are
		seconded from Fortress Investment Group Japan Godo Kaisha, a
		subsidiary of FIG.

This English language notice is a translation of the Japanese-language notice released on March 11, 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.

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