6th fiscal period ended april 30, 2017...7 financial impact improvement of dpu as a result fp7 dpu...

Invesco Office J-REIT, Inc. (3298)

6th Fiscal Period Ended April 30, 2017

Invesco Global Real Estate Asia Pacific, Inc.

http://invesco-reit.co.jp/en/

Table of Contents

1 Implementation of Measures to Improve Investor Value

Highlights Major Events After FP6 and Benefits Continuous Measures to Improve Investor Value Financial Impact Acquisition and Cancellation of Own Investment Units Funding of Acquisition and Cancellation of Investment Units Expected Financial Effect of Acquisition and Cancellation of Investment Units Enhancing Portfolio through Asset Replacement Quantitative Results of Asset Replacement Proactive Leasing Examples Revenue Enhancement and Cost Reduction Acquisition of Credit Rating and Issuance of Investment Corporation Bonds Key Facts

4 5 6 7 8 9 10 11 12 13 14 15 16

2 Financial Results and Forecasts Positive Earnings Variance from Original Forecast Continued Earnings Growth Projected

18 19

3 Portfolio Summary Current Portfolio Composition Portfolio Summary

21 22-23

4 Strategic Overview Remain Shareholder Focused Track Record Excellent Sourcing Capabilities External Growth: Acquired Aqua Dojima East Leasing Achievements & Occupancy Continue to Focus on Increasing Rent Levels within the Portfolio Average Rent Summary Focus On Leasing Opportunities Maintain Financial Stability and Flexibility Comparison in Valuation by Rating

25 26 27 28 29 30 31 32 33 34

5 Invesco Group Overview About Invesco Group Invesco Real Estate Invesco Global Real Estate Asia Pacific, Inc.

36 37 38

6 Appendix Top 10 Tenants Achievements of Individual Assets Portfolio Information Balance Sheet (Assets) Balance Sheet (Liabilities and Net Assets) Income Statement Cash Flow Statement Proprietary Market Research Market Overview Environmental Initiatives and Energy-Saving Measures Unitholders Governance Rotation Rules Investment Unit Price

40 41-44 45-46 47 48 49 50 51-52 53-54 55 56 57 58 59

This document is provided for informational purposes only and is not intended as an inducement or invitation to invest in securities issued by Invesco Office J-REIT, Inc.

1. Implementation of Measures to Improve Investor Value

3

Unit Buyback: The first J-REIT to formally approve a unit buy-back

Proactive Asset Management:

Realized an improvement in both profitability and stability of the portfolio by conducting asset enhancement strategies

Results of Global IR:

Improved overseas institutional investor ratio from 14% to 20% through proactive outreach

Highlights

4

Major Events After FP6 and Benefits

Funding stability and credit quality improvement

Portfolio occupancy2:

96.7%

Impact of FP6 rent renewal increase3:

DPU +¥22

Impact of cost reduction4:

DPU +¥74

Debt cost reduction since IPO

Average interest rate

0.74% → 0.58%

1 Leased area basis 2 Average portfolio occupancy rate during FP6 3 The number is calculated in the case the renewal increase contributes to DPU for the whole period. 4 The number is calculated in the case the cost reduction contributes to DPU for the whole period.

Results

Internal Growth

External Growth

Disposition of Harumi

Island Triton Square Office

Tower Z

Acquisition of

Kinshicho Prime Tower

Acquisition of Aqua Dojima

East

Asset enhancement strategy Portfolio growth

since IPO:

approx. 2 times

(¥78.6bn → ¥161.9bn)

Top 10 tenant ratio

since IPO1:

52% → 39%

Financing Strategy

FP5 FP6 FP7

Oct. 2016 Nov. 2016 Dec. 2016 Jan. 2017 Feb. 2017 Apr. 2017 May 2017 Jun. 2017 Mar. 2017

5

Effective renovation led to successful leasing

96.4% (Estimate)

81.6%

86.4% 98.2% (Estimate)

Ebisu Prime Square

Nagoya Prime

Central Tower

Sendai Honcho Building

92.7% (Estimate)

85.0%

Executed a large new lease contract

Successful in back filling and leasing up

Investment corporation bond issue

New borrowing for

acquisition

Refinancing remaining debt

Credit rating

acquisition

Amended asset management guidelines

(added rules on unit buyback)

Unit buyback and

cancellation

Proactive capital management

95.0%

100.0%

105.0%

110.0%

115.0%

120.0%

125.0%

May-2016 Jun-2016 Jul-2016 Aug-2016 Sep-2016 Oct-2016 Nov-2016 Dec-2016 Jan-2017 Feb-2017 Mar-2017 Apr-2017 May-2017

Continuous Measures to Improve Investor Value Trend of Investment Unit Price1

Invesco Office J-REIT Inc. (“IOJ”) gives importance on improving investor value, and proactively manages the portfolio aiming its continuous improvement.

1 Relativized based on the closing price at the beginning of FP6 (November 1, 2016) (IOJ: 84,500 yen, TSE REIT Index: 1,781.03pt).

Act to

Broad

en

In

vesto

r B

ase

FP6 (Ended April 30, 2017) FP5 (Ended October 31, 2016)

Remain committed to holding seminars for sales representative at securities companies and participating in J-REIT seminars

AIFMD registration Acquisition of credit rating

Conducted international IR

IOJ

TSE REIT Index

IOJ: 119.4% (100,900 yen)

Jun 9, 2017

TSEREIT Index: 99.1% (1,764.30pt)

Launch date

Pricing date

June 15, 2016 Financial results

for FP4

2016 Public offering (May 16: Launch date, May 24: Pricing date)

Shinagawa Seaside

East Tower

Hakata Prime East

Sun Towers Center Building

Akiba CO Building


Assets acquired

November 1, 2016 Beginning of FP6: 100.0%

October 11, 2016 Acquired A+ (JCR)

December 15, 2016

Financial results for FP5

March 30, 2017 Notice concerning the

acquisition of Aqua Dojima East ⇒Quality asset with high yields

5.5%

Appraisal NOI yield

1,910 million yen

Acquisition price

April 20, 2017 Issuance of the first

investment corporation bond

(5 years: 0.32%, 7 years: 0.52%)

April 21, 2017 Notice concerning amendments to asset

management guideline ⇒Adding rules regarding acquisition and

cancellation of own investment units

December 7, 2016 Notice concerning asset

replacement ⇒Improved profitability

and stability of the portfolio

Disposal Acquisition

Triton Square Z


Global IR in FP5: Asia Pacific and North America

Overseas investor ratio: 14% (before)

Global IR in FP6: Asia Pacific, Europe and North America

Overseas investor ratio: 20% (after)

6

IR activities to over 100 overseas institutional investors (North America: 56, Europe: 19, Asia Pacific: 31)

Jun 7, 2017

June 12, 2017 Notice concerning

determination of matters regarding Acquisition of own

investment units

Jun-2017

7

Financial Impact Improvement of DPU as a result

FP7 DPU forecast is expected to improve by ¥203 or 7.6% from ¥2,676 to ¥2,879 due to effective measures conducted in FP6

1 Effect of taxes. 2 Excluded profit from disposition of ¥962 from actual DPU for FP6 of ¥3,638. The number is reference purpose only and it differs from the actual DPU for FP6.

FP6 DPU adjusted2: ¥2,676 FP7 DPU forecast: ¥2,879

2,489 2,814

187 1

+164

+241 +121

-122 -18 -186

+39

-7 -29 65 1

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Adjusted DPU

for FP6

Increase in

rental revenue

from existing

assets

Increase in

rental revenue

from asset

replacement

Increase in

other rental

revenue

Property tax

effect end

Increase in

rental expense

from asset

replacement

Increase in

rental related

expenses for

existing assets

Decrease in

other operating

expense

Decrease in

non-operating

income

Increase in

interest expense

due to new

acquisition

DPU forecast for

FP7

2,676

Up by

7.6%

(¥)

2,879

+203

Proactive Capital Management to Improve Investor Value

Acquiring investment units might be regarded as an efficient way of utilizing available cash in hand, depending on the state of the real estate market

Provide returns to investors by efficiently using available cash in hand

DPU increases in line with decrease in investment units

NAV per unit increases if IOJ buys its own investment units below NAV per unit

Decreasing the number of issued investment units will:

Increase net income per unit

Increase DPU

1. Increase Net Income Per Unit and DPU

2. Return Profit to Investors

3. Efficient Use of Available Cash in Hand

Expected Benefits

Acquisition and Cancellation of Own Investment Units

8

Initiated unit-buyback program

First J-REIT to formally approve a unit-buyback

Committed to optimizing capital allocation

1 IOJ aims to keep LTV below 50% after the acquisition and cancellation of own investment units.

Proactive Management

On April 21, 2017, Invesco Global Real Estate Asia Pacific, Inc. (“IGRE” or “Asset Manager”) added provisions regarding the acquisition and cancellation of own investment units to the asset management guidelines as part of its financial and capital management strategy1. On June 12, 2017, IOJ resolved to acquire own investment units based on the asset management guidelines.

Funding of Acquisition and Cancellation of Investment Units

E.g.: Present Cash in Hand from Gap between Depreciation Expenses and Capital Expenditures

(¥ mm)

9

0

300

600

900

1,200

1,500

1,800

FP1 FP2 FP3 FP4 FP5 FP6

Accumulated total of approx. ¥1.48 billion

Cash in hand３ (a)-(b) Depreciation expenses (a) Capital expenditures (b)


1 Depreciation expenses are costs by which property and equipment are depreciated over the remaining period of use and recorded as expenses in the profit/loss statement. Because depreciation expenses are not funded by cash, the amount of depreciation expenses remain as cash in hand. In contrast, capital expenditures, which are expenses paid to repair property and equipment are not recorded as profit/loss and are funded by the payment of cash. As a result, the difference between the actual capital expenditure and depreciation expenses remains as cash in hand. 2 IOJ does not intend to sell its own assets to provide funds to acquire investment units. 3 Cash in hand is calculated as the gap between depreciation expenses and capital expenditures and may differ from the actual cash balance.

The main sources of capital for acquisition of investment units are:

Available cash in hand generated from the gap between depreciation expenses and capital expenditures1

Potential excess funds generated from asset dispositions2

1 Book-value per unit is calculated by dividing net asset value mentioned in the financial statements by the issued number of investment units.

2 NAV per unit is calculated by dividing net asset value, reflecting the gap between book value and appraisal value of investment assets, by issued number of investment units.

3 Depending on market trends, etc., it is possible that the total number and cost of own investment units acquired do not reach the maximum level, or that there is no acquisition at all.

Details of Acquisition of Own Investment Units Determined on June 12, 20173

4 The expected numbers above are calculated based on conditions as the date hereof and the actual DPU amount may differ in accordance with changes in circumstances. Also, the amount of DPU is not guaranteed.

5 Based on the closing price of June 9, 2017, the previous business day of determination of acquisition of own investment units at a meeting of the board of directors of IOJ.

6 The maximum number of units that can be acquired at the assumed average purchase price within the total acquisition cost limit.

Expected Financial Effect of Acquisition and Cancellation of Investment Units

Cancellation of Investment Units and Antidilutive Effect

Cancel investment units by end of same FP (planned)

DPU increases in line with decrease in outstanding investment units

Cancel End of FP7 Acquire

FP8 (ending Apr. 2018) FP7 (ending Oct. 2017)

Consideration of Potential Impact of Buyback4

If IOJ conducts effective use of available cash in hand of ¥800 million for the following choices, the impact on DPU is expected to be as follows:

1. Unit buyback: (assuming average purchase price of ¥100,9005 and acquisition & cancellation of 7,928 units6):

+¥29

2. Prepayment of short-term debt: +¥2

3. Asset acquisition: IOJ is not considering buying an asset for ¥800 million.

Total expected no. of investment units to be acquired: 10,000 units (maximum)

Total acquisition cost: ¥800 million (maximum)

Acquisition period: June 13, 2017 to July 20, 2017

• IOJ will terminate transactions to acquire own investment units when either the expected number of own investment units acquired or the total acquisition cost reaches the maximum amount, or when the acquisition period ends.

10


Aim to improve investor value by increasing BPU 1 or NAV 2 per unit by the acquisition and cancellation of own investment units utilizing available cash in hand

Enhancing Portfolio through Asset Replacement

Kinshicho Prime Tower Triton Square Z

Sold Property

Aqua Dojima East

Acquired Property

Disposition price

¥10,100mm

NOI yield 4.5%

Yield after depreciation

3.6%

Book value ¥9,190mm

Acquisition price

¥15,145mm

NOI yield 4.6%


4.1%

Appraisal value

¥15,600mm

December 2016 January 2017 March 2017

Acquisition price

¥1,910mm

NOI yield 4.4%


3.8%

Appraisal value

¥2,010mm

Total acquisition price

¥17,055mm

Average NOI yield

4.6%

Avg. yield after depreciation

4.1%

Total appraisal value

¥17,610mm

Acquired Property

Total / Average of two properties acquired during the fiscal period

Eliminated uncertainty of major tenants moving out

The transfer eliminated uncertainty about the risk of Sumitomo Corp.’s subsidiaries moving out

Achieved unrealized gain

Forecasted DPU for FP6 increased to ¥3,638 as a result of asset replacement, including gain on transfer of Triton Square Z

Improved profitability

and stability

Improved stability and profitability of the portfolio due to enhancement of tenant diversification by acquiring multi tenant asset

Contributed to unrealized gain

The difference between total appraisal value and acquisition price of the two properties was ¥555mm, contributing to greater future unrealized gain

Acquired properties with

higher yields than the

sold property

Key Points Key Points

IOJ steadily improved the profitability and stability of its portfolio through asset replacement during the fiscal period

11

Closing unit price on Dec. 7, 2016

¥88,900 Increased by 17.4%

Highest closing unit price up to the end of April 2017

¥104,400

Dividend per unit (DPU) NOI yield

4.0% 4.1%

Top 10 tenant share (Leased area basis)

43.7% 38.7%

Before (as of FP5 end (10/2016))

After (as of FP6 end (4/2017))

5.0% 5.1%

2,588 2,489 2,814

1451

1871

651

9622

0

1,000

2,000

3,000

4,000

FP5 FP6 FP7 Estimate

3,638

(Unit: ¥)

2,733 2,879

After depreciation

Before (as of FP5 end (10/2016))

After (as of FP6 end (4/2017))


12

1 Effect of taxes 2 Profit from disposition

Quantitative Results of Asset Replacement

Increased profitability and raised yield through asset replacement and subsequent acquisition

85.0%

89.6%

92.7%

80%

90%

100%

Jan.1, 2017 Apr.30, 2017 Jun.17, 2017

Proactive Leasing Examples

Successful in Back Filling and Leasing Up

Stable demand for rare vacant space in Ebisu sub market

• The anchor tenant that occupied a total of 4.25 floors (2,057sqm) vacated during December 31,2016 and February 28, 2017 resulting in a total of 2,780sqm of available spaces.

• Succeeded in back filling 1,657sqm through leasing the vacant space to 10 tenants.

• Received two new applications for the remaining floors and expect further occupancy improvement in FP7.

6 tenants moved out

10 tenants moved in

Occupancy Rate

1 The number of move-in/move out tenant is only for office tenant (including City/Plaza ). 13

Lease Contracts Secured 1

84.2%

90.0%

98.2%

80%

90%

100%

Jan.1, 2017 Apr.30, 2017 Jun.17, 2017

Effective renovation led to successful leasing

Renovation contributed to high occupancy

• The building was fully renovated in January 2017 and was well received by the market.

• The occupancy rate is expected to reach 98.2% as at June 17, 2017 with 12 new tenants (2,233sqm) from 84.2% in January 1, 2017.

Occupancy Rate

Lease Contracts Secured

6 tenants moved out

12 tenants moved in

Floor

22F

21F

20F

19F

18F

17F Tenant A

16F

15F

14F

13F

12F

11F

10F Tenant B Tenant C

9F Tenant D

8F

7F Tenant E

6F Tenant F Tenant G

5F

4F

3F

2F Vacant

1F

Ongoing Lease Contract

Leasing Progress (as of June 1, 2017)











Vacant

Received App.

Tenant H Tenant I








Received App.


Ebisu Prime Square Sendai Honcho Building

Revenue Enhancement and Cost Reduction Contributing to enhanced NOI

14

Expected to contribute to DPU improvement 2

Proactive Cost Control in FP6 & FP7

Vending Machine Vendor was changed through

competitive bidding and a higher fee rate was secured.

With cancellation of a number of parking lots, conducted competitive bidding for subleasing.

Existing contract with power supplier was

reviewed through competitive bidding to reduce the cost level.

Contract terms were reviewed through discussions with the existing supplier to reflect fuel cost adjustment.

Revised the building maintenance contracts

with existing vendors through a competitive bidding process.

Revised the specifications of building maintenance with the existing vendors through intensive negotiations.

Other Income Improvement

¥28.8 million per period1,2

Reduction in Building Maintenance Cost Reduction in Power Supply Contract Cost

¥27.2 million per period1,2 ¥4.5 million per period1,2

Approximately ¥74 per unit

Tokyo Nissan Nishi Gotanda Building

Shinagawa Seaside East Tower

ORTO Yokohama


Tokyo Nissan Nishi Gotanda Building

Nishi Shinjuku KF Building Hakata Prime East

CS Tower/ CS Tower Annex

Shinagawa Seaside East Tower


Nishi Shinjuku KF Building

Tokyo Nissan Nishi Gotanda

Building

Hakata Prime East



Nagoya Prime Central Tower


1 Figures rounded to the 100,000. 2 The number is calculated in the case the cost reduction contributes to DPU for the whole period.

Fiscal period ended October 31, 2016

Fiscal period ended April 30, 2017

Fiscal period ending October 31, 2017

Acquisition of new credit rating

Acquisition date October 11, 2016

Rating agency Japan Credit Rating Agency (JCR)

Subject Long-term Issuer Rating

Rating A+

Rating outlook Stable

15


3.3 2.8 2.7 2.2 2.7 2.3 2.7

0.74 0.70 0.70 0.70 0.61 0.59 0.58

0.0

3.0

6.0

0.0

0.5

1.0

FP1 FP2 FP3 FP4 FP5 FP6 6-Jun-17

Average remaining years (right scale) Average borrowing rate (left scale)

（%）（Year）

Issue date Issue

Amount Duration

Interest rate

Redemption date

First Series Bonds

2017/4/20 ¥1.8bn 5 years 0.320% 2022/4/20

Second Series Bonds

2017/4/20 ¥1.6bn 7 years 0.520% 2024/4/19

Acquisition of Credit Rating and Issuance of Investment Corporation Bonds


IOJ’s average borrowing rate was lowered to 0.58% and the average remaining period to maturity was extended to 2.7 years1.

Diversification in debt maturity by investment corporation bonds

Reducing financing cost by improving creditability Diversifying financing methods by issuing investment corporation bonds

1 The figures are as of June 6, 2017 after refinancing of debt.

Key Facts As of the end of April 2017

Properties

No. of properties: 14 properties

Total purchase price: ¥161.9 bn

Appraisal value: ¥179.2 bn

Unrealized gains: ¥ 15.3 bn

Average building size1: 64,163 m2

% in Tokyo Metropolitan Area2:

83.9%

Average occupancy rate: 96.7%

Financials

DPU forecast in FP7 (October 2017)3: ¥2,879

FFO/unit3,4: AFFO/unit3,5:

¥3,598 ¥2,803

NAV/unit3: ¥115,640

Book value/unit3: ¥100,467

Dividend yield6: 5.7 %

LTV book value: LTV appraisal value:

49.5% 45.6%

JCR Long-term issuer rating:

A+/Stable

1 Average gross floor area of each building. 2 Purchase price basis. 3 Based on 815,547 units, the number of units issued and outstanding as of the end of April 2017. 4 (Net income + depreciation expense – gain/loss on sales of property) / units issued and outstanding 5 (Net income + depreciation expense – gain/loss on sales of property – capital expenditures) / units issued and outstanding 6 As of the end of May, 2017. 16

2. Financial Results and Forecasts

17

(¥ mm)

FP5 Ended October 31, 2016

FP6 Ended April 30, 2017

Actual Forecast (A) (as of Dec. 15,

2016)

Actual (B) (B)-(A)

Operating Revenue 5,684 6,519 6,543 24

Operating Income 2,597 3,236 3,324 88

Ordinary Income 2,230 2,873 2,967 94

Net Income 2,229 2,872 2,966 94

Units Issued & Outstanding

815,547 815,547 815,547 -

DPU (¥) 2,733 3,523 3,638 115

LTV (%) 47.7 - 49.5 -

Total Assets 172,204 - 179,894 -

Interest bearing debt

82,100 - 89,000 -

Positive Earnings Variance from Original Forecast Financial Results for FP6 (ended April 30 2017)

Earnings Variance from Original Forecast (¥ mm)

Operating Revenue

Acquisition of Aqua Dojima etc. +16

Increase in other rental revenue +8

Operating Revenue +24

Operating Income

Decrease in utility expense +78

Decrease in BM cost +27

Increase in other rental expense -14

Increase in other operating expenses

-27

Operating Income +88

Ordinary Income

Increase in non-operating income +6

Ordinary Income +94

Net Income +94

18

(¥ mm)

FP6

Ended April 30, 2017

FP7 Ending October 31, 2017

Actual (A) (A)– Profit from

disposition (B)

Forecast (C) (As of Jun. 12,

2017)

(C)-(B)

Operating Revenue

6,543 5,758 6,186 428

Operating Income 3,324 2,742 2,734 194

Ordinary Income 2,967 2,182 2,349 167

Net Income 2,966 2,182 2,348 166

Units Issued & Outstanding

815,547 815,547 815,547 -

DPU (¥)1 3,638 2,676 2,879 203

Continued Earnings Growth Projected Financial forecasts for FP7 (ending October 31, 2017)

Analysis of Earnings Variance (¥ mm)

Operating Revenue

Increase in rental revenue by asset replacement

+196

Increase in rental revenue for existing 12 assets

+134

Increase in other rental revenue +98

Operating Revenue +428

Operating Income

Increase in operating expense for existing 12 assets

-152

Decrease in property tax effect -100

Increase in rental related expenses by asset replacement

-15

Decrease in other operating expenses +33

Operating Income +194

Ordinary Income

Increase in interest expense due to new borrowing for new acquisition

-22

Decrease in non-operating income -5

Ordinary Income +167

Net Income +166

19

1 The DPU forecast for FP7 mentioned above is calculated based on 815,547 units, which is the number of units issued and outstanding before the acquisition and cancellation of investment units.

3. Portfolio Summary

20

By Asset Type (%)

Characteristics4 Highlights (14 properties)

Purchase Price

¥161.9 billion

Appraisal Value1

¥179.2 billion

Average Occupancy Rate

96.7%

Average NOI Yield2

5.1%

Average Purchase Price

¥11.5 billion

Portfolio PML3

2.32%

95.0

5.0

ORTO Yokohama

Investment Ratio by Geographic Location

Large-scale offices Others (mid-size offices)

95.0% 5.0%

Tokyo Metropolitan Area

-Tokyo 23 wards

(Tokyo central 5 wards5

Other Areas

83.9%

66.0%

24.5%)

16.1%

1 The figure includes the appraisal values for the 14 holding assets as of the end of FP6. 2 The ratio is calculated using the following formula and rounded to the nearest one decimal place. (NOI during the fiscal period / operating days during FP6*365 days) / total purchase price of the portfolio as of the end of FP6. 3 The PML (Probable Maximum Loss) represents the estimated total cost associated with restoring a property damaged in connection with an earthquake event on a scale expected to occur once in 475 years to the property’s condition prior to that event, expressed as a percentage of the replacement cost of such property. 4 The ratio is calculated based on the purchase price. 5 Tokyo central 5 wards includes Chiyoda-ward, Chuo-ward, Minato-ward, Shinjuku-ward and Shibuya-ward.

By Geographic Location (%)

83.9

16.1

Current Portfolio Composition As of the end of April 2017

Nagoya City

¥14.6 bn 9.0%


¥135.9 bn 83.9%

Sendai City

¥5.0 bn 3.1%

21

Osaka City

¥1.9 bn 1.2%

Fukuoka City

¥4.5 bn 2.8%

Quality Assets in Prime Locations

Property Name

Ebisu Prime Square


Queens Square Yokohama


Tokyo Nissan Nishi-Gotanda

Building ORTO Yokohama

Nishi-Shinjuku KF Building

Pictures

Area Tokyo

Metropolitan Area Tokyo


Metropolitan Area Other




Metropolitan Area

Address Shibuya-ku, Tokyo Taito-ku, Tokyo Yokohama-city,

Kanagawa Nagoya-city, Aichi

Shinagawa-ku, Tokyo

Yokohama-city, Kanagawa

Shinjuku-ku, Tokyo

Purchase Price

¥ 25,014 mm ¥ 13,700 mm ¥ 16,034 mm ¥ 14,600 mm ¥ 6,700 mm ¥ 13,000 mm ¥ 6,600 mm

Appraisal Value

¥ 27,538 mm ¥ 16,300 mm ¥ 18,200 mm ¥ 18,000 mm ¥ 7,340 mm ¥ 14,400 mm ¥ 7,030 mm

Book Value ¥ 25,413 mm ¥ 13,812 mm ¥ 16,046 mm ¥ 14,379 mm ¥ 6,899 mm ¥ 12,983 mm ¥ 6,845 mm

Unrealized Gain1 ¥ 2,124 mm ¥ 2,487 mm ¥ 2,153 mm ¥ 3,620 mm ¥ 440 mm ¥ 1,416 mm ¥ 184 mm

NOI Yield 2 3.8% 5.9% 6.3% 4.9% 5.2% 6.1% 4.2%

Purchase Date

June 6, 2014 June 6, 2014 Sept. 30, 2014 June 6, 2014 May 11, 2015 June 1, 2015 June 30, 2015

GFA 67,581.00m2 32,996.92m2 498,282.77m2 59,602.89m2 21,404.84m2 57,261.81m2 9,828.37m2

Property Characteri-stics

A large sized complex building consisting of high-rise office, retail and residential buildings. Equipped with excellent facilities located in central Tokyo area.

The location is high level of traffic convenience and visibility. Having one of the largest leasable areas in this area in which small-scale office buildings are located.

An iconic large sized complex property named “Queens Square Yokohama” consisting of office, retail and hotel properties in Yokohama.

Recently constructed high-rise office building with 23 stories located in central Nagoya. Equipped with high-level facilities and air- conditioning system.

Large sized office building built in 1990 but its common areas were upgraded in 2010. Located in Tokyo 23 wards with convenient access to transportation and visibility.

Having one of the largest standard floor areas in buildings located in Yokohama. Equipped with cogeneration system which provides tenants with self-generated electricity.

Excellent access to Shinjuku Station which provides good access to transportation. This asset boasts a quite large standard floor area for a building in the district known for having a high concentration of large-sized offices.

Portfolio Summary As of the end of April 2017

IPO 1st Follow-on Acquired by Debt

22

1 Unrealized gains are calculated from the difference between book value and appraisal value at the end of FP6. 2 The ratio is calculated by the following formula : annualized actual NOI during the FP6 / purchase price.

Since the listing, IOJ has built a high quality portfolio of large-scale properties

Property Name

Shinagawa Seaside

East Tower

Akiba CO Building



Hakata Prime East

Harumi Island Triton Square Office Tower Z


Aqua Dojima East

Pictures

Area Tokyo



Metropolitan Area Other Area

Other Metropolitan Area



Other Area

Address Shinagawa-ku,

Tokyo Chiyoda-ku, Tokyo Setagaya-ku, Tokyo Sendai-shi, Miyagi

Fukuoka-shi, Fukuoka

Chuo-ku, Tokyo Koto-ku, Tokyo Osaka-shi,

Osaka Purchase Price

¥ 25,066 mm ¥ 8,078 mm ¥ 6,615 mm ¥ 5,000 mm ¥ 4,500 mm ¥ 9,300 mm ¥ 15,145 mm ¥ 1,910 mm

Appraisal Value

¥ 26,600 mm ¥ 9,330 mm ¥ 7,070 mm ¥ 5,200 mm ¥ 4,620 mm - ¥ 15,600 mm ¥ 2,010 mm

Book Value

¥ 25,260 mm ¥ 8,316 mm ¥ 6,695 mm ¥ 5,337 mm ¥ 4,535 mm - ¥ 15,360 mm ¥ 1,953 mm

Unrealized Gain1 ¥ 1,339 mm ¥ 1,013 mm ¥ 374 mm ¥ -137 mm ¥ 84 mm - ¥ 239 mm ¥ 56 mm

NOI Yield 2 5.4% 4.5% 5.1% 4.8% 4.9% - 4.6% 4.4%

Purchase Date

June 1, 2016 June 1, 2016 June 1, 2016 June 1, 2016 June 1, 2016 June 6, 2014 January 20, 2017 March 31, 2017

GFA 43,014.06m2 6,957.74m2 25,577.35m2 13,049.82m2 9,213.20m2 267,132.67m2 28,789.18m2 24,726.19m2

Property Characteri-stics

High-spec office bldg. with hotel facility, located in the middle of Tokyo central area and Haneda Airport.

Office bldg. located in “Akihabara”, business and commercial area, with convenient access to transportation.

Large-sized office bldg. located at area brand “Sancha”, available to attract office needs in Shibuya, one of the major down towns in Tokyo.

Office bldg. located in central Sendai, with convenient access to transportation and visibility.

Office bldg. with favorable location in central Fukuoka, with convenient access to transportation.

Disposed on December 16, 2016 at ¥10,100 mm. Profit from disposition is ¥ 784 mm.

Large-sized office bldg. located in the east side of Tokyo, with good access to office areas in Tokyo metropolitan wards.

Office bldg. located in Dojima area close to Osaka station, with high locational competitiveness.

Portfolio Summary As of the end of April 2017

2nd Follow-on Asset replacement Acquired by cash

23

Disposition

1 Unrealized gains are calculated from the difference between book value and appraisal value at the end of FP6. 2 The ratio is calculated by the following formula : annualized actual NOI during the FP6 / purchase price. For Aqua Dojima East, the ratio is calculated by the following formula because the

operating period is only one month in FP6: appraisal NOI based on the appraisal value as of the end of FP6/ purchase price .

Since the listing, IOJ has built a high quality portfolio of large-scale properties

4. Strategic Overview

24

Asset Quality

DPU Growth

NAV Growth

External Growth Internal Growth Financing Strategy

Focus on the best long term markets

Acquire quality assets utilizing Invesco Real Estate’s expertise and relationships among local partners

Utilize bridge funds to maximize growth opportunities

Replace assets to enhance the portfolio

Identify market cycles

Seek further improvements in occupancy and rental growth

Maintain and improve asset competitiveness through strategic capital expenditures

Improve NOI by reducing operating costs and increasing revenue

Prudent financial management

Target LTV between 40% and 50%

Equity finance/debt finance/ bridge funds/optimal financing strategies for acquisitions

Acquire credit rating

Strengthen financial stability by issuing investment corporation bonds

Best Practice Management

Remain Shareholder Focused Value Creation Philosophy: Focus on high quality assets to drive long-term growth

25

Track Record

Aqua Dojima East

（¥bn）

Number of properties 5 2 1 8 5 13 1 1 1 14

Number of tenants 243 32 17 299 84 384 1 15 18 426 Ratio of top 5 tenants

42.5% - - 37.2% - 28.1% - - - 25.6%

Appraisal value (¥bn)

83.1 20.6 6.8 115.6 52.3 171.2 10.9 15.6 2.0 179.2

NOI yield after depreciation

3.8% - - 3.9% - 4.0% - - - 4.1%

DPU (¥) 1,005 2,575 2,733 2,8791

＋＋＋－＋＋

January 2017 Amendment of investment targets

Introduction of cumulative investment unit program April 2017

First issuance of investment corporation bonds April 2017

Partial amendment of asset management guidelines as it relates to acquisition of own investment units

October 2016 Acquisition of long-term issuer rating (A+/stable (JCR))


Harumi Island Triton Square Office Tower Z

(Triton Square Z)

Asset replacement contributing to

improved portfolio profitability and stability

Medium- to Long-Term Targets

AUM: ¥300-400 bn Profitability: Long-term DPU accretion focus Stability: Top 5 tenant share of overall portfolio under 10% Market position: Inclusion in global index

* For illustrative purpose only.

Measures taken to increase asset size and improve investor value since IPO

1 DPU forecast for FP7 26

78.6 +19.7

+6.6 104.9

+49.2

154.2 -9.3 +15.1

+1.9 161.9

End of FP1 1stfollow-on

Acquiredin FP3

End of FP3 2ndfollow-on

End of FP5 Dispositionof TritonSquare Z

Acquisitionof KinshichoPrime Tower

Acquisitionof Aqua

Dojima East

End of FP6

IOJ’s Diversity of Sourcing1 IOJ’s Flexible Ownership Structure1

IOJ’s Acquisition Track Record Steady Acquisition Pipeline from Diverse Investment Sources2

(Note1) (Note1) (Note1)

(Note3)

IGRE Sourcing Capability Procured information on 1,000 acquisition opportunities per

annum (on average) over the past 18 years

IGRE Acquisition Track Record Cumulative investment amount of approximately ¥1.1 trillion

or 122 properties3

Approximately 73% of the investments (total purchase price basis) were in large-scale office buildings4

Current AUM is approximately ¥306 billion

1 As of June 1, 2017. Includes information on assets to be disposed and acquired. 2 As of March 31, 2017. 3 Figures above include assets that were managed by IGRE prior to the Invesco Group’s

acquisition of IGRE from American International Group (AIG) in December 2010 and that IGRE continued to manage following its acquisition by the Invesco Group.

4 Office buildings which have total floor area of 10,000sqm or more.

Acquired 2 properties in FP6 sourced through closed bids

Utilized bridge SPC scheme to maximize acquisition opportunities

0

20

40

60

80

100

120

140

160

180

FP1 After 1st

follow-on

FP3 After 2nd

follow-on

FP6

(¥ bn)

78.6

98.3 104.9

154.2 161.9

5 5 5 5

6 6 6

7 7

9

8

27

Excellent Sourcing Capabilities

40.1%

9.2%

36.7%

9.9%

4.1% Developers and SPCsarranged by developers

Domestic property funds

Foreign property funds

Financial institutions

Others

35.5%

64.5%

Co-ownership ofassets withdevelopers,

financialinstitutions andtrading companies

Others

5 Acquired 2 assets at the 1st follow-on, total amount of ¥19.7 billion. 6 Acquired 1 asset with debt, amount of ¥6.6 billion. 7 Acquired 5 assets at the 2nd follow-on, total amount ¥49.2 billion. 8 Disposed 1 asset, for ¥9.3 billion (book value). 9 Acquired 2 assets, total amount of ¥17.055 billion.

External Growth: Acquired Aqua Dojima East

Location

10-minute walk from Osaka Station – the main station of the

Kansai area

Close to the underground passage exit of Dojima underground

shopping center, which is connected to Osaka Station

Located in front of the Dojima Entrance of Hanshin Expressway

Building

19 stories above ground and 2 below with total building area of

24,726.19 sqm

Large standard floor area of 630.25 sqm

Flexible, efficient floor layout that can be divided into various

formats to meet tenant demands

High demand from restaurant tenants at Kita-shinchi, a leading

entertainment district

Key Statistics

Location: Osaka City, Osaka

Acquisition price1: ¥1,910 million

Appraised value2: ¥2,010 million

Appraised NOI yield: 4.4%

Gross floor area: 24,726.19 sqm

Ownership structure: Partial ownership (land); Co-ownership of sectional ownership (building)3


Benefits

28

1 Acquired on March 31, 2017 2 As of April 30, 2017 3 Co-ownership ratio: East block (office area) approx. 29.87%, Fontana (retail area) 23.65%

Leasing Achievements & Occupancy

Leasing achievements (FP6)

• Achieved 96.7% of average portfolio occupancy rate in FP6, 0.4 points higher than the initial forecast.

• The average portfolio occupancy rate dropped from 98.8% in the previous fiscal period to 96.7% due to moving out of major tenants in Ebisu Prime Square, Nagoya Prime Central Tower and Sendai Honcho Building.

Leasing policy and occupancy outlook (FP7)

• Focusing on leasing activities at Ebisu Prime Square, Sun Towers Center Building and Aqua Dojima East.

• The average portfolio occupancy rate in FP7 is expected to improve to 98.1% due to new leases in Nagoya Prime Central Tower, Sendai Honcho Building and Shinagawa Seaside East Tower.

1 The occupancy estimation for FP7 is as of June 1, 2017. 29

Average occupancy rate improved to 96.7% comparing to the original forecast for FP6 by successful leasing activities

3,937

2,032

849 158

656

1,602 1,410 353

1,260

2,843 3,051

457 565

3,305

387 919

457 813

99.2%

98.6%

96.8% 97.1%

95.9%

96.4% 96.7% 96.8% 97.1%

98.5% 98.4% 98.4% 98.4% 98.1%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

85%

90%

95%

100%

FP4 FP5 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17(Est.)

Jul-17(Est.)

Aug-17(Est.)

Sep-17(Est.)

Oct-17(Est.)

Move-in (sqm)

Move-out (sqm)

Occ.(Result)

Occ.(Est)

(sqm)

Portfolio Average Occupancy Rate during Fiscal Period

98.4% in FP4

96.7% in FP6 98.8% in FP5

98.1% in FP7 (Forecast) 1

2.9% 1.1% 4.5%

6.2%

4.8%

8.4%

6.6%

5.0%

5.7%

0.0%

10.0%

20.0%

30.0%

6th Period(Actual)

7th Period(Est.)

8th Period(Est.)

65 tenants

51 tenants

76 tenants

Continued Focus on Increasing Rent Levels within the Portfolio As of June 1, 2017

67 contracts renewed, 19 contracts (39.3%) revised upward

Aim to raise rents due to potential for further upward rent revisions

30

NRA 6,742 sqm 4,867 sqm 10,152 sqm

Rent increase2 6.0% 6.2% 7.8%3


Planned

0.1%

(1)

4.5%

(2)

79.4%

(46) 69.8%

(44) 56.2%

(46)

20.5%

(9) 30.2%

(14) 39.3%

(19)

0%

50%

100%

FP4(Actual)

FP5(Actual)

FP6(Actual)

Downward Flat Upward

1 The number of contracts is shown in parentheses. 2 The number is calculated in the case the rent increase contributes to DPU for the whole period. 3 Percentage figures and number of tenants above represent the percentage or number of lease contracts renewed or to be renewed for office space to total office contracted space. In addition, the chart shows the difference between in-place rents and market rents. Market rents above represent contracted rent for a typical floor of assets managed by IOJ evaluated by CBRE.

Rent Gap Between In-place Rents and Market Rents (Leased Area Basis)3

Lease Renewal Status (Leased Area Basis)1

Rent Gap

More than 10% below market

Aim to raise rents

Between 10% above and 10% below market

Strive to increase or maintain current levels

More than 10% above market

Focus on maintaining current levels

Average Rents for the 12 assets (¥/tsubo)1

Existing Rents (average)

Market Rents Rent Gap

¥15,250/tsubo ¥15,868/tsubo 3.9%

Portfolio Average Rent at the end of FP6 (14 asset basis)

2

Vacancy Trends in Submarket (%)

Source: Sanko Estate

Average Rent Summary

31

0.0％

1.0％

2.0％

3.0％

4.0％

5.0％

6.0％

7.0％

8.0％

9.0％

10.0％

Jun-1

4

Aug-1

4

Oct-

14

Dec-1

4

Feb-1

5

Apr-

15

Jun-1

5

Aug-1

5

Oct-

15

Dec-1

5

Feb-1

6

Apr-

16

Jun-1

6

Aug-1

6

Oct-

16

Dec-1

6

Feb-1

7

Apr-

17

1 As of the end of FP6. The 12 assets are adjusted by excluding Triton Square Z from FP5 portfolio and Kinshicho Prime Tower and Aqua Dojima East from FP6 portfolio. 2 Market rent above represents contracted rent for a typical floor of assets managed by IOJ evaluated by CBRE.

15,384 15,414

15,862

16,020 3.0%

3.8%

-3.0%

-1.0%

1.0%

3.0%

5.0%

14,500

15,000

15,500

16,000

16,500

FP512 assets

FP612 assets

Portfolio Aver. Rent Market Rent Rent Gap

Tokyo central 5 wards


Sendai city (Central)

Osaka city, Kita ward

Tokyo 23 wards

Nagoya city

Fukuoka city (Hakataeki higashi)

2

Rent gap of the portfolio was 3.9% at the end of FP6 (market rents > average portfolio rents, 14 asset basis) providing further potential for internal rental growth

Focus On Leasing Opportunities

Potential Rental Uplift to Nagoya Prime Central Tower Conversion Potential in Aqua Dojima East Building

Address 1-4-4, Dojimahama, Kita-ku, Osaka-shi, Osaka

Completion April 21, 1993

Gross Floor Area 24,726.19 sqm

Leasable Area 3,189.68 sqm

Acquisition Date March 31, 2017

Purchase Price JPY1,910 million

Occupancy Rate (As of June 17, 2017)

91.9%

Back ground

Current vacancy on 3rd and 4th floor of the retail annex, of which one floor has received an application with 11% higher than previous tenant’s and market rents. Office Building is fully occupied.

Action Plan

Marketing the vacant spaces to brokers and potential tenants for both retail and office use to increase the occupancy and rental potential.

• Located in the Meieki submarket which is the preferred office area in Nagoya.

• Due to the acquisition of existing buildings for the new line, demand will be generated from the affected tenants.

• Potential for income growth by increasing the in-place rent and the rental of the conference room facility.

Year 2014 （First Term)

Schedule of new Nagoya Linear Station

Year 2020 （Second Term)

Year 2027

Advantage of Nagoya Prime Central Tower

Leasing Strategy

Analyzed office demand and rent levels in this market. Conversion from retail to office is one option to capture prospective tenants.

32

Administrative Procedure

Demolishment and Re-Construction

Land Development Site Acquisition


Subway

地下鉄鶴舞線

Site acquisition area N 0 50 150 500m

Linear Chuo Shinkansen （under development)

Nagoya Sta.

Tenant relocation

Tenant relocation

Nagoya Sta. (Linear Chuo Shinkansen)

Expect new demand around Nagoya Station due to the development of the Linear Chuo Shinkansen, which is planned to start running in 2027.

17,500

30,850

17,200

20,050

1,800 1,600

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2018 2019 2020 2021 2022 2023 2024

Loans Corporate Bond

3.3 2.8 2.7

2.2 2.7 2.3 2.7

0.74 0.70 0.70 0.70 0.61

0.59 0.58

0.0

3.0

6.0

0.0

0.5

1.0

FP1 FP2 FP3 FP4 FP5 FP6 6-Jun-17

Average remaining years (right scale)

Average borrowing rate (left scale) 3

45.0% 45.0%

47.7% 47.6% 47.7% 49.5%

43.4%

42.4%

44.2%

43.1% 43.7%

45.6%

40.0%

42.0%

44.0%

46.0%

48.0%

50.0%

FP1 FP2 FP3 FP4 FP5 FP6

LTV ratio based on book value 1

LTV ratio based on appraisal value 2Change in LTV (%)

1 Book value LTV = Total debt / Total assets 2 Appraisal value LTV = Total debt / (Total assets + Unrealized gain of existing portfolio)

Lenders Number of Lenders： 12

Total Interest Bearing Debt: ¥89.0 bn

Average Interest Rate and Maturity

Share (%)

Balance (¥ bn)

33

Borrowings

Corporate Bonds

Sumitomo Mitsui Banking Corporation

28% 23.85

The Bank of Tokyo-Mitsubishi UFJ

17% 14.10

Mizuho Bank 15% 12.90

Sumitomo Mitsui Trust Bank

11% 9.30

Resona Bank 11% 9.30

Development Bank of Japan

5% 4.50

First Series Bonds 1.8bn 5Y 0.320% Apr. 20, 2022

Second Series Bonds 1.6bn 7Y 0.520% Apr. 19, 2024

Mitsubishi UFJ Trust and Banking Corporation

4% 3.40

Shinsei Bank 3% 2.25

Aozora Bank 2% 2.00

The Bank of Fukuoka 2% 2.00

ORIX Bank Corporation 1% 1.00

The Nishi-Nippon City Bank

1% 1.00

Share (%)

Balance (¥ bn)

Amount of Issued

Duration Interest rate Redemption

date

Fixed Interest Rate Ratio Long-Term Loan Ratio Credit Rating （JCR）

86.6 % 100.0 % A+ （Stable）

Maintain Financial Stability and Flexibility As of June 6, 2017

Diversification of Debt Maturities (¥mn)

1

2

(%) (Year)

Comparison in Valuation by Rating 1

34

1 Calculated by IGRE by using the latest disclosure materials and unit price as of May 31,2017. 2 Indicates J-REITs which have not received credit rating from JCR.

Average Dividend Yield (%) Average P/NAV (x)

5.7%

3.3%

3.9% 3.8%

4.9%

5.3% 5.2% 5.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

IOJ AA+ AA AA- A+ A A- N/R2

0.88

1.11

1.25

1.08

0.98 0.91

0.88

0.99

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

IOJ AA+ AA AA- A+ A A- N/R2

A comparison of IOJ to other J-REITs which have a long term issuer rating from JCR (the average of the J-REITs with the same rating) are provided in the charts below as well as other J-REITs without ratings

5. Invesco Group Overview

35

1. Client Focus

An "investor first" mindset and commitment to helping clients pursue their financial goals

2. Global Presence

$834.8 billion (JPY 74.9tn)1 in AUM around the globe

Equity market cap of more than $12 billion

3. Independent firm with investment management as our only business

More than 6,500 dedicated employees worldwide

S&P 500 constituent

Source: Invesco group

1 As of March 31,2017 and $1= ¥111.405. 2 All data is as of the end of December.

Credit Ratings of Holding Company, Invesco, Ltd.

Invesco Group is a leading independent global investment management firm, dedicated to helping investors worldwide achieve their financial objectives. By delivering the combined power of our distinctive investment management capabilities, Invesco Group provides a wide range of investment strategies and vehicles to our clients around the world.

Rating Company Rating

Moody's Investors Service A2 Stable

Standard & Poor's A Stable

Fitch Ratings A- Positive

Financial Data (Invesco, Ltd. / consolidated basis) 2

About Invesco Group As of March 31, 2017

2016 2015 2014 2013 2012 2011

Operating Data

Operating revenues ($ in millions) 4,734 5,123 5,147 4,645 4,050 3,982

Year on Year △7.6% △0.5% 10.8% 14.7% 1.7% 17.6%

Operating income ($ in millions) 1,176 1,358 1,277 1,120 843 882

Operating margin 24.80% 26.50% 24.80% 24.10% 20.80% 22.20%

Net income ($ in millions) 854 968 988 940 677 730

Per Share Data

Diluted EPS ($) 2.06 2.26 2.27 2.1 1.49 1.57

Balance Sheet Data

Total assets ($ in millions) 25,734 25,073 20,450 19,257 17,487 19,346

Total equity ($ in millions) 7,504 7,885 8,326 8,393 8,317 8,119

Other Data

Ending AUM ($ in billions) 812.9 775.6 792.4 778.7 667.4 607.3

Average AUM ($ in billions) 788.8 794.7 790.3 725.6 645.3 617.8

Headcount (Employees) 6,790 6,490 6,264 5,932 5,889 5,917

36

Invesco Real Estate As of March 31, 2017

Invesco Real Estate’s AUM by Real Estate Related Assets (US$)

63%

37%

Real property

North America

Europe

Asia

Global securities

Total 66.1 bn

41.7bn

24.4bn

28.2bn 42%

8.4bn 13%

5.1bn 8%

Invesco Real Estate’s Investment Properties (sample)

Residential: New York, NY, USA

Office: Washington DC, USA

Retail: Las Vegas, NV, USA

Retail: Seoul, South Korea

Office: London, UK Hotel: Paris, France

Logistics: Melbourne, Australia Invesco Office J-REIT, Inc. is managed by Invesco Global Real Estate Asia Pacific, Inc. which belongs to the Invesco Group. The properties as described on the right side of this page are not owned by Invesco Office J-REIT, Inc. 37

The photographs are provided for illustrative purposes only.

Invesco Real Estate manages real property and securities through 21 offices in 16 countries worldwide with AUM of $66.1 billion

Invesco Global Real Estate Asia Pacific, Inc. As of March 31, 2017

Key Points of Differentiation

Global best practice Independence

Sourcing Asset management Portfolio execution

IGRE’s local expertise Has invested approximately ¥1.1 trillion

with 122 properties1

IGRE Acquisition Track Record by Asset Type

IGRE’s Investment Properties (Non IOJ examples)2

76%

14%

7% 3% Office

Retail

Residential

Others

Total: ¥1.1 trillion

38

The photographs are provided for illustrative purposes only.

1 Figures based on the purchase price include assets that were managed by IGRE prior to the Invesco Group’s acquisition of IGRE from American International Group (AIG) in December 2010 and that IGRE continued to manage following its acquisition by the Invesco Group. 2 Properties as described on the right side of this page are not owned by IOJ and IOJ has no plan to acquire these properties.

Retail: Tokyo

Logistics: Osaka

Retail: Osaka

Office: Tokyo

Residential: Tokyo

6. Appendix

39

1 Unless otherwise stated, “Leased Area’ represents the part of the total leased area stated in the relevant lease agreement pertaining to each managed real estate and entrusted real estate as of the end of FP6 that is the part equal to the Investment Corporation’s interest.

2 % of Total Leased Area represents the percentage of each tenant’s leased area to the total leased area of all managed assets, rounded to one decimal place. 3 Information is not disclosed as the tenant’s authorization has not been obtained.

Top 10 Tenants (Leased area basis) As of April 30, 2017

40

End Tenants Property Name Leased Area

(sqm) 1

Ratio of Leased Area to Total Leasable

Area (%) 2

1 FUJITSU LIMITED ORTO Yokohama 13,989.74 6.8

2 Tokyu Hotels Co., Ltd. Queen's Square Yokohama 13,506.72 6.6

3 SUNROUTE Co., LTD Shinagawa Seaside East Tower 9,237.18 4.5

4 Yachiyo Engineering Co., Ltd CS Tower / CS Tower Annex 8,533.78 4.1

5 Not disclosed 3 Shinagawa Seaside East Tower 7,456.21 3.6

6 Queens East Queen's Square Yokohama 6,395.39 3.1

7 Marvelous Inc. Shinagawa Seaside East Tower 6,225.70 3.0

8 Tokyu Corporation Queen's Square Yokohama 5,596.31 2.7

9 Good Smile Company Akiba CO Building 5,514.42 2.7

10 Not disclosed 3 Kinshicho Prime Tower 3,234.82 1.6

Total of Top 10 Tenants 79,690.27 38.7

Occupancy Rate at

the end of Oct. 2016 (A)

Occupancy Rate at

the end of Apr. 2017 (B)(B)-(A)

Occupancy Rate at


Occupancy Rate at


97.5% 89.6% -8.0% 99.8% 100.0% 0.2%

Move-in area (C) Move-out area (D) (C)-(D) Move-in area (C) Move-out area (D) (C)-(D)

1,746 ㎡ 3,126 ㎡ -1,380 ㎡ 117 ㎡ 67 ㎡ 50 ㎡

70004 70005

Occupancy Rate at


Occupancy Rate at


Occupancy Rate at


Occupancy Rate at


98.8% 98.8% 0.0% 92.6% 86.9% -5.8%


73 ㎡ 72 ㎡ 1 ㎡ 1,059 ㎡ 2,046 ㎡ -987 ㎡

Nagoya Prime Central TowerQueen's Square Yokohama

Ebisu Prime Square CS Tower / CS Tower Annex

92.6%

81.6% 81.6% 81.6%

85.4%

86.9% 86.9%80%

90%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

97.5% 97.4% 96.2%

85.5% 86.0%88.0% 89.6%

80%

90%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

99.8% 99.4% 99.7% 99.7% 100.0% 100.0% 100.0%

90%

95%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

98.8% 98.8% 98.8% 98.7% 98.8% 98.8% 98.8%

90%

95%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

・ Although the occupancy rate declined due to major tenants moving out at

the end of December 2016, IOJ successfully concluded new lease contracts

with several tenants and the occupancy rate recovered to approximately 90% at the end of FP6. Also, IOJ received unexpected cancellation penalty

from a tenant during FP6.

・ Due to new lease contracts with several tenants, the occupancy rate is

expected to improve to 92.7%. IOJ will continuously focus on leasing

activities to fill the vacancy in a short time in FP7.

・ IOJ maintained the occupancy rate at 100% in the office portion as well

as succeeded in raising rents through negotiations with several existing

tenants which renewed lease contracts during FP6. It also successfully

achieved 100% occupancy rate in the residential portion owing to

proactive leasing activities during FP6.

・ IOJ will continuously focus on raising rents with existing tenants which

renew lease contracts in FP7.

・ High occupancy rate was maintained in FP6 and it is expected to achieve

the occupancy rate of 99.5% in FP7 due to several new lease contracts

including space increase of existing office tenants. Also, the occupancy rate and ADR of the hotel remained firm.

・ IOJ succeeded in raising rents through negotiations with existing tenants

which renewed lease contracts during FP6. It will continuously focus on maintaining high occupancy rate and raising rents in FP7.

・ Owing to new contracts with several tenants, the occupancy rate is

expected to recover to 96.4% in June 2017 (FP7) after the occupancy

rate dropped due to a large tenant moving out in November 2016.

・ Since the occupancy rate is expected to fall to 88.7% due to a major

tenant leave in November 2017, IOJ will continuously focus on leasing

activities including building strong relationship of trust with brokers to

recover the rate in a short time.

Achievements of Individual Assets FP6 (ended April 30, 2017)

41

Occupancy Rate at


Occupancy Rate at


Occupancy Rate at


Occupancy Rate at


100.0% 100.0% 0.0% 100.0% 100.0% 0.0%


0 ㎡ 0 ㎡ 0 ㎡ 0 ㎡ 12 ㎡ -12 ㎡

70008 70009

Occupancy Rate at


Occupancy Rate at


Occupancy Rate at


Occupancy Rate at


98.7% 100.0% 1.3% 100.0% 100.0% 0.0%


82 ㎡ 0 ㎡ 82 ㎡ 0 ㎡ 0 ㎡ 0 ㎡


BuildingORTO Yokohama

Nishi-Shinjuku KF Building Shinagawa Seaside East Tower

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

90%

95%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

90%

95%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

98.7% 98.7% 98.7% 98.7% 98.7%100.0% 100.0%

90%

95%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

90%

95%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

・ IOJ maintained the occupancy rate of 100% in FP6 (4/2017). Also, it

conducted strategic renewals of pantry spaces and planting of exterior in

FP6 (4/2017).

・ IOJ will continuously renovate facilities in the common area and

enhance tenant satisfaction to remain current occupancy rate of 100%

in FP7 (10/2017).

・ IOJ successfully filled vacancy of the retail area with 54% of rent

increase in a short time. As a result, the occupancy rate achieved 100%

in FP6 (4/2017) again.

・ IOJ will focus on maintaining the high occupancy during FP7

(10/2017).

・ IOJ maintained the occupancy rate at 100% in the office portion as well

as achieved success in raising rent with several existing tenants which

renewed leasing contracts during FP6 (4/2017). Also, the residential

portion successfully achieved 100% occupancy due to proactive leasing

activities during FP6 (4/2017).

・ IOJ aims to improve net operating income with high occupancy rate by

conducting renovation works in the common area and raising rent with the

tenants whose rent are lower than the market price in FP7 (10/2017).

・ Due to termination of master lease contract which agreed with the

seller at acquisition, the master lease contracts were switched to direct

leases with end tenants in May 2017 (FP7 (10/2017). The occupancy

rate remained 100% because all vacant spaces were leased up before

terminating the master lease contract.

・ As the occupancy rate is expected to drop to 98.1% in November

2017, IOJ aims to fill the vacant space in a short time.

42


Occupancy Rate at


Occupancy Rate at


Occupancy Rate at


Occupancy Rate at


100.0% 100.0% 0.0% 100.0% 91.5% -8.5%


0 ㎡ 0 ㎡ 0 ㎡ 362 ㎡ 1,079 ㎡ -717 ㎡

70012 70013

Occupancy Rate at


Occupancy Rate at


Occupancy Rate at


Occupancy Rate at


95.1% 90.0% -5.0% 100.0% 100.0% 0.0%


1,376 ㎡ 1,827 ㎡ -451 ㎡ 0 ㎡ 0 ㎡ 0 ㎡

Akiba CO Building Sun Towers Center

Sendai Honcho Building Hakata Prime East

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

90%

95%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

100.0% 100.0% 100.0%

91.5% 91.5% 91.5% 91.5%

90%

95%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

95.1%

89.6%86.9% 86.4%

90.5%88.7%

90.0%

80%

90%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

90%

95%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

・ The occupancy rate remains stable at 100% due to wholesale lease

by one tenant.

・ IOJ aims to remain stable occupancy by keeping good relationship

with the tenant.

・ Although the occupancy rate declined due to moving out of several

tenants in January 2017, new lease contracts were successfully

concluded and the occupancy rate is expected to improve to 96.6% in

June 2017. IOJ aims to fill the remaining vacancy in a short time.

・ IOJ has started negotiations with tenants which renew lease contracts

in FP7 and whose rent level is lower than the market price.

・ Although the occupancy rate declined by 5.1% due to several tenants

moving out during FP6, IOJ successfully concluded 12 new lease

contracts in or after November 2016 owing to renovation of the common

area and leasing campaign. As a result, the occupancy rate is expected

to rise to 98.2% at the end of June 2017.

・ IOJ will continuously focus on leasing activities to maintain current

high occupancy rate in FP7.

・ IOJ kept the occupancy rate at 100% and succeeded in raising rents

through negotiations with several existing tenants which renewed lease

contracts in FP6.

・ IOJ will continuously negotiate with tenants whose rent is lower than

the market price to further improve rental revenues in FP7.

43


Occupancy Rate at

the end of Jan. 2017 (A)

Occupancy Rate at


Occupancy Rate at

the end of Mar. 2017 (A)

Occupancy Rate at


97.5% 97.5% 0.0% 95.9% 95.9% 0.0%


0 ㎡ 0 ㎡ 0 ㎡ 0 ㎡ 0 ㎡ 0 ㎡

Kinshicho Prime Tower Aqua Dojima East

97.5% 97.5% 97.5% 97.5%

90%

95%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

・ IOJ maintained high occupancy rate and achieved success in raising

rent with several existing tenants which renewed leasing contracts

during FP6 (4/2017).

・ Since the occupancy rate is expected to fall to 91.8% in April 2018,

IOJ aim to fill the vacancy space in a short time.

・ Because the occupancy rate dropped to 91.9% in May 2017, IOJ aim

to fill vacancy of the 2 retail areas in a short time.

・ IOJ will focus on remaining high occupancy rate in the office area by

maintaining good relationships with existing tenants.

95.9% 95.9%

90%

95%

100%

2016/10/31 2016/11/30 2016/12/31 2017/1/31 2017/2/28 2017/3/31 2017/4/30

44


45

1 The ratio is calculated by the following formula: annualized actual NOI during the FP6/ purchase price For Aqua Dojima East, the ratio is calculated by the following formula: appraisal NOI as of the end of FP6/ purchase price

Portfolio Information As of April 30, 2017 Portfolio Details

1 Ebisu Prime Square Shibuya-ku, Tokyo 25,014 27,538 17,354.06 15.4 20 3.8 89.6 2.35

2 CS Tower / CS Tower Annex Taito-ku, Tokyo 13,700 16,300 19,998.31 8.5 26 5.9 100.0 3.21

3 Queen's Square YokohamaYokohama-shi,

Kanagawa16,034 18,200 41,954.39 9.9 20 6.3 98.8 2.96

4 Nagoya Prime Central Tower Nagoya-shi ,Aichi 14,600 18,000 17,117.10 9.0 8 4.9 86.9 3.61

5 Tokyo Nissan Nishi Gotanda Building Shinagawa-ku, Tokyo 6,700 7,340 8,522.42 4.1 27 5.2 100.0 7.14

6 ORTO YokohamaYokohama-shi,

Kanagawa13,000 14,400 23,593.92 8.0 16 6.1 100.0 4.94

7 Nishi Shinjuku KF Building Shinjuku-ku, Tokyo 6,600 7,030 6,287.78 4.1 24 4.2 100.0 5.03

8 Shinagawa Seaside East Tower Shinagawa-ku, Tokyo 25,066 26,600 27,892.63 15.5 13 5.4 100.0 4.94

9 Akiba CO Building Chiyoda-ku, Tokyo 8,078 9,330 5,514.42 5.0 17 4.5 100.0 6.18

10 Sun Towers Center Setagaya-ku, Tokyo 6,615 7,070 7,876.60 4.1 25 5.1 91.5 0.96

11 Sendai Honcho Building Sendai-shi, Miyagi 5,000 5,200 8,962.47 3.1 32 4.8 90.0 2.66

12 Hakata Prime East Fukuoka-shi, Fukuoka 4,500 4,620 7,018.05 2.8 25 4.9 100.0 1.56

13 Kinshicho Prime Tower Koto-ku, Tokyo 15,145 15,600 17,606.11 9.4 23 4.6 97.5 2.79

14 Aqua Dojima East Osaka-shi, Osaka 1,910 2,010 3,189.68 1.2 24 4.4 95.9 7.37

161,962 179,238 212,887.94 100.0 21 5.1 96.8 2.32Total

LocationLeasable

Area (sqm)NOI Yield1

(%)Property Name

Purchase

Price

(¥mm)

Appraisal

Value

(¥mm)

Investment

Ratio

(%)

Age

(Years)

Occupancy

(%)

PML

(%)

Portfolio Information As of April 30, 2017 Appraisal Value Overview

46 1 Appraisal value and direct cap rate for FP5 is based on the appraisal report when IOJ acquired each property.

1

1

(a)-(b) (c)-(d)

1 Ebisu Prime Square 25,014 27,538 0 3.6 -0.1 25,413 2,124 27,538 3.7

2 CS Tower / CS Tower Annex 13,700 16,300 600 4.5 -0.1 13,812 2,487 15,700 4.6

3 Queen's Square Yokohama 16,034 18,200 400 4.6 -0.1 16,046 2,153 17,800 4.7

4 Nagoya Prime Central Tower 14,600 18,000 0 4.5 -0.1 14,379 3,620 18,000 4.6

5Tokyo Nissan Nishi Gotanda

Building6,700 7,340 50 4.1 -0.1 6,899 440 7,290 4.2

6 ORTO Yokohama 13,000 14,400 0 4.8 0.0 12,983 1,416 14,400 4.8

7 Nishi Shinjuku KF Building 6,600 7,030 10 3.8 -0.1 6,845 184 7,020 3.9

8 Shinagawa Seaside East Tower 25,066 26,600 0 3.9 0.0 25,260 1,339 26,600 3.9

9 Akiba CO Building 8,078 9,330 180 3.6 -0.1 8,316 1,013 9,150 3.7

10 Sun Towers Center 6,615 7,070 0 4.4 -0.1 6,695 374 7,070 4.5

11 Sendai Honcho Building 5,000 5,200 0 4.9 -0.1 5,337 -137 5,200 5.0

12 Hakata Prime East 4,500 4,620 10 4.8 0.0 4,535 84 4,610 4.8

13 Kinshicho Prime Tower 15,145 15,600 0 4.2 -0.1 15,360 239 15,600 4.3

14 Aqua Dojima East 1,910 2,010 0 4.4 0.0 1,953 56 2,010 4.4

161,962 179,238 1,250 4.1 -0.2 163,841 15,392 177,988 4.3

Appraisal

Value

(JPY mm)(b)

Direct Cap

Rate (%)(d)

FP5 End

(ended October 31, 2016)

Property Name

Purchase

Price

(JPY mm)Unrealized

Gain/Loss

(JPY mm)

FP6 End

(ended April 30, 2017)

Appraisal Value

(JPY mm) (a)Direct Cap Rate (%) (c)

Book Value

(JPY mm)

Total

(Unit: Thousands of Yen)

Fifth Fiscal Period

As of October 31, 2016

Sixth Fiscal Period

As of April 30, 2017

ASSETS Current assets: Cash and cash deposits 3,711,863 4,108,833 Entrusted cash and entrusted cash deposits 10,264,404 10,230,271 Account receivables - operating 438,068 402,022 Consumption tax receivable 648,094 183,882 Income taxes receivable 1,386 2,251 Short-term prepaid expenses 270,814 251,269 Deferred tax assets 21 6 Other current assets 1,518 5,867

Total current assets 15,336,173 15,184,404 Fixed assets: Property and equipment

Entrusted buildings 40,348,924 41,543,129

Accumulated depreciation -2,445,998 -2,974,670

Entrusted buildings, net 37,902,926 38,568,458

Entrusted building improvements 370,321 318,568

Accumulated depreciation -70,988 -75,407

Entrusted building improvements, net 299,332 243,161

Entrusted machineries 20,386 19,735


Entrusted machineries, net 18,024 16,800

Entrusted furniture and equipment 62,847 81,622


Entrusted furniture and equipment, net 50,396 63,280

Entrusted land 117,507,265 124,928,377

Entrusted construction in progress 20,525 21,603

Total property and equipment 155,798,472 163,841,681

Intangible assets: Other intangible assets 4,738 6,009

Total intangible assets 4,738 6,009 Investment and other assets: Investment in securities 102,531 -

Security deposits and guarantee deposits 10,101 10,088

Long-term prepaid expenses 463,185 384,660

Derivative assets 58,496 79,972

Other investments 430,545 363,971

Total investment and other assets 1,064,859 838,693

Total fixed assets 156,868,069 164,686,384

Deferred assets:

Investment corporation bond issuance costs - 23,823

Total deferred assets - 23,823

TOTAL ASSETS 172,204,243 179,894,611

Balance Sheet (Assets)

47


Fifth Fiscal Period As of October 31, 2016

Sixth Fiscal Period As of April 30, 2017

LIABILITIES AND NET ASSETS

Current liabilities:

Accounts payable - operating 563,516 371,428

Short-term loans 2,000,000 -

Current portion of long-term loans 13,000,000 18,500,000

Accounts payable - other 332,734 412,735

Accrued expenses 82,475 82,938

Income tax payable 738 645

Rent received in advance 678,569 593,832

Other current liabilities 151,203 160,928

Total current liabilities 16,809,237 20,122,508

Non-current liabilities:

Investment corporation bond - 3,400,000

Long-term loans 67,100,000 67,100,000

Entrusted tenant leasehold and security deposits 7,093,376 7,311,222

Deferred tax liabilities 18,478 25,263

Total non-current liabilities 74,211,855 77,836,485

TOTAL LIABILITIES 91,021,093 97,958,994

Net Assets

Unitholders' equity:

Unitholders' equity 78,913,658 78,913,658

Surplus:

Retained earnings 2,229,474 2,967,250

Total surplus 2,229,474 2,967,250

Total Unitholders' equity 81,143,132 81,880,908

Valuation and translation adjustments:

Deferred income on hedges 40,017 54,708

Total valuation and translation adjustments 40,017 54,708

TOTAL NET ASSETS 81,183,149 81,935,617

TOTAL LIABILITIES AND NET ASSETS 172,204,243 179,894,611

Balance Sheet (Liabilities and Net Assets)

48


Fifth Fiscal Period May 1, 2016 through

October 31, 2016

Sixth Fiscal Period November 1, 2016 through

April 30, 2017

Operating revenues:

Rental revenues 5,151,585 5,239,918

Other rental revenues 527,258 515,660

Gain on sales of real estate properties - 784,581

Dividend income from investments in securities 5,470 3,142

Total operating revenues 5,684,314 6,543,304

Operating expenses

Property-related expenses 2,592,499 2,583,389

Asset management fees 410,212 510,620

General administration and Custodian fees 16,472 17,618

Compensation for directors 4,800 3,900

Other operating expenses 63,178 102,850

Total operating expenses 3,087,162 3,218,378

Operating income 2,597,151 3,324,925

Non-operating revenues

Interest income 38 44

Interest on refund - 4,349

Other non-operating revenues 99 238

Total non-operating revenues 138 4,632

Non-operating expenses

Interest expense 242,619 252,167

Interest expense on investment corporation bond issuance costs - 382

Amortization of investment corporation bond issuance costs - 344

Public offering costs 25,054 -

Financing costs 97,936 107,694

Other non-operating expenses 1,440 1,545

Total non-operating expenses 367,050 362,134

Ordinary income 2,230,238 2,967,423

Net income before income taxes 2,230,238 2,967,423

Current income taxes 1,051 742

Deferred tax expenses -9 15

Total income taxes 1,042 757

Net income 2,229,196 2,966,666

Retained earnings at beginning of period 277 584

Retained earnings at the end of period 2,229,474 2,967,250

Income Statement

49

(Unit: Thousands of Yen) Fifth Fiscal Period

May 1, 2016 through October31, 2016 Sixth Fiscal Period

November 1, 2017 through April 30, 2017

Cash flows from operating activities: Income before income taxes 2,230,238 2,967,423

Depreciation expenses 711,158 753,532

Amortization of investment corporation bond issuance costs - 344

Public offering costs 25,054 -

Financing costs 97,936 107,694

Interest income -38 -44

Interest expense 242,619 252,550

(Increase) decrease in account receivables -102,124 36,046

(Increase) decrease in consumption tax receivable -648,094 464,212

(Increase) decrease in income taxes receivable -1,386 -864

(Increase) decrease in short-term prepaid expenses -23,066 6,896

(Increase) decrease in long-term prepaid expenses -17,792 -5,521

(Increase) decrease in other current assets 34,830 62,225

Increase (decrease) in accounts payable – operating 171,753 -73,673

Increase (decrease) in accounts payable – other 78,229 53,795

Increase (decrease) in consumption tax payable -198,012 -

Increase (decrease) in rental received in advance 426,505 -84,736

Increase (decrease) in property and equipment held in trust due to sale - 9,190,016

Increase (decrease) in other current liabilities 148,091 9,724

Others 1,155 903

Sub-total 3,177,058 13,740,523

Interest received 38 44

Interest expenses paid -219,206 -252,088

Income taxes paid -766 -738

Net cash provided by operating activities 2,957,123 13,487,742

Cash flows from Investing activities:

Purchase of entrusted property and equipment -50,526,106 -18,080,298

Purchase of intangible assets - -2,277

Redemption of investment in securities 304,359 101,531

Purchase of investment in securities -102,535 -

Payment of entrusted leasehold and security deposits -101 12

Net cash used in investing activities -50,324,382 △17,981,032

Cash flows from Financing activities:

Repayments of short-term borrowings -6,600,00 -2,000,000

Proceeds from long-term borrowings 32,500,000 5,500,000

Payment of financing costs -402,387 -11,000

Proceeds from issuance of investment corporation bonds - 3,400,000

Payments of investment corporation bond issuance costs - -24,167

Proceeds from issuance of investment units 25,022,635 -

Payment of issuance of investment units -25,054 -

Distribution payments -1,461,578 -2,226,551

Net cash provided by (used in) financing activities 49,033,614 4,638,280

Net change in cash and cash equivalents 1,666,355 144,990 Cash and cash equivalents at the beginning of period 5,216,535 6,882,891 Cash and cash equivalents at the end of period 6,882,891 7,027,882 50

Cash Flow Statement

45%

46%

47%

48%

49%

50%

0

10

20

30

40

50

60

70

80

90

100

2010

2015

2020

2025

2030

2035

Nationwide (left axis) Major Metropolitan Areas (left axis)

% of Major Metropolitan Areas (right axis)

Labor Force/National vs Major Metropolitan Areas

1 Tokyo, Saitama, Chiba, Kanagawa, Aichi, Osaka and Fukuoka Source：National Institute of Population and Social Security Research * The Asset Management Company charted the above based on forecasts as of May 2013.

3%

4%

5%

6%

7%

8%

9%

10%

0

20

40

60

80

100

120

140

160

180

200

2011Q

1

Q3

2012Q

1

Q3

2013Q

1

Q3

2014Q

1

Q3

2015Q

1

Q3

2016Q

1

Q3

2017Q

1

New Supply (left axis) Net Absorption (left axis)

Overall Vacancy (right axis) Large Scale Office Vacancy (right axis)

(thousand tsubo)

Office Supply & Demand, Vacancy Trends of Overall Office vs Large-Scale Office (Greater Tokyo)

2 Over 200 tsubo (661sqm) NRA of standard floor. Source: Commercial Property Research Institute * The Asset Management Company charted the above based on data reported by Sanko Estate as of

May 2017.

Proprietary Market Research Focus on Best Long-Term Markets

(mm people)

51

2

1

1 Risk measure is represented by Standard Deviation and Expected Return is represented by Long-term Average Source: Invesco Real Estate estimated based on ARES (AJPI Quarterly Data, 2005Q1-2014Q4) and CBRE, as of October 2015

Expecte

d I

ncom

e R

etu

rn

Risk of Income Return

Sapporo

Hiroshima

Kobe

Kyoto

Sendai

Yokohama Fukuoka

Osaka

Nagoya

Saitama

Tokyo 500,000

5,000,000

20,000,000

Market Size (NFA, Sqm)

High

High

Low

2 SAP-Sapporo, SEN-Sendai, SAI-Saitama, TKO-Tokyo, YOK-Yokohama, NAG- Nagoya, KYO-Kyoto, OSA-Osaka, KOB-Kobe, HIR-Hiroshima and FUK-Fukuoka Source: Invesco Real Estate estimated as of May 2017

Proprietary Market Research Identifying Market Characteristics and Cycles

52

Expected Return/Risk of Income1 Current Market Cyclical Position2

• Concentration of population and business activities support real estate demand

• The office sector benefits from long term expansion and upgrade demand alongside economic cycles

• In 2016, largely affected by a volatile capital market movement and lack of large scale deal, total transaction volume of office was around JPY 1.8 trillion, decreased by 38.8% y-o-y compared to the 33.5% y-o-y decline of overall property

Population Growth Potential in Metropolitan Areas Office Market Trends

Tokyo M.A 30.0%

Labor Force Distribution

46.6%

Major Metropolitan Areas

Osaka Pref. 6.8%

Aichi Pref. 6.0%

Fukuoka Pref. 3.8%

Others 53.4%

Source: Ministry of Internal Affairs and Communications, as of 2016Q4

Shift of Population

Nationwide

Major Metropolitan Areas

% of Major Metropolitan Areas

[Million] （%）

Source：National Institute of Population and Social Security Research

• Continued population and labor force growth in major metropolitan areas is expected as long term trend

• A focus on core metropolitan areas helps capture stronger growth prospects and more investment opportunities

• Office vacancy rates in

major cities have been

trending down

• Strengthening demand for

high quality space amid the

economic recovery and

increased BCP concerns after

the 3.11 Earthquake have

driven vacancies down in the

Grade A segment

Source：CBRE (As of the end of March, 2017)

（JPY Billions）

Source：REAL CAPITAL ANALYSTICS, as of May 2017

Transaction Volume 1H Transaction Volume 2H Annual Office Volume

Dynamics of Property Transactions

Shift of Office Vacancy Rate

（%）

Tokyo 23wards

Tokyo Grade A

Osaka City

Nagoya City

Fukuoka City

42

44

46

48

0

50

100

150

2010 15 20 250

Market Overview Office Market Conditions

53

Office Fundamental Dynamics Across Metropolitan Areas

IOJ strategically focuses on the large scale high quality offices located in core CBD within major metropolitan areas, aiming to take advantage of higher occupancy and solid income growth over the long term

Source: Commercial Property Research Institute Source: Commercial Property Research Institute

Source: Commercial Property Research Institute Source: Commercial Property Research Institute

Market Overview Trends in Office Supply, Demand and Vacancy Rates

54

Environmental Initiatives and Energy-Saving Measures

Acquired CASBEE Certificates1

Invesco Group has been a Member of GRESB Since 20143

3 GRESB (Global Real Estate Sustainability Benchmark) is a benchmark to evaluate sustainability performance of private and listed real estate portfolio from environmental and social perspectives.


Acquired “S Rank” as of January 26,

2015


Acquired “A Rank” as of September 5,

2014

1 CASBEE (The Comprehensive Assessment System for Built Environment Efficiency) is a tool for assessing and rating the environmental performance of buildings built and used in Japan.

ORTO Yokohama

Acquired “A Rank” as of October 28,

2015

Acquired DBJ Green Building Certification2

2 DBJ Green Building Certification is a certification system that Development Bank of Japan selects and evaluates properties with environmental and social awareness, which is necessary in the current real estate market, based on its comprehensive assessment measure.

Ebisu Prime Square Acquired 3 stars (Properties with excellent environmental and social awareness) as of October 7, 2015


Building

Acquired “A Rank” as of December 24,

2015

55

Financial

Institutions

0%

Domestic

Corporations

2% Foreign

Corporations and

Individuals 1%

Domestic

Individuals

97%

Financial

Institutions

39%

Domestic

Corporations

4%

Foreign

Corporations and

Individuals 20%

Domestic

Individuals

37%

Unitholders Units

Owned % of Units

Issued1

1 Japan Trustee Services Bank, Ltd. (Trust Account)

88,357 10.83

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

68,188 8.36

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

54,747 6.71

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

28,076 3.44

5 HSBC BANK PLC A/C CLIENTS, NON TREATY1 2

24,504 3.00

6 NORTHERN TRUST CO. (AVFC) RE IEDU UCITS CLIENTS NON LENDING 15 PCT TREATY ACCOUNT

15,087 1.84

7 GOLDMAN, SACHS & CO. REG 13,550 1.66

8 Japan Trustee Services Bank, Ltd. (Trust Account9)

6,995 0.85

9 STATE STREET BANK AND TRUST COMPANY 505001

6,463 0.79

10 MORGAN STANLEY&CO. LLC 6,433 0.78

Total 312,400 38.30

815,547 units

24,211 unitholders

1 Percentage of units issued is rounded down to the second decimal place. 2 HSBC Bank Plc, as trustee, holds 24,504 units of IOJ in trust for the benefit of Invesco

Investments (Bermuda) Ltd. Invesco Limited is the parent company of Invesco Investments (Bermuda) Ltd. and the Asset Management Company.

Unitholders As of the end of April 2017

56

Breakdown by Units

Breakdown by Unitholders

Major Unitholders

By aligning unitholder interests with those of IGRE through the adoption of an asset management fee structure based on total assets and Adjusted EPU during each business term, investment management is designed to focus on investor interests.

Management Fee (Annual Percentage)

Amount of Total Assets×0.45%

(maximum percentage)

Management Fee

Adjusted EPU×NOI×0.00080% (maximum percentage)

Acquisition Fee

Acquisition Price×1.00% (maximum percentage)

(percentage used on a transaction with a related party: 0.50% (maximum

percentage))

Disposition Fee

Disposition Price×0.50% (maximum percentage)

(percentage used on a transaction with a related party: 0.25% (maximum

percentage))

Link to Adjusted EPU

By aligning unitholder interests with those of IGRE with the adoption of a management fee structure linking a portion of asset management fees to Adjusted EPU, the investment management of IGRE is designed to focus on unitholder interests.

Fee Structure

Asset Manager’s Decision Making Process

Elimination of Conflict of Interest Transactions

Among members of the Invesco Group, the only company that engages in the real property-related business in Japan is IGRE. Accordingly, IGRE will have no conflicts of interest with IOJ in Japan in the asset management business, such as brokerage services, property management, building management, etc.

Origination

Approval

Discussion・Resolution



Discussion・Approval

Origination Departments

Compliance Officer

Compliance Committee

Investment Committee

Board of Directors

Board of Directors of Investment Corporation

Related Party Transactions / Compliance Concerns

Related Party Transactions

Revise / Rejection

Revise / Rejection

Revise / Rejection

Revise / Rejection

Revise / Rejection

As the objective of maximizing unitholder interests, IGRE and IOJ will use a multi-tiered decision making process diagrammed below for purposes of property acquisition decisions, management decisions and all other important matters.

Decision Making Process

Governance Strong Alignment of Interest and Robust Corporate Governance

57

Asset Manager’s Rotation Rules on Information

Registration in the Registry of Received Information on Real Estate and Other Transactions (Japan): Regular Meeting

Holding of Meetings for Information on New Transactions (Japan)

IOJ will consider the acquisition of the relevant property

Order Under the Rotation Log

If IOJ ranks higher

Other Funds will consider the acquisition of the relevant property

Meetings are held regularly (on a weekly basis). The participants include each of the fund managers related to real estate in Japan. (Meetings are held by the Director of the Investment Division and the Investment Department.)

Information on real estate and other transactions in Japan is registered from time to time, and the representative explains the outline of deals at weekly regular meetings of the Investment Department (managed by the Investment Department).

If only IOJ expresses an interest to evaluate the relevant transaction

If several funds, including IOJ, express an interest to evaluate the relevant transaction

Initial Judgment by Each Fund Manager Determine whether any Fund expresses an interest to evaluate the relevant transaction

Sourcing of Information on real Estate and Other Transactions (Japan)

Sourcing of information on real estate and other transactions in Japan for real estate funds of Invesco Real Estate (managed by the Investment Department ).

Introduction of new deals to each fund manager

If IOJ ranks lower

Registration in the Deal Log (Japan) of Information on New Deals that may Match the Mandate of One or More of the Funds

If the Director of Investment Division and the Head of the Investment Department determine that a specific new deal may match the mandate of one or more of the funds, the relevant information on the transactions shall be registered in the Deal Log (Japan).

Rotation Rules

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Trends in Investment Unit Price and Trading Volume after IPO

Investment Unit Price

59 Source: Bloomberg

(Units) (¥)

This document is solely intended to provide information and is not intended to solicit securities or special product investment products.

This document includes forward-looking information, such as plans, strategies and future performance. Such descriptions are based on current assumptions and beliefs, and involves known and unknown risks, uncertainties, and other factors. Please be advised that, for a variety of reasons, actual results may differ materially from those discussed in the forward-looking information.

Financial information contained in this presentation has been prepared based on Japanese generally acceptable accounting principles.

The information contained in this document is not audited and there is no assurance regarding the accuracy, certainty and consistency of the information.

Although much attention has been paid to the inclusion of all relevant information in this document, there may be errors and omissions. Therefore, they are subject to correction or amendment without prior notice.

Duplication or reproduction of any information herein without the prior consent of IOJ or IGRE is strictly prohibited.

Disclaimer

C2017-06-04

6th fiscal period ended april 30, 2017...7 financial impact improvement of dpu as a result fp7 dpu...

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