This English translation is provided for information purposes only. If any discrepancy is identified between thistranslation and the Japanese original, the Japanese original shall prevail.
February 25, 2021

Financial Report for the Fiscal Year Ended December 31, 2020
(January 1, 2020 – December 31, 2020)
Japan Hotel REIT Investment Corporation
Listing:
Securities code:
URL:
Representative:

Tokyo Stock Exchange8985
http://www.jhrth.co.jp/en/
Kaname Masuda, Executive Director

Asset Management Company:
Representative:
Contact:

Japan Hotel REIT Advisors Co., Ltd.
Hisashi Furukawa, President & CEO
Noboru Itabashi
Managing Director, Director of the Board, Head of Operations Division
Phone: +81-3-6422-0530

Scheduled date to file Securities Report: March 25, 2021
Scheduled date to start dividend payment: March 22, 2021
Preparation of supplementary material on financial report:
Schedule for presentation of financial results:

Yes
Yes (Analysts and institutional investors only)(Amounts are rounded down to the nearest million yen)

1. Status summary of operation and assets for the fiscal year ended December 31, 2020
(January 1, 2020 – December 31, 2020)(1) Operating results(Percentages show changes from the previous year)

Operating revenue
Fiscal year ended
December 31, 2020
December 31, 2019

JPY1M
13,83828,278%(51.1)
0.1

Net income per unit
Fiscal year ended
December 31, 2020
December 31, 2019
(Note)

Operating income
JPY1M
3,176
17,148

Ordinary income%(81.5)
(4.7)

JPY1M
1,398
15,291

Ordinary income tototal assets

Return on equity (ROE)

JPY
342
3,447

Net income%(90.9)
(5.7)

%
0.7
7.0

JPY1M
1,527
15,290%(90.0)(5.7)

Ordinary income tooperating revenue
%
0.3
4.0

%
10.1
54.1

Net income per unit is calculated based on the period-average number of investment units issued.

(2) Cash distributions
Dividend per unit
(Excess of earnings
exclusive)

Total dividends(Excess of earnings
exclusive)

Dividend per unit
resulting fromexcess of earnings

Total dividends
fromexcess of earnings

JPY

JPY1M

JPY
-

JPY1M
-

Fiscal year ended
December 31, 2020
December 31, 2019

410
3,690

1,829
16,466

Dividend to
net assets

Payout ratio
%

119.8
107.7

%

0.8
7.1

(Note 1) The source of dividends for the fiscal year ended December 31, 2020, is calculated by adding appropriation for dividends (¥305 million) to unappropriatedretained earnings. For details of the appropriation for dividends, please refer to “<Reference Information 3> Dividend per unit and appropriation for
dividends” on page 18.
(Note 2) The source of dividends for the fiscal year ended December 31, 2019, is calculated by adding appropriation for dividends (¥1,176 million) tounappropriated retained earnings. For details of the appropriation for dividends, please refer to “<Reference Information 3> Dividend per unit andappropriation for dividends” on page 18.
(Note 3) Payout ratio is calculated using the following formula, rounded off to one decimal place.
Total dividends (total dividends from excess of earnings exclusive) ÷ Net income × 100- 1 -(3) Financial position

Total assets
JPY1M
400,296415,722

Fiscal year ended
December 31, 2020
December 31, 2019
(Note)Net assets

Equity ratio

JPY1M
221,201
236,522

%
55.3
56.9

Net assets per unit
JPY
49,57053,004

Net assets per unit are calculated based on the total number of investment units issued and outstanding at the end of the fiscal year.

(4) Cash flows

Cash flows fromoperating activities
JPY1M
13,74720,000Fiscal year ended
December 31, 2020
December 31, 2019

Cash flows frominvesting activities
JPY1M(3,077)(72,464)

Cash flows from
Cash and cash equivalents
financing activities
at end of year
JPY1M
JPY1M
(16,461)
28,55349,62334,343

2. Operating forecast for the fiscal year ending December 31, 2021
(January 1, 2021 – December 31, 2021)(Percentages show changes from the previous year)
Operating revenue
JPY1M

Midterm
Full year

4,556
13,920%(17.7)
0.6

Operating income
JPY1M

(750)
2,715

%
(14.5)

Ordinary income
JPY1M(1,636)879%(37.1)Net income
JPY1M(1,637)877%(42.5)

Dividend per unit
(Excess of earnings
exclusive)

Dividend per unit
resulting fromexcess of earnings

JPY
270

JPY
-

(Reference) Estimated net income per unit for the fiscal year ending December 31, 2021 (full year) ¥196
(Calculated based on the estimate of period-average number of investment units of 4,462,347.)(Note)

JHR plans to use reversal of reserve for temporary difference adjustment in the amount of ¥330 million for dividend payment.

* Other(1) Changes in accounting policies, changes in accounting estimates, and restatement of financial statements for prior period after
error corrections(a) Changes in accounting policies due to revisions to accounting standards and other regulations: No change(b) Changes in accounting policies due to other reasons than above (a): No change(c) Changes in accounting estimates: No change(d) Restatement of financial statements for prior period after error corrections: No change(2) Total number of investment units issued and outstanding(a) Total number of investment units issued and outstanding at the end of the fiscal year(including investment units owned by Japan Hotel REIT Investment Corporation)
As of December 31, 2020
As of December 31, 2019(b) Number of JHR’s own investment units held at the end of the fiscal year
As of December 31, 2020
As of December 31, 2019

4,462,347 units
4,462,347 units
0 units
0 units(Note) For the number of investment units serving as the basis of computation of net income per unit, please refer to “Notes on per unit information” on page 40.

* Financial reports are exempt from the audit by a certified public accountant or an auditing firm.
* Special items

Forward-looking statements presented in this financial report including operating forecasts are based on information currently
available to us and on certain assumptions we deem to be reasonable. As such, actual operating and other results may differ
materially from these forecasts due to a number of factors. Furthermore, we do not intend to guarantee any dividend amount by
this forecast. For the assumptions of the operating forecast and notes for the use of operating forecast, please refer to “1. Operating
results; (1) Operating results; (B) Outlook for the next fiscal period” on page 6 and “Assumptions of the operating forecast forthe midterm of the fiscal year ending December 31, 2021 (22nd period) and full year of the fiscal year ending December 31, 2021
(22nd period)” on page 11.

- 2 -○ Table of Contents

1. Operating results .............................................................................................................................................................................. 4(1) Operating results............................................................................................................................................................................ 4(2) Material events related to going concern assumption .................................................................................................................. 19
2. Financial statements ....................................................................................................................................................................... 20(1) Balance sheets ............................................................................................................................................................................. 20(2) Statements of income .................................................................................................................................................................. 22(3) Statements of changes in net assets ............................................................................................................................................. 23(4) Statements of cash dividends ...................................................................................................................................................... 25(5) Statements of cash flows ............................................................................................................................................................. 26(6) Notes on going concern assumption............................................................................................................................................ 27(7) Notes on matters concerning significant accounting policies...................................................................................................... 27(8) Notes to financial statements ...................................................................................................................................................... 29(9) Changes in total number of investment units issued and outstanding ......................................................................................... 41
3. Reference information .................................................................................................................................................................... 42(1) Information on values of assets under management, etc. ............................................................................................................. 42(2) Status of capital expenditures ...................................................................................................................................................... 54- 3 -1. Operating results(1) Operating results(A) Overview of the fiscal year under review(a) Brief history and principal activities
Japan Hotel REIT Investment Corporation (hereinafter referred to as “JHR”) was established under the Act on Investment
Trusts and Investment Corporations (Act No. 198 of 1951, as amended; hereinafter referred to as the “Investment TrustsAct”) on November 10, 2005, and was listed on the Real Estate Investment Trust (REIT) section of the Tokyo Stock Exchange(Securities code: 8985) on June 14, 2006.
JHR entrusts the asset management to Japan Hotel REIT Advisors Co., Ltd. (hereinafter referred to as the “Asset Management
Company”). Focusing on the importance of hotels as social infrastructure and their profitability as investment real estate
properties, JHR has primarily invested in real estate related assets which are in themselves wholly or partially used as hotels
or real estate equivalents of such real estate or which are backed by such real estate or real estate equivalents (hereinafterreferred to as the “Real Estate for Hotels, etc.”).
JHR, the former Nippon Hotel Fund Investment Corporation (hereinafter referred to as the “former NHF”), merged with theformer Japan Hotel and Resort, Inc. (hereinafter referred to as the “former JHR”) with an effective date of April 1, 2012
(hereinafter referred to as the “Merger”), and changed its name to Japan Hotel REIT Investment Corporation. Since theMerger to the end of the fiscal year under review, JHR has carried out nine public offerings for capital increase andcontinuously acquired “highly-competitive hotels” in mainly “strategic investment target areas” where domestic and inboundleisure demand can be expected over the medium to long term.
By implementing the aforementioned growth strategy, JHR has expanded its asset size while improving the quality of its
portfolio through new property acquisitions of 26 properties amounting to ¥275,160 million (acquisition price basis) in total
in a little less than nine years since the Merger to the end of the fiscal year under review (December 31, 2020). As a result,
JHR had a portfolio of 42 properties with a combined acquisition price of ¥370,031 million, and the total number ofinvestment units issued and outstanding stood at 4,462,347 units at the end of the fiscal year under review.
(b) Investment performance for the fiscal year under review
The Japanese economy in the fiscal year under review (from January 1, 2020 to December 31, 2020) remained in a difficult
situation since February 2020, as economic activities were significantly restrained both in and outside Japan due to the impactof the novel coronavirus (COVID-19). The domestic accommodation and tourism market was heavily impacted by asignificant decrease in the number of foreign visitors to Japan (hereinafter referred to as “inbound visitors”), which wasestimated to be 4.11 million in 2020 (-87.1% year on year), due to travel restrictions to Japan from abroad, etc., as well as by
the nationwide self-restraint pertaining to events and suspension of operations at large theme parks in accordance with thegovernment’s declaration of a state of emergency, resulting in a sharp drop in domestic demand. Accordingly, the cumulative
number of overnight guests at domestic accommodation facilities in 2020 fell by 48.6% year on year to 306 million guest
nights (preliminary release). Domestic demand for accommodation showed a sign of recovery in the latter half of the year
thanks to the “Go To Travel” campaign, a government measure to stimulate domestic tourism demand that started in late July
2020, but the earnings environment surrounding hotels remained uncertain as temporary suspension of the campaign was
decided in December due to the re-spread of COVID-19 from November.
As to the performance of hotels owned by JHR under these circumstances, RevPAR (Note 1) and GOP (gross operating
profit) of all hotels including The 24 hotels with Variable Rent, etc. (Note 2) for the fiscal year fell significantly below thefigures of the previous year due to the impact of the spread of COVID-19.
To cope with the hardship, JHR maintained close communication with the lessees and operators of its respective hotels andworked to secure hotel earnings through reduction of operating costs, etc. In particular, after discussions and investigations
with JHR, Hotel Management Japan Co., Ltd. (hereinafter referred to as “HMJ”), a hotel lessee and a group company of theAsset Management Company and a hotel lessee, and its subsidiaries (hereinafter collectively called the “HMJ Group”),
implemented large-scale restructuring of labor costs, outsourcing costs and other costs. Having achieved larger cost
reductions in the fiscal year under review compared with fiscal 2019, the HMJ Group is expected to reduce costs consistently
in the following fiscal year and thereafter. Based on this, JHR concluded fixed-term building lease contract with the HMJ
Group as of August 25, 2020, agreeing to exempting fixed rent of each hotel operated by the HMJ Group from February 2020
through the end of 2021 (fixed rent and variable rent will be employed as before for 2022 and thereafter).
- 4 -As for The Ishin Group Hotels (Note 3), its performance worsened due to the impact of the spread of COVID-19, making it
difficult for JHR to collect fixed rent as designated in the lease contract. Accordingly, JHR decided to change the rent structurein the lease contract with respective lessees of The Ishin Group Hotels for April 2020 and thereafter, in consideration of its
impact on rent not only for the fiscal year under review but also for the future.
Moreover, JHR decided that it is appropriate to partly realize unrealized gain of owned assets to record it as gain on sale ofreal estate properties and enhance the liquidity on hand. Accordingly, JHR sold Sotetsu Fresa Inn ShimbashiKarasumoriguchi as of July 1, 2020, recording ¥3,158 million as gain on sale of real estate properties. JHR also exchanged
the real estate beneficial interest in trust of land that is part of the site of HOTEL ASCENT FUKUOKA with the real estate
beneficial interest in trust of the land that is part of an adjacent building (hereinafter referred to as the “Exchange
Transaction”) as of October 29, 2020. As a result of the Exchange Transaction, the mutual leasehold ownership was
terminated and JHR acquired full ownership of HOTEL ASCENT FUKUOKA. This led to higher asset value, and JHR
recorded ¥184 million as gain on exchange of real estate properties.
Furthermore, JHR made a drastic review of its capital expenditures, including large-scale renovation work planned for the
fiscal year under review, and worked to reduce such cost items as real estate operating costs and general and administrative
expenses.
For further details of management indicators for The 24 hotels with Variable Rent, etc., please refer to “<Reference
Information 2> Hotel operation indexes, sales and GOP” on page 17.
(Note 1)

RevPAR: Represents revenue per available room, which is calculated by dividing revenue for rooms for a certain period (including service
charges) by the total number of rooms available for sale during the period. The same shall apply hereinafter.

(Note 2)The hotel group combining the hotels which JHR leases to HMJ (Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba
Oriental Hotel, Hotel Nikko Alivila and Oriental Hotel Hiroshima, (hereinafter referred to as “The Five HMJ hotels”)), with the hotels
which JHR leases to HMJ subsidiaries (Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel (main facility of ACTIVEINTER CITY HIROSHIMA), Oriental Hotel Fukuoka Hakata Station, Holiday Inn Osaka Namba, Hilton Tokyo Narita Airport,
International Garden Hotel Narita, Hotel Nikko Nara, Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba, totaled 14
hotels, are referred to as the “HMJ Group Hotels.” The 24 hotels with variable rent, etc. refers to the HMJ Group Hotels plus ibis Tokyo
Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure Okinawa Naha, Mercure Yokosuka, the b suidobashi,
the b ikebukuro, the b hachioji and the b hakata. The same shall apply hereinafter.

(Note 3)The Ishin Group Hotels refers to the four hotels comprising the b suidobashi, the b ikebukuro, the b hachioji and the b hakata. The same
shall apply hereinafter.

(c) Funding conditions
In the fiscal year under review (from January 1, 2020 to December 31, 2020), JHR took out loans of ¥4,700 million in total
to refinance existing borrowings that were due for repayment in January 2020. Moreover, also for the purpose of refinancing
existing borrowings that were due for repayment, JHR took out loans of ¥1,092 million in total in June, ¥11,847 million in
total in September, and ¥935 million in December 2020, respectively.
Consequently, as of the end of the fiscal year under review, balance of interest-bearing debt totaled ¥168,754 million,
including short-term loans payable of ¥12,782 million, current portion of long-term loans payable of ¥10,800 million, longterm loans payable of ¥103,572 million, current portion of investment corporation bonds of ¥1,500 million and investment
corporation bonds of ¥40,100 million, and the ratio of interest-bearing debt to total assets at end of year (Note) stood at 42.2%.
The ratio of fixed interest rate debt to the total interest-bearing debt at the end of the fiscal year under review was at 91.0%.
(Note)

Ratio of interest-bearing debt to total assets at end of year = Balance of interest-bearing debt at end of year ÷ Total assets at end of year
× 100

As of December 31, 2020, JHR’s issuer ratings were as follows.
Japan Credit Rating Agency, Ltd. (JCR) changed the outlook of long-term issuer rating for JHR from “A+ (Stable)” to “A+(Negative)” on December 25, 2020. Rating and Investment Information, Inc. changed the outlook of issuer rating for JHR
from “A (Stable)” to “A (Negative)” on January 5, 2021.
- 5 -Rating agency

RatingJapan Credit Rating Agency, Ltd.

A+

(Negative)

Rating and Investment Information, Inc.

A

(Negative)(d) Financial results
As a result of the abovementioned asset management, operating revenue, operating income and ordinary income were
¥13,838 million, ¥3,176 million and ¥1,398 million, respectively, for the fiscal year under review (12-month period fromJanuary 1, 2020 to December 31, 2020). Net income was ¥1,527 million. With regard to dividends, it was decided that ¥1,829
million will be distributed, which was calculated by adding a reversal of reserve for temporary difference adjustment(appropriation for dividends) of ¥305 million to unappropriated retained earnings of ¥1,527 million. Consequently, thedividend per unit came to ¥410. For details of the appropriation for dividends for the fiscal year under review, please refer to“<Reference Information 3> Dividend per unit and appropriation for dividends” on page 18.
(B) Outlook for the next fiscal period(a) Investment policies and issues to be addressed
It is forecasted that the Japanese economy will remain in a difficult situation for some time under the impact of COVID-19,
as the government again declared a state of emergency in January 2021. The domestic accommodation and tourism market
is also forecast to remain in a harsh environment due to a continuing significant decrease in the number of inbound visitors
as well as a decrease in domestic tourists. Under such circumstances, JHR will discuss, investigate and implement withlessees and operators a variety of measures, such as reducing operating costs through review of operations at each hotel,
maintaining necessary employment, handling cash management, and implementing sales measures in response to new
demand including “staycation” and “workation.” Especially for the hotels with variable rent, etc. centering on the HMJ Group
Hotels, JHR will endeavor to maximize GOP of each hotel and thus maximize the rent JHR can receive as a result.
In addition, it is assumed that JHR will receive requests for rent reduction, etc. from the lessees that have been impacted by
the spread of infection of COVID-19, etc.. To cope with such requests, JHR will examine what has been requested fromrespective lessees, details of the existing lease contracts with them, rent levels compared with the market rent, the possibility
to collect the reduced rent portion in the future, and their financial conditions. By doing so, JHR will respond to the requests
individually after discussing with each lessee and operator, while carefully considering the possibility of replacing operators.
On the other hand, JHR believes that domestic tourism demand will gradually recover going forward thanks to thedevelopment and distribution of vaccinations against COVID-19 and resumption of “Go To Travel” campaign by thegovernment, among other factors. Moreover, given the large potential demand for overseas tourism globally and in particular,
improvement in income levels especially in Asian countries as well as the popularity of Japan as travel destination,accommodation demand from inbound visitors to Japan is expected to recover over a medium to long term. As such, there is
no change in the view of JHR that the accommodation and tourism market will expand over the medium to long term. On
the belief that the location and competitiveness of individual hotels as well as the capabilities of the operators (the ability todifferentiate from other hotels, improve profitability including cost management and capture recovering demand, etc.) willlead to differentiation of performance among hotels, JHR will continue to implement strategies to differentiate its hotels as
it has done to date.
In the meanwhile, as a result from the spread of COVID-19, the spread of contactless new behavior pattern such as web
conferencing, etc. may cause structural changes in hotel industry, for instance, a reduction in banquet demand etc. JHR will
work more closely than ever with hotel lessees and operators to respond to environmental changes. Under the recognition ofsuch circumstances, JHR intends to work with the Asset Management Company to implement strategies to differentiate hotels
owned by JHR in the market by utilizing the experience it has cultivated as a J-REIT specializing in hotel investment, andmanage assets based on the approach described below.
Internal growth
JHR will work to secure “stability” mainly with fixed rent contracts, while at the same time aim for “upside potential” throughimplementation of active asset management strategy, which proactively pursues greater profitability and asset value of its
properties by way of a variety of measures such as expanding international brands and coordinating with HMJ.

- 6 -For properties with fixed rent contracts, JHR will continue to focus on setting and maintaining appropriate rents based on therent levels in the market where respective hotels are located or each tenant’s creditworthiness and ability to bear the rent
costs, and aims at raising rents (including introduction of revenue sharing structure) in accordance with the conditions of theaccommodation market. For the moment, with possible requests for reduction of fixed rent, etc. from the lessees that wereheavily impacted by the spread of infection of COVID-19, JHR intends to appropriately cope with the situation throughdiscussions with respective lessees and operators.
For hotels under variable rent contracts and under a management contract structure, JHR is working to increase variable rent
and reduce management fees by implementing the active asset management strategy.
In January 2021, for Chisun Hotel Kamata (former Hotel Vista Kamata Tokyo), JHR conducted rebranding of the property
upon the termination of the lease contract. Moreover, for Hotel Keihan Universal City and HOTEL ASCENT FUKUOKA,JHR plans to conduct their rebranding in accordance with the termination and cancellation of the lease contracts. As torebranding of Hotel Keihan Universal City and HOTEL ASCENT FUKUOKA, inviting the HMJ Group as new lessee, JHR
will work to operate them efficiently through such measures as coordination with existing HMJ Group hotels, sharing ofmanagement resources with neighboring hotels and utilization of the hotel operation know-how accumulated in the past. By
doing so, JHR aims to maximize earnings from them.
i) Properties under variable rent contracts
JHR works to enhance the profitability of its properties under variable rent contracts through its active asset management
strategy. JHR has adopted world-leading international brands such as Hilton, Marriott, Sheraton, Mercure and Holiday Innor leading brands in Japan including Oriental Hotel and Hotel Nikko that are operated in various areas throughout the country
and, together with excellent operators, aims to increase variable rent through improved performance of these hotels. JHR
coordinates with the operators in an effort to enhance the hotel performances by requesting them to implement marketing
initiatives to attract a wider range of demand with considerations given to the recovery of leisure demand from domestic andinbound visitors, measures to maintain and increase room rates, and realization of the synergy effects like cost reductions
from owning multiple properties, among other issues.
On the other hand, under the impact of the spread of infection of COVID-19, recovery in hotel performance is expected totake time. To cope with such a situation, JHR will closely cooperate with the lessees and operators of respective hotels to
promote drastic reform of the hotel earnings structure through cost-cutting measures centered on thoroughly enhancing
efficiency of the operating system, while continuing efforts on health consideration for the guests and employees of respective
hotels and environmental sanitation management. JHR will also promote various measures to restore hotel earnings, such as
the creation of appropriate products in response to major changes in the market environment and the preparation of hotel
facility environments.
Moreover, in an attempt to recover and enhance hotel earnings, JHR will accurately grasp the situation of the accommodationand tourism market and changing customer needs and conduct strategic capital expenditures (CAPEX) in an appropriatemanner as needed.

- 7 -ii) Properties under fixed rent contracts
JHR will pursue efforts to appropriately monitor operating conditions of these hotels and set and maintain reasonable rent
levels by paying careful attention to each tenant’s ability to bear the rent costs. At the same time, JHR will appropriately
respond to requests to reduce fixed rent from the lessees that were greatly affected by the spread of infection of COVID-19.
In addition, JHR will carry out investments for the purpose of continuous facility maintenance and improvement to ensureeach hotel becomes prominent in the market and to maintain and increase the value of its assets.
External growth
In terms of external growth strategy, JHR believes that domestic and inbound leisure demand will recover over the medium
to long term and will continue targeting acquisition of highly competitive Real Estate for Hotels, Etc. (Hotel Assets) in areas
which can expect “domestic and inbound leisure demand” over the medium to long term as it has done to date. In addition,
JHR will build a portfolio which can secure stable revenues and with future growth potential in mind in order to achieve
upside.
Upon acquiring properties, JHR will focus on the infrastructure aspects of the relevant Hotel Assets such as buildings andfacilities, the services aspects such as the credibility of the hotel lessee and operator (including the ability of the hotel lessee
to bear rent costs) as well as operation and management capabilities, and the properties’ location superiority that serves as
the base for demand stability and growth potential.
Specifically, JHR will target to invest in “full-service hotels” and “resort hotels” that pose barriers to new opening due tosuch factors as operation and management know-how required for operating the hotels and limitations in terms of invested
capital and location. As for “limited-service hotels,” JHR emphasizes the credibility and operation capabilities of the hotel
lessee and operator as well as the building age, location, guestroom composition and profitability of the properties. Moreover,
JHR will take a particularly selective approach to hotels specialized for accommodation, which are categorized as a budget
type (low price zone) that mainly offers single rooms and where the source of competitiveness relies only on prices.
In the hotel investment market, the environment continues to be difficult for the hotel operation under the impact of COVID19, and hotel transactions remain on a stagnant trend due to a sense of uncertainty over the domestic accommodation andtourism market. Under such circumstances, JHR believes that it must be prudent in investigating property acquisitions.
Moreover, JHR plans to investigate property dispositions as needed, from the viewpoint of securing its earnings and financial
soundness. On the other hand, there is a possibility of an increase in special investment opportunities unlike before, such as
sales of assets due to rapid deterioration in the financial position of operators, sales of hotels as non-core assets due todeterioration in main business performance, sales of hotels completed or scheduled to be completed without operators, etc.,
and JHR will flexibly deal with such investment opportunities by utilizing the efficient hotel operation platform of HMJ.
Moreover, over the medium to long term, JHR believes that, along with the spread of COVID-19 coming to an end andaccompanying recovery of domestic accommodation demand including that from inbound visitors, many investors who havebeen on the sideline may resume investment in hotels, and competition over acquisition may become active again. Goingforward, while closely monitoring market trends from many angles and responding to changes in hotel earnings structures
and the investment environment according to circumstances, JHR will work to acquire highly competitive properties byleveraging its strengths and advantages, as well as utilizing the HMJ platform for certain properties in pursuit of expansionof asset size that accompanies improvement of the portfolio quality.
Finance strategy
Under the basic policy of carrying out conservative financial strategy which places importance on securement of financial
stability and soundness, JHR intends to communicate more closely than before with existing financial institutions with which
it does business in order to maintain and enhance the relationships of trust, while endeavoring to diversify the means offinancing. It aims to conduct financial operations by keeping the ratio of interest-bearing debt to total assets at no larger than
50% as in the past. In addition, when seeking new borrowing for property acquisitions or refinancing existing debt, JHR will
work to disperse maturity dates of its debt as well as further reinforce and expand its base of lenders and further diversify
funding methods, such as issuance of investment corporation bonds (including green bonds), while considering the balancewith the funding costs.
Moreover, while JHR believes that no abrupt change is likely to occur to the interest rate level in the current situation, it aims
to maintain and enhance financial stability and soundness in preparation for future change in the financial market environment,- 8 -by taking into account the dispersion of maturity dates while working to optimize financing costs and, when necessary,conducting interest rate risk management including interest rate fixation. While being impacted by COVID-19, JHR will
work to securely achieve refinancing of existing borrowings by paying attention to financing costs while maintaining good
relationships with respective lenders. In addition, JHR will conduct appropriate control of capital expenditures and secureliquidity on hand in an effort to strengthen its financial foundation.
Policy on handling of negative goodwill
From the fiscal year ended December 31, 2017 (18th period), JHR started appropriation for dividends through reversal ofreserve for temporary difference adjustment in connection with partial amendments to the “Ordinance on Accounting ofInvestment Corporations” (Cabinet Office Ordinance No. 47 of 2006, as amended; hereinafter referred to as the “Ordinanceon Accountings of Investment Corporations”) and the “Regulation for Real Estate Investment Trusts and Real Estate
Investment Corporations” of The Investment Trusts Association, Japan. JHR stipulated a policy to reverse ¥262 million(hereinafter called the “50-year amortization amount of negative goodwill”), which is an amount equivalent to 2% (1/50) of
the balance of the reserve for temporary difference adjustment for the fiscal year ended December 31, 2017, to pay out as
dividends every year, with the balance of the reserve for temporary difference adjustment remaining at the time of reversal
set as the maximum reversal amount (Note 1).
Furthermore, in cases of incurrence of losses caused by property dispositions, impairment loss of assets, dilution of dividend
per unit due to the issuance of new investment units through public offerings, etc., loss on retirement of noncurrent assets,
and suspension of sales and such due to large-scale renovations with significant impact on revenues, JHR stipulated a policy
to reverse additional portion of the negative goodwill on top of the 50-year amortization amount of negative goodwill (¥262
million) (Note 1). As for the fiscal year ending December 31, 2021 (22nd period), JHR expects ¥330 million, which is thetotal of the 50-year amortization amount of negative goodwill (¥262 million), loss on retirement of noncurrent assets (¥11
million) and amortization of the trademark rights for the Oriental Hotel brand, etc. (Note 2) (¥56 million), as additionalamounts to dividends by reversing negative goodwill.
(Note 1)The policy may change due to a resolution of the board of directors, and it does not guarantee the method of reversing the reserve fortemporary difference adjustment, and amounts to be reversed, etc., in the future.

(Note 2)

JHR acquired the trademark rights on May 15, 2020 as announced in “Notice Concerning Acquisition of New Assets (Trademark Rights
of “Oriental Hotel” brand, etc.)” on May 15, 2020. The trademark rights are amortized over 10 years using the straight-line method.

Initiatives for Sustainability
In recent years, there has been growing importance of the risks and opportunities of ESG (Environment, Social andGovernance) issues in the investment management industry from the standpoint of long-term sustainability. JHR recognizes
that conducting real estate investment management based on consideration for ESG is important to enhance unitholder value
and to further raise the attractiveness of JHR. In addition, JHR believes that it is indispensable to establish favorable
relationships with its stakeholders including unitholders, hotel users (guests), lessees, operators, business partners including
property managers, etc., local communities, officers and employees of the Asset Management Company and others and tofulfill our social responsibilities expected from each of them.
In order to put such ideas into practice, JHR, along with the Asset Management Company, has established a “Sustainability
Policy” as guidance to ESG initiatives. We have promoted efforts to reduce environmental impact at properties in our portfolio
based on this policy, and received the Building-Housing Energy-efficiency Labeling System (BELS) evaluation for the two
properties of Hotel Nikko Alivila and Mercure Okinawa Naha in February 2018 as first such cases for J-REIT’s hotel
properties (Note 1). In September 2018, JHR became the first J-REIT specializing in hotels to be recognized by GRESB(Note 2) for its environmental awareness and sustainability initiatives, acquiring “Green Star” in the GRESB Real Estate
Assessment for the three consecutive years. Moreover, in April 2020, Hilton Tokyo Odaiba acquired CASBEE Certificationfor Buildings, the first such recognition for an existing hotel property. JHR was also selected for Sector Leader of Asian Hotel
Sector in the GRESB Real Estate Assessment conducted in 2020. Going forward, JHR will continue to actively promoteenhancement of its initiatives on a variety of sustainability issues.
Furthermore, JHR issued green bonds in July 2019 to allocate funds mainly to refinance loans procured for funding capital
expenditures and constructions cost, etc. which contribute to environment, including reduction of CO2 and water
consumption in the renovation work at Oriental Hotel Fukuoka Hakata Station. It was the first case of a J-REIT specializing
in hotels issuing green bonds.
- 9 -In addition, as an effort under the expanding spread of COVID-19, JHR worked together with the lessees to provide two
hotels which it owns in Tokyo as facilities to accept patients with mild or no symptoms who do not require hospital treatment
among the patients infected with COVID-19.
Recognizing its social responsibility towards local communities as a J-REIT specializing in hotels, JHR will proactively carryout social contribution activities capitalizing on the characteristics of the hotel sector and each hotel.
(Note 1)

Investigated by the Asset Management Company based on disclosed information.

(Note 2)GRESB which stands for Global Real Estate Sustainability Benchmark is an annual benchmarking assessment to measure ESG(Environmental, Social and Governance) integration of real estate companies and funds. It evaluates initiatives for sustainability of realestate companies, REITs and real estate funds, not of individual properties. The GRESB Rating makes relative assessment based on total
scores, with 5 Stars being the highest ranking.

(b) Significant subsequent events
Not applicable(c) Operating forecast
The following is JHR’s operating forecast for the midterm of the fiscal year ending December 31, 2021 (22nd period) andthe full year of the fiscal year ending December 31, 2021 (22nd period). For the assumptions of the operating forecast, pleaserefer to “Assumptions of the operating forecast for the midterm of the fiscal year ending December 31, 2021 (22nd period)
and the full year of the fiscal year ending December 31, 2021 (22nd period)” on page 11.
Midterm of the fiscal year ending December 31, 2021 (22nd period)
Operating revenue
Operating income¥4,556 million(¥750 million)

Ordinary income
Midterm net income(¥1,636 million)(¥1,637 million)

Full year of the fiscal year ending December 31, 2021 (22nd period)
Operating revenue
Operating income¥13,920 million¥2,715 million

Ordinary income
Net income¥879 million¥877 million

Dividend per unit
Dividend per unit resulting from excess of earnings

¥270
¥-

(Note) The forecast figures above are the current forecasts calculated based on certain assumptions. As such, actual operating revenue,
operating income, ordinary income, net income (midterm / full year), dividend per unit and dividend per unit resulting from excessof earnings may vary due to changes in the circumstances. Furthermore, the forecasts are not intended to guarantee any dividend
amount.

- 10 -

Assumptions of the operating forecast for the midterm of the fiscal year ending December 31, 2021 (22nd period) andthe operating forecast for the fiscal year ending December 2021 (22nd period)
Item・

Calculation
Period・・
Assets under ・Management

・Assumptions
Midterm of the fiscal year ending December 2021 (22nd Period): January 1, 2021 through June 30, 2021
(181 days)
Full fiscal year ending December 2021 (22nd Period): January 1, 2021 through December 31, 2021
(365 days)
The 42 properties owned by JHR as of today are assumed.
It is assumed that there will be no change (acquisition of new property or disposition of property, etc.) in
assets under management through the end of the fiscal year ending December 2021 (22nd period).
However, the actual results may fluctuate depending on the changes in assets under management that may
take place.
Operating revenue is calculated based on the conditions of the lease and other effective contracts, taking
into consideration the competitiveness of hotels, market environment, and other factors. If there are lease
contracts with facilities other than hotels, such as commercial facilities and offices, operating revenue
calculated based on the said lease contracts is included. It may fluctuate significantly due to the impact of
COVID-19.

・ Rents, etc. of the main hotels are calculated based on the following assumptions.
(1) The HMJ Group Hotels
JHR concluded a memorandum of understanding for the fixed-term building lease contract with the HMJ
Group Hotels on August 25, 2020. From January 1, 2021 through December 31, 2021, the rent is only
variable rent and is calculated by multiplying the hotel AGOP (*1) by the variable rent ratio for each hotel.
However, if AGOP is less than 0 (zero), the variable rent will be 0 (zero).
(Unit: millions of yen)
Hotel AGOP
Kobe Meriken Park Oriental
Hotel
Oriental Hotel tokyo bay
Operating
Revenue

Namba Oriental Hotel
Hotel Nikko Alivila
Oriental Hotel Hiroshima
Okinawa Marriott Resort & Spa
Sheraton Grand Hiroshima
Hotel (*2)
Oriental Hotel Fukuoka Hakata
StationHoliday Inn
Osaka Namba (*3)
Hilton Tokyo Narita Airport
International Garden Hotel
NaritaHotel Nikko Nara
Hotel Oriental Express Osaka
Shinsaibashi (*3)

Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year
Midterm
Full year- 11 -

(0)
482
(54)
626
166
642
161
1,382
(41)
116
(132)
402
117
396
75
402
(17)
(33)
(62)
348
(3)
189
(60)
124
(19)
(41)

Variable rent ratio

Variable rent

86.0%

－
414
－
495
151
584
119
1,022
－
103
－
358
108
368
73
389
－
－
－
330
－
179
－
117
－
－

79.0%
91.0%
74.0%
89.0%
89.0%
93.0%
97.0%
98.0%
95.0%
95.0%
95.0%
87.0%

Item

Assumptions
Hotel AOP
Hilton Tokyo Odaiba
Total
(*1)

(*2)

Operating
Revenue

(105)
1,034
22
6,073

Variable rent

97.0%

－
1,003
453
5,370

－

AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. GOP (grossoperating profit) and GOL (gross operating loss) are the remainder after expenses incurred in hotel operation, suchas personnel costs and general and administrative expenses, etc., are deducted from total sales. The same shallapply hereinafter
Stating the rent for Sheraton Grand Hiroshima Hotel, the major facility of ACTIVE-INTER CITY HIROSHIMA.
Fixed rent and variable rent for office and commercial tenants of ACTIVE-INTER CITY HIROSHIMA are as
follows.

Midterm
Full year(*3)

Midterm
Full year
Midterm
Full year

Variable rent ratio

Variable rent
3
7

Fixed rent
240
476

(Unit: millions of yen)
Total rent
244
483

It is assumed that Holiday Inn Osaka Namba and Hotel Oriental Express Osaka Shinsaibashi are closed throughout
the year.

(2) Hotel Ascent Fukuoka and Hotel Keihan Univesal City
Hotel Ascent Fukuoka and Hotel Keihan Univesal City are planned to be rebranded with HMJ subsidiaries
as the lessees on June 18, 2021 and July 1, 2021, respectively. The assumptions for fixed and variable rent
stipulated in the fixed-term building contract after rebranding concluded on February 12, 2021 are as follows.
The starting date of the variable rent is January 1, 2022, and the variable rent is not expected in the fiscal
year ending December 2021.
<Hotel Ascent Fukuoka (name after rebranding: Hotel Orinetal Express Fukuoka Tenjin)>
Lease term: June 18, 2021 to December 31, 2031
Total rent = Fixed rent + Variable rent
Fixed rent = ¥150 million (annual)
Fixed rent is waived from June 18, 2021 through June 30, 2022. The fixed rent to be recognized for the
fiscal year ending December 2021 is expected to be ¥72 million, which is 6.4 months’ worth of the average
fixed rent of ¥11 million per month, divided proportionally by the total fixed rent of the whole lease periodof ¥1,425 million.
Variable rent = [Hotel AGOP – AGOP base amount of ¥165 million] × Variable rent ratio (97.0%)<Hotel Keihan Universal City (name after rebranding: undecided)>Lease term: July 1, 2021 to December 31, 2031
Total rent = Fixed rent + Variable rent
Fixed rent = ¥350 million (annual)
Fixed rent is waived from July 1, 2021 through June 30, 2022. The fixed rent to be recognized for the
fiscal year ending December 2021 is expected to be ¥158 million, which is 6 months’ worth of the average
fixed rent of ¥26 million per month, divided proportionally by the total fixed rent of the whole lease periodof ¥3,325 million.
Variable rent = [Hotel AGOP – AGOP base amount of ¥370 million] × Variable rent ratio (95.0%)(*4)

For Hotel Ascent Fukuoka and Hotel Keihan Universal City, the variable rents from the current lessees before
rebranding are not expected.

- 12 -

Item

Assumptions(3) Income from management contracts (*5) and variable rent from other hotels with variable rent, etc.
(Unit: millions of yen)ibis Tokyo Shinjuku (*5)
ibis Styles Kyoto Station (*5)
ibis Styles Sapporo (*5)
Mercure Sapporo (*5)
Mercure Okinawa Naha (*5)
Mercure Yokosuka
the b suidobashi (*6)
the b ikebukuro (*6)
the b hachioji (*6)
the b hakata (*6)
Comfort Hotel Tokyo Higashi Nihombashi
Smile Hotel Nihombashi Mitsukoshimae
Chisun Hotel Kamata (*7)
Chisun Inn Kamata
Hilton Tokyo Bay
Hilton Nagoya
Total

Operating
Revenue

(*5)

(*6)
(*7)
(*8)

・

Midterm

Full year

2
(1)
33
(6)
44
75
－
43
－
－
－
－
13
7
Undisclosed (*8)
Undisclosed (*8)
365

90
52
228
224
99
101
－
59
－
－
－
－
38
19
Undisclosed (*8)
Undisclosed (*8)
1,265

For income from management contracts, it is assumed that each hotel’s GOP amount is recognized as income frommanagement contracts, and the management contract fees to be paid by JHR are recognized as an operating
expense. If the performance for the midterm period is expected to be GOL, it is recognized as minus in the income
from management contracts.
The variable rent for the Ishin Group Hotels is the sum of fixed and variable rent from January 1, 2021 throughDecember 31, 2021 due to the fixed-term building lease contract concluded on October 30, 2020, and the variable
rent is recognized when GOP reaches the certain levels.
Hotel Vista Kamata Tokyo was rebranded to Chisun Hotel Kamata with Solare Hotels and Resorts Co., Ltd. as thelessee on January 1, 2021.
Undisclosed since tenants that concluded lease contracts did not agree to disclose rent revenue, etc.

The following is the breakdown of variable rent and income from management contracts(Unit: millions of yen)
The HMJ Group Hotels
Office and commercial tenants (*9)
Other hotels with variable rent, etc. (16 hotels)
Total (30 hotels)
(*9)
(*10)

Midterm

Full year

453
3
365
821

5,370
7
1,265
6,642

Variable rent for office and commercial tenants of ACTIVE-INTER CITY HIROSHIMA is shown.
For details of variable rent, please refer to page 51, “3. Reference Information; (1) Information on values ofassets under management, etc. (ii) Assets under management; (C) Other major assets under management; C.
Overview of the hotel business; a. Rent structures of hotels with variable rent, management contract or revenue
sharing” below.

- 13 -

Item

Assumptions
・
・

・
・

OperatingExpenses・¥250 million is assumed as the risk of rent reduction, considering the possibility of the impact on operating
revenue by rent reductions due to the impact of COVID-19.
With respect to real estate leasing expenses, which constitute a major part of the operating expenses,
expenses other than depreciation are calculated based on historical data, and variable factors are reflected in
the calculation.
It is assumed that ¥1,994 million will be recognized as expenses for fixed asset taxes, city planning taxes,
etc.
In general, fixed asset tax and city planning tax and other taxes and public dues on acquired assets are settledwith the previous owners at the time of acquisition, calculated on a pro rata basis of the holding period. For
JHR, such settlement amount is included in the acquisition price, and it will not be recognized as expenses
for the calculation period.
Capital expenditure is assumed to be ¥3,522 million (¥2,259 million for capital expenditure I, ¥1,263 million
for capital expenditure II). Capital expenditure III is not planned for the fiscal year ending December 2021.

(*)
JHR classifies capital expenditures into the following three categories. (I) Capital investment related to renewalof equipment and facilities of buildings which is required to maintain proper values of properties, (II) capital investment
for fixtures, furniture and equipment that are not directly related to building structure or facilities but necessary for
operating hotels, and (III) strategic capital investment such as renovating guest rooms, etc. for improving thecompetitiveness of the hotels.

・・

Depreciation is calculated using the straight-line method including the planned capital expenditures above,and is assumed to be ¥4,813 million.
Repair expenses for buildings are recognized as expenses in the assumed amount necessary for each
operating period. Please note that the repair expenses of each operating period may differ materially fromthe forecast amount for various reasons, such as; (1) Emergency repair expenses may be necessary due todamage to buildings from unexpected causes; (2) The amount of repair expenses generally tends to increasein difference over time; and (3) Repair expenses are not required on a regular basis.

・
Non-operating
Expenses ・¥1,836 million is expected for borrowing-related costs, including interest expense, amortization for
financing fee and arrangement fee, and other non-operating expenses.
Expenses for issuance of new investment units and secondary offering are amortized over a period of three
years by the straight-line method.

・The balance of interest-bearing debt (sum of loans and investment corporation bonds) as of the end of
December 2020 was ¥168,754 million and is assumed to be ¥168,754 million as of the end of December
2021.
There are ¥23,582 million of loans due during the fiscal year ending December 2021 (22nd Period), however,
it is assumed that the entire amount will be refinanced.
There are ¥1,500 million of investment corporation bonds that mature during the fiscal year ending
December 2021 (22nd Period), however, it is assumed that the same amount of investment corporation bonds
will be issued.

Interest- ・bearing Debt
・・

Dividend per
Unit

Dividend per unit for the fiscal year ending December 2021 (22nd period) is calculated based on thefollowing assumptions.
Net income
Reversal of reserve for temporary difference adjustment(negative goodwill)
50-year amortization amount of negative goodwill (*1)
Loss on retirement of noncurrent assets (*2)
Amortization of trademark rights (*3)
Distributable amount
Total number of investment units issued
Dividend per unit

(*1)
(*2)
(*3)

¥877 million¥262 million¥11 million¥56 million¥1,208 million
4,462,347 units¥270¥262 million (hereinafter called “50-year amortization amount of negative goodwill”) is scheduled to be paid out
as dividends, with the remaining balance of the reserve for temporary difference adjustment set as the maximum
amount, for every fiscal year.
The amount recognized as a loss on retirement of noncurrent assets will be appropriated by reserve for temporary
difference adjustment (negative goodwill) and is expected to have no impact on dividend per unit.
The trademark rights are amortized over 10 years using the straight-line method. Amortization is expected to berecognized during the current fiscal year will be appropriated by reserve for temporary difference adjustment(negative goodwill) and is expected to have no impact on dividend per unit.
- 14 -

Item

Assumptions
・・

Dividend per
Unit・
Resultingfrom Excessof Earnings
・
Others・・

Dividend per unit may fluctuate due to various causes, such as fluctuation of rent revenue resulting fromtransfer of assets under management, change of tenants, etc. at hotels, change in the business environmentof hotel business for hotel tenants, etc., unexpected repairs, and actual number of new investment units
issued, etc.
The remaining balance of the reserve for temporary difference adjustment (negative goodwill) after theappropriation of the reserve for temporary difference adjustment (negative goodwill) for dividends for the
fiscal year ending December 2021 (22nd period) is expected to be ¥9,981 million.

It is assumed that the excess of earnings (dividend per unit resulting from excess of earnings) will not be
distributed.

It is assumed that revision in law, tax system, accounting standard, regulations of the listing, and regulationsof the Investment Trusts Association, Japan that may impact the forecast above will not be made.
It is assumed that unexpected major incident will not occur in the general economy, real estate market andhotel business environment, etc.
The numerical values are rounded down to the nearest millions of yen in the assumptions above.

- 15 -

<Reference Information 1> Highlights of the operating forecast and forecast of dividend
The following is the comparison and the major factors causing the variance between the operating results and dividend forthe full fiscal year ended December 2020 (January 1, 2020 through December 31, 2020) and the operating forecast andforecast of dividend for the full fiscal year ending December 2021.
Fiscal Year Ended
December 2020
(21st Period)
Results

Properties(A)(Reference)
Annualized
Results(*1)

Fiscal YearEnding December
2021(22nd Period)
Forecast This
Time
(B)

(Unit: millions of yen)Comparison
with Previous
Period(B)-(A)

Sale of
Property(*2)

Existing
Property
Major Factors Causing the Variance%

No. of Properties

42

42

42

-

-

-

-

Acquisition Price

343,038

343,038

343,038

-

-

-

-

Operating Revenue

13,838

10,243

13,92082

0.6%(3,390)3,472

Reasl Estate
Operating Revenue

10,495

10,243

13,920

3,425

32.6%

(232)

3,657

Fixed Rent

7,640

7,491

6,345

(1,294) (16.9%)(149)

Composition

72.8%

73.1%

45.6%

40

4.6%

(16)

4,679

238.3%(66)

Profit and Loss Statement

1) Decrease in fixed rent of the HMJ Group Hotels by JPY794 MM

Other Rent
Composition

892

854

932

8.5%

8.3%

6.7%

Variable Rent

1,963

1,896

6,642

Composition

18.7%

18.5%

47.7%

Gain on Sale ofProperties, etc.

3,343

-

-

(3,343)-(3,158)(184)

NOI (*6)

6,547

6,267

9,455

2,907

44.4%

(200)

3,107

NOI Yield

6.4%

1.7%

2.6%

0.8%

NOI after Depreciation
(*6)

1,778

1,496

4,628

2,849

160.3%

(187)

3,037

Operating Income

5.1%
3,176

0.4%
(428)

1.3%
2,715

0.8%
(460) (14.5%)

Ordinary Income

1,398(2,205)879(519) (37.1%)

Net Income

1,527(2,207)877(649) (42.5%)

Reversed Amount of theReserve for Temporary
Difference Adjustment(Negative Goodwill)

305

324

330

Total Dividends

1,829

-

1,204

4,462,347

4,462,347

4,462,347

410

-

270

NOI Yield after Depreciation

Dividend(1,145) 2) Decrease in fixed rent of the Ishin Group Hotels by JPY7 MM
3) Decrease in fixed rent of Chisun Hotel Kamata by 93 MM (*3)4) Decrease in fixed rent due to the change in lease scheme
accompanying by rebranding by JPY172 MM (*4)5) Decrease in fixed rent in tenants other than hotels by JPY78 MM

Number ofUnits Issued (Unit)
Dividend per Unit (JPY)

(*1)

(*2)
(*3)
(*4)

(*5)
(*6)

57
1) Increase in variable rent of the HMJ Group Hotels by JPY4,319

24

4,745 MM
2) Increase in variable rent, etc. of the Accor Group Hotels (*5) by
JPY659 MM
3) Decrease in variable rent of the Ishin Group Hotels by JPY181MM
4) Increase in variable rent of Chisun hotel Kamata by JPY38 MM(*3)5) Decrease in variable rent of other hotels by JPY89MM

8.1% Reversed Amount of the Reserve for Temporary Difference Adjustment (*7)

2020: 50-year negative goodwill amortization: JPY262 MM, Loss on retirement of
noncurrent assets: JPY5 MM, Amortization of trademark rights: JPY37 MM
2021: 50-year negative goodwill amortization: JPY262 MM, Loss on retirement of- noncurrent assets: JPY11 MM, Amortization of trademark rights: JPY56 MM(624) (34.1%)-(140) (34.1%)

The assumptions of the annualized effect for the result are as follows.
1) It is assumed that Sotetsu Fresa Inn Shimbashi-Karasumoriguchi sold on July 1, 2020, will not be held throughout theyear and that there will be no gain on sale of real estate properties.
2) The full-year effect of the exchange of a part of the site of Hotel Ascent Fukuoka is assumed. A gain of exchange ofreal estate, etc. and extraordinary income by the acknowledgement of a claim for refund of the security deposit, which
had not been recorded as security deposit are not assumed.
3) Fixed asset tax, city planning tax, etc. for Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba acquiredin the fiscal year ended December 2019 (20th period) are assumed to be ¥337 million (for 12 months).
4) The trademark rights are assumed to be held throughout the year and will be amortized over 10 years using the straightline method. Annualized amortization is assumed to be ¥56 million and is appropriated by reserve for temporary
difference adjustment (negative goodwill).
Stating the amount of impact of sale of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi, which was sold on July 1, 2020.
Hotel Vista Kamata Tokyo was rebranded to Chisun Hotel Kamata with Solare Hotels and Resorts Co., Ltd. as the lessee on
January 1, 2021. No fixed rent is posted due to a new fixed-term building lease contract, which resulted in a rent structurewith only variable rent effective January 1, 2021.
Hotel Ascent Fukuoka and Hotel Keihan Universal City are planned to be rebranded with HMJ subsidiaries as the lessees
on June 18, 2021 and July 1, 2021, respectively. For the rent for the fiscal year ending December 2021 (22nd Period) after
rebranding, please refer to “Assumptions of the operating forecast for the midterm of the fiscal year ending December 2021
(22nd period) and the operating forecast for the full year of the fiscal year ending December 2021 (22nd period)” above.
Accor Group Hotels refers to 6 hotels: ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo,
Mercure Okinawa Naha, Mercure Yokosuka. The same shall apply hereinafter.
Each is calculated using the following formula. The same shall apply hereinafter.
NOI (Net Operating Income) = Real estate operating revenue – Real estate operating costs + Depreciation + Loss onretirement of noncurrent assets + Asset retirement obligations expenses- 16 -

(*7)

NOI yield = NOI ÷ acquisition price
NOI after depreciation = Real estate operating revenue – Real estate operating costs
NOI yield after depreciation = NOI after depreciation ÷ acquisition priceFor the details of the reversed amount of the reserve for temporary difference adjustment, please refer to ““Assumptions of
the operating forecast for the midterm of the fiscal year ending December 2021 (22nd period) and the operating forecast for
the full year of the fiscal year ending December 2021 (22nd period)” above.

<Reference Information 2> Hotel operation indexes, sales and GOP
The numeral figures are based on figures obtained from hotel lessees, etc. Please note that these figures have not been
audited or gone through other procedures. No guarantee is made as to the accuracy or completeness of the figures andinformation.
ADR and RevPAR are rounded off to the nearest yen. Sales and GOP are rounded off to the nearest millions of yen.
Occupancy rate and comparison with the previous period are rounded off to one decimal place.
<1> The 24 Hotels with Variable Rent, etc.
Fiscal year ended December
2020
Results

Fiscal year ending December 2021

Comparison withprevious period

Forecast thistimeComparison withprevious period

Occupancy
Rate

First half of the year

34.0%

(51.1pt)

39.4%

5.4pt

Second half of the year

40.8%

(46.1pt)

68.8%

28.1ptFull year

37.4%(48.6pt)

54.2%

16.8ptADR(*2)

First half of the year

13,362(14.8%)

12,368(7.4%)

Second half of the year

13,354(22.6%)

16,39822.8%

Full year

13,357(19.0%)

14,947

11.9%

RevPAR(*3)

First half of the year

4,536

(66.0%)

4,868

7.3%

Second half of the year

5,445

(63.7%)

11,289107.3%

Full year

4,993(64.8%)

8,105

62.3%

Sales
(JPY1M)First half of the year

10,718(62.1%)

11,010

3.2%

Second half of the year

13,378(57.5%)

23,455

91.4%

Full year

24,096(59.6%)

34,466

50.3%

First half of the year

(213)

(102.4%)

277－%

Second half of the year

1,867

(84.2%)

7,046

277.4%

Full year

1,654(92.1%)

7,323

342.9%GOP(JPY1M)(*1)(*2)

ADR: Represents average daily rate, which is calculated by dividing revenue of the rooms department for a given
period (including service charges) by the total number of rooms sold during the period. The same shall apply
hereinafter.
RevPAR represents revenue per available room, which is calculated by dividing total room revenue for a certain period(including service charges) by the total number of rooms available for sale during the period. The same shall apply
hereinafter.

- 17 -

<2>The HMJ Group Hotels
Fiscal year ended December 2020
Results
Occupancy
Rate

ADR

RevPARSales(JPY1M)GOP(JPY1M)

Fiscal year ending December 2021

Comparison withprevious period

Forecast thistimeComparison withprevious period

First half of the year

33.1%

(52.2pt)

36.4%

3.3pt

Second half of the year

38.4%

(49.5pt)

68.3%

29.9ptFull year

35.8%(50.8pt)

52.5%

16.7ptFirst half of the year

15,222(13.4%)

14,906(2.1%)

Second half of the year

16,814(14.4%)

19,590

16.5%

Full year

16,081(13.7%)

17,97911.8%

First half of the year

5,045

(66.4%)

5,428

7.6%

Second half of the year

6,460

(62.6%)

13,379107.1%

Full year

5,757(64.3%)

9,436

63.9%

First half of the year

9,167

(61.9%)

9,443

3.5%

Second half of the year

11,978(55.9%)

20,624

81.6%

Full year

21,146(58.7%)

30,067

47.7%

First half of the year

(370)

(105.1%)

113－%

Second half of the year

1,696

(82.8%)

6,280

270.3%

Full year

1,326(92.3%)

6,393

382.2%<Reference Information 3> Dividend per unit and appropriation for dividends
Dividend per unit for the fiscal year ended December 31, 2019 and the fiscal year ended December 31, 2020 are
calculated based on the following assumptions.

Unappropriated retained earnings

Fiscal year ended
December 31, 2019

Fiscal year ended
December 31, 2020

(JPY1M)(JPY1M)
15,290

1,527

1,176

305

50-year amortization amount of negative goodwill

262

262

Loss on retirement of noncurrent assets

246

5

Correspondence to large-scale renovation works (*1)

357－

Adjustment for dilution (*2)

310－

Amortization of trademark rights－

37

16,466

1,829

4,462,347 units

4,462,347 units

Total of reserve for temporary difference adjustment (negative
goodwill) used

Total dividends
Total number of investment units issued

Dividend per unit
¥3,690¥410(*1) Oriental Hotel Fukuoka Hakata Station implemented large-scale renovation works accompanied by suspension of hotel
operation from October 1, 2018 to April 8, 2019. Taking into consideration the impact on dividend by the suspensionof hotel operation due to the renovation, reserve for temporary difference adjustment (negative goodwill) is
appropriated.
(*2) Adjustment for dilution of dividend per unit due to issuance of new investment units.

- 18 -

(2) Material events related to going concern assumption
In the fiscal year under review, the hotel market conditions deteriorated sharply due to the impact by the spread of the infection of
COVID-19. JHR recorded a significant year-on-year decrease in revenues and profits since JHR granted exemption of fixed rent
or changed the variable rent structure for certain tenants including HMJ Group and other factors. As the result, debt-service
coverage ratio, which designated in the loan-related contracts with the financial institutions which JHR conducts business with,fell below the predetermined reference value. Since such financial situation caused temporary breach of financial covenants, there
is condition that may cause substantial doubts on going concern. However, JHR has been agreed with the financial institutions
that such financial situation is not considered as a breach of the financial covenants. In case in which the debt-service coverage
ratio is lower than the predetermined reference value in the midterm period of the coming fiscal year and thereafter, JHR may
breach the financial covenants.
Still, JHR believes that there is no material uncertainty regarding the going concern assumption due to consideration of good
relationships between JHR and financial institutions which JHR conducts business with, continuing support from sponsor related
entities, the sufficient amount of cash it has on hand and conservative debt ratio, etc.

- 19 -

2. Financial statements(1) Balance sheets

As of
December 31, 2019
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Income taxes receivable
Derivative assets
Other current assets
Total current assets
Noncurrent assets
Property and equipment, at cost
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Construction in progress
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Net property and equipment
Intangible assets
SoftwareTrademark rightLeasehold rights in trust
Fixed-term leasehold rights in trust
Other intangible assets
Total intangible assets
Investments and other assets
Security deposits
Leasehold and security deposits in trust
Long-term prepaid expenses
Derivative assets
Reserve for repairs and maintenanceTotal investments and other assets
Total noncurrent assets
Deferred assets
Investment unit issuance costs
Investment corporation bond issuance costs
Total deferred assets
Total assets*1- 20 -(thousands of yen)
As ofDecember 31, 2020

22,449,911
11,894,019
2,779,730
550,28154573
88,04537,762,616

19,382,019
9,171,145
672,415533,15042－
82,69829,841,471

579,731(195,551)
384,180
4,211,971(2,102,782)
2,109,188－
136,930,501(21,656,979)
115,273,521
2,721,962(438,160)
2,283,802
675,362(154,739)
520,622
136,526(104,535)
31,990219,901,119
18,384
340,522,811

622,365(252,877)
369,487
4,373,456(2,739,679)
1,633,776
2,761
137,193,115(25,172,139)
112,020,975
2,772,035(511,004)
2,261,030
683,995(183,954)
500,040
133,628(112,061)
21,566
216,410,533
83,507
333,303,679*1

227,600－
28,532,362
5,036,941
7,756
33,804,661

162,441
523,498
28,532,362
4,765,994
7,076
33,991,374

12,520150,223
2,766,474
43,870307,5133,280,602
377,608,075

12,520150,223
2,449,539－
314,067
2,926,350
370,221,403

140,631
211,194
351,826
415,722,517

56,111
177,418
233,529400,296,404

(thousands of yen)
As ofDecember 31, 2019
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of investment corporation bonds
Current portion of long-term loans payable
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Dividends payable
Deposits received
Derivative liabilities
Other current liabilities
Total current liabilities
Long-term liabilities
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Derivative liabilities
Deferred tax liabilities
Asset retirement obligations
Total long-term liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
SurplusCapital surplus
Voluntary reserve
Reserve for temporary difference adjustment
Reserve for tax purpose reduction entry
Reserve for special account for tax purpose reduction
entry
Total voluntary reserve
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains (losses) on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 21 -

As ofDecember 31, 2020

1,485,375

2,654,679
12,782,000
1,500,000
10,800,000
527,572
1,210
143,389
423,355
17,381
9,111
21,39842,76328,922,861－－

12,782,000
651,435
1,210
661,048909,293
15,852
8,696
17,22995,331
16,627,473
41,600,000
114,372,000
1,040,520
4,681,825
416,600
13,981
447,677
162,572,605
179,200,079

40,100,000
103,572,000
1,040,520
4,356,804
767,749

186,894,169

186,894,169

21,746,398

21,746,398－

10,617,580
1,174,860

1,174,860－

12,968,932
15,290,314
50,005,645
236,899,815

11,792,441
1,527,790
35,066,630
221,960,800(377,376)(377,376)*3 236,522,438
415,722,517(759,492)(759,492)*3 221,201,308
400,296,404*2

11,794,071－

335,161
150,172,234
179,095,095*2

(2) Statements of income(thousands of yen)
For the year ended
December 31, 2019
Operating revenue
Real estate operating revenue
Other real estate operating revenue
Gain on sales of real estate properties
Gain on exchange of real estate properties
Total operating revenue
Operating expenses
Real estate operating costs
Asset management fee
Asset custody and Administrative service fee
Directors’ compensation
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends
Gain on insurance claims
Refunded fixed asset tax
Interest on tax refunds
Gain on derivative instruments
Total non-operating income
Non-operating expenses
Interest expense
Interest expense on investment corporation bonds
Borrowing costs
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Loss on derivative instruments
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain from collection of security deposits
Total extraordinary income
Income before income taxes
Income taxes – current
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)*1*1

For the year ended
December 31, 2020

27,107,988
1,170,561－－

28,278,550*1

8,997,408
1,781,691
119,138
14,400217,357
11,129,995
17,148,555*1*1

8,717,332
1,479,381
125,986
17,400322,710
10,662,810
3,176,022

357
4,361
28,063
1,239
549
12,382
46,953278
3,535
34,217940,789284,524
483,761
30,298151,922378
12,3091,903,983
15,291,524

963,502316,795
399,645
33,776
84,5204,802
13,9891,817,032
1,398,255－

130,000
130,000
1,528,255
1,210
1,210
1,527,045
744
1,527,790－

15,291,524
1,210
1,210
15,290,314－

15,290,314- 22 -

9,603,724
892,001*2 3,158,381*3 184,725
13,838,832
*1

－

95
1,138
39,266

(3) Statements of changes in net assets
For the year ended December 31, 2019
(thousands of yen)
Unitholders’ equity
Surplus
Voluntary reserve
Unitholders’capitalBalance, January 1, 2019
Changes of items during theyear:
Issuance of new investment
units
Reversal of reserve fortemporary difference
adjustment
Provision of reserve for
special account for tax
purpose reduction entry

153,516,129

Reserve for
specialaccount for
tax purpose
reduction
entry

CapitalsurplusReserve fortemporarydifference
adjustment

21,746,398

12,357,644

Total
voluntary
reserve-

12,357,644

Unappropriatedretainedearnings(undisposed
loss)
16,213,482

Total
unitholders’ equity

Total
surplus50,317,525 203,833,655

33,378,040

33,378,040(563,572)
1,174,860(563,572)

563,572－－

1,174,860(1,174,860)－－

Dividends paid

(15,602,194) (15,602,194) (15,602,194)

Net income

15,290,314

Net changes of items
other than unitholders’equityTotal changes of items
during the year
Balance, December 31, 2019－

(563,572)

1,174,860

611,287(923,168)(311,880) 33,066,160*1

21,746,398

11,794,071

1,174,860

12,968,932

15,290,314

50,005,645 236,899,815

186,894,169(461,435)(461,435) 203,372,219

Changes of items during theyear:
Issuance of new investment
units
Reversal of reserve fortemporary difference
adjustment
Provision of reserve for
special account for tax
purpose reduction entry

33,378,040－－

Dividends paid

(15,602,194)

Net income

15,290,314

Net changes of items
other than unitholders’equityTotal changes of items
during the year
Balance, December 31, 201915,290,314

33,378,040(thousands of yen)
Valuation and translation
adjustments
Total
Total
Deferred
net assets
valuation andgains (losses)
translation
on hedges
adjustments
Balance, January 1, 201915,290,314

84,05984,05984,05984,05984,05933,150,219(377,376)(377,376) 236,522,438- 23 -

For the year ended December 31, 2020
(thousands of yen)
Unitholders’ equity
Surplus
Voluntary reserve
Unitholders’capitalBalance, January 1, 2020

Capitalsurplus186,894,169 21,746,398

Changes of items during theyear:
Reversal of reserve fortemporary difference
adjustment
Provision of reserve for tax
purpose reduction entry
Reversal of reserve for
special account for tax
purpose reduction entry

Reserve fortemporarydifference
adjustment

Reserve fortax purpose
reduction
entry

Reserve for
specialaccount for
tax purpose
reduction
entry

11,794,071－

1,174,860(1,176,490)
1,174,860(1,174,860)

Total
voluntary
reserve

15,290,314

50,005,645(1,176,490)

1,176,490－

1,174,860(1,174,860)－(1,174,860)

1,174,860－(16,466,060)(16,466,060)

1,527,045

1,527,045

Net income

Balance, December 31, 2020－－

(1,176,490)

1,174,860(1,174,860)(1,176,490)(13,762,523)(14,939,014)*1

21,746,398

10,617,580

1,174,860－

11,792,441

1,527,790

35,066,630

186,894,169

Unitholders’ equity
Total unitholders’equityBalance, January 1, 2020
Changes of items during theyear:
Reversal of reserve fortemporary difference
adjustment
Provision of reserve fortax purpose reduction
entry
Reversal of reserve for
special account for tax
purpose reduction entry
Dividends paid
Net income
Net changes of items
other than unitholders’equityTotal changes of items
during the year
Balance, December 31, 2020

Total
surplus12,968,932

Dividends paid

Net changes of items
other than unitholders’equityTotal changes of items
during the year

Unappropriatedretainedearnings(undisposed
loss)

236,899,815

Valuation and translation
adjustments
Total
Deferredvaluation andgains (losses)
translation
on hedges
adjustments(377,376)(thousands of yen)

(377,376)

Total
net assets

236,522,438

－

－

－

－

－

－

(16,466,060)(16,466,060)

1,527,045

1,527,045(382,115)(382,115)(382,115)(14,939,014)(382,115)(382,115)(15,321,130)

221,960,800(759,492)(759,492)

221,201,308- 24 -

(4) Statements of cash dividends
Classification
I. Unappropriated retained earnings

For the year ended
December 31, 2019

For the year ended
December 31, 2020

¥15,290,314,375¥1,527,790,689*1 ¥1,176,490,844*1 ¥305,694,382

II. Reversal of voluntary reserve
Reversal of reserve fortemporary difference adjustment
Reversal of reserve for special
advanced depreciation
III. Dividends[Dividend per unit]¥1,174,860,958－¥16,466,060,430[¥3,690]¥1,829,562,270[¥410]¥1,174,860,958－¥744,789¥3,922,801

IV. Voluntary reserve
Provision of reserve foradvanced depreciation
V. Retained earnings carried forward
Method of calculating the amount ofdividends

In accordance with the monetary distribution
policy stipulated in Article 34, paragraph 1

In accordance with the monetary distribution
policy stipulated in Article 34, paragraph 1of JHR’s Articles of Incorporation, amountof dividend must exceed 90% of JHR’sof JHR’s Articles of Incorporation, amountof dividend must exceed 90% of JHR’s

distributable profit that is defined by Article
67-15 of the Act on Special Measures

distributable profit that is defined by Article
67-15 of the Act on Special Measures

Concerning Taxation. It was decided that
¥16,466,060,430, which excludes fractions

Concerning Taxation. It was decided that
¥1,829,562,270, which excludes fractions ofof less than one yen of dividend per unit from
¥16,466,805,219, an amount calculated byless than one yen of dividend per unit from
¥1,833,485,071, an amount calculated byadding a reversal of reserve for temporary
difference adjustment of ¥1,176,490,844 toadding a reversal of reserve for temporary
difference adjustment of ¥305,694,382 tounappropriated retained earnings of¥15,290,314,375, would all be distributed.

unappropriated retained earnings of¥1,527,790,689, would all be distributed.

The monetary distribution in excess ofearnings stipulated in Article 34, paragraph 1

The monetary distribution in excess ofearnings stipulated in Article 34, paragraph 1(4) of JHR’s Articles of Incorporation will
not be made.

(4) of JHR’s Articles of Incorporation will
not be made.

- 25 -

(5) Statements of cash flows(thousands of yen)
For the year ended
December 31, 2019
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Gain on exchange of real estate properties
Loss on retirement of noncurrent assets
Loss (Profit) on derivative instruments
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Decrease in property and equipment due to sale
Decrease in property and equipment in trust due to sale
Proceeds from refund of guarantee deposits
Interest income
Interest expense
Interest on tax refunds(Increase) decrease in operating accounts receivable(Increase) decrease in prepaid expenses(Increase) decrease in long-term prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accrued expenses
Increase (decrease) in consumption taxes payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Other – net
SubtotalInterest received
Interest paid
Interest received on tax refunds
Income taxes – refunded (paid)
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property and equipment
Purchase of property and equipment in trust
Purchase of intangible assets
Payments of reserve for repairs and maintenance
Proceeds from collection of guarantee deposits
Reimbursements of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Reimbursements of tenant leasehold and security deposits in trust
Net cash used in investing activities
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from investment corporation bonds
Redemption of investment corporation bonds
Payments for investment corporation bond issuance costs
Proceeds from issuance of investment units
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

- 26 -For the year ended
December 31, 2020

15,291,524
4,557,414－
246,890(12,004)
30,298151,922－－－(357)
1,225,314(549)(305,608)(22,789)(78,478)(240,644)
116,600
164,127
27,2401,380
69,494
21,221,777
482(1,220,857)
549(1,230)20,000,722

1,528,255
4,761,907(184,725)
5,701
3,663
33,776
84,5201,010
4,789,585(130,000)(278)
1,280,297(95)
2,107,315
17,130316,935
1,693,683(124,063)(517,659)(485,938)
414(153,173)
15,028,266
312(1,280,097)
95(1,197)
13,747,378(1,332,712)(71,102,935)(89,263)(40,453)－(496)
329,120(228,114)(72,464,854)(476,704)(1,858,016)(604,760)(36,549)
130,000－
64,941(296,047)(3,077,137)

8,000,000(8,000,000)
37,000,000(12,917,000)
10,000,000(2,000,000)(69,102)33,209,706(15,600,256)
49,623,347(2,840,785)
37,184,716*1 34,343,930

18,574,000(5,792,000)－(12,782,000)－－－－(16,461,008)(16,461,008)(5,790,766)
34,343,930*1 28,553,164

(6) Notes on going concern assumption
Not applicable.

(7) Notes on matters concerning significant accounting policies
1.

Method ofdepreciation andamortization of
noncurrent assets(1) Property and equipment (including trust accounts)
Depreciation of property and equipment is calculated using the straight-line method. The useful livesof major property and equipment components are as follows:
Machinery and equipment
2 to 17 years
Tools, furniture and fixtures
Buildings in trust

2 to 20 years
2 to 64 years

Structures in trust
Machinery and equipment in trust

2 to 64 years
3 to 32 years

Tools, furniture and fixtures in trust(2) Intangible assets

2 to 27 years

Intangible assets are amortized using the straight-line method. The amortization period of major
intangible assets is as follows.
Software (for internal use)
Trademark right

5 years as internally usable years
10 years

Fixed-term leasehold rights in trust are amortized using the straight-line method based on remaining
period (41 years and 49 years) of the contract.
(3) Long-term prepaid expenses
Long-term prepaid expenses are amortized using the straight-line method.
2.

Accounting fordeferred assets(1) Investment unit issuance costs
Investment unit issuance costs are amortized using the straight-line method over three years.
(2) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the interest method over therespective term of the bond.

3.

Standards forrecognition ofTreatment of property taxes and other taxes
For taxes imposed on properties under management such as property taxes, city planning taxes, andrevenues andexpensesdepreciable asset taxes, the imposed amounts are allocated to the respective period and expensed as “Realestate operating costs.”
Cash paid for property taxes and city planning taxes to the transferor of real properties at acquisition is notrecorded as “Real estate operating costs” but capitalized as part of the acquisition cost of the relevant
property.
The amount of such taxes capitalized in the acquisition cost of real properties was ¥249,415 thousand forthe year ended December 31, 2019, and none for the year ended December 31, 2020.

4.

Method of(1) Method of hedge accounting

hedge accounting

Deferred hedge accounting is applied(2) Hedging instruments and hedged items
Hedging instruments
Interest rate swaps
Hedged items
Interest rates on loans payable(3) Hedging policy
JHR enters into certain derivative transactions in accordance with its financial policy in order tomanage risks, which is provided in the Articles of Incorporation.
(4) Method for assessing hedge effectiveness
JHR evaluates hedge effectiveness by comparing the cumulative changes in cash flow of hedging
instruments and the hedged items and assessing the ratio between the changes.

- 27 -

5.

Scope of funds(cash and cash

Cash and cash equivalents in the statements of cash flows consist of cash on hand, cash in trust accounts,
bank deposit and trust deposit, which can be withdrawn at any time, and short-term investments with aequivalents) in
the statements ofmaturity of three months or less when purchased, which can easily be converted to cash and subject tominimal risk of change in value.

cash flows
6.

Other
significant matters(1) Accounting treatment of beneficial interests in trust with real estate, etc. as their assets
For trust beneficial interests in real estate, etc., all assets and liabilities held in trust accounts as wellserving as the basis
for preparing

as all income generated and expenses incurred from assets in trust are presented in the accompanying
balance sheet and income statement accounts accordingly.

financial statements

The following material items of the trust accounts recorded in the relevant accounts are presented
separately on the balance sheets.
(a) Cash and deposits in trust(b) Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools, furniture andfixtures in trust; Land in trust; Construction in progress in trust(c) Leasehold rights in trust; Fixed-term leasehold rights in trust; Leasehold and security deposits
in trust(d) Tenant leasehold and security deposits in trust(2) Accounting treatment of consumption taxes
Consumption taxes are excluded from the transaction amounts.

- 28 -

(8) Notes to financial statements
Disclosure of notes on “securities,” “share of (profit) loss of entities accounted for using equity method,” “related-party
transactions” and “retirement benefits” is omitted because the significance of disclosure in the financial report is minimal.

[Notes to balance sheets]*1. Accumulated advanced depreciation of property and equipment deducted from acquisition costs due to government subsidies
received, etc.
(thousands of yen)
As ofDecember 31, 2019
Buildings in trust

As ofDecember 31, 2020
¥24,921¥24,921*2. Matters concerning provision and reversal of reserve for temporary difference adjustment
As of December 31, 2019
Amount ofinitialaccrualBalance at
beginning of
periodAmount ofprovision
during period

Amount ofreversalduringperiod13,127,153

12,357,644－

563,572(thousands of yen)
Balance at
end ofperiodGrounds for provision and reversal

11,794,071

Allocation for dividend

Dividend
reserve(Note)(Note) Dividend reserve indicates the remaining balance of the amount subdivided into gain on negative goodwill which wasrecorded as a dividend reserve before the fiscal year ended December 31, 2016, and is scheduled for reversal every fiscal
year, starting from the fiscal year following the fiscal year in which the reserve was made, in an amount that shall be no lessthan that in equal amounts every fiscal year over a period of no more than 50 years.
As of December 31, 2020
Amount ofinitialaccrualBalance at
beginning of
periodAmount ofprovision
during period

Amount ofreversalduringperiod13,127,153

11,794,071－

1,176,490(thousands of yen)
Balance at
end ofperiodGrounds for provision and reversal

10,617,580

Allocation for dividend

Dividend
reserve(Note)(Note) Dividend reserve indicates the remaining balance of the amount subdivided into gain on negative goodwill which wasrecorded as a dividend reserve before the fiscal year ended December 31, 2016, and is scheduled for reversal every fiscal
year, starting from the fiscal year following the fiscal year in which the reserve was made, in an amount that shall be no lessthan that in equal amounts every fiscal year over a period of no more than 50 years.
*3. Minimum net assets as required by Article 67, paragraph 4 of the Investment Trusts Act
As ofDecember 31, 2019
¥50,000 thousand- 29 -

As ofDecember 31, 2020
¥50,000 thousand

[Notes to statements of income]*1. Components of real estate operating revenue and real estate operating costs(thousands of yen)
For the year ended
December 31, 2019A.

For the year ended
December 31, 2020

Real estate operating revenue
Real estate operating revenue
Fixed rent
Variable rent

15,931,097
8,675,885

Income from management contracts

7,640,060
1,902,240

2,501,004

61,423

27,107,988

9,603,724

Parking lots
Other incidental revenue

161,660
63,016

116,458
83,051

Utilities
Other

803,012
142,873

546,450
146,041

Total
Other real estate operating revenue

Total
Total real estate operating revenue
B.

892,001
10,495,725

Real estate operating costs
Real estate operating costs
Land lease and other rent expenses

C.

1,170,561
28,278,550

898,207890,001

Property taxes
Outsourcing expenses (Note)

1,658,930
653,041

1,915,565
423,852

Nonlife insurance
Depreciation and amortization

51,0304,557,414

67,271
4,761,907

Loss on retirement of noncurrent assets
Repairs

246,890
41,4105,701
29,261

Utilities
Trust fees

818,290
44,679559,044
42,480Other

27,511

22,245

Total real estate operating costs

8,997,408

8,717,332

Net real estate operating income (A − B)

19,281,141

1,778,393(Note) Outsourcing expenses include management fees of ¥296,029 thousand for the year ended December 31, 2019, and ¥70,119 thousand for the year ended
December 31, 2020.

*2．Breakdown of gain on sales of real estate properties
For the year ended December 31, 2019
Not applicable.
For the year ended December 31, 2020
(thousands of yen)
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi
Proceeds from sale of real estate
Cost of sale of real estate

8,000,000
4,790,596

Other related sales expenses

51,021Gain on sales of real estate properties

3,158,381- 30 -

*3．Breakdown of gain on exchange of real estate properties
For the year ended December 31, 2019
Not applicable.
For the year ended December 31, 2020
(thousands of yen)
HOTEL ASCENT FUKUOKA (part of site)
Proceeds from transfer of real estate

523,000

Cost of transfer of real estate
Other related transfer expenses

333,359
4,915

Gain on exchange of real estate properties

184,725[Notes to statements of changes in net assets]
For the year ended
December 31, 2019

For the year ended
December 31, 2020

*1 Total number of investment units
authorized, and issued and outstanding
Total number of investment units authorized

20,000,000 units

20,000,000 units

Total number of investment units issued and outstanding

4,462,347 units

4,462,347 units[Notes to statements of cash dividends]*1. Reserve for temporary difference adjustment
For the year ended December 31, 2019
By application of the transitional measures of Paragraph 3 of the Supplementary Provisions of the “Ordinance on Accountingsof Investment Corporations” (Cabinet Office Ordinance No. 27 of 2015), ¥13,127,153,216 in dividend reserve that is theremaining balance of the amount subdivided into gain on negative goodwill recorded in prior fiscal years is set aside as
reserve for temporary difference adjustment on the statements of cash dividends for the year ended December 31, 2016.
Starting from the fiscal year following the fiscal year in which the reserve was made, reversal of the concerned reserveamount in an amount that shall be no less than the 50-year even amortization amount (¥262,543,065) of the remaining balanceof the amount when the reserve was made, is required. In this fiscal year under review, reversal of ¥1,176,490,844 has been
decided, which is the amount calculated by adding ¥246,890,844 equivalent to loss on retirement of fixed assets,¥357,000,000 for the large-scale renovation at Oriental Hotel Fukuoka Hakata Station (former name: Hotel Centraza Hakata)and ¥310,000,000 for adjustment to dilution of dividend per unit due to capital increase through public offering to¥262,600,000 of the reversal.
For the year ended December 31, 2020
By application of the transitional measures of Paragraph 3 of the Supplementary Provisions of the “Ordinance on Accountingsof Investment Corporations” (Cabinet Office Ordinance No. 27 of 2015), ¥13,127,153,216 in dividend reserve that is theremaining balance of the amount subdivided into gain on negative goodwill recorded in prior fiscal years is set aside as
reserve for temporary difference adjustment on the statements of cash dividends for the year ended December 31, 2016.
Starting from the fiscal year following the fiscal year in which the reserve was made, reversal of the concerned reserveamount in an amount that shall be no less than the 50-year even amortization amount (¥262,543,065) of the remaining balanceof the amount when the reserve was made, is required. In this fiscal year under review, reversal of ¥305,694,382 has been
decided, which is the amount calculated by adding ¥5,701,616 equivalent to loss on retirement of fixed assets and¥37,392,766 equivalent to amortization of trademark right to ¥262,600,000 of the reversal.

- 31 -

[Notes to statements of cash flows]*1. Relation of balance of cash and cash equivalents at end of year and the amount in balance sheet accounts
For the year ended
December 31, 2019
Cash and deposits(thousands of yen)
For the year ended
December 31, 2020

¥22,449,911¥19,382,019

Cash and deposits in trust¥11,894,019¥9,171,145

Cash and cash equivalents¥34,343,930¥28,553,164[Notes on lease transactions]Operating leases (as lessor)
Minimum rental revenue under non-cancellable operating leases
As ofDecember 31, 2019

(thousands of yen)
As ofDecember 31, 2019

Due within one year

¥1,459,034¥990,152

Due after one year

¥2,106,234¥1,213,075

Total¥3,565,268¥2,203,227[Notes on financial instruments]
1. Matters concerning status of financial instruments(1) Policy for financial instruments
JHR is an investment corporation set forth in Article 2, paragraph 12 of the Investment Trusts Act, managing investments
mainly in specified assets as prescribed in the Investment Trusts Act. As a policy, JHR procures funds through issuance ofinvestment units, etc. and loans from financial institutions in order to make investments in specified assets. JHR does not
utilize surplus funds to invest in financial instruments except for short-term deposits and other equivalent short-term
financial instruments. JHR may enter into derivative transactions in order to hedge against interest rate risk, but not for
speculative trading purposes.
(2) Details of financial instruments, their risks, and risk management system
Operating accounts receivable is operating receivables and is exposed to credit risks of clients. As for the risks, JHR is
managing payment dates and balances by each client with an aim to grasp concerns in collecting due to deterioration in theirfinancial status and other factors in early stage and reduce the risks.
The floating rate loans payable are exposed to risks of interest rate fluctuations. In order to mitigate interest rate risk, JHR
may enter into derivative transactions, if necessary, to fix the interest expense.
Derivative transactions are conducted principally in accordance with rules prescribed by JHR and risk management rules
applied by the Asset Management Company. Derivative transactions are arranged by the section in charge of finance at theAsset Management Company by using financial institutions with high credit ratings through approval and resolution byauthorized personnel and a meeting committee structure set forth in its decision-making standards and resolution of JHR’sboard of directors.
Loans payable are exposed to liquidity risks. The section in charge of finance at the Asset Management Company preparesand updates projections and actual cash flows on a monthly basis to manage liquidity risks and monitor compliance withrestrictive covenants set forth in the loan agreements. JHR manages liquidity risks by managing the ratio of short-term andlong-term loans payable considering the current financial environment through approval and resolution by authorized
personnel and meeting committee structure in the Asset Management Company and resolution of JHR’s board of directors.
(3) Supplementary explanation on matters concerning fair value, etc. of financial instruments
Regarding the contract amount, etc. of derivative transactions in “2. Matters concerning fair value of financial instruments,”
the amount itself does not indicate certain scale of market risk exposure related to derivative transactions.

- 32 -

2. Matters concerning fair value of financial instruments
Carrying amounts of financial instruments on the balance sheets, their fair values, and the differences as of December 31,
2019, were as follows. Financial instruments whose fair values are considered extremely difficult to measure are not includedin the table. See Note 2 below.
Carrying amount(JPY 1,000)

Fair value(JPY 1,000)

Difference(JPY 1,000)(1) Cash and deposits

22,449,911

22,449,911―(2) Cash and deposits in trust

11,894,019

11,894,019―(3) Operating accounts receivable

2,779,730

2,779,730―

Total assets

37,123,661

37,123,661―(4) Short-term loans payable

―

―

―

(5) Current portion of investment corporation bonds
payable―――(6) Current portion of long-term loans payable

12,782,000

12,782,000―(7) Investment corporation bonds

41,600,000

41,480,400(119,600)(8) Long-term loans payable

114,372,000

114,372,000―

Total liabilities

168,754,000

168,634,400(119,600)(9) Derivative transactions (*)(389,386)(389,386)―(*) Receivables and payables arising from derivative transactions are presented on a net basis and amounts in parenthesis denote net
payables.
Carrying amounts of financial instruments on the balance sheets, their fair values, and the differences as of December 31,
2020, were as follows. Financial instruments whose fair values are considered extremely difficult to measure are not includedin the table. See Note 2 below.
Carrying amount
Fair value
Difference(JPY 1,000)(JPY 1,000)(JPY 1,000)(1) Cash and deposits

19,382,019

19,382,019―(2) Cash and deposits in trust

9,171,145

9,171,145―

672,415

672,415―

Total assets

29,225,579

29,225,579―(4) Short-term loans payable

12,782,000

12,782,000―(5) Current portion of investment corporation bonds
payable1,500,000

1,468,350(31,650)(6) Current portion of long-term loans payable

10,800,000

10,800,000―(7) Investment corporation bonds

40,100,000

34,415,280(5,684,720)(8) Long-term loans payable

103,572,000

103,572,000―

Total liabilities

168,754,000

163,037,630(5,716,370)(3) Operating accounts receivable(9) Derivative transactions (*)(789,147)(789,147)―(*) Receivables and payables arising from derivative transactions are presented on a net basis and amounts in parenthesis denote net
payables.
(Note 1) Methods to measure fair value of financial instruments, and derivative transactions(1) Cash and deposits; (2) Cash and deposits in trust; (3) Operating accounts receivable; (4) Short-term loans payable
The carrying value is deemed to approximate the fair value since the instruments are scheduled to be settled in a short periodof time. Therefore, carrying value is stated.
(5) Current portion of investment corporation bonds payable; (7) Investment corporation bonds
The fair value of these instruments is measured based on the market price.
(6) Current portion of long-term loans payable; (8) Long-term loans payable
The carrying value is deemed to approximate the fair value since the interest rate on long-term loans payable are floatinginterest rates which are revised periodically to reflect market interest rates.
(9) Derivative transactions
The information on the fair value of derivative transactions is presented in “Notes on derivative transactions” below.
- 33 -

(Note 2) Carrying amount of financial instruments whose fair values are considered extremely difficult to measure(thousands of yen)
As ofDecember 31, 2019

Classification

As ofDecember 31, 2020

Tenant leasehold and security deposits

1,040,520

1,040,520

Tenant leasehold and security deposits in trust

4,681,825

4,356,804

Total

5,722,345

5,397,324

Tenant leasehold and security deposits / Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits (in trust) for rental properties are not subject to fair value disclosure because they haveno market price and their actual deposit periods from a tenant’s move-in to move-out are not estimable, thus making areasonable estimate of future cash flows is difficult.
3. Redemption schedule for monetary claims subsequent to the account closing date
As of December 31, 2019
Due within
one year(JPY 1,000)

Due after
one to two
years(JPY 1,000)

Due after
two to threeyears(JPY 1,000)

Due after
three to four
years
(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

Cash and deposits

22,449,911

―

―

―

―

―

Cash and deposits in trust

11,894,019

―

―

―

―

―

Operating accounts receivable

2,779,730

―

―

―

―

―

Total

37,123,661

―

―

―

―

―

Due within
one year(JPY 1,000)

Due after
one to two
years(JPY 1,000)

Due after
two to threeyears(JPY 1,000)

Due after
three to four
years
(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

Cash and deposits

19,382,019

―

―

―

―

―

Cash and deposits in trust

9,171,145

―

―

―

―

―

672,415

―

―

―

―

―

29,225,579

―

―

―

―

―

As of December 31, 2020

Operating accounts receivable
Total

4. Schedule for repayment of loans payable and redemption of investment corporation bonds subsequent to the account closing
date
As of December 31, 2019
Due within
one year(JPY 1,000)

Due after
one to two
years(JPY 1,000)

Due after
two to threeyears(JPY 1,000)

Due after
three to four
years
(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

Short-term loans payable

―

―

―

―

―

―

Current portion of investment
corporation bonds payable

―

―

―

―

―

―

12,782,000

―

―

―

―

―

Investment corporation bonds―

1,500,000

6,000,000―

3,000,000

31,100,000

Long-term loans payable―

10,800,000

10,900,000

15,772,000

18,650,000

58,250,000

12,782,000

12,300,000

16,900,000

15,772,000

21,650,000

89,350,000

Current portion of
long-term loans payableTotal- 34 -

As of December 31, 2020
Due within
one year(JPY 1,000)

Due after
one to two
years(JPY 1,000)

Due after
two to threeyears(JPY 1,000)

Due after
three to four
years
(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

Short-term loans payable

12,782,000

―

―

―

―

―

Current portion of investment
corporation bonds payable

1,500,000

―

―

―

―

―

Current portion of
long-term loans payable

10,800,000

―

―

―

―

―

Investment corporation bonds―

6,000,000―

3,000,000―

31,100,000

Long-term loans payable―

10,900,000

15,772,000

18,650,000

19,000,000

39,250,000

25,082,000

16,900,000

15,772,000

21,650,000

19,000,000

70,350,000

Total- 35 -

[Notes on derivative transactions]
1. Derivative transactions to which hedge accounting is not applied
As of December 31, 2019
For derivative transactions which hedge accounting is not applied, the contract amount or the amount equivalent to theprincipal provided in the contract, etc. as of the account closing date was as follows:(thousands of yen)Classification

Type, etc. of
derivative transaction

Transactions
other thanmarkettransactions

Interest rate swaps(fixed rate payment,
floating rate receipt)

Contract amount, etc.
Of which, due
after one year
3,494,000

3,494,000

Fair value

Method to measure the fair value

The fair value is measured at the(25,992) quoted price, etc. obtained from thecounterparty financial institutions.

As of December 31, 2020
For derivative transactions which hedge accounting is not applied, the contract amount or the amount equivalent to theprincipal provided in the contract, etc. as of the account closing date was as follows:(thousands of yen)Classification

Type, etc. of
derivative transaction

Transactions
other thanmarkettransactions

Interest rate swaps(fixed rate payment,
floating rate receipt)

Contract amount, etc.
Of which, due
after one year
3,494,000

3,494,000

Fair value

Method to measure the fair value

The fair value is measured at the(29,655) quoted price, etc. obtained from thecounterparty financial institutions.

2. Derivative transactions to which hedge accounting is applied
As of December 31, 2019
For derivative transactions which hedge accounting is applied, the contract amount or the amount equivalent to the principal
provided in the contract, etc. as of the account closing date for each method of hedge accounting was as follows:(thousands of yen)
Method ofhedge
accounting

Type, etc. of
derivative transaction

DeferralmethodInterest rate swaps(fixed rate payment,
floating rate receipt)Mainhedged item

Long-termloans payable

Contract amount, etc.
Of which, due
after one year
112,654,000

101,072,000

Fair value

Method to measure thefair value

The fair value ismeasured at the quoted(363,394) price, etc. obtained
from the counterparty
financial institutions.

As of December 31, 2020
For derivative transactions which hedge accounting is applied, the contract amount or the amount equivalent to the principal
provided in the contract, etc. as of the account closing date for each method of hedge accounting was as follows:(thousands of yen)
Method ofhedge
accounting

Type, etc. of
derivative transaction

DeferralmethodInterest rate swaps(fixed rate payment,
floating rate receipt)Mainhedged item

Long-termloans payable

Contract amount, etc.
Of which, due
after one year
101,072,000- 36 -

90,272,000

Fair value

Method to measure thefair value

The fair value ismeasured at the quoted(759,492) price, etc. obtained
from the counterparty
financial institutions.

[Notes on tax-effect accounting]1.

Significant components of deferred tax assets and liabilities by cause(thousands of yen)
As ofDecember 31, 2019

As ofDecember 31, 2020

Deferred tax assets:
Valuation difference on assets accepted through merger

1,712,010

1,696,476

Amortization of fixed-term leasehold of land

162,810206,151

Asset retirement obligations

14,951

15,530―11,763

Deferred gains (losses) on hedges

128,306

238,937

Total gross deferred tax assets

2,018,079

2,168,860(2,018,079)(2,168,860)――

13,981―

13,981―

Amortization of trademark right

Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Deferred gains (losses) on hedges
Total gross deferred tax liabilities
2.

Details of major causes of material differences between the statutory tax rate and the tax rate under effective tax accounting
As ofDecember 31, 2019

Statutory tax rate

As ofDecember 31, 2020
31.51%

31.46%

Deduction for dividends paid

(31.72%)(34.09%)Change in valuation allowance

0.20%

2.63%

Other – net

0.03%

0.08%

Actual effective tax rate

0.01%

0.08%

[Adjustments][Notes on asset retirement obligations]
Asset retirement obligations recognized on the balance sheet
1. Outline of the subject asset retirement obligations
JHR recognizes asset retirement obligations as it is obliged to restore the land of Oriental Hotel Fukuoka Hakata Station(former name: Hotel Centraza Hakata), acquired on April 1, 2016, and HOTEL ASCENT FUKUOKA, acquired on August 19,
2016, to the original state in accordance with the fixed-term leasehold agreement. For the asset retirement obligations of
HOTEL ASCENT Fukuoka, the obligations have been expired with the termination of the fixed-term leasehold agreement on
its land due to the exchange of part of the site as of October 29, 2020.
2. Calculation method of the subject asset retirement obligations
Calculated the amount of asset retirement obligations estimating that the expected useful life is 34 years and 48 years,
respectively, due to their remaining use period and using the discount rate of 0.484% and 0.394%, respectively.

- 37 -

3. Increase and decrease of the subject asset retirement obligations(thousands of yen)
For the year ended
December 31, 2019
Balance at beginning of period
Increase due to acquisition of property and equipment
Adjustment due to passage of time
Decrease due to expiration of asset retirement
obligations
Balance at end of period

For the year ended
December 31, 2020
445,622447,677

―

―

2,054

1,989

―

(114,505)

447,677

335,161[Notes on segment and related information]
1. Segment information
The segment information has been omitted because JHR has only one segment, which is the investment and management ofhotel real estate.
2. Related information
For the year ended December 31, 2019(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in a single
product / service category accounted for more than 90% of total operating revenue on the statements of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Name of related segment

Hotel Management Japan Co., Ltd.
(Note)

15,221,983

Investment and management of hotel real estate

AAPC Japan K.K.

2,996,251

Investment and management of hotel real estate(Note) Operating revenue includes the operating revenue of customers belonging to the same company group as said customers.

For the year ended December 31, 2020
(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in a single
product / service category accounted for more than 90% of total operating revenue on the statements of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located in- 38 -

Japan accounted for more than 90% of net property and equipment on the balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer
Hotel Management Japan Co., Ltd.
(Note 1)

Operating revenue

Name of related segment

1,990,793

Investment and management of hotel real estate

THE DAI-ICHI BUILDING CO., LTD. Undisclosed (Note 2)

Investment and management of hotel real estate(Note 1) Operating revenue includes the operating revenue of customers belonging to the same company group as said customers.
(Note 2) Undisclosed as the consent on disclosure has not been obtained from the lessee.

[Notes on rental properties, etc.]
JHR owns rental properties for hotels. The carrying amounts, changes in such balances, and fair values of such properties wereas follows:(thousands of yen)
For the year ended
December 31, 2019Use

For the year ended
December 31, 2020

Carrying amount

Hotel

Balance at beginning of period

306,789,379

374,314,498

Net increase (decrease) during period

67,525,119(7,030,802)

Balance at end of period

374,314,498

367,283,696

525,910,000

493,330,000

Fair value at end of period(Note 1)

Increase during the year ended December 31, 2019, principally represents the acquisition of Hotel Oriental Express Osaka Shinsaibashi for ¥2,841
million and Hilton Tokyo Odaiba for ¥63,468 million. Decrease during the year ended December 31, 2020, principally represents the sale of Sotetsu
Fresa Inn Shimbashi-Karasumoriguchi for ¥4,790 million and recording of depreciation.
Fair value at end of period is the appraisal value determined by external licensed real estate appraisers.

(Note 2)

Real estate operating revenue and costs related to the rental properties were as follows:(thousands of yen)
For the year ended
December 31, 2019Use

For the year ended
December 31, 2020

Amount on the statements of income
Hotel(Note)

Real estate operating revenue

28,278,550

10,495,725

Real estate operating costs

8,997,408

8,717,332

Net real estate operating income

19,281,141

1,778,393“Real estate operating revenue” and “Real estate operating costs” are income from real estate operation (including other income from real estate operation)and corresponding expenses (such as depreciation, property tax, etc., trust fees, repair expenses and others), and are included in “Real Estate operating
revenue” and “Real estate operating costs,” respectively.

- 39 -

[Notes on per unit information]
For the year ended
December 31, 2019

For the year ended
December 31, 2020

Net assets per unit

¥53,004¥49,570

Net income per unit

¥3,447¥342(Note 1)
(Note 2)

Net income per unit is computed by dividing net income by the average number of investment units during the period.
Net income per unit after the adjustment of potentially dilutive units is not presented since there are no potentially dilutive units.
The basis of computation of net income per unit is as follows:

For the year ended
December 31, 2019
Net income (JPY 1,000)

For the year ended
December 31, 2020

15,290,314

1,527,045――

Net income attributable to common investment units (JPY 1,000)

15,290,314

1,527,045

Average number of investment units during period (units)

4,434,849

4,462,347

Amount not attributable to common unitholders (JPY 1,000)[Notes on significant subsequent events]
Not applicable.

[Additional information]
Impact of COVID-19
With the number of infections starting to increase again since November 2020, and despite growing expectations forcontainment of infections as vaccination started in Europe and the U.S., the worldwide spread of the infection by COVID-19
and the deterioration in social and economic conditions have not yet settled, and recovery in hotel performance is expected totake more time.
Under such circumstances, some of the lessees whose business performance has worsened have requested reduction or
postponement of fixed rent, leading to the risk of JHR’s operating revenue possibly decreasing.
Although it is uncertain and difficult to foresee when COVID-19 will be contained, JHR made accounting estimates byapplying impairment accounting for property and equipment based on information available as of the date of preparation ofthis Financial Report and assuming that the impact by COVID-19 will continue through the fiscal year ending December 31,
2021, followed by recovery in performance after a certain period of time.
However, as it is difficult to accurately predict when COVID-19 will be contained and how large its impact will be, JHR may
see its asset status, income and cash flows affected in case the recovery is delayed.

- 40 -

(9) Changes in total number of investment units issued and outstanding
The following is the status of increase (decrease) in the total number of investment units issued and outstanding and unitholders’capital for past five years through to the end of the fiscal year under review.
Total number ofinvestment units
Unitholders’ capitalissued and outstanding(JPY1M)
Date
Capital transaction
Note(Units)Increase
Increase
Balance
Balance(Decrease)(Decrease)
Capital increase throughJanuary 20, 2016
170,000
3,314,227
13,98699,456 (Note 1)
public offering of investment units
Capital increase throughFebruary 17, 2016
7,680
3,321,907
631
100,088 (Note 2)
third-party allotment of investment units
Capital increase throughJuly 27, 2016
428,260
3,750,167
33,813
133,902 (Note 3)
public offering of investment units
Capital increase throughAugust 23, 2016
11,7403,761,907
926
134,829 (Note 4)
third-party allotment of investment units
Capital increase throughJuly 5, 2017
236,000
3,997,907
17,715
152,544 (Note 5)
public offering of investment units
Capital increase throughAugust 2, 201712,9404,010,847
971
153,516 (Note 6)
third-party allotment of investment units
Capital increase throughJanuary 23, 2019447,800
4,458,647
33,104
186,620 (Note 7)
public offering of investment units
Capital increase throughFebruary 20, 2019
3,700
4,462,347
273
186,894 (Note 8)
third-party allotment of investment units(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)New investment units were issued through public offering with an issue price per unit of ¥85,020 (issue value of ¥82,273) in order to procure funds forthe allocation to acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥82,273 in order to procure funds for allocation toacquisition of new properties, etc.
New investment units were issued through public offering with an issue price per unit of ¥81,536 (issue value of ¥78,956) in order to procure funds forthe allocation to acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥78,956 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of other loans, or repair expenses and capital expenditures to maintain or improve
competitiveness of existing properties.
New investment units were issued through public offering with an issue price per unit of ¥77,518 (issue value of ¥75,065) in order to procure funds forthe allocation to acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥75,065 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of other loans, or repair expenses and capital expenditures to maintain or improve
competitiveness of existing properties.
New investment units were issued through public offering with an issue price per unit of ¥76,342 (issue value of ¥73,927) in order to procure funds forthe allocation to acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥73,927 in order to procure funds for allocation to partof acquisitions of new properties, etc.

- 41 -

3. Reference information

For detailed information of each property and the operating results of hotels, please see the reference information below as wellas Financial Results Briefing dated today and the website of JHR (https://www.jhrth.co.jp/en/ir/library.html).

(1) Information on values of assets under management, etc.
(i) Investment status

The following outlines the investment status of JHR as of the end of the fiscal year under review.

Assetcategory

Hotel type
(Note 1)

Prefectural
location

Osaka

1.2

－

－

3,527
2,680
2,022
1,822

0.8
0.6
0.5
0.4

3,491
2,664
2,042
1,806

0.9
0.7
0.5
0.5

1,452

0.3

1,447

0.4

1,194
941
769
6,561
5,792
5,161
2,340
2,022
1,419
6,650
2,833
2,139
1,798
121,41063,42917,486
13,205
9,162
3,178

0.3
0.2
0.2
1.6
1.4
1.2
0.6
0.5
0.3
1.6
0.7
0.5
0.4
29.2
15.3
4.2
3.2
2.2
0.8

1,173
934
768
6,492
5,735
5,450
2,329
2,038
1,401
6,623
2,801
2,170
1,764
116,265
63,376
17,19013,088
9,127
3,145

0.3
0.2
0.2
1.6
1.4
1.4
0.6
0.5
0.4
1.7
0.7
0.5
0.4
29.0
15.8
4.3
3.3
2.3
0.8

17,327

4.2

17,215

4.3

4,099
15,65010,355
9,678
9,560
1,621
174,756

1.0
3.8
2.5
2.3
2.3
0.4
42.0

4,048
15,695
10,254
9,482
9,251
1,606
173,483

1.0
3.9
2.6
2.4
2.3
0.4
43.3

Hotel Nikko Alivila

17,904

4.3

17,790

4.4

Okinawa Marriott Resort & Spa
The Beach Tower Okinawa
Chiba
Hilton Tokyo Bay
Osaka
Hotel Keihan Universal City
Kanagawa
Hakone Setsugetsuka
Subtotal
Real estate in trust – Total

14,924
6,581
26,4085,905
3,689
75,413
371,580

3.6
1.6
6.4
1.4
0.9
18.1
89.4

14,745
6,490
26,2895,830
3,616
74,763364,512

3.7
1.6
6.6
1.5
0.9
18.7
91.1

Deposits and other assets (Note 7)

44,142

10.6

35,783

8.9

Total assets

415,722100.0

400,296100.0

Limited-service
hotel

Hokkaido
Fukuoka
Kyoto
Okinawa
Kumamoto
Nara
Tokyo
Chiba

Full-service hotel

Hiroshima
Aichi
Nara
Hyogo
Fukuoka
Kanagawa

Okinawa

Resort hotel

Holiday Inn Osaka Namba
Namba Oriental Hotel
Hotel Oriental Express Osaka Shinsaibashi
ibis Tokyo Shinjuku
CANDEO HOTELS UENO-KOEN
the b ikebukuro
Sotetsu Fresa Inn ShimbashiKarasumoriguchi (Note 4)
Comfort Hotel Tokyo Higashi Nihombashi
the b hachioji
Smile Hotel Nihombashi Mitsukoshimae
R&B Hotel Ueno Hirokoji
Chisun Hotel Kamata(former Hotel Vista Kamata Tokyo)(Note 5)the b suidobashi
dormy inn·global cabin Asakusa
Chisun Inn Kamata
ibis Styles Sapporo
Mercure Sapporo
HOTEL ASCENT FUKUOKA
the b hakata
Hakata Nakasu Washington Hotel Plaza
Toyoko Inn Hakata-guchi Ekimae
ibis Styles Kyoto Station
Mercure Okinawa Naha
Dormy Inn Kumamoto
Nara Washington Hotel Plaza
Subtotal
Hilton Tokyo Odaiba
Oriental Hotel tokyo bay
Hilton Tokyo Narita Airport
International Garden Hotel Narita
Hotel Francs
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel) (Note 6)
Oriental Hotel Hiroshima
Hilton Nagoya
Hotel Nikko Nara
Kobe Meriken Park Oriental Hotel
Oriental Hotel Fukuoka Hakata Station
Mercure Yokosuka
Subtotal

As ofDecember 31, 2020
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
26,8706.7
14,437
3.6
2,805
0.7
7,830
2.0
6,606
1.7
6,578
1.6

4,801

Tokyo

Real
estate
in
trust

Name

As of
December 31, 2019
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
26,985
6.5
14,539
3.5
2,817
0.7
7,908
1.9
6,644
1.6
6,584
1.6

Amount(JPY1M)
Total liabilities
Total net assets

179,200
236,522- 42 -

Ratio tototal assets
(%)
43.1
56.9

Amount(JPY1M)
179,095
221,201

Ratio tototal assets
(%)
44.7
55.3

(Note 1)(Note 2)

Hotels are categorized as limited-service hotels, full-service hotels or resort hotels according to the manner of operation.
For real estate in trust, “Total amount held” shows the amount calculated by deducting accumulated depreciation from acquisition price (including
expenses incidental to acquisition).
“Ratio to total assets” shows the ratio of total amount of each asset to total assets, rounded off to one decimal place.
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi was sold on July 1, 2020.
Hotel Vista Kamata Tokyo changed its name to Chisun Hotel Kamata on January 1, 2021 due to rebranding following cancellation of lease contract. In
this report, the same shall apply hereinafter.
ACTIVE-INTER CITY HIROSHIMA is classified in accordance with the business category of Sheraton Grand Hiroshima Hotel, its main facility.
Includes machinery and equipment, tools, furniture and fixtures, construction in progress, construction in progress in trust, and intangible assets(excluding leasehold rights in trust and fixed-term leasehold of land in trust).

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(ii) Assets under management(A) Major issues of investment securities
Not applicable(B) Real estate properties under management
Not applicable(C) Other major assets under management
A. Summary of real estate properties (in trust) under management
The following summarizes the real estate properties (in trust) under management by JHR as of the end of the fiscal year underreview.
a. Details of assets under management (acquisition price, etc.)
PropertyNo.

Name

Acquisition
price(JPY1M)(Note 2)Carrying
amountat end ofperiod(JPY1M)(Note 3)

Appraisalvalue
at end ofperiod(JPY1M)(Note 4)Upper-middle

10,9009,654

13,900N

2.9

Unsecured

Grade(Note 1)

Investment
ratio
Appraisal(Acquisition
agencyprice)(Note 5)(%)(Note 6)

Collateral(Note 7)

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

Mid-price

19,90017,367

32,100N

5.4

Unsecured

3

Namba Oriental Hotel

Mid-price

15,00014,51331,400N

4.1

Unsecured

4

Hotel Nikko Alivila

Luxury18,90018,01928,800N

5.1

Unsecured

5

Oriental Hotel Hiroshima

Upper-middle

4,100

4,112

4,130

N

1.1

Unsecured6

ibis Tokyo Shinjuku

Mid-price

7,243

7,903

9,900

N

2.0

Unsecured

8

The Beach Tower Okinawa

Mid-price

7,610

6,495

10,000N

2.1

Unsecured

9

Hakone Setsugetsuka

Mid-price

4,070

3,622

5,300

N

1.1

Unsecured

10

Dormy Inn Kumamoto

Mid-price

2,334

2,170

3,030

N

0.6

Unsecured

12

the b suidobashi

Mid-price

1,120

1,186

2,280

N

0.3

Unsecured

13

Dormy inn·global cabin Asakusa

Economy

999

934

1,280

J

0.3

Unsecured

14

Hakata Nakasu Washington Hotel Plaza

Mid-price

2,130

2,038

4,510

N

0.6

Unsecured

15

Nara Washington Hotel Plaza

Mid-price

2,050

1,765

2,430

N

0.6

Unsecured16

R&B Hotel Ueno Hirokoji

Economy

1,720

1,806

1,910

J

0.5

Unsecured

18

Comfort Hotel Tokyo Higashi Nihombashi

Economy

3,746

3,491

5,390

J

1.0

Unsecured

22

Smile Hotel Nihombashi Mitsukoshimae

Economy

2,108

2,042

2,930

J

0.6

Unsecured24

Toyoko Inn Hakata-guchi Ekimae

Economy

1,652

1,401

2,750

T

0.4

Unsecured

25

Chisun Hotel Kamata(former Hotel Vista Kamata Tokyo)

Economy

1,512

1,458

2,010

T

0.4

Unsecured

26

Chisun Inn Kamata

Economy

823

771

1,370

T

0.2

Unsecured

29

Hotel Keihan Universal City

Mid-price

6,000

5,833

15,400R

1.6

Unsecured

31

Hilton Tokyo Bay

Luxury26,05026,301

39,900D

7.0

Unsecured32

ibis Styles Kyoto Station

Mid-price

6,600

6,641

10,200D

1.8

Unsecured33

ibis Styles Sapporo

Mid-price

6,797

6,522

11,100N

1.8

Unsecured34

Mercure Sapporo

Mid-price

6,000

5,789

10,500N

1.6

Unsecured35

Mercure Okinawa Naha

Mid-price

3,000

2,841

6,940

N

0.8

Unsecured37

the b ikebukuro

Mid-price

6,520

6,593

6,980

N

1.8

Unsecured39

the b hachioji

Mid-price

2,610

2,681

2,560

N

0.7

Unsecured- 43 -

Property
No.

Name

Grade
(Note 1)

Acquisition
price(JPY1M)(Note 2)Carrying
amountat end ofperiod(JPY1M)(Note 3)

Appraisalvalue
at end ofperiod(JPY1M)(Note 4)

Investment
ratio
Appraisal(Acquisition
agencyprice)(Note 5)(%)(Note 6)

Collateral(Note 7)40

the b hakata

Mid-price

2,300

2,347

4,330

N

0.6

Unsecured

41

Hotel Francs

Mid-price

3,105

3,145

4,080

D

0.8

Unsecured42

Mercure Yokosuka

Mid-price

1,650

1,634

3,310

D

0.4

Unsecured

43

Okinawa Marriott Resort & Spa

Upper-middle

14,95014,87817,200N

4.0

Unsecured

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Luxury17,32017,29421,000D

4.7

Unsecured

45

CANDEO HOTELS UENO-KOEN

Mid-price

6,705

6,613

7,430

D

1.8

Unsecured

46

Oriental Hotel Fukuoka Hakata Station

Upper-middle

7,197

9,473

15,200D

1.9

Unsecured

47

Holiday Inn Osaka Namba

Mid-price

27,00026,941

26,500N

7.3

Unsecured

48

HOTEL ASCENT FUKUOKA (Note 8)

Economy

5,248

5,451

6,650

D

1.4

Unsecured

49

Hilton Nagoya

50

Hilton Tokyo Narita Airport

51

International Garden Hotel Narita

52

Hotel Nikko Nara

53

Hotel Oriental Express Osaka Shinsaibashi

54

Hilton Tokyo Odaiba

Luxury15,25015,69615,000D

4.1

Unsecured

Upper-middle

13,175

13,343

13,400N

3.6

UnsecuredMid-price

9,125

9,196

9,500

N

2.5

Unsecured

Upper-middle

10,373

10,357

9,790

D

2.8

UnsecuredMid-price

2,738

2,816

2,840

D

0.7

Unsecured

Upper-middle

62,40063,607

68,100N

16.9

Unsecured

370,031366,760

493,330

Total(Note 1)
(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)100.0

JHR categorizes hotels into the four grade classes “Luxury,” “Upper-middle,” “Mid-price” and “Economy” mainly from the perspective of average
daily rate, etc.
“Acquisition price” is the acquisition price stated on the purchase and sale agreement for beneficial interest in trust, etc. (consumption tax, local
consumption tax and the acquisition expense such as broker’s fee are not included). The acceptance prices are indicated for the properties that havebeen accepted through the merger with the former JHR.
“Carrying amount at end of period” is the book value at the end of the fiscal year under review, and includes not only the amounts for real estate intrust, but also machinery and equipment, tools, furniture and fixtures, construction in progress, construction in progress in trust, and intangible assets.
“Appraisal value at end of period” is the appraisal value at the end of the fiscal year under review as the date of appraisal, in accordance with the asset
valuation methods and standards provided in JHR’s Articles of Incorporation and the regulations set forth by The Investment Trusts Association, Japan.
Under “Appraisal agency,” the letters indicate the appraisers for the properties as follows:N:
Nihon Fudosan Kenkyusho (Japan Real Estate Institute)J:
JLL Morii Valuation & Advisory K.K.
T:
The Tanizawa Sōgō Appraisal Co., Ltd.
R:
Rich Appraisal Institute Co., Ltd.
D:DAIWA REAL ESTATE APPRAISAL CO., LTD.
“Investment ratio” is the ratio of acquisition price of the respective asset held at the end of the fiscal year under review to the total amount of acquisition
price of all assets held at the end of the fiscal year under review, rounded off to one decimal place.
“Collateral” is whether or not a pledge has been established for the beneficial interest in trust.
The acquisition price for HOTEL ASCENT FUKUOKA was changed due to the exchange of part of the site conducted as of October 29, 2020.
The omitted property numbers are the property numbers of assets that have been transferred.

b. Details of assets under management (change of tenants in portfolio)
The following is the changes in total number of tenants, total leasable area, total leased area, and occupancy rate of real estate
properties (in trust) under management for the past five years.

Total number of tenants(Note 1)
Total leasable area
(Note 2)
Total leased area
(Note 3)
Occupancy rate
(Note 4)(Note 1)

End of 17th period
December 2016

End of 18th period
December 2017

End of 19th period
December 2018

End of 20th period
December 2019

End of 21st period
December 2020

128

131

126

125

121

587,481.02 m2

687,124.54 m2

678,714.48 m2

746,329.68 m2

741,083.02 m2

587,050.94 m2

686,694.46 m2

677,863.00 m2

745,227.67 m2

740,146.96 m2

99.9%

99.9%

99.9%

99.9%

99.9%

Total number of tenants indicates the total number of tenants based on the lease contracts for respective real estate in trust (excluding tenants of parking
lots, etc.) as of the end of each fiscal period. However, for properties for which master lease contracts under the pass-through scheme are concluded inwhich trustee receives the same amount of rents, etc. from end tenants as is in principle, the total number of end tenants (excluding tenants of parking
lots, etc.) is indicated.

- 44 -

(Note 2)

In principle, total leasable area represents leasable area of the building, which does not include leasable area of land (including parking lots on ground),based on a lease contract or plan for each real estate in trust. For properties in which the leased area is not described in the lease contract, leasable area
represents the area described in the registration of the building. Furthermore, when the leasable area in the lease contract is indicated in tsubo units, thefigure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo). In this report, the same shall apply hereinafter.
In principle, leased area represents the leased area described in the lease contract of the building. For properties in which the leased area is not describedin the lease contract, leased area shows the area described in the registration of the building. Furthermore, when the leased area in the lease contract isindicated in tsubo units, the figure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo). However, forproperties for which master lease contracts under the pass-through scheme are concluded in which trustee receives the same amount of rents, etc. fromend tenants as is in principle, the total area for which lease contracts have been concluded with end tenants and which are actually leased is indicated.
The same shall apply hereinafter.
Occupancy rate indicates the percentage of leased area to leasable area of respective real estate properties in trust as of the end of each fiscal period.
The same shall apply hereinafter.

(Note 3)(Note 4)c. Details of assets under management (information on major real estate)
Major real estate of which total annual rent accounts for 10% or more of the total annual rent (Note 1) of the entire portfolio is asfollows.
Property name

Total number oftenants

Hilton Tokyo Bay(Note 1)

(Note 2)
(Note 3)

Total annual rent

1

(Note 2)

Total leased area

64,928.83 m2(Note 3)

Total leasable
area

64,928.83 m2(Note 3)

Change in occupancy rate
for the past five years
December 2016

100.0%

December 2017100.0%

December 2018

100.0%

December 2019100.0%

December 2020

100.0%“Total annual rent” is the amount of (i) the amount arrived at when monthly fixed rent (rent of the building itself only, excluding common area
maintenance charges and signage and parking usage fees; not factoring in any change in rent during the fiscal year) in lease contracts at the end of the
fiscal year under review is multiplied by 12, plus (ii) assumed amounts of revenue sharing, variable rent or income from management contracts for fullyear.
The total annual rent for the HMJ Group Hotels indicates the sum of the fixed rent stated in the memorandum of understanding concerning the fixedterm lease contract concluded on August 25, 2020, and the assumed amount of variable rent.
Total annual rent for Hilton Tokyo Bay is not indicates as consent for disclosure has not been obtained from the tenant.
The building of Hilton Tokyo Bay is co-owned with other right holders, and JHR owns co-ownership interest for 64,928.83 square meters (JHR owns
9/10 of co-ownership interest).

d. Details of assets under management (NOI, etc.)

1

Kobe Meriken Park Oriental Hotel

Variable/Fixed

Real estate
operating revenue(JPY 1,000)
176,149

2

Oriental Hotel tokyo bay (Note 4)

Variable/Fixed(134,058)(253,226)

3

Namba Oriental Hotel (Note 4)

Variable/Fixed

415,818

310,818

147,170

4Hotel Nikko Alivila (Note 4)

Variable/Fixed

263,662

114,808(182,738)

5

Oriental Hotel Hiroshima (Note 4)

6

ibis Tokyo Shinjuku

8PropertyNo.

Name

Rent type(Note 1)NOINOI after depreciation(Note 2)
(Note 3)
(JPY 1,000)(JPY 1,000)(75,480)(372,925)(621,781)

Variable/Fixed(96,585)(141,251)(230,949)

Management contract

141,133

11,211(102,802)

The Beach Tower Okinawa

Fixed

511,008

467,758

333,365

9

Hakone Setsugetsuka

Fixed294,940

270,927

176,232

10

Dormy Inn Kumamoto

Fixed

194,460

171,991

126,234

12

the b suidobashi

Variable/Fixed

21,24910,443(17,711)

13

Fixed

63,99555,08741,283

Fixed

240,000

224,000

199,000

15

Dormy inn·global cabin Asakusa (Note 4)
Hakata Nakasu Washington Hotel Plaza(Note 4) (Note 5)
Nara Washington Hotel Plaza (Note 5)

Fixed

150,000

134,000

98,000

16

R&B Hotel Ueno Hirokoji (Note 4)

97,30082,881

66,29218

Comfort Hotel Tokyo Higashi Nihombashi

272,674

242,314205,537

22

Smile Hotel Nihombashi Mitsukoshimae

147,047

130,833

109,80224

Toyoko Inn Hakata-guchi Ekimae

FixedVariable/Fixed(Note 7)
Variable/Fixed(Note 7)
Fixed

25

Chisun Hotel Kamata(former Hotel Vista Kamata Tokyo) (Note 4)
Chisun Inn Kamata

14

26

141,039

126,347

108,128

Variable/Fixed(Note 7) (Note 8)

97,50182,54456,407

Variable

22,167

15,131

5,399- 45 -

Property
No.

Name

Rent type(Note 1)

Real estate
operating revenue(JPY 1,000)

NOI(Note 2)(JPY 1,000)

NOI after depreciation(Note 3)
(JPY 1,000)

31

Hotel Keihan Universal City (Note 4)
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi(Note 6)
Hilton Tokyo Bay (Note 4)32

ibis Styles Kyoto Station (Note 4)

Variable/Fixed(Note 7)
Variable/Fixed(Note 7)
Variable/Fixed(Note 7)
Management contract

33

ibis Styles Sapporo (Note 4)

Management contract

92,94014,69434

Mercure Sapporo (Note 4)

Management contract

154,080

14,691(80,122)35

Mercure Okinawa Naha (Note 4)

Management contract－(47,747)(113,015)

37

the b ikebukuro (Note 4)

Variable/Fixed

187,555

159,712

127,47739

the b hachioji

Variable/Fixed

204,505

175,614142,10140

the b hakata

Variable/Fixed

33,07919,660(2,580)41

Hotel Francs

Fixed

300,000

237,804

192,61942

Mercure Yokosuka

Variable

112,624

10,456(24,779)

43

Okinawa Marriott Resort & Spa (Note 4)

Variable/Fixed

45,833(38,612)(329,030)

Variable/Fixed

895,756

511,061

290,48729
30

558,039

481,584

392,871

232,363

200,048

187,174

1,978,209

1,694,658

1,509,889

45,934(1,980)(40,372)(68,172)45

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel) (Note 4)
CANDEO HOTELS UENO-KOEN (Note 4)

Fixed

349,971

323,336

283,025

46

Oriental Hotel Fukuoka Hakata Station (Note 4)

Variable/Fixed

373,331

124,751(284,573)

47

Holiday Inn Osaka Namba (Note 4)

Variable/Fixed

48,000(1,019)(192,538)

48

HOTEL ASCENT FUKUOKA (Note 4)

Fixed

468,119

351,497

315,87649

Hilton Nagoya

Variable

816,688

201,653

33,60950

Hilton Tokyo Narita Airport

Variable/Fixed

123,748

35,932(185,608)

51

International Garden Hotel Narita (Note 4)

Variable/Fixed

136,052

91,442(56,863)

52

Hotel Nikko Nara (Note 4)
Hotel Oriental Express Osaka Shinsaibashi(Note 4)
Hilton Tokyo Odaiba (Note 4)
Total

Variable/Fixed

35,000(13,029)(159,944)

Variable/Fixed

9,200(2,050)(14,942)

Variable/Fixed

258,300
10,480,185

6,320
6,532,452(267,118)
1,800,246

44

53
54
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)Under “Rent type,” “Fixed” is a property under a fixed rent structure, “Variable” is a property under a variable rent structure, “Management contract”
is a property under a management contract structure, and “Variable/Fixed” is a property under a combination of fixed and variable rent structures.
NOI = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement
obligations expenses
NOI after depreciation (net operating income) = Real estate operating revenue − Real estate operating costs
Temporarily closed for a certain period of time during the fiscal year under review due to the impact of COVID-19.
For Hakata Nakasu Washington Hotel Plaza and Nara Washington Hotel Plaza, consent on disclosure of rent in units of thousand yen has not beenobtained from the lessees and is thus rounded down to the nearest million yen.
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi was sold on July 1, 2020.
For Comfort Hotel Tokyo Higashi Nihombashi, Smile Hotel Nihombashi Mitsukoshimae, Hotel Vista Kamata Tokyo, Hotel Keihan Universal City,
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi and Hilton Tokyo Bay, the rent structure is one that has set not only fixed rent, but also partly has rent
based on a revenue sharing structure.
The rent type for Hotel Vista Kamata Tokyo through December 31, 2020 is indicated. Hotel Vista Kamata Tokyo changed its name to Chisun Hotel
Kamata on January 1, 2021 due to rebranding following cancellation of lease contract. On January 1, 2021, and thereafter, the rent type for Chisun
Hotel Kamata is "Variable."
The property numbers of assets that were sold before the end of the previous fiscal year are intentionally omitted.

- 46 -

B. Income statements for individual real estate properties (in trust) under management
The following are the individual income statements for real estate properties (in trust) under management for the fiscal year underreview (from January 1, 2020 to December 31, 2020). Figures are rounded down to the nearest thousand yen in principle, but areotherwise noted if circumstances do not allow for the figures to be stated in units of thousand yen.
Property No.

-

Number of operating days

-

1
Kobe
Meriken Park
Oriental Hotel
366

Property name

Portfolio total(Note 1)

(A) Real estate operating revenue subtotal

10,480,185

176,149(134,058)

415,818

263,662(96,585)

Fixed rent

7,640,060

49,991

63,21670,32567,00817,875

Variable rent

1,963,664

125,187(197,275)

345,493

196,654(114,460)

Other revenue

876,461

969

-

-

-

-

(B) Real estate operating costs subtotal

8,679,939

549,074

487,723

268,648

446,401

134,363

Land lease and other rent expenses

890,001

192,714--84,149-Property taxes

1,915,565

52,362112,958

100,507

57,526

41,164

Outsourcing expenses

423,852

960

960

960

1,920

960

Nonlife insurance

67,271

4,271

4,240

1,747

3,234

1,381

Depreciation and amortization

4,724,515

296,932

368,554

160,357

297,271

89,697

Loss on retirement of noncurrent assets

5,701

511

-

3,290

275

-

Other costs

653,032

1,321

1,009

1,784

2,023

1,160

(C) Net real estate operating income = (A) − (B)1,800,246(372,925)(621,781)

147,170(182,738)(230,949)(Reference) Occupancy rate

99.9%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

121

1

1

1

1

1

Property No.

682
Oriental Hoteltokyo bay
(Note 2)
366

3
Namba
Oriental Hotel(Note 2)366

4Hotel Nikko
Alivila(Note 2)366

5Oriental Hotel
Hiroshima(Note 2)
366

9

ibis
The Beach Tower
Property nameTokyo Shinjuku
Okinawa(Note 1)366
366
Number of operating days

10

HakoneSetsugetsuka

12

Dormy Inn
Kumamoto

366

366

13

Dormy inn·global
the bcabin Asakusa
suidobashi(Note 2)366366(A) Real estate operating revenue subtotal

141,133

511,008

294,940

194,460

21,24963,995

Fixed rent

103,778

511,008

294,340

194,460

21,24963,395

Variable rent

-

-

-

-

-

-

Other revenue

37,354

-

600

-

-

600

(B) Real estate operating costs subtotal

243,935

177,642

118,707

68,22538,961

22,711

Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

35,492

39,662

21,635

19,107

8,168

6,095

Outsourcing expenses

53,788

-

-

-

1,200

1,200

Nonlife insurance

759

1,454

847

561

252

147

Depreciation and amortization

114,014

134,393

94,69445,75728,154

13,804

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

39,880

2,132

1,530

2,799

1,185

1,465

(C) Net real estate operating income = (A) − (B)(102,802)

333,365

176,232

126,234(17,711)41,283(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

4

1

1

1

1

1

- 47 -

Property No.

14

15

16

Hakata Nakasu
Nara
Washington Hotel Washington Hotel
Plaza
Plaza
(Note 2) (Note 3)(Note 3)366
Number of operating days
366

Property nameR&B Hotel
Ueno
Hirokoji(Note 2)
366

18

22

24

Comfort HotelTokyo Higashi
Nihombashi

Smile Hotel
Nihombashi
Mitsukoshimae

Toyoko Inn
Hakata-guchi
Ekimae

366

366

366

(A) Real estate operating revenue subtotal

240,000

150,000

97,300272,674

147,047

141,039

Fixed rent

240,000

146,000

96,504

260,271

134,400

141,039

Variable rent

-

-

-

1,197

12,647-

Other revenue

0

3,000

795

11,205--(B) Real estate operating costs subtotal

41,00052,00031,00867,137

37,24432,910Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

12,00011,00012,227

26,772

13,074

11,067

Outsourcing expenses

1,000

3,000

840

1,614

1,200

1,080

Nonlife insurance

0

0

219

545

246

311

Depreciation and amortization

24,00036,00016,58936,776

21,031

18,219Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

1,000

0

1,132

1,427

1,692

2,231

(C) Net real estate operating income = (A) − (B)199,000

98,00066,292

205,537

109,802108,128(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

2

1

2

1

1

Property No.

25

26

29

30

31

32

Chisun Inn
KamataHotel Keihan
Universal City
(Note 2)

Sotetsu Fresa Inn
ShimbashiKarasumoriguchi(Note 5)

HiltonTokyo Bay
(Note 2)

ibis Styles
Kyoto Station(Note 1) (Note 2)

366

182

558,039

232,363

Number of operating days

Chisun Hotel
Kamata(former Hotel
Vista Kamata
Tokyo)(Note 2)366(A) Real estate operating revenue subtotal

97,501

Fixed rent

93,534-

Variable rent-

22,167

Other revenue

3,967

-

(B) Real estate operating costs subtotal

41,094

16,768165,167

45,188468,320

86,307

Land lease and other rent expenses--

21,110-123,720-

Property taxes

11,8184,796

45,197

12,965

141,696

20,843

Outsourcing expenses

1,200

1,080

4,751

2,406

12,42725,370Nonlife insurance

296

126

2,025

183

4,255

498

Depreciation and amortization

26,137

9,732

87,08812,874

184,769

38,392

Loss on retirement of noncurrent assets

-

-

1,624

-

-

-

Other costs

1,641

1,033

3,370

16,759

1,451

1,201

(C) Net real estate operating income = (A) − (B)56,407

5,399

392,871

187,174

1,509,889(40,372)(Reference) Occupancy rate

100.0%

100.0%

100.0%-

100.0%

100.0%(Reference) Number of tenants

1

1

1

-

1

2

Property name366
22,167- 48 -

Undisclosed(Note 4)
Undisclosed(Note 4)
Undisclosed(Note 4)

149,00266,668
16,692366

366

1,978,209

45,934

Undisclosed(Note 4)
Undisclosed(Note 4)
Undisclosed(Note 4)42,3343,600

Property No.

33

34

35

ibis Styles
MercureMercureSapporoSapporoOkinawa Naha
(Note 1) (Note 2) (Note 1) (Note 2) (Note 1) (Note 2)

Property name

37

39

40

the b
ikebukuro(Note 2)the bhachioji

the bhakataNumber of operating days

366

366

366

366

366

366

(A) Real estate operating revenue subtotal

92,940154,080-

187,555

204,505

33,079Fixed rent

21,19656,142-

100,967

38,24528,022

Variable rent

39,93921,484-84,575

152,238

5,057

Other revenue

31,80476,453-

2,012

14,021-(B) Real estate operating costs subtotal

161,112234,203

113,01560,07762,40435,660Land lease and other rent expenses

-

45

321

-

-

-

Property taxes

37,112

49,70423,35922,291

21,363

10,030Outsourcing expenses

8,028

23,102

20,506

1,200

1,200

1,200

Nonlife insurance

1,182

1,399

976

515

568

321

Depreciation and amortization

82,867

94,81465,26832,23533,51322,241

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

31,922

65,137

2,582

3,835

5,758

1,866

(C) Net real estate operating income = (A) − (B)(68,172)(80,122)(113,015)

127,477

142,101(2,580)(Reference) Occupancy rate

98.3%

95.9%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

4

11

1

4

10

2

42

43

44

45

46

MercureYokosuka

Okinawa
MarriottResort & Spa(Note 2)

ACTIVE-INTERCITY
HIROSHIMA(Note 2)CANDEOHOTELS
UENO-KOEN(Note 2)

Oriental Hotel
Fukuoka Hakata
Station(Note 2)366

366

Property No.

41

Property name

Hotel Francs

Number of operating days

366

366

366

366

(A) Real estate operating revenue subtotal

300,000

112,624

45,833895,756

349,971373,331

Fixed rent

300,000-

45,833509,729

Undisclosed(Note 4)35,416

Variable rent-

77,111-

170,719

Other revenue-

35,513-

215,307(B) Real estate operating costs subtotal

107,380

137,404

374,863

Land lease and other rent expenses--

Property taxes

58,570Outsourcing expenses

Undisclosed(Note 4)

337,915605,268

66,945657,905---

222,206

35,171

78,184120,419

22,93920,911

1,800

19,3662,400

96,366

1,200

3,000

Nonlife insurance

1,325

1,984

3,023

4,189

608

1,617

Depreciation and amortization

45,18535,235

290,417220,573

40,310407,711

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

498

45,646

838

163,720

1,886

2,458

(C) Net real estate operating income = (A) − (B)192,619(24,779)(329,030)

290,487

283,025(284,573)(Reference) Occupancy rate

100.0%

100.0%

100.0%

99.8%

100.0%

100.0%(Reference) Number of tenants

1

1

1

40

1

1

- 49 --

Property No.

47

48

49

50

51

52

Property name

Holiday Inn
Osaka Namba(Note 2)

HOTEL
ASCENTFUKUOKA(Note 2)

Hilton Nagoya

Hilton Tokyo
Narita Airport

International
Garden Hotel
Narita(Note 2)

Hotel Nikko Nara
(Note 2)

Number of operating days

366

366

366

366

366

366

(A) Real estate operating revenue subtotal

48,000468,119

816,688

123,748

136,052

35,00037,00028,00035,00086,748108,052

-

-

-

-

309,357

192,916

194,944

Undisclosed(Note 4)
Undisclosed(Note 4)
Undisclosed(Note 4)

Fixed rent

48,000372,640

Variable rent--

Other revenue-

95,478(B) Real estate operating costs subtotal

240,538

152,242783,078

Land lease and other rent expenses-

23,331

222,401---

Property taxes

45,222

31,625

105,069

80,05839,40040,774

Outsourcing expenses

1,560

14,892

99,455

2,520

2,280

2,610

Nonlife insurance

1,400

615

4,206

4,188

1,888

3,144

Depreciation and amortization

191,519

35,246

168,043

221,541

148,306

146,914

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

836

46,530183,901

1,048

1,040

1,500

(C) Net real estate operating income = (A) − (B)(192,538)

315,876

33,609(185,608)(56,863)(159,944)(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

6

4

1

1

1

Property No.

53

54

Property name

Hotel Oriental
Express Osaka
Shinsaibashi(Note 2)

Hilton Tokyo
Odaiba(Note 2)

Number of operating days

366

366

(A) Real estate operating revenue subtotal

9,200

258,300

Fixed rent

9,200

258,300

Variable rent--

Other revenue--(B) Real estate operating costs subtotal

24,142525,418

Land lease and other rent expenses--

Property taxes

8,385

245,585

Outsourcing expenses

2,160

120

Nonlife insurance

210

5,439

Depreciation and amortization

12,892

273,439

Loss on retirement of noncurrent assets--

Other costs

494

834

(C) Net real estate operating income = (A) − (B)(14,942)(267,118)(Reference) Occupancy rate

100.0%

100.0%(Reference) Number of tenants11(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)

Variable rent includes income from management contracts. For details of the management contract, please refer to “C. Overview of the hotel business;
a. Rent structures of hotels with variable rent, management contract or revenue sharing” on page 51.
Temporarily closed for a certain period of time during the fiscal year under review due to the impact of COVID-19.
Consent on disclosure of rent in units of thousand yen has not been obtained from the lessee and is thus rounded down to the nearest million yen.
Rent income, etc. is not disclosed as consent on disclosure has not been obtained from the tenant with whom a lease contract has been concluded..
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi was sold on July 1, 2020.
The property numbers of assets that were sold before the end of the previous fiscal year are intentionally omitted.

- 50 -

C. Overview of the hotel businessa. Rent structures of hotels with variable rent, management contract or revenue sharing
Property
No.

The
HMJ
Group
Hotels(Note 1)

The
Accor
Group
Hotels

The
Ishin
Group
HotelsOther
hotelswithvariablerentorrevenuesharing

Name

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

Method of calculating variable rent and income from management contracts

Rent type

FY2020

FY2021

FY2022 and after

AGOP (Note 3)
x 86.0%
Variable/Fixed

Total GOP of The FiveHMJ Hotels x 89.78% −fixed rent for January

AGOP x 79.0%

3

Namba Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

43

Okinawa Marriott Resort & Spa

Variable/Fixed

GOP x 82.92% − fixed
rent for January

AGOP x 89.0%(AGOP – base amount (¥655
million/year)) x 95.0%

44

Sheraton Grand Hiroshima Hotel(ACTIVE-INTER CITY HIROSHIMA)

Variable/Fixed(Note 2)

GOP x 79.03% − fixed
rent for January

AGOP x 93.0%(AGOP – base amount (¥360
million/year)) x 90.0%

46

Oriental Hotel Fukuoka Hakata Station

Variable/Fixed

47

Holiday Inn Osaka Namba

Variable/Fixed

50

Hilton Tokyo Narita Airport

Variable/Fixed

51

International Garden Hotel Narita

Variable/Fixed

52

Hotel Nikko Nara

Variable/Fixed

53

Hotel Oriental Express Osaka
Shinsaibashi

Variable/Fixed

54

Hilton Tokyo Odaiba

Variable/Fixed

6

ibis Tokyo Shinjuku

32

ibis Styles Kyoto Station

33

ibis Styles Sapporo

34

Mercure Sapporo

35

Mercure Okinawa Naha

42

Mercure Yokosuka

12

the b suidobashi

37

the b ikebukuro39

the b hachioji

40

the b hakata

18

Comfort Hotel Tokyo Higashi
Nihombashi

22

Smile Hotel Nihombashi Mitsukoshimae

25

Chisun Hotel Kamata(former Hotel Vista Kamata Tokyo)(Note 7)26

Chisun Inn Kamata

29

Hotel Keihan Universal City

30

Sotetsu Fresa Inn ShimbashiKarasumoriguchi

31

Hilton Tokyo Bay

49

Hilton Nagoya

AGOP x 91.0%(Total AGOP of The FiveHMJ Hotels – base amount(¥4,120 million/year (Note4))) x 85.0%

AGOP x 74.0%
AGOP x 89.0%

GOP x 96.98% −fixed
rent for January
GOP x 90.15% − fixed
rent for January
GOP x 83.59% − fixed
rent for January
GOP x 95.35% − fixed
rent for January
GOP x 90.05% − fixed
rent for January
GOP x 87.11% − fixed
rent for January
GOP x 92.10% − fixed
rent for January

AGOP x 97.0%
AGOP x 98.0%
AGOP x 95.0%
AGOP x 95.0%
AGOP x 95.0%
AGOP x 87.0%
AGOP x 97.0%(AGOP – base amount (¥442
million/year)) x 98.0%(AGOP – base amount (¥580
million/year)) x 97.0%(AGOP – base amount (¥450
million/year)) x 93.0%(AGOP – base amount (¥360
million/year)) x 98.0%(AGOP – base amount (¥440
million/year)) x 95.0%(AGOP – base amount (¥128
million/year)) x 91.0%(AGOP – base amount(¥1,660 million/year)) x
98.0%

Amount equivalent to GOP
Management
contract(Note 5)

Amount equivalent to GOP
Amount equivalent to GOP
Amount equivalent to GOP
Amount equivalent to GOP

VariableAmount linked to GOP (Note 6)

Variable/Fixed

Amount linked to GOP (Note 6)

Fixed +
Revenue sharing
Fixed +
Revenue sharing
Fixed +
Revenue sharing
Variable
Fixed +
Revenue sharing
Fixed +
Revenue sharing
Fixed +
Revenue sharing
VariableAmount that is a certain percentage of sales exceeding the threshold (Note 6)
Amount that is a certain percentage of sales exceeding the threshold (Note 6)
When hotel total sales from January 1 to December 31 of every year exceeds¥270 million, the amount arrived at when the amount exceeding ¥270 million
is multiplied by 32.5%
Amount that is the monthly GOP multiplied by 86.0%(¥0 if the amount is below ¥0).
Amount that is a certain percentage of sales exceeding the threshold (Note 6)
Amount that is a certain percentage of sales exceeding the threshold (Note 6)
Amount that is a certain percentage of sales exceeding the threshold (Note 6)
Variable rents linked to hotel sales, etc. (Note 6)(Note 1)

Variable rents for the HMJ Group Hotels are those stated in the memorandum of understanding concerning the fixed-term lease contracts and therevised fixed-term lease contracts concluded on August 25, 2020.

(Note 2)The indicated structures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.

- 51 -

(Note 3)

AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. The same shall apply hereinafter.

(Note 4)

For the purpose of payments of variable rent from each hotel, etc. JHR has set an individual AGOP base amount for each hotel. The breakdownof the AGOP base amount of The Five HMJ Hotels (¥4,120 million/year) is as follows.
Kobe Meriken Park Oriental Hotel: ¥690,000 thousand, Oriental Hotel tokyo bay: ¥1,060,000 thousand, Namba Oriental Hotel: ¥890,000
thousand, Hotel Nikko Alivila: ¥1,250,000 thousand, and Oriental Hotel Hiroshima: ¥230,000 thousand(Note 5)(Note 6)(Note 7)b.

The management contract structure is a structure for hotel real estate owned by JHR in which JHR entrusts an operator to operate the hotel andtakes in the outcome of that business as real estate operating revenue. Specifically, JHR, the owner of the hotel real estate, concludes a management
contract with an operator and entrusts the operator with the tasks necessary to run the hotel business. JHR receives the hotel revenue achieved
from the hotel business (operation) by the operator and, at the same time, pays a management fee to the operator. This hotel revenue achieved isrecognized as “real estate operating revenue through management contract” and is equivalent to the rent that is the real estate operating revenue
under the leasing structure.
The detailed content of the contract is not disclosed as consent on disclosure has not been obtained from the lessee, etc.
The rent structure for Hotel Vista Kamata Tokyo through December 31, 2020 is indicated. Hotel Vista Kamata Tokyo changed its name to Chisun
Hotel Kamata on January 1, 2021 due to rebranding following cancellation of lease contract. After the property name is changed to Chisun Hotel
Kamata, the rent structure will be the same as that of Chisun Inn Kamata.

Major indicators of the hotel business
The following tables indicate the figures related to the hotel business of the HMJ Group Hotels for the operating period fromJanuary 1, 2020, through December 31, 2020, based on the data provided by the hotel lessees, etc. While these indicators of
the hotels are among the indicators that show the operating status of the rooms departments, please note that they do notnecessarily represent the operating revenue and the ability to bear rent, etc. of the respective hotels, as the room rates andprofit margins, etc. of the respective rooms available for sale are not uniform, among other reasons. As such, the indicators are
no more than the reference figures.
Kobe
Meriken Park
Oriental Hotel
Ratio tototal sales(%)

Oriental Hoteltokyo bay
(Note 4)
Ratio tototal sales
(%)

Namba
Hotel Nikko Alivila
Oriental Hotel(Note 4)(Note 4)
Ratio toRatio tototal sales
total sales(%)(%)

Oriental Hotel
Hiroshima(Note 4)
Ratio tototal sales(%)

The Five HMJ
HotelsTotal/Average
Ratio tototal sales(%)

Occupancy rate

48.8%

-

40.3%

-

17.1%

-

40.7%

-

51.5%

-

40.0%

-

ADR
(Note 1)

18,914-

15,293-

13,663-24,169

-

8,166

-

16,895-

RevPAR(Note 2)

9,225

-

6,167

-

2,330

-

9,837

-

4,208

-

6,756

-

Total sales

2,853

100.0

2,291

100.0

918

100.0

2,636

100.0

826

100.0

9,525

100.0

Rooms department

1,091

38.2

1,153

50.3

220

24.0

1,429

54.2

350

42.3

4,243

44.5

Food & beveragedepartment

1,385

48.5

740

32.3

16

1.7

837

31.8

405

49.0

3,382

35.5

Tenant department

77

2.7

144

6.3

622

67.8

2

0.1

22

2.6

868

9.1

Other departments(Note 3)

300

10.5

255

11.1

60

6.6

367

13.9

50

6.1

1,033

10.8

195

6.8

(149)

(6.5)

463

50.4

294

11.1

(108)

(13.0)

695

7.3

GOP

- 52 -Okinawa Marriott
Resort & Spa(Note 4)

Oriental Hotel
Holiday Inn Osaka
Fukuoka Hakata
Hilton Tokyo Narita
Namba
AirportStation(Note 4)(Note 4)
Ratio toRatio toRatio toRatio tototal sales
total sales
total sales
total sales
(%)
(%)
(%)
(%)

Sheraton Grand
Hiroshima Hotel(Note 4) (Note 5)

Ratio tototal sales(%)
Occupancy rate

31.7%

－

38.9%

－

44.5%

－

16.5%

－

43.3%

－

36.0%

－

ADR
(Note 1)

19,171－

22,663－

13,058－

11,792－

12,281

－

7,989

－

RevPAR(Note 2)

6,083

－

8,818

－

5,814

－

1,951

－

5,320

－

2,875

－

Total sales

1,403

100.0

1,670

100.0

1,145

100.0

272

100.0

1,653

100.0

712

100.0

Rooms department

804

57.3

768

46.0

470

41.1

224

82.3

1,067

64.6

487

68.5

Food & beveragedepartment

338

24.1

797

47.7

346

30.2

－

－

404

24.4

143

20.1

Tenant department

32

2.3

－

－

257

22.4

34

12.5

38

2.3

4

0.6

Other departments(Note 3)

229

16.3

104

6.3

72

6.3

14

5.2

144

8.7

77

10.8

(70)

(5.0)

243

14.5

385

33.6

27

10.0

148

9.0

143

20.1

GOP

Hotel Nikko Nara
(Note 4)
Ratio tototal sales(%)(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

Hotel Oriental
Express Osaka
Shinsaibashi(Note 4)
Ratio tototal sales(%)

The HMJ Group
HotelsTotal/Average(Note 6)
Ratio toRatio tototal sales
total sales(%)(%)

Hilton Tokyo
Odaiba(Note 4)

Occupancy rate

29.7%

－

10.8%

－

32.6%

－

35.8%

－

ADR
(Note 1)

12,818

－

7,736

－

27,458－16,081－

RevPAR(Note 2)

3,812

－

833

－

8,951

－

5,757

－

Total sales

1,071

100.0

49

100.0

3,646

100.0

21,146

100.0

Rooms department

460

43.0

38

76.5

1,484

40.7

10,046

47.5

Food & beveragedepartment

539

50.3

2

4.0

1,584

43.4

7,535

35.6

Tenant department

11

1.1

－

－

131

3.6

1,375

6.5

Other departments(Note 3)

61

5.7

10

19.5

447

12.3

2,190

10.4

(102)

(9.5)

(35)

(69.9)

(109)

(3.0)

1,326

6.3

GOP
(Note 1)

International
Garden Hotel
Narita(Note 4)
Ratio tototal sales(%)

ADR: Represents average daily rate, which is calculated by dividing revenue for rooms for a certain period (including service charges) by the
total number of rooms sold during the period.
Service charges are 10% for Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, Oriental
Hotel Hiroshima, Okinawa Marriott Resort & Spa, ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel), International
Garden Hotel Narita, Hotel Nikko Nara and Oriental Hotel Fukuoka Hakata Station; 12% for Hilton Tokyo Narita Airport; and 13% for Hilton
Tokyo Odaiba. Holiday Inn Osaka Namba and Hotel Oriental Express Osaka Shinsaibashi do not request service charges. The same shall apply
hereinafter.
RevPAR: Represents revenue per available room, which is calculated by dividing total rooms revenue for a certain period (including service
charges) by the total number of rooms available for sale during the period. The same shall apply hereinafter
Figures for the other departments include sales of the department for sale of goods.
The properties were temporarily closed for a certain period of time during the fiscal year under review due to the impact of COVID-19, but theoccupancy rate has been calculated by including the closed period.
The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
For Total/Average of the HMJ Group Hotels, figures are calculated by JHR as reference since no figures have been provided by the hotel lessees,etc.
The occupancy rate is rounded off to one decimal place, while ADR and RevPAR are rounded off to the nearest whole number. Sales and GOP
are rounded off to the nearest million yen. For the ratio to total sales, the ratio of sales in each department to total sales is rounded off to one
decimal place.

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(2) Status of capital expenditures
a. Planned capital expenditures (Note)
The following table shows major estimated capital expenditures items for renovation work planned as of the end of the fiscal
year under review. Expenditures are expected to total ¥3,534 million, which consists of capital expenditures of ¥3,522 million(Note) and repair expenses of ¥12 million, for the next fiscal year.
Estimated construction
costs
Name of property, etc.
(JPY1M)
PurposeScheduled period
Total(Location)
Totalamountamountpaid
Kobe Meriken Park Oriental Hotel(Kobe-shi, Hyogo)

Renovation of prefabricatedbathrooms in guest rooms

From April 2021
to July 2021

55－

Dormy Inn Kumamoto(Kumamoto-shi, Kumamoto)

Renewal of air conditioning
equipment

From March 2021
to July 2021

80

－

160

－

60

－

500

－

265

－

55

－

Hotel Keihan Universal City
(Osaka-shi, Osaka)
Okinawa Marriott Resort & Spa(Nago-shi, Okinawa)
Okinawa Marriott Resort & Spa(Nago-shi, Okinawa)
HOTEL ASCENT FUKUOKA(Fukuoka-shi, Fukuoka)
HOTEL ASCENT FUKUOKA(Fukuoka-shi, Fukuoka)

Renovation of guest rooms
Painting of exterior walls
Renovation of guest rooms, etc.
Renovation of guest rooms, etc.
Renewal of furniture in guest rooms

From April 2021
to July 2021
From March 2021
to April 2021
From October 2021
to December 2021
From April 2021
To June 2021
From April 2021
to June 2021

HOTEL ASCENT FUKUOKA(Fukuoka-shi, Fukuoka)

Renewal of heat-source equipment
for air conditioning facilities

From April 2021
to May 2021

73－

International Garden Hotel Narita(Narita-shi, Chiba)

Renewal of air conditioning units

From October 2021
to November 2021

55－

Hilton Tokyo Odaiba(Minato-ku, Tokyo)

Renewal of central monitoring
deviceFrom March 2021
to June 2021

63－

Hilton Tokyo Odaiba(Minato-ku, Tokyo)

Renovation of information and

From April 2021
to June 2021

100

－

1,467

－

telecommunication equipment
Total(Note)New construction and renewal work includes that for buildings, attached facilities, etc. as well as items classified as furniture and fixtures. The scheduled
period of the above planned renovation work and whether or not the renovation work will be performed may change.

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b. Capital expenditures during the year (Note)
Major construction work conducted by JHR during the fiscal year under review that represents capital expenditures is as below.
Capital expenditures for the fiscal year under review totaled ¥1,665 million, and repair expenses that were accounted for as
expense in the fiscal year under review totaled ¥29 million. In aggregate, ¥1,694 million of construction work was carried out.
Name of property, etc.
Construction costs
Purpose
Period(Location)(JPY1M)
Hotel Nikko Alivila
From March 2020
Additional installation of sewage tank
72
(Nakagamigun, Okinawa)
to June 2020
From May 2020
Dormy Inn Kumamoto
Renewal of air conditioning equipment
67(Kumamoto-shi, Kumamoto)to June 2020
Hilton Tokyo Bay
From May 2020
Renewal of air conditioning equipment
52(Urayasu-shi, Chiba)
to July 2020
HOTEL ASCENT FUKUOKA
From March 2020
Renewal of air conditioning equipment
90(Fukuoka-shi, Fukuoka)
to March 2020
Hilton Nagoya
From March 2020
Work on plumbing equipment
57(Nagoya-shi, Aichi)
to May 2020
Hilton Nagoya
From June 2020
Renewal of elevators
51(Nagoya-shi, Aichi)
to December 2020
Hilton Tokyo Odaiba
From December 2019
Renovation of banquet rooms
92(Minato-ku, Tokyo)
to March 2020
Total

483

(Note) New construction and renewal work include those for buildings, attached facilities, etc. as well as items classified as furniture and fixtures.

- 55 -