Make The World
More Sustainable[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

January 30, 2020
IssuerIchigo Hotel REIT Investment Corporation (“Ichigo Hotel,” 3463)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Osamu Miyashita, Executive Director
www.ichigo-hotel.co.jp/english
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Hiroshi Iwai, President
Inquiries: Hidehito Iwasaka, Head of Ichigo Hotel
Tel: +81-3-3502-4892

Earnings Forecast Revisions for the January 2020and July 2020 Fiscal Periods
Ichigo Hotel is revising up its January 2020 and July 2020 earnings forecasts,
which were announced in the September 12, 2019 release “July 2019 Fiscal PeriodEarnings.”
1. Earnings Forecast Revision
January 2020 Fiscal Period(JPY million)
Operating
ProfitRecurring
Profit

2,383

1,402

1,199

1,198

4,700

3,550

2,323

2,123

2,121

8,321

+1,167

+920

+923

+923

+3,621% Change+49.0%+65.7%+77.0%+77.0%+77.0%

Reference:
January 2019
Actual

2,439

1,573

1,399

1,398

5,487

Previous Forecast(A)
New Forecast(B)
Difference(B) - (A)Net
IncomeDividendper Share(JPY)

OperatingRevenue

Net Income per Share: JPY 8,321; period-end number of shares outstanding: 254,974 shares
The actual operating revenue, operating profit, recurring profit, net income, and dividend
may vary due to changes in circumstances. These forecasts should not be construed as aguarantee of such performance or results. Ichigo Hotel will make a forecast revision should
there be a substantial discrepancy between the forecast and actual operating results.

1July 2020 Fiscal Period(JPY million)
Operating
ProfitRecurring
Profit1,789

972766765

3,001

1,446

776565

564

2,214

-343

-195

-200-200-787% Change-19.2%-20.1%-26.2%-26.2%-26.2%

Reference:
July 2019
Actual

1,789992805804

3,154

Previous Forecast(A)
New Forecast(B)
Difference(B) - (A)Net
IncomeDividendper Share(JPY)

OperatingRevenue

Net Income per Share: JPY 2,214; period-end number of shares outstanding: 254,974 shares
The actual operating revenue, operating profit, recurring profit, net income, and dividend
may vary due to changes in circumstances. These forecasts should not be construed as aguarantee of such performance or results. Ichigo Hotel will make a forecast revision should
there be a substantial discrepancy between the forecast and actual operating results.
2. Reason for January 2020 Earnings Forecast Revision
Ichigo Hotel is revising up its earnings forecast to reflect the gains on sale announced intoday’s release, “Hotel Sale (Nest Hotel Naha).” The revision also takes into accountthe negative earnings impact at variable-rent hotels from declining numbers of Korean
tourists, increased hotel supply, and natural disaster-related disruptions.
Operating revenue, operating profit, recurring profit, and net income are now forecast to
exceed the previous forecast by JPY 1,167 million (+49.0%), JPY 920 million(+65.7%), JPY 923 million (+77.0%), and JPY 923 million (+77.0%), respectively.
Given the higher earnings, Ichigo Hotel also increased its dividend forecast by JPY
3,621 (+77.0%).
3. Reason for July 2020 Earnings Forecast RevisionIchigo Hotel is revising down its earnings forecast to reflect decreased rental income
due to today’s hotel sale. The revision also takes into account the negative earnings
impact of declining numbers of Korean tourists and increased hotel supply, despite theoverall growth in inbound tourism.
Operating revenue, operating profit, recurring profit, and net income are now forecast tofall below the previous forecast by JPY 343 million (-19.2%), JPY 195 million (-20.1%),
JPY 200 million (-26.2%), and JPY 200 million (-26.2%), respectively. Given the lowerearnings, Ichigo Hotel also decreased its dividend forecast by JPY 787 (-26.2%).
Although the coronavirus outbreak could result in a decrease in inbound tourism, theimpact is currently unknown and therefore has not been embedded in the forecast.
Ichigo Hotel will retain today’s hotel sale proceeds as cash-on-hand for future use,
including asset acquisitions and value-add capex.

2Preconditions for the January 2020 Fiscal Period Earnings Forecast
Preconditions
PeriodNumber ofHotels

 August 1, 2019 to January 31, 2020 (184 days)• The forecast assumes 22 hotels (The sale of Nest Hotel Naha will takeplace on January 31, 2020).
Within operating revenue, rental income is forecast based on current lease
contracts taking into consideration such factors as hotel and market
conditions.
Forecast Operating Performance (15 Variable-Rent Hotels)1

Occupancy2
ADR3

January 2020 Fiscal Period
85.0%
JPY 7,758

1

The forecast rental income assumes operators and tenants will fully pay
their contractual rents without delay or default.
2Occupancy is calculated with the following formula:
Occupancy = Total number of guest rooms occupied during the period /(total number of guest rooms * number of days hotel was in operation
during the period)3
ADR or Average Daily Rate is calculated with the following formula:
ADR = Total sales from accommodation (excluding restaurant charges
and other service fees) / number of guest rooms occupied during theperiod

Operating
Revenue

Details of January 2020 Rental Income Forecast(JPY million)
Fixed Rent/
Minimum Variable
Guaranteed Rent
Rent

Hotel Name

Smile Hotel Kyoto Shijo
Hotel Vista Premio Kyoto
Nest Hotel Sapporo EkimaeChisun Inn Osaka Hommachi
Comfort Hotel Hamamatsu
Nest Hotel Sapporo Odori
Valie Hotel Tenjin
Nest Hotel Osaka Shinsaibashi
Comfort Hotel Central International
Airport
Smile Hotel Tokyo Asagaya
Nest Hotel Naha
3

Total

343732
3955
2624
65

29–
74––
51
29
78

64
37
107
39
55
77
54
144

151

–

151

28
62

60
73

88
136

Nest Hotel Matsuyama
3551
87
Comfort Hotel Okayama
45–
45
Comfort Hotel Kushiro
18–
18
Comfort Hotel Suzuka
15–
15
Court Hotel Kurashiki
333770
Nest Hotel Kumamoto
274977
Valie Hotel Hiroshima
81019
1
Other250
16266
Total993562
1,555
1
Figures for Hotel Wing International Nagoya, Hotel Wing International
Kobe Shin Nagata Ekimae, Hotel Livemax Nihombashi-Hakozaki,
Grandpark-Inn Yokohama, and Urbain Hiroshima Executive areincluded in “Other” because the hotel operators did not provide consent
to disclose hotel-specific data.
Retail: JPY 51 million of rental income from retail tenants at Hotel Vista
Premio Kyoto, Chisun Inn Osaka Hommachi, Hotel Wing International
Kobe Shin Nagata Ekimae, and Smile Hotel Tokyo Asagaya, and from thebanquet hall at Nest Hotel Kumamoto.

OperatingExpenses

Revisions to Previous Forecast
Gains on sale from the sale of Nest Hotel Naha: JPY 1,268 million ofgains on sale
 Depreciation: JPY 352 million. Depreciation has been calculated using
the straight-line method.
• Property and city planning taxes: JPY 105 million• Building maintenance and repair expenses are based on what Ichigo
Investment Advisors, the asset management company of Ichigo Hotel,
estimates will be necessary for each hotel during the period. However,actual expenses for the period could differ significantly from these
forecast amounts for reasons including the variability of maintenanceand repair expenses, one-time costs due to unexpected building damage,etc.
 Rental expenses, Ichigo Hotel’s principal operating expense (other thandepreciation, see above), are calculated based on historical data adjusted
for anticipated expense variations.
 Actual operating expenses may differ significantly from theseassumptions due to unforeseeable factors.
Revisions to Previous Forecast Increase in asset management fees: JPY 216 million
 Increase in income taxes due to change in taxable revenue: JPY 34
million

NonOperatingExpenses

 Interest expenses and other borrowing-related expenses: JPY 195
million Amortization of expenses related to the establishment of Ichigo Hoteland to new share issuance: JPY 5 million

Borrowings

 Total borrowings: JPY 25.47 billion as of January 31, 2020

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Number ofShares 254,974 shares issued and outstanding as of January 30, 2020. The
forecast assumes there will be no additional new issuance of sharesthrough January 31, 2020.

Dividend The dividend forecast assumes that dividends will comply with thedividend distribution policy stipulated in Ichigo Hotel’s Articles ofIncorporation.
 The dividend is subject to change due to factors such as sales of
portfolio assets, changes in rental income associated with operator
turnover, the occurrence of unexpected maintenance and repair costs,
and fluctuations in interest rates.

Dividend in
Excess ofEarnings

 Ichigo Hotel does not plan on paying any Dividend in Excess ofEarnings.

Other This forecast assumes that there are no material revisions to laws andregulations, the tax system, accounting standards, listing rules of theTokyo Stock Exchange, and rules of the Investment Trusts Association,
Japan, and no material changes in the state of the economy and realestate market conditions.

5Preconditions for the July 2020 Fiscal Period Earnings Forecast
Preconditions
PeriodNumber ofHotels

 February 1, 2020 to July 31, 2020 (182 days)• The forecast assumes 21 hotels (after the sale of the Nest Hotel Naha onJanuary 31, 2020).
Within operating revenue, rental income is forecast based on current lease
contracts taking into consideration such factors as hotel and market
conditions.1
Forecast Operating Performance (13 Variable-Rent Hotels)Occupancy2
ADR3

July 2020 Fiscal Period
87.0%
JPY 7,250

1

The forecast rental income assumes operators and tenants will fully pay
their contractual rents without delay or default.
2
Occupancy is calculated with the following formula:
Occupancy = Total number of guest rooms occupied during the period /(total number of guest rooms * number of days hotel was in operation
during the period)3
ADR or Average Daily Rate is calculated with the following formula:
ADR = Total sales from accommodation (excluding restaurant charges
and other service fees) / number of guest rooms occupied during theperiod

Operating
Revenue

Details of July 2020 Rental Income Forecast(JPY million)
Fixed Rent/Minimum Variable
Guaranteed Rent
Rent

Hotel Name

Smile Hotel Kyoto Shijo
Nest Hotel Sapporo Ekimae
Chisun Inn Osaka Hommachi
Comfort Hotel Hamamatsu
Nest Hotel Sapporo Odori
Valie Hotel Tenjin
Nest Hotel Osaka Shinsaibashi
Comfort Hotel Central International
Airport
Smile Hotel Tokyo Asagaya
Nest Hotel Matsuyama
Comfort Hotel Okayama
6Total30
31395527216628
69––53
3471

59
100
3955
8055
137

151

–1513336455753–918945

Comfort Hotel Kushiro

18–

18

Comfort Hotel Suzuka

15–

15

Court Hotel Kurashiki
312556
Nest Hotel Kumamoto
254469Valie Hotel Hiroshima
175269
1
Other
250
15265
Total
897
505
1,403
1
Figures for Hotel Wing International Nagoya, Hotel Wing International
Kobe Shin Nagata Ekimae, Hotel Livemax Nihombashi-Hakozaki,
Grandpark-Inn Yokohama, and Urbain Hiroshima Executive areincluded in “Other” because the hotel operators did not provide consent
to disclose hotel-specific data.
Retail: JPY 36 million of rental income from retail tenants at Chisun Inn
Osaka Hommachi, Hotel Wing International Shin Kobe Nagata Ekimae,and Smile Hotel Tokyo Asagaya, and the banquet hall at Nest HotelKumamoto.

OperatingExpenses

Revisions to Previous Forecast
Decrease in rental income due to sale of Nest Hotel Naha:
JPY 122 million Depreciation: JPY 317 million. Depreciation has been calculated using
the straight-line method.
• Property and city planning taxes: JPY 108 million• Building maintenance and repair expenses are based on what Ichigo
Investment Advisors, the asset management company of Ichigo Hotel,
estimates will be necessary for each hotel during the period. However,actual expenses for the period could differ significantly from these
forecast amounts for reasons including the variability of maintenanceand repair expenses, one-time costs due to unexpected building damage,etc.
 Rental expenses, Ichigo Hotel’s principal operating expense (other thandepreciation, see above), are calculated based on historical data adjusted
for anticipated expense variations.
 Actual operating expenses may differ significantly from theseassumptions due to unforeseeable factors.
Revisions to Previous Forecast Decrease in rental income: JPY 46 million

NonOperatingExpenses

 Interest expenses and other borrowing-related expenses: JPY 206million
 Amortization of expenses related to the establishment of Ichigo Hotel:
JPY 5 million

Borrowings

 Total borrowings: JPY 25.47 billion as of July 31, 2020

Number ofShares 254,974 shares issued and outstanding as of January 30, 2020. Theforecast assumes there will be no additional new issuance of sharesthrough July 31, 2020.

7Dividend The dividend forecast assumes that dividends will comply with thedividend distribution policy stipulated in Ichigo Hotel’s Articles ofIncorporation.
 The dividend is subject to change due to factors such as sales of
portfolio assets, changes in rental income associated with operator
turnover, the occurrence of unexpected maintenance and repair costs,and fluctuations in interest rates.

Dividend in
Excess ofEarnings

 Ichigo Hotel does not plan on paying any Dividend in Excess ofEarnings.

Other This forecast assumes that there are no material revisions to laws andregulations, the tax system, accounting standards, listing rules of theTokyo Stock Exchange, and rules of the Investment Trusts Association,Japan, and no material changes in the state of the economy and realestate market conditions.

8