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.
August 24, 2022

Midterm Financial Report for the Fiscal Year Ending December 31, 2022
(January 1, 2022 – June 30, 2022)
Japan Hotel REIT Investment Corporation
Listing:
Securities code:
URL:
Representative:

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

Asset Management Company:
Representative:
Contact:

Japan Hotel REIT Advisors Co., Ltd.
Hisashi Furukawa, President & CEO
Makoto Hanamura
Director of the Board, Head of Finance and Planning Division
Phone: +81-3-6422-0530

Scheduled date to file midterm Securities Report:

September 21, 2022

Preparation of supplementary material on midterm financial report: Yes
Schedule for presentation of midterm financial results:
Yes (Institutional investors and analysts only)(Amounts are rounded down to the nearest million yen)

1. Status summary of operation and assets for the midterm of the fiscal year ending December 31, 2022
(January 1, 2022 – June 30, 2022)(1) Operating results(Percentages: full year—changes from the previous year, midterm period—changes from the previous midterm period)

Midterm period ended
June 30, 2022
June 30, 2021

Operating revenue
JPY1M
%
5,431
18.3
4,589
(17.1)

Operating income
JPY1M
%
323
(699)
-

Ordinary income
JPY1M
%
(470)
(1,488)-Net income (loss)
JPY1M
%
(471)
(1,488)-

Fiscal year ended
December 31, 2021

Midterm period ended
June 30, 2022
June 30, 2021
Fiscal year ended
December 31, 2021

13,633

(1.5)

2,959

(6.8)

1,298

(7.2)

1,296

(15.1)Net income for current
midterm period per unit
JPY
(105)
(333)
290

(Note) Net income for current midterm period per unit is calculated based on the period-average number of investment units issued.

(2) Financial position

Midterm period ended
June 30, 2022
June 30, 2021
Fiscal year ended
December 31, 2021

Total assets
JPY1M
391,483
395,554394,323

Net assets
JPY1M
219,914
218,306

Equity ratio
%
56.2
55.2

Net assets per unit
JPY
49,23048,870221,54256.2

49,595(Note) Net assets per unit are calculated based on the total number of investment units issued and outstanding at the end of the midterm period / full year.

- 1 -(3) Cash flows

Midterm period ended
June 30, 2022
June 30, 2021
Fiscal year ended
December 31, 2021

Cash flows fromoperating activities
JPY1M
1,208
(760)

Cash flows frominvesting activities
JPY1M(3,304)(1,025)

11,682(4,695)

Cash flows from
Cash and cash equivalents
financing activities
at end of year
JPY1M
JPY1M
(1,633)26,267(1,541)
25,225(5,543)29,996

2. Operating forecast for the fiscal year ending December 31, 2022
(January 1, 2022 – December 31, 2022)
Operating revenue
JPY1M

Full year

13,337%(2.2)

Operating income
JPY1M

2,827

%
(4.5)

Ordinary income
JPY1M

1,159

%
(10.6)(Percentages show changes from the previous year)
Dividend per unit
Dividend per unit
Net income(Excess of earnings resulting from excess
exclusive)of earnings
JPY1M

1,158

%
(10.7)

JPY
333

JPY
-

(Reference) Estimated net income per unit for the fiscal year ending December 31, 2022 (full year) ¥259 (Calculated based on the estimate of period-average
number of investment units of 4,467,006.)(Note) The source of the dividend payment is planned to be the total amount of net income, plus the reversed amount of the reserve for temporary difference
adjustment (¥332 million).

* 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: Yes(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(Note) For details, please refer to “Notes on changes in accounting policies” on page 26.

(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/period(including investment units owned by Japan Hotel REIT Investment Corporation (JHR))
As of June 30, 2022
4,467,006 units
As of June 30, 2021
4,467,006 units
As of December 31, 2021
4,467,006 units(b) Number of JHR’s own investment units held at the end of the fiscal year
As of June 30, 2022
0 units
As of June 30, 2021
0 units
As of December 31, 2021
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 33.

* Status of midterm audit procedures
Midterm financial report is not subject to interim audit procedures by accountants.

* 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 amountby 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 second half of the fiscal year” on page 6 and “Assumptions of theoperating forecast for the full year of the fiscal year ending December 2022 (23rd period)” on page 11- 2 -○ Table of Contents
1. Operating results .............................................................................................................................................................................. 4(1) Operating results .......................................................................................................................................................................... 4(2) Material events related to going concern assumption ................................................................................................................. 18
2. Semi-annual financial statements ................................................................................................................................................... 19(1) Semi-annual balance sheets ........................................................................................................................................................ 19(2) Semi-annual statements of income ............................................................................................................................................. 21(3) Semi-annual statements of changes in net assets ........................................................................................................................ 22(4) Semi-annual statements of cash flows ........................................................................................................................................ 24(5) Notes on going concern assumption ........................................................................................................................................... 25(6) Notes on matters concerning significant accounting policies ..................................................................................................... 25(7) Notes on changes in accounting policies .................................................................................................................................... 26(8) Notes to semi-annual financial statements ................................................................................................................................. 27(9) Changes in total number of investment units issued and outstanding ........................................................................................ 34
3. Reference information .................................................................................................................................................................... 35(1) Information on values of assets under management, etc. ............................................................................................................. 35(2) Status of capital expenditures ...................................................................................................................................................... 48- 3 -1. Operating results(1) Operating results(A) Overview of the midterm period under review(a) Brief history and principal activities
Japan Hotel REIT Investment Corporation (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 Trusts Act”) 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 asset management to Japan Hotel REIT Advisors Co., Ltd. (hereinafter referred to as the “Asset Management
Company”). Focusing on importance as social infrastructure and profitability as investment real estate of hotels, JHR
primarily invests in real estate which are wholly or partially used as hotels or real estate equivalents of such real estate or
related assets that are backed by such real estate or real estate equivalents (hereinafter referred to as “Real Estate for Hotels,etc.”).
JHR, the former Nippon Hotel Fund Investment Corporation, merged with Japan Hotel and Resort, Inc. with an effective dateof April 1, 2012 (hereinafter referred to as the “Merger”), and changed its name to Japan Hotel REIT Investment Corporation.
Since the Merger through the end of the midterm period under review (6 months period from January 1, 2022 to June 30,2022), JHR has carried out nine public offerings for capital increase and continuously acquired “highly competitive hotels”
in mainly “strategic investment areas” where domestic and inbound leisure demand can be expected over the medium to longterm.
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 little over ten years since the Merger through the end of the midterm period under review. As a result, JHR had a portfolioof 41 properties with a combined acquisition price of ¥363,542 million, and the total number of investment units issued andoutstanding stood at 4,467,006 units at the end of the midterm period under review.
(b) Investment performance for midterm period under review
During the midterm period under review (six months period from January 1, 2022 to June 30, 2022), while a sixth wave of
the spread of infections occurred from the beginning of the year due to the epidemic of COVID-19 variants, movement
restrictions have been eased as strict measures to prevent the spread of the virus were lifted nationwide in March and efforts
towards the recovery of social and economic activities have been gradually made.
The number of foreign visitors to Japan (hereinafter referred to as “inbound visitors”) was estimated to be 507,000 in the firsthalf of 2022 (minus 96.9% from that of 2019), although the maximum number of foreigners allowed to enter Japan fromvarious countries was gradually increased. On the other hand, the cumulative number of overnight guests at domestic
accommodation facilities in the first half of 2022 rose by 51.7% year on year or fell by 33.4% from that of 2019 to 190
million guest nights (preliminary release). The figure showed a significant year-on-year increase despite the continuous
impact of COVID-19 and a recovery in accommodation demand from Japanese guests was seen.
As to the performance of hotels owned by JHR under these circumstances, RevPAR (Note 1) of The 25 Hotels with Variable
Rent, etc. (Note 2) for the midterm period under review increased significantly year on year by 91.4%, and GOP (grossoperating profit) turned from a deficit of ¥96 million in the previous midterm period to a surplus of ¥1,819 million supportedby the successful cost management measures at hotels.
Under such circumstances, JHR practiced close communication with the lessees and operators of its respective hotels andworked to secure hotel earnings through reduction of operating costs, etc. In particular, Hotel Management Japan Co., Ltd.
(hereinafter referred to as “HMJ”), which is a group company of the Asset Management Company, and its subsidiaries(hereinafter collectively referred to as the “HMJ Group”) implemented restructuring (such as reduction of labor costs throughclosure of unprofitable restaurants within hotels, reduction of outsourcing costs with the switch from outsourcing toinsourcing and change of specifications, and consolidation of back offices and common operations) from 2020, and the resultsof cost reduction exceeded those initially anticipated. Despite such achievement, we are working to further promote the abovemeasures.
- 4 -In addition, at the same time as these efforts, we are also focusing on measures to improve earnings towards the full-fledged
recovery period of accommodation demand. Particularly, for hotels that have changed the lessee to the HMJ Group andconducted rebranding in the previous year, we are promoting measures for the realization of effective operation andimprovement of earnings.
On the other hand, as a countermeasure against downside risks under the impact of COVID-19, JHR took measures to adopt
full variable rent from February 2020 to the end of 2021 in lease contracts of The 14 HMJ Hotels, and has also concluded amemorandum on February 25, 2022, to change the entire rent of The 14 HMJ Hotels to variable rent in 2022.
For further details of sales, GOP (gross operating profit) and other management indicators for The 25 Hotels with Variable
Rent, etc., please refer to “<Reference Information 2> Hotel operation indexes, sales and GOP (gross operating profit)” on
page 17.
(Note 1)

(Note 2)The Five HMJ hotels refers to following five hotels which JHR leases to HMJ. Kobe Meriken Park Oriental Hotel, Oriental Hoteltokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila and Oriental Hotel Hiroshima. The same shall apply hereinafter.
The 14 HMJ hotels refers to The Five HMJ Hotels plus following 9 hotels which JHR leases to subsidiaries of HMJ. Oriental
Hotel Okinawa Resort & Spa, Sheraton Grand Hiroshima Hotel (main facility of ACTIVE-INTER 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, Hilton Tokyo Odaiba. The same shall apply hereinafter
The Two HMJ Rebranded hotels refers to following two hotels. Hotel Oriental Express Fukuoka Tenjin and Oriental Hotel
Universal City. The same shall apply hereinafter in this document.
The 16 HMJ Hotels refers to The 14 HMJ Hotels plus The Two HMJ Rebranded Hotels. The same shall apply hereinafter.
The Accor Group Hotels refers to following 5 hotels. ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure
Okinawa Naha, Mercure Yokosuka. The same shall apply hereinafter.
The Ishin Group Hotels refers to following 4 hotels. the b suidobashi, the b ikebukuro, the b hachioji and the b hakata, The same
shall apply hereinafter.
The 25 Hotels with Variable Rent, etc. refers to The 16 HMJ Hotels plus The Accor Group Hotels plus The Ishin Group Hotels.
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.

(c) Funding status
In the midterm period under review, JHR took out loans of ¥15,234 million in total to refinance existing loans that were due
for repayment in January, March and June.
Consequently, as of the end of the midterm period under review, the balance of interest-bearing debt totaled ¥164,754 million,
including short-term loans payable of ¥32,436 million, current portion of long-term loans payable of ¥11,172 million, longterm loans payable of ¥81,046 million, current portion of investment corporation bonds of ¥6,000 million and investment
corporation bonds of ¥34,100 million, and the ratio of interest-bearing debt to total assets (Note) at end of the midterm period
under review stood at 42.1%. The ratio of fixed interest rate to total interest-bearing debt at the end of the midterm period
was at 78.5%.
(Note)

Ratio of interest-bearing debt to total assets at end of the midterm period under review = Balance of interest-bearing debt at end of themidterm period under review ÷ Total assets at end of the midterm period under review × 100

As of the end of the midterm period under review, JHR’s issuer ratings were as follows.
Rating agency

RatingJapan Credit Rating Agency, Ltd. (JCR)A+(Negative)

Rating and Investment Information, Inc. (R&I)

A(Negative)(d) Financial results
As a result of the abovementioned asset management, operating revenue, operating income and ordinary loss were ¥5,431
million, ¥323 million and ¥470 million, respectively, for the midterm period under review (six months period from January
1, 2022 to June 30, 2022). Net loss for the midterm period under review was ¥471 million. Variable rent received from hotels
under variable rent contract and recognized as operating revenue include the amount of ¥1,384 million received from thehotels leased to the HMJ Group. However, this amount is calculated based on the GOP of The 16 HMJ Hotels for the midterm
period under review. The variable rent to be ultimately received from The 16 HMJ Hotels will be determined by the full-year
GOP (12 months period) of each hotel of The 16 HMJ Hotels.

- 5 -JHR settles accounts on an annual basis and investment corporations do not have a system for interim dividends under theInvestment Trusts Act. Accordingly, no distribution of earnings can be made in the midterm period under review. Distributionof earnings is made based on the earnings for the full year (12 months period from January 1, 2022 to December 31, 2022).
With regard to such distribution of earnings, in accordance with the policy that earnings exceeding 90% of JHR’s distributableprofit as defined by Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957; as amended;hereinafter called “the Act on Special Measures Concerning Taxation”) will be distributed.
(B) Outlook for the second half of the fiscal year(a) Investment policies and issues to be addressed
In 2022, while the impact of COVID-19 variants continued to be seen from the beginning of the year, a sign of recovery indemand for domestic leisure started to be seen with moves to ease movement restrictions. As for inbound tourism, progress
towards normalization is seen through efforts such as easing immigration restrictions and partially allowing the entry of
foreign tourists from June. Although the impact of further infection is unknown, the government plans not to implement
movement restrictions, and it is believed that the behavior of people is gradually changing towards enjoying tourism andevents while paying full attention to the prevention of infection. The market continues to be significantly impacted by
COVID-19, but we believe the recovery trend of accommodation demand centering on demand for domestic travel will growstronger.
JHR will strive to capture demand which is on a recovery trend as well as continue to implement a variety of measures withlessees and operators, such as reducing operating costs through review of operations at each hotel, maintaining necessary
employment, handling cash management, and also implementing sales measures in response to new demand including“staycation” and “workation.” Especially for the hotels with variable rent, etc., JHR will endeavor to maximize the GOP ofeach hotel and thus maximize the rent JHR can receive as a result. In particular, with the HMJ Group, a strategic partner of
JHR, in addition to pursuing further consistent cost reduction through strengthening the initiatives of the restructuring plan
mentioned earlier, proactively promoting measures to create and capture demand, such as creating attractive products whichmake the hotel itself as the tourism destination and increasing brand awareness through TV commercials, etc. We areconducting initiatives from both sides to enhance profitability.
Given the large potential demand for overseas tourism globally, particularly due to the improvement in income levels in Asian
countries and the popularity of Japan as a travel destination, etc., JHR expects Japan’s accommodation demand from inboundvisitors to exceed that in 2019 over the medium term and believes that the accommodation and tourism market will expand.
On the belief that the location and competitiveness of individual hotels as well as the capabilities of 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 of the spread of infection by COVID-19, contactless behavior patterns, such as web conferencing,have spread, and these may cause structural changes in the hotel industry such as a reduction in banquet demand. JHR will
work more closely than ever with hotel lessees and operators to flexibly respond to the changes. Under the recognition ofsuch circumstances, JHR intends to work with the Asset Management Company to continue to implement strategies todifferentiate by utilizing the experience it has cultivated as a J-REIT specializing in hotels, and manage assets based on theapproach 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 strategies which proactively pursue greater profitability and asset value inproperties by way of a variety of measures such as expanding international brands and coordinating with the HMJ Group.
For properties with fixed-rent contracts, JHR will continue to focus on setting and maintaining appropriate rents based onrent levels in the market where respective hotels are located and each tenant’s creditworthiness and ability to bear the rent
costs, and aiming at raising rents (including introduction of a revenue-sharing structure) in accordance with the conditions of
the accommodation market while appropriately responding to requests for reduction of fixed rent from lessees greatly affectedby COVID-19.
- 6 -For hotels under variable rent contracts and under a management contract structure, JHR is working to increase variable rent,
etc. and reduce management contract fees by implementing active asset management strategies.
i) Properties under variable rent contracts
JHR works to enhance the profitability of its properties under variable rent contracts through its active asset management
strategies. JHR has adopted world-leading international brands such as Hilton, Sheraton, Mercure and Holiday Inn as well as
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, etc. through improved performance of these hotels. JHR
coordinates with the operators in an effort to enhance hotel performance by requesting them to implement marketing
initiatives to attract a wider range of demand with considerations given to recovery of leisure demand from domestic andinbound visitors, measures to maintain and increase room rates, and realization of synergy effects like cost reductions fromoperating multiple properties, among other efforts.
On the other hand, as the impact of infection by COVID-19 continues to be seen, JHR will closely cooperate with the lessees
and operators of respective hotels to promote drastic reform of the earnings structure through various cost-cutting measurescentered on thoroughly enhancing efficiency of the operating system, while continuing efforts on consideration for the healthof 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, JHR will strive to recover and improve hotel earnings by implementing strategic capital expenditure (CAPEX) as
necessary through accurately grasping the conditions in the domestic accommodation and tourism market and changing
customers’ needs.
ii) Properties under fixed rent contracts
JHR will monitor operating conditions of these hotels appropriately, pay careful attention to each lessee’s ability to bear thecost of rent, and pursue efforts to set and maintain reasonable rent, while appropriately responding to requests for reductionof fixed rent from lessees greatly affected by the spread of infection by COVID-19. In addition, JHR will continuously
execute investment to maintain and renew facilities and equipment in order to ensure each hotel becomes prominent in themarket and to maintain and enhance asset value.
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 with future growth potential in mind in order to achieve upside
gains.
Upon acquiring properties, JHR will focus on infrastructure aspects of the relevant Hotel Assets such as buildings andfacilities, services aspects such as the credibility of the hotel lessee and operator (including the ability of the hotel lessee tobear the cost of rent) as well as operation and management capabilities, and the properties’ locational superiority that serves
as the base for stability in demand and growth potential.
Specifically, JHR will aim to invest in “full-service hotels” and “resort hotels” that pose barriers to new opening due to suchfactors as operation and management know-how required for operating the hotels and limitations in terms of invested capitaland 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, profitability, etc. of the properties. Moreover, JHR
will take a particularly selective approach to hotels specialized for accommodation and of a budget type (low price zone) thatmainly offers single rooms and where the source of competitiveness relies only on prices.

- 7 -While many investors continue to take a cautious view on hotel investments due to a sense of uncertainty over the domestic
accommodation and tourism market stemming from the impact of COVID-19, transactions, including those involving large
properties, have started to show movement since 2021 against the backdrop of expectations regarding the recovery of thehotel market and the easing of lending attitudes for hotels by financial institutions. Furthermore, there is also increasing
possibility of special investment opportunities unlike before, such as sales of assets due to rapid deterioration in the financial
position of operators, sales of hotels which are non-core assets due to deterioration in main business performance, sales ofhotels completed or scheduled to be completed without operators, etc. JHR will flexibly deal with such investment
opportunities by utilizing the efficient hotel operation platform of the HMJ Group and such. Moreover, over the medium tolong term, JHR believes that, along with the spread of infection by COVID-19 coming to an end and accompanying recovery
of domestic accommodation demand including that from inbound visitors, many investors who have been on the sideline
may resume investment in hotels, and competition over acquisition may become more active. Going forward, while closely
monitoring market trends from many angles, JHR will flexibly respond to changes in earnings structures of hotels and theinvestment environment by leveraging the strengths and advantages it has cultivated as a J-REIT specializing in hotel
investment and aim to expand asset size that accompanies improvement of the portfolio quality through acquiring highly
competitive properties, while utilizing the operation platform of HMJ as necessary. Considering the uncertainty of the hotel
market environment due to the impact of COVID-19, JHR intends to be careful with property acquisition for the time being,from the standpoint of procurement of new funds for property acquisition. In addition, from a comprehensive standpoint
including financial soundness and portfolio management, JHR will also consider asset replacement accompanying property
disposition as necessary.
Finance strategy
As the impact of the spread of infection by COVID-19 prolongs and the outlook of earnings remains uncertain, JHR will
focus on the enhancement of financial stability and soundness more than before and intends to maintain and enhance therelationship of trust with financial institutions with which it does business through close communication and such.
Specifically, JHR will conduct refinancing of existing borrowings while paying attention to financing costs and maintaining
good relationships with respective lenders. In addition, JHR will secure liquidity on hand in an effort to strengthen its financial
foundation through appropriate control of capital expenditures and property disposition, if necessary, etc. 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, butmaintains roughly the current level for the time being. In addition, when seeking new borrowing for property acquisitions,
JHR will work to disperse the maturity dates of its debt as well as further reinforce its composition of lenders and further
diversify funding methods, such as issuance of investment corporation bonds (including green bonds), while considering thebalance with the funding costs.
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).
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).
(Note)The policy may change due to a resolution of the board of directors of JHR, and it does not guarantee the method of reversing
the reserve for temporary difference adjustment, and amounts to be reversed, etc., in the future.

- 8 -Initiatives for sustainability
In recent years, consideration for ESG (Environment, Social and Governance) has grown in importance in the investment
management industry from the standpoint of long-term sustainability. JHR recognizes that conducting real estate investment
management that considers for ESG is important to maximize 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 guests, lessees, operators, business partners such as property managers, local communities, and officers
and employees of the Asset Management Company, and to fulfill 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 Hotel
Nikko Alivila and Mercure Okinawa Naha in February 2018 as first such cases for hotel properties owned by a J-REIT (Note1). 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, and acquired “Green Star” in the GRESB Real Estate Assessment for
four consecutive years thereafter. Moreover, for the second consecutive year, JHR was selected as a Sector Leader of Asian
Hotel Sector in the GRESB Real Estate Assessment conducted in 2021. In April 2020, Hilton Tokyo Odaiba acquired
CASBEE (Comprehensive Assessment System for Built Environment Efficiency) Certification for Buildings, the first such
recognition for an existing hotel property. In May 2021, Oriental Hotel Fukuoka Hakata Station also acquired CASBEE
Certification for Buildings, the second case of such for an existing hotel property following Hilton Tokyo Odaiba. In addition,
in December 2021, JHR defined its materiality (key issues) in terms of ESG from the dual standpoints of stakeholder
expectations and impact on its business. Also, the Asset Management Company expressed support for the recommendationsof the Task Force on Climate-related Financial Disclosures (TCFD) established by the Financial Stability Board (FSB), andjoined the TCFD Consortium, an organization made up of Japanese companies that support the recommendations. Based onsuch various efforts, JHR renewed the ESG-related pages on its website on a full scale with an aim to further enhance
information disclosure on ESG-related efforts in January 2022. Going forward, JHR, together with the Asset Management
Company, will continue to actively promote enhancement of its initiatives and disclosure on a variety of sustainability issues.
Furthermore, JHR issued green bonds in July 2019 to allocate funds mainly to refinancing of loans procured for funding
investment capital and constructions cost, etc. for equipment 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. Of the funds procured from the green bonds, the remaining funds, excluding therepayment of such loans, were allocated to construction costs for reduction of CO2, etc. at four hotels including Hilton Nagoya
as funds for renovation work at the hotels. As a result, the funds procured from the green bonds have been fully appropriatedfor eligible projects and there is no unappropriated balance.
In addition, as an effort under the spread of infection by COVID-19, JHR worked together with the lessees to provide a totalof nine hotels it owns as facilities to accept patients with mild or no symptoms who do not require hospital treatment among
the patients infected with COVID-19 from 2020 through the date of this document. JHR also provided restaurants and banquet
rooms in Oriental Hotel tokyo bay and Hotel Nikko Nara as venues for vaccination under workplace vaccination programs
and for local residents. Furthermore, the HMJ Group conducted workplace vaccination to provide vaccinations to its
employees who wish to be vaccinated so that hotel guests can use the hotels safely with peace of mind.
Recognizing its social responsibility towards local communities as a J-REIT specializing in hotels, JHR will continue toproactively carry out social contribution activities capitalizing on the characteristics of the hotel sector and each hotel.
(Note 1)
(Note 2)

Investigated by the Asset Management Company based on public information.
GRESB which stands for Global Real Estate Sustainability Benchmark is an annual benchmarking assessment to measure ESG(Environmental, Social and Governance) considerations of real estate companies and funds. It evaluates initiatives forsustainability of real estate 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.

- 9 -(c) Operating forecast
JHR estimates its’ operating forecast and forecast of dividend for the full year of the fiscal year ending December 2022 (23rdperiod) as follows. For the assumptions of these forecasts, please refer to “Assumptions of the operating forecast for the full
fiscal year ending December 2022 (23rd period)” on page 11.

Full year of the fiscal year ending
December 2022 (23rd period)

Forecast this time

Previous Forecast(Note 1)

Operating revenue¥13,337 million

TBD－

Operating income¥2,827 million

TBD－

Ordinary income¥1,159 million

TBD－

Net income¥1,158 million

TBD

－

¥333

TBD

－

－

TBD

－

Dividend per unit
Dividend per unit resulting from excessof earnings

Variance(Note 1) Operating forecast and estimate of dividend for fiscal year ending December 2022 were announced as TBD in the “Financial
Report for the Fiscal Year Ended December 31, 2021 (22nd Period)” dated February 25, 2022.
(Note 2) The forecasted figures above are the current forecasts calculated based on certain assumptions. As such, actual operating
revenue, operating income, ordinary income, net income, dividend per unit and dividend per unit resulting from excess ofearnings may vary due to changes in the circumstances. Furthermore, the forecasts are not intended to guarantee any dividend
amount per unit.

- 10 -

Assumptions of the operating forecast for the full fiscal year ending December 2022 (23rd period)
Item
Calculation
PeriodAssets underManagement

Operating
Revenue

Assumptions
・

Full fiscal year ending December 2022 (23rd Period): January 1, 2022 through December 31, 2022 (365 days)

The 41 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 the existing properties, etc.)
in assets under management through the end of the fiscal year ending December 2022 (23rd period). However, theactual 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 withfacilities other than hotels, such as commercial facilities and offices, operating revenue calculated based on the said
lease contracts is included. Moreover, operating revenue 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 14 HMJ Hotels
JHR concluded a memorandum of understanding for the fixed-term building lease contract for The 14 HMJ Hotels on
February 25, 2022. From January 1, 2022 through December 31, 2022, 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)
AGOP of
Variable rent ratio
Variable renteach hotel
92
79
Midterm
Kobe Meriken Park
86.0%
Oriental Hotel
Full year
447
384
Midterm
276
218
Oriental Hotel tokyo bay
79.0%
Full year809
639
Midterm
183
166
Namba Oriental Hotel
91.0%
Full year402
366
Midterm
63
47
Hotel Nikko Alivila
74.0%
Full year
977
723
Midterm
332
295
Oriental Hotel Hiroshima
89.0%
Full year
584
520
Midterm(154)－
Oriental Hotel Okinawa
89.0%
Resort & Spa
Full year244
217
Midterm
106
98
Sheraton Grand Hiroshima
93.0%
Hotel (*2)
Full year
331
308
193
187
Midterm
Oriental Hotel Fukuoka
97.0%
Hakata Station
Full year591
574
Midterm
109
106
Holiday Inn Osaka Namba
98.0%
Full year
151
148
68
65
Midterm
95.0%
Hilton Tokyo Narita Airport
Full year
102
97
117
111
Midterm
International Garden Hotel
95.0%
NaritaFull year
188
179
Midterm
88Hotel Nikko Nara
95.0%
Full year
172
164
Midterm(10)－
Hotel Oriental Express Osaka
87.0%
Shinsaibashi (*3)
Full year(34)－
Midterm(10)－
Hilton Tokyo Odaiba
97.0%
Full year
707
686
Midterm
1,374
1,384
Total
－
Full year
5,678
5,010
(*1) AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP.
GOP (gross operating profit) are the remainder after expenses incurred in hotel operation, such as personnel costs and general andadministrative expenses, etc., are deducted from total sales. The same shall apply hereinafter.
(*2) Stating the rent for Sheraton Grand Hiroshima Hotel, the major facility of ACTIVE-INTER CITY HIROSHIMA. Fixed rent andvariable rent for office and commercial tenants of ACTIVE-INTER CITY HIROSHIMA are as follows.

Midterm
Full year

Variable rent

Fixed rent

(Unit: millions of yen)
Total rent

3
5

251
501

254
507

(*3) Hotel Oriental Express Osaka Shinsaibashi is assumed to be closed throughout the fiscal period.

- 11 -

Item

Assumptions(2) The Two HMJ Rebranded Hotels
Hotel Oriental Express Fukuoka Tenjin and Oriental Hotel Universal City were rebranded with HMJ subsidiaries as thelessees 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.
< Hotel Oriental Express Fukuoka Tenjin>
Lease term: June 18, 2021 to December 31, 2031
Total rent = Fixed rent + Variable rent
Fixed rent = ¥150 million (actual amount for the year)
Fixed rent is waived from June 18, 2021 through June 30, 2022. The fixed rent to be recognized for the fiscal year
ending December 2022 is expected to be ¥135 million, which is 12 months’ worth of the average fixed rent of ¥11
million per month, calculated as the total fixed rent for the whole lease period (¥1,425 million) divided
proportionally by the period of lease contract.
Variable rent = [Hotel AGOP – AGOP base amount of ¥165 million] × Variable rent ratio (97.0%)< Oriental Hotel Universal City>
Lease term: July 1, 2021 to December 31, 2031
Total rent = Fixed rent + Variable rent
Fixed rent = ¥350 million (actual amount for the year)
Fixed rent is waived from July 1, 2021 through June 30, 2022. The fixed rent to be recognized for the fiscal year
ending December 2022 is expected to be ¥316 million, which is 12 months’ worth of the average fixed rent of ¥26
million per month, calculated as the total fixed rent for the whole lease period (¥3,325 million) divided
proportionally by the period of lease contract.
Variable rent = [Hotel AGOP – AGOP base amount of ¥370 million] × Variable rent ratio (95.0%)
Variable rent of The Two HMJ Rebranded Hotels are as follows

Hotel AGOP
Hotel Oriental Express
Fukuoka Tenjin
Oriental Hotel Universal
City
Total

Midterm
Full year
Midterm
Full year
Midterm
Full year

32
134
30
336
62
471

AGOP baseamount
82
165
185
370

(Unit: millions of yen)
Variable rent
Variable rent
ratio
－
97.0%
－
－
95.0%
－
－
－
－

(3) Income from management contracts (*4) and variable rent from other hotels with variable rent, etc.

ibis Styles Kyoto Station (*4)
ibis Styles Sapporo (*4)
Mercure Sapporo (*4)
Mercure Okinawa Naha (*4)
Mercure Yokosuka
the b suidobashi
the b ikebukuro
the b hachioji
the b hakata
Comfort Hotel Tokyo Higashi Nihombashi
Smile Hotel Nihombashi Mitsukoshimae
Chisun Hotel Kamata
Chisun Inn Kamata
Hilton Tokyo Bay
Hilton Nagoya
Total

Midterm
－
0
－
4
66
－
162
－
－
－
－
4
3
Undisclosed (*5)
Undisclosed (*5)
475

(Unit: millions of yen)
Full year
11
114
93
18
125
－
249
－
－
－
－
28
15
Undisclosed (*5)
Undisclosed (*5)1,129(*4) Management contract structure is introduced. The management contract structure involves entrusting the management of owned
hotel properties to the management company, and incorporating the results of the business into JHR as real estate operating revenue.
The amount of GOP for each hotel is recognized as management contract revenue and as operating revenue. In case that GOP isnegative amount (GOL), such amount will be recognized as management contract cost and accounted as operating expense.

- 12 -

Item

Assumptions
GOL of each hotel, which is accounted as management contract costs, is as follows.

(Unit: millions of yen)ibis Styles Kyoto Station
Mercure Sapporo
Total

Midterm

Full year

(17)
(2)
(20)

－
－
－

(*5) 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 14 HMJ Hotels
The Two HMJ Rebranded Hotels
Office and commercial tenants (*6)
Other hotels with variable rent, etc.
Total

Midterm

Full year

1,384
－
3
475
1,863

5,010
－
5
1,129
6,145

(*6) Variable rent for office and commercial tenants of ACTIVE-INTER CITY HIROSHIMA is shown.
(*7) For details of variable rent, please refer to page 45,“3. Reference Information; (1) Information on values of assets undermanagement, etc. B. Assets under management; (C) Other major assets under management; (iii) Overview of the hotel business;
a. Rent structures of hotels with variable rent, management contract or revenue sharing.”.

・ With respect to real estate operating costs, which constitute a major part of the operating expenses, expenses other thandepreciation are calculated based on historical data, and variable factors are reflected in the calculation.
・ It is assumed that ¥1,923 million will be recognized as expenses for fixed asset taxes, city planning taxes, etc.
・ Capital expenditure is assumed to be ¥4,716 million (¥3,366 million for capital expenditure I, ¥1,349 million for capital
expenditure II). Capital expenditure III is not planned for the fiscal year ending December 2022.

OperatingExpenses(*) JHR classifies capital expenditures into the following three categories. (I) Capital investment related to renewal of equipment and facilitiesof 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 the competitiveness of the hotels.

・ Depreciation is calculated using the straight-line method including the planned capital expenditures above and is assumed
to be ¥4,733 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 from the forecast amount for various
reasons, such as; (1) Emergency repair expenses may be necessary due to damage to buildings from unexpected causes;(2) The amount of repair expenses generally tends to increase in difference over time; and (3) Repair expenses are notrequired on a regular basis.

Non-operating
Expenses・ ¥1,680 million is expected as non-operating expenses for borrowing-related costs and other expenses. Borrowing-related
costs include interest expense, amortization for financing fee and arrangement fee.
・ Expenses for issuance of new investment units and secondary offering are amortized over a period of three years by thestraight-line method.

・ The balance of interest-bearing debt (sum of loans and investment corporation bonds) as of today is ¥164,754 million.
Balance of interest-bearing debt as of end of December 2022 is expected to be ¥164,754 million.
・ There are ¥17,625 million of debt that will mature during the 2nd half of the fiscal year ending December 2022 (23rdInterest-bearing
Period), all of these debts are assumed to be refinanced.
Debt
・ There are ¥6,000 million of investment corporation bonds that will mature during the 2nd half of the fiscal year ending
December 2022 (23rd Period), however, it is assumed that the same amount of investment corporation bonds will be
issued.

- 13 -

Item

Assumptions
・ Dividend per unit for the fiscal year ending December 2022 (23rd period) is calculated based on the following
assumptions.
Net income¥1,158 million
Reversal of reserve for temporary difference adjustment(negative goodwill)
50-year amortization amount of negative goodwill (*1)¥262 million
Loss on retirement of noncurrent assets (*2)
Amortization of trademark rights (*3)

Dividend per
Unit¥13 million¥56 million

Distributable amount¥1,491 million

Total number of investment units issued

4,467,006 units

Dividend per unit

¥333(*1) ¥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.
(*2) 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.
(*3) The trademark rights are amortized over 10 years using the straight-line method. Amortization is expected to be recognized during
the current fiscal year will be appropriated by reserve for temporary difference adjustment (negative goodwill) and is expected tohave no impact on dividend per unit.

・ Dividend per unit may fluctuate due to various causes, such as fluctuation of rent revenue resulting from transfer of assets
under management, change of tenants, etc. at hotels, change in the business environment of 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 the appropriation of
the reserve for temporary difference adjustment (negative goodwill) for dividends for the fiscal year ending December
2022 (23rd period) is expected to be ¥9,643 million.
Dividend per
Unit Resulting
from Excess of
Earnings

Others・ 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 regulations of theInvestment 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 and hotel businessenvironment, etc.
・ The numerical values are rounded down to the nearest millions of yen in the assumptions above.

- 14 -

<Reference Information 1>
Highlight of operational forecast and estimate of dividend（Unit︓JPY MM）
FY2021/12(22nd Period）

FY2022/12(23rd Period）

ResultForecast(A)
Properties

Comparison with thePrevious Year

(B)

(B)-(A)

Factors Causing Variance

Variance

No. of Properties

41

41

－

Acquisition Price

363,542

363,542－―

Operating Revenue

13,633

13,337(296)(2.2%)

Real Estate
Operating Revenue

10,374

13,337

2,962

28.6%

(140)

(2.2%) ・The Two HMJ Rebranded Hotels: decrease by JPY168 MM

Fixed Rent

Other Income

Composition

Composition

61.8%

6,413 47.0%

6,273

8.4%

872 6.9%

918―

・The Ishin Group Hotels: increase by JPY114 MM・Other hotels and tenants: increase by JPY6 MM・Impact of property sold in 2021: decrease by JPY92 MM

46

5.3%

・The 14 HMJ Hotels: increase by JPY2,895 MM

3,056

Variable Rent

29.8%

ProfitandLoss

3,088 46.1%

99.0% ・The Accor Group Hotels: increase by JPY152 MM

・The Ishin Group Hotels: decrease by JPY51 MM・Other hotels and tenants: increase by JPY93 MM
・Impact of property sold in 2021: decrease by JPY33 MM

6,145

Gain on Sale ofReal Estate
Properties, etc.

3,258

－

(3,258)(100.0%)

3,085

48.5%

3,159

204.6%NOI (*1)

6,366

9,452

NOI Yield

1.8%

2.6%

NOI after Depreciation (*1)

1,544

4,703

NOI Yield after
Depreciation

0.4%

1.3%

Operating Income

2,959

2,827

(132)

(4.5%)

Ordinary Income

1,298

1,159

(138)

(10.6%)Net Income

1,296

1,158

(138)

(10.7%)

Amount of Reversal from
Reserve for Temporary
Difference Adjustments(Negative Goodwill)

335

332

(2)

Total Dividends

1,634

1,487

(147)

Number of Units Issued(Unit)

4,467,006

4,467,006－

Dividend per Unit (JPY)

366

333

(33)

Dividend(0.8%) Amount of reversal from reserve for temporary difference

adjustments (*2)
2021︓50-year negative goodwill amortization: JPY262 MM,(9.0%)
Loss on retirement of noncurrent assets: JPY16 MM,
Amortization of trademark rights: JPY56 MM
2022︓―
50-year negative goodwill amortization: JPY262 MM,
Loss on retirement of noncurrent assets: JPY13 MM,
Amortization of trademark rights: JPY56 MM(9.0%)(*1) 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 on retirement of noncurrent assets + Asset retirement obligations expenses
NOI yield = NOI ÷ acquisition price
NOI after depreciation = Real estate operating revenue – Real estate operating costs
NOI yield after depreciation = NOI after depreciation ÷ acquisition price(*2) For the detail of amount to be reversed from reserve for temporary difference adjustments, please see “Assumptions of the operating forecast for thefull fiscal year ending December 2022 (23rd period)” above. The same shall apply hereinafter.

- 15 -

<Reference Information 2>
Hotel operation indexes, sales and GOP (gross operating profit)
The numeral figures are based on figures obtained from hotel lessees, etc. Please note that these figures have not been
audited nor have they gone through other procedures. No guarantee is made as to the accuracy or completeness of the
figures and information.
ADR (Note 1) and RevPAR (Note 2) are rounded off to the nearest yen. Sales and GOP are rounded off to the nearest
million yen. Occupancy rate and comparison with the previous period are rounded off to one decimal place.
<1> The 16 HMJ Hotels
Fiscal year ended December 2021
Comparison with2019

Comparison
with previous
periodComparison
with 2019

26.4%(59.5pt)

54.6%

28.2pt(31.3pt)

47.8%(40.6pt)

69.2%

21.4pt(19.2pt)

37.2%(50.0pt)

62.0%

24.8pt(25.2pt)

12,615(26.2%)

12,292(2.6%)(28.1%)

14,038(26.2%)

16,23915.7%(14.6%)

13,537(25.1%)

14,5147.2%(19.7%)

3,333(77.3%)

6,716

101.5%(54.2%)

6,709(60.1%)

11,23867.5%(33.1%)

5,035(68.0%)

8,995

78.7%

(42.9%)

8,429(66.8%)

12,72050.9%(49.8%)

13,140(54.0%)

19,491

48.3%(31.8%)

21,569(60.0%)

32,211

49.3%(40.3%)(164)(102.1%)

1,536

－%

(80.5%)

2,178(79.5%)

4,878

124.0%(54.0%)

2,014(89.1%)

6,414

218.4%(65.3%)

ResultOccupancy
rate

ADR

RevPARSales(JPY1M)GOP(JPY1M)First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half of theyear
Second halfof the year
Full year

Fiscal year ending December 2022
1st Half: Result
2nd Half: Forecast
Full Year: Forecast.

(Note 1) ADR: Represents average daily rate, which is calculated by dividing total rooms revenue for a certain period (including service charges) by
the total number of rooms sold during the period. The same shall apply hereinafter.
(Note 2) 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.

- 16 -

<2> The 25 Hotels with Variable Rent, etc.
Fiscal year ended
December 2021

Occupancy
rate

ADR

RevPARSales(JPY1M)GOP(JPY1M)First half ofthe year
Second half ofthe year
Full year
First half ofthe year
Second half ofthe year
Full year
First half ofthe year
Second half ofthe year
Full year
First half ofthe year
Second half ofthe year
Full year
First half of theyear
Second half ofthe year
Full year

Fiscal year ending December 2022

ResultComparison with2019

1st Half: Result
2nd Half: Forecast
Full Year: Forecast

Comparison
with previous
periodComparison with
2019

29.5%

(56.0pt)

55.8%

26.3pt(29.6pt)

48.7%(38.6pt)

69.9%

21.2pt(17.4pt)

39.2%(47.2pt)

62.9%

23.7pt(23.5pt)

10,755(30.9%)

10,8721.1%(30.1%)

12,143(28.9%)

14,08916.0%(17.5%)

11,625(28.8%)

12,6759.0%(22.4%)

3,169(76.2%)

6,063

91.4%

(54.4%)

5,913(60.4%)

9,846

66.5%

(34.0%)

4,552(67.7%)

7,971

75.1%

(43.5%)

9,512(67.3%)

14,36451.0%(50.6%)

14,567(55.0%)

21,78049.5%(32.8%)

24,079(60.8%)

36,14450.1%(41.2%)(96)(101.0%)

1,819

－%

(80.8%)

2,463(79.9%)

5,387

118.7%(56.0%)

2,367(89.1%)

7,206

204.4%(66.8%)- 17 -

(2) Material events related to going concern assumption
In the midterm period under review,
Although accommodation and tourism markets for the midterm fiscal period under review showed some trend of recovery, they
were significantly affected by COVID-19 continuously.
Under such circumstance, JHR concluded “memorandums of understanding related to fixed-term building lease contracts” for The
14 HMJ Hotels on February 25, 2022. JHR agreed to exempt fixed rents throughout 2022 and adopt full variable rent scheme forfull year 2022 as it did for February 2020 through end of 2021.
In addition to continuing impact by COVID-19, due to exemption of fixed rent of The 14 HMJ Hotels, operating revenue for
midterm period under review declined 57.3% in comparison to same period in 2019.
As a result, the debt-service coverage ratio, which is designated in the loan-related contracts with the financial institutions which
JHR conducts business with, fell below the predetermined reference value. Because such financial situation caused temporary
breach of financial covenants, there is a condition where substantial doubts on going concern may arise. However, JHR has agreed
with the financial institutions with which it conducts business that such financial situation is not considered a breach of thefinancial covenants. In the case where the debt-service coverage ratio is lower than the predetermined reference value in the fullyear period of the current fiscal year and thereafter, JHR may breach the financial covenants. Still, JHR believes that there is nomaterial uncertainty regarding the going concern assumption due to consideration of good relationships between JHR and financial
institutions with which it conducts business, continuing support from sponsor-related entities, the sufficient amount of cash it has
on hand and conservative debt ratio, etc.

- 18 -

2. Semi-annual financial statements(1) Semi-annual balance sheets
As of
December 31, 2021
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Income taxes receivable
Other
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
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- 19 -(thousands of yen)
As ofJune 30, 2022

22,838,609
7,458,225
1,750,164
485,240
40
108,41132,640,693

21,040,304
7,026,851
1,941,149
442,848－
108,91130,560,064

677,977(311,345)
366,632
4,889,299(3,204,701)
1,684,597
21,972137,035,704(28,062,086)
108,973,617
2,844,532(585,251)
2,259,280
645,033(198,085)
446,947
126,678(109,785)
16,893
212,263,515
110,371
326,143,828

713,826(343,200)
370,625
5,153,801(3,461,506)
1,692,295
23,127
137,788,781(29,889,881)
107,898,900
2,968,601(624,376)
2,344,224
645,033(212,976)
432,056
126,678(110,965)
15,713
212,263,515
162,926
325,203,385*1

275,488
467,409
27,324,752
4,630,789
5,920
32,704,360

245,969
439,365
27,324,752
4,563,186
5,580
32,578,854

12,520139,668
2,191,650
12,117
327,476
2,683,432
361,531,621

12,520139,668
2,071,018
461,411322,355
3,006,974
360,789,214

7,735
143,863
151,598
394,323,913

5,950
127,988
133,938
391,483,217

(thousands of yen)
As ofDecember 31, 2021
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of investment corporation bonds
payableCurrent portion of long-term loans payable
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Dividends payable
Deposits received
Derivative liabilities
Other
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
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*2*3- 20 -

As ofJune 30, 2022

1,426,861
24,002,000

682,390
32,436,000

6,000,000

6,000,000

8,434,000
538,359
1,210
172,743658,839
9,714
6,002
5,289
10,281
41,265,303

11,172,000
512,579605
57,662355,151
7,254
4,429
615
10,232
51,238,920

34,100,000
92,218,000
1,040,520
3,614,474
202,673
3,812
336,783
131,516,263
172,781,567

34,100,000
81,046,000
1,040,520
3,632,134
28,213145,019
337,598
120,329,485
171,568,406

187,194,209

187,194,209

21,746,398

21,746,398

10,311,886

9,976,515*2

1,174,860
11,486,747

1,174,860
11,151,375

1,300,724(470,268)

34,533,870
221,728,079

32,427,506
219,621,715(185,733)(185,733)
221,542,346
394,323,913

293,095
293,095
219,914,810
391,483,217*3

(2) Semi-annual statements of income(thousands of yen)
For the six months ended
June 30, 2021
Operating revenue
Real estate operating revenue
Other real estate operating revenue
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 profit (loss)
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
Other
Total non-operating income
Non-operating Expenses
Interest expense
Interest expense on investment corporation bonds
Borrowing costs
Amortization of investment corporation bond issuancecosts
Amortization of investment unit issuance costs
Other
Total non-operating expenses
Ordinary loss
Loss before income taxes
Income taxes – current
Total income taxes
Profit (loss)
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

*1
*1

*1

- 21 -For the six months ended
June 30, 2022

4,143,994
445,316
4,589,311*1

4,417,463
706,383
60,9438,700
95,5905,289,080(699,769)*1*15,002,976
428,405
5,431,381
4,230,740
706,22159,4848,700
102,414
5,107,561
323,820

147
4,233
33,172
20,527
10,5907,356
15176,180

130
3,460
36
－
－
8,393
541
12,561

454,793
157,322
199,628

426,174
151,169
205,229

16,763

15,87429,245
6,994
864,747(1,488,336)(1,488,336)
605
605(1,488,941)
3,922(1,485,018)

1,785
6,983
807,216(470,834)(470,834)605
605(471,439)
1,171(470,268)

(3) Semi-annual statements of changes in net assets
For the six months ended June 30, 2021
(thousands of yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance, January 1, 2021
Changes of items during
the period
Issuance of new
investment unit
Reversal of reserve fortemporary difference
adjustment

186,894,169

Voluntary reserve
CapitalsurplusReserve fortemporarydifference
adjustment

Reserve fortax purpose
reduction
entry

21,746,398

10,617,580

1,174,860

Total
voluntary
reserve
11,792,441

Unappropriatedretainedearnings(undisposed
loss)
1,527,790

Total surplus

Totalunitholders’equity35,066,630 221,960,800

300,039300,039
305,694－－

Dividends paid

(1,829,562)(1,829,562)(1,829,562)

Profit (loss)(1,488,941)(1,488,941)(1,488,941)(3,018,464)

Net changes of items
other than unitholders’equityTotal changes of items
during the period
Balance, June 30, 2021

(305,694)(305,694)

300,039－(305,694)－(305,694)(3,012,809)(3,318,504)*1 187,194,209

21,746,398

10,311,886

1,174,860

11,486,747(1,485,018)

31,748,126 218,942,336(thousands of yen)
Valuation and translation
adjustments
Deferred
Total
gains
valuation and(losses) on
translation
hedgesadjustments
Balance, January 1, 2021

(759,492)(759,492)

Changes of items during
the period
Issuance of new
investment unit
Reversal of reserve fortemporary difference
adjustment

Total net
assets221,201,308

300,039－

Dividends paid

(1,829,562)

Profit (loss)(1,488,941)

Net changes of items
other than unitholders’equityTotal changes of items
during the period
Balance, June 30, 2021

123,648

123,648

123,648

123,648

123,648(2,894,816)(635,843)(635,843)

218,306,492- 22 -

For the six months ended June 30, 2022
(thousands of yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance, January 1, 2022

187,194,209

Voluntary reserve
CapitalsurplusReserve fortemporarydifference
adjustment

Reserve fortax purpose
reduction
entry

21,746,398

10,311,886

1,174,860

Unappropriatedretainedearnings
Total voluntary(undisposed
reserveloss)

Total surplus

Totalunitholders’equity11,486,747

1,300,724(335,371)

335,371－－

Dividends paid

(1,634,924)(1,634,924)(1,634,924)

Profit (loss)(471,439)(471,439)(471,439)(2,106,364)(2,106,364)

Changes of items during
the period
Reversal of reserve fortemporary difference
adjustment(335,371)

Net changes of items
other than unitholders’equityTotal changes of items
during the period
Balance, June 30, 2022－－

(335,371)－(335,371)(1,770,992)*1 187,194,209

21,746,398

9,976,515

1,174,860

11,151,375(470,268)(thousands of yen)
Valuation and translation
adjustments
Deferred
Total
gains
valuation and(losses) on
translation
hedgesadjustments
Balance, January 1, 2022

(185,733)(185,733)

Changes of items during
the period
Reversal of reserve fortemporary difference
adjustment

Total net
assets221,542,346－

Dividends paid

(1,634,924)

Profit (loss)(471,439)

Net changes of items
other than unitholders’equityTotal changes of items
during the period
Balance, June 30, 2022

478,828

478,828

478,828

478,828

478,828(1,627,535)

293,095

293,095

219,914,810- 23 -

34,533,870 221,728,079

32,427,506 219,621,715

(4) Semi-annual statements of cash flows(thousands of yen)
For the six months ended
June 30, 2021
Cash flows from operating activities
Profit (loss) before income taxes
Depreciation and amortization
Loss on retirement of noncurrent assets
Loss (profit) on derivative instruments
Amortization of investment corporation bond issuancecosts
Amortization of investment unit issuance costs
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
SubtotalInterest received
Interest paid
Interest received on tax refunds
Income taxes - refunded (paid)
Net cash provided by (used in) 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 tenant leasehold and security deposits
in trust
Reimbursements of tenant leasehold and security
deposits in trust
Payments into deposit with withdrawal restrictions
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Repayments of long-term loans payable
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 period*1- 24 -For the six months ended
June 30, 2022

(1,488,336)
2,334,009
7,227(7,356)(470,834)
2,312,304
432(8,393)

16,763

15,87429,245(147)
612,116(10,590)
131,468
98,178131,221(1,653,476)(11,790)(128,363)(86,360)(2,143)(125,668)(154,002)
150(615,657)
10,590(1,167)(760,085)

1,785
(130)
577,344－(190,985)
42,392
120,631(166,091)(22,711)(115,081)(303,687)(1,573)(1,238)1,790,036
130(580,412)－(1,169)1,208,584(224,682)(775,972)(29,766)(20,312)(394,726)(1,363,339)(43,613)(20,312)49,04938,789(23,589)(21,129)－(1,025,273)(1,500,000)(3,304,332)

7,735,000(935,000)(6,800,000)
289,329(1,831,295)(1,541,965)(3,327,325)
28,553,164
25,225,838

15,234,000(6,800,000)(8,434,000)－(1,633,932)(1,633,932)(3,729,680)
29,996,835*1 26,267,155

(5) Notes on going concern assumption
Not applicable.

(6) Notes on matters concerning significant accounting policies
1. Method ofdepreciation andamortization of
noncurrent assets

2. Accounting fordeferred assets

3. Accounting forrecognition ofrevenues andexpenses

4. Method of hedge
accounting(1) Property and equipment (including trust accounts)
Property and equipment are amortized using the straight-line method. The useful lives of major
property and equipment components are as follows:
Machinery and equipment
2 to 17 years
Tools, furniture and fixtures
2 to 26 years
Buildings in trust
2 to 64 years
Structures in trust
2 to 64 years
Machinery and equipment in trust
3 to 32 years
Tools, furniture and fixtures in trust
2 to 27 years(2) Intangible assets
Intangible assets are amortized using the straight-line method. The amortization period of major
intangible assets is as follows.
Software (for internal use)
5 years as internally usable years
Trademark right
10 years
Fixed-term leasehold rights in trust is amortized using the straight-line method based on remaining
period (41 years) of the contract.
(3) Long-term prepaid expenses
Long-term prepaid expenses are amortized using the straight-line method.
(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.
(1) Revenue recognition
The details of main performance obligations concerning revenue generated from contracts concluded
with JHR’s customers and the ordinary time to fulfil such performance obligations (ordinary time torecognize revenue) are as follows.
(a) Sale of real estate properties
For the proceeds from sale of real estate properties, JHR recognizes revenue when the purchaser
who is a customer obtains control of the relevant real estate properties, etc. as a result of theseller fulfilling its delivery obligations stipulated in the transaction agreement of the real estate,properties, etc.
The amount obtained by deducting “Cost of sale of properties,” which is the book value of realestate, etc. sold, and “Other selling expenses,” which are the various expenses directly requiredin the sale, from “Proceeds from sale of properties,” which are the sales proceeds of real estate,etc., is indicated as “Gain on sales of real estate properties” or “Loss on sales of real estate
properties” in the statements of income. There is no gain or loss on sales of real estate properties
in the midterm period under review.
(b) Utilities income
For utilities income, JHR recognizes revenue in accordance with the supply of electricity, water,etc. to the lessee who is a customer based on the lease agreement of real estate, etc. andagreements incidental to it.
(2) Treatment of property taxes and other taxes
For taxes imposed on properties, etc. under management such as property taxes, city planning taxes,
and depreciable asset taxes, the imposed amounts are allocated to the midterm period and expensed
as “Real estate operating costs.”
Cash paid for property taxes and city planning taxes, etc. to the transferor of real estate properties,
etc. at acquisition is not recorded as “Real estate operating costs” but capitalized as part of theacquisition cost of the relevant property.
The amount of such taxes capitalized in the acquisition cost of real properties, etc. was none for theprevious midterm period and the midterm period under review.
(1) Method of hedge accounting
Deferred hedge accounting is applied(a) Hedging instruments and hedged items
Hedging instruments
Interest rate swaps
Hedged items
Interest rates on loans payable(b) 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.
(2) 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.
- 25 -

5. Scope of funds (cashand cash equivalents)
in the semi-annual
statements of cashflows
6. Other significant
matters serving as thebasis for preparing
semi-annual financial
statements

Cash and cash equivalents in the semi-annual statements of cash flows consist of cash on hand, cash intrust accounts, bank deposit and trust deposit, which can be withdrawn at any time, and short-term
investments with a maturity of three months or less when purchased, which can easily be converted to
cash and subject to minimal risk of change in value.
Accounting treatment of beneficial interests in trust with real estate, etc. as their assets
For trust beneficial interests in real estate, etc., under management, all assets and liabilities held in trust
accounts as well as all income generated and expenses incurred from assets in trust are presented in theaccompanying semi-annual balance sheet and income statement accounts accordingly.
The following material items of the trust accounts recorded in the relevant accounts are presented
separately on the semi-annual 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(7) Notes on Changes in Accounting Policies(Application of Accounting Standard for Revenue Recognition, etc.)
JHR has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29 (revised 2020) issued on March
31, 2020; hereinafter referred to as the “Revenue Recognition Accounting Standard”), etc. from the beginning of the midterm
period under review, and decided to recognize revenue at the amount expected to be received in exchange for the promised goods
or services when control of such goods or services is transferred to the customer. This has minimal impact on the semi-annual
financial statements for the midterm period under review.
Furthermore, in accordance with the transitional treatment stipulated in Paragraph 89-3 of the Revenue Recognition AccountingStandard, the note related to revenue recognition for the previous midterm period is not shown.
(Application of Accounting Standard for Fair Value Measurement, etc.)
JHR has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30 issued on July 4, 2019;
hereinafter referred to as the “Fair Value Measurement Accounting Standard”), etc. from the beginning of the midterm period
under review, and decided to apply the new accounting policy set forth in the Fair Value Measurement Accounting Standard, etc.
going forward in accordance with the transitional treatment stipulated in Paragraph 19 of the Fair Value Measurement AccountingStandard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 (revised 2019)
issued on July 4, 2019). This has minimal impact on the semi-annual financial statements for the midterm period under review.
Moreover, the matters set forth in Article 8-6-2, Paragraph 1, Item 3 of the revised Regulation on Terminology, Forms, andPreparation Methods of Financial Statements are omitted pursuant to Article 4, Paragraph 5 of supplementary provisions in
Cabinet Office Ordinance on Partially Amending Regulation on Terminology, Forms and Preparation Methods of Interim
Financial Statement. etc. (Cabinet Office Ordinance No.61 issued on September 24th, 2021).

- 26 -

(8) Notes to semi-annual financial statements
Disclosure of notes on “securities” and “share of (profit) loss of entities accounted for using equity method” is omitted because
there is thought to be no significant need for disclosure in the midterm financial report.

[Notes to semi-annual 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, 2021
Buildings in trust

As ofJune 30, 2022
24,921

24,921*2. Matters concerning provision and reversal of reserve for temporary difference adjustment
As of December 31, 2021
(thousands of yen)

Dividend
reserve(Note)

Amount ofinitial accrualBalance at
beginning of
periodAmount ofprovision
during period

Amount ofreversalduring period

Balance at
end of period

13,127,153

10,617,580-

305,694

10,311,886

Grounds for provision and reversal

Allocation for dividend(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 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 noless than that in equal amounts every fiscal year over a period of no more than 50 years.
As of June 30, 2022
(thousands of yen)

Dividend
reserve(Note)

Amount ofinitial accrualBalance at
beginning of
periodAmount ofprovision
during period

Amount ofreversalduring period

Balance at
end of period

13,127,153

10,311,886-

335,371

9,976,515

Grounds for provision and reversal

Allocation for dividend(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 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 noless than 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, 2021
¥50,000 thousand- 27 -

As ofJune 30, 2022
¥50,000 thousand

[Notes to semi-annual statements of income]*1. Components of real estate operating revenue and real estate operating costs(thousands of yen)
For the six months ended
June 30, 2021
A. Real estate operating revenue
Real estate operating revenue
Fixed rent
Variable rent
Income from management contracts
Total
Other real estate operating revenue
Parking lots
Other incidental revenue
Utilities
Other
Total
Total real estate operating revenue
B. Real estate operating costs
Real estate operating costs
Land lease and other rent expenses
Property taxes
Outsourcing expenses (Note)
Nonlife insurance
Depreciation and amortization
Loss on retirement of noncurrent assets
Repairs
Utilities
Trust fees
Other
Total real estate operating costs

For the six months ended
June 30, 2022

3,302,542
838,154
3,297
4,143,994

3,139,560
1,858,186
5,228
5,002,976

48,27232,262
217,611
147,169
445,316
4,589,311

63,76536,127
269,035
59,476428,405
5,431,381

433,307981,618
312,058
38,7572,334,009
7,227
7,601
228,019
24,01550,846
4,417,463

422,755
957,825
187,885
33,861
2,312,304
432
6,709
283,244
18,591
7,131
4,230,740

171,847

1,200,640

C. Net real estate operating income (A-B)(Note) Outsourcing expenses include management contract fees of ¥136,852 thousand for the six months ended June 30, 2021, and ¥29,655 thousand for the six
months ended June 30, 2022.

[Notes to semi-annual statements of changes in net assets]
For the six months ended
June 30, 2021

For the six months ended
June 30, 2022

*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 andoutstanding

4,467,006 units

4,467,006 units- 28 -

[Notes to semi-annual statements of cash flows]*1. Relation of balance of cash and cash equivalents at end of period and the amount in semi-annual balance sheet accounts(thousands of yen)
For the six months ended
For the six months ended
June 30, 2021
June 30, 2022
Cash and deposits

18,040,761

21,040,304

Cash and deposits in trust

7,185,076

7,026,851－(1,800,000)

25,225,838

26,267,155

Deposit with withdrawal restrictions
Cash and cash equivalents[Notes on lease transactions]Operating leases (as lessor)
Minimum rental revenue under non-cancellable operating leases(thousands of yen)
As ofJune 30, 2022

As ofDecember 31, 2021
Due within one year

1,293,157

1,286,528

Due after one year

4,979,488

4,598,983

Total

6,272,645

5,885,511[Notes on financial instruments]
Matters concerning fair value, etc. of financial instruments.
Carrying amounts of financial instruments on the (semi-annual) balance sheets, their fair values, and the differences were as
follows. Furthermore, notes on “Cash and deposits,” “Cash and deposits in trust,” “Operating accounts receivable” and “Shortterm loans payable” are omitted as these are settled with cash and within a short period of time and thus the fair value
approximates the book value. Notes on “Tenant leasehold and security deposits” and “Tenant leasehold and security deposits
in trust” are also omitted as they lack materiality.
As of December 31, 2021
Carrying amount(JPY 1,000)(1) Current portion of investment corporation
bonds payable(2) Current portion of long-term loans payable

Fair value(JPY 1,000)

Difference(JPY 1,000)

6,000,000

5,886,600(113,400)

8,434,000

8,434,000-(3) Investment corporation bonds

34,100,000

29,514,460(4,585,540)(4) Long-term loans payable

92,218,000

92,218,000-

Total liabilities

140,752,000

136,053,060(4,698,940)(195,846)(195,846)-(5) Derivative transactions (*)
As of June 30, 2022

Carrying amount(JPY 1,000)

Fair value(JPY 1,000)

Difference(JPY 1,000)(1) Current portion of investment corporation
bonds payable(2) Current portion of long-term loans payable

6,000,000

5,956,200(43,800)

11,172,000

11,172,000-(3) Investment corporation bonds

34,100,000

29,766,270(4,333,730)(4) Long-term loans payable

81,046,000

81,046,000-

Total liabilities

132,318,000

127,940,470(4,377,530)(5) Derivative transactions (*)
432,582
432,582(*) Receivables and payables arising from derivative transactions are presented on a net basis and amounts in parenthesis denote net
payables.
(Note)

Methods to measure fair value of financial instruments, and derivative transactions(1) Current portion of investment corporation bonds payable; (3) Investment corporation bonds
The fair value of these instruments is measured based on the market price.
(2) Current portion of long-term loans payable; (4) 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.
(5) Derivative transactions
The information on the fair value of derivative transactions is presented in “Notes on derivative transactions” below.
- 29 -

[Notes on derivative transactions]
1. Derivative transactions to which hedge accounting is not applied
As of December 31, 2021
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 derivativetransaction

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 quoted(13,924) price, etc. obtained from the counterparty
financial institutions.

As of June 30, 2022
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 for the midterm was as follows:(thousands of yen)Classification

Type, etc. of derivativetransaction

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 quoted(5,531) price, etc. obtained from the counterparty
financial institutions.

2. Derivative transactions to which hedge accounting is applied
As of December 31, 2021
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 Main hedgedtransaction
item

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

Long-termloans payable

Contract amount, etc.
Of which, due
after one year
89,660,000

78,460,000

Fair value

Method to measure the fairvalue

(181,921)

The fair value is measured at
the quoted price, etc. obtained
from the counterparty
financial institutions.

As of June 30, 2022
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 the midterm for each method of hedge accounting was asfollows:(thousands of yen)
Method ofhedge
accounting

Type, etc. of derivative Main hedgedtransaction
item

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

Long-termloans payable

Contract amount, etc.
Of which, due
after one year
78,460,000- 30 -

74,372,000

Fair value

Method to measure the fairvalue

The fair value is measured at
the quoted price, etc. obtained
438,114from the counterparty
financial institutions.

[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 to the original state in accordance with the fixed-termleasehold agreement.
2. Calculation method of the subject asset retirement obligations
Calculated the amount of asset retirement obligations by estimating the expected useful period of use of 34 years based on
the remaining useful lives of the period of buildings and using the discount rate of 0.484%.
3. Increase and decrease of the subject asset retirement obligations(thousands of yen)
For the year ended
For the six months ended
December 31, 2021
June 30, 2022
Balance at beginning of period

335,161

336,783

1,622

815

336,783

337,598

Adjustment due to passage of time
Balance at end of period[Notes on rental properties, etc.]
JHR owns rental properties for hotels to earn lease income and income from management contracts. The carrying amounts,changes in such balances, and fair values of such properties were as follows:(thousands of yen)
For the year ended
December 31, 2021

Use

For the six months ended
June 30, 2022

Carrying amount

Hotel

Balance at beginning of period

367,283,696

358,819,865

Net increase (decrease) during period(8,463,831)(1,064,133)

Balance at end of period

358,819,865

357,755,731

485,480,000

486,080,000

Fair value at end of period(Note 1) Decrease during the year ended December 31, 2021 principally represent sale of ibis Tokyo Shinjuku (¥7,809 million) and recording of depreciation.
Decrease during the six months ended June 30, 2022 principally represents recording of depreciation.
(Note 2) Fair value at end of mid-term (end of fiscal period) is the appraisal value determined by licensed real estate appraisers from outside.

[Notes on revenue recognition]
For the six months ended June 30, 2022
Breakdown of information on revenue generated from contracts with customers
For the breakdown of information on revenue generated from contracts with customers, please refer to “*1. Components ofreal estate operating revenue and real estate operating costs” in [Notes to semi-annual statements of income].
“*1. Components of real estate operating revenue and real estate operating costs” include revenue based on the “AccountingStandard for Lease Transactions” (Corporate Accounting Standard No. 13). In addition, the revenue generated from contracts
with major customers is “Utilities income.”- 31 -

[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 six months ended June 30, 2021
(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 semi-annual 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 semi-annual statements of income.
(ii) Property and equipment, at cost
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 semi-annual balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

THE DAIICHI BUILDING CO., LTD.

Undisclosed (Note 1)

Kyoritsu Maintenance Co., Ltd.

531,901

Hotel Management Japan Co., Ltd. (Note 2)

508,905

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

For the six months ended June 30, 2022
(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 semi-annual 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 semi-annual statements of income.
(ii) Property and equipment, at cost
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 semi-annual balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Hotel Management Japan Co., Ltd. (Note 1)

1,726,757

THE DAIICHI BUILDING CO., LTD.

Undisclosed (Note 2)

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

- 32 -

[Notes on per unit information]
Net assets per unit is as follows:
As of
December 31, 2021
Net assets per unit

As ofJune 30, 2022
¥49,595¥49,230

Net income (loss) per unit and the basis of computation of net income per unit are as follows:
For the six months ended
June 30, 2021
Net income (loss) per unit

For the six months ended
June 30, 2022(¥333)(¥105)(1,488,941)(471,439)――(1,488,941)(471,439)

4,465,101

4,467,006[Basis of computation]
Net income (loss) for midterm (JPY 1,000)
Amount not attributable to common
unitholders (JPY 1,000)
Net income (loss) for midterm attributable tocommon investment units (JPY 1,000)
Average number of investment units during
period (units)(Note)Net income (loss) per unit for midterm is computed by dividing net loss for midterm by the average number of investment units during the midterm period.
Net income (loss) per unit for midterm after the adjustment of potentially dilutive units is not presented since there are no potentially dilutive units.

[Notes on significant subsequent events]
Not applicable.

[Additional information]
Impact by spread of infection by COVID-19
Since real estate investment management business of JHR is significantly affected by worldwide pandemic of COVID-19 andchanges in society and economic conditions caused by such pandemic, risks such as decreasing operating revenue, etc. are arising
due to decrease of variable rent linked to performance of hotels, etc.
Although timing of convergence of spread of COVID-19 and its impacts are unknown and difficult to estimate, based on
available information as of the date we prepared this financial report, we assume the impact by COVID-19 will continue throughthis fiscal year and recovery may be seen certain period after that and we made accounting estimate for application of impairment
loss of fixed assets.
Since it is difficult to precisely estimate timing of convergence of pandemic of COVID-19 and degree of impact by pandemic,
JHR’s status of asset, profit and loss and cash flow may be affected by delay of recovery.

- 33 -

(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 midterm period under review.

Date

July 5, 2017
August 2, 2017
January 23, 2019
February 20, 2019
March 16, 2021

Capital transaction
Capital increase throughpublic offering ofinvestment units
Capital increase throughthird-party allotment ofinvestment units
Capital increase throughpublic offering ofinvestment units
Capital increase throughthird-party allotment ofinvestment units
Capital increase throughthird-party allotment ofinvestment units

Total number of investment units
issued and outstanding (Units)
Increase
Balance(Decrease)

Unitholders’ capital (JPY1M)
Increase(Decrease)

Note
Balance

236,000

3,997,907

17,715

152,544(Note 1)

12,9404,010,847

971

153,516(Note 2)447,800

4,458,647

33,104

186,620(Note 3)3,700

4,462,347

273

186,894(Note 4)

4,659

4,467,006

300

187,194(Note 5)(Note 1) 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 acquisition of new properties, etc.
(Note 2) New investment units were issued through third-party allotment with an issue value per unit of ¥75,065 in order to procure part of funds for futureacquisitions of specified assets, part of funds for repayment of loans, or for repair and capital expenditures to maintain or improve competitiveness ofexisting properties.
(Note 3) 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 acquisition of new properties, etc.
(Note 4) New investment units were issued through third-party allotment with an issue value per unit of ¥73,927 in order to procure part of funds for the acquisitionof new properties.
(Note 5) New investment units were issued through third-party allotment with an issue value per unit of ¥64,400 in order to procure part of funds for capital
expenditures.

- 34 -

3. Reference information
For detailed information of each property and the operating result of hotels, please see the reference information below as well as the
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.
A. Investment status
The following outlines the investment status of JHR as of the end of the midterm period under review.

Assetcategory

Hotel type
(Note 1)

Prefectural
location

Name

Holiday Inn Osaka Namba
Namba Oriental Hotel
Hotel Oriental Express Osaka Shinsaibashi
the b ikebukuro
CANDEO HOTELS UENO-KOEN
Comfort Hotel Tokyo Higashi Nihombashi
the b hachioji
Smile Hotel Nihombashi MitsukoshimaeTokyo
R&B Hotel Ueno Hirokoji
Chisun Hotel Kamata
the b suidobashi
Limited-service
dormy inn·global cabin Asakusa
hotel
Chisun Inn Kamata
ibis Styles Sapporo
Hokkaido
Mercure Sapporo
Hotel Oriental Express Fukuoka Tenjin
the b hakata
Fukuoka
Hakata Nakasu Washington Hotel Plaza
Toyoko Inn Hakata-guchi Ekimae
Kyoto
ibis Styles Kyoto Station
Okinawa
Mercure Okinawa Naha
Kumamoto
Dormy Inn Kumamoto
Nara
Nara Washington Hotel Plaza
SubtotalTokyo
Hilton Tokyo Odaiba
Oriental Hotel tokyo bay
Hilton Tokyo Narita Airport
Chiba
International Garden Hotel Narita
Hotel Francs
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel) (Note 4)
Full-service hotel Hiroshima
Oriental Hotel Hiroshima
Aichi
Hilton Nagoya
Nara
Hotel Nikko Nara
Hyogo
Kobe Meriken Park Oriental Hotel
FukuokaOriental Hotel Fukuoka Hakata Station
Kanagawa
Mercure Yokosuka
Subtotal
Hotel Nikko Alivila
Okinawa
Oriental Hotel Okinawa Resort & Spa
The Beach Tower Okinawa
Resort hotel
Chiba
Hilton Tokyo Bay
Osaka
Oriental Hotel Universal City
Kanagawa
Hakone Setsugetsuka
Subtotal
Real estate in trust – Total
Deposits and other assets (Note 5)
Total assets
Osaka

Real
estate
in
trust

As of
December 31, 2021
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)26,757
6.8
14,354
3.6
2,793
0.7
6,567
1.7
6,567
1.7
3,457
0.9
2,683
0.7
2,028
0.5
1,794
0.5
1,452
0.4
1,170
0.3
930
0.2
775
0.2
6,432
1.6
5,671
1.4
5,716
1.4
2,345
0.6
2,054
0.5
1,382
0.4
6,599
1.7
2,784
0.7
2,203
0.6
1,736
0.4
108,259
27.5
63,26616.0
16,945
4.3
13,015
3.3
9,059
2.3
3,141
0.8
17,0604.3

17,0044.3

4,043
15,618
10,145
9,337
8,955
1,598
172,186
17,627
14,597
6,472
26,1597,019
3,593
75,469355,915
38,408394,323

1.0
4.0
2.6
2.4
2.3
0.4
43.7
4.5
3.7
1.6
6.6
1.8
0.9
19.1
90.3
9.7
100.0

4,009
15,52910,106
9,231
8,831
1,591
171,340
17,534
14,891
6,425
26,0787,127
3,547
75,604354,842
36,640391,483

1.0
4.0
2.6
2.4
2.3
0.4
43.8
4.5
3.8
1.6
6.7
1.8
0.9
19.3
90.6
9.4
100.0

Ratio toRatio toAmounttotal assets
total assets(JPY1M)(%)(%)
Total liabilities
172,78143.8
171,568
43.8
Total net assets
221,54256.2
219,91456.2
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 held to total assets, rounded off to one decimal place.
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 land lease right in trust).
Amount(JPY1M)(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)As ofJune 30, 2022
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
26,7006.8
14,296
3.7
2,787
0.7
6,556
1.7
6,554
1.7
3,439
0.9
2,670
0.7
2,019
0.5
1,785
0.5
1,440
0.4
1,159
0.3
930
0.2
770
0.2
6,395
1.6
5,639
1.4
5,748
1.5
2,336
0.6
2,050
0.5
1,373
0.4
6,585
1.7
2,758
0.7
2,177
0.6
1,719
0.4
107,897
27.6
63,15716.1
16,8194.3
12,947
3.3
8,989
2.3
3,121
0.8

- 35 -

B. 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(i) 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 midterm period
under review.
a. Details of assets under management (acquisition price, etc.)
Property
No.

Name

Grade
(Note 1)

Acquisition
price(JPY1M)(Note 2)Carrying
Appraisalamount at end value at end of Appraisal
agencyof period
period(JPY1M)(JPY1M)(Note 5)(Note 3)(Note 4)

Investment
ratio(Acquisition
price)(%)(Note 6)

Collateral(Note 7)

1

Kobe Meriken Park Oriental Hotel

Upper-middle

10,9009,414

14,000N

3.0

Unsecured

2

Oriental Hotel tokyo bay

Mid-price

19,90016,964

32,100N

5.5

Unsecured

3

Namba Oriental Hotel

Mid-price

15,00014,36031,200N

4.1

Unsecured

4

Hotel Nikko Alivila

Luxury18,90017,73328,900N

5.2

Unsecured

5

Oriental Hotel Hiroshima

Upper-middle

4,100

4,064

4,200

N

1.1

Unsecured

8

The Beach Tower Okinawa

Mid-price

7,610

6,428

9,960

N

2.1

Unsecured

9

Hakone Setsugetsuka

Mid-price

4,070

3,552

5,260

N

1.1

Unsecured

10

Dormy Inn Kumamoto

Mid-price

2,334

2,177

2,930

N

0.6

Unsecured

12

the b suidobashi

Mid-price

1,120

1,173

2,270

N

0.3

Unsecured13

dormy inn·global cabin Asakusa

Economy

999

930

1,300

J

0.3

Unsecured

14

Hakata Nakasu Washington Hotel Plaza

Mid-price

2,130

2,050

4,510

N

0.6

Unsecured

15

Nara Washington Hotel Plaza

Mid-price

2,050

1,719

2,430

N

0.6

Unsecured16

R&B Hotel Ueno Hirokoji

Economy

1,720

1,785

1,850

J

0.5

Unsecured

18

Comfort Hotel Tokyo Higashi Nihombashi

Economy

3,746

3,439

5,370

J

1.0

Unsecured

22

Smile Hotel Nihombashi Mitsukoshimae

Economy

2,108

2,020

2,940

J

0.6

Unsecured24

Toyoko Inn Hakata-guchi Ekimae

Economy

1,652

1,373

2,760

T

0.5

Unsecured

25

Chisun Hotel Kamata

Economy

1,512

1,453

2,020

T

0.4

Unsecured

26

Chisun Inn Kamata

Economy

823

776

1,370

T

0.2

Unsecured

29

Oriental Hotel Universal City

Mid-price

6,753

7,472

17,700R

1.9

Unsecured

31

Hilton Tokyo Bay

Luxury26,05026,08740,400D

7.2

Unsecured32

ibis Styles Kyoto Station

Mid-price

6,600

6,600

9,990

D

1.8

Unsecured33

ibis Styles Sapporo

Mid-price

6,797

6,426

11,100N

1.9

Unsecured34

Mercure Sapporo

Mid-price

6,000

5,687

10,500N

1.7

Unsecured35

Mercure Okinawa Naha

Mid-price

3,000

2,796

6,940

N

0.8

Unsecured37

the b ikebukuro

Mid-price

6,520

6,566

7,160

N

1.8

Unsecured39

the b hachioji

Mid-price

2,610

2,686

2,560

N

0.7

Unsecured40

the b hakata

Mid-price

2,300

2,351

4,320

N

0.6

Unsecured

41

Hotel Francs

Mid-price

3,105

3,121

4,040

D

0.9

Unsecured42

Mercure Yokosuka

Mid-price

1,650

1,616

3,360

D

0.5

Unsecured

43

Oriental Hotel Okinawa Resort & Spa

Upper-middle

14,95015,10517,800N

4.1

Unsecured

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Luxury17,32017,14020,700D

4.8

Unsecured

45

CANDEO HOTELS UENO-KOEN

Mid-price

6,705

6,560

7,440

D

1.8

Unsecured

46

Oriental Hotel Fukuoka Hakata Station

Upper-middle

7,197

8,977

15,200D

2.0

Unsecured

47

Holiday Inn Osaka Namba

Mid-price

27,00026,72826,500N

7.4

Unsecured

48

Hotel Oriental Express Fukuoka Tenjin

Mid-price

5,248

5,845

6,620

D

1.4

Unsecured

49

Hilton Nagoya

Luxury15,25015,53014,800D

4.2

Unsecured

50

Hilton Tokyo Narita Airport

Upper-middle

13,175

13,164

13,500N

3.6

Unsecured

51

International Garden Hotel Narita

Mid-price

9,125

9,050

9,520

N

2.5

Unsecured

Upper-middle

10,373

10,194

9,870

D

2.9

UnsecuredMid-price

2,738

2,808

2,890

D

0.8

Unsecured

52

Hotel Nikko Nara

53

Hotel Oriental Express Osaka Shinsaibashi- 36 -

Property
No.

54

Grade
(Note 1)

Name

Hilton Tokyo Odaiba

Upper-middle

Total(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)Acquisition
price(JPY1M)(Note 2)Carrying
Appraisalamount at end value at end of Appraisal
agencyof period
period(JPY1M)(JPY1M)(Note 5)(Note 3)(Note 4)62,40063,37767,800363,542357,316

486,080

N

Investment
ratio(Acquisition
price)(%)(Note 6)

Collateral(Note 7)

17.2

Unsecured

100.0

JHR categorizes hotels into the four grade classes of “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.
“Carrying amount at end of period” is the book value at the end of the midterm period under review, and includes not only the amounts for real estatein trust, but also for 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 midterm period under review as the date of appraisal, in accordance with theasset 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 midterm period under review to the total amount ofacquisition price of all assets held at the end of the midterm period 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 omitted property numbers are the property numbers of assets that have been transferred.

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

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

(Note 2)

(Note 3)(Note 4)End of18th period
December 2017

End of19th period
December 2018

End of20th period
December 2019

End of21st period
December 2020

End of22nd period
December 2021

End of midterm
period of 23rd
periodJune 2022

131

126

125

121

116

113

687,124.54 m2

678,714.48 m2

746,329.68 m2

741,083.02 m2

733,995.61 m2

733,995.61 m2

686,694.46 m2

677,863.00 m2

745,227.67 m2

740,146.96 m2

732,764.69 m2

732,697.03 m2

99.9%

99.9%

99.9%

99.9%

99.8%

99.8%

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 or midterm period. However, for properties for which master lease contracts under the pass-through scheme
are concluded in which trustee receives the same amounts of rents, etc. from end tenants as is in principle, the total number of end tenants (excluding
tenants of parking lots, etc.) is indicated.
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). The same shall apply hereinafter.
In principle, total leased area represents the leased area described in the lease contract of the building. For properties in which the leased area is notdescribed in the lease contract, leased area shows the area described in the registration of the building. Furthermore, when the leased area in the lease
contract is indicated 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,for properties for which master lease contracts under the pass-through scheme are concluded in which trustee receives the same amounts of rents, etc.
from end tenants as is in principle, the total area for which lease contracts have been concluded with end tenants and which are actually leased isindicated. The same shall apply hereinafter.
Occupancy rate indicates the percentage of leased area of leasable area of respective real estate properties in trust as of the end of each fiscal period or
midterm period. The same shall apply hereinafter.

- 37 -

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 as follows.

Property name

Total number oftenants

Hilton Tokyo Bay(Note 1)

(Note 2)
(Note 3)

Total annual rent1

Total leased area

64,928.83 m2(Note 3)(Note 2)

Total leasablearea

Change in occupancy rate
for the past five years

64,928.83 m2(Note 3)

December 2017100.0%

December 2018

100.0%

December 2019100.0%

December 2020

100.0%

December 2021

100.0%

June 2022

100.0%“Total annual rent” is the total amount of 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 themidterm period under review is multiplied by 12, plus assumed amounts of revenue sharing, variable rent and income from management contracts forthe full fiscal year.
Total annual rent for Hilton Tokyo Bay is not disclosed 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 (Note 4)

Real estate
operating revenue(JPY 1,000)
80,2182

Oriental Hotel tokyo bay

Variable/Fixed (Note 4)

218,288

159,7123,435

3

Namba Oriental Hotel

Variable/Fixed (Note 4)

166,768

113,861

45,354

4

Hotel Nikko Alivila

Variable/Fixed (Note 4)

47,089(26,235)(157,446)

5

Oriental Hotel Hiroshima

Variable/Fixed (Note 4)295,904

274,145

232,095

8

The Beach Tower Okinawa

Fixed

255,531234,445

178,086

9

Hakone Setsugetsuka

Fixed147,469

134,928

85,98010

Dormy Inn Kumamoto

59,92412

the b suidobashi

13

dormy inn·global cabin Asakusa

14
15

PropertyNo.

Name

Rent type(Note 1)NOINOI after depreciation(Note 2)
(Note 3)
(JPY 1,000)(JPY 1,000)(43,476)(190,027)

Fixed

97,23086,294

Variable/Fixed

15,0008,943(5,343)

Fixed

32,53728,13521,931

Hakata Nakasu Washington Hotel Plaza (Note 5)

Fixed

120,000

113,000

101,000

Nara Washington Hotel Plaza (Note 5)

Fixed

75,00066,00048,000

16

R&B Hotel Ueno Hirokoji

Fixed48,65441,50133,09418

Comfort Hotel Tokyo Higashi Nihombashi

Variable/Fixed (Note 6)

135,763

120,780

102,172

22

Smile Hotel Nihombashi Mitsukoshimae

Variable/Fixed (Note 6)

67,20059,06949,09424

Toyoko Inn Hakata-guchi Ekimae

Fixed70,51963,691

54,59025

Chisun Hotel Kamata

Variable

4,342(2,784)(18,828)

26

Chisun Inn Kamata

29

Oriental Hotel Universal City

31
32
33

Variable

3,826

310

(5,756)

Variable/Fixed

178,499

151,023

38,007

Hilton Tokyo Bay

Variable/Fixed (Note 6)

990,117849,617754,582

ibis Styles Kyoto Station

Management contract

23,161(8,471)(24,953)

ibis Styles Sapporo

Management contract

34,419(8,176)(48,517)34

Mercure Sapporo

Management contract

65,180(10,953)(55,778)35

Mercure Okinawa NahaManagement contract

4,746(14,756)(46,549)37

the b ikebukuro

Variable/Fixed

238,936

224,694

211,40739

the b hachioji

Variable/Fixed

33,326

21,2893,394

40

the b hakata

Variable/Fixed

33,261

26,925

15,84341

Hotel Francs

Fixed

150,000

118,969

96,43442

Mercure Yokosuka

Variable

88,136

37,164

18,64543

Variable/Fixed (Note 4)-(41,504)(187,524)

Variable/Fixed (Note 4)472,920

263,109

155,460

45

Oriental Hotel Okinawa Resort & Spa
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)
CANDEO HOTELS UENO-KOEN

Fixed

174,985

162,063

141,910

46

Oriental Hotel Fukuoka Hakata Station

Variable/Fixed (Note 4)

187,475

63,980(126,690)

47

Holiday Inn Osaka Namba

Variable/Fixed (Note 4)

106,786

82,40922,57248

Hotel Oriental Express Fukuoka Tenjin

Variable/Fixed

136,222

93,45949,354

Variable

430,075

126,206

36,402

Variable/Fixed (Note 4)

65,29025,132(75,448)

44

49

Hilton Nagoya

50

Hilton Tokyo Narita Airport- 38 -

51

International Garden Hotel Narita

Variable/Fixed (Note 4)

Real estate
operating revenue(JPY 1,000)
111,105

52

Hotel Nikko Nara
Hotel Oriental Express Osaka Shinsaibashi(Note 7)
Hilton Tokyo Odaiba

Variable/Fixed (Note 4)

8,053(15,335)(89,120)

Variable/Fixed (Note 4)-(7,018)(14,868)

Property
No.

53
54

Name

Rent type(Note 1)

Variable/Fixed (Note 4)

Total(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)NOI
(Note 2)(JPY 1,000)
89,264

NOI after depreciation(Note 3)
(JPY 1,000)
11,682-(164,625)(312,450)

5,414,765

3,497,576

1,212,069

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 real estate operating income) = Real estate operating revenue – Real estate operating costs
Only variable rent is paid in the fiscal year ending December 2022 and no fixed rent will be incurred.
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 numbers are thus rounded down to the nearest million yen.
For Comfort Hotel Tokyo Higashi Nihombashi, Smile Hotel Nihombashi Mitsukoshimae, and Hilton Tokyo Bay, the rent structure is one that has set
not only fixed rent but also partial rent based on a revenue sharing structure.
Temporarily closed during the midterm period under review due to the impact of the spread of the infection by COVID-19.
The property numbers of assets that were sold before the end of the previous fiscal year are intentionally omitted.

e. Summary of analyses, etc. of earthquake risk
The following is the PML value, etc. of real estate properties (in trust) under management as of the end of the midterm
period under review.

Name

Probable
Maximum Loss
（PML）ratio by
earthquake risk
analyses (%)(Note 1)

1

Kobe Meriken Park Oriental Hotel2

Existence ofearthquake
insurance

Provider of
PML value

11.6

None

P

Oriental Hotel tokyo bay

14.2

None

P

3

Namba Oriental Hotel

13.4

None

P

4

Hotel Nikko Alivila

7.3

None

P

5

Oriental Hotel Hiroshima

10.7

None

O

8

The Beach Tower Okinawa

2.7

None

S

9

Hakone Setsugetsuka

14.4

None

P

10

Dormy Inn Kumamoto

5.6

None

S

12

the b suidobashi

5.4

None

S

13

dormy inn·global cabin Asakusa

4.9

None

S

14

Hakata Nakasu Washington Hotel Plaza

8.2

None

P

15

Nara Washington Hotel Plaza

13.7

None

P

16

R&B Hotel Ueno Hirokoji

3.6

None

S

18

Comfort Hotel Tokyo Higashi Nihombashi

6.7

None

S

22

Smile Hotel Nihombashi Mitsukoshimae

7.5

None

S

24

Toyoko Inn Hakata-guchi Ekimae

Total: 3.8

None

S

25

Chisun Hotel Kamata

9.0

None

S

26

Chisun Inn Kamata

4.2

None

S

29

Oriental Hotel Universal City

8.7

None

P

31

Hilton Tokyo Bay

3.2

None

T

32

ibis Styles Kyoto Station

10.5

None

T

33

ibis Styles Sapporo

1.0

None

T

34

Mercure Sapporo

1.0

None

T

35

Mercure Okinawa Naha

0.5

None

T

37

the b ikebukuro

5.3

None

T

39

the b hachioji

4.9

None

T

40

the b hakata

3.3

None

T

41

Hotel Francs

2.5

None

T

PropertyNo.

- 39 -

Property
No.

Name

Probable
Maximum Loss
（PML）ratio by
earthquake risk
analyses (%)(Note 1)

Existence ofearthquake
insurance

Provider of
PML value

42

Mercure Yokosuka

7.1

None

T

43

Oriental Hotel Okinawa Resort & Spa

0.7

None

T

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

2.0

None

T

45

CANDEO HOTELS UENO-KOEN

3.1

None

T

46

Oriental Hotel Fukuoka Hakata Station

2.4

None

T

47

Holiday Inn Osaka Namba

6.5

None

T

48

Hotel Oriental Express Fukuoka Tenjin

3.3

None

T

49

Hilton Nagoya

1.7

None

T

50

Hilton Tokyo Narita Airport

2.4

None

T

51

International Garden Hotel Narita

5.2

None

T

52

Hotel Nikko Nara

7.5

None

T

53

Hotel Oriental Express Osaka Shinsaibashi

7.3

None

S

54

Hilton Tokyo Odaiba

4.3

None

T

(Note 1)

(Note 2)

(Note 3)

PML (Probable Maximum Loss) represent damage caused by major earthquake that may occur once every 475 years (estimated probability of such
earthquake to occur during the 50 years is 10%.) during expected holding period (50 years = useful life of ordinary buildings.) PML is anticipatedpercentage of recovery cost against the building replacement cost. JHR will evaluate possibility to acquire earthquake insurance for the property if the
PML of the particular property exceed 15%. As of the end of the midterm fiscal period under review, there is no property with plan to be insured byearthquake insurance.
Under “Provider of PML value” the letters indicate the provider as follows.
T: Tokio Marine dR Co., Ltd.
P: Deloitte Tohmatsu Property Risk Solution Co., Ltd.
O: OBAYASHI CORPORATION
S: SOMPO Risk Management, Inc.
The property numbers of assets that were sold before the end of the previous fiscal year are intentionally omitted.

- 40 -

(ii) 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 midterm
period under review (from January 1, 2022, to June 30, 2022). Figures are rounded down to the nearest thousand yen in
principle, but are otherwise noted if circumstances do not allow for the figures to be stated in units of thousand yen.
Property No.

-

Property name

Portfolio total(Note 1)

1
Kobe
Meriken Park
Oriental Hotel

2

3

4

5

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Hotel Nikko
AlivilaOriental Hotel
Hiroshima

Number of operating days

-

181

181

181

181

181

(A) Real estate operating revenue subtotal

5,414,765

80,218218,288

166,768

47,089295,904

Fixed rent

3,139,560

-

-

-

-

-

Variable rent

1,863,415

79,248218,288

166,768

47,089295,904

Other revenue

411,789

969

-

-

-

-

(B) Real estate operating costs subtotal

4,202,696

270,245

214,852

121,413204,536

63,809Land lease and other rent expenses

422,755

96,351--42,074-

Property taxes

957,825

23,95655,55050,39327,723

20,145

Outsourcing expenses

187,885

480

480

480

960

480

Nonlife insurance

33,861

2,090

2,039

820

1,553

628

Depreciation and amortization

2,284,259

146,551

156,257

68,506131,210

41,713

Loss on retirement of noncurrent assets

432

-

19

-

-

336

Other costs

315,677

816

505

1,213

1,014

505

(C) Net real estate operating income = (A) − (B)1,212,069(190,027)

3,435

45,354(157,446)

232,095(Reference) Occupancy rate

99.8%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

113

1

1

1

1

1

Property No.

8

9

10

12

14

Hakata Nakasu
dormy inn·global
Washington Hotelcabin Asakusa
Plaza (Note 2)

The Beach Tower
Okinawa

HakoneSetsugetsuka

Number of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

255,531

147,469

97,23015,00032,537

120,000

Fixed rent

255,504

147,169

97,23015,00031,697

120,000

Variable rent

-

-

-

-

-

-

Property name

Dormy Inn
Kumamoto

13

the b
suidobashi

Other revenue

27

300

-

-

840

0

(B) Real estate operating costs subtotal

77,444

61,48937,305

20,343

10,60619,000Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

19,781

11,687

10,118

3,973

3,043

5,000

Outsourcing expenses

-

-

-

600

600

0

Nonlife insurance

785

448

298

117

78

0

Depreciation and amortization

56,35848,94826,37014,287

6,204

11,000Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

519

405

518

1,365

679

0

(C) Net real estate operating income = (A) − (B)178,086

85,98059,924(5,343)

21,931

101,000(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

1

1

1

1

1

- 41 -

Property No.

15

16

18

22

24

25

Property nameNara
Washington Hotel
Plaza(Note 2)

R&B Hotel
Ueno
Hirokoji

Comfort HotelTokyo Higashi
Nihombashi

Smile Hotel
Nihombashi
Mitsukoshimae

Toyoko Inn
Hakata-guchi
EkimaeChisun Hotel
KamataNumber of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

75,00048,654

135,763

67,20070,5194,342

Fixed rent

73,00048,252130,160

67,20070,519-Variable rent

-

-

-

-

-

4,272

Other revenue

1,000

402

5,602

-

-

70

(B) Real estate operating costs subtotal

26,00015,55933,59018,105

15,92923,171

Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

5,000

6,100

13,371

6,575

5,587

5,863

Outsourcing expenses

1,000

420

807

600

540

600

Nonlife insurance

0

115

283

128

182

146

Depreciation and amortization

17,0008,406

18,607

9,975

9,101

16,043

Loss on retirement of noncurrent assets

0

-

-

-

-

-

Other costs

0

517

520

826

518

517

(C) Net real estate operating income = (A) − (B)48,00033,094102,172

49,09454,590(18,828)(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

2

1

2

1

1

1

Property No.

26

29

31

32

33

34

Property name

Chisun Inn
KamataOriental Hotel
Universal City

HiltonTokyo Bay

ibis Styles
Kyoto Station(Note 1)

ibis Styles
Sapporo(Note 1)

MercureSapporo(Note 1)

Number of operating days

181

181

(A) Real estate operating revenue subtotal

3,826

178,499

181

181

181

181

990,117

23,161

34,41965,18021,167

12,84625,031

-

505

-

1,993

21,06640,148

Undisclosed(Note 3)
Undisclosed(Note 3)
Undisclosed(Note 3)Fixed rent-

158,333

Variable rent

3,826

-

Other revenue-

20,166(B) Real estate operating costs subtotal

9,583

140,492

235,534

48,11482,936

120,959

Land lease and other rent expenses--

61,860---Property taxes

2,400

23,76969,828

10,743

18,54924,600Outsourcing expenses

540

1,967

5,965

18,881

2,984

13,143Nonlife insurance

57

1,080

2,220

211

595

693

Depreciation and amortization

6,067

113,016

95,035

16,481

40,34044,825

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

517

658

624

1,796

20,466

37,695(C) Net real estate operating income = (A) − (B)(5,756)38,007754,582(24,953)(48,517)(55,778)(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

99.4%

95.7%

(Reference) Number of tenants

1

1

1

2

5

9

- 42 -

Property No.

35

37

39

40

41

42

Property nameMercureOkinawa Naha
(Note 1)the bikebukuro

the bhachioji

the bhakataHotel Francs

MercureYokosuka

Number of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

4,746

238,936

33,32633,261150,000

88,136

Fixed rent-

75,65829,84633,261150,000-

Variable rent

4,723

162,911---66,494

Other revenue

23

366

3,480

-

-

21,642(B) Real estate operating costs subtotal

51,29627,52829,932

17,41753,56569,491

Land lease and other rent expenses

166

-

-

-

-

-

Property taxes

11,591

11,106

10,4585,046

28,37816,432

Outsourcing expenses

5,699

1,812

600

600

900

10,494

Nonlife insurance

493

277

333

177

722

1,063

Depreciation and amortization

31,793

13,286

17,895

11,081

22,535

18,519Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

1,552

1,045

645

511

1,029

22,981(C) Net real estate operating income = (A) − (B)(46,549)

211,407

3,394

15,84396,434

18,645(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

3

10

2

1

1

Property No.

43

44

Oriental Hotel ACTIVE-INTER
Okinawa Resort
CITY
& Spa
HIROSHIMA

Property name

45

46

47

48

CANDEOHOTELS
UENO-KOEN

Oriental Hotel
Fukuoka Hakata
StationHoliday Inn
Osaka Namba

Hotel Oriental
Express Fukuoka
Tenjin

181

181

181

181

Number of operating days

181

181

(A) Real estate operating revenue subtotal-

472,920

174,985

187,475

106,786

136,222

Undisclosed(Note 3)--

111,724

Fixed rent-

251,827

Variable rent-

101,802-

187,475

106,786---

24,497

Other revenue-

119,289

Undisclosed(Note 3)(B) Real estate operating costs subtotal

187,524

317,459

33,075314,166

84,21386,867

Land lease and other rent expenses

-

-

-

111,103--

Property taxes

38,24460,07911,348

9,678

22,577

16,031

Outsourcing expenses

1,200

48,695

600

1,500

780

5,886

Nonlife insurance

1,631

2,410

333

787

600

310

Depreciation and amortization

146,020

107,649

20,153

189,856

59,83644,104

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

428

98,625

640

1,241

418

20,535(C) Net real estate operating income = (A) − (B)(187,524)

155,460

141,910(126,690)

22,57249,354(Reference) Occupancy rate

100.0%

99.3%

100.0%

100.0%

100.0%

96.1%(Reference) Number of tenants

1

39

1

1

1

5

- 43 -

Property No.

49

Property name
Number of operating days(A) Real estate operating revenue subtotal

50

51

52

53

54

Hotel Oriental
Express Osaka
Hotel Nikko Nara
Shinsaibashi(Note 4)

Hilton Nagoya

Hilton Tokyo
Narita Airport

International
Garden Hotel
Narita

181

181

181

181

181

181

430,075

65,290111,105

8,053

-

-

Hilton Tokyo
OdaibaUndisclosed(Note 3)
Undisclosed(Note 3)
Undisclosed(Note 3)

-

-

-

-

-

65,290111,105

8,053

-

-

-

-

-

-

-

(B) Real estate operating costs subtotal

393,672

140,738

99,422

97,173

14,868

312,450

Land lease and other rent expenses

111,200

-

-

-

-

-

Property taxes

48,70236,295

19,298

20,116

5,602

161,328

Outsourcing expenses

51,364

1,260

1,140

1,200

1,080

60

Nonlife insurance

2,206

2,128

929

1,748

87

2,581

Depreciation and amortization

89,804

100,580

77,58173,784

7,850

147,824

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

90,394

474

473

323

248

655

(C) Net real estate operating income = (A) − (B)36,402(75,448)

11,682(89,120)(14,868)(312,450)(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

Fixed rent
Variable rent
Other revenue(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)

Variable rent includes income from management contracts. For details of the management contract, please refer to “(iii). Overview of the hotel business;
a. Rent structures of hotels with variable rent, management contract or revenue sharing” on page 45.
Consent on disclosure of rent in units of thousand yen has not been obtained from the lessee and numbers are thus rounded down to the nearest million
yen.
Undisclosed as consent on disclosure has not been obtained from the tenant with whom a lease contract has been concluded.
Temporarily closed for the midterm period under review due to the impact of the spread of COVID-19.
The property numbers of assets that were sold before the end of the previous fiscal year are intentionally omitted.

- 44 -

(iii) Overview of the hotel businessa.

Rent structures of hotels with variable rent, management contract or revenue sharing

PropertyNo.

The 16
HMJ
Hotels

The
Accor
Group
Hotels

The
Ishin
Group
HotelsOther
hotelswithvariablerentorrevenuesharing(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)Name

Rent type

Method of calculating variable rent and income from management contracts
FY2022

FY2023 and after

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

29

Oriental Hotel Universal City

Variable/Fixed(AGOP – base amount (¥370 million/year)) x 95.0%

43

Oriental Hotel Okinawa Resort & Spa

Variable/Fixed

AGOP x 89.0%

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Variable/Fixed(Note 1)AGOP x 93.0%

46

Oriental Hotel Fukuoka Hakata Station

Variable/Fixed

AGOP x 97.0%

47

Holiday Inn Osaka Namba

Variable/Fixed

AGOP x 98.0%

48

Hotel Oriental Express Fukuoka Tenjin

Variable/Fixed(AGOP – base amount (¥165 million/year)) x 97.0%

50

Hilton Tokyo Narita Airport

Variable/Fixed

AGOP x 95.0%

51

International Garden Hotel Narita

Variable/Fixed

AGOP x 95.0%

52

Hotel Nikko Nara

Variable/Fixed

AGOP x 95.0%

53

Hotel Oriental Express Osaka Shinsaibashi

Variable/Fixed

AGOP x 87.0%

54

Hilton Tokyo Odaiba

Variable/Fixed

AGOP x 97.0%

32

ibis Styles Kyoto Station

33

ibis Styles Sapporo

34

Mercure Sapporo

Management
contract(Note 4)

Amount equivalent to GOP

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

26

Chisun Inn Kamata

31

Hilton Tokyo Bay

49

Hilton Nagoya

AGOP (Note 2) x 86.0%
AGOP x 79.0%
Variable/Fixed

AGOP x 91.0%
AGOP x 74.0%(Total AGOP of The Five HMJ
Hotels – base amount (¥4,120
million/year (Note 3))) x 85.0%

AGOP x 89.0%

VariableAmount linked to GOP (Note 5)

Variable/Fixed

Amount linked to GOP (Note 5)(AGOP – base amount(¥655 million/year)) x 95.0%(AGOP – base amount(¥360 million/year)) x 90.0%(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%

Fixed +
Amount that is a certain percentage of sales exceeding the threshold
Revenue sharing (Note 5)
Fixed +
Amount that is a certain percentage of sales exceeding the threshold
Revenue sharing (Note 5)
Amount that is the monthly GOP multiplied by 86.0%
Variable(¥0 if the amount is below ¥0).
Amount that is the monthly GOP multiplied by 86.0%
Variable(¥0 if the amount is below ¥0).
Fixed +
Amount that is a certain percentage of sales exceeding the threshold
Revenue sharing (Note 5)
Variable

Variable rents linked to hotel sales, etc. (Note 5)

The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. The same shall apply hereinafter.
For the purpose of payments of variable rent from each hotel, etc. JHR has set individual GOP base amount for each hotel. The breakdown of the AGOP
base amount of The Five HMJ Hotels (¥4,120 million/year) is as follows.
Kobe Meriken Park Oriental Hotel ¥690,000 thousands, Oriental Hotel tokyo bay ¥1,060,000 thousands, Namba Oriental Hotel ¥890,000 thousands,
Hotel Nikko Alivila ¥1,250,000 thousands, and Oriental Hotel Hiroshima ¥230,000 thousands.
The management contract structure is a structure for hotel real estate owned by JHR in which JHR entrusts an operator to operate the hotel and takes
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 hotelbusiness (operation) by the operator and, at the same time, pays a management fee to the operator. This hotel revenue achieved is recognized as “realestate 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.

- 45 -

b.

Major indicators of the hotel business
The following tables indicate the figures related to the hotel business of The 16 HMJ Hotels for the operating period fromJanuary 1, 2022, through June 30, 2022, based on the data provided by the hotel lessees. While these indicators of the hotels
are among the indicators that show the operating status of the rooms departments, please note that they do not necessarily
represent the operating revenue and the ability to bear rent, etc. of the respective hotels, as the room rates and profit margins,etc. of the respective rooms available for sale are not uniform, among other reasons. As such, the indicators are no morethan the reference figures.

Occupancy rate
ADR
(Note 1)
RevPAR(Note 2)
Total sales
Rooms department
Food & beveragedepartment
Tenant department
Other departments(Note 3)GOP

Kobe
Meriken Park
Oriental Hotel
Ratio tototal sales
(%)
56.7%
－

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Hotel Nikko
AlivilaRatio tototal sales
(%)
72.3%
－

Ratio tototal sales
(%)
43.4%
－

Ratio toRatio tototal sales
total sales
(%)
(%)
37.8%
－ 100.0%－

The Five HMJ
HotelsTotal/Average
Ratio tototal sales
(%)
60.7%
－

17,459－14,357

－

7,396

－

24,395

－

9,092

－

14,454

－

9,897

－

10,385

－

3,208

－

9,226

－

9,092

－

8,775

－

1,638
579

100.0
35.3

1,707
961

100.0
56.3

401
150

100.0
37.4

1,222
663

100.0
54.3

568
374

100.0
65.8

5,536
2,725

100.0
49.2

931

56.8

521

30.5

10

2.5

397

32.5

15

2.6

1,874

33.9

33

2.0

71

4.2

226

56.4

1

0.1

－

－

331

6.0

96

5.9

154

9.0

16

4.0

160

13.1

180

31.7

605

10.9

92

5.6

276

16.2

183

45.6

65

5.3

332

58.5

949

17.1

Oriental Hotel
Hiroshima

Oriental Hotel
Sheraton Grand
Oriental Hotel
Hotel Oriental
Holiday Inn Osaka
Okinawa Resort & Hiroshima Hotel
Fukuoka Hakata
Express Fukuoka
Namba
Spa
(Note 4)
StationTenjinRatio toRatio toRatio toRatio toRatio toRatio tototal sales
total sales
total sales
total sales
total sales
total sales
(%)
(%)
(%)
(%)
(%)
(%)
42.4%
－
32.7%
－
44.5%
－
52.5%
－ 100.0%－
50.1%－
Oriental Hotel
Universal City

Occupancy rate
ADR
(Note 1)
RevPAR(Note 2)
Total sales
Rooms department
Food & beveragedepartment
Tenant department
Other departments(Note 3)
GOP

15,081－

17,362－

19,787－

11,285

－

3,324

－

5,683

－

6,389

－

5,669

－

8,802

－

5,924

－

3,324

－

2,845

－

458
382

100.0
83.4

640
370

100.0
57.8

864
379

100.0
43.9

600
237

100.0
39.5

199
189

100.0
95.0

145
135

100.0
93.1

72

15.7

168

26.3

449

52.0

220

36.7

－

－

4

2.8

－

－

16

2.5

－

－

113

18.8

9

4.5

－

－

5

1.1

84

13.1

36

4.2

29

4.8

0

0.0

6

4.1

30

6.6

(155)

(24.2)

132

15.3

193

32.2

118

59.3

33

22.8

- 46 -

Hilton Tokyo
Narita Airport

International
Garden Hotel
NaritaRatio tototal sales(%)
Occupancy rate

Hotel Oriental
Express
Osaka Shinsaibashi(Note 5)
Ratio toRatio tototal sales
total sales(%)(%)

Hotel Nikko Nara

Ratio tototal sales(%)

Hilton Tokyo
OdaibaThe 16 HMJ Hotels
Total/Average(Note 6)

Ratio tototal sales(%)

Ratio tototal sales
(%)

58.9%

－

63.2%

－

41.0%

－

－

－

46.5%

－

54.6%

－

10,298

－

6,974

－

12,351－－－

21,595－

12,292

－

6,070

－

4,410

－

5,069

－

－

－

10,051

－

6,716

－

957

100.0

492

100.0

622

100.0

－

－

2,206

100.0

12,720100.0

Rooms department

602

62.9

370

75.2

303

48.7

－

－

824

37.4

6,517

51.2

Food & beveragedepartment

276

28.8

93

18.9

291

46.8

－

－

1,224

55.5

4,672

36.7

Tenant department

11

1.1

2

0.4

2

0.3

－

－

39

1.8

524

4.1

Other departments(Note 3)

68

7.1

28

5.7

26

4.2

－

－

119

5.4

1,008

7.9

103

10.8

117

23.8

12

1.9

(10)

－

13

0.6

1,536

12.1

ADR
(Note 1)
RevPAR(Note 2)
Total sales

GOP(Note 1)

(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

ADR: Represents average daily rate, which is calculated by dividing total rooms revenue 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, Oriental Hotel Okinawa 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. Oriental Hotel Universal City, Holiday Inn Osaka Namba, Hotel Oriental Express Fukuoka
Tenjin 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 indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
Due to the impact of the spread of the infection by COVID-19, the temporary closure was implemented during the midterm period.
For Total/Average of The 16 HMJ Hotels, figures are calculated by JHR as reference since no figures have been provided by the hotel
lessees.
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.

- 47 -

(2) Status of capital expenditures
a. Planned capital expenditures (Note)
The following table shows major estimated capital expenditures items for renovation work during the fiscal year planned
as of the end of the midterm period under review. Capital expenditures are expected to total ¥3,521 million for the second
half and, in aggregate with the capital expenditures for the first half, capital expenditures are expected to total ¥4,716
million for the full year.

Name of property, etc.
(Location)

Kobe Meriken Park Oriental Hotel(Kobe-shi, Hyogo)
Kobe Meriken Park Oriental Hotel(Kobe-shi, Hyogo)
Oriental Hotel Universal City
(Osaka-shi, Osaka)
Hilton Tokyo Bay(Urayasu-shi, Chiba)

PurposeEstimated construction costs(JPY 1M)
Paid in
Total
Total
the
amountamount paid
first half

Scheduled period

Renovation of
prefabricated bathrooms inguest rooms
Renovation of executive
rooms
Renovation of guest
rooms, etc.
(5F-12F)
Renewal of elevators

From July 2022
to September 2022

62

－

－

From May 2022
to July 2022

100

－

－

From January 2022
to July 2022

453

3

6

From November 2022
to December 2022

65

－

－

219

－

－

200

－

－

70

－

－

264

－

－

147

47

47

57

－

－

1,637

51

54

Renewal of airFrom May 2022
conditioning equipment in
to December 2022
guest rooms
Oriental Hotel Okinawa Resort & Spa Renewal of piping in guest From September 2022
(Nago-shi, Okinawa)
rooms
to December 2022
Oriental Hotel Okinawa Resort & Spa
From September 2022
Painting of exterior walls(Nago-shi, Okinawa)
to December 2022
Oriental Hotel Okinawa Resort & Spa
From September 2022
Renovation of guest rooms(Nago-shi, Okinawa)
to December 2022
ACTIVE-INTER CITY HIROSHIMA Renovation of lobby andFrom May 2022
(Hiroshima-shi, Hiroshima)lounge area on 6F
to July 2022
Oriental Hotel Fukuoka Hakata Station Renovation of restaurant
From August 2022
(Fukuoka-shi, Fukuoka)
on B2F
to September 2022
Oriental Hotel Okinawa Resort & Spa(Nago-shi, Okinawa)

Total(Note)New construction and renewal work include those 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 the renovation work will be performed may change.

b. Capital expenditures during the period (Note)
Major construction work conducted by JHR during the midterm period under review that represents capital expenditures is
as below. Capital expenditures for the midterm period under review totaled ¥1,195 million, and repair expenses that were
accounted for as expense for the midterm period under review totaled ¥6 million. In aggregate, ¥1,201 million of
construction work was carried out.
Name of property, etc.
(Location)
Oriental Hotel Universal City
(Osaka-shi, Osaka)
Oriental Hotel Okinawa Resort & Spa(Nago-shi, Okinawa)
Hotel Oriental Express Fukuoka Tenjin(Fukuoka-shi, Fukuoka)

PurposeRenovation of guest rooms, etc.
(13F-17F)
Renovation of lobby and pool area
Renewal of heat-source equipment for
air conditioning facilities

PeriodConstruction costs(JPY 1M)

From January 2022
to February 2022
From December 2021
to March 2022
From February 2022
to May 2022

Total
(Note)

283
493
57
833

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

- 48 -