Japan Hotel REIT Investment Corporation (TSE: 8985)

Financial Results

FY12/2020 (21st Period) February 25, 2021

Japan Hotel REIT Investment Corporation
Japan Hotel REIT Advisors Co., Ltd.
https://www.jhrth.co.jp/en/

Table of Contents
Ⅰ. Settlement of Accounts for FY12/2020 — Highlights
1.

FY12/2020 Highlights

Appendix 1 JHR's Characteristics and Strategy
1. JHR's Investment Targets
2. Simultaneous Pursuit of Stability and Upside Potential
3. External Growth Strategy
4. Internal Growth Strategy
5. Financial Strategy
6. Change in Asset Size
7. Benefits Program for Unitholders

3

Ⅱ. Summary of Settlement of Accounts andRevenue Forecast for the Full Fiscal Year
1.

Results for FY12/2020

52.

Revenue Forecast for FY12/2021

6

Ⅲ. Status of Hotel Operations
1.

Monthly Performance of The 24 Hotels with Variable Rent,
etc.

8

2.

Performance of The 24 Hotels with Variable Rent, etc.

93.

Response to Lessees/Operators

104.

Change in Lessees/Rebranding

12

5.

Active Asset Management for Post COVID-19

14

6.

Sale and Acquisition of Property

15

7.

Capital Expenditure and Depreciation

16

8.

Sustainability Initiatives

17

Appendix 2 Information on Properties
1. Portfolio
2. Portfolio Diversification
3. Rent Structures
4. Property List
5. Summary of Lease Contracts
6. Major CAPEX Ⅲ by Hotels
7. Change in Number of COVID-19 Cases and Major Events
8. RevPAR Variance to Previous Year by Region of
The 24 Hotels with Variable Rent, etc.
9. The Five HMJ Hotels — Highlights
10. Balance Sheet
11. Portfolio Map

Ⅳ. Financial Conditions
1.

Financial Conditions

20

Market Environment

24

Takeaways

49
50
51
52

Appendix 4 Summary of the Asset Management Company
1. Summary of the Asset Management Company
57
2. Features and Governance of the Asset Management Company 58

Ⅵ. Takeaways
1.

39
40
41
42
44
47
48

Appendix 3 Investors Composition and Investment Unit Price
1. Major Unitholders and Classification of Unitholders
54
2. Changes in Investment Unit Price and Market Capitalization
55

Ⅴ. Market Environment
1.

31
32
33
34
35
36
37

28

1

Ⅰ. Settlement of Accounts for FY12/2020 — Highlights

1. FY12/2020 Highlights
1. Status of Hotel Operations

3. Change in DPU and NAV▶ Performance of The 24 Hotels with Variable Rent,
etc.(*1)

 Results in 2020 deteriorated significantly from theprevious year and cost management for HMJ and otheroperators was strengthened In 2021, a moderate recovery is expected in thesecond half of the fiscal year
Results andForecast

2020(vs 2019)

2019

RevPAR(JPY)

14,178First Half

13,348

Second Half

14,993GOP(JPY MM)

20,8722021 (forecast)(vs 2019)

4,993(-64.8%)4,536(-66.0%)5,445(-63.7%)1,654(-92.1%)8,105(-42.8%)4,868(-63.5%)
11,289(-24.7%)7,323(-64.9%)

2. Sale of Property

4.7Bn

JPY

Appraisal Value

8.0Bn

4,000

3,690

(88.9%)

3,000
2,000
1,000

410

0
-1,000(34.1%)

270(-297*)
FY12/2019

FY12/2020

FY12/2021(20th Period)(21st Period)(22nd Period* Rough estimate in case gain on sale was excluded(*3)▶ Change in NAV

80,000JPY

60,0003.1Bn

50,00042 properties/JPY370.0Bn(*2)(as of the end of December 2020)

LTV

Costs for Interestbearing Debt

Average Life of
Debt

42.2%

1.0%

4.3 years

 Secure cash on hand and strengthen thefinancial baseFree cash after deducting dividends(*4)(as of the end of December 2020)

17.0

JPY
Bn
 Refinancing results in 2020 and schedule in 2021

(forecast))

70,000Gain on sale: JPY
End of
FY12/2020

5,000(as of end of
December 2019)

8.9Bn

 Continue to maintain good relationships withlenders
 Maintain a solid financial base(JPY)

90,000

Disposition Price
JPY The impact of COVID-19 was significant in 2020.
Difficult conditions are expected to continue in2021

 Decrease in appraisal value was minimal(Sotetsu Fresa Inn Shimbashi-Karasumoriguchi)Book Value▶ Conservative Financial Management(JPY)▶ Sale of property in July 2020(as of the end ofJune 2020)▶ Change in DPU

4. Financial Soundness

83,28678,233(6.1%)

2020

13.0BnJPY

2021 (forecast)

25.0BnJPY

5. Sustainability Initiatives▶ Acquisition of GRESB Real Estate Assessment

77,525

 Received "4-star" in 2020 and selected for"Sector Leader" of Asian Hotel Sector(0.9%)

FY12/2019

Midterm FY12/2020

FY12/2020(20th Period)(Midterm of(21st Period)

21st Period)(*1) The 24 Hotels with Variable Rent, etc. refers to 24 hotels: 14 hotels, which are 5 hotels of Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, Oriental Hotel
Hiroshima ("The Five HMJ Hotels"), plus Okinawa Marriott 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, and Hilton Tokyo Odaiba ("The HMJ Group Hotels"), plus 4 hotels of theb ikebukuro, the b hachioji, the b hakata, and the b suidobashi ("The Ishin Group Hotels") and 6 hotels of ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure Okinawa
Naha, Mercure Yokosuka ("The Accor Group Hotels"). The same shall apply hereinafter.
(*2) Stating total amount of the acquisition price.
(*3) Rough estimate calculated by excluding the amount equivalent to the gain on sale of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi from the distributable profit.
(*4) The figures represent balance of cash and deposits after exclusion of various reserves for trust and amount equivalent to dividends to be paid, etc.

3

Ⅱ. Summary of Settlement of Accounts andRevenue Forecast for the Full Fiscal Year

1. Results for FY12/2020

Properties(Unit: JPY MM)
FY12/2019(20th Period)

FY12/2020(21st Period)

Results(A)

Results(B)

Variance

Major Causes of Variance ofExisting Properties

43

42

–

–

–

–

Acquisition Price

374,508

370,031(4,477)(1.2%)(4,800)323• The HMJ Group Hotels(JPY7,868MM)• The Ishin Group Hotels(JPY320MM)

Real Estate Operating Revenue
Fixed Rent
Other Income
Variable Rent
Gain on Sale of Properties, etc.
NOI(*2)
Profit and Loss

(B)–(A)

Existing
Sale of
Property(*3) Properties(*4)

No. of Properties

Operating Revenue

28,278

13,838(14,439)(51.1%)

2,944(17,383)

28,278

10,495(17,782)(62.9%)(214)(17,568)(8,291)(52.0%)(149)(8,142)

4.1%

1,170

8.5%

892

(278)

(23.8%)

(17)

(261)

39.5% 11,176

18.7%

1,963

(9,213)(82.4%)(47)(9,165)• The 24 Hotels with Variable Rent, etc.
(JPY8,101MM)

–

3,343

3,343

–

3,158

184

[Of these, The HMJ Group Hotels (JPY5,312MM)]

24,087

6,547(17,539)(72.8%)(182)(17,356)

1.8%(4.7%)
204

(9)

213

2

1

0

–

0

246

5

(241)

–

(241)

19,281

1,778(17,502)(173)(17,328)

5.1%

0.5%

(4.7%)

2,132

1,945

(187)

–

Operating Income

17,148

3,176(13,972)(81.5%)

Ordinary Income

15,291

1,398(13,893)(90.9%)

Extraordinary Income

–

(*5)

130

Others1

1–15,2901,527(13,763)(90.0%)

1,176

305

(870)

(74.0%)

16,466

1,829(14,636)(88.9%)

4,462,347

4,462,347

–

–

3,690

410

(3,280)(88.9%)

Loss on Retirement of Noncurrent Assets(*2)

NOI after Depreciation

Other Operating Expenses

Net Income
Use of Negative Goodwill
Total Dividends
Number of Units Issued (Unit)
Dividend per Unit (JPY)JPY47MM
total (JPY8,142MM)

7,640

4,761

Asset Retirement Obligations Expenses• Other tenants

72.8%

6.4%

Depreciation

Fixed Rent

56.3% 15,931

4,557

NOI Yield

NOI Yield after Depreciation

Dividend

Breakdown of Variance130(90.8%)

5

Variable Rent

• Other hotels(JPY1,063MM)
total (JPY9,165MM)(*1) For detail, please refer to Financial Report for the Fiscal Year Ended December 31,
2020 (January 1, 2020–December 31, 2020) dated February 25, 2021.
(*2) Each is calculated using the following formula: NOI (Net Operating Income) =Real estate operating revenue − Real estate operating costs + Depreciation +Loss on retirement of noncurrent assets + Asset retirement obligations expenses NOI
after depreciation = Real estate operating revenue − Real estate operating costs(*3) Stating the amount of effect of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi, which
was sold on July 1, 2020.
(*4) Existing properties refer to 42 properties JHR owns as of February 25, 2021.
The same shall apply hereinafter.
(*5) Stating the income from the acknowledgement of the claim for return of rental depositthat had not been recorded as guarantee deposit at HOTEL ASCENT FUKUOKA.

2. Revenue Forecast for FY12/2021(Unit: JPY MM)
FY12/2020(21st Period)

Properties

Results(A)

Forecast(B)(B)–(A)

Variance

Sale of
Existing
Property Properties

42

42

42

–

–

–

–

Acquisition Price

370,031370,031370,031

–

–

–

–

Real Estate Operating
Revenue

Profit and Loss

(Reference)
Annualized Results

Comparison with Previous Period

No. of Properties

Operating Revenue

Fixed Rent, etc.

72.8%

Other Income

8.5%

Variable Rent

18.7%

Gain on Sale ofProperties, etc.

13,838

10,243

13,92082

10,495

10,243

13,9203,425

7,640 73.1%
892

8.3%

1,963 18.5%

7,491 45.9%

6,345

6.7%

932

1,896 47.7%

6,642

854

0.6% (3,390)

3,472

32.6%

3,657

(1,294) (16.9%)
40

(232)

(149) (1,145)

4.6%

(16)

57

4,679 238.3%

(66)

4,745

– (3,158)

(184)

3,343

–

–

(3,343)

6,547

6,267

9,455

2,907

1.8%

1.7%

1,778

44.4%

(200)

3,107

2.6%

0.8%

1,496

4,628

2,849 160.3%

(187)

3,037

0.5%

0.4%

1.3%

0.8%

Operating Income

3,176

(428)

2,715

(460) (14.5%)

Ordinary Profit

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

NOI
NOI Yield
NOI after Depreciation
NOI Yield after Depreciation

Extraordinary Income
Net Income
Use of Negative Goodwill
Dividend

FY12/2021(22nd Period)

Total Dividends

130

–

–

1,527

(2,207)

877

305

324

330

1,829

–

1,204

Number of Units Issued(Unit)

4,462,347

4,462,347

4,462,347

Dividend per Unit (JPY)

410

–

270

(649) (42.5%)
8.1%(624) (34.1%)–

Fixed Rent
• The HMJ Group Hotels(JPY794MM)• The Ishin Group Hotels(JPY7MM)• Change in lessees/rebranding(JPY172MM)• Chisun Hotel Kamata(*2)(JPY93MM)• Other tenants(JPY78MM)
total (JPY1,145MM)

Variable Rent
• The 24 Hotels with Variable Rent, etc.
[Of these, The HMJ Group Hotels

JPY4,797MM
JPY4,319MM]• Chisun Hotel Kamata

JPY38MM• Other hotels(JPY89MM)
total

JPY4,745MM

Use of Negative Goodwill(*3)

(130)

24

Major Causes of Variance ofExisting Properties–(140) (34.1%)＜FY12/2020＞
50-year negative goodwill amortization

JPY262MM

Loss on retirement of noncurrent assets

JPY5MM

Amortization of trademark rights
total＜FY12/2021 (plan)＞
50-year negative goodwill amortization

JPY262MM

Loss on retirement of noncurrent assets

JPY11MM

Amortization of trademark rights
total(*1) For detail, please refer to Financial Report for the Fiscal Year Ended December 31, 2020 (January 1, 2020–December 31, 2020) dated February 25, 2021.
(*2) Hotel Vista Kamata Tokyo was rebranded and changed its name to Chisun Hotel Kamata on January 1, 2021. The rent scheme was changed from fixed rent plus revenue sharing to variable rent.
(*3) Please refer to P.22 for the use of negative goodwill (reserve for temporary difference adjustment).

6

JPY37MM
JPY305MM

JPY56MMJPY330MM

Ⅲ. Status of Hotel Operations

1. Monthly Performance of The 24 Hotels with Variable Rent, etc.
(JPY)

Occupancy (right axis)
ADR (left axis)
RevPAR (left axis)

25,000Declarationof a State ofEmergency

Go To Travel
Campaign

Tokyo was added to
Go To Travel
Campaign

Declaration
of a
State
of
Emergency

20,00015,00014,103

13,777

14,46913,350

11,246

13,239
11,17813,362

13,354

3,750

10,658
40%

79.7%
2020
January

65.3%

February

28.1%

March

4,862

6,048

5,855

4,536

3,461
701

8.9%

7.4%

April

May

5,445

4,993
2,779

14.8%

26.1%

32.3%

June

July

August

38.7%

46.1%

September October

56.6%

45.3%

34.0%

40.8%

37.4%

26.1%

November December First Half

SecondHalf

Full Year

2021
January＜Number of hotels temporarily closed of The 24 Hotels with Variable Rent, etc. ＞
000% of No. of
guest rooms of
the hotels closed

0

0

0

10

16

20%

1,606

+1.6% (29.6%) (72.7%) (93.5%) (95.0%) (87.7%) (78.1%) (75.3%) (63.4%) (59.2%) (44.9%) (54.6%) (66.0%) (63.7%) (64.8%) (75.3%)

No. of hotels
closed80%

60%

13,357

10,843

4,669

991

YoY of
RevPAR

13,345

7,835

5,000

0

13,847

9,420

9,003

10,00012,553

12,714100%915.3% 70.5% 33.9%

4

2

2

2

2

3

ー

ー

ー

5

8.1%

5.6%

5.6%

5.6%

5.6%

7.4%

ー

ー

ー

10.3%

8

0%

2. Performance of The 24 Hotels with Variable Rent, etc.
Performance and Forecast of Major Indicators
Occupancy (right axis)

Total of The 24 Hotels with Variable Rent, etc.
(JPY)
20,000

Full Year

16,492

15,00010,0005,000
0(19.0%)

14,17886.0%(64.8%)

15,00010,0005,000
013,35737.4%
2020

18,635
16,143+11.9%+62.3%

20192020(21.2%)(7.4%)

13,348(66.0%)

14,993(22.6%)

13,354+22.8%(63.7%)(63.5%)(24.7%)

11,28968.8%

2021 (forecast)

2019

2020

2019

2020

2021 (forecast)(2021 vs 2019)

17,979

(3.5%)

17,587(2021 vs 2019)15,222(13.4%)

9,436(41.5%)+63.9%First Half

14,906(66.4%)

52.5%

85.3%

33.1%

2021 (forecast)

2019

2020

20,872

36.4%

87.9%

38.4%

68.3%

2021 (forecast)

2019

2020

2021 (forecast)

5,000
0

The HMJ Group Hotels(2021 vs 2019)15,00010,000Total of The 24 Hotels with Variable Rent, etc.

17,1162019(92.1%)(92.3%)

7,323
1,654
1,326
2020

9

+342.9%+382.2%50%+107.1%

Performance and Forecast of GOP(JPY MM)
20,000100%(22.5%)

13,3796,460(63.8%)+7.6%(0.2%)+16.5%(62.6%)

0%(2021 vs 2019)19,59016,814

17,263

5,428

5,045

Second Half
(14.4%)(15.2%)(2.1%)

15,005

19,63550%+107.3%40.8%2021 (forecast)100%(5.0%)

5,445

4,868

4,536

16,398

86.9%

5,757
35.8%

12,368(14.8%)(2021 vs 2019)17,263

34.0% +7.3% 39.4%+11.8%

86.6%(42.8%)

13,362

Second Half

85.1%

16,081(64.3%)(9.4%)(2021 vs 2019)

RevPAR (left axis)

54.2%

Full Year

(13.7%)

15,691

14,947
8,105

4,993

2019

The HMJ Group Hotels(JPY)
20,000First Half

(2021 vs 2019)

ADR (left axis)

6,393
2021 (forecast)(64.9%)(62.6%)

0%3. Response to Lessees/Operators
 Response to requests for rent reductions will be comprehensively judged depending on each operator
Status of Operators

Restructure sustainable relationships with HMJ, the largest operator

No. of Operators
of JHR

Others (10 operators)
Ishin (the b)

Change of Lease Contract with HMJ

9.9% (12)Kyoritsu Maintenance 3.4% (4)Summary of Rent

16 operators(Dormy Inn, etc.)
4.1% (4)2020

Change to variable rent only on and after February

2021

Variable rent only

Nagoya Hilton

Fixed rent

4.1% (1)2022
onwards Variable
rent

THE DAI-ICHI BUILDING(Hilton Tokyo Bay)
7.0% (1)(Mercure/ibis)
HMJ

Change in Rent

63.0% (14)(*)

If the rent is calculated based on the same hotel performance as in2019, the rent will increase due to the effect of cost reduction by HMJ

Based on acquisition price. A parenthesis represents the number of hotel.
As of the end of December 2020

Rent increaseby cost reduction

Response to Requests for Rent Reduction(JPY Bn)

Change in lease contract with two operators• HMJ Groupon August 25, 2020

• Ishin Groupon October 30, 2020

Review the GOP base amount for each property
and set variable rent ratio with appropriate
rent burden ratio(*2)(*1) The fixed rent of Hilton Tokyo Odaiba is the same amount as the fixed rent on and after 2022
(JPY1.6Bn), which was stipulated in the contract before revision.
(*2) When AGOP of each hotel exceeds AGOP base, the fixed rent is calculated by multiplying the amountby the fixed rent set for each hotel.

Accor
8.5% (6)Same amount as the previous lease contract(*1)

16
12

15.26

Fixed Rent

• Hotel Vista Kamata Tokyoon January 1, 2021

4

• HOTEL ASCENT FUKUOKA

June 2021 (plan)• Hotel Keihan Universal City

July 2021 (plan)0

Under discussion with other several operators

(*)

10

15.93
0.67

7.23

7.23

8

Change in lessees/rebranding of three operators

Variable Rent

5.37
8.03
2019

1.85
1.06
0.79
2020

5.37
2021
(forecast)

8.03
Assuming the same
RevPAR as in 2019

In 2019, the rents of Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba wereannualized. The fixed rent of Hilton Tokyo Odaiba was calculated at JPY1.6Bn.

3. Response to Lessees/Operators (cont.)
 For HMJ, implemented cost reductions as scheduled, and plan to implement additional measures in the future Flexibly respond to requests from other operators depending on their conditions
Response to Other Operators

Status of HMJ' Restructuring Plan

Ishin Group Emergency measures in 2020
Personnel
Operating cost
Secure funding

Plan toreduce by
JPY4,258MM

Changed to a rent scheme according to the capability to pay
rent to maximize rent in 2020 onwards

Reduced byapproximately 40%
over the initial plan
(reduction of
JPY6,014MM)

Before change: Fixed rent (JPY428MM/year) + Variable rent (linked to GOP)
April 2020 onwards

 Permanent cost reduction in 2021 onwards
Personnel cost
reduction
Outsourcing
cost reduction

Plan toreduce by
JPY1,518MM(vs 2019)

Maintenance andimprovement oforganizational strength

Maintain core human resources andestablish a sales and marketing
structure

Fixed rent (JPY214MM) + Variable rent

Contract term

the b ikebukuro
the b hachioji
the b hakata

January 31, 2015 to July 31, 2024
(extended by two and a half years)

January 1, 2020
to December 31, 2026

Accepted a request for early-cancellation and changed thelessee to Sorale Hotels and Resorts Co., Ltd.

 Use of employment adjustment subsidy
Fully utilize employment adjustment subsidies to secure profits
while securing human resources

2022 onwards

Vista Hotel Management

 Other measures in 2021
Optimization of hotel
operation

Fixed rent (JPY100MM) + Variable rent

the b suidobashi

Aim to reduce
more than initiallyplannedCross-divisional review of hotel
operations
Introduction of smart check-in

Fixed rent (waive) + Variable rent

2021

After

BeforeName ofhotel

Chisun Hotel Kamata

Hotel Vista Kamata Tokyo

LesseeSolare Hotels & Resorts Co., Ltd.

Vista Hotel Management Co., Ltd.

Contract
schemeFixed-term lease contract

Ordinary lease contract

Contract
term

January 1, 2021 to
December 31, 2025

Rent
schemeJanuary 1, 2019 to
December 30, 2021
(terminated on December 31, 2020)

Variable rent (GOP x 86.0%)

Fixed rent + Revenue sharing

Other Operators

11

Under discussion with several operators based on the policy fornegotiation with operators

4. Change in Lessees/Rebranding①
 Significant upside is expected in the hotel market recovery period by utilizing the HMJ platform and adopting a rent structure that adopts anappropriate rent burden ration, etc.
 Record a certain amount of rent as revenue in the current hotel market due to free rent for a certain period after rebranding

Hotel Oriental Express Fukuoka Tenjin (current HOTEL ASCENT FUKUOKA) Aiming to improve profitability by upgrading from economy to mid-price Efficient management through the standardization of back offices with Oriental Hotel Fukuoka Hakata Station in the same area

Major Changes
LesseeHotel grade
Contract
schemeContract
term
Rent
schemeAfter
Hotel operator belonging to
HMJ Group
Mid-price

K.K. Ascent

Fixed-term lease contract

Fixed-term lease contract

June 18, 2021 to
December 31, 2031
(10.5 years)
Fixed rent + Variable rent(*)

April 1, 2019 to
December 31, 2026
(the contract was cancelled)
to March
Fixed rent
2020
(JPY246MM/year)
from April
Fixed rent
2020
(JPY270MM/year)(JPY150MM/year +Excess of GOP amount of
JPY165MM x 97%)

Comparison with the b hakata

Change in NOI and NOI Yield

Before(JPY MM)

400

HOTEL ASCENT FUKUOKA
86.1%
JPY7,224
JPY6,220
Limited-service
Economy

300

200

6.1%

6.7%

351

278

284

302

2017

2018

2019

2020

9%

6.3%
408

6%

312
Assuming
Assuming
the2024 the ザ・ビー
2024
2019年と博多のsame RevPAR same RevPAR as
同じRevPARをasin 2019 after at 2019年とthe b hakata
同じRevPARを想定した場合rebrandingin 2019 after
rebranding
想定した場合3%(*) The lease contract was changed from the ordinary lease contract to fixed-term lease contract in order
to increase fixed rent in April 2019.

the b hakata
84.8%
JPY8,978
JPY7,610
Limited-service
Mid-price(*) Fixed rent is waived from June 18, 2021 to June 30, 2022 as a free rent period. The rent to berecorded for the fiscal year ending December 2021 is expected to be JPY72MM, which is equivalent toaverage monthly fixed rent of JPY11MM multiplied by 6.4 months. The average monthly rent iscalculated by prorating the total fixed rent of JPY1,425MM for the entire lease term. From the fiscal
year ending December 2022 onwards, JPY136MM, the average monthly fixed rent of JPY11MM
multiplied by 12 months is expected to be recorded.

5.6%

5.8%

8.3%

NOI Yield (right axis)

EconomyOCC
ADR
RevPAR
Hotel type
Hotel grade
Average size of
15.2㎡
15.6㎡
guest roomAge
21.7 years
23.3 years
Aiming to upgrade the hotel grade by rebranding and to improve RevPAR
by increasing ADR

KPI(2019)NOI (left axis)

Estimate of Rent
Rent

NOI(*)NOI Yield

2019

JPY235MM

JPY302MM

6.1%

Assuming the same RevPAR
as in 2019 after rebranding

JPY245MM

JPY312MM

6.3%

Assuming the same RevPAR
as at the b hakata in 2019
after rebranding

JPY341MM

JPY408MM

8.3%(*) The rent from tenants other than operators are included.

12

4. Change in Lessees/Rebranding②
Hotel Keihan Universal City (new hotel name is undecided) Aiming to maximize revenue in the recovery period of domestic demand as a theme park hotel adjacent to USJ
 Efficient management utilizing the management resources of the three properties operated in Osaka
Major Changes

LesseeChange in NOI and NOI Yield
After

BeforeHotel operator belonging to
HMJ group

K.K. Hotel Keihan

Contract
schemeFixed-term building lease
contract

Ordinary building lease contract

Contractterm

July 1, 2021 to
December 31, 2031
(10.5 years)

July 1, 2001 to June 30, 2021
(The contract was terminatedupon expiration)

Rent
schemeNOI (left axis)

NOI Yield (right axis)

1,500
13.1% 13.2%
1,000

8.2% 7.9%500
0Fixed rent + Variable rent(*)(JPY350MM/year +Excess of GOP amount of
JPY370MM x 95%)

(JPY MM)

495

475

2013

2014

12.0% 11.7% 11.1%

786

789

721

704

669

2015

2016

2017

2018

2019

20%
15%

8.0%
1,101
482
2020

The rent scheme was changed in July 2014
(Fixed rent to Fixed rent + Revenue sharing)

Fixed rent + Revenue sharing

18.4%

10%
5%
0%

Assuming2024
the same RevPAR
as in 2019
after rebranding

Estimate of Rent
Rent

NOI

NOI Yield

Not disclosed

JPY669MM

11.1%

Assuming the same RevPAR
JPY1,133MM
as in 2019 after rebranding

JPY1,101MM

18.4%

2019

(*) Fixed rent is waived from July 1, 2021 to June 30, 2022 as a free rent period. The rent to berecorded for the fiscal year ending December 2021 is expected to be JPY158MM, which is equivalent
to average monthly fixed rent of JPY26MM multiplied by 6 months. The average monthly rent iscalculated by prorating the total fixed rent of JPY3,325MM for the entire lease term. From the fiscal
year ending December 2022 onwards, JPY316.7MM, the average monthly fixed rent of JPY26MM
multiplied by 12 months is expected to be recorded.

13

5. Active Asset Management for Post COVID-19
 Potential upside by active asset management
Conceptual Diagram

Pre COVID-19

2020

Active Asset Management

Post COVID-19①

 Aiming to improve hotel management throughchanges in hotel operators, rebranding, andupgrades, etc. in order to increase hotel sales

①
Cost

Hotel

②

Cost

②

Sales

Revenueof lessee

Increase in sales by improvement ofhotel management

Revenueof lessee

Review of cost by restructuring

 Reviewing the cost structure and improving therevenue structure. Aiming to maximize GOP throughefficient management

③

③

GOP

Rent

REIT

Rent
Cost

Revise in rent scheme, etc.

 Aiming to increase the rent that JHR receives byraising the rent burden ratio at the time ofrebranding and other measures

GOL

Rent

Loss of lessee
by hotel management

Increase in rent

14

6. Sale and Acquisition of Property
Sale of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi(July 2020)

Exchange of Part of Site of HOTEL ASCENT FUKUOKA(October 2020)

 Sold a large, limited-service hotel in Tokyo, which has a large amountof unrealized gain
 Improved liquidity of cash on hand to increase dividend Agreed on exchange part of the site of HOTEL ASCENT FUKUOKA The mutual leasehold relationship was terminated and JHR acquired
the full ownership of HOTEL ASCENT FUKUOKA

Sotetsu Fresa Inn Shimbashi-Karasumoriguchi

HOTEL ASCENT FUKUOKA

Sale Price

JPY8,000MM

Sale Price

JPY523MM

Acquisition Price

JPY4,800MM

Acquisition Price

JPY653MM

Book Value

JPY4,790MM

Book Value

JPY333MM

Gain on Sale

JPY3,158MM

Amount of Impact
on Dividend per Unit

JPY707

Gain on Sale
JPY3,158MM

Book Value
JPY4,791MM

BeforeSale Price
JPY8,000MMAt the timeof the sale

Cash and
Deposits
JPY4,842MM

Gain on Exchange ofReal Estate Properties
Amount of Impact
on Dividend per Unit

Increased profit
available fordividends
Improved
liquidityon hands

After

JPY41
Increase in
distributable profit

Part of Site of
HOTEL ASCENTFUKUOKA
JPY653MM

Acquired by JHR

15

JPY184MM

Sales
Transaction

Part of Siteof Adjacent
Building
JPY523MM

Gain on Exchange
of Real Estate
Properties

JPY184MM

Book Value
JPY333MM

Sold by JHR

7. Capital Expenditure and Depreciation
 Prioritize securing liquidity of cash on hand by restraining mainly CAPEX Ⅲ, taking into account the conditions of the hotel market
Clarification of CAPEX

CAPEX ⅠCAPEX ⅡCAPEX Ⅲ(JPY MM)

5,000

capital investment related to renewal of buildings, facilities, and equipment which is
required to maintain proper values of properties
capital investment for fixtures furniture and equipment that are not directly related to building
structures or facilities but necessary for operating hotels
strategic capital investment for renewals of guest rooms, banquet rooms, restaurant
and others in order to maintain or to improve the competitiveness of the hotels

Depreciation

4,091
4,000

3,000

3,725

2,898
469

2,000

4,761

4,557

475

6,766
3,619 Oriental Hotel Fukuoka

3,056
476

4,813

393

3,147

999
1,690

781

3,522

Hakata Station

Cost for large-scalerenovation works

1,263

1,665
100
237

1,000

1,954

1,798

2,259

2,226
1,456

1,328

0

Asset Size
(JPY MM)

319,474309,370

374,508

374,508

370,031

FY12/2017

FY12/2018

FY12/2019

FY12/2020

FY12/2021(*)(forecast)(*) Capital expenditures for the fiscal year ending December 2021 (forecast) include expenses for rebranding of HOTEL ASCENT FUKUOKA (JPY365MM) and Hotel Keihan Universal City (JPY283MM) (total JPY648MM).

16

8. Sustainability Initiatives
In order to achieve a mid to long-term growth that coexists with society and environment aiming to enhance sustainability throughappropriate actions for ESG issues(*1)
GRESB Real Estate Assessment(*2)

CASBEE Certification for Buildings(*3)

 Acquired "Green Star" for three consecutive years from 2018

 Hilton Tokyo Odaiba received CASBEE Certification for Buildings,(B+: Good) for the first time as existing hotel in April 2020

▶ In 2020, JHR was selected for "Sector Leader"
as a participant who received the highest
ranking in Asian hotel sector▶ Acquired "4-star"in GRESB Rating

Accommodation of COVID-19 Patients

Sustainability Policy
 JHR and JHRA stipulated "Sustainability Policy," which definesmaterial issues and initiatives for sustainability in our business Accommodation of COVID-19
patients with mild or no symptoms
at two hotels

Sustainability Policy• Of COVID-19 patients in Tokyo,
two hotels have accommodated
patients with mild or no symptoms

 Monitoring and improvement ofenvironmental performance in our
portfolio• Introduced cleaning and welcoming
robots to make stay at hotels safer
and more comfortable Promotion of comfortable, healthy,
secure and safe hotels
 Promotion of ESG in value chains Consideration for and contribution
to local communities
 Initiatives for our officers andemployees
 Compliance as corporate citizens
 Improvement of transparency andengagement with our stakeholders(*1) For sustainability policy and examples of initiatives by JHR, please see websites of JHR (https://www.jhrth.co.jp/en/about/sustainability.html).
(*2) The GRESB is an annual benchmarking program to evaluate ESG considerations of property companies and real estate funds. The GRESB Real Estate Assessment is distinguished by its comprehensive evaluationof initiatives for sustainability of property companies, REITs and real estate funds, not of individual properties. GRESB rating is a relative evaluation based on comprehensive scores and the highest being "5-stars."(*3) CASBEE (Comprehensive Assessment System for Built Environment Efficiency) is a method for evaluating and rating the environmental performance of buildings. CASBEE Certification for Buildings is granted forassessment results provided by CASBEE for New Construction, Existing Buildings, and Renovation. Assessment results by CASBEE are indicated in a scale of the following five ranks: "S: Superior," "A: Very Good,""B+: Good," "B-: Slightly Poor," and "C: Poor."17

8. Sustainability Initiatives (cont.)
JHR is also working on measures to prevent the infections of COVID-19
Infection Prevention Measures at The HMJ Group Hotels
 HMJ provides customers with safe and secure stays by implementing the measures in highest level to prevent COVID-19
Guest Room
▶ Introduction of electrostatic
sprayers to ensure thoroughdisinfection of guest rooms, etc.

Restaurant and Public Space, etc.
▶ Introduction of automatic
sanitation equipment forguestroom keys

▶ Acrylic panels for anti-spill measures ▶ Installed QR code to accessare installed at all breakfast buffet
the menu at restauranttables of The HMJ Group Hotels＜ Hotel Nikko Alivila ＞＜ Okinawa Marriott Resort & Spa ＞＜ Okinawa Marriott Resort & Spa ＞＜ Oriental Hotel tokyo bay ＞＜ Hilton Tokyo Odaiba ＞▶ Placing a room seal on doors toindicate rooms are thoroughly
cleaned as one of the Hilton
CleanStay program▶ Distribution of portablealcohol antibacterial gels to
all guests for a limited period▶ Held an event to light up thegarden pool in "blue" and "green"colors and convey appreciation to
healthcare professionals andlocal businesses＜ Hilton Tokyo Odaiba ＞＜ Oriental Hotel tokyo bay ＞

18

Ⅳ. Financial Conditions

1. Financial Conditions
Main Financial Indicators

Repayment Schedule of Interest-bearing Debt

(as of the end of December 2020)

30,00042.2%

LTV (total asset base)

25,000

1.0%

Cost for all interest-bearing debt

Free cash after deducting dividends
as of the end of December 2020(*1)

10,000

JPY17.0Bn

21,65016,90023,582Average Life of Debt
5.0

4.7

1.5%
1.0%

1.2%

1.1%

0.5%
0.0%

1.0%

1.0%

End of

End of

End of

End of

FY12/2016

FY12/2017

FY12/2018

FY12/2019

FY12/2020

15,772

18,650 19,000

2021

2022

2023

2024

2025

Repayment Date

Balance

4.0First Half

JPY7,735MM

3.0

Second Half

JPY17,347MM

Total

JPY25,082MM

2.0
1.0

End of

19,00010,00017,350 17,000

13,10017,000 18,000

2026

8,000
8,000

2027

2028

2029

Refinancing Schedule in 2021

Costs for Interest-bearing Debt (year)
6.0
5.2
4.8
5.0
4.3

1.1%

15,772

3,000

4,250

Changes in Costs for Interest-bearing Debt(*2) and
Average Life of Debt(*3)
2.0%

28,0006,000

10,9005,000
0Investment Corporation Bonds

1,500

15,000

JPY126.5Bn

Unrealized gainLoans
25,08220,0004.3 years

Average life of debt

(as of the end of December 2020)(JPY MM)

0.0

Cost

1.26%

(*1) Represent cash and deposits, excluding various reserves for trust and amountequivalent to dividends to be paid, etc.
(*2) Weighted-average costs for interest-bearing debt (including up-front fee, etc.) as ofthe end of each period/year. Rounded off to one decimal place.
(*3) Average life of debt as of the end of each year.

(17th Period) (18th Period) (19th Period) (20th Period) (21st Period)20

1. Financial Conditions (cont.)
Lender List for Interest-bearing Debt

Breakdown of Interest-bearing Debt

Balance(as of the end of
December 2019)
Balance%

Balance(as of the end of
December 2020)
Balance%

Sumitomo Mitsui Banking Corporation

31,90118.9%

32,38819.2%

487

Mizuho Bank, Ltd.

19,00011.3%

19,37011.5%

370

Shinsei Bank, Ltd.

19,015

11.3%

19,015

11.3%–

Sumitomo Mitsui Trust Bank, Limited

13,6408.1%

13,825

8.2%

185Resona Bank, Limited

10,126

6.0%

10,1266.0%–

Development Bank of Japan Inc.

5,750

3.4%

5,900

3.5%

150

Fukuoka Bank, Ltd.

4,750

2.8%

4,750

2.8%

–

The Nomura Trust and Banking Co., Ltd.

4,660

2.8%

4,660

2.8%

–

MUFG Bank, Ltd.

4,135

2.5%

4,135

2.5%

–

Aozora Bank, Ltd.

3,435

2.0%

3,435

2.0%

–

The Chiba Bank, Ltd.

3,100

1.8%

2,900

1.7%

(200)

The Nishi-Nippon City Bank, Ltd.

2,750

1.6%

2,750

1.6%

–

Hiroshima Bank, Ltd.

2,892

1.7%

1,900

1.1%

(992)

Sompo Japan Insurance Inc.

1,500

0.9%

1,500

0.9%

–

500

0.3%

500

0.3%

–

75.3% 127,154

75.3%

–

Lenders/Bond Name

The Shizuoka Bank, Ltd.

Investment Corporation Bonds

Total of Bank Loans
127,154
Investment Corporation Bonds(for institutional investors)
4th Investment Corporation Bonds without Collateral
1,500

Variance

0.9%

1,500

0.9%

–

6th Investment Corporation Bonds without Collateral

3,000

1.8%

3,000

1.8%

–

8th Investment Corporation Bonds without Collateral

1,100

0.7%

1,100

0.7%

–

9th Investment Corporation Bonds without Collateral

1,000

0.6%

1,000

0.6%

–

12th Investment Corporation Bonds without Collateral
Total of Investment Corporation Bonds(for institutional investors)
Investment Corporation Bonds(for individual investors)
5th Investment Corporation Bonds without Collateral

2,000

1.2%

2,000

1.2%

–

8,600

5.1%

8,600

5.1%

–

6,000

3.6%

6,000

3.6%

–

7th Investment Corporation Bonds without Collateral

9,000

5.3%

9,000

5.3%

–

10th Investment Corporation Bonds without Collateral

10,000

5.9%

10,000

5.9%–

11th Investment Corporation Bonds without Collateral
8,000
Total of Investment Corporation Bonds
33,000(for individual investors)
Total of Investment Corporation Bonds
41,600

4.7%

8,000

4.7%

–

19.6%

33,000

19.6%

–

24.7%

41,60024.7%–

168,754 100.0% 168,754 100.0%–

Total of Interest-bearing Debt

(as of the end of December 2020)(Unit: JPY MM)

7.6%
7.3%

24.7%

9.0%

85.1%

75.3%

Short-term

Loans
Investment
Corporation Bonds

91.0%
Fixed Interest Rate

Long-term(scheduled repayment
within one year)

Long-term

Variable Interest Rate(*) Long-term represents debts with original maturity over one year, and short-term represents debts
with original maturity within one year.

Changes in LTV (total asset base)
LTV (total asset base)

45%

41.4%

41.6%

40.8%

39.7%

39.9%

39.0%

40%
35%

LTV (total asset base/after deducting total dividends)

42.3%

40.6%

42.4%
42.2%

End of

End of

End of

End of

End of

FY12/2016

FY12/2017

FY12/2018

FY12/2019

FY12/2020(17th Period)(18th Period)(19th Period)(20th Period)(21st Period)(*) LTV as of the end of each year.

Status of Credit Rating

21

Japan Credit Rating Agency, Ltd.
(JCR)

A+ (negative)

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

A

(negative)

1. Financial Conditions (cont.)
Negative Goodwill

Changes in Appraisal Value (Unrealized Gains)<Policy for Use of Negative Goodwill>(JPY Bn)

1. Add JPY262 million (50-year amortization amount ofnegative goodwill) to dividends every period

500

2. In addition to above, dividends will be increased in
response to the following
•
•
•
•
•

Book Value＜Amount used in FY12/2020＞

300
200
100

302.1
205.4

122.1

130.7

284.9

317.2

306.7

39.9%

38.5%

42.6%

113.8

493.3

151.5

126.5

223.3

374.3

366.7

40.5%

34.5%

0
Ratio of
Unrealized Gains

20.4%

35.2%

FY12/2014 FY12/2015 FY12/2016 FY12/2017 FY12/2018 FY12/2019 FY12/2020

50-year amortization amount on negative goodwill :JPY262MM

Cope with loss on retirement of noncurrent assets :JPY5MM

Amortization of trademark rights:

JPY37MM

Total amount:

JPY305MM

Balance of Negative Goodwill
after the end of December 2020

(15th Period) (16th Period) (17th Period) (18th Period) (19th Period) (20th Period) (21st Period)(*) Unrealized gains are calculated by subtracting book value from appraisal value.

Change in Appraisal Value(as of December 31, 2020)

JPY10,311MM

Appraisal
No. of Acquisition
Price
Property
Appraisal Variance of
Variance of Net Cash Variance(*1)(JPY MM)
Appraisal CAP Rate Cap Rate
Flowof Net
Value
(*2)
(*2)
Value
(JPY MM) Cash Flow
(JPY MM)＜Amount to be used in FY12/2021＞
50-year amortization amount on negative goodwill :JPY262MM

Cope with loss on retirement of noncurrent assets :JPY11MM

Amortization of trademark rights:

JPY56MM

Total amount (plan):

JPY330MM

Balance of Negative Goodwill
after the end of December 2021 (forecast)

437.5

78.7

34.8
170.5

525.9

439.3

398.7

400

Cope with losses caused by property dispositions
Cope with loss on retirement of noncurrent assets
Cope with dilution of dividend per unit
Cope with inconsistency between tax and accounting treatments(Amortization of fixed-term leasehold of land, amortization ofasset retirement obligations, etc.)
Cope with suspension of sales and such due to large-scalerenovation works with significant impact on revenues

Unrealized Gains

JPY9,981MM

22

End of December
2020

42

370,031 493,330(0.3%)

4.6%+0.0pt22,566+0.6%

End of June
2020

42

369,708 494,690(4.3%)

4.5%+0.1pt22,422(2.9%)End of December
2019

42

369,708 515,960

–

4.5%

–

23,098–(*1) Stating figures for 42 properties excluding Sotetsu Fresa Inn Shimbashi-Karasumoriguchi.
(*2) Cap rate and variance of cap rate are rounded off.

Ⅴ. Market Environment

1. Market Environment
 The number of inbound visitors in 2020 fell significantly from last year.
Resumption of entry of inbound tourists is awaited The number of total overnight guests decreased by 48.6% YoY andespecially, the number of inbound overnight guests decreased by 84.4%.
Therefore, the situation continues to be severe

Changes in Number of Inbound Visitors

Changes in Number of Overnight Guests in Japan(Ten thousands)

3,500(Guest nights in millions)

Number of Inbound Visitors

600

3,188
3,119

Tourists
3,000

2,403

1,973

2,000

500

2,825
2,776

1,341

2,544

636
475

1,696

300
413

(0.9%)

432+1.6%+2.3% (3.5%)

429

438

423

+3.2%

430

444

306
(40.0%)

200
288
100

411

0

2020

2019

2018

2017

2016

2015

2014

2013

2012

(48.6%)

+4.7%

604

2011

474

510

+8.2% 480

405

2010

2009

2008

2007

436

2006

383

2005

0

2003

305

498

595 604

466

492

2,104

861
835
1,088
834 835
733
678
672
621
613
521
796

2004

500

504

+1.6%

538

400

1,036
1,000

+6.0%

439

(87.1%)
1,500

+5.6%

+6.5% (2.3%) +3.5%

2,869

2,500

+10.8% 596

No. of Japanese Overnight Guests
No. of Inbound Overnight Guests

Source: Number of International Visitors to Japan by Japan National Tourism Organization (JNTO)(*) The numbers for Jan.–Nov. 2020 are provisional numbers, and December 2020 are estimated numbers.

24+46.4%+33.8%+27.3%

26

33

45

2012

2013

2014

+22.7%+18.3%+14.8%
+5.8%

66

69

80

2015

2016

2017

94

116

(84.4%)

18
2018

2019

2020

Source: Statistics of Overnight Travel by Japan Tourism Agency(*) Rounded off to the nearest millions of people.
Numbers for Jan.–Nov. 2020 are second preliminary figures, numbers for Dec. 2020 are firstpreliminary figures. The annual revised report, which reflects newly opened hotels in 2020, etc. isscheduled to be released on June 30, 2021.

1. Market Environment (cont.) Domestic accommodation demand is expected to recover if the number of new cases of COVID-19 is under control andsentiment toward travel improves
Change in Number of Overnight Guests in Japan(Guest nights in millions)No. of Inbound Overnight Guests

310

Declaration of
a State ofEmergency

300
50

Tokyo was included to
Go To Travel Campaign

37.4
32.4
23.9

33.5

9.7

4.9

2020

26.0

25.9

25.8

14.2
22.8

10

26.1
21.6

32.6

20

0

Go To Travel
Campaign

306.2

9.7

7.8

14.1

21.4

9.5

7.7

1.1

0.2

0.1

0.2

0.2

0.2

March

April

May

June

July

August

0.2

32.1

288.1

34.5
29.2

34.1

28.7
18.1

0.3

0.6

To be
announced

2020

February+1.1%(14.0%) (53.2%) (80.9%) (84.9%) (68.9%) (58.3%) (58.6%) (46.6%) (35.2%) (30.5%) (37.9%) (48.6%)

Japanese (0.1%)(4.9%) (45.2%) (75.9%) (81.6%) (61.2%) (47.9%) (51.8%) (36.2%) (19.2%) (16.1%) (24.4%) (40.0%)

Inbound(47.7%) (88.1%) (98.2%) (98.7%) (98.1%) (97.9%) (97.7%) (97.8%) (97.4%) (95.2%) (93.9%) (84.4%)+5.4%

September October

0.4

January＜Year-on-year＞
Total

Declaration of aState of
Emergency

43.2

40
30

No. of Japanese Overnight Guests

November December Full year

2021
January

Source: Statistics of Overnight Travel by Japan Tourism Agency(*) Rounded off to the nearest millions of people. Numbers for Jan.– Nov. 2020 are the second preliminary figures and numbers for December 2020 are the first preliminary figure.
The annual revised report, which reflects newly opened hotels in 2020, etc. is schedule to be released on June 30, 2021.

25

1. Market Environment (cont.) New supply in 2020 decreased by more than 10,000 rooms compared to the forecast of a year ago due to COVID-19
Supply of Rooms in Hotels/Ryokans in Japan
As of the end of January 2021
＜Japan＞(No. of rooms)

80,00060,00040,00020,00016,51732,988Actual54,051 59,052 49,016

42,54921,7092017(No. of rooms)

2019

2020

2021

6,107

5,866

0

Ratio of New Supply +4.1%(%: change from theprevious year)(%: change from the 2016previous year)

2017

2018

2020

2021

12,0008,329(%: change from the 2016previous year)

2023~

5,014

3,401

2017

2018

2019

6,107

0

Ratio of New Supply +4.1%(%: change from the 2016previous year)

2020

2021

2022

6,000
3,000

2023~

2020

2021

2022

2023~

1,348

2,267

6,273

5,866

+3.8% +7.4% +6.5% +9.5% +3.1% +0.7% +1.1%
2017

2018

2019

2020

2021

8,082
4,257

1,402

0

(%: change from the 2016previous year)2023~

11,003

5,018

Ratio of New Supply +1.8%

2022＜Osaka＞
8,329

9,000

4,775

+6.3% +9.9% +11.6% +6.0% +4.6% +3.0% +4.0%

201911,833 11,095

12,000

6,205

2018

＜Tokyo＞ 17,344(No. of rooms)

1,402

0

2017

5,000

10,721

5,018

Ratio of New Supply +1.8%

2022

10,0002,412＜Osaka＞(No. of rooms)

9,000

2019

2016

15,000+3.8% +7.4% +6.4% +7.0% +5.0% +2.4% +1.1%

10,21927,937+2.1% +3.4% +3.6% +3.7% +1.5% +0.6% +1.5%
Excl. Tokyo, Osaka +0.7% +1.7% +2.5% +2.7% +2.7% +1.2% +0.4% +1.5%

9,686
5,009

27,4080

20,000

5,000

3,000

2023~

Supply Forecast

63,49832,988(No. of rooms)

11,833 11,062 12,748

15,000

6,000

2022

16,517

ActualRatio of New Supply +1.1%＜Tokyo＞

20,00010,0002018

40,00020,000+2.1% +3.4% +3.6% +2.9% +2.4% +1.2% +1.6%
Excl. Tokyo, Osaka +0.7% +1.7% +2.5% +2.7% +2.1% +1.9% +0.9% +1.4%

53,812 59,572

60,00028,53402016＜Japan＞(No. of rooms)

80,000

Ratio of New Supply +1.1%(%: change from theprevious year)

Reference: as of the end of January 2020(*2)

Supply Forecast

2,347

3,419

+6.3% +9.9% +11.9% +7.8% +3.8% +2.0% +2.9%
2017

2018

2019

2020

2021

2022

2023~

Source: Estimated by the Asset Management Company using data from "Public Health Administration Report" by Ministry of Health, Labour and Welfare (MHLW), a weekly hotel & restaurant magazine (HOTERES), and Nikkei Telecom.
(*1) Ratio of new supply is the ratio of new rooms to be supplied in a year to the stock of rooms at the beginning of the year. With regard to the above data, please note that in case the number of rooms are stated as "to be
determined" by hotels, the asset management company has used 180, the average number of new supply of hotel rooms, for calculation.
(*2) The figures were announced in the Financial Results Briefing for the fiscal year ended December 2019.

26

Ⅵ. Takeaways

1. Takeaways
Pre
COVID-19
2019

With
COVID-19

2020● Development and distribution ofeffective vaccine and medicine

2021

2022

Post
COVID-192023

ChangeSense ofSocial &values/economic

Lifestyleactivity

Leisuredemand(quantity andquality)

FinancialmarketSociety

Guests'Investment

needs

opportunity

Hotel market

Respond flexibly to change
Aim to become a front-runneradopting to
the "post COVID-19" period

Survivethe "with COVID-19" period
28

Memo

29

Appendix 1
JHR's Characteristics and Strategy

1. JHR's Investment Targets
Strong ability in acquiring properties

Aim to increase dividend
for mid to long term Highly recognized as Japan's largest J-REIT specializing
in hotels
 High presence and credibility in the property market bycontinuously acquiring properties Capability to propose various acquisition schemes and to
execute acquisitions

High capability in achieving internal growthHighcapability inachievinginternal
growthStrongability inacquiringproperties

 Management approach through active asset management
strategies that achieves a good balance between stability
and upside potential
 Increase in hotel revenue through collaboration with highquality operators
 Attract inbound demand through enhanced international
brand portfolio
 Strengthen and maintain competitiveness by investing inappropriate capital expenditures

Stablefinancingcapability

Stable financing capability
 Secure sound and stable finance Diversify financing methods31

2. Simultaneous Pursuit of Stability and Upside Potential
 JHR pursues both stability and upside potential by steadily implementing growth strategies

Ensure Stable Revenue

Pursue UpsideManagement
contract structure

Fixed rent structure

Variable rent
structure

Revenue sharing
structure

Active Asset Management Strategies

 Appropriate monitoring of hotel operation
 Capital expenditures to maintain competitiveness and asset value

 Change in rent structures and rebranding Strategic capital expenditures, etc.

Maintain and improve rent-paying capacity of tenants, etc.

Increase in rental income, etc. throughimprovement in hotels' performance

Proportion of Rental Income

Proportion of Rent Structures

2019 Results(annualized)(as of February 25, 2021)

2021 Forecast

Fixed rent only

11 properties

Variable rent, etc.(＊)

38.4%

Fixed rent, etc.

Fixed rent, etc. Variable rent, etc.(＊)

52.2%

47.8%

Variable rent, etc.(＊)

31 properties

61.6%
(*)

Variable rent, Rent from revenue sharing andIncome from management contracts

(*)

32

Fixed rent + variable rent structure
Fixed rent + revenue sharing structure
Variable rent structure and management contract structure

3. External Growth Strategy
Recognition of External
Environment
Trend of the Hotel
Investment Market
 Due to the impact of COVID-19, selfrestraint of economic activity andeconomic downturn has been
continuing and hotel revenues havebeen severely hit. Such situation has
been causing events such as a request
by tenant to reduce rent or cancel thecontracts and credit uncertainty of
hotel operators. The hotel market has
been continuing to face challenging
management environment.
 In the short term, both sellers andbuyers are quiet due to the uncertainty
about the market conditions, and hoteltransactions are stagnant.
 For medium to long term, demand fordomestic and overseas
accommodations is expected torecover as a result of the development
and commercialization of vaccines andtreatments for COVID-19. As themarket recovers, the hotel investment
may be revitalized again. However, thecompetitiveness of hotels is becoming
more evident in accordance with the
hotel specifications, locations, and theabilities of hotel operators, and it isimportant to differentiate each hotel.

Basic Policies
 Acquire highly competitive hotel real estate, etc. in areas that have potential to attract "demand by both
domestic and inbound leisure customers" in the medium to long-term
 Improve profitability, stability, and quality of the overall portfolio

Key Measures
 Emphasize the superiority of buildings and facilities (infrastructure), operations (services), and locations ofhotel real estate, etc.
• The prime investment targets are "full-service hotels" and "resort hotels" that have high barriers to entry
due to operation and management know-how, capital outlay and locations• In the case of "limited-service hotels," the creditworthiness of the hotel lessee, the age of the building,location, guest room composition and profitability are important• For limited-service hotels specialized in selling single rooms, consider acquisition individually, taking into
account the hotel specifications and the possibility of achieving the upside• Especially, proactively review the purchase of hotels that have potential for internal growth byimplementing active asset management or the possibility of synergy effect with the existing properties Strategic investment areas• Hokkaido area, Tokyo and bay area, Osaka/Kyoto area, Fukuoka area, and Okinawa area
 Investigation and planning of the internal growth strategy upon property acquisition• Investigate the appropriate rent level and rent structure upon renewal, etc., cost reduction possibilities,
and possibilities to improve buildings and facilities• Particularly, if the hotel pays variable rent, etc., promote internal growth through collaboration withlessees and/or operators
 Use HMJ's efficient hotel operation platform, etc. to respond to new investment opportunities (such as salesof hotels without operators, etc.) caused by the impact of COVID-19

33

4. Internal Growth Strategy
Recognition of External
Environment
Hotel Market Environment Due to the spread of COVID-19, both
inbound and domestic demand havebeen declined significantly, and theJapanese tourism and hotel industries
are expected to remain stagnant for
the time being. On the other hand,
inbound and domestic demand arealso expected to gradually recover due
to the development and distribution of
vaccines and measures by the national
and local governments to stimulate
demand.
 Although there are supply-demand
imbalances depending on the market
due to the continued supply of newhotels against the backdrop of robust
hotel demand in recent years, there
are no changes to the medium to longterm trend of expansion in the tourism
market accompanying economic
growth in the Asia region.
 As hotel operators are temporarily
exposed to significant deterioration in
the market environment, they must
adopt a defensive strategy to maintainsound management and respondflexibly to changes.

Basic Policies
 Pursue both stability and upside potential by steadily implementing active asset management strategies

Key Measures Planning and execution of the active asset management in order to realize pursuit in upside revenue• Make strategic CAPEX which will improve profitability and strengthen competitiveness mainly at hotels
with high growth potential• Raise rent and change to rent structures that can achieve upside revenue• Reduction of management contract fee of properties under management contract• Increase hotel revenue through collaboration with high-quality operators• Attract inbound demand through rebranding to international brands• Make proactive proposals to build effective hotel operating structures which aim to maximize GOP, fromthe perspective of both hotel sales and expenses• Stimulate and capture domestic demand by creating products utilizing the characteristics of each hotel inline with the current market environment Planning and execution of strategic CAPEX which secure steady revenue, and monitoring of lessees• Analyze the creditworthiness of hotel lessees, understand hotel income and expenditures, closely observeand improve rent-paying capacity• Maintain and improve rent-paying capacity of tenants, etc. through capital expenditures, which lead tomaintain and improve competitiveness and asset value

34

5. Financial Strategy
Recognition of External
Environment
Trend of Financing Environment
and Interest Rates
 Although the number of public offeringof J-REITs in 2020 fell from theprevious year's level, the amount offunds procured by J-REITs increased
due to a series of large-scale offerings.
The TSE REIT Index fell sharply in the
middle of March 2020 and
subsequently recovered, but
underperformed in comparison with
TOPIX for the full year.
 Although there has been no change insupportive attitude by financial
institutions. However, some sectors,
such as hotels, have seen a cautious
stance toward long-term loan andupward pressure on interest rates dueto the spread of infection by COVID-19.
 Both short-term and long-term interest
rates remain at low levels due to themonetary easing policy.

Basic Policies
 Ensure healthy and stable finance Strengthen lender formation and relationships with financial institutions
 Diversify financing methods

Key Measures Secure the internal reserve and further strengthen the financial base by controlling capital expenditures,etc.
 Maintain LTV level at a maximum of 50% (total asset base) for the time being
 Diversify financing methods such as public offerings and issuance of investment corporation bonds
 Improve financial stability by diversifying repayment periods and fixing interest rates, etc. as necessary Optimize borrowing costs As for investment corporation bonds,
the amount of issuance of investment
corporation bonds increased from theprevious year. The Green, Social andSustainability Bonds accounted formore than 60% of the amount issued.

35

6. Change in Asset Size
 Improvement of the quality of JHR's portfolio and successive external growth through strategic asset replacement
Growth in Asset Size(*1), etc. (JPY MM)+21.1%+27.1%+11.4%(1.2%)(3.2%)+30.2%

122,285

130,883+9.1%

158,902173,429

225,723

286,801

319,474309,370

374,508

370,031

April 2012 FY12/2012 FY12/2013 FY12/2014 FY12/2015 FY12/2016 FY12/2017 FY12/2018 FY12/2019 FY12/2020(merger)(13th Period) (14th Period) (15th Period) (16th Period) (17th Period) (18th Period) (19th Period) (20th Period) (21st Period)

NOI Yield(*2)

–

6.2%

6.2%

6.3%

6.6%

6.6%

6.7%

7.1%

6.4%

1.8%

NOI Yield after
Depreciation(*2)

–

4.5%

4.8%

5.0%

5.3%

5.4%

5.5%

5.8%

5.1%

0.5%

NAV per Unit

– JPY32,321 JPY36,074 JPY46,272 JPY63,385 JPY75,209 JPY77,129 JPY79,407 JPY83,286

JPY77,525

No. of Properties
No. of Acquisition
Acquisition Price
No. of Dispositions
Sale Price

28

28

28

30

36

41

44

41

43

2

2

3

9

5

3

2

JPY10.8Bn JPY32.6Bn JPY15.7Bn JPY57.0Bn JPY61.0Bn JPY32.6Bn

JPY65.1Bn

42

2

2

1

3

3

1

JPY0.8Bn

JPY2.6Bn

JPY0.7Bn

JPY4.8Bn

JPY12.1Bn

JPY8.0Bn(*1) Asset size is based on the aggregate acquisition price of the properties at the end of each fiscal period. The same shall apply hereinafter.
(*2) NOI yield for FY12/2012 is hypothetically annualized based on actual NOI after merger.

36

Aim for Successive Growth+7.0%+21.4%

7. Benefits Program for Unitholders
JHR implemented benefits program for unitholders to obtain a better understanding, improve theirsatisfaction and expand the investor baseEligible recipients of complimentary couponsComplimentary coupons will be sent to those who hold ten or more JHR units
at the end of June every year (end of the midterm settlement)<FY2020>
Eligible unitholders: 16,369
Valid period: One year between October 1, 2020 to September 30, 2021

Details of the benefits program
Five complimentary coupons for accommodations and fivecomplimentary coupons for restaurants(*)
10% discount from the best rate for accommodation by each
hotel and 10% discount for restaurants(*) Complimentary coupons for restaurants are only available at selected hotels.

Hotels that offer the Benefits Program
The HMJ Group Hotels

Kobe Meriken Park
Oriental Hotel

Oriental Hoteltokyo bay

ACTIVE-INTER CITY
Oriental Hotel Fukuoka
HIROSHIMA (Sheraton
Hakata Station
Grand Hiroshima Hotel)

Hotel Nikko Nara

Namba
Oriental Hotel

Oriental Hotel
Hiroshima

Holiday Inn
Osaka Namba

Hilton Tokyo Odaiba

The Accor Group Hotels

Hotel Nikko Alivila

Hilton Tokyo
Narita Airport

Okinawa Marriott
Resort & Spa

International Garden Hotel Narita

Hotel Oriental Express Osaka Shinsaibashi

37

ibis Tokyo Shinjuku

ibis Styles Kyoto Station

Mercure Sapporo

ibis Styles Sapporo

Mercure Okinawa Naha

Mercure Yokosuka

Appendix 2
Information on Properties

1. Portfolio Portfolio consisting of competitive hotels in areas with strong leisure lodging demand Selectively invest in locations with high growth potential of leisure demand such as Strategic Investment Areas
Portfolio Summary

Total Assets

Strategic Investment Areas and Locations of Properties
Existing properties
Strategic Investment Areas

JPY370.0Bn
Hokkaido Area

No. of Hotels

Okinawa Area

42 Hotels(33 in Strategic Investment Areas)

No. of Guest Rooms

11,485 Rooms

Tokyo & the Bay Area(*1)

Fukuoka
Area

Osaka/Kyoto Area(*2)
Tokyo 23 wards(*1) Bay Area includes the coastal area of Tokyo Bay in Kanagawa and Chiba prefectures.
(*2) Osaka/Kyoto Area refers to Osaka and Kyoto prefectures.

39

2. Portfolio Diversification
 Widely diversified and high-quality portfolio Appeal to inbound visitors by international brands
By Area and Rent(*1)
(F)
(V)

(F)

(V)

(V)

By Hotel Brand(*2)

8.5%

3.1%

Dormy Inn, etc.

(Kyoritsu Maintenance)
(V)

3.5%

5.0%

Tokyo

Kyushu(F)(excluding Okinawa)

7.1%

Kanto

9.9%

14.3%

Kansai

18.8%

Tokyo)

Osaka

26.8%

7.5%

5.6%

10.7%

(V)

(F)
3.7%

(V)
4.2%

(F)

1.4% 4.2%

Fixed Rent, etc. (F)

52.2%

(V)

16%
Hotel Nikko

3%

8%
Holiday Inn

(F)

(IHG)
7%
Sheraton
Hilton32%

By Grade(*2)(excluding Osaka)(V)

Oriental Hotel(Ishin Hotels Group)

International
Brand:
56%(F)(excluding

Okinawa

4%

3%

8%

8.5%

2.8%

12%

ibis/Mercure (Accor)

17.2%

Chugoku

(V)

the b

8.7%

Hokkaido
Chubu
4.5%
5.6%

(F)

Of "Others," two hotels are planned to be
Others(*3) rebranded to "Oriental Hotel" brand

(F)

3.3%
2.5% 1.3%

Of "Economy," 1.4% isplanned to be changed
to "Mid-price" due torebranding of HOTELASCENT FUKUOKA

Mariott

5%

4%

By Hotel Type(*2)

Economy8.0%

5%
LuxuryResort21%

21%

Mid-price

3.3%

41%

Variable Rent (V)47.8%

Limitedservice
32%

Uppermiddle

Full-service

33%

47%

(*1) Based on the rent in revenue forecast of FY12/2021.
(*2) Based on the acquisition price.
(*3) Of "Others," HOTEL ASCENT FUKUOKA and Hotel Keihan Universal City are planned to be rebranded to "Oriental Hotel" brand in June 2021 and July 2021, respectively.

40

3. Rent Structures
Stability

Upside(FY12/2021 forecast)Rent Structure(*1)

Fixed rent

Fixed rent +Revenue sharing

Fixed rent + Variable rent

Variable rentManagement contract

Type of Contract

Lease contract

Lease contract

Lease contract

Lease contract

Management contract

Fixed

○

○

○

–

–

–

Variable–

A certain percentage of sales
exceeding the threshold

A certain percentage of
hotel GOP

A certain percentage of hotelrevenue or hotel GOP

Hotel GOP–

JPY2,344MM(16.9%)

JPY2,384MM(17.2%)

JPY7,142MM(51.4%)

JPY972MM(7.0%)

JPY1,047MM(7.5%)

JPY13,890MM(100.0%)

Fixed Rent,
etc.(*3) (%)

JPY2,344MM(16.9%)

JPY2,384MM(17.2%)

JPY1,705MM(12.3%)JPY463MM(3.3%)JPY350MM(2.5%)

JPY7,247MM(52.2%)

Variable Rent
(%)

–

0
(0%)

JPY5,437MM(39.1%)

JPY509MM(3.7%)JPY696MM(5.0%)

JPY6,642MM(47.8%)

Low

Low

High

High

High

–

CAPEX Paid by JHR

1) Renewal of building
and facilities

1) Renewal of building
and facilities<3) Strategic investment>

1) Renewal of building andfacilities
2) Fixtures and equipment
3) Strategic investment

1) Renewal of building andfacilities
2) Fixtures and equipment
3) Strategic investment

1) Renewal of building andfacilities
2) Fixtures and equipment
3) Strategic investment–

No. of Properties

10

3

20

4

5

42

Acquisition Price(%)

JPY32,375MM(8.7%)

JPY31,904MM(8.6%)

JPY256,876MM(69.4%)

JPY19,235MM(5.2%)

JPY29,640MM(8.0%)JPY370,031MM(100.0%)

The Beach Tower
Okinawa

Hilton Tokyo Bay

The HMJ Group Hotels(*4)

Hilton Nagoya

ibis Tokyo Shinjuku

Hotel Francs

Smile Hotel
Nihombashi Mitsukoshimae

The Ishin Group Hotels

Mercure Yokosuka

ibis Styles Kyoto Station

CANDEO HOTELS
UENO-KOEN

Comfort Hotel Tokyo
Higashi Nihombashi

Hotel Keihan Universal City

Chisun Hotel Kamata

ibis Styles Sapporo

HOTEL ASCENT FUKUOKA

Chisun Inn Kamata

Mercure Sapporo

Type of
Rent

Real Estate Operating
Revenue(*2)(%)(breakdown)(forecast for FY12/2021)

Involvement inHotel Operation

Hotels

Mercure Okinawa Nahaand other hotels(*1) Rent structure is categorized according to the rent contract for hotels of each asset owned by JHR.
(*2) Revenue from trademark rights is excluded from the real estate operating revenue in the table above.
(*3) Fixed rent includes fixed rent and utility income based on rent contract of non-hotel portion (offices, signage, car parks, retail shops, etc.) of asset owned by JHR.
(*4) The rent structure for The HMJ Group Hotels is only variable rent in 2021.

41

Total

–

4. Property List (1/2)(as of the end of December 2020)
Appraisal ValueNo.

Property Name

Hotel Type
(*1)

Grade
(*2)

No. of
Guest
Rooms

LocationAge(*3)

Acquisition
Price(JPY MM)(*4)

Book Value(JPY MM)(*5)

21st Period(as of June 30, 2020)
Appraisal
Value(JPY MM)CAP Rate

21st Period(as of December 31, 2020) Investment
Ratio
Appraisal
(*6)
Value
CAP Rate(JPY MM)

Revenue from
Real Estate
NOI
Operation(JPY1,000)(JPY1,000)
(*7)
(*7)

P/L from
Real Estate
Operation(JPY1,000)(*7)

NOI Yield(actual)(*8)

1

Kobe Meriken Park Oriental Hotel

Full-service

Upper-middle

323

Hyogo

25.5

10,9009,654

14,6004.8%

13,9004.8%

2.9%

176,149(75,480)(372,925)(0.7%)

2

Oriental Hotel tokyo bay

Full-service

Mid-price

511

Chiba

25.7

19,90017,367

32,100

4.4%

32,1004.4%

5.4%(134,058)(253,226)(621,781)(1.3%)

3

Namba Oriental Hotel

Limited-service

Mid-price

258

Osaka

24.8

15,00014,51331,4004.1%

31,4004.1%

4.1%

415,818

310,818

147,170

2.1%

4Oriental Hotel Hiroshima

Full-service

Upper-middle

227

Hiroshima

27.3

4,100

4,112

4,370

4.9%

4,130

4.9%

1.1%

(96,585)(141,251)(230,949)(3.4%)

5

Hotel Nikko Alivila

ResortLuxury397

Okinawa

26.8

18,90018,01928,9004.8%

28,800

4.8%

5.1%

263,662

114,808(182,738)

0.6%

6

The Beach Tower Okinawa

ResortMid-price

280

Okinawa

16.8

7,610

6,495

10,100

4.4%

10,0004.4%

2.1%

511,008

467,758

333,365

6.1%

7

Hakone Setsugetsuka

ResortMid-price

158

Kanagawa 14.3

4,070

3,622

5,310

4.9%

5,300

4.9%

1.1%

294,940

270,927

176,232

6.7%

8

Dormy Inn Kumamoto

Limited-service

Mid-price

291

Kumamoto 12.9

2,334

2,170

2,990

5.7%

3,030

5.6%

0.6%

194,460

171,991

126,234

7.4%

9

the b suidobashi

Limited-service

Mid-price

99

Tokyo

34.4

1,120

1,186

2,420

4.1%

2,280

4.1%

0.3%

21,24910,443(17,711)0.9%

10dormy inn・global cabin Asakusa

Limited-service

Economy

75

Tokyo

23.8

999

934

1,280

4.0%

1,280

4.0%

0.3%

63,99555,08741,283

5.5%

11

Hakata Nakasu Washington Hotel Plaza

Limited-service

Mid-price

247

Fukuoka

25.8

2,130

2,038

4,510

4.4%

4,510

4.4%

0.6%

240,000

224,000

199,000

10.5%

12Nara Washington Hotel Plaza

Limited-service

Mid-price

204

Nara

20.8

2,050

1,765

2,430

5.0%

2,430

5.0%

0.6%

150,000

134,000

98,000

6.5%

13

R&B Hotel Ueno-hirokoji

Limited-service

Economy

187

Tokyo

18.7

1,720

1,806

1,910

4.0%

1,910

4.0%

0.5%

97,30082,881

66,292

4.8%

14

Comfort Hotel Tokyo Higashi Nihombashi

Limited-service

Economy

259

Tokyo

12.9

3,746

3,491

5,390

4.4%

5,390

4.4%

1.0%

272,674

242,314205,537

6.5%

15

Smile Hotel Nihombashi Mitsukoshimae

Limited-service

Economy

164

Tokyo

23.8

2,108

2,042

2,930

4.1%

2,930

4.1%

0.6%

147,047

130,833

109,802

6.2%

16

Toyoko Inn Hakata-guchi Ekimae

Limited-service

Economy257

Fukuoka

19.3

1,652

1,401

2,750

4.5%

2,750

4.5%

0.4%

141,039

126,347

108,128

7.6%

17

Hotel Keihan Universal City

ResortMid-price

330

Osaka

19.5

6,000

5,833

13,4004.9%

15,4005.0%

1.6%

558,039

481,584

392,871

8.0%

18

Chisun Inn Kamata

Limited-service

Economy

70

Tokyo

17.7

823

771

1,370

4.6%

1,370

4.6%

0.2%

22,167

15,131

5,399

1.8%

19

Chisun Hotel Kamata (*9)

Limited-service

Economy

105

Tokyo

28.9

1,512

1,458

1,930

4.6%

2,010

4.8%

0.4%

97,50182,54456,407

5.5%

20

Hilton Tokyo Bay

ResortLuxury

828

Chiba

32.5

26,05026,30140,000

4.3%

39,9004.3%

7.0%

1,978,209

1,694,658

1,509,889

6.5%

21

ibis Tokyo Shinjuku

Limited-service

Mid-price

206

Tokyo

40.3

7,243

7,903

9,900

4.1%

9,900

4.1%

2.0%

141,133

11,211(102,802)

0.2%

22

ibis Styles Kyoto Station

Limited-service

Mid-price

215

Kyoto

11.8

6,600

6,641

10,200

4.3%

10,2004.3%

1.8%

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

0.0%

23

ibis Styles Sapporo

Limited-service

Mid-price278

Hokkaido

10.4

6,797

6,522

11,100

4.7%

11,1004.7%

1.8%

92,94014,694(68,172)

0.2%

42

4. Property List (2/2)(as of the end of December 2020)
Appraisal ValueNo.

Property Name

Hotel Type
(*1)

Grade
(*2)

No. of
Guest
Rooms

LocationAge(*3)

Acquisition
Price(JPY MM)(*4)

Book Value(JPY MM)(*5)

21st Period(as of June 30, 2020)
Appraisal
Value(JPY MM)CAP Rate

21st Period(as of December 31, 2020) Investment
Ratio
Appraisal
(*6)
Value
CAP Rate(JPY MM)

Revenue from
Real Estate
NOI
Operation(JPY1,000)(JPY1,000)
(*7)
(*7)

P/L from
Real Estate
Operation(JPY1,000)(*7)

NOI Yield(actual)(*8)

24

Mercure Sapporo

Limited-service

Mid-price285

Hokkaido

11.7

6,000

5,789

10,6004.7%

10,5004.7%

1.6%

154,080

14,691(80,122)0.2%

25Mercure Okinawa Naha

Limited-service

Mid-price

260

Okinawa

11.4

3,000

2,841

6,950

4.7%

6,940

4.7%

0.8%

0

(47,747)(113,015)(1.6%)

26

the b ikebukuro

Limited-service

Mid-price

175

Tokyo

38.5

6,520

6,593

7,280

4.2%

6,980

4.2%

1.8%

187,555

159,712

127,477

2.4%

27

the b hachioji

Limited-service

Mid-price

196

Tokyo

34.4

2,610

2,681

2,770

5.1%

2,560

5.1%

0.7%

204,505

175,614142,101

6.7%

28

the b hakata

Limited-service

Mid-price

175

Fukuoka

23.3

2,300

2,347

4,550

4.3%

4,330

4.3%

0.6%

33,07919,660(2,580)0.9%29Hotel Francs

Full-service

Mid-price

222

Chiba

29.4

3,105

3,145

4,120

4.6%

4,080

4.6%

0.8%

300,000

237,804

192,6197.7%

30

Mercure Yokosuka

Full-service

Mid-price

160

Kanagawa 27.2

1,650

1,634

3,450

4.6%

3,310

4.6%

0.4%

112,624

10,456(24,779)

0.6%

ResortUpper-middle

361

Okinawa

15.9

14,95014,87817,5004.9%

17,2004.9%

4.0%45,833(38,612)(329,030)(0.3%)

Full-service

Luxury238

Hiroshima

10.3

17,32017,294

21,200

4.6%

21,0004.6%

4.7%

895,756

511,061

290,487

3.0%

Limited-service

Mid-price

268

Tokyo

11.0

6,705

6,613

7,610

4.0%

7,430

4.0%

1.8%

349,971

323,336

283,025

4.8%

Full-service

Upper-middle

221

Fukuoka

35.5

7,197

9,473

15,200

4.6%

15,2004.6%

1.9%

373,331

124,751(284,573)

1.7%

31

Okinawa Marriott Resort & Spa

32

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

33

CANDEO HOTELS UENO-KOEN

34

Oriental Hotel Fukuoka Hakata Station

35

Holiday Inn Osaka Namba

Limited-service

Mid-price

314

Osaka

12.4

27,00026,941

26,5004.3%

26,500

4.3%

7.3%

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

0.0%

36

HOTEL ASCENT FUKUOKA (*10)

Limited-service

Economy263

Fukuoka

21.7

5,248

5,451

6,530

4.8%

6,650

4.8%

1.4%

468,119

351,497

315,876

6.7%

37

Hilton Nagoya

Full-service

Luxury

460

Aichi

31.9

15,25015,69615,0004.2%

15,000

4.2%

4.1%

816,688

201,653

33,6091.3%

38

Hilton Tokyo Narita Airport

Full-service

Upper-middle

548

Chiba

27.4

13,175

13,343

13,500

4.6%

13,400

4.6%

3.6%

123,748

35,932(185,608)

0.3%

39

International Garden Hotel Narita

Full-service

Mid-price

463

Chiba

24.6

9,125

9,196

9,500

4.8%

9,500

4.8%

2.5%

136,052

91,442(56,863)1.0%

40Hotel Nikko Nara

Full-service

Upper-middle

330

Nara

22.8

10,373

10,357

9,840

4.8%

9,790

4.8%

2.8%

35,000(13,029)(159,944)(0.1%)

41

Hotel Oriental Express Osaka
Shinsaibashi

Limited-service

Mid-price

124

Osaka

2.9

2,738

2,816

2,900

4.6%

2,840

4.7%

0.7%

9,200

(2,050)(14,942)(0.1%)

42

Hilton Tokyo Odaiba

Full-service

Upper-middle

453

Tokyo

25.0

62,40063,607

68,4003.7%

68,100

3.7%

16.9%

258,300

6,320(267,118)

0.0%

–

–

11,485–22.9

370,031366,760

494,690

4.5%

493,330

4.6%

100.0%

10,247,822 6,332,403 1,613,071

1.8%

Total or Average (42 properties)
(*1)
(*2)
(*3)
(*4)
(*5)
(*6)
(*7)
(*8)
(*9)
(*10)
(*11)

Under the category of Hotel Type, "Full-service" is full-service hotel, "Resort" is resort hotel, and "Limited-service" is limited-service hotel.
Mainly based on ADR, etc., JHR has classified the hotels into four categories as "luxury," "upper-middle," "mid-price," and "economy."
Average age: Weighted average calculated as follows. The sum of (acquisition price of each property x property age)/total acquisition price.
The acquisition price in the Purchase & Sale Agreement for the Beneficial Interest in Trust, etc. is indicated. (Consumption tax, amount equivalent to consumption tax, brokerage fee, and other purchase-related costs are excluded.)Book value as of the end of December 2020.
Investment ratio indicate percentage of the acquisition price of each asset to the total acquisition price. Numbers beyond one decimal place is rounded off.
Actual for one year from January to December 2020. Since the lessees did not agree to disclose numbers in units of JPY1,000 for No. 11 and 12, amounts are rounded down to the nearest JPY million.
NOI yield for the portfolio is calculated as follows: Total NOI for FY12/2020 (actual) (6,547,992 thousand yen)/total acquisition price of properties held as of the end of FY12/2020.
The name has changed from Hotel Vista Kamata Tokyo on January 1, 2021.
The acquisition price of HOTEL ASCENT FUKUOKA was changed due to the exchange transaction of part of site on October 29, 2020.
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi was sold on July 1, 2020.

43

5. Summary of Lease Contracts (1/3)(as of the end of December 2020)
No.

1

2

Property Name

Lease
Type

Rent
Structure(*1)

LesseeHotel Operator/
Lease/ Expiration
Date of
Hotel Consulting andMCManagement Company Term Contract

Contractual Rent(*2)

Kobe Meriken Park Oriental Hotel【2021】 Hotel AGOP x 86%(If the amount is below JPY0, it will be JPY0)【2022】 The Five HMJ Hotels amount(JPY3,221MM/year) + when Hotel AGOP
exceeds JPY4,120MM, the excess x 85% is paid

Oriental Hotel tokyo bay【2021】 Hotel AGOP x 79%(If the amount is below JPY0, it will be JPY0)【2022】 The Five HMJ Hotels amount(JPY3,221MM/year) + when Hotel AGOP
exceeds JPY4,120MM, the excess x 85% is paid

Hotel Management Japan Co., Ltd.
Fixedlease

Fixed +
Variable

Rent Modification Summary

Rent Modification Summary(After acquisition)
TimingCondition

Modified Structure【2021】Hotel AGOP x 91%(variable rent only from
(If the amount is below JPY0, it will be JPY0)
In principle, the same rent will
February 2020 toDec. 2034 【2022】 The Five HMJ Hotels amountbe applied until expiration of the Aug. 2020
December 2021)(JPY3,221MM/year) + when Hotel AGOP
contract.
(variable rent ratio will be
exceeds JPY4,120MM, the excess x 85% is paidchanged in 2022 onwards)

Rent Modification Schedule(2021 to 2022)
2021

2022

–

–

3

Namba Oriental Hotel

4

Oriental Hotel Hiroshima

5

Hotel Nikko Alivila

6

The Beach Tower Okinawa

Fixedlease

Fixed

20

Jun. 2026 JPY42MM/month

The same rent will be applied
until expiration of the contract.

–

–

–

–

7

Hakone Setsugetsuka

Fixedlease

Fixed

20

Oct. 2026 JPY24MM/month

The same rent will be applied
until expiration of the contract.

–

–

–

–

Apr. 2020

Same

–

–

Apr. 2020

Same

–

–

15

【2021】 Hotel AGOP x 89%(If the amount is below JPY0, it will be JPY0)【2022】 The Five HMJ Hotels amount(JPY3,221MM/year) + when Hotel AGOP
exceeds JPY4,120MM, the excess x 85% is paid
【2021】 Hotel AGOP x 74%(If the amount is below JPY0, it will be JPY0)【2022】 The Five HMJ Hotels amount(JPY3,221MM/year) + when Hotel AGOP
exceeds JPY4,120MM, the excess x 85% is paid

Okura Nikko HotelManagement Co., Ltd.

Kyoritsu Maintenance Co., Ltd.

Rent can be modified throughmutual agreement every three
years.
Rent can be modified throughmutual agreement every three
years.

8

Dormy Inn Kumamoto

Fixedlease

Fixed

12

Mar. 2023 JPY16MM/month9

dormy inn・global cabin Asakusa

Lease

Fixed

3

Mar. 2023 JPY5MM/month10

Hakata Nakasu Washington Hotel
Plaza

Lease

Fixed

3

Mar. 2021 JPY20MM/month

Rent can be modified throughmutual agreement.

Apr. 2018

Same

To be expired(Mar.)–

11

Nara Washington Hotel Plaza

Lease

Fixed

3

Mar. 2023 JPY11MM/month

Rent can be modified throughmutual agreement.

Mar. 2020

Same

–

–

12

R&B Hotel Ueno-hirokoji

Lease

Fixed

20

Apr. 2022 JPY8MM/month

Rent can be modified throughmutual agreement.

Apr. 2011

Increased(+3.0%)–To be expired(Apr.)

13

Comfort Hotel Tokyo Higashi
Nihombashi

Fixedlease

Greens Co., Ltd.

20

Jan. 2028 JPY21MM/month + Revenue sharing

Rent can be modified throughmutual agreement every five
years.

Apr. 2018

Same(Introduced
revenue sharing)

–

–

14

Smile Hotel Nihombashi
Mitsukoshimae

Lease

THE KAMOGAWA GRAND HOTEL, LTD.

3

Mar. 2023 JPY11MM/month + Revenue sharing

Rent can be modified throughmutual agreement.

Mar. 2020

Same

–

–

15

Toyoko Inn Hakata-guchi Ekimae

Lease

Toyoko Inn Co., Ltd.

30

Sep. 2031 JPY11MM/month

No rule has been stipulated.

Oct. 2007

Increased(+9.4%)––

Fixed +
Revenuesharing
Fixed +
Revenuesharing
Fixed

Washington Hotel K.K.

44

5. Summary of Lease Contracts (2/3)(as of the end of December 2020)
No.

Property Name

Lease
Type

Rent
Structure(*1)

16

Hotel Keihan Universal City

Lease

Fixed +
Revenuesharing

17

Chisun Inn Kamata

Fixedlease

Variable

18

Chisun Hotel Kamata (*4)

Fixedlease

Variable

19

Hilton Tokyo Bay

Fixedlease

Fixed +
Revenuesharing

20

ibis Tokyo Shinjuku–

21

ibis Styles Kyoto Station

22

LesseeHotel Operator/
Lease/ Expiration
Date of
Hotel Consulting andMCManagement Company Term Contract

K.K. Hotel Keihan

Solare Hotels &Resorts Co., Ltd.

SHR Hotels, Co., Ltd.

THE DAI-ICHI
BUILDING CO., LTD.

Hilton International
Company

Contractual Rent
(*2)

20

Jun. 2021 Nondisclosure(*3)

7Dec. 2026

Hotel GOP x 86%(If the amount is below JPY0, it will be JPY0)
Hotel GOP x 86%(If the amount is below JPY0, it will be JPY0)

Rent Modification Summary

Rent Modification Summary(After acquisition)
TimingCondition

Nondisclosure(*3)

Jul. 2014

Modified Structure–Jan. 2020

Rent Modification Schedule(2021 to 2022)
2021
Lesseechanged andModified
Structure(from Jul.)

2022

Same

–

–

Jul. 2015

Modified Structure

Lesseechanged andModified
Structure(from Jan.)–

Jan. 2019

Renewed(Increased)–

To be expired(Dec.)–

5

Dec. 2025

4

Dec. 2022 JPY163MM/month + Revenue sharing

Management
contract

12Jun. 2024 Amount equivalent to hotel GOP–

Jul. 2012

Modified Structure

–

–

–

Management
contract

5Dec. 2024 Amount equivalent to hotel GOP

–

–

–

–

–

ibis Styles Sapporo–

Management
contract

5Dec. 2024 Amount equivalent to hotel GOP

–

–

–

–

–

23

Mercure Sapporo–

Management
contract

15

Sep. 2029 Amount equivalent to hotel GOP

–

–

–

–

–

24

Mercure Okinawa Naha–Management
contract

10

Apr. 2024 Amount equivalent to hotel GOP

–

–

–

–

–

25

Mercure Yokosuka

Fixedlease

Variable

AAPC Japan K.K.

5

Aug. 2024 Linked to hotel GOP

The same rent will be applied
until expiration of the contract.

Aug. 2019

Renewed(Increased)

–

–

26

the b ikebukuro

Fixedlease

Fixed +
Variable

Ishin Ikebukuro Operations K.K.

9.5

Jul. 2024【2021】JPY38MM/year + Linked to hotel AGOP
【2022】JPY80MM/year + Linked to hotel AGOP

The same rent will be applied
until expiration of the contract.

Oct. 2020

Fixed rent was changed(Reduction)

–

–

27

the b hachioji

Fixedlease

Fixed +
Variable

Ishin Hachioji Operations, Y.K.

9.5

Jul. 2024【2021】JPY21MM/year + Linked to hotel AGOP
【2022】JPY45MM/year + Linked to hotel AGOP

The same rent will be applied
until expiration of the contract.

Oct. 2020

Fixed rent was changed(Reduction)

–

–

28

the b hakata

Fixedlease

Fixed +
Variable

Ishin Hakata Operations K.K.

9.5

Jul. 2024【2021】JPY28MM/year + Linked to hotel AGOP
【2022】JPY59MM/year + Linked to hotel AGOP

The same rent will be applied
until expiration of the contract.

Oct. 2020

Fixed rent was changed(Reduction)

–

–

29

the b suidobashi

Fixedlease

Fixed +
Variable

Ishin Suidobashi Operations K.K.

5

Dec. 2026【2021】JPY13MM/year + Linked to hotel AGOP
【2022】JPY30MM/year + Linked to hotel AGOP

The same rent will be applied
until expiration of the contract.

Oct. 2020

Fixed rent was changed(Reduction)

–

–

30

Hotel Francs

Fixedlease

Fixed

K.K. Bridal Produce

19

Oct. 2024 JPY25MM/month

The same rent will be applied
until expiration of the contract.

–

–

–

–

31

Okinawa Marriott Resort & Spa

Fixedlease

Fixed +
Variable

10【2021】Hotel AGOP x 89%(If the amount is below JPY0, it will be JPY0)
Dec. 2030【2022】JPY550MM/year + when Hotel AGOP
exceeds JPY655MM, the excess x 95% is paid

In principle, the same rent will
be applied until expiration of the Aug. 2020
contract.

–

–

32

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Fixedlease

Fixed +
Variable11

Dec. 2026––

AAPC Japan K.K.

–

Lagoon resort Nago Co., Ltd.

K.K. A.I.C Hiroshima
Management

Luxury Hotels
International of
Hong Kong Limited【2021】Hotel AGOP x 93%(If the amount is below JPY0, it will be JPY0)【2022】JPY348MM/year + when Hotel AGOP
exceeds JPY360MM, the excess x 90% is paid

45–

Rent can be modified throughmutual agreement.

Modified Structure(variable rent only fromFebruary 2020 to
December 2021)(variable rent ratio will bechanged in 2022 onwards)
Modified Structure(variable rent only fromIn principle, the same rent will
February 2020 tobe applied until expiration of the Aug. 2020
December 2021)
contract.
(variable rent ratio will bechanged in 2022 onwards)

5. Summary of Lease Contracts (3/3)(as of the end of December 2020)
No.

Property Name

Lease
Type

Rent
Structure(*1)

33

CANDEO HOTELS UENO-KOEN

Fixedlease

Fixed

34

Oriental Hotel Fukuoka Hakata
StationFixedlease

Fixed +
Variable

35

Holiday Inn Osaka Namba

Fixedlease

36

HOTEL ASCENT FUKUOKA

37

Hilton Nagoya

Hotel Operator/
Lease/ Expiration
Date of
Hotel Consulting andMCManagement Company Term Contract

Lessee20

Feb. 2030 Nondisclosure(*3)

Hotel Centraza Co., Ltd.

15【2021】Hotel AGOP x 97%(If the amount is below JPY0, it will be JPY0)
Dec. 2034【2022】JPY425MM/year + when Hotel AGOP
exceeds JPY442MM, the excess x 98% is paid

Fixed +
VariableOW Hotel Operations KK

15

Oct. 2031【2021】Hotel AGOP x 98%(If the amount is below JPY0, it will be JPY0)【2022】JPY576MM/year + when Hotel AGOP
exceeds JPY580MM, the excess x 97% is paid

Fixedlease

Fixed

K.K.ASCENT.

7

Jun. 2021【Fixed rent】① May 1, 2019 to March 31, 2020:
JPY20MM/month② April 1, 2020 to March 31, 2026:
JPY22MM/month

Lease

Variable41

Dec. 2029 Nondisclosure(*3)

Candeo Hospitality Management, Inc.

Nagoya Hilton Co.,Ltd.

Hilton International
Company

38

Hilton Tokyo Narita Airport

Fixedlease

Fixed +
Variable

KK NaritaKosuge Operations

20

39

International Garden Hotel Narita

Fixedlease

Fixed +
Variable

KK NaritaYoshikura Operations

10

40

Hotel Nikko Nara

Fixedlease

Fixed +
Variable

Hotel Management
Okura Nikko Hotel
Co., Ltd.
Management Co., Ltd.

1041

Hotel Oriental Express Osaka
Shinsaibashi

Fixedlease

Fixed +
Variable

K.K. HOTEL ORIENTAL EXPRESS

1042

Hilton Tokyo Odaiba

Fixedlease

Fixed +
Variable

Tokyo Humania Enterprise Inc.

11

(*1)

Contractual Rent(*2)

Rent Modification Summary
Rent can be modified throughmutual agreement every three
years.

Rent Modification Summary(After acquisition)

Rent Modification Schedule(2021 to 2022)

TimingCondition

2021

2022

Jul. 2016

Nondisclosure(*3)

–

–

–

–

–

–

Modified Structure(variable rent only fromFebruary 2020 to
December 2021)(variable rent ratio will bechanged in 2022 onwards)
Modified Structure(variable rent only fromIn principle, the same rent will
February 2020 tobe applied until expiration of the Aug. 2020
December 2021)
contract.
(variable rent ratio will bechanged in 2022 onwards)
In principle, the same rent will
be applied until expiration of the Aug. 2020
contract.

The same rent will be applied
until expiration of the contract.

Apr. 2019

Renewed(Increased)

Lesseechanged andModified
Structure(from Jun.)–

Rent can be modified throughmutual agreement.

–

–

–

–

–

–

–

–

–

–

–

–

–

–

Modified Structure【2021】Hotel AGOP x 95%(variable rent only from
(If the amount is below JPY0, it will be JPY0)
In principle, the same rent will
February 2020 toJun. 2037 【2022】JPY444MM/year + when Hotel AGOP
be applied until expiration of the Aug. 2020
December 2021)
exceeds JPY450MM, the excess x 93% is paid
contract.
(variable rent ratio will bechanged in 2022 onwards)
Modified Structure【2021】Hotel AGOP x 95%(variable rent only from
(If the amount is below JPY0, it will be JPY0)
In principle, the same rent will
February 2020 toJun. 2027 【2022】JPY336MM/year + when Hotel AGOP
be applied until expiration ofAug. 2020
December 2021)
exceeds JPY360MM, the excess x 98% is paid
the contract.
(variable rent ratio will bechanged in 2022 onwards)
Modified Structure【2021】Hotel AGOP x 95%(variable rent only from
(If the amount is below JPY0, it will be JPY0)
In principle, the same rent will
February 2020 toDec. 2030 【2022】JPY420MM/year + when Hotel AGOP
be applied until expiration ofAug. 2020
December 2021)
exceeds JPY440MM, the excess x 95% is paid
the contract.
(variable rent ratio will bechanged in 2022 onwards)
Modified Structure【2021】Hotel AGOP x 87%(variable rent only from
(If the amount is below JPY0, it will be JPY0)
In principle, the same rent will
February 2020 toMar. 2028 【2022】JPY110.4MM/year + when Hotel AGOP
be applied until expiration ofAug. 2020
December 2021)
exceeds JPY128MM, the excess x 91% is paid
the contract.
(variable rent ratio will bechanged in 2022 onwards)
Modified Structure【2021】Hotel AGOP x 97%(variable rent only fromIn principle, the same rent will
(If the amount is below JPY0, it will be JPY0)
February 2020 toDec. 2029
be applied until expiration ofAug. 2020【2022】JPY1,600MM/year + when Hotel AGOP
December 2021)
the contract.
(variable rent ratio will be
exceeds JPY1,660MM, the excess x 98% is paidchanged in 2022 onwards)

Rent structure is as follows:(*2) Amount including car park and CAM without tax
Fixed: Fixed rent(*3) The detailed content of the contract is not disclosed as consent on disclosure has not been obtained from the lessee.
Variable: Variable rent(*4) The name was changed from Hotel Vista Kamata Tokyo on January 1, 2021 and the conditions of the new contract are stated.
Management contract: Management contract
Fixed + Variable: Property paying both fixed and variable rent
Fixed + Revenue sharing: When the sales of the hotel exceed pre-determined amount, additional rent is paid46

6. Major CAPEX Ⅲ by Hotels(Numbers in parentheses are CAPEX amounts: JPY MM)
FY12/2012

FY12/2013

FY12/2014

FY12/2015

FY12/2016

FY12/2017

FY12/2018

FY12/2019

Guest rooms on 7F
Private rooms at
Restaurant (30)(50)
Conversion of brides'
restaurant andBalconies on each Bridal salon (76)room to guest
balcony, etc. on 3F
floor (62)rooms (40)(19)
Bar (85)

FY12/2020

Kobe Meriken
Park Oriental
Hotel

–

–

–

Chapel (36)

Oriental Hoteltokyo bay–

Restaurant
(45)

–

–

Guest rooms on 4F(101)

Guest rooms on 11F
to 12F (140)––

Namba Oriental
Hotel

–

Corner rooms
on 5F to 8F
(10)

–

–

Guest rooms on 9F Guest rooms on Guest rooms on 6F(78)
7F (77)(91)––

Hotel Nikko
Alivila––Guest rooms on 3F to
8F of North building
and 3F to 5F ofcentral building (333)–

Guest rooms on 9F(55)
Restaurant (31)–Guest rooms on 1F,
etc.
(16)

–

–

–

Guest rooms on
7F to 10F (43)Banquet room on 4F(38)–

Chapel (10)–Guest rooms on
3F to 10F (192)

Guest rooms on
3F to 10F (312)

–

–

–

Guest rooms on
10F to 11F (72)
Guest rooms on
8F to 9F (72)–Oriental Hotel
Hiroshima––

Banquet room on 23F(10)

Ibis Tokyo
Shinjuku

Lobby and
restaurant on 2F,
and guest rooms
on 3,5,7,9F (170)

–

–

–

–

Guest rooms on 13F Increase number ofseats in café (8.5)
to 14F (14)Holiday Inn
Osaka Namba

–

–

–

–

–

–

Guest rooms on
4,6,7,12F (115)

ibis Styles
Sapporo

–

–

–

–

–

–

Vacant space on 1F
(28)

–

–

Mercure Hotel
Sapporo

–

–

–

–

–

–

Banquet room (15)––the b Ikebukuro

–

–

–

–

–

–

Guest rooms on
3F to 10F, etc. (18)––

Okinawa Marriott
Resort & Spa

–

–

–

–

–

–

–

Restaurant (142)–

Oriental Hotel
Fukuoka
Hakata Station

–

–

–

–

–

–

–

Large-scalerenovation works(1,690)–

Hilton Tokyo
Odaiba

–

–

–

–

–

–

–

–

Banquet room (92)47

7. Change in Number of COVID-19 Cases and Major Events
Number of New Cases of COVID-19 in Japan(No. of cases)
9,000(as of February 17, 2021)
January 23, Wuhan lockdown

July 22, "Go To Travel" campaign started
October 1, Tokyo was included
in "Go To Travel" campaign

January 30, Public Health Emergency by WHO

8,000

March 11, WHO declared COVID-19 as a pandemic
March 13, National Emergency in the United States
March 24, Tokyo Olympics and Paralympics were officially postponed

7,000

April 7, State of Emergency in Japan (Tokyo, Kanagawa, Saitama, Chiba, Osaka, Hyogo, Fukuoka)
April 16, State of Emergency was expanded nationwide
May 14, State of Emergency was lifted in 39 prefectures

6,000

May 21, State of Emergency was lifted in Osaka, Kyoto and Hyogo
May 25, State of Emergency was lifted nationwide

December 28, "Go To Travel" Campaign
was suspended
January 7, State of Emergency(Tokyo, Kanagawa, Saitama, Chiba)
January 13, State of Emergency
expanded to seven more prefectures
February 7, State ofEmergency extended toMarch 7 (excluding Tochigi)
February 17,
vaccinations in Japan
started for medical
workers

5,000

4,000

3,000

2,000

1,000

0

Jan. 2020 Feb. 2020 Mar. 2020 Apr. 2020 May 2020 Jun. 2020 Jul. 2020

Aug. 2020 Sep. 2020 Oct. 2020 Nov. 2020 Dec. 2020 Jan. 2021 Feb. 2021

48

8. RevPAR Variance to Previous Year by Region of The 24 Hotels with Variable Rent, etc.
 Diversified Portfolio
Hokkaido (2 properties)(vs 2019)

Total of 24 properties(vs 2019)

Strategic Investment Areas
Properties owned by JHR-42.8%-64.8%

Full Year 2020
(actual)-71.1%

Full Year 2020
(actual)

Full Year 2021
(forecast)

Okinawa (3 properties)(vs 2019)-52.9%-33.5%

Full Year 2020
(actual)

Full Year 2021
(forecast) Hotel Nikko Alivila
 Okinawa Marriott Resort & Spa Mercure Okinawa Naha

Full Year 2020
(actual)

Narita (2 properties)(vs 2019)-36.1%-55.5%

Full Year 2021
(forecast)

Full Year 2020
(actual) Oriental Hotel Hiroshima
 ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Full Year 2020
(actual)-38.7%
Full Year 2021
(forecast) Hilton Tokyo Narita Airport
 International Garden Hotel Narita

Tokyo and Bay Area (6 properties)(vs 2019)

Fukuoka (2 properties)(vs 2019)-58.3%

Full Year 2021
(forecast) ibis Styles Sapporo
 Mercure Sapporo

Hiroshima (2 properties)(vs 2019)-63.9%-42.5%-37.5%

Osaka, Kyoto (4 properties)(vs 2019)

Full Year 2021
(forecast) Oriental Hotel Fukuoka Hakata Station
 the b hakata-85.5%

Full Year 2020
(actual)(*) Stating major hotels in each area out of The 24 Hotels with Variable Rent, etc.

49-80.1%

Full Year 2021
(forecast)-67.6%

Full Year 2020
(actual)-40.4%
Full Year 2021
(forecast) Namba Oriental Hotel Holiday Inn Osaka Namba
 Hotel Oriental Express Osaka Shinsaibashi
 ibis Styles Kyoto Station

 Hilton Tokyo Odaiba
 Oriental Hoteltokyo bay
 ibis Tokyo Shinjuku
 the b ikebukuro the b hachioji
 the b suidobashi

9. The Five HMJ Hotels — Highlights
Change in GOP and GOP ratio(JPY MM)
10,000

6,296

6,000
4,000

27.0%

GOP ratio

5,136
24.3%

5,696

5,645

5,158

26.6%

25.5%

26.5%

6,155
28.0%

6,302
28.3%

6,941

29.9%

7,591

31.8%

50%

7,765

8,033

7,793

32.8%

34.2%

33.7%
7.3%

2,000
0

40%
23.4%

30%

3,264

20%
10%

695
CY2008

CY2009CY2010CY2011CY2012

CY2013

CY2014

CY2015

CY2016

CY2017

CY2018CY2019CY2020

GOP ratio

GOP

8,000

GOP

CY2021(forecast)(forecast)

0%

Change in KPI

20,00015,00010,0005,000

ADR

RevPAR

OCC

91.0% 89.9% 90.5%
86.1% 86.9% 87.7% 88.4%
82.7%
80.4% 76.7%
77.9% 77.8%
73.8%
21,067
19,212 20,153 19,856 22,197
18,427
16,895
17,297 17,551
19,954
15,980 15,846 16,200
19,066
17,970 18,463 17,197
18,06017,807
16,843
63.1%
15,245
14,88613,999 14,367
40.0%
12,696 12,845 12,160 13,400
11,6206,756
CY2007

CY2008

CY2009CY2010CY2011CY2012

CY2013

CY201450

CY2015

CY2016

CY2017

CY2018CY2019CY2020CY2021(forecast)(forecast)

100%
80%
60%
40%
20%
0%

OCC

ADR・RevPAR(JPY)
25,00010. Balance Sheet(Unit: JPY MM)
FY12/2019
End ofFiscal Year(as of) December 31,
2019

ASSETS
Current Assets(*1)

Cash and Deposits

Operating Accounts Receivables

FY12/2020
End ofFiscal Year
December 31,
2020

Variance

37,762

29,841(7,921)34,34328,553(5,790)Operating Accounts Payable

2,779

672

(2,107)

Short-term Loans

LIABILITIESFY12/2019
End ofFiscal Year(as of) December 31,
2019

Current Liabilities

638

615

(23)

377,608

370,221(7,386)

Current Portion of Long-term Loans Payable

340,522333,303(7,219)Buildings in Trust

118,128

114,887

Land in Trust

219,901

OthersNoncurrent Assets
Net Property and Equipment
(*2)

(*3)

28,922

12,295

1,485

2,654

1,169

–

12,782

12,782

1,500

1,500

10,800(1,982)

Accounts Payable

1,313

672

(641)

(3,241)

Advances Received

909

423

(485)

216,410(3,490)

Others

137

90

(46)

162,572

150,172(12,400)

41,60040,100(1,500)114,372

103,572(10,800)

5,722

5,397

(325)

416

767

351

2,006

(487)

33,991

186

3,280

2,926

(354)

162

162

–

Others

3,117

2,763

(354)

Deferred Assets

351

233

(118)

Leasehold and Security Deposits

16,627–

2,493

Other Assets

Variance

12,78233,804

OthersIntangible Assets

FY12/2020
End ofFiscal Year
December 31,
2020

Current Portion of Investment Corporation Bond

Long-term Liabilities
Investment Corporation Bonds
Long-term Loans Payable
Tenant Leasehold and Security Deposits
Derivative Liabilities
OthersTOTAL LIABILITIES

461

335

(126)

179,200

179,095(104)

NET ASSETS

186,894

186,894–

Capital Surplus

21,746

21,746–

Reserve for Temporary Difference Adjustment

11,794

10,617(1,176)

–

1,174

1,174

1,174

–

(1,174)

15,2901,527(13,762)

Unitholders' Capital

Reserve for Special Advanced Depreciation
Reserve for Special Account for Tax Purpose
Reduction Entry
Unappropriated Retained Earnings
OthersTOTAL NET ASSETSTOTAL ASSETS

415,722400,296(15,426)

TOTAL LIABILITIES AND NET ASSETS(*1) Cash and deposits in trust is included.
(*2) The sum of buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture and fixtures in trust, and construction in progress in trust.
(*3) The sum of machinery and equipment, tools, furniture and fixtures, and construction in progress.

51

(377)

(759)

(382)

236,522

221,201(15,321)415,722400,296(15,426)

12. Portfolio Map
 Portfolio consisting of competitive hotels in areas with strong leisure lodging demand Selectively invest in locations with high growth potential of leisure demand such as Strategic Investment Areas
Total Assets(as of February 25, 2021)

Strategic Investment Areas
Existing properties

JPY370.0Bn

1

2

3

4

5

Kobe Meriken Park
Oriental Hotel

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Oriental Hotel
Hiroshima

13

6

7

8

Limited-service hotel

No. of Hotels

Full-service hotel

23 24

Resort hotel

42 Hotels

Hokkaido Area

Hotel Nikko Alivila

The Beach
HakoneTower Okinawa Setsugetsuka

Dormy Inn
Kumamoto

14

15

16

17

Comfort HotelTokyo Higashi
Nihombashi

Smile Hotel
Nihombashi
Mitsukoshimae

Toyoko Inn
Hakata-guchi
EkimaeHotel Keihan
Universal City

9

10

11

12

the b
suidobashi

dormy inn・
global cabin
Asakusa

Hakata Nakasu
Washington
Hotel PlazaNara Washington R&B Hotel
Hotel Plaza
Ueno-hirokoji

18

19

20

21

22

23

24

25

26

Chisun Inn
KamataChisun Hotel
KamataHilton Tokyo Bay

ibis Tokyo
Shinjuku

ibis Styles
Kyoto Station

ibis Styles
SapporoMercureSapporoMercureOkinawa Naha

the b ikebukuro

No. of Guest Rooms

11,485 Rooms
Tokyo & the Bay Area(*1)

Osaka/Kyoto Area(*2)

2722

3 17 35 41

38 39

7

Fukuoka
11 16
Area

30

28 34 36

2 20

37
12 40

8
4 32

1

31

21

9

13 33

10

28

29

30

31

32

the b hachioji

the b hakata

Hotel Francs

MercureYokosuka

Okinawa Marriott
Resort & Spa

ACTIVE-INTER CITY

35

36

37

Holiday Inn
Osaka Namba

HOTEL ASCENTFUKUOKA

Hilton Nagoya Hilton Tokyo
Narita Airport

14
15

6

25

27

33

34

Tokyo 23 wards
26

5

29

42

38

CANDEOHIROSHIMA (Sheraton HOTELSGrand Hiroshima Hotel) UENO-KOEN

Oriental Hotel
Fukuoka
Hakata Station

39

40

41

42

International
Garden Hotel
NaritaHotel Nikko Nara

Hotel Oriental
Express Osaka
Shinsaibashi

Hilton Tokyo Odaiba

18 19

Okinawa Area(*1) Bay Area includes the coastal area of Tokyo Bay in Kanagawa and Chiba prefectures.
(*2) Osaka/Kyoto Area refers to Osaka and Kyoto prefectures.

52

Appendix 3
Investors Composition and Investment Unit Price1. Major Unitholders and Classifications of Unitholders
Top 10 Major Unitholders
As of the end of June 2020

As of the end of December 2020

Name

Rank

No. of Units

(*)

%

Rank

1

Name

No. of Units%(*)

739,108

16.56

1

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

621,578

13.92

2

Japan Trustee Service Bank, Ltd. (Trust)

462,840

10.37

STICHTING PGGM DEPOSITARY PGGM LISTED REALESTATE PF FUND

2

Custody Bank of Japan, Ltd. (Trust)

429,0059.61

3

350,747

7.86

3

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

226,474

5.07

4

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

190,091

4.25

4Custody Bank of Japan, Ltd. (Securities Investment Trust)

162,196

3.63

5

186,509

4.17

5

BNYM AS AGT/CLTS 10 PERCENT

158,778

3.55

184,356

4.13

8

BNYM AS AGT/CLTS 10 PERCENT
THE CHASE MANHATTAN BANK, N.A. LONDON SPECIALACCOUNT NO.1
Trust and Custody Services Bank, Ltd.
(Securities Investment Trust)
STATE STREET BANK WEST CLIENT - TREATY 505234

9

Shikoku Railway Company

6
7

6

SDSS K INVESTCO LIMITED

117,567

2.63

7

ELLIOTT INTERNATIONAL LP

93,886

2.10

8

THE BANK OF NEW YORK 133970

67,259

1.50

THE BANK OF NEW YORK MELLON 140044

63,797

1.42

63,476

1.42

2,121,546

47.54

140,364

3.14

59,561

1.33

56,9891.27

950,763

1.13

10 STATE STREET BANK WEST CLIENT - TREATY 505234

2,303,798

51.62

10 THE BANK OF NEW YORK MELLON 140044
Total

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

Total(*) The total units held by each investor to the total units issued by JHR as of the end of June 2020 and the end of December 2020, respectively. (Rounded off to two decimal places.)

Owners of the Investment Units
As of the end of June 2020
OwnersNo. ofInvestors

No. ofUnits

Individuals & Others

39,485

598,621

Financial Institutions(Incl. Securities Firms)

100 1,675,074

Other Domestic Firms

462

Foreign Firms &Individuals
Total

No. of Investors

0.2%

1.1%

445 2,061,073
40,492 4,462,347

Owners

13.4%

1.0%

Individuals & Others

46.1%

127,579

As of the end of December 2020

No. of Units

37.5%

Financial Institutions(Incl. Securities Firms)

34,136498,318

83 1,765,849

Other Domestic Firms

412

Total

2.8%
Individuals &OthersNo. of
Units

Financial Institutions(Incl. Securities Firms)

Foreign Firms &Individuals

97.5%

No. ofInvestors

Other Domestic
Firms

No. of Investors

0.2%

1.1%

35,117 4,462,347

11.1%

1.3%
46.5%

119,807486 2,078,373

No. of Units

39.5%

97.2%
2.6%

Foreign Firms &Individuals(*) Percentage of investors is percentage of owners in each segment to the total number of investors in JHR, and percentage of investment units is percentage of investment units owned by each segment to the total investment units issued as ofrespective date (both rounded off to one decimal place).

54

2. Changes in Investment Unit Price and Market Capitalization
Changes in the investment unit priceand market capitalization

Jun. 2015
Jan. 2016
Jun. 2017
Jan. 2019
PO(*2) JPY10.7Bn PO(*2) JPY14.6Bn PO(*2) JPY18.6Bn PO(*2) JPY33.3Bn(Based on the closing price)
Price of the investment unit:(JPY)

JPY52,500

120,000

JPY234.2Bn

100,000

Total market capitalization:(based on the closing price of January 29, 2021)(*1) Price of the real estate investment securities
may fall depending on the fluctuations ofprice of the real estate under management
or profitability, etc., and investors may suffer
losses. Investors may also suffer losses
through the bankruptcy or deteriorated
financial condition of the issuer. Withreference to the risk of investment in JHR
units, please see Securities Report dated
March 27, 2020 and Midterm Securities
Report dated September 24, 2020.

80,00060,000Market Capitalization
Investment Unit Price of JHR

Apr. 2013
PO JPY20.5Bn

Jan. 2015

PO(*2) JPY15.6Bn

Jul. 2016

PO(*2) JPY34.7Bn(*)

100 is the closing price of JHR unit, REIT
index and TOPIX at TSE dated April 2, 2012.
REIT Index of TSE is an index of a weighted
average of the market capitalization of all
REITs listed on TSE.

450,000

Sep. 2014
PO JPY10.1Bn
300,000

Sep. 2012
PO(*2) JPY5.0Bn

150,000

40,00020,00000(*2) Including OA

Comparison withREIT Index and TOPIX of
Tokyo Stock Exchange(TSE)(JPY MM)600

Investment Unit Price of JHR

TSE REIT Index

500

400

300

200

100

0

55

TOPIX

Appendix 4
Summary of the Asset Management Company

1. Summary of the Asset Management Company
Company

Japan Hotel REIT Advisors Co., Ltd.

Location

Ebisu Neonato 4F, 4-1-18 Ebisu, Shibuya-ku, Tokyo 150-0013

Establishment
CapitalShareholders
Representative Director

August 10, 2004
JPY300MM as of December 31, 2020
Rockrise Sdn Bhd, Kyoritsu Maintenance Co., Ltd., ORIX Corporation
Hisashi Furukawa
Building Lots and Buildings Transaction Business Operator, Governor of Tokyo (4) No. 83613
Discretionary Transaction Agent by Minister of Land, Infrastructure, Transport and Tourism No. 38

Registration and Licenses

Financial Instruments Trading Company, Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trusts Association, Japan
Member of The Japan Investment Advisers Association<Organization Chart>

Shareholders' Meeting
AuditorBoard of Directors' Meeting

Investment (andOperation) Committee

Compliance Committee
Representative Director
Compliance Office

Investment Division

Acquisitions

Public REIT

Operations Division

Private Fund

Planning

57

Finance

Accounting &Reporting

Personnel and
Administration

2. Features and Governance of the Asset Management Company
Mission Statement"Provide attractive hotel investment opportunities to investors as specialist in investment and management of hotel assets. Gain
trust from our stakeholders, and contribute to local communities and society through investing and managing hotel assets."

Code of Conduct
As an independent asset management company, all employees and officers at JHRA should have a "spirit of challenge" aiming
to constantly provide high added value.
Also, "teamwork" is inevitable to provide high added value.
JHRA recognizes "challenge" and "teamwork" as essential value which our code of conduct is based upon.

Challenge

Teamwork Respect teamwork and collaborate with team-mates Be a self-starter, take initiative and demonstrate drive Respect others. Respect values and opinions of others Set high goal and strive Promote "sharing" (idea, knowledge, information, goal,
achievement, joy of achievement, lesson, etc.)

 Respect creativity and innovation
 Promote challenge, free from fear of failure Make effort for open, frank and sincere communication

58

2. Features and Governance of the Asset Management Company (cont.)
Advanced Expertise Ability to propose transaction scheme, execute transaction, and plan and execute unprecedented measures of asset
management based on in-depth understanding of hotel operation and track record of such asset management.
 Extensive experience of renovation and rebranding through collaboration with many hotel lessees and hotel operators.
 Strong and long-term relationships with a large number of hotel lessees and hotel operators.
 High analytical skills and accurate judgement capacity based on rich information and data obtained through a broad
network and high credibility.

Ensured Independence No director and employee of JHRA is a seconded employee from sponsor.
 Part-time directors from our main sponsor, SC CAPITAL PARTNERS group and non-sponsor-related full-time directors
each account for half of JHRA's board of directors.
 With regard to transactions with sponsor-related parties and JHR, JHRA has set strict decision-making rules.
In principle, in addition to obtaining approval by Compliance Committee which includes an outside specialist, who isauthorized to dismiss proposals, JHRA is required to obtain approval from JHR's board of directors' meetings(directors are all third-party members who do not have any relationship with the sponsor-related parties).
 As our main sponsor, SC CAPITAL PARTNERS group is also an independent asset management company, it fully
understands and respects importance of JHRA's independency. JHRA conducts asset management business based
upon its own judgement.

59

Disclaimer
This material is prepared and provided solely for the purpose of providing information and not to offer, solicit, or do business, etc. with specific products
including purchase of investment units, investment unit subscription rights, or investment corporation bonds of Japan Hotel REIT Investment Corporation("JHR") or any other particular products. If any discrepancy is identified between this translation and the Japanese original, the Japanese original shall prevail.
This material is neither a disclosure document nor an investment report required under or prepared pursuant to the Financial Instruments and Exchange Act,Act on Investment Trusts and Investment Corporations and related government ordinances, Cabinet Office regulations, listing rules by Tokyo Stock Exchange,
Regulations of The Investment Trusts Association, Japan, or other related rules and regulations.
This material contains forward-looking statements about financial conditions, operational results, and businesses of JHR, as well as plans and intentions of JHR
and its asset management company, Japan Hotel REIT Advisors Co., Ltd ("JHRA"). Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause actual results or performance of JHR to materially differ from those expressed or implied forecasts. Those
forecasts are made based on JHR's present and future business strategies and assumptions relating to the political and economic circumstances surrounding
JHR in the future.
Every effort has been made to ensure the accuracy of the information contained in this material. However, there can be no assurance that the information isaccurate, complete, appropriate or fair. The information may be revised or retracted without prior notice.
Regarding the offering and trading of investment units, investment unit subscription rights or investment corporation bonds, financial institutions may charge
you pre-determined handling fees and other charges aside from the price of the investment units, investment unit subscription rights or investment corporation
bonds. Since neither JHR nor JHRA handles the offering and trading of investment units, investment unit subscription rights or investment corporation bonds,
please ask financial institutions for the amount, upper limit, and calculation methods of such fees and other charges.
JHR mainly invests in real estate-related assets, primarily hotels which are subject to change in values. Therefore, unitholders, holders of investment unit
subscription rights and investment corporation bonds may suffer losses due to economic conditions of the real estate market or securities market, economic
situations including interest rate environment, the nature of investment units, investment unit subscription rights, and investment corporation bonds,
dependency on mechanisms and related persons of investment corporations, changes in legal systems related to real estate (include tax regulations, building
regulations and others), damage caused to the real estate-related assets by natural disasters, fluctuation in prices or profitability of the real estate-related
assets, nature of the trust beneficiary rights under management, delisting of the investment units, or worsening financial position or insolvency of JHR.
For details, please refer to the Articles of Incorporation, Securities Registration Statement, Annual Securities Report and Extraordinary Report, etc. of JHR.
The contents of this material may not be copied or reproduced without our prior permission.
Japan Hotel REIT Advisors Co., Ltd.
Financial Instruments Trading Company
Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trust Association, Japan
Member of The Japan Investment Advisers Association

60