Ichigo Hotel (3463)

Ichigo Hotel January 2018 Fiscal Period
Corporate Presentation
March 15, 2018

Ichigo Hotel REIT Investment Corporation (3463)
Ichigo Investment Advisors Co., Ltd.

© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

www.ichigo-hotel.co.jp/english

Ichigo Preserves andImproves Real Estate© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

January 2018 Results
 January 2018 Highlights
 January 2018 Earnings Breakdown
 Revenue, RevPAR, Occupancy & ADR
All Up Year-on-Year Earnings Stability via Geographic
Diversification
 Portfolio Overview & Growth Organic Growth: Value-Add Capex –Smile Hotel Tokyo Asagaya
 Organic Growth: Across-the-Board Actions
to Grow Earnings
 Organic Growth: Increasing NOI of
Acquired Hotels
 Share Buyback to Grow Shareholder
Value

Ongoing Growth Hotel Market Environment
 Ichigo Hotel Growth Results Growth Strategy Roadmap
 Organic Growth: Driving Earnings via
Value-Add Capex Portfolio Growth Potential via Ichigo
Sponsor Support
 Stable Financial Base

July 2018 and January 2019 Forecasts
 July 2018 Forecast January 2019 Forecast

Appendix© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

4

January 2018 Results© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

5

January 2018 Highlights
Achievements
Net Income
RevPARNOI

JPY 841M+JPY 33M (+4.2%) YOY

JPY 8,234 (12 variable rent hotels)+JPY 214 (+2.7%) YOY

JPY 1.62B+JPY 162M (+11.1%) YOY

Drivers• Continued organic and external growth• Organic growth +2.5% vs. initial forecast• Increased both occupancy and ADR• +0.2% vs. initial forecast• Organic growth +JPY 58M (+4.0%)• External growth +JPY 103M (+7.1%) 2 asset acquisitions

Share Buyback

2,610 shares(1.0% of shares outstanding)• Share buyback to increase dividend and NAV per shareand grow shareholder value

FFO

JPY 4,586• NOI growth driving higher cash flow

Dividend

JPY 3,302

NAV

JPY 143,045

Portfolio+JPY 311 (+7.3%) YOY+JPY 165 (+5.3%) YOY• +JPY 115 (+3.6%) vs. initial forecast+JPY 3,105 (+2.2%) vs. previous period• Total portfolio appraisal value JPY 56.3B• Unrealized gains JPY 4.15B  JPY 4.88B (+17.5%)

JPY 50.9B (21 hotels)• Acquired Urbain Hiroshima Executive (JPY 1.8B)+JPY 1.8B (+3.7%) vs. previous period* FFO (Funds from Operations) = (Net Income + Depreciation + Amortization of Expenses Related to REIT Establishment + Amortization of Share Issuance Expenses+ Loss on Disposal of Fixed Assets + Liability for Asset Retirement Obligation +/- Losses/Gains on Sales +/- Extraordinary Losses/Gains) / Number of Shares Outstanding
NAV = BPS + Unrealized Capital Gains© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.
6

January 2018 Earnings Breakdown(JPY million)

Jan 2017

Jan 2018

Initial Forecast

vs. Initial Forecast

Operating Revenue

1,560

1,782

1,770

+11

Variable Rent

681

748

736

+11

Fixed Rent

823

974

974

–

Other

54

59

58

–

581

747

757

-9

8

15

29

-13

Depreciation

268

302

301

–

Operating Profit

978

1,034

1,012

+21

Recurring Profit

809

842

821

+20

Net Income

808

841

821

+20

DPS

JPY 3,137

JPY 3,302

JPY 3,187+JPY 115FFO

JPY 4,275

JPY 4,586

JPY 4,457+JPY 129

NOI

1,458

1,620

1,595

+24

Post-Depreciation NOI

1,189

1,318

1,294

+23

256

283

296

-13

48,20451,512––257,584 shares

254,974 shares

257,584 shares-2,610 shares

Operating Expenses
Repair & Maintenance

Capex
Book Value
Shares Outstanding© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Major Variation Factors (vs. Forecast)

Increase: 8 hotels; Decrease: 4 hotels

Increase in AM fees and other expenses: +4
Decrease in planned construction costs: -13

Decrease in interest expenses: -1
Increase in share buyback-related expenses: +2+3.6% vs. initial forecast+5.3% (+JPY 165) vs. Jan 2017

Share buyback and cancellation7

Revenue, RevPAR, Occupancy, & ADR All Up Year-on-YearHigher RevPAR and Value-Add Capex to Increase Number of Guestrooms
Driving Revenue Growth
Variable Rent Hotels (12 Hotels)
Aug 1, 2016 Jan 31, 2017

Aug 1, 2017 Jan 31, 2018

Difference

YOY

Room Revenue (JPY M)

2,690

2,775

+85

+3.2%

Revenue (JPY M)

3,123

3,199

+75

+2.4%

RevPAR (JPY)

8,020

8,234

+214

+2.7%

Occupancy

91.3%

92.9%

+1.6%

+1.8%

ADR (JPY)

8,784

8,860

+76

+0.9%

Total Portfolio (20 Hotels)
Aug 1, 2016 Jan 31, 2017

Aug 1, 2017 Jan 31, 2018

Difference

YOY

Room Revenue (JPY M)

4,088

4,202

+113

+2.8%

Revenue (JPY M)

4,610

4,706

+96

+2.1%

RevPAR (JPY)

7,041

7,216

+175

+2.5%

Occupancy

87.7%

89.0%

+1.3%

+1.5%

ADR (JPY)

8,033

8,110

+77

+1.0%

* Excludes Grandpark-Inn Yokohama. Operating results before the acquisition are based on data provided by previous owner.

© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

8

Earnings Stability via Geographic Diversification
YOY by Region (Aug 2017 – Jan 2018)
RevPAR
Occupancy

+9%

ADR

+5%

+5%

+4%

+3%

+2%

+1%
+3%
+2%
0%

+4%

+3%

+4%

+3%

-1%

-1%
+3%

+3%

+5%
+3%

0%

0%
-2%

-4% +5%18 Hotels (excludes Grandpark-Inn Yokohama, Hotel Suave
Kobe Asuta, and Hotel Livemax Nihombashi-Hakozaki)

-8%

-10%
Total

Hokkaido

Tokyo

Tokai/Chubu

Kyoto

Osaka

18 Hotels

3

2

4

2

2

JPY 7,379

JPY 7,754

JPY 7,411

JPY 6,287

JPY 10,591

JPY 8,338© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Chugoku/
Shikoku3
JPY 5,967

KyushuOkinawa1

1

JPY 8,752

JPY 9,152
9

Portfolio Overview & Growth
IPO(November 30, 2015)

July 2016
Fiscal Period

January 2017
Fiscal Period

July 2017
Fiscal Period

January 2018
Fiscal Period

Portfolio Size

Portfolio Size

Portfolio Size

Portfolio Size

Portfolio Size

9 hotels
JPY 20.4B

9 hotels
JPY 20.4B

19 hotels
JPY 47.6B

20 hotels
JPY 49.1B

21 hotels
JPY 50.9B(Appraisal Value JPY 21.3B)(Appraisal Value JPY 22.1B)(Appraisal Value JPY 51.6B)(Appraisal Value JPY 53.7B)(Appraisal Value JPY 56.3B)

IPO Acquisitions

Acquisitions－

PO Acquisitions

Acquisitions

Acquisitions(Appraisal NOI Yield 5.5%)(Appraisal NOI Yield 5.0%)(Appraisal NOI Yield 6.3%)

Yokohama: 1

Chugoku/Shikoku: 1

9 hotels
JPY 20.4B

Hotels(Appraisal NOI Yield 5.9%)

Hokkaido: 2 Kyoto: 2
Nagoya: 1
Tokai: 1 Osaka: 1
Kobe: 1 Fukuoka: 1

10 hotels
JPY 27.2B

Hokkaido: 1 Tokyo: 3
Tokai: 2 Osaka: 1
Chugoku/Shikoku: 2
Okinawa: 1

1 hotelJPY 1.4B

1 hotelJPY 1.8B

By Location
Fukuoka
6.8%
Kobe
7.3%
Tokai
7.6%
Osaka
8.0%
Nagoya13.1%

Hokkaido
17.7%

Geographic Diversification
Supports Earnings Stability
Kyoto
39.6%

Steady Portfolio Growth via
Acquisitions© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Yokohama
2.9%

Kobe
2.9%

Fukuoka
2.7%

Nagoya
5.2%

Osaka
18.1%

Okinawa
7.4%
Hokkaido
7.7%
Chugoku/
Shikoku
9.0%

Kyoto
15.9%

Tokai
14.0%

Tokyo
14.1%

10

Organic Growth: Value-Add Capex – Smile Hotel Tokyo Asagaya− Full renovation to respond to shift in market needs and maximize its prime
location− Installed larger beds to increase capacity and capture leisure and inboundguest demand (ADR +14%)− Forecast rent increase JPY 39.6M p.a. (+20% vs. NOI at acquisition)− ROI 34.1% (capex: JPY 116.1M)
5F
4F

Phase 1
(Completed)

Phase 2(Completed)

3F
2F
1F &
Lobby

Phase 2 (Jan 2018 Fiscal Period)

Renovated hallways and all 56 guest
rooms on 3F & 4F → +70% capacity withlarger beds
Timing:Oct – Dec 2017
Capex:
JPY 53.2M
Forecast return:JPY 19.8M p.a.*
ROI:
37.3%

Phase 3
July 2018
Fiscal Period(Plan)* Annualized figures based on forecast© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

11Organic Growth: Across-the-Board Actions to Grow Earnings
Capturing Leisure and Inbound Guest Demand− Installed larger beds (Nest Hotel Osaka Shinsaibashi, Nest Hotel Matsuyama)
Capex: JPY 2.9M, Rent increase p.a.: JPY 1.5M, ROI 51.7%− Increased number of non-smoking rooms preferred by leisure and inboundguests (Nest Hotel Osaka Shinsaibashi, Nest Hotel Naha, Hotel Vista Premio
Kyoto)

Optimizing Use of Common Areas− Laundry room to drive earnings and serve guests (Nest Hotel Matsuyama)
Capex: JPY 6.1M, Rent increase p.a.: JPY 1.0M, ROI 16.4%

Reducing Operating Expenses− Reduced water consumption while maintaining customer satisfaction(Nest Hotel Osaka Shinsaibashi, Nest Hotel Naha)
Capex: JPY 9.0M, Rent increase p.a.: JPY 3.7M, ROI 41.7%

Increasing Customer Satisfaction via Collaboration with Hotel Operators− Identifying and visualizing customer feedback via systematic analysis ofcustomer reviews− Based on customer reviews, improving Wi-Fi connectivity and bathrooms© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

12Organic Growth: Increasing NOI of Acquired Hotels− Steady organic growth via measures to respond to market changes such as
value-add capex− NOI 5.6%  6.3% (on book value of JPY 45.3B)
YOY by Region2017 NOI / Appraisal NOI at Acquisition

January 2018 Book Value / Book Value at Acquisition

+39%

+13%

+8%

+1%

+0%

+0%

-1%

Total
17 Hotels

+35%

+33%

+3%
-1%

+10%

+8%

+1%

+0%

Chugoku/
Shikoku

+2%

+0%

-1%

Hokkaido

Tokyo

Tokai/Chubu

Kyoto

Osaka

3

2

4

2

2

2

KyushuOkinawa

1

12017 NOI is from February 2017 to January 2018.
17 Hotels (excludes Hotel Suave Kobe Asuta, Hotel Livemax Nihombashi-Hakozaki, Grandpark-Inn Yokohama, and Urbain Hiroshima Executive)© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

13

Share Buyback to Grow Shareholder Value− Grow value for shareholders via share buyback, organic growth, and external
growth (2nd J-REIT to do buyback)− Shares have outperformed TSE REIT Index post-buyback(JPY)

Number of
SharesAmountBuyback Period
Share Price(Oct 10, 2017
to Feb 28, 2018)

Dividend Impact

2,610 shares

140,000

Ichigo Hotel (3463)
TSE REIT Index(1.0% of total shares outstanding)

JPY 299,921,900
Oct 11 to Nov 9, 2017+13.1％(TSE REIT Index: +3.8%)+JPY 34 (+1.0％)

130,000

120,000

Buyback

110,000

Beginning of Jan 2018 Period:
End of Jan 2018 Period:
Period-High:

100,000
2017/8/1© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

JPY 111,300 (2017/8/1)
JPY 124,400 (2018/1/31)
JPY 131,400 (2018/1/18)

2017/9/1 2017/10/1 2017/11/1 2017/12/1 2018/1/1

2018/2/1

14

Ongoing Growth© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

15

Hotel Market Environment (1)Business hotel demand remains robust and growing− Inbound business hotel guests: +420.0% (vs. 2011)− Continued growth expected due to increasing domestic and inbound tourism;
Government target of 40 million inbound tourists by 2020
No. of Guests by Hotel Type (Japanese Guests)

No. of Guests by Hotel Type (Inbound Guests)(million persons)(million persons)
30

200

25
150

20

100

15

10
50

5
0
2011

2012

2013

2014

Business Hotels

Japanese Inns

Full-Service Hotels

Budget Hotels

2015

2016
Resort Hotels

2017

0
2011

2012

2013

2014

Business Hotels

Japanese Inns

Full-Service Hotels

Budget Hotels

2015

2016

2017

Resort Hotels* Calculated by Ichigo Investment Advisors based on Japan Tourism Agency (JTA) “Statistical Survey of Travelers”© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

16

Hotel Market Environment (2)UN World Tourism Organization（UNWTO）Forecasts Total International
Tourists to Reach 1.8B in 2030 (+36.9% vs. 2017)− Asia/Pacific forecast +65.1％ vs. 2017
− 2017 total growth rate +7% YOY, highest pace in seven years (average annual
growth at +4％ plus since 2010)− 2017 inbound tourism to Japan at record high, +19.3% (28.7M tourists) vs. 2016
− Need for infrastructure to meet government target of 60M inbound tourists
No. of International Tourists (Japan)

No. of International Tourists (Global)(million persons)(million persons)

2,000
EuropeAsia/Pacific

Americas

Africa1,810

Middle East

60

60

Average Annual Growth+3.3%■ Government Target

1,500
1,138
1,000

953
182
150

269

1,189

193
284

1,235

1,322

248
40

40

199
308

207

535

28

324

24
20

20

208
500

13

489

576

604

616

671

2014

2015

2016

2017

744

2030
(Forecast)

6

0

8

10

0

2010

2011

2012

2013

2014

2015

2016

2017

2020

2030

* Calculated by Ichigo Investment Advisors based on Japan National Tourism* Calculated by Ichigo Investment Advisors based on UNWTO data –Organization (JNTO) “Number of Inbound Tourists.”
2016 and 2017 are flash data
© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

17

Ichigo Hotel Growth Results (1)NOI: JPY 699M (July 2016) → JPY 1.62B (January 2018) +131.6%
Dividend: JPY 5,962 (2016) → JPY 6,429 (2018 forecast) +7.8%

NOI

Dividend
JPY 6,403

JPY 6,429

JPY 5,962

JPY 3,137(Jan 2017)

JPY 1,458M(19 hotels)

JPY 180M(9 hotels)

Jan 20161

JPY 1,523M(20 hotels)

Jan 2017

Jul 2017

JPY 3,162(Jan 2019)

JPY 1,620M(21 hotels)

JPY 2,728

JPY 699M(9 hotels)

Jul 2016

JPY 3,302(Jan 2018)

Jan 2018

JPY 2,728(Jan 2016)

JPY 2,825(Jul 2016)

20152

2016

JPY 3,101(Jul 2017)2017

JPY 3,267(Jul 2018)2018(Forecast)

1 January 2016 was a shortened fiscal period that ran from Nov 30, 2015 to Jan 31, 2016.
2 January 2016 actual dividend of JPY471 converted to full-period dividend.

© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

18

Ichigo Hotel Growth Results (2)Appraisal Value：JPY 21.4B → JPY 56.4B (+163.7%)
Unrealized Gains: JPY 737M → JPY 4.9B (+561.1%)
NAV per Share: JPY 107,461 → JPY 143,045 (+33.1%)
Appraisal Value

NAV
(JPY)

Unrealized gains

56.4B
53.8B
51.6B

(JPY)

Unrealized gains per share

+4.9B

+4.1B

+3.4B

21.4B
+0.7B

22.2B
+1.6B

20.6B

20.6B

Jan 2016

Jul 2016

48.2B

Jan 2017

49.6B

Jul 2017

51.5B

Jan 2018

107,461+5,325143,045

137,197+13,363

139,940+16,106

123,834

123,834

123,925

Jan 2017

Jul 2017

Jan 2018+19,120

113,393+11,256

102,136

102,137

Jan 2016

Jul 2016© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

19

Growth Strategy Roadmap
Flexibly Responding to Market Environment
Stage I

Stage II

Continuous Dividend Growth via External Growth, Organic Growth, and Strong Financial Base

External
Growth• Drive higher earnings via economies of scale from increased
asset size
• Invest primarily in stay-only hotels• Acquisition of conversion-feasible assets and lodging
facilities such as serviced apartments• Asset acquisitions via SPCs

Organic
Growth••• Construct a diversified portfolio to pursue both income
stability and earnings growth• Acquire prime-location full-service hotels and resort hotels in
addition to stay-only hotels• Increase portfolio size and generate scale efficiencies via
acquisitions of newly built hotels in addition to value-add ofexisting hotels

Enhance operational efficiency by monitoring operations and providing advice to partner hotel operators
Increase rents and earnings through value-add capex

Financing• Minimize expenses via collaboration with operators• Further increase earnings via more favorable lease contracts,
rebranding, etc.

• Maintain a strong lender base
• Control LTV• Manage interest rate risk
• Prepare to acquire credit rating• Prepare to enter global REIT indices• Acquire credit rating• Diversify financing• Continue to control LTV and manage interest rate risk
• Enter global REIT indices

Lay Foundation for Growth via Increased
Asset Scale

Pursue Portfolio Diversification,
Stability, and Growth© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

20

Organic Growth: Driving Earnings via Value-Add Capex (1)− Increased Rental Income via Value-Add Capex: +JPY 21.9M− Added 15 New Guestrooms (as of Feb 2018)− Will Continue High-ROI Value-Add Capex to Respond to Shifting
Market Needs
July 2018 Value-Add Capex Plan

Hotel Name
Smile Hotel Kyoto Shijo

Split up guest rooms (4 additionalrooms)
Installation of water flow regulating
valvesRenovation of guest rooms & lobby(Phase 3)

Investment

ROI

JPY 46.0M+JPY 7.2M

15.7%

JPY 16.8M+JPY 4.8M

28.6%

JPY 34.0M+JPY 9.9M

29.1%

JPY 15.0M

–

–

Total

JPY 111.8M+JPY 21.9M

19.6%

January 2018 Fiscal Period Total

JPY 65.1M+JPY 25.0M

38.4%

Nest Hotel Sapporo Odori &7 Other Hotels
Smile Hotel Tokyo Asagaya
Valie Hotel Tenjin

Value-Add Capex

Expected Rental
Income Increase
per Annum

Renovation of lobby and entrance* Expected Rental Income Increase per Annum includes forecast© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

21

Driving Earnings via Value-Add Capex (2)Smile Kyoto Shijo: Increased Number of Guestrooms to Drive Higher Earnings− Added four new guestrooms via splitting up four existing rooms− 1.8X revenue increase− Capex: JPY 46M, Forecast return: +JPY 7.2M p.a., ROI 15.7%
BeforeAfter

Guestroom with wasted space

Split into two guestrooms
PS

PS
PS

Double room (30m2)

Double room (16m2)© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Double room (11m2)

22Portfolio Growth Potential via Ichigo Sponsor Support
25 Hotels (JPY 57.8B) in Sponsor Pipeline as of January 31, 2018
− Locations: Major cities such as Tokyo, Yokohama, Osaka, Nagoya,Fukuoka, Kumamoto, and Naha
− New hotels also in-development
Completed

New Hotel 1
Osaka
Opened: Apr 2017

New Hotel 2
Fukuoka
Opened: Apr 2017

New Hotel 3
Tokyo
Opened: Sep 2017

New Hotel 4
Kanazawa
Opened: Dec 2017

Asahikawa

YokohamaTokyo

NagoyaKumamoto

Osaka

Osaka

Naha

Fukuoka

Fukuoka

In-Development
Hotel Development
Kyoto
Forecast Completion:
Sep 2018© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

23

Stable Financial Base
− Loans with shorter maturities are floating rate to take advantage ofcurrent low interest rates− 70% of loans are fixed to hedge against a rise in interest rates
Outstanding Loan Balance
Jan 31, 2016

Jul 31, 2016

Jan 31, 2017

Jul 31, 2017

Jan 31, 2018

AmountJPY 8.50B

JPY 8.50B

JPY 19.50B

JPY 19.95B

JPY 21.75B

Long-Term Loan Ratio

100.0%

100.0%

100.0%

100.0%

100.0%

Fixed Rate Ratio

61.8%

61.8%

73.1%

71.4%

73.8%

Average Interest Rate

0.96%

0.91%

0.89%

0.88%

0.88%

Average Remaining
Maturity

4.2 years

3.6 years

4.5 years

4.1 years

3.6 years

LTV (Total Assets Basis)

36.8%

36.2%

36.6%

37.1%

39.2%

(JPY M) Distribution of Loan Maturities

6,000
5,000

■ Fixed Rate ■ Floating Rate
5,250

4,000
3,000

4,500

4,500

Jul 2023

Jan
2024
2024年

3,250

2,000

2,450
1,800

1,000
0
Jul 2018

Jan 2019

Jul 2019

Jan 2020

Jul 2020

Jan 2021

Jul 2021

Jan 2022

Jul 2022© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Jan 2023

Jul 2024

24

July 2018 and January 2019 Forecasts© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

25

July 2018 Forecast
External Growth (1 Additional Asset) and Organic Growth via Higher
Variable Rents(JPY million)
July 2018
Previous Forecast(September 2017)

July 2017
Actual (A)July 2018
Revised
Forecast (B)Major Factors for Variation(B) - (A)Increase in portfolio: +1 hotel vs. July 2017 (Urbain Hiroshima Executive)

Operating Revenue

1,687

1,805

1,810

+122

Variable Rent

757

795

799

+42

Fixed Rent

870

952

952

+82

Other

60

57

58

-2

714

785

788

+74

Increase in expenses due to asset increase: +3
Increase in property tax: +9 (Increase in newly acquired hotel: +7
Reappraisal: +1)

Repair & Maintenance

19

34

31

+11

Increase in newly acquired hotel: +1

Depreciation

280

309

314

+34

Increase in newly acquired hotel: +13

Operating Profit

973

1,020

1,022

+48

Recurring Profit

799

831

833

+34

Net Income

798

830

833

+34

DPS

JPY 3,101

JPY 3,224

JPY 3,267+JPY 166

FFO

JPY 4,287

JPY 4,525

JPY 4,601+JPY 182

NOI

1,523

1,615

1,624

+100

Post-Depreciation NOI

1,243

1,305

1,309

+66

210

308

289

+79

Operating Expenses

Capex

Expected RevPAR at Variable Rent Hotels: JPY 8,648(+5.0% vs. July 2017; +2.4% vs. previous forecast )Increase in rent from newly acquired hotel: +78
Increase in rent from revised lease contract: +3

Interest-related costs: +13+1.3% (+JPY 43) vs. previous forecast+5.3% YOY

© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

26

January 2019 Forecast− Operating Revenue Equivalent to January 2018
− Increase in Operating Expenses to Hit Operating Profit(JPY million)
Jan 2018
Actual (A)Jan 2019
Forecast (B)Major Factors for Variation(B) - (A)Operating Revenue

1,782

1,780

-1

Variable Rent

748

747

–

Fixed Rent

974

974

–

Other

59

58

–

747

784

+36

Repair & Maintenance

15

19

+3

Depreciation

302

320

+18

Operating Profit

1,034

996

-38

Recurring Profit

842

807

-35

Net Income

841

806

-35

DPS

JPY 3,302

JPY 3,162-JPY 140

FFO

JPY 4,586

JPY 4,502-JPY 84

NOI

1,620

1,605

-14

Post-Depreciation NOI

1,318

1,284

-33

283

306

+23

Operating Expenses

Capex

Expected RevPAR at Variable Hotels:： JPY 8,424 (+2.3% vs. Jan 2018)

Increase in property tax: +10 (Increase in newly acquired hotels: +7, Reappraisal: +2)
Shareholder meeting-related expenses: +5

Increase in capex: +18

Interest-related costs: +4
Decrease in share buyback-related expenses: -2-4.2% YOY

© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

27

Appendix: Portfolio Details© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

28

Hotel Map
Tokyo

Kanto

C-1

C-2

C-3

Hokuriku/Tokai

B-1

D-1

Hokkaido
D-2

D-3

D-4

A-2

A-3

Nest Hotel
Sapporo Odori

ComfortHotel Kushiro

A-1

Smile HotelTokyo Asagaya

Smile Hotel
Asakusa

Hotel Livemax
NihombashiHakozaki

Kinki (Kyoto/Osaka/Kobe)

Grandpark-Inn
Yokohama

Comfort Hotel
Hamamatsu

Hotel Wing
Comfort HotelInternational Central International
NagoyaAirport

F-2

F-3

Comfort Hotel
SuzukaNest Hotel
Sapporo Ekimae

Chugoku/Shikoku▶Sapporo

E-2

E-1

E-3

A-1 A-2▶Kushiro

F-1

Smile Hotel
Kyoto Shijo

Hotel Vista
Premio Kyoto

Chisun Inn
Osaka
HommachiA-3

Comfort Hotel
Okayama

Nest Hotel
Matsuyama

Urbain Hiroshima
Executive▶KyotoE-1 E-2

Kyushu/Okinawa
E-4

E-5

G-1

▶Matsuyama▶Nagoya
Nest Hotel Osaka
Shinsaibashi

Valie Hotel
TenjinC-1 C-2 C-3

E-3 E-5▶Okayama▶Fukuoka ▶Hiroshima F-1 E-4
F-3
▶Kobe
G-1
F-2

Hotel Suave
Kobe Asuta▶Tokyo▶OsakaG-2

Nest HotelNaha

D-2 D-3▶Suzuka
D-4▶Yokohama
B-1▶Hamamatsu
D-1

21 Hotels
JPY 50.9B

Variable Rent
Fixed Rent

▶Okinawa
G-2© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

(as of January 31, 2018)29

Multi-Faceted Portfolio Diversification
Portfolio Characteristics
Hotel Operator

Location
Kobe
2.9%

Fukuoka
2.7%

Yokohama
2.9%

Other
27.6%

Nagoya
5.2%

Osaka
18.1%

Hospitality
Operations
16.1%

Okinawa
7.4%
Hokkaido
7.7%
Chugoku/
Shikoku
9.0%

Nest Hotel
Japan
39.7%

Greens
16.6%

Kyoto
15.9%
Fixed vs. Variable Rent

Tokai
14.0%

Tokyo
14.1%

Fixed Rent
56.6%

Variable
Rent
43.4%

* Location is based on Acquisition Price; Hotel Operator and Fixed vs. Variable Rent Hotels are based upon hotel rent (Jan 2018 period).
© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

30

Individual Hotel Summary
Hotel
No.

Hotel Name

Location

Leasable
Area
2

(m )

Jan 2018 Appraisal

Acquisition
Price(JPY M)

Book Value(JPY M)(A)

Value(JPY M) (B)Cap Rate(% )Unrealized
Gains (JPY M)(B) - (A)A-1 Nest Hotel Sapporo Ekimae

Variable + Fixed Rent

Sapporo, Hokkaido

5,734.93

2,160

2,153

2,440

5.4

+286

A-2 Nest Hotel Sapporo Odori

Variable + Fixed Rent

Sapporo, Hokkaido

5,638.78

1,450

1,481

1,680

5.3

+198

A-3 Comfort Hotel Kushiro

Fixed Rent

Kushiro, Hokkaido

3,180.58

300

300

421

5.5

+120

B-1 Grandpark-Inn Yokohama

Fixed Rent

Yokohama

1,183.26

1,490

1,509

1,560

4.6

+50

C-1 Smile Hotel Tokyo Asagaya

Variable + Fixed Rent

Tokyo

2,721.70

3,910

3,983

4,050

4.4

+66

C-2 Smile Hotel Asakusa

Variable + Fixed Rent

Tokyo

1,793.43

1,920

1,922

2,130

4.1

+207

C-3 Hotel Livemax Nihombashi-Hakozaki

Fixed Rent

Tokyo

853.00

1,360

1,351

1,440

4.5

+88

D-1 Comfort Hotel Hamamatsu

Fixed Rent

Hamamatsu,Shizuoka

4,173.92

1,550

1,508

1,810

5.4

+301

Variable + Fixed Rent

Nagoya, Aichi

5,255.66

2,670

2,701

2,910

4.9

+208

D-3 Comfort Hotel Central International Airport

Fixed Rent

Tokoname, Aichi

11,599.63

5,308

5,302

5,880

4.0

+577

D-4 Comfort Hotel Suzuka

Fixed Rent

Suzuka, Mie

2,186.65

300

298

377

5.0

+78

E-1 Smile Hotel Kyoto Shijo

Variable + Fixed Rent

Kyoto

4,891.84

4,480

4,524

4,990

4.6

+465

E-2 Hotel Vista Premio Kyoto

Variable + Fixed Rent

Kyoto

3,867.66

3,600

3,598

4,050

4.3

+451

E-3 Chisun Inn Osaka Hommachi

Variable + Fixed Rent

Osaka

3,690.00

1,630

1,670

1,990

4.5

+319

Fixed Rent

Kobe, Hyogo

4,633.16

1,490

1,456

1,700

4.9

+243

Variable + Fixed Rent

Osaka

8,057.26

7,600

7,778

7,690

4.5

-88

F-1 Comfort Hotel Okayama

Fixed Rent

Okayama

5,543.70

1,200

1,202

1,240

5.3

+37

F-2 Nest Hotel Matsuyama

Variable + Fixed Rent

Matsuyama, Ehime

6,671.94

1,610

1,660

1,770

5.7

+109

Fixed Rent

Hiroshima

2,756.20

1,800

1,870

2,080

5.3

+209

G-1 Valie Hotel Tenjin

Variable + Fixed Rent

Fukuoka

1,910.94

1,380

1,434

2,090

4.5

+655

G-2 Nest Hotel Naha

Variable + Fixed Rent

Naha, Okinawa

9,240.20

3,750

3,803

4,090

5.3

+286

21 Hotels

95,584.44

50,95851,512

56,3884.7+4,875D-2 Hotel Wing International Nagoya

Hotel

Lease Terms

E-4 Hotel Suave Kobe Asuta
E-5 Nest Hotel Osaka Shinsaibashi

F-3 Urbain Hiroshima Executive* While Hotel Suave Kobe Asuta’s lease contract includes a variable rent clause, it has never been triggered. Because Ichigo Hotel does not anticipate receiving variable
rent at this hotel, it has been classified as a fixed rent hotel.
© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

31

Individual Hotel Operating Results(year-on-year)
Hotel
No.

Hotel Name

No. of
Guest
Rooms

January 2018 (August 2017 - January 2018)

Lease Terms

Location

A-1 Nest Hotel Sapporo Ekimae

Variable + Fixed Rent

Sapporo, Hokkaido

162

8,332

(+0.4%)

96.7

8,621

(+0.5%)

300.3(-3.3%)

A-2 Nest Hotel Sapporo Odori

Variable + Fixed Rent

Sapporo, Hokkaido

121 10,303(+3.2%)

96.7 (+0.6%) 10,659(+2.5%)

254.1(+5.2%)

A-3 Comfort Hotel Kushiro

Fixed Rent

Kushiro, Hokkaido

126(+12.1%)77.3 (+0.4%)(+11.6%)105.8(+4.6%)

B-1 Grandpark-Inn Yokohama

Fixed Rent

Yokohama

175

C-1 Smile Hotel Tokyo Asagaya

Variable + Fixed Rent

Tokyo

112

8,184

(+2.5%)

92.3(-6.3%)

8,865(+9.4%)

174.3(+2.4%)

C-2 Smile Hotel Asakusa

Variable + Fixed Rent

Tokyo

96

6,509

(-3.5%)

93.4(-2.1%)

6,968(-1.5%)

120.3(-3.2%)

Fixed Rent

Hamamatsu, Shizuoka

196

4,696

(-7.6%)

79.7(-1.0%)

5,891(-6.7%)

169.4(-7.6%)

Variable + Fixed Rent

Nagoya, Aichi

220

5,871

(+12.4%)89.3 (+5.1%)

6,575(+6.9%)

267.9 (+12.0%)

D-3 Comfort Hotel Central International Airport

Fixed Rent

Tokoname, Aichi

346

7,935

(+7.1%)

87.5 (+3.9%)

9,073(+3.1%)

562.3(+6.4%)

D-4 Comfort Hotel Suzuka

Fixed Rent

Suzuka, Mie

105

4,699

(+3.1%)

76.9 (+1.5%)

6,108(+1.5%)

92.0(+1.9%)

E-1 Smile Hotel Kyoto Shijo

Variable + Fixed Rent

Kyoto

140

9,671

(-12.5%)99.0(-0.7%)

9,769(-11.9%)262.3(-11.9%)E-2 Hotel Vista Premio Kyoto

Variable + Fixed Rent

Kyoto

84 12,124(-6.0%)

84.9(-5.7%) 14,277(-0.3%)

201.1(-5.4%)

E-3 Chisun Inn Osaka Hommachi

Variable + Fixed Rent

Osaka

130

7,256

(-2.2%)

91.6 (+6.1%)

7,920(-7.8%)

173.6(-2.2%)

E-5 Nest Hotel Osaka Shinsaibashi

Variable + Fixed Rent

Osaka

302

8,803

(+5.6%)

97.1 (+3.3%)

9,066(+2.2%)

527.5(+3.8%)

F-1 Comfort Hotel Okayama

Fixed Rent

Okayama

208

5,627

(+4.6%)

89.4 (+2.8%)

6,296(+1.8%)

223.6(+3.7%)

F-2 Nest Hotel Matsuyama

Variable + Fixed Rent

Matsuyama, Ehime

190

6,289

(+26.1%)90.4 (+8.6%)

6,958(+16.1%)

310.8 (+20.9%)

Fixed Rent

Hiroshima

171

6,022

－

87.1

6,917

－

189.5

－

G-1 Valie Hotel Tenjin

Variable + Fixed Rent

Fukuoka

77

8,752(+4.3%)

90.2 (+5.3%)

9,699(-1.0%)

134.3(+4.1%)

G-2 Nest Hotel Naha

Variable + Fixed Rent

Naha, Okinawa

198

9,152

(+3.1%)

88.9(－) 10,300(+3.1%)

472.9(+3.7%)

181

4,527

(-7.6%)

78.4(-2.0%)

5,771(-5.6%)

164.8(-6.2%)

Variable Rent Hotels

1,832

8,234

(+2.7%)

92.9 (+1.8%)

8,860(+0.9%) 3,199.5(+2.4%)

Fixed Rent Hotels

1,333

5,817

(+2.0%)

83.6 (+1.1%)

6,962(+0.9%) 1,507.3(+1.4%)

Total

3,340

7,216

(+2.5%)

89.0 (+1.5%)

8,110(+1.0%) 4,706.8(+2.1%)

D-1 Comfort Hotel Hamamatsu
D-2 Hotel Wing International Nagoya

F-3 Urbain Hiroshima Executive

Other

Fixed Rent

RevPAR (JPY)

4,564

Occupancy (%)－(-0.1%)ADR (JPY)

5,906

－

Revenue (JPY M)

－

－

－

* Data for Hotel Suave Kobe Asuta and Hotel Livemax Nihombashi-Hakozaki are consolidated under Other, because the hotel operators did not provide consent to disclose
hotel-specific data. In addition, data for Grandpark-Inn Yokohama is not shown except for No. of Guest Rooms, as the hotel operator did not provide consent to disclose hotelspecific data. While Hotel Suave Kobe Asuta’s lease contract includes a variable rent clause, it has never been triggered. Because Ichigo Hotel does not anticipate receiving
variable rent at this hotel, it has been classified as a fixed rent hotel.
© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

32

Individual Hotel Financialsは当初予想より9.4%上昇(JPY thousand)No.

Hotel Name

A-1
Total

A-2

Nest Hotel Nest Hotel
Sapporo Sapporo
Odori
Ekimae

A-3

C-1

ComfortHotel
Kushiro

Smile
Hotel
Tokyo
Asagaya

C-2

D-1

D-3

Comfort
Comfort
Smile
Hotel Central
Hotel
Hotel
International
Asakusa Hamamatsu
Airport

D-4

E-1

ComfortHotel
Suzuka

Smile
Hotel
Kyoto
Shijo

E-2

E-3

E-5

F-1

F-2

G-1

G-2

ComfortHotel Vista Chisun Inn Nest Hotel
Nest Hotel Valie Hotel Nest Hotel
Hotel
Osaka
Osaka
PremioMatsuyama
TenjinNaha
Hommachi Shinsaibashi Okayama
Kyoto

Other

Real Estate(A) Management
Revenue

1,782,023

103,563

86,47018,41991,73048,95555,361

151,441

15,442

136,21292,54740,408233,359

46,000106,560

62,046

153,442

340,060

Fixed Rent

974,852

32,392

23,385

18,41928,372

15,47655,361

151,441

15,442

34,64475,00039,60063,97445,90035,55824,752

59,109256,020

Variable Rent

748,007

71,17062,885–63,35833,478–––

101,567

17,547789

169,384–

70,99937,293

94,33325,199Other Revenue

59,163

–

200

–

–

–

–

–

–

–

–

19

–

100

3

–

–

58,840161,749

9,428

12,081

5,464

8,041

4,475

3,446

14,092

2,817

7,680

9,191

4,774

15,096

5,766

6,185

4,465

9,321

39,419Outsourcing
Fees

17,721

600

600

900

2,320

600

600

570

540

606

1,475

900

1,200

900

1,080

600

1,080

3,150

Insurance

2,618

150

158

83

88

57

96

282

48

154

103

102

248

142

201

56

240

401

RepairExpenses &Equipment

15,949

3,145

2,382

–

1,787

1,052

–

227

–

1,760

319

271

848

212

461

226

2,916

338

Taxes

97,009

5,103

8,304

4,070

3,435

2,357

2,478

12,604

1,821

4,799

6,878

3,140

12,392

4,101

4,028

3,221

4,667

13,605

Other
Expenses

28,450

429

636

409

408

408

271

407

407

360

414

360

407

411

415

360

417

21,923

NOI(A) - (B)

1,620,274

94,134

74,388

12,95583,68844,47951,915

137,349

12,625

128,531

83,35535,634

218,262

40,233

100,375

57,580144,121300,641(D) Depreciation

302,163

12,705

17,842

4,550

23,422

13,276

14,39029,088

4,072

15,446

12,777

5,172

32,33011,98319,086

8,457

31,63845,921

1,318,111

81,42856,546

8,404

60,266

31,20337,525108,261

8,552

113,085

70,57730,461

185,932

28,24981,28949,123

112,482

254,720

Real Estate(B) Management
Expenses(C)

Net Rental Income(* Rents for Hotel Wing International Nagoya, Hotel Suave Kobe Asuta, Hotel Livemax Nihombashi-Hakozaki, Grandpark-Inn Yokohama, and Urbain Hiroshima Executive, andretail rents are included in Other, as the operators did not provide consent to disclose the data. NOI for Other includes NOI for Hotel Wing International Nagoya, Hotel Suave
Kobe Asuta, Hotel Livemax Nihombashi-Hakozaki, Grandpark-Inn Yokohama, and Urbain Hiroshima Executive which are JPY 78.3 million, JPY 46.6 million, JPY 33.2 million,
JPY 40.0 million, and JPY 63.4 million, respectively. Depreciation for Other includes depreciation for Hotel Wing International Nagoya, Hotel Suave Kobe Asuta, Hotel Livemax
Nihombashi-Hakozaki, Grandpark-Inn Yokohama, and Urbain Hiroshima Executive which are JPY 8.5 million, JPY 12.7 million, JPY 9.1 million, JPY 2.2 million, and JPY 13.4
million, respectively.
© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.
33

Fixed/Variable Rent, RevPAR, ADR & Occupancy Trends
Fixed/Variable Rent

(JPY thousand)Jan 2016
Rent

Fixed Rent

Jul 2016
Ratio

Rent

Jan 2017
Ratio

Rent

Jul 2017
Ratio

Rent

Jan 2018
Ratio

Rent

Ratio

131,07966.2%

423,06354.6%

878,775

56.3%

930,906

55.1%

1,034,015

58.0%

Fixed Rent from Operators

119,61660.4%

387,25350.0%

823,97952.8%

870,22851.6%

974,852

54.7%

Other (Rent from Retail Tenants)

11,463

5.8%

35,810

4.6%

54,796

3.5%

60,678

3.6%

59,163

3.3%

66,87033.8%

351,895

45.4%

681,95943.7%

757,07744.9%

748,00742.0%

197,950

100.0%

774,959

100.0%

1,560,734

100.0%

1,687,985

100.0%

1,782,023

100.0%

Variable Rent
Total

Operating Results (Feb 2017 – Jan 2018)

RevPAR (right)

ADR (right)

Occupancy (left)

100%

(JPY)
10,000

80%

8,000

60%

6,000

40%

4,000

20%

2,000

0%

0
Feb 2017

Mar 2017

Apr 2017

May 2017

Jun 2017

Jul 2017

Aug 2017

Sep 2017

Oct 2017© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Nov 2017

Dec 2017

Jan 2018

34

Variable Rent Hotel Details
A-1 Nest Hotel Sapporo Ekimae
Location

Sapporo, Hokkaido

Access5-minute walk from
Sapporo Station on
Sapporo City Metro
Namboku LineOperator

Nest Hotel Japan
Corporation

Guest Rooms
Acquisition
Price

Operating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

15,00080%

12,000

60%

9,000

40%

6,000

162

20%

3,000

JPY 2.16B

0%0Feb 2017

May 2017

Aug 2017

Nov 2017

A-2 Nest Hotel Sapporo Odori
Location

Sapporo, Hokkaido

Access4-minute walk from
Odori Station on
Sapporo City Metro
Namboku LineOperator

Nest Hotel Japan
Corporation

Guest Rooms
Acquisition
Price

Operating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

15,00080%

12,000

60%

9,000

40%

6,000

121

20%

3,000

JPY 1.45B

0%0Feb 2017© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2017

Aug 2017

Nov 2017

35

Variable Rent Hotel Details
C-1 Smile Hotel Tokyo Asagaya
Location

Suginami-ku, Tokyo

Access1-minute walk from
Asagaya Station on JR
Chuo/Sobu LineOperator

K.K. Hospitality
Operations

Guest Rooms
Acquisition
Price

Operating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

10,000

80%

8,000

60%

6,000

40%

4,000

112

20%

2,000

JPY 3.91B

0%0Feb 2017

May 2017

Aug 2017

Nov 2017

C-2 Smile Hotel Asakusa
Location

Taito-ku, Tokyo

Access11-minute walk from
Asakusa Station on
Tokyo Metro
Ginza LineOperating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

10,000

80%

8,000

60%

6,000

K.K. Hospitality
Operations

40%

4,000

Guest Rooms

96

20%

2,000

AcquisitionPrice

JPY 1.92B

Operator00%
Feb 2017© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2017

Aug 2017

Nov 2017

36

Variable Rent Hotel Details
D-2 Hotel Wing International Nagoya
Location

Nagoya, Aichi

Access2-minute walk from
Marunouchi Station on
both Nagoya Subway
Network SakuradoriLine and Tsurumai
Line

Operating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

10,000

80%

8,000

60%

6,000

Forbes Co., Ltd.

40%

4,000

Guest Rooms

220

20%

2,000

AcquisitionPrice

JPY 2.67B

0%Operator0
Feb 2017

May 2017

Aug 2017

Nov 2017

E-1 Smile Hotel Kyoto Shijo
Location

Kyoto

Access5-minute walk from
Shijo Station on Kyoto
City Subway Karasuma
Line and Karasuma
Station on Hankyu
Kyoto Main LineOperator

K.K. Hospitality
Operations

Guest Rooms

140

AcquisitionPrice

JPY 4.48B

Operating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

20,00080%

16,00060%

12,000

40%

8,000

20%

4,000
0

0%
Feb 2017© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2017

Aug 2017

Nov 2017

37

Variable Rent Hotel Details
E-2 Hotel Vista Premio Kyoto
Location

Kyoto

Access5-minute walk from
Kyoto Shiyakushomae
Station on Kyoto City
Subway Tozai LineOperator

Vista HotelManagement Co., Ltd.

Guest Rooms
Acquisition
Price

Operating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

20,00080%

16,00060%

12,000

40%

8,000

84

20%

4,000

JPY 3.60B

0%0Feb 2017

May 2017

Aug 2017

Nov 2017

E-3 Chisun Inn Osaka Hommachi
Location

Osaka

Access5-minute walk from
Sakaisuji-Hommachi
Station on Osaka
Municipal Subway
Chuo LineOperating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

10,000

80%

8,000

60%

6,000

SHR Hotel Lease Co.,
Ltd.

40%

4,000

Guest Rooms

130

20%

2,000

AcquisitionPrice

JPY 1.63B

0%Operator0
Feb 2017© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2017

Aug 2017

Nov 2017

38

Variable Rent Hotel Details
E-5 Nest Hotel Osaka Shinsaibashi
Location

AccessOperatorOsaka
1-minute walk from
Nagahoribashi Station
on Osaka Municipal
Subway Sakaisuji Lineand NagahoritsurumiRyokuchi Line
Nest Hotel Japan
Corporation

Operating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

10,000

80%

8,000

60%

6,000

40%

4,000
2,000

Guest Rooms

302

20%

AcquisitionPrice

JPY 7.60B

0%0Feb 2017

May 2017

Aug 2017

Nov 2017

F-2 Nest Hotel Matsuyama
Location

AccessOperator

Matsuyama, Ehime
25-minute drive from
Matsuyama Airport,
3-minute walk from
Katsuyamacho Station
on Iyo Railway JonanLine
Nest Hotel Japan
Corporation

Operating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

10,000

80%

8,000

60%

6,000

40%

4,000
2,000

Guest Rooms

190

20%

AcquisitionPrice

JPY 1.61B

0%0Feb 2017

May 2017© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Aug 2017

Nov 2017

39

Variable Rent Hotel Details
G-1 Valie Hotel Tenjin
Location

Fukuoka

Access6-minute walk from
Tenjin Station on
Fukuoka City Subway
Kuko LineOperating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

10,000

80%

8,000

60%

6,000

The Court Co., Ltd.

40%

4,000

Guest Rooms

77

20%

2,000

AcquisitionPrice

JPY 1.38B

0%Operator0
Feb 2017

May 2017

Aug 2017

Nov 2017

G-2 Nest Hotel Naha
Location

AccessOperatorNaha, Okinawa
7-minute drive fromNaha Airoirt, 5-minute
walk from Asahibashi
Station on Okinawa
Urban Monorail
Nest Hotel Japan
Corporation

Operating Results (Feb 2017 - Jan 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

15,00080%

12,000

60%

9,000

40%

6,000
3,000

Guest Rooms

198

20%

AcquisitionPrice

JPY 3.75B

0%0Feb 2017

May 2017© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Aug 2017

Nov 2017

40

Fixed Rent Hotel Details
A-3 Comfort Hotel Kushiro
Location

Kushiro, Hokkaido

B-1 Grandpark-Inn Yokohama
Location

Yokohama, Kanagawa

Access2-minute walk from
Kushiro Station on JR
Nemuro Main Line

Access6-minute walk from
Yokohama Station on
JR Line, private
railways, and subway

Operator

Greens Co., Ltd.

Operator

MiddleWood Co., Ltd.

Guest Rooms

126

Guest Rooms

175

AcquisitionPrice

JPY 300M

AcquisitionPrice

JPY 1.49B

C-3 Hotel Livemax Nihombashi-Hakozaki

D-1 Comfort Hotel Hamamatsu
Location

Hamamatsu, Shizuoka

Access3-minute walk from
Suitengumae Station
on Tokyo Metro
Hanzomon Line

Access2-minute walk from
Hamamatsu Station on
JR Tokaido Main Line,
Tokaido Shinkansen

Operator

Live Max Inc.

Operator

Greens Co., Ltd.

Location

Chuo-ku, Tokyo

Guest Rooms

48

Guest Rooms

196

AcquisitionPrice

JPY 1.36B

AcquisitionPrice

JPY 1.55B© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

41

Fixed Rent Hotel Details
D-3 Comfort Hotel Central International Airport

D-4 Comfort Hotel Suzuka

Location

Tokoname, Aichi

LocationSuzuka, Mie

Access5-minute walk from Central
International Airport,
3-minute walk from Central
International Airport Station
on Meitetsu Airport Line

Access3-minute walk from
Shirako Station on
Kintetsu Nagoya LineOperator

Greens Co., Ltd.

Operator

Greens Co., Ltd.

Guest
Rooms

346

Guest Rooms

105

JPY 5.31B

AcquisitionPrice

JPY 300M

AcquisitionPrice

E-4 Hotel Suave Kobe Asuta

F-1 Comfort Hotel Okayama
Location

OkayamaAccess2-minute walk from
Shinnagata Station on
JR Kobe Line (Sanyo
Main Line)

Access15-minute walk from
Okayama Station on
Sanyo Shinkansen,
Sanyo Main Line, Uno
Line

OperatorHotel Tetora

Operator

Greens Co., Ltd.

Location

Kobe, Hyogo

Guest Rooms

133

Guest Rooms

208

AcquisitionPrice

JPY 1.49B

AcquisitionPrice

JPY 1.20B© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

42

Fixed Rent Hotel Details
F-3 Urbain Hiroshima Executive
Location

Hiroshima

Access6-minute walk from
Hiroshima Station on
JR Sanyo Shinkansen
and Sanyo Main LineOperator

Yuki Corporation

Guest Rooms

171

AcquisitionPrice

JPY 1.80B© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

43

Appendix: Hotel Market Environment© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

44

Hotel Market Environment (1)Trend in Number of Inbound Guests per Prefecture(1,000 persons)(1,000 persons)Tokyo

12,00010,000

9,350
8,013

8,000
6,000

8,153

(1,000 persons)Osaka

12,00012,00012,00010,00010,00010,000

8,000

8,000

8,000

6,221

5,755

6,000
4,000

4,000

(1,000 persons)Hokkaido

6,162

5,173
3,784

6,000
3,976

4,000

4,414

4,947

6,000
4,000

2,749
2,000

2,000

2,000

0

0
201 4

(1,000 persons)

201 5

201 6

Okinawa(1,000 persons)

3,000
2,384

2,500
1,935

2,000

201 4

201 7

201 5

201 6

201 7

0

(1,000 persons)

Fukuoka

201 5

201 6

201 7

3,000

2,500

2,500

2,500

2,026
1,571

2,000

1,744

1,690

1,500

2,193

201 4

201 5

201 6

201 7

(1,000 persons)

Aichi

3,000

2,000

2,198

2,525

1,642

0

3,000

2,091

1,500

2,000

201 4

Kyoto

1,757

1,792

1,500

Ehime

2,000
1,500

1,304
1,000

1,000

500

500

0

0
201 4

201 5

201 6

201 7

1,000

877

1,017

1,000

500

500

0
201 4

201 5

201 6

201 7

201 4

201 5

201 6

201 7

0

44

76

112

128

201 4

201 5

201 6

201 7

* Calculated by Ichigo Investment Advisors based on Japan Tourism Agency (JTA) “Statistical Survey of Travelers” (lodging facilities with ten or more employees).
Prefectures shown are where Ichigo Hotel has variable rent hotels.
© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

45

Hotel Market Environment (2)New Hotel Room Supply by Prefecture
New Supply
Japanese Inns
Hotels200,000

25%

150,000

9%31%
100,000

5%2% 19%

12%

14% 15%25%
3% 8%50,000

4%

25%
3% 5%

0% 7% 5%2% 5% 4% 11% 7%
1% 12% 3% 6%
3% 2% 1% 6%
1% 0% 2% 5% 7% 8% 10%

4% 9%
6% 2% 3% 4% 18%

Nara

Tottori

Saga

Tokushima

Shimane

Kochi

KagawaShiga

ToyamaEhime

Miyazaki

Fukui

Akita

Wakayama

Yamagata

Yamaguchi

Aomori

OkayamaNagasaki

Iwate

Saitama

Gifu

Yamanashi

Ishikawa

Ibaraki

Oita

Kagoshima

Kumamoto

Hiroshima

Gunma

Mie

Miyagi

Tochigi

Kyoto

Okinawa

Fukushima

Hyogo

Kanagawa

Niigata

Chiba

Fukuoka

Aichi

NaganoOsaka

Hokkaido

Tokyo

Shizuoka

02%* The percentage shows the increase of new supply relative to existing hotel rooms. Calculated by Ichigo Investment Advisors based on Ministry of
Health, Labor, and Welfare’s Report on Public Health Administration and Services and Hotel Restaurant Weekly (December 1, 2017 edition).
© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

46

Appendix: Loan Details & Shareholder Composition© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

47

Loan Details
Loan Balances
Loan

Amount(JPY million)

LenderInterest Rate(%)

Borrowing Date

Maturity

Term Loan I

SMBC, Mizuho, Shinsei, Resona

3,250

0.65545

November 30, 2015

November 30, 2018

Term Loan II

SMBC, Mizuho, Shinsei, Resona

5,250

1.08000

November 30, 2015

November 30, 2020

Term Loan III

SMBC, Mizuho, Shinsei, Resona, Fukuoka, Nishi-Nippon City

2,000

0.58000

August 17, 2016

February 28, 2020

Term Loan IV

SMBC, Mizuho, Shinsei, Resona, Fukuoka, Nishi-Nippon City

4,500

0.90750

August 17, 2016

February 28, 2023

Term Loan V

SMBC, Mizuho, Shinsei, Resona, Fukuoka, Nishi-Nippon City

4,500

0.98500

August 17, 2016

August 31, 2023

Term Loan VI

SMBC

450

0.53000

March 27, 2017

February 28, 2020

Term Loan VII

SMBC, Mizuho, Shinsei, Resona, Fukuoka, Nishi-Nippon City

1,800

0.78750

August 1, 2017

January 31, 2023

21,750

Average 0.88%

Total

Lender Composition

Fixed vs. Floating

Strong Lender Group

Nishi-Nippon City
4%

Fukuoka
4%

Average Remaining Loan Term 3.6 years

LTV Control
Resona10%

Floating
26.2%

Interest Rate Risk Management

SMBC
39%

Shinsei
12%

Fixed
73.8%
Mizuho31%© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Stable Financial Base48

Shareholder Composition
Major Shareholders (as of January 31, 2018)
Name
1

Japan Trustee Services Bank, Ltd., Trust AccountShareholdings by Shareholder TypeNo. ofShares30,548Foreign Corporations & Individuals
Non-Financial Domestic Corporations

Share
12.0%

2

The Master Trust Bank of Japan, Trust Account24,8939.8%

3

Trust & Custody Service Bank, Ltd.,
Securities Investment Trust Account13,321

5.2%

4

SIX SIS LTD.

12,253

4.8%

5The Nomura Trust and Banking Co., Ltd.,
Investment Trust Account

8,960

3.5%

6

Ichigo Inc. (Sponsor)

6,500

2.5%

Domestic Financial Institutions
Domestic Individuals

100%
55,102 shares(21.3%)
80%

16,024 shares(6.2%)

60,069 shares(23.3%)
18,653 shares(7.2%)

65,834 shares(25.8%)
19,037 shares(7.5%)

60%

7

Ichigo Trust Pte. Ltd.

6,424

2.5%

8

Morgan Stanley MUFG Securities

4,356

1.7%

9

THE BANK OF NEW YORK MELLON (INTERNATIONAL)
LIMITED 131800

3,990

1.6%

BNP PARIBAS SECURITIES SERVICES
10 LUXEMBOURG/JASDEC/BPSS DUBLIN CLIENTS/UCITSASSETS

3,935

1.5%

115,223 shares(44.7%)

100,216 shares(38.9%)

71,235 shares(27.7%)

78,646 shares(30.5%)

72,369 shares(28.4%)

Jul 2017(257,584 shares)

Jan 2018(254,974 shares)

97,734 shares(38.3%)

40%

20%

0%

115,180

45.2%

Jan 2017(Outstanding Shares) (257,584 shares)

Note: 2,610 shares were cancelled on November 28, 2017.

Shareholders by Shareholder TypeJan 31, 2018
Jan 31, 2017
Jul 31, 2017
Shareholders Shareholders Shareholders
Share
Domestic Individuals
9,656
10,705
10,503
97.0%
Financial Institutions
52
51
53
0.5%
City banks, trust banks
5
8
8
0.1%
Regional banks
3
4
4–
Other (including securities companies)
44
39
41
0.4%
Non-Financial Domestic Corporations
181
178
179
1.7%
Foreign Corporations & Individuals
57
56
90
0.8%
Total
9,946
10,99010,825100.0%© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

49

Appendix: Synergies with Sponsor Ichigo (2337)© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

50

Ichigo Hotel’s Sponsor: Ichigo (2337)
Core Businesses: Asset Management, Real Estate Value-Add, Clean Energy‒ Manages Ichigo Hotel (3463), Ichigo Office (8975), and Ichigo Green (9282)‒ TSE First Section, JPX-Nikkei 400 Member‒ Deeply committed to CSR and Sustainability – Japan’s first zero-carbon listed realestate company
Key Ichigo Subsidiaries
Ichigo(TSE First Section 2337)

Ichigo Preserves andImproves Real Estate

The word “Ichigo” comes from the ancient Japanese
proverb, Ichigo Ichie, literally meaning “One lifetime,
one encounter.” The phrase was first used by a 16th
century master of the tea ceremony, Sen no Rikyu.
He called upon his disciples to give total focus andsincerity to each act of the tea ceremony for every
guest, because that particular moment will only exist
once and must be fully lived and realized.
Ichigo embraces the Ichigo Ichie philosophy ofsincerity and service, and works to build strong longterm relationships to support the success of ourclients, shareholders, and all stakeholders.

Ichigo Investment Advisors

Asset manager of Ichigo Hotel (3463), Ichigo Office (8975), and Ichigo
Green (9282)

Ichigo Estate

Real estate value-add

Ichigo ECO Energy

Clean energy business focusing on utility-scale solar power production,
making purposeful use of unused land nationwide

Ichigo Owners

Real estate owner services company

Ichigo Land Shinchiku

Real estate value-add

Ichigo Real Estate Services Fukuoka

Real estate business centered on Fukuoka in Kyushu region

Ichigo Marché

Operates Matsudo Nanbu wholesale market in Chiba Prefecture

Miyako City

Operates Miyako City shopping mall in Miyazaki Prefecture© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

51

Ichigo Hotel (3463) and Ichigo (2337) Synergies
 Strengthen acquisitions through leveraging Ichigo’s sourcing network Increase asset value through Ichigo’s real estate value-add capabilities
 Drive higher returns for Ichigo Hotel shareholders
Buy

Ichigo Hotel (3463)
Buy

Ichigo (2337 – Sponsor)

Real
EstatePreserve & Improve

Sell

Long-Term Asset Management(Grow Earnings for Shareholders)







Grow earnings via collaboration with hotel
operators
Grow earnings via rebranding and improving
contract terms
Grow earnings via smart cost control

Sell

Value-Add(Increase Asset Value)

Role

Value-add capex
On-going renovation and equipment renewal
Increase hotel attractiveness & competitiveness



Hard





Soft

Buy

Value‐Add

Rectify building code issues
Seismic and safety reinforcement
Large-scale structural and equipment renewal
Upgrade hotel operator/brandImprove contract terms
Improve hotel operations

Third-Party Investors© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Sell

52

Ichigo Hotel Overview
Ichigo Hotel
Name

Ichigo Hotel REIT Investment Corporation

Securities Code3463

Address

1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo

Executive Director

Osamu Miyashita

Fiscal Periods

January (August 1 - January 31) and July (February 1 - July 31)

Asset Management Company
Name

Ichigo Investment Advisors Co., Ltd.

President

Wataru Orii

Registration &Membership

Financial Instruments Dealer License (Investment
Management Services, Investment Advisory & Agency
Services, and Type II Financial Instruments Services)
Minister of Finance, Kanto Financial Bureau #318

© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

53

MEMO

© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

54

Disclaimer
These materials are for informational purposes only, and do not constitute or form a part of, and should not be construed as,
an offer to sell or buy securities of Ichigo Hotel REIT Investment Corporation (Ichigo Hotel ).
These materials may contain forward-looking statements regarding the intent, belief or current expectations of Ichigo Hotelwith respect to financial condition and future results. These statements are based on certain assumptions founded on
currently available information. Accordingly, such statements are subject to risks and uncertainties, and there is no assurance
as to actual financial conditions or future results. Actual results may vary from those indicated in the forward-looking
statements.
In creating these materials, Ichigo Hotel and Ichigo Investment Advisors Co., Ltd. (IIA) have sought to provide accurate
information. However, there can be no assurance given as to the accuracy, certainty, validity or fairness of any suchinformation. The content of these materials is also subject to revision or retraction without prior notice.
This document is a translation. If there is any discrepancy between the Japanese version and the English translation, theJapanese version shall prevail.

Contact:
Ichigo Hotel IR Desk (3463)
TEL: +81-3-3502-4854
E-mail： ir_ichigo-hotel@ichigo.gr.jp
www.ichigo-hotel.co.jp/english
Ichigo is Japan’s first zero-carbon listed real estate company. We are taking
responsibility for our environmental footprint by offsetting our carbon emissions
and investing in low-carbon technologies such as solar energy.

© 2018 Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

55