Ichigo Preserves and Improves Real Estate[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

April 20, 2018
REIT Issuer
Ichigo Hotel REIT Investment Corporation (“Ichigo Hotel,” 3463)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Osamu Miyashita, Executive Director
www.ichigo-hotel.co.jp/english
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Wataru Orii, PresidentInquiries: Hiroto Tajitsu, Head of Administration
Tel: +81-3-3502-4892

Hotel Sale (Smile Hotel Asakusa)
Ichigo Investment Advisors (“IIA”), the asset management company of Ichigo Hotel,
decided today to sell Smile Hotel Asakusa.
The sale price of Smile Hotel Asakusa is 1.4X book value and 1.3X appraisal value,generating gains on sale of c. JPY 690 million in the January 2019 fiscal period.
1. Sale Summary
Hotel Name
Smile Hotel Asakusa
Hotel No.
C-2 014
Hotel Type
Stay-Only
Date Built
September 22, 1992
Form of Ownership
Trust beneficiary interest in real estate (juekiken)
Acquisition Date
August 17, 2016
Appraisal Value1
JPY 2,130 million
2
Sale Price
JPY 2,700 million
3Book Value
JPY 1,912 million
4
Gains on Salec. JPY 690 million
Contract Date
April 20, 2018
Transaction Date
August 1, 2018
Closing Date
August 1, 2018
Transaction Method
Sale of trust beneficiary interest in real estate1
Appraisal Value is as calculated by Daiwa Real Estate Appraisal Co., Ltd. as ofJanuary 31, 2018, and is compliant with the appraisal guidelines of IIA as well as therules of The Investment Trusts Association, Japan.
2Sale Price excludes incidental expenses such as fees and property, city planning, andconsumption taxes.
3Book Value is an estimate based on the most recent book value (January 2018 fiscalperiod-end), adjusted for expected capital expenditures and depreciation through theTransaction Date.
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Gains on Sale is an estimate calculated as the Sale Price less Book Value and forecast
sale expenses, and is subject to change.

2. Sale Rationale
Ichigo Hotel is committed to growing value for its shareholders, and consistent with thiscommitment was Japan’s second J-REIT to conduct a share buyback in October 2017.
Since acquiring Smile Hotel Asakusa, Ichigo Hotel has worked in partnership with thehotel operator to increase the hotel’s value. Having received an offer from a buyer thatvalues the hotel at 1.4X book value and 1.3X appraisal value, Ichigo Hotel has decided
that it is in the best interest of shareholders to sell the hotel and deploy the gains on saletowards future growth investments that will further grow shareholder value.
In negotiation with the buyer, the closing date has been set on August 1, 2018, which is
3.5 months from the contract date. The buyer has completed due diligence and will pay
10% of the sale price on the contract date, so there is minimal settlement risk. The
August 1 closing date will provide time for Ichigo Hotel to transfer operational knowhow to the buyer to ensure a smooth ownership transition and review potential growthinvestments to grow shareholder value using the sale proceeds.
As a result of today’s sale, Ichigo Hotel’s January 2019 fiscal period net income isforecast to increase by c. JPY 564 million (+70.0%).

23. Hotel Overview
Hotel Name
Form of Ownership
Address
Property RightAreaLandZoningCoverage Ratio
Floor Area Ratio
Property Right
Use
Building
Structure
Total Floor Area
Date Built
Number of Tenants
Monthly Rental Income1
Deposit
Leasable Area
Leased Area
Occupancy
Acquisition PriceAppraiser
Appraisal Date
Value

Hotel Overview
Smile Hotel Asakusa
Trust beneficiary interest in real estate (juekiken)
6-35-8 Asakusa, Taito-ku, Tokyo
Freehold
361.38m2
Retail80%
500%
Freehold
Hotel, retail
SRC2 10 Floors
1,793.43m2September 22, 1992
1 (as of January 31, 2018)
Minimum guaranteed rent: JPY 31,316,680 p.a.
Variable rent: Monthly GOP – (Minimum guaranteed rent +percentage of monthly revenue + percentage of monthlyGOP)
No lease deposit, no guarantee deposit
1,793.43m2
1,793.43m2
Oct 2017 Nov 2017 Dec 2017 Jan 2018 Feb 2018
100%100%100%100%100%
JPY 1,920 million
Daiwa Real Estate Appraisal Co., Ltd.
January 31, 2018
JPY 2,130 million

1

Minimum guaranteed rent is the annual minimum guaranteed rent covering the 12month period from February 2017 to January 2018.
2
SRC = Steel-Reinforced Concrete

3Hotel Name
Appraisal Value
Appraiser
Appraisal Date

Appraisal Details
Smile Hotel Asakusa
JPY 2,130 million
Daiwa Real Estate Appraisal Co., Ltd.
January 31, 2018
Amount (JPY)

Appraisal Value
Value by Direct
Capitalization Method
IncomeMaximum
Obtainable
Rental Income
Vacancy LossExpenses
Administrativeand MaintenanceExpensesUtility Expenses
Repair Expenses
PM Fees
Leasing
Brokerage Fees
Taxes
Insurance
Premiums
Other Expenses
Net Operating
Income (NOI)
Income on
Investment ofDeposits
Received
CapitalExpenditures
Net Profit
Cap RateValue via DCF
MethodNotes
on a DCF valuation, and verified
2,130,000,000 Basedusing a direct capitalization valuation
2,160,000,000
107,772,000
107,772,000–
8,242,767– Borne by tenant– Borne by tenant
on the average of past 12 years of
1,137,417 Basedengineering reports
1,200,000 Based on the contractual amount–on FY2017 actual amounts
4,714,600 Based(including depreciable asset tax)
113,030 Based on the actual amountsof rental income (accounted for as a
1,077,720 1.0%
variable expense)
99,529,233– None, pursuant to contractual terms
on average renewal expense of the11,061,735 Basedpast 12 years in engineering reports
88,467,498
Based on transactions of similar assets andcomprehensive assessment of the asset’s
4.1% alocation,
its individual characteristics, andmarket trends
2,120,000,000

Discount Rate

Based on transactions of similar assets and3.9% the yields of financial assets with the asset’s
individual characteristics taken into account

Terminal Cap Rate

4.3% Based on risk-adjusted NOI4Value via Cost Approach
Land
Building

Amount (JPY)557,000,000
66.5%

NotesSum of building and Furniture, Fixtures, &33.5% Equipment (FF&E) values divided by sumof building, FF&E, and land values
Notes

None
4. Buyer ProfileName

The buyer, a Japanese SPC, did not provide consent todisclose its name.

Relationship withIchigo Hotel or IIA

The buyer does not have any capital, personnel, or business
relationship of note with Ichigo Hotel or IIA. In addition,
the buyer is not an interested party as defined in theEnforcement Ordinance of the Investment Trust andInvestment Corporation Law or the internal rules of theAsset Management Company.

5. Broker Profile
Name
Address
Representative
Principal Businesses
CapitalEstablishment Date
Relationship withIchigo Hotel or IIA
Brokerage Fee

Tokyu Livable, Inc.
1-9-5 Dogenzaka, Shibuya-ku, Tokyo
Shinji Sakaki, President
Brokerage, sale, and consigned sale of real estate
JPY 1,396,300,000
March 10, 1972
The broker does not have any capital, personnel, or business
relationship of note with Ichigo Hotel or IIA. In addition,
the broker is not an interested party as defined in theEnforcement Ordinance of the Investment Trust andInvestment Corporation Law or the internal rules of theAsset Management Company.
The broker did not provide consent to disclose the fee.

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6. Forward Commitment
Because the Transaction Date is August 1, 2018, the sale of Smile Hotel Asakusa (the“Sale”) constitutes a “forward commitment” 1 by Ichigo Hotel as stipulated in the“Comprehensive Guidelines for Supervision of Financial Instruments BusinessOperators” by the Financial Services Agency.
In the event of a violation of the provisions of the Sale by Ichigo Hotel or the buyer, theother party shall have the right to terminate the Sale and claim an amount equivalent to
20% of the purchase price as penalty.
Because Ichigo Hotel is the seller, it is highly unlikely that Ichigo Hotel will not be able
to fulfill its obligations under the Sale.
1Refers to a post-dated purchase and sales agreement under which payment andproperty delivery shall be made at least 1 month after the conclusion of the agreement,or any other agreement similar thereto.

7. Settlement Method
JPY 270 million payment (10% of the sale price) on contract date with the remainder
fully paid on closing date
8. Use of Sale ProceedsIchigo Hotel will retain the sale proceeds as cash-on-hand for future use, including asset
acquisitions and value-add capex.
9. Earnings Outlook
The sale is forecast to generate gains on sale of c. JPY 690 million in the January 2019fiscal period. Ichigo Hotel will distribute 100% of this January 2019 net income as adividend to its shareholders, including all of the profits on this sale, and will continue towork to maximize shareholder value.
Because the closing date is August 1, 2018, the sale does not impact the July 2018 fiscal
period earnings forecast. The impact of the sale on the January 2019 fiscal period isdetailed in today’s announcement “Earnings Forecast Revision for the January 2019
Fiscal Period.”

6Post-Sale Portfolio
Hotel
No.1
A-1 004
A-2 008
A-3 018B-1 020
C-1 012
C-3 016
D-1 006
D-2 003
D-3 011
D-4 019E-1 001E-2 002
E-3 005
E-4 007
E-5 010F-1 017
F-2 015
F-3 021G-1 009G-2 013

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Hotel Name

Prefecture

Hokkaido
Nest Hotel Sapporo Ekimae
Hokkaido
Nest Hotel Sapporo Odori
Hokkaido
Comfort Hotel Kushiro
Kanagawa
Grandpark-Inn Yokohama
Tokyo
Smile Hotel Tokyo Asagaya
Hotel Livemax NihombashiTokyo
Hakozaki
Shizuoka
Comfort Hotel Hamamatsu
Hotel Wing International
Aichi
NagoyaComfort Hotel Central
Aichi
International Airport
Mie
Comfort Hotel Suzuka
Kyoto
Smile Hotel Kyoto Shijo
Kyoto
Hotel Vista Premio Kyoto
Osaka
Chisun Inn Osaka Hommachi
Hyogo
Hotel Suave Kobe Asuta
Nest Hotel Osaka
Osaka
Shinsaibashi
Okayama
Comfort Hotel Okayama
Ehime
Nest Hotel Matsuyama
Hiroshima
Urbain Hiroshima Executive
Fukuoka
Valie Hotel Tenjin
Okinawa
Nest Hotel Naha
Total 20 Hotels

FixedFixedVariableAcquisition
Price2(JPY million)
2,160
1,450300
1,490
3,910

Fixed

1,360

2.8

Fixed

1,550

3.2

Variable

2,670

5.4

Fixed

5,308

10.8

Fixed
Variable
Variable
Variable
Fixed4300
4,480
3,600
1,630
1,490

0.6
9.1
7.3
3.3
3.0

Variable

7,600

15.5

Fixed
VariableFixed
Variable
Variable

1,200
1,610
1,800
1,380
3,750
49,038

2.4
3.3
3.7
2.8
7.6
100.0

LeaseTerms
Variable
Variable% ofPortfolio3
4.4
3.0
0.6
3.0
8.0

The initial letter (A, B, etc.) is a regional code which identifies the area in which the hotel is located.
CodeA

RegionHokkaido/Tohoku

BKantoCDEFTokyo
Hokuriku/TokaiKinki
Chugoku/Shikoku

GKyushu/Okinawa

Prefectures
Hokkaido, Aomori, Iwate, Miyagi, Akita, Yamagata, Fukushima
Ibaraki, Tochigi, Gunma, Saitama, Chiba, Kanagawa, Yamanashi,Nagano, Niigata
TokyoToyama, Ishikawa, Fukui, Gifu, Shizuoka, Aichi, Mie
Osaka, Hyogo, Kyoto, Shiga, Nara, Wakayama
Tottori, Shimane, Okayama, Hiroshima, Yamaguchi, Kagawa,Tokushima, Kochi, Ehime
Fukuoka, Saga, Nagasaki, Kumamoto, Oita, Miyazaki, Kagoshima,Okinawa

Acquisition Price is the price as indicated in the purchase and sales agreement for the hotel(excluding fees and incidental expenses such as property, city planning, and consumption taxes).
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3% of Portfolio is the Acquisition Price of each hotel as a percentage of the Total Acquisition Price forthe portfolio, rounded to the nearest tenth.
4While 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 beenclassified as a fixed rent hotel.

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