Disclaimers
This document has been prepared solely for the purpose of providing U.K. and Dutch
investors with certain information under Article 23 of the European Alternative
Investment Fund Managers Directive (European Directive 2011/61/EU) (the “AIFMD”) as
implemented in their respective jurisdictions. Accordingly, you should not use thisdocument for any other purpose.
Prohibition of Sales to EEA Retail Investors
In addition to the restrictions under the AIFMD, the units of Japan Hotel REIT Investment
Corporation (“JHR” or the “AIF”) are not intended to be offered, sold or otherwise madeavailable to and should not be offered, sold or otherwise made available to any retailinvestor in the European Economic Area, or the EEA. For these purposes, a retail investor
means a person who is one (or more) of: (i) a retail client as defined in point (11) of
Article 4(1) of Directive 2014/65/EU, as amended, or the MiFID II; or (ii) a customer
within the meaning of Directive (EU) 2016/97, where that customer would not qualify as aprofessional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not aqualified investor as defined in Regulation (EU) 2017/1129, as amended, the Prospectus
Regulation. Consequently no key information document required by Regulation (EU) No
1286/2014, or the PRIIPs Regulation, for offering or selling the units of JHR or otherwise
making them available to retail investors in the EEA has been prepared and therefore
offering or selling the units of JHR, or otherwise making them available, to any retailinvestor in the EEA may be unlawful under the PRIIPs Regulation.
United Kingdom
The units of JHR are being marketed in the United Kingdom pursuant to Article 59 of theUnited Kingdom Alternative Investment Fund Managers Regulations 2013. In accordancewith this provision, Japan Hotel REIT Advisors Co., Ltd. (the “AIFM”) has notified the
Financial Conduct Authority (the “FCA”) of its intention to offer these units in the United
Kingdom. For the purposes of the United Kingdom Financial Services and Markets Act
2000 (“FSMA”) JHR is an unregulated collective investment scheme which has not beenauthorized by the FCA. Accordingly, any communications of an invitation or inducement
to invest in JHR may be made only to: (i) investment professionals falling within Article
19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005,
as amended, or the Order; (ii) high net worth companies unincorporated associations orother entities falling within Articles 49(2)(a) to (d) of the Order; or (iii) other persons to

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whom it may lawfully be communicated, (all such persons together being referred to as“Relevant Persons”). In the United Kingdom, this document and its contents are directed
only at Relevant Persons and must not be acted on or relied on by persons who are not
Relevant Persons. Any person who is not a Relevant Person may not act or rely on thisdocument or any of its contents. The transmission of this document and its contents in the
United Kingdom to any person other than a Relevant Person is unauthorized and may
contravene the FSMA and other United Kingdom securities laws and regulations.
European Economic Area Investors
The AIFMD was adopted on June 8, 2011 and was required to be implemented by each
Member State of the EEA into its national legislation by July 22, 2013. The units of JHR
may not be marketed (within the meaning given to the term “marketing” under the
AIFMD), and the Communication may not be conducted, to prospective investors
domiciled or with a registered office in any Member State of the EEA unless: (i) the unitsof JHR may be marketed under any national private placement regime (including underthe AIFMD) or other exemption in that Member State; or (ii) the units of JHR canotherwise be lawfully marketed or sold in that Member State in circumstances in which
the AIFMD does not apply, provided that any such offer or sale is not made to a retailinvestor as described above. We have made a notification to each of the Netherlands
Authority for the Financial Markets and the United Kingdom Financial Conduct Authority
pursuant to Article 42 of the AIFMD in order to market the units of JHR in the
Netherlands and the United Kingdom, respectively.
Netherlands
The units of JHR are being marketed in the Netherlands under Section 1:13b of the Dutch
Financial Supervision Act (Wet op het financieel toezicht, or the “Wft”). In accordancewith this provision, the AIFM has notified the Dutch Authority for the Financial Markets
of its intention to offer these units in the Netherlands. The units of JHR will not, directly
or indirectly, be offered, sold, transferred or delivered in the Netherlands, except to or byindividuals or entities that are qualified investors (gekwalificeerde beleggers) within themeaning of Article 1:1 of the Wft, and as a consequence neither the AIFM nor JHR is
subject to the license requirement pursuant to the Wft. Consequently, neither the AIFM
nor JHR is subject to supervision of the Dutch Central Bank (De Nederlandsche Bank,“DNB”) or the Netherlands Authority for Financial Markets (Autoriteit Financiële

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Markten, the “AFM”) and this Article 23 AIFMD Prospectus is not subject to approval by
the AFM. No approved prospectus is required to be published in the Netherlands pursuant
to Article 3 of the Regulation (EU) 2017/1129 as amended and applicable in the
Netherlands. The AIFM is therefore solely subject to limited ongoing regulatory
requirements as referred to in Article 42 of the AIFMD.

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Article 23 (1)(a)Objectives of the AIF

Focusing on hotels, which are important and profitable components of the social
infrastructure, JHR primarily invests in real estate related assets that are wholly or partiallyused as hotels and that are in themselves real estate or real estate equivalents or that arebacked by such real estate or real estate equivalents.

Investment strategy

JHR’s investment strategy is to ensure steady and stable revenue in the mid to long term.
JHR focuses on investing in hotels with prospects for attracting domestic and overseas
leisure demand, that is, those located in appealing or fashionable areas. Limited-service
hotels, full-service hotels and resort hotels are all investment targets, but JHR only
acquires properties with competitive advantages in terms of buildings and facilities(infrastructure) and the capabilities of the hotel tenant and operator (services). The
investment strategy is defined in the articles of incorporation of JHR and the investment
guidelines determined by the AIFM.

Types of assets the AIF

Real estate, trust beneficiary interests in real estate, real estate securities, specified assets

may invest in

and other assets, including equity interests in corporations holding overseas real estate(provided, however, that such corporations are required to be unlisted and all of its assets
be composed of real estate and monetary claims, etc. pertaining to such real estate andmeet certain other requirements under the Act on Investment Trusts and Investment
Corporations (the “ITA”)), renewable power generating facilities and the rights to operate
public facilities.

Techniques it may

JHR focuses on investing in hotels with prospects for attracting domestic and overseas

employ and all

leisure demand. The principal risks with respect to investment in JHR are as follows:

associated risks•

any adverse conditions in the Japanese economy could adversely affect JHR;•

The coronavirus pandemic, through its worldwide economic impact, may
adversely affect JHR;•

JHR may not be able to acquire properties to execute the growth and investment
strategy in a manner that is accretive to earnings;•

illiquidity in the real estate market may limit the ability to grow or adjust theportfolio;•

the past experience of the AIFM in the Japanese real estate market is not anindicator or guarantee of the future results;•

JHR’s reliance on the JHR’s related parties, the AIFM and its related parties could
have a material adverse effect on its business;

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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•

JHR’s reliance on third party service providers, particularly on hotel lessees, hotel
operators and operation support companies, may have a material adverse effecton the revenue of the hotels, including as a result of the service providers’prioritizing the interests of their other clients;•

The coronavirus pandemic may cause a significant decline in hotel demand andmay result in a material adverse effect on the revenues of the hotels;•

continued weakness in the performance of the hotels owned by JHR may cause
JHR to be in breach of the restrictive covenants under debt financing
arrangement;•

JHR may change its detailed investment policy without a formal amendment of thearticles of incorporation;•

there are potential conflicts of interest between JHR, the AIFM and its relatedparties, including those arising among the AIF and private funds or other investors,
to which the AIFM provides investment management or advisory services;•

the AIFM’s provision of investment management or advisory services to otherfunds may expose the AIFM to indemnification and other obligations inconnection with such services;•

JHR’s revenues largely comprise leasing revenues and income from management
contract from the portfolio properties, which may be negatively affected byfactors including vacancies, decreases in rent or sales, and late or missed
payments by tenants or the operators to which it outsources operation of certain
properties;•

income from management contract is tied to the revenue of the hotels withrespect to which operation is outsourced to operators, and the agreement with anoperator generally does not provide for a fixed rent; as a result, income frommanagement contract may be volatile and could have a material adverse effect on
JHR’s results;•

competition for guests with other hotel properties in the same and surrounding
areas, as well as with short-term lodging such as vacation rentals and apartment
rentals including Airbnb, may adversely affect JHR’s ability to maintain occupancy
rates and revenue;•

JHR may find difficulty finding suitable tenants or operators to which it outsources
operation of certain properties, because of the requirement that they be able tooperate hotels;

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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•

increases in interest rates may increase the interest expense and may result in a
decline in dividends and market price of the units;•

JHR may suffer large losses if any of the properties incurs damage from a natural
or man-made disaster;•geographic concentration of the portfolio in major cities in Japan could have amaterial adverse effect on JHR’s business;•

any inability to obtain financing or refinancing from issuance of investments units,loan and issuance of investment corporation bonds for future acquisitions could
adversely affect the growth of the portfolio;•

JHR’s failure to satisfy a complex series of requirements pursuant to Japanese tax
regulations would disqualify JHR from certain taxation benefits and significantly
reduce the cash distributions to the unitholders;•the ownership rights in some of the properties may be declared invalid or limited;and•support from JHR’s related parties, particularly in connection with management ofhotels, may not achieve the anticipated results.

In addition, JHR is subject to the following risks:•

risks related to operation of hotels;•risks related to specialization in investment in hotels;•risks related to the small number of tenants per each building;•risks related to seasonality of our performance;•risks related to maintenance of facilities and infrastructure;•risks related to increasing operating costs;•

risks related to JHR’s dependence on the efforts of the AIFM’s key personnel;•risks related to the restrictive covenants under debt financing arrangement;•risks related to covenants with lessees or hotel operators prohibiting JHR fromtransferring its properties as well as other third-party approval requirements;•

risks related to entering into forward commitment contracts;•

risks related to third party leasehold interests in the land underlying JHR’s
properties;•risks related to holding the property in the form of compartmentalized ownership(kubun shoyū) interests or co-ownership interests (kyōyū-mochibun);•risks related to holding the property through trust beneficiary interests;

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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•risks related to properties not in operation (including properties underdevelopment);•risks related to defective title, ground, design or construction (including withrespect to piles and beams of buildings, as well as seismic and vibration insulation
oil dampers) or other defects, non-conformity or problems in the properties;•risks related to suffering impairment losses relating to the properties;•risks related to decreasing tenant leasehold deposits and/or security deposits;•risks related to tenants’ default as a result of financial difficulty or insolvency;•

risks related to the insolvency of master lessor;•

risks related to relying on expert appraisals and engineering, environmental andseismic reports as well as industry and market data by third party experts andstatistics or projections published by the Japanese government or its related
entities;•

risks related to the presence of hazardous or toxic substances in the properties, orthe failure to properly remediate such substances;•risks related to the strict environmental liabilities for the properties;•risks related to the amendment of the applicable administrative laws and local
ordinances;•risks related to investments in trust beneficiary interest;•

risks related to the tight supervision by the regulatory authorities;•risk of non-compliance with applicable rules and regulations, including withrespect to insider trading under the ITA or management of personal information
under the Act on the Protection of Personal Information or the Act on the Use of
Numbers to Identify a Specific Individual in the Administrative Procedure;•risks related to the tax authority disagreement with the AIF’s understanding ofJapanese tax laws and regulations;•risks related to being unable to benefit from reductions in certain real estate taxes
enjoyed by qualified J-REITs;•

risks related to changes in Japanese tax laws; and•the risk of dilution as a result of further issuances of units.

Any applicable

JHR is subject to investment restrictions under Japanese laws and regulations (e.g., the Act

investment restrictions

on Investment Trusts and Investment Corporations (the “ITA”), the Financial Instruments
and Exchange Act (the “FIEA”)) as well as its articles of incorporation.

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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JHR must invest primarily in specified assets as defined in the ITA. Specified assets include,
but are not limited to, securities, real estate, leaseholds of real estate, surface rights(chijō-ken) (i.e., right to use land for the purpose of having a structure on it) or trust
beneficiary interests for securities, real estate, leaseholds of real estate or surface rights.
Furthermore, a listed J-REIT must invest substantially all of its assets in real estate, realestate-related assets and liquid assets as provided by the listing requirements. Real estatein this context includes, but is not limited to, real estate, leaseholds of real estate, surface
rights, and trust beneficiary interests for these assets, and real estate-related assets in thiscontext include, but are not limited to, anonymous association (tokumei kumiai) interests
for investment in real estate.

Pursuant to the ITA, investment corporations may not independently develop land for
housing or to construct buildings, but may outsource such activities in certain
circumstances.
Circumstances in

JHR may take out loans or issue long-term or short-term investment corporation bonds forwhich the AIF may use

the purpose of investing in properties, conducting repairs, paying cash distributions,leverage

repaying obligations (including repayment of tenant leasehold or security deposits, andobligations related to loans or long-term or short-term investment corporation bonds) andother activities.

The types and sources

Loans or investment corporation bonds. JHR currently does not have any outstandingof leverage permitted

guarantees, but may be subject to restrictive covenants in connection with any future

and associated risks

indebtedness that may restrict the operations and limit the ability to make cash
distributions to unitholders, to dispose of the properties or to acquire additional
properties. Furthermore, JHR may violate restrictive covenants contained in the loan
agreements JHR executes, such as the maintenance of debt service coverage or loan-tovalue ratios, which may entitle the lenders or bondholders to require JHR to collateralize
the properties or demand that the entire outstanding balance be paid. Further, in theevent of an increase in interest rates, to the extent that JHR has any debt with unhedged
floating rates of interest or JHR incurs new debt, interest payments may increase, which inturn could reduce the amount of cash available for distributions to unitholders. Higher
interest rates may also limit the capacity for short- and long-term borrowings, which
would in turn limit the ability to acquire properties, and could cause the market price of
the units to decline.

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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Any restrictions on

The maximum amount of each loan and investment corporation bond issuance will be one

leveragetrillion yen (the maximum amount of short-term investment corporation bond issuance
will be 250 billion yen), and the aggregate amount of all such debt will not exceed one
trillion yen.

Any restrictions on

No applicable arrangements.

collateral and asset
reuse arrangements
Maximum level of

JHR has set an upper limit of 65% as a general rule for its loan-to-value, or LTV, ratio inleverage which theorder to operate with a stable financial condition. JHR may, however, temporarily exceed

AIFM is entitled toany such levels as a result of property acquisitions or other events.

employ on behalf of
the AIF
Article 23(1) (b)Procedure by which

Amendment of the articles of incorporation. Amendment requires a quorum of a majority

the AIF may change itsof the total issued units and at least a two-thirds vote of the voting rights represented atinvestment strategy /the meeting. Unitholders should note, however, that under the ITA and our articles ofinvestment policy

incorporation, unitholders who do not attend and exercise their voting rights at a General
Meeting of Unitholders are deemed to be in agreement with proposals submitted at themeeting, except in cases where contrary proposals are also being submitted.
Additionally, the guidelines of the AIFM, which provide more detailed policies within JHR’s
overall investment strategy and policy, can be modified without such formal amendmentof the articles of incorporation.

Article 23(1) (c)Description of the

JHR has entered into an Agreement with Kyoritsu Maintenance Co., Ltd. for support for

main legal implications

property acquisition, pursuant to which JHR receives information regarding theof the contractual

prospective sales of real estate and trust beneficiary interests for real estate.

relationship enteredinto for the purpose ofinvestment, including

JHR has entered into a Basic Agreement with Sumitomo Mitsui Trust Bank, Limited for
information provision regarding sales or brokerage of income-type properties held ordeveloped by third parties.

jurisdiction, applicablelaw, and the existenceor not of any legal
instruments providing

In 2011, JHR succeeded to an Information Service Agreement with Goldman Sachs (Japan)
Co., Ltd. pursuant to which JHR receives information regarding real estate and trust
beneficial rights for real estate; this agreement was originally executed with JHR’s

for the recognition andThis document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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enforcement ofpredecessor, Japan Hotel and Resort Investment Corporation and Japan Hotel and Resort,

judgments in theInc.

territory where the AIF
is establishedJHR has entered into a Technical Advisory Agreement with Shin Nippon Air Technologies
Co., Ltd (“SNK”) pursuant to which SNK supports JHR in due diligence for acquisition ofassets.
All of the above agreements are governed by Japanese law.
JHR is not involved in or threatened by any legal arbitration, administrative or otherproceedings, the results of which might, individually or in the aggregate, be material.

JHR is a corporate-type investment trust in the form of investment corporation (toshi
hojin) provided for under the ITA. Therefore, the relationship between JHR and its
unitholders is governed by JHR’s articles of incorporation (as opposed to individual
agreements), which can be amended from time to time upon resolution of a generalunitholders’ meeting. JHR’s articles of incorporation stipulate rules relating to generalunitholders meetings, including the convocation, setting of record date, exercise of voting
rights, resolutions and election of JHR’s directors.
The relationship between JHR and its unitholders is also governed by, and is subject to theprovisions of, Japanese law, including the ITA.
The courts in Japan would recognize as a valid and final judgment any final and conclusive
civil judgment for monetary claims (which, for this purpose, are limited to those of apurely civil nature and do not include monetary claims of the nature of criminal oradministrative sanction, such as punitive damages, even though they take the form of civil
claims) against JHR obtained in a foreign court provided that (i) the jurisdiction of suchforeign court is admitted under the laws of Japan, (ii) JHR has received service of process
for the commencement of the relevant proceedings, otherwise than by a public notice or
any method comparable thereto, or has appeared without any reservation before suchforeign court, (iii) neither such judgment nor the relevant proceeding is repugnant topublic policy as applied in Japan, and (iv) there exists reciprocity as to the recognition bysuch foreign court of a final judgment obtained in a Japanese court and (v) there is noconflicting judgement on the subject matter by any Japanese court.
Article 23(1) (d)This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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The identity of the• AIFM (Asset Manager): Japan Hotel REIT Advisors Co., Ltd.

AIFM, AIF's depository,

The AIFM provides services related to asset management, financing of the AIF,

auditor and any otherreporting to the AIF, asset management planning for the AIF, and other mattersservice providers and adelegated by the AIF.

description of their• Auditor: KPMG AZSA LLC

duties and the

The Auditor audits financial statements, prepares audit reports, and reports to theinvestors' rights

supervisory directors if it finds any misconduct or any material fact that is in violation oftheretolaws and regulations or the articles of incorporation with regard to execution of theduties of the executive director.
• General Administrator (for administration), Custodian, Transfer Agent and Special
Accounts Administrator: Sumitomo Mitsui Trust Bank, Limited
The General Administrator (for administration) provides administrative services related
to administration of accounting matters, preparation of accounting books, tax-related
services (other than those entrusted to PwC Tax Japan) and management and recordingof board of directors meetings. The Custodian provides administrative services related
to custody of our assets. The Transfer Agent provides administrative services related topreparation and maintenance of the unitholder registry, payments of cash distributions
to unitholders, acceptance of requests for the exercise of voting rights by unitholders
or any other applications from unitholders, and distribution of meeting convocation
notices and other unitholder notifications and information. The Special Accounts
Administrator provides administrative services, including the preparation, management
and custody of the transfer account book in relation to special accounts.
• General Administrator (for investment corporation bonds): Sumitomo Mitsui Trust
Bank, Limited, Mizuho Bank, Ltd., Resona Bank Limited. and MUFG Bank, Ltd.
The General Administrators provides administrative services in connection with the
AIF’s investment corporation bonds.
• General Administrator (for tax payment): PwC Tax JapanThe General Administrator provides tax-related administrative services.

Service providers owe contractual obligations under their respective agreements with theAIF, as the case may be. In addition, the FIEA provides that the Asset Manager owes the
AIF a fiduciary duty and must conduct its activities as the asset manager in good faith.

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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The FIEA also prohibits the Asset Manager from engaging in certain specified conduct,
including entering into transactions outside the ordinary course of business or with relatedparties of the Asset Manager that are contrary to or violate the AIF’s interests.
Pursuant to the ITA, the unitholders have the right to approve the execution or
termination of the asset management agreement at a General Meeting of Unitholders.
Article 23(1) (e)Description of how the

Not applicable.

AIFM complies withthe requirements tocover professional
liability risks (ownfunds / professional
indemnity insurance)
Article 23(1) (f)Description of any
delegatedmanagement function
such as portfolio

Not applicable.
There is no delegation of such functions beyond the AIFM, which is responsible for
portfolio and risk management, and the Custodian, which is responsible for safekeeping
activities.

management or risk
management and of
any safekeeping
function delegated by
the depositary, theidentification of thedelegate and any
conflicts of interest
that may arise fromsuch delegations
Article 23(1) (g)Description of the AIF’s JHR makes investment decisions based on the valuation of properties, upon consideration
valuation procedureand pricing
methodology,
including the methodsof the property appraisal value.
JHR shall evaluate assets in accordance with its articles of incorporation. The methods andstandards that JHR uses for the evaluation of assets shall be based on the Regulations
Concerning the Calculations of Investment Corporations, as well as the Regulations

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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used in valuing hard-

Concerning Real Estate Investment Trusts and Real Estate Investment Corporations andto-value assets

other regulations stipulated by the Investment Trusts Association, Japan, in addition to
Japanese GAAP.
The rules of the Investment Trusts Association, Japan, emphasize market price valuation.

Article 23(1) (h)Description of the AIF’s The AIFM stipulates basic provisions of risk management in its risk management rules.
liquidity risk
management,
including redemption
rights in normal andexceptional

Additionally, the AIF uses various financing methods, including investment corporation
bonds and long-term loans, to finance acquisitions and repayment obligations. JHR
controls related risk by maintaining the ratio of interest-bearing debt to total assets undera certain percentage, diversifying repayment deadlines, and retaining a certain amount ofhighly liquid cash and deposits.

circumstances andexisting redemption
arrangements withinvestors

For floating rate borrowings exposed to the risk of interest rate fluctuations, JHR closely
monitors the movement of interest rates.
As JHR is a closed-end investment corporation, unitholders are not entitled to request theredemption of their investment.

Article 23(1) (i)Description of all fees,

Compensation: The articles of incorporation provide that JHR may pay its executive andcharges and expenses

supervisory officers up to 800,000 and up to 500,000 yen per month. The board of officers

and a maximum

is responsible for determining a reasonable compensation amount for the executive andamount which issupervisory officers.

directly / indirectly
borne by the investors

Asset Manager:• Asset Management Fee: JHR will pay the Asset Manager an asset management fee asfollows:
1. Management Fee 1
The amount calculated by (i) multiplying the balance of total assets(*) held by JHR
as of the end of March, June, September and December, (the “Calculation Recorddate”) by an annual rate of no more than 0.35% to be separately agreed upon
between the JHR and the AIFM and (ii) then prorated on a per day basis (whereamounts less than one yen are rounded down), based on a year of three hundred
sixty five days, for the period from the previous Calculation Record Date (notincluding such date) until the relevant Calculation Record Date (including such date).

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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(*) The total assets are the total of the cash reserves balance, the securities balance,
tangible fixed assets and intangible fixed asset.
Management Fee 1 is payable within three month from the each Calculation Record
date.
2. Management Fee 2
The amount calculated by multiplying Net Operating Income(*) of JHR for each fiscal
period by a rate of no more than 1.0% to be separately agreed upon between JHR
and the AIFM.
Provisional Management Fee 2(**) shall be paid within three months after the endof March, June and September each year, and the balance after deducting theaggregate amount of Provisional Management Fee 2 paid from accrued
Management Fee 2 shall be paid within three months after the end of December. In
the event that the aggregate amount of Provisional Management Fee 2 paid exceeds
the amount of accrued Management Fee 2, the excess will be refunded within threemonths after the end of December each year.
(*) Net Operating Income is the amount calculated by subtracting real estate
operating costs (not including Depreciation) from real estate operating revenue.
(**)Provisional Management Fee 2 is the amount calculated by multiplying Net
Operating Income of JHR for each of three-month periods ending at the end of
March, June and September each year, by a rate of no more than 1.0% to be
separately agreed upon between JHR and the AIFM
3. Management Fee 3
The amount calculated by (i) dividing the total available dividend amount before
deducting Management Fee 3(*) for each fiscal period of JHR by the total investment
units issued at the end of December each year (where amounts less than one yen
are rounded down.) and (ii) then multiplying the coefficient of no more than 43,000
which separately agreed upon between JHR and the AIFM. (In the event that theinvestment unit is split, 43,000 shall be multiplied by split ratio(**). When theinvestment unit is split multiple times, the same calculation shall be repeated.)(*) Total available dividend before deducting the Management Fee 3 is the dividend
amount for each fiscal period of JHR stipulated by Article 34, Clause 1 of the articles
This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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of incorporation (before deducting corporate tax, inhabitant tax and business tax,
adjustment amount of the corporate tax, Management Fee 3 and its nondeductible
consumption tax, etc.).
(**) Split ratio is the ratio calculated by (i) dividing the total investment units issued
after split by the total investment units issued before split.
The Provisional Management Fee 3(*) shall be paid within three months after theend of March, June and September each year, and the balance after deducting theaggregate amount of Provisional Management Fee 3 paid from accrued
Management Fee 3 shall be paid within three months after the end of December. In
the event that the aggregate amount of Provisional Management Fee 3 paid exceeds
the amount of accrued Management Fee 3, the excess will be refunded within threemonths after the end of December each year.
(*) Provisional Management Fee 3 is the amount calculated by (i) dividing themidterm net profit before tax for the period of three months ending at the end of
March, June and September each year (before deducting Provisional Management
Fee 3 and its nondeductible consumption tax) by the total investment units issued
as of the end respectively of March, June and September above (where amounts
less than one yen are rounded down), and (ii) then multiplying the coefficient of no
more than 43,000 to be separately agreed upon between JHR and the AIFM (In theevent that the investment unit is split, 43,000 shall be multiplied by the split
ratio(**). When the investment unit is split multiple times, the same calculation
shall be repeated.)(**) The split ratio is the ratio calculated by (i) dividing the total investment units
issued after the split by the total investment units issued before the split.
4. Acquisition Fee
For each acquisition of a real estate-related property, the AIFM receives an
Acquisition Fee. The amount of the Acquisition Fee is calculated by multiplying theacquisition price (not including consumption tax pertaining to the building etc.
(stipulated by Article 39 of the articles of incorporation, the same applies
hereinafter) and other acquisition costs) by a rate of no more than 0.75% to be
separately agreed upon between JHR and the AIFM (where amounts less than one
This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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yen are rounded down). In the event that JHR acquires a real estate-related
property from a sponsor-related party(*), such rate shall be lowered by 0.25%(stipulated in Article 36 of the articles of incorporation).
The Acquisition Fee shall be paid by the end of the month following the month of
acquisition.
5. Disposition Fee
For each disposition of a real estate-related property, the AIFM receives a
Disposition Fee. The amount of the Disposition Fee is calculated by multiplying thetransfer price (not including consumption tax pertaining to the building etc. and thesales cost etc.) by a rate of no more than 0.5% to be separately agreed upon
between JHR and the AIFM (where amounts less than one yen are rounded down).
In the event that JHR sells the real estate-related property to a sponsor-related
party(*), such rate shall be lowered by 0.25% (stipulated in Article 36 of the articles
of incorporation).
The Disposition Fee shall be paid by the end of the month following the month of
the transfer.
(*) The term “sponsor-related party” is stipulated in the AIFM’s rules fortransactions with sponsor-related parties, and includes (a) interested parties, etc.,(b) the AIFM’s shareholders, (c) companies, etc. that take a 50% or more stake in ashareholder that holds 50% or more of the shares in the AIFM, (d) companies inwhich a shareholder of the AIFM has a 50% or more stake, (e) entities or persons
who ceased to fall under (a) through (d) within the last 3 months, and (f) entities or
persons who are deemed appropriate by the compliance officer to be treated assponsor-related parties in light of the AIFM’s rules for transactions with sponsorrelated parties and the purpose of these rules.
6. Merger Fee
In the event that JHR succeeds to the assets of another party pursuant to a merger,
following the due diligence, valuation and other merger-related tasks conducted by
the AIFM of such assets held by such party, the AIFM receives a Merger Fee
according to the Asset Management Agreement between JHR and the AIFM. The
amount of Merger Fee is calculated by (i) multiplying the appraisal value, as of theThis document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

16

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merger date, of the real estate-related assets JHR succeeds to, by a rate of no morethan 0.25% to be separately agreed upon JHR and the AIFM (where amounts lessthan one yen are rounded down) and (ii) adding to (i) the consumption tax
pertaining to the amount calculated in (i). The Merger Fee shall be paid within threemonths from the effective date of the merger.

Custodian/ General Administrator:•

Custodian Fee, General Administrator Fee:
1. JHR will pay the Custodian in connection with custody.
2. JHR will pay the General Administrator, in connection with accounting,government of the Investment Corporation, preparation of tax return, fiscal
agent of investment corporation bond and other tasks agreed upon between
JHR and the General Administrator.

Transfer Agent:• Transfer Agent Fee (Standard Fee):
Standard transfer agent fees are for services such as preparation, maintenance andstorage of JHR’s unitholder register; preparation and reporting of the end-of-fiscal
period unitholders register and unitholder statistical data.
The monthly standard fees will be the total of the amount calculated using thefollowing table divided by 6, with a minimum monthly fee of 200,000 yen.
Number of Unitholders

Fees per Unitholder

first 5,000 unitholders

480 yenover 5,000 to 10,000

420 yenover 10,000 to 30,000

360 yenover 30,000 to 50,000

300 yenover 50,000 to 100,000

260 yenover 100,000

225 yen• Other fees:
JHR pays the transfer agent other fees for various other services, including inconnection with the payment of dividends.

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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Special Accounts Administrator• Special Accounts Administrator Fee:
Special accounts administrator fees are for the administration of special accounts,
including preparation and maintenance of a ledger related to such accounts andhandling of inquiries from Japan Securities Depository Center (JASDEC). The
standard fees will be the total of the amount calculated using the following table,with a minimum monthly fee of 20,000 yen.
Number of Subscribers

Fees per Subscribers

first 5,000 subscribers

150 yenover 5,000 to 10,000

130 yenover 10,000 subscribers

110 yen• Other fees:
JHR pays the special accounts administrator other fees for various other services,
including in connection with receipt and confirmation of requests for transfers andfor processing transfers to a recipient account.
Auditor:• Auditor Fee:JHR shall pay the independent auditor up to 30 million yen per fiscal period within
three months after the date of the invoice from the independent auditor. The board
of officers is responsible for determining the actual compensation amount.
The AIF may also incur other miscellaneous fees in connection with property
management, issuance of units, investment corporation bonds and the operation,acquisition or disposition of properties.
Article 23(1) (j)Description of theUnder Article 77 paragraph 4 of the Act on Investment Trusts and Investment

AIFM's procedure to

Corporations of Japan, which applies the requirements of Article 109 paragraph 1 of theensure fair treatment

Companies Act to investment corporations, investment corporations are required to treatof investors and details

unitholders equally depending on the number and content of units held. In addition, uponof any preferential

liquidation, the allotment of residual assets to unitholders is required to be made equallytreatment received bydepending on the number units held under Article 77 paragraph 2 item 2 and Article 158

investors, includingof the ITA.

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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detailing the type ofinvestors and theirlegal or economic links
with the AIF or AIFM
Article 23(1) (k)The latest annual

Additional information may be found in our most recent annual report prepared inreport referred to inaccordance with Article 22 of the AIFMD, which is available at the Asset Manager’s office

Article 22(1)located at Ebisu Neonato, 4-1-18, Ebisu, Shibuya-ku, Tokyo 150-0013 Japan.

Article 23(1) (l)The procedure andJHR is authorized under the articles of incorporation to issue up to 20,000,000 units. Its

conditions for theunits have been listed on the Tokyo Stock Exchange since June 14, 2006. (*)

issue and sale of the(*) On April 1, 2012, the former Japan Hotel and Resort, Inc. merged with and into theunitsformer Nippon Hotel Fund Investment Corporation, which, as the surviving entity, changed
its name to Japan Hotel REIT Investment Corporation.
Secondary market sales and transfers of units will be conducted in accordance with therules of the Tokyo Stock Exchange. Unit prices on the Tokyo Stock Exchange aredetermined on a real-time basis by the equilibrium between bids and offers. The Tokyo
Stock Exchange sets daily price limits, which limit the maximum range of fluctuation within
a single trading day. Daily price limits are set according to the previous day’s closing priceor special quote.

Article 23(1) (m)Latest net asset value

JHR’s unit’s latest market price is publicly available at the Tokyo Stock Exchange or fromof the AIF or latest

financial information venders (including Reuters, which can be viewed atmarket price of theunit or share of the AIF

http://www.reuters.com/finance/stocks/overview?symbol=8985.T).

Article 23(1) (n)Details of the historical

The units of JHR were listed on the Tokyo Stock Exchange on June 14, 2006.

performance of the

The most recent five fiscal periods’ performance of the units is as follows.

AIF, where available
Fiscal period

Total Assets

Net Assets(JPY million)(JPY million)

Net Assets
per unit(JPY)

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

19

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21th Fiscal Period(January 1, 2020 to400,296

221,201

49,570415,722

236,52253,004

350,556

203,372

50,705352,183

201,963

50,354

317,878

181,989

48,376

December 31, 2020)
20th Fiscal Period(January 1, 2019 to
December 31, 2019)19th Fiscal Period(January 1, 2018 to
December 31, 2018)18th Fiscal Period(January 1, 2017 to
December 31, 2017)17th Fiscal Period(January 1, 2016 to
December 31, 2016)
Article 23(1) (o)Identity of the prime

No applicable prime broker.

broker, any material
arrangements of the
AIF with its prime
brokers, how conflictsof interest aremanaged with theprime broker and theprovision in thecontract with thedepositary on thepossibility of transfer
and reuse of AIF
assets, andinformation about any
transfer of liability toThis document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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the prime broker that
may exist
Article 23(1) (p)Description of how and The AIFM will disclose the matters described in Articles 23(4) and 23(5) periodicallywhen periodic

through the AIF Internet website and other public disclosures.

disclosures will bemade in relation toleverage, liquidity andrisk profile of theassets, pursuant to
Articles 23(4) and23(5)Article 23(2)The AIFM shall inform

Not applicable.

the investors before
they invest in the AIF
of any arrangement
made by thedepository tocontractually discharge
itself of liability inaccordance with
Article 21(13)The AIFM shall also

Not applicable.

inform investors of any
changes with respect
to depositary liability
without delay
Article 23(4)(a)Percentage of the AIF's assets which

There are no assets that are subject to special arrangements arising fromare subject to special arrangements

their illiquid nature.

arising from their illiquid nature. The
percentage shall be calculated as the
net value of those assets subject toThis document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

21

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special arrangements divided by the
net asset value of the AIF concerned
Overview of any special

There are no such special arrangements.

arrangements, including whether
they relate to side pockets, gates orother arrangements
Valuation methodology applied to

There are no such special arrangements.

assets which are subject to sucharrangements
How management and performance

There are no such special arrangements.

fees apply to such assets
Article 23(4)(b)Any new arrangements for managing

Any new arrangements or change in applicable arrangements will be

the liquidity of the AIF

disclosed at an appropriate time.

For each AIF that the AIFM manages

Any new arrangements or change in applicable arrangements will bethat is not an unleveraged closed-end

disclosed at an appropriate time.

AIF, notify to investors wheneverthey make changes to its liquidity
management systems (which enable
an AIFM to monitor the liquidity riskof the AIF and to ensure the liquidity
profile of the investments of the AIF
complies with its underlying
obligations) that are material inaccordance with Article 106(1) ofRegulation (EU) No 231/2013 (i.e.,there is a substantial likelihood that areasonable investor, becoming awareof such information, would
reconsider its investment in the AIF,
including because such information
could impact an investor’s ability to
exercise its rights in relation to its
investment, or otherwise prejudiceThis document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

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the interests of one or more investors
in the AIF).
Immediately notify investors where

Any new arrangements or change in applicable arrangements will bethey activate gates, side pockets ordisclosed at an appropriate time.

similar special arrangements or
where they decide to suspend
redemptions
Overview of changes to liquidity

Any new arrangements or change in applicable arrangements will bearrangements, even if not special

disclosed at an appropriate time.

arrangements
Terms of redemption and

JHR is a closed-end investment corporation, and unitholders are notcircumstances where management

entitled to request the redemption of their investment.

discretion applies, where relevant
Also any voting or other restrictions

There are no voting or other restrictions on the rights attaching to units.

exercisable, the length of any lock-up
or any provision concerning ‘first inline’ or ‘pro-rating’ on gates andsuspensions shall be included
Article 23(4)(c)
The current risk profile of the AIF and

The AIFM stipulates basic provisions of risk management in their risk

the risk management systems

management rules.

employed by the AIFM to manage
those risks

Investment corporation bonds and long-term loans are used to financerehabilitation obligations, acquisition of real estate and repayment of loans.
These financial instruments are exposed to liquidity risk. JHR controls suchrisks by maintaining the ratio of interest-bearing debt to total assets undera certain percentage and diversifying repayment deadlines.
For floating rate borrowings exposed to the risk of interest rate
fluctuations, JHR, in order to reduce the impact caused by rising interest
rates, closely monitors the movement of interest rates, and intends toincrease the ratio of fixed rate loans compared to floating rate loans.

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

23

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Measures to assess the sensitivity of

No such measures have been implemented.

the AIF’s portfolio to the most
relevant risks to which the AIF is or
could be exposed
If risk limits set by the AIFM have

No such situation has occurred.

been or are likely to be exceeded andwhere these risk limits have been
exceeded a description of thecircumstances and the remedial
measures taken
Article 23(5)(a)Any changes to the maximum

Any new arrangements or change in applicable arrangements will beamount of leverage which the AIFM

disclosed at an appropriate time.

may employ on behalf of the AIF,
calculated in accordance with thegross and commitment methods. This
shall include the original and revised
maximum level of leverage calculated
in accordance with Articles 7 and 8 ofRegulation (EU) No 231/2013,
whereby the level of leverage shall becalculated as the relevant exposure
divided by the net asset value of the
AIF.
Any right of the reuse of collateral or

No such right or guarantee exists.

any guarantee granted under theleveraging agreement, including thenature of the rights granted for thereuse of collateral and the nature of
the guarantees granted
Details of any change in service

Any new arrangements or change in applicable arrangements will be

providers relating to the above.

disclosed at an appropriate time.

Article 23(5)(b)This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

24

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Information on the total amount of

The aggregate amount of debt with interest is JPY 168,754 million as ofleverage employed by the AIF

December 31, 2020.

calculated in accordance with thegross and commitment methods

This document has been prepared solely for the purpose of providing U.K. and Dutch investors with certain information
under Article 23 of the AIFMD as implemented in their respective jurisdictions. This document is not an offer to sell or asolicitation of any offer to buy the units of Japan Hotel REIT Investment Corporation.

25

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