Japan Hotel REIT Investment Corporation (TSE: 8985)

Midterm Financial Results
FY12/2021 (22nd Period )August 25, 2021

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

Table of Contents
Ⅰ. Midterm Settlement of Accounts for FY12/2021 — Highlights
1. Highlights of Midterm for FY12/2021

Appendix 1

3

Ⅱ. Summary of Midterm Settlement of Accounts
1. Midterm Results for the Fiscal Year Ending December 2021

5

Ⅲ. Status of Hotel Operations
1. Monthly Performance of The 24 Hotels with Variable Rent, etc. 7
2. Performance of the Hotels

8

3. Response to Lessees/Operators

9

4. Change in Lessees/Rebranding

JHR's Characteristics and Strategy

1. JHR's Investment Targets

28

2. Simultaneous Pursuit of Stability and Upside Potential

29

3. External Growth Strategy

30

4. Internal Growth Strategy

31

5. Financial Strategy

32

6. Benefits Program for Unitholders

33

Appendix 2

Information on Properties

1. Portfolio

35

2. Portfolio Diversification

36

10

3. Property List

37

5. Active Asset Management for Post COVID-19

12

4. Summary of Lease Contracts

39

6. Acquisition of Property

13

5. Major CAPEX Ⅲ by Hotels

42

7. Sustainability Initiatives

14

6. The Five HMJ Hotels — Highlights

43

7. Balance Sheet

44

8. Portfolio Map

45

Ⅳ. Financial Conditions
1. Financial Conditions

17

Appendix 3

Ⅴ. Market Environment
1. Market Environment

21

1. Takeaways

1. Major Unitholders and Classifications of Unitholders

47

2. Changes in Investment Unit Price and Market Capitalization

48

Appendix 4

Ⅵ. Takeaways
25

1

Investors Composition and Investment Unit Price

Summary of the Asset Management Company

1. Summary of the Asset Management Company

50

2. Features and Governance of the Asset Management Company

51

Ⅰ. Midterm Settlement of Accounts for FY12/2021 — Highlights

1. Highlights of Midterm for FY12/2021
1. Status of Hotel Operations

3. Financial Soundness▶ Performance of The 24 Hotels with Variable Rent, etc.(*1)▶ Conservative Financial Management
 Maintain a solid financial base Revenue forecast for FY12/2021 is undecided and will be announced laterFirst Half of2019 Result

First Half of2020 Result

First Half of2021 Result

Occupancy

85.1%

34.0%

30.6%

RevPAR

JPY13,348

JPY4,536

JPY3,320

vs 1H 2019

(66.0%)(75.1%)

vs 1H 2020－

(26.8%)

JPY9,067MM(JPY213MM)(JPY65MM)

Variance of
RevPAR

GOP

LTV

42.7%

(JPY)
4,000
3,000

60,000(88.9%)

2,000
1,000

410

0
-1,000(JPY)
90,000FY12/2020

17.0Bn

JPY

7.7Bn

JPY

Second Half of 2021 (schedule)

18.3

Bn
JPY
(Of these, Investment Corporation Bonds JPY1.5Bn)

4. Rebranding▶ Rebranding to Oriental Hotel (The HMJ Group)

77,525(6.9%)

 Rebranding to The HMJ Group was implemented/is planned to be
implemented at three hotels, aiming at upside in market recovery period

77,523(0.0%)Old

HOTEL ASCENTFUKUOKA

Hotel Keihan
Universal City

Okinawa Marriott
Resort & Spa

New
新

Hotel
Oriental Express
Fukuoka Tenjin

Oriental Hotel
Universal City

Oriental Hotel
Okinawa
Resort & Spa

30,000

TBD(-297※)
FY12/201983,286

3.8 years

First Half of2021 Result▶ Change in NAV

3,690

1.0%

Free Cash(*3)

 Refinancing results in 1H 2021 and schedule in 2H 2021

2. Change in DPU and NAV▶ Change in DPU(as of the end of June 2021)

Costs for InterestAverage Life ofbearing Debt
Interest-bearing Debt

FY12/2021(20th Period) (21st Period) (22nd Period)

0
FY12/2019 FY12/2020
End of(20th Period) (21st Period) June 2021
(Midterm of
22nd Period)

Grand opening

June 18, 2021

* Rough estimate in case gain on sale was excluded(*2)

Pre-open

July 1, 2021

Grand opening
December 2021
(schedule)Grand opening (schedule)

October 1, 2021(*1) The 24 Hotels with Variable Rent, etc. refers to 24 hotels: 14 hotels, which are 5 hotels of Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, Oriental Hotel Hiroshima ("The FiveHMJ Hotels"), plus Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel (main facility of ACTIVE-INTER CITY HIROSHIMA), Oriental Hotel Fukuoka Hakata Station, Holiday Inn Osaka Namba, Hilton Tokyo Narita Airport,
International Garden Hotel Narita, Hotel Nikko Nara, Hotel Oriental Express Osaka Shinsaibashi, and Hilton Tokyo Odaiba ("The HMJ Group Hotels"), plus 4 hotels of the b ikebukuro, the b hachioji, the b hakata, and the bsuidobashi ("The Ishin Group Hotels") and 6 hotels of ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure Okinawa Naha, Mercure Yokosuka ("The Accor Group Hotels"). The same shallapply hereinafter.
(*2) Rough estimate calculated by excluding the amount equivalent to the gain on sale of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi sold in July 2020 from the distributable profit.
(*3) The figure represents balance of cash and deposits after exclusion of various reserves for trust, etc.

3

Ⅱ. Summary of Midterm Settlement of Accounts

1. Midterm Results for the Fiscal Year Ending December 2021
(Unit: JPY MM)
FY12/2020(21st Period)

FY12/2021(22nd Period)

FY12/2021(22nd Period)

Midterm
Result(A)

Midterm Previous
Forecast(*1)(B)

Midterm
Result(*2)(C)

Variance with thePrevious Forecast(C)–(A)(C)–(B)%%

Variance with the Previous Result
Fixed rent
• The HMJ Group Hotel(JPY794MM)• Other hotels and tenants(JPY200MM)• Sold property(*4)(JPY149MM)

43

42

42

(1)

–

–

–

Acquisition Price

374,508

370,031370,031(4,477)–––

Operating Revenue

5,536

4,556

4,589

(947) (17.1%)

32

0.7%

5,536

4,556

4,589

(947) (17.1%)

32

0.7%

Variable rent

(1,143) (25.7%)

23

0.7%

• The HMJ Group Hotels

JPY248MM• Other hotels and tenants

JPY12MM• Sold property(*4)(JPY66MM)

Properties

No. of Properties

Real Estate Operating
Revenue
Fixed Rent

80.3%

4,446

71.9%

3,278

72.0%

3,302

Other Income

8.0%

443

10.0%

456

9.7%

445

1

0.3%

(10)

(2.4%)

Variable Rent

11.7%

646

18.0%

821

18.3%

841

194

30.2%

19

2.4%

(1,074) (29.9%)(19)(0.8%)

NOI(*3)
Profit and Loss

Variance with thePrevious Result

3,588

2,533

2,513

2,365

2,368

2,334

(31)

(34)

1

0

0

0

0

0

11

7

6

(4)

1,220

152

171

Other Operating
Expenses

894

902

871

(23)

Operating Income

325

(750)

(699)

(1,025)Non-operating Income

35

0

76

41

76

Non-operating Expenses

911

886

864

(46)

(21)

Ordinary Income(550)(1,636)(1,488)

(937)

–

148

–

Net Income(551)(1,637)(1,488)

(937)

–

148

–

Depreciation
Asset Retirement
Obligations Expenses
Loss on Retirement ofNoncurrent Assets
NOI after Depreciation(*3)(1,048) (85.9%)

total (JPY1,143MM)

total

JPY194MM

Variance with the Previous Forecast

19

12.8%

–

(30)

–

–

50

–

Fixed rent
• Tenants other than hotels

JPY23MM
total

JPY23MM

Variable rent
• The HMJ Group Hotels(JPY15MM)• The Ishin Group Hotels (the b)• Other hotels and tenants

73MM(JPM38MM)

total

JPY19MM(*1) Stating the forecast announced in the Financial Report for the Fiscal Year Ended December 31, 2020 (January 1, 2020–December 31, 2020) dated February 25, 2021.
(*2) For detail, please refer to Midterm Financial Report for the Fiscal Year Ending December 31, 2021 (January 1, 2021–June 30, 2021) dated August 25, 2021.
(*3) Each is calculated using the following formula: NOI (Net Operating Income) = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of
noncurrent assets + Asset retirement obligations expenses. NOI after depreciation = Real estate operating revenue − Real estate operating costs(*4) Stating the impact by Sotetsu Fresa Inn Shimbashi-Karasumoriguchi sold in July 2020.

5

Ⅲ. Status of Hotel Operations

1. Monthly Performance of The 24 Hotels with Variable Rent, etc.
2020

Quasi-Emergency
MeasuresOccupancy (right axis)
ADR (left axis)
Declaration
RevPAR (left axis)

20,000

Go To Travel Tokyo was added
Campaign
to Go To Travel
Campaign

of a State ofEmergency

15,00014,103

13,777

13,35013,239
11,178Declarationof a State ofEmergency

Declarationof a State ofEmergency
16,258

14,46911,246

10,0002021

13,847
12,553 12,714

13,345 13,362 13,354 13,357

10,843

10,658 10,595

11,32010,868

11,690

9,420

9,003

Declaration of a State of Emergency

(JPY)

100%

80%

60%
10,846

9,822

7,835

40%

6,879
6,048

5,855
4,669 4,862

5,000

3,750

79.7% 65.3% 28.1%
January February
2020

March

4,993
3,978

3,461

991

0

5,445
4,536

2,779 2,817

3,632 3,519
3,148

3,320

1,606
701

8.9%

7.4%

April

May

14.8% 26.1% 32.3% 38.7% 46.1% 56.6% 45.3% 34.0% 40.8% 37.4% 26.1% 26.6% 35.1% 33.4% 30.1% 32.0% 42.3% 30.6%
June

July

August September October November December

1H

2H

Full Year January February
2021

March

April

May

June

July

1H

＜RevPAR comparison with the same period of 2019 and 2020＞
vs 2019+1.6%(29.6%) (72.7%) (93.5%) (95.0%) (87.7%) (78.1%) (75.3%) (63.4%) (59.2%) (44.9%) (54.6%) (66.0%) (63.7%) (64.8%) (74.9%) (78.0%) (71.0%) (76.3%) (75.1%) (75.9%) (56.5%) (75.1%)

vs 2020＜Number of hotels temporarily closed of The 24 Hotels with Variable Rent, etc. ＞
No. of hotels
closed000% of No. of
guest rooms of
the hotels closed

0

0

0

10

20%

16

9

4

2

2

2

2

3

15.3%70.5%33.9% 8.1% 5.6% 5.6% 5.6% 5.6% 7.4%

7

ー

ー

ー

ー

ー

ー

(75.3%) (68.7%)

55+6.1% +266.5% +401.8% +96.0% +98.7% (26.8%)

4

2

3

3

2

10.3%17.4% 7.1% 6.4% 6.6% 8.9% 6.4%

ー
ー

0%

2. Performance of the Hotels
First Half Result of Major Indicators
Occupancy (right axis)

ADR (left axis)

Total of The 24 Hotels with Variable Rent, etc.

(JPY)
20,00015,691

15,00010,0005,000
013,34885.1%

1H 2019
Resultvs 2019
RevPAR
vs 2020
vs forecast

The HMJ Group Hotels(JPY)
20,000100%
13,362

10,846

4,536

3,320

12,368

80%

34.0%

30.6%

39.4%

1H 2020
Result(66.0%)ーー

1H 2021
Result(75.1%)(26.8%)(31.8%)

1H 2021
Forecastーーー

17,587

15,222

13,04815,00060%
4,868

RevPAR (left axis)

10,000

40%
20%

5,000

0%

0

15,00585.3%

1H 2019
Resultvs 2019
RevPAR
vs 2020
vs forecast

14,906

100%
80%
60%

5,045

3,618

5,428

33.1%

27.7%

36.4%

1H 2020
Result(66.4%)ーー

1H 2021
Result(75.9%)(28.3%)(33.3%)

1H 2021
Forecast
ー
ー
ー

40%
20%
0%

Result and Forecast of GOP
Total of The 24 Hotels with Variable Rent, etc.
20,871(JPY MM)
3,000
20,00010,0002,000

The HMJ Group Hotels(JPY MM)

9,067

10,000
2,000

1,654
277

1,000

7,230

1,326

1,000

0
(1,000)17,1163,000
20,000113

0
1H 2019 Full Year
Result2019
Result(213)

1H 2020 Full Year
Result2020
Result(65)(1,000)

1H 2021 1H 2021
ResultForecast

1H 2019 Full Year
Result2019
Result(370)

1H 2020 Full Year
Result2020
Result(136)

1H 2021 1H 2021
ResultForecast(*) The forecast for the first half 2021 states the forecast announced in the Financial Report for the Fiscal Year Ended December 31, 2020 (January 1, 2020–December 31, 2020)
dated February 25, 2021.

8

3. Response to Lessees/Operators
 Most of the negotiations with lessees/operators have finished

Response to Lessees/Operators

Status of Lessees/Operators

The HMJ GroupThe lease contract was changed on August 25, 2020
2020

Change to variable rent only on and after February

2021

4.1% (4)Nagoya Hilton
4.1% (1)
THE DAI-ICHI BUILDING

Fixed rent Same amount as the previous lease contract(*1)
Variablerent(Hilton Tokyo Bay)

Review the GOP base amount for each property
and set variable rent ratio with appropriate
rent burden ratio(*2)

7.0% (1)
Accor(Mercure/ibis)(*1) The fixed rent of Hilton Tokyo Odaiba is the same amount as the fixed rent on and after 2022
(JPY1.6Bn), which was stipulated in the contract before revision.
(*2) When AGOP of each hotel exceeds AGOP base, the fixed rent is calculated by multiplying theamount by the fixed rent set for each hotel.

8.5% (6)HMJ

The Ishin Group

66.0% (16)The lease contract was changed on October 30, 2020(*)

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

13 operators(Dormy Inn, etc.)

Variable rent only2022
onwards

No. of Lessees/
Operators of JHROthers (7 operators)
Ishin (the b)
6.9% (10)Kyoritsu Maintenance 3.4% (4)Fixed rent (waived) + Variable rent

2021

Fixed rent (JPY100MM) + Variable rent

2022 onwards

Fixed rent (JPY214MM) + Variable rent

Contract term

the b ikebukuro
the b hachioji
the b hakata
the b suidobashi

The number of hotels that HMJ is the lessee
increased to 16 from 14
Rebranding to HMJ

January 31, 2015 to July 31, 2024

(extended by two and a half years)

 Rebranding to HMJ, the biggest strategic operator for JHR

January 1, 2020
to December 31, 2026

 Further promote restructuring, centered on cost reduction
 Aim to increase rent by setting appropriate rent burden
ratio (increase rent burden ratio)

Other Operators
Under discussion with several operators on request for rent
reduction, etc.

Based on acquisition price. A parenthesis represents the number of hotel.
As of August 25, 2021.

 Promote branding strategy of "Oriental Hotels & Resorts"
since 2021 at HMJ

9

4. Change in Lessees/Rebranding Upside by change in lessees/rebranding
Hotel Name(date of rebranding)

Chisun Hotel Kamata

Points of the Change

Points of Lease Contract Accepted a request for early-cancellation of theordinary lease contract

 Changed to fixed-term lease contractfrom ordinary lease contract

 The lessee was changed to Solare Hotels &Resorts Co., Ltd. and the hotel was rebranded Term: January 2021 to December2025 Changed to variable rent from fixed
rent + revenue sharing

January 1, 2021

Hotel Oriental Express  The grade of the hotels has been changed from
economy to mid-price
Fukuoka Tenjin

June 18, 2021

Oriental Hotel
Universal City

July 1, 2021

 Changed the lessee to The HMJ Group inaccordance with the withdrawal of the former
lessee. More efficient operations will be carriedout through sharing back offices with The HMJ
Group Hotels located in Fukuoka

 Changed the lessee to The HMJ Group inaccordance with the expiration of the lease
contract with the former lessee. Aim at more
efficient operations utilizing business resources
at The HMJ Group Hotels in Osaka Fixed-term lease contract
 Term: June 2021 to December 2031
 Changed to fixed rent + variable rent
from fixed rent only
(same scheme as the other HMJ grouphotels) Changed to fixed-term lease contractfrom ordinary lease contract
 Term: July 2021 to December 2031

 Changed to fixed rent + variable rent
from fixed rent + revenue sharing Aim to maximize revenue from the hotel in the(same scheme as the other HMJ group
recovery period of domestic demand as a theme
hotels)park hotel adjusted to Universal Studios Japan The name will be changed to Oriental Hotel
Oriental Hotel
Okinawa Resort & Spa of The HMJ Group in line
Okinawa Resort & Spa

 No changewith the expiration of the franchise contract(*2)
with the Marriott group

 Plan to conduct renovation at lobby, pool, guest
rooms, etc. 2022 onwards
October 1, 2021 (schedule)(*1) Market recovery period refers to the yield when the market recovers, and RevPAR is at the same level as the 2019 results.
(*2) Stating a contract between the hotel operating company and Global Hospitality Licensing S.a r.l., a franchisor of the international brand, Marriott.

10

Revenue Upside, etc.
<NOI Yield Assumption>
Result of 20196.5%

Market recovery period(*1)
8.8%<NOI Yield Assumption>
Result of 20196.1%

Market recovery period(*1)
8.3%<NOI Yield Assumption>
Result of 201911.1%

Market recovery period(*1)
18.4%

 Reduce the franchise fee Improve brand recognitionof Oriental Hotel brand Promote branding strategyof "Oriental Hotels &Resorts"

4. Change in Lessees/Rebranding (cont.)
Hotel Oriental Express Fukuoka Tenjin(former, HOTEL ASCENT FUKUOKA)
BeforeExterior

Oriental Hotel Okinawa Resort & Spa(current, Okinawa Marriott Resort & Spa)

After

BeforeA distinctive facade was newly established at
the top of the entrance to improve visibility

After (plan)

Expanded the poolside to allow more guests
to enjoy the pool more comfortably

Pool

Lobby

Guest room

Photogenic resort pool is produced in thenight pool by light direction

Using indirect lighting, the entire lobby
makes a bright impression

Changing to natural colors for appeal to broadcustomer base from business to leisure115. Active Asset Management for Post COVID-19
 Potential upside by active asset management
Initiatives for Post COVID-19

Hotels1

Improvement ofHotel Sales

Reduction ofHotel Operating Costs

2

Increase sales byimprovement ofhotel management

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

Review of cost by
restructuring

Reviewing the cost structure and improving therevenue structure. Aiming to maximize GOP
through efficient management

Improve GOP

REIT

3

Improvement ofReal Estate Operating Revenue
Reduction ofReal Estate Operating Costs

Revise in rent
scheme, etc.

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

Reduction of cost for Property Management and Trust, management
contract fee, and ground rent, etc.
Improve NOI

Increase rent
12

6. Acquisition of Property
Part of Site of Oriental Hotel Universal City (July 2021)
 Pursuant to the provisions at the time of expiration of the ground lease contract with Osaka City, part of the hotel site that was under groundlease was acquired Increase asset value by becoming a wholly owned real estate Improve cash flow since the increase in fixed asset tax taxes, city planning taxes, etc. is smaller than the ground rent payment

Oriental Hotel Universal City
Co-owner's interest of the land atpart of site of the hotel

Asset

2

Asset Area

8,788.67m

Acquisition Price

JPY754MM

Appraisal Value

JPY763MM

SellerOsaka City

Buyer

Mitsubishi UFJ Trust and Banking (MUTB)(trustee of JHR)

Overview of Rights about Universal Citywalk Osaka (outline drawing)

Building

Name

Oriental Hotel
Universal City

Hotel Kintetsu
Universal City

Commercial tower
Cooling facility

Business tower

Exclusively-owned area(voting right ratio)

Trustee : MUTB
Beneficiary : JHR(22.15%)Compartmentalized
owner A
(31.18%)Compartmentalized
owner B
(25.22%)Compartmentalized
owner C
(21.45%)

Common area

Land

Parking lot, and other facilities

Land A (co-owner's interest)

MUTB(19.06%)Compartmentalized owner A(26.83%)Compartmentalized owner B(54.11%)

Land B (co-owner's interest)(formerly owned by Osaka
City. Acquired this time)

MUTB(19.06%)Compartmentalized owner A(26.83%)Compartmentalized owner B(54.11%)

Acquired this time13

7. Sustainability Initiatives
In order to achieve a mid to long-term growth that coexists with society and environment, aiming to enhance sustainability throughappropriate actions for ESG issues(*1)
ESG Initiatives to date
Sustainability Policy

Green Building Certification

 Formulated in December 2017

 Promote to obtain BELS/CASBEE certification despite limited number ofcertification that covers hotel

GRESB Real Estate Assessment(*2)
 Acquired "Green Star" forthree consecutive years from 2018

Ratio of certification obtained: 17.2% (based on the floor area)◆ BELS Certification(*3)◆ CASBEE Certification for Buildings(*4)

Mercure Okinawa Naha
February 2018

Oriental Hotel Fukuoka Hakata Station
May 2021
CASBEE Certification for Buildings "B+: Good"

Hotel Nikko Alivila
February 2018

Hilton Tokyo Odaiba
April 2020
CASBEE Certification for Buildings "B+: Good"▶ In 2020, JHR was selected for"Sector Leader" inAsian hotel sector▶ Acquired "4-star"in GRESB Rating

Disclosure of Environmental Performance Measure energy consumption (electricity and gas), water
consumption and amount of waste generated and disclose
them on the website of JHR

Aim to expand disclosure of ESG-related information and obtain green building certification in the future(*1) For sustainability policy and examples of initiatives by JHR, please see websites of JHR (https://www.jhrth.co.jp/en/about/sustainability.html).
(*2) The GRESB is an annual benchmarking program to evaluate ESG considerations of property companies and real estate funds. The GRESB Real Estate Assessment is distinguished by its comprehensive evaluation of
initiatives for sustainability of property companies, REITs and real estate funds, not of individual properties. GRESB rating is a relative evaluation based on comprehensive scores and the highest being "5-stars."(*3) BELS (Building-Housing Energy-Efficiency Labeling System) is a display system of energy conservation performance of a building set by Ministry of Land, Infrastructure, Transport and Tourism.
(*4) CASBEE (Comprehensive Assessment System for Built Environment Efficiency) is a method for evaluating and rating the environmental performance of buildings. CASBEE Certification for Buildings is granted forassessment results provided by CASBEE for New Construction, Existing Buildings, and Renovation. Assessment results by CASBEE are indicated in a scale of the following five ranks: "S: Superior," "A: Very Good,""B+: Good," "B-: Slightly Poor," and "C: Poor."

14

7. Sustainability Initiatives (cont.)
Working on to prevent the spread of COVID-19
Efforts to Prevent the Spread of COVID-19 at Hotels
Accommodation of COVID-19 Patients

Vaccine Rollout

Accommodation of COVID-19 patients with mild orno symptoms at seven hotels

Vaccine rollout at The HMJ Group• To ensure the safety of hotel guests at hotels, The HMJ Group
Hotels conducted vaccinations for all employees (including parttime employees) and their families who want it at all hotels• Of COVID-19 patients, seven hotels
have accommodated patients with mild
or no symptoms• Introduced cleaning and welcoming
robots to make stay at hotels safer andmore comfortable

COVID-19 Prevention Measures(Digital Transformation (DX))

Provide banquet rooms• Provide banquet rooms, etc. in Oriental Hotel tokyo bay andHotel Nikko Nara as vaccination of local workers and residents

Introduction of automatic check-in machine• Introduced automatic checkin machines to prevent the
spread of infection andreduce cost at Hotel Oriental
Express Fukuoka Tenjin• Plan to introduce themachine to other HMJ grouphotels in the future15

Ⅳ. Financial Conditions

1. Financial Conditions
Main Financial Indicators

Repayment Schedule of Interest-bearing Debt

(as of the end of June 2021)

42.7%

LTV (total asset base)

20,00015,00010,00017.0BnFree cash(*3)

JPY

0

JPY

Changes in Costs for Interest-bearing Debt(*1) and
Average Life of Interest-bearing Debt(*2)
2.0%

Average Life of Interest-bearing Debt

4.7

4.8

4.3

1.1%

1.1%

1.0%

3.8

1.0%

0.5%
0.0%

6,000
15,772

1,500

3,000

19,00018,650 19,000
16,782 17,700 15,772

10,00017,350 17,000

13,10017,000 18,000

8,000

4,250
2021

2022

2023

2024

2025

2026

8,000

2027

2028

2029

Refinancing Result and Schedule in 2021
6.0

Repayment Date

Balance

5.0First Half
(result)

JPY7,735MM

4.0
3.0

1.0%

21,65028,000(year)

5.2

1.5%
1.0%

Costs for Interest-bearing Debt

18,282

Investment Corporation Bonds

5,000

127.9Bn

Unrealized gain

23,70025,000

3.8 years

Average life of interest-bearing debt(*2)

Loans

30,000

1.0%

Cost for all interest-bearing debt(*1)(as of the end of June 2021)(JPY MM)

Second Half
(schedule)

2.0

JPY18,282MM(Of these, Investment Corporation Bonds JPY1,500MM)

1.0
FY12/2017(18th Period)

FY12/2018(19th Period)

FY12/2019(20th Period)

FY12/2020(21st Period)

End of June 2021
(Midterm of
22nd Period)

0.0

17

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

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

Changes in LTV (total asset base)

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

Balance(as of the end ofJune 2021)
Balance%

Sumitomo Mitsui Banking Corporation

32,38819.2%

32,85019.5%

462Mizuho Bank, Ltd.

19,37011.5%

19,646

11.6%

276

Shinsei Bank, Ltd.

19,015

11.3%

19,015

11.3%–

Sumitomo Mitsui Trust Bank, Limited

13,825

8.2%

14,022

8.3%

197

Resona Bank, Limited

10,126

6.0%

10,1266.0%–

Development Bank of Japan Inc.

5,900

3.5%

5,900

3.5%

–

Fukuoka Bank, Ltd.

4,750

2.8%

4,750

2.8%

–

The Nomura Trust and Banking Co., Ltd.

4,660

2.8%

4,660

2.8%

–

Aozora Bank, Ltd.

3,435

2.0%

3,435

2.0%

–

MUFG Bank, Ltd.

4,135

2.5%

3,200

1.9%

(935)

The Chiba Bank, Ltd.

2,900

1.7%

2,900

1.7%

–

The Nishi-Nippon City Bank, Ltd.

2,750

1.6%

2,750

1.6%

–

Hiroshima Bank, Ltd.

1,900

1.1%

1,900

1.1%

–

Sompo Japan Insurance Inc.

1,500

0.9%

1,500

0.9%

–

0.3%

500

0.3%

–

75.3% 127,154

75.3%

–

Lenders/Bond Name

The Shizuoka Bank, Ltd.

500

Investment Corporation Bonds

Total of Bank Loans
127,154
Investment Corporation Bonds(for institutional investors)
4th Investment Corporation Bonds without Collateral
1,500
6th Investment Corporation Bonds without Collateral

3,000

11.6%

Variance

0.9%

1,500

0.9%

–

1.8%

3,000

1.8%

–

8th Investment Corporation Bonds without Collateral

1,100

0.7%

1,100

0.7%

–

9th Investment Corporation Bonds without Collateral

1,000

0.6%

1,000

0.6%

–

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

2,000

1.2%

2,000

1.2%

–

8,600

5.1%

8,600

5.1%

–

6,000

3.6%

6,000

3.6%

–

7th Investment Corporation Bonds without Collateral

9,000

5.3%

9,000

5.3%

–

10th Investment Corporation Bonds without Collateral

10,000

5.9%

10,000

5.9%–

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

4.7%

8,000

4.7%

–

19.6%

33,000

19.6%

–

24.7%

41,60024.7%–

168,754 100.0% 168,754 100.0%–

Total of Interest-bearing Debt

(as of the end of June 2021)(Unit: JPY MM)

24.7%

13.0%

9.7%
75.3%

Loans
Investment
Corporation Bonds

78.7%

Short-term

87.0%

Fixed Interest Rate

Long-term(scheduled repayment
within one year)

Long-term

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

Changes in LTV (total asset base)
45%
39.9%

40%
35%

FY12/2017(18th Period)

40.6%

39.0%

FY12/2018(19th Period)

FY12/2019(20th Period)

42.2%

42.7%

FY12/2020(21st Period)

End of June 2021
(Midterm of
22nd Period)(*) LTV as of the end of each period/year.

Status of Credit Rating

18

Japan Credit Rating Agency, Ltd.
(JCR)

A+ (negative)

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

A

(negative)

1. Financial Conditions (cont.)
Changes in Appraisal Value (Unrealized Gains)(JPY Bn)

Book Value

Unrealized Gains

525.9

151.5

398.7

400

122.1
302.1

300

End of
FY12/2019

End ofJune 2020

End of
FY12/2020

End ofJune 2021

No. of Property(*2)

42

42

42

42

Acquisition Price(JPY MM)369,708

369,708

370,031370,071

516,960

494,690493,330

493,730–(4.3%)(0.3%)

0.1%

CAP Rate(*3)

4.5%

4.5%

4.6%

4.6%

Variance of
Cap Rate(*3)–+0.1pt+0.0pt(0.0pt)Net Cash Flow
(JPY MM)

23,09822,422

22,56622,556

Variance of
Net CashFlow(*3)–(2.9%)

0.6%(0.0%)

493.3 493.7

500
439.3 437.5

Variance in Appraisal Value

126.5

127.9

130.7

Appraisal
Value(JPY MM)
Variance ofAppraisal
Value

113.8

78.7
200

34.8

374.3
284.9

100

317.2

366.7

Appraisal

205.4
365.7

306.7

223.3
170.5

0

Ratio of
Unrealized Gains 20.4%

35.2% 39.9% 38.5% 42.6% 40.5% 34.5% 35.0%

FY12/2014 FY12/2015 FY12/2016 FY12/2017 FY12/2018 FY12/2019 FY12/2020
End of(15th Period) (16th Period) (17th Period) (18th Period) (19th Period) (20th Period) (21st Period) June 2021
(Midterm of
22nd Period)(*) Unrealized gains are calculated by subtracting book value from appraisal value.

19(*1) Based on the appraisal value at each period.
(*2) For the end of FY12/2019 and the end of June 2020, stating figures for 42 properties
excluding Sotetsu Fresa Inn Shimbashi-Karasumoriguchi sold in July 2020.
(*3) Cap rate, variance of cap rate and net cash flow are rounded off.

Ⅴ. Market Environment

1. Market Environment Inbound for tourism purposes is restricted and international travel
constraints continue The total number of overnight guests in the first half of 2021
decreased by 16.4% year-on-year and by 56.3% compared to thesame period in 2019

Changes in Number of Inbound Visitors(Ten thousands)

3,500

3,000

2,500

Number of Inbound Visitors+2.2%+8.7% 3,119 3,188

Changes in Number of Overnight Guests in Japan(Guest nights in millions)

Tourists

600
+3.5%

+19.4% 2,869

500

2,403

(87.1%)

492

+5.6%

510

300

1,500

+8.2%
+1.6%

423

480

+3.2%

430

(35.2%)

500

100

394

9
2016

2017

2018

2019

2020

1H
2019

1H
2020

0

1H
2021

Source: Number of International Visitors to Japan by Japan National Tourism Organization (JNTO)(*) The numbers for January to May 2021 are provisional numbers, and the number s for June are
estimated numbers.

21

285

(16.4%)(vs 1H 2020)

311(97.6%)(vs 1H 2020)

411(56.3%)(vs 1H 2019)

332

444

200

1,000

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

538

400

1,663

596

(44.3%)(99.4%)(vs 1H 2019)

2,000

0

+10.8%+14.8%+18.3%

69

80

2016

2017

227

149

+22.7%(5.9%)(82.4%)

94

116
20

2018

2019

2020

125

131
59
1H
2019

123

(91.0%)

18

2

1H
2020

1H
2021

Source: Statistics of Overnight Travel by Japan Tourism Agency(*) Rounded off to the nearest millions of people.
Numbers for January to May 2021 are second preliminary figure, numbers for June 2021 are firstpreliminary figure.

1. Market Environment (cont.) New supply in 2021 decreased by more than 6,000 rooms compared to the forecast of half a year ago
Supply of Rooms in Hotels/Ryokans in Japan
As of the end of July 2021
(No. of rooms)＜Japan＞

60,00054,051 59,079 49,115

80,00040,00020,00016,51732,988Actual36,29860,00025,48324,644
11,92440,00020,0000

Ratio of New Supply +1.1% +2.1% +3.4% +3.6% +2.9% +2.1% +1.4% +0.7% +1.4%

2016

2017

2018

(No. of rooms)

2020

2021

2022

2023

Excl. Tokyo, Osaka2024~(including
undetermined plan)(%: change from theprevious year)

6,107 5,866

1,987

0

1,418

10,000

3,743

6,107

0

(%: change from theprevious year)

12,000

8,329

9,000
3,000

2020

2021

2022

＜Osaka＞(No. of rooms)

6,000

2019

2023

2024~

(including
undetermined plan)

2016

1,402

4,260

2,927 2,989

6,000
3,000
0

(%: change from theprevious year)

2019

2020

2021

2022

2023

2024~

(including
undetermined plan)

2022

2023~

(including
undetermined plan)

9,686

2018

2019

2020

2021

2016

2,412

2022

2023~

(including
undetermined plan)

10,721
6,205

5,014

1,402

(%: change from theprevious year)

2018

2017

5,018

Ratio of New Supply +1.8%

2017

2021

5,009

8,329

Ratio of New Supply +1.8% +6.3% +9.9% +11.6% +6.0% +3.9% +2.6% +2.6% +3.8%

2016

2020

＜Osaka＞

9,000

4,585

3,087

0

28,534+3.8% +7.4% +6.4% +7.0% +5.0% +2.4% +1.1%

12,000

6,205

2019

5,866

(No. of rooms)

10,721

5,018

2018

5,000

(%: change from theprevious year)2018

21,70911,833 11,062 12,748

Ratio of New Supply +4.1%

2017

42,549＜Tokyo＞

Ratio of New Supply +4.1% +3.8% +7.4% +6.5% +6.8% +3.1% +2.3% +0.7% +1.8%

2016

2017

15,0006,032 4,619

5,000

2016

20,00011,833 11,105 12,483

15,00054,051 59,052 49,016

Supply Forecast+2.1% +3.4% +3.6% +2.9% +2.4% +1.2% +1.6%+0.7% +1.7% +2.5% +2.7% +2.1% +1.9% +0.9% +1.4%(No. of rooms)＜Tokyo＞

20,00010,0002019

16,51732,988ActualRatio of New Supply +1.1%

Excl. Tokyo, Osaka +0.7% +1.7% +2.5% +2.7% +2.1% +1.8% +1.2% +0.5% +1.1%(%: change from theprevious year)＜Japan＞(No. of rooms)

80,00022,6510

Reference: as of the end of January 2021(*2)

Supply Forecast

3,401

4,775

+6.3% +9.9% +11.6% +6.0% +4.6% +3.0% +4.0%
2017

2018

2019

2020

2021

2022

2023~

(including
undetermined plan)

Source: Estimated by the Asset Management Company using data from "Public Health Administration Report" by Ministry of Health, Labour and Welfare (MHLW), a weekly hotel & restaurant magazine (HOTERES), and Nikkei Telecom.
(*1) Ratio of new supply is the ratio of new rooms to be supplied in a year to the stock of rooms at the beginning of the year. With regard to the above data, please note that in case the number of rooms are stated as "to be
determined" by hotels, the asset management company has used 180, the average number of new supply of hotel rooms, for calculation.
(*2) The figures were announced in the Financial Results Briefing for the fiscal year ended December 2020.

22

1. Market Environment (cont.)
Number of New Cases of COVID-19 in Japan and Events in the World and Japan
January 23, Wuhan lockdown

Eventsin theWorld(No. of cases)

15,000December 14, Vaccine rollout started in the United States

July 23,
Tokyo Olympics started

March 6, non-essential travel restrictions to EU for a period of 30 days, and EU started lockdown measures
March 24, Postponement of Tokyo Olympics and Paralympics was decided
April 7, State of Emergency declared in Japan(Tokyo metropolitan area, Kansai area, Fukuoka)
April 16, State of Emergency was expanded nationwide
May 25, State of Emergency was lifted nationwide
July 22, "Go To Travel" campaign started

Japan

May 23, State of Emergency (Okinawa)
January 8, State of Emergency(Tokyo metropolitan area)
July 12, State of Emergency
February 17, Vaccine rollout to medical workers(Tokyo)April 12, Vaccine rollout toAugust 2,
people aged 65 or older
December 28, "Go To Travel"
State of Emergency
Campaign was temporally(Saitama, Chiba,
April 25, State of Emergency
suspended(Tokyo, Osaka, Kyoto, Hyogo) Kanagawa, Osaka)(No. of cases)

Percentage of population fully vaccinatedin Japan and US(*)

60%

20,000July 19,
Lockdown rules easedin the UK

December 2, Vaccine rollout started in the UK

March 13, National Emergency in the United States

Eventsin Japan

25,000

October 14, Public Health Emergency Declaration again in France

January 30, Public Health Emergency by WHO

5th wave

Number of New Cases of COVID-19 in Japan (left axis)
Number of deaths in Japan (right axis)

US

250

4th wave

40%

200

20%
0%

Dec. 2020Feb. 2021

10,000

Apr. 2021

1st waveJun. 2021

Aug. 2021

150

3rd wave

2nd wave

100

5,000

0
Jan. 2020

300

50

Mar. 2020

May. 2020

Jul. 2020

Sep. 2020

Nov. 2020

Jan. 2021

Mar. 2021

May. 2021

Jul. 2021

Source: "Coronavirus disease" Ministry of Health, Labour and Welfare, and One World in Data (https://ourworldindata.org/covid-vaccinations?country=OWID_WRL)(*) As of August 17, 2021. Stating percentage of population fully vaccinated against COVID-19.

230

Ⅵ. Takeaways

1. Takeaways
Pre
COVID-19
2019

With
COVID-19

2020● Development and distribution ofeffective vaccine and medicine

2021

2022

Post
COVID-192023

ChangeSense ofSocial &values/economic

Lifestyleactivity

Leisuredemand(quantity andquality)

FinancialmarketSociety

Guests'Investment

needs

opportunity

Hotel market

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

Survivethe "with COVID-19" period
25

Memo

26

Appendix 1
JHR's Characteristics and Strategy

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

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

High capability in achieving internal growthHighcapability inachievinginternal
growthStrongability inacquiringproperties

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

Stablefinancingcapability

Stable financing capability
 Secure sound and stable finance Diversify financing methods28

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

Ensure Stable Revenue

Pursue UpsideManagement
contract structure

Fixed rent structure

Variable rent
structure

Revenue sharing
structure

Active Asset Management Strategies

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

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

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

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

Proportion of Rental Income

Proportion of Rent Structures(2019 Results (annualized))(as of August 25, 2021)

Fixed rent only

10 properties

Variable rent, etc.(＊)

38.4%

Variable rent, etc.(＊)

Fixed rent, etc.

32 properties

61.6%

(*)

Variable rent, Rent from revenue sharing andIncome from management contracts

(*)

29

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

3. External Growth Strategy
Recognition ofExternal Environment
Trend of the Hotel
Investment Market
 Infection by COVID-19 has not yet settled,
and an emergency declaration has been
issued repeatedly, therefore, the economy
has continued to worsen, and economic
activity has been restrained. Under suchcircumstances, the slump in hotelrevenues has become prolonged, and wehave seen events such as tenant requests
for rent reduction, early cancellations thecontracts and credit uncertainty of hotel
operators. The hotel market has continued
to be in the challenging management
environment.
 In the short term, market uncertainty andthe cautious lending attitudes of financial
institutions and other factors have kept
both sellers and buyers to quietly review
market trends, and hotel transactions havebeen stagnant. On the other hand,transactions are gradually starting toappear, such as transactions aimed at
off-balancing by business companies, andsuch transactions may increase in the
future.
 For medium to long term, demand fordomestic and overseas accommodations is
expected to recover as a result of the risein coronavirus vaccine rollout and otherfactors. As the market recovers, the hotel
investment may be revitalized again.
However, the competitiveness of hotels is
becoming more evident in accordance withthe hotel specifications, locations, and theabilities of hotel operators, and it isimportant to differentiate each hotel.

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

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

30

4. Internal Growth Strategy
Recognition ofExternal Environment
Hotel Market Environment

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

 Due to the spread of infection by
COVID-19, both inbound and domestic
demand have been stagnant. On theother hand, inbound and domestic
demand are also expected to gradually
recover due to the distribution of
vaccines domestically and internationallyand measures by the national and local
governments to stimulate demand after
the spread of infections comes to andend.
 Although there are supply-demand
imbalances depending on the market
due to the continued supply of newhotels against the backdrop of robust
hotel demand in recent years, there are
no changes to the medium to long term
trend of expansion in the tourism
market accompanying economic growthin the Asia region.
 As hotel operators are temporarily
exposed to significant deterioration in
the market environment, they are
required to respond flexibly to changes,
such as a defensive strategy to maintainmanagement soundness and a shift toan aggressive strategy that captures themomentum for recovery.

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

31

5. Financial Strategy
Recognition ofExternal Environment
Trend of Financing Environment
and Interest Rates
 The TSE REIT Index rose for eight
consecutive months from November
2020 to June 2021, against the
backdrop of large-scale monetary easingby central banks and expectations ofnormalization of economic activities dueto the coronavirus vaccine rollout. There
were 12 public offerings by J-REITs in
the first half of 2021, which is in trendof recovery against the backdrop ofstrong unit prices.

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

Key Measures

 Although there has been no change insupportive attitude by financial
institutions. However, some sectors,
such as hotels, have seen a cautious
stance toward long-term loan andupward pressure on interest rates dueto the spread of infection by COVID-19.

 Secure the internal reserve and further strengthen the financial base by controlling capital expenditures,etc.

 Both short-term and long-term interest
rates remain at low levels due to themonetary easing policy.

 Improve financial stability by diversifying repayment periods and fixing interest rates, etc. as necessary As for investment corporation bonds,
the amount of issuance of investment
corporation bonds increased from theprevious year. The Green, Social andSustainability Bonds accounted for morethan 70% of the amount issued.

 Maintain LTV level at a maximum of 50% (total asset base) for the time being
 Diversify financing methods such as public offerings and issuance of investment corporation bonds

 Optimize borrowing costs

32

6. Benefits Program for Unitholders
JHR implemented benefits program for unitholders to obtain a better understanding, improve theirsatisfaction and expand the investor baseEligible recipients of complimentary couponsComplimentary coupons will be sent to those who hold ten or more JHR units
at the end of June every year (end of the midterm settlement)<FY2020>
Eligible unitholders: 13,175
Valid period: One year between October 1, 2021 to September 30, 2022

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

Hotels that offer the Benefits Program
The HMJ Group Hotels

Kobe Meriken Park
Oriental Hotel

Oriental Hoteltokyo bay

ACTIVE-INTER CITYHIROSHIMA (Sheraton
Grand Hiroshima Hotel)

Oriental Hotel Fukuoka
Hakata Station

Hotel Nikko Nara

Namba
Oriental Hotel

Holiday Inn
Osaka Namba

Hilton Tokyo Odaiba

Oriental Hotel
Hiroshima

The Accor Group Hotels

Hotel Nikko Alivila

Hilton Tokyo
Narita Airport

Hotel Oriental Express
Osaka Shinsaibashi

Okinawa Marriott
Resort & Spa

International Garden Hotel Narita

Newly Added

Oriental Hotel
Universal City

33

Hotel Oriental Express
Fukuoka Tenjin

ibis Tokyo Shinjuku

ibis Styles Kyoto Station

Mercure Sapporo

ibis Styles Sapporo

Mercure Okinawa Naha

Mercure Yokosuka

Appendix 2
Information on Properties

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

Strategic Investment Areas and Locations of Properties(as of the end of June 2021)

Total Assets(*1)

Existing properties
Strategic Investment Areas

JPY370.0Bn
Hokkaido Area

No. of Hotels

Okinawa Area

42 Hotels(33 in Strategic Investment Areas)

No. of Guest Rooms

11,485 Rooms

Tokyo & Bay Area(*2)

Fukuoka
Area

Osaka/Kyoto Area(*3)(*1) Asset size is based on the aggregate acquisition price of the properties.
The same shall apply hereinafter.
(*2) Bay Area includes the coastal area of Tokyo Bay in Kanagawa and Chiba prefectures.
(*3) Osaka/Kyoto Area refers to Osaka and Kyoto prefectures.

Tokyo 23 wards

35

2. Portfolio Diversification
 Widely diversified and high-quality portfolio Appeal to inbound visitors by international brands
By Hotel Brand

By Grade(as of August 25, 2021)

Dormy Inn, etc.
(Kyoritsu Maintenance)
the b

3%

Others9%(as of the end of June 2021)

EconomyOriental Hotel

Luxury

(HMJ)

4%

21%

19%

(Ishin Hotels Group)

Mid-price42%

3%

Upper-middle

ibis/Mercure

33%

Hotel Nikko(Accor)8%8%

By Hotel Type

Holiday Inn(IHG)(as of the end of June 2021)

7%
Sheraton
Hilton32%

MarriottResort

5%

21%

4%

service32%

Full-service

International Brand:
56%(*) Based on the acquisition price.

Limited-47%

36

3. Property List (1/2)(as of the end of June 2021)
Appraisal ValueNo.

Property Name

Hotel Type
(*1)

Grade
(*2)

No. of
Guest
Rooms

LocationAge(*3)

Acquisition
Price(JPY MM)(*4)

Book Value(JPY MM)(*5)

21st Period(as of December 31, 2020)

22nd Period(as of June 30, 2021)

Appraisal
Value(JPY MM)CAP Rate

Appraisal
Value(JPY MM)CAP Rate

Investment
Ratio
(*6)

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

NOI
(JPY1,000)(*7)

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

1Kobe Meriken Park Oriental Hotel

Full-service

Upper-middle

323

Hyogo

26.0

10,9009,576

13,9004.8%

14,000

4.8%

2.9%

969

(123,965)(267,192)

2

Oriental Hotel tokyo bay

Full-service

Mid-price

511

Chiba

26.2

19,90017,215

32,100

4.4%

32,200

4.4%

5.4%

–

(59,239)(240,276)

3

Namba Oriental Hotel

Limited-service

Mid-price

258

Osaka

25.3

15,00014,457

31,4004.1%

31,4004.1%

4.1%

140,717

88,10817,321

4

Oriental Hotel Hiroshima

Full-service

Upper-middle

227

Hiroshima

27.8

4,100

4,088

4,130

4.9%

4,220

4.9%

1.1%

22,609513(43,018)

5

Hotel Nikko Alivila

ResortLuxury397

Okinawa

27.2

18,90017,89928,8004.8%

28,9004.8%

5.1%

49,816(24,348)(160,265)

6

The Beach Tower Okinawa

ResortMid-price

280

Okinawa

17.3

7,610

6,443

10,000

4.4%

10,0004.4%

2.1%

255,504

232,689

171,847

7

Hakone Setsugetsuka

ResortMid-price

158

Kanagawa

14.7

4,070

3,622

5,300

4.9%

5,270

4.9%

1.1%

147,469

134,832

87,1238

Dormy Inn Kumamoto

Limited-service

Mid-price

291

Kumamoto

13.4

2,334

2,146

3,030

5.6%

2,950

5.6%

0.6%

97,23085,457

61,5209

the b suidobashi

Limited-service

Mid-price

99

Tokyo

34.8

1,120

1,174

2,280

4.1%

2,280

4.1%

0.3%

6,499

510

(12,433)

10

dormy inn・global cabin Asakusa

Limited-service

Economy

75

Tokyo

24.3

999

929

1,280

4.0%

1,280

4.0%

0.3%

31,997

27,604

21,202

11

Hakata Nakasu Washington Hotel Plaza

Limited-service

Mid-price

247

Fukuoka

26.3

2,130

2,067

4,510

4.4%

4,530

4.4%

0.6%

120,000

112,000

99,00012

Nara Washington Hotel Plaza

Limited-service

Mid-price

204

Nara

21.3

2,050

1,754

2,430

5.0%

2,430

5.0%

0.6%

75,00067,00048,000

13

R&B Hotel Ueno-hirokoji

Limited-service

Economy

187

Tokyo

19.2

1,720

1,802

1,910

4.0%

1,900

4.0%

0.5%

48,64541,34533,02914

Comfort Hotel Tokyo Higashi Nihombashi

Limited-service

Economy

259

Tokyo

13.4

3,746

3,473

5,390

4.4%

5,350

4.4%

1.0%

135,763

119,473

101,078

15

Smile Hotel Nihombashi Mitsukoshimae

Limited-service

Economy

164

Tokyo

24.3

2,108

2,036

2,930

4.1%

2,930

4.1%

0.6%

67,20059,33348,747

16

Toyoko Inn Hakata-guchi Ekimae

Limited-service

Economy257

Fukuoka

19.8

1,652

1,391

2,750

4.5%

2,750

4.5%

0.4%

70,51963,63654,531

17

Oriental Hotel Universal City (*8)

ResortMid-price

330

Osaka

20.0

6,000

5,924

15,4005.0%

15,4005.0%

1.6%

290,788234,452

186,149

18

Chisun Inn Kamata

Limited-service

Economy

70

Tokyo

18.2

823

770

1,370

4.6%

1,370

4.6%

0.2%

421

(3,099)(7,826)19

Chisun Hotel Kamata (*9)

Limited-service

Economy

105

Tokyo

29.4

1,512

1,483

2,010

4.8%

2,020

4.8%

0.4%

70

(7,300)(23,067)

20

Hilton Tokyo Bay

ResortLuxury

828

Chiba

33.0

26,05026,22639,9004.3%

40,3004.3%

7.0%

989,235

847,882

754,430

21

ibis Tokyo Shinjuku

Limited-service

Mid-price

206

Tokyo

40.8

7,243

7,858

9,900

4.1%

9,900

4.1%

2.0%

67,20912,928(42,133)

22

ibis Styles Kyoto Station

Limited-service

Mid-price

215

Kyoto

12.3

6,600

6,626

10,200

4.3%

9,990

4.3%

1.8%

23,193(19,990)(38,026)

23

ibis Styles Sapporo

Limited-service

Mid-price278

Hokkaido

10.9

6,797

6,486

11,100

4.7%

11,1004.7%

1.8%

25,132(38,935)(79,477)37

3. Property List (2/2)(as of the end of June 2021)
Appraisal ValueNo.

Property Name

Hotel Type
(*1)

Grade
(*2)

No. of
Guest
Rooms

LocationAge(*3)

Acquisition
Price(JPY MM)(*4)

Book Value(JPY MM)(*5)

21st Period(as of December 31, 2020)

22nd Period(as of June 30, 2021)

Appraisal
Value(JPY MM)CAP Rate

Appraisal
Value(JPY MM)CAP Rate

Investment
Ratio
(*6)

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

NOI
(JPY1,000)(*7)

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

24

Mercure Sapporo

Limited-service

Mid-price285

Hokkaido

12.2

6,000

5,753

10,5004.7%

10,5004.7%

1.6%

55,243(66,887)(112,292)

25

Mercure Okinawa Naha

Limited-service

Mid-price

260

Okinawa

11.9

3,000

2,813

6,940

4.7%

6,950

4.7%

0.8%

–

(28,115)(59,716)26

the b ikebukuro

Limited-service

Mid-price

175

Tokyo

39.0

6,520

6,581

6,980

4.2%

7,020

4.2%

1.8%

169,338

155,109139,28227

the b hachioji

Limited-service

Mid-price

196

Tokyo

34.9

2,610

2,695

2,560

5.1%

2,570

5.1%

0.7%

22,336

9,788(6,897)28

the b hakata

Limited-service

Mid-price

175

Fukuoka

23.8

2,300

2,341

4,330

4.3%

4,330

4.3%

0.6%

17,761

11,245

103

29

Hotel Francs

Full-service

Mid-price

222

Chiba

29.9

3,105

3,128

4,080

4.6%

4,040

4.7%

0.8%

150,000

119,016

95,84430

Mercure Yokosuka

Full-service

Mid-price

160

Kanagawa

27.7

1,650

1,627

3,310

4.6%

3,340

4.6%

0.4%

124,00279,27361,327

ResortUpper-middle

361

Okinawa

16.4

14,95014,742

17,2004.9%

17,200

4.9%

4.0%

–

(42,120)(179,550)

Full-service

Luxury238

Hiroshima

10.8

17,32017,19021,0004.6%

20,700

4.6%

4.7%

408,764

228,078

117,191

Limited-service

Mid-price

268

Tokyo

11.5

6,705

6,593

7,430

4.0%

7,440

4.0%

1.8%

174,985

161,900

141,739

Full-service

Upper-middle

221

Fukuoka

36.0

7,197

9,318

15,200

4.6%

15,2004.6%

1.9%

81,313(43,183)(253,874)

31

Okinawa Marriott Resort & Spa

32

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

33

CANDEO HOTELS UENO-KOEN

34

Oriental Hotel Fukuoka Hakata Station

35

Holiday Inn Osaka Namba

Limited-service

Mid-price

314

Osaka

12.9

27,00026,861

26,5004.3%

26,500

4.3%

7.3%

–

(24,501)(105,166)

36

Hotel Oriental Express Fukuoka Tenjin(*10)

Limited-service

Mid-price

263

Fukuoka

22.2

5,248

5,849

6,650

4.8%

6,480

4.8%

1.4%

274,043

206,261

184,654

37

Hilton Nagoya

Full-service

Luxury

460

Aichi

32.3

15,25015,667

15,0004.2%

14,8004.2%

4.1%

352,822

65,360(21,967)

38

Hilton Tokyo Narita Airport

Full-service

Upper-middle

548

Chiba

27.9

13,175

13,291

13,4004.6%

13,600

4.6%

3.6%

–

(42,457)(147,853)

39

International Garden Hotel Narita

Full-service

Mid-price

463

Chiba

25.1

9,125

9,125

9,500

4.8%

9,520

4.8%

2.5%

76,57654,329(20,189)40

Hotel Nikko Nara

Full-service

Upper-middle

330

Nara

23.3

10,373

10,298

9,790

4.8%

9,890

4.8%

2.8%

–

(24,144)(98,497)

41

Hotel Oriental Express Osaka Shinsaibashi

Limited-service

Mid-price

124

Osaka

3.4

2,738

2,823

2,840

4.7%

2,880

4.7%

0.7%

–

(7,022)(13,753)

42

Hilton Tokyo Odaiba

Full-service

Upper-middle

453

Tokyo

25.5

62,40063,581

68,1003.7%

68,300

3.7%

16.9%

–

(165,255)(306,978)––11,485–23.4

370,031

365,741

493,330–

493,730–

100.0%

4,573,905

2,498,490

184,486

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

Under the category of Hotel Type, "Full-service" is full-service hotel, "Resort" is resort hotel, and "Limited-service" is limited-service hotel.
Mainly based on ADR, etc., JHR has classified the hotels into four categories as "luxury," "upper-middle," "mid-price," and "economy."
Average age: Weighted average calculated as follows. The sum of (acquisition price of each property x property age)/total acquisition price.
The acquisition price in the Purchase & Sale Agreement for the Beneficial Interest in Trust or real estate is indicated. (Consumption tax, amount equivalent to consumption tax, brokerage fee, and other purchase-related costs are excluded.)Book value as of the end of June 2021.
Investment ratio indicate percentage of the acquisition price of each asset to the total acquisition price. Numbers beyond one decimal place is rounded off.
Actual for six months from January to June 2021. Since the lessees did not agree to disclose numbers in units of JPY1,000 for No. 11 and 12, amounts are rounded down to the nearest JPY million.
The name has changed from Hotel Keihan Universal City on July 1, 2021.
The name has changed from Hotel Vista Kamata Tokyo on January 1, 2021.
The name has changed from HOTEL ASCENT FUKUOKA on June 18, 2021.

38

4. Summary of Lease Contracts (1/3)(as of the end of June 2021)
No.

1

2

Property Name

Lease
Type

Rent
Structure(*1)

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

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

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

Hotel Management Japan Co., Ltd.
3

Contractual Rent(*2)

Namba Oriental Hotel

Fixedlease

Fixed +
Variable

15【2021】Hotel AGOP x 91%(If the amount is below JPY0, it will be JPY0)
Dec. 2034 【2022】 The Five HMJ Hotels amount(JPY3,221MM/year) + when Hotel AGOP
exceeds JPY4,120MM, the excess x 85% is paid

Rent Modification Summary

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

Rent Modification Summary(After acquisition)
TimingCondition

Modified Structure(variable rent only fromFebruary 2020 to December
Aug. 2020
2021)(variable rent ratio waschanged for 2022 onwards)

Rent Modification Schedule(2021 to 2022)
2021

2022

–

–

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

4

Oriental Hotel Hiroshima

5

Hotel Nikko Alivila

6

The Beach Tower Okinawa

Fixedlease

Fixed

20

Jun. 2026 JPY42MM/month

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

–

–

–

–

7

Hakone Setsugetsuka

Fixedlease

Fixed

20

Oct. 2026 JPY24MM/month

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

–

–

–

–

Apr. 2020

Same

–

–

Apr. 2020

Same

–

–

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

Okura Nikko HotelManagement Co., Ltd.

Kyoritsu Maintenance Co., Ltd.

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

8

Dormy Inn Kumamoto

Fixedlease

Fixed

12

Mar. 2023 JPY16MM/month9

dormy inn・global cabin Asakusa

Lease

Fixed

3

Mar. 2023 JPY5MM/month10

Hakata Nakasu Washington Hotel
Plaza

Lease

Fixed

3

Mar. 2024 JPY20MM/month

Rent can be modified throughmutual agreement.

Apr. 2021

Same

–

–

11

Nara Washington Hotel Plaza

Lease

Fixed

3

Mar. 2023 JPY11MM/month

Rent can be modified throughmutual agreement.

Mar. 2020

Same

–

–

12

R&B Hotel Ueno-hirokoji

Lease

Fixed

20

Apr. 2022 JPY8MM/month

Rent can be modified throughmutual agreement.

Apr. 2011

Increased(+3.0%)–To be expired(Apr.)

13

Comfort Hotel Tokyo Higashi
Nihombashi

Fixedlease

Greens Co., Ltd.

20

Jan. 2028 JPY21MM/month + Revenue sharing

Rent can be modified throughmutual agreement every five
years.

Apr. 2018

Same(Introduced
revenue sharing)

–

–

14

Smile Hotel Nihombashi
Mitsukoshimae

Lease

THE KAMOGAWA GRAND HOTEL, LTD.

3

Mar. 2023 JPY11MM/month + Revenue sharing

Rent can be modified throughmutual agreement.

Mar. 2020

Same

–

–

15

Toyoko Inn Hakata-guchi Ekimae

Lease

Toyoko Inn Co., Ltd.

30

Sep. 2031 JPY11MM/month

No rule has been stipulated.

Oct. 2007

Increased(+9.4%)––

Fixed +
Revenuesharing
Fixed +
Revenuesharing
Fixed

Washington Hotel K.K.

39

4. Summary of Lease Contracts (2/3)(as of the end of June 2021)
No.

Property Name

Lease
Type

Rent
Structure(*1)

16

Oriental Hotel Universal City (*4)

Fixedlease

Fixed +
Variable

17

Chisun Inn Kamata

Fixedlease

Variable

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

K.K. Osaka Sakurajima Operations

Solare Hotels &Resorts Co., Ltd.

SHR Hotels, Co., Ltd.

THE DAI-ICHI
BUILDING CO., LTD.

Hilton International
Company

Contractual Rent(*2)

JPY350MM/year + when Hotel AGOP exceeds
JPY370MM, the excess x 95% is paid (Fixed
10.5 Dec. 2031 rent payments from June 2021 to June 2022
are waived. The starting date of variable rent
is January 1, 2022.)

Rent Modification Summary

Rent Modification Summary(After acquisition)

Rent Modification Schedule(2021 to 2022)

TimingCondition

2021

2022

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

Jul. 2021

Change in lessee andModified Structure

–

–

7

Dec. 2026

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

Jan. 2020

Same

–

–

5

Dec. 2025

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

Jan. 2021

Change in lessee andModified Structure

–

–

4

Dec. 2022 JPY163MM/month + Revenue sharing

Rent can be modified throughmutual agreement.

Jan. 2019

Renewed(Increased)–

To be expired(Dec.)

18

Chisun Hotel Kamata (*5)

Fixedlease

Variable

19

Hilton Tokyo Bay

Fixedlease

Fixed +
Revenuesharing

20

ibis Tokyo Shinjuku–

Management
contract

12Jun. 2024 Amount equivalent to hotel GOP–

Jul. 2012

Modified Structure

–

–

21

ibis Styles Kyoto Station–

Management
contract

12

Dec. 2024 Amount equivalent to hotel GOP

–

–

–

–

–

22

ibis Styles Sapporo–

Management
contract10Dec. 2024 Amount equivalent to hotel GOP

–

–

–

–

–

23

Mercure Sapporo–

Management
contract

15

Sep. 2029 Amount equivalent to hotel GOP

–

–

–

–

–

24

Mercure Okinawa Naha–Management
contract

10

Apr. 2024 Amount equivalent to hotel GOP

–

–

–

–

–

25

Mercure Yokosuka

Fixedlease

Variable

AAPC Japan K.K.

5

Aug. 2024 Linked to hotel GOP

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

Aug. 2019

Renewed(Increased)

–

–

26

the b ikebukuro

Fixedlease

Fixed +
Variable

Ishin Ikebukuro Operations K.K.

9.5

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

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

Oct. 2020

Fixed rent was changed(Reduction)

–

–

27

the b hachioji

Fixedlease

Fixed +
Variable

Ishin Hachioji Operations, Y.K.

9.5

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

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

Oct. 2020

Fixed rent was changed(Reduction)

–

–

28

the b hakata

Fixedlease

Fixed +
Variable

Ishin Hakata Operations K.K.

9.5

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

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

Oct. 2020

Fixed rent was changed(Reduction)

–

–

29

the b suidobashi

Fixedlease

Fixed +
Variable

Ishin Suidobashi Operations K.K.

5

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

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

Oct. 2020

Fixed rent was changed(Reduction)

–

–

30

Hotel Francs

Fixedlease

Fixed

K.K. Bridal Produce

19

Oct. 2024 JPY25MM/month

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

–

–

–

–

–

–

–

–

31

Okinawa Marriott Resort & Spa

Fixedlease

Fixed +
Variable32

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Fixedlease

Fixed +
Variable–

AAPC Japan K.K.

Lagoon resort Nago Co., Ltd.

K.K. A.I.C Hiroshima
Management

Luxury Hotels
International of
Hong Kong Limited

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

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

11

Dec. 2026【2021】Hotel AGOP x 93%(If the amount is below JPY0, it will be JPY0)【2022】JPY348MM/year + when Hotel AGOP
exceeds JPY360MM, the excess x 90% is paid

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

40

Modified Structure(variable rent only fromFebruary 2020 to December
Aug. 2020
2021)(variable rent ratio waschanged for 2022 onwards)
Modified Structure(variable rent only fromFebruary 2020 to December
Aug. 2020
2021)(variable rent ratio waschanged for 2022 onwards)

4. Summary of Lease Contracts (3/3)(as of the end of June 2021)
No.

Property Name

Lease
Type

Rent
Structure(*1)

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

Rent Modification Summary

20

Feb. 2030 Nondisclosure(*3)

Rent can be modified throughmutual agreement every three
years.

Hotel Centraza Co., Ltd.

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

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

Fixed +
VariableOW Hotel Operations KK

15

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

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

Fixedlease

Fixed +
Variable

K.K Fukuoka Tenjin Operations

Lease

Variable

33

CANDEO HOTELS UENO-KOEN

Fixedlease

Fixed

34

Oriental Hotel Fukuoka Hakata
StationFixedlease

Fixed +
Variable

35

Holiday Inn Osaka Namba

Fixedlease36

Hotel Oriental Express Fukuoka
Tenjin (*6)

37

Hilton Nagoya

Candeo Hospitality Management, Inc.

Nagoya Hilton Co.,Ltd.

Hilton International
Company

JPY150MM/year + when Hotel AGOP exceeds
JPY165MM, the excess x 97% is paid (Fixed
10.5 Dec. 2031 rent payments from June 2021 to June 2022 iswaived. The starting date for calculation ofvariable rent is January 1, 2022.)
41

38

Hilton Tokyo Narita Airport

Fixedlease

Fixed +
Variable

KK NaritaKosuge Operations

20

39

International Garden Hotel Narita

Fixedlease

Fixed +
Variable

KK NaritaYoshikura Operations

10

40

Hotel Nikko Nara

Fixedlease

Fixed +
Variable

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

1041

Hotel Oriental Express Osaka
Shinsaibashi

Fixedlease

Fixed +
Variable

K.K. HOTEL ORIENTAL EXPRESS

1042

Hilton Tokyo Odaiba

Fixedlease

Fixed +
Variable

Tokyo Humania Enterprise Inc.

11

(*1)

Contractual Rent(*2)

Dec. 2029 Nondisclosure(*3)

Rent Modification Summary(After acquisition)
TimingCondition

2021

2022

Jul. 2016

Nondisclosure(*3)

–

–

–

–

–

–

Modified Structure(variable rent only fromFebruary 2020 to December
Aug. 2020
2021)(variable rent ratio waschanged for 2022 onwards)
Modified Structure(variable rent only fromFebruary 2020 to December
Aug. 2020
2021)(variable rent ratio waschanged for 2022 onwards)

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

Jun. 2021

Change in lessee andModified Structure––

Rent can be modified throughmutual agreement.

–

–

–

–

–

–

–

–

–

–

–

–

–

–

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

Rent structure is as follows:
Fixed: Fixed rent
Variable: Variable rentManagement contract: Management contract
Fixed + Variable: Property paying both fixed and variable rent
Fixed + Revenue sharing: When the sales of the hotel exceed pre-determined amount, additional rent is paid

(*2)
(*3)
(*4)
(*5)
(*6)

Rent Modification Schedule(2021 to 2022)

Amount including car park and CAM without tax.
The detailed content of the contract is not disclosed as consent on disclosure has not been obtained from the lessee.
As the hotel was rebranded from Hotel Keihan Universal City on July 1, 2021, the conditions of the new contract are stated.
As the hotel was rebranded from Hotel Vista Kamata Tokyo on January 1, 2021, the conditions of the new contract are stated.
As the hotel was rebranded from HOTEL ASCENT FUKUOKA on June 18, 2021, the conditions of the new contract are stated.

41

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

FY12/2013

FY12/2014

FY12/2015

FY12/2016

FY12/2017

FY12/2018

FY12/2019

FY12/2020

FY12/2021 Plan

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

Kobe Meriken
Park Oriental
Hotel

–

–

–

Chapel (36)

Oriental Hoteltokyo bay–

Restaurant
(45)

–

–

Guest rooms on 4F(101)

Guest rooms on 11F
to 12F (140)

–

–

–

Namba Oriental
Hotel

–

Corner rooms
on 5F to 8F
(10)

–

–

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

–

–

–

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

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

–

–

–

Oriental Hotel
Hiroshima––

Banquet room on 23F(10)–

Guest rooms on
7F to 10F (43)Banquet room on
4F (38)–Chapel (10)Guest rooms on
13F to 14F (14)Increase number ofseats in café (8.5)–

Ibis Tokyo
Shinjuku

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

–

–

–

Guest rooms on
3F to 10F (192)

Guest rooms on
3F to 10F (312)

–

–

–

–

Holiday Inn
Osaka Namba

–

–

–

–

–

–

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

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

ibis Styles
Sapporo

–

–

–

–

–

–

Vacant space on 1F
(28)

–

–

–

Mercure Hotel
Sapporo

–

–

–

–

–

–

Banquet room (15)

–

–

–

the b Ikebukuro

–

–

–

–

–

–

Guest rooms on
3F to 10F, etc. (18)

–

–

–

Okinawa
MarriottResort & Spa

–

–

–

–

–

–

–

Restaurant (142)––

Oriental Hotel
Fukuoka
Hakata Station

–

–

–

–

–

–

–

Large-scalerenovation works(1,690)––

Hilton Tokyo
Odaiba

–

–

–

–

–

–

–

–

Banquet room (92)

–

42

–

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

6,296
5,136

6,000
4,000

GOP ratio

27.0%

24.3%

5,696

5,645

5,158

26.6%

25.5%

26.5%

6,302

6,155
28.0%

28.3%

6,941

29.9%

7,591

31.8%

50%

7,765

8,033

7,793

32.8%

34.2%

33.7%

CY2008

CY2009CY2010CY2011

30%
20%

7.3%

2,000
0

40%

CY2012

CY2013

CY2014

CY2015

CY2016

CY2017

CY2018CY2019695

TBD

CY2020CY2021(forecast)(forecast)

GOP ratio

GOP

8,000

GOP

10%
0%

Change in KPI

20,00015,00010,0005,000

ADR

RevPAR

OCC

91.0% 89.9% 90.5%
86.1% 86.9% 87.7% 88.4%
82.7%
80.4% 76.7%
77.9% 77.8%
73.8%
21,067
19,212 20,153 19,856 22,197
16,895
17,297 17,551
19,954
15,980 15,846 16,200
19,066
17,970 18,463 17,197
17,807 18,060
16,843
14,886 15,245
13,999 14,367
40.0%
13,40012,845
12,696
12,1606,756
CY2007

CY2008

CY2009CY2010CY2011CY2012

CY2013

CY2014

CY2015

CY2016

CY2017

CY2018CY2019CY2020

100%
80%
60%
40%
TBD
CY2021(forecast)(forecast)OCC

ADR・RevPAR(JPY)
25,00020%
0%(*) Changes have been made to include service fees in ADR and RevPAR from May 2019 onward to eliminate variations in ADR and RevPAR between hotels due to existence of service fees.

43

7. Balance Sheet(Unit: JPY MM)
FY12/2020
End ofFiscal Year(as of) December 31,
2020

ASSETS
Current Assets(*1)

Cash and Deposits

Operating Accounts Receivables

FY12/2021
End of
Midterm
June 30,
2021

Variance

29,841

26,309(3,531)

28,55325,225(3,327)

672

540

(131)

LIABILITIESFY12/2020
End ofFiscal Year(as of) December 31,
2020

Current Liabilities
Operating Accounts Payable
Short-term Loans

615

542

(73)

370,221369,047(1,174)Current Portion of Long-term Loans Payable

Net Property and Equipment

333,303332,275(1,028)

Buildings in Trust(*2)

114,887

113,853(1,033)

Land in Trust

OthersNoncurrent Assets

216,410

216,410ー

Others(*3)

2,006

2,011

5

Intangible Assets

33,991

33,970

(20)

2,926

2,801

(124)

162

162

ー

Others

2,763

2,638

(124)

Deferred Assets

233

198

(35)

Other Assets
Leasehold and Security Deposits

FY12/2021
End of
Midterm
June 30,
2021

Variance

38,157

9,234

2,654

1,251

(1,403)

12,782

19,5826,800

28,922

1,500

1,500

ー

10,80014,9004,100

Accounts Payable

672

527

(144)

Advances Received

423

336

(86)

Current Portion of Investment Corporation Bond

90

59

(31)

150,172

139,090(11,081)

40,10040,100ー

103,572

92,672(10,900)

5,397

5,350

(47)

Derivative Liabilities

767

632

(134)

Others

335

335

0

179,095

177,248(1,846)

OthersLong-term Liabilities
Investment Corporation Bonds
Long-term Loans Payable
Tenant Leasehold and Security Deposits

TOTAL LIABILITIESNET ASSETS

186,894

187,194300

Capital Surplus

21,746

21,746ーReserve for Temporary Difference Adjustment

Unitholders' Capital

10,617

10,311(305)

Reserve for Special Advanced Depreciation

1,174

1,174

ー

Unappropriated Retained Earnings

1,527(1,485)(3,012)OthersTOTAL NET ASSETSTOTAL ASSETS

400,296395,554(4,741)TOTAL LIABILITIES AND NET ASSETS(*1) Cash and deposits in trust is included.
(*2) The sum of buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture and fixtures in trust, and construction in progress in trust.
(*3) The sum of machinery and equipment, tools, furniture and fixtures, and construction in progress.

44

(759)

(635)

123

221,201

218,306(2,894)400,296395,554(4,741)

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

Strategic Investment Areas
Existing properties

JPY370.0Bn

1

2

3

4

5

6

7

8

Kobe Meriken Park
Oriental Hotel

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Oriental Hotel
Hiroshima

Hotel Nikko Alivila

The BeachTower Okinawa

HakoneSetsugetsuka

Dormy Inn
Kumamoto

Limited-service hotel

No. of Hotels

Full-service hotel

23 24

Resort hotel

42 Hotels

Hokkaido Area

9

10

11

12

13

14

15

16

17

the b
suidobashi

dormy inn・
global cabin
Asakusa

Hakata Nakasu
Washington
Hotel PlazaNara Washington
Hotel Plaza

R&B Hotel
Ueno-hirokoji

Comfort HotelTokyo Higashi
Nihombashi

Smile Hotel
Nihombashi
Mitsukoshimae

Toyoko Inn
Hakata-guchi
EkimaeOriental Hotel
Universal City

18

19

20

21

22

23

24

25

26

Chisun Inn
KamataChisun Hotel
KamataHilton Tokyo Bay

ibis Tokyo
Shinjuku

ibis Styles
Kyoto Station

ibis Styles
SapporoMercureSapporoMercureOkinawa Naha

the b ikebukuro

No. of Guest Rooms

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

Osaka/Kyoto Area(*2)

2722

3 17 35 41

38 39

7

Fukuoka
11 16
Area

30

28 34 36

2 20

37
12 40

8
4 32

1

31

21

9

13 33

10
14
15

6

25

27

28

29

30

31

32

the b hachioji

the b hakata

Hotel Francs

MercureYokosuka

Okinawa Marriott
Resort & Spa

ACTIVE-INTER CITY

33

34

Tokyo 23 wards
26

5

29

42

CANDEOHIROSHIMA (Sheraton HOTELSGrand Hiroshima Hotel) UENO-KOEN

Oriental Hotel
Fukuoka
Hakata Station

35

36

37

38

39

40

41

42

Holiday Inn
Osaka Namba

Hotel Oriental
Express
Fukuoka Tenjin

Hilton Nagoya

Hilton Tokyo
Narita Airport

International
Garden Hotel
NaritaHotel Nikko Nara

Hotel Oriental
Express Osaka
Shinsaibashi

Hilton Tokyo Odaiba

18 19

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

45

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

As of the end of June 2021

Name

Rank

No. of Units

%(*)

Rank

1

Name

No. of Units%(*)

738,140

16.52

1

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

739,108

16.56

2

Custody Bank of Japan, Ltd. (Trust)

429,005

9.61

2

Custody Bank of Japan, Ltd. (Trust)

460,578

10.31

3

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

226,474

5.07

3

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

205,527

4.60

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

162,196

3.63

4

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

199,616

4.46

5

BNYM AS AGT/CLTS 10 PERCENT

158,778

3.55

5

SDSS K INVESTCO LIMITED

117,567

2.63

6

SDSS K INVESTCO LIMITED

117,567

2.63

6

ELLIOTT INTERNATIONAL LP

93,886

2.10

7

ELLIOTT INTERNATIONAL LP

93,886

2.10

7

Credit Suisse

88,010

1.97

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

8

THE BANK OF NEW YORK 133970

67,2591.50

8GOLDMAN SACHS & CO. REG

71,084

1.59

9

THE BANK OF NEW YORK MELLON 140044

63,797

1.42

9

GOLDMAN SACHS INTERNATIONAL

68,162

1.52

63,476

1.42

10 STATE STREET BANK CLIENT - TREATY 505234

66,943

1.49

2,121,546

47.54

2,109,513

47.22

10 STATE STREET BANK WEST CLIENT - TREATY 505234
Total

Total

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

Owners of the Investment Units
As of the end of December 2020 No. of Investors
OwnersIndividuals & Others

No. ofInvestors
34,136

No. ofUnits

498,318

Financial Institutions(Incl. Securities Firms)

83

Other Domestic Firms

412

119,807

Foreign Firms &Individuals

486

2,078,373

35,117

4,462,347

Total

0.2%

1.1%

As of the end of June 2021

No. of Units

11.1%

1.3%

1,765,849

46.5%

39.5%

97.2%

No. ofUnits

Individuals & Others

32,189439,430

Financial Institutions(Incl. Securities Firms)

81

1,917,630

Other Domestic Firms

395

126,029

Foreign Firms &Individuals

468

1,983,917

33,133

4,467,006

Total

2.6%
Individuals &OthersOwnersNo. ofInvestors

Financial Institutions(Incl. Securities Firms)

Other Domestic
Firms

No. of Investors

0.2%

1.1%
1.4%

No. of Units

9.8%

44.4%

42.9%

97.1%
2.8%

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

47

2. Changes in Investment Unit Price and Market Capitalization
Changes in the investment unit priceand market capitalization(Based on the closing price)
Price of the investment unit:(JPY)

JPY66,700

120,000

JPY297.9Bn

100,000

Total market capitalization:(based on the closing price of July 30, 2021)(*1) Price of the real estate investment securities
may fall depending on the fluctuations ofprice of the real estate under management
or profitability, etc., and investors may suffer
losses. Investors may also suffer losses
through the bankruptcy or deteriorated
financial condition of the issuer. Withreference to the risk of investment ininvestment securities of JHR, please see
Securities Report dated March 25, 2021.
(*2) Including OA

Comparison withREIT Index and TOPIX of
Tokyo Stock Exchange
(TSE)
(*)

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

80,00060,000Market Capitalization
Investment Unit Price of JHR
Sep. 2014
PO JPY10.1Bn

Jun. 2015
Jan. 2016
Jun. 2017
Jan. 2019
PO(*2) JPY10.7Bn PO(*2) JPY14.6Bn PO(*2) JPY18.6Bn PO(*2) JPY33.3Bn

Jan. 2015
PO(*2) JPY15.6Bn

Jul. 2016
PO(*2) JPY34.7Bn

Apr. 2013
PO JPY20.5Bn(JPY MM)450,000

300,000

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

40,000150,000

20,00000600

Investment Unit Price of JHR

TSE REIT Index

500

400

300

200

100

0

48

TOPIX

Appendix 4
Summary of the Asset Management Company

1. Summary of the Asset Management Company
Company

Japan Hotel REIT Advisors Co., Ltd.

Location

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

Establishment
CapitalShareholders
Representative Director

August 10, 2004
JPY300MM as of June 30, 2021
SCJ One (S) Pte. Ltd., Kyoritsu Maintenance Co., Ltd., ORIX Corporation
Hisashi Furukawa
Building Lots and Buildings Transaction Business Operator, Governor of Tokyo (4) No. 83613
Discretionary Transaction Agent by Minister of Land, Infrastructure, Transport and Tourism No. 38

Registration and Licenses

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

Shareholders' Meeting
AuditorBoard of Directors' Meeting

Investment and Operation
Committee

Compliance Committee
President & CEO
Compliance Office

Investment Division
Acquisition
Group

Public REITGroup

Planning Division
Private FundGroup

Planning
Group

50

Operations Division
Finance &Accounting
Group

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

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

Challenge

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

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

51

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

Ensured Independence No director and employee of JHRA is a seconded employee from sponsor.
 The majority of the Board of Directors of JHRA is composed of full-time directors, who are not related to the mainsponsor, SC CAPITAL PARTNERS group.
 We established a more rigorous decision-making process for transactions with sponsor-related parties. In principle,
JHRA undergoes deliberations and resolutions by the Investment and Operation Committee, the Compliance Committee
which includes an outside specialist who is authorized to dismiss proposals, and the Board of Directors Meeting of JHRA.
In addition, in cases where Japan Hotel REIT Investment Corporation (hereinafter called "JHR") conducts transactions
with sponsor-related parties, such transactions shall be conducted upon the approval and resolution by the Board of
Directors Meeting at JHR. The officers of JHR are all third parties unrelated to the sponsor-related parties.
 As our main sponsor, SC CAPITAL PARTNERS group is also an independent asset management company, it fully
understands and respects importance of JHRA's independency. JHRA conducts asset management business based uponits own judgement.

52

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

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