Japan Hotel REIT Investment Corporation (TSE: 8985)

Financial Results
FY12/2021 (22nd Period)

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

February 25, 2022

Table of Contents
Appendix 1

Ⅰ. Settlement of Accounts for FY12/2021 ̶ Highlights
1. FY12/2021 Highlights

3

Ⅱ. Summary of Settlement of Accounts
1. Results for FY12/2021

5

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

7

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

8

3. Acquisition and Sale of Properties

9

4. Response to Lessees/Operators

JHR's Characteristics and Strategy

1. JHR's Investment Targets

29

2. Simultaneous Pursuit of Stability and Upside Potential

30

3. External Growth Strategy

31

4. Internal Growth Strategy

32

5. Financial Strategy

33

6. Benefits Program for Unitholders

34

Appendix 2

Information on Properties

1. Portfolio

36

2. Portfolio Diversification

37

10

3. Rent Structures

38

5. Change in Lessees/Rebranding

11

4. Property List

39

6. Active Asset Management for Post COVID-19

14

5. Summary of Lease Contracts

41

7. Capital Expenditure and Depreciation

15

6. Major CAPEX Ⅲ by Hotels

44

8. Sustainability Initiatives

16

7. The Five HMJ Hotels ̶ Highlights

45

8. Portfolio Map

46

9. Balance Sheet

47

Ⅳ. Financial Conditions
1. Financial Conditions

19

Appendix 3

Ⅴ. Market Environment
1. Market Environment

23

1. Major Unitholders and Classifications of Unitholders

49

2. Changes in Investment Unit Price and Market Capitalization

50

Appendix 4
Ⅵ. Takeaways
1. Takeaways

27

1

Investors Composition and Investment Unit Price

Summary of the Asset Management Company

1. Summary of the Asset Management Company

52

2. Features and Governance of the Asset Management Company

53

Ⅰ. Settlement of Accounts for FY12/2021 ̶ Highlights

1. FY12/2021 Highlights
1. Status of Hotel Operations▶ Performance of The 24 Hotels with Variable Rent,
etc.(*1)••

Although the results in 2021 worsened slightly from theprevious year, the second half of the fiscal year showed arecovery trend through December
Strengthened cost management of operators with a focus
on HMJ
Results

20192020(vs 2019)

2021(vs 2019)

RevPAR(JPY)

14,1784,993[(64.8%)]4,724[(66.7%)]First Half
Second Half
GOP
(JPY MM)

13,3484,536[(66.0%)]3,320[(75.1%)]

14,9935,445[(63.7%)]6,112[(59.2%)]

1,654[(92.1%)]2,437[(88.3%)]

20,871

2. Acquisition and Sale of Properties▶ Acquired part of the site of Oriental Hotel Universal
City (July 2021)▶ Changes in DPU•▶ Sold ibis Tokyo Shinjuku (December 2021)
JPY11.3Bn

(JPY)
4,000

Appraisal Value

JPY9.9Bn

Book Value

JPY7.8Bn

JPY

3.2Bn

•

2,000

(10.7%)
366
410

1,000

(TBD)

0

(297)※(363)※

FY12/2019

FY12/2020

FY12/2021

FY12/2022(20th Period)(21st Period)(22nd Period)(23rd Period-1,000LTV(total asset base)

41.8％

Costs for Interestbearing Debt

1.0％

Average Life ofDebt

3.5 years

Free Cash(*4)

JPY21.6Bn(Forecast))▶ Changes in NAV per Unit

60,00077,525(6.9%)•(*2)

JPY24.1Bn

2022

JPY38.4Bn(forecast)Received "4-star" and selected for "Sector Leader"of Asian Hotel Sector in 2021 for two consecutive
years

77,688+0.2%▶ Definition of materiality

30,000•41 properties/JPY363.5Bn

2021(result)▶ Acquisition of GRESB Real Estate Assessment

Almost no change in the appraisal value and NAV
per unit remained at the same level

83,286

Refinancing

5. Sustainability Initiatives※ Rough estimate in case gain on sale was excluded(*3)•

Continue to maintain good relationships with lenders
Secure cash on hand and maintain a solid financialbase
All matured loans are fully refinanced. Matured
investment corporation bonds are redeemed by loans
from major lenders(as of the end of December 2021)(88.9%)

0

End of
FY12/2021

•
•

3,690

3,000

90,000Gain on sale

▶ Conservative Financial Management

The market environment is unclear due to theimpact of COVID-19. Forecasts for 2022 areundecided(JPY)

Disposition Price

4. Financial Soundness

3. Changes in DPU and NAV

FY12/2019

FY12/2020

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

Further promotion of ESG-related initiatives▶ Expressed support for the TCFD
recommendations(*1) The 24 Hotels with Variable Rent, etc. refers to 24 hotels: 14 hotels, which are 5 hotels of Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, Oriental Hotel Hiroshima ("The Five HMJ Hotels"), plus
Oriental Hotel Okinawa 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 b suidobashi ("The Ishin Group Hotels") and 6 hotels of
ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure Okinawa Naha, Mercure Yokosuka ("The Accor Group Hotels"). The same shall apply hereinafter.
(*2) Stating total amount of the acquisition price.
(*3) Rough estimate calculated by excluding the amount equivalent to the gain on sale of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi from the distributable profit in FY12/2020 and the amount equivalent to the gain on sale of ibis Tokyo Shinjuku fromthe distributable profit in FY12/2021 respectively.
(*4) The figures represent balance of cash and deposits after exclusion of various reserves in trust, etc.

3

Ⅱ. Summary of Settlement of Accounts

1. Results for FY12/2021(Unit: JPY MM)
FY12/2019(20th Period)

FY12/2020(21st Period)

ActualFY12/2021(22nd Period)

Actual(A)

Actual(B)

Breakdown of Variance(Reference)
Annualized Results(B)–(A)

Variance

Property
Sold in
2020

Properties(*3)

No. of Properties

43

42

41

41

(1)

–

Acquisition Price

374,508

370,031363,542

363,542(6,489)(1.8%)

Operating Revenue
Real Estate Operating
Revenue

Other Income
Variable Rent
Gain on Sale ofProperties, etc.
NOI

(*2)

Profit and LossNOI Yield• The HMJ Group Hotels– (7,243)753• The Ishin Group Hotels(JPY7MM)• Chisun Hotel Kamata(JPY93MM)• Change in lessees/rebranding(*6)(JPY172MM)

13,633

10,218(205)(1.5%) (3,390)

28,278

10,495

10,374

10,218(121)(1.2%)(232)(1,226) (16.0%)(149)(11) (1,065)

8.5%

892

8.4%

872

8.3%

3,273

(87)

14

96

• Others(JPY794MM)+JPY1MM
total (JPY1,065MM)

843

(19)

(2.2%)

(16)

(8)

5

39.5% 11,176 18.7% 1,963 29.8% 3,088 29.9% 3,054

1,124

57.3%

(66)

33

1,157

• The HMJ Group Hotels+JPY1,063MM

3,258

(184)

• The Accor Group Hotels+JPY72MM

34(15)• The Ishin Group Hotels

+58MM

–

3,343

3,258

–

(84)

(2.5%) (3,158)

24,087

6,547

6,366

6,321

(181)

(2.8%)

6.4%

1.8%

1.8%

1.7%

(0.0%)

(200)

4,804

4,695

42

(12)

(5)

60

2

1

1

1

0

–

–

0

246

5

16

16

10

–

–

10

19,281

1,778

1,544

1,607

(187)

39

(86)

5.1%

0.5%

0.4%

0.4%

(0.1%)

2,132

1,945

1,843

1,843

(102)

–

Operating Income

17,148

3,176

2,959

(236)

(216)

(6.8%)

Ordinary Income

15,291

1,398

1,298

(1,897)(100)(7.2%)

130

–

–

(130)
–

(*7)

Extraordinary Income–

Others111

115,290

1,527

1,296

(1,897)

Use of Negative
Goodwill

1,176

305

335

335

Total Dividends

16,466

1,829

1,634

–

Number of Units Issued(Unit)

4,462,347

4,462,347

4,467,006

4,467,006

Dividend per Unit (JPY)

3,690

410

366

–

(234) (13.2%)(230) (15.1%)
29

9.7%

(194) (10.6%)
4,659

0.1%

(44) (10.7%)

5

Variable Rent

• Other hotels, etc.

4,761

Asset Retirement
Obligations Expenses
Loss on Retirement ofNoncurrent Assets
NOI after
Depreciation(*2)
NOI Yield after
Depreciation
Other Operating
Expenses

Fixed Rent–

13,838

4.1% 1,170

Major Causes of Variance ofExisting Properties

–

–

4,557

Depreciation

Net Income

Dividend(*4)

28,278

56.3% 15,931 72.8% 7,640 61.8% 6,413 61.9% 6,321

Fixed Rent

Property
Existing
Sold in
Properties
2021
(*5)

(JPY37MM)
total +JPY1,157MM(*1) For detail, please refer to Financial Report for the Fiscal Year Ended December 31, 2021
(January 1, 2021–December 31, 2021) dated February 25, 2022.
(*2) Each is calculated using the following formula: NOI (Net Operating Income) =Real estate operating revenue ­ Real estate operating costs + Depreciation +Loss on retirement of noncurrent assets + Asset retirement obligations expenses.
NOI after depreciation = Real estate operating revenue ­ Real estate operating costs(*3) Stating the impact by the sale of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi, which
was sold on July 1, 2020.
(*4) Stating the impact by the sale of ibis Tokyo Shinjuku sold on December 15, 2021.
(*5) Existing properties refer to 41 properties JHR owns as of February 25, 2022. The same
shall apply hereinafter.
(*6) Stating impact by Hotel Oriental Express Fukuoka Tenjin (former Ascent Fukuoka) and
Oriental Hotel Universal City (former Hotel Keihan Universal City). Both hotels arerebranded with subsidiaries of HMJ as their lessees.
(*7) Stating the income from the acknowledgement of the claim for return of rental depositthat had not been recorded as guarantee deposit at Hotel Oriental Express Fukuoka
Tenjin.

Ⅲ. Status of Hotel Operations

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

Occupancy (right axis)

20,000ADR (left axis)

State of
Emergency

Go To Travel
Campaign

14,103
13,777
15,00013,350
11,246

11,178

10,8439,420

2022

Quasi-Emergency Measures

Quasi-Emergency
MeasuresState of
Emergency

State of
Emergency

4,669 4,862

3,750

3,461
991

701

79.7% 65.3% 28.1%
2020
Jan.

Feb.

Mar.

Apr.

May

80%

60%

7,978

6,440

40%

6,272
4,128

3,519 3,148

11,757

5,050

4,971

4,993 4,724
20%

1,606
14.8%

8.9% 7.4%

2,779 2,817

100%

13,357

12,716
10,587
10,82810,0806,879
3,978 3,632

Full Year

16,258
14,79810,037
6,048

5,855

State of
Emergency

11,69011,32010,658
10,868
10,595
9,822

7,835

5,000

0

Go To Travel
Campaign
including Tokyo

14,46913,847
13,23913,345
12,714
12,553

9,003

10,000

RevPAR (left axis)

2021

Jun.

26.1% 32.3% 38.7% 46.1% 56.6% 45.3% 26.1% 26.6% 35.1% 33.4% 30.1% 32.0% 42.3% 43.5% 41.1% 49.3% 59.2% 62.7% 46.6%
Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

2021
Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

37.4% 40.2%2022(*1)
Jan.

2020

2021

35.2

33.3

0%

Full Year Full Year

Trend of RevPAR Index in Comparison with 2019 (same month in 2019=100)
100

101.6

26.7 (“Mar. 2020 ー Feb. 2021" vs "2019 Full Year")(*2)

70.4

55.1
36.6

27.3

2020
Jan.

Feb.

Mar.

6.5

5.0

Apr.

May

12.3

Jun.

21.9

24.7

Jul.

Aug.

Sep.

40.8

Oct.

Nov.

35.3 (“Mar. 2021 ー Feb. 2022" vs "2019 Full Year")(*2)
59.9

45.4

Dec.

43.5
25.1

22.0

2021
Jan.

Feb.

29.0

Mar.

23.7

24.9

24.1

Apr.

May

Jun.

Jul.

34.1

31.1

34.6

Aug.

Sep.

Oct.

45.6

44.1

Nov.

Dec.

34.1

2022(*1)
2020 2021
Jan. Feb.(*3) Full Year Full Year

＜Number of temporarily closed hotels and hotels accepting COVID-19 patients with mild or no symptoms among The 24 Hotels with Variable Rent, etc.＞
No. of hotels
closed% of No. of guest
rooms of the hotels
closedNo. of hotels
accepting patientswith mild or no
symptoms

0

0

0

0%

0%

0%

0

0

0

10

16

9

4

2

2

2

2

3

5

5

4

2

3

3

2

3

1

1

1

1

1

1

15.3% 70.5% 33.9% 8.1% 5.6% 5.6% 5.6% 5.6% 7.4% 10.3% 17.4% 7.1% 6.4% 6.6% 8.9% 6.4% 5.4% 1.8% 1.8% 1.8% 1.8% 1.8％ 1.8％
0

1

1

2

2

2

1

1

1

1

1

1

1

2

2

2

3

3

3

3

3

3

3

ー

ー

ー

ー

ー

ー

(*1) Based on 23 hotels which excludes ibis Tokyo Shinjuku (sold on December 15, 2021) from The 24 Hotels with Variable Rent, etc. Therefore, the figures are different from those disclosed by "Announcement of Monthly Disclosure for January 2022" today.
(*2) The numbers are result of indexation during the corresponding period (1 year from March 2020 to February 2021 and March 2021 to February 2022) with actual number of RevPAR for full year 2019 is set as 100.
(*3) Forecasted figure as of today72. Performance of The 24 Hotels with Variable Rent, etc.
Performance of Major Indicators
Occupancy (right axis)

ADR (left axis)

Total of The 24 Hotels with Variable Rent, etc.
20,00013,3625,000

0RevPAR

13,354

12,313

5,445

6,112

3,320

11,757

11,931

20,871

15,00050%

14,1785,188(JPY MM)
20,00013,357

12,733

14,993
4,536

100%

16,492

10,846
13,348

RevPAR (left axis)

Full Year

17,263

15,691

15,00010,000

Second HalfFirst Half

(JPY)

Performance of GOP

4,993

4,724

10,000

4,261
5,000

85.1%

34.0%

30.6%

86.9%

40.8%

49.6%

40.7%

86.0%

37.4%

40.2%

35.7%

2019
Result2020
Result2021
Result2019
Result2020
Result2021
Result2021
Forecast

2019
Result2020
Result2021
Result2021
Forecast

vs 2019(66.0%)(75.1%)(63.7%)(59.2%)(65.4%)(64.8%)(66.7%)

vs 2020ー(26.8%)

ー+12.2%(4.7%)

ー(5.4%)(as of Sep. 15)

0%

0

1,654

2,437

2019
Result2020
Result(69.9%)

vs 2019(92.1%) (88.3%) (95.0%)(14.7%)

vs 2020(as of Sep. 15)－

2021
Result1,046
2021
Forecast(as of Sep. 15)+47.4% (36.7%)

The HMJ Group Hotels
First Half

(JPY)
20,00019,635

17,587

6,460
5,045

RevPAR

7,179

Full Year
16,081

15,325

17,26315,0055,000

014,636

13,04815,00018,635

16,814

15,222

10,000

Second Half

100%

20,00014,06815,000
50%

5,757

3,618

5,413

17,116

14,402

16,143
6,137(JPY MM)

10,000

4,888
5,000

1,326

2,050

2019
Result2020
Result2021
Result(69.7%)

vs 2019(92.3%) (88.0%) (94.5%)(15.1%)

vs 2020

85.3%

33.1%

27.7%

87.9%

38.4%

49.0%

40.0%

86.6%

35.8%

38.5%

33.9%

2019
Result2020
Result2021
Result2019
Result2020
Result2021
Result2021
Forecast

2019
Result2020
Result2021
Result2021
Forecast

vs 2019(66.4%)(75.9%)(62.6%)(58.4%)(64.5%)(64.3%)(66.5%)

vs 2020ー(28.3%)

ー+11.1%(5.0%)

ー(6.0%)(as of Sep. 15)

8(as of Sep. 15)

0%

0

－

934
2021
Forecast(as of Sep. 15)+54.7% (29.5%)

3. Acquisition and Sale of Properties
Sale of ibis Tokyo Shinjuku(December 2021)

Sale of Property

Acquisition of Property

 Use of Gain on Sale

Acquisition of Part of Site ofOriental Hotel Universal City
(July 2021)• Aim to improve ready liquidity and to increase dividend• Control LTV with prepayment of the existing loans

 Sold a limited-service hotel in Tokyo with large
amount of unrealized gain Sold the property at a price substantially excessof the appraisal value

Date of Conclusion ofPurchase and Sale September 15, 2021
Agreement
Date of Sale

December 15, 2021

Sale Price

JPY11,300MM

Acquisition Price

JPY7,243MM

Book Value

JPY7,809MM

Gain on Sale

JPY3,258MM

Appraisal Value(*1)

JPY9,900MM

 Lease contract of part of site of the Hotel with
Osaka City was expired. According to thecondition in the contract, JHR acquired the Land
 Improve cash flow since the amount of fixed
asset tax and city planning taxes, etc. is smaller
than the ground rent payment

Miscellaneous
Expenses, JPY231MM

Gain on Sale
JPY3,258MM
Sale Price
JPY11,300MM
Book Value
JPY7,809MM

Prepayment ofexisting loans
JPY4,000MM
Cash and
Deposits
JPY3,809MM

Before(*1) As of the end of June 2021.

After

Improve profit
available for dividends
42.7%
Lower
LTV

(as of the end ofJune 2021)

AcquisitionPrice

JPY754MM

41.8%

Appraisal
Value

JPY763MM

Groundrent(*2)

JPY21MM(as of the end of
December 2021)

Improve ready liquidity
Free cash
JPY21.6Bn(*2) Stated amount of annual ground rent during the period
when JHR leased the site and paid.

After

Change in Asset Size(*3)+7.0%(JPY MM)

122,285+21.4%

130,883+9.1%

158,902(3.2%)+21.1%(1.2%)(1.8%)+30.2%

173,429

225,723

286,801

319,474309,370

374,508

370,031363,542

April 2012
FY12/2012 FY12/2013 FY12/2014 FY12/2015 FY12/2016 FY12/2017 FY12/2018 FY12/2019 FY12/2020
FY12/2021(merger) (13th Period) (14th Period) (15th Period) (16th Period) (17th Period) (18th Period) (19th Period) (20th Period) (21st Period) (22nd Period)
No. of Properties
No. of Acquisition
Acquisition Price
No. of Dispositions
Sale Price
Unrealized Gains(*4)

28

28
2
JPY10.8Bn
2
JPY0.8Bn
JPY2.2Bn28
2JPY32.6Bn
2
JPY2.6Bn
JPY9.8Bn30
3
JPY15.7Bn
1
JPY0.7Bn
JPY34.8Bn

36
9
JPY57.0Bn
3
JPY4.8Bn
JPY78.7Bn

41
5
JPY61.0Bn

JPY113.8Bn(*3) Asset size is based on the aggregate acquisition price of the properties at the end of each fiscal period. The same shall apply hereinafter.
(*4) Unrealized gains are calculated by subtracting book value from appraisal value.

944
3
JPY32.6Bn

JPY122.1Bn

41

3
JPY12.1Bn
JPY130.7Bn

43
2
JPY65.1Bn

JPY151.5Bn

42

1
JPY8.0Bn
JPY126.5Bn

41
1
JPY0.8Bn
1
JPY11.3Bn
JPY127.1Bn

Aim for Successive Growth+27.1%+11.4%

4. Response to Lessees/Operators
 Full variable rent scheme for 2021 in the lease contract with HMJ, the strategic operator, was extended by one year

Change in Lease Contract with HMJ
Summary of Rent Terms
Change to variable rent only on andafter February

2021

Variable rent only

2022

Variable rent only

2023
Onwards

 HMJ implemented significant cost reductions and achieved the planned savings.
Planning to reduce additional JPY0.5Bn through promotion of various measures
 Heading toward post COVID-19 period, implement measures to increase profit
whiled reducing cost

Detail of Agreement

2020

Fixed
Rent

Restructuring Plan by HMJ

Same amount as theprevious lease contract

Set variable rent ratio with
Variable
appropriate rent burden ratio
Rent(Approx. 85.5% of GOP)(*1)(*1) When AGOP of each hotel exceeds AGOP base amount, thevariable rent is calculated by multiplying the exceeded amountby the variable rent ratio set for each hotel.

HMJ Further promotion to
improve profit
 Cost reduction by JPY1.5Bn(implemented)
 Additional cost reduction
by JPY0.5Bn (Additional
agreement in 2022)

Measures to Reduce Cost
Personal Cost Streamlining, cutback and closure of
unprofitable department
 Streamlining through integration ofback office and common operations

JHR

 Introduction of smart check in Increase of variable rent Scheme to recover theamount equivalent to the
exempted fixed rent Streamlining by promotion ofmulti-task
 Reduce work force by measures
above

Simulation of Rent

Outsourcing Cost

 If the rent is calculated based on the same hotel performance as in 2019, the rent will
increase due to the effect of cost reduction by HMJ

 Review specification of outsourced
operation, integration of standard,
etc.

(Unit: JPY Bn)

2019(Actual)2020(Actual)2021(Actual)

Fixed
Rent

8.03

0.79

Variable
Rent

7.23

Total

15.26

Rough estimate when RevPAR in2019 is assumed(*3)
Cost Reductions(completed)

After Additional
Cost Reduction

0.00

8.03

8.03

1.05

2.14

7.90

8.35

1.85

2.14

15.93
(+4.3%)(*4)

16.38(+7.3%)(*4)

Measures to Improve Profit
 Create attractive products
Promote ″Oriental″ brand Established membership program(Club Oriental)
Stimulate demand andincrease direct booking(Reduce cost of fee) Improve recognition of brandthrough TV commercial etc.
 Introduction of tenants andoperators, etc. in restaurants

 Insourcing outsourced operation※ Rough estimate of amount of cost reduction based on result of
hotels in 2019

Amount ofReduced Cost by
2021(Annual base)(*2) For 2019, the rents of Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba were annualized. The fixed
rent of Hilton Tokyo Odaiba was calculated at JPY1.6Bn.
(*3) The figure was calculated based on certain assumptions based on hotel performance in 2019. The figure may differ
depending on the actual GOP results.
(*4) Stating the increase rate compared with the actual figure in 2019 for each estimate.

After 2022
(Plan)

Response to Other Operators
 Under discussion with only one operator for rent reduction at this point

10

Personal Cost

Outsourcing Cost

Approx. JPY1.1Bn

Approx. JPY0.4Bn

 Additional reduction of JPY0.5Bn throughstrengthened implementation of cost reduction
 Improve profit ratio through measures toimprove profit

Recover
exempted
fixed rentin the future

5. Change in Lessees/Rebranding (1)Hotel Oriental Express Fukuoka Tenjin (former HOTEL ASCENT FUKUOKA)
BeforeAfterExterior

Produce stylish entrance through establishmentof unique facade Summary of Rebranding
Opening
Date after
Rebranding

June 18, 2021
 The grade of the hotels has been changed from
economy to mid-price

Points of
the Change

Points of
Change inLease
Contract

Revenue
Upside, etc.

 Changed the lessee to The HMJ Group in accordancewith the withdrawal of the former lessee. Moreefficient operations will be carried out through sharing
back offices with The HMJ Group Hotels located in
Fukuoka

Lobby

Space with feel of warmth of wood provide
easy and calm atmosphere by indirect lighting

 Fixed-term lease contract
 Term: June 2021 to December 2031
 Changed to "fixed rent + variable rent" from"fixed rent only"(same scheme with the other HMJ group hotels)<NOI Yield Assumption>
Result of 2019
6.1%

Guest
Room

Market recovery period(*)
8.3%

Inside of guest rooms are unified with natural andcalm color and provide compact but relaxed space(*) Market recovery period refers to the timing when market recover to the level that RevPAR
reach the same level with the result in 2019. Yield is rough estimate calculated based onassumption of RevPAR in 2019. Numbers may change by various factors.

11

5. Change in Lessees/Rebranding (2)Oriental Hotel Universal City (former Hotel Keihan Universal City)
BeforeAfter

Entrance

Rising big tree at entrance is a symbol of thehotel concept "Charge from Nature" Summary of Rebranding
Opening
Date after
Rebranding

Points of
the Change

Pre-opening:Grand opening:

July 1, 2021
December 23, 2021

 Changed the lessee to The HMJ Group in accordancewith the expiration of the lease contract with theformer lessee. Operations leveraging the advantagesof operating multiple hotels in Osaka

Lobby

 As an official hotel of USJ, expect quick recovery bydomestic demand

Points of
Change inLease
Contract

Revenue
Upside, etc.

A high-quality space with image of healing forest
keeps distance from the hustle and bustle of outside

 Changed to fixed-term lease contract from ordinary
lease contract
 Term: July 2021 to December 2031
 Changed to "fixed rent + variable rent" from"fixed rent + revenue sharing"(same scheme with the other HMJ group hotels)<NOI Yield Assumption>
Result of 2019
11.1%

Guest
Room

Market recovery period(*)
18.4%
Simple and calm guestrooms with tone ofearth color(*) Market recovery period refers to the timing when market recover to the level that RevPAR
reach the same level with the result in 2019. Yield is rough estimate calculated based onassumption of RevPAR in 2019. Numbers may change by various factors.

12

5. Change in Lessees/Rebranding (3)Oriental Hotel Okinawa Resort & Spa (former Okinawa Marriott Resort & Spa)
Before Summary of Rebranding
Opening
Date after
Rebranding

Points of
the Change

Newly established pool-side deck to provide
space to relax and enjoy BBQ in cabana

Pool

October 1, 2021

 The name was changed to Oriental Hotel Okinawa
Resort & Spa of The HMJ Group in line with theexpiration of the franchise contract(*1) with the
Marriott group
 Plan to conduct renovation at lobby, pool, guest
rooms, etc.

Points of
Change inLease
Contract

Revenue
Upside, etc.

After

Night pool with lighting effects was transformed
into a photogenic spot

No change<NOI Yield Assumption>
Result of 20195.7%
Market recovery period(*2)
9.4%

Club
LoungeIn the lobby, new high-quality lounge wascreated with full of greenery by abundant
plants that grew naturally in Yanbaru(*1) Stating a contract between the hotel operating company and Global Hospitality Licensing
S.a r.l., a franchisor of the international brand, Marriott.
(*2) Market recovery period refers to the timing when market recover to the level that RevPAR
reach the same level with the result in 2019. Yield is rough estimate calculated based onassumption of RevPAR in 2019. Numbers may change by various factors.

13

6. Active Asset Management for Post COVID-19
 Potential upside by active asset management
Initiatives for Post COVID-19

Hotels1

Increase sales
by improvementof hotelmanagement

Improvement ofHotel Sales

Stimulate and acquire leisure demand through unique attractivenessof each hotels and creation of highly competitive products
Aiming to improve hotel management through changes in hotel
operators, rebranding, and upgrades, etc. in order to increase hotel
sales

2

Reduction ofHotel Operating Costs

Review of costby restructuring

Reviewing the cost structure and improving the revenue 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 by raising the rent
burden ratio at the time of rebranding and other measures

Reduction of cost for property management, trust, management contract fee, andground rent, etc.

Improve NOI

Increase rent
14

7. Capital Expenditure and Depreciation
 Prioritize securing ready liquidity by restraining mainly CAPEX Ⅲ, taking the conditions of the hotel market into accountClarification of CAPEX(JPY MM)CAPEX Ⅰ

capital investment related to renewal of buildings, facilities, and equipment which is
required to maintain proper values of propertiesCAPEX Ⅱ

capital investment for fixtures furniture and equipment that are not directly related to building
structures or facilities but necessary for operating hotels

CAPEX Ⅲ

strategic capital investment for renewals of guest rooms, banquet rooms, restaurant
and others in order to maintain or to improve the competitiveness of the hotels

Depreciation

5,000

4,091
4,000

3,000

3,725

2,898
469

2,000

4,761

4,557

475

6,766
3,619 Oriental Hotel Fukuoka

3,056
476

393

3,367

Hakata Station

3,147
830

999
1,690

781

Cost for large-scalerenovation works

1,665
100
237

1,000

4,804

1,954

1,798

2,226
1,456

2,536

1,328

0

Asset Size
(JPY MM)

319,474309,370

374,508

370,031363,542

FY12/2017

FY12/2018

FY12/2019

FY12/2020

FY12/2021

15

8. Sustainability Initiatives (JHR)
 JHR established a Sustainability Policy in December 2017. JHR is making efforts to enhance sustainability through appropriate approach to
ESG issues while aiming to JHR's growth over the medium to long term through co-existence with society and the environment in harmony

GRESB Real Estate Assessment(*1)

New Initiatives in FY12/2021

Acquired "Green Star" for four consecutive years from 2018

Definition of Materiality▶ In 2021, JHR was selected forFrom the dual standpoints of stakeholders' expectations and impact on
its business, JHR has defined seven items of materiality (key issues)
related to ESG for JHR.

"Sector Leader" inAsian hotel sector

Materiality

for two consecutive years▶ Acquired "4-star"in GRESB Rating

E

Related SDGs

1. Tackling climate change
2. Reducing water consumption and waste
3. Communication with stakeholders such as
local communities

S

Significant Expansion of ESG Related Disclosure
Information on Website

4. Ensuring safety/peace of mind andpromoting well-being at hotels
5. Creating pleasant workplaces

Fully renewed ESG related pages on website on January 2022G

https://www.jhrth.co.jp/en/esg/index.html

6. Implementing through corporate governance
7. Proactive information disclosure and dialogue

Initiatives for Climate Change〜
Support for the TCFD Recommendations(*2)• In November 2021, JHRA stated its expression of support for the
TCFD recommendations• Joined the TCFD Consortium and gradually started various activities

JHR will continue to promoteand disclose ESG-related measures proactively(*1) 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 ofproperty 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."(*2) Abbreviated name for Task Force on Climate-Related Financial Disclosures.

16

8. Sustainability Initiatives (Each Hotels) Hotels owned by JHR implemented various activities with considerations in ESG

Initiatives to Improve Satisfaction of Guests

Initiatives to Protect Environment

Aggregation and Expansion of Amenities (Amenity Eco)

Activity to Protect Native Species(Oriental Hotel tokyo bay)

(Oriental Hotel Okinawa Resort & Spa)

• Set up exclusive room where hotel guests
can select amenities to be used inside theirguest rooms. Reduce waste by usingnecessary items only

• Offer tours for the guest to experience protection of "Yanbaru no moriforest" where many precious native species are living. Implement tours toembody "Responsible tourism"(*) that can promote more nature
conservation activities as the number of tourists increases"• While created facility with image of variety
shop in France, upgraded quality ofamenities. Realized most suitableenvironment for family guests throughexpansion of goods for babies(*) Activity to create better tourist destination through asking tourist to recognize itself as one ofimportant element of tourism and take certain responsibility for own consciousness and activities.

Introduction of Self Service in Luggage Storage (guest lockers)(3 hotels including Oriental Hotel tokyo bay)
• Reduce waiting time for guests throughintroduction of self service on luggage
storage when they check in

Activity to remove exotic
species (Mikania micrantha)
by tour participants• Secure safety under "with COVID-19"
environment since entrance is controlled by
QR code which doesn't require contact

Experience trekking course andpreservation activities withprofessional tour guides

Efforts to Prevent the Spread of COVID-19 at Hotels

Initiatives to Contribute for Local Areas

Accommodation of COVID-19 Patients with Mild or
No Symptoms at Seven Hotels

Promotion of Local Production and Local Consumption(Provide menu with local foods)(Oriental Hotel tokyo bay)

• Accepted in total 9 hotels• Support farming in the nearby
area through provision ofmenu with local foods inrestaurants

Introduction of Automatic Check-in Machine• Introduced in 7 hotels including Holiday Inn
Osaka Namba

17※ Planning to gradually expand
hotels adopting such initiatives

Mizore-jiru (soup) of sardine
from Choshi

Acqua pazza by seafoodfrom Chiba Prefecture

Ⅳ. Financial Conditions

1. Financial Conditions (1)Main Financial Indicators

Repayment Schedule of Interest-bearing Debt

(as of the end of December 2021)(as of the end of December 2021)(JPY MM)

41.8%

LTV (total asset base)

40,000Loans

38,436

Investment Corporation Bonds

6,000

Cost for interest-bearing debt

1.0%

(*1)

21,536

3.5 years(*2)

Average life of interest-bearing debt

28,00030,00020,00032,436

Free cash(*3)

21.6Bn10,000127.1Bn0

JPY

Unrealized gain

JPY

Average Life of Debt
2.0%

4.7

4.8

Costs for Interest-bearing Debt

3.5

1.0%

4.0
3.0

1.1%

1.1%

1.0%

1.0%

1.0%

2.0

0.5%

0.0
End of

End of

End of

End of

End of

FY12/2017

FY12/2018

FY12/2019

FY12/2020

FY12/2021(18th Period)(19th Period)(20th Period)(21st Period)(22nd Period)

13,10017,00017,00010,00018,000

8,000

4,250
2023

2024

2025

2026

8,000

2027

2028

2029

Repayment Date

BalanceFirst Half
(result)

JPY6,800MM

Second Half
(result)

JPY17,347MM※ The 4th investment corporation bond in amount of JPY1,500MM which matured
December 2021 were redeemed by same amount of loans from lenders
centered on major lenders

1.0
0.0%

19,00017,350(year)

5.0

4.3

1.5%

18,53619,000Refinancing Result in 2021
6.0

5.2

15,4322022

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

15,432

3,000(*1) Weighted-average costs for interest-bearing debt (including up-front fee, etc.) as of the end of each year. Rounded
off to one decimal place.
(*2) Average life of interest-bearing debt as of the end of each year.
(*3) Represent the balance of cash and deposits, excluding various reserves in trust, etc.

19

1. Financial Conditions (2)Lender List for Interest-bearing Debt

Breakdown of Interest-bearing Debt
(as of the end of December 2021)(Unit: JPY MM)
Balance(as of the end of
December 2020)
Balance%

Balance(as of the end of
December 2021)
Balance%

32,38819.2%

32,323

19.6%

Mizuho Bank, Ltd.

19,37011.5%

19,330

11.7%

(40)

Shinsei Bank, Ltd.

19,015

11.3%

18,558

11.3%

(457)

Sumitomo Mitsui Trust Bank, Limited

13,825

8.2%

13,795

8.4%

(30)
(244)

Lenders/Bond Name
Sumitomo Mitsui Banking Corporation

Resona Bank, Limited

10,126

6.0%

9,882

6.0%

5,900

3.5%

5,885

3.6%

(15)

Fukuoka Bank, Ltd.

4,750

2.8%

4,636

2.8%

(114)

The Nomura Trust and Banking Co., Ltd.

4,660

2.8%

4,548

2.8%

(112)

Aozora Bank, Ltd.

3,435

2.0%

3,352

2.0%

(83)

MUFG Bank, Ltd.

4,135

2.5%

3,123

1.9%

(1,012)The Chiba Bank, Ltd.

2,900

1.7%

2,732

1.7%

(168)

The Nishi-Nippon City Bank, Ltd.

2,750

1.6%

2,684

1.6%

(66)

Hiroshima Bank, Ltd.

1,900

1.1%

1,854

1.1%

(46)

Sompo Japan Insurance Inc.

1,500

0.9%

1,464

0.9%

(36)

0.3%

488

0.3%

(12)

75.3% 124,654

75.7%(2,500)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

0.9%

0

0.0%

(1,500)

3,000

1.8%

3,000

1.8%

–

8th Investment Corporation Bonds without Collateral

1,100

0.7%

1,100

0.7%

–

9th Investment Corporation Bonds without Collateral

1,000

0.6%

1,000

0.6%

–

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

2,000

1.2%

2,000

1.2%

–

8,600

5.1%

7,100

4.3%

(1,500)

75.7%

76.7%

85.3%

Short-term

Loans
Investment
Corporation Bonds

Long-term(scheduled repayment
within one year)

Long-term

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

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

41.6%

40.8%

LTV (total asset base/after deducting total dividends)

42.3%

35%

39.9%

39.0%

40.6%

42.4%

42.0%

42.2%

41.8%

End of

End of

End of

End of

End of

FY12/2017

FY12/2018

FY12/2019

FY12/2020

FY12/2021(18th Period)(19th Period)(20th Period)(21st Period)(22nd Period)(*) LTV as of the end of each year.

Status of Credit Rating
6,000

3.6%

6,000

3.6%

9,000

5.3%

9,000

5.5%

–

10th Investment Corporation Bonds without Collateral 10,000

5.9%

10,000

6.1%–

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

4.9%

–

19.6%

33,000

20.0%

–

24.7%

40,10024.3%(1,500)100.0% 164,754

100.0%(4,000)Total of Interest-bearing Debt

8.8%

40%

6th Investment Corporation Bonds without Collateral

7th Investment Corporation Bonds without Collateral

24.3%

(65)

Development Bank of Japan Inc.

14.7%

14.6%

Variance

168,754–

20

Japan Credit Rating Agency, Ltd.
(JCR)

A+ (negative)

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

A

(negative)

1. Financial Conditions (3)Change in Appraisal Value

Changes in Appraisal Value (Unrealized Gains)(JPY Bn)

Book Value

Unrealized Gains

500

398.7
400

302.1
300

113.8

439.3
122.1

525.9

437.5

151.5

(Based on 41 hotels owned by JHR at the end of FY12/2021)

493.3

485.4

126.5

127.1

Appraisal(*1)
No. of Acquisition
Price
Property(*2)(JPY MM)

130.7

(*3)

78.7

200

223.3

100

284.9

317.2

306.7

374.3

366.7

358.3

0
Ratio of
Unrealized
Gains
No. ofProperties

Variance
Appraisal Variance of
Variance of Net Cashof NetValue
Flow
Appraisal CAP Rate Cap Rate
(*3)
(*3)
(JPY MM)
Value(JPY MM) Cash Flow

35.2%

39.9%

38.5%

42.6%

40.5%

34.5%

35.5%

36

41

44

41

43

42

41

End ofDecember
2021

41

363,542

485,480

+0.4%

4.6%

(0.0pt)22,158+0.0%

End ofDecember
2020

41

362,465

483,430(4.6%)

4.6%+0.0pt22,151(2.3%)End ofDecember
2019

41

362,465

506,760

–

4.5%

–

22,682–(*1) Based on the appraisal value as of the end of each fiscal period.
(*2) Numbers in this table are for 41 properties after exclusion of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi and ibis
Tokyo Shinjuku.
(*3) Cap rate, variance of cap rate and net cash flow are rounded off.

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

Negative Goodwill<Policy for Use of Negative Goodwill>＜Amount used in FY12/2021＞

1. Add JPY262 million (50-year amortization amount ofnegative goodwill) to dividends every period
2. In addition to above, dividends will be increased in
response to the following
•
•
•
•
•

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

50-year amortization amount on negative goodwill :JPY262MM

Cope with loss on retirement of noncurrent assets :JPY16MM

Amortization of trademark rights:

JPY56MM

Total amount:

JPY335MM

Balance of Negative Goodwill
after the end of December 2021

21

JPY9,976MM

Ⅴ. Market Environment

1. Market Environment (1) Restrictions continued on international travel due to entry
restriction caused by COVID-19

 The number of total overnight guests in 2021 decreased by
47.0% against 2019 (total number of inbound guests decreased
by 96.4%)

Changes in Number of Inbound Visitors(Ten thousands)
3,500

Number of Inbound Visitors+2.2%

Tourists
+8.7%

3,000

3,119

Changes in Number of Overnight Guests in Japan(99.2%)(vs 2019)(Guest nights in millions)
600

3,188

+6.5%

2,869

500

+19.3%
2,776

2,403

2,500

2,104

(87.1%)+47.1%
1,500+29.4%+24.0%
1,000

1,341

300

1,696

(94.0%)
411

604

331

100

24
0

0
2012

(44.3%)(4.8%)+8.2%480
332
316(35.2%)
+3.2%
444
+1.6%
+2.3% (3.5%)
430
438
423
(0.9%)
+4.7%
429
432
413
+0.1%
311
312

1,088
796

500

538

200

1,036

835

+1.6%
474
466

(2.3%) +3.5%
510
504
492

(47.0%)(vs 2019)

400

1,973

2,000

+6.0%

+5.6%

439

2,825

2,544

+21.8%+10.8% 596

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

2013

2014

2015

2016

2017

2018

2019

2020

+18.3%+14.8%+5.8%+46.4%+33.8%+27.3%
69
66
45
33
26
2012

2021

Source: Number of International Visitors to Japan by Japan National Tourism Organization (JNTO)(*) The numbers for Jan.–Nov. 2021 are provisional numbers, and December 2021 are estimated numbers.

2013

2014

2015

2016

80

2017

+22.7%(82.4%)

94

2018

116
(79.3%)
2019

20

4

2020

2021

Source: Statistics of Overnight Travel by Japan Tourism Agency(*) Rounded off to the nearest millions of people.
Numbers for January to November 2021 are second preliminary figure, numbers for December 2022 are firstpreliminary figure. The annual revised report, which reflects newly opened hotels in 2020, etc. is scheduled to bereleased on June 30, 2021.

23

1. Market Environment (2) New supply in 2021 decreased by more than 10,000 rooms compared to the forecast of a year ago. As in 2020, the pace of new supply is declining

Supply of Rooms in Hotels/Ryokans in Japan
As of the end of January 2022
＜Japan＞(No. of rooms)
80,00020,000

ActualSupply Forecast

54,051 59,079 49,115

60,00040,000

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

32,98816,51740,00012,91020,000

+1.1%

+2.1%

+3.4%

+3.6%

+2.9%

+1.7%

+1.7%

+0.7%

+2.0%

Excl. Tokyo, Osaka

+0.7%

+1.7%

+2.5%

+2.7%

+2.1%

+1.6%

+1.3%

+0.6%

(%: change from theprevious year)

2016

2017

2018

2019

2020

2021

2022

2023

(No. of rooms)
20,00021,70916,51728,534

+2.1%

+3.4%

+3.6%

+2.9%

+2.4%

+1.2%

+1.6%

+1.5%

Excl. Tokyo, Osaka

+0.7%

+1.7%

+2.5%

+2.7%

+2.1%

+1.9%

+0.9%

+1.4%

2024~

(%: change from theprevious year)

2016

2017

2018

2019

2020

2021

2022

(including
undetermined plan)(No. of rooms)
20,00011,833 11,105
6,107

5,866

3,137

10,000

5,537

5,330
2,223

2023~

(including
undetermined plan)＜Tokyo＞
11,83315,0006,107

11,062

12,748

9,686

5,866

5,009

5,000

2,412

0

0
+4.1%
2016

+3.8%
2017

+7.4%
2018

+6.5%
2019

+6.8%
2020

+1.6%
2021

+2.7%
2022

+1.1%
2023

＜Osaka＞(No. of rooms)
12,000+2.7%

Ratio of New Supply

+4.1%

+3.8%

+7.4%

+6.4%

+7.0%

+5.0%

+2.4%

2024~

(%: change from theprevious year)

2016

2017

2018

2019

2020

2021

2022

(including
undetermined plan)

8,445

8,329
6,205

5,018

6,000

3,369

1,402

＜Osaka＞(No. of rooms)
12,00010,721

9,000

3,000

42,549+1.1%

12,4835,000(%: change from theprevious year)

49,01632,988

Ratio of New Supply＜Tokyo＞

15,000

Ratio of New Supply

59,052

Supply Forecast

00Ratio of New Supply

10,00054,05160,00035,977

29,681 30,293

Actual＜Japan＞(No. of rooms)
80,000

8,329

9,000

5,213
1,805

3,000

0

2023~

(including
undetermined plan)

10,721
6,205

5,018

6,000

+1.1%

5,014

1,402

3,401

4,775

0

Ratio of New Supply

+1.8%

+6.3%

+9.9%

+11.6%

+6.0%

+3.1%

+4.6%

+1.5%

+7.0%

Ratio of New Supply

+1.8%

+6.3%

+9.9%

+11.6%

+6.0%

+4.6%

+3.0%

+4.0%

(%: change from theprevious year)

2016

2017

2018

2019

2020

2021

2022

2023

2024~

(%: change from theprevious year)

2016

2017

2018

2019

2020

2021

2022

2023~

(including(including
undetermined plan)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, theasset 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.

24

1. Market Environment (3)Number of New Cases of Infection by COVID-19 in Japan and Events in the World and Japan
2020

2021

2022

(No. of cases)(No. of cases)

Go To Travel Campaign

110,000
100,000

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

90,000

Number of Severe Cases in Japan (right axis)

Tokyo Olympics
and Paralympics

5,000

6th Wave

4,000

80,000State of Emergency

70,000

4th Wave

Quasi-Emergency Measures

60,0005th Wave

3,000

50,0002,000

40,000

1st Wave

30,000

2nd Wave

3rd Wave
1,000

20,00010,000
0

0
Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Tokyo
Osaka
Okinawa

Major Trend of Restriction/Ease on Entry to Japan(*1)
2020

2021

Percentage of Vaccination (Japan/US/UK)

Jan.

• Chinese government freezed group tours abroadMar.

• 1/3 of the areas in the world was assigned as areas to deny entry

Jul.

• Initiatives of Business track and Residence track(*2) began

Oct.

• Areas subject to new entry permit and status of residence byforeigner were significantly expanded

Dec.

• New entry of foreigners from all over the world was suspended inprinciple

Jan.

• Operations of Business track and Residence track was suspended

20%

Nov.

• Restrictions of new entry from overseas was relaxed• First case of infection by Omicron variant was found in Japan andnew entry from all over the world was suspended in principle forborder control measures

0%
2020/12

80%
60%

Japan

Japan

US

US

UK

UK

Fully Vaccinated(*3)

40%Boosted(*3)

2021/22021/42021/62021/82021/102021/122022/2

Source: "Coronavirus disease" Ministry of Health, Labour and Welfare, and One World in Data (https://ourworldindata.org/covid-vaccinations?country=OWID_WRL)(*1) Based on press releases by the government, the media, and other organizations.
(*2) Initiatives to set special quota for travelers with needs in business on entry into and departure from Japan. While maintaining the current border control measures, additional quarantine measures were adopted. Required measures include testing
for COVID-19 upon arrival at the airport (for travelers from country or area that prohibited to enter), prohibition to use public transportation and requirement to stay at home (or at location designated by the Chief of the Quarantine Station) for 14days, proof of test before entrance and maintaining location data for 14 days after entering to Japan.
(*3) "Fully Vaccinated" indicates the percentage of the persons who received vaccination for a required number of times against total population. And "Boosted" indicates those who received additional vaccination as well.

25

Ⅵ. Takeaways

1. Takeaways● Development and distribution ofeffective vaccine and medicine

Pre
COVID-19

With
COVID-19

Post
COVID-19

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" period27

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 methods29

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

Ensure Stable Revenue

Pursue UpsideManagement
contract structure

Fixed rent structure

Variable rent
structure

Revenue sharing
structure

Active Asset Management Strategies

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

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

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

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

Proportion of Rental Income

Proportion of Rent Structures

2019 Results(annualized)(as of February 25, 2022)

2021 Results(annualized)
Fixed rent only

Variable rent, etc.(*)

Variable rent, etc.(*)

38.4%

29.9%

Fixed rent, etc.

Fixed rent, etc.

61.6%

70.1%

(*)

11 properties
Variable rent, etc.(*)

30 properties

Variable rent, Rent from revenue sharing andIncome from management contracts

(*)

30

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

3. External Growth Strategy
Recognition of External
Environment
Trend of the Hotel
Investment Market
 Due to the unfinished infection by
COVID-19, self-restraint of economic
activity and economic downturn has been
continuing. Such situation led tolengthening stagnation of hotel revenue
and causing events such as a request bytenant to reduce rent or cancel thecontracts and uncertainty on credit ofhotel operators. The hotel market has
been continuing to face challenging
management environment.
 In the short term, both sellers andbuyers are watching market calmly due
to the uncertainty about the market
conditions and cautious attitude byfinancial institutions to provide loan andthus, hotel transaction market is stagnant.
On the other hand, some transactions aretaking place by business corporation to
make asset off from its balance sheet.
There is possibility that similartransaction to increase.
 For medium to long term, demand fordomestic and overseas accommodations
is expected to recover as a result of
promotion of vaccination anddevelopment of effective therapeutic
drugs for COVID-19. As the market
recovers, the hotel investment may berevitalized again. However, thecompetitiveness of hotels is becoming
more evident in accordance with the
hotel specifications, locations, and theabilities of hotel operators, and it isimportant to differentiate each hotel.

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

Key Measures
 Emphasize the superiority of buildings and facilities (infrastructure), operations (services), and locations ofhotel real estate, etc.
• The prime investment targets are "full-service hotels" and "resort hotels" that have high barriers to entry
due to operation and management know-how, capital outlay and locations• In the case of "limited-service hotels," the creditworthiness of the hotel lessee, the age of the building,location, guest room composition and profitability are important• For limited-service hotels specialized in selling single rooms, consider acquisition individually, taking into
account the hotel specifications and the possibility of achieving the upside• Especially, proactively review the purchase of hotels that have potential for internal growth byimplementing active asset management 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, etc. to respond to new investment opportunities (such as salesof hotels without operators, etc.) caused by the impact of COVID-19

31

4. Internal Growth Strategy
Recognition of External
Environment
Hotel Market Environment

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

 The impact of COVID-19 on inboundand domestic demand is continuing
and the Japanese tourism and hotelindustries remain stagnant. On theother hand, the hotel market is
expected to gradually recover due tothe promotion of vaccination and thedevelopment of therapeutic drugs, aswell as the support through measures
to promote tourism by the national
and local governments.
 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, we
believe there are no changes to themedium to long term trend of
expansion in the tourism market
accompanying economic growth in
the Asia region.
 As hotel operators are exposed tosevere market conditions, they are
required to respond flexibly tochanges, such as to switching toaggresive strategy that captures themomentum for recovery while
continuing a defensive strategy tomaintain soundness of management.

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

32

5. Financial Strategy
Recognition of External
Environment

Basic Policies

Trend of Financing Environment
and Interest Rates

 Ensure healthy and stable finance The TSE REIT index increased 15.8%
due to large-scale monetary easing
and expectation for economic
recovery after COVID-19 pandemic,
etc. Although the number of public
offering of J-REITs in 2021 increased
compared with 2020 due to strong
unit prices, the procured amount byoffering in total decreased from 2020.

 Diversify financing methods

 There has been no change insupportive attitude by financial
institutions under the prolonged
impact by COVID-19. For some
sectors including hotels, financial
institutions continuously expressed
cautious stance to provide long-termloan but upward pressure on interest
rates was reduced.
 Both short-term and long-term
interest rates remain at low levels
due to the monetary easing policy.

 Strengthen lender formation and relationships with financial institutions

Key Measures Secure the internal reserve and further strengthen the financial base by controlling capital expenditures,etc.
 Maintain good relationship with financial institutions
 Maintain LTV level at a maximum of 50% (total asset base) for the time being
 Diversify financing methods such as public offerings and issuance of investment corporation bonds
 Improve financial stability by diversifying repayment periods and fixing interest rates, etc. as necessary Optimize borrowing costs

33

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)<FY2021>
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 (21 Hotels)
The HMJ Group Hotels

Kobe Meriken Park
Oriental Hotel

ACTIVE-INTER CITYHIROSHIMA (Sheraton
Grand Hiroshima Hotel)

Hotel Nikko Nara

The Accor Group Hotels

Hotel Nikko Alivila

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Oriental Hotel
Hiroshima

Oriental Hotel Fukuoka
Hakata Station

Holiday Inn
Osaka Namba

Hilton Tokyo Narita Airport

Hilton Tokyo Odaiba

Hotel Oriental Express
Osaka Shinsaibashi

Oriental Hotel Okinawa
Resort & Spa

International Garden Hotel Narita

Newly Added

Oriental Hotel
Universal City

34

Hotel Oriental Express
Fukuoka Tenjin

Mercure Sapporo

ibis Styles Sapporo

Mercure Okinawa Naha

ibis Styles Kyoto Station

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 December 2021)
Existing properties

Total Assets(*1)

Strategic Investment Areas

JPY363.5Bn
Hokkaido Area
No. of Hotels

Okinawa Area

41 Hotels(32 in Strategic Investment Areas)

No. of Guest Rooms

11,279 Rooms

Tokyo & Bay Area(*1)

Fukuoka
Area

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

36

Tokyo 23 wards

2. Portfolio Diversification
 Widely diversified and high-quality portfolio Appeal to inbound visitors by international brands(as of February 25, 2022)

By Area and Rent

By Hotel Brand

Hokkaido
Chubu
3.5%
Chugoku 4.2%
KyushuTokyo(Kyoritsu Maintenance)

24.8%

5.9%

OthersDormy Inn, etc.

10%
Oriental Hotel

4%

(HMJ)

the b 3%(excluding Okinawa)24%

ibis/Mercure

5.7%(Accor)Okinawa7%

12.2%

Hotel Nikko
8%

KansaiKanto(excluding Osaka)(excluding Tokyo)

8.2%

21.2%

Osaka

International
Brand:
51%

Holiday Inn
HiltonSheraton

32%

14.2%

By Grade5%

By Hotel Type

Economy 4%

Mid-price
41%

LuxuryResort21%

22%

Limitedservice
30%

Uppermiddle

Full-service

34%

48%

(*) Calculated based on acquisition price as of end of December 2021.

37

(IHG)
7%

3. Rent Structures
Stability

Upside(FY12/2021)

Rent Structure(*1)

Fixed rent

Fixed rent +Revenue sharing

Fixed rent + Variable rent

Variable rentManagement contract

Type of Contract

Lease contract

Lease contract

Lease contract

Lease contract

Management contract

Fixed

○

○

○

–

–

–

Variable–

A certain percentage of sales
exceeding the threshold

A certain percentage of
hotel GOP

A certain percentage of hotelrevenue or hotel GOP

Hotel GOP–

JPY2,343MM(23.0%)

JPY2,385MM(23.4%)

JPY4,197MM(41.2%)

JPY1,040MM(10.2%)

JPY218MM(2.1%)

JPY10,184MM(100.0%)

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

JPY2,343MM(23.0%)

JPY2,385MM(23.4%)

JPY1,776MM(17.4%)

JPY406MM(4.0%)

JPY218MM(2.1%)

JPY7,130MM(70.0%)

Variable Rent
(%)

–

–

JPY2,421MM(23.8%)

JPY633MM(6.2%)–

JPY3,054MM(30.0%)

Involvement inHotel Operation

Low

Low

High

High

High

–

CAPEX Paid by JHR

1) Renewal of building andfacilities

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

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

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

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

No. of Properties

10

3

20

4

4

41

Acquisition Price(%)

JPY32,375MM(8.9%)

JPY31,904MM(8.8%)

JPY257,630MM(70.9%)

JPY19,235MM(5.3%)

JPY22,397MM(6.2%)

JPY363,542MM(100.0%)

The Beach Tower Okinawa

Hilton Tokyo Bay

The HMJ Group Hotels(*4)

Hilton Nagoya

ibis Styles Kyoto Station

Hotel Francs

Smile Hotel
Nihombashi Mitsukoshimae

The Ishin Group Hotels

Mercure Yokosuka

ibis Styles Sapporo

Oriental Hotel Universal City

Chisun Hotel Kamata

Mercure Sapporo

Hotel Oriental Express
Fukuoka Tenjin

Chisun Inn Kamata

Mercure Okinawa Naha

Type of
Rent(breakdown)

Real Estate Operating
Revenue(*2)(%)

HotelsCANDEO HOTELS
UENO-KOEN
and other hotels

(*1)
(*2)
(*3)
(*4)

Comfort Hotel Tokyo
Higashi Nihombashi

Rent structure is categorized according to the rent contract for hotels of each asset owned by JHR.
Based on the annualized real estate operating revenue for FY12/2021. Revenue arise from trademark rights are excluded.
Fixed rent includes fixed rent and utility income based on rent contract of non-hotel portion (offices, signage, car parks, retail shops, etc.) of asset owned by JHR.
During February 2020 through December 2022, The HMJ Group Hotels adopting full variable rent structure.

38

Total

–

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

22nd Period(as of June 30, 2020)

22nd Period(as of December 31, 2020)

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)

NOI Yield(actual)(*8)

1

Kobe Meriken Park Oriental Hotel

Full-service

Upper-middle

323

Hyogo

26.5

10,9009,541

14,0004.8%

14,0004.8%

3.0%

36,169(212,487)(512,615)(1.9%)

2

Oriental Hotel tokyo bay

Full-service

Mid-price

511

Chiba

26.7

19,90017,10632,200

4.4%

32,200

4.4%

5.5%

–

(117,418)(472,614)(0.6%)

3

Namba Oriental Hotel

Limited-service

Mid-price

258

Osaka

25.8

15,00014,427

31,4004.1%

31,400

4.1%

4.1%

288,185

184,123

43,891

1.2%

4

Oriental Hotel Hiroshima

Full-service

Upper-middle

227

Hiroshima

28.3

4,100

4,100

4,220

4.9%

4,230

4.9%

1.1%

297,027

253,111

165,437

6.2%

5Hotel Nikko Alivila

ResortLuxury397

Okinawa

27.8

18,90017,83928,9004.8%

28,8004.8%

5.2%

155,138

7,490(264,514)

0.0%

6

The Beach Tower Okinawa

ResortMid-price

280

Okinawa

17.8

7,610

6,476

10,000

4.4%

9,980

4.4%

2.1%

511,008

467,161

349,692

6.1%

7

Hakone Setsugetsuka

ResortMid-price

158

Kanagawa

15.2

4,070

3,599

5,270

4.9%

5,260

4.9%

1.1%

294,953

268,884

172,602

6.6%

8

Dormy Inn Kumamoto

Limited-service

Mid-price

291

Kumamoto 13.9

2,334

2,203

2,950

5.6%

2,950

5.6%

0.6%

194,460

171,797

121,524

7.4%

9

the b suidobashi

Limited-service

Mid-price

99

Tokyo

35.4

1,120

1,187

2,280

4.1%

2,280

4.1%

0.3%

12,999585(27,676)0.1%

10

dormy inn・global cabin Asakusa

Limited-service

Economy

75

Tokyo

24.8

999

930

1,280

4.0%

1,300

4.0%

0.3%

63,99555,24142,852

5.5%

11

Hakata Nakasu Washington Hotel
Plaza

Limited-service

Mid-price

247

Fukuoka

26.8

2,130

2,054

4,530

4.4%

4,530

4.4%

0.6%

240,000

225,000

198,000

10.6%

12

Nara Washington Hotel Plaza

Limited-service

Mid-price

204

Nara

21.8

2,050

1,736

2,430

5.0%

2,430

5.0%

0.6%

150,000

134,000

98,000

6.5%

13

R&B Hotel Ueno-hirokoji

Limited-service

Economy

187

Tokyo

19.7

1,720

1,794

1,900

4.0%

1,900

4.0%

0.5%

97,291

82,942

66,201

4.8%

14

Comfort Hotel Tokyo Higashi
Nihombashi

Limited-service

Economy

259

Tokyo

13.9

3,746

3,457

5,350

4.4%

5,340

4.4%

1.0%

271,527

240,418

203,217

6.4%

15

Smile Hotel Nihombashi
Mitsukoshimae

Limited-service

Economy

164

Tokyo

24.8

2,108

2,028

2,930

4.1%

2,930

4.1%

0.6%

134,400

118,183

97,657

5.6%

16

Toyoko Inn Hakata-guchi Ekimae

Limited-service

Economy257

Fukuoka

20.3

1,652

1,382

2,750

4.5%

2,760

4.5%

0.5%

141,039

127,392

109,185

7.7%

17Oriental Hotel Universal City (*9)

ResortMid-price

330

Osaka

20.5

6,753

7,292

15,4005.0%

16,7004.9%

1.9%

470,935

383,666

214,763

5.7%

18

Chisun Inn Kamata

Limited-service

Economy

70

Tokyo

18.7

823

782

1,370

4.6%

1,370

4.6%

0.2%

2,067

(4,949)(16,855)(0.6%)

19

Chisun Hotel Kamata (*10)

Limited-service

Economy

105

Tokyo

29.9

1,512

1,467

2,020

4.8%

2,020

4.8%

0.4%

15,471

895(31,289)

0.1%

20

Hilton Tokyo Bay

ResortLuxury

828

Chiba

33.5

26,05026,16940,3004.3%

40,300

4.3%

7.2%

1,979,352

1,698,065

1,510,545

6.5%

21

ibis Styles Kyoto Station

Limited-service

Mid-price

215

Kyoto

12.8

6,600

6,615

9,990

4.3%

9,990

4.3%

1.8%

46,354(12,216)(48,799)(0.2%)

22

ibis Styles Sapporo

Limited-service

Mid-price278

Hokkaido

11.4

6,797

6,463

11,100

4.7%

11,1004.7%

1.9%

55,899(29,526)(112,230)(0.4%)

23

Mercure Sapporo

Limited-service

Mid-price285

Hokkaido

12.7

6,000

5,726

10,5004.7%

10,5004.7%

1.7%

115,880(75,091)(166,345)(1.3%)

24

Mercure Okinawa Naha

Limited-service

Mid-price

260

Okinawa

12.4

3,000

2,821

6,950

4.7%

6,950

4.7%

0.8%

–

(62,176)(127,978)(2.1%)

39

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

22nd Period(as of June 30, 2020)

22nd Period(as of December 31, 2020)

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)

NOI Yield(actual)(*8)

25

the b ikebukuro

Limited-service

Mid-price

175

Tokyo

39.5

6,520

6,579

7,020

4.2%

7,230

4.2%

1.8%

404,891

376,668

346,941

5.8%

26

the b hachioji

Limited-service

Mid-price

196

Tokyo

35.4

2,610

2,702

2,570

5.1%

2,570

5.1%

0.7%

45,07620,002(15,671)

0.8%

27

the b hakata

Limited-service

Mid-price

175

Fukuoka

24.3

2,300

2,362

4,330

4.3%

4,340

4.3%

0.6%

35,522

22,764

43

1.0%

28

Hotel Francs

Full-service

Mid-price

222

Chiba

30.4

3,105

3,141

4,040

4.7%

4,040

4.7%

0.9%

300,000

238,760

193,570

7.7%

29

Mercure Yokosuka

Full-service

Mid-price

160

Kanagawa

28.2

1,650

1,627

3,340

4.6%

3,360

4.6%

0.5%

242,325

148,326

110,466

9.0%

30

Oriental Hotel Okinawa Resort & Spa(*11)

ResortUpper-middle

361

Okinawa

16.9

14,95014,72817,2004.9%

17,300

4.9%

4.1%

–

(95,798)(371,571)(0.6%)

31

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Full-service

Luxury238

Hiroshima

11.3

17,32017,15320,7004.6%

20,7004.6%

4.8%

881,883

503,832

280,434

2.9%

32

CANDEO HOTELS UENO-KOEN

Limited-service

Mid-price

268

Tokyo

12.0

6,705

6,574

7,440

4.0%

7,440

4.0%

1.8%

349,971323,623

283,287

4.8%

33

Oriental Hotel Fukuoka Hakata Station

Full-service

Upper-middle

221

Fukuoka

36.5

7,197

9,123

15,200

4.6%

15,2004.6%

2.0%

243,867(4,307)(420,532)(0.1%)

34

Holiday Inn Osaka Namba

Limited-service

Mid-price

314

Osaka

13.4

27,00026,78826,5004.3%

26,600

4.3%

7.4%

71,921

23,283(138,142)

0.1%

35

Hotel Oriental Express Fukuoka Tenjin(*12)

Limited-service

Mid-price

263

Fukuoka

22.7

5,248

5,828

6,480

4.8%

6,520

4.8%

1.4%

405,369

298,308

220,739

5.7%

36

Hilton Nagoya

Full-service

Luxury

460

Aichi

32.8

15,25015,61814,8004.2%

14,8004.2%

4.2%

780,207

193,796

17,6601.3%

37Hilton Tokyo Narita Airport

Full-service

Upper-middle

548

Chiba

28.4

13,175

13,252

13,6004.6%

13,6004.6%

3.6%

41,475(41,239)(255,199)(0.3%)

38

International Garden Hotel Narita

Full-service

Mid-price

463

Chiba

25.6

9,125

9,124

9,520

4.8%

9,520

4.8%

2.5%

284,359

240,177

87,894

2.6%

39

Hotel Nikko Nara

Full-service

Upper-middle

330

Nara

23.8

10,373

10,238

9,890

4.8%

9,800

4.8%

2.9%

–

(47,382)(198,977)(0.5%)

40

Hotel Oriental Express Osaka
Shinsaibashi

Limited-service

Mid-price

124

Osaka

3.9

2,738

2,816

2,880

4.7%

2,840

4.7%

0.8%

–

(14,004)(28,513)(0.5%)

41

Hilton Tokyo Odaiba

Full-service

Upper-middle

453

Tokyo

26.0

62,40063,48668,3003.7%

68,400

3.7%

17.2%

522,633

194,733(96,249)

0.3%

–

–

11,279–23.6

363,542358,352

483,830–

485,480–

100.0%

10,184,888 6,287,376 1,629,329

1.8%

Total or Average
(*1)
(*2)
(*3)
(*4)
(*5)
(*6)
(*7)
(*8)
(*9)
(*10)
(*11)
(*12)
(*13)

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 December 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 one year from January to December 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.
NOI yield for the portfolio is calculated as follows: Total NOI for FY12/2021 (actual) (6,366,724 thousand yen)/total acquisition price of properties held as of the end of FY12/2021.
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 Okinawa Marriott Resort & Spa on October 1, 2021.
The name has changed from HOTEL ASCENT FUKUOKA on June 18, 2021.
ibis Tokyo Shinjuku was sold on December 15, 2021.

40

5. Summary of Lease Contracts (1/3)(as of the end of December 2021)
No.

Property Name

Lease
Type

Rent
Structure(*1)

LesseeHotel Operator/
Lease/ Expiration
Hotel Consulting andMC
Date ofManagement Company Term Contract

Contractual Rent(*2)

1

Kobe Meriken Park Oriental Hotel【2022】 Hotel AGOP x 86%(If the AGOP is below JPY0, it will be JPY0)【2023】 For The Five HMJ Hotels JPY3,221MM/
year + when Hotel AGOP exceeds JPY4,120MM,
the excess x 85% is paid

2

Oriental Hotel tokyo bay【2022】 Hotel AGOP x 79%(If the AGOP is below JPY0, it will be JPY0)【2023】 For The Five HMJ Hotels JPY3,221MM/
year + when Hotel AGOP exceeds JPY4,120MM,
the excess x 85% is paid

Hotel Management Japan Co., Ltd.
3

Namba Oriental Hotel

Fixedlease

Fixed +
Variable

15

Rent Modification Summary

Rent Modification Summary(After acquisition)
Timing【2022】Hotel AGOP x 91%(If the AGOP is below JPY0, it will be JPY0)
In principle, the same rent will
be applied until expiration of
Dec. 2034 【2023】 For The Five HMJ Hotels JPY3,221MM/
year + when Hotel AGOP exceeds JPY4,120MM, the contract.
the excess x 85% is paid

Condition

Modified Structure(variable rent only fromFebruary 2020 to December
Feb. 2022
2022)(variable rent ratio waschanged for 2023 onwards)

Rent Modification Schedule(2022 to 2023)
2022

2023

–

–

【2022】 Hotel AGOP x 89%(If the AGOP is below JPY0, it will be JPY0)【2023】 For The Five HMJ Hotels 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.

–

–

–

–

【2022】 Hotel AGOP x 74%(If the AGOP is below JPY0, it will be JPY0)【2023】 For The Five HMJ Hotels JPY3,221MM/
year + when Hotel AGOP exceeds JPY4,120MM,
the excess x 85% is paid

Okura Nikko HotelManagement Co., Ltd.

Kyoritsu Maintenance Co., Ltd.
8

Dormy Inn Kumamoto

Fixedlease

Fixed

12

Mar. 2023 JPY16MM/month

Rent can be modified throughmutual agreement every three
years.

Apr. 2020

Same–

To be expired(Mar.)

9

dormy inn・global cabin Asakusa

Lease

Fixed

3

Mar. 2023 JPY5MM/month

Rent can be modified throughmutual agreement every three
years.

Apr. 2020

Same–

To be expired(Mar.)

10

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–

To be expired(Mar.)

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

Fixed +
Revenuesharing

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

Fixed +
Revenuesharing

THE KAMOGAWA GRAND HOTEL, LTD.

3

Mar. 2023 JPY11MM/month + Revenue sharing

Rent can be modified throughmutual agreement.

Mar. 2020

Same–

To be expired(Mar.)

15

Toyoko Inn Hakata-guchi Ekimae

Lease

Fixed

Toyoko Inn Co., Ltd.

30

Sep. 2031 JPY11MM/month

No rule has been stipulated.

Oct. 2007

Increased(+9.4%)––

Washington Hotel K.K.

41

5. Summary of Lease Contracts (2/3)(as of the end of December 2021)
No.

Property Name

Lease
Type

Rent
Structure(*1)

16

Oriental Hotel Universal City (*4)

Fixedlease

Fixed +
Variable

17

Chisun Inn Kamata

Fixedlease

Variable

LesseeK.K. Osaka Sakurajima Operations

Solare Hotels &Resorts Co., Ltd.

18

Chisun Hotel Kamata (*5)

Fixedlease

Variable

19

Hilton Tokyo Bay

Fixedlease

Fixed +
Revenuesharing

20

ibis Styles Kyoto Station–

Management
contract

21

ibis Styles Sapporo–

Management
contract

Hotel Operator/
Lease/ Expiration
Hotel Consulting andMC
Date ofManagement Company Term Contract

THE DAI-ICHI
BUILDING CO., LTD.

–

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 for calculation ofvariable rent is January 1, 2022.)

Rent Modification Summary

Rent Modification Summary(After acquisition)

Rent Modification Schedule(2022 to 2023)

TimingCondition

2022

2023

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.)–

12

Dec. 2024 Amount equivalent to hotel GOP

–

–

–

–

–

10

Dec. 2024 Amount equivalent to hotel GOP

–

–

–

–

–

SHR Hotels, Co., Ltd.

Hilton International
Company

AAPC Japan K.K.

22

Mercure Sapporo–

Management
contract

15

Sep. 2029 Amount equivalent to hotel GOP

–

–

–

–

–

23

Mercure Okinawa Naha–Management
contract

10

Apr. 2024 Amount equivalent to hotel GOP

–

–

–

–

–

24

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)

–

–

25

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)

–

–

26

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)

–

–

27

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)

–

–

28

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)

–

–

29

Hotel Francs

Fixedlease

Fixed

K.K. Bridal Produce

19

Oct. 2024 JPY25MM/month

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

–

–

–

–

10

【2022】Hotel AGOP x 89%(If the amount is below JPY0, it will be JPY0)
Dec. 2030【2023】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【2022】Hotel AGOP x 93%(If the amount is below JPY0, it will be JPY0)【2023】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.

–

–

30

Oriental Hotel Okinawa Resort &Spa (*6)

Fixedlease

Fixed +
Variable31

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Fixedlease

Fixed +
Variable

Lagoon resort Nago Co., Ltd.

K.K. A.I.C Hiroshima
Management

Luxury Hotels
International of
Hong Kong Limited

42

Modified Structure(variable rent only fromFebruary 2020 to December
Feb. 2022
2022)(variable rent ratio waschanged for 2023 onwards)
Modified Structure(variable rent only fromFebruary 2020 to December
Feb. 2022
2022)(variable rent ratio waschanged for 2023 onwards)

5. Summary of Lease Contracts (3/3)(as of the end of December 2021)
No.

32

Property NameCANDEO HOTELS UENO-KOEN

Lease
Type
Fixedlease

Rent
Structure
(*1)
Fixed

LesseeHotel Operator/
Lease/ Expiration
Hotel Consulting andMC
Date ofManagement Company Term Contract

Candeo Hospitality Management, Inc.

Contractual Rent
(*2)

20

Feb. 2030 Nondisclosure(*3)

Rent can be modified throughmutual agreement every three
years.
In principle, the same rent will
be applied until expiration of
the contract.

【2022】Hotel AGOP x 98%(If the amount is below JPY0, it will be JPY0)【2023】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.

33

Oriental Hotel Fukuoka Hakata
StationFixedlease

Fixed +
Variable

Hotel Centraza Co., Ltd.

15【2022】Hotel AGOP x 97%(If the amount is below JPY0, it will be JPY0)
Dec. 2034【2023】JPY425MM/year + when Hotel AGOP
exceeds JPY442MM, the excess x 98% is paid

34

Holiday Inn Osaka Namba

Fixedlease

Fixed +
VariableOW Hotel Operations KK

15

Oct. 2031

35

Hotel Oriental Express Fukuoka
Tenjin (*7)

Fixedlease

Fixed +
Variable

36

Hilton Nagoya

Lease

Variable

K.K Fukuoka Tenjin Operations

Nagoya Hilton Co.,Ltd.

Hilton International
Company

Rent Modification Summary

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

37

Hilton Tokyo Narita Airport

Fixedlease

Fixed +
Variable

KK NaritaKosuge Operations

20

38

International Garden Hotel Narita

Fixedlease

Fixed +
Variable

KK NaritaYoshikura Operations

10

39

Hotel Nikko Nara

Fixedlease

Fixed +
Variable

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

1040

Hotel Oriental Express Osaka
Shinsaibashi

Fixedlease

Fixed +
Variable

K.K. HOTEL ORIENTAL EXPRESS

1041

Hilton Tokyo Odaiba

Fixedlease

Fixed +
Variable

Tokyo Humania Enterprise Inc.

11

Dec. 2029 Nondisclosure(*3)

Rent Modification Summary(After acquisition)
TimingCondition

2022

2023

Jul. 2016

Nondisclosure(*3)

–

–

–

–

–

–

Modified Structure(variable rent only fromFebruary 2020 to December
Feb. 2022
2022)(variable rent ratio waschanged for 2023 onwards)
Modified Structure(variable rent only fromFebruary 2020 to December
Feb. 2022
2022)(variable rent ratio waschanged for 2023 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 fromIn principle, the same rent will
February 2020 to December
be applied until expiration of the Feb. 2022
2022)
contract.
(variable rent ratio waschanged for 2023 onwards)
Modified Structure(variable rent only from【2022】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 ofFeb. 2022
Jun. 2027
2022)【2023】JPY336MM/year + when Hotel AGOP
the contract.
(variable rent ratio was
exceeds JPY360MM, the excess x 98% is paidchanged for 2023 onwards)
Modified Structure(variable rent only from【2022】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 ofFeb. 2022
Dec. 2030
2022)【2023】JPY420MM/year + when Hotel AGOP
the contract.
(variable rent ratio was
exceeds JPY440MM, the excess x 95% is paidchanged for 2023 onwards)
Modified Structure(variable rent only from【2022】Hotel AGOP x 87%
In principle, the same rent will
February 2020 to December(If the amount is below JPY0, it will be JPY0)
be applied until expiration ofFeb. 2022
Mar. 2028
2022)【2023】JPY110.4MM/year + when Hotel AGOP
the contract.
(variable rent ratio was
exceeds JPY128MM, the excess x 91% is paidchanged for 2023 onwards)
Modified Structure【2022】Hotel AGOP x 97%(variable rent only fromIn principle, the same rent will
(If the amount is below JPY0, it will be JPY0)
February 2020 to December
Dec. 2029
Feb. 2022
be applied until expiration of2022)【2023】JPY1,600MM/year + when Hotel AGOP
the contract.
exceeds JPY1,660MM, the excess x 98% is paid(variable rent ratio waschanged for 2023 onwards)【2022】Hotel AGOP x 95%(If the amount is below JPY0, it will be JPY0)
Jun. 2037【2023】JPY444MM/year + when Hotel AGOP
exceeds JPY450MM, the excess x 93% is paid(*1) 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)
(*7)

Rent Modification Schedule(2022 to 2023)

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.
The name has changed from Okinawa Marriott Resort & Spa on October 1, 2021.
As the hotel was rebranded from HOTEL ASCENT FUKUOKA on June 18, 2021, the conditions of the new contract are stated.

43

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

FY12/2013

FY12/2014

FY12/2015

FY12/2016

FY12/2017

FY12/2018

FY12/2019

FY12/2020

FY12/2021

Guest rooms on 7F
Private rooms at
Restaurant (30)(50)
restaurant andConversion of
Balconies on each Bridal salon (76)balcony, etc. on 3F brides' room tofloor (62)(19)
guest rooms (40)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(91)
7F (77)
(78)

–

–

–

–

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

–

–

–

–

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

Guest rooms on
10F to 11F (72)
Guest rooms on
8F to 9F (72)––Hotel Nikko
Alivila––Guest rooms on 3F to
8F of North building
and 3F to 5F ofcentral building (333)

Oriental Hotel
Hiroshima––

Banquet room on 23F(10)–

Holiday Inn
Osaka Namba

–

–

–

–

–

–

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

ibis Styles
Sapporo

–

–

–

–

–

–

Vacant space on 1F
(28)

–

–

–

Mercure Hotel
Sapporo

–

–

–

–

–

–

Banquet room (15)

–

–

–

the b Ikebukuro

–

–

–

–

–

–

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

–

–

–

Oriental Hotel
Okinawa
Resort & Spa

–

–

–

–

–

–

–

Restaurant (142)––

Oriental Hotel
Fukuoka
Hakata Station

–

–

–

–

–

–

–

Large-scalerenovation works(1,690)––

Hilton Tokyo
Odaiba

–

–

–

–

–

–

–

–

Banquet room (92)–44

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

GOP ratio

50%

8,000

6,296
GOP

27.0%

24.3%

26.6%

5,158
25.5%

6,155

5,645
26.5%

28.0%

28.3%

7,765

8,033

31.8%

32.8%

34.2%

6,941

29.9%

7,793

40%

30%

33.7%

20%

7.3%

2,000

0
CY2008

CY2009CY2010CY2011CY2012

CY2013

CY2014

CY2015

CY2016

CY2017

CY2018CY2019GOP ratio

4,000

5,696

5,136

6,000

6,302

7,591

9.5%
10%

695

851

CY2020CY20210%Change in KPI(JPY)
28,00020,00077.9%
17,970

RevPAR
77.8%
18,46373.8%
17,197OCC
80.4%

15,98016,00012,00013,99914,367

12,696

12,845

76.7%

15,846

12,160

82.7%

86.1%

86.9%

87.7%

88.4%

91.0%

20,153

19,85689.9%
22,197

16,20013,40017,297

14,886

17,551

15,245

19,212

16,84317,80718,06019,954

90.5%

100%

80%

21,067
16,895
19,06660%

14,471
40.0%

8,000

40%

39.5%
5,715

6,756

4,000
CY2007

CY2008

CY2009CY2010CY2011CY2012

CY2013

CY2014

CY2015

CY2016

CY2017

CY2018CY2019(*) Since May 2019, in order to avoid dispersion on ADR and RevPAR between hotels caused by existence of service charge, numbers are changed to include service charge.

45

OCC

ADR・RevPAR

24,000ADR

CY202020%

0%CY2021

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(as of February 25, 2022)

Total Assets

JPY363.5Bn

Strategic Investment Areas

1

2

3

4

5

Kobe Meriken Park
Oriental Hotel

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Oriental Hotel
Hiroshima

10

11

12

13

the b
suidobashi

dormy inn・
global cabin
Asakusa

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

18

19

20

Chisun Inn
KamataChisun Hotel
KamataHilton Tokyo Bay

6

7

8

Existing properties

No. of Hotels

Limited-service hotel

41 Hotels

Full-service hotel

22 23

Resort hotel

Hokkaido Area

No. of Guest Rooms

9

Hotel Nikko Alivila

The BeachTower Okinawa

HakoneSetsugetsuka

Dormy Inn
Kumamoto

14

15

16

17

Comfort HotelTokyo Higashi
Nihombashi

Smile Hotel
Nihombashi
Mitsukoshimae

Toyoko Inn
Hakata-guchi
EkimaeOriental Hotel
Universal City

21

22

23

24

25

ibis Styles
Kyoto Station

ibis Styles
SapporoMercureSapporoMercureOkinawa Naha

the b ikebukuro

11,279 Rooms
Tokyo & Bay Area

Osaka/Kyoto Area

26

21

3 17 34 40

37 38

7

Fukuoka
Area
11 16

29

27 33 35

2 20

26

27

28

29

30

31

32

the b hachioji

the b hakata

Hotel Francs

MercureYokosuka

Oriental Hotel
ACTIVE-INTER CITY
Okinawa Resort & Spa HIROSHIMA (Sheraton
Grand Hiroshima Hotel)

33

36
12 39

8
4 31

1

Tokyo 23 wards
25
9

30
5

28

Okinawa Area

10
14

CANDEOHOTELS
UENO-KOEN

Oriental Hotel
Fukuoka
Hakata Station

34

35

36

37

38

39

40

41

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

15

6

24

13 32

41
18 19

46

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

FY12/2021
End ofFiscal Year
December 31,
2021

Variance

FY12/2021
End ofFiscal Year
December 31,
2021

Variance

29,84132,6402,799

28,922

41,265

12,34228,55330,296

1,743

Operating Accounts Payable

2,654

1,426

(1,227)

Operating Accounts Receivables

672

1,750

1,077

Short-term Loans

12,782

24,002

11,220

Others

615

593

(22)

Current Portion of Investment Corporation Bond

1,500

6,000

4,500

370,221361,531(8,689)Current Portion of Long-term Loans Payable

10,8008,434(2,366)

Net Property and Equipment

333,303

Buildings in Trust(*2)

114,887

326,143(7,159)Accounts Payable

672

712

40

111,807(3,080)

Advances Received

423

658

235

Land in Trust

216,410212,263(4,147)

Others

90

31

(59)

2,006

2,073

67

150,172

131,516(18,655)

Intangible Assets

33,991

32,704(1,287)

Investment Corporation Bonds

40,10034,100(6,000)

Other Assets

2,926

2,683

(242)

Long-term Loans Payable

103,572

92,218(11,354)ASSETS

FY12/2020
End ofFiscal Year(as of) December 31,
2020
LIABILITIESCurrent Assets
Cash and Deposits(*1)

Noncurrent Assets

Others(*3)

Current Liabilities

Long-term Liabilities

162

152

(10)

Tenant Leasehold and Security Deposits

5,397

4,654

(742)

Others

2,763

2,531

(232)

Derivative Liabilities

767

202

(565)

Deferred Assets

233

151

(81)

Others

335

340

5

179,095

172,781(6,313)

186,894

187,194300

Leasehold and Security Deposits

TOTAL LIABILITIESNET ASSETS
Unitholders' Capital
Capital Surplus

21,746

21,746ーReserve for Temporary Difference Adjustment

10,617

10,311(305)

Reserve for Special Advanced Depreciation

1,174

1,174

ー

Unappropriated Retained Earnings

1,527

1,300

(227)

Others

(759)

(185)

573

221,201

221,542341

400,296394,323(5,972)TOTAL NET ASSETSTOTAL ASSETS

400,296394,323(5,972)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.

47

Appendix 3
Investors Composition and Investment Unit Price1. Major Unitholders and Classifications of Unitholders
Top 10 Major Unitholders
As of the end of June 2021

As of the end of December 2021

Name

Rank

No. of Units

%(*)

Rank

Name

No. of Units

%(*)

1

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

738,140

16.52

1

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

723,372

16.19

2

Custody Bank of Japan, Ltd. (Trust)

460,578

10.31

2

Custody Bank of Japan, Ltd. (Trust)

473,663

10.60

3

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

205,527

4.60

3The Nomura Trust and Banking Co., Ltd. (Investment Trust)

196,659

4.40

4The Nomura Trust and Banking Co., Ltd. (Investment Trust)

199,616

4.46

4

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

184,396

4.12

5SDSS K INVESTCO LIMITED

117,567

2.63

5

SDSS K INVESTCO LIMITED

117,567

2.63

6

ELLIOTT INTERNATIONAL LP

93,8862.10

6

ELLIOTT INTERNATIONAL LP

76,823

1.71

7

Credit Suisse

88,010

1.97

7

STATE STREET BANK CLIENT - TREATY 505234

71,2491.59

8

GOLDMAN SACHS & CO. REG

71,084

1.59

8

THE BANK OF NEW YORK MELLON 140044

63,021

1.41

9

GOLDMAN SACHS INTERNATIONAL

68,162

1.52

9SSBTC CLIENT OMNIBUS ACCOUNT

62,5471.40

66,943

1.49

10 JP MORGAN CHASE BANK 385781

59,6681.33

2,109,513

47.22

2,028,965

45.42

10 STATE STREET BANK 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 2021 and the end of December 2021, respectively. (Rounded down to two decimal places.)

Owners of the Investment Units
As of the end of June 2021
OwnersNo. ofInvestors

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

Total

33,133 4,467,006

No. of Investors

0.2%

As of the end of December 2021 No. of Investors

No. of Units

1.1%
1.4%

9.8%

44.4%

42.9%

97.1%

No. ofInvestors

No. ofUnits

Individuals & Others

30,521

414,518

Financial Institutions(Incl. Securities Firms)

86

1,825,210

Other Domestic Firms

374

117,774

Foreign Firms &Individuals

500

2,109,504

Total

2.8%
Individuals &OthersOwnersFinancial Institutions(Incl. Securities Firms)

Other Domestic
Firms

31,481 4,467,006

No. of Units

0.2% 1.1%
1.5%

9.2%

47.2%

40.8%

96.9%
2.6%

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

49

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:

JPY55,800

Total market capitalization:

JPY249.2Bn

Market Capitalization
Investment Unit Price of JHR(JPY)
120,000

100,000(based on the closing price of January 31, 2022)(*1)

80,000Price of the real estate investment securities
may fall depending on the fluctuations ofprice of the real estate under management
60,000or profitability, etc., and investors may
suffer losses. Investors may also suffer
losses through the bankruptcy or
40,000deteriorated financial condition of the issuer.
With reference to the risk of investment in
JHR units, please see Securities Report
20,000
dated March 25, 2021 and Midterm
Securities Report dated September 22, 2021.

(*2)

Including OA(*3)

Indicate the third-party allotment conducted
March 2021, with sponsor group as allottee.

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.

Sep. 2014
PO JPY10.1Bn

Jun. 2015
Jan. 2016
Jun. 2017
Jan. 2019
Mar. 2021
PO(*2) JPY10.7Bn PO(*2) JPY14.6Bn PO(*2) JPY18.6Bn PO(*2) JPY33.3Bn TPA(*3) JPY0.3Bn(JPY MM)

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

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

Apr. 2013
PO JPY20.5Bn

300,000

Sep. 2012
PO(*2) JPY5.0Bn
150,0000600

450,000

0

Investment Unit Price of JHR

TSE REIT Index

500

400

300

200

100

0

50

TOPIX

Appendix 4
Summary of the Asset Management Company

1. Summary of the Asset Management Company(as of December 31, 2021)
Company

Japan Hotel REIT Advisors Co., Ltd.

Location

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

Establishment

August 10, 2004

Capital

JPY300MM

Shareholders

SCJ One (S) Pte. Ltd., Kyoritsu Maintenance Co., Ltd., ORIX Corporation

Representative Director

Hisashi Furukawa
Building Lots and Buildings Transaction Business Operator, Governor of Tokyo (4) No. 83613

Registration and Licenses

Discretionary Transaction Agent by Minister of Land, Infrastructure, Transport and Tourism No. 38
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

Investment and Operation
Committee

Compliance Committee
President & CEO
Compliance Office
Personnel &Administration Group

Business Promotion OfficeFinance and Planning
Division

Investment Division
Acquisitions Group

Public REIT Group

Private Fund Group

52

Planning Group

Finance &Accounting Group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

53

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

Ensured Independence No director and employee of JHRA is a seconded employee from sponsor.
 Part-time directors from our main sponsor, SC CAPITAL PARTNERS group and non-sponsor-related full-time directors
each account for half of JHRA's board of directors.
 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 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.

54

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

55

Memo

56