Make The World
More Sustainable[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

July 31, 2024
IssuerIchigo Hotel REIT Investment Corporation (“Ichigo Hotel,” 3463)
2-6-1 Marunouchi, Chiyoda-ku, Tokyo
Representative: Eriko Ishii, Executive Director
www.ichigo-hotel.co.jp/en
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Hiroshi Iwai, President
Inquiries: Hidehito Iwasaka, Head of Ichigo Hotel
Tel: +81-3-4485-5232
Hotel Sale (Nest Hotel Sapporo Ekimae)
Ichigo Hotel decided today to sell the Nest Hotel Sapporo Ekimae. Because the buyer isa related party as defined in the Investment Trust and Investment Corporation Law
Article 2, Clause 1 (1951 Law, Act No. 198, including subsequent revisions), the asset
sale was approved at today’s board meeting.
1. Sale Summary
Hotel No.
Hotel Name
Hotel Type
Date Built
Form of Ownership
Acquisition DateBuyerBroker
Sale Price2
Book Value3
Sale Price less Book Value
Gains on Sale4
Appraisal Value5
Contract Date
Transaction Date
Closing Date001
Nest Hotel Sapporo Ekimae
Lodging-focused1
June 1984
Trust beneficiary interest in real estate (juekiken)
November 30, 2015
Ichigo Estate
N/A
JPY 4,700 million
JPY 2,130 million
JPY 2,569 million
JPY 2,181 million
JPY 2,730 million
July 31, 2024
December 25, 2024
December 25, 2024

1

Lodging-focused hotels are hotels specialized in lodging with a limited or minimum
amount of related facilities located near train stations, airports, tourist sites, businessand commercial districts, and other key transport infrastructure such as major train
stations and highway interchanges.
2Sale Price excludes incidental expenses such as fees and property, city planning, andconsumption taxes.

13Book Value is an estimate based on the most recent book value (January 2024 fiscalperiod-end), adjusted for expected capital expenditures and depreciation through theTransaction Date.
4
Gains on Sale is an estimate calculated by IIA as the Sale Price less Book Value andforecast sale expenses, and is subject to change.
5Appraisal Value is as calculated by Daiwa Real Estate Appraisal Co., Ltd. as ofJanuary 31, 2024, and is compliant with the appraisal guidelines of IIA as well as therules of The Investment Trusts Association, Japan.
2. Sale Rationale
Ichigo Hotel continues to execute on its strategy to build a stable, diversified portfolio
and drive shareholder value. As part of this strategy, Ichigo Hotel diversified its
portfolio via the acquisition of five hotels in August 2023, i.e., Comfort Hotel Osaka
Shinsaibashi (Ichigo Shinsaibashi Building), HOTEL THE KNOT YOKOHAMA,
Quintessa Hotel Ise Shima, Quintessa Hotel Ogaki, and THE KNOT SAPPORO, fromsponsor Ichigo.
The Nest Hotel Sapporo Ekimae is a lodging-focused hotel located in central Sapporo inHokkaido Prefecture, a five-minute walk from Sapporo Station on the Sapporo
Municipal Subway Namboku Line. Since acquiring the hotel in November 2015, Ichigo
Hotel has conducted value-add initiatives to increase the hotel’s value.
As a result of its value-add, Ichigo Hotel received an offer from a buyer that values thehotel at 2.2X book value and 1.7X appraisal value, and has decided that it is in the bestinterest of shareholders to sell the hotel. Although Ichigo Hotel acquired THE KNOTSAPPORO to increase market share in central Sapporo, the decision reflects Ichigo
Hotel’s judgment that value-add capex costs and maintenance costs will potentially
increase to maintain the hotel’s competitiveness.
As a result of the sale, Ichigo Hotel is forecast to record JPY 2.1 billion in gains on saleduring the January 2025 fiscal period, which will be distributed to shareholders asdividend.
Ichigo Hotel will strategically use the proceeds from the sale to fund growthinvestments including hotel acquisitions and value-add execution.

23. Hotel Overview
Hotel Name
Form of Ownership
Address
Trustee
Period of Trust Contract
Property Right
Area
Land
ZoningCoverage Ratio
Floor Area Ratio
Property Right
Use
Building
Structure
Total Floor Area
Date Built
Number of Tenants
Monthly Rental Income1
Deposit
Leasable Area
Leased Area
Occupancy
Acquisition PriceAppraiser
Appraisal DateValue

Hotel Overview
Nest Hotel Sapporo Ekimae
Trust beneficiary interest in real estate (juekiken)2-9-2 Kita Nijo Nishi, Chuo-ku, Sapporo, Hokkaido
Mitsubishi UFJ Trust and Banking Corporation
November 30, 2015 – November 30, 2025
Freehold
899.01m2
Retail80%
800%
Freehold
Hotel
SRC2 B1/11 Floors
5,734.93m2
June 30, 1984
1 (as of June 30, 2024)
Minimum guaranteed rent: JPY 63,521,729 p.a.
Variable rent: Monthly GOP – (Minimum guaranteed rent +percentage of monthly revenue + percentage of monthlyGOP)
Deposit: JPY 15,900,000, no guarantee deposit
5,734.93m2
5,734.93m2
Feb 2024 Mar 2024 Apr 2024 May 2024 Jun 2024
100%100%100%100%100%
JPY 2,160 million
Daiwa Real Estate Appraisal Co., Ltd.
January 31, 2024
JPY 2,730 million

1Minimum guaranteed rent is the annual minimum guaranteed rent covering the 12month period from February 2024 to January 2025.
2
SRC = Steel-Reinforced Concrete

3Hotel Name
Appraisal Value
Appraiser
Appraisal Date

Appraisal Details
Nest Hotel Sapporo Ekimae
JPY 2,730,000,000
Daiwa Real Estate Appraisal Co., Ltd.
January 31, 2024
Amount (JPY)

Appraisal Value
Value by Direct
Capitalization Method
IncomeMaximum
ObtainableRental Income
Vacancy Loss
Expenses
Administrativeand MaintenanceExpensesUtility Expenses
Repair Expenses
PM Fees
Leasing
Brokerage Fees
Taxes
Insurance
Premiums
Other Expenses
Net Operating
Income (NOI)
Income on
Investment ofDeposits
Received
CapitalExpenditures
FF&E Reserve
Net Profit
Cap Rate
Value via DCF
MethodNotes
on a DCF valuation derived from
2,720,000,000 Based
expected net profit as a basis
2,750,000,000
on expected income and reference to179,379,000 Basedsimilar assets
179,379,000–18,421,722– Borne by tenant– Borne by tenant
on the average of past 12 years of
3,016,167 Basedengineering reports
1,200,000 Based on the contractual amount–on FY2023 actual amounts
12,829,400 Based(including depreciable asset tax)
479,260 Based on the actual amountsof rental income (accounted for as a
896,895 0.5%
variable expense)
160,957,278
on 1.0% investment yield for
159,000 Baseddeposits
on average renewal expense of the23,372,083 Basedpast 12 years in engineering reports–
137,744,195
Based on transactions of similar assets
5.0% located in nearby areas and similar
locations
2,720,000,000

Discount Rate

Based on transactions of similar assets and4.8% the yields of financial assets with the asset’s
individual characteristics taken into account

Terminal Cap Rate

5.2% Cap rate adjusted for uncertainties

4Value via Cost Approach
Land

Amount (JPY)
1,910,000,000
90.5%

Notes

Sum of building and Furniture, Fixtures, &9.5% Equipment (FF&E) values divided by sumof building, FF&E, and land values
Notes

Building

None
4. Buyer Profile
Name
Address
Representative
CapitalEstablishment Date
Principal Business
Net Assets
Total Assets
Major Shareholder
and Shareholding
Ratio

Ichigo Estate
2-6-1 Marunouchi, Chiyoda-ku, Tokyo
Yasuhide Hosono, Representative Director & President
JPY 500 million
November 10, 2005
Sustainable real estate, preserving and improving existing realestate
JPY 27,789 million (as of February 28, 2024)
JPY 130,195 million (as of February 28, 2024)
Ichigo 100%

Relationship to Ichigo Hotel and IIA
Personnel
Relationship

Ichigo Estate does not have any personnel relationships withIchigo Hotel or IIA. However, IIA and Ichigo Estate employees
are seconded from their parent company, Ichigo.

Ichigo Hotel acquired the HOTEL THE KNOT YOKOHAMA,
Transactional Quintessa Hotel Ise Shima, and Quintessa Hotel Ogaki, and THE
Relationship KNOT SAPPORO from Ichigo Estate on August 25, 2023.
RelatedParty
Treatment

Ichigo Estate is a wholly-owned subsidiary of Ichigo, IIA’s parentcompany, and is a related party as defined in the Enforcement
Ordinance of the Investment Trust and Investment Corporation
Law and IIA’s internal rules.

Note: Because Ichigo Estate is a related party as defined in the Investment Trust andInvestment Corporation Law, Ichigo Hotel fully implemented its related party
transaction procedures and received approval from its Board of Directors, and has
obtained third-party appraisals on the acquired hotels and has cross-checked the thirdparty appraisals with additional third-party second opinion appraisals.

55. Forward Commitment
Because the Transaction Date is December 25, 2024, the sale of Nest Hotel Sapporo
Ekimae (the “Sale”) constitutes a “forward commitment” by Ichigo Hotel as stipulated
in the “Comprehensive Guidelines for Supervision of Financial Instruments Business
Operators” by the Financial Services Agency. 1
In the event of a violation of the provisions of the Sale by Ichigo Hotel or the buyer, theother party shall have the right to terminate the Sale and claim an amount equivalent to
10% of the purchase price as penalty.
As Ichigo Hotel is the seller, it is highly unlikely that Ichigo Hotel will not be able tofulfill its obligations under the Sale.
1

Forward commitment refers to a post-dated purchase and sales agreement under which
payment and property delivery shall be made at least one month after the conclusion ofthe agreement, or any other agreement similar thereto.

6. Broker Profile
N/A
7. Settlement Method
Lump-sum payment on contract date
8. Use of Sale Proceeds
Ichigo Hotel will distribute the gains on sale of JPY 2.1 billion to shareholders asJanuary 2025 dividend, and use the remainder as cash-on-hand for future use, including
asset acquisitions and value-add capex, to maximize shareholder value.
9. Earnings Impact
The impact of the sale on the January 2025 fiscal period is detailed in today’s
announcement “Upward Earnings Forecast Revision for the January 2025 FiscalPeriod.”

6Appendix: Post-Sale Portfolio
Hotel
No.1
A-2 008
A-3 018
A-4 033
B-1 020B-2 027B-3 028
B-4 030
C-1 012
C-3 016
C-4 025
D-1 006
D-2 003
D-3 011
D-4 019
D-5 031
D-6 032
E-1 001E-3 005
E-4 007
E-5 010E-6 029
F-1 017
F-2 015
F-3 021F-4 022
F-5 024
F-6 026
G-1 009
G-3 023

Hotel Name

Prefecture

Hokkaido
Nest Hotel Sapporo Odori
Hokkaido
Comfort Hotel Kushiro
Hokkaido
THE KNOT SAPPORO
Kanagawa
Capsule Plus YokohamaNagano
Smile Hotel Nagano
Tochigi
Hotel Sunshine Utsunomiya
HOTEL THE KNOT
Kanagawa
YOKOHAMATokyo
Smile Hotel Tokyo Asagaya
Hotel Livemax NihombashiTokyo
HakozakiTokyo
The OneFive Tokyo Shibuya
Shizuoka
Comfort Hotel Hamamatsu
Hotel Wing International
Aichi
NagoyaComfort Hotel Central
Aichi
International Airport
Mie
Comfort Hotel Suzuka
Mie
Quintessa Hotel Ise Shima
Gifu
Quintessa Hotel Ogaki
Kyoto
Smile Hotel Kyoto Shijo
The OneFive Osaka Sakaisuji
Osaka
Hotel Wing International
Hyogo
Kobe Shin Nagata Ekimae
Nest Hotel Osaka
Osaka
Shinsaibashi
Comfort Hotel Osaka
Shinsaibashi (IchigoOsakaShinsaibashi Building)
Okayama
The OneFive Okayama
Ehime
Nest Hotel Matsuyama
Urbain Hiroshima ExecutiveHiroshima
The OneFive Garden
OkayamaKurashiki
Hiroshima
Valie Hotel Hiroshima
Washington Hotel Plaza
Yamaguchi
Shimonoseki Eki Nishi
The OneFive Fukuoka Tenjin
Fukuoka
Kumamoto
Nest Hotel Kumamoto
Total 29 Hotels

7

Fixed Rent
Variable Rent
Variable Rent
Variable Rent
Fixed Rent

Acquisition
Price2(JPY million)
1,450
300
4,900
1,490
670
2,200

Variable Rent

4,800

7.1

Variable Rent

3,910

5.8

Fixed Rent

1,360

2.0

Variable Rent
Fixed Rent

3,700
1,550

5.5
2.3

Variable Rent

2,670

3.9

Fixed Rent

5,308

7.8

Fixed Rent
Variable Rent
Variable Rent
Variable Rent
Variable Rent

300
610
1,070
4,480
1,630

0.4
0.9
1.6
6.6
2.4

Variable Rent

1,490

2.2

Variable Rent

7,600

11.2

Variable Rent

3,700

5.5

Variable Rent
Variable Rent
Fixed Rent

1,200
1,610
1,800

1.8
2.4
2.7

Variable Rent

1,725

2.5

Variable Rent

1,500

2.2

Fixed Rent

1,080

1.6

Variable Rent
Variable Rent

1,380
2,220
67,7032.03.3100LeaseTerms
Variable Rent

% ofPortfolio3
2.1
0.4
7.2
2.2
1.0
3.2

1

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

CodeARegion
Hokkaido/Tohoku

B

Kanto

CDEF

Tokyo
Hokuriku/Tokai
Kinki
Chugoku/Shikoku

G

Kyushu/Okinawa

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

2Acquisition Price is the price as indicated in the purchase and sales agreement for the hotel(excluding fees and incidental expenses such as property, city planning, and consumption taxes). The
assets to be acquired may include personal property.
3% of Portfolio is the Acquisition Price of each hotel as a percentage of the Total Acquisition Pricefor the portfolio, rounded to the nearest tenth.

8