Creating peace of mind through honest and committed management.

March 16, 2016
REIT Issuer
Ichigo Hotel REIT Investment Corporation (3463)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Osamu Miyashita, Executive Director
www.ichigo-hotel.co.jp/english
Asset Management Company
Ichigo Real Estate Investment Advisors Co., Ltd.
Representative: Wataru Orii, President & Representative Statutory Executive Officer
Inquiries: Hiroto Tajitsu, Head of Administration & Statutory Executive Officer
Tel: +81-3-3502-4892

Earnings and Dividend Forecast Revisions
for the July 2016 and January 2017 Fiscal Periods
Ichigo Hotel REIT is hereby revising its earnings and dividend forecasts for the July 2016 andJanuary 2017 fiscal periods as announced in the November 30, 2015 release “Earnings andDividend Forecasts for the January 2016, July 2016, and January 2017 Fiscal Periods.”
I. Earnings and Dividend Forecast for July 2016

Previous
Forecast (A)Revised Forecast(B)
Change(C) = (B) - (A)% Change(D) = (C)/(A)(Reference)(Note 1)

(Note 2)
(Note 3)

Dividendper Share(yen)

Dividend in
Excess ofEarnings
per Share
(yen)

323

2,336

0

341

340

2,455

0

11

16

16

119

0

2.6%

4.9%

4.9%

5.0%

0

Operating
Revenue(millionyen)

Operating
Profit(millionyen)

Recurring
Profit(million
yen)

701

411

324

730

423

28
3.9%

Net
Income(millionyen)

Forecast number of shares outstanding at the end of July 2016 fiscal
period: 138,500 shares
The forecast presented above for the July 2016 period is based on certain
preconditions set out below in “Preconditions for the July 2016 Earnings
Forecasts.” The preconditions are subject to change due to such factors as tenant
turnover, asset acquisitions and dispositions, unexpected maintenance and repair
costs and other expenses, changes in interest rates, and the issuance of additional
shares. The actual operating revenue, operating profit, recurring profit, net
income, and dividend per share (excluding the dividend in excess of earnings per
share) may vary due to changes in circumstances. These forecasts should not be
construed as a guarantee of such performance or results.
Ichigo Hotel REIT will make a forecast revision should there be a substantial
discrepancy between the forecast and actual operating results.
Fractions are rounded down to the nearest full unit.

1II. Reasons for the July 2016 Earnings and Dividend Forecast Revisions
Ichigo Hotel REIT has revised its earnings and dividend forecast to reflect its operating results in
the January 2016 fiscal period and in February 2016, current market conditions, and informationfrom the hotel operators. The major revisions are as follows:(1)

Higher Variable Rents
At the seven hotels with variable rents, rental income has increased. Thus, operating
revenue is forecast to increase by 17 million yen relative to the previous forecast.

(2)

Increased Operating Expenses
Depreciation expenses are forecast to increase by 6 million yen.

(3)

Decreased Non-Operating Expenses
Non-operating expenses are forecast to decrease by 5 million yen due to lower interest
expenses.

(4)

Change in Accounting Presentation of Retail Tenant-Related Rents and Rental Expenses(Full Offset between Rents and Expenses, so No Impact on Operating Profit)
The November 30, 2015 release “Earnings and Dividend Forecasts for the January 2016,
July 2016, and January 2017 Fiscal Periods” showed retail tenants’ utilities expenses on apass-through basis. Going forward, forecasts will show both the revenue received and theexpenses paid for this item, which will exactly offset each other. For this period, bothrevenue and expenses are now forecast to increase 11 million yen. This change inpresentation has no impact on operating profit.

III. Earnings and Dividend Forecast for the January 2017 Fiscal Period

Previous
Forecast (A)Revised Forecast(B)
Change(C) = (B) – (A)% Change(D) = (C)/(A)(Reference)(Note 1)Dividendper Share(yen)

Dividend in
Excess ofEarnings
per Share
(yen)

308

2,230

0

361

360

2,606

0

46

52

52

376

0

11.5%

16.8%

16.8%

16.8%

0

Operating
Revenue(millionyen)

Operating
Profit(millionyen)

Recurring
Profit(million
yen)

687

397

309

755

444

68
9.8%

Net
Income(millionyen)

Forecast number of shares outstanding at the end of January 2017 fiscal
period: 138,500 shares
The forecast presented above for the January 2017 period is based on certain
preconditions set out below in “Preconditions for the January 2017 Earnings
Forecast.” The preconditions are subject to change due to such factors as tenant
turnover, asset acquisitions and dispositions, unexpected maintenance and repair
costs and other expenses, changes in interest rates, and the issuance of additional
shares. The actual operating revenue, operating profit, recurring profit, net
income, and dividend per share (excluding the dividend in excess of earnings per
share) may vary due to changes in circumstances. These forecasts should not be
construed as a guarantee of such performance or results.

2

(Note 2)(Note 3)

Ichigo Hotel REIT will make a forecast revision should there be a substantial
discrepancy between the forecast and actual operating results.
Fractions are rounded down to the nearest full unit.

IV. Reasons for the January 2017 Earnings and Dividend Forecast Revisions
Ichigo Hotel REIT has revised its earnings and dividend forecast to reflect its operating results in
the January 2016 fiscal period and in February 2016, current market conditions, and informationfrom the hotel operators. The major revisions are as follows:(1)

Higher Variable Rents
At seven hotels with variable rents, rental income has increased. Thus, operating revenue
is forecast to increase by 56 million yen relative to the previous forecast.

(2)

Increased Operating Expenses
Depreciation expenses are forecast to increase by 5 million yen.

(3)

Decreased Non-Operating Expenses
Non-operating expenses are forecast to decrease by 5 million yen due to lower interest
expenses.

(4)

Change in Accounting Presentation of Retail Tenant-Related Rents and Rental Expenses(Full Offset between Rents and Expenses, so No Impact on Operating Profit)
The November 30, 2015 release “Earnings and Dividend Forecasts for the January 2016,
July 2016, and January 2017 Fiscal Periods” showed retail tenants’ utilities expenses on apass-through basis. Going forward, forecasts will show both the revenue received and theexpenses paid for this item, which will exactly offset each other. For this period, bothrevenue and expenses are now forecast to increase 11 million yen. This change inpresentation has no impact on operating profit.

3

Preconditions for July 2016 Fiscal Period Earnings Forecast
Item

Preconditions

Period February 1, 2016 – July 31, 2016 (182 days)

Portfolio Assets

 9 assets in total. The forecast assumes there will be no additional acquisitions orsales before the end of July 2016.
 However, the number of assets may change due to acquisitions or sales.
Rental revenue is calculated based on current lease contracts taking into
consideration such factors as tenant trends and market conditions.
Assumed Operating Performance
July 2016
Occupancy1

91.2%

ADR2

8,611 yen1

Occupancy is calculated from the following formula:
Occupancy = Total number of guest rooms occupied during the period / (total
number of guest rooms x number of days hotel was in operation during the period)2

ADR or Average Daily Rate is calculated from the following formula:
ADR = Total sales from accommodation (excluding restaurant charges and otherservice fees) / number of guest rooms occupied during the period
Details of July 2016 Rental Revenue(million yen)

Operating
Revenue

Fixed Rent/
Minimum
Variable Rent
Guaranteed
Rent

Asset Name

Total

Smile Hotel Kyoto Shijo

30

128

158

Hotel Vista Premio Kyoto

75

—

75

Nest Hotel Sapporo Ekimae

31

58

89

Chisun Inn Osaka Hommachi

36

22

58

Comfort Hotel Hamamatsu

55

—

55

Nest Hotel Sapporo Odori

23

50

74

Valie Hotel Tenjin

21

31

53

Other (Hotel Wing International
Nagoya and Hotel Suave Kobe Asuta)

114

17

131

Total

387

308

695

(Note) The data for Hotel Wing International Nagoya and Hotel Suave Kobe Asuta
are totaled under “Other,” because the hotel operators did not give consent todisclose hotel-specific data.
Other rental revenue: 34 million yen (total rent from retail tenants at Hotel Vista
Premio Kyoto and Chisun Inn Osaka Hommachi)

4Operating
Expenses Rental expenses, Ichigo Hotel REIT’s principal operating expense, are calculated
based on historical data adjusted for anticipated expense variations. (Depreciation
expenses are treated separately.) Depreciation has been calculated using the straight-line method. Depreciation of
101 million yen is anticipated for the July 2016 fiscal period.
 Property taxes and city planning taxes are anticipated to total 48 million yen for the
July 2016 fiscal period.
 Building maintenance and repair expenses are based on what Ichigo Real Estate
Investment Advisors Co., Ltd., the asset management company of Ichigo Hotel
REIT, estimates will be necessary for each asset during the period. However, actual
expenses for the period could differ significantly from these forecast amounts forreasons including the variability of maintenance and repair expenses, one-timecosts due to unexpected building damage, etc.

Non-Operating
Expenses Interest expenses and borrowing-related expenses of 65 million yen are anticipated
for the July 2016 fiscal period.
 Depreciation of expenses related to the establishment of the REIT and shareissuance is anticipated to total 16 million yen for the July 2016 period.

Borrowings

 Ichigo Hotel REIT’s balance of loans payable stands at 8,500 million yen as ofMarch 16, 2016.

Number of
SharesOutstanding Number of shares outstanding as of today is 138,500. The forecast assumes there
will be no change in the number of shares as a result of new share issuance before
the end of July 2016.

Dividend per
Share The dividend forecasts assume that distributions will comply with the dividend
distribution policy stipulated in Ichigo Hotel REIT’s Articles of Incorporation.
 The dividend per share is subject to change due to factors such as sales of portfolio
assets, changes in rental revenue associated with tenant turnover, the occurrence of
unexpected maintenance and repair costs, and fluctuations in interest rates.

Dividend in
Excess ofEarnings per
Share Ichigo Hotel REIT does not plan on making any dividend distribution in excess ofearnings per share or retained earnings.

Other Performance forecasts are based on the assumption that no material revisions will
be made to laws and ordinances, the tax system, accounting standards, listing rulesof the Tokyo Stock Exchange, and rules of the Investment Trusts Association,
Japan, etc.
 Performance forecasts are also based on the assumption that there will be no
unexpected material change in general economic trends and real estate market
conditions, etc.

5Preconditions for January 2017 Fiscal Period Earnings Forecast
Item

Preconditions

Period August 1, 2016 – January 31, 2017 (184 days)

Portfolio Assets

 9 assets in total. The forecast assumes there will be no additional acquisitions orsales before the end of January 2017.
 However, the number of assets may change due to acquisitions or sales.
Rental revenue is calculated based on current lease contracts taking into
consideration such factors as tenant trends and market conditions.
Assumed Operating Performance
January 2017
Occupancy1

90.5%

ADR2

8,841yen1

Occupancy is calculated using the following formula:
Occupancy = Total number of guest rooms occupied during the period / (total
number of guest rooms x number of days hotel was in operation during the period)2
ADR or Average Daily Rate is calculated using the following formula:
ADR = Total sales from accommodation (excluding restaurant charges and otherservice fees) / number of guest rooms occupied during the period
Details of January 2017 Rental Revenue(million yen)
Operating
Revenue

Fixed Rent/
Minimum
Variable Rent
Guaranteed
Rent

Asset Name

Total

Smile Hotel Kyoto Shijo

34

151

186

Hotel Vista Premio Kyoto

75

14

89

Nest Hotel Sapporo Ekimae

32

53

86

Chisun Inn Osaka Hommachi

36

—

36

Comfort Hotel Hamamatsu

55

—

55

Nest Hotel Sapporo Odori

23

49

72

Valie Hotel Tenjin

24

36

61

Other (Hotel Wing International
Nagoya and Hotel Suave Kobe Asuta)

114

19

133

Total

395

325

721

(Note) The data for Hotel Wing International Nagoya and Hotel Suave Kobe Asuta
are totaled under “Other,” because the hotel operators did not give consent todisclose hotel-specific data.
Other rental revenue: 34 million yen (total rent from retail tenants at Hotel Vista
Premio Kyoto and Chisun Inn Osaka Hommachi)

6Operating
Expenses Rental expenses, Ichigo Hotel REIT’s principal operating expense, are calculated
based on historical data adjusted for anticipated expense variations. (Depreciation
expenses are treated separately.) Depreciation has been calculated using the straight-line method. Depreciation of
104 million yen is anticipated for the January 2017 fiscal period.
 Property taxes and city planning taxes are anticipated to total 48 million yen for theJanuary 2017 fiscal period.
 Building maintenance and repair expenses are based on what Ichigo Real Estate
Investment Advisors Co., Ltd., the asset management company of Ichigo Hotel
REIT, estimates will be necessary for each asset during the period. However, actual
expenses for the period could differ significantly from these forecast amounts forreasons including the variability of maintenance and repair expenses, one-timecosts due to unexpected building damage, etc.

Non-Operating
Expenses Interest expenses and borrowing-related expenses of 65 million yen are anticipated
for the January 2017 fiscal period.
 Depreciation of expenses related to the establishment of the REIT and shareissuance is anticipated to total 16 million yen for the January 2017 fiscal period.

Borrowings

 Ichigo Hotel REIT’s balance of loans payable stands at 8,500 million yen as ofMarch 16, 2016.

Number of
SharesOutstanding Number of shares outstanding as of today is 138,500. The forecast assumes there
will be no change in the number of shares as a result of new share issuance before
the end of January 2017.

Dividend per
Share The dividend forecasts assume that distributions will comply with the dividend
distribution policy stipulated in Ichigo Hotel REIT’s Articles of Incorporation.
 The dividend per share is subject to change due to factors such as sales of portfolio
assets, changes in rental revenue associated with tenant turnover, the occurrence of
unexpected maintenance and repair costs, and fluctuations in interest rates.

Dividend in
Excess ofEarnings per
Share Ichigo Hotel REIT does not plan on making any dividend distribution in excess ofearnings per share or retained earnings.

Other Performance forecasts are based on the assumption that no material revisions will
be made to laws and ordinances, the tax system, accounting standards, listing rulesof the Tokyo Stock Exchange, and rules of the Investment Trusts Association,
Japan, etc.
 Performance forecasts are also based on the assumption that there will be no
unexpected material change in general economic trends and real estate market
conditions, etc.

The forecasts presented above are current figures based on certain preconditions. Accordingly, theactual operating revenue, operating income, recurring profit, net income, and dividend per share mayvary due to changes in circumstances.

7