Ichigo Hotel (3463)

Ichigo Hotel January 2019 Fiscal Period
Corporate Presentation
March 14, 2019

Ichigo Hotel REIT Investment Corporation (3463)
Ichigo Investment Advisors Co., Ltd.

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

www.ichigo-hotel.co.jp/english

Ichigo Preserves andImproves Real Estate© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

January 2019 Results
 January 2019 Highlights
 January 2019 Earnings Breakdown Accretive Asset Sale & Acquisition
 Steady Operating Results Despite Natural
Disasters
 Geographic Diversification Supports
Earnings Stability
 Actions to Grow Earnings
 Value-Add Capex: Nest Hotel Naha Value-Add Capex: Hotel Wing
International Nagoya

Ongoing Earnings Growth Growth Driver: Value-Add Capex
 Growth Driver: Hotel Operator Replacement Growth Driver: Strong Inbound Demand Strong Growth Track Record
 Ongoing Potential to Drive Increased
Shareholder Value Portfolio Growth Opportunity via Ichigo
Sponsor Support

July 2019 and January 2020 Forecasts
 July 2019 Forecast January 2020 Forecast

Appendices Hotel Market Environment Portfolio Details
 Loan Details & Shareholder Composition Growth Roadmap, Sponsor, Governance,
Sustainability, Shareholder Alignment© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

4

January 2019 Results© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

5

January 2019 Highlights
Achievements

Drivers

Net Income

JPY 1,398M+JPY 557M (+66.2%) YOY• Gains on sale of Asakusa asset: JPY 694M
• Limited impact from natural disasters due togeographically diversified portfolio

Asset
Acquisition

Court Hotel Kurashiki• Asset acquisition via Ichigo sponsor support

Asset Sale

Smile Hotel Asakusa

RevPAR(Acquisition Price: JPY 1.73B)(Sale Price: JPY 2.7B)

JPY 8,137 (12 variable rent hotels)-JPY 127 (-1.5%) YOY• Sale price: 1.4X book value, 1.3X appraisal value• RevPAR slightly down due to natural disasters anddownward price pressure from new hotel supply

NOI

JPY 1.57B-JPY 45M (-2.8%) YOY• NOI gain on asset sale & acquisition offset by decline
due to new supply in the Kinki area and natural disasters

FFO

JPY 4,055• FFO down on lower NOI

Dividend

JPY 5,487

NAV

JPY 145,726-JPY 531 (-11.6%) YOY+JPY 2,185 (+66.2%) YOY-JPY 591 (-0.4%) vs. previous period• Gains on sale fully paid out to shareholders as dividend• +JPY 58 (+1.1%) vs. forecast• NAV down versus previous period on dropping out of
Asakusa asset that generated JPY 694M gains on sale
• NAV +JPY 2,681 (+1.9%) YOY

FFO (Funds from Operations) = (Net Income + Depreciation + Amortization of Expenses Related to REIT Establishment + Amortization of Share Issuance Expenses+ Loss on Disposal of Fixed Assets + Liability for Asset Retirement Obligation +/- Losses/Gains on Sales +/- Extraordinary Losses/Gains) / Number of Shares Outstanding
NAV = BPS + Unrealized Capital Gains per Share© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

6

January 2019 Earnings Breakdown(JPY million)
Jan 2018
ActualJan 2019
Actual (A)Forecast (B)(Sep 2018)

vs. Forecast(A) - (B)

Major Variation Factors (vs. Forecast)

Operating Revenue

1,782

2,439

2,448

-8

Variable Rent

748

701

711

-9

Fixed Rent

974

984

984

–

Other

59

753

752

+1

747

866

874

-8

Repair & Maintenance

15

16

20

-3

Depreciation

302

308

312

-3

Operating Profit

1,034

1,573

1,574

–

Recurring Profit

842

1,399

1,385

+14

Net Income

841

1,398

1,384

+14

Dividend

JPY 3,302

JPY 5,487

JPY 5,429+JPY 58

FFO

JPY 4,586

JPY 4,055

JPY 4,030+JPY 25

NOI

1,620

1,574

1,583

-8

Post-Depreciation NOI

1,318

1,266

1,270

-4

283

321

379

-57

51,512

51,299––Operating Expenses

Capex
Book Value© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Above forecast: 4 hotels
Below forecast: 7 hotels

Increase in bicycle parking space income

Effective cost control

Insurance income from natural disaster+1.1% vs. forecast+66.2% (+JPY 2,185) YOY

Effective cost control

7

Accretive Asset Sale & Acquisition
Smile Hotel Asakusa
Sale Price: JPY 2.70B (1.4X Book Value) Gains on sale exceeded NAV-based unrealized gains

Sale(1.3X appraisal value) Fully distributed gains on sale as dividend to shareholders(JPY 694M)

Court Hotel Kurashiki
Acquisition Price: JPY 1.73B (Appraisal Value: JPY 1.96B)
 Geographic diversification supports earnings stability

Acquisition

 NOI and growth potential are both higher than Smile Hotel Asakusa,

which will drive dividend growth

Sale &
Acquisition
ImpactGreater Geographic Diversification(Before)(After)Tokyo 14.1%
Tokyo 10.4%→
Chugoku/Shikoku 9.0% Chugoku/Shikoku 12.5%

NOI Growth
Smile Hotel Asakusa
Jan 2018 (6 months)→

Court Hotel Kurashiki
Jan 2019 (5 months)+JPY 17.6M (+40%)* Court Hotel Kurashiki’s NOI is based on a 5-month period starting August 31, 2018, its acquisition date. NOI growth +JPY 14M (+32%) factors in Court Hotel Kurashiki’s 5-monthproperty tax.

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

8

Steady Operating Results Despite Natural Disasters
Variable Rent Hotels (12 Hotels)
Aug 1, 2017
- Jan 31, 2018

Aug 1, 2018
- Jan 31, 2019

Difference

YOY

Room Revenue (JPY M)

2,797

2,764

-32

-1.2%

Revenue (JPY M)

3,241

3,207

-33

-1.0%

RevPAR (JPY)

8,264

8,137

-127

-1.5%

Occupancy

92.0%

91.2%

-0.8%

-0.9%

ADR (JPY)

8,980

8,919

-62

-0.7%

Total Portfolio (19 Hotels)
Aug 1, 2017
- Jan 31, 2018

Aug 1, 2018
- Jan 31, 2019

Difference

YOY

Room Revenue (JPY M)

4,117

4,136

+19

+0.5%

Revenue (JPY M)

4,634

4,620

-13

-0.3%

RevPAR (JPY)

7,361

7,380

+18

+0.2%

Occupancy

89.1%

89.0%

–

–

ADR (JPY)

8,266

8,290

+24

+0.3%

* Excludes Hotel Suave Kobe Asuta and Grandpark-Inn Yokohama. Operating results before acquisition are based on data provided by previous owner.

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

9

Geographic Diversification Supports Earnings Stability
Negative Results in Kyoto and Osaka Offset by Other Regions
YOY by Region (Aug 2018 – Jan 2019)
RevPAR

Total Portfolio

Occupancy

Hokkaido+11%

18 Hotels (excludes Grandpark-Inn Yokohama, Hotel Suave
Kobe Asuta, and Hotel Livemax Nihombashi-Hakozaki)

ADR

Tokyo

Tokai/
Chubu

Kyoto

Osaka

Chugoku/
Shikoku

KyushuOkinawa

+12%
+5%

+9%

+14%

+4%
+7%

+4%
0%

+1%

-1%
+2%

0% 0%

-1%

+5%

+1% +5%

+4%
0%

-4%

-3%

-8%
-13%
-4%

-12%

-11%
(JPY)

RevPAR

8,539

9,131

6,339

9,288

7,499

6,300

9,532

9,257

No. Hotels

3

1

4

2

2

4

1

1

% of Total Portfolio
Rental Income

14%

8%

18%

11%

14%

16%

4%

9%

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

10

Actions to Grow Earnings––

Following Actions Forecast to Increase NOI by JPY 23.8M p.a.
Revenue Drivers:
 Value-Add Capex: NOI +JPY 18.2M p.a.
Capex
TimingHotel

Capex Details

Capex
AmountNOI Increase

ROI

Sept 2018

Hotel Wing International Nagoya

Convert storage space to guest
rooms (4 additional rooms)

JPY 14.3M +JPY 2.8M p.a.

Sept 2018

Nest Hotel Sapporo Odori

Increase restaurant capacity

JPY 0.8M––

Jan 2019

Nest Hotel Naha

Renovate and split guest rooms

JPY 50.0M +JPY 9.9M p.a.

19.8%

Jan 2019

Court Hotel Kurashiki

Convert double rooms into twin-bed
JPY 29.9M +JPY 5.5M p.a.
rooms

18.5%

19.8%

 Pro-active monetization of common areas: NOI +JPY 4.6M p.a.
— Increased bicycle parking & fee income (Smile Hotel Tokyo Asagaya)–

Cost Reductions: NOI +JPY 1.0M p.a.
 Revised electricity utility contracts & reduced water consumption(Court Hotel Kurashiki, Nest Hotel Matsuyama)© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

11

Value-Add Capex: Nest Hotel Naha
Increased guest room capacity to cater to needs of guests traveling withfamily or friends−−−−

Increased guest capacity in 6 double rooms (capacity increased by 6 guests)
Split 2 suites into 4 double rooms (capacity increased by 8 guests)
Expected outcome: +JPY 9.9M p.a. rental income
Forecast ROI 19.8% (Total renovation cost JPY 50M)
BeforeAfter Placed bunk beds in double rooms to increase guest
capacity to 4 (previously 3)
 Split suites to create more guest rooms Rearranged furniture for a more spacious andoptimized layout

Double (29m2)

Split

Suite (58m2)© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

12

Value-Add Capex: Hotel Wing International Nagoya
Converted non-revenue generating storage spaces into 4 single rooms− Outcome: +JPY 2.8M p.a. rental income− Forecast ROI 19.8% (Total capex JPY 14.3M, joint investment with operator)
BeforeConverted 2 storage spaces into guest rooms

After
4 single rooms primarily used by businesstravelers

StorageLinen
Storage© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

13

Ongoing Earnings Growth© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

14

Growth Driver: Value-Add Capex− Adding 8 new guest rooms in July 2019 period− Continuing high-ROI value-add capex to meet changes in demand trends
From IPO(Nov 30, 2015) toJanuary 2019

July 2019 (Forecast)
Court Hotel
Kurashiki

Nest Hotel Naha

Cumulative

Capex
Details

Renovate andcreate new guest
rooms

Add 6 new guest
rooms

Add 2 new guest
rooms

–

Capex
AmountJPY 423M

JPY 62M

JPY 22M

JPY 507M

NOI Increase+JPY 103.9M p.a.

+JPY 10.6M p.a.

+JPY 3.7M p.a.

+JPY 118.2M p.a.

ROI

24.6%

17.2%

17.0%

23.3%

Note: NOI Increase includes forecast rent increase© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

15

Growth Driver: Hotel Operator Replacement
Replacing Operator of Hotel Suave Kobe Asuta− New lease will both increase fixed rent & add variable rent
− Changing hotel name to Hotel Wing International Kobe Shin Nagata Ekimae(June 2019)− Higher demand from June with completion of nearby government building− Adding new restaurant & mini onsen (hot spring) to drive NOI & additional traffic
Before Operator Change
Tenant: Hotel Operator

After Operator Change
Tenants：Hotel Operator, Restaurant
Image

1F
to
9F

Hotel Suave Kobe Asuta

2F
to
9F

Hotel Wing International
Kobe Shin Nagata Ekimae

Source: Kobe City Housing and Urban Planning
Department

1F

Restaurant
Tenant© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Mini
Onsen

Re-opened in collaboration
with the City of Kobe on
behalf of local community
16

Growth Driver: Strong Inbound Demand− New hotel supply forecast to peak in 2019
− Domestic demand firm while inbound demand continues to grow
Growth in New Hotel Supply By Major City vs. 2017

Total Number of Tourists in Domestic Lodging Facilities(million persons)

20.0%

600

東京都
Tokyo

大阪市
Osaka

札幌市
Sapporo名古屋市
Nagoya

京都市
Kyoto

福岡市
Fukuoka

InboundDomestic

那覇市
Naha

69

80

89

438

423

430

420

2015

2016

2017

2018

429

2014

33

45

413

432

2012

2013

26

400

509

492

66

474

439

510

504
466

500

349
26

300

15.0%

200
323
100

0
2011

10.0%

* Calculated by Ichigo Investment Advisors based on Japan Tourism Agency (JTA) “Statistical Survey of Travelers”

Number of Inbound Tourists(million persons)60

60■ Government Target

5.0%
40
40

+402%

31
28
24

20
20

0.0%

13

2018

2019

2020

2021

2022
6

* Calculated by Ichigo Investment Advisors based on Ministry of Health, Labor, and Welfare’s “Report on
Public Health Administration and Services” and hotel and restaurant data published December 7, 2018. Does
not include new hotels whose opening dates are not confirmed.

8

10

0
2011

2012

2013

2014

2015

2016

2017

2018

2020

2030

* Calculated by Ichigo Investment Advisors based on Japan National Tourism Organization (JNTO)’s“Visitor Trends” and Prime Minister’s Office of Japan’s published documents© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

17

Strong Growth Track Record
(JPY)

(JPY)

160,000

6,000
5,487

NAV per Share (left axis)
150,000

Gains on Sale from Smile Hotel Asakusa Sale2

DPS (right axis)

146,317
143,045

5,000
145,726

3,096

139,940

140,000

4,000

137,197
3,137

3,302

3,101

3,352

2,825

130,000

3,000

120,000

2,000
1,375

110,0001

113,393

1,000

107,462

100,000(No. of Hotels)(Portfolio Size)

Events0
January 2016
9 Hotels
20.4B

July 2016
9 Hotels
20.4B

January 201719 Hotels
47.6B

July 201720 Hotels
49.1B

January 2018
21 Hotels
50.9B

July 2018
21 Hotels
50.9B

January 201921 Hotels
50.7B

IPO

PublicOffering

1 HotelAcquisition(New Loan)

1 HotelAcquisition(New Loan)

Acquisition
and Sale

9 HotelAcquisitions

10 HotelAcquisitions

Share
Buyback andCancellation

Full Distributionof Gains on Sale
as Dividend

New AM Fee
Structure
Refinance
1 Annualized January 2016 DPS (JPY 471)
2 Unrealized gains of Smile Hotel Asakusa (sold in August 2018) = (Sales price – book value at sale) / number of shares outstanding© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

18

Ongoing Potential to Drive Increased Shareholder Value
Dividend Growth and Highly Secure Earnings Base Support Further
Growth in Shareholder Value
Dividend Growth
Organic
Growth• Pro-actively execute value-add capex• Dispose of hotels with limited growthpotential• Recycle capital– Deploy proceeds from sales into higherreturn acquisitions• Use low-cost borrowing capacity
AcquisitionLed
GrowthHighly Secure Earnings Base– Increase capital efficiency (substitute lowcost debt for high-cost shareholder equity)– Manage interest rate risk (extend loan
maturities and fix interest rates)• Geographic diversification and centrally-locatedhotels with stable demand support high earnings
stability• High underlying land values reflect high location
attractiveness and value• Focus on major regional cities with convenientpublic transportation access and revenue upsidefrom local events further reinforces earnings
stability• Grow with sponsor support– Acquire assets without having toparticipate in competitive auctions

Drive Increased Shareholder Value© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

19

Portfolio Growth Opportunity via Ichigo Sponsor Support
16 Hotels (JPY 43.9B) in Sponsor Pipeline as of January 31, 2019
− Locations: Major cities such as Tokyo, Yokohama, Osaka, Fukuoka, andKumamoto− New hotels also in-development
Completed

New Hotel
Fukuoka
Opened: April 2018

Yokohama

Kumamoto© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Fukuoka

Shinjuku

Osaka

20

July 2019 and January 2020 Forecasts© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

21

July 2019 Forecast
Reflects expected negative impact from new hotel supply in Kyoto andOsaka and conservative forecast of variable-rent income(JPY million)
Jul 2019
Previous Forecast(Sep 2018)

Jul 2018
Actual (A)Jul 2019
Revised
Forecast (B)(B) - (A)

Major Factors for Variation

Operating Revenue

1,814

1,823

1,785

-28

Variable Rent

803

794

750

-53

Expected RevPAR at Variable Rent Hotels: JPY 8,374 (-2.0% YOY)

Fixed Rent

952

963

969

+16

Increase due to acquisition & sale: +15, Increase in rent from revised lease
contract (Sapporo Odori, Osaka Shinsaibashi, Naha, Matsuyama): +6
Decrease due to revised lease contract (Kobe): -5

Other

58

64

65

+7

Increase due to revised lease contract (Kobe): +6
Increase due to revised bicycle parking space contract (Asagaya): +2

771

811

796

+24

Increase in property tax due to acquisition:+3
Engineering report-related expense: +2

Repair & Maintenance

20

21

22

+1

Depreciation

310

323

317

+6

Operating Profit

1,042

1,011

989

-53

Recurring Profit

855

827

810

-45

Net Income

854

827

809

-45

Dividend

JPY 3,352

JPY 3,243

JPY 3,174-JPY 178

FFO

JPY 4,671

JPY 4,567

JPY 4,473-JPY 198

NOI

1,640

1,644

1,606

-34

Post-Depreciation NOI

1,329

1,320

1,288

-40

246

310

319

+72

Operating Expenses

Capex© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Increase in capex conducted in Jul 2018 through Jul 2019-2.1% (-JPY 69) vs. previous forecast-5.3% YOY

22

January 2020 Forecast
Lower forecast reflects drop off of January 2019 gains on sale (JPY 694M)(JPY million)
Jan 2019
Actual (A)Jan 2020
Forecast (B)Major Factors for Variation(B) - (A)Operating Revenue

2,439

1,773

-666

Variable Rent

701

713

+11

Expected RevPAR at Variable Rent Hotels: JPY 8,290 (+1.9% YOY)

Fixed Rent

984

991

+7

Increase due to asset acquisition & sale: +8, Increase due to revised lease
contract (Sapporo Odori, Osaka Shinsaibashi, Naha, Matsuyama): +5
Decrease due to revised lease contract (Kobe): -6

Other

753

68

-685

Increase due to revised lease contract (Kobe): +7, Increase due to revised
bicycle parking space contract (Asagaya): +1, Decrease in gains on sale: -694

866

793

-72

Increase in property tax due to acquisition: +3
Engineering report-related expense: +2, Decrease in AM fee: -78
Decrease in sale-related exemption of consumption tax: -19

Repair & Maintenance

16

23

+6

Depreciation

308

322

+13

Operating Profit

1,573

979

-593

Recurring Profit

1,399

803

-596

Net Income

1,398

802

-596

Dividend

JPY 5,487

JPY 3,147-JPY 2,340

FFO

JPY 4,055

JPY 4,432+JPY 377

NOI

1,574

1,592

+17

Post-Depreciation NOI

1,266

1,270

+4

321

317

-3

Operating Expenses

Capex

Increase in capex conducted in Jan 2019 through Jan 2020

-42.6% YOY© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

23

Appendix: Hotel Market Environment© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

24

Business Hotel Demand Strong and Growing
Business hotels benefit from both robust domestic demand and growing
inbound demand− 183M domestic business hotel guests in 2018, +1% YOY− 33M inbound business hotel guests in 2018, +16% YOY
No. of Guests by Hotel Type (Domestic)

No. of Guests by Hotel Type (Inbound)(million persons)(million persons)

200

40

2018 Business Hotel
Market Share 38%

2018 Business Hotel
Market Share 44%
150

30

100

20

50

10

0

0

2011

2012

2013

2014

2015

Business Hotels

Japanese Inns

Full-Service Hotels

Budget Hotels

2016

2017

Resort Hotels

2018

2011

2012

2013

2014

2015

Business Hotels

Japanese Inns

Full-Service Hotels

Budget Hotels

2016

2017

2018

Resort Hotels* Calculated by Ichigo Investment Advisors based on Japan Tourism Agency (JTA) “Statistical Survey of Travelers”© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

25

Minpaku* (Airbnb, etc.) Serves <1% of Tourists Nationwide
No. of Guests at Minpaku Rentals by Prefecture
Japan

Tokyo

Hokkaido

600,000

3.0%

150,000% of Total Number ofTourists

3.0%

Aichi

300,000% of Total Number ofTourists

3.0%

30,000% of Total Number ofTourists

3.0%% of Total Number ofTourists

400,000

2.0%

100,000

2.0%

200,000

2.0%

20,0002.0%

200,000

1.0%

50,0001.0%

100,000

1.0%

10,000

1.0%

0.0%

0

0.0%

0

0.0%

0

0
Jun-Jul
2018

Aug-Sept
2018

Oct-Nov
2018

Jun-Jul
2018

Aug-Sept
2018

Jun-Jul2018

Oct-Nov
2018

Aug-Sept
2018

3.0%

75,000% of Total Number ofTourists

0.0%
Jun-Jul
2018

Ehime

Osaka

Kyoto
30,000Oct-Nov
2018

3.0%

Oct-Nov
2018

Okayama

600% of Total Number ofTourists

Aug-Sept
2018

0.3%

900

% of Total Number ofTourists

3.0%% of Total Number ofTourists

20,0002.0%

50,000

2.0%

400

0.2%

600

2.0%

10,0001.0%

25,000

1.0%

200

0.1%

300

1.0%

0.0%

0

0.0%

0

0.0%

0

0
Jun-Jul
2018

Aug-Sept
2018

Oct-Nov
2018

Jun-Jul
2018

Aug-Sept
2018

Jun-Jul2018

Oct-Nov
2018

Fukuoka

Aug-Sept
2018

Oct-Nov
2018

3.0%

30,000% of Total Number ofTourists

Oct-Nov
2018

3.0%* Private residences available for short-term rent
as approved under the new Minpaku (Private
Lodging) Law* Calculated by Ichigo Investment Advisors basedon Japan Tourism Agency (JTA)’s “Private
Lodging Business Results”% of Total Number ofTourists

20,0002.0%

20,0002.0%

10,000

1.0%

10,000

1.0%

0.0%

0

0
Aug-Sept
2018

Aug-Sept
2018

Okinawa

30,000Jun-Jul2018

0.0%
Jun-Jul2018

Oct-Nov
2018

0.0%
Jun-Jul2018© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Aug-Sept
2018

Oct-Nov
201826

New Hotel Room Supply in Japan +12%
No. of New Hotel Rooms Planned for Completion (after March 31, 2018)
New Supply
Japanese Inns
Hotels% Increase of New Supply

2,000,000+12%

1,500,000

1,000,000

500,000
+27%
+35%

+6%

+7%

+4%

岡Okayama
山市

松Matsuyama
山市

倉Kurashiki
敷市

浜Hamamatsu
松市

広Hiroshima
島市

神Kobe
戸市

那Naha
覇市

横Yokohama
浜市

福Fukuoka
岡市

京Kyoto
都市

名Nagoya
古屋市

札Sapporo
幌市

大Osaka
阪市

東Tokyo京都

全Japan国

0+14% +29% +44% +25% +35% +13% +17% +22% +5%* Increase of new supply relative to existing hotel rooms calculated by Ichigo Investment Advisors based on Ministry of Health, Labor, and Welfare’s“Report on Public Health Administration and Services” published on October 25, 2018 and hotel and restaurant data published December 7, 2018.
* New hotel rooms include rooms whose opening dates are not confirmed.
© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

27

Appendix: Portfolio Details© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

28

Hotel Map
Tokyo

Kanto

Hokuriku/Tokai

C-1

C-3

B-1

D-1

Smile HotelTokyo Asagaya

Hotel Livemax
NihombashiHakozaki

Grandpark-Inn
Yokohama

Comfort Hotel
Hamamatsu

Kinki (Kyoto/Osaka/Kobe)
E-2

E-1

Hokkaido
D-2

Hotel Wing
International
Nagoya

D-3

D-4

A-1

Comfort Hotel
SuzukaNest Hotel
Nest Hotel
Sapporo Ekimae Sapporo Odori

Comfort Hotel
Central International
Airport

A-2

A-3

ComfortHotel Kushiro

Chugoku/Shikoku
E-3

F-1

F-2

▶Sapporo

F-4

F-3

A-1 A-2▶Kushiro
A-3

Smile Hotel
Kyoto Shijo

Hotel Vista
Premio Kyoto

Chisun Inn
Osaka
HommachiComfort Hotel
Okayama

Nest Hotel
Matsuyama

Urbain Hiroshima
Executive

Variable Rent

21 Hotels
JPY 50.7B

Court Hotel
Kurashiki

Fixed Rent

▶KyotoKyushu/Okinawa
E-4

E-5

G-1

E-1 E-2▶Tokyo▶Osaka

G-2

E-3

C-1 C-3

E-5▶Okayama▶Suzuka▶Hiroshima F-4 F-1 E-4
D-4
F-3
▶Kobe
G-1
F-2
▶Fukuoka▶Matsuyama
Hotel Suave
Kobe Asuta

Nest Hotel Osaka
Shinsaibashi

Valie Hotel
Tenjin▶Nagoya

Nest HotelNaha

D-2 D-3

Hotel Operator▶Yokohama B-1▶Hamamatsu
D-1

Other
31.4%

Nest Hotel
Japan
39.1%

Hospitality
Operations Greens
12.4%
17.0%

▶Okinawa
G-2© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

(January 2019 rent-basis)29Portfolio GrowthHotelsIPO(November 30, 2015)

January 2017
Fiscal Period

July 2017
Fiscal Period

January 2018
Fiscal Period

January 2019
Fiscal Period

Portfolio Size

Portfolio Size

Portfolio Size

Portfolio Size

Portfolio Size

9 hotels
JPY 20.4B

19 hotels
JPY 47.6B

20 hotels
JPY 49.1B

21 hotels
JPY 50.9B

21 hotels
JPY 50.7B(Appraisal Value JPY 21.3B)(Appraisal Value JPY 51.6B)(Appraisal Value JPY 53.7B)(Appraisal Value JPY 56.3B)

IPO Acquisitions

PO Acquisitions

Acquisition

Acquisition

Acquisition

9 hotels
JPY 20.4B

10 hotels
JPY 27.2B

1 hotelJPY 1.4B

1 hotelJPY 1.8B

1 hotelJPY 1.7B(Appraisal NOI Yield 5.9%)(Appraisal NOI Yield 5.5%)(Appraisal NOI Yield 5.0%)(Appraisal NOI Yield 6.3%)(Appraisal NOI Yield 6.9%)

Yokohama: 1

Chugoku/Shikoku: 1

Chugoku/Shikoku: 1

Hokkaido: 2 Kyoto: 2
Nagoya: 1
Tokai: 1 Osaka: 1
Kobe: 1 Fukuoka: 1

Hokkaido: 1 Tokyo: 3
Tokai: 2 Osaka: 1
Chugoku/Shikoku: 2
Okinawa: 1Sale

1 hotelJPY2.7B
January 31, 2019

IPO

Geographic Diversification
Increases Earnings Stability

Fukuoka
6.8%

Location

Kobe
7.3%
Tokai
7.6%

Kyoto
39.6%

Osaka
8.0%
Nagoya13.1%

Hokkaido
17.7%

Yokohama
2.9%

Kobe Fukuoka
2.7%
2.9%

Nagoya5.3%
Okinawa
7.4%
Hokkaido
7.7%

Steady Portfolio Growthvia Acquisitions

Acquisition price-basis© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Osaka
18.2%

Kyoto
15.9%

Tokyo
10.4%
Chugoku/
Shikoku
12.5%

Tokai
14.1%

Acquisition price-basis

30

Individual Hotel Summary
Hotel
No.

Hotel

Hotel Name

Lease Terms

Location

Leasable
Area
2

(m )

Acquisition
Price(JPY M)

Book Value(JPY M)(A)

Jan 2019 Appraisal
Value(JPY M)(B)

Cap Rate(% )Unrealized
Gains (JPY M)(B) - (A)

A-1

Nest Hotel Sapporo Ekimae

Variable + Fixed Rent

Sapporo5,734.93

2,160

2,152

2,640

5.3

+487

A-2

Nest Hotel Sapporo Odori

Variable + Fixed Rent

Sapporo5,638.78

1,450

1,465

1,780

5.2

+314

A-3

Comfort Hotel Kushiro

Fixed Rent

Kushiro, Hokkaido

3,180.58

300

295

421

5.5

+125

B-1

Grandpark-Inn Yokohama

Fixed Rent

Yokohama

1,183.26

1,490

1,505

1,560

4.6

+54

C-1

Smile Hotel Tokyo Asagaya

Variable + Fixed Rent

Tokyo

2,721.70

3,910

3,987

4,310

4.4

+322

C-3

Hotel Livemax Nihombashi-Hakozaki

Fixed Rent

Tokyo

853.00

1,360

1,333

1,440

4.5

+106

D-1

Comfort Hotel Hamamatsu

Fixed Rent

Hamamatsu,Shizuoka

4,173.92

1,550

1,482

1,850

5.3

+367

D-2

Hotel Wing International Nagoya

Variable + Fixed Rent

Nagoya5,255.66

2,670

2,701

2,920

4.9

+218

D-3

Comfort Hotel Central International Airport

Fixed Rent

Tokoname, Aichi

11,599.63

5,308

5,325

5,890

4.0

+564

D-4

Comfort Hotel Suzuka

Fixed Rent

Suzuka, Mie

2,186.65

300

290

377

5.0

+86

E-1

Smile Hotel Kyoto Shijo

Variable + Fixed Rent

Kyoto

4,891.84

4,480

4,567

4,640

4.5

+72

E-2

Hotel Vista Premio Kyoto

Variable + Fixed Rent

Kyoto

3,867.66

3,600

3,587

3,960

4.2

+372

E-3

Chisun Inn Osaka Hommachi

Variable + Fixed Rent

Osaka

3,690.00

1,630

1,704

1,990

4.5

+285

E-4

Hotel Suave Kobe Asuta

Fixed Rent

Kobe

4,633.16

1,490

1,431

1,820

4.8

+388

E-5

Nest Hotel Osaka Shinsaibashi

Variable + Fixed Rent

Osaka

8,057.26

7,600

7,722

7,690

4.5

-32

F-1

Comfort Hotel Okayama

Fixed Rent

Okayama

5,543.70

1,200

1,193

1,260

5.3

+66

F-2

Nest Hotel Matsuyama

Variable + Fixed Rent

Matsuyama, Ehime

6,671.94

1,610

1,672

1,890

5.7

+217

F-3

Urbain Hiroshima Executive

Fixed Rent

Hiroshima

2,756.20

1,800

1,848

2,080

5.3

+231

F-4

Court Hotel Kurashiki

Variable + Fixed Rent

Kurashiki, Okayama

3,964.19

1,725

1,780

1,960

5.1

+179

G-1

Valie Hotel Tenjin

Variable + Fixed Rent

Fukuoka

1,910.94

1,380

1,445

2,200

4.3

+754

G-2

Nest Hotel Naha

Variable + Fixed Rent

Naha, Okinawa

9,240.20

3,750

3,805

4,180

5.3

+374

21 Hotels

97,755.20

50,76351,29956,858

4.7+5,558* While Hotel Suave Kobe Asuta’s lease contract includes a variable rent clause, it has never been triggered. Because Ichigo Hotel does not anticipate receiving variable
rent at this hotel, it has been classified as a fixed rent hotel.

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

31

Individual Hotel Operating Results(year-on-year)
Hotel No.

Hotel Name

Lease Terms

Location

No. of
Guest
Rooms

January 2019 (August 2018 - January 2019)
RevPAR (JPY)

Occupancy (%)

ADR (JPY)

Revenue (JPY M)

A-1

004 Nest Hotel Sapporo Ekimae

Variable + Fixed Rent

Sapporo

162

9,821

(+17.9%)95.8(-0.9%)

10,257(+19.0%)354.1(+17.9%)A-2

008 Nest Hotel Sapporo Odori

Variable + Fixed Rent

Sapporo121

11,301(+9.7%)

94.5(-2.2%)

11,959(+12.2%)275.5(+8.4%)

A-3

018 Comfort Hotel Kushiro

Fixed Rent

Kushiro, Hokkaido

126

4,237

(-1.8%)

73.2(-5.3%)

5,792(+3.8%)

103.5(-2.2%)

C-1

012 Smile Hotel Tokyo Asagaya

Variable + Fixed Rent

Tokyo

112

9,131

(+11.6%)98.5(+6.7%)

9,267(+4.5%)

193.0(+10.7%)D-1

006 Comfort Hotel Hamamatsu

Fixed Rent

Hamamatsu, Shizuoka

196

4,783

(+1.9%)

81.2(+1.8%)

5,892

(–)

172.5

(+1.9%)

D-2

003 Hotel Wing International Nagoya

Variable + Fixed Rent

Nagoya224

5,504(-6.2%)

88.9(-0.5%)

6,193(-5.8%)

254.1(-5.2%)

D-3

011 Comfort Hotel Central International Airport

Fixed Rent

Tokoname, Aichi

346

8,126

(+2.4%)

90.7(+3.7%)

8,960(-1.2%)

542.2(-3.6%)

D-4

019 Comfort Hotel Suzuka

Fixed Rent

Suzuka, Mie

105

5,126

(+9.1%)

78.9(+2.5%)

6,498(+6.4%)

100.3(+9.0%)

E-1

001 Smile Hotel Kyoto Shijo

Variable + Fixed Rent

Kyoto

144

8,350

(-13.7%)97.5(-1.5%)

8,563(-12.3%)236.3(-9.9%)

E-2

002 Hotel Vista Premio Kyoto

Variable + Fixed Rent

Kyoto

84

10,896(-10.1%)88.4(+4.0%)

12,332(-13.6%)185.1(-8.0%)

E-3

005 Chisun Inn Osaka Hommachi

Variable + Fixed Rent

Osaka

130

6,318

(-16.9%)84.7(-7.5%)

7,458(-10.1%)151.1(-16.9%)E-5010 Nest Hotel Osaka Shinsaibashi

Variable + Fixed Rent

Osaka

302

8,007

(-9.0%)

89.2(-8.2%)

8,979(-1.0%)

476.0(-9.8%)

F-1

017 Comfort Hotel Okayama

Fixed Rent

Okayama

208

5,610

(-0.3%)

88.9(-0.6%)

6,313(+0.3%)

223.7(+0.1%)

F-2

015 Nest Hotel Matsuyama

Variable + Fixed Rent

Matsuyama, Ehime

190

5,544

(-11.8%)89.2(-1.3%)

6,216(-10.7%)273.9(-11.9%)F-3

021 Urbain Hiroshima Executive

Fixed Rent

Hiroshima

171

6,883

(+14.3%)90.9(+4.4%)

7,574(+9.5%)

216.6(+14.3%)F-4

022 Court Hotel Kurashiki

Variable + Fixed Rent

Kurashiki, Okayama

104

8,106

(+20.2%)

97.7(+26.2%)8,296(-4.7%)

182.8(+18.4%)G-1

009 Valie Hotel Tenjin

Variable + Fixed Rent

Fukuoka

77

9,532(+8.9%)

94.9(+5.1%)

10,046(+3.6%)

144.3(+7.4%)

G-2

013 Nest Hotel Naha

Variable + Fixed Rent

Naha, Okinawa

198

9,257

(+1.1%)

85.3(-4.0%)

10,855(+5.4%)

481.5(+1.8%)

Other

Fixed Rent

356

–

–

–

–

Variable Rent Hotels

1,848

8,137

(-1.5%)

91.2(-0.9%)

8,919(-0.7%)

3,207.9(-1.0%)

Fixed Rent Hotels

1,508

6,220

(+3.8%)

85.8(+1.7%)

7,251(+2.1%)

1,358.7(+1.2%)

Total

3,356

7,380

(+0.2%)

89.0

(–)

8,290

(+0.3%)

4,620.4(-0.3%)* No. of Guest Rooms data for Hotel Suave Kobe Asuta, Hotel Livemax Nihombashi-Hakozaki, and Grandpark-Inn Yokohama are consolidated under Other, because thehotel operators did not provide consent to disclose hotel-specific data. Fixed Rent Hotels and Total include Hotel Livemax Nihombashi-Hakozaki’s operating results. Although
Hotel Suave Kobe Asuta’s lease contract includes a variable rent clause, Ichigo Hotel does not anticipate receiving variable rent at this hotel and has thus classified it as afixed rent hotel.
© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

32

Individual Hotel Financials(JPY thousand)
No.
Total
Hotel Name

A-1

A-2

A-3

Nest Hotel
SapporoEkimaeNest Hotel
SapporoOdori

ComfortHotel
Kushiro

D-3

D-4

E-1

E-2

E-3

E-5

F-1

F-2

G-1

G-2

F-4

Smile Hotel
Smile Hotel Comfort HotelTokyo
Asakusa Hamamatsu
AsagayaComfort Hotel
CentralInternational
Airport

ComfortHotel
SuzukaSmile Hotel
Kyoto Shijo

Hotel Vista
PremioKyoto

Chisun Inn
Osaka
Hommachi

Nest Hotel
Osaka
Shinsaibashi

ComfortHotel
Okayama

Nest Hotel
Matsuyama

Valie Hotel
TenjinNest Hotel
Naha

Court
Hotel
Kurashiki

C-1

D-1

C-2

Other

(A) Rental Income

1,745,367

120,997

91,985

18,419101,048

17

55,361

151,441

15,442

108,80980,20939,600199,862

45,91490,17669,435

157,136

63,096

336,409

Fixed Rent

984,468

32,392

23,385

18,41928,372–55,361

151,441

15,442

34,64475,00039,60063,97445,90035,55824,752

59,10925,093

256,020

Variable Rent

701,671

88,60568,600–72,676––––

74,165

5,209–

135,887–

54,56644,683

98,027

37,95921,288Other Rent

59,227

–

–

–

–

17

–

–

–

–

–

–

–

14

51

–

–

43

59,101(B) Rental Expenses

170,595

10,387

12,137

5,566

8,021

376

3,516

14,158

2,865

6,586

9,647

6,101

15,311

5,293

6,220

4,416

8,100

1,000

50,886

Outsourcing
Fees

18,612

600

600

900

2,700

–

600

570

540

600

1,475

915

1,200

600

720

600

1,081

590

4,320

Insurance

2,628

150

158

82

90

–

95

279

48

148

102

101

247

140

200

56

239

89

397

RepairExpenses

16,501

4,212

2,759

144

1,426

–

120

350

84

690

513

1,601

611

278

1,002

70

1,941

–

697

Taxes

102,866

4,993

8,182

4,030

3,396

376

2,430

12,552

1,786

4,789

7,144

3,120

12,846

3,857

3,864

3,326

4,423

–

21,746

Other
Expenses

29,987

430

436

408

407

–

271

406

406

359

412

363

406

417

434

363

414

321

23,725NOI(A) - (B)

1,574,772

110,610

79,84812,85393,027-359

51,844

137,283

12,577102,22270,56133,498

184,550

40,621

83,95565,019149,035

62,095285,523(D) Depreciation

308,764

13,763

16,521

4,913

25,7602,212

14,48031,3294,154

15,501

13,501

6,532

33,797

12,574

17,1089,039

33,2507,898

46,424

1,266,007

96,84763,327

7,939

67,266-2,57137,364

105,954

8,422

86,721

57,06026,966

150,753

28,046

66,84755,979115,785

54,197

239,098(C)

Net Rental Income(C) - (D)* Rents for Hotel Wing International Nagoya, Hotel Suave Kobe Asuta, Hotel Livemax Nihombashi-Hakozaki, Grandpark-Inn Yokohama, and Urbain Hiroshima Executive as well
as all retail rents are included in Other, as the operators did not provide consent to disclose the data. NOI for Other includes NOI for Hotel Wing International Nagoya, Hotel
Suave Kobe Asuta, Hotel Livemax Nihombashi-Hakozaki, Grandpark-Inn Yokohama, and Urbain Hiroshima Executive, which are JPY 74 million, JPY 43.9 million, JPY 33.1
million, JPY 37.4 million, and JPY 58 million respectively. Depreciation for Other includes depreciation for Hotel Wing International Nagoya, Hotel Suave Kobe Asuta, Hotel
Livemax Nihombashi-Hakozaki, Grandpark-Inn Yokohama, and Urbain Hiroshima Executive, which are JPY 8.8 million, JPY 12.7 million, JPY 9.1 million, JPY 2.2 million, and
JPY 13.6 million respectively.

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

33

Fixed/Variable Rent, RevPAR, ADR, & Occupancy Trends
Fixed/Variable Rent

(JPY thousand)Jan 2018

Jul 2018

Jan 2019

Rent

Ratio

Rent

Ratio

Rent

Ratio

1,034,015

58.0%

1,010,663

55.7%

1,043,696

59.8%

Fixed Rent from Operators

974,85254.7%

952,65352.5%

984,468

56.4%

Other (Rent from Retail Tenants)

59,163

3.3%

58,0103.2%

59,2273.4%

748,00742.0%

803,40144.3%

701,67140.2%

1,782,023

100.0%

1,814,064

100.0%

1,745,367

100.0%

Fixed Rent

Variable Rent
Total

Total Rent
(excludes Other Revenue)

Variable Rent
41.6%
Fixed Rent
58.4%

(January 2019 rent-basis)

Operating Results (Feb 2018 – January 2019)
RevPAR (right)

ADR (right)(JPY)

Occupancy (left)

100%

10,000

80%

8,000

60%

6,000

40%

4,000

20%

2,000

0%

0
Feb 2018

Mar 2018

Apr 2018

May 2018

Jun 2018

Jul 2018

Aug 2018

Sep 2018© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Oct 2018

Nov 2018

Dec 2018

Jan 2019

34

Variable Rent Hotel Details
A-1 Nest Hotel Sapporo Ekimae
Location

SapporoAccess5-minute walk from
Sapporo Station on
Sapporo City Metro
Namboku LineOperator

Nest Hotel Japan
Corporation

Guest Rooms

162

AcquisitionPrice

JPY 2.16B

Operating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

25,00080%

20,00060%

15,00040%

10,000

20%

5,000

0%

0
Feb 2018

May 2018

Aug 2018

Nov 2018

A-2 Nest Hotel Sapporo Odori
Location

SapporoAccess4-minute walk from
Odori Station on
Sapporo City Metro
Namboku LineOperating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

25,00080%

20,000

Nest Hotel Japan
Corporation60%

15,00040%

10,000

Guest Rooms

121

20%

5,000

AcquisitionPrice

JPY 1.45B

Operator0%0
Feb 2018© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2018

Aug 2018

Nov 2018

35

Variable Rent Hotel Details
C-1 Smile Hotel Tokyo Asagaya
Location

Suginami-ku, Tokyo

Access1-minute walk from
Asagaya Station on JR
Chuo/Sobu LineOperator

K.K. Hospitality
Operations

Guest Rooms

112

AcquisitionPrice

JPY 3.91B

Operating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)100%

12,50080%

10,000

60%

7,500

40%

5,000

20%

2,500
0

0%
Feb 2018

May 2018

Aug 2018

Nov 2018

D-2 Hotel Wing International Nagoya
Location

NagoyaAccess2-minute walk from
Marunouchi Station on
both Nagoya Subway
Network SakuradoriLine and Tsurumai
Line

Operating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)100%

12,50080%

10,00060%

7,500

Forbes Co., Ltd.

40%

5,000

Guest Rooms

224

20%

2,500

AcquisitionPrice

JPY 2.67B

Operator0%0
Feb 2018© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2018

Aug 2018

Nov 2018

36

Variable Rent Hotel Details
E-1 Smile Hotel Kyoto Shijo
Location

Kyoto

Access5-minute walk from
Shijo Station on Kyoto
City Subway Karasuma
Line and Karasuma
Station on Hankyu
Kyoto Main LineOperator
Guest Rooms
Acquisition
Price

K.K. Hospitality
Operations
144

Operating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

25,00080%

20,00060%

15,00040%

10,000

20%

5,000

0%

0
Feb 2018

May 2018

Aug 2018

Nov 2018

JPY 4.48B

E-2 Hotel Vista Premio Kyoto
Location

Kyoto

Access5-minute walk from
Kyoto Shiyakushomae
Station on Kyoto City
Subway Tozai LineOperator

Vista HotelManagement Co., Ltd.

Guest Rooms

84

AcquisitionPrice

JPY 3.60B

Operating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

25,00080%

20,00060%

15,00040%

10,000

20%

5,000

0%

0
Feb 2018© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2018

Aug 2018

Nov 2018

37

Variable Rent Hotel Details
E-3 Chisun Inn Osaka Hommachi
Location

Osaka

Access5-minute walk from
Sakaisuji-Hommachi
Station on Osaka
Municipal Subway
Chuo LineOperator

SHR Hotel Lease Co.,Ltd.

Guest Rooms

130

AcquisitionPrice

JPY 1.63B

Operating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)100%

12,50080%

10,000

60%

7,500

40%

5,000

20%

2,500

0%

0
Feb 2018

May 2018

Aug 2018

Nov 2018

E-5 Nest Hotel Osaka Shinsaibashi
Location

AccessOperatorOsaka
1-minute walk from
Nagahoribashi Station
on Osaka Municipal
Subway Sakaisuji Lineand NagahoritsurumiRyokuchi Line
Nest Hotel Japan
Corporation

Guest Rooms

302

AcquisitionPrice

JPY 7.60B

Operating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)100%

12,50080%

10,000

60%

7,500

40%

5,000

20%

2,500

0%

0
Feb 2018© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2018

Aug 2018

Nov 2018

38

Variable Rent Hotel Details
F-2 Nest Hotel Matsuyama
Location

AccessOperator

Matsuyama, Ehime
25-minute drive from
Matsuyama Airport,
3-minute walk from
Katsuyamacho Station
on Iyo Railway JonanLine
Nest Hotel Japan
Corporation

Guest Rooms

190

AcquisitionPrice

JPY 1.61B

Operating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)100%

12,50080%

10,000

60%

7,500

40%

5,000

20%

2,500

0%

0
Feb 2018

May 2018

Aug 2018

Nov 2018

F-4 Court Hotel Kurashiki
Location

Kurashiki, Okayama

Access8-minute walk from
Kurashiki Station on
JR Sanyo Main LineOperating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)100%

12,50080%

10,00060%

7,500

The Court Co., Ltd.

40%

5,000

Guest Rooms

104

20%

2,500

AcquisitionPrice

JPY 1.73B

Operator0%0
Feb 2018© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2018

Aug 2018

Nov 2018

39

Variable Rent Hotel Details
G-1 Valie Hotel Tenjin
Location

Fukuoka

Access6-minute walk from
Tenjin Station on
Fukuoka City Subway
Kuko LineOperating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)100%

12,50080%

10,00060%

7,500

The Court Co., Ltd.

40%

5,000

Guest Rooms

77

20%

2,500

AcquisitionPrice

JPY 1.38B

Operator0%0
Feb 2018

May 2018

Aug 2018

Nov 2018

G-2 Nest Hotel Naha
Location

AccessOperatorNaha, Okinawa
7-minute drive fromNaha Airport, 5-minute
walk from Asahibashi
Station on Okinawa
Urban Monorail
Nest Hotel Japan
Corporation

Guest Rooms

198

AcquisitionPrice

JPY 3.75B

Operating Results (February 2018 – January 2019)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)100%

12,50080%

10,000

60%

7,500

40%

5,000

20%

2,500

0%

0
Feb 2018© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2018

Aug 2018

Nov 2018

40

Fixed Rent Hotel Details
A-3 Comfort Hotel Kushiro
Location

Kushiro, Hokkaido

B-1 Grandpark-Inn Yokohama
Location

Yokohama

Access2-minute walk from
Kushiro Station on JR
Nemuro Main Line

Access6-minute walk from
Yokohama Station on
JR Line, private
railways, and subway

Operator

Greens Co., Ltd.

Operator

MiddleWood Co., Ltd.

Guest Rooms

126

Guest Rooms

175

AcquisitionPrice

JPY 300M

AcquisitionPrice

JPY 1.49B

C-3 Hotel Livemax Nihombashi-Hakozaki
Location

Chuo-ku, Tokyo

D-1 Comfort Hotel Hamamatsu
Location

Hamamatsu, Shizuoka

Access3-minute walk from
Suitengumae Station
on Tokyo Metro
Hanzomon Line

Access2-minute walk from
Hamamatsu Station on
JR Tokaido Main Line,
Tokaido Shinkansen

Operator

Live Max Inc.

Operator

Greens Co., Ltd.

Guest Rooms

48

Guest Rooms

196

AcquisitionPrice

JPY 1.36B

AcquisitionPrice

JPY 1.55B© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

41

Fixed Rent Hotel Details
D-3 Comfort Hotel Central International Airport

D-4 Comfort Hotel Suzuka

Location

Tokoname, Aichi

LocationSuzuka, Mie

Access5-minute walk from Central
International Airport,
3-minute walk from Central
International Airport Station
on Meitetsu Airport Line

Access3-minute walk from
Shirako Station on
Kintetsu Nagoya LineOperator

Greens Co., Ltd.

Operator

Greens Co., Ltd.

Guest
Rooms

346

Guest Rooms

105

JPY 5.31B

AcquisitionPrice

JPY 300M

AcquisitionPrice

E-4 Hotel Suave Kobe Asuta

F-1 Comfort Hotel Okayama
Location

OkayamaAccess2-minute walk from
Shinnagata Station on
JR Kobe Line (Sanyo
Main Line)

Access15-minute walk from
Okayama Station on
Sanyo Shinkansen,
Sanyo Main Line, Uno
Line

OperatorHotel Tetora

Operator

Greens Co., Ltd.

Location

Kobe

Guest Rooms

133

Guest Rooms

208

AcquisitionPrice

JPY 1.49B

AcquisitionPrice

JPY 1.20B© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

42

Fixed Rent Hotel Details
F-3 Urbain Hiroshima Executive
Location

Hiroshima

Access6-minute walk from
Hiroshima Station on
JR Sanyo Shinkansen
and Sanyo Main LineOperator

Yuki Corporation

Guest Rooms

171

AcquisitionPrice

JPY 1.80B© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

43

Appendix: Loan Details & Shareholder Composition© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

44

Stable Financial Base
− Shorter-term loans are floating rate to take advantage of current low
interest rates− 80% of loans are fixed to hedge against a rise in interest rates
Outstanding Loan Balance
Jan 31, 2017
AmountJul 31, 2017

Jan 31, 2018

Jul 31, 2018

Jan 1, 2019

JPY 19.50B

JPY 19.95B

JPY 21.75B

JPY 21.75B

JPY 21.75B

Long-Term Loan Ratio

100.0%

100.0%

100.0%

100.0%

100.0%

Fixed Rate Ratio

73.1%

71.4%

73.8%

73.8%

80.7%

Average Interest Rate

0.89%

0.88%

0.88%

0.88%

0.89%

Average Remaining
Maturity

4.5 years

4.1 years

3.6 years

3.1 years

3.2 years

LTV (Total Assets Basis)

36.6%

37.1%

39.2%

39.1%

38.8%

Distribution of Loan Maturities(JPY M)
6,000■ Fixed Rate ■ Floating Rate
5,250
4,000

4,500

4,200

4,500

2,000
1,800

1,500

0
Jul 2019

Jan 2020

Jul 2020

Jan 2021

Jul 2021

Jan 2022

Jul 2022

Jan 2023© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Jul 2023

Jan 2024

Jul 2024

Jan 2025

45

Loan Details
Loan Balances
Loan

Amount(JPY million)

LenderFloating/
Fixed

Interest Rate(%)

Borrowing Date

Maturity

Term Loan II

SMBC, Mizuho, Shinsei, Resona

5,250

Fixed

1.08000

November 30, 2015

November 30, 2020

Term Loan III

SMBC, Mizuho, Shinsei, Resona, Fukuoka, Nishi-Nippon City

2,000

Floating

0.61091

August 17, 2016

February 28, 2020

Term Loan IV

SMBC, Mizuho, Shinsei, Resona, Fukuoka, Nishi-Nippon City

4,500

Fixed

0.90750

August 17, 2016

February 28, 2023

Term Loan V

SMBC, Mizuho, Shinsei, Resona, Fukuoka, Nishi-Nippon City

4,500

Fixed

0.98500

August 17, 2016

August 31, 2023

Term Loan VI

SMBC

450

Floating

0.56091

March 27, 2017

February 28, 2020

Term Loan VII

SMBC, Mizuho, Shinsei, Resona, Fukuoka, Nishi-Nippon City

1,800

Fixed

0.78750

August 1, 2017

January 31, 2023

Term Loan VIII

SMBC, Mizuho, Shinsei, Resona

1,750

Floating

0.46091

November 30, 2018

May 29, 2020

Term Loan IX

SMBC, Mizuho, Shinsei, Resona

1,500

Fixed

0.92000

November 30, 2018

November 29, 2024

Total

21,750Strong Lender Group

Nishi-Nippon City
4%

LTV Control

Floating
19.3%

Resona10%Interest Rate Risk Management

SMBC
39%

Shinsei
12%

Mizuho31%

Average Remaining Loan Term 3.2 years

Fixed vs. Floating

Lender Composition
Fukuoka
4%

Average 0.89%

Fixed
80.7%

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Stable Financial Position46

Shareholder Composition
Major Shareholders (as of January 31, 2019)
Name

By Number of Shares Held:
No. ofSharesForeign Corporations & Individuals
Non-Financial Domestic Corporations

Share

Domestic Financial Institutions
Domestic Individuals(Shares)100%1Japan Trustee Services Bank, Ltd., Trust Account

31,33912.3%
65,834(25.8%)

2
3

The Master Trust Bank of Japan, Trust AccountTrust & Custody Service Bank, Ltd.,
Securities Investment Trust Account28,192

11.1%

80%
19,037(7.5%)

11,45160,448(23.7%)
18,870(7.4%)

45,576(17.9%)
18,843(7.4%)

4.5%
60%

4

SIX SIS LTD.

9,533

3.7%

5

The Nomura Trust and Banking Co., Ltd.,
Investment Trust Account

8,714

3.4%

6

Ichigo Inc. (Sponsor)

6,500

2.5%

7

GOLDMAN SACHS INTERNATIONAL

6,445

2.5%

97,734(38.5%)

95,188(37.3%)

101,053(39.6%)

40%

8

Ichigo Trust Pte. Ltd.

6,424

2.5%

9

BNYMSANV RE GCLB RE JP RD LMGC

4,215

1.7%

20%

72,369(28.4%)

80,468(31.6%)

89,502(35.1%)Jan 2018

Jul 2018(254,974)

Jan 2019(254,974)0%(Outstanding Shares) (254,974)

By Number of Shareholders:

10 Fukoku Mutual Life Insurance Company

2,800

1.1%

115,613

45.3%

Domestic Individuals
Domestic Financial Institutions
City Banks, trust banks
Regional banks
Other (including securities companies)
Non-Financial Domestic Corporations
Foreign Corporations & Individuals
Total© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Jan 31, 2019
Jan 31, 2018
Jul 31, 2018
Shareholders Shareholders Shareholders
Share
10,503
11,29913,101
97.4%
53
54
48
0.4%
8
7
7
0.1%
4
4
3
–
41
43
38
0.3%
179
183
218
1.6%
90
107
78
0.6%
10,825
11,643
13,445100.0%

47

Appendix: Growth Roadmap, Sponsor, Governance,
Sustainability, Shareholder Alignment© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

48

Growth Strategy Roadmap
Flexibly Responding to Market Environment
Stage I

Stage II

Continuous Dividend Growth via External Growth, Organic Growth, and Strong Financial Base

External
Growth• Drive higher earnings via economies of scale from increased
asset size
• Invest primarily in stay-only hotels• Acquisition of conversion-feasible assets and lodging
facilities such as serviced apartments• Asset acquisitions via SPCs

Organic
Growth••• Construct a diversified portfolio to pursue both income
stability and earnings growth• Acquire prime-location full-service hotels and resort hotels in
addition to stay-only hotels• Increase portfolio size and generate scale efficiencies via
acquisitions of newly built hotels in addition to value-add ofexisting hotels

Enhance operational efficiency by monitoring operations and providing advice to partner hotel operators
Increase rents and earnings through value-add capex

Financing• Minimize expenses via collaboration with operators• Further increase earnings via more favorable lease contracts,
rebranding, etc.

• Maintain a strong lender base
• Appropriate LTV• Manage interest rate risk
• Prepare to acquire credit rating• Prepare to enter global REIT indices• Acquire credit rating• Diversify financing• Continue to control LTV and manage interest rate risk
• Enter global REIT indices

Lay Foundation for Growth via Increased
Asset Scale

Pursue Portfolio Diversification,
Stability, and Growth© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

49

Ichigo Hotel’s Sponsor: Ichigo (2337)
Core Businesses: Asset Management, Real Estate Value-Add, Clean Energy‒‒‒‒

Manages Ichigo Office (8975), Ichigo Hotel (3463), and Ichigo Green (9282)
TSE First Section, JPX-Nikkei 400 Member
Deeply committed to CSR and Sustainability
Japan’s first zero-carbon listed real estate company©J.LEAGUE

Key Ichigo Subsidiaries
IchigoIchigo Investment Advisors

Asset manager of Ichigo Office (8975), Ichigo Hotel (3463), and Ichigo
Green (9282)

Ichigo Estate

Real estate value-add

Ichigo ECO Energy

Clean energy business focusing on utility-scale solar power production,
making purposeful use of idle land nationwide

Ichigo Owners

Real estate investment services

Ichigo Land Shinchiku

Real estate value-add

Ichigo Real Estate Services Fukuoka

Real estate business centered on Fukuoka

Ichigo Marché

Operates Matsudo Nanbu wholesale market in Chiba Prefecture

Miyako City

Operates Miyako City shopping mall in Miyazaki Prefecture

CentroNew real estate-related businesses

Storage Plus

High-grade self storage

TenutoSmart Agriculture technology(TSE First Section 2337)

Ichigo Preserves andImproves Real Estate

The word “Ichigo” comes from the ancient Japanese
proverb, Ichigo Ichie, literally meaning “One lifetime,
one encounter.” The phrase was first used by a 16th
century master of the tea ceremony, Sen no Rikyu.
He called upon his disciples to give total focus andsincerity to each act of the tea ceremony for every
guest, because that particular moment will only exist
once and must be fully lived and realized.
Ichigo embraces the Ichigo Ichie philosophy ofsincerity and service, and works to build strong longterm relationships to support the success of ourclients, shareholders, and all stakeholders.

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

50

Synergies Between Ichigo Hotel and Sponsor‒ Strengthen acquisitions through leveraging Ichigo’s sourcing network‒ Increase asset value through Ichigo’s real estate value-add capabilities‒ Drive higher returns for Ichigo Hotel shareholders
Ichigo Hotel (3463)

Buy

Sponsor: Ichigo (2337)

Hotel

Value-Add

Buy

Buy

Preserve & Improve
Sell

Long-Term Asset Management(Grow Earnings for Shareholders)







Value-add capex
On-going renovation and equipment renewal
Increase hotel attractiveness & competitiveness
Grow earnings via collaboration with hotel
operators
Grow earnings via rebranding and improving
contract terms
Grow earnings via smart cost control

Sell

Value-Add(Increase Asset Value)

Role


Hard





Soft




Rectify building code issues
Seismic and safety reinforcement
Large-scale structural and equipment renewal
Change hotel operator/brandImprove contract terms
Improve hotel operations

Third-Party Investors© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Sell

51

Ichigo Sustainability Activities
Ichigo Sustainability Policy
Ichigo believes that working on behalf of society and the environment is a fundamental social
responsibility and will support the sustainable growth of Ichigo and Ichigo Hotel REIT. Ichigo has thus
made sustainability a key priority, and has established the following Sustainability Policy to actively work
to reduce Ichigo’s environmental impact and support sustainable outcomes.

1. Harmony with the Environment
Ichigo actively monitors and minimizes the environmental impact of its real estate operations.
2. Energy Conservation, CO2 Emissions Reduction, and Recycling
Ichigo seeks to contribute to a low-carbon, low-waste society by lowering its energy consumption, extending theuseful life of its assets, actively recycling and reducing waste and water consumption.
3. Regulatory and Environmental Compliance
Ichigo complies with all environmental laws and regulations and Ichigo’s own independently-establishedenvironmental rules. Ichigo also carefully monitors and complies with all applicable changes in laws and regulations.
4. Training and AwarenessIchigo promotes understanding of its Sustainability Policy and works to increase sustainability awareness among all
Ichigo employees.
5. Sustainability Performance Communication and Disclosure
Ichigo communicates this Sustainability Policy and Ichigo’s sustainability initiatives to society at large. Ichigo also
obtains certifications for its sustainability activities on an ongoing basis.

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

52

Global Best-Practice Corporate GovernanceStrong focus on ESG issues to support long-term value growth for shareholders– All Ichigo Hotel Directors are Independent Directors– External experts also support asset management decision-making– Risk & Compliance Committee carries out ongoing monitoring & management of any
potential conflicts of interests
Ichigo Hotel
Asset

Investment Corporation

Ichigo Hotel
Asset

Ichigo Hotel(TSE 3463)
Shareholder Meeting
RentalIncomeBoard of Directors

Administrative Service
Agreement/
Asset Custodial Service
Agreement/
Shareholder Registrar
Service Agreement

Executive Director Osamu Miyashita
Supervising Director Masaru Iida
Supervising Director Satoko Suzuki

Administrative Agent,
Custodian, and Shareholder
Registrar
Mizuho Trust & Banking

External Auditor
Grant Thornton Taiyo

Property
Management
Agreement

Property Management
Company

Asset Management Agreement

Asset Management Company
Ichigo Investment Advisors© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

53

First J-REIT No Fixed Fee, Performance Fee-Only Structure
Overwhelming Shareholder Support (99.3% Yes Vote at AGM)
Before Change(Until January 31, 2019)

Asset Management Fee Structure

Asset
SizeBased

EarningsBased

After Change(From February 1, 2019)

AM Fee I

Total Asset Value

X

0.4%

–

Asset
Acquisition Fee

Acquisition Price

X

1%

–

Asset
Sale Fee

Sale Price

X

0.5%

–

AM Fee II(NOI & Dividend
Performance Fee)NOI x Dividend

X

0.002%

0.0036%

Increased

Gains on Sale
Performance Fee

Gains on Sale

X

－

15%

New

EliminatedNote: The Gains on Sale Performance Fee has a high-water mark, so that it will only be paid if Ichigo Hotel’s cumulative Gains/Losses on Sales to-date are positive.

‒ Fee Change Outcomes Support Ichigo Hotel earnings growth and shareholder value creation
 Support pro-active, dynamic (vs. static) management of Ichigo Hotel assets on behalf ofshareholders© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

54

Ichigo Hotel Overview
Ichigo Hotel
Name

Ichigo Hotel REIT Investment Corporation

Securities Code3463

Address

1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo

Executive Director

Osamu Miyashita

Fiscal Periods

January (August 1 - January 31) and July (February 1 - July 31)

Asset Management Company
Name

Ichigo Investment Advisors Co., Ltd.

President

Hiroshi Iwai

Registration &Membership

Financial Instruments Dealer License (Investment
Management Services, Investment Advisory & Agency
Services, and Type II Financial Instruments Services)
Minister of Finance, Kanto Financial Bureau #318

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

55

MEMO

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

56

MEMO

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

57

MEMO

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

58

Disclaimer
These materials are for informational purposes only, and do not constitute or form a part of, and should not be construed as,
an offer to sell or buy securities of Ichigo Hotel REIT Investment Corporation (Ichigo Hotel ).
These materials may contain forward-looking statements regarding the intent, belief or current expectations of Ichigo Hotelwith respect to financial condition and future results. These statements are based on certain assumptions founded on
currently available information. Accordingly, such statements are subject to risks and uncertainties, and there is no assurance
as to actual financial conditions or future results. Actual results may vary from those indicated in the forward-looking
statements.
In creating these materials, Ichigo Hotel and Ichigo Investment Advisors Co., Ltd. (IIA) have sought to provide accurate
information. However, there can be no assurance given as to the accuracy, certainty, validity or fairness of any suchinformation. The content of these materials is also subject to revision or retraction without prior notice.
This document is a translation. If there is any discrepancy between the Japanese version and the English translation, theJapanese version shall prevail.

Contact:
Ichigo Hotel IR Desk (3463)
TEL: +81-3-3502-4892
E-mail： ir_ichigo-hotel@ichigo.gr.jp
www.ichigo-hotel.co.jp/english
Ichigo is Japan’s first zero-carbon listed real estate company. We are taking
responsibility for our environmental footprint by offsetting our carbon emissions
and investing in low-carbon technologies such as solar energy.

© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

59