Ichigo Hotel (3463)

Ichigo Hotel January 2020 Fiscal Period
Corporate Presentation
March 16, 2020

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

Make The World
More Sustainable© 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.

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

January 2020 Results
 January 2020 Highlights
 January 2020 Earnings Breakdown Operating Results Down YOY on Drop in
Inbound Tourism
 RevPAR Down in All Areas, Particularly
Osaka and Kyoto
 Continuing Strong Demand for Business
Hotels Highly Accretive Asset Sales

Actions to Drive Earnings Growth Achieving Organic Growth at Contract
Renewals Operator Change to Generate Higher
Earnings
 Value-Add Capex to Generate Higher
Earnings (1) Value-Add Capex to Generate Higher
Earnings (2) Acquisition: HOTEL EMIT SHIBUYA Acquisition: Washington Hotel Plaza
Shimonoseki Eki Nishi

 Highly-Stable, Diversified Hotel Portfolio
 Lease Details
 Portfolio Growth Opportunity via Ichigo
Sponsor Support
 Launch of Ichigo J.League Shareholder
ProgramJuly 2020 and January 2021 Forecasts
 July 2020 Forecast January 2021 Forecast

Ichigo’s Commitment to ESG Ichigo Sustainability Policy
 Ichigo ESG – Environmental
 Ichigo ESG – Social
 Ichigo ESG – GovernanceAppendices Hotel Market Environment Portfolio Details
 Loan Details & Shareholder Composition Growth Roadmap, Sponsor, Shareholder
Alignment© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

5

January 2020 Results© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

6

January 2020 Highlights
Results
Net Income

JPY 2,130M

Asset Sales

2 Hotels (Kyoto & Naha)+JPY 731M (+52.3%) YOY(Total Sale Price: JPY 9.79B)

JPY 6,630 (12 variable rent hotels)

Details• Record earnings due to gains on asset sales• Both hotels sold at prices significantly exceeding bothbook value & third-party appraisal value-JPY 1,066 (-13.9%) YOY• RevPAR down due to significant drop in Korean tourists
and impact of coronavirus

NOI

JPY 1.44B• NOI down on asset sales and lower variable rents

FFO

JPY 2,129• FFO down on lower NOI

Dividend

JPY 8,356• +JPY 3,656 (+77.8%) vs. forecast

NAV

JPY 140,839

RevPAR-JPY 136M (-8.6%) YOY-JPY 1,926 (-47.5%) YOY+JPY 2,869 (+52.3%) YOY-JPY 5,741 (-3.9% vs. previous period)• Unrealized gains down due to 2 asset sales• 100% of gains on sales (significantly above unrealized
gains) paid out as dividend

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 + Accrued Asset Disposal Costs +/- 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.

7

January 2020 Earnings Breakdown(JPY million)

Jan 2019
ActualJan 2020
Actual (A)vs. Forecast(A)-(B)

Forecast (B)Major Variation Factors (vs. Forecast)

Operating Revenue

2,439

3,561

2,383

+1,177

Variable Rent

701

564

665

-101

Fixed Rent

984

993

989

+3

Increase due to revised lease (Naha): +3

Other (Gains on Sales, etc.)

753

2,003

727

+1,275

Increase in gains on sales due to sale of
Nest Hotel Naha +1,274

866

1,226

980

+245

Repair & Maintenance

16

26

27

–

Depreciation

308

352

354

-2

Operating Profit

1,573

2,334

1,402

+931

Recurring Profit

1,399

2,132

1,199

+932

Net Income

1,398

2,130

1,198

+931

Dividend

JPY 5,487

JPY 8,356

JPY 4,700+JPY 3,656

FFO

JPY 4,055

JPY 2,129

JPY 3,494-JPY 1,365

NOI

1,574

1,438

1,538

-100

Post-Depreciation NOI

1,266

1,086

1,183

-97

321

257

363

-106

51,29947,549––Operating Expenses

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

Above forecast: 2 hotels; Below forecast: 10 hotels

Increase in AM fee: +218; Increase in consumption tax: +35+77.8% vs. forecast+52.3% (+JPY 2,869) YOY

Effective cost controls

8Operating Results Down YOY on Drop in Inbound Tourism
Variable Rent Hotels (12 Hotels)
Aug 1, 2018
– Jan 31, 2019

Aug 1, 2019
– Jan 31, 2020

Difference

YOY

Room Revenue (JPY M)

2,780

2,405

-375

-13.5%

Total Revenue (JPY M)

3,234

2,822

-411

-12.7%

RevPAR (JPY)

7,696

6,630

-1,066-13.9%

Occupancy

90.9%

85.4%

-5.4%

-6.0%

ADR (JPY)

8,468

7,760

-708

-8.4%

Total Portfolio (19 Hotels)
Aug 1, 2018
– Jan 31, 2019

Aug 1, 2019
– Jan 31, 2020

Difference

YOY

Room Revenue (JPY M)

4,152

3,714

-438

-10.6%

Total Revenue (JPY M)

4,646

4,168

-477

-10.3%

RevPAR (JPY)

7,134

6,364

-770

-10.8%

Occupancy

88.9%

84.5%

-4.4%

-4.9%

ADR (JPY)

8,026

7,530

-496

-6.2%

* Excludes Hotel Wing International Kobe Shin Nagata Ekimae, Valie Hotel Hiroshima, Hotel Vista Premio Kyoto (sold on October 31, 2019), andGrandpark-Inn Yokohama, and includes Nest Hotel Naha (sold on January 31, 2020). 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

RevPAR Down in All Areas, Particularly Osaka and Kyoto
19 Hotels (excludes Grandpark-Inn Yokohama, Hotel Wing
International Kobe Shin Nagata Ekimae, and Valie Hotel
Hiroshima, and includes data for Hotel Vista Premio Kyoto up todate sold, October 31, 2019)

YOY by Region (Aug 2019 – Jan 2020)
RevPAR

Total Portfolio

Occupancy

Hokkaido

ADR

Tokyo

Tokai/
Chubu

Kyoto

Osaka

Chugoku/
Shikoku

Kyushu0%+3%0%

Okinawa

-1%

-4%
-6%

-5%

0%
-5% -5%-3%-5%-11% -7%

-3%

-4%

-2%

+1%
-4%
-5%

-14%

-17% -17%-22% -24%-25% -12%(JPY)

RevPAR

7,798

7,675

6,072

6,800

5,165

5,904

5,995

8,348

No. Hotels

3

2

4

2

2

4

2

1

% of Total Portfolio
Rental Income

13%

8%

19%

6%

12%

19%

8%

9%

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

10

Continuing Strong Demand for Business Hotels
No. of Guests by Hotel Type (August-December)+4,000,000
Domestic

Inbound-4,424,320-788,810

Number of Inbound Tourists by Country/Region
Country/
Region+794,610+2,000,000+505,600

0+188,210+318,560+1,923,740-952,420-261,740-2,000,000-1,590,400-4,000,000-495,940-6,000,000-6,427,790-8,000,000
Total

Japanese Resort Hotels
Inns

Business
HotelsFull-Service
HotelsBudgetHotels* Calculated by Ichigo Investment Advisors based on Japan Tourism Agency (JTA) “Statistical Survey of Travelers”
comparing Aug-Dec 2018 vs. Aug-Dec 2019

No. of Guests by Area (Business Hotels, August-December)+4,000,000

Domestic+3,000,000

Inbound+2,718,350+2,000,000+1,000,000+528,670+166,910+510,740+579,310+235,960

0-1,400-586,610-1,000,000(Total Number of Domestic and Inbound Tourists)-980,850

Hokkaido

Tokyo

Tokai

Kyoto

Osaka

Chugoku/ Kyushu
Shikoku

%

YOY

Total

12,257,259

100%

-1.6%

Korea

1,160,3059%-60.2%

China

4,011,475

33%+16.5%

Taiwan1,950,568

16%

+8.9%

Hong Kong

976,0518%+12.1%

Thailand562,1445%+24.6%

Singapore

256,4772%+18.6%

Malaysia

240,7562%+15.1%

Indonesia

171,6881%+9.9%

Philippines

280,1812%+40.5%

Vietnam

201,0362%+24.7%

India

69,6951%+14.1%

Australia

260,0392%+16.5%

US

691,8746%+14.3%

Canada162,1761%+17.9%

UK

209,6032%+51.6%

France141,4281%+15.5%

Russia55,065–+35.5%

Other

619,7715%+24.6%* Calculated by Ichigo Investment Advisors based on Japan National Tourism
Organization (JNTO)’s “Visitors Trends”, comparing Aug-Dec 2018 vs. Aug-Dec 2019

-2,000,000
Total

Aug-Dec 2019
Total

Okinawa* Calculated by Ichigo Investment Advisors based on Japan Tourism Agency (JTA) “Statistical Survey of Travelers”
comparing Aug-Dec 2018 vs. Aug-Dec 2019

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

11

Highly Accretive Asset Sales− Sold 2 hotels, one in Kyoto (Oct 2019) and one in Naha (Jan 2020),
generating gains on sales of JPY 1.94B− Sale prices significantly exceeded book value & third-party appraisal value
Hotel Vista Premio Kyoto

Nest Hotel Naha

– Sale completed in October 2019
– Sale price (JPY 4.5B) 1.2X appraisal value– Gains on sale of c. JPY 670M (net of performance feeto AM)– Distributing 100% of gains on sale as dividend toshareholders; using rest of proceeds to fund asset
acquisitions and value-add capex(Funded HOTEL EMIT SHIBUYA acquisition
announced in January 2020)– Sale completed in January 2020
– Sale price (JPY 5.29B) 1.3X appraisal value– Gains on sale of c. JPY 1.27B (net of performance feeto AM)– Distributing 100% of gains on sale as dividend toshareholders; using rest of proceeds to fund asset
acquisitions and value-add capex(Partially funded Washington Hotel Plaza Shimonoseki
Eki Nishi acquisition announced in February 2020)© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

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

13

Achieving Organic Growth at Contract Renewals
Negotiating Higher Rents at Contract Renewals to Drive Organic Growth

Plan

ActualTimingHotel Name

Lease Terms

ChangesJun 2017

Chisun Inn Osaka Hommachi

Variable+Fixed
Rent

Renewal atHigher Rent

• Increased fixed rent
• Increased variable rent

Mar 2019

Hotel Wing International Kobe Variable+Fixed
Shin Nagata Ekimae
Rent

Rebranding• Increased fixed rent
• Added variable rent

Jun 2019

Nest Hotel (4 Hotels)

Variable+Fixed
Rent

Renewal atHigher Rent

• Increased fixed rent

Sep 2019

Valie Hotel Hiroshima

Variable+Fixed
Rent

Rebranding• Rebrand and reopen• Added variable rent

Sep 2019

Nest Hotel Naha

Variable+Fixed
Rent

Renewal atHigher Rent

• Increased fixed rent

Jun 2020

Smile Hotel Tokyo Asagaya

Variable+Fixed
Rent

Lease Expiry• Increased fixed rent
• Increased variable rent

Sep 2020

Comfort Hotel Okayama

Fixed Rent

Rebranding• Operator change to Hakata Hotels• Increased fixed rent & added variable rent

Dec 2020

3 Hotels

Fixed Rent

Renewal• New contract terms to be negotiated2021

2 Hotels

Variable+Fixed
Rent

Lease Expiry• New contract terms to be negotiated© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

14

Operator Change to Generate Higher Earnings
The OneFive Okayama* (formerly Comfort Hotel Okayama)− Hotel operator change from third-party operator to Ichigo-owned Hakata Hotels− New lease increases fixed rent and newly adds variable rent
(Forecast to increase annual NOI by JPY 71M)
− Deploying Ichigo’s PROPERA AI-based hotel revenue management system (operating trackrecord: GOP +20%) to drive higher earnings & customer satisfaction
Hakata Hotels
Name

Hakata Hotels Inc.

Address

3-13-1 Haruyoshi, Chuo-ku, Fukuoka

Representative

Minoru Ishihara, Representative Director & Chairman
Takanobu Kitazaki, Representative Director & President

Establishment
Date

March 2019

Paid-In Capital* Provisional name. Scheduled to rebrand and re-open
on September 13, 2020.

Relationship to
Ichigo Hotel/IIA© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

JPY 10 million(100% Ichigo group subsidiary)

Consolidated subsidiary of Ichigo Investment Advisor’s
parent company, Ichigo(Hakata Hotels is a related party as defined in the
Ordinance of the Investment Trust and Investment
Corporation Law and IIA’s internal rules)

15

Value-Add Capex to Generate Higher Earnings (1)NEST Hotels (4 Hotels)− Acquired Sapporo Odori & Sapporo Ekimae in November 2015 and Osaka Shinsaibashi &Matsuyama in August 2016
− Conducted value-add capex after acquisition to drive higher earnings and asset value− Fixed rent +JPY 11M p.a. at lease renewal (June 2019)
Value-Add Capex Details
Details
Create guest
rooms
Add guest rooms

Drive
Earnings

ReduceCosts

Renovate
guest rooms/
Replace beds

Split guest
rooms
Renovation
Convert into
twin beds
Install larger
beds

Apr 2016
Jan 2017
Jan 2017
Jan 2019
Jul 2019
Apr 2016
Jan 2017
Jan 2017
Nov 2017
Jan 2018

Investment(JPY M)
16.3
27.8
24.2
50.0
22.0
16.6
0.8
3.8
1.1
1.8

NOI Increase(JPY M p.a.)
2.3
4.8
2.2
9.9
3.7
2.4
1.2
1.1
1.4
1.3

Jul 2017

6.0

1.0

Dec 2017
Dec 2017
Feb 2018
Mar 2018

170.4
6.8
2.3
2.9
4.4

31.3
2.3
1.4
0.7
0.6

Apr 2018－

1.0

Oct 2018－

3.0

Jan 2017

－

2.0

16.4

11.0

Hotel

PeriodNest Hotel Sapporo Odori
Nest Hotel Naha
Nest Hotel Sapporo Odori
Nest Hotel Naha
Nest Hotel Naha
Nest Hotel Sapporo Odori
Nest Hotel Osaka Shinsaibashi
Nest Hotel Matsuyama
Nest Hotel Osaka Shinsaibashi
Nest Hotel Matsuyama

Install coin-operated laundry
Nest Hotel Matsuyama
machines
Total - Drive Earnings
Nest Hotel Osaka Shinsaibashi
Reduce water Nest Hotel Naha
consumption Nest Hotel Sapporo Odori
Nest Hotel Matsuyama
Hotel operating Improve power
Nest Hotel Matsuyama
expenses
efficiency
Reworkbuilding
Nest Hotel Matsuyama
services
contract
Real estateReduce tax Nest Hotel Matsuyama
related expenses
Total - Reduce Costs© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

16

Value-Add Capex to Generate Higher Earnings (2)Smile Hotel Tokyo Asagaya (Acquired in August 2016)− Increased rent with new retail tenant on first floor & new external advertising lease− Driving higher earnings and asset value via guest room renovations & layout changes fromsingle-bed rooms to twin-bed rooms (June 2017 to June 2018 fiscal periods)− Annual rent forecast to increase by JPY 10M via increase in fixed rent and revision ofvariable rent calculation (new rent applied from June 2020)
Value-Add Capex Details
TimingCapex Details

Capex AmountRent Increase p.a.

JPY 4.0M

JPY 1.3M

JPY 116.1M

JPY 39.6M

Installation & leasing of rooftop billboard
Jul 2017 Fiscal Period
Guest room renovations (Phase 1, 5F)
Jan 2018 Fiscal Period

Guest room renovations (Phase 2, 3F & 4F)

Jul 2018 Fiscal Period

Guest room & lobby renovations (Phase 3, 2F & 1F)

BeforeEntrance

After

Twin-Bed Room

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

EntranceTwin-Bed Room17

Acquisition: HOTEL EMIT SHIBUYAHOTEL EMIT SHIBUYA (Announced Jan 30, 2020; Completed Feb 25, 2020)−−−−

6-minute walk from Shibuya Station, one of Tokyo’s top transportation hubs
Demand forecast to grow on back of inbound tourism growth
Acquired at 11% discount to third-party appraisal value
Will deploy Ichigo’s PROPERA AI-based hotel revenue management system to drive higher
earnings− Forecast increase in annual portfolio NOI: JPY 144 million© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

18

Acquisition: Washington Hotel Plaza Shimonoseki Eki Nishi
Washington Hotel Plaza Shimonoseki Eki Nishi(Announced Feb 26, 2020; Completed Mar 12, 2020)− Located in Shimonoseki, Yamaguchi, one of the largest cities in the Chugoku region;
3-minute walk from Shimonoseki Station on the JR Sanyo Main Line
− Tourist attractions (Karato Market) and historic sites (Dannoura Battlefield) as well as
corporate HQs and branch offices in the area drive business and leisure demand− Acquired at 10% discount to third-party appraisal value− Forecast increase in annual portfolio NOI: JPY 74 million− Fixed rent hotel to support portfolio earnings stability© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

19

Highly-Stable, Diversified Hotel Portfolio
Geographic Diversification (Acquisition-Price Basis)
November 30, 2015 (IPO)

Kobe Osaka
7.3% 8.0%
Nagoya
13.1%
Kyushu6.8%

July 31, 2019

Okinawa
6.9%
Hokkaido
7.2%
Tokyo
9.7%

Kyoto
39.6%

Tokai
7.6%

Breakdown

Portfolio Size

9 Hotels

Osaka 1, Kyoto 2, Tokai 1,
Hokkaido 2, Kyushu 1,
Nagoya 1, Kobe 1

JPY 20.4B

Yokohama
Nagoya 2.9%
5.1%
Kyushu6.9%

Yokohama
Kobe
2.7%
2.7%
Nagoya
4.9%
Kyushu
Osaka
6.6%
16.9%

Hokkaido
17.7%

HotelsMarch 12, 2020

HotelsBreakdown

Portfolio Size

JPY 54.4B

Kyoto
8.6%
Chugoku/
Shikoku
17.2%

Tokyo
17.3%

Chugoku/
Shikoku
Tokai
14.4%
13.1%

Osaka 2, Kyoto 2,
Chugoku/Shikoku 5,
Tokai 3, Tokyo 2,
Hokkaido 3, Okinawa 1
Kyushu 2, Nagoya 1,
Yokohama 1, Kobe 1

Osaka
17.8%

Hokkaido
7.5%

Kyoto
14.8%

23 Hotels

Kobe
2.9%

Tokai
13.8%

HotelsBreakdown

Portfolio Size

23 Hotels
Osaka 2, Kyoto 1,
Chugoku/Shikoku 6,
Tokai 3, Tokyo 3,
Hokkaido 3, Kyushu 2,
Nagoya 1, Yokohama 1,
Kobe 1
JPY 51.9B* After HOTEL EMIT SHIBUYA/Washington Hotel Plaza
Shimonoseki Eki Nishi acquisitions© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

20

Lease Details (as of January 31, 2020)
Stability
Lease Term

UpsideFixed Rent

Fixed + Variable Rent

Total

Contract

Lease

Lease

Lease

–

Fixed Rent

Yes

Yes

Yes

–

Variable Rent–

Fixed Portion of Revenue
UpsideFixed Portion of Hotel GOP–

Rental Income(Jan 2020 Actual)

JPY 428M(27.5%)

JPY 165M(10.6%)

JPY 964M(61.9%)

JPY 1.56B(100%)

Fixed Rent

JPY 428M(27.5%)

JPY 147M(9.5%)

JPY 417M(26.8%)

JPY 993M(63.8%)

Variable Rent

None

JPY 17M(1.1%)

JPY 546M(35.1%)

JPY 564M(36.2%)

Number of Hotels

8 Hotels

3 Hotels

10 Hotels

21 Hotels

Total AcquisitionPrice

JPY 13.31B(28.2%)

JPY 5.79B(12.3%)

JPY 28.04B(64.9%)

JPY 47.13B(100%)

Comfort Hotel Kushiro
Comfort Hotel Hamamatsu
Comfort Hotel Central
International Airport
Comfort Hotel Suzuka
Comfort Hotel Okayama
Grandpark-Inn Yokohama
Hotel Livemax NihombashiHakozaki
Urbain Hiroshima Executive(Washington Hotel Plaza
Shimonoseki Eki Nishi)

Hotel Wing International Nagoya
Hotel Wing International Kobe
Shin Nagata Ekimae
Chisun Inn Osaka Hommachi

Nest Hotel Sapporo Ekimae
Nest Hotel Sapporo Odori
Nest Hotel Osaka Shinsaibashi
Nest Hotel Matsuyama
Nest Hotel Kumamoto
Smile Hotel Tokyo Asagaya
Smile Hotel Kyoto Shijo
Valie Hotel Hiroshima
Valie Hotel Tenjin
Court Hotel Kurashiki
Hotel Vista Premio Kyoto (Sold)
Nest Hotel Naha (Sold)(HOTEL EMIT SHIBUYA)–

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

21

Portfolio Growth Opportunity via Ichigo Sponsor Support
18 Hotels (JPY 55B) in Ichigo Sponsor Pipeline as of January 31, 2020
− Lodging-focused hotels across Japan− Locations: Major cities such as Tokyo, Yokohama, Osaka, Kyoto, and Fukuoka

Fukuoka

Tokyo
Osaka

Fukuoka

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

22

Launch of Ichigo J.League Shareholder Program
Represents Two Firsts for a Shareholder Program in Japan− Ichigo is the first Japanese company to include not just its own shareholders, butalso the shareholders of the REITs and YieldCo that it manages, in its
shareholder program− Ichigo is the first company to offer shareholders free tickets to every J.League
game at every J.League club

Ichigo is deepening its partnership with the J.League and working tofurther Ichigo’s mission of promoting local community developments.

Ichigo J.League Shareholder
Program Website Landing Page
© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

23

July 2020 and January 2021 Forecasts© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

24

July 2020 Forecast
Dividend -29.8% YOY(JPY million)
Jul 2020
Previous Forecast(Jan 2020)

Jul 2019
Actual (A)Jul 2020
Revised
Forecast (B)(B) - (A)Operating Revenue

1,789

1,446

1,474

-315

Variable Rent

735

505

477

-258

Fixed Rent

984

897

953

-30

Other (Gains on Sales, etc.)

70

42

43

-26

797

669

702

-95

Repair & Maintenance

18

24

29

+10

Depreciation

328

317

337

+9

Operating Profit

992

776

771

-220

Recurring Profit

805

565

565

-239

Net Income

804

564

565

-239

Dividend

JPY 3,154

JPY 2,214

JPY 2,216-JPY 938

FFO

JPY 4,496

JPY 3,480

JPY 3,561-JPY 935

NOI

1,611

1,277

1,299

-312

Post-Depreciation NOI

1,283

959

961

-321

256

331

356

+100

Operating Expenses

Capex

Major Factors for Variation

Expected RevPAR at Variable Rent Hotels: JPY 6,197 (-18.3% YOY)
Decrease due to acquisitions & sales: -33, Increase in rent from revised lease(Asagaya): +3, Decrease due to revised lease (Kobe): -1
Decrease due to acquisitions & sales: -26, Decrease due to revised lease (Kobe):+1
Decrease in asset-related expenses due to acquisitions & sales: -10
Decrease in AM fee: -110

Increase in borrowing-related expenses on acquisitions: +24
Decrease due to end of new share issuance amortization: -8+0.1% (+JPY 2) vs. previous forecast-29.8% YOY

Due to the significant forecast uncertainty, the impact of the COVID-19 coronavirus outbreak has not been reflected in the earnings forecast.
© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

25

January 2021 Forecast
Dividend -72.1% YOY(JPY million)
Jan 2020
Actual (A)Jan 2021
Forecast (B)Major Factors for Variation(B) - (A)Operating Revenue

3,561

1,525

-2,035

Variable Rent

564

455

-108

Fixed Rent

993

1,026

+32

Other (Gains on Sales, etc.)

2,003

43

-1,959

1,226

728

-498

Repair & Maintenance

26

35

+8

Depreciation

352

337

-14

Operating Profit

2,334

797

-1,537

202

202

–

Recurring Profit

2,132

594

-1,537Net Income

2,130

593

-1,536

Dividend

JPY 8,356

JPY 2,328-JPY 6,028

FFO

JPY 3,561

JPY 3,651+JPY 90

NOI

1,438

1,339

-98

Post-Depreciation NOI

1,086

1,002

-84

257

310

+53

Operating Expenses

Non-Operating Expenses

Capex

Expected RevPAR at Variable Rent Hotels: JPY 6,206 (-6.3% YOY)
Decrease due to acquisitions & sales: -22
Increase due to acquisitions & sales: +2, Increase due to renewed or revised lease (Tenjin,
Asagaya, Okayama)： +29
Decrease due to acquisitions & sales: -14, Decrease in gains on sales: -1,945
Decrease due to acquisitions & sales: -18, Decrease in AM fee: -424,Decrease in
consumption tax: -76-72.1% YOY

Due to the significant forecast uncertainty, the impact of the COVID-19 coronavirus outbreak has not been reflected in the earnings forecast.
© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

26

Ichigo’s Commitment to ESG© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

27

Ichigo Sustainability Policy
Harmony with the Environment
Ichigo actively monitors and minimizes the environmental impact of its business operations.

Energy Conservation, CO2 Reduction, and Recycling
Ichigo seeks to contribute to a low-carbon, low-waste society by reducing energy
consumption, extending the useful life of assets, actively recycling, reducing waste
production and water consumption, and implementing green procurement measures.

Regulatory and Environmental Compliance
Ichigo complies with all environmental laws and regulations and Ichigo’s own independentlyestablished environmental rules. Ichigo also carefully monitors and complies with all applicablechanges in laws and regulations.

Training and AwarenessIchigo promotes understanding of its Sustainability Policy and works to increase sustainability
awareness among all Ichigo employees.

Sustainability Performance Communication and Disclosure
Ichigo communicates its Sustainability Policy and Ichigo’s sustainability initiatives to society atlarge. 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.

28

Ichigo ESG – Environmental
Sustainable Real Estate
Preserve & Enhance Existing Buildings
to End Wasteful Demolish & Rebuild

Solar and Wind Energy: Safe and Clean
Annual CO2 Reduction
93,521,697 kg

Annual Power Generation
141,699,548 kWh‒ Lengthen useful life of real estate‒ Shrink footprint by reducing demolition
waste and use of raw materials, energy,
and human effort for construction

DemolishLowestImpactHighestEfficiency

Equivalent to annual
CO2 emission of
40,661 cars

Equivalent to annual
energy consumption of
47,233 households

Ministry of Environment
Annual CO2 emission per car c. 2,300kg

The Federation of Electric Power
Companies of Japan
Annual energy consumption per household
3,000kWh(July 2018 to June 2019 – Total of Ichigo
and Ichigo Green)

Natural Disaster Response
No injuries or damages at any Ichigo asset or power
plant from recent natural disasters
Robust Assets- Real estate: continuous improvements to safety & functionality via
value-add capex- Power plants: site selection and construction based on detailed
specifications customized to local geography
Robust BCP & Real-time Response- Pre-typhoon preventative measures (water shielding, sandbags,etc.) & on-site checks- Overwhelming priority is safety of tenants: on-the-groundconfirmation & on-the-ground response- Ichigo engineering team immediate response: same day on-site
safety and engineering inspections to prevent secondary damage
and losses- Developed & deployed proprietary Susport software system forreal-time information sharing & emergency response

Environmental Certifications
CASBEE(Comprehensive Assessment System
for Built Environment Efficiency)
S rankIchigoTakamatsu
Building

IchigoMarunouchi
Building

Ichigo Office (8975)

A rankEbisu
Green Glass

IchigoSakaisuji
Honmachi
Building

Ichigo Sendai
East Building

Green Star(Highest Ranking)3 years in a row

Other Certifications
BELS (Building-housing Energy-efficiency Labeling System),
DBJ Green Building© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

29

Ichigo ESG – Social
Sports & Arts
Supporting Outstanding,World-Class Athletes‒ Weightlifting‒ Riflery‒ Track & Field

Paralym Art Sponsor‒ Support artists withdisabilities

Weightlifting Athlete
Hiromi Miyake

Children’s Cancer Treatment
Supporting University of Miyazaki
Faculty of Medicine’s Program forChildren with Cancer‒ Issued CSR bond & donated a portion ofunderwriter commission to the Cancer
Program‒ Sponsoring volunteer activities in supportof children with cancer

Local Communities
Promoting Community Development as J.League
Top Partner

Strengthen Local Communities, Create Jobs,
and Boost Rural Economies via Smart Agriculture‒ Renovate and upgrade stadiums and help local governments
reduce steep operating and maintenance costs‒ Collaborate with local farmers to increase agricultural
output, improve quality, and raise rural incomes‒ Use real estate expertise to help build stronger and healthierlocal communities‒ Increase Japan’s food self-sufficiency©J.LEAGUE© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

30

Ichigo ESG – GovernanceFirst J-REIT No Fixed Fee, Performance Fee-Only Structure Performance-linked fee structure to support shareholder value creation
 Pro-active, dynamic management of Ichigo Hotel assets on behalf ofshareholders

Best Practice Governance
REIT

Asset Management Company (AMC)

Monitors Asset Management Company• All Ichigo Hotel Directors are Independent
Directors• Active dialogue and effective internal controls via
Board discussions led by REIT Executive Director• Draw upon expertise of REIT Supervisory Directors(qualified lawyers & accountants)

Best Practice
Majority of AMC Directors (3 of 5) are Independent
Directors
Independent asset management team & bestpractice execution on behalf of Ichigo Hotel within
AMC
Compliance and Audit are directly under the AMC
President to monitor and review critical compliancematters
Ensure objectivity by including third-party,
independent lawyers and accountants in theInvestment Committee & Risk & Compliance
Committee••••

Ichigo Hotel (3463) and Ichigo Office (8975) are the only J-REITs (out of 63)
that both have an Asset Management Company (AMC) board that has a majority of Independent
Directors and whose AMC President does NOT serve as the Executive Director of the REIT
Independence of the Investment Corporation from AMC

Independent Directors at AMC➡ 31 of 63 J-REITs have AMC Presidents serving as➡ Only 4 Asset Management Companies have any

Executive Director of the REIT

All Ichigo Hotel Directors are Independent

Independent Directors

3 of 5 Ichigo Investment Advisors' Directors
are Independent© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

31

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

32

Growth Driver: Strong Inbound Demand− New hotel supply forecast to peak in 2020
− Domestic demand firm while inbound demand continues to grow
Growth in New Hotel Supply By Major City vs. March 31, 2018
20.0%

Total Number of Tourists in Domestic Lodging Facilities(million persons)600
Domestic

Tokyo

Osaka

SapporoKyoto

FukuokaNaha

Nagoya

500
400

15.0%

Inbound

33

45

66

69

80

94

101

18

26

399

413

432

429

438

423

430

444

442

2011

2012

2013

2014

2015

2016

2017

2018

2019

300
200
100

10.0%
0
*Calculated by Ichigo Investment Advisors based on Japan Tourism Agency (JTA) “Statistical Survey of Travelers”

Number of Inbound Tourists
5.0%

60

(million persons)

40

+430%

0.0%
2019

2020

2021

2022

2023

29
20

6

2011

8

2012

10

2013

31

32

2018

2019

24

13

2014

2015

2016

2017

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.

33

Business Hotel Demand Strong and Growing
Business hotels benefit from both robust domestic demand and growing
inbound demand− 203M domestic business hotel guests in 2019, +10.7% YOY− 41M inbound business hotel guests in 2019, +24.1% YOY
No. of Guests by Hotel Type (Domestic)

No. of Guests by Hotel Type (Inbound)(million persons)(million persons)250

2019 Business Hotel
Market Share 47%

40

2019 Business Hotel
Market Share 41%

200

30
150

20
100

10

50

0
2011

2012

2013

2014

2015

Business Hotels

Japanese Inns

Full-Service Hotels

Budget Hotels

2016

2017

2018

Resort Hotels

2019

0
2011

2012

2013

2014

2015

Business Hotels

Japanese Inns

Full-Service Hotels

Budget Hotels

2016

2017

2018

2019

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.

34

New Hotel Room Supply in Japan
No. of New Hotel Rooms (vs. March 31, 2019)
Existing Hotel Rooms
New Supply% Increase of New Supply* 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” and hotel and restaurant data published June 7, 2019.
* % Increase of New Supply = New Supply / (Existing Hotels + Japanese Inns)© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

35

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

36

Hotel Map
Tokyo

Hokkaido

Kanto

C-1

C-3

B-1

Hokuriku/Tokai

A-1

A-2

D-1

A-3

D-2

D-3

D-4

Variable Rent
Fixed Rent
Smile HotelTokyo Asagaya

Hotel Livemax
NihombashiHakozaki

Grandpark-Inn
Yokohama

Kinki (Kyoto/Osaka/Kobe)
E-1

Nest Hotel
Sapporo Ekimae

Nest Hotel
Sapporo Odori

ComfortHotel Kushiro

F-1

Comfort Hotel
Hotel Wing
International Central International
AirportNagoyaKyushuChugoku/Shikoku

E-3

Comfort Hotel
Hamamatsu

F-3

F-2

G-1

Comfort Hotel
Suzuka▶ Sapporo
A-1 A-2

G-3▶ Kushiro
A-3

Smile Hotel
Kyoto Shijo

E-4

Chisun Inn
Osaka
HommachiComfort Hotel
Okayama

E-5

F-4

Nest Hotel
Matsuyama

Urbain Hiroshima
Executive

Valie Hotel
TenjinNest Hotel
Kumamoto

F-5▶ Nagoya D-2▶ Kyoto E-1▶ Osaka E-3 E-5▶ Kurashiki F-4

Hotel Wing International
Kobe Shin Nagata Ekimae

C-4
Newly
Acquired

Nest Hotel Osaka
Shinsaibashi

HOTEL EMIT SHIBUYA(Acquired on Feb 25, 2020)

Court Hotel
Kurashiki

F-6

Valie Hotel
Hiroshima

21 Hotels
JPY
47.1B▶ TokyoC-1 C-3▶ Yokohama B-1▶ Hamamatsu D-1▶ Matsuyama▶ Aichi D-3
F-2▶ Suzuka D-4▶ Kumamoto▶ Kobe E-4
G-3▶ Okayama F-1▶ Fukuoka
G-1

Washington Hotel Plaza
Shimonoseki Eki Nishi(Acquired on Mar 12, 2020)© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

▶ Hiroshima F-3 F-5(January 2020 rent-basis)37

Portfolio Growth
IPO(November 30, 2015)

January 2017
Fiscal Period

July 2017 through July 2019
Fiscal Period

IPO Acquisitions
9 hotels
JPY 20.4B

PO Acquisitions
10 hotels
JPY 27.2B

July 2017
1 hotelJPY 1.4B

Jan 2018
1 hotelJPY 1.8B(Appraisal NOI
Yield 5.9%)(Appraisal NOI
Yield 5.5%)(Appraisal NOI
Yield 5.0%)(Appraisal NOI
Yield 6.3%)

Jan 2019
1 hotelJPY 1.7B

January 2020
Fiscal Period

July 2019
2 hotels
JPY 3.7B(Appraisal NOI (Appraisal NOI
Yield 6.9%)
Yield 6.9%)

None

Hotels

Sale

None

None

None

None

Portfolio
Size

9 Hotels : JPY 20.4B(January 2016 end)

19 Hotels
JPY 47.6B

20 Hotels
JPY 49.1B

21 Hotels
JPY 50.9B

1 HotelJPY 2.7BNone

21 Hotels
JPY 50.7B

23 Hotels
JPY 54.4B

Gains on Sale
JPY 0.69B

IPO

Location

Geographic Diversification
Increases Earnings Stability

21 Hotels
JPY 47.1B

Yokohama
3.2%

Nagoya
5.7%

Kobe
3.2%
Osaka
19.6%

Kyushu7.6%

Steady Portfolio Growthvia Acquisitions

Kyoto
39.6%

Hokkaido
17.7%
Tokai
7.6%

Gains on Sales
JPY 1.94B

Jan 31, 2020

Kobe Osaka
7.3% 8.0%
Nagoya
13.1%
Kyushu6.8%

2 Hotels
JPY 9.7B

Kyoto
9.5%

Hokkaido
8.3%
Tokyo
11.2%
Tokai
15.2%

Chugoku/
Shikoku
16.6%

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

38

Hakata Hotels and PROPERA− Hakata Hotels, a consolidated subsidiary of Ichigo, is a Hotel Operator operating
5 hotels in the Hakata area
− Hakata Hotels will deploy PROPERA, an AI-based revenue management systemdeveloped by Ichigo to maximize earnings and increase guest satisfaction.
Name

Hakata Hotels Inc.

Address

3-13-1 Haruyoshi, Chuo-ku, Fukuoka

Representatives

Minoru Ishihara, Representative Director & Chairman
Takanobu Kitazaki, Representative Director & President

Paid-In Capital

JPY 10 million (100% shareholding by Centro Co. Ltd. , 100% Ichigo subsidiary)

Establishment Date

March 2019

Main Business・Development, operation, lease, and management of retail buildings, hotels and restaurants
・Lease and management of real estate・Design and construction of buildings and interior designs
・Consulting services related to retail buildings, retail facilities, and restaurants

Operating Hotels

Hakata area
Hotel Il Palazzo (62 rooms), 5th Hotel WEST (83 rooms), The OneFive Villa Fukuoka (50 rooms),
Plaza Hotel Tenjin (205 rooms), Plaza Hotel Premier (170 rooms)
Tokyo
HOTEL EMIT SHIBUYA (72 rooms)

PROPERA (AI-based revenue management system developed by Ichigo)• Increase guest satisfaction• Track record of increasing annual revenues by 10 to 40%• Started third-party sales to build on Ichigo’s non-asset business contributing to stock earnings© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

39

Individual Hotel Summary
Hotel
No.

Hotel

Hotel Name

Lease Terms

Location

Leasable
Area
2

(m )

Jan 2020 Appraisal

Acquisition
Price(JPY M)

Book Value(JPY M)(A)

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

2,143

2,700

5.1

+556

A-2

Nest Hotel Sapporo Odori

Variable + Fixed Rent

Sapporo5,638.78

1,450

1,481

1,900

5.0

+418

A-3

Comfort Hotel Kushiro

Fixed Rent

Kushiro, Hokkaido

3,180.58

300

290

431

5.4

+140

B-1

Grandpark-Inn Yokohama

Fixed Rent

Yokohama

1,183.26

1,490

1,501

1,550

4.5

+48

C-1

Smile Hotel Tokyo Asagaya

Variable + Fixed Rent

Tokyo

2,721.70

3,910

3,983

4,370

4.3

+386

C-3

Hotel Livemax Nihombashi-Hakozaki

Fixed Rent

Tokyo

853.00

1,360

1,314

1,440

4.5

+125

D-1

Comfort Hotel Hamamatsu

Fixed Rent

Hamamatsu, Shizuoka

4,173.92

1,550

1,456

1,790

5.1

+333

D-2

Hotel Wing International Nagoya

Variable + Fixed Rent

Nagoya5,255.66

2,670

2,710

2,820

4.7

+109

D-3

Comfort Hotel Central International Airport

Fixed Rent

Tokoname, Aichi

11,599.63

5,308

5,346

5,880

4.0

+533

D-4

Comfort Hotel Suzuka

Fixed Rent

Suzuka, Mie

2,186.65

300

282

387

4.9

+104

E-1

Smile Hotel Kyoto Shijo

Variable + Fixed Rent

Kyoto

4,891.84

4,480

4,538

3,860

4.3

-678

E-3

Chisun Inn Osaka Hommachi

Variable + Fixed Rent

Osaka

3,690.00

1,630

1,711

1,850

4.4

+138

E-4

Hotel Wing International Kobe Shin Nagata Ekimae

Variable + Fixed Rent

Kobe

4,540.90

1,490

1,416

1,840

4.6

+423

E-5

Nest Hotel Osaka Shinsaibashi

Variable + Fixed Rent

Osaka

8,057.26

7,600

7,669

6,990

4.4

-679

F-1

Comfort Hotel Okayama

Fixed Rent

Okayama

5,543.70

1,200

1,184

1,280

5.2

+95

F-2

Nest Hotel Matsuyama

Variable + Fixed Rent

Matsuyama, Ehime

6,671.94

1,610

1,648

2,060

5.6

+411

F-3

Urbain Hiroshima Executive

Fixed Rent

Hiroshima

2,756.20

1,800

1,833

2,100

5.2

+266

F-4

Court Hotel Kurashiki

Variable + Fixed Rent

Kurashiki, Okayama

3,964.19

1,725

1,801

2,130

4.9

+328

F-5

Valie Hotel Hiroshima

Variable + Fixed Rent

Hiroshima

4,332.50

1,500

1,590

1,770

4.8

+179

G-1

Valie Hotel Tenjin

Variable + Fixed Rent

Fukuoka

1,910.94

1,380

1,441

2,230

4.2

+788

G-3

Nest Hotel Kumamoto

Variable + Fixed Rent

Kumamoto

6,404.36

2,220

2,202

2,490

5.2

+287

95,291.94

47,13347,54951,8684.6+4,31821 Hotels© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

40

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

Hotel Name

Lease Terms

Location

No. ofGuest
Rooms

Sapporo

162

8,950

A-1

004 Nest Hotel Sapporo Ekimae

Variable + Fixed Rent

A-2

008 Nest Hotel Sapporo Odori

Variable + Fixed Rent

Sapporo121

A-3

018 Comfort Hotel Kushiro

Fixed Rent

Kushiro, Hokkaido

126

C-1

012 Smile Hotel Tokyo Asagaya

Variable + Fixed Rent

Tokyo

D-1

006 Comfort Hotel Hamamatsu

Fixed Rent

D-2

003 Hotel Wing International Nagoya

D-3

011 Comfort Hotel Central International Airport

D-4

January 2020 (August 2019 - January 2020)
RevPAR (JPY)

Occupancy (%)(-8.9%)

96.8

9,380

(-17.0%)4,796(+13.2%)

112

8,677

Hamamatsu, Shizuoka

196

Variable + Fixed Rent

NagoyaFixed Rent

Tokoname, Aichi

019 Comfort Hotel Suzuka

Fixed Rent

E-1

001 Smile Hotel Kyoto Shijo

E-2

ADR (JPY)

Revenue (JPY M)(+1.1%)

9,245(-9.9%)

326.5

91.7

(-3.0%)

10,233(-14.4%)231.2(-16.1%)

79.7(+8.9%)

6,018(+3.9%)

116.7(+12.8%)(-5.0%)

97.6(-1.0%)

8,891(-4.1%)

184.1(-4.6%)

4,507(-5.8%)

76.1(-6.3%)

5,923(+0.5%)

162.5(-5.8%)

224

5,340

(-3.0%)

86.0(-3.2%)

6,210(+0.3%)

241.5(-5.0%)

346

7,944

(-2.2%)

85.8(-5.4%)

9,255(+3.3%)

527.8(-2.6%)

Suzuka, Mie

105

4,389

(-14.4%)75.1(-4.8%)

5,845(-10.1%)

85.6(-14.6%)

Variable + Fixed Rent

Kyoto

144

6,800

(-18.6%)97.1(-0.4%)

7,000(-18.3%)194.0(-17.9%)002 Hotel Vista Premio Kyoto

Variable + Fixed Rent

Kyoto

84

9,702

(-11.0%)91.1(+3.1%)

10,650(-13.6%)

86.7(-53.1%)E-3005 Chisun Inn Osaka Hommachi

Variable + Fixed Rent

Osaka

130

4,180

(-33.8%)67.7(-20.1%)

6,176(-17.2%)100.0(-33.8%)E-4

007 Hotel Wing International Kobe Shin Nagata Ekimae

Variable + Fixed Rent

Kobe

133

6,160

–

77.6

–

7,934

–

167.9

–

E-5

010 Nest Hotel Osaka Shinsaibashi

Variable + Fixed Rent

Osaka

302

5,589

(-30.2%)

78.1(-12.4%)

7,155(-20.3%)335.7(-29.5%)F-1

017 Comfort Hotel Okayama

Fixed Rent

Okayama

208

5,259

(-6.2%)

86.3(-2.9%)

6,097(-3.4%)

209.7(-6.3%)

F-2

015 Nest Hotel Matsuyama

Variable + Fixed Rent

Matsuyama, Ehime

190

5,424

(-2.2%)

86.8(-2.7%)

6,250(+0.6%)

269.0(-1.8%)

F-3

021 Urbain Hiroshima Executive

Fixed Rent

Hiroshima

171

6,233

(-9.4%)

88.1(-3.0%)

7,073(-6.6%)

196.1(-9.4%)

F-4

022 Court Hotel Kurashiki

Variable + Fixed Rent

Kurashiki, Okayama

107

7,483

(-7.7%)

88.7(-9.3%)

8,440(+1.7%)

174.0(-4.8%)

F-5

024 Valie Hotel Hiroshima

Variable + Fixed Rent

Hiroshima

171

3,327

–

64.5

–

5,161

–

78.5

–

G-1

009 Valie Hotel Tenjin

Variable + Fixed Rent

Fukuoka

77

8,393(-11.9%)94.7(-0.2%)

8,864(-11.8%)128.3(-11.1%)G-2

013 Nest Hotel Naha

Variable + Fixed Rent

Naha, Okinawa

200

7,986

(-13.7%)79.1(-7.3%)

10,099(-7.0%)

425.2(-11.7%)G-3

023 Nest Hotel Kumamoto

Variable + Fixed Rent

Kumamoto

201

5,077

(+1.9%)

79.1(-8.7%)

6,419(+11.6%)213.2(+0.9%)

Other

–

223

–

–

–

(-7.8%)–

Variable Rent Hotels

2,358

6,630

(-13.9%)85.4(-6.0%)

7,760(-8.4%)

2,822.8(-12.7%)

Fixed Rent Hotels

1,375

5,927

(-4.6%)

83.0(-3.0%)

7,140(-1.6%)

1,345.8(-4.7%)

Total

3,733

6,364

(-10.8%)84.5(-4.9%)

7,530(-6.2%)

4,168.6(-10.3%)* Operating Results data for Hotel Livemax Nihombashi-Hakozaki, and Grandpark-Inn Yokohama are consolidated under Other, because the hotel operators did not provide
consent to disclose hotel-specific data. Fixed Rent Hotels and Total include Hotel Livemax Nihombashi-Hakozaki’s operating results. YOY changes for Hotel Wing
International Kobe Shin Nagata Ekimae and Valie Hotel Hiroshima are unavailable because the operators did not provide consent to disclose pre-acquisition data.
© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

41

Individual Hotel Financials(JPY thousand)
A-1
Total

A-2

A-3

C-1

D-1

D-3

D-4

E-1

Nest
Nest
Smile
Comfort
Comfort
Comfort
Comfort
Hotel
Hotel
Hotel
Hotel Central
Hotel
Hotel
Hotel
Sapporo Sapporo
Tokyo
International
KushiroHamamatsu
SuzukaEkimaeOdori
Asagaya
Airport

Smile
Hotel
Kyoto
Shijo

E-2

E-3

E-5

F-1

F-2

F-4

F-5

Hotel Vista Chisun Inn Nest Hotel
ComfortNest Hotel Court Hotel Valie Hotel
Premio
Osaka
Osaka
Hotel
Matsuyama Kurashiki Hiroshima
Kyoto
Hommachi Shinsaibashi Okayama

G-1

G-2

G-3

Valie
Hotel
Tenjin

Nest
Hotel
Naha

Nest Hotel
Kumamoto

Other(A) Rental Income

1,615,986

108,014

77,52918,41990,12855,361

151,441

15,44264,11337,096

39,600140,847

45,90087,91572,433

20,176

52,610135,991

77,956

325,006

Fixed Rent

993,479

32,392

26,083

18,41928,37255,361

151,441

15,442

34,64437,096

39,60065,48745,90035,71733,013

8,914

24,752

63,46927,348250,020

Variable Rent

564,434

75,621

51,446-61,755---29,468--75,359-52,19439,420

10,661

27,857

72,52250,60817,516

Other Rent

58,073

-

-

-

-

-

-

-

-

-

-

-

-

3

-

600

-

-

-

57,470(B) Rental Expenses

177,249

9,150

11,321

5,819

8,452

4,820

14,157

3,162

7,036

8,875

4,938

16,842

6,463

6,316

5,018

3,735

5,409

8,566

2,397

44,764

Outsourcing
Fees

17,189

600

600

900

2,298

600

570

540

600

729

915

1,200

600

720

600

720

600

616

780

3,000

Insurance

2,985

159

168

84

91

99

284

49

146

50

102

250

143

204

110

139

60

243

185

410

RepairExpenses

26,975

2,880

1,784

389

1,198

1,428

239

384

938

2,902

268

1,316

1,436

1,057

-

2,507

1,014

1,997

897

4,335

Taxes

108,236

5,083

8,332

4,036

4,455

2,422

12,656

1,782

4,992

4,984

3,288

13,668

3,856

3,924

3,944

-

3,372

5,195

-

22,240

Other
Expenses

21,862

426

434

409

408

271

406

406

359

208

363

406

427

410

363

368

363

513

530

14,782

NOI(A) - (B)

1,438,737

98,863

66,20812,59981,67550,541

137,284

12,28057,07728,22034,661

124,004

39,436

81,59967,415

16,441

47,200127,424

75,563

280,237(D) Depreciation

352,077

15,774

15,633

5,028

27,141

14,68934,228

4,160

16,084

7,049

6,978

34,395

13,084

18,295

11,073

16,2698,935

36,993

18,82247,437

Net Rental
Income(C) - (D)1,086,659

83,08950,575

7,570

54,53335,851103,055

8,119

40,992

21,171

27,68389,60926,351

63,30456,341

171

38,26490,43056,740232,799(C)* Rents for Hotel Wing International Nagoya, Hotel Wing International Kobe Shin Nagata Ekimae, Hotel Livemax Nihombashi-Hakozaki, Grandpark-Inn Yokohama, and Urbain
Hiroshima Executive as well as retail rents of Hotel Vista Premio Kyoto, Chisun Inn Osaka Honmachi, Smile Hotel Tokyo Asagaya and Nest Hotel Kumamoto are included in
Other, as the operators did not provide consent to disclose the data.

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

42

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

(JPY thousand)Jan 2019

Jul 2019

Jan 2020

Rent

Ratio

Rent

Ratio

Rent

Ratio

1,020,028

58.4%

1,029,238

57.5%

1,032,448

63.9%

Fixed Rent from Operators

984,468

56.4%

984,14555.0%

993,479

61.5%

Other (Rent from Retail Tenants)

35,5592.0%

45,092

2.5%

38,969

2.4%

Variable Rent

701,67140.2%

735,49341.1%

564,434

34.9%

Other (Utility Income)

23,668

1.4%

24,937

1.4%

19,1041.2%

1,745,367

100%

1,789,669

100%

1,615,986

100%

Fixed Rent

Total

Total Rent
(excludes Other Revenue)

Variable
Rent
36.2%

Fixed
Rent
63.8%

(January 2020 rent-basis)

Operating Results (Feb 2019 – Jan 2020)

RevPAR (right)

ADR (right)

Occupancy (left)

(JPY)

100%

10,000

80%

8,000

60%

6,000

40%

4,000

20%

2,000

0%

0
Feb 2019

Mar 2019

Apr 2019

May 2019

Jun 2019

Jul 2019

Aug 2019

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

Oct 2019

Nov 2019

Dec 2019

Jan 2020

43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

ADR(right)Operating Results (Feb 2019 – Jan 2020)

RevPAR(right)Occupancy(left)(JPY)

100%

20,00080%

16,00060%

12,000

40%

8,000
4,000

Guest Rooms

162

20%

AcquisitionPrice

JPY 2.16B

0%0Feb 2019

May 2019

Aug 2019

Nov 2019

A-2 Nest Hotel Sapporo Odori
Location

SapporoAccess4-minute walk from
Odori Station on
Sapporo City Metro
Namboku LineOperator

Nest Hotel Japan
Corporation100%

Occupancy(left)(JPY)
20,00080%

16,00060%

12,000

40%

8,000
4,000

ADR
(right)Operating Results (Feb 2019 – Jan 2020)

Guest Rooms

121

20%

AcquisitionPrice

JPY 1.45B

0%

RevPAR(right)0
Feb 2019© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2019

Aug 2019

Nov 2019

44

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

100%

Occupancy(left)(JPY)
15,00080%

12,000

60%

9,000

40%

6,000
3,000

ADR
(right)Operating Results (Feb 2019 – Jan 2020)

Guest Rooms

112

20%

AcquisitionPrice

JPY 3.91B

0%

RevPAR(right)0
Feb 2019

May 2019

Aug 2019

Nov 2019

D-2 Hotel Wing International Nagoya
Location

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

Operator

Forbes Co., Ltd.

100%

Occupancy(left)(JPY)
10,000

80%

8,000

60%

6,000

40%

4,000
2,000

ADR
(right)Operating Results (Feb 2019 – Jan 2020)

Guest Rooms

224

20%

AcquisitionPrice

JPY 2.67B

0%

RevPAR(right)0
Feb 2019© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2019

Aug 2019

Nov 2019

45

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

K.K. Hospitality
Operations

Guest Rooms

144

AcquisitionPrice

JPY 4.48B

ADR(right)Operating Results (Feb 2019 – Jan 2020)

RevPAR(right)Occupancy(left)(JPY)

100%

15,00080%

12,000

60%

9,000

40%

6,000

20%

3,000

0%

0
Feb 2019

May 2019

Aug 2019

Nov 2019

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.

100%

Occupancy(left)(JPY)
20,00080%

16,00060%

12,000

40%

8,000
4,000

ADR
(right)Operating Results (Feb 2019 – Jan 2020)

Guest Rooms

84

20%

AcquisitionPrice

JPY 3.60B

0%

RevPAR(right)0
Feb 2019

May 2019

Aug 2019

Nov 2019* Sale of hotel announced on August 27, 2019

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

46

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
Acquisition
Price

ADR
(right)Operating Results (Feb 2019 – Jan 2020)

RevPAR(right)Occupancy(left)(JPY)

100%

10,000

80%

8,000

60%

6,000

40%

4,000

130

20%

2,000

JPY 1.63B

0%0Feb 2019

May 2019

Aug 2019

Nov 2019

E-4 Hotel Wing International Kobe Shin Nagata Ekimae
Location

Kobe

100%

Access2-minute walk from
Shin Nagata Station
on JR Kobe Line and
JR Sanyo Honsen Line

Occupancy(left)(JPY)
10,000

80%

8,000

60%

6,000

Forbes Co., Ltd.

40%

4,000

Guest Rooms

133

20%

2,000

AcquisitionPrice

JPY 1.49B

0%Operator

ADR(right)Operating Results (Feb 2019 – Jan 2020)

RevPAR(right)0
Feb 2019

May 2019

Aug 2019

Nov 2019* Hotel name changed from Hotel Suave Kobe Asuta on March 1, 2019. Rebranded and reopened in June 2019.

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

47

Variable Rent Hotel Details
E-5 Nest Hotel Osaka Shinsaibashi

100%

Occupancy(left)(JPY)
10,000

80%

8,000

60%

6,000

Nest Hotel Japan
Corporation

40%

4,000

Guest Rooms

302

20%

2,000

AcquisitionPrice

JPY 7.60B

Location

Osaka

Access1-minute walk from
Nagahoribashi Station
on Osaka Municipal
Subway Sakaisuji LineOperator

ADR(right)Operating Results (Feb 2019 – Jan 2020)

RevPAR(right)0%0
Feb 2019

May 2019

Aug 2019

Nov 2019

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
Corporation100%

Occupancy(left)(JPY)
10,000

80%

8,000

60%

6,000

40%

4,000
2,000

ADR
(right)Operating Results (Feb 2019 – Jan 2020)

Guest Rooms

190

20%

AcquisitionPrice

JPY 1.61B

0%

RevPAR(right)0
Feb 2019© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2019

Aug 2019

Nov 2019

48

Variable Rent Hotel Details
F-4 Court Hotel Kurashiki

100%

Occupancy(left)(JPY)
15,00080%

12,00060%

9,000

The Court Co., Ltd.

40%

6,000

Guest Rooms

104

20%

3,000

AcquisitionPrice

JPY 1.73B

0%

Location

Kurashiki, Okayama

Access8-minute walk from
Kurashiki Station on
JR Sanyo Main LineOperator

ADR(right)Operating Results (Feb 2019 – Jan 2020)

RevPAR(right)0
Feb 2019

May 2019

Aug 2019

Nov 2019

F-5 Valie Hotel Hiroshima (Acquired on July 19, 2019, Rebranded and reopened in September 2019)100%

Occupancy(left)(JPY)
10,000

80%

8,000

60%

6,000

The Court Co., Ltd.

40%

4,000

Guest Rooms

171

20%

2,000

AcquisitionPrice

JPY 1.5B

0%Location

Hiroshima

Access3-minute walk from
Jogakuin-mae Station
on Hiroden Tram LineOperator

Operating Results (Feb 2019 – Jan 2020)

ADR(right)

RevPAR(right)0
Feb 2019© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2019

Aug 2019

Nov 2019

49

Variable Rent Hotel Details
G-1 Valie Hotel Tenjin

100%

Occupancy(left)(JPY)
15,00080%

12,00060%

9,000

The Court Co., Ltd.

40%

6,000

Guest Rooms

77

20%

3,000

AcquisitionPrice

JPY 1.38B

0%

Location

Fukuoka

Access6-minute walk from
Tenjin Station on
Fukuoka City Subway
Kuko LineOperator

ADR(right)Operating Results (Feb 2019 – Jan 2020)

RevPAR(right)0
Feb 2019

May 2019

Aug 2019

Nov 2019

G-2 Nest Hotel Naha (Announced sale on January 30, 202, Sold on January 31, 2020)
Location

AccessOperatorNaha, Okinawa
7-minute drive fromNaha Airport, 5-minute
walk from Asahibashi
Station on Okinawa
Urban Monorail
Nest Hotel Japan
Corporation100%

Occupancy(left)(JPY)
15,00080%

12,000

60%

9,000

40%

6,000
3,000

ADR
(right)Operating Results (Feb 2019 – Jan 2020)

Guest Rooms

200

20%

AcquisitionPrice

JPY 3.75B

0%

RevPAR(right)0
Feb 2019© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

May 2019

Aug 2019

Nov 2019

50

Variable Rent Hotel Details
G-3 Nest Hotel Kumamoto

100%

Occupancy(left)(JPY)
10,000

80%

8,000

60%

6,000

Nest Hotel Japan
Corporation

40%

4,000

Guest Rooms

201

20%

2,000

AcquisitionPrice

JPY 2.22B

0%Location

Kumamoto

Access2-minute walk from
Nishikarashimacho
Station on Kumamoto
City Tram LineOperator

ADR(right)Operating Results (Feb 2019 – Jan 2020)

RevPAR(right)0
Feb 2019

May 2019

Aug 2019

Nov 2019

Hotels Acquired in July 2020 Fiscal Period
C-4 HOTEL EMIT SHIBUYA

F-6 Washington Hotel Plaza Shimonoseki Eki Nishi

Location

Shibuya-ku, Tokyo

Location

Shimonoseki, Yamaguchi

Access6-minute walk from
Shibuya Station on JR,
Tokyu, Keio, andTokyo Metro Lines

Access3-minute walk from
Shimonoseki Station on
JR Sanyo Main LineOperator

Hakata Hotels Inc.
Shidax Daishinto
Human Services Inc.

Operator

Washington Hotel Corp.

Lease Terms

Fixed + Variable

Guest Rooms

72

AcquisitionPrice

JPY 3.7B* Announced on January 31 ,2020, completed on February 25, 2020

Lease Terms

Fixed

Guest
Rooms

238

AcquisitionPrice

JPY 1.08B* Announced on February 26, 2020, completed on March 12, 2020

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

51

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.

52

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

F-1 Comfort Hotel Okayama

F-3 Urbain Hiroshima Executive
Location

Hiroshima

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

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

Greens Co., Ltd.

Operator

Yuki Corporation

Location

Okayama

Guest Rooms

208

Guest Rooms

171

AcquisitionPrice

JPY 1.20B

AcquisitionPrice

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

53

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

54

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, 2018
AmountJul 31, 2018

Jan 31, 2019

Jul 31, 2019

Jan 31, 2020

JPY 21.75B

JPY 21.75B

JPY 21.75B

JPY 25.47B

JPY 25.47B

Long-Term Loan Ratio

100%

100%

100%

100%

100%

Fixed Rate Ratio

73.8%

73.8%

80.7%

83.5%

83.5%

Average Interest Rate

0.88%

0.88%

0.91%

0.86%

0.88%

Average Remaining
Maturity

3.6 years

3.1 years

3.2 years

3.0 years

2.5 years

LTV (Total Assets Basis)

39.2%

39.1%

38.8%

43.0%

41.5%

Distribution of Loan Maturities(JPY M)
6,000

Fixed Rate
Floating Rate

5,250
4,000

4,500

4,200

4,500
3,000

2,000

2,220

1,800
0
Jul 2020

Jan 2021

Jul 2021

Jan 2022

Jul 2022

Jan 2023

Jul 2023

Jan 2024

Jul 2024© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Jan 2025

Jul 2025

Jan 2026

Jul 2026

55

Loan Details
Loan Balances(as of January 31, 2020)

Loan

Amount(JPY million)

LenderFloating/
Fixed

Interest Rate(%)

Borrowing Date

Maturity

Term Loan 2

SMBC, Mizuho, Shinsei, Resona

5,250

Fixed

1.08000%

November 30, 2015

November 30, 2020

Term Loan 3

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

2,000

Floating

0.58000%

August 17, 2016

February 28, 2020

Term Loan 4

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

4,500

Fixed

0.90750%

August 17, 2016

February 28, 2023

Term Loan 5

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

4,500

Fixed

0.98500%

August 17, 2016

August 31, 2023

Term Loan 6

SMBC

450

Floating

0.53000%

March 27, 2017

February 28, 2020

Term Loan 7

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

1,800

Fixed

0.78750%

August 1, 2017

January 31, 2023

Term Loan 8

SMBC, Mizuho, Shinsei, Resona

1,750

Floating

0.78750%

November 30, 2018

May 29, 2020

Term Loan 9

SMBC, Mizuho, Shinsei, Resona

1,500

Fixed

0.92000%

November 30, 2018

November 29, 2024

Term Loan 10

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

2,220

Fixed

0.75450%

April 25, 2019

April 30, 2024

Term Loan 11

SMBC, Mizuho, Shinsei, Resona, Aozora

1,500

Fixed

0.73575%

July 19, 2019

November 29, 2024

Total

25,470

Nishi-Nippon City
4%

Average Remaining Loan Term 2.5 years

Fixed vs. Floating

Lender Composition
Fukuoka3%

Average 0.88%

Strong Lender Group
Aozora1%

LTV Control
Floating
16.5%

Resona10%Interest Rate Risk Management

SMBC
39%

Shinsei
12%

Mizuho
31%

Fixed
83.5%

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

Stable Financial Position

56

Shareholder Composition
Major Shareholders (as of January 31, 2020)
Name
1

Japan Trustee Services Bank, Ltd., Trust AccountBy Number of Shares Held
No. ofShares
26,008

Share
10.2%

45,576(17.9%)

40,149(15.7%)

18,843(7.4%)

16,748(6.6%)

2

The Master Trust Bank of Japan, Trust Account

20,5498.1%

3

Trust & Custody Service Bank, Ltd.,
Securities Investment Trust Account

9,298

3.6%

4

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

7,246

2.8%

5

Ichigo Inc. (Sponsor)

6,500

2.5%

6

Ichigo Trust Pte. Ltd.

6,424

2.5%

7

GOLDMAN SACHS INTERNATIONAL

3,433

1.3%

8

BNY FOR GCM CLIENT ACCOUNTS (E) ISG

3,311

1.3%

9

UEDA YAGI TANSHI Co., Ltd.

3,000

1.2%

10 Fukoku Mutual Life Insurance Company
Total

Foreign Corporations & Individuals
Non-Financial Domestic Corporations

2,800

1.1%

88,56934.7%

101,053(39.6%)

106,633(41.8%)

89,502(35.1%)

91,444(35.8%)Jan 2019(Outstanding Shares) (254,974)

Jul 2019(254,974)

Domestic Financial Institutions
Domestic Individuals(Shares)

25,161(9.9%)
16,953(6.6%)
91,029(35.7%)

121,831(47.8%)Jan 2020(254,974)

By Number of Shareholders

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, 2020
Jan 31, 2019
Jul 31, 2019
Shareholders Shareholders Shareholders
Share
13,101
13,415
17,201
97.7%
48
54
56
0.3%
7
7
6
–
3
2
3
–
38
45
47
0.3%
218
220
248
1.4%
78
88
99
0.6%
13,445
13,777
17,604100%

57

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

58

Strong Growth Track Record
Gains on Sale from Kyoto and Naha Hotel sales2
Gains on Sale from Smile Hotel Asakusa sale2

NAV per Share (JPY)DPS (JPY)

137,197

139,940

143,040

146,317

145,727

3,096

146,580

140,860

9,492
8,356

102,472

107,462

113,393

2,825

5,457

3,137

3,101

3,302

3,352

3,154
1,3751

No. of Hotels
Portfolio Size

IPO
9 Hotels
20.4B

EventsJanuary 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

IPO

PublicOffering

1 HotelAcquisition(New Loan)

1 HotelAcquisition(New Loan)

9 HotelAcquisitions

10 HotelAcquisitions

Share
Buyback andCancellation

July 2018
21 Hotels
50.9B

January 201921 Hotels
50.7B

July 201923 Hotels
54.4B

January 2020
21 Hotels
47.1B

Acquisition
and Sale

2 HotelAcquisitions(New Loan)

2 HotelSales

Full
Distribution of
Gains on Sale
as Dividend

Full
Distribution of
Gains on Sale
as Dividend

New AM Fee
Structure

Shareholder
ProgramRefinance
1 Annualized January 2016 DPS (JPY 471)
2 Unrealized gains of 3 hotels = (Sales price – book value at sale) / number of shares outstanding© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

59

Ongoing Actions to Drive Increased Shareholder Value
Dividend Growth and Highly Secure Earnings Provide Strong Foundation
for Further Growth in Shareholder Value
Drive Further Dividend Growth
Organic Growth

Acquisition-Led Growth• Proactively execute value-add capex• Dispose of hotels with limited growth potential• Increase earnings by revising fixed rent andvariable rent terms at timings of rent renewals• Grow with sponsor support– Acquire assets without having to participate
in competitive auctions• Recycle capital– Deploy proceeds from sales into higherreturn acquisitions• Use low-cost borrowing capacity– Increase capital– Manage interest rate risk (extend loan
maturities and fix interest rates)

Highly Secure Earnings Base• Grow portfolio of lodging-focused hotels, a hotel type having stable revenue• High underlying land values reflect high location attractiveness and value• Focus on major regional cities with convenient public transportation access and revenue upsidefrom local events further reinforces earnings stability• Geographic diversification and centrally-located hotels with stable demand support high earnings
stability

Portfolio Growth & Diversification Drive Earnings Growth & Stability© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

60

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 lodging-focused hotels• Acquisition of conversion-feasible assets and lodging
facilities such as serviced apartments• Asset acquisitions via SPCs
• Asset acquisitions using low cost borrowing capacity (LTV)

Enhance operational efficiency by monitoring operations and providing advice to partner hotel operators
Increase rents and earnings through value-add capex• Minimize expenses via collaboration with operators• Increase earnings via more favorable lease contracts,
rebranding, etc.

• Examine opportunities for large-scale renovations andrebranding to increase earnings• Further increase earnings via more favorable lease contracts,
rebranding, etc.

Financing• Maintain a strong lender base
• Appropriate LTV• Manage interest rate risk
• Prepare to acquire credit rating• Shift to no fixed fee, performance fee-only structure• Acquire credit rating• Diversify financing• Continue to control LTV and manage interest rate risk
• Prepare to enter global REIT indices

Other

Organic
Growth••• Construct a diversified portfolio to pursue both income
stability and earnings growth• Maximize dividend and earnings via unrealized gains via asset
acquisitions and sales• Acquire prime-location full-service hotels and resort hotels in
addition to lodging-focused hotels• Increase portfolio size and generate scale efficiencies via
acquisitions of newly built hotels in addition to value-add ofexisting hotels• Conduct share buybacks to increase dividend and maintainappropriate share price• Conduct share buybacks to increase dividend and maintainappropriate share price• Promote responsiveness to disasters (Respond to ESG
requirements)© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

61

Ichigo Hotel’s Sponsor: Ichigo (2337)
Core Businesses: Asset Management, Sustainable Real Estate, 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

Ichigo(TSE First Section 2337)

Ichigo Hotel (3463)

Ichigo Preserves andImproves Real Estate

Hiromi Miyake(Weightlifting)

The word “Ichigo” comes from theancient Japanese proverb, Ichigo
Ichie, literally meaning “Onelifetime, one encounter.” Thephrase was first used by a 16th
century master of the tea
ceremony, Sen no Rikyu. He
called upon his disciples to give
total focus and sincerity to eachact of the tea ceremony for every
guest, because that particular
moment will only exist once andmust be fully lived and realized.

Ichigo embraces the Ichigo Ichie philosophy of sincerity
and service, and works to build strong long-term
relationships to support the success of our clients,
shareholders, and all stakeholders.

AssetManagement

Ichigo Investment Advisors

Ichigo Green (9282)
Ichigo Office (8975)

Sustainable
Real Estate

Clean Energy

Ichigo Estate

Miyako City

Ichigo Owners

CentroIchigo Land Shinchiku

Storage Plus

Ichigo Real Estate Services
Fukuoka

Ichigo Animation

Ichigo Marché

Hakata Hotels

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

62

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

Sell

Make The World
More Sustainable

Buy

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

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

Value-add capex
On-going renovation and equipment renewal
Increase hotel attractiveness & competitiveness



Hard





Soft

Buy




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

63

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 proactive, dynamic (vs. static) management of Ichigo Hotel assets on behalf ofshareholders© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

64

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.

65

MEMO

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

66

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,
the Japanese version shall prevail.

Make The World
More Sustainable

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 andinvesting in low-carbon technologies such as solar energy.

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

67