Ichigo Hotel (3463)

Ichigo Hotel July 2018 Fiscal Period
Corporate Presentation
September 13, 2018

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

We express our deepest condolences to all
those affected by the recent heavy rainfall inwestern Japan, Typhoon Jebi, and the
Hokkaido earthquake, and our wishes for theearliest possible recovery.

© 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.

July 2018 Results July 2018 Highlights
 July 2018 Earnings Breakdown Variable Rents Up on Strong Hotel
Operating Results Earnings Stability via Geographic
Diversification
 Across-the-Board Actions to Grow
Earnings
 Value-Add Capex – Smile Hotel Tokyo
Asagaya Value-Add Capex – Valie Hotel Tenjin

Ongoing Earnings Growth Asset Sale & Acquisition to Maximize
Shareholder Value January 2019 Acquisition: Court Hotel
Kurashiki Portfolio Growth Value-Add Capex Driving Earnings (CapexPlan) First J-REIT No Fixed Fee, Performance
Fee-Only Structure

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

Appendices
Portfolio Details, Hotel Market Environment,
Loan Details & Shareholder Composition© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

4

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

5

July 2018 Highlights
Achievements
Net Income
RevPAR

JPY 854M

Drivers+JPY 56M (+7.0%) YOY• Continued organic and accretive acquisition-driven
earnings growth

JPY 8,537 (12 variable rent hotels)• ADR +3.9% YOY+JPY 285 (+3.5%) YOY+JPY 117M (+7.7%) YOY• Organic growth +JPY 58M (+3.9%)• Accretive acquisition growth +JPY 58M (+3.8%)(1 asset acquisition in Hiroshima)

FFO

JPY 4,671• NOI growth driving increased cash flows

Dividend

JPY 3,352

NAV

JPY 146,317

NOI

JPY 1.64B+JPY 384 (+9.0%) YOY+JPY 251 (+8.1%) YOY+JPY 3,272 (+2.3%) vs. previous period• +JPY 85 (+2.6%) vs. forecast• Unrealized gains +JPY 4.8B  +JPY 5.7B(+17.1% vs. previous period)

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 (Except for Smile Hotel Asakusa using Sale Price minus Period-End Book Value)© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

6

July 2018 Earnings Breakdown(JPY million)
July 2017
ActualOperating Revenue

1,687

1,814

Forecast (B)(March 2018)
(M
1,810

Variable Rent

757

803

799

+3

Fixed Rent

870

952

952

–

Other

60

58

58

–

714

771

788

-17

Repair & Maintenance

19

20

31

-10

Depreciation

280

310

314

-3

Operating Profit

973

1,042

1,022

+20

Recurring Profit

799

855

833

+21

Net Income

798

854

833

+21

Dividend

JPY 3,101

JPY 3,352

JPY 3,267+JPY 85

FFO

JPY 4,287

JPY 4,671

JPY 4,605+JPY 66

NOI

1,523

1,640

1,624

+16

Post-Depreciation NOI

1,243

1,329

1,309

+20

210

246

289

-43

49,64951,448––Operating Expenses

Capex
Book Value

July 2018
Actual (A)vs. Forecast(B) - (A)© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Major Variation Factors (vs. Forecast)+3
Above forecast: 5 hotels; On forecast: 1 hotel;
Below forecast: 6 hotels

Effective cost control+2.6% vs. forecast+8.1% (+JPY 251) YOY

Effective cost control

7

Variable Rents Up on Strong Hotel Operating Results
Variable Rent Hotels (12 Hotels)

Feb 1, 2017 Jul 31, 2017

Feb 1, 2018 Jul 31, 2018

Difference

YOY

Room Revenue (JPY M)

2,730

2,836

+105

+3.9%

Revenue (JPY M)

3,134

3,261

+126

+4.0%

RevPAR (JPY)

8,252

8,537

+285

+3.5%

Occupancy

93.4%

92.9%

-0.4%

-0.5%

ADR (JPY)

8,837

9,186

+348

+3.9%

Total Portfolio (20 Hotels)

Feb 1, 2017 Jul 31, 2017

Feb 1, 2018 Jul 31, 2018

Difference

YOY

Room Revenue (JPY M)

4,126

4,262

+135

+3.3%

Revenue (JPY M)

4,621

4,762

+140

+3.0%

RevPAR (JPY)

7,213

7,432

+219

+3.0%

Occupancy

89.7%

89.4%

-0.3%

-0.4%

ADR (JPY)

8,038

8,313

+276

+3.4%

* Excludes Grandpark-Inn Yokohama. Operating results before the acquisition are based on data provided by previous owner.

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

8

Earnings Stability via Geographic Diversification
YOY by Region (Feb – Jul 2018)
RevPAR

Occupancy

ADR

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

+16%

+11%
+3%

+8%

+17%
+5%

+5%

+3%

+2%

+4%

+3%

+0%
-1%

+8%

+3%
+7%

+0%
-1%

-1%

+3%

+0%

-1%

+3%

+2%

-4%

-9%

RevPAR by Region

-9%

(JPY)

18 Hotels

Hokkaido
3

Tokyo
2

Tokai/Chubu
4

Kyoto
2

Osaka
2

Chugoku/
Shikoku
3

Kyushu1

Okinawa
1

7,594

9,123

7,933

6,299

10,516

8,540

5,754

9,268

8,965

Total

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

9Organic Growth

Across-the-Board Actions to Grow Earnings
Grow Revenues−

Value-Add Capex Guest room and lobby renovations(Smile Hotel Tokyo Asagaya)
 Entrance and lobby renovation (Valie Hotel Tenjin)
 Renovation to add 4 new guest rooms (Smile Hotel Kyoto Shijo)
Capex JPY 46.0M, Rent increase: JPY 7.2M p.a., ROI 15.7%−

Optimizing Use of Common Areas

New Retail Tenant at Smile Hotel Kyoto Shijo

 New retail tenant in unused space (Smile Hotel Kyoto Shijo)
Café offering guests the opportunity to experience Japanese musical instruments and tea ceremony
 Increased parking (Valie Hotel Tenjin)−

Operator change upon expiration of fixed-rent contract
 Bringing in new operator to drive higher earnings (Hotel Suave Kobe Asuta, March 2019)

Effective Cost Control−

Reduced hotel operating expenses
 Reduced water consumption via high-efficiency, flow-regulating valves(Nest Hotel Sapporo Ekimae and 7 other hotels)
Capex: JPY 15.8M, Cost savings: JPY 4.4M p.a., ROI 28.1%
 Reworked building services contract (Nest Hotel Matsuyama)© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

10Organic Growth

Value-Add Capex – Smile Hotel Tokyo Asagaya
Completed all phases of a full-renovation to respond to increasing leisureand inbound needs− Forecast rent increase JPY 39.6M p.a. (NOI +20% vs. pre-acquisition)− ROI 34.7%（Total renovation cost JPY 114M）© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

11Organic Growth

Value-Add Capex – Valie Hotel Tenjin
Completed entrance and entry lobby renovations to drive higher earnings− Guest room renovations in 2015 and the launch of a new restaurant and lounge
in 2016 increased ADR +24% & NOI +70% vs. pre-acquisition− Improvements targeted at attracting more female guests and tourist demand
Before© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

After

12

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

13

Accretive Acquisition-Driven Growth

Asset Sale & Acquisition to Maximize Shareholder Value− Accelerate Organic Growth and Maximize Gains on Asset Sale in a Strong
Seller’s Market− Fully Distribute Gains on Sale as a Dividend to Shareholders and Reinvest
Principal Proceeds in Hotel with Strong Growth Potential
Sale

Acquisition

Smile Hotel Asakusa

Court Hotel Kurashiki

・Sold at 1.4X book value and 1.3X appraisal value
・Gains on sale of JPY 694M, all of which to be distributed
to shareholders as a dividend this period (January 2019)

・High NOI will drive higher Ichigo Hotel EPS
・Located in a popular tourist destination
・Room configuration can flexibly accommodate
diverse needs of travelers

At Acquisition(August 2016)

vs.
At Sale(August 2018) Acquisition

Asset
Sale &
Acquisition

At Acquisition(August 2018)

NOI(Cap Rate)

JPY 96M(4.9%1)JPY 99M(5.2%3)+3%

NOI(Book Value Yield)

JPY 118M(6.9%1)

Price(Cap Rate)

JPY 1.92B(4.9%2)

JPY 2.70B(3.7%4)+41%

Acquisition Price(Cap Rate)

JPY 1.73B(6.9%2)

Appraisal Value(Unrealized Gain)

JPY 2.02B(+JPY 58M)

JPY 2.13M(+JPY 207M)+5%(+257%)

Appraisal Value(Unrealized Gain)

JPY 1.96B(+ JPY 213M)

Gains on Sale of JPY 690M

Value-Add
Capex toFurther Drive
Asset Value

Increase Portfolio Diversity & Quality

Maximize Shareholder Value
1 Appraisal NOI divided by acquisition date book value

3 Actual NOI (Feb 2017 – Jan 2018) divided by sale date book value

2 Appraisal NOI divided by acquisition price4 Actual NOI (Feb 2017 – Jan 2018) divided by sale price© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

14

Accretive Acquisition-Driven Growth

January 2019 Acquisition: Court Hotel Kurashiki− Acquired from Ichigo (2337), Ichigo Hotel’s sponsor− 6.9% NOI Yield, +23% NOI vs. Smile Hotel Asakusa Sold in August− Further Earnings Growth Expected on Back of Growing Inbound and Business
DemandMajor Tourist Spots• Kurashiki Bikan Historical Quarter1• Kojima Area (Jeans Street)• Tamashima Area
• Mitsui Outlet Park Kurashiki• Kurashiki Muscat Stadium• Ohara Museum of Art• Okayama Koraku-en(One of the Three Great Gardens of Japan)• Mt. Washuzan Observatory• Great Seto Bridge

Business Demand• Third populous city in the Chugoku region(after Hiroshima and Okayama)

Hotel Overview
Acquisition Price

JPY 1.73B

Appraisal Value

JPY 1.96B

NOI (NOI Yield)

JPY 118M (6.9%) (appraisal basis)

Asset Type

Stay-only hotel

Location

2-2-26 Chuo, Kurashiki, Okayama

Leasable Area

3,964.19m2

Structure

RC 8F

Date Built

March 1993

Occupancy

100% (as of July 31, 2018)

Kurashiki Bikan
Historical Quarter• Okayama Prefectural Office• Mizushima Coastal Industrial Complex

Convenient Access• 35 min. by bus to Okayama Airport• 10 min. by train to Shin Kurashiki Station(Shinkansen station)• 3 train lines to Kurashiki: JR Sanyo &Hakubi and Mizushima Coastal

1 Kurashiki Bikan Historical Quarter is a tourist destination popular for its historical Edo-period buildings, attracting 3.85 million tourists in 2016.

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

15

Accretive Acquisition-Driven Growth

Portfolio Growth
IPO(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(Appraisal Value JPY 21.3B)(Appraisal Value JPY 51.6B)(Appraisal Value JPY 53.7B)(Appraisal Value JPY 56.3B)

IPO Acquisitions

PO Acquisitions

10 hotels
JPY 27.2B

Acquisition

1 hotelJPY 1.4B

Acquisition

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

9 hotels
JPY 20.4B

HotelsHokkaido: 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: 1(Forecast)

Geographic Diversification
Supports Earnings Stability
Kyoto
39.6%

Osaka
8.0%
Nagoya13.1%

Sale

January 31, 2019

Fukuoka
6.8%

Location

Acquisition

1 hotelJPY2.7B

IPO

Kobe
7.3%
Tokai
7.6%

21 hotels
JPY 50.7B

Hokkaido
17.7%

Steady Portfolio Growthvia Acquisitions

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

Yokohama
2.9%

Kobe Fukuoka
2.7%
2.9%

Nagoya5.3%
Okinawa
7.4%
Hokkaido
7.7%

Osaka
18.2%

Kyoto
15.9%

Tokyo
10.4%
Chugoku/
Shikoku
12.5%

Tokai
14.1%

Acquisition price-basis

16Organic Growth

Value-Add Capex Driving Earnings (Capex Plan)‒‒

Renovating Low-Return Spaces to Add Six New Rooms
Capturing Changes in Market Demand with High-Return Capex
Nest Hotel Naha

Hotel Wing
International Nagoya

Court Hotel Kurashiki

Capex
Details

Convert suite to 3 guest rooms,
and renovate guest rooms andhallways

Convert storage space to 4
new guest rooms

Renovate guest rooms andhallways

PurposeDrive earnings by adding highoccupancy rooms

Conversion of non-revenue
generating space to revenue
generating space

Drive earnings via improving
rooms and guest spaces

Capex
AmountJPY 50.0M

JPY 14.5M(excludes operator contribution)

JPY 50.0M

Forecast
Rent Increase

JPY 8.0M

JPY 2.8M

JPY 8.3M

Forecast ROI

16.0%

19.3%

16.8%

January 2019

September 2018

December 2018

Capex
Timing* Forecast rent increase* Capex at Hotel Wing International Nagoya is joint investment with the lessor© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

17

First J-REIT No Fixed Fee, Performance Fee-Only Structure (1)‒ Proposing Amendments to Ichigo Hotel’s AM Fee Structure to Increase
Shareholder Alignment
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
Note: The change in AM fee structure will be effective upon approval by Ichigo Hotel’s shareholders at its shareholder meeting on October 27, 2018.
© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

18

First J-REIT No Fixed Fee, Performance Fee-Only Structure (2)New Fee Structure 15% Lower on an Actual To-Date + Forecast Basis(Cumulative sum of actual AM fees since Ichigo Hotel’s listing (Jan 2016 – Jul 2018) plus
forecast AM fees (Jan 2019 – Jul 2019))
Actual AM Fees (Jan 2016 – Jul 2018) + Forecast AM Fees (Jan 2019 – Jul 2019)(JPY million)

2,056-15.4%

13
526

1,740
104

■ AM Fee I (AUM-linked)■ AM Fee II (NOI & Dividend Performance Fee)
■ Asset Acquisition Fee■ Asset Sale Fee■ Gains on Sale Performance Fee

827
1,636

688

Before Change

After Change(Estimate)© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

19

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

20

January 2019 Forecast
Dividend JPY 5,429, +64.4% YOY Resulting from Full Distribution of
Gains on Sale as Dividend to Shareholders(JPY million)

Jan 2018
Actual (A)Jan 2019
Previous Forecast(April 2018)

Jan 2019
Revised
Forecast (B)(B) - (A)

Major Factors for Variation

Operating Revenue

1,782

2,424

2,448

Variable Rent

748

715

711

-36 (+0.4% YOY)

Fixed Rent

974

959

984

+9 Increase due to acquisition and sale

Other

59

749

752

Operating Expenses+666
Expected RevPAR at Variable Rent Hotels: JPY 8,300+693 Gains on sale: +694
Increase in property tax due to acquisition: +7
Increase in shareholder meeting-related expenses: +5
Increase in asset sale-related expenses: +96

747

863

874

+126

Repair & Maintenance

15

19

20

+4

Depreciation

302

309

312

+10 fiscal periods

Operating Profit

1,034

1,560

1,574

+539

Recurring Profit

842

1,372

1,385

+542

Net Income

841

1,371

1,384

+542

Dividend

JPY 3,302

JPY 5,377

JPY 5,429

FFO

JPY 4,586

JPY 3,977

JPY 4,030

NOI

1,620

1,562

1,583

-37

Post-Depreciation NOI

1,318

1,253

1,270

-47

283

303

379

Capex

Increase in capex conducted in Jan 2018 through Jan 2019

+1.0% (+JPY 52) vs. previous forecast+JPY 2,127 +64.4% YOY-JPY 556 Increase due to asset sale-related expenses© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

+96 Value-add capex for acquired hotel: +50

21

July 2019 Forecast− Operating Revenue Increase via Acquisition and Sale
− Gains on Sale Not Incorporated in Forecast(JPY million)

July 2018
Actual (A)July 2019
Forecast (B)(B) - (A)

Major Factors for Variation

Operating Revenue

1,814

1,823

Variable Rent

803

794

Fixed Rent

952

963

+10 Decrease due to revised lease contract (Hotel Suave Kobe Asuta): -5

Other

58

64

+6 Increase due to revised lease contract (Hotel Suave Kobe Asuta)

771

811

+39 Increase in asset management fees due to change in AM fee structure: +13

Repair & Maintenance

20

21

+1

Depreciation

310

323

+13 Increase in capex conducted in Jul 2018 through Jul 2019 fiscal periods

Operating Profit

1,042

1,011

-30

Recurring Profit

855

827

-27

Net Income

854

827

-27

Dividend

JPY 3,352

JPY 3,243-JPY 109 -3.3% YOY

FFO

JPY 4,671

JPY 4,567-JPY 104

NOI

1,640

1,644

+3

Post-Depreciation NOI

1,329

1,320

-9

246

310

+64

Operating Expenses

Capex

+9
Expected RevPAR at Variable Rent Hotels: JPY 8,572-8 (+0.3% YOY)

Increase due to asset sale & acquisition: +15* Reflects the change in AM fee structure effective upon approval at the shareholder meeting to be held on October 27, 2018
© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

22

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

23

Hotel Map
Tokyo

Kanto

C-1

C-2

Smile HotelTokyo Asagaya

Smile Hotel
Asakusa1

C-3

B-1

D-1

Hotel Livemax
NihombashiHakozaki

Grandpark-Inn
Yokohama

Comfort Hotel
Hamamatsu

Kinki (Kyoto/Osaka/Kobe)
E-2

E-1

Hokuriku/Tokai

Hokkaido
D-2

D-3

F-1

A-1

Comfort Hotel
SuzukaNest Hotel
Nest Hotel
Sapporo Ekimae Sapporo Odori

Comfort Hotel
Hotel Wing
International Central International
AirportNagoyaA-2

A-3

ComfortHotel Kushiro

New Acquisition

Chugoku/Shikoku
E-3

D-4

F-2

▶Sapporo

F-4

F-3

A-1 A-2▶Kushiro
A-3

Smile Hotel
Kyoto Shijo

Hotel Vista
Premio Kyoto

Comfort Hotel
Okayama

Chisun Inn
Osaka
Hommachi

Nest Hotel
Matsuyama

Urbain Hiroshima
Executive

Court Hotel
Kurashiki2▶KyotoKyushu/Okinawa
E-4

E-5

G-1

E-1 E-2

E-3▶Hiroshima F-4 F-1 E-4
F-3
▶Kobe
G-1
F-2

▶Fukuoka
Nest Hotel Osaka
Shinsaibashi

Valie Hotel
TenjinNest Hotel
Naha▶Matsuyama▶Nagoya
D-2 D-3

1 Smile Hotel Asakusa sold on August 1, 2018
2 Court Hotel Kurashiki acquired on August 31, 2018

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

C-1 C-2 C-3

E-5▶Okayama

Hotel Suave
Kobe Asuta▶Tokyo▶OsakaG-2▶Suzuka
D-4▶Yokohama B-1▶Hamamatsu
D-1

21 Hotels
JPY 50.9B

Variable Rent
Fixed Rent

(as of July 31, 2018)24

Multi-Faceted Portfolio Diversification
Location(Acquisition-price basis)

Fixed vs. Variable Rent
(Hotel-rent basis)

Hotel Operator(Hotel-rent basis)

Kobe Fukuoka
2.9%
2.7%
Yokohama
2.9%
Nagoya5.2%

As of
Jul 31, 2018

Other
28.5%

Okinawa
7.4%
Hokkaido
7.7%
Chugoku/
Shikoku
9.0%

Yokohama
2.9%

As of
Jan 31, 2019
(Forecast)

Osaka
18.1%

Kyoto
15.9%

Tokai
14.0%

Fixed Rent
54.2%

Variable Rent
45.8%

Hospitality
Operations
16.4%

Tokyo
14.1%

Nest Hotel
Japan
38.8%

Greens16.3%

Kobe Fukuoka
2.7%
2.9%

Nagoya5.3%
Okinawa
7.4%

Osaka
18.2%

Hokkaido
7.7%

Kyoto
15.9%

Tokyo
10.4%
Chugoku/
Shikoku
12.5%

Variable Rent
42.0%
Fixed Rent
58.0%

Tokai
14.1%

Other
29.3%

Hospitality
Operations
13.4%

Nest Hotel
Japan
40.4%

Greens16.9%* Location is based on Acquisition Price; Hotel Operator and Fixed vs. Variable Rent Hotels are based upon hotel rent (Jul 2018 period).
© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

25

Individual Hotel Summary
Hotel
No.

Hotel Name

Lease Terms

2

(m )

Acquisition Book Value
Price(JPY M)(JPY M)(A)

Jul 2018 Appraisal
Value(JPY M)(B)

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

A-1 Nest Hotel Sapporo Ekimae

Variable + Fixed Rent

Sapporo, Hokkaido

5,734.93

2,160

2,148

2,490

5.4

+341

A-2 Nest Hotel Sapporo Odori

Variable + Fixed Rent

Sapporo, Hokkaido

5,638.78

1,450

1,472

1,700

5.3

+227

A-3 Comfort Hotel Kushiro

Fixed Rent

Kushiro, Hokkaido

3,180.58

300

299

421

5.5

+121

B-1 Grandpark-Inn Yokohama

Fixed Rent

Yokohama

1,183.26

1,490

1,507

1,560

4.6

+52

C-1 Smile Hotel Tokyo Asagaya

Variable + Fixed Rent

Tokyo

2,721.70

3,910

3,997

4,130

4.4

+132

C-2 Smile Hotel Asakusa

Variable + Fixed Rent

Tokyo

1,793.43

1,920

1,912

2,700

C-3 Hotel Livemax Nihombashi-Hakozaki

Fixed Rent

Tokyo

853.00

1,360

1,342

1,440

4.5

+97

D-1 Comfort Hotel Hamamatsu

Fixed Rent

Hamamatsu,Shizuoka

4,173.92

1,550

1,494

1,810

5.4

+315

Variable + Fixed Rent

Nagoya, Aichi

5,255.66

2,670

2,695

2,920

4.9

+224

D-3 Comfort Hotel Central International Airport

Fixed Rent

Tokoname, Aichi

11,599.63

5,308

5,309

5,890

4.0

+580

D-4 Comfort Hotel Suzuka

Fixed Rent

Suzuka, Mie

2,186.65

300

294

377

5.0

+82

E-1 Smile Hotel Kyoto Shijo

Variable + Fixed Rent

Kyoto

4,891.84

4,480

4,558

4,810

4.6

+251

E-2 Hotel Vista Premio Kyoto

Variable + Fixed Rent

Kyoto

3,867.66

3,600

3,589

4,050

4.2

+460

E-3 Chisun Inn Osaka Hommachi

Variable + Fixed Rent

Osaka

3,690.00

1,630

1,700

1,990

4.5

+289

Fixed Rent

Kobe, Hyogo

4,633.16

1,490

1,443

1,700

4.9

+256

Variable + Fixed Rent

Osaka

8,057.26

7,600

7,748

7,690

4.5

-58

F-1 Comfort Hotel Okayama

Fixed Rent

Okayama

5,543.70

1,200

1,198

1,260

5.3

+61

F-2 Nest Hotel Matsuyama

Variable + Fixed Rent

Matsuyama, Ehime

6,671.94

1,610

1,650

1,890

5.7

+239

Fixed Rent

Hiroshima

2,756.20

1,800

1,857

2,080

5.3

+222

G-1 Valie Hotel Tenjin

Variable + Fixed Rent

Fukuoka

1,910.94

1,380

1,450

2,120

4.5

+669

G-2 Nest Hotel Naha

Variable + Fixed Rent

Naha, Okinawa

9,240.20

3,750

3,775

4,130

5.3

+354

21 Hotels

95,584.44

50,95851,44857,158(Reference) 20 Hotels (excluding Smile Hotel Asakusa)

93,791.01

49,03849,53554,458D-2 Hotel Wing International Nagoya
Hotel

Location

LeasableArea

E-4 Hotel Suave Kobe Asuta
E-5 Nest Hotel Osaka Shinsaibashi

F-3 Urbain Hiroshima Executive

-

+787

-

+5,7094.7+4,922* 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.

26

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

Hotel Name

Lease Terms

Location

No. of
Guest
Rooms

July 2018 (January 2018 - July 2018)
RevPAR (JPY)

Occupancy (%)

ADR (JPY)

Revenue (JPY M)

A-1

Nest Hotel Sapporo Ekimae

Variable + Fixed Rent

Sapporo, Hokkaido

162

10,591 (+15.8%)

98.0(+0.3%)

10,812 (+15.4%)

373.7 (+15.8%)

A-2

Nest Hotel Sapporo Odori

Variable + Fixed Rent

Sapporo, Hokkaido

121

12,667 (+20.0%)

97.4(+0.9%)

13,006 (+19.0%)

303.4 (+19.6%)

A-3

Comfort Hotel Kushiro

Fixed Rent

Kushiro, Hokkaido

126

3,833

71.8

(-5.2%)

5,337 (+10.8%)

87.4

B-1

Grandpark-Inn Yokohama

Fixed Rent

Yokohama

175

C-1

Smile Hotel Tokyo Asagaya

Variable + Fixed Rent

Tokyo

112

8,809

(+6.7%)

95.4(+0.2%)

9,230(+6.4%)

183.9(+7.6%)

C-2

Smile Hotel Asakusa

Variable + Fixed Rent

Tokyo

96

6,910

(-3.8%)

94.4(-2.9%)

7,319(-1.0%)

125.1(-4.0%)

D-1

Comfort Hotel Hamamatsu

Fixed Rent

Hamamatsu, Shizuoka

196

4,662

(-5.3%)

79.3(-0.6%)

5,881(-4.7%)

165.4(-5.3%)

D-2

Hotel Wing International Nagoya

Variable + Fixed Rent

Nagoya, Aichi

220

5,396

(-8.5%)

86.9(-2.9%)

6,209(-5.8%)

242.3(-8.3%)

D-3

Comfort Hotel Central International Airport

Fixed Rent

Tokoname, Aichi

346

8,312

(+3.7%)

90.8(+2.4%)

9,152(+1.3%)

571.5(+2.2%)

D-4

Comfort Hotel Suzuka

Fixed Rent

Suzuka, Mie

105

4,616

(-1.3%)

74.9(-7.7%)

6,162(+7.0%)

88.8(-1.7%)

E-1

Smile Hotel Kyoto Shijo

Variable + Fixed Rent

Kyoto

144

9,474

(-10.1%)98.1(-1.7%)

9,658(-8.6%)

261.8(-6.7%)

E-2

Hotel Vista Premio Kyoto

Variable + Fixed Rent

Kyoto

84

12,299(-6.2%)

93.7(+4.3%)

13,120(-10.1%)205.0(-3.8%)

E-3

Chisun Inn Osaka Hommachi

Variable + Fixed Rent

Osaka

130

7,203

(-4.7%)

88.8(-2.3%)

8,114(-2.5%)

169.5(-4.7%)

E-5

Nest Hotel Osaka Shinsaibashi

Variable + Fixed Rent

Osaka

302

9,116

(+6.0%)

94.0(-4.6%)

9,693 (+11.1%)

532.0(+4.0%)

F-1

Comfort Hotel Okayama

Fixed Rent

Okayama

208

5,612 (+10.1%)

90.1(+4.9%)

6,231(+5.0%)

220.1(+9.5%)

F-2

Nest Hotel Matsuyama

Variable + Fixed Rent

Matsuyama, Ehime

190

5,334

(+1.2%)

88.8(+1.8%)

6,005(-0.5%)

271.3(+1.3%)

F-3

Urbain Hiroshima Executive

Fixed Rent

Hiroshima

171

6,393

–

90.4

–

7,073

–

197.9

–

G-1

Valie Hotel Tenjin

Variable + Fixed Rent

Fukuoka

77

9,268 (+10.5%)

96.4(+7.7%)

9,612(+2.6%)

138.5(+8.8%)

G-2

Nest Hotel Naha

Variable + Fixed Rent

Naha, Okinawa

198

8,965

(+7.9%)

90.2(+3.2%)

9,937(+4.6%)

454.6(+9.7%)

181

4,757

(-3.9%)

80.8(-1.8%)

5,887(-2.1%)

170.1–

Variable Rent Hotels

1,836

8,537

(+3.5%)

92.9(-0.5%)

9,186(+3.9%)

3,261.1(+4.0%)

Fixed Rent Hotels

1,508

5,911

(+2.1%)

84.5(-0.2%)

6,991(+2.4%)

1,501.2(+1.0%)

Total

3,344

7,432

(+3.0%)

89.4(-0.4%)

8,313(+3.4%)

4,762.3(+3.0%)

Other

Fixed Rent(+5.1%)–––(-1.9%)–* Data for Hotel Suave Kobe Asuta and Hotel Livemax Nihombashi-Hakozaki are consolidated under Other, because the hotel operators did not provide consent to disclose
hotel-specific data. In addition, data for Grandpark-Inn Yokohama is not shown except for No. of Guest Rooms, as the hotel operator did not provide consent to disclose hotelspecific data. 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.

27

Individual Hotel Financials(JPY thousand)
No.

A-1

Hotel Name

Total

A-2

Nest Hotel Nest Hotel
Sapporo Sapporo
Ekimae
Odori

A-3

C-1

C-2

ComfortHotel
Kushiro

Smile
Hotel
Tokyo
Asagaya

D-1

D-3

ComfortSmile
ComfortHotel Central
Hotel
Hotel
International
Asakusa Hamamatsu
Airport

D-4

E-1

ComfortHotel
Suzuka

Smile
Hotel
Kyoto
Shijo

E-2

E-3

E-5

F-1

F-2

G-1

G-2

Hotel Vista Chisun Inn Nest Hotel
ComfortNest Hotel Valie Hotel Nest Hotel
Premio
Osaka
Osaka
Hotel
Matsuyama
TenjinNaha
Kyoto
Hommachi Shinsaibashi Okayama

Other

Real Estate(A) Management
Revenue

1,814,064

129,917

105,752

18,41998,22755,79655,361

151,441

15,442

133,671

75,00082,834226,005

45,90088,90565,038130,639

335,710

Fixed Rent

952,653

31,12923,766

18,41930,041

15,83955,361

151,441

15,44230,74475,00039,60064,58145,90036,167

21,664

41,531

256,020

Variable Rent

803,401

98,787

81,824-68,08439,956---

102,926-

43,234

161,408-

52,73843,374

89,106

21,959Other Rent

58,010

-

160

-

101

-

-

-

-

-

-

-

16

-

-

-

-

57,731

Real Estate(B) Management
Expenses

173,452

9,034

10,565

5,480

8,665

3,723

3,395

14,270

3,083

10,695

9,221

4,671

19,797

5,525

6,294

4,516

7,857

46,654

Outsourcing
Fees

16,769

600

600

900

2,347

600

600

570

540

639

1,475

915

1,232

490

580

600

1,080

3,000

Insurance

2,536

146

154

81

87

55

93

273

47

147

101

98

240

137

195

54

233

388

RepairExpenses &Equipment

20,740

2,868

1,126

58

2,455

333

-

418

301

4,758

85

157

5,068

496

454

170

1,702

286

Taxes

105,497

4,993

8,182

4,030

3,367

2,326

2,430

12,553

1,786

4,789

7,144

3,130

12,846

3,860

4,528

3,326

4,423

21,775

Other
Expenses

27,908

425

503

410

407

407

271

456

408

359

415

370

408

541

535

365

418

21,203

NOI(A) - (B)

1,640,612

120,882

95,186

12,93989,562

52,072

51,966

137,171

12,359122,976

65,77878,162

206,208

40,374

82,611

60,522

122,781

289,056(D) Depreciation

310,913

13,205

18,426

4,790

25,591

13,634

14,43029,344

4,119

15,204

13,237

5,627

33,665

12,296

20,031

8,992

32,292

46,021

1,329,698

107,677

76,7598,149

63,97038,43737,536

107,8268,240

107,771

52,541

72,534

172,542

28,07762,58051,52990,489243,034(C)

Net Rental Income* Rents for Hotel Wing International Nagoya, Hotel Suave Kobe Asuta, Hotel Livemax Nihombashi-Hakozaki, Grandpark-Inn Yokohama, and Urbain Hiroshima Executive, andretail 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 75 million, JPY 46.7 million, JPY 33.1 million,
JPY 37.4 million, and JPY 58.4 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 8.5 million, JPY 12.7 million, JPY 9.1 million, JPY 2.2 million, and JPY 13.5
million, respectively.
© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

28

Fixed/Variable Rent, RevPAR, ADR & Occupancy Trends
Fixed/Variable Rent
(JPY thousand)Jul 2016
Rent
Fixed Rent

Jan 2017
Ratio

Rent

Jul 2017
Ratio

Rent

Jan 2018

Jul 2018

Ratio

Rent

Ratio

Rent

Ratio

423,06354.6%

878,775

56.3%

930,906

55.1%

1,034,015

58.0%

1,010,663

55.7%

Fixed Rent from Operators

387,25350.0%

823,97952.8%

870,22851.6%

974,85254.7%

952,653

52.5%

Other (Rent from Retail Tenants)

35,810

4.6%

54,796

3.5%

60,678

3.6%

59,163

3.3%

58,0103.2%

351,895

45.4%

681,95943.7%

757,07744.9%

748,00742.0%

803,401

44.3%

774,959

100.0%

1,560,734

100.0%

1,687,985

100.0%

1,782,023

100.0%

1,814,064

100.0%

Variable Rent
Total

Operating Results (Feb 2018 – July 2018)
RevPAR (right)

ADR (right)

Occupancy (left)

(JPY)

100%

10,000

80%

8,000

60%

6,000

40%

4,000

20%

2,000

0%

0
Aug 2017

Sep 2017

Oct 2017

Nov 2017

Dec 2017

Jan 2018

Feb 2018

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

Apr 2018

May 2018

Jun 2018

Jul 2018

29

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

Sapporo, Hokkaido

Access5-minute walk from
Sapporo Station on
Sapporo City Metro
Namboku LineOperator

Nest Hotel Japan
Corporation

Operating Results (August 2017 – July 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

25,00080%

20,00060%

15,00040%

10,000

Guest Rooms

162

20%

5,000

AcquisitionPrice

JPY 2.16B

0%0
Aug 17

Nov 17

Feb 18May 18A-2 Nest Hotel Sapporo Odori
Location

Sapporo, Hokkaido

Access4-minute walk from
Odori Station on
Sapporo City Metro
Namboku LineOperating Results (August 2017 – July 2018)

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
Aug 17© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Nov 17

Feb 18May 1830

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 (August 2017 – July 2018)

ADR(right)

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

12,50080%

10,000

60%

7,500

40%

5,000

20%

2,500

0%

0
Aug 17

Nov 17

Feb 18May 18C-2 Smile Hotel Asakusa
Location

Taito-ku, Tokyo

Access11-minute walk from
Asakusa Station on
Tokyo Metro
Ginza LineOperator

K.K. Hospitality
Operations

Operating Results (August 2017 – July 2018)

ADR(right)

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

12,50080%

10,000

60%

7,500

40%

5,000
2,500

Guest Rooms

96

20%

AcquisitionPrice

JPY 1.92B

0%0
Aug 17

Nov 17

Feb 18May 18Smile Hotel Asakusa was sold on August 1, 2018.

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

31

Variable Rent Hotel Details
D-2 Hotel Wing International Nagoya
Location

Nagoya, Aichi

Access2-minute walk from
Marunouchi Station on
both Nagoya Subway
Network SakuradoriLine and Tsurumai
Line

Operating Results (August 2017 – July 2018)

ADR(right)

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

12,50080%

10,00060%

7,500

Forbes Co., Ltd.

40%

5,000

Guest Rooms

220

20%

2,500

AcquisitionPrice

JPY 2.67B

0%Operator0
Aug 17

Nov 17

Feb 18May 18E-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 Line100%

25,00080%

20,00060%

15,000K.K. Hospitality
Operations40%

10,00020%

5,000Operator
Guest Rooms

144

AcquisitionPrice

JPY 4.48B

Operating Results (August 2017 – July 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

0%

0
Aug 17© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Nov 17

Feb 18May 1832

Variable Rent Hotel Details
E-2 Hotel Vista Premio Kyoto
Location

Kyoto

Access5-minute walk from
Kyoto Shiyakushomae
Station on Kyoto City
Subway Tozai LineOperating Results (August 2017 – July 2018)

ADR(right)

RevPAR(right)Occupancy(left)(JPY)

100%

25,00080%

20,000Vista HotelManagement Co., Ltd.

60%

15,00040%

10,000

Guest Rooms

84

20%

5,000

AcquisitionPrice

JPY 3.60B

Operator0%0
Aug 17

Nov 17

Feb 18May 18E-3 Chisun Inn Osaka Hommachi
Location

Osaka

Access5-minute walk from
Sakaisuji-Hommachi
Station on Osaka
Municipal Subway
Chuo LineOperating Results (August 2017 – July 2018)

ADR(right)

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

12,50080%

10,000SHR Hotel Lease Co.,
Ltd.

60%

7,500

40%

5,000

Guest Rooms

130

20%

2,500

AcquisitionPrice

JPY 1.63B

Operator0%0
Aug 17© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Nov 17

Feb 18May 1833

Variable Rent Hotel Details
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

Operating Results (August 2017 – July 2018)

ADR(right)

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

12,50080%

10,000

60%

7,500

40%

5,000
2,500

Guest Rooms

302

20%

AcquisitionPrice

JPY 7.60B

0%0
Aug 17

Nov 17

Feb 18May 18F-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 (August 2017 – July 2018)

ADR(right)

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

12,50080%

10,000

60%

7,500

40%

5,000

20%

2,500

0%

0
Aug 17© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Nov 17

Feb 18May 1834

Variable Rent Hotel Details
G-1 Valie Hotel Tenjin
Location

Fukuoka

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

The Court Co., Ltd.

Guest Rooms

77

AcquisitionPrice

JPY 1.38B

Operating Results (August 2017 – July 2018)

ADR(right)

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

12,50080%

10,000

60%

7,500

40%

5,000

20%

2,500

0%

0
Aug 17

Nov 17

Feb 18May 18G-2 Nest Hotel Naha
Location

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

Guest Rooms

198

AcquisitionPrice

JPY 3.75B

Operating Results (August 2017 – July 2018)

ADR(right)

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

12,50080%

10,000

60%

7,500

40%

5,000

20%

2,500

0%

0
Aug 17© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Nov 17

Feb 18May 1835

Fixed Rent Hotel Details
A-3 Comfort Hotel Kushiro
Location

Kushiro, Hokkaido

B-1 Grandpark-Inn Yokohama
Location

Yokohama, Kanagawa

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.

36

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, Hyogo

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.

37

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.

38

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

39

Hotel Market Environment (1)Business hotel demand remains robust and growing− Inbound business hotel guests: +420% (vs. 2011)− Continued growth expected due to increasing domestic and inbound tourism;
Government target of 40 million inbound tourists by 2020
No. of Guests by Hotel Type (Japanese Guests)

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

200

30

25
150

20

100

15

10
50

5
0
2011

2012

2013

2014

Business Hotels

Japanese Inns

Full-Service Hotels

Budget Hotels

2015

2016
Resort Hotels

2017

0
2011

2012

2013

2014

Business Hotels

Japanese Inns

Full-Service Hotels

Budget Hotels

2015

2016

2017

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.

40

Hotel Market Environment (2)Inbound Tourism Growth in Not Only Tokyo− Cumulative total number of inbound hotel guests up in all regions since 2011
− Hotel guests in regional areas account for 41% of total inbound hotel guests in 2017
Inbound Hotel Guests by Regional Area (2011 vs. 2017)(thousand)

20,000800%
19,025

Cumulative Total Number of Foreign Tourists in 2011 (left)
Cumulative Total Number of Foreign Tourists in 2017 (left)

721%

◆

◆ Growth Rate (right)

15,000600%

481%

11,707

◆

453%

431%

437%

◆

◆

◆
395%

10,000

◆

369%

352%

◆

◆

388%

385%

◆

◆

400%

315%

7,515

◆

7,433
6,749

5,652

237%

5,587

◆

5,282

184%

5,000

4,604

200%

◆
3,130
2,365

2,467

2,374
1,662

1,584
1,053

2,407

1,271

1,079
561

566

425

493

201

1,019
210

0%

0
Tokyo

Osaka

KyushuHokkaido

Kanto

Kyoto

Tokai

Okinawa(excluding Tokyo)

Koshin-etsu

Chugoku/
Kinki
Hokuriku
Shikoku (excluding Osaka & Kyoto)

Tohoku* 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.

41

Hotel Market Environment (3)New Hotel Room Supply by Prefecture
New Supply
Japanese Inns
Hotels200,000

28%

150,000

11%
35%

100,000

6%
2%

23%
15%

15% 18%28%
3%50,000

10%

33%
5%
3%

2%

1%

9%

5%

2%

7%

5%

15%

8%

1% 14% 3%

6%

6%

2%

2%

7%

1%

1%

3%

5%

7% 10% 10%

4% 18%

Tottori

Nara

2%

Saga

Kochi

Shimane4%

Tokushima

4% 16%
6%

KagawaShiga

ToyamaEhime

Miyazaki

Fukui

Akita

Wakayama

Yamaguchi

Yamagata

Aomori

OkayamaNagasaki

Iwate

Saitama

Yamanashi

Gifu

Ishikawa

Oita

IbarakiKumamoto

Kagoshima

Hiroshima

Gunma

Mie

Miyagi

Tochigi

Kyoto

Fukushima

Okinawa

Hyogo

Niigata

Kanagawa

Fukuoka

Chiba

Aichi

NaganoShizuoka

Osaka

Hokkaido

Tokyo

0

5%

* The percentage shows the 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 Restaurant Weekly (June 1, 2018 edition).
© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

42

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

43

Stable Financial Base
− Loans with shorter maturities are floating rate to take advantage ofcurrent low interest rates− 74% of loans are fixed to hedge against a rise in interest rates
Outstanding Loan Balance
Jul 31, 2016

Jan 31, 2017

Jul 31, 2017

Jan 31, 2018

Jul 31, 2018

AmountJPY 8.50B

JPY 19.50B

JPY 19.95B

JPY 21.75B

JPY 21.75B

Long-Term Loan Ratio

100.0%

100.0%

100.0%

100.0%

100.0%

Fixed Rate Ratio

61.8%

73.1%

71.4%

73.8%

73.8%

Average Interest Rate

0.91%

0.89%

0.88%

0.88%

0.88%

Average Remaining
Maturity

3.6 years

4.5 years

4.1 years

3.6 years

3.1 years

LTV (Total Assets Basis)

36.2%

36.6%

37.1%

39.2%

39.1%

Distribution of Loan Maturities(JPY M)
6,000
5,000

■ Fixed Rate ■ Floating Rate
5,250

4,000
3,000

4,500

4,500

Jul 2023

Jan 2024

3,250

2,000

2,450
1,800

1,000
0
Jan 2019

Jul 2019

Jan 2020

Jul 2020

Jan 2021

Jul 2021

Jan 2022

Jul 2022© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

Jan 2023

Jul 2024

44

Loan Details
Loan Balances
Loan

LenderAmount(JPY million)

Floating/
Fixed

Interest Rate(%)

Borrowing Date

Maturity

Term Loan I

SMBC, Mizuho, Shinsei, Resona

3,250

Floating

0.65364

November 30, 2015

November 30, 2018

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

0.60364

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

0.55364

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

Total

21,750

Lender Composition

Average Remaining Loan Term

3.1 years

Fixed vs. Floating

Strong Lender Group

Nishi-Nippon City
4%

Fukuoka
4%

Average 0.88%

LTV Control
Resona
10%
SMBC
39%

Shinsei
12%

Mizuho31%

Floating
26.2%

Interest Rate Risk Management

Fixed
73.8%

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

Stable Financial Base45

Shareholder Composition
Major Shareholders (as of July 31, 2018)
Name

Shareholdings by Shareholder TypeNo. ofSharesForeign Corporations & Individuals
Non-Financial Domestic Corporations

Share

Domestic Financial Institutions
Domestic Individuals(Shares)100%

1

The Master Trust Bank of Japan, Trust Account26,220

10.3%

2

Japan Trustee Services Bank, Ltd., Trust Account25,754

10.1%

3

Trust & Custody Service Bank, Ltd.,
Securities Investment Trust Account12,5694.9%

4

SIX SIS LTD.

10,957

4.3%

5

GOLDMAN SACHS INTERNATIONAL

8,675

3.4%

60,069(23.3%)
80%
18,653(7.2%)

8,452

7

Ichigo Inc. (Sponsor)

6,500

2.5%

8

Ichigo Trust Pte. Ltd.

6,424

2.5%

6

18,870(7.4%)

19,037(7.5%)

60%
100,216(38.9%)

95,188(37.3%)

97,734(38.3%)

40%

20%

The Nomura Trust and Banking Co., Ltd.,
Investment Trust Account60,448(23.7%)

65,834(25.8%)

78,646(30.5%)

72,369(28.4%)

80,468(31.6%)

Jul 2017(Outstanding Shares) (257,584)

Jan 2018(254,974)

Jul 2018(254,974)

3.3%0%Note: 2,610 shares were cancelled on November 28, 2017.

Shareholders by Shareholder Type9Morgan Stanley MUFG Securities

10 CGML - LONDON EQUITY

5,076

2.0%

4,465

1.8%

115,092

45.1%

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.

Jul 31, 2017
Shareholders
10,705
51
8
4
39
178
56
10,990Jan 31, 2018
Shareholders
10,503
53
8
4
41
179
90
10,825

Jul 31, 2018
Shareholders
Share
11,299
97.0%
54
0.5%
7
0.1%
4
0.0%
43
0.4%
183
1.6%
107
0.9%
11,643100.0%

46

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

47

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
• Control 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.

48

Ichigo Hotel’s Sponsor Ichigo (2337)
Core Businesses: Asset Management, Real Estate Value-Add, Clean Energy‒ Manages Ichigo Hotel (3463), Ichigo Office (8975), and Ichigo Green (9282)‒ TSE First Section, JPX-Nikkei 400 Member‒ Deeply committed to CSR and Sustainability – Japan’s first zero-carbon listed realestate company
Key Ichigo Subsidiaries
Ichigo(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

Asset manager of Ichigo Hotel (3463), Ichigo Office (8975), 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 unused land nationwide

Ichigo Owners

Real estate owner services company

Ichigo Land Shinchiku

Real estate value-add

Ichigo Real Estate Services Fukuoka

Real estate business centered on Fukuoka in Kyushu region

Ichigo Marché

Operates Matsudo Nanbu wholesale market in Chiba Prefecture

Miyako City

Operates Miyako City shopping mall in Miyazaki Prefecture© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

49

Ichigo Hotel (3463) and Ichigo Synergies‒ 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
Buy

Ichigo Hotel (3463)
Buy

Ichigo (2337 – Sponsor)

HotelLong-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

Sell

Preserve & Improve

Role

Value-Add(Increase Asset Value)


Hard





Soft

Buy

Value‐Add

Rectify building code issues
Seismic and safety reinforcement
Large-scale structural and equipment renewal
Upgrade 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

50

Portfolio Growth Potential via Ichigo Sponsor Support
20 Hotels (JPY 47.8B) in Sponsor Pipeline as of July 31, 2018
− Locations: Major cities such as Tokyo, Yokohama, Osaka, Fukuoka,
Kumamoto, and Okinawa− New hotels also in-development
Completed

New Hotel
Kanazawa
Opened: Dec 2017

In-Development

Yokohama

Shinjuku

Fukuoka

Kumamoto

Osaka

Osaka

Hokkaido

Fukuoka

Fukuoka

Hotel Development
Kyoto
Expected Completion:
Sep 2018© Ichigo Investment Advisors Co., Ltd. Ichigo Hotel REIT Investment Corporation All rights reserved.

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 Office 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 the useful 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-established environmental 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. Ichigo will also promote sustainability in coordination with Ichigo stakeholders, seeking understanding andcooperation on sustainability from Ichigo partner companies and tenants.
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.
6. Green Procurement
Ichigo will implement green procurement measures, such as environmentally-sensitive building materials and sustainable
design, in Ichigo’s building renovations, as well as selecting partner companies based on their environmental sustainability
initiatives.

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

52

Global Best-Practice Corporate Governance
Proactive in ESG investments and asset management to build an attractive longterm asset portfolio– All Ichigo Hotel Directors are independent, third party, non-Ichigo employees– External advisors participate in the asset management company’s decision-making
process– Ongoing monitoring of conflicts of interests (Risk & Compliance Committee)
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

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

Wataru Orii

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.

54

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.

55