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

February 26, 2020
IssuerIchigo Hotel REIT Investment Corporation (“Ichigo Hotel,” 3463)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Osamu Miyashita, Executive Director
www.ichigo-hotel.co.jp/english
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Hiroshi Iwai, President
Inquiries: Hidehito Iwasaka, Head of Ichigo Hotel
Tel: +81-3-3502-4892
Hotel Acquisition (Washington Hotel Plaza Shimonoseki Eki Nishi)
Ichigo Hotel decided today to acquire the Washington Hotel Plaza Shimonoseki Eki Nishiin Yamaguchi Prefecture.
1. Acquisition Summary
Hotel Name

Washington Hotel Plaza Shimonoseki Eki Nishi

Hotel Number1

F-6 026

Hotel Type

Lodging-focused

Date Built

March 1999

Form of Ownership

Trust beneficiary interest in real estate (juekiken)

Appraisal Value2

JPY 1,200,000,000

Acquisition Price3

JPY 1,080,000,000

Seller4

Third-party Japanese companyContract Date

February 26, 2020

Closing Date

March 12, 2020

Financing Method

Cash-on-handSettlement Method

Lump-sum payment

1

The initial letter “F” is Ichigo Hotel’s region code for where the hotel is located, in thiscase Chugoku/Shikoku. Please see page 9 for region code details.
2
Appraisal Value is calculated by Tanizawa Sogo Appraisal as of January 1, 2020, andis in compliance with the appraisal guidelines of Ichigo Investment Advisors (“IIA”)
as well as the rules of the Investment Trusts Association of Japan.
3Acquisition Price excludes incidental expenses such as fees and property, cityplanning, and consumption taxes.
4The seller, a third-party Japanese company, did not provide consent to disclose its name.
12. Acquisition Rationale
Ichigo Hotel continues to execute on its strategy to grow earnings and dividends for its
shareholders.
As part of that strategy, Ichigo Hotel is today acquiring the Washington Hotel Plaza
Shimonoseki Eki Nishi in Shimonoseki, Yamaguchi, an area with stable business andleisure demand.
Ichigo Hotel will acquire the hotel at a 10% discount to appraisal value using proceedsfrom the sale of the Nest Hotel Naha announced in the January 30, 2020 release “HotelSale (Nest Hotel Naha).”The Washington Hotel Plaza Shimonoseki Eki Nishi is a three-minute walk fromShimonoseki Station on the JR Sanyo Main Line. (Shimonoseki Station was fully
renovated in 2014.)
Shimonoseki has historically thrived as a port city facing the Kanmon Straits between
the Japanese islands of Honshu and Kyushu. It has grown into Yamaguchi Prefecture’s
most populated city and economic center, with many company headquarter and branch
offices. The city also draws the most tourists in the prefecture with historic sites andattractions such as the waterfront Karato Market. In addition, tourists can easily accesspopular attractions such as Ganryu Island and Moji Port by ferry.
Shimonoseki also offers convenient access to northern Kyushu, with the city ofKitakyushu within easy commuting distance just across the Kanmon Straits.
Ichigo Hotel has a fixed-rent lease with the hotel’s operator, which will drive further
earnings growth and geographic diversification. Today’s acquisition is forecast toincrease Ichigo Hotel’s annual NOI by JPY 74 million.

2

3. Description and Location of the Washington Hotel Plaza Shimonoseki Eki Nishi
The Washington Hotel Plaza Shimonoseki Eki Nishi is a lodging-focused hotel locatedat a three-minute walk from Shimonoseki Station on the JR Sanyo Main Line.
The area near Shimonoseki Station attracts both business and leisure demand given its
convenient location, and demand going forward is expected to be stable on the back ofopportunities to host sporting events and conferences.
The hotel’s single-bed rooms and twin-bed rooms allow it to flexibly accommodate thediverse needs of travelers.

3Legal Form of Asset
Trustee
Period of Trust Contract
Location
Property RightAreaLandZoningCoverage Ratio
Floor Area Ratio
Property Right
Use
Building Structure1
Total Floor Area
Date Built
Appraiser
Appraisal Value
Appraisal Date
Value by Direct Capitalization
MethodNumber of Guest Rooms
Architect2
Builder2
Structural Designer2
Inspection Agency2
PML (Assessor)
Collateral
Tenant Overview
Number of Tenants
Rental Income3
Deposit
Leasable Area
Leased Area
Occupancy

Hotel Details
Trust beneficiary interest in real estate (juekiken)
Sumitomo Mitsui Trust Bank, Limited
March 12, 2020 – March 31, 2030 (Expected)
1-4-1 Yamatomachi, Shimonoseki, Yamaguchi
Freehold
978.36m2
Commercial
80%600%Freehold
Hotel
Steel Reinforced Concrete 11F
5,228.95m2
March 18, 1999
Tanizawa Sogo Appraisal Co., Ltd.
JPY 1,200,000,000
January 1, 2020
JPY 1,250,000,000
238
JA-Sekkei Architects & Engineers, Inc. / Koei Kikaku Sekkei
Takenaka Corporation Hiroshima Branch
JA-Sekkei Architects & Engineers, Inc. / Koei Kikaku Sekkei
Shimonoseki City
3.04% (Sompo Risk Management & Health Care Inc.)
NoneLease Details
1The hotel operator did not provide consent to disclose leasedetails. Ichigo Hotel has a fixed-rent lease with the operator.
Lease deposit: JPY 157,609,000. No guarantee deposit.
5,709.35m2
5,709.35m2
September October November DecemberJanuary
2019
2019
2019
2019
2020
100%
100%
100%100%100%4Property Management
Company
Master Lease Company
Master Lease TypeAppraisal NOI Yield4
Post-Depreciation NOI Yield5

Uniho Co., Ltd.
Ichigo Hotel REIT Investment Corporation
Pass-through
7.3%
4.6%
Special Items

None1

Building Structure refers to the structure described in the real estate registry.
Names of the architect, builder, structural designer, and inspection agency are those as ofwhen the building was built.
3Rental Income includes all rent from hotel facilities.
4
Appraisal NOI Yield = Appraisal NOI (Net Operating Income) in the real estate appraisal
report divided by the Acquisition Price. This figure is independently calculated by IIA
based upon the above data and is therefore not in the real estate appraisal report itself.
5
Post-Depreciation NOI Yield = Appraisal NOI in the real estate appraisal report minus
Depreciation, divided by the Acquisition Price. Depreciation is independently calculated
by IIA using the straight-line method, and the Post-Depreciation NOI Yield is calculated
by IIA based upon the above data and are therefore not in the real estate appraisal report
itself.
25Hotel Name
Appraisal Value
Appraiser
Appraisal Date

Appraisal Value
Value by Direct
Capitalization Method
IncomeMaximum
Obtainable Rental
IncomeVacancy Loss
Expenses
Administrative &MaintenanceExpensesUtility Expenses
Repair Expenses
PM FeeLeasing
Brokerage Fees
Taxes
Insurance
Premiums
Other Expenses
Net Operating
Income (NOI)
Income onInvestment ofDeposits Received
CapitalExpenditure
Net ProfitAppraisal Details
Washington Hotel Plaza Shimonoseki Eki Nishi
JPY 1,200,000,000
Tanizawa Sogo Appraisal Co., Ltd.
January 1, 2020
AmountNote
Based on a DCF valuation, and verified
JPY 1,200,000,000 using a direct capitalization valuation
and DCF valuation
JPY 1,250,000,000
JPY 99,720,000
JPY 99,720,000–
JPY 20,577,632– Borne by tenant– Borne by tenant
Based on the average of the past 12
JPY 8,700,000 years of engineering reports and past
expenses at similar assets
JPY 1,440,000 Based on estimates
JPY 52,352
JPY 9,728,300

Based on FY2019 actual amounts(including depreciable asset tax)

JPY 357,820 Based on insurance estimates
JPY 299,160 Based on actual amounts
JPY 79,142,368
JPY 1,576,090
Based on the average of the past 12
JPY 20,880,000 years of engineering reports and past
expenditures at similar assets
JPY 59,838,458
Based on transactions of similar assets
and comprehensive assessment of the4.8%
asset’s location, its individual
characteristics, and property rights

Cap Rate6

Value via DCF Method

Terminal Cap RateJPY 1,180,000,000
4.8%(Until 10th year)
4.9%th(From 11 year)
5.0%

Value via Cost ApproachLand

JPY 1,190,000,000
34.3%

Discount Rate

Based on transactions of similar assets
and the yields of financial assets withthe asset’s individual characteristics
taken into accountBased upon risk-adjusted NOI

Sum of building and FF&E values
65.7% divided by sum of building, FF&E, andland values

Building

Notes
None
4. Seller Profile
Name

Third-party Japanese company

Relationship withIchigo Hotel or IIA

The seller does not have any capital, personnel, or business
relationship of note with Ichigo Hotel or IIA. In addition, theseller is not a related party as defined in the Enforcement
Ordinance of the Investment Trust and Investment Corporation
Law or the internal rules of the Asset Management Company.

5. Ownership History
The seller of the Washington Hotel Plaza Shimonoseki Eki Nishi is not a related party.
6. Broker Profile
Name

The broker did not provide consent to disclose its name.

Relationship withIchigo Hotel or IIA

The broker does not have any material capital, personnel, ortransactional relationship with Ichigo Hotel or IIA. Inaddition, the broker is not a related party as defined in theEnforcement Ordinance of the Investment Trust andInvestment Corporation Law or the internal rules of theAsset Management Company.

Broker Fee

The broker did not provide consent to disclose the fee.

7. Acquisition Schedule
Ichigo Hotel Board Resolution Date
Contract Date
Acquisition and Settlement Date

February 26, 2020
February 26, 2020
March 12, 2020 (Expected)

78. Earnings Outlook
The acquisition of the Washington Hotel Plaza Shimonoseki Eki Nishi is forecast toincrease Ichigo Hotel’s July 2020 fiscal period NOI and dividend by c. JPY 32 million
and JPY 50, respectively. Nonetheless, given the uncertainty surrounding the negative
impact of the coronavirus on inbound tourism, Ichigo Hotel is not currently revising its
existing earnings forecast for the July 2020 fiscal period. Should an earnings forecast
revision become necessary, Ichigo Hotel will promptly disclose the details.
Appendix A: Engineering Report Summary
Inspector Name
Inspection Date
Short-Term Repair Expenses1
Long-Term Repair Expenses2
Current Replacement Cost

Tokio Marine & Nichido Risk Consulting Co., Ltd.
January 2020–
JPY 360,472,000
JPY 1,800,700,000

1

Short-Term Repair Expenses are defined as repair expenses considered necessary
beyond the scope of ordinary maintenance within a year from the time of inspection.
2Long-Term Repair Expenses are defined as cumulative repair expenses considerednecessary for the maintenance of the hotel within twelve years from the time ofinspection.

8

Appendix B: Post-Acquisition Portfolio
Hotel Name

Prefecture

Nest Hotel Sapporo Ekimae
Nest Hotel Sapporo Odori
Comfort Hotel Kushiro
Grandpark-Inn Yokohama
Smile Hotel Tokyo Asagaya
Hotel Livemax NihombashiHakozakiHOTEL EMIT SHIBUYA
Comfort Hotel Hamamatsu
Hotel Wing InternationalNagoya
Comfort Hotel Central
International Airport
Comfort Hotel Suzuka
Smile Hotel Kyoto Shijo
Chisun Inn Osaka
HommachiHotel Wing International
Kobe Shin Nagata Ekimae
Nest Hotel Osaka
Shinsaibashi
Comfort Hotel Okayama
Nest Hotel Matsuyama
Urbain Hiroshima Executive

Hokkaido
Hokkaido
Hokkaido
Kanagawa
Tokyo

Variable Rent
Variable Rent
Fixed Rent
Fixed Rent
Variable Rent

Acquisition
Price2(JPY million)
2,160
1,450
300
1,490
3,910Tokyo

Fixed Rent

1,360

2.6Tokyo
Shizuoka

Variable Rent
Fixed Rent

3,700
1,550

7.1
3.0

Aichi

Variable Rent

2,670

5.1

Aichi

Fixed Rent

5,308

10.2

MieKyoto

Fixed Rent
Variable Rent

300
4,480

0.6
8.6

Osaka

Variable Rent

1,630

3.1

Hyogo

Variable Rent

1,490

2.9

Osaka

Variable Rent

7,600

14.6

Okayama
Ehime
Hiroshima
Okayama
Hiroshima

Fixed Rent
Variable Rent
Fixed Rent
Variable Rent
Variable Rent

1,200
1,610
1,800
1,725
1,500

2.3
3.1
3.5
3.3
2.9

Fixed Rent

1,080

2.1

Variable Rent
Variable Rent

1,380
2,220
51,9132.7
4.3
100HotelNo.1
A-1 004
A-2 008
A-3 018B-1 020
C-1 012
C-3 016
C-4 025
D-1 006
D-2 003
D-3 011
D-4 019E-1 001E-3 005
E-4 007
E-5 010F-1 017
F-2 015
F-3 021F-4 022
F-5 024
F-6 026
G-1 009
G-3 023
1

Court Hotel Kurashiki
Valie Hotel Hiroshima
Washington Hotel Plaza
Yamaguchi
Shimonoseki Eki Nishi
Fukuoka
Valie Hotel Tenjin
Kumamoto
Nest Hotel Kumamoto
Total 23 Hotels

Lease
Terms% ofPortfolio3

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

CodeA

RegionHokkaido/Tohoku

BKantoCDEFTokyo
Hokuriku/TokaiKinki
Chugoku/Shikoku

Prefectures
Hokkaido, Aomori, Iwate, Miyagi, Akita, Yamagata, Fukushima
Ibaraki, Tochigi, Gunma, Saitama, Chiba, Kanagawa, Yamanashi,Nagano, Niigata
TokyoToyama, Ishikawa, Fukui, Gifu, Shizuoka, Aichi, MieOsaka, Hyogo, Kyoto, Shiga, Nara, Wakayama
Tottori, Shimane, Okayama, Hiroshima, Yamaguchi, Kagawa,Tokushima, Kochi, Ehime
94.2
2.8
0.6
2.9
7.5

GKyushu/Okinawa

Fukuoka, Saga, Nagasaki, Kumamoto, Oita, Miyazaki, Kagoshima,
Okinawa

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

Appendix C: Annual Tourists and Hotel Guests in Yamaguchi Prefecture(thousand)Tourists Visiting Yamaguchi

Hotel Guests

40,00030,00031,396

31,25533,181

34,13928,47429,005

3,889

4,129

4,847

4,664

4,441

4,352

2013

2014

2015

2016

2017

2018

20,00010,0000Note: Data prepared by IIA based on Yamaguchi Prefecture’s “Number of Hotel Guests
and Tourists Visiting Yamaguchi in 2018.”

10