This English translation is provided for information purposes only. If any discrepancy is identified between thistranslation and the Japanese original, the Japanese original shall prevail.
August 25, 2020
REIT Issuer:
Japan Hotel REIT Investment Corporation (TSE code: 8985)
Kaname Masuda, Executive Director
Asset Management Company:
Japan Hotel REIT Advisors Co., Ltd.
Hisashi Furukawa, President & CEO
Contact:
Makoto Hanamura
Executive Director
Head of Planning Group, Operations Division
TEL: +81-3-6422-0530
Notice Concerning Difference Between Operating Forecast and Actual Results
for the Midterm of the Fiscal Year Ending December 2020 (21st Period), and Operating Forecast and Forecast of Dividend
for the Fiscal Year Ending December 2020 (21st Period)
Japan Hotel REIT Investment Corporation (hereinafter called “JHR”) announces the difference between the operating
forecast for the midterm of the fiscal year ending December 2020 (January 1, 2020 through December 31, 2020), announced
as “to be determined (TBD)” in “Notice Concerning Revision of Operating Forecast and Forecast of Dividend for the Fiscal
Year Ending December 2020 (21st Period)” dated March 25, 2020, and the actual results announced today. JHR alsoannounces the revision of operating forecast and forecast of dividend for the full fiscal year ending December 2020 (January
1, 2020 through December 31, 2020), which were also stated as “to be determined (TBD),” based on JHR’s recent businessperformance. Details are as follows.

1. Difference between operating forecast and actual results for the midterm of the fiscal year ending December 2020
(January 1, 2020 through June 30, 2020)

Forecast dated
February 20, 2020
(A)
Previous forecast
Forecast this time
(Actual)(B)
Variance(C) = (B)－(A)Variance ratio(D) = (C) / (A)Operatingrevenue

OperatingincomeOrdinary
income

JPY1M

JPY1M

JPY1M

13,539

7,895

6,972

Net income

Dividend per unit
(Excess ofearnings
exclusive)

Dividend per unit
resulting fromexcess of earnings

JPY1M

JPY

JPY

6,972

－

－

JPY1M
(TBD)

JPY1M
(TBD)

JPY1M
(TBD)

JPY1M
(TBD)

JPY

JPY

－

－

JPY1M

JPY1M

JPY1M

JPY1M

JPY

JPY

5,536

JPY1M

325

JPY1M

(550)

JPY1M

(551)

JPY1M

－

－

JPY

JPY

－

－

(8,003)(7,570)(7,523)(7,523)

%

%

%

%

%

%

－

－

－

－

(59.1)(95.9)

Note: This document is intended to serve as a press release to make available the information on the difference between the operating forecast and actual
results for the midterm of the fiscal year ending December 2020 (21st Period), and revisions to the operating forecast and dividend forecast for the
fiscal year ending December 2020 (21st Period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any
investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

1

2.

Revision of operating forecast and forecast of dividend for the full fiscal year ending December 2020
(January 1, 2020 through December 31, 2020)

Forecast dated
February 20, 2020
(A)
Previous forecast
Revised forecast(B)
Variance(C) = (B)－(A)Variance ratio(D) = (C) / (A)(Reference)
(*1)

(*2)
(*3)
(*4)
(*5)

3.

Net income

Dividend per unit
(Excess ofearnings
exclusive)

Dividend per unit
resulting fromexcess of
earnings

JPY1M

JPY1M

JPY

JPY

16,23916,238

3,750

－
JPY
(TBD)
JPY
－
JPY
－
%
－

Operatingrevenue

OperatingincomeOrdinary
income

JPY1M

JPY1M

29,971

18,128

JPY1M
(TBD)
JPY1M

13,126

JPY1M

JPY1M
(TBD)
JPY1M

2,085

JPY1M

JPY1M
(TBD)
JPY1M

244

JPY1M

JPY1M
(TBD)
JPY1M

243

JPY1M

JPY
(TBD)
JPY

126
JPY

(16,844)(16,042)(15,994)(15,994)(3,624)(56.2)(88.5)(98.5)(98.5)(96.6)

%

%

%

%

%

Forecast of net income per unit for the full fiscal year: ¥54(Calculated based on the forecast of the average number of investment units during the period (4,462,347 units))
Operating forecast for the midterm of the fiscal year ending December 2020 (January 1, 2020 through June 30, 2020)and operating forecast and forecast of dividend for the fiscal year ending December 2020 (January 1, 2020 throughDecember 31, 2020) were announced as “to be determined (TBD)” in “Notice Concerning Revision of Operating
Forecast and Forecast of Dividend for the Fiscal Year Ending December 2020 (21st Period)” dated March 25, 2020.
Therefore, figures announced in “Financial Report for the Fiscal Year Ended December 31, 2019 (January 1, 2019 December 31, 2019)” dated February 20, 2020, are shown for reference. The same shall apply hereinafter.
The number of investment units issued as of today is 4,462,347 units.
Total dividend is planned to be an amount of net income plus the reversed amount of reserve for temporary difference
adjustment (¥319 million).
For the assumptions of the operating forecast and forecast of dividend above, please refer to “<Reference Information
1> Assumptions of the operating forecast for the full fiscal year ending December 2020 (21st period)” below.
Amounts are rounded down to the nearest million yen and percentages are rounded to the first decimal place. The same
shall apply hereinafter.

Rationale for revisions to the operating forecast(1) Comparison of operating forecast for the midterm of the fiscal year ending December 2020 (January 1, 2020 throughJune 30, 2020) with the forecast dated February 20, 2020
With the voluntary cancellation of events and suspension of operations of large theme parks across the nation in linewith the declaration of a state of emergency by the government in addition to restrained economic activities in Japanand abroad and the decrease in the number of foreign visitors to Japan due to the spread of infection by COVID-19,
the hotel market has deteriorated rapidly as seen in the temporary closure of some hotels owned by JHR, etc.
Under such circumstances, JHR received a request to review rent from the largest lessee, Hotel Management Japan
Co., Ltd. (hereinafter called “HMJ”) and its subsidiaries. After discussion and examination together with JHR, HMJ
Group implemented measures to cut operating costs, etc. through thorough review of business operations of HMJ
Group Hotels (*1), and agreed on reduction of fixed rent for the current fiscal year including the midterm period(midterm: ¥3,970 million, full year: ¥8,736 million) (*2). As a result, fixed rent of the hotels decreased by ¥3,970 for
the current midterm period.
In addition, variable rent, income from management contracts, and revenue sharing decreased by ¥3,911 million, andutilities income, etc. decreased by ¥128 million, resulting in a decrease of ¥8,003 in operating revenue compared withthe forecast dated February 20, 2020.
On the other hand, operating expenses decreased by ¥432 million due to reduction of various expenses related toproperties and review of the implementation schedule of repair work, etc. Moreover, non-operating income increasedby ¥34 million mainly due to non-life insurance income, and financial costs decreased by ¥11 million, resulting in adecrease of ¥7,523 million in net income from the forecast dated February 20, 2020.

Note: This document is intended to serve as a press release to make available the information on the difference between the operating forecast and actual
results for the midterm of the fiscal year ending December 2020 (21st Period), and revisions to the operating forecast and dividend forecast for the
fiscal year ending December 2020 (21st Period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any
investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

2(2) Comparison of operating forecast for the full fiscal year ending December 2020 (January 1, 2020 through December
31, 2020) with the forecast dated February 20, 2020
Although the declaration of a state of emergency by the government was lifted in May 2020, the spread of infection
by COVID-19 around the globe and the deterioration of social/economic conditions due to the pandemic are yet toend, and thus it is likely that hotel businesses will need time to recover.
Under such circumstances, JHR received a request for reduction of fixed rent, etc. from some of its lessees of which
performance has deteriorated, and JHR has responded through discussions with lessees on an individual basis.
Considering the situations of such discussions, JHR expects a risk of revenue decrease of ¥200 million in its forecast.
On another front, JHR sold Sotetsu Fresa Inn Shimbashi-Karasumoriguchi on July 1, 2020, and expects gain on saleof ¥3,156 million.
As a result, fixed rent, etc. from hotel, office, and commercial tenants is expected to decrease by ¥8,897 million,
while variable rent, income from management contracts, and revenue sharing also are expected to decrease by¥10,935 million, and utilities income, etc. is expected to decrease by ¥169 million. Accordingly, operating revenue
is expected to decrease by ¥16,844 million from the forecast dated February 20, 2020.
Operating expenses is expected to decrease by ¥802 million due to reduction of various expenses related to properties
and review of the implementation schedule of repair work, etc. Moreover, non-operating income is expected toincrease by ¥35 million mainly due to non-life insurance income, and financial costs are expected to decrease by ¥12
million, resulting in a decrease in net income of ¥15,994 million from the previous forecast.
For detailed information on the operating results of hotels with variable rent, etc., please refer to “<Reference
Information 3> Hotel operation indexes, sales, and GOP (*3)” below.
(*1)

(*2)
(*3)

HMJ Group Hotels refers to 14 hotels: Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel,
Hotel Nikko Alivila, and Oriental Hotel Hiroshima, which JHR leases to HMJ, (hereinafter called “the Five HMJ Hotels”),
plus Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel (main facility of ACTIVE-INTER CITYHIROSHIMA), Oriental Hotel Fukuoka Hakata Station, Holiday Inn Osaka Namba, Hilton Tokyo Narita Airport,
International Garden Hotel Narita, Hotel Nikko Nara, Hotel Oriental Express Osaka Shinsaibash, and Hilton Tokyo Odaiba,
which JHR leases to subsidiaries of HMJ. The same shall apply hereinafter.
For the details of a lease contract with HMJ Group Hotels, please see “Notice Concerning Revision of Fixed-Term Lease
Contracts” announced today.
GOP (gross operating profit) and GOL (gross operating loss) are the remainder after expenses, such as personnel costs andgeneral and administrative expenses, etc. incurred in hotel operation, are deducted from total sales. The same shall apply
hereinafter.

Note: This document is intended to serve as a press release to make available the information on the difference between the operating forecast and actual
results for the midterm of the fiscal year ending December 2020 (21st Period), and revisions to the operating forecast and dividend forecast for the
fiscal year ending December 2020 (21st Period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any
investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

3

4.

Highlights of the operating forecast and forecast of dividend(1) Comparison with the operating forecast and forecast of dividend (forecast dated February 20, 2020) for the full
fiscal year ending December 2020, which was released in the “Financial Report for the Fiscal Year Ended
December 31, 2019 (January 1, 2019 – December 31, 2019)” dated February 20, 2020, and the major factors
causing the variance(Unit: millions of yen)
FY12/2019(20th Period)

FY12/2020(21st Period)
Forecast dated
February 20, 2020(*1)

ActualProperties(A)

Profit and Loss Statement

Forecast This Time(annualized effect)

(B)

(*2)

(B)-(A)

No. of Properties

43

43

42

42

(1)

Acquisition Price

374,508

374,508

369,708

369,708(4,800)Operating Revenue

28,27829,971

13,126

9,738

Reasl Estate
Operating Revenue

Dividend

Forecast ThisTime

Comparison with
the Forecast
dated February
20, 2020

28,27829,971

Composition

Composition

Fixed Rent

56.3% 15,931

56.1%

Other Rent

4.1%

1,170

3.9%

1,158

-

(1.3%)(4,800)-(16,844)(56.2%)

2,990(19,835)

9,738(20,001)(66.7%)(165)(19,835)

7,931 79.9%

7,782(8,897)(52.9%)(149)(8,748)989 10.0%

974

(169)

(14.6%)

(16)

9,970

Variable Rent

39.5% 11,176

Gain on Sale ofProperties, etc.

--

Operating Expenses
related to Properties

4,191

NOI (*6)
NOI Yield

NOI after
Depreciation (*6)

9.9%

%
(1)

Composition

16,828 79.5%

Sale of
Existing
Property Properties
(*3)
(*4)
Major Factors Causing the Variance

Composition(91.2%)

-

3,156

-

3,156

-

3,156

-

4,698

4,355

4,408

(342)

(32)

(310)

24,08725,273

5,614

5,330

(19,658)(77.8%)(133)(19,524)

6.4%

6.7%

1.5%

1.4%

(5.2%)

19,281

20,392841

568(19,550)(95.9%)(122)(19,427)

1,049 10.1%

5.1%

5.4%

0.2%

0.2%

(5.2%)

Operating Income

17,14818,1282,085(1,340)(16,042)(88.5%)

Ordinary Profit (Loss)

15,291

16,239244(3,181)(15,994)(98.5%)Net Income (Loss)

15,290

16,238243(3,182)(15,994)(98.5%)

Reversed Amount of
the Reserve for
Temporary Difference
Adjustment(Negative Goodwill)

1,176

496

319

337

(177)

(35.8%)

Total Dividends

16,466

16,733562-(16,171)

Number ofUnits Issued (Unit)

4,462,347

4,462,347

4,462,347

4,462,347-

Dividend per Unit
(JPY)

3,690

3,750

126

-

(3,624)

(*2)
(*3)
(*4)
(*5)
(*6)

1) Decrease in variable rent, etc. fromthe 24 Hotels with Variable Rent, etc.
(*5) by JPY9,771M (of these, decreasein variable rent, etc. from the HMJ(10,935)
Group Hotels by JPY6,614M)
2) Decrease in variable rent, etc. fromother hotels with variable rent, etc. by
JPY1,163M(10,935)

11,984 10.5%

NOI Yield after
Depreciation(*1)(152) Decrease mainly in utilities cost

982

40.0%

1) Decrease in fixed rent from the HMJ
Group Hotels (*5) by JPY8,736MM2) Decrease in fixed rent from othertenants by JPY11M

Reversed Amount of the Reserve for Temporary Difference
Adjustment (*7)
2019: 50-year negative goodwill amortization: JPY262 MM,
Loss on retirement of noncurrent assets: JPY246 MM,(96.6%)
Correspondence to large-scale renovation work:
JPY357 MM, Correspondence to dilusion: JPY310 MM
2020: 50-year negative goodwill amortization: JPY262 MM,
Loss on retirement of noncurrent assets: JPY19 MM,
Amortization of trademark rights: JPY37 MM(annualized effect: JPY56 MM)(96.6%)

The forecast dated February 20, 2020 indicates figures announced in “Financial Report for the Fiscal Year Ended December
31, 2019 (January 1, 2019 - December 31, 2019)” dated February 20, 2020. The same shall apply hereinafter.
For the assumptions of the annualized effect for the forecast this time, please refer to “<Reference Information 2> Assumptionsof the annualized effect (full-year effect) for the forecast for the fiscal year ending December 2020 (21st period)” below.
The amount of the impact of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi, which was sold on July 1, 2020, is stated.
“Existing properties” refers to the 42 properties excluding Sotetsu Fresa Inn Shimbashi-Karasumoriguchi sold on July 1, 2020,of the 43 properties owned by JHR as of June 30, 2020. The same shall apply hereinafter.
The 24 Hotels with Variable Rent, etc. represents the 24 hotels comprising the HMJ Group Hotels plus ibis Tokyo Shinjuku,
ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure Okinawa Naha, Mercure Yokosuka, the bsuidobashi, the b ikebukuro, the b hachioji, and the b hakata. The same shall apply hereinafter in this document.
Each is calculated using the following formula. The same shall apply hereinafter.

Note: This document is intended to serve as a press release to make available the information on the difference between the operating forecast and actual
results for the midterm of the fiscal year ending December 2020 (21st Period), and revisions to the operating forecast and dividend forecast for the
fiscal year ending December 2020 (21st Period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any
investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

4

(*7)

NOI (Net Operating Income) = Real estate operating revenue – Real estate operating costs + Depreciation + Loss on retirementof noncurrent assets + Asset retirement obligations expenses
NOI yield = NOI ÷ acquisition price
NOI after depreciation = Real estate operating revenue – Real estate operating costs
NOI yield after depreciation = NOI after depreciation ÷ acquisition priceFor the details of the reversed amount of the reserve for temporary difference adjustment, please refer to “<Reference
Information 1> Assumptions of the operating forecast for the full year of the fiscal year ending December 2020 (21st period)”
below.

(Note)
The above is the forecasts based on status of operation as of today, and actual dividend per unit may fluctuate. This forecast
does not guarantee the amount of dividend shown above.
* Website of Japan Hotel REIT Investment Corporation: https://www.jhrth.co.jp/en/

Note: This document is intended to serve as a press release to make available the information on the difference between the operating forecast and actual
results for the midterm of the fiscal year ending December 2020 (21st Period), and revisions to the operating forecast and dividend forecast for the
fiscal year ending December 2020 (21st Period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any
investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

5<Reference Information 1> Assumptions of the operating forecast for the full fiscal year ending December 2020 (21st period)
Item
Assumptions
Calculation
・ Full fiscal year ending December 2020 (21st Period): January 1, 2020 through December 31, 2020 (366 days)
Period・ The 42 properties owned by JHR as of today after the sale of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi(hereinafter called the “Sale”) on July 1, 2020, are assumed.
Assets Under ・ It is assumed that there will be no change (acquisition of new property or disposition of the existingManagement
properties, etc.) in assets under management other than the Sale through the end of the fiscal year ending
December 2020 (21st period). However, the actual results may fluctuate depending on the changes in assets
under management that may take place.
・ Gain on sale of real estate properties of ¥3,156 million is expected to be recognized due to the Sale.
・ Operating revenue is calculated based on the conditions of the lease and other contracts effective as of today,
taking into consideration the competitiveness of hotels, market environment, and other factors. If there arelease contracts with facilities other than hotels, such as retail facilities and offices, operating revenue
calculated based on the said lease contracts is included.
・ Rents, etc. of the main hotels are calculated based on the following assumptions.
(1) The HMJ Group Hotels
JHR concluded a memorandum of understanding for the fixed-term lease contracts of the HMJ Group
Hotels on August 25, 2020. Assumptions for fixed and variable rent from January 1, 2020, to December
31, 2020 are as follows.

Operating
Revenue

Total rent = Fixed rent + Variable rent
Fixed rent = ¥794 million (equivalent to monthly fixed rent for one month)
Variable rent = Total GOP of the hotels x Variable rent ratio (%) – Fixed rent
Variable rent is calculated separately for each hotel, and is set as 0 (zero) when GOL arises.
(Unit: millions of yen)
Total GOP
Variable Variable Fixed
Totalof therent ratio
rent
rent
rent
hotel(s)Midterm
(120)
‐
268
268
The Five HMJ Hotels
89.78%
Full year
241
‐
268
268
Midterm
(149)
‐
45
45
Okinawa Marriott Resort & Spa
82.92%
Full year
(170)
‐
45
45
Midterm
86
39
29
68
Sheraton Grand Hiroshima
79.03%
Hotel (*1)
Full year
118
65
29
94
Midterm
170
130
35
165
Oriental Hotel Fukuoka Hakata
96.98%
StationFull year
286
242
35
278
Midterm63‐ (*2)
48
48
Holiday Inn
90.15%
Osaka Namba
Full year
22
‐
48
48
Midterm91‐ (*3)
37
37
Hilton Tokyo Narita Airport
83.59%
Full year
64
16
37
53
Midterm
49
19
28
47
International Garden Hotel
95.35%
NaritaFull year
64
33
28
61
Midterm
(175)
‐
35
35
Hotel Nikko Nara
90.05%
Full year
(210)
‐
35
35
Midterm(16)‐
9
9Hotel Oriental Express Osaka
87.11%
Shinsaibashi
Full year
(42)
‐
9
9
Midterm(369)
92.10%‐
258
258
Hilton Tokyo Odaiba
Full year
(170)
‐
258
258
Midterm
(370)
188
794
982
Total
Full year
204
357
794
1,151
(*1) Stating the rent for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
Fixed rent and variable rent for office and commercial tenants of ACTIVE-INTER CITY HIROSHIMA are as follows.

Note: This document is intended to serve as a press release to make available the information on the difference between the operating forecast and actual
results for the midterm of the fiscal year ending December 2020 (21st Period), and revisions to the operating forecast and dividend forecast for the
fiscal year ending December 2020 (21st Period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any
investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

6

Item

Assumptions
Midterm
Full year

Variable rent
3
5

Fixed rent
239
477

(Unit: millions of yen)
Total rent
243483(*2) Variable rent for the midterm is not recognized since variable rent does not arise based on the expected full-year GOP.
(*3) As the expected GOP for the full year is less than the GOP for the midterm period, variable rent is not recorded in
the midterm period.

(2) Income from management contracts (*4) and variable rent from other hotels with variable rent, etc.
(Unit: millions of yen)
Midterm
Full year
ibis Tokyo Shinjuku
18
3
ibis Styles Kyoto Station‐ (*5)‐ (*5)
ibis Styles Sapporo
23
38
Mercure Sapporo
40
68
Mercure Okinawa Naha
‐ (*5)‐ (*5)
Mercure Yokosuka
27
17
the b suidobashi‐‐
the b ikebukuro
1
1
the b hachioji
44105
the b hakata
22
Comfort Hotel Tokyo Higashi Nihombashi
1
1
Smile Hotel Nihombashi Mitsukoshimae
1212Hotel Vista Kamata Tokyo‐‐
Chisun Inn Kamata
15
18
Undisclosed (*6)
Undisclosed (*6)
Hotel Keihan Universal City
Sotetsu Fresa Inn Shimbashi Karasumoriguchi (*7)
66
66
Undisclosed (*6)
Undisclosed (*6)
Hilton Tokyo Bay
Undisclosed (*6)
Undisclosed (*6)
Hilton Nagoya
Total
454
685
(*4)
(*5)

For income from management contracts, it is assumed that each hotel’s GOP amount is recognized as income frommanagement contracts, and GOL and the management contract fees to be paid by JHR are recognized as an
operating expense.
GOL recognized as cost for management contracts are as follows.

Midterm
(20)
(13)
(33)

ibis Styles Kyoto Station
Mercure Okinawa Naha
Total
(*6)
(*7)

(Unit: millions of yen)
Full year
(40)
(39)
(80)

Undisclosed since tenants that concluded lease contracts did not agree to disclose rent revenue, etc.
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi was sold on July 1, 2020. The above shows the variable rent arising
before the sale date.

・ The following is the breakdown of variable rent and income from management contracts(Unit: millions of yen)
Midterm
Full year
The HMJ Group Hotels
188
357
Office and commercial tenants (*8)
3
5Other hotels with variable rent, etc. (18 hotels)
454
685
Total (32 hotels)
646
1,049
(*8)
(*9)

Variable rent for office and commercial tenants of ACTIVE-INTER CITY HIROSHIMA is shown.
For details of variable rent, please refer to page 51, “3. Reference Information; B. Assets under management; (C)Other major assets under management; C. Overview of the hotel business; a. Rent structures of hotels with variable

Note: This document is intended to serve as a press release to make available the information on the difference between the operating forecast and actual
results for the midterm of the fiscal year ending December 2020 (21st Period), and revisions to the operating forecast and dividend forecast for the
fiscal year ending December 2020 (21st Period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any
investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

7

Item

OperatingExpensesAssumptions

rent, management contract or revenue sharing” of the “Midterm Financial Report for the Fiscal Year Ending
December 31, 2020 (January 1, 2020 - June 30, 2020)” dated today.

・ JHR is in discussions with tenants concerning temporary rent reduction due to the impact of COVID-19. In
light of the current status of discussions, JHR assumes a risk of revenue decrease of ¥200 million considering
the possible impact of revenue decrease on operating income.
・ With respect to real estate leasing expenses, which constitute a major part of the operating expenses, expenses
other than depreciation are calculated based on historical data, and variable factors are reflected in thecalculation.
・ It is assumed that ¥1,915 million will be recognized as expenses for fixed asset tax, city planning tax, etc.
・ In general, fixed asset tax, city planning tax, and other taxes and public dues on acquired assets are settledwith the previous owners at the time of acquisition calculated on a pro rata basis of the holding period. For
JHR, such settlement amount is included in the acquisition price, and it will not be recognized as expenses
for the calculation period.
・ For capital expenditure, ¥3,000 million was assumed for the large-scale renovation at Hilton Tokyo Odaiba
for the fiscal year ending December 2020 (21st period) and ¥2,600 was assumed for the large-scalerenovation at Namba Oriental Hotel for the fiscal year ending December 2021 (22nd period) in the forecast
dated February 20, 2020. However, all renovations including large-scale renovations were reviewed(including whether to execute in the future is undecided), and capital expenditure for the fiscal year ending
December 2020 (21st period) is assumed to be ¥1,799 million (¥1,605 million for capital expenditure I, ¥93
million for capital expenditure II, and ¥100 million for capital expenditure III).
(*)

JHR classifies capital expenditures across the following three categories. (I) Capital investment related to renewalof equipment and facilities of buildings, which is required to maintain proper values of properties; (II) capital
investment for fixtures, furniture, and equipment that are not directly related to building structure or facilities but
necessary for operating hotels; and (III) strategic capital investment such as renovating guest rooms, etc. for
improving the competitiveness of the hotels.

・ Depreciation is calculated using the straight-line method including the planned capital expenditures above,and is assumed to be ¥4,751 million.
・ Repair expenses for buildings are recognized as expenses in the assumed amount necessary for each operating
period. Please note that the repair expenses of each operating period may differ materially from the forecast
amount for various reasons, such as; (1) Emergency repair expenses may be necessary due to damage tobuildings from unexpected causes; (2) The amount of repair expenses generally tends to increase in difference
over time; and (3) Repair expenses are not required on a regular basis.
・ ¥1,876 million is expected for borrowing-related costs, including interest expense, amortization for financing
Non-Operating
fee and arrangement fee, and other non-operating expenses.
Expenses・ Expenses for issuance of new investment units and secondary offering are amortized over a period of three
years under the straight-line method.
・ The balance of interest-bearing debt (sum of loans and investment corporation bonds) as of the end of June
2020 was ¥168,754 million. It is assumed that the balance of interest-bearing debt will be ¥168,754 million
Interestas of December 31, 2020.
Bearing Debt
・ It is assumed that loans totaling ¥12,782 million due in the second half of the fiscal year ending December
2020 (21st period) will be fully refinanced.

Note: This document is intended to serve as a press release to make available the information on the difference between the operating forecast and actual
results for the midterm of the fiscal year ending December 2020 (21st Period), and revisions to the operating forecast and dividend forecast for the
fiscal year ending December 2020 (21st Period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any
investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

8

Item

Assumptions
・ Dividend per unit for the fiscal year ending December 2020 (21st period) is calculated based on the following
assumptions.
Net income
Reversal of reserve for temporary difference adjustment(negative goodwill)
50-year amortization amount of negative goodwill (*1)

¥19 million

Amortization of trademark rights (*3)

¥37 million¥562 million

Total number of investment units issued

4,462,347 units

Dividend per unit

(*1)
(*2)
(*3)

¥262 million

Loss on retirement of noncurrent assets (*2)
Distributable amount

Dividend per
Unit¥243 million¥126¥262 million (hereinafter called “50-year amortization amount of negative goodwill”) is scheduled to be paid out
as dividends, with the remaining balance of the reserve for temporary difference adjustment set as the maximum
amount, for every fiscal year.
The amount recognized as loss on retirement of noncurrent assets will be appropriated by reserve for temporary
difference adjustment (negative goodwill) and is expected to have no impact on dividend per unit.
As announced in the press release “Notice Concerning Acquisition of New Assets (Trademark Rights of “Oriental
Hotel” brand, etc.)” dated May 15, 2020, JHR acquired the trademark rights on May 15, 2020. The trademark
rights are amortized over 10 years using the straight-line method. Amortization expected to be recognized during
the current fiscal year will be appropriated by reserve for temporary difference adjustment (negative goodwill)
and is expected to have no impact on dividend per unit.

・ Dividend per unit may fluctuate due to various causes, such as fluctuation of rent revenue resulting fromtransfer of assets under management, change of tenants, etc. of hotels, change in the business environment
surrounding tenants, etc. of hotels, unexpected repairs, and actual number of new units issued, etc.
・ The remaining balance of reserve for temporary difference adjustment (negative goodwill) after theappropriation of reserve for temporary difference adjustment (negative goodwill) for dividends for the fiscal
year ending December 2020 (21st period) is expected to be ¥10,298 million.
Dividend per
Unit・ It is assumed that excess of earnings (dividend per unit resulting from excess of earnings) will not be
Resulting
distributed.
from Excessof Earnings
・ It is assumed that no revisions to laws, tax systems, accounting standards, listing regulations, and regulationsof the Investment Trusts Association, Japan (“ITAJ”) that may impact the forecast above will be made.
Others・ It is assumed that no unexpected major incident in the general economy, real estate market, and hotel businessenvironment, etc. will occur.
・ In the above assumptions, numerical values are rounded down to the nearest million yen.

Note: This document is intended to serve as a press release to make available the information on the difference between the operating forecast and actual
results for the midterm of the fiscal year ending December 2020 (21st Period), and revisions to the operating forecast and dividend forecast for the
fiscal year ending December 2020 (21st Period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any
investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

9<Reference Information 2> Assumptions of the annualized effect (full-year effect) for the forecast for the fiscal year ending
December 2020 (21st period)(1) It is assumed that the existing properties (42 properties) excluding Sotetsu Fresa Inn Shimbashi-Karasumoriguchi(hereinafter the “Sold Property”) sold on July 1, 2020, will be held throughout the year and that there will be no gain onsale of real estate properties.
(2) There is no change in operating revenue and operating expenses of the existing properties (42 properties) excluding theSold Property from the above “<Reference Information 1> Assumptions of the operating forecast for the full fiscal year
ending December 2020 (21st period),” except for fixed asset tax and city planning tax.
(3) Fixed asset tax, city planning tax, etc. for Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba acquiredin the fiscal year ended December 2019 (20th period) are assumed to be ¥337 million (for 12 months).
(4) The trademark rights are amortized over 10 years using the straight-line method. Annualized amortization is assumed tobe ¥56 million and is appropriated by reserve for temporary difference adjustment (negative goodwill).

<Reference Information 3> Hotel operation indexes, sales and GOP
The numeral figures are based on figures obtained from hotel lessees, etc. Please note that these figures have not been auditedor gone through other procedures. No guarantee is made as to the accuracy or completeness of the figures and information.
ADR and RevPAR are rounded down to the nearest yen. Sales and GOP are rounded down to the nearest million yen.
Occupancy rate and comparison with the previous period are rounded to one decimal place.
<1> The 24 Hotels with Variable Rent, etc.
Fiscal year ended December 2019
ActualForecast
Comparison withdated
the previous
February 20,
period2020

Fiscal year ending December 2020
Forecast thistime(first half:
actual)Comparison
with theprevious period

Comparison
with theforecast dated
February 20,
2020

First half
85.1%
(2.9pt)87.0%
34.0%(51.1pt)(53.0pt)of the year
Occupancy
Second half of
86.9%
0.5pt
87.3%
34.2%
(52.6pt)(53.1pt)
Rate
the year
Full year
86.0%(1.2pt)87.1%
34.1%(51.9pt)(53.1pt)
First half
15,691
0.4%
15,69013,362(14.8%)(14.8%)of the year
ADR
Second half of
17,263(3.4%)
18,97013,264(23.2%)(30.1%)(*1)
the year
Full year
16,492(1.6%)
17,341
13,313(19.3%)(23.2%)First half
13,348(3.0%)
13,6494,536(66.0%)(66.8%)of the year
RevPAR
Second half of
14,993(2.9%)
16,5594,541(69.7%)(72.6%)(*2)
the year
Full year
14,178(2.9%)
15,112
4,539(68.0%)(70.0%)First half
28,259
(2.0%)
29,036
10,718(62.1%)(63.1%)of the year
Sales
Second half of
31,453(2.0%)
34,21911,593(63.1%)(66.1%)(JPY 1M)
the year
Full year
59,712(2.0%)
63,25522,310(62.6%)(64.7%)First half
9,067
(5.6%)
9,167(213)(102.4%)(102.3%)of the year
GOP
Second half of
11,804(2.8%)
13,177628(94.7%)(95.2%)(JPY 1M)
the year
Full year
20,871(4.0%)
22,344414(98.0%)(98.1%)(*1) ADR: Represents average daily rate, which is calculated by dividing revenue of the rooms department for a given period(including service charges) by the total number of rooms sold during the period. As for service charge, Kobe Meriken Park
Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, Oriental Hotel Hiroshima, Okinawa
Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel (main facility of ACTIVE-INTER CITY HIROSHIMA), International
Garden Hotel Narita, Hotel Nikko Nara, and Oriental Hotel Fukuoka Hakata Station request 10%, Hilton Tokyo Narita Airport
Note: This document is intended to serve as a press release to make available the information on the difference between the operating forecast and actual
results for the midterm of the fiscal year ending December 2020 (21st Period), and revisions to the operating forecast and dividend forecast for the
fiscal year ending December 2020 (21st Period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any
investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

10requests 12%, and Hilton Tokyo Odaiba requests 13%. Moreover, the other 24 hotels with variable rent, etc. do not request a
service charge. The same shall apply hereinafter.
(*2) RevPAR represents revenue per available room, which is calculated by dividing total room revenue for a certain period(including service charges) by the total number of rooms available for sale during the period. The same shall apply hereinafter.

<2>The HMJ Group Hotels
Fiscal year ended December 2019
ActualFiscal year ending December 2020
Forecast thisComparison
Comparison with Forecast dated
Comparisontimewith the forecast
the previous
with theFebruary 20,(first half:
dated February
periodprevious period
2020
actual)20, 2020

First half
85.3%
(3.0pt)87.6%
33.1%(52.2pt)(54.5pt)of the year
Occupancy
Second half
87.9%
1.4pt
86.9%
31.2%
(56.7pt)(55.7pt)
Rateof the year
Full year
86.6%(0.8pt)87.3%
32.2%(54.4pt)(55.1pt)
First half
17,587(0.7%)
17,587
15,222(13.4%)(13.5%)of the year
ADR
Second half
19,635(4.5%)
21,95016,623(15.3%)(24.3%)(*1)
of the year
Full year
18,635(2.7%)
19,772
15,906(14.6%)(19.6%)First half
15,005(4.1%)
15,406
5,045(66.4%)(67.3%)of the year
RevPAR
Second half
17,263
(3.0%)
19,083
5,193(69.9%)(72.8%)(*2)
of the year
Full year
16,143
(3.5%)
17,2555,120(68.3%)(70.3%)First half
24,050(2.4%)
24,7669,167(61.9%)(63.0%)of the year
Sales
Second half
27,137(2.0%)
29,483
10,191(62.4%)(65.4%)(JPY 1M)of the year
Full year
51,187(2.2%)
54,24819,358(62.2%)(64.3%)First half
7,230
(6.1%)
7,363(370)(105.1%)(105.0%)of the year
GOP
Second half
9,886
(2.0%)
11,014575(94.2%)(94.8%)(JPY 1M)of the year
Full year
17,116(3.8%)
18,376204(98.8%)(98.9%)(*1) Large-scale renovation work with the suspension of hotel operation was implemented at Oriental Hotel Fukuoka Hakata Stationfrom October 1, 2018 to April 8, 2019. Actual for the fiscal year ended December 2019 includes the impact of the suspension
due to the renovation work.
(*2) Large-scale renovation work was scheduled at Namba Oriental Hotel from November 2020 to March 2021 and at Hilton Tokyo
Odaiba from September 2020 to December 2020. Therefore, the forecast dated February 20, 2020 for the fiscal year ending
December 2020 includes the impact of the suspension of operations and sales due to the large-scale renovation work.
(*3) As Hotel Oriental Express Osaka Shinsaibashi opened on April 2, 2018, tallies for 2018 do not include figures from before theopening.
(*4) Hilton Tokyo Odaiba was acquired on April 8, 2019. The actual and comparison with the previous period for the fiscal year
ended December 2019 are calculated as the total for the full year including figures prior to the acquisition date.

Note: This document is intended to serve as a press release to make available the information on the difference between the operating forecast and actual
results for the midterm of the fiscal year ending December 2020 (21st Period), and revisions to the operating forecast and dividend forecast for the
fiscal year ending December 2020 (21st Period). This document should not be construed as an offer to sell or solicitation of an offer to purchase any
investment units or other investment of JHR. Prospective investors are advised to make any investment decisions at their own risk and responsibility.

11