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.
February 20, 2020

Financial Report for the Fiscal Year Ended December 31, 2019
(January 1, 2019 – December 31, 2019)Japan Hotel REIT Investment Corporation
Listing:
Securities code:
URL:
Representative:

Tokyo Stock Exchange8985
http://www.jhrth.co.jp/en/
Kaname Masuda, Executive Director

Asset Management Company:
Representative:
Contact:

Japan Hotel REIT Advisors Co., Ltd.
Hisashi Furukawa, President & CEO
Noboru Itabashi
Managing Director, Director of the Board, Head of Operations Division
Phone: +81-3-6422-0530

Scheduled date to file Securities Report: March 27, 2020
Scheduled date to start dividend payment: March 19, 2020
Preparation of supplementary material on financial report:
Schedule for presentation of financial results:

Yes
Yes (Analysts and institutional investors only)(Amounts are rounded down to the nearest million yen)

1. Status summary of operation and assets for the fiscal year ended December 31, 2019
(January 1, 2019 – December 31, 2019)(1) Operating results(Percentages show changes from the previous year)

Operating revenue
Fiscal year ended
December 31, 2019
December 31, 2018

JPY1M
28,27828,253%0.1
10.9

Net income per unit
Fiscal year ended
December 31, 2019
December 31, 2018
(Note)

Operating income
JPY1M
17,14817,993

Ordinary income
%
(4.7)
14.2

JPY1M
15,291
16,211

Ordinary income tototal assets

Return on equity (ROE)

JPY
3,447
4,041

Net income
%
(5.7)
15.7

%
7.0
8.0

JPY1M
15,29016,210

%
(5.7)
15.7

Ordinary income tooperating revenue
%
4.0
4.6

%
54.1
57.4

Net income per unit is calculated based on the period-average number of investment units issued.

(2) Cash distributions

Fiscal year ended
December 31, 2019
December 31, 2018

Dividend per unit
(Excess of earnings
exclusive)

Total dividends(Excess of earnings
exclusive)

Dividend per unit
resulting fromexcess of earnings

Total dividends
fromexcess of earnings

JPY

JPY1M

JPY
-

JPY1M
-

3,690
3,890

16,466
15,602

Dividend to
net assets

Payout ratio
%

107.7
96.2

%

7.1
7.7

(Note 1) The source of dividends for the fiscal year ended December 31, 2019 is calculated by adding appropriation for dividends (¥1,176 million) tounappropriated retained earnings. For details of the appropriation for dividends, please refer to “<Reference Information 3> Dividend per unit andappropriation for dividends” on page 20.
(Note 2) The source of dividends for the fiscal year ended December 31, 2018 is calculated by deducting ¥1,174 million of the reserve for special advanced
depreciation from the amount obtained by adding appropriation for dividends (¥563 million) to unappropriated retained earnings. For details of theappropriation for dividends, please refer to “<Reference Information 3> Dividend per unit and appropriation for dividends” on page 20.
(Note 3) Payout ratio is calculated using the following formula, rounded off to one decimal place.
Total dividends (total dividends from excess of earnings exclusive) ÷ Net income × 100-1-(3) Financial position

Total assets
JPY1M
415,722350,556

Fiscal year ended
December 31, 2019
December 31, 2018
(Note)Net assets

Equity ratio

JPY1M
236,522
203,372

%
56.9
58.0

Net assets per unit
JPY
53,00450,705

Net assets per unit are calculated based on the total number of investment units issued and outstanding at the end of the fiscal year.

(4) Cash flows

Cash flows fromoperating activities
JPY1M
20,00030,938

Fiscal year ended
December 31, 2019
December 31, 2018

Cash flows frominvesting activities
JPY1M(72,464)(3,110)Cash flows from
Cash and cash equivalents
financing activities
at end of year
JPY1M
JPY1M
49,62334,343(18,563)
37,184

2. Operating forecast for the fiscal year ending December 31, 2020
(January 1, 2020 – December 31, 2020)(Percentages show changes from the previous year)
Operating revenue
JPY1M

Midterm
Full year

13,53929,971%

6.4
6.0

Operating income
JPY1M

7,895
18,128%8.3
5.7

Ordinary income
JPY1M

6,972
16,239Dividend per unit
(Excess of earnings
exclusive)

Net income
%

9.7
6.2

JPY1M

6,972
16,238%

9.7
6.2

Dividend per unit
resulting fromexcess of earnings

JPY
-

3,750

JPY
-

(Reference) Estimated net income per unit for the fiscal year ending December 31, 2020 (full year) ¥3,638(Calculated based on the estimate of period-average number of investment units of 4,462,347.)(Note)

Reserve for temporary difference adjustment in the amount of ¥496 million is planned to be the source of dividend payment.

* Other(1) Changes in accounting policies, changes in accounting estimates, and restatement of financial statements for prior period after
error corrections(a) Changes in accounting policies due to revisions to accounting standards and other regulations: No change(b) Changes in accounting policies due to other reasons than above (a): No change(c) Changes in accounting estimates: No change(d) Restatement of financial statements for prior period after error corrections: No change(2) Total number of investment units issued and outstanding(a) Total number of investment units issued and outstanding at the end of the fiscal year(including investment units owned by Japan Hotel REIT Investment Corporation
As of December 31, 2019
As of December 31, 2018(b) Number of JHR’s own investment units held at the end of the fiscal year
As of December 31, 2019
As of December 31, 2018

4,462,347 units
4,010,847 units
0 units
0 units(Note) For the number of investment units serving as the basis of computation of net income per unit, please refer to “Notes on per unit information” on page 40.

* Financial reports are exempt from the audit by a certified public accountant or an auditing firm.
* Special items

Forward-looking statements presented in this financial report including operating forecasts are based on information currently
available to us and on certain assumptions we deem to be reasonable. As such, actual operating and other results may differ
materially from these forecasts due to a number of factors. Furthermore, we do not intend to guarantee any dividend amount by
this forecast. For the assumptions of the operating forecast and notes for the use of operating forecast, please refer to “1. Operating
results; (1) Operating results; (B) Outlook for the next fiscal period” on page 6 and “Assumptions of the operating forecast forthe midterm and full year of the fiscal year ending December 31, 2020 (21st period)” on page 10.

-2-

○ Table of Contents

1. Operating results .............................................................................................................................................................................. 4(1) Operating results ........................................................................................................................................................................... 4
2. Financial statements ....................................................................................................................................................................... 21(1) Balance sheets ............................................................................................................................................................................. 21(2) Statements of income .................................................................................................................................................................. 23(3) Statements of changes in net assets ............................................................................................................................................. 24(4) Statements of cash dividends ...................................................................................................................................................... 26(5) Statements of cash flows ............................................................................................................................................................. 27(6) Notes on going concern assumption............................................................................................................................................ 28(7) Notes on matters concerning significant accounting policies...................................................................................................... 28(8) Note on change in the indication method .................................................................................................................................... 29(9) Notes to financial statements ...................................................................................................................................................... 29(10) Changes in total number of investment units issued and outstanding ........................................................................................ 41
3. Reference information .................................................................................................................................................................... 42(1) Information on values of assets under management, etc. ............................................................................................................. 42(2) Status of capital expenditures ...................................................................................................................................................... 55- 3 -1. Operating results(1)Operating results(A) Overview of the fiscal year under review(a) Brief history and principal activities
Japan Hotel REIT Investment Corporation (hereinafter referred to as “JHR”) was established under the Act on Investment
Trusts and Investment Corporations (Act No. 198 of 1951, as amended; hereinafter referred to as the “Investment TrustsAct”) on November 10, 2005 and was listed on the Real Estate Investment Trust (REIT) section of the Tokyo Stock Exchange(Securities code: 8985) on June 14, 2006.
JHR entrusts the asset management to Japan Hotel REIT Advisors Co., Ltd. (hereinafter referred to as the “Asset Management
Company”). Focusing on importance of hotels as social infrastructure and their profitability as investment real estate
properties, JHR has primarily invested in real estate related assets which are in themselves wholly or partially used as hotels
or real estate equivalents of such real estate or which are backed by such real estate or real estate equivalents (hereinafterreferred to as the “Real Estate for Hotels, etc.”).
JHR, the former Nippon Hotel Fund Investment Corporation (hereinafter referred to as the “former NHF”), merged with theformer Japan Hotel and Resort, Inc. (hereinafter referred to as the “former JHR”) with an effective date of April 1, 2012
(hereinafter referred to as the “Merger”) and changed its name to Japan Hotel REIT Investment Corporation. Since the Merger,
JHR has carried out nine public offerings for capital increase and continuously acquired “highly-competitive hotels” inmainly “strategic investment target areas” where domestic and inbound leisure demand can be expected over the medium tolong term.
By implementing the aforementioned growth strategy, JHR has expanded its asset size while improving the quality of its
portfolio through new property acquisitions of 26 properties amounting to ¥275,160 million (acquisition price basis) in total
in a little less than eight years since the Merger to the end of the fiscal year under review (December 31, 2019). As a result,
JHR had a portfolio of 43 properties with a combined acquisition price of ¥374,508 million, and the total number ofinvestment units issued and outstanding stood at 4,462,347 units at the end of the fiscal year under review.
(b) Investment performance for the fiscal year under review
In 2019, the domestic tourism market have remained strong although the impact of the future course of trade issues on theworld economy and the impact of future prospects of the Chinese economy among others were carefully watched. The
demand for accommodation remained solid as the cumulative number of overnight guests at domestic accommodation
facilities in 2019 totaled 545 million guest nights (preliminary release), surpassing the figure for 2018 when the figure reachedrecord high. The number of foreign visitors to Japan (hereinafter referred to as “inbound”) was estimated 31.88 million (up2.2% from the previous year) during the year marking a record high, due to a large increase in the number of visitors from
China, Southeast Asia, the U.S. and Europe offsetting the significant drop in the number of visitors from South Korea. On
the other hand, as new supply of hotels increased against the backdrop of strong demand for accommodation, the loosening
supply-demand balance resulted in weak accommodation market particularly in the Kansai area.
The hotel investment market continued to be in a brisk state, with continual attention paid to Japan’s tourism industry andhotel industry against the backdrop of the expected growth in demand for accommodation. JHR has continuously expanded
its asset size capitalizing on the strengths such as high recognition as Japans largest J -REIT specializing in hotels, capability
to propose various acquisition schemes and cooperation with Hotel Management Japan Co., Ltd. (hereinafter referred to as“HMJ”), a group company of the Asset Management Company.
During the fiscal year under review, JHR acquired Hilton Tokyo Odaiba (acquisition price: ¥62,400 million), a scarce largescale full-service hotel positioned as JHR’s flagship property; and Hotel Oriental Express Osaka Shinsaibashi (acquisition
price: ¥2,738 million), a hotel which HMJ has been involved with since the beginning of development and has managed
utilizing its market knowledge and operational knowhow. Amid some overheated mood in the hotel investment market, JHR
improved the portfolio quality through acquisitions of highly competitive properties that can differentiate themselves fromothers.
As to the performance of hotels owned by JHR, RevPAR (Note 1) and GOP (gross operating profit) of the 21 hotels withvariable rent, etc. (Note 2) fell below the previous year mainly due to a decrease in room sales at some hotels impacted byfactors such as the increase in new hotel supply and the decrease of visitors from South Korea.
- 4 -While taking measures to increase fixed and variable rent, etc. through the active asset management strategy, which is theaggressive and proactive pursuit of greater profitability and asset value of owned hotels such as the large-scale renovation ofOriental Hotel Fukuoka Hakata Station (formerly Hotel Centraza Hakata) (Note 3) which just reopened in April 2019 after
the renovation, JHR has endeavored to generate greater earnings by appropriately reviewing the costs of each item such asreal estate operating costs, general and administrative expenses and borrowing costs through negotiations with relevant
parties and other measures. For further details of management indicators for the 21 hotels with variable rent, etc., please referto “<Reference Information 2> Hotel operation indexes, sales and GOP” on page 15.
(Note 1)

RevPAR: Represents revenue per available room, which is calculated by dividing revenue for rooms for a certain period (including service
charges) by the total number of rooms available for sale during the period. Revenue per available room given the product of ADR andoccupancy rate. The same shall apply hereinafter.

(Note 2)The hotel group combining the hotels which JHR leases to HMJ (Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba
Oriental Hotel, Hotel Nikko Alivila and Oriental Hotel Hiroshima, (hereinafter referred to as “The Five HMJ hotels”)), with the hotels
which JHR leases to HMJ subsidiaries (Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel (main facility of ACTIVEINTER CITY HIROSHIMA), Oriental Hotel Fukuoka Hakata Station, Holiday Inn Osaka Namba, Hilton Tokyo Narita Airport,
International Garden Hotel Narita, Hotel Nikko Nara, Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba) is called the
HMJ Group Hotels. 12 Hotels excluding Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba from HMJ Group Hotels
are called The Twelve HMJ Hotels. The 21 hotels with variable rent, etc. refers to the HMJ Group Hotels excluding Oriental Hotel Fukuoka
Hakata Station, Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba which cannot be compared with the previous fiscal
year due to renovation or new acquisition, plus ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo,
Mercure Okinawa Naha, Mercure Yokosuka, the b suidobashi, the b ikebukuro, the b hachioji and the b hakata. The same shall apply
hereinafter.

(Note 3)Former Hotel Centraza Hakata underwent large-scale renovation work accompanying the suspension of hotel operations from October 1,
2018, and has been operated as Oriental Hotel Fukuoka Hakata Station since April 9, 2019. The same shall apply hereinafter.

(c) Funding conditions
JHR took out loans of ¥30,000 million in total in April 2019, in addition to procuring ¥33,378 million by way of capitalincrease through public offering in January 2019 and third-party allotment in February 2019; and acquired two properties,
Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba in February and April 2019, respectively.
In March 2019, JHR took out loans of ¥6,000 million in total mainly to refinance existing investment corporation bonds that
had matured and existing borrowings that were due for repayment. Furthermore, JHR took out loans of ¥1,800 million mainly
for renovation of Oriental Hotel Fukuoka Hakata Station. JHR issued investment corporation bonds of ¥8,000 million
targeting individual investors in June 2019 and allocated the funds to the prepayment of existing loans.
In addition, in July 2019, JHR issued green bonds (investment corporation bonds for institutional investors) of ¥2,000 million
for the first time among J-REITs specializing in hotels mainly for the purpose of repaying existing borrowings allocated tocapital expenditures and constructions of equipment which contribute to environment, including reduction of CO2 and water
consumption, out of the renovation cost for Oriental Hotel Fukuoka Hakata Station.
Furthermore, JHR took out loans of ¥7,200 million for the refinance and partial prepayment of existing loans in September
2019.
Consequently, as of the end of the fiscal year under review, balance of interest-bearing debt totaled ¥168,754 million,
including current portion of long-term loans payable of ¥12,782 million, long-term loans payable of ¥114,372 million andinvestment corporation bonds of ¥41,600 million, and the ratio of interest-bearing debt to total assets at end of year (Note)stood at 40.6%.
JHR reduced borrowing costs and extended maturity dates through the aforementioned series of fund procurement. Alongwith such, JHR concluded loans with fixed interest rates as well as interest rate swap contracts to hedge against risks ofinterest rates rising in the future. These actions brought the fixed rate ratio on total interest-bearing debt at the end of the
fiscal year under review to 97.8%.
- 5 -(Note)Ratio of interest-bearing debt to total assets at end of year = Balance of interest-bearing debt at end of year ÷ Total assets at end of year
× 100

As of December 31, 2019, JHR’s issuer ratings were as follows.
Rating and Investment Information, Inc. changed the outlook of issuer rating for JHR from “stable” to “positive” on October
17, 2019.
Rating agency

RatingJapan Credit Rating Agency, Ltd.

A+

(Stable)Rating and Investment Information, Inc.

A

(Positive)(d) Financial results
As a result of the abovementioned asset management, operating revenue, operating income and ordinary income were¥28,278 million, ¥17,148 million and ¥15,291 million, respectively, for the fiscal year under review (12-month period fromJanuary 1, 2019 to December 31, 2019). Net income was ¥15,290 million. With regard to dividends, it was decided that
¥16,466 million will be distributed, which was calculated by adding a reversal of reserve for temporary difference adjustment(appropriation for dividends) of ¥1,176 million to unappropriated retained earnings of ¥15,290 million. Consequently, thedividend per unit came to ¥3,690. For details of the appropriation for dividends for the fiscal year under review, please referto “<Reference Information 3> Dividend per unit and appropriation for dividends” on page 20.
(B) Outlook for the next fiscal period(a) Investment policies and issues to be addressed
As for the environment surrounding the tourism industry, JHR anticipates continued expansion of national tourism policies
as the budget of the Japan Tourism Agency for the fiscal year 2020 was increased by 2.2% year on year to ¥68.0 billion(except reconstruction budget), marking a record high. Furthermore, the major event, Tokyo 2020 Olympic and Paralympic
Games, is expected to provide a further boost to the tourism industry. On the other hand, however, close attention should be
paid to the impact of an increase in supply from new hotels following trends of increase in inbound tourism on the supplydemand balance as well as the impact of a decrease in the number of visitors from South Korea and the impact of novel
coronavirus outbreak in China in December 2019. The supply-demand balance appears to be loosening in certain areas
negatively affecting hotel earnings, whereas high-grade hotels with limited supply are anticipated to continue growing. As
such, JHR believes that the location and competitiveness of individual hotels and operator’s capability to differentiate theirhotels from others and to improve earning capability by controlling costs, etc. are the factors to widen the difference inperformance among the hotels. Under recognition of such circumstances, JHR intends to work with the Asset Management
Company to implement strategies to differentiate hotels owned by JHR in the market by utilizing experience which JHR has
cultivated as J-REIT specializing in hotel investment, and manage assets based on the approach described below.
Internal growth
JHR will work to secure “stability” mainly with fixed rent contracts, while at the same time aim for “upside potential” throughimplementation of active asset management strategy, which proactively pursues greater profitability and asset value of its
properties by way of a variety of measures such as expanding international brands and coordinating with HMJ.
For properties with fixed rent contracts, JHR will focus on setting, maintaining and increasing appropriate rents based on therent levels in the market where respective hotels are located or each tenant’s ability to bear the rent costs, and plans to aim at
raising rents (including introduction of revenue sharing structure) in accordance with the conditions of the accommodation
market.
For hotels under variable rent contracts and under a management contract structure, JHR is working to increase variable rent
and reduce management contract fees by implementing the active asset management strategy.

- 6 -i) Properties under variable rent contracts
JHR works to enhance the profitability of its properties under variable rent contracts through its active asset management
strategy. JHR has adopted world-leading international brands such as Hilton, Marriott, Sheraton, Mercure and Holiday Innor leading brands in Japan including Oriental Hotel and Hotel Nikko that are operated in various areas throughout the country
and, together with excellent operators, aims to increase variable rent through improved performance of these hotels. JHR
coordinates with the operators in an effort to enhance the hotel performances by requesting them to implement marketing
initiatives to attract a wider range of demand with considerations given to solid domestic leisure demand and increasing
leisure demand from inbound visitors, measures to maintain and increase room rates, and realization of the synergy effects
like cost reductions from owning multiple properties, among other issues. Moreover, JHR conducts strategic capital
expenditure such as renovating guest rooms, etc. for improving property competitiveness primarily for hotels with highgrowth expectations, in an attempt to further enhance hotel earnings led by the growth in RevPAR. As such, JHR plans to
implement large-scale renovation for Hilton Tokyo Odaiba and Namba Oriental Hotel in 2020.
ii) Properties under fixed rent contracts
JHR will increase its efforts to appropriately monitor operating conditions of these hotels and, by paying careful attention toeach tenant’s ability to bear the rent costs, conduct negotiations with the hotels at which the ability to bear rent costs has beenenhanced through better performances so that the improvement in hotel earnings would lead to an increase in JHR’s earnings,
such as revising rents upward and introducing revenue sharing structure. In addition, JHR will carry out investments for the
purpose of continuous facility maintenance and improvement to ensure each hotel becomes prominent in the market and tomaintain and increase the value of its assets.
External growth
In terms of external growth strategy, JHR will keep target to acquire highly-competitive Real Estate for Hotels, etc. (Hotel
Assets) in areas which can expect “domestic and inbound leisure demand” over the medium to long term as JHR has done todate. In addition, JHR will build a portfolio which can secure stable revenues and with future growth potential in mind inorder to achieve upside gains.
Upon acquiring properties, JHR will focus on the infrastructure aspects of the relevant Hotel Assets such as buildings andfacilities, the services aspects such as the credibility of the hotel lessee and operator (including the ability of the hotel lessee
to bear rent costs) as well as operation and management capabilities, and the properties’ location superiority that serves as
the base for demand stability and growth potential.
Specifically, JHR will target to invest in “full-service hotels” and “resort hotels” that pose barriers to new opening due tosuch factors as operation and management know-how required for operating the hotels and limitations in terms of invested
capital and location. As for “limited-service hotels,” JHR emphasizes the credibility and operation capabilities of the hotel
lessee and operator as well as the building age, location, guestroom composition and profitability of the properties. Moreover,
JHR will take a particularly selective approach to hotels specialized for accommodation and of a budget type (low price zone)that mainly offers single rooms and where the source of competitiveness relies only on prices.
In the hotel investment market, harsh competition over acquisition is ongoing due in part to competitions with J-REITs andnon-listed private J-REITs that invest in hotels, overseas investors and others. JHR will aim for expansion of asset size that
accompanies an improvement in the quality of its portfolio by acquiring highly competitive properties while leveraging its
strength and advantages and also utilizing the HMJ platform in some cases.
Finance strategy
Under the basic policy of carrying out conservative financial strategy which places importance on securement of financial
stability and soundness, JHR intends to maintain and enhance the relationships of trust with existing financial institutions
with which it does business while endeavoring to diversify the means of financing. It aims to conduct financial operations
by keeping the ratio of interest-bearing debt to total assets at no larger than 50% as in the past. In addition, when seeking
new borrowing for property acquisitions or refinancing existing debt, JHR will work to disperse maturity dates of its debt aswell as further reinforce and expand its base of lenders and further diversify funding methods, such as issuance of investment
corporation bonds (including green bonds), while considering the balance with the funding costs.

- 7 -Moreover, while JHR understands that no abrupt change is likely to occur to the interest rate level in the current situation, it
aims to further improve its financial foundation by managing risk of interest rates market through extending maturity dates
and fixing rates, etc., in preparation for addressing any change in the financial market environment.
Policy on handling of negative goodwill
From the fiscal year ended December 31, 2017 (18th period), JHR started appropriation for dividends through reversal ofreserve for temporary difference adjustment in connection with partial amendments to the “Ordinance on Accounting ofInvestment Corporations” (Cabinet Office Ordinance No. 47 of 2006, as amended; hereinafter referred to as the “Ordinanceon Accountings of Investment Corporations”) and the “Regulation for Real Estate Investment Trusts and Real Estate
Investment Corporations” of The Investment Trusts Association, Japan. JHR stipulated a policy to reverse ¥262 million(hereinafter called the “50-year amortization amount of negative goodwill”), which is an amount equivalent to 2% (1/50) of
the balance of the reserve for temporary difference adjustment for the fiscal year ended December 31, 2017, to pay out as
dividends every year, with the balance of the reserve for temporary difference adjustment remaining at the time of reversal
set as the maximum reversal amount (Note).
Furthermore, in cases of incurrence of losses caused by property dispositions, impairment loss of assets, dilution of dividend
per unit due to the issuance of new investment units through public offerings, etc., loss on retirement of noncurrent assets,
and suspension of sales and such due to large-scale renovations with significant impact on revenues, JHR stipulated a policy
to reverse additional portion of the negative goodwill on top of the 50-year amortization amount of negative goodwill (¥262
million) (Note). As for the fiscal year ending December 31, 2020 (21st period), JHR expects ¥496 million, which is the totalof the 50-year amortization amount of negative goodwill (¥262 million), loss on retirement of noncurrent assets (¥18 million)
and the correspondence to the large-scale renovation at Hilton Tokyo Odaiba (¥44 million) and at Namba Oriental Hotel(¥172 million) as additional amounts to dividends by reversing negative goodwill.
(Note)The policy may change due to a resolution of the board of directors, and it does not guarantee the method of reversing the reserve fortemporary difference adjustment, and amounts to be reversed, etc., in the future.

Initiatives for Sustainability
In recent years, there has been growing importance of the risks and opportunities of ESG (Environment, Social andGovernance) issues in the investment management industry from the standpoint of long-term sustainability. JHR recognizes
that conducting real estate investment management based on consideration for ESG is important to enhance unitholder value
and to further raise the attractiveness of JHR. In addition, JHR believes that it is indispensable to establish favorable
relationships with its stakeholders including unitholders, hotel users (guests), lessees, operators, business partners including
property managers, etc., local communities, officers and employees of the Asset Management Company and others and tofulfill our social responsibilities expected from each of them.
In order to put such ideas into practice, JHR, along with the Asset Management Company, has established a “Sustainability
Policy” as guidance to ESG initiatives. We have promoted efforts to reduce environmental impact at properties in our portfolio
based on this policy, and received the Building-Housing Energy-efficiency Labeling System (BELS) evaluation for the two
properties of Hotel Nikko Alivila and Mercure Okinawa Naha in February 2018 as first such cases for J-REIT’s hotel
properties (Note 1). Moreover, in September 2018, JHR became the first J-REIT specializing in hotels (Note 1) to berecognized by GRESB for its environmental awareness and sustainability initiatives, acquiring “Green Star,” the highest
ranking, in the GRESB Real Estate Assessment (Note 2). JHR was evaluated as “3 Stars” in GRESB Rating in September
2019.
Furthermore, JHR issued green bonds in July 2019 to allocate funds mainly to refinance loans procured for funding capital
expenditures and constructions cost, etc. which contribute to environment, including reduction of CO2 and water
consumption in the renovation work at Oriental Hotel Fukuoka Hakata Station. It was the first case of a J-REIT specializing
in hotels issuing green bonds.
Recognizing its social responsibility towards local communities as a J- REIT specializing in hotels, JHR will proactively
carry out social contribution activities capitalizing on the characteristics of the hotel sector and each hotel.
(Note 1)
(Note 2)

Investigated by the Asset Management Company based on disclosed information.
GRESB, which stands for Global Real Estate Sustainability Benchmark, is an annual benchmarking program to evaluate Environment,
Social and Governance (ESG) awareness of real estate companies and funds. It evaluates initiatives for sustainability of real estate- 8 -companies, REITs and real estate funds, not of individual properties. The GRESB Rating makes relative assessment based on total scores,
with 5 Stars being the highest ranking.

(b) Significant subsequent events
Not applicable.
(c) Operating forecast
The following is JHR’s operating forecast for the midterm of the fiscal year ending December 31, 2020 (21st period) and thefull year of the fiscal year ending December 31, 2020 (21st period). For the assumptions of the operating forecast, pleaserefer to “Assumptions of the operating forecast for the midterm and full year of the fiscal year ending December 31, 2020
(21st period)” on page 10.
Midterm of the fiscal year ending December 31, 2020 (21st period)
Operating revenue
Operating income¥13,539million¥7,895 million

Ordinary income
Midterm net income¥6,972 million¥6,972 million

Full year of the fiscal year ending December 31, 2020 (21st period)
Operating revenue
Operating income¥29,971 million¥18,128 million

Ordinary income
Net income¥16,239million¥16,238million

Dividend per unit
Dividend per unit resulting from excess of earnings¥3,750¥-(Note) The forecast figures above are the current forecasts calculated based on certain assumptions. As such, actual operating revenue,
operating income, ordinary income, net income (midterm / full year), dividend per unit and dividend per unit resulting from excessof earnings may vary due to changes in the circumstances. Furthermore, the forecasts are not intended to guarantee any dividend
amount.

- 9 -Assumptions of the operating forecast for the midterm and full year of the fiscal year ending December 31, 2020 (21st period)
Item
Calculation
periodAssumptions
・Midterm (21st Period) : January 1, 2020 through June 30, 2020 (182 days)
・Full year (21st Period) : January 1, 2020 through December 31, 2020 (366 days)
・The 43 properties owned by JHR as of today are assumed.

Assets undermanagement

・It is assumed that there will be no change (acquisition of new property or disposition of the existing properties,etc.) in assets under management through the end of the fiscal year ending December 31, 2020 (21st period).
However, the actual results may fluctuate depending on the changes in assets under management that may takeplace.
・Operating revenue is calculated based on leases and other contracts effective as of today and in consideration ofcompetitiveness of hotels, market environment and other factors. If there are lease contracts with regards tofacilities other than hotels, such as retail facilities and offices, etc., 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 21 Hotels with Variable Rent, etc. and Oriental Hotel Fukuoka Hakata Station① The Twelve HMJ Hotels
The assumptions of the fixed rent and variable rent are as follows.
Total rent = Fixed rent + Variable rent
Variable rent = [Total GOP of the hotels – GOP base amount] × Variable rent ratio (%)

Operatingrevenue(Unit: millions of yen)

Total GOP
of thehotel(s)GOP baseamountThe Five HMJ Hotels

Midterm

3,007

1,675

(*1)

Full year

7,546

3,351

Okinawa Marriott

Midterm

384

350

Resort & Spa

Full year

1,354

700

Midterm

499

234

Sheraton Grand
Hiroshima Hotel (*2)

Oriental Hotel
Fukuoka Hakata
Station (*3)

Full year

1,093

468

Midterm602

221

Full year

1,253

442

Holiday Inn
Osaka Namba

Midterm

512

325

Full year

1,053

650

Hilton Tokyo Narita
AirportMidterm

437

275

Full year

1,122

550

Midterm314

180

Full year

675

360

International Garden
Hotel Narita
Hotel Nikko Nara
Sub Total
ACTIVE-INTER
CITY HIROSHIMA(Office andcommercial tenants)
Total

Midterm

307

235

Full year

701

470

Midterm

6,065－

Full year

14,801－

Midterm－－

Full year－－

Midterm－－

Full year－－

Variablerent ratio

Variable
rent

Fixed
rent

Total
rent

85.0%

1,132
3,566

1,610

2,743

3,221

6,787

30

274

305

589

550

1,139

174

392

348

863

212

586

425

1,220

90.0%

82.5%

218
515

98.0%

373
795

92.5%

173
373

288

461

576

949

86.5%

140
495

222

362

444

939

98.0%

131
309

168

299

336

645

91.5%

66
211

210

276

420

631

2,267

3,160

5,427

6,856

6,320

13,176

5

233

238

10

467

478

2,272

3,393

5,666

6,867

6,787

13,655－－－(*1) Namba Oriental Hotel, one of The Five HMJ hotels is planning to implement large-scale renovation- 10 -

Item

Assumptions
accompanying the suspension of hotel operations from November 2020 through March 2021. Taking into
consideration impact on dividend due to the renovation, reserve for temporary difference adjustment (negative
goodwill) will be appropriated.
(*2) Rent for Sheraton Grand Hiroshima Hotel, the major facility of ACTIVE-INTER CITY HIROSHIMA, isstated.
(*3) The fixed-term lease agreement for Oriental Hotel Fukuoka Hakata Station was renewed on December 20,
2019 and the amount of fixed rent, GOP base amount and variable rent ratio were changed from January 1,
2020.
②

Income from management contracts (*4) and variable rent for the 21 hotels with Variable Rent, etc.
excluding The Twelve HMJ Hotels

Midterm

ibis Tokyo Shinjuku
ibis Styles Kyoto Station
ibis Styles Sapporo
Mercure Sapporo
Mercure Okinawa Naha
Mercure Yokosuka
the b suidobashi
the b ikebukuro
the b hachioji
the b hakata
Total(Unit: millions of yen)

Full year

248
179
268
288
179
178
19
65
26
66
1,520

547
364
666
688
374
298
70
179
67
138
3,395

(*4)For income from management contracts, it is assumed that each hotel’s GOP amount is recognized as income
from management contracts and the management contract fees to be paid by JHR are recognized as an
operating expense.
(2) The Two New HMJ Hotels (Acquired Assets)
1. Hotel Oriental Express Osaka Shinsaibashi
The assumptions of the fixed rent and variable rent are as follows.
Total rent = Fixed rent + Variable rent
Variable rent = [Total GOP of the hotels – GOP base amount] × Variable rent ratio (%)

Hotel Oriental Express
Osaka Shinsaibashi

Total GOP of GOP basethe hotel
amountMidterm72
64
Full year
151
128

Variablerent ratio
91.0%(Unit: millions of yen)
Variable
Fixed
Total
rent
rent
rent
8
55
63
21
110
131

2. Hilton Tokyo Odaiba
The assumptions of the fixed rent and variable rent are as follows.
Total rent = Fixed rent + Variable rent
Variable rent = [Total AGOP of the hotels (*1) – AGOP base amount] × Variable rent ratio (%)(Unit: millions of yen)

Hilton Tokyo Odaiba(*2)

Midterm
Full year

AGOP of the
hotel

AGOP baseamountVariablerent ratio

Variable
rent

Fixed
rent

Total
rent

1,163
3,283

1,485
2,970

30.0%

94

1,549
3,100

1,549
3,194

(*1) AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. The
same shall apply hereinafter.
(*2) Hilton Tokyo Odaiba is planning to implement large-scale renovation works accompanying the suspensionof sale in part of hotel rooms from September 2020 through December 2020.
(3) Other hotels with variable rent
- 11 -

Item

Assumptions
The following are variable rent for other hotels subject to variable rent
(Unit: millions of yen)
Midterm
Full year
Comfort Hotel Tokyo Higashi Nihombashi
1
1
Smile Hotel Nihombashi Mitsukoshimae
17
17
Hotel Vista Kamata Tokyo
23－
Chisun Inn Kamata
42
85
Hotel Keihan Universal City
Undisclosed (*)
Undisclosed (*)
Sotetsu Fresa Inn Shimbashi Karasumoriguchi
89
89
Hilton Tokyo Bay
Undisclosed (*)
Undisclosed (*)
Hilton Nagoya
Undisclosed (*)
Undisclosed (*)
Total
756
1,605
(*) Undisclosed since tenants that concluded lease agreements did not agree to disclose rent revenue, etc.
・The following is the breakdown of variable rent and income from management contracts
Breakdown of variable rent, etc. for fiscal year ending December 31, 2020 (21st period)(Unit: millions of yen)
Midterm
Full year
The Twelve HMJ Hotels (*)
2,272
6,867
The 21 Hotels with Variable Rent, etc.
1,520
3,395
excluding The Twelve HMJ Hotels
The Two New HMJ Hotels (Acquired Assets)
8
115
Other hotels with variable rent (8 hotels)
756
1,605
Total (32 hotels)
4,557
11,984(*) The figure includes revenue-linked rent of office and commercial tenants at ACTIVE-INTER CIYT

OperatingExpenses

HIROSHIMA.
・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 the calculation.
・It is assumed that ¥1,921 million will be recognized as expenses for fixed asset tax, city planning tax and othertaxes and public dues.
・In general, fixed asset tax and city planning tax and other taxes and public dues on acquired assets are settled withthe 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.
・Capital expenditure is assumed to be ¥6,775 million (¥3,478 million for capital expenditure I, ¥862 million for
capital expenditure II, ¥2,434million for capital expenditure III, include ¥3,000 million (¥800 million for capital
expenditure I and ¥2,200 million for capital expenditure III for the renovation work at Hilton Tokyo Odaiba) for
the fiscal year ending December 31, 2020 (21st period). Moreover, ¥2,600 million for the renovation work at
Namba Oriental Hotel is expected for the fiscal year ending December 31, 2021 (22nd period).
(*) JHR classifies capital expenditures into the following three categories. (I) Capital investment related to renewalof buildings, facilities, and equipment which is required to maintain proper values of properties, (II) capital
investment for fixtures and furniture 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. formaintaining / improving the competitiveness of the hotels.
・Depreciation is calculated using the straight-line method including the planned capital expenditures above, and isassumed to be ¥4,859million.
・Repair expenses for buildings are recognized as expenses in the estimated amount necessary for each operating
period. Please note that the repair expenses of each operating period may differ materially from the forecast amountfor various reasons, such as; (1) Emergency repair expenses may be necessary due to damage to buildings from
unexpected causes; (2) The amount of repair expenses generally tends to increase in difference over time; and (3)operatingexpenses

Repair expenses are not required on a regular basis.
・¥1,888 million is expected for all non-operating expenses, including cost related to debt such as interest expense,
arrangement fee, amortization for the following (1) handling fees and (2) derivative instruments and other nonoperating expenses.
・Expenses for issuance of new investment units and secondary offering are amortized over a period of three years

Interest-

・The balance of interest-bearing debt (sum of loans and investment corporation bonds) as of the end of DecemberNon-by the straight-line method.
- 12 -

Item
bearing debt

Assumptions
2019 was ¥168,754million. It is assumed that the balance of interest-bearing debt as of the end of December 2020
is unchanged at ¥168,754 million.
・It is assumed that JHR will refinance all loans in the amount of ¥12,782 million, which mature within the fiscal
year ending December 31, 2020 (21st period).

Issuance ofinvestment

・The number of investment units issued as of today (4,462,347 units) is assumed.
・It is assumed that there will be no additional issuance of investment units through to the end of the fiscal year

units

ending December 31, 2020 (21st period).
・Dividend per unit for the fiscal year ending December 31, 2020 (21st period) is calculated based on the following
assumptions.
¥16,238million

Net income
Reversal of reserve for temporary difference adjustment (negative goodwill)

50-year amortization amount of negative goodwill (*1)
Loss on retirement of noncurrent assets (*2)¥262 million¥18 million

Correspondence to large-scale renovation works at Hilton Tokyo Odaiba (*3)
Correspondence to large-scale renovation works at Namba Oriental Hotel (*4)

¥44 million¥172 million

Distributable amount
Total number of investment units issued¥16,735 million
4,462,347 units

Dividend per unit(*1)¥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.

Dividend per
unit¥3,750(*2)

The amount recognized as a 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.

(*3)

Implementation of large-scale renovation work is planned at Hilton Tokyo Odaiba during September 2020
through December 2020. Taking into consideration the impact on dividend due to the renovation, reserve(*4)

for temporary difference adjustment (negative goodwill) will be appropriated.
Implementation of large-scale renovation work accompanied with suspension of hotel operation is plannedat Namba Oriental Hotel during November 2020 through March 2021. Taking into consideration theimpact on dividend due to the renovation, reserve for temporary difference adjustment (negative goodwill)

will be appropriated.
・Dividend per unit may fluctuate due to various causes, such as fluctuation of rent revenue resulting from transfer
of assets under management, change of tenants, etc. at 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 the reserve for temporary difference adjustment (negative goodwill) after theappropriation of the reserve for temporary difference adjustment (negative goodwill) for dividends for the fiscal
year ending December 31, 2020 (21st period) is expected to be ¥10,120 million.
Dividend perunit resulting
from excessof earnings

・It is assumed that the excess of earnings (dividend per unit resulting from excess of earnings) will not be
distributed.
・It is assumed that revision in law, tax system, accounting standard, regulations of the listing, regulations of The

Other

Investment Trusts Association, Japan that may impact the forecast above will not be made.
・It is assumed that unexpected major incident will not occur in the general economy, real estate market and hotelbusiness environment, etc.
・The numerical values are rounded down to the nearest millions of yen in the assumptions above.

- 13 -

<Reference Information 1> Highlights of the operating forecast and forecast of dividend(1) The following is a comparison and major causes of variance between the actual results for the fiscal year ended December
31, 2019 (20th period) and the forecast for the fiscal year ending December 31, 2020 (21st period)(Unit: millions of yen)
2019

No. of Properties

Properties

Forecast
This time

(A)

(B)

(B)-(A)%

374,50843-

Operating Revenue

28,27829,971

1,692

Composition

43

Comparison with
the Previous Period

374,508

Fixed Rent, etc.

28,278
17,101

60.5%

29,971
17,98760.0%

Oriental
Properties
Hotel
Existing
Acquired in Fukuoka
Properties
2019
Hakata(*3)(*1)
Station
(*2)

-

-

-

-

-

950
950

480

261

885

5.2%

842

25

18

6.0%

11,984Composition

39.5%

40.0%

Gain on Sale ofReal Estate
Properties

-

-

-

-

-

NOI （*4）

24,08725,273

1,185

4.9%

670

NOI Yield

6.4%

6.7%

0.3%

19,281

20,392

1,111

807

5.4%

0.3%

18,128979

5.7%

Ordinary Income

15,291

16,239948

6.2%

Net Income

15,290

16,238948

6.2%

Reserve for Temporary
Difference Adjustments(Negative Goodwill)

1,176

496

(679)

(57.8%)

Total Dividends

16,466

16,733267

4,462,347 4,462,347

-

3,750

60

531

5.8%

5.1%

3,690

261

1. Increase in variable rent, etc. from the 20 Hotels with
Variable Rent, etc. (*5) by JPY589 MM
2. Decrease in variable rent from Namba Oriental Hotel by
243 JPY320 MM
3. Decease in rent from other hotels with revenue sharing, etc.
by JPY25 MM

-

-

471

43

(*7）

17,148Dividend per Unit (JPY)

455

（*6）

Operating Income

Number of Units Issued(Unit)

108

7.2%

480

Factors Causing Variance

-

6.0%

11,176（*4）
NOI Yield after
Depreciation

-

1,692

Variable Rent

NOI after Depreciation

Dividend

ActualAcquisition Price
Real Estate

Profitand
Loss
Statement

2020

621

(41)

(*7）

Amount to be reversed from reserve for temporary difference adjustments
2019:50-year amortization amount of negative goodwill: JPY262 MM
Loss on retirement of noncurrent assets: JPY246 MM
Correspondence to large-scale renovation works at Oriental Hotel Fukuoka Hakata Station: JPY357
1.6% MM
Correspondence to dilution: JPY310 MM- 2020:50-year amortization amount of negative goodwill: JPY262 MM
Loss on retirement of noncurrent assets:JPY18 MM
1.6% Correspondence to large-scale renovation works at Hilton Tokyo Odaiba: JPY44 MM
Correspondence to large-scale renovation works at Namba Oriental Hotel: JPY172 MM(*1)

Stating the impact of the Hotel Oriental Express Osaka Shinsaibashi and Hilton Tokyo Odaiba acquired during fiscal year ended
December 31, 2019.

(*2)

Oriental Hotel Fukuoka Hakata Station implemented large-scale renovation work accompanied by suspension of hotel operation
during October 1, 2018 through April 8, 2019. Impact by the renovation is stated.

(*3)“The existing properties” above refers to properties excluding the properties acquired in 2019 and Hotel Oriental Fukuoka Hakata
station from 43 properties owned by JHR as of December 31, 2019.

(*4)

Each numbers are calculated by following formula.
NOI (Net Operating Income) = Real estate operating revenue – Real estate operating costs + Depreciation + Loss on retirement of
noncurrent assets + Asset retirement obligations expenses.
NOI after depreciation = Real estate operating revenue – Real estate operating costs.
NOI yield after depreciation = NOI after depreciation ÷ (Anticipated) acquisition price(*5)

Implementation of the large-scale renovation work accompanied with suspension of hotel operation is planned at Namba Oriental
Hotel during November 2020 through March 2021. Therefore, Namba Oriental Hotel is excluded from calculation of the 21 Hotels
with Variable Rent, etc. The 20 Hotels with Variable Rent, etc. are 20 hotels excluding Namba Oriental Hotel from the 21 Hotels with
Variable Rent, etc.

(*6)

Decrease of variable rent in amount of ¥44 million is assumed for Hilton Tokyo Odaiba due to implementation of the large-scalerenovation work accompanied with suspension of a part of room sales which planned during September 2020 through December 2020.

(*7)

Due to the renovation at Oriental Hotel Fukuoka Hakata Station, loss on retirement of noncurrent asset in amount of ¥202 million wasrecorded.

- 14 -

<Reference Information 2> 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 audited nor havethey gone through other procedures. No guarantee is made as to the accuracy or completeness of the figures and information.
ADR and RevPAR are rounded off to the nearest yen. Sales and GOP are rounded off to the nearest million yen. Occupancy rate andcomparison with the previous period are rounded off to one decimal place.
<1> The 21 Hotels with Variable Rent, etc.

Fiscal year ended December 2018
ActualOccupancy
Rate

ADR
(*1)

RevPAR
(*2)

(*1)

(*2)
(*3)

Comparison with

Actualprevious period

87.3%

0.3pt

86.5%

(0.7pt)Second halfof the year

87.1%

(1.4pt)86.5%(0.6pt)Full year

87.2%(0.6pt)86.5%(0.7pt)First half ofthe year

14,6852.2%

14,7490.4%

Second halfof the year

17,0200.4%

16,316(4.1%)

Full year

15,861

1.1%

15,539

(2.0%)First half ofthe year

12,817

2.6%

12,765(0.4%)

Second halfof the year

14,831(1.2%)

14,113(4.8%)

Full year

13,8330.5%

13,444(2.8%)

22,9580.8%

23,124

0.7%

Second halfof the year

26,257(1.2%)

25,320(3.6%)

Full year

49,215(0.3%)

48,444(1.6%)

7,715

2.6%

7,709

(0.1%)

10,196

0.3%

9,561

(6.2%)

the yearFirst half of

GOP(JPY1M)

previous period

First half ofthe yearFirst half of

Sales(JPY1M)

Comparison with

Fiscal year ended December 2019the year
Second halfof the year

Full year
17,911
1.3%
17,270(3.6%)
ADR represents average daily rate, which is calculated by dividing revenue for rooms in a given period by the total numberof rooms sold during the period. The same shall apply hereinafter. With regard to service charge, Kobe Meriken Park
Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, Oriental Hotel Hiroshima, Okinawa
Marriott Resort & Spa, ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel), International Garden
Hotel Narita, Hotel Nikko Nara and Oriental Hotel Fukuoka Hakata Station charge 10%, Hilton Tokyo Narita Airport
charges 12%, and Hilton Tokyo Odaiba charges 13%. Other hotels within 21 hotels with Variable Rent, do not charge
service charge.
RevPAR represents revenue per available room, which is calculated by dividing revenue for rooms for a given period(excluding service charges) by the total number of rooms available for sale during the period. The same shall apply
hereinafter.
Implementation of large-scale renovation work accompanied with suspension of hotel operation is planned at Namba
Oriental Hotel during fiscal period ending December 31, 2020. Therefore, the comparison between fiscal year ended
December 31, 2019 and the fiscal year ending December 31, 2020 is not stated. For the forecast for the fiscal year ending
December 2020, please refer to “<2> the 20 Hotels with Variable Rent, etc.”- 15 -

<2> The 20 Hotels with Variable Rent, etc.
The figures are the total amount for 20 hotels from the 21 Hotels with Variable Rent, etc. excluding Namba Oriental Hotel in order
to exclude the impact of the renovation that resulted in suspension of sales.

Fiscal year ended
December 2018

Occupancy
Rate

ADR

RevPARSales(JPY1M)GOP(JPY1M)First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year

Fiscal year ending
December 2020

Fiscal year ended December 2019

ActualComparison
withprevious
periodPrevious
forecast(firsthalf:
actual)ActualComparison
withprevious
periodComparison
withprevious
forecast

Forecast
this time

Comparison
withprevious
period

87.0%

0.4pt

86.1%

86.1%

(0.9pt)

0.0pt

86.3%

0.2pt

86.9%

(1.3pt)

86.5%

86.3%

(0.6pt)(0.2pt)

88.6%

2.2pt

87.0%

(0.5pt)

86.3%

86.2%

(0.7pt)(0.1pt)

87.5%

1.2pt

14,3442.2%

14,502

14,5021.1%

0.0%

14,485(0.1%)

16,8200.8%

16,262

16,263

(3.3%)

0.0%

17,611

8.3%

15,592

1.4%

15,392

15,391(1.3%)(0.0%)

16,077

4.5%

12,4802.7%

12,491

12,4910.1%

0.0%

12,5060.1%

14,619(0.6%)

14,075

14,041(4.0%)(0.2%)

15,600

11.1%

13,5590.9%

13,28913,272(2.1%)(0.1%)

14,061

5.9%

21,541

0.9%

21,78021,7801.1%

0.0%

21,8140.2%

24,783(0.9%)

24,10824,075(2.9%)(0.1%)

25,9797.9%46,324(0.1%)

45,88845,855(1.0%)(0.1%)

47,792

4.2%

6,841

2.8%

6,889

6,889

0.7%

0.0%

6,579

(4.5%)

9,260

0.1%

8,853

8,833

(4.6%)(0.2%)

9,766

10.6%

16,101

1.2%

15,742

15,722(2.4%)(0.1%)

16,345

4.0%<3> The 10 HMJ Hotels
The figures are the total amount for 10 hotels from The Twelve HMJ Hotels excluding Hotel Oriental Fukuoka Hakata Station andNamba Oriental Hotel in order to exclude the impact of the renovation that resulted in suspension of sales.

Fiscal year ended
December 2018

Occupancy
Rate

ADR

RevPAR

First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year

Fiscal year ending
December 2020

Fiscal year ended December 2019

ActualComparison
withprevious
periodPrevious
forecast(firsthalf:
actual)ActualComparison
withprevious
periodComparison
withprevious
forecast

Forecast
this time

Comparison
withprevious
period86.8%(0.0pt)

87.0%

87.0%

0.2pt

0.0pt

86.7%

(0.3pt)87.4%(1.1pt)

87.6%

87.4%

0.0pt

(0.2pt)

88.8%

1.4pt

87.1%

(0.6pt)

87.3%

87.2%

0.1pt

(0.1pt)

87.8%

0.6pt

16,293

2.4%

16,251

16,251(0.3%)

0.0%

16,291

0.2%

19,6650.3%

18,78918,796(4.4%)

0.0%

20,6149.7%

17,9991.2%

17,535

17,537(2.6%)

0.0%

18,4905.4%

14,1492.4%

14,14514,145(0.0%)

0.0%

14,131(0.1%)

17,183(1.0%)

16,455

16,430(4.4%)(0.2%)

18,313

11.5%

15,6790.5%

15,31015,297(2.4%)(0.1%)

16,234

6.1%- 16 -

Sales(JPY1M)GOP(JPY1M)First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year<4> Namba Oriental HotelOccupancy
Rate

ADR

RevPARSales(JPY1M)GOP(JPY1M)First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year

17,336

0.3%

17,571

17,571

1.4%

0.0%

17,544(0.2%)

20,357(1.2%)

19,77319,759(2.9%)(0.1%)

21,242

7.5%

37,694(0.5%)

37,34437,330(1.0%)(0.0%)

38,786

3.9%

4,936

2.4%

5,051

5,051

2.3%

0.0%

4,774

(5.5%)

7,204

1.0%

6,925

6,914

(4.0%)(0.2%)

7,603

10.0%

12,1401.6%

11,976

11,966(1.4%)(0.1%)

12,377

3.4%

Fiscal year ended
December 2018

Fiscal year ending
December 2020

Fiscal year ended December 2019

ActualComparison
withprevious
periodPrevious
forecast(firsthalf:
actual)93.5%(1.3pt)92.2%

ActualComparison
withprevious
periodComparison
withprevious
forecast

Forecast
this time

Comparison
withprevious
period

95.8%

95.8%

2.3pt

0.0pt

93.6%

(2.2pt)(4.4pt)

90.1%

90.1%

(2.1pt)

0.1pt

62.1%

(28.0pt)

92.8%(2.9pt)

92.9%

92.9%

0.1pt

0.0pt

77.8%

(15.2pt)

21,7482.4%

19,707

19,707(9.4%)

0.0%

18,137(8.0%)

21,214(5.5%)

17,616

17,447(17.8%)(1.0%)

17,933

2.8%

21,481(1.7%)

18,685

18,602(13.4%)(0.4%)

18,055(2.9%)

20,3301.0%

18,88018,880(7.1%)

0.0%

16,971(10.1%)

19,558(9.9%)

15,867

15,726(19.6%)(0.9%)

11,142(29.2%)

19,941(4.7%)

17,361

17,290(13.3%)(0.4%)

14,041(18.8%)

1,418

1.7%

1,344

1,344

(5.2%)

0.0%

1,226

(8.7%)

1,474(1.3%)

1,252

1,245

(15.5%)(0.6%)

943(24.2%)

2,891

0.2%

2,596

2,589

(10.5%)(0.3%)

2,170(16.2%)

874

1.1%

820

820

(6.1%)

0.0%

688(16.0%)

937

2.8%

729

729

(22.2%)(0.1%)

483(33.7%)

1,810

1.9%

1,549

1,549

(14.5%)(0.0%)

1,172(24.3%)(*) Implementation of large-scale renovation work accompanied with suspension of hotel operation is planned at Namba Oriental
Hotel during November, 2020 through March 2021.

<5> Oriental Hotel Fukuoka Hakata Station

Fiscal year ended
December 2018

Occupancy
Rate

First half ofthe year
Second halfof the year
Full year

Fiscal year ending
December 2020

Fiscal year ended December 2019

ActualComparison
withprevious
periodPrevious
forecast(firsthalf:
actual)

94.7%

1.0pt

47.0%
70.7%

ActualComparison
withprevious
periodComparison
withprevious
forecast

Forecast
this time

Comparison
withprevious
period

39.1%

39.1%

(55.6pt)

0.0pt

87.5%

48.4pt(48.4pt)

88.4%

89.2%

42.2pt

0.8pt

88.8%

(0.4pt)(23.9pt)

64.0%

64.4%

(6.3pt)

0.4pt

88.1%

23.8pt- 17 -

ADR

RevPARSales(JPY1M)GOP(JPY1M)First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year

13,323

8.4%

19,385

19,385

45.5%

0.0%

18,137(6.4%)

13,343(1.5%)

18,31418,30937.2%(0.0%)

18,6992.1%

13,3303.1%

18,63918,63339.8%(0.0%)

18,421(1.1%)

12,621

9.6%

7,588

7,588

(39.9%)

0.0%

15,869109.2%

6,274(51.5%)

16,19816,330160.3%

0.8%

16,595

1.6%

9,422

(22.9%)

11,928

11,995

27.3%

0.6%

16,234

35.3%

1,199

(5.3%)

673

673(43.9%)

0.0%

1,287

91.3%

637

(46.8%)

1,313

1,321

107.4%

0.6%

1,367

3.5%

1,836

(22.5%)

1,985

1,994

8.6%

0.4%

2,654

33.1%

494

3.9%

131

131

(73.4%)

0.0%

603

358.4%

141(69.8%)

661

671

375.9%

1.6%

651(3.0%)

635(32.6%)

792

803

26.3%

1.3%

1,254

56.1%

First half ofthe year
Second halfof the year
Full year(*)

Large-scale renovation work accompanied with suspension of hotel operation was implemented at Oriental Hotel Fukuoka
Hakata Station during October 1, 2018 through April 8, 2019.

<6> Hotel Oriental Express Osaka Shinsaibashi

Fiscal year ended
December 2018

Occupancy
Rate

ADR

RevPARSales(JPY1M)GOP(JPY1M)

Fiscal year ending
December 2020

Fiscal year ended December 2019

ActualComparison
withprevious
periodPrevious
forecast(firsthalf:
actual)ActualComparison
withprevious
periodComparison
withprevious
forecast

Forecast
this time

Comparison
withprevious
period

－

－

92.3%

92.3%

－

0.0pt

90.7%

(1.6pt)

－

－

88.3%

88.7%

－

0.4pt

92.2%

3.5pt

－

－

90.3%

90.5%

－

0.2pt

91.5%

1.0pt

－

－

9,611

9,611

－

0.0%

9,275

(3.5%)

－

－

9,013

8,967

－

(0.5%)

9,385

4.7%

－

－

9,316

9,293

－

(0.2%)

9,331

0.4%

－

－

8,868

8,868

－

0.0%

8,414

(5.1%)

－

－

7,958

7,954

－

(0.0%)

8,654

8.8%

－

－

8,409

8,407

－

(0.0%)

8,535

1.5%

－

－

205

205

－

0.0%

199

(2.7%)

－

－

190

190

－

(0.2%)

207

9.1%

－

－

395

395

－

(0.1%)

407

3.0%

－

－

84

84

－

0.0%

73

(13.7%)

－

－

71

72

－

0.6%

78

9.4%

－

－

156

156

－

0.3%

151

(3.1%)First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year(*1)

Hotel Oriental Express Osaka Shinsaibashi was acquired on February 1, 2019. Figures for the fiscal year ended December(*2)

31, 2019 is full year figures calculated by adding numbers prior to acquisition.
Hotel Oriental Express Osaka Shinsaibashi opened on April 2, 2018. Therefore, figures for the fiscal year ended December
31, 2018 is not stated.

- 18 -

<7> Hilton Tokyo Odaiba

Occupancy
Rate

ADR

RevPARSales(JPY1M)GOP(JPY1M)First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year
First half ofthe year
Second halfof the year
Full year

Fiscal year ended
December 2018

Fiscal year ending
December 2020

Fiscal year ended December 2019

ActualComparison
withprevious
periodPrevious
forecast(firsthalf:
actual)

95.2%

0.9pt

92.9%

ActualComparison
withprevious
periodComparison
withprevious
forecast

Forecast
this time

Comparison
withprevious
period

85.9%

85.9%

(9.3pt)

0.0pt

90.4%

4.5pt

(3.0pt)

89.7%

89.9%

(2.9pt)

0.2pt

83.2%

(6.8pt)94.0%(1.1pt)

87.8%

87.9%

(6.1pt)

0.1pt

86.8%

(1.2pt)28,831

6.8%

29,26329,263

1.5%

0.0%

29,4880.8%

31,396

8.6%

31,53331,085(1.0%)(1.4%)

40,86031.4%

30,1087.6%

30,43230,2020.3%(0.8%)

34,96915.8%

27,451

7.7%

25,13525,135(8.4%)

0.0%

26,6506.0%

29,154

5.3%

28,28927,957(4.1%)(1.2%)

33,981

21.5%

28,3096.4%

26,72526,558(6.2%)(0.6%)

30,336

14.2%

4,591

9.5%

4,258

4,258

(7.3%)

0.0%

4,509

5.9%

5,008

7.3%

4,660

4,622

(7.7%)(0.8%)

5,723

23.8%

9,599

8.3%

8,918

8,880

(7.5%)(0.4%)

10,232

15.2%

1,374

21.7%

1,144

1,144

(16.7%)

0.0%

1,225

7.0%

1,723

15.2%

1,522

1,500

(13.0%)(1.5%)

2,198

46.6%

3,097

18.0%

2,666

2,644

(14.6%)(0.8%)

3,423

29.5%

(*1)

Hilton Tokyo Odaiba was acquired on April 8, 2019. Figures for the fiscal year ended December 31, 2018 and the fiscal(*2)

year ended December 31, 2019 are full year figures calculated by adding numbers prior to acquisition.
Implementation of large-scale renovation work is planned at Hilton Tokyo Odaiba from September 2020 throughDecember 2020.

- 19 -

<Reference Information 3> Dividend per unit and appropriation for dividends
Dividend per unit for the fiscal year ended December 31, 2018 and the fiscal year ended December 31, 2019 are calculated based on
the following assumptions.
Fiscal year ended

Fiscal year ended

December 31, 2018
(JPY1M)

December 31, 2019
(JPY1M)

Unappropriated retained earnings

16,213

15,290Reserve for special advanced depreciation (*1)

(1,174)

－

563

1,176

50-year amortization amount of negative goodwill (*2)

262

262

Loss on retirement of noncurrent assets (*3)

35

246

Correspondence to large-scale renovation works (*4)

265

357

Adjustment for dilution (*5)－

310

15,602

16,466

4,010,847 units

4,462,347 units¥3,890¥3,690Total of reserve for temporary difference adjustment (*2)
(negative goodwill) used

Total dividends
Total number of investment units issued
Dividend per unit(*1) R&B Hotel Higashi-nihonbashi, the b akasaka-mitsuke and the b Ochanomizu was sold on August 10, 2018. ¥1,174 millionof gain on sale by the sales was retained as reserve for special advanced depreciation within the limit to maintain conduit status
stipulated by Article 67-15 of Act on Special Measures Concerning Taxation (Act No. 26 of 1957; as amended; hereinafter
called “the Act on Special Measures Concerning Taxation” The same shall apply hereinafter.) by applying “Special provisions
for taxation in the case where a special account is set up accompanied with transfer of specified assets” (Article 65-8 in the
Act on Special Measures Concerning Taxation).
(*2) Starting from the fiscal year ended December 31, 2017 (18th period), JHR commenced paying out dividends through reversalof reserve for temporary difference adjustment in connection with partial amendments to the “Ordinance on Accountings ofInvestment Corporations” and the “Regulation for Real Estate Investment Trusts and Real Estate Investment Corporations” of
The Investment Trusts Association, Japan. Specifically, JHR transferred the remaining balance of dividend reserve (¥13,127
million) attributable to the gain on negative goodwill in the cash dividends statements for the fiscal year ended December 31,
2016 (17th period) to “reserve for temporary difference adjustment,” and reverse ¥262 million (hereinafter called the “50-year
amortization amount of negative goodwill”), which is an amount equivalent to 2% (1/50) of the remaining balance of thereserve for temporary difference adjustment, to payout as dividends, with the remaining balance of the reserve for temporary
difference adjustment set as the maximum amount, for every year from the fiscal year ended December 31, 2017 (18th period).
(*3) Amount recognized as a loss on retirement of noncurrent assets are appropriated by reserve for temporary difference
adjustment (negative goodwill) and have no impact on dividend per unit.
(*4) Former Hotel Centraza Hakata implemented large-scale renovation work accompanied by suspension of hotel operation
starting October 1, 2018 and resumed its operation as Oriental Hotel Fukuoka Hakata Station on April 9, 2019. Taking into
consideration the impact on dividend by the suspension of hotel operation due to the renovation, reserve for temporary
difference adjustment (negative goodwill) is appropriated.
(*5) Adjustment for dilution of dividend per unit due to issuance of new investment units.

- 20 -

2. Financial statements(1) Balance sheets(thousands of yen)
As ofDecember 31, 2018
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Income taxes receivable
Derivative assets
Other current assets
Total current assets
Noncurrent assets
Property and equipment, at cost
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Net property and equipment
Intangible assets
SoftwareLeasehold rights in trust
Fixed-term leasehold rights in trust
Other intangible assets
Total intangible assets
Investments and other assets
Security deposits
Leasehold and security deposits in trust
Long-term prepaid expenses
Derivative assets
Reserve for repairs and maintenanceTotal investments and other assets
Total noncurrent assets
Deferred assets
Investment unit issuance costs
Investment corporation bond issuance costs
Total deferred assets
Total assets*1- 21 -

As ofDecember 31, 201925,706,559
11,478,156
2,474,121
527,491
34
2,229
77,98740,266,582

22,449,911
11,894,019
2,779,730
550,28154573
88,04537,762,616

398,134(150,113)
248,021
3,121,628(1,505,450)
1,616,178
122,605,307(18,178,952)
104,426,355
2,535,539(367,369)
2,168,169
598,790(125,229)
473,561
136,526(95,925)
40,601
163,151,369
765,363
272,889,620

579,731(195,551)
384,180
4,211,971(2,102,782)
2,109,188
136,930,501(21,656,979)
115,273,521
2,721,962(438,160)
2,283,802
675,362(154,739)
520,622
136,526(104,535)
31,990219,901,119
18,384
340,522,811*1

199,563
28,532,362
5,175,217
8,436
33,915,580

227,600
28,532,362
5,036,941
7,756
33,804,661

12,520150,223
2,687,996
45,125292,508
3,188,374
309,993,574

12,520150,223
2,766,474
43,870307,5133,280,602
377,608,075

124,220
172,390296,610
350,556,767

140,631
211,194
351,826
415,722,517

(thousands of yen)
As ofDecember 31, 2018
Liabilities
Current liabilities
Operating accounts payable
Current portion of investment corporation bonds
Current portion of long-term loans payable
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Dividends payable
Deposits received
Derivative liabilities
Other current liabilities
Total current liabilities
Long-term liabilities
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Derivative liabilities
Deferred tax liabilities
Asset retirement obligations
Total long-term liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
SurplusCapital surplus
Voluntary reserve
Reserve for temporary difference adjustment
Reserve for special account for tax purpose reduction
entry
Total voluntary reserve
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains (losses) on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 22 -*2

As ofDecember 31, 2019

1,941,008
2,000,000
11,117,000
530,377
1,210
496,921882,052
18,275
7,315
17,608
9,013
17,020,784

12,782,000
651,435
1,210
661,048909,293
15,852
8,696
17,22995,331
16,627,473

31,600,000
91,954,000
1,041,016
4,593,946
514,339
14,838445,622130,163,763
147,184,548

41,600,000
114,372,000
1,040,520
4,681,825
416,600
13,981
447,677
162,572,605
179,200,079

153,516,129

186,894,169

21,746,398

21,746,398

12,357,644

1,485,375－*2

11,794,071－

1,174,860

12,357,644
16,213,482
50,317,525
203,833,655

12,968,932
15,290,314
50,005,645
236,899,815(461,435)(461,435)*3 203,372,219
350,556,767(377,376)(377,376)*3 236,522,438
415,722,517

(2) Statements of income(thousands of yen)
For the year ended
December 31, 2018
Operating revenue
Real estate operating revenue
Other real estate operating revenue
Gain on sales of real estate properties
Total operating revenue
Operating expenses
Real estate operating costs
Asset management fee
Asset custody and Administrative service fee
Directors’ compensation
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends
Gain on insurance claims
Refunded fixed asset tax
Interest on tax refunds
Gain on derivative instruments
Total non-operating income
Non-operating expenses
Interest expense
Interest expense on investment corporation bonds
Borrowing costs
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Loss on derivative instruments
Other
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes – current
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

25,140,735
1,178,141*2 1,934,974
28,253,850*1*1*1, *3- 23 -

8,344,364
1,577,515
110,273
13,400214,828
10,260,381
17,993,469

For the year ended
December 31, 2019*1
*1

27,107,988
1,170,561－

28,278,550*1

8,997,408
1,781,691
119,138
14,400217,357
11,129,995
17,148,555

225
3,583
4,627
10,354
118
12,84331,752357
4,361
28,063
1,239
549
12,382
46,953

818,631
246,329525,031
27,751
147,887
39,417
8,529
1,813,577
16,211,644
16,211,644
1,210
1,210
16,210,434
3,048
16,213,482

940,789284,524
483,761
30,298151,922378
12,3091,903,983
15,291,524
15,291,524
1,210
1,210
15,290,314－

15,290,314

(3) Statements of changes in net assets
For the year ended December 31, 2018
(thousands of yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance, January 1, 2018

153,516,129

Voluntary reserve

Unappropriatedretainedearnings(undisposed
loss)

CapitalsurplusReserve fortemporarydifference
adjustment

Total
voluntary
reserve

21,746,398

13,127,153

13,127,153

14,005,489(769,508)(769,508)

769,508

Changes of items during theyear:
Reversal of reserve fortemporary difference
adjustment

Total
unitholders’ equity

Total
surplus48,879,041 202,395,170－－

Dividends paid

(14,771,949) (14,771,949) (14,771,949)

Net income

16,210,434

16,210,434

16,210,434

1,438,484

Net changes of items
other than unitholders’equityTotal changes of items
during the year
Balance, December 31, 2018－－

(769,508)(769,508)

2,207,993

1,438,484*1

21,746,398

12,357,644

12,357,644

16,213,482

50,317,525 203,833,655

153,516,129(thousands of yen)
Valuation and translation
adjustments
Total
Total
Deferred
net assets
valuation andgains (losses)
translation
on hedges
adjustments
Balance, January 1, 2018

(431,849)(431,849)

Changes of items during theyear:
Reversal of reserve fortemporary difference
adjustment

201,963,321－

Dividends paid

(14,771,949)

Net income

16,210,434

Net changes of items
other than unitholders’equityTotal changes of items
during the year
Balance, December 31, 2018(29,586)(29,586)(29,586)(29,586)(29,586)

1,408,897(461,435)(461,435)

203,372,219- 24 -

For the year ended December 31, 2019
(thousands of yen)
Unitholders’ equity
Surplus
Voluntary reserve
Unitholders’capitalBalance, January 1, 2019
Changes of items during theyear:
Issuance of new investment
units
Reversal of reserve fortemporary difference
adjustment
Provision of reserve for
special account for tax
purpose reduction entry

153,516,129

Reserve for
specialaccount for
tax purpose
reduction
entry

CapitalsurplusReserve fortemporarydifference
adjustment

21,746,398

12,357,644

Total
voluntary
reserve-

12,357,644

Unappropriatedretainedearnings(undisposed
loss)
16,213,482

Total
unitholders’ equity

Total
surplus50,317,525 203,833,655

33,378,040

33,378,040(563,572)
1,174,860(563,572)

563,572－－

1,174,860(1,174,860)－－

Dividends paid

(15,602,194) (15,602,194) (15,602,194)

Net income

15,290,314

Net changes of items
other than unitholders’equityTotal changes of items
during the year
Balance, December 31, 2019－

(563,572)

1,174,860

611,287(923,168)(311,880) 33,066,160*1

21,746,398

11,794,071

1,174,860

12,968,932

15,290,314

50,005,645 236,899,815

186,894,169(461,435)(461,435) 203,372,219

Changes of items during theyear:
Issuance of new investment
units
Reversal of reserve fortemporary difference
adjustment
Provision of reserve for
special account for tax
purpose reduction entry

33,378,040－－

Dividends paid

(15,602,194)

Net income

15,290,314

Net changes of items
other than unitholders’equityTotal changes of items
during the year
Balance, December 31, 201915,290,314

33,378,040(thousands of yen)
Valuation and translation
adjustments
Total
Total
Deferred
net assets
valuation andgains (losses)
translation
on hedges
adjustments
Balance, January 1, 201915,290,314

84,05984,05984,05984,05984,05933,150,219(377,376)(377,376) 236,522,438- 25 -

(4) Statements of cash dividends
Classification
I. Unappropriated retained earnings

For the year ended
December 31, 2018

For the year ended
December 31, 2019¥16,213,482,816¥15,290,314,375*1 ¥563,572,972*1 ¥1,176,490,844

II. Reversal of voluntary reserve
Reversal of reserve fortemporary difference adjustment
Reversal of reserve for special
advanced depreciation－¥1,174,860,958¥15,602,194,830[¥3,890]¥16,466,060,430[¥3,690]¥1,174,860,958－

Provision of reserve foradvanced depreciation－¥1,174,860,958

V. Retained earnings carried forward－¥744,789

III. Dividends[Dividend per unit]
IV. Voluntary reserve
Reserve for special advanced
depreciation

Method of calculating the amount ofdividends

In accordance with the monetary distribution
policy stipulated in Article 34, paragraph 1

In accordance with the monetary distribution
policy stipulated in Article 34, paragraph 1of JHR’s Articles of Incorporation, amountof dividend must exceed 90% of JHR’sof JHR’s Articles of Incorporation, amountof dividend must exceed 90% of JHR’s

distributable profit that is defined by Article
67-15 of the Act on Special Measures

distributable profit that is defined by Article
67-15 of the Act on Special Measures

Concerning Taxation. It was decided that
¥15,602,194,830, which was calculated byConcerning Taxation. It was decided that
¥16,466,060,430, which excludes fractions

adding a reversal of reserve for temporary
difference adjustment of ¥563,572,972 to theof less than one yen of dividend per unit from
¥16,466,805,219, an amount calculated byamount obtained by deducting reserve for
special advanced depreciation (defined byadding a reversal of reserve for temporary
difference adjustment of ¥1,176,490,844 to

Article 65-8 of the Act on Special Measures
Concerning Taxation) of ¥1,174,860,958

unappropriated retained earnings of¥15,290,314,375, would all be distributed.

from unappropriated retained earnings of¥16,213,482,816, would be distributed. The

The monetary distribution in excess ofearnings stipulated in Article 34, paragraph 1

monetary distribution in excess of earnings
stipulated in Article 34, paragraph 1 (4) of(4) of JHR’s Articles of Incorporation will
not be made.

JHR’s Articles of Incorporation will not be
made.

- 26 -

(5) Statements of cash flows(thousands of yen)
For the year ended
December 31, 2018
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Loss on retirement of noncurrent assets
Loss (Profit) on derivative instruments
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Decrease in property and equipment due to sale
Decrease in property and equipment in trust due to sale
Decrease in intangible assets due to saleInterest income
Interest expense
Interest on tax refunds(Increase) decrease in operating accounts receivable(Increase) decrease in prepaid expenses(Increase) decrease in long-term prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accrued expenses
Increase (decrease) in consumption taxes payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Other – net
SubtotalInterest received
Interest paid
Interest received on tax refunds
Income taxes – refunded (paid)
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property and equipment
Purchase of property and equipment in trust
Purchase of intangible assets
Payments of reserve for repairs and maintenance
Proceeds from collection of guarantee deposits in trust
Reimbursements of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Reimbursements of tenant leasehold and security deposits in trust
Net cash used in investing activities
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from investment corporation bonds
Redemption of investment corporation bonds
Payments for investment corporation bond issuance costs
Proceeds from issuance of investment units
Dividends paid
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

- 27 -For the year ended
December 31, 201916,211,644
4,091,929
35,972
26,57427,751
147,887
19,104
9,995,677
117,138(225)
1,064,961(118)(62,284)
44,621
320,330
286,480(139,228)(63,249)(18,206)(14,782)(106,639)
31,985,341
170(1,045,923)
118(1,211)30,938,494

15,291,524
4,557,414
246,890(12,004)
30,298151,922－－－(357)
1,225,314(549)(305,608)(22,789)(78,478)(240,644)
116,600
164,127
27,2401,380
69,494
21,221,777
482(1,220,857)
549(1,230)20,000,722(536,481)(2,399,742)(87,074)(40,330)
8,100－
59,743(115,020)(3,110,806)(1,332,712)(71,102,935)(89,263)(40,453)－(496)
329,120(228,114)(72,464,854)

5,000,000(8,000,000)
10,150,000(20,878,750)
10,000,000－(68,082)－(14,766,490)(18,563,322)
9,264,365
27,920,350*1 37,184,716

8,000,000(8,000,000)
37,000,000(12,917,000)
10,000,000(2,000,000)(69,102)33,209,706(15,600,256)
49,623,347(2,840,785)
37,184,716*1 34,343,930

(6) Notes on going concern assumption
Not applicable.

(7) Notes on matters concerning significant accounting policies
1.

Method ofdepreciation andamortization of
noncurrent assets(1) Property and equipment (including trust accounts)
Depreciation of property and equipment is calculated using the straight-line method. The useful livesof major property and equipment components are as follows:
Machinery and equipment
2 to 17 years
Tools, furniture and fixtures
Buildings in trust

2 to 20 years
2 to 64 years

Structures in trust
Machinery and equipment in trust

2 to 64 years
3 to 32 years

Tools, furniture and fixtures in trust(2) Intangible assets

2 to 27 years

Intangible assets are amortized using the straight-line method. The amortization period of major
intangible assets is as follows.
Software (for internal use)
5 years as internally usable years
Fixed-term leasehold rights in trust are amortized using the straight-line method based on remaining
period (41 years and 49 years) of the contract.
(3) Long-term prepaid expenses
Long-term prepaid expenses are amortized using the straight-line method.
2.

Accounting for(1) Investment unit issuance costs

deferred assets

Investment unit issuance costs are amortized using the straight-line method over three years.
(2) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the interest method over therespective term of the bond.

3.

Standards for

Treatment of property taxes and other taxes

recognition ofrevenues and

For taxes imposed on properties under management such as property taxes, city planning taxes, anddepreciable asset taxes, the imposed amounts are allocated to the respective period and expensed as “Realexpenses

estate operating costs.”
Cash paid for property taxes and city planning taxes to the transferor of real properties at acquisition is notrecorded as “Real estate operating costs” but capitalized as part of the acquisition cost of the relevant
property.
The amount of such taxes capitalized in the acquisition cost of real properties was none for the year ended
December 31, 2018 and ¥249,415 thousand for the year ended December 31, 2019.

4.

Method ofhedge accounting(1) Method of hedge accounting
Deferred hedge accounting is applied(2) Hedging instruments and hedged items
Hedging instruments
Interest rate swaps
Hedged items
Interest rates on loans payable(3) Hedging policy
JHR enters into certain derivative transactions in accordance with its financial policy in order tomanage risks, which is provided in the Articles of Incorporation.
(4) Method for assessing hedge effectiveness
JHR evaluates hedge effectiveness by comparing the cumulative changes in cash flow of hedging
instruments and the hedged items and assessing the ratio between the changes.

- 28 -

5.

Scope of funds(cash and cash

Cash and cash equivalents in the statements of cash flows consist of cash on hand, cash in trust accounts,
bank deposit and trust deposit, which can be withdrawn at any time, and short-term investments with aequivalents) in
the statements ofmaturity of three months or less when purchased, which can easily be converted to cash and subject tominimal risk of change in value.

cash flows
6.

Other
significant matters(1) Accounting treatment of beneficial interests in trust with real estate, etc. as their assets
For trust beneficial interests in real estate, etc., all assets and liabilities held in trust accounts as wellserving as the basis
for preparing

as all income generated and expenses incurred from assets in trust are presented in the accompanying
balance sheet and income statement accounts accordingly.

financial statements

The following material items of the trust accounts recorded in the relevant accounts are presented
separately on the balance sheets.
(a) Cash and deposits in trust(b) Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools, furniture andfixtures in trust; Land in trust; Construction in progress in trust(c) Leasehold rights in trust; Fixed-term leasehold rights in trust; Leasehold and security deposits
in trust(d) Tenant leasehold and security deposits in trust(2) Accounting treatment of consumption taxes
Consumption taxes are excluded from the transaction amounts.

(8) Note on change in the indication method
By applying “Partial Amendments to ‘Accounting Standard for Tax Effect Accounting’” (ASBJ Statement No. 28, February 16,2018) from the beginning of the fiscal year under review, the indication method has been changed to indicate deferred tax assets
under investments and other assets and deferred tax liabilities under long-term liabilities.
As a result, deferred tax liabilities (¥583 thousand) indicated under current liabilities in the balance sheets of the previous fiscal
year is included in deferred tax liabilities (¥14,838 thousand) under long-term liabilities.

(9) Notes to financial statements
Disclosure of notes on “securities,” “share of (profit) loss of entities accounted for using equity method,” “related-party
transactions” and “retirement benefits” is omitted because there is thought to be not important and thus not necessary fordisclosure in the financial report.

[Notes on accounting standards and other regulations yet to be applied]・“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (ASBJ) Statement No. 29 issued on
March 30, 2018)
・“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 issued on March 30,
2018)(1) Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the UnitedStates have jointly developed comprehensive accounting standards for revenue recognition and issued “Revenue fromContracts with Customers” (IFRS 15 by IASB and Topic 606 by FASB) in May 2014. Given the situation where IFRS 15
will be applied from fiscal years beginning on or after January 1, 2018 and that Topic 606 will be applied from fiscal years
beginning after December 15, 2017, the ASBJ has developed comprehensive accounting standards for revenue recognition
and issued them together with the Implementation Guidance.
The basic policy for the ASBJ when it developed the accounting standards for revenue recognition was to specify theaccounting standards, incorporating the basic principles of IFRS 15 as a starting point, from the perspective of comparability
between financial statements, which is one of the benefits of maintaining compatibility with IFRS 15. The basic policy also
stipulates that if there is an item to which consideration should be given, such as practices that have been conducted thus far
in Japan, alternative treatments will be added to the extent to which comparability is not impaired.

- 29 -

(2) Scheduled date of application
The above standards will be applied from the beginning of the fiscal year ending December 31, 2022.
(3) Impact of applying the accounting standards
The level of the impact on the financial statements of applying the “Accounting Standard for Revenue Recognition” and thelike is currently under review.

[Notes to balance sheets]*1. Accumulated advanced depreciation of property and equipment deducted from acquisition costs due to government subsidies
received, etc.
(thousands of yen)
As ofDecember 31, 2018
Buildings in trust

As ofDecember 31, 2019¥24,921¥24,921*2. Matters concerning provision and reversal of reserve for temporary difference adjustment
As of December 31, 2018

Dividend
reserveAmount ofinitialaccrualBalance at
beginning of
periodAmount ofprovision
during period

Amount ofreversalduringperiod13,127,153

13,127,153－

769,508(thousands of yen)
Balance at
end ofperiodGrounds for provision and reversal

12,357,644

Allocation for dividend(Note)(Note) Dividend reserve indicates the remaining balance of the amount subdivided into gain on negative goodwill which wasrecorded as a dividend reserve before the fiscal year ended December 31, 2016, and is scheduled for reversal every fiscal
year, starting from the fiscal year following the fiscal year in which the reserve was made, in an amount that shall be no lessthan that in equal amounts every fiscal year over a period of no more than 50 years.
As of December 31, 2019

Dividend
reserveAmount ofinitialaccrualBalance at
beginning of
periodAmount ofprovision
during period

Amount ofreversalduringperiodBalance at
end ofperiodGrounds for provision and reversal

13,127,153

12,357,644－

563,572

11,794,071

Allocation for dividend(Note)(Note) Dividend reserve indicates the remaining balance of the amount subdivided into gain on negative goodwill which wasrecorded as a dividend reserve before the fiscal year ended December 31, 2016, and is scheduled for reversal every fiscal
year, starting from the fiscal year following the fiscal year in which the reserve was made, in an amount that shall be no lessthan that in equal amounts every fiscal year over a period of no more than 50 years.

*3. Minimum net assets as required by Article 67, paragraph 4 of the Investment Trusts Act
As ofDecember 31, 2018
¥50,000 thousand- 30 -

As ofDecember 31, 2019
¥50,000 thousand

[Notes to statements of income]*1. Components of real estate operating revenue and real estate operating costs(thousands of yen)
For the year ended
December 31, 2018
A.

For the year ended
December 31, 2019

Real estate operating revenue
Real estate operating revenue
Fixed rent
Variable rent

13,610,785
8,851,482

Income from management contracts

15,931,097
8,675,885

2,678,467

2,501,004

25,140,735

27,107,988

Parking lots
Other incidental revenue

173,453
62,693

161,660
63,016

Utilities
Other

804,915
137,078803,012
142,873

Total
Other real estate operating revenue

Total
Total real estate operating revenueB.

1,170,561
28,278,550

Real estate operating costs
Real estate operating costs
Land lease and other rent expenses

C.

1,178,141
26,318,876

907,621898,207

Property taxes
Outsourcing expenses (Note)

1,630,178
714,663

1,658,930
653,041

Nonlife insurance
Depreciation and amortization

47,7984,091,929

51,0304,557,414

Loss on retirement of noncurrent assets
Repairs

35,972
46,405

246,890
41,410Utilities
Trust fees

813,91142,537818,290
44,679Other

13,34527,511

Total real estate operating costs

8,344,364

8,997,408

Net real estate operating income (A − B)

17,974,512

19,281,141(Note) Outsourcing expenses include management contract fees of ¥337,442 thousand for the year ended December 31, 2018 and ¥296,029 thousand for the year
ended December 31, 2019.

*2．Breakdown of gain on sales of real estate properties
For the year ended December 31, 2018
(thousands of yen)
R&B Hotel Higashi-nihonbashi
Proceeds from sale of real estate

3,050,000

Cost of sale of real estate
Other related sales expenses

1,483,749
22,955Gain on sales of real estate properties

1,543,295

the b akasaka-mitsuke
Proceeds from sale of real estate
Cost of sale of real estate

6,600,000
6,294,221

Other related sales expenses

41,508Gain on sales of real estate properties

264,270- 31 -

the b ochanomizu
Proceeds from sale of real estate
Cost of sale of real estate

2,500,000
2,353,951

Other related sales expenses

18,639Gain on sales of real estate properties

127,408

For the year ended December 31, 2019
Not applicable.

[Notes to statements of changes in net assets]

For the year ended
December 31, 2018

For the year ended
December 31, 2019

*1 Total number of investment units
authorized, and issued and outstanding
Total number of investment units authorized

20,000,000 units

20,000,000 units

Total number of investment units issued and outstanding

4,010,847 units

4,462,347 units[Notes to statements of cash dividends]*1. Reserve for temporary difference adjustment
For the year ended December 31, 2018
By application of the transitional measures of Paragraph 3 of the Supplementary Provisions of the “Ordinance on Accountingsof Investment Corporations” (Cabinet Office Ordinance No. 27 of 2015), ¥13,127,153,216 in dividend reserve that is theremaining balance of the amount subdivided into gain on negative goodwill recorded in prior fiscal years is set aside as
reserve for temporary difference adjustment on the statements of cash dividends for the year ended December 31, 2016.
Starting from the fiscal year following the fiscal year in which the reserve was made, reversal of the concerned reserveamount in an amount that shall be no less than the 50-year even amortization amount (¥262,543,065) of the remaining balanceof the amount when the reserve was made, is required. In this fiscal year under review, reversal of ¥563,572,972 has been
decided, which is the amount calculated by adding ¥35,972,972 equivalent to loss on retirement of fixed assets and¥265,000,000 for the large-scale renovation at Oriental Hotel Fukuoka Hakata Station (former name: Hotel Centraza Hakata)to ¥262,600,000 of the reversal.
For the year ended December 31, 2019
By application of the transitional measures of Paragraph 3 of the Supplementary Provisions of the “Ordinance on Accountingsof Investment Corporations” (Cabinet Office Ordinance No. 27 of 2015), ¥13,127,153,216 in dividend reserve that is theremaining balance of the amount subdivided into gain on negative goodwill recorded in prior fiscal years is set aside as
reserve for temporary difference adjustment on the statements of cash dividends for the year ended December 31, 2016.
Starting from the fiscal year following the fiscal year in which the reserve was made, reversal of the concerned reserveamount in an amount that shall be no less than the 50-year even amortization amount (¥262,543,065) of the remaining balanceof the amount when the reserve was made, is required. In this fiscal year under review, reversal of ¥1,176,490,844 has been
decided, which is the amount calculated by adding ¥246,890,844 equivalent to loss on retirement of fixed assets,¥357,000,000 for the large-scale renovation at Oriental Hotel Fukuoka Hakata Station (former name: Hotel Centraza Hakata)and ¥310,000,000 for adjustment to dilution of dividend per unit due to capital increase through public offering to¥262,600,000 of the reversal.

[Notes to statements of cash flows]*1. Relation of balance of cash and cash equivalents at end of year and the amount in balance sheet accounts
For the year ended
December 31, 2018
Cash and deposits¥25,706,559(thousands of yen)
For the year ended
December 31, 2019¥22,449,911

Cash and deposits in trust¥11,478,156¥11,894,019

Cash and cash equivalents¥37,184,716¥34,343,930- 32 -

[Notes on lease transactions]Operating leases (as lessor)
Minimum rental revenue under non-cancellable operating leases
As ofDecember 31, 2018

(thousands of yen)
As ofDecember 31, 2019

Due within one year

¥1,666,631¥1,459,034

Due after one year

¥3,562,086¥2,106,234

Total¥5,228,717¥3,565,268[Notes on financial instruments]
1. Matters concerning status of financial instruments(1) Policy for financial instruments
JHR is an investment corporation set forth in Article 2, paragraph 12 of the Investment Trusts Act, managing investments
mainly in specified assets as prescribed in the Investment Trusts Act. As a policy, JHR procures funds through issuance ofinvestment units, etc. and loans from financial institutions in order to make investments in specified assets. JHR does not
utilize surplus funds to invest in financial instruments except for short-term deposits and other equivalent short-term
financial instruments. JHR may enter into derivative transactions in order to hedge against interest rate risk, but not for
speculative trading purposes.
(2) Details of financial instruments, their risks, and risk management system
Operating accounts receivable is operating receivables and is exposed to credit risks of clients. As for the risks, JHR is
managing payment dates and balances by each client with an aim to grasp concerns in collecting due to deterioration in theirfinancial status and other factors in early stage and reduce the risks.
The floating rate loans payable are exposed to risks of interest rate fluctuations. In order to mitigate interest rate risk, JHR
may enter into derivative transactions, if necessary, to fix the interest expense.
Derivative transactions are conducted principally in accordance with rules prescribed by JHR and risk management rules
applied by the Asset Management Company. Derivative transactions are arranged by the section in charge of finance at theAsset Management Company by using financial institutions with high credit ratings through approval and resolution byauthorized personnel and a meeting committee structure set forth in its decision-making standards and resolution of JHR’sboard of directors.
Loans payable are exposed to liquidity risks. The section in charge of finance at the Asset Management Company preparesand updates projections and actual cash flows on a monthly basis to manage liquidity risks and monitor compliance withrestrictive covenants set forth in the loan agreements. JHR manages liquidity risks by managing the ratio of short-term andlong-term loans payable considering the current financial environment through approval and resolution by authorized
personnel and meeting committee structure in the Asset Management Company and resolution of JHR’s board of directors.
(3) Supplementary explanation on matters concerning fair value, etc. of financial instruments
Regarding the contract amount, etc. of derivative transactions in “2. Matters concerning fair value of financial instruments,”
the amount itself does not indicate certain scale of market risk exposure related to derivative transactions.

- 33 -

2. Matters concerning fair value of financial instruments
Carrying amounts of financial instruments on the balance sheets, their fair values, and the differences as of December 31, 2018
were as follows. Financial instruments whose fair values are considered extremely difficult to measure are not included in thetable. See Note 2 below.
Carrying amount(JPY 1,000)

Fair value(JPY 1,000)

Difference(JPY 1,000)(1) Cash and deposits

25,706,559

25,706,559―(2) Cash and deposits in trust

11,478,156

11,478,156―(3) Operating accounts receivable

2,474,121

2,474,121―

Total assets

39,658,838

39,658,838―

2,000,000

2,002,200

2,200(5) Current portion of long-term loans payable

11,117,000

11,117,000―(6) Investment corporation bonds

31,600,000

31,785,870

185,870(7) Long-term loans payable

91,954,000

91,954,000―

Total liabilities

136,671,000

136,859,070

188,070(484,593)(484,593)―(4) Current portion of investment corporation bonds
payable(8) Derivative transactions (*)

Carrying amounts of financial instruments on the balance sheets, their fair values, and the differences as of December 31, 2019were as follows. Financial instruments whose fair values are considered extremely difficult to measure are not included in thetable. See Note 2 below.
Carrying amount
Fair value
Difference(JPY 1,000)(JPY 1,000)(JPY 1,000)(1) Cash and deposits

22,449,911

22,449,911―(2) Cash and deposits in trust

11,894,019

11,894,019―(3) Operating accounts receivable

2,779,730

2,779,730―

Total assets

37,123,661

37,123,661

―

―

―

―

(5) Current portion of long-term loans payable

12,782,000

12,782,000―(6) Investment corporation bonds

41,600,000

41,480,400(119,600)(7) Long-term loans payable

114,372,000

114,372,000―

Total liabilities

168,754,000

168,634,400(119,600)(4) Current portion of investment corporation bonds
payable(8) Derivative transactions (*)(389,386)(389,386)―(*) Receivables and payables arising from derivative transactions are presented on a net basis and amounts in parenthesis denote net
payables.
(Note 1) Methods to measure fair value of financial instruments, and derivative transactions(1) Cash and deposits; (2) Cash and deposits in trust; (3) Operating accounts receivable
The carrying value is deemed to approximate the fair value since the instruments are scheduled to be settled in a short periodof time. Therefore, carrying value is stated.
(4) Current portion of investment corporation bonds payable; (6) Investment corporation bonds
The fair value of these instruments is measured based on the market price.
(5) Current portion of long-term loans payable; (7) Long-term loans payable
The carrying value is deemed to approximate the fair value since the interest rate on long-term loans payable are floatinginterest rates which are revised periodically to reflect market interest rates.
(8) Derivative transactions
The information on the fair value of derivative transactions is presented in “Notes on derivative transactions” below.

- 34 -

(Note 2) Carrying amount of financial instruments whose fair values are considered extremely difficult to measure(thousands of yen)
As ofDecember 31, 2018

Classification

As ofDecember 31, 2019

Tenant leasehold and security deposits

1,041,016

1,040,520

Tenant leasehold and security deposits in trust

4,593,946

4,681,825

Total

5,634,962

5,722,345

Tenant leasehold and security deposits / Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits (in trust) for rental properties are not subject to fair value disclosure because they haveno market price and their actual deposit periods from a tenant’s move-in to move-out are not estimable, thus making areasonable estimate of future cash flows is difficult.
3. Redemption schedule for monetary claims subsequent to the account closing date
As of December 31, 2018
Due within
one year(JPY 1,000)

Due after
one to two
years(JPY 1,000)

Due after
two to threeyears(JPY 1,000)

Due after
three to four
years
(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

Cash and deposits

25,706,559

―

―

―

―

―

Cash and deposits in trust

11,478,156

―

―

―

―

―

Operating accounts receivable

2,474,121

―

―

―

―

―

Total

39,658,838

―

―

―

―

―

Due within
one year(JPY 1,000)

Due after
one to two
years(JPY 1,000)

Due after
two to threeyears(JPY 1,000)

Due after
three to four
years
(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

Cash and deposits

22,449,911

―

―

―

―

―

Cash and deposits in trust

11,894,019

―

―

―

―

―

Operating accounts receivable

2,779,730

―

―

―

―

―

Total

37,123,661

―

―

―

―

―

As of December 31, 2019

4. Schedule for repayment of loans payable and redemption of investment corporation bonds subsequent to the account closing
date
As of December 31, 2018
Due within
one year(JPY 1,000)

Due after
one to two
years(JPY 1,000)

Due after
two to threeyears(JPY 1,000)

Due after
three to four
years
(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

2,000,000

―

―

―

―

―

11,117,000

―

―

―

―

―

Investment corporation bonds――

1,500,000

6,000,000―

24,100,000

Long-term loans payable―

12,782,000

10,800,000

10,900,000

15,772,000

41,700,000

13,117,000

12,782,000

12,300,000

16,900,000

15,772,000

65,800,000

Current portion of investment
corporation bonds payable
Current portion of
long-term loans payable

Total- 35 -

As of December 31, 2019
Due within
one year(JPY 1,000)

Due after
one to two
years(JPY 1,000)

Due after
two to threeyears(JPY 1,000)

Due after
three to four
years
(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

―

―

―

―

―

―

12,782,000

―

―

―

―

―

Investment corporation bonds―

1,500,000

6,000,000―

3,000,000

31,100,000

Long-term loans payable―

10,800,000

10,900,000

15,772,000

18,650,000

58,250,000

12,782,000

12,300,000

16,900,000

15,772,000

21,650,000

89,350,000

Current portion of investment
corporation bonds payable
Current portion of
long-term loans payable

Total[Notes on derivative transactions]
1. Derivative transactions to which hedge accounting is not applied
As of December 31, 2018
For derivative transactions which hedge accounting is not applied, the contract amount or the amount equivalent to theprincipal provided in the contract, etc. as of the account closing date was as follows:(thousands of yen)Classification

Type, etc. of
derivative transaction

Transactions
other thanmarkettransactions

Interest rate swaps(fixed rate payment,
floating rate receipt)

Contract amount, etc.
Of which, due
after one year
6,088,000

3,494,000

Fair value

Method to measure the fair value

The fair value is measured at the(37,996) quoted price, etc. obtained from thecounterparty financial institutions.

As of December 31, 2019
For derivative transactions which hedge accounting is not applied, the contract amount or the amount equivalent to theprincipal provided in the contract, etc. as of the account closing date was as follows:(thousands of yen)Classification

Type, etc. of
derivative transaction

Transactions
other thanmarkettransactions

Interest rate swaps(fixed rate payment,
floating rate receipt)

Contract amount, etc.
Of which, due
after one year
3,494,000

3,494,000

Fair value

Method to measure the fair value

The fair value is measured at the(25,992) quoted price, etc. obtained from thecounterparty financial institutions.

2. Derivative transactions to which hedge accounting is applied
As of December 31, 2018
For derivative transactions which hedge accounting is applied, the contract amount or the amount equivalent to the principal
provided in the contract, etc. as of the account closing date for each method of hedge accounting was as follows:(thousands of yen)
Method ofhedge
accounting

DeferralmethodType, etc. of
derivative transaction

Interest rate swaps(fixed rate payment,
floating rate receipt)Mainhedged item

Long-termloans payable

Contract amount, etc.
Of which, due
after one year

90,654,000- 36 -

81,554,000

Fair value

Method to measure
the fair value

The fair value ismeasured at thequoted price, etc.
(446,597)
obtained from thecounterparty
financial institutions.

As of December 31, 2019
For derivative transactions which hedge accounting is applied, the contract amount or the amount equivalent to the principal
provided in the contract, etc. as of the account closing date for each method of hedge accounting was as follows:(thousands of yen)
Method ofhedge
accounting

DeferralmethodType, etc. of
derivative transaction

Interest rate swaps(fixed rate payment,
floating rate receipt)Mainhedged item

Long-termloans payable

Contract amount, etc.
Of which, due
after one year

112,654,000

101,072,000

Fair value

Method to measure
the fair value

The fair value ismeasured at thequoted price, etc.
(363,394)
obtained from thecounterparty
financial institutions.

[Notes on tax-effect accounting]1.

Significant components of deferred tax assets and liabilities by cause(thousands of yen)
As ofDecember 31, 2018

As ofDecember 31, 2019

Deferred tax assets:
Valuation difference on assets accepted through merger

1,728,216

1,712,010

119,491

162,810

Amortization of fixed-term leasehold of land
Asset retirement obligations

11,25914,951

Deferred gains (losses) on hedges

156,203

128,306

Total gross deferred tax assets
Valuation allowance

2,015,170

2,018,079(2,015,170)(2,018,079)――

14,83813,981

14,83813,981

Total deferred tax assets
Deferred tax liabilities:
Deferred gains (losses) on hedges
Total gross deferred tax liabilities
2.

Details of major causes of material differences between the statutory tax rate and the tax rate under effective tax accounting
As ofDecember 31, 2018

Statutory tax rate

As ofDecember 31, 201931.74%

31.51%(29.63%)(31.72%)

Reserve for special advanced depreciation(2.30%)―%

Change in valuation allowance

0.10%

0.20%

Other – net

0.09%

0.03%

Actual effective tax rate

0.01%

0.01%

[Adjustments]
Deduction for dividends paid

- 37 -

[Notes on asset retirement obligations]
Asset retirement obligations recognized on the balance sheet
1. Outline of the subject asset retirement obligations
JHR recognizes asset retirement obligations as it is obliged to restore the land of Oriental Hotel Fukuoka Hakata Station(former name: Hotel Centraza Hakata), acquired on April 1, 2016, and HOTEL ASCENT FUKUOKA, acquired on August 19,
2016, to the original state in accordance with the fixed-term leasehold agreement.
2. Calculation method of the subject asset retirement obligations
Calculated the amount of asset retirement obligations estimating that the expected useful life is 34 years and 48 years,
respectively, due to their remaining use period and using the discount rate of 0.484% and 0.394%, respectively.
3. Increase and decrease of the subject asset retirement obligations(thousands of yen)
For the year ended
December 31, 2018
Balance at beginning of period

For the year ended
December 31, 2019443,577

Increase due to acquisition of property and equipment
Adjustment due to passage of time
Balance at end of period

445,622

―

―

2,045

2,054

445,622447,677[Notes on segment and related information]
1. Segment information
The segment information has been omitted because JHR has only one segment, which is the investment and management ofhotel real estate.
2. Related information
For the year ended December 31, 2018(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in a single
product / service category accounted for more than 90% of total operating revenue on the statements of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Name of related segment

Hotel Management Japan Co., Ltd.
(Note)

13,093,017

Investment and management of hotel real estate

AAPC Japan K.K.

3,121,263

Investment and management of hotel real estate(Note) Operating revenue includes the operating revenue of customers belonging to the same company group as said customers.

- 38 -

For the year ended December 31, 2019(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in a single
product / service category accounted for more than 90% of total operating revenue on the statements of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer
Hotel Management Japan Co., Ltd.
(Note)AAPC Japan K.K.

Operating revenue

Name of related segment

15,221,983

Investment and management of hotel real estate

2,996,251

Investment and management of hotel real estate(Note) Operating revenue includes the operating revenue of customers belonging to the same company group as said customers.

[Notes on rental properties, etc.]
JHR owns rental properties for hotels. The carrying amounts, changes in such balances, and fair values of such properties wereas follows:(thousands of yen)
For the year ended
December 31, 2018

Use

For the year ended
December 31, 2019

Carrying amount

Hotel

Balance at beginning of period

317,229,208

306,789,379

Net increase (decrease) during period(10,439,828)

67,525,119

Balance at end of period

306,789,379

374,314,498

437,510,000

525,910,000

Fair value at end of period(Note 1)

Decrease during the year ended December 31, 2018, principally represents the sale of R&B Hotel Higashi Nihonbashi for ¥1,483 million, the bakasakamitsuke for ¥6,294 million and the b ochanomizu for ¥2,353 million. Increase during the year ended December 31, 2019, principally represents
the acquisition of Hotel Oriental Express Osaka Shinsaibashi for ¥2,841 million and Hilton Tokyo Odaiba for ¥63,468 million.
Fair value at end of period is the appraisal value determined by licensed real estate appraisers.

(Note 2)

Real estate operating revenue and costs related to the rental properties were as follows:(thousands of yen)
For the year ended
December 31, 2018

Use

For the year ended
December 31, 2019

Amount on the statements of income
Hotel(Note)

Real estate operating revenue

26,318,876

28,278,550

Real estate operating costs

8,344,364

8,997,408

Net real estate operating income

17,974,512

19,281,141“Real estate operating revenue” and “Real estate operating costs” are income from real estate operation (including other income from real estate operation)and corresponding expenses (such as depreciation, property tax, etc., trust fees, repair expenses and others), and are included in “Real Estate operating
revenue” and “Real estate operating costs,” respectively.

- 39 -

[Notes on per unit information]
For the year ended
December 31, 2018

For the year ended
December 31, 2019

Net assets per unit

¥50,705¥53,004

Net income per unit

¥4,041¥3,447(Note 1)
(Note 2)

Net income per unit is computed by dividing net income by the average number of investment units during the period.
Net income per unit after the adjustment of potentially dilutive units is not presented since there are no potentially dilutive units.
The basis of computation of net income per unit is as follows:

For the year ended
December 31, 2018
Net income (JPY 1,000)

For the year ended
December 31, 201916,210,434

15,290,314――

Net income [?] attributable to common investment units (JPY 1,000)

16,210,434

15,290,314

Average number of investment units during period (units)

4,010,847

4,434,849

Amount not attributable to common unitholders (JPY 1,000)[Notes on significant subsequent events]
Not applicable.

- 40 -

(10) Changes in total number of investment units issued and outstanding
The following is the status of increase (decrease) in the total number of investment units issued and outstanding and unitholders’capital for past five years through to the end of the fiscal year under review.
Total number ofinvestment units
Unitholders’ capitalissued and outstanding(JPY1M)
Date
Capital transaction
Note(Units)Increase
Increase
Balance
Balance(Decrease)(Decrease)
Capital increase throughJanuary 27, 2015
200,000
2,991,281
14,97473,999 (Note 1)
public offering of investment units
Capital increase throughFebruary 18, 2015
9,041
3,000,322
676
74,676 (Note 2)
third-party allotment of investment units
Capital increase throughJune 22, 2015
140,000
3,140,322
10,50085,177 (Note 3)
public offering of investment units
Capital increase throughJuly 23, 2015
3,905
3,144,227
292
85,470 (Note 4)
third-party allotment of investment units
Capital increase throughJanuary 20, 2016
170,000
3,314,227
13,98699,456 (Note 5)
public offering of investment units
Capital increase throughFebruary 17, 2016
7,680
3,321,907
631
100,088 (Note 6)
third-party allotment of investment units
Capital increase throughJuly 27, 2016
428,260
3,750,167
33,813
133,902 (Note 7)
public offering of investment units
Capital increase throughAugust 23, 2016
11,7403,761,907
926
134,829 (Note 8)
third-party allotment of investment units
Capital increase throughJuly 5, 2017
236,000
3,997,907
17,715
152,544 (Note 9)
public offering of investment units
Capital increase throughAugust 2, 201712,9404,010,847
971
153,516 (Note 10)
third-party allotment of investment units
Capital increase throughJanuary 23, 2019447,800
4,458,647
33,104
186,620 (Note 11)
public offering of investment units
Capital increase throughFebruary 20, 2019
3,700
4,462,347
273
186,894 (Note 12)
third-party allotment of investment units(Note 1)

New investment units were issued through public offering with an issue price per unit of ¥77,415 (issue value of ¥74,874) in order to procure funds forthe acquisition of new properties, etc.
(Note 2) New investment units were issued through third-party allotment with an issue value per unit of ¥74,874 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of other loans, or capital expenditures to maintain or improve competitiveness of existing
properties.
(Note 3) New investment units were issued through public offering with an issue price per unit of ¥77,512 (issue value of ¥75,007) in order to procure funds forthe acquisition of new properties, etc.
(Note 4) New investment units were issued through third-party allotment with an issue value per unit of ¥75,007 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of other loans, or capital expenditures to maintain or improve competitiveness of existing
properties.
(Note 5) New investment units were issued through public offering with an issue price per unit of ¥85,020 (issue value of ¥82,273) in order to procure funds forthe allocation to acquisition of new properties, etc.
(Note 6) New investment units were issued through third-party allotment with an issue value per unit of ¥82,273 in order to procure funds for allocation toacquisition of new properties, etc.
(Note 7) New investment units were issued through public offering with an issue price per unit of ¥81,536 (issue value of ¥78,956) in order to procure funds forthe allocation to acquisition of new properties, etc.
(Note 8) New investment units were issued through third-party allotment with an issue value per unit of ¥78,956 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of other loans, or repair expenses and capital expenditures to maintain or improve
competitiveness of existing properties.
(Note 9) New investment units were issued through public offering with an issue price per unit of ¥77,518 (issue value of ¥75,065) in order to procure funds forthe allocation to acquisition of new properties, etc.
(Note 10) New investment units were issued through third-party allotment with an issue value per unit of ¥75,065 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of other loans, or repair expenses and capital expenditures to maintain or improve
competitiveness of existing properties.
(Note 11) New investment units were issued through public offering with an issue price per unit of ¥76,342 (issue value of ¥73,927) in order to procure funds forthe allocation to acquisition of new properties, etc.
(Note 12) New investment units were issued through third-party allotment with an issue value per unit of ¥73,927 in order to procure funds for allocation to partof acquisitions of new properties, etc.

- 41 -

3. Reference information

For detailed information of each property and the operating results of hotels, please see the reference information below as wellas Financial Results Briefing dated today and the website of JHR (http://www.jhrth.co.jp/en/ir/library.html).

(1) Information on values of assets under management, etc.
(i) Investment status

The following outlines the investment status of JHR as of the end of the fiscal year under review.

Assetcategory

Hotel type
(Note 1)

Prefectural
location

Osaka

1.4

4,801

1.2

3,557
2,686
2,030
1,766
1,465
1,198
952
779
6,620
5,853
5,178
2,340
2,033
1,437
6,665
2,860
2,165
1,802
119,010
17,79013,253
9,195
3,187

1.0
0.8
0.6
0.5
0.4
0.3
0.3
0.2
1.9
1.7
1.5
0.7
0.6
0.4
1.9
0.8
0.6
0.5
33.9
5.1
3.8
2.6
0.9

3,527
2,680
2,022
1,822
1,452
1,194
941
769
6,561
5,792
5,161
2,340
2,022
1,419
6,650
2,833
2,139
1,798
121,41063,42917,486
13,205
9,162
3,178

0.8
0.6
0.5
0.4
0.3
0.3
0.2
0.2
1.6
1.4
1.2
0.6
0.5
0.3
1.6
0.7
0.5
0.4
29.2
15.3
4.2
3.2
2.2
0.8

17,4875.0

17,3274.2

4,106
15,605
10,442
9,772

1.2
4.5
3.0
2.8

4,099
15,65010,355
9,678

1.0
3.8
2.5
2.3

7,178

2.0

9,560

2.3

1,642
109,661

0.5
31.3

1,621
174,7560.4
42.0

Hotel Nikko Alivila

17,9895.1

17,904

4.3

Okinawa Marriott Resort & Spa
The Beach Tower Okinawa
Chiba
Hilton Tokyo Bay
Osaka
Hotel Keihan Universal City
Kanagawa
Hakone Setsugetsuka
Subtotal
Real estate in trust – Total

14,875
6,677
26,0985,930
3,722
75,295
303,967

4.2
1.9
7.4
1.7
1.1
21.5
86.7

14,924
6,581
26,4085,905
3,689
75,413
371,580

3.6
1.6
6.4
1.4
0.9
18.1
89.4

Deposits and other assets (Note 8)

46,58913.3

44,142

10.6

Total assets

350,556100.0

415,722100.0

Limited-service
hotel

Hokkaido
Fukuoka
Kyoto
Okinawa
Kumamoto
Nara
Tokyo
Chiba

Full-service hotel

Hiroshima
Aichi
Nara
Hyogo
Fukuoka
Kanagawa

Okinawa

Resort hotel

Holiday Inn Osaka Namba
Namba Oriental Hotel
Hotel Oriental Express Osaka Shinsaibashi
ibis Tokyo Shinjuku
CANDEO HOTELS UENO-KOEN
the b ikebukuro
Sotetsu Fresa Inn ShimbashiKarasumoriguchi (Note 4)
Comfort Hotel Tokyo Higashi Nihombashi
the b hachioji
Smile Hotel Nihombashi Mitsukoshimae
R&B Hotel Ueno Hirokoji
Hotel Vista Kamata Tokyo
the b suidobashi
dormy inn·global cabin Asakusa (Note 5)
Chisun Inn Kamata
ibis Styles Sapporo
Mercure Sapporo
HOTEL ASCENT FUKUOKA
the b hakata
Hakata Nakasu Washington Hotel Plaza
Toyoko Inn Hakata-guchi Ekimae
ibis Styles Kyoto Station
Mercure Okinawa Naha
Dormy Inn Kumamoto
Nara Washington Hotel Plaza
Subtotal
Hilton Tokyo Odaiba
Oriental Hotel tokyo bay
Hilton Tokyo Narita Airport
International Garden Hotel Narita
Hotel Francs
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel) (Note 6)
Oriental Hotel Hiroshima
Hilton Nagoya
Hotel Nikko Nara
Kobe Meriken Park Oriental Hotel
Oriental Hotel Fukuoka Hakata Station(Note 7)
Mercure Yokosuka
Subtotal

As ofDecember 31, 2019
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
26,985
6.5
14,539
3.5
2,817
0.7
7,908
1.9
6,644
1.6
6,584
1.6

4,821

Tokyo

Real
estate
in
trust

Name

As of
December 31, 2018
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)27,033
7.7
14,552
4.2
7,940
2.3
6,681
1.9
6,584
1.9

Amount(JPY1M)
Total liabilities
Total net assets

147,184
203,372- 42 -

Ratio tototal assets
(%)
42.0
58.0

Amount(JPY1M)
179,200
236,522

Ratio tototal assets
(%)
43.1
56.9

(Note 1)(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)

Hotels are categorized as limited-service hotels, full-service hotels or resort hotels according to the manner of operation.
For real estate in trust, “Total amount held” shows the amount calculated by deducting accumulated depreciation from acquisition price (including
expenses incidental to acquisition).
“Ratio to total assets” shows the ratio of total amount of each asset to total assets, rounded off to one decimal place.
Hotel Sunroute Shinbashi was renamed as Sotetsu Fresa Inn Shimbashi-Karasumoriguchi on April 23, 2019. In this report, the same shall apply
hereinafter.
Dormy Inn EXPRESS Asakusa was renamed as dormy inn·global cabin Asakusa on August 4, 2019. In this report, the same shall apply hereinafter.
ACTIVE-INTER CITY HIROSHIMA is classified in accordance with the business category of Sheraton Grand Hiroshima Hotel, its main facility.
Hotel Centraza Hakata was renamed as Oriental Hotel Fukuoka Hakata Station on April 9, 2019. In this report, the same shall apply hereinafter.
Includes machinery and equipment, tools, furniture and fixtures, construction in progress, construction in progress in trust, and intangible assets(excluding leasehold rights in trust and fixed-term leasehold of land in trust).

- 43 -

(ii) Assets under management(A) Major issues of investment securities
Not applicable(B) Real estate properties under management
Not applicable(C) Other major assets under management
A. Summary of real estate properties (in trust) under management
The following summarizes the real estate properties (in trust) under management by JHR as of the end of the fiscal year underreview.
a. Details of assets under management (acquisition price, etc.)
PropertyNo.

Name

Acquisition
price(JPY1M)(Note 2)Carrying
amountat end ofperiod(JPY1M)(Note 3)

Appraisalvalue
at end ofperiod(JPY1M)(Note 4)Upper-middle

10,9009,888

16,200N

2.9

Unsecured

Grade(Note 1)

Investment
ratio
Appraisal(Acquisition
agencyprice)(Note 5)(%)(Note 6)

Collateral(Note 7)

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

Mid-price

19,90017,69937,800N

5.3

Unsecured

3

Namba Oriental Hotel

Mid-price

15,00014,64032,900N

4.0

Unsecured

4

Hotel Nikko Alivila

Luxury18,90018,16832,900N

5.0

Unsecured

5

Oriental Hotel Hiroshima

Upper-middle

4,100

4,171

4,400

N

1.1

Unsecured6

ibis Tokyo Shinjuku

Mid-price

7,243

8,013

10,200N

1.9

Unsecured

8

The Beach Tower Okinawa

Mid-price

7,610

6,587

10,100N

2.0

Unsecured

9

Hakone Setsugetsuka

Mid-price

4,070

3,696

5,310

N

1.1

Unsecured

10

Dormy Inn Kumamoto

Mid-price

2,334

2,139

3,060

J

0.6

Unsecured

12

the b suidobashi

Mid-price

1,120

1,213

2,440

N

0.3

Unsecured

13

Dormy inn·global cabin Asakusa

Economy

999

941

1,330

J

0.3

Unsecured

14

Hakata Nakasu Washington Hotel Plaza

Mid-price

2,130

2,022

4,520

N

0.6

Unsecured

15

Nara Washington Hotel Plaza

Mid-price

2,050

1,800

2,440

N

0.5

Unsecured16

R&B Hotel Ueno Hirokoji

Economy

1,720

1,822

2,010

J

0.5

Unsecured

18

Comfort Hotel Tokyo Higashi Nihombashi

Economy

3,746

3,527

5,830

J

1.0

Unsecured

22

Smile Hotel Nihombashi Mitsukoshimae

Economy

2,108

2,022

3,160

J

0.6

Unsecured24

Toyoko Inn Hakata-guchi Ekimae

Economy

1,652

1,419

2,750

T

0.4

Unsecured

25

Hotel Vista Kamata Tokyo

Economy

1,512

1,453

1,990

T

0.4

Unsecured

26

Chisun Inn Kamata

Economy

823

772

1,430

T

0.2

Unsecured

29

Hotel Keihan Universal City

Mid-price

6,000

5,905

13,900R

1.6

Unsecured

30

Sotetsu Fresa Inn ShimbashiKarasumoriguchi

Mid-price

4,800

4,802

8,950

D

1.3

Unsecured

31

Hilton Tokyo Bay

Luxury26,05026,42240,500D

7.0

Unsecured32

ibis Styles Kyoto Station

Mid-price

6,600

6,675

10,900D

1.8

Unsecured33

ibis Styles Sapporo

Mid-price

6,797

6,601

11,200N

1.8

Unsecured34

Mercure Sapporo

Mid-price

6,000

5,857

11,000N

1.6

Unsecured35

Mercure Okinawa Naha

Mid-price

3,000

2,887

7,190

N

0.8

Unsecured37

the b ikebukuro

Mid-price

6,520

6,608

7,350

N

1.7

Unsecured39

the b hachioji

Mid-price

2,610

2,699

2,790

N

0.7

Unsecured40

the b hakata

Mid-price

2,300

2,361

4,610

N

0.6

Unsecured

41

Hotel Francs

Mid-price

3,105

3,178

4,140

D

0.8

Unsecured42

Mercure Yokosuka

Mid-price

1,650

1,658

3,590

D

0.4

Unsecured

43

Okinawa Marriott Resort & Spa

Upper-middle

14,95015,106

17,900N

4.0

Unsecured

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Luxury17,32017,436

21,900D

4.6

Unsecured

45

CANDEO HOTELS UENO-KOEN

Mid-price

6,705

6,652

7,650

D

1.8

Unsecured

46

Oriental Hotel Fukuoka Hakata Station(Note 8)Upper-middle

7,197

9,847

15,300D

1.9

Unsecured

47

Holiday Inn Osaka Namba

Mid-price

27,00027,12627,200N

7.2

Unsecured

48

HOTEL ASCENT FUKUOKA

Economy

4,925

5,161

6,620

D

1.3

Unsecured- 44 -

Property
No.

Grade
(Note 1)

Acquisition
price(JPY1M)(Note 2)Carrying
amountat end ofperiod(JPY1M)(Note 3)

Appraisalvalue
at end ofperiod(JPY1M)(Note 4)Luxury15,25015,651

15,700D

4.1

Unsecured

Upper-middle

13,175

13,49913,700N

3.5

UnsecuredMid-price

9,125

9,245

9,660

N

2.4

Unsecured

Upper-middle

10,373

10,442

10,900D

2.8

Unsecured

Name

49

Hilton Nagoya

50

Hilton Tokyo Narita Airport

51

International Garden Hotel Narita

52

Hotel Nikko Nara

53

Hotel Oriental Express Osaka Shinsaibashi

54

Hilton Tokyo Odaiba(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)Collateral(Note 7)

Mid-price

2,738

2,829

2,990

D

0.7

Unsecured

Upper-middle

62,40063,652

69,500N

16.7

Unsecured

374,508374,314525,910

Total(Note 1)

Investment
ratio
Appraisal(Acquisition
agencyprice)(Note 5)(%)(Note 6)100.0

JHR categorizes hotels into the four grade classes “Luxury,” “Upper-middle,” “Mid-price” and “Economy” mainly from the perspective of average
daily rate, etc.
“Acquisition price” is the acquisition price stated on the purchase and sale agreement for beneficial interest in trust, etc. (consumption tax, local
consumption tax and the acquisition expense such as broker’s fee are not included). The acceptance prices are indicated for the properties that havebeen accepted through the merger with the former JHR.
“Carrying amount at end of period” is the book value at the end of the fiscal year under review, and includes not only the amounts for real estate intrust, but also machinery and equipment, tools, furniture and fixtures, construction in progress in trust, and intangible assets.
“Appraisal value at end of period” is the appraisal value at the end of the fiscal year under review as the date of appraisal, in accordance with the asset
valuation methods and standards provided in JHR’s Articles of Incorporation and the regulations set forth by The Investment Trusts Association, Japan.
Under “Appraisal agency,” the letters indicate the appraisers for the properties as follows:N:
Nihon Fudosan Kenkyusho (Japan Real Estate Institute)J:
JLL Morii Valuation & Advisory K.K.
T:
The Tanizawa Sōgō Appraisal Co., Ltd.
R:
Rich Appraisal Institute Co., Ltd.
D:DAIWA REAL ESTATE APPRAISAL CO., LTD.
“Investment ratio” is the ratio of acquisition price of the respective asset held at the end of the fiscal year under review to the total amount of acquisition
price of all assets held at the end of the fiscal year under review, rounded off to one decimal place.
“Collateral” is whether or not a pledge has been established for the beneficial interest in trust.
The grade for Oriental Hotel Fukuoka Hakata Station was changed from “Mid-price” to “Upper-middle” following the reopening after renovation in
April 2019.
The omitted property numbers are the property numbers of assets that have been transferred.

b. Details of assets under management (change of tenants in portfolio)
The following is the changes in total number of tenants, total leasable area, total leased area, and occupancy rate of real estate
properties (in trust) under management for the past five years.

Total number of tenants(Note 1)
Total leasable area
(Note 2)
Total leased area
(Note 3)
Occupancy rate
(Note 4)(Note 1)

(Note 2)

(Note 3)(Note 4)End of 16th period
December 2015

End of 17th period
December 2016

End of 18th period
December 2017

End of 19th period
December 2018

End of 20th period
December 2019

113

128

131

126

125

493,758.78 m2

587,481.02 m2

687,124.54 m2

678,714.48 m2

746,329.68 m2

493,138.06 m2

587,050.94 m2

686,694.46 m2

677,863.00 m2

745,227.67 m2

99.9%

99.9%

99.9%

99.9%

99.9%

Total number of tenants indicates the total number of tenants based on the lease contracts for respective real estate in trust (excluding tenants of parking
lots, etc.) as of the end of each fiscal period. However, for properties for which master lease contracts under the pass-through scheme are concluded inwhich trustee receives the same amount of rents, etc. from end tenants as is in principle, the total number of end tenants (excluding tenants of parking
lots, etc.) is indicated.
In principle, total leasable area represents leasable area of the building, which does not include leasable area of land (including parking lots on ground),based on a lease contract or plan for each real estate in trust. For properties in which the leased area is not described in the lease contract, leasable area
represents the area described in the registration of the building. Furthermore, when the leasable area in the lease contract is indicated in tsubo units, thefigure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo). In this report, the same shall apply hereinafter.
In principle, leased area represents the leased area described in the lease contract of the building. For properties in which the leased area is not describedin the lease contract, leased area shows the area described in the registration of the building. Furthermore, when the leased area in the lease contract isindicated in tsubo units, the figure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo). However, forproperties for which master lease contracts under the pass-through scheme are concluded in which trustee receives the same amount of rents, etc. fromend tenants as is in principle, the total area for which lease contracts have been concluded with end tenants and which are actually leased is indicated.
The same shall apply hereinafter.
Occupancy rate indicates the percentage of leased area to leasable area of respective real estate properties in trust as of the end of each fiscal period.
The same shall apply hereinafter.

- 45 -

c. Details of assets under management (information on major real estate)
Major real estate of which total annual rent accounts for 10% or more of the total annual rent (Note 1) of the entire portfolio is asfollows.
Property name

Total number oftenants

Hilton Tokyo Odaiba

Total annual rent

1

Fixed rent
¥3,100
millionTotal leased area

64,907.76 m2

Total leasable
area

64,907.76 m2

Variable rent
- (Note 1)(Note 1)

(Note 2)

Change in occupancy rate
for the past five years (Note 2)
December 2015

100.0%

December 2016

100.0%

December 2017100.0%

December 2018

100.0%

December 2019100.0%“Total annual rent” is the amount of (i) the amount arrived at when monthly fixed rent (rent of the building itself only, excluding common area
maintenance charges and signage and parking usage fees; not factoring in any change in rent during the fiscal year) in lease contracts at the end of the
fiscal year under review is multiplied by 12, plus (ii) assumed amounts of revenue sharing, variable rent or income from management contracts for full
year. The assumed full-year amounts of variable rent of the two properties acquired during the fiscal year ended December 31, 2019 (Hotel Oriental
Express Osaka Shinsaibashi and Hilton Tokyo Odaiba) are rationally calculated assuming that they were held throughout the fiscal year, and variable
rent for Hilton Tokyo Odaiba is not expected for the fiscal year ended December 31, 2019 (20th period).
Occupancy rates prior to December 2018 are figures provided by the seller.

d. Details of assets under management (NOI, etc.)

1

Kobe Meriken Park Oriental Hotel

Variable/Fixed

Real estate
operating revenue(JPY 1,000)
1,256,795

2

Oriental Hotel tokyo bay

Variable/Fixed

1,883,870

1,765,658

1,357,731

3

Namba Oriental Hotel

Variable/Fixed

1,406,836

1,299,612

1,139,547

4

Hotel Nikko Alivila

Variable/Fixed

1,977,644

1,829,606

1,512,840

5

Oriental Hotel Hiroshima

Variable/Fixed

472,555

428,306

340,288

6

ibis Tokyo Shinjuku

Management contract

704,537

497,729385,256

8

The Beach Tower Okinawa

Fixed

511,028

468,191

335,312

9

Hakone Setsugetsuka

Fixed294,957

271,037

177,854

10

Dormy Inn Kumamoto

Fixed

194,460

173,568

130,77012the b suidobashi

Variable/Fixed

103,848

89,84061,79313

Dormy inn·global cabin Asakusa

Fixed

63,99554,89941,35914

Hakata Nakasu Washington Hotel Plaza (Note 4)

Fixed

240,000

224,000

198,000

15

Nara Washington Hotel Plaza (Note 4)

Fixed

151,000

134,000

97,000

16

R&B Hotel Ueno Hirokoji

97,292

83,017

66,69418

Comfort Hotel Tokyo Higashi Nihombashi

287,814

256,887

220,539

22

Smile Hotel Nihombashi Mitsukoshimae24

Toyoko Inn Hakata-guchi Ekimae

25

Hotel Vista Kamata Tokyo

26

Chisun Inn Kamata

29

Hotel Keihan Universal City

30

Sotetsu Fresa Inn Shimbashi-Karasumoriguchi

31

Hilton Tokyo Bay

32

ibis Styles Kyoto Station

Fixed
Variable/Fixed(Note 5)
Variable/Fixed(Note 5)
Fixed
Variable/Fixed(Note 5)
Variable
Variable/Fixed(Note 5)
Variable/Fixed(Note 5)
Variable/Fixed(Note 5)
Management contract

33

ibis Styles Sapporo

Management contract

34

Mercure Sapporo

35

Mercure Okinawa Naha

37

PropertyNo.

Name

Rent type(Note 1)

NOI
(Note 2)(JPY 1,000)
1,003,298

NOI after depreciation(Note 3)
(JPY 1,000)
669,037

154,623

138,482

118,017

141,039

127,703

109,484

112,476

98,166

72,95180,87673,891

62,713746,118

668,997583,302446,477

383,039

361,0932,220,187

1,938,334

1,765,290

459,002412,032

373,486

661,063

525,459442,798

Management contract

797,832

523,042

430,996

Management contract

342,013

270,481

209,569

the b ikebukuro

Variable/Fixed

356,173

328,770

296,70539

the b hachioji

Variable/Fixed

185,672

160,629

129,08440

the b hakata

Variable/Fixed

228,379

215,725

194,131

41

Hotel Francs

Fixed

300,000

237,023

193,824

42

Mercure Yokosuka

Variable

360,970

250,373

212,998

43

Okinawa Marriott Resort & Spa
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Variable/Fixed

937,465

853,261

569,108

Variable/Fixed

1,624,836

1,182,632

966,13344- 46 -

Property
No.

Name

Rent type(Note 1)

NOI
(Note 2)(JPY 1,000)
323,962

NOI after depreciation(Note 3)
(JPY 1,000)
283,94245

CANDEO HOTELS UENO-KOEN

46

Oriental Hotel Fukuoka Hakata Station (Note 6)

Variable/Fixed

740,062494,731(65,231)47

Holiday Inn Osaka Namba

Variable/Fixed

967,957

920,119

728,343

48

HOTEL ASCENT FUKUOKA

Fixed447,198

302,154

266,423

49

Hilton Nagoya

Variable

1,452,768

746,661

591,86050

Hilton Tokyo Narita Airport

Variable/Fixed

912,491

826,763621,261

51

International Garden Hotel Narita

Variable/Fixed

604,422560,153

422,31152

Hotel Nikko Nara
Hotel Oriental Express Osaka Shinsaibashi(Note 7)
Hilton Tokyo Odaiba (Note 8)
Total

Variable/Fixed

625,869

576,007434,069

53
54(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)Fixed

Real estate
operating revenue(JPY 1,000)
349,975

Variable/Fixed

109,991

107,162

95,381

Variable/Fixed

2,264,830
28,278,550

2,261,016
24,087,502

2,075,257
19,281,141

Under “Rent type,” “Fixed” is a property under a fixed rent structure, “Variable” is a property under a variable rent structure, “Management contract”
is a property under a management contract structure, and “Variable/Fixed” is a property under a combination of fixed and variable rent structures.
NOI = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement
obligations expenses
NOI after depreciation (net operating income) = Real estate operating revenue − Real estate operating costs
For Hakata Nakasu Washington Hotel Plaza and Nara Washington Hotel Plaza, consent on disclosure of rent in units of thousand yen has not beenobtained from the lessees and is thus rounded down to the nearest million yen.
For Comfort Hotel Tokyo Higashi Nihombashi, Smile Hotel Nihombashi Mitsukoshimae, Hotel Vista Kamata Tokyo, Hotel Keihan Universal City,
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi and Hilton Tokyo Bay, the rent structure is one that has set not only fixed rent, but also partly has rent
based on a revenue sharing structure.
Oriental Hotel Fukuoka Hakata Station (formerly Hotel Centraza Hakata) underwent large-scale renovation work suspended its hotel operation from
October 1, 2018 through the reopening on April 9, 2019.
Hotel Oriental Express Osaka Shinsaibashi was acquired on February 1, 2019. Figures indicate numbers after acquisition.
Hilton Tokyo Odaiba was acquired on April 8, 2019. Figures indicate numbers after acquisition.
The property numbers of assets that were sold before the end of the previous fiscal year are intentionally omitted.

- 47 -

B. Income statements for individual real estate properties (in trust) under management
The following are the individual income statements for real estate properties (in trust) under management for the fiscal year underreview (from January 1, 2019 to December 31, 2019). Figures are rounded down to the nearest thousand yen in principle, but areotherwise noted if circumstances do not allow for the figures to be stated in units of thousand yen.
Property No.

-

Property name

Portfolio total(Note 1)

1
Kobe
Meriken Park
Oriental Hotel

2

3

4

5

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Hotel Nikko
AlivilaOriental Hotel
Hiroshima

Number of operating days

-

365

365

365

365

365

(A) Real estate operating revenue subtotal

28,278,550

1,256,795

1,883,870

1,406,836

1,977,644

472,555

Fixed rent

15,931,097

645,900

631,600

797,900

804,100

341,504

Variable rent

11,176,890

609,602

1,252,270

608,936

1,173,544

131,051

Other revenue

1,170,561

1,293

-

-

-

-

(B) Real estate operating costs subtotal

8,997,408

587,758

526,138

267,288464,804

132,267

Land lease and other rent expenses

898,207

192,709--

84,149-Property taxes

1,658,930

52,313113,008

100,634

57,415

41,213

Outsourcing expenses

653,041

960

960

960

1,920

960

Nonlife insurance

51,030

3,243

3,232

1,448

2,528

1,064

Depreciation and amortization

4,557,414

319,683

395,925

158,949

307,081

87,806

Loss on retirement of noncurrent assets

246,890

14,577

12,001

1,114

9,684

212

Other costs

931,892

4,271

1,010

4,180

2,024

1,010

(C) Net real estate operating income = (A) − (B)19,281,141

669,037

1,357,731

1,139,547

1,512,840

340,288(Reference) Occupancy rate

99.9%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

125

1

1

1

1

1

Property No.

6

8

ibis
The Beach Tower
Tokyo Shinjuku
Okinawa(Note 1)

Property name

9

10

12

13

HakoneSetsugetsuka

Dormy Inn
Kumamoto

the bsuidobashi

Dormy inn·global
cabin Asakusa

Number of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

704,537

511,028

294,957

194,460

103,848

63,995

Fixed rent

103,778

511,008

294,340

194,460

84,99963,395

Variable rent

538,163---

18,848-Other revenue

62,594

20

617

-

-

600

(B) Real estate operating costs subtotal

319,281

175,716

117,103

63,68942,055

22,635Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

35,48839,57521,96019,133

8,140

6,093

Outsourcing expenses

102,888

-

-

-

1,200

1,200

Nonlife insurance

585

1,114

648

430

186

109

Depreciation and amortization

112,473

132,879

93,18342,79728,047

13,540Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

67,845

2,147

1,310

1,327

4,481

1,692

(C) Net real estate operating income = (A) − (B)385,256

335,312

177,854

130,770

61,79341,359(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

4

1

1

1

1

1

- 48 -

Property No.

14

15

Hakata Nakasu
Nara
Washington Hotel Washington Hotel
Plaza
Plaza
(Note 2)
(Note 2)
Number of operating days
365
365

Property name

16

18

22

24

R&B Hotel
Ueno
Hirokoji

Comfort HotelTokyo Higashi
Nihombashi

Smile Hotel
Nihombashi
Mitsukoshimae

Toyoko Inn
Hakata-guchi
Ekimae

365

365

365

365

(A) Real estate operating revenue subtotal

240,000

151,000

97,292287,814

154,623

141,039

Fixed rent

240,000

146,000

96,504

259,721

134,400

141,039

Variable rent

-

-

-

16,887

20,223-

Other revenue

0

4,000

787

11,205--(B) Real estate operating costs subtotal

42,00053,00030,59867,27436,60531,554

Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

12,00011,00012,232

26,797

12,968

10,773

Outsourcing expenses

1,000

3,000

840

1,614

1,200

1,080

Nonlife insurance

0

0

169

423

189

241

Depreciation and amortization

25,00034,00016,32336,34820,465

18,219Loss on retirement of noncurrent assets

0

1,000

-

-

-

-

Other costs

2,000

1,000

1,032

2,091

1,782

1,240

(C) Net real estate operating income = (A) − (B)198,000

97,00066,694

220,539

118,017

109,484(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

2

1

2

1

1

Property No.

25

26

29

30

31

32

Property name

Hotel Vista
Kamata Tokyo

Chisun Inn
KamataHotel Keihan
Universal City

Sotetsu Fresa Inn
ShimbashiKarasumoriguchi

HiltonTokyo Bay

ibis Styles
Kyoto Station(Note 1)365

365746,118

446,477

Number of operating days

365

365

(A) Real estate operating revenue subtotal

112,476

80,876

Undisclosed

365

2,220,187

459,002

Undisclosed

Fixed rent

93,534-

Variable rent

18,84280,876

Other revenue

100-(B) Real estate operating costs subtotal

39,525

18,162

162,815

85,384454,896

85,515Land lease and other rent expenses--

21,110-127,277-

Property taxes

11,851

4,774

45,13625,890137,399

19,811

Outsourcing expenses

1,200

1,080

5,580

4,710

11,372

23,797

Nonlife insurance

223

96

1,489

351

3,209

415

Depreciation and amortization

25,215

11,177

85,69421,946173,043

38,545

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

1,034

1,033

3,804

32,486

2,594

2,945

(C) Net real estate operating income = (A) − (B)72,951

62,713

583,302361,093

1,765,290

373,486(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

1

1

4

1

2

- 49 -(Note 3)
Undisclosed(Note 3)
Undisclosed(Note 3)

298,004

365

114,41234,060(Note 3)
Undisclosed(Note 3)
Undisclosed(Note 3)42,334
413,0673,600

Property No.

33

34

35

37

39

40

Property name

ibis Styles
Sapporo(Note 1)

MercureSapporo(Note 1)

MercureOkinawa Naha
(Note 1)the bikebukuro

the bhachioji

the bhakataNumber of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

661,063

797,832

342,013356,173

185,672

228,379

Fixed rent

21,29164,002-

221,181

117,017

89,522

Variable rent

596,896

612,577

340,503132,855

62,084

138,857

Other revenue

42,875

121,252

1,510

2,136

6,570

-

(B) Real estate operating costs subtotal

218,265

366,836

132,444

59,46756,58834,248Land lease and other rent expenses

-

40

315

-

-

-

Property taxes

36,97449,46823,166

21,683

21,3039,664

Outsourcing expenses

54,352

134,173

43,222

1,200

1,200

1,200

Nonlife insurance

825

997

667

400

435

256

Depreciation and amortization

82,661

92,04660,912

32,06431,545

21,594

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

43,451

90,110

4,159

4,119

2,104

1,533

(C) Net real estate operating income = (A) − (B)442,798

430,996

209,569

296,705

129,084

194,131(Reference) Occupancy rate

98.3%

95.4%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

4

12

1

4

11

2

45

46

Property No.

41

Property name42

43

MercureYokosuka

Hotel Francs

44

Okinawa
MarriottResort & Spa

ACTIVE-INTERCITY
HIROSHIMACANDEOHOTELS
UENO-KOEN

Oriental Hotel
Fukuoka Hakata
Station(Note 4)365

365349,975

740,062

Number of operating days

365

365

365

365

(A) Real estate operating revenue subtotal

300,000

360,970

937,465

1,624,836

Fixed rent

300,000-

550,000

809,785

Variable rent-

315,983

387,465

532,340

Undisclosed(Note 3)
Undisclosed

400,000
340,062

Other revenue-

44,987-282,710(B) Real estate operating costs subtotal

106,175

147,972

368,357

658,703

66,032805,293

Land lease and other rent expenses

-

-

-

-

-

222,206

Property taxes

58,55835,231

78,528

118,523

23,014

18,154

Outsourcing expenses

1,800

20,2672,400

94,364

1,200

3,000

Nonlife insurance

918

1,771

2,322

3,364

473

1,125

Depreciation and amortization

43,19937,375282,190

216,499

40,020352,796

Loss on retirement of noncurrent assets

-

-

1,963

-

-

205,559

Other costs

1,699

53,326953

225,951

1,324

2,451

(C) Net real estate operating income = (A) − (B)193,824

212,998

569,108

966,133

283,942(65,231)(Reference) Occupancy rate

100.0%

100.0%

100.0%

99.6%

100.0%

100.0%(Reference) Number of tenants

1

1

1

38

1

1

- 50 -(Note 3)-

Property No.

47

48

49

50

51

52

Property name

Holiday Inn
Osaka Namba

HOTEL
ASCENTFUKUOKA

Hilton Nagoya

Hilton Tokyo
Narita Airport

International
Garden Hotel
NaritaHotel Nikko Nara

Number of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

967,957

447,198

1,452,768

912,491

604,422625,869

Fixed rent

576,000

334,626

444,000

336,000

420,000

Variable rent

391,957-

468,491

268,422205,360

Other revenue-

112,572--509(B) Real estate operating costs subtotal

239,614

180,774

860,907291,229

182,111

191,800

Land lease and other rent expenses-

27,998222,401---

Property taxes

44,32831,576103,22079,01539,511

40,572

Outsourcing expenses

1,560

14,638100,346

2,520

2,280

2,760

Undisclosed(Note 3)
Undisclosed(Note 3)
Undisclosed(Note 3)Nonlife insurance

1,109

482

3,261

3,127

1,424

2,740

Depreciation and amortization

191,776

35,283

154,800

205,502

137,842

141,937

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

839

70,795

276,877

1,063

1,053

3,789

(C) Net real estate operating income = (A) − (B)728,343

266,423591,860

621,261

422,311434,069(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

6

4

1

1

1

Property No.

53

54

Property name

Hotel Oriental
Express Osaka
Shinsaibashi(Note 5)

Hilton Tokyo
Odaiba(Note 6)

Number of operating days

334

268

(A) Real estate operating revenue subtotal

109,991

2,264,830

Fixed rent

102,700

2,264,830

Variable rent

7,055

-

Other revenue

235

0(B) Real estate operating costs subtotal

14,609189,572

Land lease and other rent expenses--

Property taxes--

Outsourcing expenses

1,980

87

Nonlife insurance

169

3,114

Depreciation and amortization

11,781

185,758

Loss on retirement of noncurrent assets--

Other costs

678

611

(C) Net real estate operating income = (A) − (B)95,381

2,075,257(Reference) Occupancy rate

100.0%

100.0%(Reference) Number of tenants11(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

Variable rent includes income from management contracts. For details of the management contract, please refer to “C. Overview of the hotel business;
a. Rent structures of hotels with variable rent, management contract or revenue sharing” on page 52.
Consent on disclosure of rent in units of thousand yen has not been obtained from the lessee and is thus rounded down to the nearest million yen.
Rent income, etc. is not disclosed as consent on disclosure has not been obtained from the tenant with whom a lease contract has been concluded andthus considered to be a case where disclosure cannot be made due to unavoidable circumstances.
Oriental Hotel Fukuoka Hakata Station (formerly Hotel Centraza Hakata) underwent large-scale renovation work suspending its hotel operation from
October 1, 2018 through the reopening on April 9, 2019.
Hotel Oriental Express Osaka Shinsaibashi was acquired on February 1, 2019.
Hilton Tokyo Odaiba was acquired on April 8, 2019.
The property numbers of assets that were sold before the end of the previous fiscal year are intentionally omitted.

- 51 -

C. Overview of the hotel businessa. Rent structures of hotels with variable rent, management contract or revenue sharing
Property
No.

HMJ
Group
Hotels

The
Accor
Group
Hotels

The
Ishin
Group
HotelsName

Rent type

Method of calculating variable rent and income from management contracts

Variable/Fixed

When total GOP of The Five HMJ hotels exceeds GOP base amount(set at ¥3,351 million / year), the amount arrived at when the amountexceeding GOP base amount is multiplied by 85.0%.
GOP base amount is set individually for each hotel for such purposes as
payment of variable rent from each hotel.
Hotel name
Annual GOP base amount
Kobe Meriken Park Oriental Hotel¥599,900 thousand
Oriental Hotel tokyo bay¥693,200 thousand
Namba Oriental Hotel¥832,200 thousand
Hotel Nikko Alivila¥995,700 thousand
Oriental Hotel Hiroshima¥230,000 thousand
Total¥3,351,000 thousand
When hotel GOP exceeds GOP base amount (set at ¥700 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 90.0%

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

43

Okinawa Marriott Resort & Spa

Variable/Fixed

44

Sheraton Grand Hiroshima Hotel(ACTIVE-INTER CITY HIROSHIMA)

Variable/Fixed(Note 1)

46

Oriental Hotel Fukuoka Hakata Station

Variable/Fixed

47

Holiday Inn Osaka Namba

Variable/Fixed

50

Hilton Tokyo Narita Airport

Variable/Fixed

51

International Garden Hotel Narita

Variable/Fixed

52

Hotel Nikko Nara

Variable/Fixed

53

Hotel Oriental Express Osaka
Shinsaibashi

Variable/Fixed

54

Hilton Tokyo Odaiba

Variable/Fixed

6

ibis Tokyo Shinjuku

32

ibis Styles Kyoto Station

33

ibis Styles Sapporo

34

Mercure Sapporo

35

Mercure Okinawa Naha

42

Mercure Yokosuka

12

the b suidobashi

37

the b ikebukuro39

the b hachioji

40

the b hakata

When hotel GOP exceeds GOP base amount (set at ¥468 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 82.5%
FY2019: When hotel GOP exceeds GOP base amount (set at ¥425
million / year), the amount arrived at when the amount exceeding GOP
base amount is multiplied by 90.0%
FY2020 and after: When hotel GOP exceeds GOP base amount (set at¥442 million / year), the amount arrived at when the amount exceeding
GOP base amount is multiplied by 98.0%.
When hotel GOP exceeds GOP base amount (set at ¥650 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 92.5%
When hotel GOP exceeds GOP base amount (set at ¥550 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 86.5%
When hotel GOP exceeds GOP base amount (set at ¥360 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 98.0%
When hotel GOP exceeds GOP base amount (set at ¥470 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 91.5%
FY2019: When hotel GOP for July 2019 to December 2019 exceeds
GOP base amount (set at ¥64 million / year), the amount arrived at when
the amount exceeding GOP base amount is multiplied by 91.0%
FY2020 and after: When hotel GOP exceeds GOP base amount (set at¥128 million / year), the amount arrived at when the amount exceeding
GOP base amount is multiplied by 91.0%
FY2019: When hotel AGOP (Note 2) exceeds AGOP base amount (set at¥2,450 million / year), the amount arrived at when the amount exceeding
AGOP base amount is multiplied by 30.0%
FY2020 and FY2021: When hotel AGOP exceeds AGOP base amount(set at ¥2,970 million / year), the amount arrived at when the amountexceeding AGOP base amount is multiplied by 30.0%
FY2022 and after: When hotel AGOP exceeds AGOP base amount (set at¥1,660 million / year), the amount arrived at when the amount exceeding
AGOP base amount is multiplied by 98.0%
Amount equivalent to GOP

Management
contract(Note 3)

Amount equivalent to GOP
Amount equivalent to GOP
Amount equivalent to GOP
Amount equivalent to GOP

VariableAmount linked to GOP (Note 4)

Variable/Fixed

Amount linked to GOP (Note 4)- 52 -

Property
No.

Other
hotelswithvariablerentorrevenuesharing

Name

18

Comfort Hotel Tokyo Higashi
Nihombashi

22

Smile Hotel Nihombashi Mitsukoshimae

25

Hotel Vista Kamata Tokyo

26

Chisun Inn Kamata

29

Hotel Keihan Universal City

30

Sotetsu Fresa Inn ShimbashiKarasumoriguchi

31

Hilton Tokyo Bay

49

Hilton Nagoya

Rent type

Method of calculating variable rent and income from management contracts

Fixed +
Revenue sharing
Fixed +
Revenue sharing

Amount that is a certain percentage of sales exceeding the threshold(Note 4)
Amount that is a certain percentage of sales exceeding the threshold(Note 4)
When hotel total sales from January 1 to December 31 of every year
exceeds ¥270 million, the amount arrived at when the amount exceeding¥270 million is multiplied by 32.5%
Amount that is the monthly GOP multiplied by 86.0%(¥0 if the amount is below ¥0).

Fixed +
Revenue sharing
Variable
Fixed +
Revenue sharing

Amount that is a certain percentage of sales exceeding the threshold(Note 4)

Fixed +
Revenue sharing
Fixed +
Revenue sharing

Amount that is a certain percentage of sales exceeding the threshold(Note4)
Amount that is a certain percentage of sales exceeding the threshold(Note 4)

Variable

Variable rents linked to hotel sales, etc. (Note4)(Note 1)

The indicated structures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.

(Note 2)AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. The same shall apply hereinafter.

(Note 3)The management contract structure is a structure for hotel real estate owned by JHR in which JHR entrusts an operator to operate the hotel andtakes in the outcome of that business as real estate operating revenue. Specifically, JHR, the owner of the hotel real estate, concludes a management
contract with an operator and entrusts the operator with the tasks necessary to run the hotel business. JHR receives the hotel revenue achieved
from the hotel business (operation) by the operator and, at the same time, pays a management fee to the operator. This hotel revenue achieved isrecognized as “real estate operating revenue through management contract” and is equivalent to the rent that is the real estate operating revenue
under the leasing structure.
The detailed content of the contract is not disclosed as consent on disclosure has not been obtained from the lessee, etc..

(Note 4)b.

Major indicators of the hotel business
The following tables indicate the figures related to the hotel business of the HMJ Group Hotels for the operating period fromJanuary 1, 2019 through December 31, 2019 based on the data provided by the hotel lessees, etc. While these indicators of thehotels are among the indicators that show the operating status of the rooms departments, please note that they do not necessarily
represent the operating revenue and the ability to bear rent, etc. of the respective hotels, as the room rates and profit margins,etc. of the respective rooms available for sale are not uniform, among other reasons. As such, the indicators are no more than
the reference figures.
Kobe
Meriken Park
Oriental Hotel
Ratio tototal sales(%)

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Ratio tototal sales(%)

Hotel Nikko Alivila

Ratio tototal sales(%)

Oriental Hotel
Hiroshima

Ratio tototal sales(%)

Ratio tototal sales(%)

The Five HMJ
HotelsTotal/Average
Ratio tototal sales(%)

Occupancy rate

84.8%

－

98.1%

－

92.9%

－

84.8%

－

88.5%

－

90.5%

－

ADR
(Note 1)

19,337－

21,230－18,602－

30,614

－

9,932

－

21,067－

RevPAR(Note 2)

16,397－

20,837－

17,290－25,961

－

8,788

－

19,066－

Total sales

5,433

100.0

6,758

100.0

2,589

100.0

6,264

100.0

2,110

100.0

23,153

100.0

Rooms department

1,909

35.1

3,886

57.5

1,628

62.9

3,762

60.1

728

34.5

11,914

51.5

Food & beveragedepartment

3,256

59.9

2,322

34.4

116

4.5

1,856

29.6

1,314

62.3

8,863

38.3

Tenant department

77

1.4

222

3.3

796

30.8

2

0.0

23

1.1

1,120

4.8

Other departments(Note 3)

191

3.5

328

4.8

48

1.9

644

10.3

45

2.1

1,256

5.4

1,317

24.2

2,166

32.1

1,549

59.8

2,376

37.9

384

18.2

7,793

33.7

GOP

- 53 -Okinawa Marriott
Resort & Spa

Oriental Hotel
Fukuoka Hakata Holiday Inn Osaka Hilton Tokyo Narita
Namba
AirportStation(Note 5)
Ratio toRatio toRatio toRatio tototal sales
total sales
total sales
total sales
(%)
(%)
(%)
(%)

Sheraton Grand
Hiroshima Hotel(Note 4)

Ratio tototal sales
(%)
80.6%

－

91.3%

－

64.4%

－

91.2%

－

88.8%

－

82.5%

－

ADR
(Note 1)21,805－

20,676－

18,633－

16,597－

12,768

－

8,712

－

RevPAR(Note 2)

17,577－

18,872－

11,995－

15,134－

11,337

－

7,191

－

Total sales

3,693

100.0

3,442

100.0

1,994

100.0

1,784

100.0

3,431

100.0

1,541

100.0

Rooms department

2,316

62.7

1,639

47.6

968

48.5

1,735

97.2

2,268

66.1

1,215

78.8

Food & beveragedepartment

961

26.0

1,706

49.6

748

37.5

－

－

1,063

31.0

315

20.4

Tenant department

58

1.6

0

0.0

263

13.2

37

2.1

52

1.5

6

0.4

Other departments(Note 3)

358

9.7

97

2.8

16

0.8

12

0.7

48

1.4

5

0.3

1,131

30.6

1,097

31.9

803

40.3

1,074

60.2

1,092

31.8

634

41.1

Hotel Nikko Nara

Hotel Oriental
Express Osaka
Shinsaibashi

Ratio tototal sales(%)(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

The HMJ Group
HotelsTotal/Average(Note 6)
Ratio toRatio tototal sales
total sales(%)(%)

Hilton Tokyo
OdaibaRatio tototal sales(%)

Occupancy rate

79.3%

－

90.5%

－

87.9%

－

86.6%

－

ADR
(Note 1)

13,039

－

9,293

－

30,202－

18,635－

RevPAR(Note 2)

10,337

－

8,407

－

26,558－16,143－

Total sales

2,874

100.0

395

100.0

8,880

100.0

51,187

100.0

Rooms department

1,245

43.3

381

96.4

4,391

49.5

28,071

54.8

Food & beveragedepartment

1,586

55.2

14

3.5

4,093

46.1

19,34837.8

Tenant department

26

0.9

－

－

241

2.7

1,804

3.5

Other departments(Note 3)

16

0.6

0

0.1

155

1.7

1,964

3.8

694

24.2

156

39.5

2,644

29.8

17,117

33.4

GOP(Note 2)

Ratio tototal sales(%)

Occupancy rate

GOP

(Note 1)

International
Garden Hotel
Narita

ADR: Represents average daily rate, which is calculated by dividing revenue for rooms for a given period (including service charges) by the total
number of rooms sold during the period.
Service charges are 10% for Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, Oriental
Hotel Hiroshima, Okinawa Marriott Resort & Spa, ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel), International
Garden Hotel Narita, Hotel Nikko Nara and Oriental Hotel Fukuoka Hakata Station; 12% for Hilton Tokyo Narita Airport; and 13% for Hilton
Tokyo Odaiba. Holiday Inn Osaka Namba and Hotel Oriental Express Osaka Shinsaibashi do not request service charges. The same shall apply
hereinafter.
RevPAR: Represents revenue per available room, which is calculated by dividing total rooms revenue for a certain period (including service
charges) by the total number of rooms available for sale during the period. Revenue per available room equals the product of ADR and occupancy
rate. The same shall apply hereinafter
Figures for the other departments include sales of the department for sale of goods.
The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
Oriental Hotel Fukuoka Hakata Station (formerly Hotel Centraza Hakata) underwent large-scale renovation work suspending its hotel operationfrom October 1, 2018 through the reopening on April 9, 2019. The occupancy rate is calculated including the suspension period.
For Total/Average of the HMJ Group Hotels, figures are calculated by JHR as reference since no figures have been provided by the hotel lessees,etc.
The occupancy rate is rounded off to one decimal place, while ADR and RevPAR are rounded off to the nearest whole number. Sales and GOP
are rounded off to the nearest million yen. For the ratio to total sales, the ratio of sales in each department to total sales is rounded off to one
decimal place.

- 54 -

(2) Status of capital expenditures
a. Planned capital expenditures (Note 1)
The following table shows major estimated capital expenditures items for renovation work planned as of the end of the fiscal
year under review. Expenditures are expected to total ¥6,830 million, which consists of capital expenditures of ¥6,775 millionand (Note 2) repair expenses of ¥55 million, for the next fiscal year.
Estimated construction
costs
Name of property, etc.
(JPY1M)
PurposeScheduled period
Total(Location)
Totalamountamountpaid
Kobe Meriken Park Oriental Hotel(Kobe-shi, Hyogo)

Renovation of prefabricatedbathrooms in guest rooms

From April 2020
to July 2020

55－

Kobe Meriken Park Oriental Hotel(Kobe-shi, Hyogo)

Conversion of back-office to guest
rooms

From June 2020
to July 2020

120－

Hotel Nikko Alivila(Nakagami-gun, Okinawa)

Additional installation of sewage

From March 2020
to April 2020

65

9

From December 2020
to December 2020

65－

Hotel Nikko Alivila(Nakagami-gun, Okinawa)tank
Renewal of elevator controller, etc.

Dormy Inn Kumamoto(Kumamoto-shi, Kumamoto)

Renewal of air conditioning
equipment

From May 2020
to June 202070－

Hilton Tokyo Bay(Urayasu-shi, Chiba)

Renewal of air conditioning
equipment

From May 2020
to July 2020

68－

HOTEL ASCENT FUKUOKA(Fukuoka-shi, Fukuoka)

Renewal of air conditioning
equipment

From April 2020
To April 2020

89

－

57

－

57

－

50

－

120

－

55

－

92

－

From July 2020
to July 2020

64－

From September 2020
to December 2020

3,000

22

From November 2020
to March 2021

2,600

6

6,628

38

Hilton Nagoya(Nagoya-shi, Aichi)
Hilton Nagoya(Nagoya-shi, Aichi)
Hilton Tokyo Narita Airport(Narita-shi, Chiba)
Hilton Tokyo Narita Airport(Narita-shi, Chiba)
International Garden Hotel Narita(Narita-shi, Chiba)
Hilton Tokyo Odaiba(Minato-ku, Tokyo)
Hilton Tokyo Odaiba(Minato-ku, Tokyo)
Hilton Tokyo Odaiba(Minato-ku, Tokyo)
Namba Oriental Hotel(Osaka-shi, Osaka)

Work on plumbing equipment
Renewal of elevators
Renewal of telephone switchboard
Renovation of guest rooms(guestrooms on the 11th floor)
Renewal of air conditioning units
Renovation of banquet rooms
Renewal of central monitoring
deviceRenewal of guest rooms, etc.
Large-scale renovation works for
entire property
Total

From March 2020
to March 2020
From February 2020
to December 2020
From November 2020
to November 2020
From November 2020
to November 2020
From March 2020
to October 2020
From December 2019
to February 2020

(Note 1) New construction and renewal work includes that for buildings, attached facilities, etc. as well as items classified as furniture and fixtures. The scheduled
period of the above planned renovation work and whether or not the renovation work will be performed may change.
(Note 2) The planned amount of large-scale renovation works for the entire property of Namba Oriental Hotel is not included in the capital expenditures for the
next fiscal period due to the construction being scheduled for completion in March 2021.

- 55 -

b. Capital expenditures during the year (Note)
Major construction work conducted by JHR during the fiscal year under review that represents capital expenditures is as below.
Capital expenditures for the fiscal year under review totaled ¥6,767 million, and repair expenses that were accounted for as
expense in the fiscal year under review totaled ¥41 million. In aggregate, ¥6,809 million of construction work was carried out.
Name of property, etc.
Construction costs
Purpose
Period(Location)(JPY1M)
R&B Hotel Ueno Hirokoji
From October 2018
Renewal of air conditioning units
53(Taito-ku, Tokyo)
to January 2019
Hilton Tokyo Bay
From December 2018Land preparation for parking lot
419(Urayasu-shi, Chiba)
to May 2019
Hilton Tokyo Bay
Renewal of disaster prevention
From September 201933
(Urayasu-shi, Chiba)
equipment
to December 2019
Okinawa Marriott Resort & Spa
From May 2019
Renovation of restaurants
298(Nago-shi, Okinawa)
to July 2019
Okinawa Marriott Resort & Spa
Replacement of air-conditioning
From November 201912
(Nago-shi, Okinawa)
facilities for guestrooms
to December 2019
Oriental Hotel Fukuoka Hakata Station
Large-scale renovation works for entire From October 2018
(formerly Hotel Centraza Hakata)
3,147
property
to April 2019
(Fukuoka-shi, Fukuoka)
Renovation of guest rooms
Holiday Inn Osaka Namba
From May 2019
(guestrooms on the 10th and 11th
72
(Osaka-shi, Osaka)
to May 2019floors)Holiday Inn Osaka Namba
Renovation of guest rooms
From December2019
72(Osaka-shi, Osaka)(guestrooms on the 8th and 9th floors)
to December 2019
Hilton Nagoya
From August 2018
Renewal of water supply piping
16(Nagoya-shi, Aichi)
to March 2019
From July 2019
Hilton Nagoya
Renewal of water supply piping
25(Nagoya-shi, Aichi)
to November 2019
Total

4,149

(Note) New construction and renewal work include those for buildings, attached facilities, etc. as well as items classified as furniture and fixtures.

- 56 -