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.
July 1, 2020
REIT Issuer:
Japan Hotel REIT Investment Corporation (TSE code: 8985)
Kaname Masuda, Executive Director
Asset Management Company:
Japan Hotel REIT Advisors Co., Ltd.
Hisashi Furukawa, President & CEO
Contact:
Makoto Hanamura
Executive Director
Head of Planning Group, Operations Division
TEL: +81-3-6422-0530

Notice Concerning Sale of Asset(Sotetsu Fresa Inn Shimbashi-Karasumoriguchi)This is to inform you that Japan Hotel REIT Advisors Co., Ltd., the asset management company of Japan Hotel REIT
Investment Corporation (hereinafter called “JHR”), resolved today to sell the asset under management (hereinaftercalled the “Sale”) and completed the sale as below on behalf of JHR.
1.

Summary of Sale
Name of assets-to-be-soldSotetsu Fresa Inn Shimbashi-Karasumoriguchi

Type of assets-to-be-soldReal estate beneficial interest in trust

Acquisition date

September 19, 2012

Asset type

Hotel

Hotel type (*1)

Limited-service hotel

Grade (*2)

Mid-price

Sale price (*3)

JPY8,000M

Book value (*4)

JPY4,791M

Gain on sale (forecast) (*5)

JPY3,156M

Appraisal value (*6)

JPY8,950M

Contract dateJuly 1, 2020

Closing dateJuly 1, 2020

Buyer

Undisclosed (*7)(*1) JHR has categorized its hotels into limited-service hotels, full-service hotels, and resort hotels in accordance with theirtypes of operations.
(*2) Based on ADR, etc., JHR has classified its hotels into four categories as luxury, upper middle, mid-price, andeconomy.
(*3) Excludes settlement amount of fixed asset tax and city planning tax, etc., as well as selling expenses, consumption tax
and local consumption tax.
(*4) The book value (forecast) as of the end of June 2020 is rounded off to the nearest JPY1M.
(*5) The gain on sale (forecast) of the properties are calculated based on the sale price, assumed book value (forecast) as ofthe end of June 2020, and expenses related to the sale (forecast). Also, amounts are rounded down to the nearest
JPY1M.
(*6) Appraisal value is as of December 31, 2019.
(*7) Undisclosed as the consent of the buyer has not been obtained.

12.

Rationale for Sale
As described in “Notice Concerning Revision of Operating Forecast and Forecast of Dividend for Fiscal YearEnding December 2020 (21st Period)” dated on March 25, 2020, the business environment in the hotel market
has been challenging due to the global spread of COVID-19, and at present, it has been still difficult to forecast
the impact on our hotel performance.
Under such circumstances where the outlook for revenue is uncertain, JHR judged that it would be appropriate torecognize a part of the unrealized gains on its owned assets as gain on sale of properties and improve liquidity onhand. Therefore, JHR decided to sell the asset.

3.

Use of Proceeds from Sale and allocation of revenue
As for the use of sales proceeds, we plan to improve liquidity on hand through keeping the proceeds as cash onhand. Also, we consider allocating the proceeds to capital expenditures such as guest room renovation, etc. andfunds for acquiring new properties in the future, etc., depending on the situation.
Furthermore, we expect the gain on sale of properties in the amount of JPY3,156M by the Sale, and plan toallocate part of the amount or the entire amount to dividends.

4.

Summary of the Sales Asset
Name of the Sales Asset
Asset category
Address (Lot Number)
Intended use
LandArea
Building
Land
Ownership
Building
Building structure
Completion
Acquisition priceAppraisal value
TrusteeMaturity date of trust
No. of tenants
Rentable area
Rented area
Rent (*1)

Sotetsu Fresa Inn Shimbashi-Karasumoriguchi
Real estate beneficial interest in trust
4-34-1, Shinbashi, Minato-ku, Tokyo and ten other lots
Hotel, Stores, Parking lot
761.01 m25,476.39 m2Ownership
Ownership
Steel structured and steel-framed reinforced concrete building/sixteen
stories above ground and 1 story below ground
March 2008
JPY4,800M
JPY8,950M
Date of appraisal: December 31, 2019
Appraiser: DAIWA REAL ESTATE APPRAISAL CO., LTD.
Sumitomo Mitsui Trust Bank, Limited
July 31, 2022
45,246.66 m2
5,246.66 m2
Fixed rent
JPY24,833 thousands/month
As for the hotel lessee, apart from the
Variable rent
above fixed rent, rent from revenue
sharing is paid.
JPY60,599 thousands

Deposit and guarantee moneyOccupancy rate (based on
100%
rented area)
Collateral
N/A(*1) Stating based on the fixed-term building lease agreements, etc. which are in effect as of today, withthe lessees of the hotel and stores. The detail of the rent from revenue sharing is not disclosed asconsent on disclosure has not been obtained from the lessee.
(*2) Stating the amount at the time of conclusion of fixed-term building lease agreements, etc. with thelessees of the hotel and stores.

25.

Summary of Buyer
Information is undisclosed since JHR has not obtained consent from the buyer. There are no capital, humanor business relationships to be specifically noted between JHR or the Asset Management Company, and thebuyer. The buyer also does not fall under the category of related parties of JHR and the Asset Management
Company. The buyer also does not fall under the category of interested parties, etc. as stipulated in the Act
on Investment Trusts and Investment Corporations, nor does it fall under the category of sponsor-relatedparties stipulated by the Asset Management Company.

6.

Summary of Brokerage
Not applicable

7.

Payment MethodA lump-sum payment on transfer

8.

Schedule of Sale
Date of resolution for the sale

9.

July 1, 2020

Date of conclusion of purchase and sale agreement

July 1, 2020

Settlement and transfer

July 1, 2020

Future prospects
As mentioned in “1. Summary of Sale” above, although the gain on sale of properties, etc. in the amount of
JPY3,156M is expected by the Sale, it is difficult to forecast the impact of COVID-19 on our hotel revenue atpresent. Therefore, the operating forecast after the Sale remains unchanged from “Notice Concerning Revision ofOperating Forecast and Forecast of Dividend for Fiscal Year Ending December 2020 (21st Period)” dated on
March 25, 2020, and will be determined later.
We will promptly announce the operating forecast after carefully examining and considering the impact of theabove-mentioned events on revenues of the hotels owned by JHR, the status of implementation of measures toreduce costs, which we are working with our tenants, etc., the review of plans for capital expenditure, as well as
various measures to be taken by JHR including the appropriateness of utilizing negative goodwill and its details,etc.

310. Appraisal Report Summary
Property name

Sotetsu Fresa Inn Shimbashi-Karasumoriguchi

Appraisal value

JPY8,950,000 thousands

Name of appraiser

DAIWA REAL ESTATE APPRAISAL CO., LTD.

Date of appraisal

December 31, 2019

Item

DetailIndicated value by income approach

JPY8,950,000 thousands

Value by direct capitalization method

Operating income

Summary, etc.

JPY9,100,000 thousands
JPY430,937 thousands

Potential gross income

JPY432,700 thousands

Potential rent income

JPY399,430 thousands

Utilities income

JPY26,663 thousands

Parking lots income

JPY4,410 thousands

Other income

JPY2,196 thousands

Vacancy loss, etc.

JPY1,762 thousands

Operating expenses
Maintenance andmanagement expenses
Utilities cost

JPY69,667 thousands
JPY3,510 thousands
JPY30,411 thousands

Repair cost

JPY7,105 thousands

Property management fee

JPY1,200 thousands

Tenant leasing cost, etc.

JPY642 thousands

Tax and public dues
Casualty insurance
premium
Other expenses
Net operating income
Gain on management ofdeposits
Capital expenditures

JPY25,941 thousands
JPY500 thousands
JPY361,270 thousands

Net cash flow

JPY354,910 thousands

Cap rate
Value by DCF method
Discount rateTerminal cap rate
Indicated value by cost approach
Land ratio
Building ratio
Other matters noted in appraisal
by appraiser

JPY354 thousands

JPY597 thousands
JPY6,958 thousands
3.9%
JPY8,880,000 thousands
3.7%
4.1%
JPY6,380,000 thousands
89.1%
10.9%
The appraiser judged that the indicated value by an income approach is relatively
convincing compared to the indicated value by cost approach. Therefore, the appraiser
decided the appraisal value by using the indicated value by cost approach as reference
and using the indicated value by income approach as standard.

* Website of Japan Hotel REIT Investment Corporation: https://www.jhrth.co.jp/en/

4

（Reference) Portfolio list after the sale of the asset
HotelNo.

TypeGradeNo. ofguestrooms
(*1)

Area
(*2)
Kansai(excluding Osaka)Kanto(excluding Tokyo)

Completion

Acquisition
Price
(*3)
(JPY1M)

Investment
Ratio
(*4)

July 1995

10,900

2.9%

May 1995

19,900

5.4%

1Kobe Meriken Park Oriental Hotel

Full-service

Upper-middle

323

2

Oriental Hotel tokyo bay

Full-service

Mid-price511

3

Namba Oriental Hotel

Limited-service

Mid-price

258

Osaka

March 1996

15,000

4.1%

4Hotel Nikko Alivila

ResortLuxury397

Okinawa

April 1994

18,900

5.1%

Full-service

Upper-middle

227

Chugoku

September 1993
Extended in September 2006

4,100

1.1%

Limited-service

Mid-price

206

Tokyo

September 1980

7,243

2.0%

The Beach Tower Okinawa

ResortMid-price

280

Okinawa

March 2004
Extended in June 2005
Extended in May 2006

7,610

2.1%

Hakone Setsugetsuka

ResortMid-price

158

October 2006

4,070

1.1%

Limited-service

Mid-price

291

January 2008

2,334

0.6%

August 1986
Extended in September 1989

1,120

0.3%

5

Oriental Hotel Hiroshima

6ibis Tokyo Shinjuku

89

10 Dormy Inn Kumamoto
12 the b suidobashi

Limited-service

Mid-price

99

Kanto
(excluding Tokyo)
Kyushu(excluding Okinawa)Tokyo

13 dormy inn・global cabin Asakusa

Limited-service

Economy75

14 Hakata Nakasu Washington Hotel Plaza

Limited-service

Mid-price

247

Tokyo

15 Nara Washington Hotel Plaza

Limited-service

Mid-price204

16 R&B Hotel Ueno-hirokoji

Limited-service

Economy

187

Tokyo

April 2002

1,720

0.5%

18 Comfort Hotel Tokyo Higashi Nihombashi

Limited-service

Economy

259

Tokyo

January 2008

3,746

1.0%

22 Smile Hotel Nihombashi Mitsukoshimae

Limited-serviceEconomy

164

Tokyo

March 1997

2,1080.6%

1,6520.4%

Kyushu(excluding Okinawa)
Kansai(excluding Osaka)

March 1997

999

0.3%

March 1995

2,1300.6%

March 2000

2,0500.6%

Main building and annex bothKyushu
in September 2001
(excluding Okinawa)

24 Toyoko Inn Hakata-guchi Ekimae

Limited-service

Economy257

25 Hotel Vista Kamata Tokyo

Limited-service

Economy

105

Tokyo

January 1992

1,512

0.4%

26 Chisun Inn Kamata

Limited-service

Economy70TokyoApril 2003

823

0.2%

29 Hotel Keihan Universal City

ResortMid-price

330

Osaka

June 2001

6,000

1.6%

31 Hilton Tokyo Bay

ResortLuxury

828

June 1988

26,0507.0%

32 ibis Styles Kyoto Station

Limited-service

Mid-price

215

March 2009

6,600

1.8%

33 ibis Styles Sapporo

Limited-service

Mid-price278

Hokkaido

July 2010

6,797

1.8%

34 Mercure Sapporo

Limited-service

Mid-price285

Hokkaido

April 2009

6,000

1.6%

35 Mercure Okinawa Naha

Limited-service

Mid-price

260

Okinawa

August 2009

3,000

0.8%

37 the b ikebukuro

Limited-service

Mid-price

175

Tokyo

June 1982

6,520

1.8%

39 the b hachioji

Limited-service

Mid-price196

40 the b hakata

Limited-service

Mid-price175

41 Hotel Francs

Full-service

Mid-price222

42 Mercure Yokosuka

Full-service

Mid-price160

November 1993

1,650

0.4%

ResortUpper-middle

361

Okinawa

February 2005
Extended in December 2006

14,950

4.0%

Full-service

Luxury238

Chugoku

August 2010

17,3204.7%

43 Okinawa Marriott Resort & Spa
44

ACTIVE-INTER CITY HIROSHIMA (*5)
(Sheraton Grand Hiroshima Hotel)

45 CANDEO HOTELS UENO-KOEN
46 Oriental Hotel Fukuoka Hakata Station
47 Holiday Inn Osaka Namba

Kanto(excluding Tokyo)
Kansai(excluding Osaka)

TokyoKyushu(excluding Okinawa)
Kanto(excluding Tokyo)
Kanto(excluding Tokyo)

August 1991

3,105

0.8%

Mid-price

268

Tokyo

Decemeber 2009

6,705

1.8%

221

Kyushu(excluding Okinawa)

July 1985

7,197

1.9%

Limited-service

Mid-price

314

Osaka

August 2008

27,000

7.3%

April 1999

4,925

1.3%

February 1989

15,2504.1%

August 1993

13,175

3.6%

Economy263

Full-service

Luxury460

Chubu

50 Hilton Tokyo Narita Airport

Full-service

Upper-middle

548

51 International Garden Hotel Narita

Full-service

Mid-price463

52 Hotel Nikko Nara

Full-service

Upper-middle

330

Total

0.6%

Upper-middle

Limited-service

54 Hilton Tokyo Odaiba

0.7%

2,300

Full-service

49 Hilton Nagoya

53 Hotel Oriental Express Osaka Shinsaibashi

2,610

Limited-service

Kyushu(excluding Okinawa)

48 HOTEL ASCENT FUKUOKA

August 1986
September 1997

Kanto(excluding Tokyo)
Kanto(excluding Tokyo)
Kansai(excluding Osaka)

May 1996

9,125

2.5%

February 1998

10,3732.8%

Limited-service

Mid-price

124

Osaka

January 2018

2,738

0.7%

Full-service

Upper-middle

453

Tokyo

January 1996

62,40016.9%--

11,485--

369,708

100.0%

5(*1) Number of rooms available to sell as of today (rooms occupied by the hotel for a long term is excluded).
(*2) Tokyo means Tokyo metropolitan area. Kanto (excluding Tokyo) means Kanagawa, Chiba, Saitama, Ibaraki, Gunma, Tochigi and Yamanashi
prefectures. Chubu means Aichi, Mie, Shizuoka, Nagano, Gifu, Niigata, Toyama, Ishikawa and Fukui prefectures. Osaka means Osaka
prefecture. Kansai (excluding Osaka) means Kyoto, Shiga, Hyogo, Nara and Wakayama prefectures. Chugoku means Hiroshima, Okayama,Tottori, Yamaguchi and Shimane prefectures. Kyushu (excluding Okinawa) means Fukuoka, Nagasaki, Miyazaki, Kumamoto, Saga, Oita andKagoshima prefectures. Okinawa means Okinawa prefecture.
(*3) Acquisition prices stated on a purchase and sale agreement for beneficial interest in trust are indicated (consumption tax, local consumption
tax and the acquisition expenses such as broker’s fee are not included). The acceptance prices are indicated for the assets that have been
accepted through the merger.
(*4) The percentage of each acquisition price to the total of acquisition price is indicated and the numbers are rounded off to one decimal place.
(*5) Type, grade and total number of guest rooms of ACTIVE-INTER CITY HIROSHIMA are those of the main facility, Sheraton Grand
Hiroshima Hotel.
(*6) Numbers for the assets transferred and the sales asset are missing numbers.

6