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.
October 26, 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 Purchase and Sale of Asset(Exchange of a Part of Site of Hotel Ascent Fukuoka)
This is to inform you that Japan Hotel REIT Investment Corporation (hereinafter called “JHR”) has reached anagreement on a transaction (hereinafter called the “Exchange Transaction”), through Sumitomo Mitsui Trust Bank,
Limited (“SMTB”), who is the trustee of the Property, in order to acquire a land, which is a part of site of Hotel Ascent
Fukuoka (hereinafter called the “Property”), and also to dispose a land, which is a part of site of an adjacent building
owned by JHR, as described in the settlement below as of today.

1.

Rationale and Background of the TransactionThe Exchange Transaction is an exchange transaction between the land leased by SMTB, who is the trustee, as apart of site of the Property (hereinafter called “Leased Land,” the owner of the land of the Leased Land is called
the “Owner of the Adjacent Site,” and the acquisition of the Leased Land is called the “Acquisition”), and thereal estate beneficial interest in trust of the land owned by SMTB, which is leased to the Owner of the Adjacent
Site as a part of the site of the adjacent building (hereinafter called the “Beneficial Interest in Trust of the Land toLet,” and the sale of the Beneficial Interest in Trust of the Land to Let is called the “Sale”).
With respect to the Leased Land, the Owner of the Adjacent Site filed a lawsuit against SMTB, who is the current
lessee, to request confirmation on non-existence of repayment obligation on the security deposit. The security
deposit was originally pledged by the former owner to the Owner of the Adjacent Site when the Owner of theAdjacent Site concluded a fixed-term lease contract with the former owner of the Property. However, this lawsuitwas rejected in the first trial. Negotiations for settlement have been held in the subsequent appeals court. At thistime, the Owner of the Adjacent Site agreed to acknowledge the existence of the obligation to repay the security
deposit, and to exchange the Leased Land and the Beneficial Interest in Trust of the Land to Let. Therefore, thesettlement has been reached.
JHR believes that the Exchange Transaction will contribute to the enhancement of the asset value as the mutualleasehold relationship will be terminated and JHR will acquire the full ownership of the Property. There is no
impact on compliance with laws and regulations with respect to the assets after the Exchange Transaction.

12.

Summary of SaleAcquisition

Sale

Details of asset(registered lot number)
Area of asset(registered area)

Land at 3-47, Tenjin, Chuo-ku,Fukuoka-shi

Land at 3-46-2 Tenjin,
Chuo-ku, Fukuoka-shi

113.52m2

135.62m2Type of asset

Real estateTransaction price

JPY653MM

Real estate beneficial interestin trust
JPY523MM

Book value (Note 1)－JPY333MM

Expected gain on exchange of real－JPY184MM

JPY660MM

JPY523MM

July 1, 2020

July 1, 2020

Settlement date

October 26, 2020

October 26, 2020

Transaction date

October 29, 2020 (scheduled)
Seller: Owner of the Adjacent
Site
Buyer: JHRestate, etc. (Note 2)
Appraisal value (Note 3)
Date of appraisal

October 29, 2020 (scheduled)
Seller: JHR
Transaction party
Buyer: Owner of the Adjacent
Site
The beneficial interest in trust
JHR will acquire it andTransaction method
will be split and JHR will
additionally put it into a trust
dispose it(*1) The estimated book value as of the timing of the transaction. Rounded down to the nearest JPY1M.
(*2) The amount obtained by excluding book value and related expenses for the Exchange Transaction is expected
to be recorded as a gain on exchange of real estate, etc.
(*3) Appraisal value by Japan Real Estate Institute3.

Summary of the Counterparty
Information is undisclosed since JHR has not obtained consent from the counterparty. There are no capital,
human or business relationships to be specifically noted between JHR or the Asset Management Company, andthe counterparty. The counterparty also does not fall under the category of related parties of JHR and the AssetManagement Company. The counterparty 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 ofsponsor-related parties stipulated by the Asset Management Company.

4.

Future prospects
As for the operating forecast after the Exchange Transaction, please refer to “Notice Concerning of Operating
Forecast and Forecast of Dividend for Fiscal Year Ending December 2020 (21st Period)” as of today.

* Website of Japan Hotel REIT Investment Corporation: https://www.jhrth.co.jp/en/2