Asset Management Report
For the Year Ended December 31, 2021

Japan Hotel REIT Investment Corporation

Dear Investors,
Thank you for your support and patronage to Japan Hotel REIT Investment Corporation (JHR) and
its asset management company, Japan Hotel REIT Advisors Co., Ltd.
Having settled the accounts for the 22nd fiscal period (from January 1, 2021 to December 31, 2021)
of JHR, we are pleased to present you with the status of management and detail of the settlement ofaccounts for the period.
In the second year of COVID-19 pandemic, the Japanese economy continued to face severe
conditions by the impact of the state-of-emergency declarations and stricter measures to prevent the
spread of the virus, etc. implemented in line with the spread of infection by COVID-19. In addition
to a sharp decline in the number of inbound visitors to Japan, domestic demand was sluggish due torestrictions on moving, etc. and the overall tourism market including accommodation market became
further severe throughout the year. However, it gradually showed movements of picking up in andafter October when the state-of-emergency was lifted with improvement in the COVID-19 situation.
Under such environment, JHR maintained close communication with the lessees and operators of its
respective hotels and worked to secure hotel earnings through reduction of operating costs, etc. The HMJ
Group, JHR's largest lessee and strategic partner, implemented large-scale restructuring such as reductionof labor costs through closure of unprofitable restaurants within hotels and reduction of outsourcing costswith the switch from outsourcing to insourcing and change of specifications.
In conjunction with that, JHR conducted rebranding of four hotels in order to improve hotel operation andincrease earnings. In addition, JHR acquired land that is a part of the site of Oriental Hotel Universal City
upon the expiration of the ground lease contract with the City of Osaka and changed to wholly owned
property. Moreover, JHR sold ibis Tokyo Shinjuku and recorded ¥3,258 million as gain on sales of realestate properties and actualized a portion of unrealized gains on assets in order to secure distributableprofits and improve liquidity on hand.

As a result, JHR posted operating revenue of ¥13,633 million and net income of ¥1,296 million forthe 22nd Period. Dividend per unit came to ¥366.
In 2022, variants of COVID-19 caused the number of confirmed new cases of infection to sharply
rise from the beginning of the year, however, policy review in accordance with the status of infection
such as promotion of the additional dose of vaccination and development and practical application ofeffective therapeutic drugs, etc. are expected. Although a harsh environment is forecast for the time
being, the pace of recovery in domestic travel demand will likely be fast if the situation of infection
by COVID-19 improves to a certain level like that in and after October 2021. Moreover, given thelarge potential demand for overseas tourism globally, the popularity of Japan as a travel destination,etc. JHR believes that Japan’s accommodation demand from inbound visitors will recover over the
medium to long term.
JHR will continue to cooperate and collaborate with lessees and operators of each hotel andimplement a variety of measures to capture accommodation demand in the hotel market for recovery
period. JHR and its asset management company, Japan Hotel REIT Advisors Co., Ltd., will makefull efforts for further growth and improvement of the attractiveness of JHR through flexible
response to changes in the hotel industry by leveraging the high level of expertise and know-how
cultivated to date and promotion of initiatives for sustainability.

1

We would appreciate your continued support for us.

Kaname Masuda
Executive Director
Japan Hotel REIT Investment Corporation
Hisashi Furukawa
Representative Director, President and CEO
Japan Hotel REIT Advisors Co., Ltd.

2JAPAN HOTEL REIT INVESTMENT CORPORATION
Contents:

I.

Asset Management Report

4This section (P1-P42) is the translation of the Asset Management Report for the 22nd Period releasedon March 22, 2022 except for, if any, the update on I.6. Significant subsequent events. If any
discrepancy is identified between this translation and the Japanese original, the Japanese original shallprevail.

II. Financial Statements
For the Years ended December 31, 2021 and 2020
Balance Sheets

44

Statements of Income46

Statements of Changes in Net Assets

47

Statements of Cash Flows48

Notes to Financial Statements

50

Independent Auditor’s Report

683

I. ASSET MANAGEMENT REPORT
Outline of Asset Management Operation
1. Operating results and financial position, etc.
Fiscal period
Account closing date
Operating revenue

18th period
December 201719th period
December 2018

20th period
December 2019

21st period
December 2020

22nd period
December 2021

(Note 1)

¥1M

25,47528,25328,278

13,838

13,633[Real estate operating revenue]¥1M[25,475][26,318][28,278][10,495][10,374]

¥1M

9,717

10,26011,12910,662

10,673¥1M[7,911][8,344][8,997][8,717][8,830]Operating income¥1M

15,757

17,993

17,148

3,176

2,959

Ordinary income¥1M

14,006

16,211

15,291

1,398

1,298

¥1M

14,005

16,21015,290

1,527

1,296

¥1M

352,183

350,556

415,722400,296394,323[%][10.8][(0.5)][18.6][(3.7)][(1.5)]¥1M

201,963

203,372

236,522

221,201

221,542[%][11.0][0.7][16.3][(6.5)][0.2]

Unitholders’ capital¥1M

153,516

153,516

186,894

186,894

187,194

Number of investment units issued andoutstandingUnits

4,010,847

4,010,847

4,462,347

4,462,347

4,467,006¥

50,35450,70553,00449,57049,595

¥

3,606

4,041

3,447

342

290

Total dividends¥1M

14,771

15,602

16,466

1,829

1,634

Dividend per unit

¥

3,683

3,890

3,690

410

366

[Earnings dividend per unit]

¥

3,683

3,890

3,690

410

366

[Dividend per unit resulted fromexcess of earnings]

¥

–

–

–

–

–

%

4.2

4.6

4.0

0.3

0.3

%

7.3

8.0

7.0

0.7

0.6

%

57.3

58.0

56.9

55.3

56.2

Operating expenses[Real estate operating costs]

Net income(Note 2)

Total assets[Period-on-period change]
Net assets[Period-on-period change]

Net assets per unit
Net income per unit

(Note 3)

Ratio of ordinary income to total assets(Note 4)Return on unitholders’ equity(Note 5)

Ratio of net assets to total assets(Note 6)[Period-on-period change]
Payout ratio

[%]

[0.1]

[0.7]

[(1.1)][(1.6)][0.9](Note 7)

%

105.5

96.2

107.7

119.8

126.1
6,366

[Additional information]
NOI(Note 8)¥1M

21,424

22,10424,087

6,547

FFO per unit

(Note 9) (Note 10)

¥

4,454

4,588

4,503

632

640

FFO multiple(Note 10) (Note 11)

Times

17.0

17.1

18.0

83.9

87.8

Times

15.6

18.0

17.5

3.3

3.4

Interest-bearing debt

¥1M

140,399

136,671

168,754

168,754

164,754

Ratio of interest-bearing debt to total(Note 13)
assets

%

39.9

39.0

40.6

42.2

41.8

Debt service coverage ratio(Note 10) (Note 12)

Number of investment properties

44

41

43

42

41

687,124.54

678,714.48

746,329.68

741,083.02

733,995.61

Tenants

131

126

125

121

116

％

99.9

99.9

99.9

99.9

99.8

Depreciation

¥1M

3,725

4,091

4,557

4,761

4,804

Capital expenditures

¥1M

2,898

3,056

6,767

1,665

3,367

Number of operating days

Days

365

365

365

366

365

Total leasable aream2

Number of tenants at end of period(Note 14)

Occupancy rate at end of period(Note 15)

(Note 1)
(Note 2)

Properties

Operating revenue does not include consumption tax, etc.
Net income for the 19th fiscal period includes gain on sale of real estate properties (¥1,934 million). Net income for the
21st fiscal period includes gain on sale of real estate properties (¥3,158 million) and gain on exchange of real estate
properties (¥184 million). Net income for the 22nd fiscal period includes gain on sale of real estate properties (¥3,258
million).

4

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)(Note 10)(Note 11)
(Note 12)(Note 13)

The computation of net income per unit is based on the weighted-average number of units outstanding during the year.
Ratio of ordinary income to total assets = Ordinary income / ((Total assets at beginning of period + Total assets at end of
period) / 2) × 100
Return on unitholders’ equity = Net income / ((Net assets at beginning of period + Net assets at end of period) / 2) × 100
Ratio of net assets to total assets = Net assets at end of period / Total assets at end of period × 100
Payout ratio = Total dividends (excess of earnings exclusive) / Net income × 100
NOI = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of noncurrent
assets + Asset retirement obligations expenses
FFO per unit = (Net income + Depreciation + Loss on retirement of noncurrent assets + Asset retirement obligations
expenses - gain on sale of real estate properties - gain on exchange of real estate properties ± Extraordinary loss or income(excluding loss on disaster)) / Number of investment units issued and outstanding
For the 19th fiscal period, FFO per unit, FFO multiple and debt service coverage ratio are calculated excluding gain onsale of real estate properties (¥1,934 million). For the 21st fiscal period, FFO per unit, FFO multiple and debt service
coverage ratio are calculated excluding gain on sale of real estate properties (¥3,158 million) and gain on exchange ofreal estate properties (¥184 million) and extraordinary income (¥130 million). For the 22nd fiscal period, FFO per unit,
FFO multiple and debt service coverage ratio are calculated excluding gain on sale of real estate properties (¥3,258
million).
FFO multiple = Investment unit price at end of period / Annualized FFO per unit
Debt service coverage ratio = (Income before income taxes + Depreciation + Loss on retirement of noncurrent assets +Asset retirement obligations expenses - gain on sale of real estate properties - gain on exchange of real estate properties± Extraordinary loss or income (excluding loss on disaster) + Amortization of investment corporation bond issuancecosts + Amortization of investment unit issuance expenses ± Loss or gain on derivative instruments + Interest expense+ Interest expense on investment corporation bonds) / (Interest expense + Interest expense on investment corporation
bonds + Total of contractual principal repayments (excluding lump-sum principal repayments))
Ratio of interest-bearing debt to total assets = Interest-bearing debt at end of period / Total assets at end of period × 100(Note 14)

Number of tenants at end of period indicates the total number of tenants based on the lease contracts for respective realestate properties in trust (excluding tenants of parking lots, etc.) as of the end of each fiscal period. However, forproperties with pass-through master lease contracts in which JHR receives the same amount of rents, etc. paid by end
tenants as is in principle, the total number of the end tenants (excluding tenants of parking lots, etc.) is indicated.

(Note 15)

Occupancy rate at end of period indicates the percentage of leased area to leasable area of respective real estate properties
in trust as of the end of each fiscal period.

2. Asset management operation for the fiscal period under review(1) 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 Trusts Act”) 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 “AssetManagement Company”). Focusing on the 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 inthemselves 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 (hereinafter referred 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 the former Japan Hotel and Resort, Inc. (hereinafter referred to as the “former JHR”) with aneffective date of April 1, 2012 (hereinafter referred to as the “Merger”) and changed its name to Japan Hotel
REIT Investment Corporation. Since the Merger by the end of the fiscal period under review, JHR has carriedout nine public offerings for capital increase and continuously acquired “highly-competitive hotels” in mainly“strategic investment target areas” where domestic and inbound leisure demand can be expected over the
medium to long term.
By implementing the aforementioned growth strategy, JHR has expanded its asset size while improving thequality of its portfolio through new property acquisitions of 26 properties amounting to ¥275,160 million (onan acquisition price basis) in total in approximately a little less than ten years since the Merger. As a result, asof the end of the fiscal period under review, JHR had a portfolio of 41 properties with a combined acquisition
price of ¥363,542 million and the total number of investment units issued and outstanding stood at 4,467,006
units.
5

(2) Investment performance for the fiscal period under review
The Japanese economy in the fiscal period under review (12-month period from January 1, 2021 to December
31, 2021) was in a severe situation due to the impact of state-of-emergency declarations, stricter measure toprevent the spread of the virus, etc. implemented in line with the spread of COVID-19, but gradually showed
movements of picking up in and after October when the state-of-emergency declaration was lifted withimprovement in the COVID-19 situation.
The domestic accommodation and tourism market was heavily impacted by the low number of foreign visitors
to Japan (hereinafter referred to as “inbound visitors”), which was estimated to be 245,000 in 2021 (-94.0%
from the previous year; -99.2% from 2019), due to travel restrictions to Japan from various countries, etc., aswell as the sluggish domestic demand due to the worsening of the COVID-19 situation. Accordingly, thecumulative number of overnight guests at domestic accommodation facilities in 2021 fell by 4.8% from theprevious year or fell by 47.0% from 2019 to 315 million guest nights (preliminary release).
As to the performance of hotels owned by JHR under these circumstances, RevPAR (Note 2) of the 24 Hotels
with Variable Rent, etc. (Note 1) for the fiscal period under review fell below that of the previous year by 5.4%
due to the impact of the spread of COVID-19, but GOP (gross operating profit) increased from the previous
year by 47.4% due to the effects of cost management measures at hotels, etc.
Under such circumstances, JHR maintained, as it did in the previous year, close communication with the lessees
and operators of its respective hotels and worked to secure hotel earnings through reduction of operating costs,
etc. In particular, Hotel Management Japan Co., Ltd. (hereinafter referred to as “HMJ”), which is a groupcompany of the Asset Management Company, and its subsidiaries (hereinafter collectively referred to as the“HMJ Group”), implemented large-scale restructuring (such as reduction of labor costs through closure of
unprofitable restaurants within hotels, reduction of outsourcing costs with the switch from outsourcing toinsourcing and change of specifications, and consolidation of back offices and common operations) uponconclusion of contracts to change fixed-term building lease contracts on August 25, 2020, and resulted inachieving results that were better than initially planned.
In conjunction with that, JHR changed lessees and conducted rebranding during the fiscal period under review
in order to improve hotel operations and increase earnings as follows. In January 2021, for Chisun Hotel Kamata(former name: Hotel Vista Kamata Tokyo), JHR changed lessees and conducted rebranding after terminating
the existing lease contract. In addition, JHR changed lessees and conducted rebranding to the HMJ Group for
Hotel Oriental Express Fukuoka Tenjin (former name: HOTEL ASCENT FUKUOKA) in June 2021 and for
Oriental Hotel Universal City (former name: Hotel Keihan Universal City) in July 2021, and also conductedrebranding to the HMJ Group for Oriental Hotel Okinawa Resort & Spa (former name: Okinawa Marriott Resort& Spa) in October 2021. Following aforementioned implementation, we are promoting more efficient operations
through measures including sharing of human resources and back offices with the HMJ Group Hotels locatedin the surrounding areas. Furthermore, with the improving earnings structure of hotel operations through therestructuring by the HMJ Group, the amount of rent JHR will receive during the hotel market recovery period
is expected to increase.
Moreover, JHR decided that it is appropriate to partly realize unrealized gain of owned assets to record it asgain on sale of real estate properties and enhance the liquidity on hand. Accordingly, JHR sold ibis Tokyo
Shinjuku as of December 15, 2021, recording ¥3,258 million as gain on sale of real estate properties. In addition,
JHR acquired land that is part of the site of Oriental Hotel Universal City on July 30, 2021, upon the expirationof the ground lease contract with the City of Osaka. Through this, the hotel is now real estate under fullownership and there is no need to pay ground rent of ¥21 million a year.
Furthermore, JHR conducted a drastic review of its capital expenditures, including postponement of large-scalerenovation work planned for the fiscal period under review, and also worked to reduce costs of each cost items
including real estate operating costs and general and administrative expenses through discussions with relevant
counterparties and other measures. For further details of sales, GOP (gross operating profit) and othermanagement indicators for the 24 Hotels with Variable Rent, etc., please refer to “<Reference 2> Hotel operationindexes, sales and GOP” in 7. Reference information.
(Note 1) The hotel group combining the hotels which JHR leases to HMJ (Kobe Meriken Park Oriental Hotel, Oriental Hoteltokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila and Oriental Hotel Hiroshima, (hereinafter referred to as “The6

Five HMJ hotels”)), with the hotels which JHR leases to subsidiaries of HMJ (Oriental Hotel Okinawa Resort & Spa,
Sheraton Grand Hiroshima Hotel (main facility of ACTIVE-INTER 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, totaled 14 hotels, are referred to as the “HMJGroup Hotels.” Although the lessee of Hotel Oriental Express Fukuoka Tenjin was changed on June 18, 2021, and thelessee of Oriental Hotel Universal City was changed on July 1, 2021, to subsidiaries of HMJ, these are not included in
the HMJ Group Hotels in the fiscal period under review. The 24 hotels with variable rent, etc. refers to the HMJ Group
Hotels plus ibis Tokyo Shinjuku (completed its transfer on December 15, 2021), 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 2) 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. The same shall apply
hereinafter.

(3) Funding conditions
In the fiscal period under review (12-month period from January 1, 2021 to December 31, 2021), JHR procured¥300 million through third-party allotment with the sponsor group as the allottee in March 2021, and took outloans of ¥6,800 million in total to refinance existing borrowings that were due for repayment in the same month.
Moreover, also for the purpose of refinancing existing borrowings that were due for repayment, JHR took outloans of ¥935 million in total in June, ¥15,847 million in total in September, respectively. Moreover, JHR
redeemed the fourth unsecured investment corporation bonds of ¥1,500 million due for redemption in December
2021 by taking out loans in the same amount mainly from main banks. JHR also used part of the funds fromthe sale of ibis Tokyo Shinjuku, which was sold in the same month, for partial early repayment of existing
borrowings, reducing the ratio of interest-bearing debt to total assets by 0.9 points in an effort to strengthen
financial soundness.
Consequently, as of the end of the fiscal period under review, balance of interest-bearing debt totaled ¥164,754
million, including short-term loans payable of ¥24,002 million, current portion of long-term loans payable of¥8,434 million, long-term loans payable of ¥92,218 million, current portion of investment corporation bonds of¥6,000 million and investment corporation bonds of ¥34,100 million, and the ratio of interest-bearing debt tototal assets at end of year (Note) stood at 41.8%. The ratio of fixed interest rate debt to the total interest-bearing
debt at the end of the fiscal period under review was at 85.3%.
(Note) Ratio of interest-bearing debt to total assets at end of period = Balance of interest-bearing debt at end of period / Total
assets at end of period x 100

As of the end of the fiscal period under review, JHR’s issuer ratings were as follows:
Rating agency

RatingOutlookJapan Credit Rating Agency, Ltd. (JCR)

A＋(Negative)

Rating and Investment Information, Inc. (R&I)

A(Negative)(4) Financial results
As a result of the abovementioned asset management, operating revenue, operating income and ordinary income
were ¥13,633 million, ¥2,959 million and ¥1,298 million, respectively, for the fiscal period under review (12month period from January 1, 2021 to December 31, 2021). Net income was ¥1,296 million.
With regard to dividends, it was decided that ¥1,634 million will be distributed, which was calculated by adding
a reversal of reserve for temporary difference adjustment (appropriation for dividends) of ¥335 million tounappropriated retained earnings of ¥1,300 million. Consequently, ¥1,634 million will be distributed as
dividend and the dividend per unit came to ¥366.
For details of the appropriation for dividends for the fiscal period under review, please refer to “<Reference 3>
Dividend per unit and appropriation for dividends” in 7. Reference information.

7

3. Changes in unitholders’ capital, etc.
The table below indicates increases (decreases) in the number of investment units issued and outstanding andunitholders’ capital of JHR in the past five years.
Date

Capital transaction

Number of units issued(Units)Unitholders’ capital(¥1M)

Increase(decrease)

Balance

Increase(decrease)

Balance

Note

July 5,2017

Capital increase through public
offering of investment units

236,000

3,997,907

17,715

152,544(Note 1)

August 2,
2017

Capital increase through third-party
allotment of investment units

12,9404,010,847

971

153,516(Note 2)January 23,
2019

Capital increase through public
offering of investment units

447,800

4,458,647

33,104

186,620(Note 3)February 20,
2019

Capital increase through third-party
allotment of investment units

3,700

4,462,347

273

186,894(Note 4)

March 16,
2021

Capital increase through third-party
allotment of investment units

4,659

4,467,006

300

187,194(Note 5)(Note 1)
(Note 2)

(Note 3)(Note 4)(Note 5)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 raise funds for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥75,065 in order to raise
funds for allocation to part of future acquisitions of specified assets, part of repayment of loans, or repair expenses andcapital expenditures to maintain or improve competitiveness of existing properties.
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 raise funds for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥73,927 in order to raise
funds for allocation to part of the acquisition of new properties.
New investment units were issued through third-party allotment with an issue value per unit of ¥64,400 in order to raise
funds for allocation to part of capital expenditures.

[Fluctuation in market price of investment units]
The highest and lowest prices (closing price) during each fiscal period of the investment units of JHR on the Tokyo
Stock Exchange REIT section are as follows:(yen)
Fiscal period

18th period

19th period

20th period

21st period

22nd period

Account closing month

December 2017

December 2018

December 2019

December 2020

December 2021

81,20085,00091,80082,40071,400

Lowest price

71,10075,00075,90024,70051,600Price at end of period

75,60078,40081,20053,00056,200Highest price8

4. Dividends, etc.
Earnings dividend for the period under review was decided in accordance with the monetary distribution policy
stipulated in Article 34, paragraph 1 of JHR’s Articles of Incorporation. And ¥1,634,924,196, which excludes
fractions of less than one yen of dividend per unit from ¥1,636,095,860, which was calculated by adding a reversalof the reserve for temporary difference adjustment of ¥335,371,387 to unappropriated retained earnings of¥1,300,724,473 as of end of the fiscal period under review, will be distributed. Consequently, the dividend per unit
came to ¥366.
(yen)
18th period

19th period

20th period

21st period

22nd period(From January 1, 2017
to December 31, 2017)(From January 1, 2018
to December 31, 2018)(From January 1, 2019
to December 31, 2019)(From January 1, 2020
to December 31, 2020)(From January 1, 2021
to December 31, 2021)

14,005,489,588

16,213,482,816

15,290,314,375

1,527,790,689

1,300,724,473

3,048,696–

744,789

3,922,801

1,171,664

Total cash dividends

14,771,949,501

15,602,194,830

16,466,060,430

1,829,562,270

1,634,924,196[Dividend per unit][3,683][3,890][3,690]

[410]

[366]

14,771,949,501

15,602,194,830

16,466,060,430

1,829,562,270

1,634,924,196[3,683][3,890][3,690]

[410]

[366]

–

–

–

–

–

[–]

[–]

[–]

[–]

[–]

–

–

–

–

–

[–]

[–]

[–]

[–]

[–]

–

–

–

–

–

[–]

[–]

[–]

[–]

[–]

Classification
Unappropriated retained
earnings
Retained earnings

Of the above, total earnings
dividends[Earnings dividend per unit]
Of the above, total return ofcapital contributions[Return of capital
contributions per unit]
Of total return of capital
contributions, total
distributions from allowancefor temporary difference
adjustment[Of return of capital
contributions per unit,
distributions from allowancefor temporary difference
adjustment per unit]
Of total return of capital
contributions, total
distributions from theunitholders’ capital for tax
purpose[Of return of capital
contribution per unit,
distributions from theunitholders’ capital for tax
purpose per unit]

95. Investment policies and issues to be addressed
General investment outlook
The Japanese economy remains in a severe situation due to the impact of the spread of infection by COVID-19. In
2021, signs of picking up were seen with the increasing moves to gradually ease movement restrictions due toprogress in the vaccination rollout and other factors through the second half of the year. In 2022, however, variantsof COVID-19 caused the number of confirmed new cases of infection to sharply rise in various areas from the
beginning of the year, leading to application of a stricter measure to prevent the spread of the virus, etc. in various
regions again and other factors turning the situation into an uncertain outlook. In the domestic accommodation andtourism market, although upcoming recovery in demand is expected as the third-dose vaccination rollout
progresses, effective therapeutic medicine for COVID-19 are developed and put into practical use, etc., a harshenvironment is forecast for the time being. On the other hand, the pace of recovery in domestic travel demand will
likely be fast if the COVID-19 situation improves to a certain level like that in November through December 2021.
JHR will continue to discuss, investigate and implement with lessees and operators a variety of measures, such as
reducing operating costs through review of operations at each hotel, maintaining necessary employment, handling
cash management, and also implementing sales measures in response to new demand including “staycation” and“workation.” Especially for the hotels with variable rent, etc., JHR will endeavor to maximize GOP of each hotel
and thus maximize the rent JHR can receive as a result. In particular, with the HMJ Group, a strategic partner of
JHR, in addition to strengthening the initiatives of the large-scale restructuring plan mentioned earlier and pursuingfurther consistent cost reduction, measures to create and capture demand will be proactively promoted, such as
making attractive products with the hotel itself as the tourism destination and increasing brand awareness throughTV commercials, etc., conducting initiatives from both sides to enhance profitability.
In addition, if JHR receives requests for rent reduction, etc. from the lessees that have been impacted by the spreadof infection by COVID-19, etc., JHR will examine what has been requested from respective lessees, the details of
the existing lease contracts with them, rent levels compared with the market rent, the possibility to collect the
reduced rent portion in the future, and their financial conditions. By doing so, JHR will respond to requests
individually after discussing with each lessee and operator, while carefully considering the possibility of replacing
operators. With the HMJ Group, in the contracts to change fixed-term building lease contracts concluded on August25, 2020, mentioned earlier in “2. Asset management operation for the fiscal period under review; (2) Investment
performance for the fiscal period under review” above, JHR agreed to set all rent as variable rent only fromFebruary 2020 through the end of 2021. In light of the situation of the spread of infection by COVID-19 and otherfactors, agreement has been reached to similarly set all rent to be variable rent only throughout 2022, too, byconclusion of memorandums of understandings related to modifying fixed-term building lease contracts on
February 25, 2022. For details, please refer to “6. Significant subsequent events” later in this document on page
14.
On the other hand, JHR believes that accommodation demand from inbound visitors to Japan will recover over a
medium to long term, given the large potential demand for overseas tourism globally and in particular,
improvement in income levels in Asian countries as well as the popularity of Japan as travel destination. As such,there is no change in the view of JHR that the accommodation and tourism market will expand over the medium
to long term. On the belief that the location and competitiveness of individual hotels as well as the capabilities ofthe operators (the ability to differentiate from other hotels, improve profitability including cost management andcapture recovering demand, etc.) will lead to differentiation of performance among hotels, JHR will continue to
implement strategies to differentiate its hotels as it has done to date.
In the meanwhile, as a result from the spread of infection by COVID-19, the spread of contactless new behavior
pattern such as web conferencing, etc. may cause structural changes in hotel industry, for instance, a reduction inbanquet demand etc. JHR will work more closely than ever with hotel lessees and operators to respond flexibly toenvironmental changes. Under the recognition of such circumstances, JHR intends to work with the AssetManagement Company to implement strategies continuously to differentiate hotels owned by JHR in the market
by utilizing the experience it has cultivated as a J-REIT specializing in hotel investment, and manage assets basedon the approach described below.

10Internal growth
JHR will work to secure “stability” mainly with fixed rent contracts, while at the same time aim for “upside
potential” through implementation 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 Group.
For properties with fixed rent contracts, JHR will continue to focus on setting and maintaining appropriate rents
based on rent levels in the market where respective hotels are located or each tenant’s creditworthiness and ability
to bear the rent costs, and aiming at raising rents (including introduction of a revenue sharing structure) in
accordance with the conditions of the accommodation market while appropriately responding to requests for
reduction of fixed rent from lessees greatly affected by COVID-19.
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.
In 2021, JHR changed lessees and conducted rebranding by the HMJ Group for Hotel Oriental Express Fukuoka
Tenjin (former name: HOTEL ASCENT FUKUOKA) in June and for Oriental Hotel Universal City (former name:
Hotel Keihan Universal City) in July. Each was aimed at achieving more efficient operations, such as throughsharing of human resources and back offices with the HMJ Group Hotels located in the surrounding areas.
Furthermore, JHR aims to maximize revenue from the hotels in the recovery period of domestic demand by
upgrading the hotel grade from economy to mid-price in the case of the former and as a theme park hotel adjacentto Universal Studios Japan in the case of the latter. JHR has adopted a rent scheme that combines fixed rent andvariable rent in the lease contract with the HMJ Group. Under the scheme, the rent burden ratio for the Group has
risen compared with the former lease contract, and thus the amount of rent JHR will receive during the market
recovery period is expected to increase.
In addition, in October 2021, JHR conducted rebranding by the HMJ Group for Oriental Hotel Okinawa Resort &Spa (former name: Okinawa Marriott Resort & Spa) upon the expiration of the franchise contract. The HMJ Groupis deploying its branding strategy of “Oriental Hotels & Resorts” since 2021 in order to further strengthen its effort
to capture business and leisure demand. JHR believes that, with the brand development by the HMJ Group,
increase in hotel revenue can be expected from the “Oriental Hotel” brand penetration, and that will contribute toimprovement of the revenue of JHR’s portfolio.
A. 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, Sheraton, Mercureand Holiday Inn or 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 throughimproved 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 withconsiderations given to the recovery of leisure demand from domestic and inbound visitors, measures tomaintain and increase room rates, and realization of the synergy effects like cost reductions from operating
multiple properties, among other issues.
On the other hand, under the impact of the spread of infection by COVID-19, recovery in hotel performance is
expected to take time. To cope with such a situation, JHR will closely cooperate with the lessees and operatorsof respective hotels to promote drastic reform of the hotel earnings structure through cost-cutting measurescentered on thoroughly enhancing efficiency of the operating system, while continuing efforts on healthconsideration for the guests and employees of respective hotels and environmental sanitation management. JHR
will also promote various measures to restore hotel earnings, such as the creation of appropriate products in
response to major changes in the market environment and the preparation of hotel facility environments, etc.
Moreover, in an attempt to recover and enhance hotel earnings, JHR will accurately grasp the situation of theaccommodation and tourism market and changing customer needs and conduct strategic capital expenditures(CAPEX) in an appropriate manner as needed.
B. Properties under fixed rent contracts
JHR will pursue efforts to set and maintain reasonable rent levels by appropriately monitoring operating
11

conditions of these hotels and by paying careful attention to each tenant’s ability to bear the rent costs. At thesame time, JHR will appropriately respond to requests to reduce fixed rent from the lessees that were greatly
affected by the spread of infection of COVID-19. In addition, JHR will carry out investments for the purpose ofcontinuous maintenance and renewal of facilities and equipment to ensure each hotel becomes prominent in themarket and to maintain and increase the value of its assets.
External growth
In terms of external growth strategy, JHR believes that domestic and inbound leisure demand will recover over the
medium to long term and will continue targeting acquisition of 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 it has done to date. In addition, JHR will build a portfolio which can secure stable revenues and with future
growth potential in mind in order to achieve upside.
Upon acquiring properties, JHR will focus on the infrastructure aspects of the relevant Hotel Assets such asbuildings and facilities, the services aspects such as the credibility (including the ability of the hotel lessee to bearrent costs) as well as operation and management capabilities of hotel lessee and operator, and the aspect of location
whose superiority 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 to such factors as operation and management know-how required for operating the hotels and limitations interms of capital to be invested in and location. As for “limited-service hotels,” JHR emphasizes the credibility andoperation capabilities of the hotel lessee and operator as well as the building age, location, guestroom compositionand profitability of the properties, etc. 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 transaction market, although hotel transactions had remained stagnant due to a sense of uncertainty
over the domestic accommodation and tourism market stemming from the impact of COVID-19 and transactions
continued to remain in low volume as it was in 2021, transactions, including those involving large properties, havestarted to show movement. Furthermore, there is also increasing possibility of special investment opportunities
unlike before, such as sales of assets due to rapid deterioration in the financial position of operators, sales of hotels
which are categorized as non-core assets for companies facing deterioration of its main business performance,
sales of hotels completed or scheduled to be completed without operators, etc.
JHR will flexibly deal with such investment opportunities by utilizing the efficient hotel operation platform of
HMJ Group or by other measures. Moreover, over the medium to long term, JHR believes that, along with the
spread of COVID-19 coming to an end and accompanying recovery of domestic accommodation demand includingthat from inbound visitors, many investors who have been on the sideline may resume investment in hotels, andcompetition over acquisition may become active again. Going forward, while closely monitoring market trends
from many angles, JHR will flexibly respond to changes in earnings structures of hotels and the investment
environment by leveraging the strengths and advantages it has cultivated as a J-REIT specializing in hotel
investment. As it does so, JHR will aim to expand asset size that accompanies improvement of the portfolio quality
through acquiring highly competitive properties, while utilizing the operation platform of the HMJ Group as
necessary. For the time being, however, JHR intends to be careful with property acquisition from the standpointof procurement of new funds for property acquisition in light of the uncertainty of the hotel market environment
due to the impact of COVID-19. In addition, from a comprehensive standpoint including financial soundness andportfolio management, JHR will also consider asset replacement accompanying property disposition as necessary.
Finance strategy
As the impact of the spread of infection by COVID-19 prolongs and the outlook of earnings remains uncertain,
JHR will focus on the enhancement of financial stability and soundness more than before and intends to maintainand enhance the relationship of trust with financial institutions with which it does business through close
communication and such.
Specifically, JHR will work to securely achieve refinancing of existing borrowings while paying attention tofinancing costs and maintaining good relationships with respective lenders. In addition, JHR will secure liquidity
on hand in an effort to strengthen its financial foundation through appropriate control of capital expenditures and12property disposition, if necessary, etc. Although JHR aims to conduct financial operations by keeping the ratio ofinterest-bearing debt to total assets at no larger than 50% as in the past, JHR intends to maintain around the current
level for the time being. In addition, when seeking new borrowing for property acquisitions, JHR will work todisperse maturity dates of its debt as well as further reinforce its formation of lenders while considering the balancewith the funding cost and further diversify funding methods, such as issuance of investment corporation bonds(including green bonds).
Policy on handling of negative goodwill
From the fiscal period ended December 31, 2017 (18th period), JHR started appropriation for dividends throughreversal of reserve for temporary difference adjustment in connection with partial amendments to the “Ordinanceon Accounting of Investment Corporations” (Cabinet Office Ordinance No. 47 of 2006, as amended; hereinafterreferred to as the “Ordinance on 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 period ended December 31, 2017, to pay out as dividends every year, with the balance ofthe 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, dilutionof dividend per unit due to the issuance of new investment units through public offerings, etc., loss on retirementof noncurrent assets, and suspension of sales and such due to large-scale renovations with significant impact onrevenues, 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).
(Note)The policy may change due to a resolution of the board of directors. etc., and it does not guarantee the method ofreversing the reserve for temporary 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, Socialand Governance) 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 isindispensable to establish favorable relationships with its stakeholders including unitholders, hotel guests, lessees,
operators, business partners including property managers, local communities, officers and employees of the AssetManagement Company and others and to fulfill 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. JHR 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 hotel properties owned by J-REITs (Note 1). In September 2018, JHR became the first
J-REIT specializing in hotels to be recognized by GRESB (Note 2) for its environmental awareness andsustainability initiatives and acquired “Green Star” in the GRESB Real Estate Assessment for the four consecutive
years since then. Moreover, for the second consecutive year, JHR was selected as a Sector Leader of Asian Hotel
Sector in the GRESB Real Estate Assessment conducted in 2021. In April 2020, Hilton Tokyo Odaiba acquired
CASBEE Certification for Buildings, the first such recognition for an existing hotel property. In May 2021,
Oriental Hotel Fukuoka Hakata Station also acquired CASBEE Certification for Buildings, the second case of suchfor an existing hotel property following Hilton Tokyo Odaiba. In addition, in December 2021, JHR defined its
materiality (key issues) in terms of ESG from the dual standpoints of expectations by stakeholders and impact on
its business. Also, the Asset Management Company expressed support for the recommendations of the Task Forceon Climate-related Financial Disclosures (TCFD) established by the Financial Stability Board (FSB), and joined
the TCFD Consortium, an organization made up of Japanese companies that support the recommendations. Goingforward, JHR, together with the Asset Management Company, will continue to actively promote enhancement of
its initiatives and disclosure on a variety of sustainability issues.
Furthermore, JHR issued green bonds in July 2019 to allocate funds mainly to refinance loans procured for funding
13

capital expenditures and constructions cost, etc. which contribute to the 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. Of the funds procured from the green bonds, the remaining
funds, excluding the repayment of such loans, were used to fund renovation work, etc. at other hotels, and during
the fiscal period under review, JHR allocated funds to construction costs for reduction of CO2, etc. at four hotels
including Hilton Nagoya. As a result, the funds procured from the green bonds have been fully appropriated for
eligible projects and there is no unappropriated balance.
In addition, as an effort under the expanding spread of infection by COVID-19, JHR worked together with thelessees to provide a total of nine hotels it owns as facilities to accept patients with mild or no symptoms who do
not require hospital treatment among the patients infected with COVID-19 from 2020 through the date of thisdocument. JHR also provided restaurants and banquet rooms in Oriental Hotel tokyo bay and Hotel Nikko Nara
as venues for vaccination under workplace vaccination programs and for local residents. Furthermore, the HMJ
Group conducted workplace vaccination to provide vaccinations to its employees who wish to be vaccinated sothat hotel guests can use the hotels safely with peace of mind.
Recognizing its social responsibility towards local communities as a J- REIT specializing in hotels, JHR willproactively carry out social contribution activities capitalizing on the characteristics of the hotel sector and each
hotel.
(Note 1) Investigated by the Asset Management Company based on disclosed information(Note 2) GRESB is an annual benchmarking assessment to measure ESG (Environmental, Social and Governance) integration ofreal estate companies and funds. It evaluates initiatives for sustainability of real estate 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.

6. Significant subsequent events
Conclusion of memorandums of understanding related to modifying fixed-term building lease contracts
JHR resolved at its Board of Directors’ meeting held on February 25, 2022 to conclude “memorandums ofunderstanding related to fixed-term building lease contracts” with the HMJ Group in order to revise the rent
structure for the fiscal year 2022 for the 14 properties listed in (1) Fixed rent in the table below, out of the 16
properties leased to the HMJ Group as lessee, concerning the “contracts to modify fixed-term building lease
contracts” dated August 25, 2020 (hereinafter, the “Previous Modification Contracts”). JHR concluded thememorandums of understanding as of the same date.
Although JHR believes that the hotel market will gradually recover during fiscal year 2022 due to progressof vaccination and development of therapeutic medicine in addition to supporting measures by national andlocal governments to promote tourism, it is difficult to make reasonable estimate as to the speed of recovery
and downside risks. Therefore, as it did in the Previous Modification Contracts dated August 2020, JHR has
decided to exempt annual fixed rents totaling ¥ 8,030 million by HMJ group hotels in fiscal year 2022 andadopt a full variable rent structure. No change is made for the base amount of AGOP (Note 1) and payment
ratio of variable rent when AGOP exceeds the base amount. In addition, rent structure for the fiscal year
2023 onwards is unchanged from that for the fiscal year 2022 onwards set forth in the Previous Modification
Contracts.

The details of the change are indicated below.
(1) Fixed rent
Fixed rent
No.

Name of property

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Hotel Nikko Alivila

LesseeBefore change

Hotel Management
Japan Co., Ltd.

14

After change

From FY2022 onwards

FY2022

From FY2023 onwards¥¥ 3,221 million/year

Not applicable¥ 3,221 million/yearFixed rent
No.

Name of property

LesseeBefore change
From FY2022 onwards

5

Oriental Hotel Hiroshima

6

Oriental Hotel Okinawa Resort & Spa

7

Lagoon resort Nago Co.,Ltd.

After change
FY2022

From FY2023 onwards¥ 550 million/year¥ 550 million/year

ACTIVE-INTER CITY HIROSHIMA
K.K. A.I.C Hiroshima(Sheraton Grand Hiroshima Hotel)
Management(Note 2)

¥ 348 million/year¥ 348 million/year

8

Oriental Hotel Fukuoka Hakata
StationHotel Centraza Co., Ltd.

¥ 425 million/year¥ 425 million/year9

Holiday Inn Osaka Namba

OW Hotel Operations KK¥ 576 million/year¥ 576 million/year10

Hilton Tokyo Narita Airport

KK Narita Kosuge
Operations¥ 444 million/year¥ 444 million/year

11

International Garden Hotel Narita

KK Narita Yoshikura
Operations¥ 336 million/year¥ 336 million/year

12

Hotel Nikko Nara

Hotel Management Co.,Ltd.

¥ 420 million/year¥ 420 million/year

13

Hotel Oriental Express Osaka
Shinsaibashi

Hotel Oriental Express
Co., Ltd.

¥ 110 million/year¥ 110 million/year

14

Hilton Tokyo Odaiba

Tokyo Humania
Enterprise KK¥ 1,600 million/year¥ 1,600 million/year(2) Variable rent
Calculation method of variable rent
No.

Name of property, etc.

Before change

After change

From FY2022 onwards
1

Kobe Meriken Park Oriental
Hotel

FY2022

From FY2023 onwards

AGOP x 86.0%(Total AGOP of The Five HMJ
Hotels (Note 3) – base amount(¥4,120 million/year (Note 4))) x
85.0%(Total AGOP of The Five HMJ
Hotels (Note 3) – base amount(¥4,120 million/year (Note 4))) x
85.0%

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

AGOP x 89.0%

6Oriental Hotel Okinawa Resort & (AGOP – base amount (¥655
million/year)) x 95.0%
Spa

AGOP x 89.0%(AGOP – base amount (¥655
million/year)) x 95.0%

7

ACTIVE-INTER CITYHIROSHIMA(Sheraton Grand Hiroshima
Hotel) (Note 2)(AGOP – base amount (¥360
million/year)) x 90.0%

AGOP x 93.0%(AGOP – base amount (¥360
million/year)) x 90.0%8Oriental Hotel Fukuoka Hakata
Station(AGOP – base amount (¥442
million/year)) x 98.0%

AGOP x 97.0%(AGOP – base amount (¥442
million/year)) x 98.0%

9Holiday Inn Osaka Namba(AGOP – base amount (¥580
million/year)) x 97.0%

AGOP x 98.0%(AGOP – base amount (¥580
million/year)) x 97.0%

10

Hilton Tokyo Narita Airport(AGOP – base amount (¥450
million/year)) x 93.0%

AGOP x 95.0%(AGOP – base amount (¥450
million/year)) x 93.0%

11International Garden Hotel Narita(AGOP – base amount (¥360
million/year)) x 98.0%

AGOP x 95.0%(AGOP – base amount (¥360
million/year)) x 98.0%

12

Hotel Nikko Nara

(AGOP – base amount (¥440
million/year)) x 95.0%

AGOP x 95.0%(AGOP – base amount (¥440
million/year)) x 95.0%

13

Hotel Oriental Express Osaka
Shinsaibashi(AGOP – base amount (¥128
million/year)) x 91.0%

AGOP x 87.0%(AGOP – base amount (¥128
million/year)) x 91.0%

14

Hilton Tokyo Odaiba(AGOP – base amount (¥1,660
million/year)) x 98.0%

AGOP x 97.0%(AGOP – base amount (¥1,660
million/year)) x 98.0%

AGOP x 79.0%
AGOP x 91.0%
AGOP x 74.0%(Note 1) AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. GOP (Gross Operating Profit) is theamount calculated by subtracting cost for hotel operation (personal cost, general administration cost, etc.) form sales of the hotel. The same shallapply hereinafter.
(Note 2) The indicated descriptions are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
(Note 3) The Five HMJ Hotels refers to the 5 hotels (Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko
Alivila and Oriental Hotel Hiroshima) which JHR leases to HMJ.
(Note 4) The breakdown of the AGOP base amount of The Five HMJ Hotels (¥4,120 million/year) are: ¥690,000 thousand for Kobe Meriken Park Oriental
Hotel, ¥1,060,000 thousand for Oriental Hotel tokyo bay, ¥890,000 thousand for Namba Oriental Hotel, ¥1,250,000 thousand for Hotel Nikko
Alivila and ¥230,000 thousand for Oriental Hotel Hiroshima.

15

(3) Impact of concluding the memorandums of understanding on profit and loss
Due to the conclusion of the memorandums, fixed rent to be recorded for operating revenue is anticipated
to decrease by ¥8,030 million for the fiscal period ending December 2022. However, the impact on variable
rent cannot be estimated at this point as variable rent to be recorded for operating revenue will be determinedby the AGOP for the full year of the fiscal period ending December 2022.
7. Reference information<Reference 1>
Major indicators of the hotel business for the fiscal period ended December 31, 2021
The following tables indicate the figures related to the hotel business of the HMJ Group Hotels for theoperating period from January 1, 2021 through December 31, 2021, based on the data provided by thehotel lessees, etc. Furthermore, while the indicators of the hotels are among the indicators that show theoperating status of the rooms departments, they do not necessarily represent the operating revenue andthe ability to bear rent, etc. of the respective hotels, as the room rates and profit margins, etc. are notuniform, among other reasons. As such, the indicators are no more than the reference figures.
Kobe Meriken Park Oriental Hotel tokyo
Oriental Hotelbay
Ratio to
total
sales

Namba Oriental
Hotel

Ratio to
total
sales

Hotel Nikko
AlivilaRatio to
total
sales

The Five HMJ
hotelsTotal/Average

Oriental Hotel
Hiroshima

Ratio to
total
sales

Ratio to
total
sales

Ratio to
total
sales

Occupancy rate

40.7%

－

36.7%

－

26.8%

－

29.2%

－

76.6%

－

39.5%

－

ADR (Note 1)

17,680－13,849

－

6,186

－

25,258

－

8,811

－

14,471－

RevPAR (Note 2)

7,188

－

5,076

－

1,659

－

7,384

－

6,746

－

5,715

－

Total sales(millions of yen)

2,820

100.0%

2,103

100.0%

775

100.0%

2,275

100.0%

993

100.0%

8,966

100.0%

Rooms department

847

30.1%

947

45.0%

156

20.1%

1,070

47.0%

559

56.3%

3,579

39.9%

Food & beveragedepartment

1,548

54.9%

562

26.7%

5

0.6%

643

28.2%

137

13.8%

2,895

32.3%

Tenant department

70

2.5%

112

5.3%

567

73.1%

2

0.1%

5

0.5%

757

8.4%

Other departments(Note 3)

353

12.5%

482

22.9%

48

6.1%

560

24.6%

293

29.5%

1,735

19.4%

GOP
(millions of yen)

41

1.5%

(53)

(2.5%)

317

40.8%

213

9.4%

334

33.6%

851

9.5%

Oriental Hotel
Okinawa Resort &Spa
Ratio to
total
sales

Oriental Hotel
Fukuoka Hakata
StationSheraton Grand
Hiroshima Hotel(Note 5)

Ratio to
total
sales

Holiday Inn Osaka
Namba

Ratio to
total
sales

(Note 4)

Ratio to
total
sales

Hilton Tokyo Narita International Garden
AirportHotel Narita

Ratio to
total
sales

Ratio to
total
sales

Occupancy rate

26.5%

－

31.5%

－

44.8%

－

37.5%

－

45.0%

－

54.8%

－

ADR (Note 1)

19,948－21,173－

10,446

－

3,273

－

11,354

－

7,504

－

RevPAR (Note 2)

5,284

－

6,673

－

4,678

－

1,228

－

5,104

－

4,109

－

Total sales(millions of yen)

1,296

100.0%

1,558

100.0%

999

100.0%

175

100.0%

1,655

100.0%

1,005

100.0%

Rooms department

696

53.7%

580

37.2%

377

37.8%

141

80.5%

1,021

61.7%

694

69.1%

Food & beveragedepartment

288

22.2%

853

54.8%

307

30.7%

－

－

421

25.4%

231

23.0%

Tenant department

39

3.0%

－

－

208

20.9%

31

17.7%

22

1.4%

2

0.2%

Other departments(Note 3)

273

21.1%

125

8.1%

106

10.6%

3

1.7%

191

11.5%

78

7.7%

GOP
(millions of yen)(237)

(18.3%)

235

15.1%

251

25.2%

77

44.0%

101

6.1%

299

29.8%

16

Hotel Nikko Nara
Ratio to
total
sales

Hotel Oriental
Express Osaka
Shinsaibashi

Hilton Tokyo Odaiba

Ratio to
total
sales

(Note 4)

The HMJ Group
HotelsTotal/Average

Ratio to
total
sales

(Note 6)Ratio
to totalsales

Occupancy rate

24.8%

－

－

－

41.4%

－

38.5%

－

ADR (Note 1)

12,500－－－28,582－

14,068－

RevPAR (Note 2)

3,103

－

－

－

11,843

－

5,413

－

Total sales(millions of yen)916

100.0%

1

100.0%

4,505

100.0%

21,078100.0%

Rooms department

374

40.8%

－

－

1,958

43.5%

9,421

44.7%

Food & beveragedepartment

443

48.4%

－

－

1,857

41.2%

7,295

34.6%

Tenant department

5

0.5%

－

－

79

1.7%

1,143

5.4%

Other departments(Note 3)

94

10.3%

1

100.0%

612

13.6%

3,220

15.3%

(100)

(10.9%)

(21)

－

594

13.2%

2,050

9.7%

GOP
(millions of yen)

(Note 1)
(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

ADR: Represents average daily rate, which is calculated by dividing total rooms revenue for a certain period (including
service charges) by the total number of rooms sold during the period.
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. The same shall apply
hereinafter.
Figures for the Other departments include sales of the product sales department.
The properties were temporarily closed for a certain period of time during the fiscal period under review due to the impact
of COVID-19, but the occupancy rate has been calculated by including the closed period.
The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
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 single units. 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.

17

<Reference 2>
Hotel operation indexes, sales and GOP
The numerical figures are based on figures obtained from hotel lessees, etc. Please note that these figures have notbeen audited or gone through other procedures. No guarantee is made as to the accuracy or completeness of the
figures and information.
<1> The HMJ Group Hotels
Fiscal period ended December 31, 2020
Comparison withprevious period

ActualOccupancy rate

ADR

RevPAR

Sales(millions of yen)

GOP
(millions of yen)

Fiscal period ended December 31, 2021
Comparison withprevious period

ActualFirst half

33.1%

(52.2)pt

27.7%(5.4)pt

Second half

38.4%

(49.5)pt

49.0%

10.6ptFull year

35.8%(50.8)pt

38.5%

2.7pt

First half

15,222(13.4)%

13,048(14.3)%

Second half

16,814(14.4)%

14,636(13.0)%

Full year

16,081(13.7)%

14,068(12.5)%First half

5,045

(66.4)%

3,618(28.3)%

Second half

6,460

(62.6)%

7,179

11.1%

Full year

5,757(64.3)%

5,413(6.0)%First half

9,167

(61.9)%

8,313(9.3)%

Second half

11,978(55.9)%

12,765

6.6%

Full year

24,146(58.7)%

21,078(0.3)%First half

(370)

(105.1)%

(136)

－%

Second half

1,696

(82.8)%

2,186

28.9%

Full year

1,326(92.3)%

2,050

54.7%

<2> The 24 Hotels with Variable Rent
Fiscal period ended December 31, 2020
Comparison withprevious period

ActualOccupancy rate

ADR

RevPAR

Sales(millions of yen)

GOP
(millions of yen)

Fiscal period ended December 31, 2021
Comparison withprevious period

ActualFirst half

34.0%

(51.1)pt

30.6%(3.3)pt

Second half

40.8%

(46.1)pt

49.6%

8.9pt

Full year

37.4%(48.6)pt

40.2%

2.8pt

First half

13,362(14.8)%

10,846(18.8)%

Second half

13,354(22.6)%

12,313(7.8)%

Full year

13,357(19.0)%

11,757(12.0)%First half

4,536

(66.0)%

3,320(26.8)%

Second half

5,445

(63.7)%

6,112

12.2%

Full year

4,993(64.8)%

4,724(5.4)%First half

10,718(62.1)%

9,478(11.6)%

Second half

13,378(57.5)%

14,3097.0%

Full year

24,096(59.6)%

23,786(1.3)%First half

(213)

(102.4)%(65)－%

Second half

1,867

(84.2)%

2,502

34.0%

Full year

1,654(92.1)%

2,437

47.4%

18

<Reference 3>

Dividend per unit and appropriation for dividends

Dividend per unit for the fiscal periods ended December 31, 2020 and December 31, 2021 were calculated basedon the assumptions described below.
(millions of yen)
Fiscal period ended
December 31, 2020
Unappropriated retained earnings
Total of reserve for temporary difference adjustments (negative goodwill)
used
Negative goodwill – 50-year amortization amount (Note 1)
Loss on retirement of noncurrent assets (Note 2)
Amortization of trademark rights (Note 3)

1,527

1,300

305

335

262

262

5

16

37

56

1,829

1,634

4,462,347

4,467,006

410

366

Total dividends
Total number of investment units issued (Units)

Fiscal period ended
December 31, 2021

Dividend per unit (¥)(Note 1) JHR reverses ¥262 million (hereinafter called the “50-year amortization amount of negative goodwill”) to payout as
dividends, with the remaining balance of the reserve for temporary difference adjustment set as the maximum amount, forevery year.
(Note 2) The amount recognized as a loss on retirement of noncurrent assets are appropriated by reserve for temporary difference
adjustment (negative goodwill).
(Note 3) The trademark rights for the Oriental Hotel brand, etc. are amortized over 10 years using the straight-line method. For theamount to be amortized in the fiscal period under review, reserve for temporary difference adjustment (negative goodwill)is appropriated.

<Reference 4>Balance of reserve for temporary difference adjustment

The balance of reserve for temporary difference adjustment (negative goodwill) after appropriation for dividends
for the fiscal period ended December 2021 is as follows.
Balance of reserve for temporary difference adjustment as of December 31, 2021
Appropriation for dividends as of December 31, 2021
Balance of reserve for temporary difference adjustment after appropriation for dividends for the
fiscal period ended December 31, 2021

19

(millions of yen)
10,311(335)
9,976

Overview of JHR
1. Unitholders’ capital
18th period

19th period

20th period

21st period

22nd period

As ofDecember 31, 2017

As ofDecember 31, 2018

As ofDecember 31, 2019

As ofDecember 31, 2020

As ofDecember 31, 2021

Total number of authorized units(Units)

20,000,000

20,000,000

20,000,000

20,000,000

20,000,000

Number of investment units issued andoutstanding(Units)4,010,847

4,010,847

4,462,347

4,462,347

4,467,006

153,516

153,516

186,894

186,894

187,194

35,04631,15530,574

35,11731,481

Account closing date

Unitholders’ capital(¥1M)
Number of unitholders(Persons)

2. Matters regarding investment units
Major unitholders of JHR as of December 31, 2021 were as follows:
Number of units held
(Units)Name

Percentage (Note)(%)

The Master Trust Bank of Japan, Ltd. (Trust Account)723,372

16.19%

Custody Bank of Japan, Ltd. (Trust Account)473,663

10.60%The Nomura Trust and Banking Co., Ltd. (Investment Trust Account)

196,659

4.40%

Custody Bank of Japan, Ltd. (Securities Investment Trust Account)

184,396

4.12%

SDSS K INVESTCO LIMITED

117,567

2.63%

ELLIOTT INTERNATIONAL LP

76,823

1.71%

STATE STREET BANK WEST CLIENT TREATY 505234

71,249

1.59%

THE BANK OF NEW YORK MELLON 140044

63,021

1.41%

SSBTC CLIENT OMNIBUS ACCOUNT

62,547

1.40%

JP MORGAN CHASE BANK 385781

59,668

1.33%

Total

2,028,965

45.42%(Note)The percentage indicates the ratio of the number of units held to the number of units issued and outstanding, rounded down
to the two decimal places.

3. Matters regarding officers, etc.
(1) Officers, etc. as of December 31, 2021 were as follows:
Position

Name

Major concurrent post outside
JHR

Total amount of remuneration foreach position during thecorresponding fiscal period(¥1000)Executive Director

Kaname Masuda (Note 1)

Representative Partner, Masuda &Partners Law Office

6,600Supervisory Director

Tetsuya Mishiku (Note 1)

Representative Attorney, Mishiku& Nagamachi Law Office

3,600Supervisory Director

Hiroto Kashii (Note1)

–

3,600

Supervisory Director

Mayumi Umezawa (Note1)

Independent auditor

KPMG AZSA LLC(Note 1)

(Note 2)

Representative of Umezawa
Accountant Office–

3,600
25,000None of the Executive Director and the Supervisory Directors own investment units of JHR in their own name or anotherperson’s name. Moreover, although the Supervisory Directors may be officers in corporations other than those listed above,
there are no conflicts of interest between those corporations including those listed above and JHR.
In case the number of Executive Director does not meet the requirement stipulated by laws and regulations, Hisashi
Furukawa, Representative Director of the Asset Management Company, was reappointed as Substitute Executive Director,
based on the resolution made by the 11th General Meeting of Unitholders of JHR held on November 25, 2021.

20

(2) Policy for decisions on dismissal or non-reappointment of independent auditor
We have a policy to determine, at a General Meeting of Unitholders, whether to dismiss the independent auditor
pursuant to provisions of the Investment Trusts Act, and to determine whether or not to reappoint theindependent auditor taking into comprehensive consideration the audit quality, audit fees and other various
matters.
4. Matters regarding directors and officers liability insurance contract
JHR has entered into a directors and officers liability insurance agreement as follows:
Scope of the insured

Overview of contract(Overview of insured event covered by the insurance)

Executive Director
and Supervisory
Directors

JHR has entered into a directors and officers liability insurance contract, as provided in Article 116-3-1 of theInvestment Trusts Act, with an insurance company. The contract shall cover, to a certain extent, such legal
loss as compensation payment for damages and dispute costs to be borne by the insured when they receive aclaim for compensation of damages caused by the actions they have taken as a director of JHR.
(Burden ration of insurance premium)
JHR bears 92.7% of the insurance premium and the insured persons bear the remaining 7.3%.
(Measures to ensure the appropriateness of the execution of duties by directors and officers)
When the insured suffer damages by actions which they executed while recognizing that it may constitutecriminal act or violate the laws and regulations, the loss is not subject of the protection.

5. Asset management company, custodian and general administrators
The asset management company, etc. as of December 31, 2021 were as follows:
Consignment classification

Name

Asset management company

Japan Hotel REIT Advisors Co., Ltd.

Custodian

Sumitomo Mitsui Trust Bank, Limited

General administrator (administration of the unitholders’registry, etc., bookkeeping, etc., tax payments, etc.,
Sumitomo Mitsui Trust Bank, Limitedorganizational operations, etc., and administration of the special
account management agency)
General administrator (administration regarding investment
corporation bonds)

Sumitomo Mitsui Trust Bank, Limited
Mizuho Bank, Ltd.
Resona Bank, Limited
MUFG Bank, Ltd.

General administrator (tax return preparation, etc.)

PwC Tax Japan

21

Status of Investment Assets
1. Composition of assets
21st period(As of December 31, 2020)
Type ofassetsHotel Type
(Note 1)

Prefectural
location

Name of property, etc.

Total amount of
Total amount ofRatio to total
Ratio to total
assets held
assets held
assets (%)
assets (%)
(¥1M)
(¥1M)
(Note 3)(Note 3)(Note 2)

Osaka

Tokyo

Limitedservice hotel

Fukuoka

Real estatein trust

26,8706.7

26,757

Namba Oriental Hotel

14,437

3.6

14,354

3.6

Hotel Oriental Express Osaka Shinsaibashi

2,805

0.7

2,793

0.7

ibis Tokyo Shinjuku (Note 4)

7,830

2.0

－

－

the b ikebukuro

6,578

1.6

6,567

1.7

CANDEO HOTELS UENO-KOEN

6,606

1.7

6,567

1.7

Comfort Hotel Tokyo Higashi Nihombashi

3,491

0.9

3,457

0.9

the b hachioji

2,664

0.7

2,683

0.7

Smile Hotel Nihombashi Mitsukoshimae

2,042

0.5

2,028

0.5

R&B Hotel Ueno Hirokoji

1,806

0.5

1,794

0.5

Chisun Hotel Kamata

1,447

0.4

1,452

0.4

the b suidobashi

1,173

0.3

1,170

0.3

934

0.2

930

0.2

Chisun Inn Kamata

768

0.2

775

0.2

ibis Styles Sapporo

6,492

1.6

6,432

1.6

Mercure Sapporo

5,735

1.4

5,671

1.4

Hotel Oriental Express Fukuoka Tenjin(former name: HOTEL ASCENTFUKUOKA) (Note 5)

5,450

1.4

5,716

1.4

the b hakata

2,329

0.6

2,345

0.6

Hakata Nakasu Washington Hotel Plaza

2,038

0.5

2,054

0.5

6.8

Toyoko Inn Hakata-guchi Ekimae

1,401

0.4

1,382

0.4

Kyoto

ibis Styles Kyoto Station

6,623

1.7

6,599

1.7

Okinawa

Mercure Okinawa Naha

2,801

0.7

2,784

0.7

Kumamoto Dormy Inn Kumamoto

2,170

0.5

2,203

0.6

Nara

Nara Washington Hotel Plaza

1,764

0.4

1,736

0.4

116,265

29.0

108,259

27.5

Tokyo

Hilton Tokyo Odaiba

63,376

15.8

63,266

16.0

Oriental Hotel tokyo bay

17,190

4.3

16,945

4.3

Hilton Tokyo Narita Airport

13,0883.3

13,015

3.3

International Garden Hotel Narita

9,127

2.3

9,059

2.3

Hotel Francs

3,145

0.8

3,141

0.8

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)(Note 6)

17,215

4.3

17,0604.3

Subtotal

Chiba

Full-service
hotel(Note 2)

Holiday Inn Osaka Namba

dormy inn・global cabin Asakusa

Hokkaido

22nd period(As of December 31, 2021)

Hiroshima

Oriental Hotel Hiroshima

4,048

1.0

4,043

1.0

Aichi

Hilton Nagoya

15,695

3.9

15,6184.0

Nara

Hotel Nikko Nara

10,254

2.6

10,145

2.6

Hyogo

Kobe Meriken Park Oriental Hotel

9,482

2.4

9,337

2.4

FukuokaOriental Hotel Fukuoka Hakata Station

9,251

2.3

8,955

2.3

Kanagawa

Mercure Yokosuka

1,606

0.4

1,598

0.4

173,48343.3

172,186

43.7

Hotel Nikko Alivila

17,7904.4

17,627

4.5

Oriental Hotel Okinawa Resort & Spa(former name: Okinawa Marriott Resort &Spa) (Note 5)

14,745

3.7

14,597

3.7

Subtotal

Okinawa
Resort hotel

The Beach Tower Okinawa

6,490

1.6

6,472

1.6

Chiba

Hilton Tokyo Bay

26,2896.6

26,159

6.6

Osaka

Oriental Hotel Universal City
(former name: Hotel Keihan Universal
City) (Note 5)

5,830

1.5

7,019

1.8

22

21st period(As of December 31, 2020)
Type ofassetsHotel Type
(Note 1)

Prefectural
location

Name of property, etc.

Total amount of
Total amount ofRatio to total
Ratio to total
assets held
assets held
assets (%)
assets (%)
(¥1M)
(¥1M)
(Note 3)(Note 3)(Note 2)Kanagawa

Hakone Setsugetsuka
Subtotal(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

22nd period(As of December 31, 2021)(Note 2)

3,616

0.9

3,593

0.9

74,76318.7

75,46919.1
90.3

Real estate in trust – Total

364,51291.1

355,915

Deposits and other assets (Note 7)

35,7838.9

38,408

9.7

Total assets

400,296

100.0

394,323

100.0

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 of assets held” shows the amount calculated by deducting accumulated depreciationfrom acquisition price (including expenses incidental to acquisition).
“Ratio to total assets” shows the ratio of each asset held to total assets, rounded off to one decimal place.
ibis Tokyo Shinjuku was sold on December 15, 2021.
Through rebranding, HOTEL ASCENT FUKUOKA changed its name to Hotel Oriental Express Fukuoka Tenjin on June18, 2021, Hotel Keihan Universal City changed its name to Oriental Hotel Universal City on July 1, 2021, and Okinawa
Marriott Resort & Spa changed its name to Oriental Hotel Okinawa Resort & Spa on October 1, 2021. In this report, thesame shall apply hereinafter.
ACTIVE-INTER CITY HIROSHIMA is classified in accordance with the hotel type of Sheraton Grand Hiroshima Hotel,
its main facility.
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 rights in trust).

23

2. Major portfolio assets
An overview of the portfolio assets of JHR (41 properties in total) as of December 31, 2021 are as follows.

PropertyNo.

Name of property, etc.

Book value(¥1M)

Leasable area(m2)

Leased area(m2)

(Note 1)

(Note 2)

(Note 3)Tenantoccupancy
ratio
(%)

Ratio of rental
revenue tototal rental
revenue
(%)

Major
use

(Note 4)

1

Kobe Meriken Park Oriental Hotel(Note 5)

9,541

32,663.90

32,663.90

100.0

0.3

Hotel

17,10644,833.11

44,833.11

100.0

0.0

Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

14,427

19,364.33

19,364.33

100.0

2.8

Hotel

4

Hotel Nikko Alivila (Note 6)

17,83938,024.98

38,024.98

100.0

1.5

Hotel

5

Oriental Hotel Hiroshima

4,100

13,752.22

13,752.22

100.0

2.9

Hotel

8

The Beach Tower Okinawa (Note 7)

6,476

20,140.01

20,140.01

100.0

4.9

Hotel

9

Hakone Setsugetsuka

3,599

10,655.03

10,655.03

100.0

2.8

Hotel

10

Dormy Inn Kumamoto

2,203

7,701.19

7,701.19

100.0

1.9

Hotel

12

the b suidobashi

1,187

3,097.25

3,097.25

100.0

0.1

Hotel

13

dormy inn・global cabin Asakusa

930

2,014.90

2,014.90

100.0

0.6

Hotel

14

Hakata Nakasu Washington Hotel Plaza

2,054

5,602.04

5,602.04

100.0

2.3

Hotel

15

Nara Washington Hotel Plaza

1,736

5,271.54

5,271.54

100.0

1.4

Hotel

16

R&B Hotel Ueno Hirokoji

1,794

3,060.31

3,060.31

100.0

0.9

Hotel

18

Comfort Hotel Tokyo Higashi Nihombashi

3,457

5,765.27

5,765.27

100.0

2.6

Hotel

22

Smile Hotel Nihombashi Mitsukoshimae

2,028

3,167.82

3,167.82

100.0

1.3

Hotel

Main building: Main building:
3,581.66
3,581.66
Annex:
Annex:
868.36868.36

100.0

1.4

Hotel

3,831.80

100.0

0.1

Hotel

24

Toyoko Inn Hakata-guchi Ekimae

1,382

25

Chisun Hotel Kamata

1,467

26

Chisun Inn Kamata782

1,499.87

1,499.87

100.0

0.0

Hotel

29

Oriental Hotel Universal City (Note 8)

7,292

15,926.83

15,926.83

100.0

4.5

Hotel

31

Hilton Tokyo Bay (Note 9)26,16964,928.83

64,928.83

100.0

19.1

Hotel

32

ibis Styles Kyoto Station

6,615

5,003.99

5,003.99

100.0

0.4

Hotel

33

ibis Styles Sapporo

6,463

14,992.49

14,896.40

99.4

0.5

Hotel

34

Mercure Sapporo

5,726

15,189.42

14,532.53

95.7

1.1

Hotel

35

Mercure Okinawa Naha

2,821

10,884.25

10,884.25

100.0

0.0

Hotel

37

the b ikebukuro (Note 10)6,579

5,650.01

5,650.01

100.0

3.9

Hotel

39

the b hachioji (Note 10)

2,702

7,847.65

7,847.65

100.0

0.4

Hotel

40

the b hakata (Note 10)2,362

3,986.09

3,986.09

100.0

0.3

Hotel

41

Hotel Francs

3,141

19,213.39

19,213.39

100.0

2.9

Hotel

42

Mercure Yokosuka (Note 11)

1,627

16,881.82

16,881.82

100.0

2.3

Hotel

43

Oriental Hotel Okinawa Resort & Spa

14,72836,430.15

36,430.15

100.0

0.0

Hotel

44

ACTIVE-INTER CITY HIROSHIMA(Note 12)

17,15331,181.03

31,025.15

99.5

8.5

Hotel

45

CANDEO HOTELS UENO-KOEN(Note 13)

6,574

7,934.26

7,934.26

100.0

3.4

Hotel

46

Oriental Hotel Fukuoka Hakata Station

9,123

18,105.42

18,105.42

100.0

2.4

Hotel

47

Holiday Inn Osaka Namba

26,788

11,501.10

11,501.10

100.0

0.7

Hotel

48

Hotel Oriental Express Fukuoka Tenjin

5,828

8,238.75

7,916.69

96.1

3.9

Hotel

49

Hilton Nagoya (Note 14)

15,61847,942.71

47,942.71

100.0

7.5

Hotel

50

Hilton Tokyo Narita Airport

13,25256,817.28

56,817.28

100.0

0.4

Hotel

51

International Garden Hotel Narita

9,124

21,814.93

21,814.93

100.0

2.7

Hotel

52

Hotel Nikko Nara (Note 15)

10,23821,011.31

21,011.31

100.0

0.0

Hotel

53

Hotel Oriental Express Osaka Shinsaibashi

2,816

2,710.55

2,710.55

100.0

0.0

Hotel

54

Hilton Tokyo Odaiba

63,48664,907.76

64,907.76

100.0

5.0

Hotel

358,352

733,995.61

732,764.69

99.8

98.2

Total

(Note 1)
(Note 2)

3,831.80

Book value includes real estate in trust, machinery and equipment, tools, furniture and fixtures, construction in progress,
construction in progress in trust, and intangible assets.
In principle, leasable area represents leasable area of the building, which does not include leasable area of land (including24

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, the figure in the table has been
converted to the area in metric units (3.30578 square meters per one tsubo).
(Note 3)

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 described in the lease contract, leased area shows the area described in the registration of thebuilding. Furthermore, when the leased area in the lease contract is indicated 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, for properties for whichmaster lease companies have concluded lease contracts with lessees, etc. under the pass-through scheme in which JHR
receives the same amount of rents, etc. paid by end tenants as is in principle, the total area for which lease contracts havebeen concluded with end tenants and which are actually leased is indicated. In this report, the same shall apply hereinafter.

(Note 4)

Represents the ratio of rental revenue to total real estate operating revenue for the fiscal period under review. In
calculating, the figures are rounded off to one decimal place. Please note that the sum of the ratio of rental revenue tototal rental revenue is 98.2% because the relevant ratios of the trademark rights for the Oriental Hotel brand, etc. and ofibis Tokyo Shinjuku that was sold in the 22nd fiscal period are not included.
Kobe Meriken Park Oriental Hotel is a building owned in the form of a compartmentalized ownership by two owners(JHR and Kobe City). The area in this table shows the portion owned exclusively by JHR (including an accessory buildingof 764.83 square meters).
Leasable area and leased area for Hotel Nikko Alivila include an accessory building of 120.10 square meters and exclude
a building of 493.50 square meters rented by JHR from Kabushiki Kaisha Okinawa Umi No Sono.
Leasable area and leased area for The Beach Tower Okinawa include the floor area of a warehouse in a two-story lightgauge steel annex building (91.20 square meters).
The building of Oriental Hotel Universal City is a building with compartmentalized ownership for Universal CityWalk
Osaka, which comprises two hotel buildings, business facilities, commercial facilities and others, as a single building.
For the leasable area and leased area of the property, the leased area under the lease contract of the hotel is indicated.
The building of Hilton Tokyo Bay is co-owned with other right holders, and JHR owns co-ownership interest for
64,928.83 square meters (JHR owns 9/10 of co-ownership interest).
The b ikebukuro, the b hachioji and the b hakata are properties with pass-through master lease contracts in which JHR
receives the same amount of rents, etc. paid by end tenants as is in principle. In this report, the same shall apply hereinafter.
The building of Mercure Yokosuka is a building with compartmentalized ownership for Bay Square Yokosuka Ichibankan,
which comprises a hotel, a theater, stores, apartments, office spaces and parking lots, as a single building. For the leasablearea and leased area of the property, the leased area under the lease contract of the hotel is indicated.
The building of ACTIVE-INTER CITY HIROSHIMA is a building with compartmentalized ownership for ACTIVEINTER CITY HIROSHIMA, which comprises Sheraton Grand Hiroshima Hotel, office spaces, stores, parking lots andbicycle parking lots etc., as a single building. For the leasable area and leased area of the property, the leased area under
the lease contracts of the hotel, office spaces and stores are indicated.
Leasable area and leased area of CANDEO HOTELS UENO-KOEN indicate the total floor area described in thecertificate of inspection, based on the building lease contract with the hotel lessee. Furthermore, the figure includes thefloor area for the mechanical parking facilities.
The building of Hilton Nagoya is a compartmentalized ownership of AMMNAT SQUARE, which consists of a hotel
building (including retail space), office building and car parking space, etc., as a single building. Leasable area and leased
area indicate the sum total of the leased area for the hotel building, the office building and the retail space described in
the lease contracts.
The building of Hotel Nikko Nara is a compartmentalized ownership of the entire building of Redeveloped Building 1
in front of JR Nara Station, which consists of hotel building, retail space and car parking space, etc. JHR’s share of voting
right of the building is 223/353 (approximately 63.2%).
The omitted property numbers are the numbers for assets that have been transferred.

(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)(Note 10)(Note 11)

(Note 12)(Note 13)

(Note 14)

(Note 15)

(Note 16)25

3. Details of property assets, etc.
(1) Details of property assets
The details of real estate properties, etc. held by JHR as of December 31, 2021 were as follows:
PropertyNo.

Name of property, etc.

Location (Displayed address)

Form ofownership

Assessed value
at end ofperiod(¥1M)

Book value(¥1M)

Appraisal
agency(Note 2)

(Note 3)(Note 1)

1

Kobe Meriken Park Oriental
Hotel

5-6 Hatobacho, Chuo-ku, Kobe-shi,
Hyogo

Beneficial
interest in trust

14,000

9,541

JR

2

Oriental Hotel tokyo bay

8-2 Mihama 1-chome, Urayasu-shi, Chiba

Beneficial
interest in trust

32,20017,106

JR

3

Namba Oriental Hotel

8-17 Sennichimae 2-chome, Chuo-ku,
Osaka-shi, Osaka

Beneficial
interest in trust

31,40014,427

JR

4

Hotel Nikko Alivila

600 Aza Gima, Yomitan-son, Nakagamigun, Okinawa

Beneficial
interest in trust

28,80017,839JR

5

Oriental Hotel Hiroshima

6-10 Tanakamachi, Naka-ku, Hiroshima- Beneficial
shi, Hiroshima
interest in trust

4,230

4,100

JR

8-6 Aza Mihama, Chatan-cho, Nakagami- Beneficial
gun, Okinawa
interest in trust

9,980

6,476

JR

8

The Beach Tower Okinawa(Note 4)

9

Hakone Setsugetsuka

1300 Goura, Hakone-machi,
Ashigarashimo-gun, Kanagawa

Beneficial
interest in trust

5,260

3,599

JR

10

Dormy Inn Kumamoto

3-1 Karashimacho, Kumamoto-shi,
Kumamoto

Beneficial
interest in trust

2,950

2,203

JR

12

the b suidobashi

25-27 Hongo 1-chome, Bunkyo-ku,
Tokyo

Beneficial
interest in trust

2,280

1,187

JR

13

dormy inn・global cabin
Asakusa

3-4 Hanakawado 1-chome, Taito-ku,
Tokyo

Beneficial
interest in trust

1,300

930

JM

14

Hakata Nakasu Washington
Hotel Plaza

8-28 Nakasu 2-chome, Hakata-ku,
Fukuoka-shi, Fukuoka

Beneficial
interest in trust

4,530

2,054

JR

15

Nara Washington Hotel Plaza 31-1 Shimosanjo-cho, Nara-shi, Nara

Beneficial
interest in trust

2,430

1,736

JR

16

R&B Hotel Ueno Hirokoji

Beneficial
interest in trust

1,900

1,794

JM

18

Comfort Hotel Tokyo Higashi 10-11 Nihonbashi-bakurocho 1-chome,
Nihombashi
Chuo-ku, Tokyo

Beneficial
interest in trust

5,340

3,457

JM

22

Smile Hotel Nihombashi
Mitsukoshimae

4-14 Nihonbashi-Honcho 1-chome,
Chuo-ku, Tokyo

Beneficial
interest in trust

2,930

2,028

JM

24

Toyoko Inn Hakata-guchi
EkimaeMain building: 15-5 Hakataekimae 1chome, Hakata-ku, Fukuoka-shi, Fukuoka Beneficial
Annex: 1-15 Hakataekimae 1-chome,interest in trust
Hakata-ku, Fukuoka-shi, Fukuoka

2,760

1,382

T

25

Chisun Hotel Kamata20-11 Nishikamata 8-chome, Ota-ku,
Tokyo

Beneficial
interest in trust

2,020

1,467

T

26

Chisun Inn Kamata23-13 Kamata 4-chome, Ota-ku, Tokyo

Beneficial
interest in trust

1,370

782

T

29

Oriental Hotel Universal City

2-78 Shimaya 6-chome, Konohana-ku,
Osaka-shi, Osaka

Beneficial
interest in trust

16,700

7,292

R

31

Hilton Tokyo Bay

1-33 Maihama, Urayasu-shi, Chiba

Beneficial
interest in trust

40,30026,169D

32

ibis Styles Kyoto Station

47-1, 47-2 Higashikujo Kamitonodacho,
Minami-ku, Kyoto-shi, Kyoto

Beneficial
interest in trust

9,990

6,615

D

33

ibis Styles Sapporo

10-10 Minami 8-jo Nishi 3-chome, Chuo-ku, Beneficial
Sapporo-shi, Hokkaido
interest in trust

11,100

6,463

JR

34

Mercure Sapporo

2-4 Minami 4-jo Nishi 2-chome, Chuoku, Sapporo-shi, Hokkaido

Beneficial
interest in trust

10,500

5,726

JR

35

Mercure Okinawa Naha

3-19 Tsubogawa 3-chome, Naha-shi,
Okinawa

Beneficial
interest in trust

6,950

2,821

JR

37

the b ikebukuro39-4 Higashi-ikebukuro 1-chome,
Toshima-ku, Tokyo

Beneficial
interest in trust

7,230

6,579

JR

39

the b hachioji

6-12 Myojincho 4-chome, Hachioji-shi,Tokyo

Beneficial
interest in trust

2,570

2,702

JR

40

the b hakata

3-9 Hakata-eki Minami 1-chome, Hakata- Beneficial
ku, Fukuoka-shi, Fukuoka
interest in trust

4,340

2,362

JR

18-8 Ueno 1-chome, Taito-ku, Tokyo

26

Property
No.

Name of property, etc.

Location (Displayed address)

Form ofownership

Assessed value
at end ofperiod(¥1M)

Book value(¥1M)

Appraisal
agency(Note 2)

(Note 3)(Note 1)41

Hotel Francs

10-2 Hibino 2-chome, Mihama-ku,
Chiba-shi, Chiba

Beneficial
interest in trust

4,040

3,141

D

42

Mercure Yokosuka

27 Honcho 3-chome, Yokosuka-shi,
Kanagawa

Beneficial
interest in trust

3,360

1,627

D

43

Oriental Hotel Okinawa
Resort & Spa

1490-1 Kise, Nago-shi, Okinawa

Beneficial
interest in trust

17,30014,728JR

44ACTIVE-INTER CITYHIROSHIMA

12-1 Wakakusa-cho, Higashi-ku,
Hiroshima-shi, Hiroshima

Beneficial
interest in trust

20,70017,153

D

45

CANDEO HOTELS UENO2-13 Negishi 1-chome, Taito-ku, Tokyo
KOEN

Beneficial
interest in trust

7,440

6,574

D

46

Oriental Hotel Fukuoka
Hakata Station

4-23 Hakata-eki Chuogai, Hakata-ku,
Fukuoka-shi, Fukuoka

Beneficial
interest in trust

15,200

9,123

D

47

Holiday Inn Osaka Namba

5-15 Soemon-cho, Chuo-ku, Osaka-shi,
Osaka

Beneficial
interest in trust

26,60026,788JR

48

Hotel Oriental Express
Fukuoka Tenjin

3-3-14 Tenjin, Chuo-ku, Fukuoka-shi,
Fukuoka

Beneficial
interest in trust

6,520

5,828

D

49

Hilton Nagoya

1-3-3 Sakae, Naka-ku, Nagoya-shi, Aichi

Beneficial
interest in trust

14,80015,618D50

Hilton Tokyo Narita Airport

456 Kosuge, Narita-shi, Chiba

Beneficial
interest in trust

13,60013,252

JR

51

International Garden Hotel
Narita241-1 Yoshikura, Narita-shi, Chiba

Beneficial
interest in trust

9,520

9,124

JR

52

Hotel Nikko Nara

8-1 Sanjyohonmachi, Nara-shi, Nara

Beneficial
interest in trust

9,800

10,238D

53

Hotel Oriental Express Osaka 2-13 Minamisenba 3-chome, Chuo-ku,
Osaka-shi, Osaka
Shinsaibashi

Beneficial
interest in trust

2,840

2,816

D

54

Hilton Tokyo Odaiba

Beneficial
interest in trust

68,40063,486

JR

485,480

358,352

9-1 Daiba 1-chome, Minato-ku, Tokyo
Total(Note 1)

(Note 2)
(Note 3)(Note 4)(Note 5)

Assessed value at end of period shows appraisal value as of the end of the fiscal period under review as the date ofvaluation, in accordance with JHR’s Articles of Incorporation, the Ordinance on Accounting of Investment Corporations
and regulations set forth by The Investment Trusts Association, Japan.
Book value includes amounts of real estate in trust, machinery and equipment, tools, furniture and fixtures, constructionin progress, construction in progress in trust, and intangible assets.
The letters indicate the appraisers for the properties as follows:
JR: Japan Real Estate InstituteJM: 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.
Due to the lack of a displayed address, “location” in the registration or registration record is shown.
The omitted property numbers are the numbers for assets that have been transferred.

27

(2) Transition of real estate leasing business, etc.
An overview of leasing business of real estate, etc. owned by JHR is as follows:
21st period(From January 1, 2020 to December 31, 2020)

22nd period(From January 1, 2021 to December 31, 2021)

Ratio toRatio toTenantReal estate
TenantReal estate
Number of
total real Number of
total real
occupancy operating
occupancy operating
tenants
estatetenants
estaterate
revenuerate
revenueat end ofoperating at end ofoperatingat end of during theat end of during theperiodrevenueperiodrevenueperiodperiodperiodperiod(Note 1)
(Note 1)
(%)
(%)
(%)
(¥1M)
(%)
(¥1M)

PropertyNo.

Name of property, etc.

1

Kobe Meriken Park Oriental
Hotel

1

100.0

176

1.7

1

100.0

36

0.3

2

Oriental Hotel tokyo bay

1

100.0

(134)

(1.3)

1

100.0

－

0.0

3

Namba Oriental Hotel

1

100.0

415

4.0

1

100.0

288

2.8

4

Hotel Nikko Alivila

1

100.0

263

2.5

1

100.0

155

1.5

5

Oriental Hotel Hiroshima

1

100.0

(96)

(0.9)

1

100.0

297

2.9

6

ibis Tokyo Shinjuku (Note 3)

4

100.0

141

1.3

－

－

155

1.5

8

The Beach Tower Okinawa

1

100.0

511

4.9

1

100.0

511

4.9

(Note 2)

(Note 2)

9

Hakone Setsugetsuka

1

100.0

294

2.8

1

100.0

294

2.8

10

Dormy Inn Kumamoto

1

100.0

194

1.9

1

100.0

194

1.9

12

the b suidobashi

1

100.0

21

0.2

1

100.0

12

0.1

13

dormy inn・global cabin
Asakusa

1

100.0

63

0.6

1

100.0

63

0.6

14

Hakata Nakasu Washington
Hotel Plaza

1

100.0

240

2.3

1

100.0

240

2.3

15

Nara Washington Hotel Plaza

2

100.0

150

1.4

2

100.0

150

1.4

16

R&B Hotel Ueno Hirokoji

1

100.0

97

0.9

1

100.0

97

0.9

18

Comfort Hotel Tokyo Higashi
Nihombashi

2

100.0

272

2.6

2

100.0

271

2.6

22

Smile Hotel Nihombashi
Mitsukoshimae

1

100.0

147

1.4

1

100.0

134

1.3

24

Toyoko Inn Hakata-guchi
Ekimae

1

100.0

141

1.3

1

100.0

141

1.4

25

Chisun Hotel Kamata

1

100.0

97

0.9

1

100.0

15

0.1

26

Chisun Inn Kamata

1

100.0

22

0.2

1

100.0

2

0.0

29

Oriental Hotel Universal City

1

100.0

558

5.3

1

100.0

470

4.5

30

Sotetsu Fresa Inn ShimbashiKarasumoriguchi (Note 4)

－

－

232

2.2

－

－

－

－

31

Hilton Tokyo Bay

1

100.0

1,978

18.8

1

100.0

1,979

19.1

32

ibis Styles Kyoto Station

2

100.0

45

0.4

2

100.0

46

0.4

33

ibis Styles Sapporo

4

98.3

92

0.9

5

99.4

55

0.5

34

Mercure Sapporo

11

95.9

154

1.5

11

95.7

115

1.1

35

Mercure Okinawa Naha

1

100.0

－

0.0

1

100.0

－

0.0

37

the b ikebukuro

4

100.0

187

1.8

3

100.0

404

3.9

39

the b hachioji

10

100.0

204

1.9

10

100.0

45

0.4

40

the b hakata

2

100.0

33

0.3

2

100.0

35

0.3

41

Hotel Francs

1

100.0

300

2.9

1

100.0

300

2.9

42

Mercure Yokosuka

1

100.0

112

1.1

1

100.0

242

2.3

43

Oriental Hotel Okinawa Resort
& Spa

1

100.0

45

0.4

1

100.0

－

0.0

44

ACTIVE-INTER CITYHIROSHIMA

40

99.8

895

8.5

40

99.5

881

8.5

45

CANDEO HOTELS UENOKOEN

1

100.0

349

3.3

1

100.0

349

3.4

46

Oriental Hotel Fukuoka Hakata
Station

1

100.0

373

3.6

1

100.0

243

2.4

47

Holiday Inn Osaka Namba

1

100.0

48

0.5

1

100.0

71

0.7

48

Hotel Oriental Express
Fukuoka Tenjin

6

100.0

468

4.5

5

96.1

405

3.9

28

21st period(From January 1, 2020 to December 31, 2020)
PropertyNo.

Name of property, etc.

22nd period(From January 1, 2021 to December 31, 2021)

Ratio toRatio toTenantReal estate
TenantReal estate
Number of
total real Number of
total real
occupancy operating
occupancy operating
tenants
estatetenants
estaterate
revenuerate
revenueat end ofoperating at end ofoperatingat end of during theat end of during theperiodrevenueperiodrevenueperiodperiodperiodperiod(Note 1)
(Note 1)
(%)
(%)
(%)
(¥1M)
(%)
(¥1M)
(Note 2)

(Note 2)49

Hilton Nagoya

4

100.0

816

7.8

4

100.0

780

7.5

50

Hilton Tokyo Narita Airport

1

100.0

123

1.2

1

100.0

41

0.4

51

International Garden Hotel
Narita

1

100.0

136

1.3

1

100.0

284

2.7

52

Hotel Nikko Nara

1

100.0

35

0.3

1

100.0

－

0.0

53

Hotel Oriental Express Osaka
Shinsaibashi

1

100.0

9

0.1

1

100.0

－

0.0

54

Hilton Tokyo Odaiba

1

100.0

258

2.5

1

100.0

522

5.0

Total

121

99.9

10,480

99.9

116

99.8

10,34099.7(Note 1)

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
companies have concluded lease contracts with lessees, etc. under the pass-through scheme in which JHR receives thesame amount of rents, etc. paid by end tenants as is in principle, the number of end tenants is indicated. For properties
with sub-lease-type master lease contracts in which JHR receives predetermined rents despite fluctuations in rents fromend tenants, the number of the master lease companies is indicated as tenants.

(Note 2)

Represents the ratio of real estate operating revenue of each property to total real estate operating revenue. In calculating,the figures are rounded off to the first decimal place. Please note that the sum of the ratio to total real estate operating
revenue 99.9% for the 21st fiscal period and 99.7% for the 22nd fiscal period because the relevant ratio of the trademark
rights for the Oriental Hotel brand, etc. is not included.

(Note 3)

ibis Tokyo Shinjuku was sold on December 15, 2021.

(Note 4)

Sotetsu Fresa Inn Shimbashi-Karasumoriguchi was sold on July 1, 2020.

(Note 5)The property numbers of assets that were transferred before the previous fiscal period are intentionally omitted.

4. Details of securities assets
There are no applicable securities held by JHR as of December 31, 2021.
5. Contractual amounts and fair values of specified transactions
The contractual amounts and fair values of specified transactions as of December 31, 2021 were as follows:
Classification

Amounts of contract, etc.
(¥1M) (Note 1)

Transaction

Over 1 year
Transactions other thanmarket transactions

Interest rate swap transactions
Payable fixed rate / Receivable floating rate
Total

(Note 1)
(Note 2)

Fair value(¥1M)(Note 2)

93,154

81,954(195)

93,154

81,954(195)

Contractual amounts, etc. of interest rate swap transactions are based on notional principal amounts, etc.
Fair value is based on the price, etc. provided by counterparty financial institutions.

6. Other assets
All of the beneficial interest in trust mainly invested in real estate held by JHR is included in “3. Details of property
assets, etc.” presented above. There were no other major specified assets that are considered to be JHR’s maininvestments in the portfolio of JHR as of December 31, 2021.
7. Asset holdings by country and region
There is nothing to be reported on countries and regions other than Japan.
29

Capital Expenditures for Portfolio Properties
1. Planned capital expenditures (Note)
The following table shows major estimated capital expenditures items for renovation work planned as of the endof the fiscal period under review for investment real estate properties (in trust) held by JHR. Expenditures are
expected to total ¥4,762 million, which consists of capital expenditures of ¥4,751 million (Note) and repair
expenses of ¥10 million, for the next fiscal period.
Name of property, etc.
(Location)

Purpose

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

Renovation of prefabricatedbathrooms in guest rooms

Kobe Meriken Park Oriental
Hotel(Kobe-shi, Hyogo)
Hotel Nikko Alivila(Nakagami-gun, Okinawa)

Scheduled period

Estimated construction costs(¥1M)
Total amount

Total amount
paid

From May 2022
to June 2022

75-

Renovation of executive
rooms

From March 2022
to March 2022

100-

Renewal of elevators

From February2022
to November 2022

151-

Oriental Hotel Universal City Renovation of guest rooms,
etc.
(Osaka-shi, Osaka)

From January 2022
to July 2022

752

7

Hilton Tokyo Bay(Urayasu-shi, Chiba)

Renewal of elevators

From November
2022 to December
2022

72

-

Oriental Hotel Okinawa
Resort & Spa(Nago-shi, Okinawa)

Renewal of air conditioning
units in guest rooms

From February
2022 to December
2022

260

-

Oriental Hotel Okinawa
Resort & Spa(Nago-shi, Okinawa)

Renewal of guest room
pipingFrom February
2022 to December
2022

200

-

Oriental Hotel Okinawa
Resort & Spa(Nago-shi, Okinawa)

Painting of exterior walls

From June 2022 to
December 2022

70-

Oriental Hotel Okinawa
Resort & Spa(Nago-shi, Okinawa)

Renovation of lobby and pool
area

From December
2021 to March
2022

436

16

Oriental Hotel Okinawa
Resort & Spa(Nago-shi, Okinawa)

Renovation of guest rooms

From June 2022 to
December 2022

264-

ACTIVE-INTER CITYHIROSHIMA(Hiroshima-shi, Hiroshima)

Renovation of lobby andlounge area on sixth floor

From February
2022 to April 2022

100-

Hotel Oriental Express
Fukuoka Tenjin(Fukuoka-shi, Fukuoka)

Renewal of heat sources

From February
2022 to April 2022

62

-

2,544

23

Total
(Note)New construction and renewal work includes that for buildings, attached facilities, etc. as well as items classified as furnitureand fixtures. The scheduled period of the above planned renovation work and whether or not the renovation work will be
performed may change.

30

2. Capital expenditures during the period (Note)
For investment real estate properties (in trust) held by JHR, major construction work conducted during the fiscal
period under review that represents capital expenditures is as below. Capital expenditures for the fiscal period
under review totaled ¥3,367 million, and repair expenses that were accounted for as expense in the fiscal period
under review totaled ¥30 million. In aggregate, ¥3,397 million of construction work was carried out.
Name of property, etc. (Location)

Purpose

PeriodConstruction costs(¥1M)

Kobe Meriken Park Oriental Hotel Renovation of prefabricated bathrooms inguest rooms(Kobe-shi, Hyogo)

From April 2021
to July 2021

57

Dormy Inn Kumamoto(Kumamoto-shi, Kumamoto)

Renewal of air conditioning equipment

From March 2021
to July 2021

80

Oriental Hotel Universal City
(Osaka-shi, Osaka)

Renovation related to rebranding

From April 2021
to December 2021

822

Hotel Oriental Express Fukuoka
Tenjin(Fukuoka-shi, Fukuoka)

Renewal of heat-source equipment for air
conditioning facilities

From April 2021
to June 2021

67

Hotel Oriental Express Fukuoka
Tenjin(Fukuoka-shi, Fukuoka)

Renovation of guest rooms, etc.

From April 2021
to July 2021

366

Hilton Tokyo Odaiba(Minato-ku, Tokyo)

Renovation of central monitoring device

From March 2021
to June 2021

63
1,457

Total
(Note)New construction and renewal work includes that for buildings, attached facilities, etc. as well as items classified as furnitureand fixtures.

31

3. Cash reserves for the long-term repairs and maintenance plan (reserve for repairs and maintenance)
JHR accumulates cash reserves from cash flows for each fiscal period as detailed below to utilize for medium- tolong-term future expenditures on large-scale repairs and maintenance projects based on long-term repairs andmaintenance plans prepared for each property.
(millions of yen)
18th period

19th period

20th period

21st period

22nd period(From January 1, 2017
to December 31, 2017)(From January 1, 2018
to December 31, 2018)(From January 1, 2019
to December 31, 2019)(From January 1, 2020
to December 31, 2020)(From January 1, 2021
to December 31, 2021)

Balance at beginning of period

791

946

951

1,060

1,075

Provision during the period

154

15

116

25

1

Fiscal period

Reversal during the period

-

9

8

10

11

Amount carried forward

946

951

1,060

1,075

1,066

Expenses and Liabilities
1. Details of expenses related to asset management, etc.
(thousands of yen)Item

21st period(From January 1, 2020 to
December 31, 2020)

22nd period(From January 1, 2021 to
December 31, 2021)(a) Asset management fees (Note)

1,479,381

1,447,210(b) Asset custody and administrative
service fee

125,986

121,700(c) Officers’ compensation

17,40017,400(d) Other operating expenses

322,710257,097

1,945,477

1,843,408

Total(Note)For asset management fees for the 21st fiscal period, besides the above amounts, there are ¥7,647 thousand of fees forproperty acquisition included in the acquisition price of the relevant investment property, and ¥42,615 thousand of feesfor property sale deducted from the gain on sale of real estate properties. For asset management fees for the 22nd fiscal
period, besides the above amounts, there are ¥5,654 thousand of fees for property acquisition included in the acquisition
price of the relevant investment property, and ¥56,500 thousand of fees for property sale deducted from the gain on saleof real estate properties.

32

2. Loans payable
The status of loans by contractual agreement and by financial institution as of December 31, 2021 was as follows:
Category

LenderBalance at Balance at Average
Borrowing beginningend ofinterestdateof period
periodrate (%)
(¥1M)
(¥1M)
(Note 1)

Sumitomo Mitsui Banking
Corporation

2,787

－

Shinsei Bank, Limited

1,470

－

3,470

－

1,485

－

1,600

－

Development Bank of Japan Inc.

650－

Aozora Bank, Ltd.

285－

11,747

－

100

－

100

－

935

－

935

－

－

648

－

2,516

－

1,120

－

2,516

－

6,800

Sumitomo Mitsui Banking
Corporation

－

3,487

Mizuho Bank, Ltd.

－

4,670

－

2,450

－

2,220

Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank,
Limited

September
30, 2020

Resona Bank, Limited

Subtotal
The Chiba Bank, Ltd.

September
30, 2020

Subtotal
December30, 2020

MUFG Bank, Ltd.
Subtotal
Sumitomo Mitsui Banking
Corporation
Shinsei Bank, Limited
Sumitomo Mitsui Trust Bank,
Short-term Limitedloans
payableMarch 31,2021

Resona Bank, Limited
SubtotalResona Bank, Limited
Shinsei Bank, Limited
Sumitomo Mitsui Trust Bank,
LimitedDevelopment Bank of Japan Inc.
(Note 3)September
30, 2021

Aozora Bank, Ltd.
Subtotal
Sumitomo Mitsui Banking
Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedDecember16, 2021

Development Bank of Japan Inc.
Subtotal
Short-term loans payable － Total

－

2,085

－

505

－

285

－

15,702

－

626

－

434

－

310

－

130

－

1,500

12,782

24,00233

Maturity
date

Repayment
methodUse

Remarks

0.38%

September
30, 2021

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.31%

September
30, 2021

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.58%

June 30,
2021

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.58%

March 31,2022

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.56%

September
30, 2021

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.58%

December16, 2022

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteedCategory

LenderBalance at Balance at Average
Borrowing beginningend ofinterestdateof period
periodrate (%)
(¥1M)
(¥1M)
(Note 1)

Sumitomo Mitsui Banking
Corporation

648

－

2,516

－

2,516

－

Sumitomo Mitsui Trust Bank,
Limited

1,120－

Subtotal

6,800

－

600

－

1,200

－

850

－

Shinsei Bank, Limited

750－

Sumitomo Mitsui Trust Bank,
Limited600－

SubtotalResona Bank, Limited
Shinsei Bank, Limited

March 31,2014

Sumitomo Mitsui Banking
Corporation
Mizuho Bank, Ltd.
Resona Bank, Limited

September
30, 2014

4,000－

Sumitomo Mitsui Banking
Corporation (Note 3)

1,700

909

Mizuho Bank, Ltd. (Note 3)

3,000

2,526

1,050

593

1,000

756

1,000

660

150

67

7,900

5,511

1,500

1,500

Shinsei Bank, Limited (Note 3)
Resona Bank, Limited (Note 3)

January 30,
2015

Sumitomo Mitsui Trust Bank,
Limited (Note 3)Long-term Aozora Bank, Ltd. (Note 3)
loans
SubtotalpayableSumitomo Mitsui Banking
Corporation

March 31,2015

Subtotal

1,500

1,500

1,000

1,000

500

423

Subtotal

1,500

1,423

Sumitomo Mitsui Trust Bank,
Limited

960

960

960

960

Aozora Bank, Ltd.
MUFG Bank, Ltd. (Note 3)

Resona Bank, Limited

July 10,2015

September
24, 2015

The Nomura Trust and Banking Co.,Ltd.
Subtotal
Sumitomo Mitsui Banking
Corporation
Shinsei Bank, Limited

September
30, 2015

Subtotal
Sumitomo Mitsui Banking
Corporation
Mizuho Bank, Ltd.
SubtotalMarch 28,
2016

960

960

2,880

2,880

703

703

189

189

892

892

1,050

1,050

1,050

1,050

2,100

2,100

34

Maturity
date

Repayment
methodUse

Remarks

1.15%

March 31,2021

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

1.04%

September
30, 2021

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.90%

January 31,
2022

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.93%

March 31,2022

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.95%

June 30,2022

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

1.07%

September
29, 2023

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

1.07%

September
29, 2023

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.77%

March 29,2024

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteedCategory

LenderBalance at Balance at Average
Borrowing beginningend ofinterestdateof period
periodrate (%)
(¥1M)
(¥1M)
(Note 1)The Nomura Trust and Banking Co.,
Ltd.

1,200

1,200

600

600

550

550

300

186

2,650

2,536

Sumitomo Mitsui Banking
Corporation

1,200

1,200

Mizuho Bank, Ltd.

1,000

1,000

1,000

1,000

Resona Bank, Limited

500

500

The Nomura Trust and Banking Co.,
Ltd.(Note 3)

500

388

4,200

4,088

800

800

The Chiba Bank, Ltd.
Development Bank of Japan Inc.

March 31,2016

The Bank of Fukuoka, Ltd.
(Note 3)
Subtotal

Shinsei Bank, Limited

March 31,2016

Subtotal
Sumitomo Mitsui Trust Bank,
LimitedMarch 31,2016

Subtotal

800

800

500

500

500

500

2,900

2,900

1,700

1,700

1,700

1,700

1,000

1,000

The Nomura Trust and Banking Co.,
Ltd.

500

500

The Chiba Bank, Ltd.

500

500

1,200

1,200

9,500

9,500

1,300

1,300

Development Bank of Japan Inc.

March 31,2016

Subtotal
Sumitomo Mitsui Banking
Corporation
Long-term
Shinsei Bank, Limitedloans
payable Mizuho Bank, Ltd.
Resona Bank, Limited

September
1, 2016

The Bank of Fukuoka, Ltd.
Subtotal
Sumitomo Mitsui Trust Bank,
Limited

September
1, 2016

Subtotal
September
1, 2016

MUFG Bank, Ltd.
Subtotal
Development Bank of Japan Inc.

September
1, 2016

Subtotal
September
1, 2016

Aozora Bank, Ltd.
Subtotal
Sumitomo Mitsui Banking
Corporation
The Chiba Bank, Ltd.
Subtotal

July 12,
2017

1,300

1,300

2,000

2,000

2,000

2,000

700

700

700

700

500

500

500

500

1,750

1,750

500

500

2,250

2,250

35

Maturity
date

Repayment
methodUse

Remarks

0.77%

March 29,2024

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.68%

March 31,2023

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.66%

March 29,2024

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.57%

March 29,2024

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.74%

September
30, 2025

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.56%

September
30, 2024

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.56%

September
30, 2024

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.59%

September
30, 2024

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.71%

September
30, 2024

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.48%

June 30,
2023

Lump-sum
repayment

Unsecured,(Note 2) unguaranteedCategory

LenderBalance at Balance at Average
Borrowing beginningend ofinterestdateof period
periodrate (%)
(¥1M)
(¥1M)
(Note 1)

Sumitomo Mitsui Banking
Corporation
Shinsei Bank, Limited
Mizuho Bank, Ltd.

August 1,
2017

Resona Bank, Limited
Subtotal
Sumitomo Mitsui Trust Bank,
LimitedAugust 1,
2017

SubtotalAugust 1,
2017

MUFG Bank, Ltd.
Subtotal
Development Bank of Japan Inc.

August 1,
2017

Subtotal
The Bank of Fukuoka, Ltd.

August 1,
2017

SubtotalAugust 1,
2017

Aozora Bank, Ltd.
Subtotal
THE NISHI-NIPPON CITY BANK,LTD.
Long-term
Subtotalloans
payable Shinsei Bank, Limited

August 1,
2017
August 1,
2017

Subtotal
Sumitomo Mitsui Banking
Corporation
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank,
Limited

September
19, 2017

Shinsei Bank, Limited
Subtotal
Sumitomo Mitsui Banking
Corporation
Shinsei Bank, Limited

November15, 2017

Subtotal
Sumitomo Mitsui Banking
Corporation
Shinsei Bank, Limited
Development Bank of Japan Inc.

November15, 2017

The Bank of Fukuoka, Ltd.
Subtotal
Sumitomo Mitsui Banking
Corporation
SubtotalMarch 30,
2018

1,250

1,250

1,250

1,250

1,250

1,250

500

500

4,250

4,250

1,000

1,000

1,000

1,000

700

700

700

700

500

500

500

500

500

500

500

500

500

500

500

500

1,000

1,000

1,000

1,000

300

300

300

300

1,200

1,200

500

500

460

460

390

390

2,550

2,550

2,500

2,500

1,500

1,500

4,000

4,000

1,500

1,500

500

500

300

300

150

150

2,450

2,450

1,700

1,700

1,700

1,700

36

Maturity
date

Repayment
method0.85%

September
30, 2026

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.73%

September
30, 2025

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.68%

September
30, 2025

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.75%

September
30, 2025

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.73%

September
30, 2025

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.73%

September
30, 2025

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.73%

September
30, 2025

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.68%

September
30, 2025

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.65%

March 31,2025

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.57%

March 29,2024

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.65%

March 31,2025

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.43%

March 31,2023

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

Use

RemarksCategory

LenderBalance at Balance at Average
Borrowing beginningend ofinterestdateof period
periodrate (%)
(¥1M)
(¥1M)
(Note 1)

Sumitomo Mitsui Banking
Corporation
Shinsei Bank, Limited
The Chiba Bank, Ltd. (Note 3)
THE NISHI-NIPPON CITY BANK,
LTD.(Note 3)
Sompo Japan Insurance Inc.
(Note 3)

April 26,
2018

650

650

950

950

500

432

250

184

500

464

2,850

2,680

500

454

500

454

500

488

500

488

1,700

1,700

1,400

1,400

500

500

300

300

3,900

3,900

500

500

500

500

500

500

Sompo Japan Insurance Inc.

1,000

1,000

Subtotal

2,500

2,500

2,500

2,500

1,500

1,500

Subtotal
The Hiroshima Bank, Ltd. (Note 3)

April 26,2018

Subtotal
The Shizuoka Bank, Ltd. (Note 3)

September
28, 2018

Subtotal
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,
LimitedLong-term
Shinsei Bank, Limitedloans
payable Mizuho Bank, Ltd.

September
28, 2018

Subtotal
The Bank of Fukuoka, Ltd.
The Chiba Bank, Ltd.
THE NISHI-NIPPON CITY BANK,
LTD.

April 8,2019

Sumitomo Mitsui Banking
Corporation
Shinsei Bank, Limited
April 8,2019

Mizuho Bank, Ltd.

1,500

1,500

Sumitomo Mitsui Trust Bank,
Limited

1,000

1,000

Development Bank of Japan Inc.

1,000

1,000

7,500

7,500

Subtotal

37

Maturity
date

Repayment
method0.43%

March 31,2023

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.52%

March 31,2023

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.55%

September
29, 2023

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.95%

September
30, 2027

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.38%

March 29,2024

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.72%

March 31,2027

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

Use

RemarksCategory

LenderBalance at Balance at Average
Borrowing beginningend ofinterestdateof period
periodrate (%)
(¥1M)
(¥1M)
(Note 1)

Sumitomo Mitsui Banking
Corporation

4,000

4,000

Shinsei Bank, Limited

3,000

3,000

Mizuho Bank, Ltd.

3,000

3,000

Sumitomo Mitsui Trust Bank,
Limited

2,500

2,500

1,000

1,000

500

500

Development Bank of Japan Inc.

1,000

1,000

The Bank of Fukuoka, Ltd.

1,000

1,000

Aozora Bank, Ltd.

1,000

1,000

THE NISHI-NIPPON CITY BANK,
LTD.

1,000

1,000

18,00018,000

200

200

1,400

1,400

Resona Bank, Limited
The Nomura Trust and Banking Co.,Ltd.

April 8,2019

SubtotalLong-term The Chiba Bank, Ltd.
loans
payable The Hiroshima Bank, Ltd.

September
30, 2019

1,600

1,600

Sumitomo Mitsui Banking
Corporation

Subtotal

550

550

Shinsei Bank, Limited

450

450

Mizuho Bank, Ltd.

1,400

1,400

200

200

200

200

700

700

The Bank of Fukuoka, Ltd.

1,100

1,100

The Nomura Trust and Banking Co.,
Ltd.

1,000

1,000

Subtotal

5,600

5,600

Long-term loans payable – Total

114,372

100,652

Total loans payable

127,154

124,654

Sumitomo Mitsui Trust Bank,
LimitedResona Bank, Limited

September
30, 2019

Development Bank of Japan Inc.

(Note 1)

(Note 2)
(Note 3)(Note 4)

Maturity
date

Repayment
method0.82%

March 31,2028

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.23%

September
30, 2024

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

0.68%

September
30, 2027

Lump-sum
repayment

Unsecured,(Note 2) unguaranteed

Use

Remarks

The average interest rate is a weighted average of interest rates during the period, rounded off to second decimal places.
As JHR has conducted interest rate swap transactions in order to hedge against interest rate fluctuation risks, the interest
rate of loans subject to such interest rate swap transactions is presented as the rate obtained by taking into account theeffect of interest rate swaps, rounded off to second decimal places.
The funds were appropriated for acquisition of the beneficial interest of real estate in trust, refinancing of borrowings andredemption of investment corporation bonds.
JHR made partial early repayment of the loan on December 17, 2021.
In order to list each loan payable, ¥8,434 million of the current portion of long-term loans payable in the balance sheets is
included in long-term loans payable in the above table.

38

3. Investment corporation bonds
Status of investment corporation bonds as of December 31, 2021 was as follows:
Name

Issuance
date

Balance at
beginning of
period(¥1M)

Balance at
end ofperiod(¥1M)

Fourth unsecured investment
corporation bonds

December19, 2014

1,500－

Fifth unsecured investment
corporation bonds

October 23,
2015

6,000

Sixth unsecured investment
corporation bonds

March 22,2016

Seventh unsecured
investment corporation bonds

Interest
rate

Maturity
date

Repayment
methodUse

0.860

December17, 2021

Lump-sum
repayment(Note 1)

6,000

0.820

October
21, 2022

Lump-sum
repayment(Note 2)

3,000

3,000

0.935

March 19,2026

Lump-sum
repayment(Note 2)

November29, 2016

9,000

9,000

0.600

November27, 2026

Lump-sum
repayment(Note 3)Eighth unsecured investment
corporation bonds

November29, 2016

1,100

1,100

0.600

November27, 2026

Lump-sum
repayment(Note 3)

Ninth unsecured investment
corporation bonds

November24, 2017

1,000

1,000

0.530

November22, 2024

Lump-sum
repayment(Note 2)Tenth unsecured investment
corporation bonds

February 21,
201810,00010,0000.840

February21, 2028

Lump-sum
repayment(Note 1)Eleventh unsecured
investment corporation bonds

June 14,
2019

8,000

8,000

0.854

June 14,2029

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed(Note 6)

Twelfth unsecured investment
corporation bonds (green
bonds)

July 31,
2019

2,000

2,000

0.400

July 31,2024

Lump-sum
repayment(Note 4)

Unsecured,
unguaranteed(Note 5)41,60040,100Total

Remarks
Unsecured,
unguaranteed(Note 5)
Unsecured,
unguaranteed(Note 6)
Unsecured,
unguaranteed(Note 5)
Unsecured,
unguaranteed(Note 6)
Unsecured,
unguaranteed(Note 5)
Unsecured,
unguaranteed(Note 5)
Unsecured,
unguaranteed(Note 6)(Note 1)

The funds were appropriated for repayment of existing borrowings and acquisition of real estate or the beneficial interestof real estate in trust, etc.

(Note 2)

The funds were appropriated to partly fund the repayment of existing borrowings.

(Note 3)

The funds were appropriated for redemption of the second unsecured investment corporation bonds, repayment ofexisting borrowings and acquisition of real estate or the beneficial interest of real estate in trust, etc.

(Note 4)

The funds were mainly appropriated for repayment of existing borrowings that were appropriated for capital expendituresand constructions costs which contribute to environment, including reduction of CO2 and water consumption.

(Note 5)A special pari passu clause among specified investment corporation bonds is attached to the bonds.

(Note 6)

A special pari passu clause among investment corporation bonds is attached to the bonds.

4. Short-term investment corporation bonds
Not applicable.
5.

(%)

Subscription rights to new investment units
Not applicable.

39

Purchase and Sale during the Period
1. Purchase and sale, etc. of real estate, etc., asset-backed securities, etc. infrastructure assets, etc., andinfrastructure-related assets
Acquisition
Asset type

Name of property, etc.

Acquisition
date

Sale

Acquisition
price
(¥1M)

Oriental Hotel Universal City
(part of site)

Beneficial interest ofreal estate in trustibis Tokyo Shinjuku
Total(Note)

Gain (loss) on
sale
(¥1M)

―

―

―

(Note 1)

(Note 1)

Real estateBook value(¥1M)

Sale price(¥1M)

Sale dateJuly 30,
2021

753

―

―

―

December15, 2021

11,300

7,809

3,258

―

753

―

11,300

7,809

3,258

Acquisition price and Sale price indicates contracted amount of the property in the purchase and sale agreement, etc.
excluding related expenses (brokerage fees, taxes, etc.) incurred on the acquisition or sale of such property.

2. Purchase and sale of other assets, etc.
Assets other than real estate, etc., asset-backed securities, etc., infrastructure assets, etc. and infrastructure- related
assets are mostly bank deposits and bank deposits in trust.
3. Investigation into prices, etc. of specified assets(1) Real estate properties, etc.
Acquisition/
sale

Asset type

Name of property, etc.

Oriental Hotel Universal
City (part of site)

Acquisition

Real estate

Sale

Beneficial interest ofibis Tokyo Shinjuku
real estate in trust

Acquisition/
sale date

Acquisition/
sale priceAppraisal
value

(¥1M)

(¥1M)

(Note 1)

(Note 2)

Date ofappraisal

Appraisal agency

July 30,
2021

753

763

June 30, 2021

Rich Appraisal
Institute Co., Ltd.

December15, 2021

11,3009,900

June 30, 2021

Japan Real Estate
Institute(Note 1)

Acquisition price and sale price indicate contracted amount of the property in the purchase and sale agreement, etc.
excluding related expenses (brokerage fees, taxes, etc.) incurred on the acquisition or sale of such property.

(Note 2)

The above appraisals were evaluated by applying the “Real Estate Appraisal Standards, Chapter 3: Valuation for price ofreal estate for securitization.”(2)

Transaction of securities

Not applicable.
(3) Other
Not applicable.

404. Transactions with interested parties, etc. (Note 1)(1) Transactions(millions of yen)Price, etc. (Note 2) (Note 3)

Category

Acquisition price, etc.

Total amountSale price, etc.

753

Real estate operating revenue
11,30010,374

Breakdown of transactions with interested parties, etc.
Kyoritsu Maintenance Co., Ltd.

–

[–%]

–

[–%]

1,063

[10.3%]

Hotel Management Japan Co., Ltd.

–

[–%]

–

[–%]

803

[7.7%]

Tokyo Humania Enterprise KK

–

[–%]

–

[–%]

522

[5.0%]

K.K. A.I.C Hiroshima Management

–

[–%]

–

[–%]

301

[2.9%]KK Narita Yoshikura Operations

–

[–%]

–

[–%]

284

[2.7%]

Hotel Centraza Co., Ltd.

–

[–%]

–

[–%]

243

[2.4%]KK Osaka Sakurajima Operations

–

[–%]

–

[–%]

171

[1.6%]KK Fukuoka Tenjin Operations

–

[–%]

–

[–%]

84

[0.8%]OW Hotel Operations KK

–

[–%]

–

[–%]

71

[0.7%]KK Narita Kosuge Operations

–

[–%]

–

[–%]

41

[0.4%]

Total

–

[–%]

–

[–%]

3,587

[34.6%](Note 1)

(Note 2)
(Note 3)

(2)

Interested parties, etc. are the Asset Management Company’s interested parties, etc. stipulated in Article 201, paragraph
1 of the Investment Trust Act (hereinafter referred to as “Interested parties, etc.”). The amounts in “(1) Transactions”
above and “(2) Amounts of fees paid, etc.” below include transactions with the Interested parties, etc. as well as majortransactions with sponsor-related parties stipulated in the Asset Management Company’s company code for transactions
with sponsor-related parties, which include 1. Interested parties, etc., 2. The Asset Management Company’s shareholders,
3. Companies, etc. that take a 50% or more stake in a shareholder that holds 50% or more of the shares in the AssetManagement Company, 4. Companies in which a shareholder of the Asset Management Company have a 50% or more
stake, 5. Companies with which the Asset Management Company has concluded an asset management agreement, a
discretionary investment agreement or an investment advisory agreement, 6. Entity or persons who ceased to fall under
1. through 5. within 3 months, and 7. Entity or persons who are deemed appropriate by the compliance officer of theAsset Management Company to be treated as sponsor-related parties in light of the company code for transactions withsponsor-related parties and the purpose of these rules.
Acquisition price, etc. and sale price, etc. indicate contracted amounts of the property in the purchase and sale agreement,
etc. excluding related expenses (brokerage fees, taxes, etc.) incurred on the acquisition or sale of such property.
The figures in brackets show the ratio of the relevant amount to the total amount, rounded off to one decimal place.

Amount of fees paid, etc.
(thousands of yen)Classification

Outsourcing
expenses (Note)(Note)

Total amountsof fees paid,
etc.
(A)494,005

Breakdown of transactions withinterested parties, etc.
Counter party
Hotel Management Japan Co., Ltd.
Tokyo Humania Enterprise KK

Amount of payment(B)

Ratio to total
amountB/A (%)

5,760

1.2

120

0.0

Includes base fees under the property management agreement as well as outsourcing expenses related to routine
maintenance and management of buildings and facilities and management contract fees, etc.

5. Transactions with the Asset Management Company in other businesses of the Asset Management
Company
The Asset Management Company does not concurrently conduct any of the class 1 financial instruments
transaction business, class 2 financial instruments transaction business, building lots and buildings transaction
business, or real estate specified joint enterprise business, and there are no applicable transactions.

41II. Financial Information
1. Assets, liabilities, equity, and profit and loss
For the status of assets, liabilities, equity (contribution), and profit and loss, please refer to “Balance Sheets,”“Statements of Income,” “Statements of Changes in Net Assets,” and “Notes to Financial Statements.”
2. Changes in calculation method of depreciation
Not applicable.
3．Changes in evaluation method of real estate, etc. and infrastructure assets, etc.
Not applicable.
Status of beneficiary certificates of investment trusts set up by asset management company, etc.
Japan Hotel REIT Advisors Co., Ltd., the asset management company of JHR, has acquired JHR’s investment
units as indicated below.
(1) Status of acquisition, etc.
Date

Number of units acquired

Number of units disposed

Number of units held

(units)(units)(units)July 5, 2017

1,200

―

3,700

Accumulated total

1,200

―

3,700

(2) Status of holding units
Total investment
at end of period

Number of units
held at end of
period(thousands ofyen)(units)(Note 1)

Ratio to total
units issued(%)(Note 2)

(Reference)
Total number of units
issued at end of
period(units)18th
fiscalperiodFrom January 1, 2017 to
December 31, 2017

3,700

305,5710.09

4,010,847

19th
fiscalperiodFrom January 1, 2018 to
December 31, 2018

3,700

305,5710.09

4,010,847

20thfiscalperiodFrom January 1, 2019 to
December 31, 2019

3,700

305,571

0.08

4,462,347

21stfiscalperiodFrom January 1, 2020 to
December 31, 2020

3,700

305,571

0.08

4,462,347

22ndfiscalperiodFrom January 1, 2021 to
December 31, 2021

3,700

305,5710.08

4,467,006(Note 1)
(Note 2)

Total investment at end of period indicates the acquisition price.
Ratio to total units issued is percentage of investment units held at end of period to the total investment units issued
at end of period and is rounded down to second decimal place.

42

Other(1) Announcements
The following shows the summary of major conclusions, changes, etc. of the principal agreements that wereapproved or reported at meetings of JHR’s Board of Directors during the fiscal period under review.
Approval date

Item

Summary

March 4, 2021

Conclusion of an underwriting agreement
for new investment units in association
with the issuance of new investment units
through third-party allotment

Due to the issuance of new investment units through third-party
allotment, general administration for offering the investment units
was entrusted to SMBC Nikko Securities Inc.

Shelf registration and comprehensive
resolution on the issuance of investment
corporation bonds and entrustment ofaccompanying administration

A comprehensive resolution was made on the issuance of investment
corporation bonds with the issuance period between May 9, 2021 andMay 8, 2023 with the total amount issued of within ¥100 billion. At
the same time, a resolution was made on the issuance of investment
corporation bonds of within ¥20 billion in total, and the decision onmatters regarding the issuance of investment corporation bonds,
including the administration related to issuance and entrustment ofoperations, was left to the discretion of the Executive Director.

April 22, 2021

The 11th General Meeting of Unitholders of JHR was held on November 25, 2021. The major items approvedat the General Meeting of Unitholders are summarized below.
AgendaSummary

Partial amendments to the Articles
of Incorporation

In association with the amendment of the Accounting Standard for Financial Instruments(ASBJ Statement No. 10) (including newly established or revised accounting standards andguidance in relation thereto), necessary changes were made in the method of asset evaluation.

Election of one Executive Director

Kaname Masuda was again elected as Executive Director. His term of office commences on
November 25, 2021 and continues until the end of the general meeting of unitholders which
will be held within 30 days from the day immediately following the day on which two years
have passed since his election and at which a vote will be held on the election of Executive
Director(s).

Election of three Supervisory
Directors

Tetsuya Mishiku, Hiroto Kashii and Mayumi Umezawa were elected as Supervisory
Directors. The term of office of the elected Supervisory Directors commences on November
25, 2021 and continues until the end of the general meeting of unitholders which will be held
within 30 days from the day immediately following the day on which two years have passed
since their election and at which a vote will be held on the election of Supervisory Directors.

Election of one Substitute Executive
Director

Hisashi Furukawa, Representative Director of the Asset Management Company, was again
elected as Substitute Executive Director.

(2) Status, etc. of corporation owning foreign real estate
Not applicable.
(3) Status, etc. of real estate owned by foreign real property holding corporations
Not applicable.
(4) Other
Unless otherwise noted, amounts and ratios in this report are rounded down and rounded off to the stated unit,
respectively.
43

JAPAN HOTEL REIT INVESTMENT CORPORATION
Balance Sheets
As of December 31, 2021 and 2020
Thousands of yen
As ofDecember 31,
2021
ASSETS
Current assets:
Cash and deposits (Notes 6 and 7)
Cash and deposits in trust (Notes 6 and 7)
Operating accounts receivable (Note 7)
Prepaid expenses
Income taxes receivable
Other current assets
Total current assets

As ofDecember 31,
2020¥ 22,838,609 ¥ 19,382,019
7,458,225
9,171,145
1,750,164
672,415
485,240
533,15040
42
108,41182,69832,640,693
29,841,471

Property and equipment, at cost (Notes 19 and 21):
Machinery and equipment
Tools, furniture and fixtures
Construction in progress
Buildings in trust (Note 16)
Structures in trust
Machinery and equipment in trust
Tools, furniture and fixtures in trust
Land in trust
Construction in progress in trust

677,977
4,889,299
21,972137,035,704
2,844,532
645,033
126,678
212,263,515
110,371358,615,085(32,471,257)
326,143,828

622,365
4,373,456
2,761
137,193,115
2,772,035
683,995
133,628
216,410,533
83,507362,275,397(28,971,718)
333,303,679

Intangible assets:
SoftwareTrademark rights
Leasehold rights in trust (Note 21)
Fixed-term leasehold rights in trust (Note 21)
Other intangible assets (Note 21)
Total intangible assets

275,488
467,409
27,324,752
4,630,789
5,920
32,704,360

162,441
523,498
28,532,362
4,765,994
7,076
33,991,374

Other assets:
Security deposits
Leasehold and security deposits in trust
Long-term prepaid expenses
Derivative assets (Notes 7 and 20)
Reserve fund for repairs and maintenance
Investment unit issuance costs
Investment corporation bond issuance costs
Total other assets

12,520139,668
2,191,650
12,117
327,476
7,735
143,863
2,835,031

12,520150,223
2,449,539
314,067
56,111
177,418
3,159,879¥394,323,913¥400,296,404

Less: Accumulated depreciation
Net property and equipment

Total assets(Continued)

44

JAPAN HOTEL REIT INVESTMENT CORPORATION
Balance Sheets
As of December 31, 2021 and 2020
Thousands of yen
As ofDecember 31,
2021

As of
December 31,
2020

LIABILITIES AND NET ASSETS
Current liabilities:
Operating accounts payable
Short-term loans payable (Notes 7 and 8)
Current portion of investment corporation bonds (Notes 7 and 9)
Current portion of long-term loans payable (Notes 7, 8 and 20)
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Dividends payable
Deposits received
Derivative liabilities (Notes 7 and 20)
Other current liabilities
Total current liabilities¥ 1,426,861
24,002,000
6,000,000
8,434,000
538,359
1,210
172,743658,839
9,714
6,002
5,289
10,281
41,265,303¥ 2,654,679
12,782,000
1,500,000
10,800,000
527,572
1,210
143,389
423,355
17,381
9,111
21,39842,76328,922,861

Long-term liabilities:
Investment corporation bonds (Notes 7 and 9)
Long-term loans payable (Notes 7, 8 and 20)
Tenant leasehold and security deposits (Note 7)
Tenant leasehold and security deposits in trust (Note 7)
Derivative liabilities (Notes 7 and 20)
Deferred tax liabilities (Note 17)
Asset retirement obligations (Note 10)
Total long-term liabilities

34,100,000
92,218,000
1,040,520
3,614,474
202,673
3,812
336,783
131,516,263

40,100,000
103,572,000
1,040,520
4,356,804
767,749
335,161
150,172,234

Total liabilities

172,781,567

179,095,095

187,194,209

186,894,169

21,746,398

21,746,398

10,311,886
1,174,860
11,486,747
1,300,724
34,533,870
221,728,079

10,617,580
1,174,860
11,792,441
1,527,790
35,066,630
221,960,800(185,733)(185,733)(759,492)(759,492)

221,542,346

221,201,308¥394,323,913¥400,296,404

Net assets (Note 11):Unitholders’ equity:
Unitholders’ capital
Units authorized: 20,000,000 units
Units issued and outstanding; 4,467,006 units and 4,462,347 units asof December 31, 2021 and 2020, respectively
Surplus:Capital surplus
Voluntary reserve:
Reserve for temporary difference adjustment (Note 12)
Reserve for advanced depreciation
Total voluntary reserve
Unappropriated retained earnings
Total surplus
Total unitholders’ equity
Valuation and translation adjustments:
Deferred gains (losses) on hedges (Note 20)
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets
See notes to financial statements.

45

JAPAN HOTEL REIT INVESTMENT CORPORATIONStatements of Income
For the years ended December 31, 2021 and 2020
Thousands of yen
For the year
For the year
ended
ended
December 31, December 31,
2020
2021
Operating revenue:
Real estate operating revenue (Note 13)
Other real estate operating revenue (Note 13)
Gain on sale of real estate properties (Note 14)
Gain on exchange of real estate properties (Note 15)
Total operating revenue
Operating expenses:
Real estate operating costs (Note 13)
Asset management fee
Asset custody and administrative service fee
Directors’ compensation
Other operating expenses
Total operating expenses¥ 9,502,439
872,223
3,258,950
13,633,613¥ 9,603,724
892,001
3,158,381
184,725
13,838,832

8,830,354
1,447,210
121,700
17,400257,097
10,673,763

8,717,332
1,479,381
125,986
17,400322,710
10,662,810

2,959,849

3,176,022

267
4,233
34,144
20,527
10,59015,730151
85,646278
3,535
34,21795
1,138
39,266907,653
315,762
416,416
33,55459,0861,000
14,011
1,747,484
1,298,011

963,502316,795
399,645
33,776
84,5204,802
13,9891,817,032
1,398,255-

130,000
130,000

Income before income taxes

1,298,011

1,528,255

Income taxes (Note 17):
Current
Total income taxes

1,210
1,210

1,210
1,210

1,296,801

1,527,045

Operating income
Non-operating income:Interest income
Gain on forfeiture of unclaimed dividends
Gain on insurance claims
Refunded taxes on property and equipment
Interest on tax refunds
Gain on derivative instruments
Other
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
Extraordinary income:Gain from collection of security deposits
Total extraordinary income

Net income
See notes to financial statements.

46

JAPAN HOTEL REIT INVESTMENT CORPORATIONStatements of Changes in Net Assets
For the years ended December 31, 2021 and 2020

Balance, January 1, 2020
Changes of items during the year:
Reversal of reserve for temporary
difference adjustment

Unitholders’capitalCapital surplus

Reserve fortemporarydifference
adjustment¥ 186,894,169¥ 21,746,398¥ 11,794,071 ¥--(1,176,490)--(1,176,490)

1,176,490

-

-

-

-

1,174,860-

1,174,860(1,174,860)

-

-

-

-

-

(1,174,860)-(1,174,860)-

1,174,860(16,466,060)
1,527,045(16,466,060)
1,527,045

-

-

-

-

-

-

-

-

¥ 186,894,169¥ 21,746,398(1,174,860)-(1,176,490)¥ 11,792,441

300,039

-

-

-

-

-

-

-

-

-

(305,694)---(305,694)-

305,694(1,829,562)
1,296,801(1,829,562)
1,296,801

-

-

-

-

-

-

-

-

300,039¥ 187,194,209¥ 21,746,398(305,694)¥ 10,311,886-(305,694)¥ 11,486,747

Provision of reserve for advanced
depreciation
Reversal of reserve for special
advanced depreciation
Dividends paid
Net income
Net changes in items other thanunitholders’ equity
Total changes in amount during theyear
Balance, December 31, 2020
Changes of items during the year:
Issuance of new investment units
Reversal of reserve for temporary
difference adjustment
Dividends paid
Net income
Net changes in items other thanunitholders’ equity
Total changes in amount during theyear
Balance, December 31, 2021

Thousands of yen
Unitholders’ equity
Surplus
Voluntary reserve
Reserve forReserve for
specialadvancedadvanceddepreciation
depreciation(1,176,490)¥ 10,617,580 ¥-¥ 1,174,860

1,174,860
1,174,860

1,174,860¥¥¥

Thousands of yen
Unitholders’equityTotal unitholders’equityBalance, January 1, 2020
¥ 236,899,815
Changes of items during the year:
Reversal of reserve for temporary
difference adjustment
Provision of reserve for advanced
depreciation
Reversal of reserve for special
advanced depreciation
Dividends paid
(16,466,060)
Net income
1,527,045
Net changes in items other thanunitholders’ equity
Total changes in amount during the(14,939,014)
year
Balance, December 31, 2020
¥ 221,960,800
Changes of items during the year:
Issuance of new investment units
300,039
Reversal of reserve for temporary
difference adjustment
Dividends paid
(1,829,562)
Net income
1,296,801
Net changes in items other thanunitholders’ equity
Total changes in amount during the(232,720)
year¥ 221,728,079
Balance, December 31, 2021

Valuation and translation adjustments
Deferred gains
Total valuation(losses) on
and translation
hedgesadjustments¥¥¥(377,376)¥(377,376)

Total net assets¥

236,522,438

-

-

-

-

-

-

-

-

(16,466,060)
1,527,045(382,115)(382,115)(382,115)(382,115)(759,492)¥(382,115)(759,492)¥(15,321,130)
221,201,308--

300,039--(1,829,562)
1,296,801

573,758

573,758

573,758

573,758(185,733)¥

573,758(185,733)

See notes to financial statements.

47¥

341,037
221,542,346

Total voluntary
reserve

Unappropriatedretained earnings¥ 12,968,932

¥

¥

¥

15,290,314(13,762,523)
1,527,790(227,066)
1,300,724

Total surplus¥¥¥

50,005,645(14,939,014)
35,066,630(532,760)
34,533,870

JAPAN HOTEL REIT INVESTMENT CORPORATIONStatements of Cash Flows
For the years ended December 31, 2021 and 2020
Thousands of yen
For the year
For the year
ended
ended
December 31,
December 31,
2020
2021
Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Gain on exchange of real estate properties
Loss on retirement of noncurrent assets(Gain) Loss on derivative instruments
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Decrease of property and equipment due to sale
Decrease of property and equipment in trust due to sale
Decrease of intangible assets due to sale
Gain from collection of security deposits
Interest 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
SubtotalInterest received
Interest paid
Interest received on tax refunds
Income taxes – refunded (paid)
Net cash provided by operating activities¥ 1,298,011
4,804,111
16,682(14,730)
33,55459,086
48,841
7,757,292
2,918
(267)
1,223,415(10,590)(1,077,749)
47,910257,888(1,694,120)
12,47529,354
235,483(3,108)(128,639)
12,897,821
271(1,225,104)
10,590(1,208)
11,682,370¥ 1,528,255
4,761,907(184,725)
5,701
3,663
33,776
84,5201,010
4,789,585(130,000)(278)
1,280,297(95)
2,107,315
17,130316,935
1,693,683(124,063)(517,659)(485,938)
414(153,173)
15,028,266
312(1,280,097)
95(1,197)
13,747,378

Cash flows from investing activities:
Purchase of property and equipment
Purchase of property and equipment in trust
Purchase of intangible assets
Payments of reserve fund for repairs and maintenance
Proceeds from collection of security deposits
Proceeds from collection of security deposits in trust
Proceeds from tenant leasehold and security deposits in trust
Repayment of tenant leasehold and security deposits in trust
Payments into deposit with withdrawal restrictions
Net cash used in investing activities(666,633)(2,828,665)(199,936)(40,625)
10,55556,530(726,247)(300,000)¥ (4,695,022)(476,704)(1,858,016)(604,760)(36,549)
130,000
64,941(296,047)¥ (3,077,137)(Continued)

48

JAPAN HOTEL REIT INVESTMENT CORPORATIONStatements of Cash Flows
For the years ended December 31, 2021 and 2020
Thousands of yen
For the year
For the year
ended
ended
December 31,
December 31,
2020
2021
Cash flows from financing activities:
Proceeds from short-term loans payable
Repayments of short-term loans payable
Repayments of long-term loans payable
Repayments of investment corporation bondProceeds from issuance of investment units
Dividends paid
Net cash provided by (used in) financing activities¥ 25,082,000(13,862,000)(13,720,000)(1,500,000)
289,329(1,833,006)(5,543,676)¥ 18,574,000(5,792,000)(12,782,000)(16,461,008)(16,461,008)

Net increase (decrease) in cash and cash equivalents

1,443,670(5,790,766)

Cash and cash equivalents at beginning of year

28,553,164

34,343,930

Cash and cash equivalents at end of year (Note 6)¥ 29,996,835¥ 28,553,164

See notes to financial statements.

49

JAPAN HOTEL REIT INVESTMENT CORPORATION
Notes to Financial Statements
For the years ended December 31, 2021 and 2020
1. Organization and Basis of Presentationa. Organization
Japan Hotel REIT Investment Corporation (“JHR”), formerly known as Nippon Hotel Fund Investment Corporation(the “Former NHF”), was established under the Act on Investment Trusts and Investment Corporations (the “Investment
Trust Act”) on November 10, 2005 and was listed on the Real Estate Investment Trust (“REIT”) Section on the Tokyo
Stock Exchange (Securities code: 8985) on June 14, 2006. JHR is externally managed by a licensed asset managementcompany, Japan Hotel REIT Advisors Co., Ltd. (hereinafter referred to as the “Asset Management Company”).
Focusing on the 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 orreal estate equivalents of such real estate or which are backed by such real estate or real estate equivalents.
In the fiscal period ended December 31, 2012, the Former NHF, as the surviving entity, merged with Japan Hotel andResort, Inc. (the “Former JHR”), as the dissolved entity, with an effective date of April 1, 2012 (the “Merger”). In
conjunction with the Merger, the Former NHF changed its name to Japan Hotel REIT Investment Corporation.
Through the Merger, nine properties held by the Former JHR were succeeded by JHR. As a result, as of the effective
date of the Merger, JHR’s property portfolio expanded to 28 properties. As of December 31, 2021, JHR has ownershipinterests in 41 properties.
b. Basis of presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Financial
Instruments and Exchange Law and their related accounting regulations, and in conformity with accounting principles
generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards.
The accompanying financial statements have been reformatted and translated into English (with certain reclassifications
and expanded descriptions) from the financial statements of JHR prepared in accordance with Japanese GAAP and
filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments
and Exchange Law. Certain supplementary information included in the statutory Japanese language financial statements,
but not necessarily required for fair presentation, is not presented in the accompanying financial statements. JHR has
not prepared consolidated financial statements, as JHR has no consolidating subsidiaries or entities.
As permitted by the regulations under the Financial Instruments and Exchange Law of Japan, the amounts are rounded
down to the nearest thousands or millions. As a result, the totals shown in the accompanying financial statements do
not necessarily agree with the sums of the individual amounts.
2. Summary of Significant Accounting Policies
a. Cash and cash equivalents
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 a maturity of three months orless when purchased, which can easily be converted to cash and subject to minimal risk of change in value.
b. Property and equipment
Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line
method over their estimated useful lives. The useful lives of major property and equipment components are as follows:
Machinery and equipment:
2 to 17 years
Tools, furniture and fixtures:
2 to 26 years
Buildings in trust:
2 to 64 years
Structures in trust:
2 to 64 years
Machinery and equipment in trust:
3 to 32 years
Tools, furniture and fixtures in trust:
2 to 27 years

50

c. Intangible assets
Intangible assets are stated at cost and amortized using the straight-line method. The amortization period of major
intangible assets is as follows.
Software (internal use): 5 years
Trademark rights: 10 years
Fixed-term leasehold rights in trust: 41 years (remaining contractual period at the time of acquisition)
Leasehold rights in trust are intangible assets with indefinite useful lives.
d. Investment unit issuance costs
Investment unit issuance costs are capitalized and amortized using the straight-line method over three years.
e. Investment corporation bond issuance costs
Investment corporation bond issuance costs are capitalized and amortized using the effective interest rate method over
the respective term of the bond.
f. Taxes on property and equipment
Taxes imposed on properties such as property taxes, city planning taxes, and depreciable asset taxes are allocated to therespective reporting period and expensed as “Real estate operating costs.” Cash paid for those properties related taxes
to the transferor of real properties at acquisition is not recorded as “Real estate operating costs” but capitalized as partof the acquisition cost of the relevant property. The amount of such taxes capitalized in the acquisition cost of real
properties was not applicable either for the year ended December 31, 2021 or for the year ended December 31, 2020.
g. Derivatives and hedging activities
JHR enters into certain derivative transactions in accordance with its financial policy in order to manage risks, which
are defined in the Articles of Incorporation, mainly arising from adverse fluctuations in interest rates on loans payable.
Derivative financial instruments are carried at fair value with changes in the unrealized gain or loss charged or credited
to operations, except for those which meet the criteria for hedge accounting in which case the unrealized gain or loss
is deferred as a component of net assets.
JHR evaluates hedge effectiveness by comparing the cumulative changes in cash flow of hedging instruments and thehedged items and assessing the ratio between the changes.
h. Beneficial interests of real estate in trust
For beneficial interests of real estate in trust, all assets and liabilities held in trust accounts as well as all income
generated and expenses incurred from assets in trust are presented in the relevant balance sheet and statement of income
accounts.
i. Consumption taxes
Consumption taxes are excluded from the transaction amounts.
3. Significant Accounting Estimates

Valuation of noncurrent assetsa.

Amounts recorded in the financial statements

Property and equipment
Intangible assets
Impairment loss

Thousands of yen
For the year ended December
31, 2021¥
326,143,828
32,704,360-

b. Information on the nature of significant accounting estimates for identified items
In accordance with the accounting standard for impairment of noncurrent assets, JHR has adopted the accounting
treatment to reduce the book value of noncurrent assets to a recoverable amount when the invested amount is deemed
to be unrecoverable due to decline in profitability.
In adopting the accounting treatment, the respective properties owned by JHR are regarded as a single asset group,51and judgment is made whether it is required to recognize impairment losses when indications of impairment are
deemed to exist for the group due to a significant decline in the market value and such.
Future cash flow estimates are used to determine whether or not to recognize impairment losses. When it is determinedthat impairment losses should be recognized, the book value is reduced to the recoverable amount, and the reduced
amount is recorded as impairment losses.
In estimating the future cash flow, the underlying rent, occupancy rate and real estate operating costs, etc. are assumed
by comprehensively taking into account the market trends and transaction cases of similar properties, etc.
JHR’s asset management business in real estate have seen risks of its operating revenue decreasing, etc. due to requests
for reduction or postponement of fixed rent arising from some of the lessees whose business performance has
worsened, a decrease in variable rents linked to hotel sales and other factors brought about by the worldwide spreadof the COVID-19 infection and the deterioration in social and economic conditions due to the such spread of infection.
Although it is uncertain and difficult to foresee when COVID-19 will be contained, JHR made accounting estimates
related to impairment accounting for noncurrent assets by assuming that the impact by COVID-19 will continue
through the fiscal period ending December 31, 2022, followed by recovery in performance after a certain period oftime, based on the information available as of the date of preparation of the financial statements.
However, as it is difficult to accurately predict when COVID-19 will be contained and how large its impact will be,
JHR’s financial position, results of operations and cash flows may be affected in case the recovery is delayed.
4. Changes in Presentation Methods

Notes on Significant Accounting Estimates is provided as JHR adopted the “Accounting Standard for Disclosure of
Accounting Estimates” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 31, issued on March 31,2020) from the fiscal year under review. However, in accordance with the transitional treatment as stipulated in theproviso of Paragraph 11 of the Accounting Standard, there is no information provided for the previous fiscal year.
5. Accounting Standards Issued but Not Yet Applied・“Accounting Standard for Revenue Recognition” ASBJ Statement No. 29 revised on March 31, 2020)
・“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 revised on
March 26, 2021)
・“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19
revised on March 31, 2020)(1) Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in
the United States have jointly developed comprehensive accounting standards for revenue recognition and issued“Revenue from Contracts with Customers” (IFRS 15 by IASB and Topic 606 by FASB) in May 2014. Given thesituation where IFRS 15 is applied from fiscal periods beginning on or after January 1, 2018 and that Topic 606 is
applied from fiscal periods 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 establish
the standards by incorporating the basic principles of IFRS 15 as a starting point, from the perspective ofcomparability between financial statements, which is one of the benefits of maintaining consistency with IFRS 15.
The basic policy also allowed to add alternative treatments to the extent that comparability is not impaired, if
consideration should be given to current practices that have been used thus far in Japan.
(2) Scheduled date of application
The above standards will be applied from the beginning of the fiscal period ending December 31, 2022.
(3) Impact of applying the accounting standards
The impact on the financial statements of applying the standards, etc. will be immaterial.
・“Accounting Standard for Fair Value Measurement" (ASBJ Statement No. 30 issued on July 4, 2019)
・“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 revised on July 4, 2019)52

・“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31 issued
on July 4, 2019)
・“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19
revised on March 31, 2020)(1) Overview
IASB and FASB have established detailed guidance for fair value measurement (IFRS 13 “Fair Value Measurement”
under the IFRS and Topic 820 “Fair Value Measurement” of the Accounting Standards Codification under the U.S.
accounting standards) containing almost the same content. In light of this, the ASBJ worked to secure consistencyof the Japanese accounting standards with these internationally recognized accounting standards, mainly in termsof the guidance on and disclosure of the fair value of financial instruments, and announced the Accounting Standard
for Fair Value Measurement, etc.
The basic policy of ASBJ for the development of the Accounting Standard for Fair Value Measurement was to adopt
all provisions of IFRS 13 as a rule from the viewpoint of improving the comparability between the financial
statements of the Japanese and foreign companies by using a unified measurement approach. Moreover, inconsideration of the practices that have been used in Japan to date, ASBJ determined to establish other treatments
for certain items, to the extent that they do not significantly impair the comparability between the financial
statements.
(2) Scheduled date of application
The above standards will be applied from the beginning of the fiscal period ending December 31, 2022.
(3) Impact of applying the accounting standards
The impact on the financial statements of applying the standards will be immaterial.

6. Cash Flow Information
Cash and cash equivalents as of December 31, 2021 and 2020 in the statements of cash flows consisted of the following:Thousands of yen
As of December
As of December
31, 2021
31, 2020
Cash and deposits¥
22,838,609¥
19,382,019
Cash and deposits in trust
7,458,225
9,171,145(300,000)
Deposit with withdrawal restrictions¥
29,996,835¥
28,553,164
Cash and cash equivalents
7. Financial Instruments
a. Status of financial instruments(1) Policy for financial instruments
JHR is an investment corporation set forth in Article 2, paragraph 12 of the Investment Trust Act, managing
investments mainly in specified assets as prescribed in the Investment Trust Act. As a policy, JHR procures funds
through issuance of investment units, etc. and loans from financial institutions in order to make investments inspecified 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 are exposed to credit risks of customers. To address the risks, JHR monitors payment
dates and balances by customers in order to detect and mitigate any suspicious accounts in a timely manner.
The floating rate loans payable are exposed to risks of interest rate fluctuations. In order to mitigate interest raterisks, JHR may enter into derivative transactions, if it is judged that fixing interest payment is necessary.
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 finance section of the53

Asset Management Company by using financial institutions with high credit ratings through approval and resolution
by authorized personnel and a meeting committee structure set forth in its decision-making standards and resolutionof JHR’s board of directors.
Loans payable expose JHR to liquidity risks. The finance section of the Asset Management Company prepares andupdates projections and actual cash flows on a monthly basis to manage liquidity risks and monitors compliancewith restrictive covenants set forth in the loan agreements. JHR manages liquidity risks by managing the ratio ofshort-term and long-term loans payable, etc. considering the current financial environment and other conditions
through approval and resolution by authorized personnel and meeting committee structure in the Asset Management
Company and resolution of JHR’s board of directors.
b. Fair value of financial instruments
Carrying amounts of financial instruments on the balance sheets, their fair values, and the differences as of December
31, 2021 and 2020 were as follows. Financial instruments whose fair values are difficult to estimate are not includedin the table. See Note (2) below.

(i) Cash and deposits(ii) Cash and deposits in trust(iii) Operating accounts receivable
Total

Thousands of yen
As of December 31, 2021
Carrying amount
Fair value¥
22,838,609 ¥
22,838,609 ¥7,458,225
7,458,225
1,750,164
1,750,164¥
32,046,999 ¥32,046,999 ¥(iv) Short-term loans payable(v) Current portion of investment corporation
bonds(vi) Current portion of long-term loans payable(vii) Investment corporation bonds(viii) Long-term loans payable
Total

¥

24,002,000¥

6,000,000
8,434,000
34,100,000
92,218,000
164,754,000(ix) Derivative transactions (*)¥(i) Cash and deposits(ii) Cash and deposits in trust(iii) Operating accounts receivable
Total

Thousands of yen
As of December 31, 2020
Carrying amount
Fair value¥
19,382,019 ¥
19,382,019 ¥
9,171,145
9,171,145
672,415
672,415¥
29,225,579 ¥
29,225,579 ¥(iv) Short-term loans payable(v) Current portion of investment corporation
bonds(vi) Current portion of long-term loans payable(vii) Investment corporation bonds(viii) Long-term loans payable
Total

¥

(ix) Derivative transactions (*)¥

24,002,000

-

¥

-

¥

5,886,600
8,434,000
29,514,460
92,218,000
160,055,060¥(113,400)(4,585,540)(4,698,940)(195,846) ¥(195,846)¥-

12,782,000¥

Difference¥

1,500,000
10,800,000
40,100,000
103,572,000
168,754,000(789,147) ¥12,782,000¥

1,468,350
10,800,000
34,415,280
103,572,000
163,037,630(789,147)

Difference(31,650)(5,684,720)(5,716,370)¥-(*) Receivables and payables arising from derivative transactions are presented on a net basis and amounts in parenthesis denote net payables.

Notes:(1) Methods to measure fair value of financial instruments and derivative transactions(i) Cash and deposits, (ii) Cash and deposits in trust, (iii) Operating accounts receivable, (iv) Short-term loans
payableThe carrying value is deemed to approximate the fair value since the instruments are scheduled to be settled in a54

short period of time.
(v) Current portion of investment corporation bonds, (vii) Investment corporation bonds
The fair value of these instruments is measured based on the market price.
(vi) Current portion of long-term loans payable, (viii) Long-term loans payable
The carrying value is deemed to approximate the fair value since the interest rate on long-term loans payable arefloating interest rates which are adjusted periodically to reflect market interest rates.
(ix) Derivative transactions
The information on the fair value of derivative transactions is presented in Note 20.
(2) Information on financial instruments whose fair values are difficult to estimate as of December 31, 2021 and 2020
was as follows:
Thousands of yen
As of December
As of December
31, 2021
31, 2020
Carrying amount
Tenant leasehold and security deposits¥
1,040,520¥
1,040,520
Tenant leasehold and security deposits in trust
3,614,474
4,356,804¥
4,654,994¥
5,397,324
Total
Tenant leasehold and security deposits / Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits (in trust) are not subject to fair value disclosure because they have no 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 difficult.
(3) Redemption schedule for monetary claims as of December 31, 2021 and 2020:

As of December 31, 2021
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Total

As of December 31, 2020
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Total

Due within
one year¥22,838,609
7,458,225
1,750,164¥32,046,999

Due after
one to two
years
¥
¥
-

Thousands of yen
Due after
Due after
two to three three to four
years
years
¥
- ¥
¥
- ¥
-

Due after
four to five
years
¥
¥
-

Due after
five years¥¥-

Due within
one year¥19,382,019
9,171,145
672,415¥29,225,579

Due after
one to two
years
¥
¥
-

Thousands of yen
Due after
Due after
two to three three to four
years
years
¥
- ¥
¥
- ¥
-

Due after
four to five
years
¥
¥
-

Due after
five years¥¥-(4) Schedule for repayment of loans payable and redemption of investment corporation bonds as of December 31, 2021
and 2020.

As of December 31, 2021
Short-term loans payable
Current portion of investment
corporation bonds
Current portion of long-termloans payable
Investment corporation bonds
Long-term loans payable
Total

Thousands of yen
Due after
Due after
two to three three to four
years
years
¥
- ¥
-

Due within
one year¥24,002,000

Due after
one to two
years
¥
-

6,000,000--

8,434,000¥38,436,000

15,432,000¥15,432,000

3,000,000
18,536,000¥21,536,00055

Due after
four to five
years
¥
-

Due after
five years
¥
-

-

-

-

19,000,000¥19,000,000

13,100,000
4,250,000¥17,350,000

18,000,000
35,000,000¥53,000,000As of December 31, 2020
Short-term loans payable
Current portion of investment
corporation bonds
Current portion of long-termloans payable
Investment corporation bonds
Long-term loans payable
Total

Thousands of yen
Due after
Due after
two to three three to four
years
years
¥
- ¥
-

Due within
one year¥12,782,000

Due after
one to two
years
¥
-

1,500,000--

10,800,000¥25,082,000

6,000,000
10,900,000¥16,900,000

15,772,000¥15,772,00056

Due after
four to five
years
¥
-

Due after
five years
¥
-

-

-

-

3,000,000
18,650,000¥21,650,000

19,000,000¥19,000,000

31,100,000
39,250,000¥70,350,000

8. Short-Term and Long-Term Loans Payable
Short-term and long-term loans payable as of December 31, 2021 and 2020 consisted of the following:

Maturity date
Short-term loans payable:
0.38% Unsecured loan, payable in a lump-sum at maturity
0.31% Unsecured loan, payable in a lump-sum at maturity
0.58% Unsecured loan, payable in a lump-sum at maturity
0.58% Unsecured loan, payable in a lump-sum at maturity
0.56% Unsecured loan, payable in a lump-sum at maturity (*1)
0.58% Unsecured loan, payable in a lump-sum at maturity
Sub-total
Long-term loans payable:
1.15% Unsecured loan, payable in a lump-sum at maturity
1.04% Unsecured loan, payable in a lump-sum at maturity
0.90% Unsecured loan, payable in a lump-sum at maturity (*1)
0.93% Unsecured loan, payable in a lump-sum at maturity
0.95% Unsecured loan, payable in a lump-sum at maturity (*1)
1.07% Unsecured loan, payable in a lump-sum at maturity
1.07% Unsecured loan, payable in a lump-sum at maturity
0.77% Unsecured loan, payable in a lump-sum at maturity
0.77% Unsecured loan, payable in a lump-sum at maturity (*1)
0.68% Unsecured loan, payable in a lump-sum at maturity (*1)
0.66% Unsecured loan, payable in a lump-sum at maturity
0.57% Unsecured loan, payable in a lump-sum at maturity
0.74% Unsecured loan, payable in a lump-sum at maturity
0.56% Unsecured loan, payable in a lump-sum at maturity
0.56% Unsecured loan, payable in a lump-sum at maturity
0.59% Unsecured loan, payable in a lump-sum at maturity
0.71% Unsecured loan, payable in a lump-sum at maturity
0.48% Unsecured loan, payable in a lump-sum at maturity
0.85% Unsecured loan, payable in a lump-sum at maturity
0.73% Unsecured loan, payable in a lump-sum at maturity
0.68% Unsecured loan, payable in a lump-sum at maturity
0.75% Unsecured loan, payable in a lump-sum at maturity
0.73% Unsecured loan, payable in a lump-sum at maturity
0.73% Unsecured loan, payable in a lump-sum at maturity
0.73% Unsecured loan, payable in a lump-sum at maturity
0.68% Unsecured loan, payable in a lump-sum at maturity
0.65% Unsecured loan, payable in a lump-sum at maturity
0.57% Unsecured loan, payable in a lump-sum at maturity
0.65% Unsecured loan, payable in a lump-sum at maturity
0.43% Unsecured loan, payable in a lump-sum at maturity
0.43% Unsecured loan, payable in a lump-sum at maturity (*1)
0.52% Unsecured loan, payable in a lump-sum at maturity (*1)
0.55% Unsecured loan, payable in a lump-sum at maturity (*1)
0.95% Unsecured loan, payable in a lump-sum at maturity
0.38% Unsecured loan, payable in a lump-sum at maturity
0.72% Unsecured loan, payable in a lump-sum at maturity
0.82% Unsecured loan, payable in a lump-sum at maturity
0.23% Unsecured loan, payable in a lump-sum at maturity
0.68% Unsecured loan, payable in a lump-sum at maturity
Sub-total
Total of short-term and long-term loans payable

Millions of yen
As of December
As of December
31, 2021
31, 2020
AmountSeptember 30, 2021
September 30, 2021
June 30, 2021
March 31, 2022
September 30, 2022
December 16, 2022

¥

6,800
15,702
1,500
24,002¥

11,747100
935
12,782

March 31, 2021
September 30, 2021
January 31, 2022
March 31, 2022
June 30, 2022
September 29, 2023
September 29, 2023
March 29, 2024
March 29, 2024
March 31, 2023
March 29, 2024
March 29, 2024
September 30, 2025
September 30, 2024
September 30, 2024
September 30, 2024
September 30, 2024
June 30, 2023
September 30, 2026
September 30, 2025
September 30, 2025
September 30, 2025
September 30, 2025
September 30, 2025
September 30, 2025
September 30, 2025
March 31, 2025
March 29, 2024
March 31, 2025
March 31, 2023
March 31, 2023
March 31, 2023
September 29, 2023
September 30, 2027
March 29, 2024
March 31, 2027
March 31, 2028
September 30, 2024
September 30, 2027

¥

5,511
1,500
1,423
2,880
892
2,100
2,536
4,088
800
500
9,500
1,300
2,000
700
500
2,250
4,250
1,000
700
500
500
500
1,000
300
2,550
4,000
2,450
1,700
2,680
454
488
3,900
2,500
7,500
18,0001,600
5,600
100,652
124,654

¥

6,800
4,000
7,900
1,500
1,500
2,880
892
2,100
2,650
4,200
800
500
9,500
1,300
2,000
700
500
2,250
4,250
1,000
700
500
500
500
1,000
300
2,550
4,000
2,450
1,700
2,850
500
500
3,900
2,500
7,500
18,0001,600
5,600
114,372
127,154¥¥

Stated interest rate, which is a rate per annum, represents the weighted average rate during the year ended December 31, 2021, or the most recent year, based on
the number of days and outstanding balance of the loans payable. The interest rate is rounded off to the nearest second decimal place. As JHR has conducted interest
rate swap transactions in order to hedge against interest rate fluctuation risks, the interest rate of loans subject to such interest rate swap transactions is presented
as the rate obtained by taking into account the effect of interest rate swaps (interest rate fixation), rounded off to second decimal places.

Notes:(*1) JHR made partial early repayment of these loans payable on December 17, 2021.

57

9. Investment Corporation Bonds
Investment corporation bonds as of December 31, 2021 and 2020 consisted of the following:
Millions of yen
As of
As of
December 31,
December 31,
2021
2020
Unsecured 4th investment corporation bond at interest rate of 0.86%, dueon December 17, 2021
Unsecured 5th investment corporation bond at interest rate of 0.82%, dueon October 21, 2022
Unsecured 6th investment corporation bond at interest rate of 0.935%, dueon March 19, 2026
Unsecured 7th investment corporation bond at interest rate of 0.60%, dueon November 27, 2026
Unsecured 8th investment corporation bond at interest rate of 0.60%, dueon November 27, 2026
Unsecured 9th investment corporation bond at interest rate of 0.53%, dueon November 22, 2024
Unsecured 10th investment corporation bond at interest rate of 0.84%, due
on February 21, 2028
Unsecured 11th investment corporation bond at interest rate of 0.854%, dueon June 14, 2029
Unsecured 12th investment corporation bond (green bonds) at interest rateof 0.40%, due on July 31, 2024

¥

¥

Total

-

¥

1,500

6,000

6,000

3,000

3,000

9,000

9,000

1,100

1,100

1,000

1,000

10,00010,000

8,000

8,000

2,000

2,000

40,100¥41,600

10. Asset Retirement Obligations
a. Outline of the asset retirement obligations
JHR recognized asset retirement obligations as it is obliged to restore the land of Oriental Hotel Fukuoka Hakata Station(former Hotel Centraza Hakata), acquired on April 1, 2016, and Hotel Oriental Express Fukuoka Tenjin (former HOTELASCENT FUKUOKA), acquired on August 19, 2016, to the original state in accordance with each of the fixed-term
land leasehold agreements. For the asset retirement obligations of Hotel Oriental Express Fukuoka Tenjin, theobligations have been expired with the termination of the fixed-term land leasehold agreement due to the exchange ofpart of the site as of October 29, 2020.
b. Calculation method of the asset retirement obligations
JHR calculated the amount of asset retirement obligations by estimating the expected periods of use of 34 years and 48
years based on the remaining useful lives of the related buildings and using the discount rates of 0.484% and 0.394%,
respectively.
c. Changes in the total amount of the asset retirement obligations
Thousands of yen
For the year ended
For the year ended
December 31, 2021
December 31, 2020
Balance at beginning of year
Adjustment due to accretion expense
Decrease due to expiration of asset retirement
obligations
Balance at end of year¥¥

335,161
1,622
336,783¥¥

447,677
1,989(114,505)
335,161

11. Net Assets
JHR maintains at least ¥50,000 thousand as the minimum net assets as required by the Investment Trust Act.
Dividends and other movements in unappropriated retained earnings related to each period that were decided after thebalance sheet date are summarized as follows:

58

Yen
For the year ended
December 31, 2021
Total
Per unit
Unappropriated retained
earnings¥
II Reversal of voluntary reserve
Reversal of reserve fortemporary difference adjustment(*1)
III Dividends
IV Retained earnings carried¥forward (I+II-III)

For the year ended
December 31, 2020
Total
Per unit

I1,300,724,473

335,371,387
1,634,924,196

¥

¥
¥

75
366

1,171,664

1,527,790,689

305,694,382
1,829,562,270
¥

¥
¥

68
410

3,922,801

Notes:(*1) JHR applied the transitional measures of Paragraph 3 of the Supplementary Provisions of the “Ordinance on
Accounting of Investment Corporations” (Cabinet Office Ordinance No. 27 of 2015) from the fiscal period
ended December 31, 2016. As a result, ¥13,127,153,216 of the dividend reserve, representing the remainingbalance of the gain on negative goodwill recorded in a prior fiscal period, was transferred to the “Reserve fortemporary difference adjustment” account through the appropriation of profit for the year ended December 31,
2016. Starting from the year ended December 31, 2017, JHR plans to reverse the reserve every year in an amountthat shall be at least 2% of the transferred amount (¥262,543,065) but not exceeding the remaining amount of
the reserve at that point in conformity with applicable rules and regulations.
For the year ended December 31, 2020, reversal of reserve for temporary difference adjustment of ¥305,694,382
was decided, which was the amount calculated by adding ¥5,701,616 equivalent to loss on retirement of
noncurrent assets and ¥37,392,766 equivalent to amortization of trademark rights to ¥262,600,000 of the basic
reversal.
For the year ended December 31, 2021, reversal of reserve for temporary difference adjustment of ¥335,371,387
has been decided, which is the amount calculated by adding ¥16,682,237 equivalent to loss on retirement of
noncurrent assets and ¥56,089,150 equivalent to amortization of trademark rights to ¥262,600,000 of the basic
reversal.
12. Provision and Reversal of Reserve for Temporary Difference Adjustment
Changes in the balance of reserve for temporary difference adjustment during the years ended December 31, 2021 and2020 consisted of the following (thousands of yen):
Provision
Reversal
Balance as of
Balance as
Rationale for provision orOriginal
during theduring theDecember
Sourceof January
reversalamountyear
year
31, 2021
1, 2021
Dividend
13,127,153 10,617,580
305,694
10,311,886
Allocation for dividend
reserve

SourceOriginal
amountBalance asof January
1, 2020

Provision
during theyear

Reversalduring theyear

Dividend
13,127,153 11,794,071- 1,176,490
reserve(Note) See (*1) of Note 11 above for further descriptions.

59

Balance as ofDecember31, 2020

Rationale for provision orreversal

10,617,580

Allocation for dividend

13. Real Estate Operating Revenue and Costs
The components of “Real estate operating revenue” and “Real estate operating costs” for the years ended December
31, 2021 and 2020 were as follows:
Thousands of yen
For the year ended For the year ended
December 31,
December 31,
2021
2020
Operating revenue:
Real estate operating revenue:
Fixed rent¥
6,413,988¥
7,640,060
Variable rent
3,054,524
1,902,240
33,92661,423
Income from management contract (*1)
Sub-total
9,502,439
9,603,724
Other real estate operating revenue:
Parking lots
116,270
116,458
Other incidental revenue
66,39583,051
Utilities
483,341
546,450
206,216
146,041
Other872,223
892,001
Sub-total
10,374,662
10,495,725
Total operating revenue
Real estate operating costs:
Land lease and other rent expenses
857,819890,001
Property taxes
1,947,316
1,915,565
Outsourcing expenses (*2)
494,005
423,852
Nonlife insurance
73,031
67,271
Depreciation and amortization
4,804,111
4,761,907
Loss on retirement of noncurrent assets
16,682
5,701
Repairs
30,17629,261
Utilities
498,283
559,044
Trust fees
43,55842,48022,24565,369Other
8,717,332
8,830,354
Total real estate operating costs¥
1,544,308¥
1,778,393
Net real estate operating income
Notes:(*1) Pursuant to management contracts with a certain hotel operator, JHR receives revenue in the amount equivalent
to the properties’ gross operating profit, or GOP, while it pays management contract fees to the operator. In theevent a property’s GOP for the relevant period is a negative number, then JHR is required to pay an amount equal
to such negative number to the operator. Even though some of the revenue JHR receives under management
contracts is variable, it recognizes such revenue as income from management contracts and not as variable rent.
(*2) Outsourcing expenses include management contract fees of ¥148,088 thousand for the year ended December 31,
2021 and ¥70,119 thousand for the year ended December 31, 2020.

60

14. Gain on Sale of Real Estate Properties
The components of “Gain on sale of real estate properties” for the year ended December 31, 2021 were as follows:
Thousands of yen
For the year ended December
31, 2021
ibis Tokyo Shinjuku¥
11,300,000
7,809,052
231,996¥
3,258,950

Proceeds from sale of properties
Costs of sale of properties
Other selling expenses
Gain on sale of real estate properties

The components of “Gain on sale of real estate properties” for the year ended December 31, 2020 were as follows:
Thousands of yen
For the year ended December
31, 2020
Sotetsu Fresa Inn ShimbashiKarasumoriguchi¥
8,000,000
4,790,596
51,021¥
3,158,381

Proceeds from sale of properties
Costs of sale of properties
Other selling expenses
Gain on sale of real estate properties
15. Gain on Exchange of Real Estate Properties

There was no gain or loss on exchange of real estate properties for the year ended December 31, 2021.
The components of “Gain on exchange of real estate properties” for the year ended December 31, 2020 were as follows:
Thousands of yen
For the year ended December
31, 2020
HOTEL ASCENT FUKUOKA(Current name: Hotel Oriental
Express Fukuoka Tenjin)(part of site)
Value of properties transferred forexchange
Costs of properties transferred forexchange
Other transferring expenses
Gain on exchange of real estate
properties¥

523,000
333,359
4,915¥

184,725

16. Advanced Depreciation of Property and Equipment
The accumulated advanced depreciation of property and equipment deducted from acquisition costs due to government
subsidies received as of December 31, 2021 and 2020 were as follows:
Thousands of yen
As of
As of
December 31, 2021
December 31, 2020¥
24,921¥
24,921

Buildings in trust6117. Income Taxes
Significant components of deferred tax assets and liabilities as of December 31, 2021 and 2020 were as follows:
Thousands of yen
As of December
As of December
31, 2021
31, 2020
Deferred tax assets
Valuation difference on assets acquired by merger
Amortization of fixed-term leasehold rights
Asset retirement obligations
Amortization of trademark rights
Deferred losses on hedges
Subtotal deferred tax assets
Valuation allowance
Total deferred tax assets¥

1,681,502¥
248,687
19,131
29,40961,0452,039,776(2,039,776)- ¥Deferred tax liabilities
Deferred gains on hedges
Total deferred tax liabilities

¥

3,812
3,812

¥

1,696,476
206,151
15,53011,763238,937
2,168,860(2,168,860)-¥

Reconciliation between the effective statutory tax rate and the actual effective tax rate reflected in the accompanying
statements of income for the years ended December 31, 2021 and 2020 was as follows:
For the year
ended December
31, 2021
31.46%(35.22)
3.76
0.09
0.09%

Effective statutory tax rate
Deduction for dividends paid
Change in valuation allowance
Other – net
Actual effective tax rate

For the year
ended December
31, 2020
31.46%(34.09)
2.63
0.08
0.08%

18. Amounts per Unit
Net income per unit for the years ended December 31, 2021 and 2020 was as follows:
Thousandsof yenNet
incomeNumber ofunits
Weightedaverage units¥

1,296,801

4,466,061

¥

290

¥

1,527,045

4,462,347¥

342

For the year ended December 31, 2021
Basic net income per unit - Net income attributable tocommon unitholders

Yen
Net income
per unit

For the year ended December 31, 2020
Basic net income per unit - Net income attributable tocommon unitholders

Notes:(1) The computation of net income per unit is based on the weighted-average number of units outstanding during theyear.
(2) Diluted net income per unit is not presented since there are no potentially dilutive units for the years ended
December 31, 2021 and 2020.

62

Net assets per unit as of December 31, 2021 and 2020 were as follows:
Yen
As of December
31, 2021¥
49,595

Net assets per unit

As of December
31, 2020¥
49,57019. Leases
As Lessor:
JHR leases its real estate properties to third parties under non-cancellable operating leases. Minimum rental revenue
under the non-cancellable operating leases as of December 31, 2021 and 2020 were as follows:
Thousands of yen
As of December
As of December
31, 2021
31, 2020¥
1,293,157¥
990,152
4,979,488
1,213,075¥
6,272,645¥
2,203,227

Due within one year
Due after one year
Total
20. Derivatives and Hedging Activities

a. Derivative transactions to which hedge accounting is not applied
Derivative transactions to which hedge accounting was not applied as of December 31, 2021 and 2020 were as follows:

As of December 31, 2021
Interest rate swaps(fixed rate payment,
floating rate receipt)

As of December 31, 2020
Interest rate swaps(fixed rate payment,
floating rate receipt)

Classification
Transactions
other thanmarkettransactions

Classification
Transactions
other thanmarkettransactions

Contract
amount(*1)

Thousands of yen
Contract
amountdue after one
year¥ 3,494,000¥ 3,494,000

Contract
amount(*1)

Thousands of yen
Contract
amountdue after one
year¥ 3,494,000¥ 3,494,000

63

Fair value(*2)¥(13,924)

Fair value(*2)¥(29,655)

b. Derivative transactions to which hedge accounting is applied
Derivative transactions to which hedge accounting was applied as of December 31, 2021 and 2020 were as follows:
Thousands of yen
Contract
Contract
amountAs of December 31,
Method of hedge
amountdue after one
Fair value
2021
accounting
Hedged item
(*1)
year
(*2)
Interest rate swaps
Long-term(fixed rate payment,
Deferral method¥ 89,660,000¥ 78,460,000 ¥ (181,921)
loans payable
floating rate receipt)

As of December 31,
2020
Interest rate swaps(fixed rate payment,
floating rate receipt)

Method of hedge
accounting
Deferral method

Hedged item
Long-termloans payable

Contract
amount(*1)

Thousands of yen
Contract
amountdue after one
year¥ 101,072,000¥ 90,272,000

Fair value(*2)¥(759,492)

Notes:(*1) The contract amounts of the interest rate swap is presented based on the contracted amount or notional principal
amounts on the contract, etc. as of the end of the fiscal period. Also, the contract amounts of derivative transactions
do not indicate market risk exposure related to derivative transactions.
(*2) The fair value is measured at the quoted price obtained from the counterparty financial institutions.
21. Investment and Rental PropertiesJHR owns rental properties for hotels to earn lease income and income from management contracts. The carrying
amounts, changes in such balances, and fair values of such properties were as follows:

HotelsJanuary 1,
2021¥
367,283,696

Thousands of yen
Carrying amount
Net increase
December 31,(decrease) (*1)
2021¥
(8,463,831) ¥ 358,819,865

Fair value (*2)
December 31,
2021¥ 485,480,000

Notes:(*1) Decrease during 2021 principally represents the sale of ibis Tokyo Shinjuku (¥7,809 million) and recording ofdepreciation.
(*2) Fair value of properties as of December 31, 2021 is generally the appraisal value determined by outside licensed
real estate appraisers.

HotelsJanuary 1,
2020¥
374,314,498

Thousands of yen
Carrying amount
Net increase
December 31,(decrease) (*1)
2020¥
(7,030,802) ¥ 367,283,696

Fair value (*2)
December 31,
2020¥ 493,330,000

Notes:(*1) Decrease during 2020 principally represents the sale of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi (¥4,790
million) and recording of depreciation.
(*2) Fair value of properties as of December 31, 2020 is generally the appraisal value determined by outside licensed
real estate appraisers.
Real estate operating revenue and costs for the years ended December 31, 2021 and 2020 related to the rental properties
were as follows:64Hotels

Thousands of yen
For the year ended December 31, 2021
Real estate
Real estate
operating revenue
operating costs
Net real estate(*)(*)
operating income¥
10,374,662¥
8,830,354 ¥1,544,308

HotelsThousands of yen
For the year ended December 31, 2020
Real estate
Real estate
operating revenue
operating costs
Net real estate(*)(*)
operating income¥
10,495,725¥
8,717,332 ¥
1,778,393

Note:(*) “Real estate operating revenue” and “Real estate operating costs” are income from real estate operation (including
other real estate operating revenue) and corresponding expenses (such as depreciation, property taxes, trust fees,and repairs and maintenance expenses), and are included in “Operating revenue” and “Real estate operating costs,”
respectively.
22. Segment Informationa. Segment information
The segment information has been omitted because JHR has only one segment, which is the investment andmanagement business of hotel real estate.
b. Related information(1) Information about products and services for the years ended December 31, 2021 and 2020
Information about products and services has been omitted because operating revenue from external customers in asingle product/service category accounted for more than 90% of total operating revenue.
(2) Information about geographical areas for the years ended December 31, 2021 and 2020(i) Operating revenue
Information about geographical areas has been omitted because operating revenue in Japan accounted for more than
90% of total operating revenue.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment locatedin Japan accounted for more than 90% of net property and equipment.
(3) Information about major customers<For the year ended December 31, 2021>
Thousands of yen
Name of customer
Segment
Operating revenue
Hotel real estate
Hotel Management Japan Co., Ltd. (*1)
investment and management¥
2,524,020
Hotel real estate
THE DAI-ICHI BUILDING CO., LTD.
investment and management
Undisclosed (*2)<For the year ended December 31, 2020>
Name of customer

Segment
Hotel real estate
investment and management
Hotel real estate
investment and management

Hotel Management Japan Co., Ltd. (*1)
THE DAI-ICHI BUILDING CO., LTD.

Thousands of yen
Operating revenue¥

1,990,793
Undisclosed (*2)Note:(*1) Operating revenue includes the operating revenue from customers belonging to the business group of the said
customer.
(*2) Undisclosed as the consent on disclosure has not been obtained from the lessee.

6523. Subsequent Events
Conclusion of memorandums of understanding related to modifying fixed-term building lease contracts

JHR resolved at its Board of Directors’ meeting held on February 25, 2022 to conclude “memorandums ofunderstanding related to fixed-term building lease contracts” with the HMJ Group (*) in order to revise therent structure for the fiscal year 2022 for the 14 properties listed in (1) Fixed rent in the table below, out of the
16 properties leased to the HMJ Group as lessee, concerning the “contracts to modify fixed-term building lease
contracts” dated August 25, 2020 (hereinafter, the “Previous Modification Contracts”). JHR concluded thememorandums of understanding as of the same date.
Although JHR believes that the hotel market will gradually recover during fiscal year 2022 due to progress of
vaccination and development of therapeutic medicine in addition to supporting measures by national and local
governments to promote tourism, it is difficult to make reasonable estimate as to the speed of recovery anddownside risks. Therefore, as it did in the Previous Modification Contracts dated August 2020, JHR has
decided to exempt annual fixed rents totaling ¥8,030 million by HMJ group hotels in fiscal year 2022 andadopt a full variable rent structure. No change is made for the base amount of AGOP (Note 1) and payment
ratio of variable rent when AGOP exceeds the base amount. In addition, rent structure for the fiscal year
2023 onwards is unchanged from that for the fiscal year 2022 onwards set forth in the Previous
Modification Contracts.

The details of the change are indicated below.
* : HMJ is an abbreviation of Hotel Management Japan Co., Ltd. which is group company of the Asset Management
Company and leases 5 hotels from JHR and HMJ Group means HMJ and its subsidiaries which lease 16 hotels fromJHR.
(1) Fixed rent
Fixed rent
No.

Name of property

LesseeBefore change
From FY2022 onwards

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

6

Oriental Hotel Okinawa Resort & Spa

7

Hotel Management
Japan Co., Ltd.

After change
FY2022

From FY2023 onwards¥ 3,221 million/year¥ 3,221 million/year¥ 550 million/year¥ 550 million/year

ACTIVE-INTER CITY HIROSHIMA
K.K. A.I.C Hiroshima(Sheraton Grand Hiroshima Hotel)
Management(Note 2)

¥ 348 million/year¥ 348 million/year

8

Oriental Hotel Fukuoka Hakata
StationHotel Centraza Co., Ltd.

¥ 425 million/year9

Holiday Inn Osaka Namba

OW Hotel Operations KK¥ 576 million/year¥ 576 million/year10

Hilton Tokyo Narita Airport

KK Narita Kosuge
Operations¥ 444 million/year¥ 444 million/year

11

International Garden Hotel Narita

KK Narita Yoshikura
Operations¥ 336 million/year¥ 336 million/year

12

Hotel Nikko Nara

Hotel Management Co.,Ltd.

¥ 420 million/year¥ 420 million/year

13

Hotel Oriental Express Osaka
Shinsaibashi

Hotel Oriental Express
Co., Ltd.

¥ 110 million/year¥ 110 million/year

14

Hilton Tokyo Odaiba

Tokyo Humania
Enterprise KK¥ 1,600 million/year¥ 1,600 million/year

Lagoon resort Nago Co.,Ltd.

(2) Variable rent66

Not applicable¥ 425 million/yearCalculation method of variable rent
No.

Name of property, etc.

Before change

After change

From FY2022 onwards
1

Kobe Meriken Park Oriental
Hotel

FY2022

From FY2023 onwards

AGOP x 86.0%(Total AGOP of The Five HMJ
Hotels (Note 3) – base amount(¥4,120 million/year (Note 4))) x
85.0%(Total AGOP of The Five HMJ
Hotels (Note 3) – base amount(¥4,120 million/year (Note 4))) x
85.0%

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

AGOP x 89.0%

6Oriental Hotel Okinawa Resort & (AGOP – base amount (¥655
million/year)) x 95.0%
Spa

AGOP x 89.0%(AGOP – base amount (¥655
million/year)) x 95.0%

7

ACTIVE-INTER CITYHIROSHIMA(Sheraton Grand Hiroshima
Hotel) (Note 2)(AGOP – base amount (¥360
million/year)) x 90.0%

AGOP x 93.0%(AGOP – base amount (¥360
million/year)) x 90.0%8Oriental Hotel Fukuoka Hakata
Station(AGOP – base amount (¥442
million/year)) x 98.0%

AGOP x 97.0%(AGOP – base amount (¥442
million/year)) x 98.0%

9Holiday Inn Osaka Namba(AGOP – base amount (¥580
million/year)) x 97.0%

AGOP x 98.0%(AGOP – base amount (¥580
million/year)) x 97.0%

10

Hilton Tokyo Narita Airport(AGOP – base amount (¥450
million/year)) x 93.0%

AGOP x 95.0%(AGOP – base amount (¥450
million/year)) x 93.0%

11International Garden Hotel Narita(AGOP – base amount (¥360
million/year)) x 98.0%

AGOP x 95.0%(AGOP – base amount (¥360
million/year)) x 98.0%

12

Hotel Nikko Nara

(AGOP – base amount (¥440
million/year)) x 95.0%

AGOP x 95.0%(AGOP – base amount (¥440
million/year)) x 95.0%

13

Hotel Oriental Express Osaka
Shinsaibashi(AGOP – base amount (¥128
million/year)) x 91.0%

AGOP x 87.0%(AGOP – base amount (¥128
million/year)) x 91.0%

14

Hilton Tokyo Odaiba(AGOP – base amount (¥1,660
million/year)) x 98.0%

AGOP x 97.0%(AGOP – base amount (¥1,660
million/year)) x 98.0%

AGOP x 79.0%
AGOP x 91.0%
AGOP x 74.0%(Note 1) AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. GOP (Gross Operating Profit) is theamount calculated by subtracting cost for hotel operation (personal cost, general administration cost, etc.) form sales of the hotel.

(Note 2) The indicated descriptions are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
(Note 3) The Five HMJ Hotels refers to the 5 hotels (Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko
Alivila and Oriental Hotel Hiroshima) which JHR leases to HMJ.

(Note 4) The breakdown of the AGOP base amount of The Five HMJ Hotels (¥4,120 million/year) are: ¥690,000 thousand for Kobe Meriken Park Oriental
Hotel, ¥1,060,000 thousand for Oriental Hotel tokyo bay, ¥890,000 thousand for Namba Oriental Hotel, ¥1,250,000 thousand for Hotel Nikko
Alivila and ¥230,000 thousand for Oriental Hotel Hiroshima.

(3) Impact of concluding the memorandums of understanding on profit and loss
Due to the conclusion of the memorandums, fixed rent to be recorded for operating revenue is anticipated
to decrease by ¥8,030 million for the fiscal period ending December 2022. However, the impact on variable
rent cannot be estimated at this point as variable rent to be recorded for operating revenue will be determinedby the AGOP for the full year of the fiscal period ending December 2022.

67