Ichigo Preserves and Improves Real Estate[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

July 22, 2016
REIT Issuer
Ichigo Hotel REIT Investment Corporation (3463)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Osamu Miyashita, Executive Director
www.ichigo-hotel.co.jp/english
Asset Management Company
Ichigo Real Estate Investment Advisors Co., Ltd.
Representative: Wataru Orii, President & Representative Statutory Executive Officer
Inquiries: Hiroto Tajitsu, Statutory Executive Officer, Head of Administration
Tel: +81-3-3502-4892

Earnings and Dividend Forecast Revisions for the January 2017 Fiscal Period andEarnings and Dividend Forecast for the July 2017 Fiscal Period
Ichigo Hotel REIT has revised up its January 2017 earnings and dividend forecast announced in
the March 16, 2016 release “Earnings and Dividend Forecast Revisions for the July 2016 andJanuary 2017 Fiscal Periods.” Ichigo Hotel REIT is also announcing its earnings and dividend
forecast for the July 2017 fiscal period.
1. January 2017 Earnings and Dividend Forecast Revision

Previous
Announced
Forecast (A)Current
Amended
Forecast (B)Difference(B-A)% Change
Reference:
January 2016
ActualOperating
Revenue(million yen)

Operating Profit(million yen)

Recurring Profit(million yen)

Net
Income(million yen)

Dividendper Share
(yen)

755

444

361

360

2,606

1,547

933

759

758

2,917

+792

+489

+398

+398

+311

+104.9%+110.1%+110.2%+110.5%+11.9%

197

102

66

65

471

Forecast number of shares outstanding at the end of the fiscal period: 260,100 shares, which is the sum of
138,500 shares issued and outstanding as of today, plus 115,800 shares to be issued via public offeringand a maximum of 5,800 shares through an underwriter new share allotment (should the over-allotment
option be exercised). For details, please refer to today’s release “Issuance of New Shares and Secondary
Share Offering.”
The forecasts presented above are based on certain preconditions set forth in “Preconditions for theJanuary 2017 Earnings Forecast” below. The actual operating revenue, operating profit, recurring profit,1

net income, and dividend per share may vary due to changes in circumstances such as asset acquisitions
and dispositions, tenant turnover, unexpected maintenance and repair costs and other expenses, changes ininterest rates, the issuance of new shares, and the offering price. These forecasts should not be construed
as a guarantee of such performance or results. Ichigo Hotel REIT will make a forecast revision should
there be a substantial discrepancy between the forecast and actual operating results.

2. January 2017 Earnings and Dividend Forecast Revision Rationale
Ichigo Hotel REIT is raising its earnings and dividend forecast due to issuance of new shares
and acquisition of ten assets as announced in today’s releases “Issuance of New Shares andSecondary Share Offering” and “Acquisition of Ten Hotel Assets,” and changes in thepreconditions for January 2017 earnings forecast announced on March 16, 2016.
With today’s asset acquisitions, Ichigo Hotel REIT is newly announcing its earnings anddividend forecast for the July 2017 fiscal period.
3. July 2017 Earnings and Dividend Forecast Revision

July 2017 Forecast

Operating
Revenue(million yen)

Operating
Profit(million yen)

Recurring
Profit(million yen)

Net
Income(million yen)

Dividendper Share
(yen)

1,566

855

679

678

2,609

Forecast number of shares outstanding at the end of the fiscal period: 260,100 shares, which is the sum of
138,500 shares issued and outstanding as of today, plus 115,800 shares to be issued via public offeringand a maximum of 5,800 shares through an underwriter new share allotment (should the over-allotment
option be exercised). For details, please refer to today’s release “Issuance of New Shares and Secondary
Share Offering.”
The forecasts presented above are based on certain preconditions set forth in “Preconditions for the July
2017 Earnings Forecast” below. The actual operating revenue, operating profit, recurring profit, net
income, and dividend per share may vary due to changes in circumstances such as asset acquisitions anddispositions, tenant turnover, unexpected maintenance and repair costs and other expenses, changes ininterest rates, the issuance of new shares, and the offering price. These forecasts should not be construed
as a guarantee of such performance or results. Ichigo Hotel REIT will make a forecast revision should
there be a substantial discrepancy between the forecast and actual operating results.

2

Preconditions for the January 2017 Earnings Forecast
Preconditions
PeriodJanuary 2017 Fiscal Period: August 1, 2016 – January 31, 2017 (184 days)

Portfolio Assets• 19 assets, which is the total of 9 assets currently owned plus 10 newly acquired assets(financed by funds raised via public offering, new bank loans, and cash-on-hand), as
announced in today’s release “Acquisition of Ten Hotel Assets.”• The forecast assumes there will be no additional acquisitions or sales through January 2017.
• The number of assets may change due to acquisitions or sales.

Number of Shares• 260,100 shares: the sum of 138,500 shares issued and outstanding as of today plus 115,800
shares to be issued from a public offering and a maximum of 5,800 shares to be issued froman underwriter new share allotment (should the over-allotment option be exercised).
• The forecast assumes there will be no additional new issuance through January 2017.
Within operating revenue, rental income is forecast based on current lease contracts taking
into consideration such factors as tenant trends and market conditions. 1
Forecast Operating Performance
January 2017
Occupancy2

89.1%

ADR3

8,339 yen

1

The forecast rental income assumes tenants will fully pay their contractual rents without
delays or default.
2
Occupancy is calculated from the following formula:
Occupancy = Total number of guest rooms occupied during the period/(total number ofguest rooms x number of days hotel was in operation during the period)3
ADR or Average Daily Rate is calculated from the following formula:
ADR = Total sales from accommodation (excluding restaurant charges and other service
fees) / number of guest rooms occupied during the period

Details of January 2017 Rental Income(million yen)Fixed Rent/
Minimum
Variable Rent
Guaranteed
Rent

Operating Revenue
Asset Name

Total

Smile Hotel Kyoto Shijo

34

151

186

Hotel Vista Premio Kyoto

75

15

90

Nest Hotel Sapporo Ekimae

32

53

86

Chisun Inn Osaka Hommachi

36

0

36

Comfort Hotel Hamamatsu

55

0

55

Nest Hotel Sapporo Odori

23

49

72

Valie Hotel Tenjin

24

35

60

Nest Hotel Osaka Shinsaibashi

57

144

202

Comfort Hotel Central International Airport

138

0

138

Smile Hotel Tokyo Asagaya

25

59

85

Nest Hotel Naha

55

66

121

Smile Hotel Asakusa

14

34

48

Nest Hotel Matsuyama

31

31

62

3

(million yen)Fixed Rent/
Minimum
Variable Rent
Guaranteed
Rent

Asset Name

Total

Comfort Hotel Okayama

41

0

41

Comfort Hotel Kushiro

16

0

16

Comfort Hotel Suzuka

14

0

14

146

19

166

34

0

34

858

663

1,521

1

Operating Revenue

Other (Hotel Wing International Nagoya, Hotel
Suave Kobe Asuta, and Hotel Livemax
Nihombashi-Hakozaki)
Retail2 (Hotel Vista Premio Kyoto, Chisun Inn
Osaka Hommachi, and Smile Hotel Tokyo
Asagaya)Total
1

The data for Hotel Wing International Nagoya, Hotel Suave Kobe Asuta, and Hotel
Livemax Nihombashi-Hakozaki are totaled under “Other,” because the hotel operators did
not give consent to disclose hotel-specific data.
2
The data for retail tenants at Hotel Vista Premio Kyoto, Chisun Inn Osaka Hommachi, andSmile Hotel Tokyo Asagaya are totaled under “Retail.”

Operating Expenses

 Depreciation: 268 million yen. Depreciation has been calculated using the straight-line
method.
 Property and city planning taxes: 48 million yen. Property and city planning taxes for the 10
newly-acquired assets will be included in operating expenses from the July 2017 fiscal
period.
• Building maintenance and repair expenses are based on what Ichigo Real Estate Investment
Advisors Co., Ltd., the asset management company of Ichigo Hotel REIT, estimates will benecessary for each asset during the period. However, actual expenses for the period could
differ significantly from these forecast amounts for reasons including the variability ofmaintenance and repair expenses, one-time costs due to unexpected building damage, etc.
 Rental expenses, Ichigo Hotel REIT’s principal operating expense (other than depreciation,
see above), are calculated based on historical data adjusted for anticipated expense
variations.
 Actual operating expenses may differ significantly from these assumptions due tounforeseeable factors.

Non-Operating
Expenses• Expenses related to the new share issuance: 9 million yen. Ichigo Hotel REIT plans toamortize the new share issuance and offering-related expenses for 36 months using thestraight-line method.
• Interest expenses and other borrowing-related expenses: 147 million yen.
• Amortization of expenses related to the establishment of Ichigo Hotel REIT and to newshare issuance: 26 million yen.

Borrowings• Total borrowings: 19,500 million yen as of January 2017

Dividend per Share The dividend forecasts assume that distributions will comply with the dividend distribution
policy stipulated in Ichigo Hotel REIT’s Articles of Incorporation.
• The dividend per share is subject to change due to factors such as sales of portfolio assets,changes in rental revenue associated with tenant turnover, the occurrence of unexpectedmaintenance and repair costs, and fluctuations in interest rates.

Dividend in Excess of
Earnings per Share• Ichigo Hotel REIT does not plan on making any dividend distribution in excess of earnings
per share or retained earnings.

Other Performance forecasts are based on the assumption that no material revisions will be madeto laws and ordinances, the tax system, accounting standards, listing rules of the Tokyo
Stock Exchange, and rules of the Investment Trusts Association, Japan, etc.
• Performance forecasts are also based on the assumption that there will be no unexpectedmaterial change in general economic trends and real estate market conditions, etc.

4

Preconditions for the July 2017 Earnings Forecast
Preconditions
July 2017 Fiscal Period: February 1, 2017 – July 31, 2017 (181 days)

PeriodPortfolio Assets• 19 assets, which is the total of 9 assets currently owned plus 10 newly acquired assets(financed by funds raised via public offering, new bank loans, and cash-on-hand), as
announced in today’s release “Acquisition of Ten Hotel Assets.”• The forecast assumes there will be no additional acquisitions or sales through July 2017.
• The number of assets may change due to acquisitions or sales.

Number of Shares• 260,100 shares: the sum of 138,500 shares issued and outstanding as of today plus 115,800
shares to be issued from a public offering and a maximum of 5,800 shares to be issued froman underwriter new share allotment (should the over-allotment option be exercised).
• The forecast assumes there will be no additional new issuance through July 2017.
Within operating revenue, rental income is forecast based on current lease contracts taking
into consideration such factors as tenant trends and market conditions. 1
Forecast Operating Performance
July 2017
Occupancy2

89.3%

ADR3

7,873 yen

1

The forecast rental income assumes tenants will fully pay their contractual rents without
delays or default.
2
Occupancy is calculated from the following formula:
Occupancy = Total number of guest rooms occupied during the period / (total number ofguest rooms x number of days hotel was in operation during the period)3
ADR or Average Daily Rate is calculated from the following formula:
ADR = Total sales from accommodation (excluding restaurant charges and other service
fees) / number of guest rooms occupied during the period

Details of July 2017 Rental Income(million yen)
Operating Revenue

Fixed Rent/
Minimum
Guaranteed
Rent

Asset Name

Variable
Total
Rent

Smile Hotel Kyoto Shijo

30

131

161

Hotel Vista Premio Kyoto

75

0

75

Nest Hotel Sapporo Ekimae

31

56

87

Chisun Inn Osaka Hommachi

35

36

71

Comfort Hotel Hamamatsu

55

0

55

Nest Hotel Sapporo Odori

23

52

75

Valie Hotel Tenjin

21

29

51

Nest Hotel Osaka Shinsaibashi

64

140

204

Comfort Hotel Central International Airport

151

0

151

Smile Hotel Tokyo Asagaya

30

60

90

Nest Hotel Naha

41

64

105

Smile Hotel Asakusa

15

36

52

5

Fixed Rent/
Minimum
Guaranteed
Rent

Asset Name

Variable
Rent

Total

Nest Hotel Matsuyama

35

37

72

Comfort Hotel Okayama

45

0

45

Comfort Hotel Kushiro

18

0

18

Comfort Hotel Suzuka

15

0

15

150

20

170

32

0

32

873

665

1,539

1

Other (Hotel Wing International Nagoya,
Hotel Suave Kobe Asuta, and Hotel Livemax
Nihombashi-Hakozaki)
Retail2 (Hotel Vista Premio Kyoto, Chisun Inn
Osaka Hommachi, and Smile Hotel Tokyo
Asagaya)Total
1

The data for Hotel Wing International Nagoya, Hotel Suave Kobe Asuta, and Hotel
Livemax Nihombashi-Hakozaki are totaled under “Other,” because the hotel operators did
not give consent to disclose hotel-specific data.

2

Operating Expenses

The data for retail tenants at Hotel Vista Premio Kyoto, Chisun Inn Osaka Hommachi, andSmile Hotel Tokyo Asagaya are totaled under “Retail.” Depreciation: 278 million yen. Depreciation has been calculated using the straight-line
method.
 Property and city planning taxes: 100 million yen Building maintenance and repair expenses are based on what Ichigo Real Estate Investment
Advisors Co., Ltd., the asset management company of Ichigo Hotel REIT, estimates will benecessary for each asset during the period. However, actual expenses for the period could
differ significantly from these forecast amounts for reasons including the variability ofmaintenance and repair expenses, one-time costs due to unexpected building damage, etc.
 Rental expenses, Ichigo Hotel REIT’s principal operating expense (other than depreciation,
see below), are calculated based on historical data adjusted for anticipated expense
variations.
 Actual operating expenses may differ significantly from these assumptions due tounforeseeable factors.

Non-Operating
Expenses• Expenses related to the new share issuance: 9 million yen Ichigo Hotel REIT plans toamortize the new share issuance and offering-related expenses for 36 months using thestraight-line method.
• Interest expenses and other borrowing-related expenses: 149 million yen• Amortization of expenses related to the establishment of Ichigo Hotel REIT and to newshare issuance: 26 million yen

Borrowings• Total borrowings: 19,500 million yen as of July 2017.

Dividend per Share The dividend forecasts assume that distributions will comply with the dividend distribution
policy stipulated in Ichigo Hotel REIT’s Articles of Incorporation.
• The dividend per share is subject to change due to factors such as sales of portfolio assets,changes in rental revenue associated with tenant turnover, the occurrence of unexpectedmaintenance and repair costs, and fluctuations in interest rates.

Dividend in Excess of
Earnings per Share• Ichigo Hotel REIT does not plan on making any dividend distribution in excess of earnings
per share or retained earnings.

Other Performance forecasts are based on the assumption that no material revisions will be madeto laws and ordinances, the tax system, accounting standards, listing rules of the Tokyo
Stock Exchange, and rules of the Investment Trusts Association, Japan, etc.
• Performance forecasts are also based on the assumption that there will be no unexpectedmaterial change in general economic trends and real estate market conditions, etc.

6

Reference: Revised Dividend Forecast

2,606
yen
YOY
+2,135 yen

YOY+2,446 yen

2,609
yen

2,455
yen

YOY
+154 yenvs. Initial
Forecast

471 yenJanuary 2016

2,917
yen

+311 yen
January 2017
(Initial Forecast)January 2017
(Revised Forecast)January Period

July 2016(Forecast)

July 2017(Newly Announced )July Period

Notes: Number of days in the January 2016 period: 63 days (November 30, 2015 – January 31, 2016). Please refer toMarch 16, 2016 release “Earnings and Dividend Forecast Revisions for the July 2016 and January 2017 Fiscal
Periods” for details on the dividend forecasts for the July 2016 and January 2017 periods. Property and city planningtaxes for the 10 acquired assets will be recorded starting in the July 2017 period.

7