Asset Management Report
For the Year Ended December 31, 2023

Japan Hotel REIT Investment Corporation

Dear Investors,
Thank you for your support and patronage to Japan Hotel REIT Investment Corporation (JHR) and its asset managementcompany, Japan Hotel REIT Advisors Co., Ltd.
We are pleased to announce that we have completed our 24th fiscal year, running from January 1, 2023 to December 31,
2023, and we would like to report on our financial performance and results for the period.
The year 2023 marked significant progress in the country's recovery from the COVID-19 pandemic and its move towards
normalizing socio-economic activities, with domestic leisure demand remaining robust throughout the year. The number of
inbound visitors for the year has recovered to almost 80% of the same period in 2019, approaching the pre-pandemic level.
Notably, the fourth quarter saw inbound visitor numbers surpass the 2019 figures, indicating a strong recovery in the hotel
market driven by vigorous domestic and international accommodation demand. Consequently, room rates at many hotels
exceeded those recorded in 2019.
Under such an environment, JHR resumed acquiring properties, which had been approached with caution during the
COVID-19 pandemic. JHR acquired UAN kanazawa in January 2023 and Sotetsu Fresa Inn Shimbashi-Karasumoriguchi
in March 2023, using cash on hand and further acquired three properties, La'gent Stay Sapporo Odori, Oriental Hotel
Kyoto Rokujo, and Hotel Oriental Express Fukuoka Nakasukawabata, in September 2023 through the first public offering
since the COVID-19 pandemic. In December of the same year, JHR acquired Hotel JAL City Kannai Yokohama, which
was entirely financed by debt. These acquisitions, totaling 33.3 billion yen for six properties, have significantly enhanced
JHR’s portfolio by adding highly competitive hotels in regions with growth potential in accommodation demand.
For its internal growth, JHR has been maintaining close communication with the lessees and operators of each hotel toimprove revenues by implementing a high unit-price sales strategy. In addition, JHR worked to improve profitability
through measures to reduce operating costs continuously.
As a result of these efforts, for the fiscal year ended December 2023, JHR recorded operating revenue of 26,574 million
yen, ordinary income of 13,135 million yen, net income of 13,134 million yen, and dividend per unit of 3,015 yen.
JHR believes that the hotel market will overcome the impact of the COVID-19 pandemic and enter a growth phase driven
by strong and robust demand from both domestic and inbound visitors. JHR aims to maximize revenue by aggressively
capturing demand in the strong hotel market.
Together with Japan Hotel REIT Advisors Co., Ltd., JHR is dedicated to further growth and enhancing its attractivenessby leveraging its extensive expertise and know-how cultivated to date.
We sincerely appreciate your continued support for us.
Kaname Masuda
Executive Director
Japan Hotel REIT Investment Corporation
Hiroyuki Aoki
President & CEO
Japan Hotel REIT Advisors Co., Ltd.

1JAPAN HOTEL REIT INVESTMENT CORPORATION
Contents:I.

ASSET MANAGEMENT REPORT

3This section (P1-P41) is the translation of the Asset Management Report for the 24th Period released on March 19,2024 except for, if any, the update on I.6. Significant subsequent events. If any discrepancy is identified between thistranslation and the Japanese original, the Japanese original shall prevail.
II.

FINANCIAL STATEMENTS
For the Years ended December 31, 2023 and 2022
Balance Sheets

42

Statements of Income

44

Statements of Changes in Net Assets

45

Statements of Cash Flows46

Notes to Financial Statements

48

Independent Auditor’s Report

62

2

Ⅰ

ASSET MANAGEMENT REPORT

Outline of Asset Management Operation
1. Operating results and financial position, etc.
Fiscal period

20th period

Account closing date
Operating revenue[Real estate operating revenue]
Operating expenses[Real estate operating costs]

21st period

22nd period

23rd period

24th period

December 2019 December 2020 December 2021 December 2022 December 2023
JPY MM

28,278

13,838

13,633

14,912

26,574

JPY MM[28,278][10,495][10,374][14,912][26,574]

JPY MM

11,12910,662

10,673

10,616

11,560JPY MM[8,997][8,717][8,830][8,796][9,466]

Operating income

JPY MM

17,148

3,176

2,959

4,296

15,014

Ordinary income

JPY MM

15,291

1,398

1,298

2,672

13,135

Net income (Note 1)

JPY MM

15,290

1,527

1,296

2,671

13,134

Total assets

JPY MM

415,722400,296394,323

396,799

429,955[18.6][(3.7)][(1.5)]

[0.6]

[8.4]

236,522

221,201

221,542

223,574

244,980[16.3][(6.5)]

[0.2]

[0.9]

[9.6]

[Period-on-period change]
Net assets[Period-on-period change]
Unitholders’ capital(%)
JPY MM(%)
JPY MM

186,894

186,894

187,194

187,194

199,051

Units

4,462,347

4,462,347

4,467,006

4,467,006

4,637,006

Net assets per unit

JPY

53,00449,57049,59550,05052,831

Net income per unit (Note 2)

JPY

3,447

342

290

598

2,909

Total dividends

JPY MM

16,466

1,829

1,634

3,046

13,980

Dividend per unit

JPY

3,690

410

366

682

3,015

[Earnings dividend per unit]

JPY[3,690]

[410]

[366]

[682]

[3,015][Dividend per unit resulted from excess of earnings]

JPY

[―]

[―]

[―]

[―]

[―]

Number of investment units issued and outstanding

Ratio of ordinary income to total assets (Note 3)

%

4.0

0.3

0.3

0.7

3.2

Return on unitholders’ equity (Note 4)

%

7.0

0.7

0.6

1.2

5.6

Ratio of net assets to total assets (Note 5)

%

56.9

55.3

56.2

56.3

57.0

[(1.1)][(1.6)]

[0.9]

[0.2]

[0.6]

%

107.7

119.8

126.1

114.0

106.4

JPY MM

24,087

6,547

6,366

10,963

22,344

JPY

4,503

632

640

1,683

3,961

[Period-on-period change]
Payout ratio (Note 6)[Additional information]
NOI (Note 7)
FFO per unit (Note 8) (Note 9)
FFO multiple (Note 9) (Note 10)

Times

18.0

83.9

87.8

46.0

17.5

Debt service coverage ratio (Note 9) (Note 11)

Times

17.5

3.3

3.4

7.5

17.0

Interest-bearing debt

JPY MM

168,754

168,754

164,754

164,231

175,231

40.6

42.2

41.8

41.4

40.8

Ratio of interest-bearing debt to total assets (Note 12)
Number of investment properties
Total leasable area%
Properties
m2

43

42

41

41

47

746,329.68

741,083.02

733,995.61

733,995.61

767,700.44

Number of tenants at end of period (Note 13)

Tenants

125

121

116

110

117

Occupancy rate at end of period (Note 14)

%

99.9

99.9

99.8

99.8

99.8

Depreciation

JPY MM

4,557

4,761

4,804

4,787

5,083

Capital expenditures

JPY MM

6,767

1,665

3,367

4,497

4,769

Number of operating days
Days
365
366
365
365
365
(Note 1) Net income for the 21st fiscal period includes gain on sale of real estate properties (3,158 million yen) and gain on exchange of real estate
properties (184 million yen). Net income for the 22nd fiscal period includes gain on sale of real estate properties (3,258 million yen).
(Note 2) Net income per unit is computed based on the weighted-average number of units outstanding during the year.
(Note 3) Ratio of ordinary income to total assets = Ordinary income / ((Total assets at the beginning of period + Total assets at the end of the period) / 2)
× 100
(Note 4) Return on unitholders’ equity = Net income / ((Net assets at the beginning of the period + Net assets at the end of the period) / 2) × 100(Note 5) Ratio of net assets to total assets = Net assets at the end of the period / Total assets at the end of the period × 100(Note 6) Payout ratio = Total dividends (excess of earnings exclusive) / Net income × 100(Note 7) NOI = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement
obligations expenses(Note 8) FFO per unit = (Net income + Depreciation + Loss on retirement of noncurrent assets + Asset retirement obligations expenses ± Gain/loss onsale of real estate properties – Gain on exchange of real estate properties ± Extraordinary loss or income (excluding loss on disaster)) / Numberof investment units issued and outstanding

3

(Note 9) 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 yen), gain on exchange of real estate properties (184 million yen) and extraordinary income (130 million yen). 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 yen). For the 24th fiscal period, FFO per unit, FFO multiple and debt service coverage ratio are calculated excluding
extraordinary income (7 million yen) and extraordinary loss (7 million yen).
(Note 10) FFO multiple = Investment unit price at the end of the period / Annualized FFO per unit
(Note 11) Debt service coverage ratio = (Income before income taxes + Depreciation + Loss on retirement of noncurrent assets + Asset retirement
obligations expenses ± Gain/loss 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 issuance costs + 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))(Note 12) Ratio of interest-bearing debt to total assets = Interest-bearing debt at the end of the period / Total assets at the end of the period × 100(Note 13) Number of tenants at the end of the period indicates the total number of tenants based on the lease contracts for respective real estate properties
in trust (excluding tenants of parking lots, etc.) as of the end of each fiscal period. However, for 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, the total number of the end tenants(excluding tenants of parking lots, etc.) is indicated.
(Note 14) Occupancy rate at the end of the period indicates the percentage of leased area to leasable area of respective real estate properties in trust as ofthe end of each fiscal period.

4

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 in themselves
wholly or partially used as hotels or real estate equivalents of such real estate or which are backed by such real estateor real estate equivalents (hereinafter referred to as the “Real Estate for Hotels, etc.”).
JHR, the former Nippon Hotel Fund Investment Corporation, merged with Japan Hotel and Resort, Inc. 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 through the end of the fiscal period under review (the 12-month period
from January 1, 2023 to December 31, 2023), JHR has carried out ten public offerings for capital increase andcontinuously acquired “highly competitive hotels” in mainly “strategic investment areas” where domestic andinbound 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 the quality of
its portfolio through new property acquisitions of 32 properties amounting to 308,537 million yen (acquisition pricebasis) in total through the end of the fiscal period under review. As of the end of the fiscal period under review, JHR
had a portfolio of 47 properties with a total acquisition price of 396,918 million yen, and the total number ofinvestment units issued and outstanding stood at 4,637,006 units.
(2) Investment performance for the fiscal year under review
The Japanese economy in the fiscal period under review (the 12-month period from January 1, 2023 to December 31,2023) exhibited a gradual recovery trend. This improvement followed the reclassification of new coronavirus
infections to a category five infectious disease in May, signaling a shift towards overcoming the COVID-19
pandemic and normalizing socio-economic activities. Despite the impact of rising prices, personal consumption
remained robust, contributing to the ongoing gradual recovery of the economy.
The domestic accommodation and tourism market saw no decline in demand even as the national travel subsidy
program, a domestic tourism promotion program, gradually came to an end in the second half of the year, anddomestic demand remained firm throughout the year. In terms of foreign visitors to Japan (hereinafter referred to as“inbound visitors”), while inbound visitors from China, which represented approximately 30% of the total in 2019
before the COVID-19 pandemic, has not fully recovered, there is an overall steady recovery led by countries andregions such as South Korea, the United States, and Singapore. Notably, in October 2023, the number of inboundvisitors surpassed that of the same month in 2019 for the first time since the onset of the COVID-19 pandemic. As aresult, the number of inbound visitors for the year 2023 was estimated to be 25.06 million, which represents anincrease of 554.1% compared to the previous year and a decrease of 21.4% compared to 2019.
The Overnight Travel Statistics Survey indicates that the number of Japanese overnight guests in domestic
accommodations for 2023 based on preliminary figures, nearly reached the pre-pandemic level, showing a 0.2%
decrease compared to 2019. The number of total foreign overnight guests has returned to a 1.3% decrease compared
to 2019. As a result, the total number of overnight stays at domestic accommodation facilities in 2023, based on
preliminary data, amounted to 593 million, marking a 31.8% increase from the previous year and a 0.4% decrease
compared to 2019.
Under such circumstances, JHR resumed the implementation of its external growth strategy, which it had approachedcautiously during the COVID-19 pandemic. JHR acquired UAN kanazawa in January 2023 and Sotetsu Fresa Inn
Shimbashi-Karasumoriguchi in March 2023, using cash on hand and further acquired three properties, La’gent Stay
Sapporo Odori, Oriental Hotel Kyoto Rokujo and Hotel Oriental Express Fukuoka Nakasukawabata, in September
2023 through the first public offering since the COVID-19 pandemic. In December of the same year, JHR acquired
Hotel JAL City Kannai Yokohama, which was entirely financed by debt. As a result, JHR acquired a total of six
properties in 2023 at an acquisition price of 33.3 billion yen.
JHR has acquired highly competitive hotels in the market where accommodation demand is expected to grow,thereby enhancing the quality of its portfolio.
5For its internal growth, JHR maintained close communication with the lessees and operators of each hotel to improve
revenue by implementing a high unit-price sales strategy as the domestic accommodation and tourism market
continues to experience a steady recovery. In addition, JHR continued its efforts to improve profitability throughmeasures to reduce operating costs. In particular, the Hotel Management Japan Co., Ltd. (hereinafter referred to as“HMJ”) and its subsidiaries (hereinafter collectively referred to as the “HMJ Group”), which are group companies of
the Asset Management Company, continued to reduce costs through restructuring implemented since the beginningof the COVID-19 pandemic. At the same time, they promoted proactive measures to improve profit using strategic
CAPEX (capital expenditure) and worked to improve sales through revenue management with an emphasis on ADR(Note 1).
As part of its internal growth strategy, JHR implemented strategic CAPEX to increase profits and strengthen
competitiveness. During the year under review, JHR conducted guest room renovation of Kobe Meriken Park
Oriental Hotel, Oriental Hotel Tokyo Bay, and Oriental Hotel Okinawa Resort & Spa to increase their ADRs.
Additionally, JHR comprehensively renovated the restaurants at Kobe Meriken Park Oriental Hotel and Oriental
Hotel Tokyo Bay, not only upgrading the spaces to a higher quality but also refreshing the menus to raise unit prices.
In April 2023, upon the expiration of its lease contract, dormy inn Kumamoto introduced a variable rent scheme
linked to GOP (Note 2) for new contracts, in addition to the same fixed rent as before. This allows JHR to enjoy
upside gains as the hotel market recovers.
Under these circumstances, with regard to the performance of the hotels owned by JHR, the RevPAR (Note 4) of the
25 Hotels with Variable Rent, etc. (Note 3) for the year under review was up 65.9% from the previous year, asignificant increase over the previous year. GOP was 20,162 million yen, a 127.2% increase compared to theprevious year, thanks to improved profitability resulting from the recovery of the domestic accommodation andtourism market and successful hotel cost management measures.
For further details of sales, GOP and other operating indexes for the 25 Hotels with Variable Rent, etc., please referto “<Reference 2> Hotel operation indexes, sales and GOP (gross operating profit), 7. Reference information” onpage 15.
(Note 1) ADR refers to the average guest room unit sales price (Average Daily Rate), which is calculated by dividing total room sales (including
service charges) for a given period by the total number of guest rooms sold for the same period. The same shall apply hereinafter.
(Note 2) GOP refers to Gross Operating Profit, which is the amount remaining after deducting expenses related to hotel operations, such as
personnel costs and general administrative expenses from hotel sales. The same shall apply hereafter.
(Note 3) The 25 Hotels with Variable Rent, etc., refer to the 25 hotels, consisting of the 16 HMJ Hotels, plus the Accor Group Hotels and the
Ishin Group Hotels. The same shall apply hereinafter.
The Five HMJ Hotels refer to the following five hotels JHR leases to HMJ.
Kobe Meriken Park Oriental Hotel
Oriental Hotel Tokyo Bay
Namba Oriental Hotel
Hotel Nikko Alivila
Oriental Hotel Hiroshima
The 16 HMJ Hotels refer to the Five HMJ Hotels plus the following 11 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
Hilton Tokyo Odaiba
Hotel Oriental Express Fukuoka Tenjin
Oriental Hotel Universal City
The Accor Group Hotels refer to the following five hotels: ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure
Okinawa Naha and Mercure Yokosuka.
The Ishin Group Hotels refer to the following four hotels: the b suidobashi, the b ikebukuro, the b hachioji, and the b hakata.
(Note 4) RevPAR represents Revenue Per Available Room, which is calculated by dividing total room sales (including service charges) for agiven period by the total number of guest rooms available for sale during the same period. The same shall apply hereinafter.

6

(3) Funding conditions
In the fiscal year under review, JHR borrowed 800 million yen to partially finance the acquisition of UAN kanazawa
in January 2023, and in September of the same year, borrowed 7,000 million yen in addition to 11,857 million yen
financed through the public offering to fund the acquisition of three properties (La’gent Stay Sapporo Odori, Oriental
Hotel Kyoto Rokujo and Hotel Oriental Express Fukuoka Nakasukawabata). In December of the same year, JHR alsoborrowed 4,000 million yen to fund the acquisition of Hotel JAL City Kannai Yokohama.
On the other hand, JHR borrowed a total of 49,745 million yen to refinance existing loans that became due forrepayment in the year under review with long-term loans with a maximum maturity of six years. Through theserefinancings, JHR sought to lengthen loan terms and diversify loan maturities.
In addition, the Kansai Mirai Bank, Limited, Ltd. and Hokuriku Bank, Ltd. were added as new lenders to JHR in
January 2023, and the Tokyo Star Bank, Limited, was added in March, further strengthening the lender formation.
Consequently, as of the end of the fiscal year under review, the balance of interest-bearing debt totaled 175,231
million yen, including short-term loans payable of 15,568 million yen, current portion of long-term loans payable of21,521 million yen, long-term loans payable of 101,242 million yen, current portion of investment corporation bondsof 3,000 million yen and investment corporation bonds of 33,900 million yen. As a result, the ratio of interest-bearing
debt to total assets (Note) at the end of the fiscal year under review stood at 40.8%, and the ratio of fixed interest rate
to total interest-bearing debt at the end of the fiscal year under review was at 65.9%.
(Note)

Ratio of interest-bearing debt to total assets at the end of the period = Balance of interest-bearing debt at the end of the period / Total
assets at the end of the period x 100

As of December 31, 2023, JHR’s issuer ratings were as follows:
Rating agency

RatingJapan Credit Rating Agency, Ltd. (JCR)

Long-term Issuer Rating: A+

Outlook: Stable

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

Issuer Rating: A

Rating Outlook: Stable(4) Financial results
As a result of the abovementioned asset management, for the year under review, JHR recorded operating revenue of
26,574 million yen, operating income of 15,014 million yen, ordinary income of 13,135 million yen, and net incomeof 13,134 million yen.
Dividend payments amounted to 13,980 million yen. This figure represents a total of 13,982 million yen, comprising
13,137 million yen in unappropriated retained earnings for the year under review and 845 million yen from thereversal of the reserve for temporary differences (appropriation for dividends), after excluding any fractionalamounts of less than one yen of dividend per unit. As a result, the dividend per unit was 3,015 yen.

7

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

Date

Capital transaction

January 23,
Capital increase through public
2019
offering of investment units
February 20, Capital increase through third-party
2019
allotment of investment units
March 16,
Capital increase through third-party
2021
allotment of investment units
September 21, Capital increase through public2023
offering of investment units

Number of units issued(Units)Increase
Balance(decrease)

Unitholders’ capital(JPY MM)
Increase
Balance(decrease)Note447,800

4,458,647

33,104

186,620(Note 1)

3,700

4,462,347

273

186,894(Note 2)

4,659

4,467,006

300

187,194(Note 3)

170,000

4,637,006

11,857

199,051(Note 4)(Note 1) New investment units were issued through public offering with an issue price per unit of 76,342 yen(issue value of 73,927 yen) in order to raise funds for the acquisition of new properties, etc.
(Note 2) New investment units were issued through third-party allotment with an issue value per unit of 73,927 yen in order to raise funds forallocation to part of the acquisition of new properties.
(Note 3) New investment units were issued through third-party allotment with an issue value per unit of 64,400 yen in order to raise funds forallocation to a part of capital expenditures.
(Note 4) New investment units were issued through public offering with an issue price per unit of 72,030 yen(issue value of 69,751 yen) in order to raise funds for the acquisition of new properties, etc.

[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:(JPY)
Fiscal period
Account closing month

20th period
December 2019

21st period
December 2020

22nd period
December 2021

23rd period
December 2022

24th period
December 2023

Highest price

91,80082,40071,40081,10085,700

Lowest price

75,90024,70051,60054,40065,400Price at end of period

81,20053,00056,20077,50069,2008

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. It was decided that 13,980,573,090 yen, an amount excluded
fractions of less than one yen of dividend per unit from 13,982,436,392 yen, which was calculated by adding a reversal ofreserve for temporary difference adjustment (appropriation for dividends) of JPY845,384,544 to unappropriated retained
earnings of 13,137,051,848 yen. Consequently, the dividend per unit came to 3,015 yen.
Classification
Unappropriated retained earnings

20th period

21st period

22nd period

23rd period

24th period(From January 1, 2019 (From January 1, 2020 (From January 1, 2021 (From January 1, 2022 (From January 1, 2023
to December 31, 2019) to December 31, 2020) to December 31, 2021) to December 31, 2022) to December 31, 2023)

15,290,314,375

1,527,790,689

1,300,724,473

2,672,927,976

13,137,051,848

744,789

3,922,801

1,171,664

2,930,982

1,863,302

Total cash dividends

16,466,060,430

1,829,562,270

1,634,924,196

3,046,498,092

13,980,573,090[Dividend per unit][3,690]

[410]

[366]

[682]

[3,015]

16,466,060,430

1,829,562,270

1,634,924,196

3,046,498,092

13,980,573,090[3,690]

[410]

[366]

[682]

[3,015]Of the above, total return of capital
contributions

–

–

–

–

–

[Return of capital contributions per
unit]

[–]

[–]

[–]

[–]

[–]

Of total return of capital contributions,
total distributions from allowance fortemporary difference adjustment

–

–

–

–

–

[Of return of capital contributions perunit, distributions from allowance fortemporary difference adjustment per
unit]

[–]

[–]

[–]

[–]

[–]

Of total return of capital contributions,
total distributions from the unitholders’capital for tax purpose

–

–

–

–

–

[Of return of capital contribution perunit, distributions from the unitholders’capital for tax purpose per unit]

[–]

[–]

[–]

[–]

[–]

Retained earnings

Of the above, total earnings dividends[Earnings dividend per unit]

95. Investment policies and issues to be addressed
General investment outlook
Although the Japanese economy's outlook demands continued vigilance regarding the effects of fluctuations in financial
and capital markets and the international situation, further economic recovery is expected due to the normalization of
economic and social activities among other factors.
While there are ongoing concerns about the impacts of rising prices and other factors on domestic leisure demand, the needfor domestic travel remains strong and is expected to stay robust, supported by improvements in employment and income
conditions. Inbound demand from South Korea, Taiwan, the U.S., and Hong Kong is already at or above the pre-pandemic
level, and in China, where recovery has been slow, a recovery is expected, especially for individual travel. The number of
inbound visitors in 2024 is expected to exceed that of 2019 to reach a record high.
JHR believes that the hotel market will overcome the impact of the COVID-19 pandemic and enter a growth phase due to
steady domestic demand and strong inbound demand.
JHR aims to achieve ADR-driven RevPAR growth by proactively capturing demand in the strong accommodation market
and implementing a high unit-price sales strategy. JHR will also work to increase sales in the non-rooms department as themarket is recovering through effective efforts on both infrastructure aspects, such as renovation and services aspects, suchas service improvements. In terms of costs, JHR will continue the efficient management of each hotel by reviewing
operations, etc., which has been achieved in cooperation with the lessees and operators and will strive to improve
profitability by optimizing the resources in line with the recovery in demand. In particular, the HMJ Group, a strategic
partner of JHR, plans to identify hotels with particularly high growth potential and renovate them through strategic
CAPEX aimed at boosting sales in guest rooms and restaurants.
JHR expects that inbound accommodation demand will continue to increase over the medium to long term, driven by thesignificant potential for overseas travel demand globally, particularly from Asian countries experiencing rising income
levels and due to Japan's sustained popularity as a travel destination. Consequently, JHR considers that the tourism andaccommodation market is expected to grow.
JHR believes that the location and competitiveness of individual hotels, as well as the ability of operators (i.e., their ability
to differentiate themselves from other hotels, improve profitability, including cost control, and execute to capture
recovering demand), will differentiate the performance of hotels.
Recognizing this environment, JHR, along with the Asset Management Company, will continue to implement a
differentiation strategy that leverages its experience as a J-REIT specializing in hotels and will manage its properties
according to the following policy.
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 strategies which proactively pursue greater profitability and asset
value in properties by way of a variety of measures such as adopting adequate brand to meet characteristic of each hotel
and coordinating with HMJ.
For properties with fixed-rent contracts, JHR will continue to focus on setting and maintaining appropriate rents based onrent 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 rent structure) in accordance with theconditions of the accommodation market.
For hotels under variable rent contracts and under a management contract structure, JHR is working to increase variable
rent, etc.by implementing active asset management strategies.
A. Properties under variable rent contracts
JHR works to enhance the profitability of its properties under variable rent contracts through its active asset
management strategies. JHR has adopted world-leading international brands such as Hilton, Sheraton, Mercure andHoliday Inn as well as leading brands in Japan including Oriental Hotel (brand of the HMJ Group) and Hotel Nikko
and, together with excellent operators, aims to increase variable rent, etc. through improved performance of thesehotels.
JHR collaborates with the operators to boost hotel performance by requesting them to implement marketingstrategies to attract domestic and inbound visitors considering the growth potential of their demand, measures tomaintain and increase room rates, and realization of synergy effects such as cost reductions by managing multiple
properties. Meanwhile, JHR will continue to work closely with the lessees and operators of each hotel to create
attractive products and provide added value by fully utilizing the characteristics of the owned properties, effective
10

marketing measures, and expansion of sales channels in order to capture domestic and overseas demand in the future.
In addition, JHR will continue its efforts for cost management and operational rationalization and promote various
measures to improve hotel revenues.
In addition, JHR will accurately assess the domestic accommodation and tourism market situation and changing
customer needs, and implement appropriate strategic CAPEX as needed to improve hotel revenues. The guest room
renovations of Kobe Meriken Park Oriental Hotel, Oriental Hotel Tokyo Bay, and Oriental Hotel Okinawa Resort &Spa that were carried out in 2023 are scheduled to continue in the next fiscal year. In addition, Namba Oriental Hotelplans to renovate the lobby floor and newly construct guest rooms, and La'gent Stay Sapporo Odori plans to partiallyrenovate guest rooms.
B. Properties under fixed rent contracts
JHR will monitor the operating conditions of these hotels appropriately and pay careful attention to each lessee’sability to bear the cost of rent. For the hotels that have shown a recovery in performance and whose lessees’ ability tobear the rents has improved, JHR will engage in negotiations for a rent raise or the introduction of variable rents tolink the increased hotel revenues to the growth of its own revenue. In addition, JHR will continuously invest in
maintaining and upgrading facilities and equipment in order to ensure each hotel becomes prominent in the market
and to maintain and enhance asset value.
External growth
In terms of external growth strategy, JHR 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. In
addition, JHR will build a portfolio which can secure stable revenues with future growth potential in order to achieve
upside gains.
Upon acquiring properties, JHR will focus on infrastructure aspects of the relevant Hotel Assets such as buildings andfacilities, services aspects such as the credibility of the hotel lessee and operator (including the ability of the hotel lessee tobear the cost of rent) as well as operation and management capabilities, and the properties’ locational superiority thatserves as the base for stability in demand and growth potential.
Specifically, JHR will aim to invest in “full-service hotels” and “resort hotels” that pose barriers to new openings due tosuch factors as operation and management know-how required for operating the hotels and limitations in terms of invested
capital and location. As for “limited-service hotels,” JHR emphasizes the credibility and operation capabilities of the hotel
lessee and operator as well as the building age, location, guestroom composition, profitability, etc. of the properties.
Moreover, JHR will take a particularly selective approach to budget-type (low-priced) hotels that specialize inaccommodation and primarily offer single rooms, relying solely on prices for competitiveness.
In the hotel trading market, against the backdrop of a recovery and growth expectations in the hotel industry, along with amore flexible lending stance by financial institutions, not only for foreign investors but also domestic investors, including
J-REITs, are actively considering investments in hotels. This could lead to an increase in active buying and selling of
hotels. Going forward, while closely monitoring market trends from many angles, JHR will flexibly respond to changes inthe 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 and 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.
Finance strategy
JHR will focus on enhancing financial stability and soundness and intends to maintain and improve the relationship oftrust with financial institutions with which it does business through close communication, leading to strengthen the lenderformation.
With the hotel market in the midst of a full-fledged recovery, JHR aims to secure a certain fixed interest ratio, lengthenloan terms, and diversify loan maturities, while paying attention to borrowing costs. At the same time, JHR will strengthen
its financial base by inviting new lenders and controlling capital expenditures appropriately. The ratio of interest-bearing
debt to total assets will be maintained at or below 50% as before. In addition, JHR will further diversify its financing
methods, including consideration of issuing investment corporation bonds and utilizing green finance.
Policy on handling negative goodwill
From the fiscal year ended December 31, 2017 (18th period), JHR started appropriation for dividends through reversal ofreserve for temporary difference adjustment in connection with partial amendments to the “Ordinance on Accounting ofInvestment Corporations” (Cabinet Office Ordinance No. 47 of 2006, as amended; hereinafter referred to as the“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 yen (hereinafter referred to as the “50-year amortization amount of negative goodwill”), which is an amount11equivalent to 2% (1/50) of the balance of the reserve for temporary difference adjustment for the fiscal year ended
December 31, 2017, to pay out as dividends every year, with the balance of the reserve for temporary difference
adjustment remaining at the time of reversal set as the maximum reversal amount (Note).
Furthermore, in cases of incurrence of losses caused by property dispositions, impairment loss of assets, dilution ofdividend per unit due to the issuance of new investment units through public offerings, etc., loss on retirement of
noncurrent assets, and suspension of sales and such due to large-scale renovations with significant impact on revenues,
JHR stipulated a policy to reverse additional portion of the negative goodwill on top of the 50-year amortization amount ofnegative goodwill (262 million yen) (Note).
(Note)The policy may change due to a resolution of the board of directors, and it does not guarantee the method of reversing the reserve fortemporary difference adjustment, amounts to be reversed, etc., in the future.

Initiatives for sustainability
In recent years, consideration for ESG (Environment, Social and Governance) has grown in importance in the investment
management industry from the standpoint of long-term sustainability. JHR recognizes that conducting real estate
investment management that considers for ESG is important to maximize unitholder value and to further raise theattractiveness of JHR. In addition, JHR believes that it is indispensable to establish favorable relationships with its
stakeholders, including unitholders, hotel guests, lessees, operators, business partners such as property managers, local
communities, and officers and employees of the Asset Management Company, 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 and received the Building-Housing Energy-efficiency Labeling System (BELS) evaluationfor Hotel Nikko Alivila and Mercure Okinawa Naha in February 2018 as the first such cases for hotel properties owned by
a J-REIT (Note 1). Subsequently, UAN kanazawa acquired the BELS evaluation in February 2024, bringing the total
number of BELS-evaluated properties in JHR’s portfolio to three. In September 2018, JHR became the first J-REIT
specializing in hotels to be recognized by GRESB (Note 2) for its environmental awareness and sustainability initiatives.
And JHR acquired “Green Star” in the GRESB Real Estate Assessment. Moreover, for the fourth consecutive year, JHR
was selected as a Sector Leader of Asian Hotel Sector in the GRESB Real Estate Assessment conducted in 2023. In April
2020, Hilton Tokyo Odaiba acquired CASBEE (Comprehensive Assessment System for Built Environment Efficiency)
Certification for Buildings, the first such recognition for an existing property used as hotel. In May 2021, Oriental Hotel
Fukuoka Hakata Station also acquired CASBEE Certification for Buildings, the second case of such for an existing
property used as hotels following Hilton Tokyo Odaiba. In addition, in December 2021, JHR defined its materiality (keyissues) in terms of ESG from the dual standpoints of stakeholder expectations and impact on its business. Also, the AssetManagement Company expressed support for the recommendations of the Task Force on 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. In August 2022, it disclosed the initiatives for the four
disclosure themes recommended by the TCFD, including the degree of financial impact based on climate change-related
scenario analysis and issued an ESG report in March 2023. In addition, it is working to sequentially clarify targets innumerical terms, such as formulating and disclosing the CO2 reduction target by 2050 in February 2023. Going forward,
JHR, together with the Asset Management Company, will continue to actively promote enhancement of its initiatives anddisclosure on a variety of sustainability issues.
In January 2024, JHR formulated the Green Finance Framework as a framework for financing environmentally friendly
projects. In the future, JHR will utilize the funds financed based on the framework to promote initiatives for environmental
improvement.
From 2020 to May 2023, as part of its efforts to contribute to society, under the spread of COVID-19, JHR provided a totalof nine hotels as accommodation and treatment facilities for patients who tested positive for COVID-19, exhibiting mild orno symptoms and did not require hospitalization. However, since July 2023, JHR has resumed normal business operations
at all of its hotels.
Recognizing its social responsibility towards local communities as a J-REIT specializing in hotels, JHR will continue toproactively carry out social contribution activities capitalizing on the characteristics of the hotel sector and each hotel.
(Note 1)
(Note 2)

Investigated by the Asset Management Company based on public information.
GRESB, which stands for Global Real Estate Sustainability Benchmark, is an annual benchmarking assessment to measure ESG(Environmental, Social and Governance) considerations of real estate companies and funds. It evaluates initiatives for sustainability of realestate companies, REITs and real estate funds, not of individual properties. The GRESB Rating makes relative assessment based on total
scores.

6. Significant subsequent events
Not applicable.
127. Reference information<Reference 1> Major indexes of the hotel business for the fiscal period ended December 31, 2023
The following tables indicate the figures related to the hotel business of the 19 HMJ Hotels (Note) for the operating period
from January 1, 2023 through December 31, 2023, based on the data provided by the hotel lessees, etc.
Furthermore, while the indexes of the hotels are among the indicators that show the operating status of the rooms
departments, they do not necessarily represent the operating revenue and the ability to bear rent, etc. of the respective
hotels, as the room rates and profit margins, etc. are not uniform, among other reasons. As such, the indicators are no morethan the reference figures.
(Note) The 19 HMJ Hotels refer to 19 hotels, consisting of the 16 HMJ Hotels plus the following three hotels acquired in 2023: Oriental Hotel Kyoto
Rokujo, Hotel Oriental Express Fukuoka Nakasukawabata and Hotel JAL City Kannai Yokohama (hereinafter referred to as the “Three HMJ
Hotels acquired in 2023”). The same shall apply hereinafter.
Kobe Meriken Park
Oriental Hotel

Oriental HotelTokyo Bay

Ratio to
total
sales
(%)

Namba Oriental
Hotel

Ratio to
total
sales
(%)

Hotel Nikko Alivila

Ratio to
total
sales
(%)

Oriental Hotel
Hiroshima

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

The Five HMJ
HotelsTotal/Average
Ratio to
total
sales
(%)

Occupancy rate

72.3%

－

86.0%

－

86.3%

－

72.4%

－

82.8%

－

79.9%

－

ADR (Note 1)

22,138－26,447－

20,900－32,964－

10,526－23,994－

RevPAR (Note 2)

16,011－

22,753－18,043－23,851

－

8,717

－

19,173－

Total sales(JPY MM)

4,607

100.0

6,313

100.0

2,252

100.0

5,405

100.0

1,124

100.0

19,702

100.0

Rooms department

1,888

41.0

4,244

67.2

1,699

75.5

3,456

63.9

722

64.2

12,00961.0

Food & beveragedepartment

2,487

54.0

1,769

28.0

85

3.8

1,584

29.3

201

17.9

6,127

31.1

Tenant department

67

1.5

189

3.0

435

19.3

3

0.1

0

0.0

694

3.5

166

3.6

111

1.8

33

1.4

362

6.7

201

17.8

872

4.4

795

17.2

2,372

37.6

1,348

59.8

1,972

36.5

408

36.3

6,895

35.0

Other departments(Note 3)GOP
(JPY MM)

Oriental Hotel
Universal City
Ratio to
total
sales
(%)

Oriental Hotel
Okinawa
Resort & Spa
Ratio to
total
sales
(%)

Sheraton Grand
Hiroshima Hotel(Note 4)
Ratio to
total
sales
(%)

Oriental Hotel
Fukuoka
Hakata Station
Ratio to
total
sales
(%)

Holiday Inn
Osaka Namba
Ratio to
total
sales
(%)

Hotel Oriental
Express Fukuoka
TenjinRatio to
total
sales
(%)

Occupancy rate

86.4%

－

59.8%

－

83.6%

－

86.4%

－

77.6%

－

84.7%

－

ADR (Note 1)

27,413－

26,463－25,006－

21,503－

17,634－

11,069－

RevPAR (Note 2)

23,674－

15,815－20,897－

18,573－

13,683

－

9,370

－

Total sales(JPY MM)

3,279

100.0

3,235

100.0

3,381

100.0

2,961

100.0

1,616

100.0

924

100.0

Rooms department

2,852

87.0

2,084

64.4

1,815

53.7

1,498

50.6

1,568

97.0

900

97.4

Food & beveragedepartment

421

12.8

821

25.4

1,488

44.0

1,172

39.6

－

－

12

1.3

Tenant department

－

－

51

1.6

－

－

240

8.1

28

1.7

－

－

7

0.2

279

8.6

77

2.3

51

1.7

20

1.2

12

1.3

1,709

52.1

751

23.2

909

26.9

1,555

52.5

981

60.7

512

55.4

Other departments(Note 3)GOP
(JPY MM)13

Hilton Tokyo
Narita Airport

International
Hotel Nikko Nara
Garden Hotel Narita

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

Hotel Oriental
Express Osaka
Shinsaibashi

Ratio to
total
sales
(%)

Hilton Tokyo
OdaibaRatio to
total
sales
(%)

Oriental Hotel
Kyoto Rokujo

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

Occupancy rate

77.8%

－

79.2%

－

68.2%

－

86.9%

－

80.5%

－

78.4%

－

ADR (Note 1)

12,273

－

8,499

－

14,639－10,352－32,091－

12,255－

RevPAR (Note 2)

9,548

－

6,733

－

9,989

－

9,000

－

25,849

－

9,605

－

Total sales(JPY MM)

2,755

100.0

1,429

100.0

2,353

100.0

409

100.0

9,458

100.0

648

100.0

Rooms department

1,910

69.3

1,138

79.6

1,203

51.1

407

99.7

4,274

45.2

582

89.8

Food & beveragedepartment

760

27.6

280

19.6

1,133

48.2

－

－

4,918

52.0

61

9.4

Tenant department

27

1.0

4

0.3

4

0.2

－

－

75

0.8

－

－

58

2.1

7

0.5

12

0.5

1

0.3

191

2.0

5

0.8

651

23.6

504

35.3

496

21.1

204

49.9

2,545

26.9

275

42.4

Other departments(Note 3)GOP
(JPY MM)

Hotel Oriental
Express Fukuoka
Nakasukawabata

Hotel JAL City
Kannai Yokohama

The 19 HMJ Hotels
Total/Average(Note 5)

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

Occupancy rate

78.7%

－

74.3%

－

78.6%

－

ADR (Note 1)

10,222－

10,998－19,740－

RevPAR (Note 2)

8,048

－

8,167

－

15,508－

Total sales(JPY MM)

577

100.0

592

100.0

53,320100.0

Rooms department

538

93.1

507

85.6

33,284

62.4

Food & beveragedepartment

34

5.9

78

13.1

17,307

32.5

Tenant department

－

－

－

－

1,123

2.1

Other departments
5
0.9
8
1.3
1,606
3.0
(Note 3)
GOP
278
48.1
135
22.8
18,39934.5(JPY MM)(Note 1) ADR refers to the average guest room unit sales price (Average Daily Rate), which is calculated by dividing total room sales (including service
charges) for a given period by the total number of guest rooms sold for the same period.
Service charges are 10% for Kobe Meriken Park Oriental Hotel, Oriental Hotel Tokyo Bay, Namba Oriental Hotel, Oriental Hotel Hiroshima,
Oriental Hotel Okinawa Resort & Spa, ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel), International Garden Hotel
Narita, Hotel Nikko Nara, Oriental Hotel Fukuoka Hakata Station and Hotel JAL City Kannai Yokohama; and 13% for Hotel Nikko Alivila,
Hilton Tokyo Narita Airport and Hilton Tokyo Odaiba. Oriental Hotel Universal City, Holiday Inn Osaka Namba, Hotel Oriental Express
Fukuoka Tenjin, Hotel Oriental Express Osaka Shinsaibashi, Oriental Hotel Kyoto Rokujo and Hotel Oriental Express Fukuoka
Nakasukawabata do not request service charges. The same shall apply hereinafter.
(Note 2) RevPAR represents Revenue Per Available Room, which is calculated by dividing total room sales (including service charges) for a given
period by the total number of guest rooms available for sale during the same period. The same shall apply hereinafter.
(Note 3) Figures for the Other departments include sales of the product sales department.
(Note 4) The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
(Note 5) For Total/Average of the 19 HMJ Hotels, figures are calculated by JHR as reference since no figures have been provided by the hotel lessees.
(Note 6) 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.

14

<Reference 2> Hotel operation indexes, sales and GOP (gross operating profit)
The numeral figures are based on figures obtained from hotel lessees, etc. Please note that these figures have not been
audited nor have they gone through other procedures. No guarantee is made as to the accuracy or completeness of the
figures and information.
ADR and RevPAR are rounded off to the nearest yen. Sales and GOP are rounded off to the nearest million yen.
Occupancy rate and comparison with the previous period are rounded off to one decimal place.
<1> The 16 HMJ Hotels

Occupancy
rate
ADR
(JPY)
RevPAR(JPY)
Sales(JPY MM)GOP(JPY MM)First half of the year
Second half of the year
Full year
First half of the year
Second half of the year
Full year
First half of the year
Second half of the year
Full year
First half of the year
Second half of the year
Full year

ADR
(JPY)
RevPAR(JPY)
Sales(JPY MM)GOP(JPY MM)

Fiscal year ended
December 31, 2023
Comparison
Resultwith previous
period76.0%
21.3pt
81.4%
8.0pt
78.7%
14.6pt18,75352.6%
22,21529.2%
20,55836.0%
14,243112.1%
18,082
43.2%
16,17966.9%23,122
81.8%
28,38028.8%
51,503
48.2%

First half of the year

1,536

－

7,166

366.6%

Second half of the year
Full year

6,222
7,757

185.7%
285.1%

10,546
17,712

69.5%
128.3%<2> The 25 Hotels with Variable Rent, etc.

Occupancy
rate

Fiscal year ended
December 31, 2022
Comparison
Resultwith previous
period54.6%
28.2pt73.4%
25.6pt64.1%
26.9pt12,292(2.6%)
17,192
22.5%
15,121
11.7%
6,716
101.5%
12,625
88.2%
9,694
92.5%
12,72050.9%
22,031
67.7%
34,752
61.1%

First half of the year
Second half of the year
Full year
First half of the year
Second half of the year
Full year
First half of the year
Second half of the year
Full year
First half of the year
Second half of the year
Full year

Fiscal year ended
December 31, 2022
Comparison
Resultwith previous
period55.8%
26.3pt74.2%
25.5pt65.1%
25.9pt10,872
1.1%
15,01823.7%
13,255
14.0%
6,063
91.4%
11,140
88.4%
8,623
89.4%
14,36451.0%
24,735
69.8%
39,100
62.4%

Fiscal year ended
December 31, 2023
Comparison
Resultwith previous
period76.0%
20.2pt
80.9%
6.7pt
78.4%
13.4pt16,61852.8%
19,72931.4%
18,23437.6%
12,628108.3%
15,95543.2%
14,30565.9%
26,221
82.5%
32,211
30.2%
58,432
49.4%

First half of the year

1,819

－

8,164

348.8%

Second half of the year
Full year

7,055
8,874

186.4%
274.9%

11,998
20,162

70.1%
127.2%

15

Overview of JHR
1. Unitholders’ capital
Account closing date
Total number of authorized units(Units)Number of investment units
issued and outstanding(Units)Unitholders’ capital(JPY MM)
Number of unitholders(Persons)

20th period(As ofDecember 31,
2019)

21st period(As ofDecember 31,
2020)

22nd period(As ofDecember 31,
2021)

23rd period(As ofDecember 31,
2022)

24th period(As ofDecember 31,
2023)

20,000,000

20,000,000

20,000,000

20,000,000

20,000,000

4,462,347

4,462,347

4,467,006

4,467,006

4,637,006

186,894

186,894

187,194

187,194

199,051

30,574

35,11731,481

27,573

26,6482. Matters regarding investment units
Major unitholders of JHR as of December 31, 2023 were as follows:

Number ofunits held
(Units)Percentage(Note)(%)

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

941,008

20.29

Custody Bank of Japan, Ltd. (Trust Account)

841,944

18.15

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

255,752

5.51

BNYM AS AGT/CLTS 10 PERCENT

96,1152.07

SSBTC CLIENT OMNIBUS ACCOUNT

81,205

1.75

STATE STREET BANK WEST CLIENT - TREATY 505234

75,764

1.63

STATE STREET BANK AND TRUST COMPANY 505103

74,474

1.60

JP MORGAN CHASE BANK 385781

63,009

1.35

GOLDMAN SACHS INTERNATIONAL

62,8401.35

STATE STREET BANK AND TRUST COMPANY 505223

57,473

1.23

2,549,584

54.98

Name

Total
(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.

16

3. Matters regarding officers, etc.
(1) Officers, etc. as of December 31, 2023 were as follows:
Position

Major concurrent postoutside JHR

Name

Executive Director

Kaname Masuda (Note 1)

Supervisory Director

Tetsuya Mishiku (Note 1)

Supervisory Director

Mayumi Umezawa (Note 1)

Supervisory Director

Akiko Tomiyama (Note 1, 2)

Independent auditor

KPMG AZSA LLC (Note 3)

Representative Partner, Masuda& Partners Law Office
Representative Attorney, Mishiku& Nagamachi Law Office
Representative of Umezawa
Accountant OfficeTotal amount of remunerationfor each position during thecorresponding fiscal period(JPY thousands)

Mimura Komatsu Law Office
–

6,600
3,600
3,600
600
29,550(Note 1) None of the Executive Directors and the Supervisory Directors own investment units of JHR in their own name or another person’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.
(Note 2) Based on the resolution by the 12th General Meeting of Unitholders of JHR held on November 22, 2023, Akiko Tomiyama newly took
office as Supervisory Director of JHR on the same date. Hiroto Kashii, former Supervisory Director, resigned at the conclusion of the 12th
General Meeting of Unitholders held on November 22, 2023. His total compensation for the business tenure was 3,300 thousand yen.
(Note 3) Fees paid to the independent auditor include fees for comfort letter preparation in relation to the public offering (3,300 thousand yen). In
addition, fees for non-audit services provided by other firms within the same network of the independent auditor are 12,500 thousand yen.
(Note 4) In case the number of Executive Director does not meet the requirement stipulated by laws and regulations, Hisashi Furukawa, Director of
the Asset Management Company, was reappointed as Substitute Executive Director, based on the resolution made by the 12th General
Meeting of Unitholders of JHR held on November 22, 2023. On February 21, 2024, Hisashi Furukawa resigned as President and CEO of theAsset Management Company and was appointed as Director of the Asset Management Company on the same date.

(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 the independent
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

Executive Director
and Supervisory
Directors

Overview of contract(Overview of an insured event covered by the insurance)
JHR has entered into a directors and officers liability insurance contract with an insurancecompany, as provided in Article 116-3-1 of the Investment Trusts Act. The contract shall cover, toa certain extent, legal losses such as compensation payment for damages and dispute costs to beborne by the insured when they receive a claim for compensation of damages caused by the actions
they have taken as a director of JHR.
(Burden ration of insurance premium)
JHR bears 100% of the insurance premium (Measures to ensure the appropriateness of theexecution of duties by directors and officers).
When the insured suffers damages by actions which they executed while recognizing that it may
constitute a criminal act or violate the laws and regulations, the loss is not subject to the protection.

17

5. Asset management company, custodian and general administrators
The asset management company, etc. as of December 31, 2023 were as follows:
Consignment classification

Name

Asset management company
CustodianJapan Hotel REIT Advisors Co., Ltd.
Sumitomo Mitsui Trust Bank, Limited

General administrator (administration of the unitholders’ registry, etc.,
bookkeeping, etc., tax payments, etc., organizational operations, etc., andadministration of the special account management agency)

Sumitomo Mitsui Trust Bank, Limited

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 Japan18

Status of Investment Assets
1. Composition of assets
Type ofassetsHotel
Prefectural
type
location(Note 1)

Osaka

Tokyo

Limitedservice
hotel
Hokkaido

FukuokaRealestatein trust
Kyoto

23rd period
24th period(As of December 31, 2022) (As of December 31, 2023)
Total amountof assets held
(JPY MM)(Note 2)

Ratio tototal assets(%)(Note 3)

Total amountof assets held
(JPY MM)(Note 2)

Ratio tototal assets(%)(Note 3)

Holiday Inn Osaka Namba

26,646

6.7

26,566

6.2

Namba Oriental Hotel

14,2503.6

14,217

3.3

Hotel Oriental Express Osaka Shinsaibashi
Sotetsu Fresa Inn ShimbashiKarasumoriguchi
the b ikebukuro

2,781

0.7

2,769

0.6

－

－

8,469

2.0

6,548

1.7

6,599

1.5

CANDEO HOTELS Ueno Koen

6,535

1.6

6,525

1.5

Comfort Hotel Tokyo Higashi Nihombashi

3,422

0.9

3,394

0.8

the b hachioji

2,685

0.7

2,691

0.6

Smile Hotel Nihombashi Mitsukoshimae

2,025

0.5

2,025

0.5

R&B Hotel Ueno Hirokoji

1,780

0.4

1,804

0.4

Chisun Hotel Kamata

1,442

0.4

1,452

0.3

the b suidobashi

Name of property, etc.

1,155

0.3

1,140

0.3

dormy inn EXPRESS Asakusa

922

0.2

917

0.2

Chisun Inn Kamata

773

0.2

778

0.2

La’gent Stay Sapporo Odori－－

10,402

2.4

ibis Styles Sapporo

6,366

1.6

6,299

1.5

Mercure Sapporo

5,614

1.4

5,563

1.3

Hotel Oriental Express Fukuoka Tenjin
Hotel Oriental Express Fukuoka
Nakasukawabata
the b hakata

5,728

1.4

5,710

1.3

－

－

4,621

1.1

2,330

0.6

2,319

0.5

Washington Hotel Plaza Hakata, Nakasu

2,062

0.5

2,065

0.5

Toyoko Inn Hakata-guchi Ekimae

1,364

0.3

1,346

0.3

ibis Styles Kyoto Station

6,580

1.7

6,556

1.5

－

－

4,570

1.1

Oriental Hotel Kyoto Rokujo

Kanagawa Hotel JAL City Kannai Yokohama
Okinawa

Mercure Okinawa Naha

Kumamoto dormy inn Kumamoto
Ishikawa

UAN kanazawa

Nara

Washington Hotel Plaza Nara

Chiba

Fullservice
hotel

－

4,027

0.9

0.7

2,713

0.6

2,186

0.6

2,205

0.5

－

－

2,056

0.5

1,703

0.4

1,716

0.4

107,65427.1

141,527

32.9

Hilton Tokyo Odaiba

63,16015.9

63,167

14.7

Oriental Hotel Tokyo Bay

16,724

4.2

16,932

3.9

Hilton Tokyo Narita Airport

13,0383.3

13,003

3.0

International Garden Hotel Narita

8,983

2.3

8,916

2.1

Hotel Francs

3,142

0.8

3,172

0.7

17,016

4.3

16,848

3.9

4,032

1.0

4,005

0.9

Subtotal
Tokyo

－
2,745

ACTIVE-INTER CITY HIROSHIMA
Hiroshima (Sheraton Grand Hiroshima Hotel) (Note 4)
Oriental Hotel Hiroshima
Aichi

Hilton Nagoya

15,5603.9

15,527

3.6

Nara

Hotel Nikko Nara

10,047

2.5

9,998

2.3

Hyogo

Kobe Meriken Park Oriental Hotel

9,260

2.3

9,443

2.2

FukuokaOriental Hotel Fukuoka Hakata Station

8,720

2.2

8,395

2.0

Kanagawa Mercure Yokosuka
Subtotal
19

1,608

0.4

1,642

0.4

171,29643.2

171,05439.8

Type ofassetsHotel
PrefecturalType
location(Note 1)

Resorthotel

Name of property, etc.

Total amountof assets held
(JPY MM)(Note 2)

Ratio toTotal amount
Total assets of assets held(%)
(JPY MM)(Note 3)(Note 2)

Ratio tototal assets(%)(Note 3)

4.4

17,441

4.1

Hotel Nikko Alivila

17,451

Oriental Hotel Okinawa Resort & Spa

15,4083.9

15,626

3.6

The Beach Tower Okinawa

6,418

1.6

6,413

1.5

Chiba

Hilton Tokyo Bay

26,097

6.6

25,9936.0

Osaka

Oriental Hotel Universal City

7,302

1.8

7,192

1.7

Kanagawa

Hakone Setsugetsuka

3,552

0.9

3,528

0.8

OkinawaRealestatein trust

23rd period
24th period(As of December 31, 2022) (As of December 31, 2023)

76,231

19.2

76,195

17.7

Real estate in trust – Total

Subtotal

355,182

89.5

388,777

90.4

Deposits and other assets (Note 5)

41,617

10.5

41,177

9.6

Total assets

396,799100.0

429,955100.0(Note 1) Hotels are categorized as limited-service hotels, full-service hotels or resort hotels according to the manner of operation.
(Note 2) For real estate in trust, “Total amount of assets held” shows the amount calculated by deducting accumulated depreciation from acquisition price(including expenses incidental to acquisition).
(Note 3) “Ratio to total assets” shows the ratio of each asset held to total assets, rounded off to one decimal place.
(Note 4) ACTIVE-INTER CITY HIROSHIMA is classified in accordance with the hotel type of Sheraton Grand Hiroshima Hotel, its main facility.
(Note 5) 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).

20

2. Major portfolio assets
An overview of the portfolio assets of JHR (47 properties in total) as of December 31, 2023 is as follows.
Property
No.

(Note 16)

Name of property, etc.

Book value(JPY MM)(Note 1)

Leasable area(m2)
(Note 2)

Leased area(m2)
(Note 3)32,663.90
44,833.11
19,364.33
38,024.98
13,752.22
20,140.01
10,655.03
7,701.19
3,097.25
2,014.90
5,602.04
5,271.54
3,060.31
5,765.27
3,167.82

32,663.90
44,833.11
19,364.33
38,024.98
13,752.22
20,140.01
10,655.03
7,701.19
3,097.25
2,014.90
5,602.04
5,271.54
3,060.31
5,765.27
3,167.82

3,581.66

3,581.66

1,468
781
7,468
26,000
6,566
6,350
5,625
2,768
6,608
2,706
2,328
3,174
1,672
16,115
17,0536,537
8,520
26,601
5,765
15,527
13,261
9,012
10,0902,789
63,365
2,062
8,469
10,422
4,608

868.36
3,831.80
1,499.87
15,926.83
64,928.83
5,003.99
14,992.49
15,189.42
10,884.25
5,650.01
7,847.65
3,986.09
19,213.39
16,881.82
36,430.15
31,181.03
7,934.26
18,105.42
11,501.10
8,238.75
47,942.71
56,817.28
21,814.93
21,011.31
2,710.55
64,907.76
2,866.02
5,246.66
9,742.83
5,464.79

868.36
3,831.80
1,499.87
15,926.83
64,928.83
5,003.99
14,896.40
15,057.90
10,884.25
5,650.01
7,847.65
3,986.09
19,213.39
16,881.82
36,430.15
30,330.68
7,934.26
18,105.42
11,501.10
7,492.26
47,942.71
56,817.28
21,814.93
21,011.31
2,710.55
64,907.76
2,866.02
5,246.66
9,742.83
5,464.79

4,657

4,614.35

4,047
391,984

5,770.18
767,700.44

1
2
3
4
5
8
9
10
12
13
14
15
16
18
22

Kobe Meriken Park Oriental Hotel (Note 5)
Oriental Hotel Tokyo Bay
Namba Oriental Hotel
Hotel Nikko Alivila (Note 6)
Oriental Hotel Hiroshima
The Beach Tower Okinawa (Note 7)
Hakone Setsugetsuka
dormy inn Kumamoto
the b suidobashi
dormy inn EXPRESS Asakusa
Washington Hotel Plaza Hakata, Nakasu
Washington Hotel Plaza Nara
R&B Hotel Ueno Hirokoji
Comfort Hotel Tokyo Higashi Nihombashi
Smile Hotel Nihombashi Mitsukoshimae

9,772
17,221
14,28017,648
4,051
6,416
3,534
2,205
1,149
917
2,065
1,717
1,804
3,395
2,025

24

Toyoko Inn Hakata-guchi Ekimae

1,346

25
26
29
31
32
33
34
35
37
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60

Chisun Hotel Kamata
Chisun Inn Kamata
Oriental Hotel Universal City (Note 8)
Hilton Tokyo Bay (Note 9)
ibis Styles Kyoto Station
ibis Styles Sapporo
Mercure Sapporo
Mercure Okinawa Naha
the b ikebukuro (Note 10)
the b hachioji (Note 10)
the b hakata (Note 10)
Hotel Francs
Mercure Yokosuka (Note 11)
Oriental Hotel Okinawa Resort & Spa
ACTIVE-INTER CITY HIROSHIMA (Note 12)
CANDEO HOTELS Ueno Koen (Note 13)
Oriental Hotel Fukuoka Hakata Station
Holiday Inn Osaka Namba
Hotel Oriental Express Fukuoka Tenjin
Hilton Nagoya (Note 14)
Hilton Tokyo Narita Airport
International Garden Hotel Narita
Hotel Nikko Nara (Note 15)
Hotel Oriental Express Osaka Shinsaibashi
Hilton Tokyo Odaiba
UAN kanazawa
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi
La’gent Stay Sapporo Odori
Oriental Hotel Kyoto Rokujo
Hotel Oriental Express
Fukuoka Nakasukawabata
Hotel JAL City Kannai Yokohama
Total

Major
use

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

2.6
7.1
4.6
5.3
1.4
1.9
1.1
0.9
0.4
0.2
0.9
0.6
0.4
1.7
0.5

Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel

100.0

0.5

Hotel

100.0
100.0
100.0
100.0
100.0
99.4
99.1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
97.3
100.0
100.0
100.0
90.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

0.4
0.3
6.1
8.8
1.2
1.8
2.4
0.6
1.2
0.6
0.8
1.1
1.2
2.4
5.8
1.3
5.7
3.4
2.2
4.8
2.0
1.8
1.7
0.7
8.8
0.4
0.9
0.5
0.4

4,614.35

100.0

0.3

Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel
Hotel

5,770.18
765,875.99

100.0
99.8

0.0
99.9

Main building: Main building:Annex:

Ratio of rental
Tenantoccupancy revenue to total
rental revenue
ratio
(%)
(%)
(Note 4)

Annex:

Hotel(Note 1) Book value includes real estate in trust, machinery and equipment, tools, furniture and fixtures, construction in progress, construction inprogress in trust, and intangible assets.
(Note 2) In principle, leasable area represents leasable area of the building, which does not include leasable area of land (including parking lots on
ground), based on a lease contract or plan for each real estate in trust. For properties in which the leased area is not described in the lease
contract, leasable area represents the area described in the registration of the building. Furthermore, when the leasable area in the lease contract
is indicated in tsubo units, 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 notdescribed in the lease contract, leased area shows the area described in the registration of the building. Furthermore, when the leased area inthe 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 which master lease companies have concluded lease contracts with lessees, etc. under the pass-throughscheme 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 have21

been 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 arerounded off to one decimal place. Please note that the sum of the ratio of rental revenue to total rental revenue is 99.9% because the relevant
ratios of the trademark rights for the Oriental Hotel brand, etc. are not included.
(Note 5) 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 building of 764.83 square meters).
(Note 6) 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.
(Note 7) Leasable area and leased area for The Beach Tower Okinawa include the floor area of a warehouse in a two-story light- gauge steel annex
building (91.20 square meters).
(Note 8) 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 theproperty, the leased area under the lease contract of the hotel is indicated.
(Note 9) 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).
(Note 10) The b ikebukuro, the b hachioji and the b hakata are properties with pass-through master lease contracts in which JHR receives the sameamount of rents, etc. paid by end tenants as is in principle. In this report, the same shall apply hereinafter.
(Note 11) 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 leasable area and leased area of the property, theleased area under the lease contract of the hotel is indicated.
(Note 12) The building of ACTIVE-INTER CITY HIROSHIMA is a building with compartmentalized ownership for ACTIVE- INTER CITYHIROSHIMA, which comprises Sheraton Grand Hiroshima Hotel, office spaces, stores, parking lots and bicycle 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 areindicated.
(Note 13) Leasable area and leased area of CANDEO HOTELS Ueno Koen indicate the total floor area described in the certificate of inspection, basedon the building lease contract with the hotel lessee. Furthermore, the figure includes the floor area for the mechanical parking facilities.
(Note 14) The building of Hilton Nagoya is a compartmentalized ownership of AMMNAT SQUARE, which consists of a hotel building (including retailspace), 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.
(Note 15) 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%).
(Note 16) The property numbers of assets that were sold are intentionally omitted.

22

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, 2023 were as follows:
Property
No.
(Note 5)

1
2
3
4
5
8
9
10
12
13
14
15
16
18
22
24
25
26
29
31
32
33
34
35
37
39
40
41
42

Name of property, etc.

Location (Displayed address)

Kobe Meriken Park
Oriental Hotel

5-6 Hatobacho, Chuo-ku,
Kobe city, Hyogo
8-2 Mihama 1-chome,
Oriental Hotel Tokyo Bay
Urayasu city, Chiba
8-17 Sennichimae 2-chome, Chuo-ku,
Namba Oriental Hotel
Osaka city, Osaka
600 Aza Gima, Yomitan-son,Hotel Nikko Alivila
Nakagami-gun, Okinawa
6-10 Tanakamachi, Naka-ku,
Oriental Hotel Hiroshima
Hiroshima city, Hiroshima
The Beach Tower Okinawa 8-6 Aza Mihama, Chatan-cho,(Note 4)
Nakagami-gun, Okinawa
1300 Goura, Hakone-machi,
Hakone Setsugetsuka
Ashigarashimo-gun, Kanagawa
3-1 Karashimacho, Chuo-ku,
dormy inn Kumamoto
Kumamoto city, Kumamoto
25-27 Hongo 1-chome,the b suidobashi
Bunkyo-ku, Tokyo
dormy inn EXPRESS
3-4 Hanakawado 1-chome,
Asakusa
Taito-ku, Tokyo
Washington Hotel Plaza
8-28 Nakasu 2-chome, Hakata-ku,
Hakata, Nakasu
Fukuoka city, Fukuoka
31-1 Shimosanjo-cho,
Washington Hotel Plaza Nara
Nara city, Nara
18-8 Ueno 1-chome,
R&B Hotel Ueno Hirokoji
Taito-ku, Tokyo
Comfort Hotel Tokyo
10-11 Nihonbashi-bakurocho 1-chome,
Higashi Nihombashi
Chuo-ku, Tokyo
Smile Hotel
4-14 Nihonbashi-Honcho 1-chome,
Nihombashi Mitsukoshimae Chuo-ku, Tokyo
Main building: 15-5 Hakataekimae 1-chome,
Hakata-ku, Fukuoka city, Fukuoka
Toyoko Inn Hakata-guchi
Annex: 1-15 Hakataekimae 1-chome,
EkimaeHakata-ku, Fukuoka city, Fukuoka
20-11 Nishikamata 8-chome,
Chisun Hotel Kamata
Ota-ku, Tokyo
23-13 Kamata 4-chome,
Chisun Inn Kamata
Ota-ku, Tokyo
2-78 Shimaya 6-chome,
Oriental Hotel Universal City
Konohana-ku, Osaka city, Osaka
1-33 Maihama,
Hilton Tokyo Bay
Urayasu city, Chiba
47-1, 47-2 Higashikujo Kamitonoda-cho,
ibis Styles Kyoto Station
Minami-ku, Kyoto city, Kyoto
10-10 Minami 8-jo Nishi 3-chome, Chuo-ku,
ibis Styles Sapporo
Sapporo city, Hokkaido
2-4 Minami 4-jo Nishi 2-chome,
Mercure Sapporo
Chuo-ku, Sapporo city, Hokkaido
3-19 Tsubogawa 3-chome,
Mercure Okinawa Naha
Naha city, Okinawa
39-4 Higashi-ikebukuro 1-chome,the b ikebukuro
Toshima-ku, Tokyo
6-12 Myojincho 4-chome,the b hachioji
Hachioji city, Tokyo
3-9 Hakata-eki Minami 1-chome, Hakata-ku,
the b hakata
Fukuoka city, Fukuoka
10-2 Hibino 2-chome, Mihama-ku,
Hotel Francs
Chiba city, Chiba
27 Honcho 3-chome,
Mercure Yokosuka
Yokosuka city, Kanagawa
23

Form ofownership

Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust
Beneficial
interest in trust

Appraisal value
Book value Appraisal
at end of period(JPY MM) agency(JPYMM)(Note 2) (Note 3)(Note 1)

14,1009,772

JR31,90017,221JR

31,00014,280JR

28,20017,648

JR

4,220

4,051

JR

9,940

6,416

JR

5,390

3,534

JR

3,390

2,205

JR

2,330

1,149

JR

1,320

917

JM

4,520

2,065

JR

2,440

1,717

JR

1,830

1,804

JM

5,470

3,395

JM

3,030

2,025

JM

2,780

1,346

T

2,080

1,468

T

1,430

781

T

18,5007,468

R40,20026,000

D

9,990

6,566

D

11,1006,350

JR10,600

5,625

JR

7,070

2,768

JR

7,200

6,608

JR

2,610

2,706

JR

4,520

2,328

JR

4,130

3,174

D

3,210

1,672

D

Property
No.
(Note 5)

43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60

Name of property, etc.

Location (Displayed address)

Oriental Hotel Okinawa
Resort & Spa
ACTIVE-INTER CITYHIROSHIMACANDEO HOTELS
Ueno Koen
Oriental Hotel Fukuoka
Hakata Station

Form ofownership

1490-1 Kise,
Beneficial
Nago city, Okinawa
interest in trust
12-1 Wakakusa-cho, Higashi-ku,
Beneficial
Hiroshima city, Hiroshima
interest in trust
2-13 Negishi 1-chome,
Beneficial
Taito-ku, Tokyo
interest in trust
4-23 Hakata-eki Chuo-gai, Hakata-ku,
Beneficial
Fukuoka city, Fukuoka
interest in trust
5-15 Soemon-cho, Chuo-ku,
Beneficial
Holiday Inn Osaka Namba
Osaka city, Osakainterest in trust
Hotel Oriental Express
3-14 Tenjin 3-chome, Chuo-ku,
Beneficial
Fukuoka Tenjin
Fukuoka city, Fukuoka
interest in trust
3-3 Sakae 1-chome, Naka-ku,
Beneficial
Hilton Nagoya
Nagoya city, Aichi
interest in trust
456 Kosuge,
Beneficial
Hilton Tokyo Narita Airport
Narita city, Chibainterest in trust
International Garden
241-1 Yoshikura,
Beneficial
Hotel Narita
Narita city, Chibainterest in trust
8-1 Sanjyo-honmachi,
Beneficial
Hotel Nikko Nara
Nara city, Narainterest in trust
Hotel Oriental Express
2-13 Minamisenba 3-chome,
Beneficial
Osaka Shinsaibashi
Chuo-ku, Osaka city, Osakainterest in trust
9-1 Daiba 1-chome,
Beneficial
Hilton Tokyo Odaiba
Minato-ku, Tokyo
interest in trust
Beneficial
6-30 Oyamacho,
UAN kanazawa
interest in trust
Kanazawa city, Ishikawa
Beneficial
Sotetsu Fresa Inn
10-2 shimbashi 4-chome,interest in trust
Shimbashi-Karasumoriguchi Minato-ku, Tokyo
Beneficial
26-5 Minami 2-jo Nishi 5-chome, Chuo-ku,
La’gent Stay Sapporo Odori
interest in trust
Sapporo city, Hokkaido
181, Bokumikanabutsucho, Aburanokojidori- Beneficial
Oriental Hotel Kyoto Rokujo
rokujo-agaru, Shimogyo-ku, Kyoto city, Kyoto interest in trust
Beneficial
Hotel Oriental Express
6-26 Tenyamachi, Hakata-ku,
interest in trust
Fukuoka Nakasukawabata
Fukuoka city, Fukuoka
Beneficial
Hotel JAL City Kannai
72 Yamashitacho, naka-ku,
interest in trust
Yokohama
Yokohama city, Kanagawa
Total

Appraisal value
Book value Appraisal
at end of period(JPY MM) agency(JPYMM)(Note 2) (Note 3)(Note 1)

18,300

16,115

JR

20,40017,053

D

7,590

6,537

D

15,0008,520

D26,60026,601

JR

6,650

5,765

D

14,90015,527D

12,30013,261

JR

9,270

9,012

JR

9,670

10,090

D

2,890

2,789

D

68,20063,365

JR

2,200

2,062

JR

10,1008,469

D10,80010,422

JR

5,940

4,608

JR

6,090

4,657

JR

4,340

4,047

JR

525,740

391,984(Note 1) Appraisal value at the end of the period shows the value assessed at the end of the fiscal period under review in accordance with JHR’s Articles
of Incorporation, the Ordinance on Accounting of Investment Corporations (Cabinet Office Ordinance No. 47, 2006) and regulations set forthby The Investment Trusts Association, Japan.
(Note 2) Book value includes amounts of real estate in trust, machinery and equipment, tools, furniture and fixtures, construction in progress,
construction in progress in trust, and intangible assets.
(Note 3) 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.
(Note 4) Due to the lack of a displayed address, “location” in the registration or registration record is shown.
(Note 5) The property numbers of assets that were sold are intentionally omitted.

24

(2) Transition of real estate leasing business, etc.
An overview of leasing business of real estate, etc. owned by JHR is as follows:
23rd period(From January 1, 2022 to December 31, 2022)
Property
No.
(Note 3)Name of property, etc.

Number oftenants
at end ofperiod(Note 1)

Tenantoccupancy
rate
at end ofperiod
(%)

1
2
3
4
5
8
9
10
12
13
14
15
16
18
22
24
25
26
29
31
32
33
34
35
37
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55

24th period(From January 1, 2023 to December 31, 2023)

Real estate Ratio to total
Number ofoperatingreal estatetenants
revenue
operatingat end ofduring therevenueperiodperiod(%)(Note 1)(JPY MM)(Note 2)Tenantoccupancy
rate
at end ofperiod(%)

Real estate Ratio to total
operatingreal estaterevenue
operatingduring therevenueperiod(%)(JPY MM)(Note 2)

Kobe Meriken Park Oriental Hotel
1
100.0
429
2.9
1
100.0
689
2.6
Oriental Hotel Tokyo Bay
1
100.0
833
5.6
1
100.0
1,874
7.1
Namba Oriental Hotel
1
100.0
460
3.1
1
100.0
1,232
4.6
Hotel Nikko Alivila
1
100.0
814
5.5
1
100.0
1,400
5.3
Oriental Hotel Hiroshima
1
100.0
618
4.1
1
100.0
366
1.4
The Beach Tower Okinawa
1
100.0
511
3.4
1
100.0
511
1.9
Hakone Setsugetsuka
1
100.0
294
2.0
1
100.0
294
1.1
dormy inn Kumamoto
1
100.0
194
1.3
1
100.0
248
0.9
the b suidobashi
1
100.0
30
0.2
1
100.0
97
0.4
dormy inn EXPRESS Asakusa
1
100.0
65
0.4
1
100.0
65
0.2
Washington Hotel Plaza Hakata, Nakasu
1
100.0
240
1.6
1
100.0
240
0.9
Washington Hotel Plaza Nara
2
100.0
150
1.0
2
100.0
150
0.6
R&B Hotel Ueno Hirokoji
1
100.0
97
0.7
1
100.0
97
0.4
Comfort Hotel Tokyo Higashi Nihombashi
2
100.0
271
1.8
2
100.0
453
1.7
Smile Hotel Nihombashi Mitsukoshimae
1
100.0
134
0.9
1
100.0
138
0.5
Toyoko Inn Hakata-guchi Ekimae
1
100.0
141
0.9
1
100.0
141
0.5
Chisun Hotel Kamata
1
100.0
26
0.2
1
100.0
118
0.4
Chisun Inn Kamata
1
100.0
18
0.1
1
100.0
66
0.3
Oriental Hotel Universal City
1
100.0
627
4.2
1
100.0
1,623
6.1
Hilton Tokyo Bay
1
100.0
1,980
13.3
1
100.0
2,349
8.8
ibis Styles Kyoto Station
2
100.0
71
0.5
2
100.0
318
1.2
ibis Styles Sapporo
5
99.4
214
1.4
5
99.4
487
1.8
Mercure Sapporo
9
95.7
269
1.8
9
99.1
632
2.4
Mercure Okinawa Naha
1
100.0
50
0.3
1
100.0
172
0.6
the b ikebukuro
3
100.0
478
3.2
3
100.0
316
1.2
the b hachioji
10
100.0
91
0.6
10
100.0
169
0.6
the b hakata
2
100.0
66
0.4
2
100.0
219
0.8
Hotel Francs
1
100.0
300
2.0
1
100.0
300
1.1
Mercure Yokosuka
1
100.0
231
1.6
1
100.0
322
1.2
Oriental Hotel Okinawa Resort & Spa
1
100.0
199
1.3
1
100.0
641
2.4
ACTIVE-INTER CITY HIROSHIMA
37
98.4
1,127
7.6
35
97.3
1,539
5.8
CANDEO HOTELS Ueno Koen
1
100.0
349
2.3
1
100.0
349
1.3
Oriental Hotel Fukuoka Hakata Station
1
100.0
612
4.1
1
100.0
1,515
5.7
Holiday Inn Osaka Namba
1
100.0
213
1.4
1
100.0
895
3.4
Hotel Oriental Express Fukuoka Tenjin
4
94.1
286
1.9
3
90.9
590
2.2
Hilton Nagoya
4
100.0
1,037
7.0
4
100.0
1,263
4.8
Hilton Tokyo Narita Airport
1
100.0
228
1.5
1
100.0
532
2.0
International Garden Hotel Narita
1
100.0
212
1.4
1
100.0
477
1.8
Hotel Nikko Nara
1
100.0
178
1.2
1
100.0
444
1.7
Hotel Oriental Express Osaka Shinsaibashi
－
－
1
100.0
1
100.0
179
0.7
Hilton Tokyo Odaiba
1
100.0
722
4.8
1
100.0
2,349
8.8
UAN kanazawa
－
－
－
－
1
100.0
118
0.4
Sotetsu Fresa Inn
56
－
－
－
－
4
100.0
230
0.9
Shimbashi-Karasumoriguchi
La’gent Stay Sapporo Odori
57
－
－
－
－
2
100.0
132
0.5
Oriental Hotel Kyoto Rokujo
－
－
－
－
58
1
100.0
94
0.4
Hotel Oriental Express
－
－
－
－
59
1
100.0
75
0.3
Fukuoka Nakasukawabata
Hotel JAL City Kannai Yokohama
60
－
－
－
－
1
100.0
10
0.0
Total
110
99.8
14,879
99.8
117
99.8
26,541
99.9(Note 1) Number of tenants indicates the total number of tenants based on the lease contracts for respective real estate in trust (excluding tenants ofparking 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 the same 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 from end 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 arerounded off to the first decimal place. Please note that the sum of the ratio to total real estate operating revenue are 99.8% for the 23rd fiscal
period and 99.9% for the 24th fiscal period because the relevant ratio of the trademark rights for the Oriental Hotel brand, etc. is not included.
(Note 3) The property numbers of assets that were sold before the previous fiscal period are intentionally omitted.

25

4. Details of securities assets
There are no applicable securities held by JHR as of December 31, 2023.
5. Contractual amounts and fair values of specified transactions
The contractual amounts and fair values of specified transactions as of December 31, 2023 were as follows:
Amounts of contract, etc.
Fair value(JPY MM) (Note 1)
Classification
Transaction(JPY MM)
Over 1 year

Transactions other thanmarket transactions

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

(Note 2)

72,35057,750395

72,35057,750395(Note 1) Contractual amounts, etc. of interest rate swap transactions are based on notional principal amounts, etc.
(Note 2) 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 main investments in theportfolio of JHR as of December 31, 2023.
7. Asset holdings by country and region
There is nothing to be reported on countries and regions other than Japan.

26

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 end of the
fiscal period under review for investment real estate properties (in trust) held by JHR. Expenditures are expected to total
6,994 million yen, which consists of capital expenditures of 6,988 million yen and repair expenses of 5 million yen, for the
next fiscal period.
Estimated construction
costs (JPY MM)
Name of property, etc.
PurposeScheduled period(Location)
Total Total amountamountpaid
Kobe Meriken Park Oriental Hotel
Renovation of guest rooms
From April 2024
280－
(Kobe city, Hyogo)(10th and 11th floors)
to August 2024
Kobe Meriken Park Oriental Hotel
Renovation of prefabricatedFrom April 2024
100－
(Kobe city, Hyogo)bathrooms in guest rooms
to August 2024
Oriental Hotel Tokyo Bay
Renovation of guest rooms
From May 2024
950－
(Urayasu city, Chiba)(7th to 10th floors)
to November 2024
Namba Oriental Hotel
Renovation of 3rd floor front
From August 2024
780－
(Osaka city, Osaka)
desk, etc.
to December 2024
Namba Oriental Hotel
Renovation of 1st and 2nd
From May 2024
520－
(Osaka city, Osaka)floor
to December 2024
Hotel Nikko Alivila
Installation of new emergency From December 2023
752
3
(Nakagami-gun, Okinawa)
generator
to June 2025
Oriental Hotel Okinawa Resort & Spa Renovation of guest rooms
From September 2023
968－
(Nago city, Okinawa)(3rd phase)to April 2024
Oriental Hotel Okinawa Resort & Spa Renewal of air conditioning
From September 2023
171－
(Nago city, Okinawa)
units in guest rooms
to April 2024
Oriental Hotel Okinawa Resort & Spa
From September 2023
Painting of exterior walls
113－(Nago city, Okinawa)
to April 2024
Oriental Hotel Okinawa Resort & Spa
From September 2023
Renewal of piping
120－(Nago city, Okinawa)
to April 2024
Oriental Hotel Okinawa Resort & Spa
From January 2024
Exterior construction
210－(Nago city, Okinawa)
to August 2024
Hilton Tokyo Narita Airport
From November 2024
Renovation of guest rooms
87
5(Narita city, Chiba)
to December 2024
Hilton Tokyo Narita Airport
Renewal of air conditioning
From November 2024
58－
(Narita city, Chiba)
units in guest rooms
to December 2024
Hilton Tokyo Narita Airport
Repair of central monitoring
From February 2024
78－
(Narita city, Chiba)
systemto December 2024
Oriental Hotel Universal City
Renewal of automatic fire
From January 2024
71
8
(Osaka city, Osaka)
alarm system
to October 2024
Hilton Tokyo Bay
Renewal of air conditioning
From May 2024
81－
(Urayasu city, Chiba)
units in guest rooms
to August 2024
Hilton Tokyo Bay
From November 2024
Renewal of elevators
82－(Urayasu city, Chiba)
to December 2024
Total
(Note)

5,423

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

27

16

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 4,769 million yen, and repair expenses that were accounted for as expense in the fiscal period under review totaled
26 million yen. In aggregate, 4,796 million yen of construction work was carried out.
Name of property, etc.
Construction costs
Purpose
Period(Location)(JPY MM)
Kobe Meriken Park Oriental Hotel
Renovation of guest rooms
From May 2023
214
(Kobe city, Hyogo)(12th and 13th floors)
to August 2023
Kobe Meriken Park Oriental Hotel
Renovation of prefabricatedFrom May 2023
59
(Kobe city, Hyogo)bathrooms in guest rooms
to August 2023
Kobe Meriken Park Oriental Hotel
From September 2023
Renovation of restaurant
165(Kobe city, Hyogo)
to December 2023
Oriental Hotel Tokyo Bay
Renovation of guest rooms
From May 2023
382
(Urayasu city, Chiba)(11th and 12th floors)
to September 2023
Oriental Hotel Tokyo Bay
From October 2023
Renovation of restaurant
63(Urayasu city, Chiba)
to October 2023
Hotel Nikko Alivila
From July 2022
Renewal of elevators
149(Nakagami-gun, Okinawa)
to March 2023
dormy inn Kumamoto
From November 2023
Repair of exterior wall
62
(Kumamoto city, Kumamoto)to December 2023
Hilton Tokyo Bay
From January 2023
Renewal of elevators
73(Urayasu city, Chiba)
to February 2023
Oriental Hotel Okinawa Resort & Spa
From September 2023
Painting of exterior walls
57(Nago city, Okinawa)
to December 2023
Oriental Hotel Okinawa Resort & Spa
Renewal of air conditioning
From October 2023
82
(Nago city, Okinawa)
units in guest rooms
to December 2023
Oriental Hotel Okinawa Resort & Spa
From September 2023
Renewal of piping
60(Nago city, Okinawa)
to December 2023
Oriental Hotel Okinawa Resort & Spa
Renovation of guest rooms
From September 2023
470
(Nago city, Okinawa)(2nd phase)to December 2023
Hilton Tokyo Narita Airport
Renewal of telephone
From March 2023
55
(Narita city, Chiba)
switchboard
to September 2023
Hilton Tokyo Odaiba
Renewal of power receiving
From November 2023
114
(Minato-ku, Tokyo)
and transforming facilities
to November 2023
Total
(Note)

2,009

New construction and renewal works includes that for buildings, attached facilities, etc. as well as items classified as furniture and fixtures.

28

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- to long-term
future expenditures on large-scale repairs and maintenance projects based on long-term repairs and maintenance plans
prepared for each property.
(JPY MM)
20th period
21st period
22nd period
23rd period
24th period(From January 1, 2019 (From January 1, 2020 (From January 1, 2021 (From January 1, 2022 (From January 1, 2023
to December 31, 2019) to December 31, 2020) to December 31, 2021) to December 31, 2022) to December 31, 2023)

Fiscal period
Balance at beginning of period

951

1,060

1,075

1,066

1,076

Provision during the period

116

25

1

9

148

Reversal during the period

8

10

11

－

－

1,060

1,075

1,066

1,076

1,224

Amount carried forward
Expenses and Liabilities

1. Details of expenses related to asset management, etc.
(JPY thousand)Item

23rd period(From January 1, 2022 to
December 31, 2022)(a) Asset management fees (Note)

24th period(From January 1, 2023 to
December 31, 2023)

1,491,325

1,745,752(b) Asset custody and administrative service fee

115,661

117,832(c) Officers’ compensation

17,40017,700(d) Other operating expenses

195,024

212,405

Total

1,819,411

2,093,690(Note)For asset management fees for the 24th fiscal period, besides the above amounts, there are 250,326 thousand yen of fees for property
acquisition included in the acquisition price of the relevant investment property.

29

2. Loans payable
The status of loans by contractual agreement and by financial institution as of December 31, 2023 were as follows:
Category

LenderBorrowingdate

Sumitomo Mitsui Banking Corporation

Balance at Balance at Average
beginning
end ofinterestof period
periodrate (%)
(¥1M)
(¥1M)
(Note 1)
909

－

2,526

－

756

－

660

－

SBI Shinsei Bank, Limited

593－

Aozora Bank, Ltd.

67

－

5,511

－

2,148

－

2,516

－

2,516

－

1,120

－

8,300

－

1,000

－

1,000

－

3,487

－

4,670

－

2,450

－

2,220

－

2,085

－

Development Bank of Japan Inc.

505－

Aozora Bank, Ltd.

285－

15,702

－

1,541

－

Mizuho Bank, Ltd.

922－

Sumitomo Mitsui Trust Bank, Limited

658

－

279

－

Resona Bank, Limited

100－

The Shizuoka Bank, Ltd.

100－

The Minato Bank Ltd.

1,000

－

4,600

－

－

500

－

300

－

800

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

January 31,
2022

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

March 31,2022

Sumitomo Mitsui Trust Bank, Limited
SubtotalJune 30,
2022

Aozora Bank, Ltd.
Subtotal
Sumitomo Mitsui Banking Corporation
Short- Mizuho Bank, Ltd.
termloans Resona Bank, Limited
payableSBI Shinsei Bank, Limited

September 30,
2022

Sumitomo Mitsui Trust Bank, Limited

Subtotal
Sumitomo Mitsui Banking Corporation

Development Bank of Japan Inc.

October 20,
2022

SubtotalKansai Mirai Bank, Limited
The Hokuriku Bank, Ltd.
SubtotalJanuary 31,
2023

30

Maturity date

Repayment
method0.57%

January 31,
2023

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.56%

March 31,2023

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.57%

June 30,
2023

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

Use

Remarks

0.57%

September 29, Lump-sum
Unsecured,(Note 2)2023
repayment
unguaranteed

0.57%

October 20,
2023

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.47%

January 31,
2024

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteedCategory

Borrowingdate

LenderBalance at Balance at Average
beginning of end ofinterest rate
Maturity dateperiodperiod
(%)
(¥1M)
(¥1M)
(Note 1)

Sumitomo Mitsui Banking Corporation

－

5,534

SBI Shinsei Bank, Limited

－

4,466

－

1,120

－

3,016

－

432

－

200

－

14,76835,113

15,568

960

－

960

－

960

－

2,880

－

703

－

189

－

892

－

1,050

1,050

1,050

1,050

2,100

2,100

1,200

1,200

600

600

550

550

186

186

2,536

2,536

Sumitomo Mitsui Banking Corporation

1,200

－

Mizuho Bank, Ltd.

1,000

－

1,000

－

Resona Bank, Limited

500－

The Nomura Trust and Banking Co., Ltd.

388

－

4,088

－

800

800

800

800

500

500

Sumitomo Mitsui Trust Bank, Limited

March 31,2023

ShortResona Bank, Limited
term
loans
The Chiba Bank, Ltd.
payableThe Minato Bank Ltd.
Subtotal
Short-term loans payable – Total
Sumitomo Mitsui Trust Bank, Limited

September 24,
2015

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

September 30,
2015

Subtotal
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.

March 28,
2016

Subtotal
The Nomura Trust and Banking Co., Ltd.
The Chiba Bank, Ltd.
Long- Development Bank of Japan Inc.
termloans The Bank of Fukuoka, Ltd.
payableMarch 31,2016

Subtotal

SBI Shinsei Bank, Limited

March 31,2016

Subtotal
Sumitomo Mitsui Trust Bank, Limited

March 31,2016

Subtotal
Development Bank of Japan Inc.
SubtotalMarch 31,
2016

500

31

500

Repayment
methodUse

Remarks

0.45%

March 29,2024

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

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Category

LenderBorrowingdate

Balance at Balance at
Average
beginning
end ofinterest rateof period
period
(%)
(¥1M)
(¥1M)
(Note 1)

Sumitomo Mitsui Banking Corporation

2,900

2,900

Mizuho Bank, Ltd.

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

1,300

1,300

2,000

2,000

2,000

2,000

700

700

700

700

500

500

500

500

1,750

－

500

－

2,250

－

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

SBI Shinsei Bank, Limited
September 1,
2016

Resona Bank, Limited

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.
SubtotalLong- Sumitomo Mitsui Banking Corporationtermloans The Chiba Bank, Ltd.
payableSubtotal

July 12,2017

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

August 1,
2017

Resona Bank, Limited
Subtotal
Sumitomo Mitsui Trust Bank, Limited

August 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

32

Maturity date

Repayment
methodUse

Remarks

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

0.46%

June 30,
2023

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.85%

September 30,
2026

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.73%

September 30,
2025

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.68%

September 30,
2025

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.75%

September 30,
2025

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.73%

September 30,
2025

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteed

0.73%

September 30,
2025

Lump-sum
repayment(Note 2)

Unsecured,
unguaranteedCategory

LenderBorrowing date

The Nishi-Nippon City Bank, Ltd.

August 1,
2017

Balance at Balance at
Average
beginning
end ofinterest rateof period
period
(%)
(¥1M)
(¥1M)
(Note 1)

1,000

1,000

1,000

1,000

300

300

300

300

1,200

1,200

500

500

460

460

390

390

Subtotal

2,550

2,550

Sumitomo Mitsui Banking Corporation November 15,
2017
SBI Shinsei Bank, Limited

2,500

2,500

1,500

1,500

Subtotal

4,000

4,000

1,500

1,500

500

500

300

300

150

150

2,450

2,450

1,700

－

1,700

－

650

－

950

－

432

－

The Nishi-Nippon City Bank, Ltd.

184－

Sompo Japan Insurance Inc.

464

－

2,680

－

454

－

454

－

488

－

488

－

1,700

1,700

1,400

1,400

500

500

300

300

3,900

3,900

Subtotal
SBI Shinsei Bank, Limited

August 1,
2017

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

September 19,
2017

SBI Shinsei Bank, Limited

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

November 15,
2017

The Bank of Fukuoka, Ltd.
LongSubtotaltermloans Sumitomo Mitsui Banking Corporation
payableMarch 30,
2018

Subtotal
Sumitomo Mitsui Banking Corporation
SBI Shinsei Bank, Limited
April 26,
2018

The Chiba Bank, Ltd.

Subtotal
The Hiroshima Bank, Ltd.

April 26,2018

Subtotal
The Shizuoka Bank, Ltd.

September 28,
2018

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

September 28,
2018

33

Maturity date

Repayment
methodUse

Remarks

0.73%

Unsecured,
September 30, Lump-sum(Note 2)2025
repayment
unguaranteed

0.68%

Unsecured,
September 30, Lump-sum(Note 2)2025
repayment
unguaranteed

0.65%

March 31,2025

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.57%

March 29,2024

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.65%

March 31,2025

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.41%

March 31,2023

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.41%

March 31,2023

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.52%

March 31,2023

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.55%

Unsecured,
September 29, Lump-sum(Note 2)
repayment
unguaranteed
2023

0.95%

Unsecured,
September 30, Lump-sum(Note 2)2027
repayment
unguaranteedCategory

LenderBorrowing date

The Bank of Fukuoka, Ltd.

Balance at Balance at
Average
beginning of end ofinterest rate
periodperiod
(%)
(¥1M)
(¥1M)
(Note 1)

500

500

500

500

500

500

1,000

1,000

2,500

2,500

2,500

2,500

1,500

1,500

1,500

1,500

Sumitomo Mitsui Trust Bank, Limited

1,000

1,000

Development Bank of Japan Inc.

1,000

1,000

Subtotal

7,500

7,500

Sumitomo Mitsui Banking Corporation

4,000

4,000

SBI 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

1,000

1,000

1,000

1,000

Aozora Bank, Ltd.

1,000

1,000

The Nishi-Nippon City Bank, Ltd.

1,000

1,000

Subtotal

18,00018,000

200

200

1,400

1,400

1,600

1,600

Sumitomo Mitsui Banking Corporation

550

550

SBI Shinsei Bank, Limited

450

450

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

5,600

5,600

The Chiba Bank, Ltd.
The Nishi-Nippon City Bank, Ltd.

April 8,2019

Sompo Japan Insurance Inc.
Subtotal
Sumitomo Mitsui Banking Corporation
SBI Shinsei Bank, Limited
April 8,2019

Mizuho Bank, Ltd.

Resona Bank, Limited
Long- The Nomura Trust and Banking Co.,
term Ltd.
loans
Development Bank of Japan Inc.
payableThe Bank of Fukuoka, Ltd.

The Chiba Bank, Ltd.
The Hiroshima Bank, Ltd.

April 8,2019

September 30,
2019

SubtotalMizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited
Development Bank of Japan Inc.

Subtotal

September 30,
2019

34

Maturity date

Repayment
method0.38%

March 29,2024

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.72%

March 31,2027

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.82%

March 31,2028

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.23%

September 30,
2024

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.68%

September 30,
2027

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

Use

RemarksCategory

LenderBorrowing date

Sumitomo Mitsui Banking Corporation

Balance at Balance at Average
beginning
end ofinterestof period
periodrate (%)
(¥1M)
(¥1M)
(Note 1)

－

909

－

593

－

660

Resona Bank, Limited－

756

Aozora Bank, Ltd.

－

67

－

2,985

－

2,526

－

2,526

－

1,000

－

454

－

1,454

－

1,000

－

1,000

－

1,750

－

1,000

－

500

－

3,250

－

100

－

500

－

100

－

700

Sumitomo Mitsui Banking Corporation

－

1,800

Mizuho Bank, Ltd.

－

1,250

SBI Shinsei Bank, Limited－

300

Sumitomo Mitsui Trust Bank, Limited

－

950

－

500

－

400

Aozora Bank, Ltd.

－

200

The Minato Bank Ltd.

－300

The Shizuoka Bank, Ltd.

－

100

Kansai Mirai Bank, Limited－

200

The Tokyo Star Bank, Limited

－

300

－

6,300

SBI Shinsei Bank, Limited
Sumitomo Mitsui Trust Bank, Limited

January 31,
2023

SubtotalJanuary 31,
2023

Mizuho Bank, Ltd.
SubtotalMizuho Bank, Ltd.
The Hiroshima Bank, Ltd.

March 31,2023

Subtotal
The Tokyo Star Bank, Limited

March 31,2023

Subtotal
Sumitomo Mitsui Banking Corporation
June 30,
2023

Aozora Bank, Ltd.
Long- The Chiba Bank, Ltd.
term
loans
payableAozora Bank, Ltd.

Subtotal
September 27,
2023

MUFG Bank, Ltd.
Kansai Mirai Bank, Limited
SubtotalResona Bank, Limited
Development Bank of Japan Inc.

Subtotal

September 27,
2023

35

Maturity date

Repayment
method0.57%

March 29,2024

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.65%

January 30,
2026

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.65%

March 31,2026

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.75%

March 31,2028

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.65%

June 30,2026

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

Use

Remarks

0.56%

September 30, Lump-sum
Unsecured,(Note 2)2026
repayment
unguaranteed

0.66%

September 27, Lump-sum
Unsecured,(Note 2)2028
repayment
unguaranteedCategory

LenderBorrowing date

Balance at Balance at Average
beginning of end ofinterest
periodperiodrate (%)
(¥1M)
(¥1M)
(Note 1)

Sumitomo Mitsui Banking Corporation

－

2,095

Mizuho Bank, Ltd.

－

1,870

SBI Shinsei Bank, Limited

－

1,200

－

1,520

－

1,705

Development Bank of Japan Inc.

－

505

Aozora Bank, Ltd.

－140

The Shizuoka Bank, Ltd.

－

240

－

9,275

Sumitomo Mitsui Banking Corporation

－

2,095

Mizuho Bank, Ltd.

－

2,800

SBI Shinsei Bank, Limited

－

1,209

－

1,525

－

1,705

－

145

－

960

－

248

－

10,687

－

900

－

900

－

2,000

－

900

－

2,900

－

200

－

1,000

－

1,200

－

800

－

700

－

800

－

500

－

2,800

92,218

122,763

127,331

138,331

Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited

September 29,
2023

Subtotal

Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited

September 29,
2023

Aozora Bank, Ltd.
LongThe Tokyo Star Bank, Limitedtermloans The Shizuoka Bank, Ltd.
payableSubtotal
October 20,
2023

Sumitomo Mitsui Banking Corporation
SubtotalMizuho Bank, Ltd.

October 20,
2023

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

December 22,
2023

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

December 22,
2023

MUFG Bank, Ltd.
SubtotalLong-term loans payable – Total
Total loans payable

Maturity date

Repayment
methodUse

Remarks

0.56%

September 30, Lump-sum
Unsecured,(Note 2)2027
repayment
unguaranteed

0.71%

September 28, Lump-sum
Unsecured,(Note 2)2029
repayment
unguaranteed

0.56% March 31, 2027

Lump-sum
Unsecured,(Note 2)
repayment
unguaranteed

0.71%

September 28, Lump-sum
Unsecured,(Note 2)2029
repayment
unguaranteed

0.58%

September 29, Lump-sum
Unsecured,(Note 2)2028
repayment
unguaranteed

0.63%

September 28, Lump-sum
Unsecured,(Note 2)2029
repayment
unguaranteed(Note 1) The average interest rate is a weighted average of interest rates during the period, rounded off to second decimal places. As JHR has conductedinterest 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, rounded off to second decimal places.
(Note 2) The funds were appropriated for acquisition of the beneficial interest of real estate in trust, etc., refinancing of borrowings and redemption of
investment corporation bonds.
(Note 3) In order to list each loan payable, 21,521 million yen of the current portion of long-term loans payable in the balance sheets is included inlong-term loans payable in the above table.

363. Investment corporation bonds
Status of investment corporation bonds as of December 31, 2023 was as follows:
Name
Sixth unsecured
investment corporation
bonds
Seventh unsecured
investment corporation
bonds
Eighth unsecured
investment corporation
bonds
Ninth unsecured
investment corporation
bonds
Tenth unsecured
investment corporation
bonds
Eleventh unsecured
investment corporation
bonds
Twelfth unsecured
investment corporation
bonds (green bonds)
Thirteenth unsecured
investment corporation
bonds
Total

Issuance date

Balance at
beginningof period(¥1M)

Balanceat end ofperiod(¥1M)

Interest
rate(%)

Maturity date

Repayment
methodUse

March 22,
2016

3,000

3,000

0.935

March 19,2026

Lump-sum
repayment(Note 1)

November 29,
2016

9,000

9,000

0.600

November 27, Lump-sum
2026
repayment(Note 1)

November 29,
2016

1,100

1,100

0.600

November 27, Lump-sum
2026
repayment(Note 1)

November 24,
2017

1,000

1,000

0.530

November 22, Lump-sum
2024
repayment(Note 1)February 21,
201810,00010,0000.840

February 21,
2028

Lump-sum
repayment(Note 1)

June 14,
2019

8,000

8,000

0.854

June 14,2029

Lump-sum
repayment(Note 1)

July 31,
2019

2,000

2,000

0.400

July 31,2024

Lump-sum
repayment(Note 2)September 20,
2022

2,800

2,800

1.000

September 19, Lump-sum
2025
repayment(Note 1)

36,90036,900Remarks
Unsecured,
unguaranteed(Note 3)
Unsecured,
unguaranteed(Note 4)
Unsecured,
unguaranteed(Note 3)
Unsecured,
unguaranteed(Note 3)
Unsecured,
unguaranteed(Note 4)
Unsecured,
unguaranteed(Note 4)
Unsecured,
unguaranteed(Note 3)
Unsecured,
unguaranteed(Note 3)(Note 1) The funds were appropriated for acquisition of the beneficial interest of real estate in trust, etc., refinancing of borrowings and redemption of
investment corporation bonds.
(Note 2) The funds were mainly appropriated for repayment of existing borrowings that were appropriated for capital expenditures and constructions
costs which contribute to environment, including reduction of CO2 and water consumption.
(Note 3) A special pari passu clause among specified investment corporation bonds is attached to the bonds.
(Note 4) 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.

37

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.

Sale

Acquisition
Acquisition
price
date
(¥1M)
(Note)

Sale date

Sale price(¥1M)(Note)

Book value(¥1M)

Gain (loss)
on sale(¥1M)

Beneficial interest
UAN kanazawaof real estate in trust

January 31,
2023

2,050

–

–

–

–

Beneficial interest Sotetsu Fresa Innof real estate in trust Shimbashi-Karasumoriguchi

March 24,
2023

8,400

–

–

–

–

Beneficial interest
La’gent Stay Sapporo Odoriof real estate in trust

September 27,
2023

10,020––––Beneficial interest
September 27,
Oriental Hotel Kyoto Rokujo
of real estate in trust
2023

4,446

–

–

–

–

Beneficial interest Hotel Oriental Expressof real estate in trust Fukuoka Nakasukawabata

September 27,
2023

4,460

–

–

–

–

Beneficial interest Hotel JAL City Kannaiof real estate in trust Yokohama

December 22,
2023

4,000

–

–

–

–

–

33,376

–

–

–

–

Total
(Note)

2.

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.

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

Acquisition/
Name of property, etc.
sale date

Acquisition/ Appraisal
sale price
value
(¥1M)
(¥1M)
(Note 1)
(Note 2)

Date ofappraisal

Appraisal agency

Beneficial interest
Acquisition of real estate in
UAN kanazawa
trust

January 31,
2023

2,050

2,140

November 30, Japan Real Estate2022
Institute

Beneficial interest Sotetsu Fresa Inn
Acquisition of real estate in
Shimbashitrust
Karasumoriguchi

March 24,
2023

8,400

10,100DAIWA REAL
February 28,
ESTATE APPRAISAL
2023
CO., LTD.

Beneficial interest
La’gent Stay Sapporo September 27,
Acquisition of real estate in
Odori
2023
trust

10,02010,800August 31,
2023

Japan Real Estate
Institute

Beneficial interest
Oriental Hotel Kyoto September 27,
Acquisition of real estate in
2023
Rokujo
trust

4,446

5,920

August 31,
2023

Japan Real Estate
Institute

Beneficial interest Hotel Oriental
Acquisition of real estate inExpress Fukuoka
trust
Nakasukawabata

September 27,
2023

4,460

6,070

August 31,
2023

Japan Real Estate
Institute

Beneficial interest
Hotel JAL City
Acquisition of real estate in
Kannai Yokohama
trust

December 22,
2023

4,000

4,310

September 30, Japan Real Estate2023
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 of real estate forsecuritization.”38

(2) Transaction of securities
Not applicable.
(3) Other
Not applicable.
4. Transactions with interested parties, etc. (Note 1)(1) Transactions(JPY MM)
Price, etc. (Note 2) (Note 3)

Category

Acquisition price, etc.

Total amountSale price, etc.

33,376

Real estate operating revenue–

26,574

Breakdown of transactions with interested parties, etc.
Hotel Management Japan Co., Ltd.

–

[–%]

–

[–%]

5,589

[21.0%]

Tokyo Humania Enterprise KK

–

[–%]

–

[–%]

2,349

[8.8%]KK Osaka Sakurajima Operations

–

[–%]

–

[–%]

1,602

[6.0%]

Hotel Centraza Co., Ltd.

–

[–%]

–

[–%]

1,515

[5.7%]

Kyoritsu Maintenance Co., Ltd.

–

[–%]

–

[–%]

1,117

[4.2%]

K.K. A.I.C Hiroshima Management

–

[–%]

–

[–%]

959

[3.6%]OW Hotel Operations KK

–

[–%]

–

[–%]

895

[3.4%]KK Lagoon Resort Nago

–

[–%]

–

[–%]

641

[2.4%]KK Narita Kosuge Operations

–

[–%]

–

[–%]

532

[2.0%]KK Fukuoka Tenjin Operations

–

[–%]

–

[–%]

520

[2.0%]KK Narita Yoshikura Operations

–

[–%]

–

[–%]

477

[1.8%]KK Hotel Management

–

[–%]

–

[–%]

444

[1.7%]KK Hotel Oriental Express

–

[–%]

–

[–%]

179

[0.7%]KK Kyoto Horikawa Operations

–

[–%]

–

[–%]

94

[0.4%]KK Fukuoka Tenyamachi Operations

–

[–%]

–

[–%]

75

[0.3%]KK Yokohama Yamashitacho Operations

–

[–%]

–

[–%]

10

[0.0%]

Total

–

[–%]

–

[–%]

17,005[64.0%](Note 1) 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 major transactions with sponsor-related parties stipulated in the AssetManagement Company’s company code for transactions with sponsor-related parties, which include 1. Interested parties, etc., 2. The AssetManagement Company’s shareholders, 3. Companies, etc. that take a 50% or more stake in a shareholder that holds 50% or more of the sharesin the Asset Management 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 the Asset Management Company to be treated as sponsor-related parties in light of thecompany code for transactions with sponsor-related parties and the purpose of these rules.
(Note 2) 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.
(Note 3) The figures in brackets show the ratio of the relevant amount to the total amount, rounded off to one decimal place.

(2) Amount of fees paid, etc.
Classification

Total amounts offees paid, etc.
(A)

Outsourcing
expenses (Note)

449,885(Note)(JPY thousands)
Breakdown of transactions with interested parties, etc.
Counter party
Hotel Management Japan Co., Ltd.
Tokyo Humania Enterprise KK

Amount of payment (B)Ratio to total amount
B/A
(%)

5,760

1.3

120

0.0

Includes base fees under the property management agreement as well as outsourcing expenses related to routine maintenance and managementof 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.
39

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
Accumulated total

Number of units acquired(units)－(2) Status of holding units, etc.

20th fiscal
period21st fiscal
period22nd fiscal
period23rd fiscal
period24th fiscal
periodFrom January 1, 2019 to
December 31, 2019
From January 1, 2020 to
December 31, 2020
From January 1, 2021 to
December 31, 2021
From January 1, 2022 to
December 31, 2022
From January 1, 2023 to
December 31, 2023

Number of units disposed(units)－Number of units held
(units)3,700

Number of units
held at end of
period(units)Total investment
at end of period(JPY thousands)(Note 1)

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

(Reference)
Total number of units
issued at end of period(units)

3,700

305,571

0.08

4,462,347

3,700

305,571

0.08

4,462,347

3,700

305,5710.08

4,467,006

3,700

305,5710.08

4,467,006

3,700

305,571

0.07

4,637,006(Note 1) Total investment at the end of the period indicates the acquisition price.
(Note 2) Ratio to total units issued is percentage of investment units held at the end of the period to the total investment units issued at the end of
the period and is rounded down to second decimal place.

40

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

April 26, 2023

Shelf registration andcomprehensive resolution on theissuance of investment
corporation bonds andentrustment of accompanying
administration

A comprehensive resolution was made on the issuance of investment
corporation bonds with the issuance period between May 9, 2023 andMay 8, 2025 with the total amount issued of within 100 billion yen. At
the same time, a resolution was made on the issuance of investment
corporation bonds of within 20 billion yen 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.

Conclusion of an underwriting
agreement for new investment
September 11, 2023
units in association with theissuance of new investment units

Due to the issuance of new investment units, general administration foroffering the investment units in Japan was entrusted to SMBC Nikko
Securities Inc., Mizuho Securities Co., Ltd., and Daiwa Securities Co.
Ltd.

The 12th General Meeting of Unitholders of JHR was held on November 22, 2023. The major items approved at theGeneral Meeting of Unitholders are summarized below.
AgendaSummary

JHR has partially amended its Articles of Incorporation due to the following reasons.
・ On September 1, 2022, the enforcement of the amended provisions under Item 3 of the
Supplementary Provisions of the Act on Arrangement of Relevant Acts Incidental to the
Enforcement of the Act Partially Amending the Companies Act (Act No. 71 of 2019) took place.
Consequently, JHR is deemed to have made by law changes to adopt measures for electronicallyproviding information contained in materials for the general meetings of unitholders, effectivefrom the same date. For clarification purposes, JHR has added a provision to enable thePartial amendments to theelectronic provision of information and also introduced a provision that limits the scope of
Articles of Incorporation
information included in the documents issued to unitholders who request printed materials.
・ In preparing the minutes of the Board of Directors, JHR amended relevant provisions to allow
electronic signatures on the minutes, which will improve administrative efficiency.
・ In order to diversify its investment methods and further expand investment opportunities, JHR
amended relevant provisions to limit the scope of securities and monetary claims that are subject
to investment restrictions.
JHR has made the necessary revisions in line with the above amendments.
Kaname Masuda was again elected as Executive Director. His term of office commences on November
Election of one Executive 22, 2023 and continues until the end of the general meeting of unitholders which will be held within 30
Directordays 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).
Tetsuya Mishiku, Mayumi Umezawa and Akiko Tomiyama were elected as Supervisory Directors. The
term of office of the elected Supervisory Directors commences on November 22, 2023 and continues
Election of three
until the end of the general meeting of unitholders which will be held within 30 days from the day
Supervisory Directors
immediately following the day on which two years have passed since their election and at which a votewill be held on the election of Supervisory Directors.
Election of one Substitute Hisashi Furukawa, Director of the Asset Management Company, was again elected as SubstituteExecutive Director
Executive Director (Note).

(Note)On February 21, 2024, Hisashi Furukawa resigned as President and CEO of the Asset Management Company and was appointed as
Director of the Asset Management Company on the same date.

(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.
41II. FINANCIAL STATEMENTS
JAPAN HOTEL REIT INVESTMENT CORPORATION
Balance Sheets
As of December 31, 2023 and 2022
Thousands of yen
As of
As of
December 31, 2023
December 31, 2022

ASSETS
Current assets:
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Income taxes receivable
Derivative assets (Notes 5 and 17)
Other current assets
Total current assets¥ 17,693,462
10,821,626
4,850,631
626,30838
1,499
56,376
34,049,942¥ 21,142,716
8,372,349
4,442,532
484,478
41－
111,037
34,553,157

Less: Accumulated depreciation
Net property and equipment

949,797
6,865,827
11,434
152,039,254
3,058,840
793,859
129,718
237,641,649
120,897
401,611,278(41,530,102)
360,081,175

804,3395,911,833
1,155
140,026,191
2,963,947
693,008
129,718
212,263,515
118,127
362,911,837(36,922,960)
325,988,877

Intangible assets (Note 18):
SoftwareTrademark rights
Leasehold rights in trust
Fixed-term leasehold rights in trust
Other intangible assets
Total intangible assets

226,128355,231
27,324,752
4,360,378
4,561
32,271,051

257,298
411,320
27,324,752
4,495,583
5,240
32,494,195

Other assets:
Security deposits
Leasehold and security deposits in trust
Long-term prepaid expenses
Derivative assets (Notes 5 and 17)
Reserve fund for repairs and maintenance
Investment unit issuance costs
Investment corporation bond issuance costs
Total other assets

12,520139,668
2,565,747
398,477
300,469
40,37995,9573,553,220

12,520139,668
1,958,131
1,195,251
327,173
4,165
126,8023,763,712¥ 429,955,390¥ 396,799,942

Property and equipment, at cost (Notes 16 and 18):
Machinery and equipment
Tools, furniture and fixtures
Construction in progress
Buildings in trust (Note 13)
Structures in trust
Machinery and equipment in trust
Tools, furniture and fixtures in trust
Land in trust
Construction in progress in trust

Total assets(Continued)

42

JAPAN HOTEL REIT INVESTMENT CORPORATION
Balance Sheets
As of December 31, 2023 and 2022

LIABILITIES AND NET ASSETS
Current liabilities:
Operating accounts payable
Short-term loans payable (Note 6)
Current portion of investment corporation bonds (Notes 5 and 7)
Current portion of long-term loans payable (Notes 5, 6 and 17)
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Dividends payable
Deposits received
Derivative liabilities (Notes 5 and 17)
Other current liabilities
Total current liabilities
Long-term liabilities:
Investment corporation bonds (Notes 5 and 7)
Long-term loans payable (Notes 5, 6 and 17)
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Derivative liabilities (Notes 5 and 17)
Deferred tax liabilities (Note 14)
Asset retirement obligations (Note 8)
Total long-term liabilities
Total liabilities
Net assets (Note 9):Unitholders’ equity:
Unitholders’ capital
Units authorized: 20,000,000 units
Units issued and outstanding; 4,637,006 units as of December 31,
2023 and 4,467,006 units as of December 31, 2022
Surplus:Capital surplus
Voluntary reserve:
Reserve for temporary difference adjustment (Note 10)
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 17)
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets
See notes to financial statements.

43

Thousands of yen
As of
As of
December 31, 2023
December 31, 2022
¥ 2,506,632
15,568,000
3,000,000
21,521,000
659,264
1,210
470,254764,638
3,634
9,966
2,626
77,81644,585,044¥ 1,943,815
35,113,000－
15,432,000
570,397
1,210
398,802664,196
6,473
2,592
11,07921,994
54,165,561

33,900,000
101,242,000
1,040,520
3,739,687
1,951
125,832
340,051
140,390,042
184,975,086

36,900,000
76,786,000
1,040,520
3,619,666－
375,207338,413
119,059,807
173,225,369

199,051,879

187,194,209

21,746,398

21,746,398

9,600,013
1,174,860
10,774,874
13,137,051
45,658,325
244,710,204

9,976,515
1,174,860
11,151,375
2,672,927
35,570,702
222,764,911

270,099
270,099

809,661
809,661

244,980,303

223,574,572¥ 429,955,390¥ 396,799,942

JAPAN HOTEL REIT INVESTMENT CORPORATIONStatements of Income
For the years ended December 31, 2023 and 2022
Thousands of yen
For the year ended
For the year ended
December 31, 2023
December 31, 2022

Operating revenue:
Real estate operating revenue (Note 11)
Other real estate operating revenue (Note 11)
Total operating revenue
Operating expenses:
Real estate operating costs (Note 11)
Asset management fee
Asset custody and administrative service fee
Directors’ compensation
Other operating expenses
Total operating expenses
Operating income
Non-operating income:Interest income
Gain on forfeiture of unclaimed dividends
Gain on insurance claims
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:Subsidy income
Total extraordinary income
Extraordinary loss:
Loss on advanced depreciation of property and equipment (Note 12)
Total extraordinary loss
Income before income taxes
Income taxes (Note 14):
Current
Total income taxes
Net income
See notes to financial statements.

44¥ 25,503,799
1,070,755
26,574,555¥ 13,925,987
986,984
14,912,972

9,466,357
1,745,752
117,832
17,700212,405
11,560,047
15,014,507

8,796,879
1,491,325
115,661
17,400
195,024
10,616,291
4,296,681

253
3,890
－
40
3,298
－
7,483

270
3,533
2,250
－
13,228541
19,824

868,687
282,254681,764
30,844
8,543
3,135
11,4881,886,717
13,135,273

855,183
301,631436,444
32,0903,570－
14,6191,643,539
2,672,966

7,972
7,972

－
－

7,915
7,915
13,135,330－－
2,672,966

1,210
1,210

1,210
1,210

13,134,120

2,671,756

JAPAN HOTEL REIT INVESTMENT CORPORATIONStatements of Changes in Net Assets
For the years ended December 31, 2023 and 2022
Thousands of yen
Unitholders’ equity
Surplus
Voluntary reserve

Balance, January 1, 2022
Changes of items during the year:
Reversal of reserve for temporary
difference adjustment
Dividends paid
Net income
Net changes in items other thanunitholders’ equity

Unitholders’capital¥ 187,194,209

Capital surplus¥ 21,746,398

Reserve fortemporarydifference
adjustment¥ 10,311,886

－
－
－

－
－
－

(335,371)
－
－

－
－
－

－

－

－

－

－
187,194,209－
21,746,398

Total changes in amount during the year
Balance, December 31, 2022¥
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 the year
Balance, December 31, 2023¥

Reserve foradvanceddepreciation¥
1,174,860

Total voluntary
reserve¥ 11,486,747

Unappropriatedretained earnings¥
1,300,724(335,371)－－

335,371(1,634,924)
2,671,756(335,371)
9,976,515 ¥¥－
1,174,860

－
¥

－

－
1,036,832
35,570,702(376,501)－－

376,501(3,046,498)
13,134,120¥

11,857,670

¥

－
－
－

－
－
－

－

－

11,857,670
199,051,879－
21,746,398¥(376,501)
－
－

－
－
－

－

－

(376,501)
9,600,013 ¥¥－1,174,860－¥(376,501)
10,774,874 ¥Valuation and translation adjustments
Deferred gains
Total valuation
Total unitholders’(losses) on
and translation
equityhedgesadjustments
Total net assets¥
221,728,079 ¥(185,733) ¥(185,733) ¥221,542,346¥－(1,634,924)
2,671,756

－
－
－

－
－
－

－
(1,634,924)
2,671,756－
1,036,832
222,764,911

995,394995,394
809,661

995,394995,394
809,661

995,394
2,032,226
223,574,572

¥

¥

¥

11,857,670¥－(1,634,924)
2,671,756

1,372,203
2,672,927

Thousands of yen

Balance, December 31, 2023

Total surplus
34,533,870(335,371)
11,151,375 ¥Unitholders’equityBalance, January 1, 2022
Changes of items during the year:
Reversal of reserve for temporary
difference adjustment
Dividends paid
Net income
Net changes in items other thanunitholders’ equity
Total changes in amount during the year
Balance, December 31, 2022
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 the year¥

11,857,670－(3,046,498)
13,134,120

－
－
－

－
21,945,292
244,710,204(539,561)(539,561)
270,099¥¥

See notes to financial statements.

45

－
－
－

－
(3,046,498)
13,134,120(539,561)(539,561)
270,099 ¥(539,561)
21,405,730
244,980,303－(3,046,498)
13,134,120－－

10,464,123
13,137,051

10,087,622
45,658,325¥

JAPAN HOTEL REIT INVESTMENT CORPORATIONStatements of Cash Flows
For the years ended December 31, 2023 and 2022

Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Loss on retirement of noncurrent assets(Gain) Loss on derivative instruments
Subsidy income
Loss on advanced depreciation of property and equipment
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
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
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 tenant leasehold and security deposits in trust
Repayment of tenant leasehold and security deposits in trust
Subsidies received
Payments into deposit with withdrawal restrictions
Withdrawal from deposit with withdrawal restriction
Net cash used in investing activities

Thousands of yen
For the year ended For the year ended
December 31,
December 31,
2023
2022
¥ 13,135,330
5,083,074
151,695(163)(7,972)
7,915
30,8448,543(253)
1,150,941(40)(408,098)(141,829)(607,615)
234,581
86,18371,452
100,441
7,373
31,404
18,933,808
247(1,148,257)
40(1,207)
17,784,631¥ 2,672,966
4,787,822
57,811(13,228)－－
32,0903,570(270)1,156,814－(2,692,368)
761
233,518(9,852)
33,714226,058
5,357(3,410)(811)
6,490,545
269(1,158,491)－(1,210)5,331,112(982,573)(37,589,514)(67,279)(40,625)
230,434(110,414)
7,972－－¥ (38,551,999)(1,102,874)(2,767,507)(48,094)(40,625)
51,124(32,161)－(1,500,000)
1,800,000¥ (3,640,139)(Continued)

46

JAPAN HOTEL REIT INVESTMENT CORPORATIONStatements of Cash Flows
For the years ended December 31, 2023 and 2022

Cash flows from financing activities:
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment corporation bond
Repayments of investment corporation bondProceeds from issuance of investment units
Payments for investment corporation bond issuance costs
Dividends paid
Net cash provided by (used in) financing activities

Thousands of yen
For the year ended For the year ended
December 31,
December 31,
2023
2022
¥

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 4)¥

See notes to financial statements.

47

15,568,000(35,113,000)
45,977,000(15,432,000)－－
11,812,912－(3,045,523)
19,767,389¥ 35,536,000(24,425,000)－(8,434,000)
2,800,000(6,000,000)－(15,029)(1,634,712)(2,172,742)(999,978)(481,768)

29,515,066

29,996,835

28,515,088¥ 29,515,066

JAPAN HOTEL REIT INVESTMENT CORPORATION
Notes to Financial Statements
For the years ended December 31, 2023 and 2022
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. Since the Merger, JHR has
expanded its asset size while improving the quality of its portfolio through new property acquisitions of 32 properties
amounting to 308,537 million yen (acquisition price basis) in total through the end of the fiscal period under review.
As of the end of the fiscal period under review, JHR had a portfolio of 47 properties with a total acquisition price of
396,918 million yen, and the total number of investment units issued and outstanding stood at 4,637,006 units.
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 withJapanese 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 years48

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. Revenue from contracts with customers
The details of main performance obligations concerning revenue generated from contracts with JHR’s customers andthe ordinary time to fulfil the performance obligations (ordinary time to recognize revenue) are as follows.
(1) Sale of real estate properties
For the proceeds from sale of real estate properties, JHR recognizes revenue when the purchaser who is acustomer obtains control of the relevant real estate properties, etc. as a result of the seller fulfilling its delivery
obligations stipulated in the transaction agreement of the real estate, etc.
The amount obtained by deducting “Costs of sale of properties,” which is the book value of real estate properties,
etc. sold, and “Other selling expenses,” which are the various expenses directly required in the sale, from
“Proceeds from sale of properties,” which are the sales proceeds of real estate properties, etc., is indicated as“Gain on sale of real estate properties” or “Loss on sale of real estate properties” in the statements of income.
There is no gain or loss on sale of real estate properties for the fiscal period ended December 31, 2023.
(2) Utilities income
For utilities income, JHR recognizes revenue in accordance with the supply of electricity, water, etc. to the lessee
who is a customer based on the lease contracts of real estate properties, etc. and agreements incidental to it.
g. 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 seller of real properties at acquisition is not recorded as “Real estate operating costs” but capitalized as part of
the acquisition cost of the relevant property. There were no taxes capitalized in the acquisition cost of real estate
properties, etc., for the previous fiscal year, while 46,192 thousand yen was capitalized for the current fiscal year.
h. 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 earnings, except for those which meet the criteria for hedge accounting in which case the unrealized gain or loss isdeferred as a component of net assets.
JHR evaluates hedge effectiveness by comparing the cumulative changes in cash flow of a hedging instrument and ahedged item and assessing the ratio between the changes.
i. 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.

49

3.

Significant Accounting Estimates

Valuation of noncurrent assets
a. Amounts recorded in the financial statements

Property and equipment
Intangible assets
Impairment loss

Thousands of yen
For the year ended
For the year ended
December 31, 2023
December 31, 2022¥
360,081,175¥
325,988,877
32,271,051
32,494,195－－

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, each property owned by JHR is regarded as a single asset group, 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.
Each property's performance and market price may be affected by trends in the real estate leasing market and the realestate trading market. Therefore, any change in the assumptions used in the estimates may affect JHR's assets andearnings in the next fiscal year.
4.

Cash Flow Information

Cash and cash equivalents as of December 31, 2023, and 2022 in the statements of cash flows consisted of the following:Thousands of yen
As of December
As of December
31, 2023
31, 2022
Cash and deposits¥
17,693,462¥
21,142,716
10,821,626
8,372,349
Cash and deposits in trust¥
28,515,088¥
29,515,066
Cash and cash equivalents
5.

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 orderto hedge against interest rate risk, but not for speculative trading purposes.
(2) Details of financial instruments, their risks, and risk management system
Operating accounts receivable is operating receivables and is exposed to credit risks of customers. As for therisks, JHR is managing payment dates and balances by each customer with an aim to grasp concerns in collecting
due to deterioration in their financial status and other factors at an early stage and reduce the risks.
The variable 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.
50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 financesection of the 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 policy
and resolution of JHR’s board of directors.
Loans payable expose JHR to liquidity risks. The finance section of the Asset Management Company preparesand updates projections and actual cash flows on a monthly basis to manage liquidity risks and monitors
compliance with restrictive covenants set forth in the loan agreements. JHR manages liquidity risks by managing
the ratio of short-term and long-term loans payable, etc. considering the current financial environment and otherconditions through approval and resolution by authorized personnel and meeting committee structure in the AssetManagement 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, 2023 and 2022 were as follows. The notes on “Cash and deposits,” “Cash and deposits in trust,” “Operating
accounts receivable” and “Short-term loans payable” are omitted as these are settled within a short period of time andthus the fair value approximates the book value.
Thousands of yen
As of December 31, 2023
Carrying amount
Fair value
Difference(i) Current portion of investment corporation bonds ¥3,000,000 ¥
2,973,700 ¥(26,300)(ii) Current portion of long-term loans payable
21,521,000
21,521,000－(iii) Investment corporation bonds
33,900,000
31,371,760(2,528,240)
101,242,000
101,242,000－(iv) Long-term loans payable
159,663,000
157,108,460(2,554,540)
Total(v) Derivative transactions (*)¥
395,399 ¥395,399 ¥－Thousands of yen
As of December 31, 2022
Carrying amount
Fair value(i) Current portion of investment corporation bonds ¥－ ¥－ ¥(ii) Current portion of long-term loans payable
15,432,000
15,432,000(iii) Investment corporation bonds
36,900,000
33,223,450
76,786,000
76,786,000(iv) Long-term loans payable
129,118,000
125,441,450
Total(v) Derivative transactions (*)¥

1,184,172¥

1,184,172¥

Difference－－(3,676,550)－(3,676,550)－(*) 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) Current portion of investment corporation bonds, (iii) Investment corporation bonds
The fair value of these instruments is measured based on the market price.
(ii) Current portion of long-term loans payable, (iv) Long-term loans payable
The carrying value is deemed to approximate the fair value since the interest rate on long-term loans payable
are variable interest rates which are adjusted periodically to reflect market interest rates.
(v) Derivative transactions
The information on the fair value of derivative transactions is disclosed in Note 17.

51

(2) Schedule for repayment of loans payable and redemption of investment corporation bonds as of December 31,
2023 and 2022.

As of December 31, 2023
Investment corporation bonds
Long-term loans payable
Total

As of December 31, 2022
Investment corporation bonds
Long-term loans payable
Total

Due within
one year¥ 3,000,000
21,521,000¥ 24,521,000

Due after
one to twoyears¥ 2,800,000
19,000,000¥ 21,800,000

Thousands of yen
Due after
Due after
two to three
three to four
years
years
¥ 13,100,000¥－
12,180,000
27,175,000¥ 25,280,000 ¥ 27,175,000

Due after
four to fiveyears
¥ 10,000,000
26,500,000¥ 36,500,000

Due after
five years¥ 8,000,000
16,387,000¥ 24,387,000

Due within
one year¥－
15,432,000¥ 15,432,000

Due after
one to twoyears¥ 3,000,000
18,536,000¥ 21,536,000

Thousands of yen
Due after
Due after
two to three
three to four
years
years
¥ 2,800,000¥ 13,100,000
19,000,000
4,250,000¥ 21,800,000 ¥ 17,350,000

Due after
four to five
years
¥
－
17,000,000¥ 17,000,000

Due after
five years¥ 18,000,000
18,000,000¥ 36,000,000

52

6.

Short-Term and Long-Term Loans Payable

Short-term and long-term loans payable as of December 31, 2023 and 2022 consisted of the following:Thousands of yen
As of
As of
December 31, 2023 December 31, 2022
AmountMaturity date
Short-term loans payable:
0.57% Unsecured loan, payable in a lump-sum at maturity
0.56% Unsecured loan, payable in a lump-sum at maturity
0.57% Unsecured loan, payable in a lump-sum at maturity
0.57% Unsecured loan, payable in a lump-sum at maturity
0.57% Unsecured loan, payable in a lump-sum at maturity
0.47% Unsecured loan, payable in a lump-sum at maturity
0.45% Unsecured loan, payable in a lump-sum at maturity
Sub-total
Long-term loans payable:
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
0.68% Unsecured loan, payable in a lump-sum at maturity
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
0.46% 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
0.41% Unsecured loan, payable in a lump-sum at maturity
0.41% Unsecured loan, payable in a lump-sum at maturity
0.52% Unsecured loan, payable in a lump-sum at maturity
0.55% Unsecured loan, payable in a lump-sum at maturity
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
0.57% Unsecured loan, payable in a lump-sum at maturity
0.65% Unsecured loan, payable in a lump-sum at maturity
0.65% Unsecured loan, payable in a lump-sum at maturity
0.75% Unsecured loan, payable in a lump-sum at maturity
0.65% Unsecured loan, payable in a lump-sum at maturity
0.56% Unsecured loan, payable in a lump-sum at maturity
0.66% Unsecured loan, payable in a lump-sum at maturity
0.56% Unsecured loan, payable in a lump-sum at maturity
0.71% Unsecured loan, payable in a lump-sum at maturity
0.56% Unsecured loan, payable in a lump-sum at maturity
0.71% Unsecured loan, payable in a lump-sum at maturity
0.58% Unsecured loan, payable in a lump-sum at maturity
0.63% Unsecured loan, payable in a lump-sum at maturity
Sub-total
Total of short-term and long-term loans payable

January 31, 2023
March 31, 2023
June 30, 2023
September 29, 2023
October 20, 2023
January 31, 2024
March 29, 2024

¥

－
－
－
－
－
800,000
14,768,000
15,568,000¥

5,511,000
8,300,000
1,000,000
15,702,000
4,600,000－－
35,113,000

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
March 29, 2024
January 30, 2026
March 31, 2026
March 31, 2028
June 30, 2026
September 30, 2026
September 27, 2028
September 30, 2027
September 28, 2029
March 31, 2027
September 28, 2029
September 29, 2028
September 28, 2029¥－－
2,100,000
2,536,000－
800,000
500,000
9,500,000
1,300,000
2,000,000
700,000
500,000－
4,250,000
1,000,000
700,000
500,000
500,000
500,000
1,000,000
300,000
2,550,000
4,000,000
2,450,000－－－－
3,900,000
2,500,000
7,500,000
18,000,000
1,600,000
5,600,000
2,985,000
2,526,000
1,454,000
1,000,000
3,250,000
700,000
6,300,000
9,275,000
10,687,000
900,000
2,900,000
1,200,000
2,800,000
122,763,000
138,331,000¥

2,880,000
892,000
2,100,000
2,536,000
4,088,000
800,000
500,000
9,500,000
1,300,000
2,000,000
700,000
500,000
2,250,000
4,250,000
1,000,000
700,000
500,000
500,000
500,000
1,000,000
300,000
2,550,000
4,000,000
2,450,000
1,700,000
2,680,000
454,000
488,000
3,900,000
2,500,000
7,500,000
18,000,000
1,600,000
5,600,000
－
－
－
－
－
－
－
－
－
－
－
－
－
92,218,000
127,331,000

¥

53

¥

Stated interest rate, which is a rate per annum, represents the weighted average rate during the year ended December 31,
2023, or the most recent year, based on the number of days and outstanding balance of the loans payable. The interest rateis 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.
7.

Investment Corporation Bonds

Investment corporation bonds as of December 31, 2023 and 2022 consisted of the following:Thousands of yen
As of
As of
December 31, 2023
December 31, 2022
Unsecured 6th investment corporation bond at interest rate of 0.935%, due on March 19, 2026¥
Unsecured 7th investment corporation bond at interest rate of 0.600%, due on November 27, 2026
Unsecured 8th investment corporation bond at interest rate of 0.600%, due on November 27, 2026
Unsecured 9th investment corporation bond at interest rate of 0.530%, due on November 22, 2024
Unsecured 10th investment corporation bond at interest rate of 0.840%, due on February 21, 2028
Unsecured 11th investment corporation bond at interest rate of 0.854%, due on June 14, 2029
Unsecured 12th investment corporation bond (green bonds) at interest rate of 0.400%, due on July 31, 2024
Unsecured 13th investment corporation bond at interest rate of 1.00%, due on September 19, 2025
Total
¥

8.

3,000,000
9,000,000
1,100,000
1,000,000
10,000,000
8,000,000
2,000,000
2,800,000
36,900,000¥¥

3,000,000
9,000,000
1,100,000
1,000,000
10,000,000
8,000,000
2,000,000
2,800,000
36,900,000

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, to the original state in accordance with the fixed-term landleasehold agreements.
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 basedon the remaining useful lives of the related buildings and using the discount rates of 0.484%.
c. Changes in the total amount of the asset retirement obligations
Thousands of yen
For the year ended
For the year ended
December 31, 2023 December 31, 2022¥
338,413 ¥336,783
1,637
1,630

Balance at beginning of year
Adjustment due to accretion expense
Balance at end of year¥

54

340,051¥

338,413

9.

Net Assets

JHR maintains at least 50,000 thousand yen 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:Yen

I Unappropriated retained Earnings ¥II Reversal of voluntary reserve
Reversal of reserve for temporary
difference adjustment (*)¥
III Dividends¥
IV Retained earnings carried forward(I+II-III)¥

For the year ended
December 31, 2023
Total
Per unit
13,137,051,848¥

For the year ended
December 31, 2022
Total
Per unit
2,672,927,976

845,384,544
13,980,573,090¥¥

376,501,098
3,046,498,092¥

2,930,982

¥
¥

182
3,015

1,863,302

¥
¥

84
682

Note:
(*) 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 yen of
the dividend reserve, representing the remaining balance of the gain on negative goodwill recorded in a prior fiscal period, was transferred to
the “Reserve for temporary difference adjustment” account through the appropriation of profit for the year ended December 31, 2016. Startingfrom the year ended December 31, 2017, JHR plans to reverse the reserve every year in an amount that shall be at least 2% of the transferred
amount (262,543,065 yen) but not exceeding the remaining amount of the reserve at that point in conformity with applicable rules andregulations.
For the year ended December 31, 2022, reversal of reserve for temporary difference adjustment of 376,501,098 yen has been decided, which is theamount calculated by adding 57,811,948 yen, equivalent to loss on retirement of noncurrent assets and 56,089,150 yen, equivalent toamortization of trademark rights to 262,600,000 yen of the basic reversal.
For the year ended December 31, 2023, reversal of reserve for temporary difference adjustment of 845,384,544 yen has been decided, which is theamount calculated by adding 151,695,394 yen, equivalent to loss on retirement of noncurrent assets and 56,089,150 yen, equivalent toamortization of trademark rights and 375,000,000 yen, equivalent to compensation for the dilution of the dividend per unit arising from thepublic offering to 262,600,000 yen of the basic reversal.

10. 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, 2023 and 2022
consisted of the following (thousands of yen):
Balance as of
Balance as ofProvision during Reversal during
Rationale for provision orJanuary 1,
December 31,
the yearthe yearreversal
2023
2023

SourceOriginal
amountDividend
reserve

13,127,153

SourceOriginal
amountDividend
reserve

Balance as of
Balance as ofProvision during Reversal during
Rationale for provision orJanuary 1,
December 31,
the yearthe yearreversal
2022
2022

13,127,153

10,311,886

9,976,515-

376,501-

335,371(Note) See (*) of Note 9 above for further descriptions.

55

9,600,013

9,976,515

Allocation for dividend

Allocation for dividend

11. Real Estate Operating Revenue and Costs
The components of “Real estate operating revenue” and “Real estate operating costs” for the years ended December 31,
2023 and 2022 were as follows:
Thousands of yen
For the year ended For the year ended
December 31,
December 31,
2023
2022
Operating revenue:
Real estate operating revenue:
Fixed rent¥
14,658,973¥
6,279,169
Variable rent
9,516,322
7,304,059
1,328,502
342,758
Income from management contract (*1)
Sub-total
25,503,799
13,925,987
Other real estate operating revenue:
127,036
141,741
Parking lots
Other incidental revenue
70,63569,068
Utilities
753,357
643,154
119,726
133,020
Other
1,070,755
986,984
Sub-total
Total operating revenue
26,574,555
14,912,972
Real estate operating costs:
Land lease and other rent expenses
846,977
845,567
Property taxes
1,976,361
1,923,806
Outsourcing expenses (*2)
449,885
352,400
Nonlife insurance
80,73170,695
Depreciation and amortization
5,083,074
4,787,822
Loss on retirement of noncurrent assets
151,695
57,811
Repairs
26,032
21,378
Utilities
790,705
683,346
Trust fees
41,17639,783
19,71814,267Other
9,466,357
8,796,879
Total real estate operating costs¥
17,108,197¥
6,116,092
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’ grossoperating profit, or GOP, while it pays management contract fees to the operator. In the event a property’s GOP for the relevant period isa negative number, then JHR is required to pay an amount equal to such negative number to the operator. Even though some of therevenue 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 129,402 thousand yen for the year ended December 31, 2023 and 40,786
thousand yen for the year ended December 31, 2022.

56

12. Loss on Advanced Depreciation of Property and Equipment
Loss on advanced depreciation of property and equipment represents the amount directly deducted from the acquisition
cost upon receipt of subsidies, and the breakdown is as follows:
Thousands of yen
For the year ended
For the year ended
December 31, 2023
December 31, 2022
Buildings in trust
¥
7,915
¥
－
13. 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, 2023 and 2022 were as follows:
Thousands of yen
As of
As of
December 31, 2023 December 31, 2022
Buildings in trust¥
17,865¥24,921
14. Income Taxes
Significant components of deferred tax assets and liabilities as of December 31, 2023 and 2022 were as follows:
Thousands of yen
As of
As of
December 31, 2023 December 31, 2022
Deferred tax assets
Valuation difference on assets acquired by merger¥
1,660,086¥
1,667,655
Amortization of fixed-term leasehold rights
333,759
291,223
Asset retirement obligations
29,17725,570
Amortization of trademark rights
64,70147,055
Deferred losses on hedges
1,272
2,447
Subtotal deferred tax assets
2,088,996
2,033,953
Valuation allowance(2,088,996)(2,033,953)
Total deferred tax assets¥¥－－
Deferred tax liabilities
Deferred gains on hedges
Total deferred tax liabilities¥

125,832
125,832¥

375,207375,207

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, 2023 and 2022 were as follows:
For the year ended
For the year ended
December 31, 2023
December 31, 2022
Effective statutory tax rate
31.46%
31.46%
Deduction for dividends paid
(31.89%)(33.44%)
Change in valuation allowance
0.43%
1.97%
Other – net
0.01%
0.05%
0.05%
Actual effective tax rate
0.01%

57

15. Amounts per Unit
Net income per unit for the years ended December 31, 2023 and 2022 were as follows:
Thousandsof yenNet
For the year ended December 31, 2023
incomeBasic net income per unit - Net income attributable tocommon unitholders

Number ofunits
Weightedaverage units

Yen
Net income
per unit¥

13,134,120

4,514,513

¥

2,909

¥

2,671,756

4,467,006¥

598

For the year ended December 31, 2022
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 the year.
(*2) Diluted net income per unit is not presented since there are no potentially dilutive units for the years ended December 31, 2023 and 2022.

Net assets per unit as of December 31, 2023 and 2022 were as follows:

Net assets per unit

Yen
As of December
As of December
31, 2023
31, 2022¥
52,831 ¥50,05016. 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, 2023 and 2022 were as follows:
Thousands of yen
As of December
As of December
31, 2023
31, 2022
Due within one year¥
1,331,074¥
1,152,214
3,782,292
4,054,288
Due after one year¥
5,113,366 ¥5,206,502
Total

58

17. 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, 2023 and 2022 were as follows:
Thousands of yen
Contract
Contract
amountamountdue after one
Fair value
As of December 31, 2023
Classification
(*1)
year
(*2)
Transactions
Interest rate swaps
other than(fixed rate payment,¥ 1,750,000
－ ¥
(532)
marketvariable rate receipt)
transactions
Thousands of yen
Contract
Contract
amountamountdue after one
Fair value
As of December 31, 2022
Classification
(*1)
year
(*2)
Transactions
Interest rate swaps
other than(fixed rate payment,¥ 3,494,000¥ 1,750,000 ¥(696)
marketvariable rate receipt)
transactions
b. Derivative transactions to which hedge accounting is applied
Derivative transactions to which hedge accounting was applied as of December 31, 2023 and 2022 were as follows:
Thousands of yen
Contract
Contract
amount
Method of hedge
amountdue after one
Fair value
As of December 31, 2023
accounting
Hedged item
(*1)
year
(*2)
Interest rate swaps
Long-term(fixed rate payment,
Deferral method¥ 70,600,000 ¥ 57,750,000 ¥
395,932
loans payable
variable rate receipt)

As of December 31, 2022
Interest rate swaps(fixed rate payment,variable rate receipt)

Method of hedge
accounting
Deferral method

Hedged item
Long-termloans payable¥

Contract
amount(*1)

Thousands of yen
Contract
amountdue after one
year

78,460,000¥

70,600,000

Fair value(*2)¥

1,184,868

Notes:(*1) The contract amounts of the interest rate swap are 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 derivativetransactions.
(*2) The fair value is measured at the quoted price, etc. obtained from the counterparty financial institutions.

5918. 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:
Thousands of yen
Carrying amount
Fair value (*2)
January 1,
Net increase
December 31,
December 31,
2023
2023
2023
(decrease) (*1)
Hotels¥358,478,812¥
33,860,769 ¥
392,339,582¥
525,740,000
Notes:(*1) Increase during 2023 principally due to acquisition of UAN kanazawa (2,082 million yen), Sotetsu Fresa Inn Shimbashi-Karasumoriguchi(8,487 million yen), La’gent Stay Sapporo Odori (10,428 million yen), Oriental Hotel Kyoto Rokujo (4,620 million yen), Hotel Oriental
Express Fukuoka Nakasukawabata (4,665 million yen) and Hotel JAL City Kannai Yokohama (4,046 million yen).
(*2) Fair value of properties as of December 31, 2023 is generally the appraisal value determined by outside licensed real estate appraisers.

HotelsJanuary 1,
2022¥
358,819,865

Carrying amount
Net increase(decrease) (*1)¥(341,052)

Thousands of yen
December 31,
2022¥
358,478,812

Fair value (*2)
December 31,
2022¥
483,110,000

Notes:(*1) Decrease during 2022 principally represents the recording of depreciation.
(*2) Fair value of properties as of December 31, 2022 is generally the appraisal value determined by outside licensed real estate appraisers.

Real estate operating revenue and costs for the years ended December 31, 2023 and 2022 related to the rental properties wereas follows:
Thousands of yen
For the year ended December 31, 2023
Real estate operating Real estate operating
Net real estaterevenue (*)
costs (*)
operating income
Hotels¥ 26,574,555¥ 9,466,357¥ 17,108,197

HotelsThousands of yen
For the year ended December 31, 2022
Real estate operating Real estate operating
Net real estaterevenue (*)
costs (*)
operating income¥ 14,912,972¥ 8,796,879¥ 6,116,092

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.

19. Revenue from Contracts with Customers
For the years ended December 31, 2023 and 2022
Breakdown information on revenue from contracts with customers
For the breakdown information on revenue from contracts with customers, please refer to Note 11, “Real Estate Operating
Revenue and Costs.”
Note that the revenues described in the Note 11 include revenues recognized under the “Accounting Standard for Lease
Transactions” (ASBJ Statement No. 13). The revenues from contracts with customers mainly consists of utilities income.

60

20. 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, 2023 and 2022
Information about products and services has been omitted because operating revenue from external customers ina single product/service category accounted for more than 90% of total operating revenue.
(2) Information about geographical areas for the years ended December 31, 2023 and 2022(i) Operating revenue
Information about geographical areas has been omitted because operating revenue in Japanaccounted 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 andequipment located in Japan accounted for more than 90% of net property and equipment.
(3) Information about major customers<For the year ended December 31, 2023>
Name of customer
Hotel Management Japan Co., Ltd. (*1)

Segment
Hotel real estate
investment and management<For the year ended December 31, 2022>
Name of customer
Hotel Management Japan Co., Ltd. (*1)
THE DAI-ICHI BUILDING CO., LTD.

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

Thousands of yen
Operating revenue¥
15,888,054

Thousands of yen
Operating revenue¥
6,862,661
Undisclosed (*2)

Notes:(*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.

21. Subsequent Events
Not applicable.

61Independent auditor’s report
To the Board of Directors of Japan Hotel REIT Investment Corporation:
Report on the Audit of the Financial Statements
OpinionWe have audited the accompanying financial statements of Japan Hotel REIT Investment Corporation(“the Company”), which comprise the balance sheets as at December 31, 2023 and 2022, the statements
of income, changes in net assets and cash flows for the years then ended, and notes, comprising asummary of significant accounting policies and other explanatory information.
In our opinion, the accompanying financial statements present fairly, in all material respects, thefinancial position of the Company as at December 31, 2023 and 2022, and its financial performanceand its cash flows for the years then ended in accordance with accounting principles generally acceptedin Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company inaccordance with the ethical requirements that are relevant to our audit of the financial statements inJapan, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.
Other Information
The other information comprises the information included in the Asset Management Report, but does
not include the financial statements and our auditor’s report thereon. Management is responsible for the
preparation and presentation of the other information. Supervisory directors are responsible foroverseeing the executive director’s performance of his duties with regard to the design, implementationand maintenance of the reporting process for the other information.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact.
We have nothing to report in this regard.

Responsibilities of Management and Supervisory Directors for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements inaccordance with accounting principles generally accepted in Japan, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability tocontinue as a going concern and disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan.
Supervisory directors are responsible for overseeing the executive director’s performance of his duties
with regard to the design, implementation and maintenance of the Company’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with auditing standards generally accepted in Japan will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness of the Company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting
and based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company tocease to continue as a going concern.



Evaluate whether the presentation and disclosures in the financial statements are in accordancewith accounting standards generally accepted in Japan, the overall presentation, structure andcontent of the financial statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the executive director regarding, among other matters, the planned scope andtiming of the audit, significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the executive director with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with him all relationships and other mattersthat may reasonably be thought to bear on our independence, and where applicable, actions taken toeliminate threats or safeguards applied.
Fee-related Information
Fees paid or payable to our firm and to other firms within the same network as our firm for audit andnon-audit services provided to the Company are described in “3. Matters regarding officers, etc.”
included in “Overview of JHR” of the Asset Management Report.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Company which is required to be disclosed pursuant to theprovisions of the Certified Public Accountants Act of Japan.

/S/ Atsunori Sadahiro
Designated Engagement Partner
Certified Public Accountant/S/ Hironori Hashizume
Designated Engagement Partner
Certified Public Accountant

KPMG AZSA LLC
Tokyo Office, Japan
April 19, 2024
Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.