Japan Hotel REIT Investment Corporation
Financial Results Briefing 17th Period (FY12/2016)

February 24, 2017

(TSE:8985)
http://www.jhrth.co.jp/en/

Table of Contents
I.

Settlement of Accounts for FY12/2016 - Highlights
１． FY12/2016 Highlights

II.

Appendix １ JHR’s Characteristics

3

Summary of Settlement of Accounts

１． Simultaneous Pursuit of Stability and Upside Potential

31

２． Key Points to Promote Growth Cycle

32

１．Operational Performance6

３． External Growth Strategy

33

２． Revenue Forecast

7

４． Internal Growth Strategy

34

３． Balance Sheet

8

５． Financial Strategy

35

６． Benefits Program for Unitholders

36

III. Portfolio

Appendix ２ Information on Properties

１． Portfolio

10

２． Diversification of Portfolio

11

１．Property List

38

２．Summary of Lease Contracts

40

１． Properties Acquired in 2016

13

３．Major CAPEX III by Hotel42

２． Changes in Asset Size

15

４．Portfolio Map

43

IV. External Growth

Appendix ３

V. Internal Growth

１． Major Unitholders and Unitholders of Investment Units

１． Performance of Major Hotels Adopting Variable Rent
Scheme, etc.

Investors Composition and Investment Unit Price

２． Changes in Investment Unit Price and Market Capitalization 46

17

２． The Five HMJ Hotels - Highlights

18

３． Case Studies of Internal Growth Strategy

19

４． Capital Expenditures and Depreciation

20

５． Rent Structures

21

45

Appendix 4

Summary of the Asset Management Company

１． Summary of the Asset Management Company

48

２． Features of the Asset Management Company

49

VI. Financial Status
１． Financial Status

23

VII. Market Environment
１． Market Environment

Former Nippon Hotel Fund Investment Corporation (“former NHF”) and former Japan Hotel and Resort, Inc. (“former JHR”)
merged on April 1, 2012. The surviving company is the former NHF. The new name after the merger is Japan Hotel REIT
Investment Corporation (“JHR”). The asset management company of JHR is Japan Hotel REIT Advisors Co., Ltd. (“AssetManagement Company”).

27

1

I. Settlement of Accounts for FY12/2016 - Highlights

１．FY12/2016 Highlights
1. External Growth

2. Internal Growth (*3, 4, 5)

 Ongoing Acquisitions of High-Quality Properties
End of FY12/2014

 Improvement in hotel performance and an increase in variable rent, etc.
through active asset management

30 properties / JPY173.4 billion

2015

 Public offering in January
Actual Results (2015)
Total Acquisition
Price

2015

 Public offering in June
Acquired 2 properties /JPY16.6 billion
 Sold (October)-3 properties / - JPY4.7 billion

JPY

39.7B

Total Funds
Raised throughPublic Offerings
JPY

RevPAR

26.4B

36 properties / JPY225.7billion

2016

Acquired 4 properties / JPY54.3

78.3B

5.7%

The Six Accor Hotels

9,130

9,868

8.1%

The Five the b Hotels

8,124

8,482

4.4%

Total of 3 HotelGroups12,352

13,116

6.2%

GOP
Revenue
Sharing

Total of Revenue
Sharing

10,532

11,671

10.8%

406

556

36.9％

3. Strengthening of Financial Base

Total Funds
Raised throughPublic Offerings
JPY

17,807

Total of 3 HotelGroupsActual Results (2016)

JPY

16,843(Unit: JPY M)

Acquired 2 properties / JPY24.0 billion(*1)
Total Acquisition
Price(*1, 2)

The Five HMJ Hotels(Unit: JPY M)

 Public offering in January Public offering in July

Variance(Unit: JPY)

Acquired 6 properties /JPY23.1 billion

End of FY12/2015

2016

 Reduce financial costs while carrying out conservative financial management
・Improvement in financial stability (End of FY12/2015→End of FY12/2016)

49.3B

LTV

billion (*2)

42.8％

⇒

39.7％

Costs for InterestBearing Debt(*6)⇒ 1.2％
1.5％

Average Life of Debt
3.7 years ⇒ 5.0 years

・Diversified funding methods and reduction in interest rate costs by issuance ofinvestment corporation bonds (total amount JPY13.1 billion)
・Improvement in credit rating

JCR
End of FY12/2016

A

41 properties / JPY286.8 billion(Positive)(*1) Includes JPY17.3 billion of ACTIVE-INTER CITY HIROSHIMA acquired in December 2015(*2) Includes JPY 7.1 billion of Hotel Centraza Hakata acquired in April 2016.
(*3) The Five HMJ Hotels are Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, and Oriental Hotel Hiroshima.
(*4) The Six Accor Hotels are ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure Okinawa Naha, and Mercure Yokosuka.
(*5) The Five the b Hotels are the b akasaka-mitsuke, the b ikebukuro, the b ochanomizu, the b hachioji, and the b hakata.
(*6) Costs for interest-bearing debt are rounded off to one decimal place.

3

⇒

R&I
A+

(Stable)A-(Positive)⇒A(Stable)１．FY12/2016 Highlights (Cont.)
Realized Steady Growth of Dividends
Changes in Dividends and NAV/Unit

Changes in Market Capitalization and Investment Unit Price

(JPY)

(JPY)
DPU

4,000

78,629NAV /Unit

80,000(JPY)(JPY M)

120,000

450,000
Market Capitalization+3.5%

66,360400,000

3,540

100,000

3,420

3,500

Investment Unit Price of JHR
350,000+15.0%
48,4273,000

80,0002,975
250,000

98
38,013300,000

60,00040,000+38.1%

200,000

2,500+11.1%

2,000

40,000150,000

2,155
100,000

1,939
20,00050,00001,500
FY12/2013
14th Period

FY12/2014
15th Period

FY12/2015
16th Period

FY12/2016
17th Period0

FY12/201718th Period(Forecast)(*) Dividends for 16th period include JPY98, which is equivalent to gain on sale.

40II. Summary of Settlement of Accounts

1. Operational Performance(Unit: JPY M)

FY12/2015(16th Period)
Actual(A)

Properties

Actual(B)

Major Causes of Variance

Major Factors Causing the Variance

Property Property Property
Other
Acquisition Acquisition Disposition
Properties
Variance in 17thin 16thin 16th(*4)
Period (*1) Period (*2) Period (*3)

(B)-(A)① Operating Revenue – Fixed Rent, etc.
•

Receipt of termination charge due to replacement of
tenants in 17th period: JPY126M

36
225,72341
286,801

5
61,077

13.9%
27.1%

Operating Revenue
Real Estate Operating
Revenue

17,343

22,107

4,763

27.5%

2,038

2,043

-599

1,281

② Operating Revenue – Variable Rent, etc.

22,107

5,073

29.8%

2,038

2,043

-293

1,285

•

The five HMJ hotels – increase in variable rent: JPY677M•

The five Accor hotels – increase in income frommanagement contracts, etc.: JPY321M•

Increase in revenue sharing, etc.: JPY149M and others

Variable
Rent
Gain on Sale of Real
Estate Properties

17,033Composition

Composition

60.5% 10,311 57.5% 12,714

39.5%

6,722 42.5%

9,392

2,403

2,670

23.3%

1,161

39.7%

1,432

876

-293

610

-

102

1,183

③ Extraordinary Losses, etc.
309

-

-309

-

-

-

-305

-4

14,82918,829

4,000

27.0%

1,601

1,457

-257
(*6)

1,199

6.6%(7.2%)

6.6%(7.1%)

0.0%

-

-

-

-

Depreciation
Loss on Retirement ofNoncurrent Assets-2,772-3,294

-521

-314

-315

73

35

-25

-16

9

-

-0

-

9

NOI after Depreciation (*5)

12,031

15,517

3,486

1,285

1,141

-184
(*6)

1,243

5.3%(5.8%)

5.4%(5.9%)

0.1%

-

-

-

-

Other Operating Expenses
Operating Income
Non-Operating Income-1,352
10,98818-1,632
13,885
5

-279
2,896
-12

Non-Operating Expenses
Ordinary Income-1,711
9,295-1,671
12,220

40
2,924

-1

-97

-95

9,294

12,123

2,828

NOI (*5)NOI Yield

NOI Yield after Depreciation

Extraordinary Losses or Income, etc.
Net Income
Use of Negative Goodwill
Dividend

Comparison with
Previous Period

No. of Properties
Acquisition Price

Fixed Rent

ProfitandLoss

FY12/2016(17th Period)

Total Dividends
Number of Units Issued (Unit)
Dividend per Unit (JPY)

29.0%

26.4%

31.5%
30.4%

60

740

9,354

12,865

3,511

679 1116.3%

3,144,227

3,761,907

617,680

19.6%

2,975

3,420

445

15.0%

37.5%

6

•

Repair expenses in the amount of JPY95M for damage
caused by the Kumamoto earthquakes, and others.

(*1) Stating the impact on the statements of income by properties acquired during fiscal year ended
December 2016 (17th period), namely CANDEO HOTELS UENO-KOEN, Hotel Centraza Hakata,
Holiday Inn Osaka Namba, HOTEL ASCENT FUKUOKA, and Hilton Nagoya.
(*2) Stating the impact on the statements of income by properties acquired during fiscal year ended
December 2015 (16th period), namely the five the b hotels, Hotel Francs, Mercure Yokosuka,
Okinawa Marriott Resort & Spa, and ACTIVE-INTER CITY HIROSHIMA.
(*3) Stating the impact on the statements of income by three properties, Comfort Hotel ShinYamaguchi, Daiwa Roynet Hotel Akita, and Hotel Sunroute Niigata, sold on October 30, 2015.
(*4) Twenty-seven properties excluding three properties sold during the fiscal year ended December
2015 from thirty properties JHR owned as of December 31, 2014.
(*5) Each is calculated using the following formula.
NOI (Net Operating Income) = Real estate operating revenue – Real estate operating costs +Depreciation + Loss on retirement of noncurrent assets + Asset retirement obligations expenses
NOI yield = NOI ÷ acquisition price
NOI after depreciation = Real estate operating revenue – Real estate operating costs
NOI yield after depreciation = NOI after depreciation ÷ acquisition price
The sum of (NOI of each property ÷ operating days x 365) ÷ acquisition price is indicated as anannualized NOI yield in parenthesis.
The sum of (NOI after depreciation of each property ÷ operating days x 365) ÷ acquisition price isindicated as an annualized NOI after depreciation in parenthesis. Please note that depreciation is
calculated as the sum of (depreciation of each property ÷ operating months x 12).
(*6) NOI and NOI after depreciation do not include gain on sale of real estate properties, etc. The
factors causing the variance on NOI and NOI after depreciation with consideration of the effect bygain on sale are -¥563 million and -¥489 million, respectively.

2. Revenue Forecast(Unit: JPY M)

FY12/2016(17th Period)

FY12/2017(18th Period)

ActualForecast
（*1）
(B)

(A)

Properties

Major Factors Causing
the Variance(B)-(A)

Property
Acquisition in
17th Period(*2)

Variance

Major Causes of Variance

Existing
Properties① Operating Revenue – Fixed Rent, etc.
•

No. of Properties
Acquisition Price

41
286,80141
286,801--

Operating Revenue
Real Estate Operating
Revenue

22,107

24,530

2,422

11.0%

2,376

46

22,107

24,530

2,422

11.0%

2,376

46

Composition
Composition
57.5% 12,714 55.9% 13,718

1,004

7.9%

1,120

-116

1,418

15.1%

1,255

Fixed Rent
Variable
Rent
Gain on Sale of Real
Estate Properties
NOI (*4)
ProfitandLossComparison with
Previous Period

NOI Yield
Depreciation
Loss on Retirement of Noncurrent
Assets
NOI after Depreciation (*4)
NOI Yield after Depreciation
Other Operating Expenses
Operating Income
Non-Operating Income
Non-Operating Expenses
Ordinary Income
Extraordinary Losses or Income, etc.

Net Income
Use of Negative Goodwill (*5)
Total Dividends
Dividend
Number of Units Issued (Unit)
Dividend per Unit (JPY)

42.5%

9,392

44.1%

10,811The seven HMJ group hotels (*3) – increase in variable rent:
JPY154M•

The six Accor hotels – increase in income from management
contracts, etc.: JPY110M

163•

The six the b hotels – increase in variable rent: JPY8M•

Decrease in revenue sharing, etc.: -JPY111M and others

-

-

-

-

-

18,8296.6%(7.1%)-3,294

20,312
7.1%-3,639

1,482
0.5%
-345

7.9%

1,618

-135

-269

-75

-16

-70

-53

-

-53

15,517
5.4%(5.9%)-1,632
13,885
5-1,671
12,22016,6005.8%-1,88014,7193-1,734
12,987

1,082
0.4%

7.0%

1,347

-265

-248
833
-2
-63
767

6.0%

-97

-1

95

-

12,123

12,986

863

7.1%

740
12,865
3,761,907
3,420

332
13,317
3,761,907
3,540

-407
451
120

-55%
3.5%
3.5%

7

② Operating Revenue – Variable Rent, etc.
•

-

6.3%

Decrease in receipt of termination charge due to replacementof tenants in 17th period: -JPY126M

(*1)
(*2)

(*3)
(*4)

(*5)

For details, please refer to the “Financial Report for the Fiscal Year Ended December 31, 2016
(January 1, 2016 – December 31, 2016)” dated February 23, 2017.
Stating the impact on the statements of income by properties acquired during fiscal year ended
December 2016 (17th period), namely CANDEO HOTELS UENO-KOEN, Hotel Centraza Hakata,
Holiday Inn Osaka Namba, HOTEL ASCENT FUKUOKA, and Hilton Nagoya in the fiscal year
ended December 2016 (17th period).
The seven HMJ group hotels are the five HMJ hotels plus Okinawa Marriott Resort & Spa andSheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
Each is calculated using the following formula: NOI (Net Operating Income) = Real estate
operating revenue − Real estate operating costs + Depreciation + Loss on retirement of
noncurrent assets + Asset retirement obligations expenses, NOI yield = NOI ÷ Acquisition
price, NOI after depreciation = Real estate operating revenue − Real estate operating costs,
NOI yield after depreciation = NOI after depreciation ÷ Acquisition price
The sum of (NOI of each property ÷ operating days x 365) ÷ acquisition price is indicated as
an annualized NOI yield in parenthesis.
The sum of (NOI after depreciation of each property ÷ operating days x 365) ÷ acquisition
price is indicated as an annualized NOI after depreciation in parenthesis.
Please note that depreciation is calculated as the sum of (depreciation of each property ÷
operating months x 12).
Please refer to P25 for the use of negative goodwill.

3. Balance Sheet(Unit: JPY M)(As of)

FY12/2015
End of Fiscal Year

FY12/2016
End of Fiscal Year12.31.2015

12.31.2016

Variance(As of)

FY12/2015
End of Fiscal Year

FY12/2016
End of Fiscal Year12.31.2015

12.31.2016（注3）
Variance

LIABILITIES AND NET ASSETSASSETS
Current Assets
Cash and Deposits (*1)
Operating Accounts Receivables
Others

15,63329,05013,417

13,69826,373

12,675

1,269

2,071

802

Current Liabilities

25,07314,364-10,709

Operating Accounts Payable

875

666

-209

Short-Term Loans Payable

9,000

1,800

-7,2002,500

0-2,500

11,393

9,679-1,714Current Portion of Investment
Corporation Bonds
Current Portion of Long-Term Loans
Payable

665

605

-60

Property and Equipment, at Cost

224,588288,441

63,853

Net Property and Equipment

203,488

250,690

47,202

Accounts Payable

502

1,107

605

Buildings in Trust (*2)

81,66094,60812,948Advances Received

692

899

207

Land in Trust

120,918

154,841

33,923

Others

109

211

102

Others (*3)

908

1,240

332

85,368

121,524

36,156

Intangible Assets

19,88434,27814,394

Investment Corporation Bonds

9,500

22,60013,100

Other Assets

1,214

3,472

2,258

Long-Term Loans Payable

70,37992,09921,720Tenant Leasehold and Security
Deposits

4,955

5,660

705

170

170

0

533

676

143

1,043

3,301

2,258

0

487

487

135

387

252

110,442

135,889

25,447

Unitholders' Capital

85,470134,829

49,359

Capital Surplus

21,746

21,7460

Dividend Reserve

13,92813,867-61

Unappropriated Retained Earnings(midterm/year)

9,296

12,126

2,830

Others

-526

-580

-54

129,914

181,989

52,075

240,356

317,878

77,522

Leasehold and Security
Deposits
OthersDeferred Assets

Long-Term Liabilities

Derivative Assets
OthersTOTAL LIABILITIESNET ASSETSTOTAL NET ASSETSTOTAL ASSETS

240,356

317,878

77,522TOTAL LIABILITIES AND NET ASSETS(*1) Cash and deposits in trust is included.
(*2) The sum of buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture and fixtures in trust, and construction in progress in trust.
(*3) The sum of machinery and equipment, tools, furniture and fixtures, and construction in progress.

8III. Portfolio

1. Portfolio
 Consists of highly competitive hotels in markets with strong leisure demand with a focus on strategic investment
areas
Portfolio Summary

Total
Assets (*1)

286.8 Billion

JPY

No. ofHotels41 Hotels

No. ofGuest
Rooms

10,140 Rooms

Strategic Investment Areas and Locations of Properties

Existing properties
Strategic Investment Areas

Hokkaido Area
Okinawa Area

Tokyo & the Bay Area(*2)
Fukuoka Area

Osaka / Kyoto Area(*3)(*1) Total Assets refers to the total acquisition price.
(*2) Tokyo & the Bay Area includes Tokyo, Kanagawa and Chiba prefectures.
(*3) Osaka / Kyoto Area includes Osaka and Kyoto prefectures.

23 wards in Tokyo10

2. Diversification of Portfolio
Diversification in Areas

Diversification in Brands

Diversification in Hotel Types

Hokkaido
4％
Chubu
5％

Others16％

Chugoku
7％
Kyushu7％

Kanto（incl Tokyo 17%）
37％

Oriental Hotels
18％

Dormy Inn, etc.
(Kyoritsu Maintenance)
5％

Nikko
7％

the b
7％
Okinawa
16％

Holiday Inn
（IHG)
10％

ibis/Mercure
11％
Kansai24％
Comfort Hotel(Choice Hotels)
1％

Strategic Investment Areas
35 Hotels / 82%

Resort hotel
27％

Hilton14％

Limited-service hotel
45％

Full-service hotel
28％

Sheraton
6％
Marriott5％

International Brands
47%

Diversification in Grades

Economy7％
Luxury27％

Mid-price56％(*) Ratio calculated based on acquisition price as of the end of December 2016.

11

Upper-middle
10％IV. External Growth1. Properties Acquired in 2016
CANDEO HOTELS UENO-KOEN

Hotel Centraza Hakata

HOTEL ASCENT FUKUOKA

Acquisition Price

JPY6,705M

JPY7,197M

JPY4,925M

No. of Rooms

268

194

263

NOI Yield (*)

4.8%

7.1%

5.8%

Brand / Operator

CANDEO /Candeo Hospitality Management, Inc.

Centraza / HMJ Group

Ascent / NIKOH SANGYO co.,Ltd.

Rent Structure

Fixed

Fixed + Variable

Fixed

Location
FeatureInvestment Strategy•

Located at three-minute walk from Uguisudani
Station on the JR Yamanote Line••A relatively new limited-service hotel
Approximately over 90% of its guest rooms areavailable for two or more guests•

Enhance the stability of portfolio by receiving
fixed rent income(*) NOI yield is calculated as annualized NOI forecast for FY12/2017 divided by acquisition price.

•

Directly connected to major JR Lines and Hakata
airport subway station••

Mid-price full-service hotel
Operated by HMJ group•

Improve RevPAR by attracting increasing
inbound demand and renovating guest rooms,
etc.

13

•

Center of the business and commercial area of
Fukuoka, where a growing number of Asian
tourists visit•

Limited-service hotel with stable fixed rent•

Enhance the stability of portfolio by receiving
fixed rent income

1. Properties Acquired in 2016 (Cont.)
Holiday Inn Osaka Namba

Hilton Nagoya

Acquisition Price

JPY27,000M

JPY15,250M

No. of Rooms

314

460

NOI Yield (*)

4.9％

4.8％

Brand / Operator

Holiday Inn / HMG Group

Hilton / Nagoya Hilton

Rent Structure

Fixed + Variable

Variable

Location•

Center of the Namba area in Osaka, a popular destination for inboundtourists•

Center of a business district in Nagoya, the third largest Japanese
metropolitan area

Feature••Limited-service hotel built only 8 years ago
Operated by HMJ group•

One of only a few full-service hotels with the international brand in Nagoya

Investment Strategy•••

Additional investment in Namba market in Osaka
Rebranded to Holiday Inn Osaka Namba
Seek synergies with neighboring Namba Oriental Hotel•

Completed full renovation in March 2016 to increase ADR(*) NOI yield is calculated as annualized NOI forecast for FY12/2017 divided by acquisition price.

14

2. Changes in Asset Size
 Improved the quality of portfolio and continued to realize external growth by taking advantage of JHR’s strength
as REIT specializing in hotels
 Acquired 21 hotel assets, around JPY177.3 billion in total acquisition price since the merger
Changes in Asset Size
(JPY100M)

Aim to expand thesize of portfolio
on a continuing basis

Net increase in Asset Size (Total Acquisition Price)

2,868

3,000
2,500

2,257

2,000

1,734

1,589

1,222

1,308
85
1,222

1,308

April 2012
(Effective Date of Merger)

FY12/2012(13th Period)

FY12/2013(14th Period)

1,500

1,222

1,000

522

145

280

1,589

2,257
1,734

FY12/2014(15th Period)

FY12/2015(16th Period)

FY12/2016（17th Period）

3

9

5

2

2

Acquisition・Hotel Keihan Universal City・Hotel Sunroute Shinbashi

・Hilton Tokyo Bay・ibis Styles Kyoto Station

Disposition

2

2

1

3

28

28

30

36

Total Properties

28

15

610

・CANDEO HOTELS UENO-KOEN・ibis Styles Sapporo
・the b akasaka-mitsuke
・Hotel Centraza Hakata
・Mercure Sapporo
・the b ikebukuro
・Holiday Inn Osaka Namba
・Mercure Okinawa Naha ・the b ochanomizu
・HOTEL ASCENT FUKUOKA
・the b hachioji
・Hilton Nagoya
・the b hakata
・Hotel Francs
・Mercure Yokosuka
・Okinawa Marriott Resort & Spa
・ACTIVE-INTER CITY HIROSHIMA

41

V. Internal Growth1. Performance of Major Hotels Adopting Variable Rent Scheme, etc.
Indicators of Rooms Department
ADR (left axis)

RevPAR (left axis)

Occupancy rate (right axis)

The Nine HMJ Hotels(JPY)
16,000

4.3%

+6.0%

15,986

19,736

19,10318,077

16,00017,671

8,000

88.7%

89.5%

2015

2016

2017
(Forecast)

100%

0%

9,130 +8.1%

0

86.1%

9,868
87.0%

2015

2016

+4.5%

16,0008,000

10,30987.5%

0%(JPY M)
18,00015,896

15,39902017(Forecast)

8,235 +4.7% 8,619 +3.4% 8,910
91.0%
89.1%
90.6%
2015

The Nine HMJ Hotels

8,000

12,794+6.3%

13,5972016

14,656The Six Accor Hotels

16,265+11.0%

12,000
+4.2%

9,830

2017
(Forecast)

Changes in GOP
100%

14,504

9,674

9,049

Total of Three Hotel Groups
(JPY)

100%

(JPY)

16,00011,783

11,344

10,605

16,947

88.4%

The Six the b Hotels

100% (JPY)

8,000

0

（*1）

The Six Accor Hotels

14,172+2.1%

The Six the b Hotels

16,60512,01012,237

2,512

2,885

2,987

2015

2016

2017
（Forecast)(Forecast)

10,912
6,000

88.2%

88.3%

89.2%

2015

2016

2017
(Forecast)

0

0%

0

1,233

(*1) The Six the b Hotels are the b akasaka-mitsuke, the b ikebukuro, the b ochanomizu, the b hachioji, the b hakata, and the b suidobashi.
(*2) The numbers of the six the b hotels and total of three hotel groups for 2015 are calculated by annualizing the actual number of the b suidobashi for six months.
(*3) For properties acquired in 2015 and 2016, numbers prior to acquisition which were obtained from hotel lessees, etc. are used for the calculation.

17

1,370

1,381

0%

2. The Five HMJ Hotels - Highlights
Changes in Total Sales and GOP

25,000Total Sales

GOP

23,304

Total Sales

21,13921,396

20,223

21,994

21,312

22,29623,18623,905

6,941
5,696

15,000(JPY M)

8,500

20,0006,296

24,436

6,155

6,302

CY2013

CY2014

7,591

GOP(JPY M)

7,761
6,500

5,645
5,158

5,136
10,0004,500
CY2008

CY2009CY2010CY2011CY2012

CY2015

CY2016

CY2017(Forecast)

Changes in KPI

ADR・RevPAR

20,000ADR

77.9%

18,00017,97016,00013,999

RevPAR

77.8%

Occupancy Rate

73.8%

80.4%

76.7%

82.7%

86.1%

14,00087.7%
19,212

18,46314,367

86.9%

17,297

17,197
15,98012,696

12,845

CY2009CY201015,846

16,20013,40012,16014,886

17,551

20,15388.4%
17,807

20,656100%

Occupancy Rate

(JPY)

89.3%
18,455

16,843

15,24512,0000%
CY2007

CY2008CY2011CY201218

CY2013

CY2014

CY2015

CY2016

CY2017(Forecast)3. Case Studies of Internal Growth Strategy
 Aggressively implemented active asset management approach to actively improve profitability of properties
and to increase asset value
Revision of Rent Schemes

Renovation by Strategical Capital Expenditures
Renovated guest rooms, etc. to increase RevPAR●The Five HMJ Hotels
Changed the variable rent rate from 81.5% to 85.0%
from January 2016 rent increase by JPY148M (4.3%)●Kobe Meriken Park Oriental Hotel: guest rooms on 7F (51 rooms)
balconies, bar●Namba Oriental Hotel: guest rooms on 9F (42 rooms)●CANDEO HOTELS UENO-KOEN
Revised to new rent from July 2016
 NOI yield 4.3% (*1) → 4.8% (*2)●Oriental Hotel tokyo bay: guest rooms on 4F (54 rooms)●ibis Tokyo Shinjuku: guest rooms on 3F-10F (67 rooms)（*1）Assumed yield at the time of acquisition.
（*2）Annualized NOI yield for FY12/2017.

Pursuit of Synergy Effects by Operating Hotels of the SameGroup Located Nearby

Rebranding

Create synergy effects from both sales and costs perspective andmaximize GOP●Holiday Inn Osaka Namba (Former HOTEL VISTA GRANDE OSAKA)
Completed rebranding in November 2016 after the acquisition in
August 2016

●HMJ group
Namba Oriental Hotel, Holiday Inn Osaka Namba
 Share guests, integrate back office・Increase the number of international brands
 Plan to attract more inbound visitors
 International brands account for 47% of the portfolio, which is a
big improvement in quality

Hotel Centraza Hakata
Share staff among HMJ group to complement positions in shortage●Accor group
Mercure Sapporo, ibis Styles Sapporo
 Share guests, integrate back office, share purchasing items

19

4. Capital Expenditures and Depreciation
 Strengthen competitiveness and improve asset value by continuing investment in CAPEX(JPY M)
4,000

(*1)

CAPEX ICAPEX IICAPEX III

Depreciation

3,639
3,294

3,500

3,000

2,772

2,500

1,869

2,000

2,072

2,212

2,242

2,322

2,214

2,297

2,400

1,811
36

1,842
1,306

1,000

668
500

0
(*2)(*3)

793

1,096

118

1,079

1,236
786

600

2,619
783

1,500

999

2,864

283

518

49
156

378

322

90
177

FY2006

FY2007

FY2008FY2009

591
233
36
322
FY2010

516
21
213
281
FY2011

640

493
529

511

343

258
198

854
58
167

203

622

629

760

CY2012

CY2013

CY2014

1,841
1,134

CY20151,324

CY2016

CY2017(Forecast）(*1) CAPEX I is capital investment related to renewal of buildings, facilities, and equipment which is required to maintain proper values of properties. CAPEX II is capital investment for fixtures and furnishings that are not directly related to building structures or
facilities but necessary for operating hotels. CAPEX III is strategic capital investment for renewing guest rooms, banquet rooms and restaurant for maintaining/improving the competitiveness of the hotels.
(*2) The actual for FY2006 is the actual of the former JHR for the period from IPO to August 2006 (6.5 months). The actual for FY2007 is the sum of the actual of the former JHR from September 2006 through August 2007 and that of the former NHF from IPO to
September 2007 (15.5 months). The actual for FY2008 is the sum of the actual of former JHR from September 2007 through August 2008 and that of former NHF from October 2007 through September 2008 (the same method applies for FY2009 to FY2011).
The sum of CY2012 is the actual from January 2012 through December 2012 (depreciation is the annualized number for the 13th period), and the actual for CY2013 through CY2016 is actual number for the period from January through December each year.
The plan for CY2017 for the period from January 2017 through December 2017 is based on the operating forecast in the Financial Report dated February 23, 2017.
(*3) The former NHF spent JPY31M (from October 2011 through December 2011) and former JHR spent JPY90M (from September 2011 through December 2011), respectively, in addition to the amount indicated above.

20

5. Rent Structures
Stability

Upside(As of end of December 2016)

Rent structure
Type of contract
Fixed
Type of rent
Variable

Fixed rent
Lease contract○-

Involvement in hotel
operation
CAPEX paid by JHR
No. of properties

Acquisition price (JPY M)（％）

Fixed rent + Revenue sharing
Lease contract○
A certain percentage of sales
exceeding the threshold

Low
1)

Renewal of building
and facilities

Low
1)

Renewal of building
and facilities< 3) Strategic investment>

13
42,580
14.8%
Hakone Setsugetsuka
The Beach Tower Okinawa
Dormy Inn Kumamoto
Hotel Francs
HOTEL ASCENT FUKUOKA(8 other hotels)

Fixed rent + Variable Rent
Lease contract○
A certain percentage of
hotel GOP

540,470
14.1%
Smile Hotel Nihombashi
Mitsukoshimae
Hotel Vista Kamata Tokyo
Hotel Keihan Universal City
Hotel Sunroute Shinbashi
Hilton Tokyo Bay

HotelsVariable rent
Lease contract
A certain percentage of
hotel GOP

High
1)

Renewal of building
and facilities
2) Fixtures and equipment
3) Strategic investment
15
156,387
54.5%

HMJ group

Kobe Meriken Park Oriental Hotel
Oriental Hotel tokyo bay
Namba Oriental Hotel
Hotel Nikko Alivila
Oriental Hotel Hiroshima
Okinawa Marriott Resort & Spa
ACTIVE-INTER CITY HIROSHIMA
Hotel Centraza Hakata
Holiday Inn Osaka Namba

Management contract
Management contract-

Renewal of building
and facilities
2) Fixtures and equipment
3) Strategic investment
3
17,723
6.2%

Chisun Inn Kamata
Mercure Yokosuka
Hilton Nagoya-

GOP of hotel

High
1)

Total
-

High
1)

Renewal of building
and facilities
2) Fixtures and equipment
3) Strategic investment
529,64010.3%

41286,801100%

Accor groupibis Tokyo Shinjuku
ibis Styles Kyoto Station
ibis Styles Sapporo
Mercure Sapporo
Mercure Okinawa Naha

the b group
The Six the b Hotels (akasaka-mitsuke,
ikebukuro, ochanomizu, hachioji, hakata,suidobashi)

Breakdown of Real Estate Operating Revenue
Real estate
operating revenue
Variable rent
Fixed rent, etc.

Total

JPY2,856M（12.9％）

JPY2,856M（12.9%）JPY556M（2.5％）
JPY2,989M（13.5％）
JPY3,545M（16.0%）(As of December 2016)

JPY5,660M（25.6％）
JPY6,098M（27.6％）
JPY11,758M（53.2％）(*) Ratios of fixed rent and variable rent and acquisition price are ratios by each rent structure against total amount (rounded down to the first decimal place).

21

JPY591M（2.7％）

JPY2,584M（11.7％）

JPY189M（0.9％）

JPY580M（2.6％）

JPY781M（3.5%）

JPY3,165M（14.3%）

JPY9,392M（42.5%）
JPY12,714M（57.5%）
JPY22,107M（100.0%）VI. Financial Status

1. Financial Status
Changes in Costs for Interest-Bearing Debt(*1) and
Average Life of Debt(*2)
Average Life of Debt
2.2%

Costs for Interest-Bearing Debt

11.7%
Loans
Investment
Corporation
Bonds

6.0

2.0%

5.0 years
5.0

1.7%

1.8%

3.3 years

2.4 years

3.7 years

4.0

1.5%

3.0

1.4%

1.2%

1.2%

2.0

End of FY12/2014(15th Period)

End of FY12/2015(16th Period)

End of FY12/2016(17th Period)(*) Long-term loan: Loans with original
maturity over one year.
Short-term loan: Loans with original
maturity within one year.

(*1) Weighted-average costs for interest-bearing debt (including up-front fee, etc.) as of the end of each period/year. Rounded off
to one decimal place.
(*2) Average life of debt as of the end of each period/year.

Changes in LTV (Total Asset Base)
43.8%

43.1%

82.1%

As of the End of FY12/2016
1.4%

90.9%

77.7%

Borrowing

17,20015,00011,47940.0%

13,322 13,217 13,544
2,000

11,47913,322

11,217

12,3006,000

13,544

10,800

11,20010,216

2021

2022

2023

35.0%
End of FY12/2014(15th Period)

End of FY12/2015(16th Period)

End of FY12/2016(17th Period)

13,10012,30010,2161,500

10,0005,000(As of the End of FY12/2016)

Investment Corporation Bonds

20,000

42.8%

39.7%

End of FY12/2013(14th Period)

7.7%

Repayment Schedule of Interest-Bearing Debt
(JPY M)

45.0%

88.3%

As of the End of FY12/2015
Short-term
8.8%
Long-term
13.5%(scheduled repayment
within one year)
Long-term

0.0
End of FY12/2013(14th Period)

17.9%

Term of Interest-Bearing Debt

1.0

1.0%

As of the End of FY12/2016

As of the End of FY12/2015(Years)

2.0%

1.6%

Breakdown of Interest-Bearing Debt

9,500
12,30013,100
9,500

0
2017

(*) LTV as of the end of each period/year.

23

2018

2019

2020

2024

2025

2026

1. Financial Status (Cont.)
Status of Credit Rating

Lender List for Interest-Bearing Debt
(JPY M)

Lenders

Sumitomo Mitsui Banking Corporation
Shinsei Bank, Limited
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited
The Tokyo Star Bank, Limited
The Nomura Trust and Banking Co., Ltd.
Mitsubishi UFJ Trust and Banking
Corporation
Development Bank of Japan Inc.
The Bank of Fukuoka, Ltd.
The Hiroshima Bank, Ltd.
The Chiba Bank, Ltd.
Aozora Bank, Ltd.
Sompo Japan Nipponkoa Insurance Inc.
The Higo Bank, Ltd.
Borrowing(Sub-Total)
2nd Investment Corporation Bonds
without Collateral
3rd Investment Corporation Bonds
without Collateral
4th Investment Corporation Bonds
without Collateral
5th Investment Corporation Bonds
without Collateral
6th Investment Corporation Bonds
without Collateral
7th Investment Corporation Bonds
without Collateral
8th Investment Corporation Bonds
without Collateral
Investment Corporation Bonds(Sub-Total)
Total Interest-Bearing Debt

Balance As of the End ofPrevious Period

Balance As of the End ofPrevious Period

Variance

Balance

Balance

Percentage

Balance(As of the End of Dec. 2015)(As of the End of Dec. 2016)

Percentage

25,052
13,52813,295
8,096
8,113
8,109
3,892

24.4%
13.2%
12.9%
7.9%
7.9%
7.9%
3.8%

25,556
14,21013,98010,163
9,593
8,570
4,868

20.3%
11.3%
11.1%
8.1%
7.6%
6.8%
3.9%

504
682
684
2,067
1,480
460
975

1,435

1.4%

3,435

2.7%

2,000

1,788
1,418
1,927
1,734
1,435
945
-

1.7%
1.4%
1.9%
1.7%
1.4%
0.9%
-

2,980
2,610
2,427
2,213
1,935
937
100

2.4%
2.1%
1.9%
1.8%
1.5%
0.7%
0.1%

1,191
1,191
500
478
500
-8
100

90,772

88.3%

103,579

82.1%

12,806

2,500

2.4%

0

0.0%

- 2,500

2,000

1.9%

2,000

1.6%

0

1,500

1.5%

1,500

1.2%

0

6,000

5.8%

6,000

4.8%

0

-

-

3,000

2.4%

3,000

-

-

9,000

7.1%

9,000

-

-

1,100

0.9%

1,100

12,00011.7%

22,60017.9%

10,600102,772

100.0%

126,179

100.0%

23,406

Japan Credit Rating Agency, Ltd. (JCR)
Rating and Investment Information,
Inc. (R&I)

A+ (stable)
A (stable)

Fixed Interest Rate Ratio
As of end of Dec. 201584.8％

As of end of Dec. 2016

98.0％

Investment Corporation Bonds (Issued in FY12/2016)

6th Investment
Corporation Bonds(Wholesale Bonds)
7th Investment
Corporation Bonds(Retail Bonds)
8th Investment
Corporation Bonds(Wholesale Bonds)

24

Date of IssuanceTotal Amountof Investment
Corporation
Bonds

PeriodRate

March 22, 2016

JPY3B

10 years

0.935%

November 29, 2016

JPY9B

10 years

0.6%

November 29, 2016

JPY1.1B

10 years

0.6%

1. Financial Status (Cont.)
Negative Goodwill

Changes in Unrealized Gains＜Policy for Use of Negative Goodwill＞

1. Add JPY262M (50-year amortization amount of negative goodwill)
to dividends every period.

(JPY100M)

2. In addition to above, dividends will be increased in response to thefollowing.

4,000Book Value・Cope with losses caused by property dispositions
・Cope with loss on retirement of noncurrent assets
・Cope with dilution of dividend per unit
・Cope with inconsistency between tax and accounting treatments*(*Amortization of fixed-term leasehold of land, amortization of asset
retirement obligations, etc.)＜Amount to be Used in FY12/2017＞

3,021

1,138

787

50-year amortization amount of negative
goodwill：

JPY262M

Cope with loss on retirement of
noncurrent assets：

JPY70M

Total amount of negative goodwill to be
used in FY12/2017： JPY332M

Balance of Negative Goodwill as of the Endof December 2017 (Forecast)

3,987

Unrealized Gains

2,054
2,000

1,662
98

1,312

348
2,849
2,233

22
JPY12.7B

1,289(*) The “50-year amortization amount of negative goodwill” includes
amortization, etc. of fixed-term leasehold of land, asset retirement
obligations, etc. of Hotel Centraza Hakata and HOTEL ASCENTFUKUOKA, which were purchased in the year ended December 2016
(17th Period).
JHR expects the amount of amortizations, etc. to be JPY152M for the
fiscal year ending December 2017 (18th Period).

1,563

1,705

6.3%

20.4%

0

Rate of
Unrealized
Gains

1.7%

39.9%

FY12/2012 FY12/2013 FY12/2014 FY12/2015 FY12/2016(13th Period) (14th Period) (15th Period) (16th Period) (17th Period)(*) Appraisal value is book value plus unrealized gains.

25

35.2%

VII. Market Environment

1. Market Environment● Number of inbound visitors in 2016 increased to over 24
millionGovernment’s goal: 40 million in 2020, 60 million in 2030

● Number of inbound visitors from the entire areas
continued to grow from 15% to around 20% on anannual basis
Rate of Increase of the Number of
Inbound Visitors by Area (Year-on-Year)

Changes in the Number of Inbound Visitors(In thousands)
25,000インバウンド数
No. of Inbound Visitors

Total
No.
of InboundInbound Visitors
Visitors

うち観光目的Tourists

EuropeNorth America

60%

19,73720,000Asia

70%

24,039

50%

53.7%
48.0%

15,00040%

13,413

43.7%

42.8%
39.3%

10,363
10,000

5,000

8,611

8,346 8,350

5,069

6,005

6,653

7,282

6,789

30%

8,358

19.0%
20%

6,218

15.5%
17.1%

10%
0

0%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

1Q

2Q

3Q
2015

Source: Number of International Visitors to Japan by Japan National Tourism Organization(JNTO)

4Q

1Q

2Q

3Q

4Q

2016

Source: Number of International Visitors to Japan by Japan National Tourism Organization (JNTO)(*) Rates in 4Q 2016 for Asia, Europe, and North America are compared to those in the same period (October andNovember) of the previous year.

27

1. Market Environment (Cont.)● Japan ranks 16th in the world, 5th in Asia.

● Number of overnight guests declined slightly in 2016
Changes in the Number of Overnight Guests in Japan

Number of Inbound Visitors by Country (2015)(Guest nights in millions)

84,452

France550

No. of Japanese overnight guests

No. of inbound overnight guests

77,510USA

504

68,215Spain

500

56,886

China
China

50,732Italy

450

39,478TurkeyGermany

34,972England34,436

Mexico32,093

Russia31,346

Thailand

29,881

Austria

26,719Hong Kong

26,686

Malaysia

25,721

439
413

400

28

417

466

474

33

45

432

429

438

2013

2014

2015

66

496
71

26

18

350

300

386

399

413

425

250

23,599Greece19,737Japan
0

10,00020,00030,000200
40,00050,00060,00070,00080,0002010

90,0002011

2012(Thousand People)
Source: Statistics of Overnight Travel by Japan Tourism Agency

Source: UNWTO and Japan National Tourism Organization (JNTO)(*) Rounded off to the nearest millions of yen.

28

2016

1. Market Environment (Cont.) New supply of hotel rooms is increasing in response to strong market environment
Number of New Supply of Rooms in Hotels/Ryokans in Japan

Changes in Number of Rooms in Hotels/Ryokans in Japan(ThousandRooms)

Tokyo

Osaka

ActualOther(Room)
40,0002,000

20,000

1,562

1,544

1,547

0

1,324

1,320

0

600

2015年
+0.8%

2016年
+1.0%

2017年
+2.5%

2018年
+1.3%

2019年～
+2.1%

2015

2016

2017

2018

2019～

<Tokyo>Ratio of New
Supply

5,994

7,237

6,330

2015年
+3.3%

2016年
+4.0%

2017年
+4.7%

2018年
+3.9%

2019年～
+6.1%

2015

2016

2017

2018

2019～

<Osaka>10,000

76

76

77

142

143

149

FY2013

FY2014FY2015

10,1994,700(Room)

400

34,214

15,545

5,000

1,344

21,32812,406

10,0001,000

0Ratio of New
Supply(Room)

1,200

200

38,33810,0001,400

800<Japan>30,000

1,800
1,600

Supply Forecast

5,000
0

Source: “Public Health Administration Report” by Ministry of Health, Labour and Welfare (MHLW)

Ratio of New
Supply

1,014

1,064

5,215

2,063

3,677

2015年
+1.3%

2016年
+1.4%

2017年
+6.6%

2018年
+2.5%

2019年～
+4.3%

2015

2016

2017

2018

2019～

Source: “Calculated by the Asset Management Company using data from “Public Health Administration Report” by Ministry of Health,Labour and Welfare (MHLW), a weekly hotel & restaurant magazine (HOTERES), and Nikkei Telecom.
(*) Ratio of new supply is the number of new rooms to be supplied in a year to the stock of rooms at the beginning of the year. With
regard to the above data, please note that the number of rooms given “not determined” by hotels, the asset management company
has used 180, the average number of new supply of hotel rooms, for calculation.

29

Appendix 1
JHR’s Characteristics

1. Simultaneous Pursuit of Stability and Upside Potential
JHR pursues both stability and upside potential by steadily implementing growth strategies.
Ensure Stable Revenue

Pursue UpsideManagement
contract structure

Fixed rent structure

Variable rent
structure

Revenue sharing
structure

Active Asset Management Strategies

・Appropriate monitoring of hotel operation
・Capital expenditures to maintain competitiveness and asset value

・Change in rent structures and rebranding
・Strategic capital expenditures, etc.

Maintain and improve rent-paying
capacity of tenants, etc.

Increase in rental income, etc. throughimprovement in hotels’ performance
Proportion of Rent Structures

Proportion of Rental Income(As of the end of December 2016)

Fixed rent, etc.

Variable rent (*)

Fixed rent only

Variable rent (*)

58％

42％

13 properties

28 properties(*)

Variable rent
Revenue sharing
Income from management contracts(*) Fixed rent + variable rent structure
Fixed rent + revenue sharing structure
Variable rent structure, Management contract structure31

2. Key Points to Promote Growth Cycle
Strong ability in acquiring properties

Aim to increase dividend Highly recognized as Japan’s largest J-REIT specializing in hotels
 High presence and credibility in the property market bycontinuously acquiring properties Capability to propose various acquisition schemes and to executeacquisitions

High capability in achieving internal growthHighcapability inachievinginternal
growthStrong ability
in acquiringproperties

 Management approach that achieves a good balance between
stability and upside potential
 Increase in hotel revenue through active asset management
strategies and collaboration with high-quality operators
 Attract inbound demand through enhanced international brandportfolio Strengthen and maintain competitiveness by investing inappropriate capital expenditures

Stablefinancingcapability

Stable financing capability

 Secure sound and stable finance Diversification of financing methods

32

3. External Growth Strategy
Recognition of External
Environment
Trend of the Hotel
Investment Market
 Amid gradually recovering economy,
hotel assets have gained a firm
position as an investment target due tostable domestic demand and anincrease in hotel revenue resulting
from growing inbound demand mainly
from Asian countries. On the other
hand, since the yields of other asset
classes are decreasing and investors,
including new REITs specializing inhotels, are increasing, competition toacquire hotel assets has become
intense.
 New supply of hotels is on the rise,
responding to the increasing numberof inbound visitors. But depending on
specifications, locations, capability of
hotel operators, the superiority or
inferiority in competitiveness of hotel
may be seen more clearly.

Basic Policies
 Acquire highly competitive hotel real estate, etc. in areas that have potential to attract “domestic
and inbound leisure customers” in the medium to long-term.
 Improve profitability, stability, and quality of the overall portfolio.

Key Measures
 Emphasize the superiority of buildings and facilities (infrastructure), operations (services), and locations of hotel
real estate, etc.
・The prime investment targets are “full-service hotels” and “resort hotels” that have high barriers to entry due to operation andmanagement know-how, capital outlay and locations.
・In the case of “limited-service hotels,” the creditworthiness of the hotel lessee, the age of the building, location, guest roomcomposition and profitability are important.
・Hotels specialized in selling single rooms are carefully chosen.
・Especially, proactively review the purchase of hotels that have potential for internal growth by implementing active asset
management.

 Strategic investment areas
・Hokkaido area, Tokyo and bay area, Osaka/Kyoto area, Fukuoka area, and Okinawa area.
 Investigation and planning of the internal growth strategy upon property acquisition.
・Investigate the appropriate rent level and rent structure upon renewal, etc., cost reduction possibilities, and possibilities toimprove buildings and facilities.

・If the hotel pays variable rent, etc., promote internal growth through collaboration with lessees and/or operators.

33

4. Internal Growth Strategy
Recognition of External
Environment
Hotel Market Environment
 In addition to stable domestic leisuredemand, the number of inboundtourists, mainly from Asian countries, iscontinuing to rise. Amid such growth
expectation for Japan’s tourism andhotel industries, although there issome impact by supply of new hotels,
demand for accommodation is
expected to continue strongly, driven
by domestic and inbound leisuredemand.

Basic Policies


Pursue both stability and upside potential by steadily implementing growth strategies

Key Measures
 Monitoring and planning and execution of the active asset management strategy based on in-depth
understanding of the hotel business which realizes pursuit in upside revenue.
• Make strategic investments which will improve profitability and strengthen competitiveness• Change to rent structures that can achieve upside revenue• Make proactive proposals to build effective hotel operating structures which aim to maximize GOP, from the perspective ofboth hotel sales and expenses• Attract inbound demand through rebranding to international brands• Increase hotel revenue through collaboration with high-quality operatorsPlanning and execution of strategic CAPEX which secure steady revenue.
• Analyze the creditworthiness of hotel lessees, understand and improve hotel income and expenditures• Maintain and improve rent-paying capacity of tenants, etc. through capital expenditures, which lead to maintenance ofcompetitiveness and asset value

34

5. Financial Strategy
Recognition of the External
Environment
Continuing Favorable Environment
for Financing in Both Direct andIndirect Financing Markets
 Expanded investor base throughcontinuous access to both equity andbond markets.
 Financial institutions are still positive toprovide loans.
 Due to the Bank of Japan’s monetaryeasing policy, short-term interest rates
are expected to be stable at a low level
for the time being.
 On the other hand, long-term interest
rates, which are at a historical low,need to be paid close attention to
unforeseeable circumstances.

Basic Policies
 Ensure healthy and stable finance Strengthen bank formation and relationships with financial institutions
 Diversify financing methods

Key Measures
 Maintain LTV level at a maximum of 50% (total asset base) for the time being

 Diversify financing methods such as public offerings and issuance of investment corporation bonds
 Improve financial stability by extending and diversifying repayment periods and fixing interest rates, etc.

 Optimize borrowing costs

35

6. Benefits Program for Unitholders
JHR offers a benefits program to unitholders to improve their satisfaction and expand the investor base
JHR expanded the benefits program from FY2015 by adding the six Accor hotels as subject hotels for the program

Eligible recipients of complimentary coupons
Complimentary coupons will be sent to those who hold ten or more JHR
units at the end of June every year (end of the midterm settlement)＜FY2015＞

Eligible unitholders: 14,901 unitholders
Valid period: Between October 2015 and September 2016


Hotels that offer the benefits program
The five HMJ hotels and the six Accor hotels

Details of the benefits program
The five HMJ hotels—50% off the rack rates for hotel accommodation and 20%
discount for restaurants
The six Accor hotels—10% discount from the best-offered accommodation rates
Five complimentary coupons for accommodations and five complimentary
coupons for restaurants (*)(*) Complimentary coupons for restaurants are only available at the five HMJ hotels



Record of coupon redemption (October 2015 through September 2016)
Accommodation



The Five HMJ Hotels

Kobe Meriken Park Oriental Hotel

Namba Oriental Hotel

Oriental Hotel HiroshimaNo. of Coupons
Used

No. of People Who
Used Coupons

No. of Coupons
Used

No. of People Who
Used Coupons

2,635

3,511

3,523

9,946

The Six Accor Hotels

Oriental Hotel tokyo bay

ibis Tokyo Shinjuku

Hotel Nikko Alivila

Mercure Sapporo

36

Restaurants

ibis Styles Kyoto Station

Mercure Okinawa Naha

ibis Styles Sapporo

Mercure Yokosuka

Appendix 2
Information on Properties

1. Property List (1/2)(As of end of December 2016)
Appraisal ValueNo.

Property Name

Hotel Type
(*1)

Grade
(*2)

No. of
Guest
Rooms

LocationAge(*3)

Acquisition Book Value
Price(JPY M)(JPY M)(*5)(*4)

16th Period(as of 12.31.2015)
Appraisal
Value(JPY M)(*6)

CAP Rate

17th Period(as of 12.31.2016)
Appraisal
Value(JPY M)CAP Rate

Investment
Ratio
(*7)

Revenue from
Real Estate
Operation(JPY1000)(*8)

NOI(JPY1000)(*8)

P/L from Real
Estate Operation(JPY1000)(*8)

NOI Yield(Actual)(*9)

1

Kobe Meriken Park Oriental Hotel

Full-service

Upper-middle

319

Hyogo

21.5

10,900

10,137

13,3005.5%

14,4005.2%

3.8%

1,103,646

825,464

502,205

7.6%

2

Oriental Hotel tokyo bay

Full-service

Mid-price

503

Chiba

21.7

19,90018,46032,600

4.6%

34,100

4.5%

6.9%

1,879,183

1,758,566

1,315,833

8.8%

3

Namba Oriental Hotel

Limited-service

Mid-price

258

Osaka

20.8

15,00014,76527,0004.4%

32,0004.3%

5.2%

1,574,336

1,474,633

1,309,019

9.8%

4

Oriental Hotel Hiroshima

Full-service

Upper-middle

227

Hiroshima

23.3

4,100

4,123

4,180

7.5%

4,250

7.3%

1.4%

469,494

423,958

340,279

10.3%

5

Hotel Nikko Alivila

ResortLuxury396

Okinawa

22.8

18,90018,54525,400

5.3%

29,2005.0%

6.6%

1,804,507

1,654,475

1,336,126

8.8%

6

The Beach Tower Okinawa

ResortMid-price

280

Okinawa

12.8

7,610

6,837

9,070

4.9%

9,420

4.7%

2.7%

511,023

467,562

342,456

6.1%

7

Hakone Setsugetsuka

ResortMid-price

158

Kanagawa

10.3

4,070

3,756

4,730

5.6%

5,020

5.2%

1.4%

294,946

270,378

187,135

6.6%

8

Dormy Inn Kumamoto

Limited-service

Mid-price

291

Kumamoto

8.9

2,334

2,199

2,950

5.8%

2,950

5.8%

0.8%

194,460

153,486

113,627

6.6%

9

the b suidobashi

Limited-service

Mid-price

99

Tokyo

30.4

1,120

1,231

1,750

4.5%

2,040

4.3%

0.4%

121,929

110,542

86,732

9.9%

10

Dormy Inn EXPRESS Asakusa

Limited-service

Economy

77

Tokyo

19.8

999

951

1,220

4.4%

1,300

4.1%

0.3%

63,99555,27542,947

5.5%

11

Hakata Nakasu Washington Hotel Plaza

Limited-service

Mid-price

247

Fukuoka

21.9

2,130

2,054

3,680

5.1%

4,350

4.7%

0.7%

240,000

225,000

199,000

10.6%

12

Nara Washington Hotel Plaza

Limited-service

Mid-price

204

Nara

16.8

2,050

1,876

2,330

5.5%

2,430

5.2%

0.7%

151,000

134,000

93,000

6.5%

13

R&B Hotel Ueno Hirokoji

Limited-service

Economy

187

Tokyo

14.8

1,720

1,764

1,810

4.4%

1,920

4.1%

0.6%

98,342

83,23870,071

4.8%

14

R&B Hotel Higashi Nihonbashi

Limited-service

Economy

202

Tokyo

18.8

1,534

1,512

1,960

4.9%

2,050

4.7%

0.5%

122,207105,397

86,505

6.9%

15

Comfort Hotel Tokyo Higashi Nihombashi

Limited-service

Economy

259

Tokyo

8.9

3,746

3,625

5,110

4.7%

5,320

4.5%

1.3%

270,114240,514204,679

6.4%

16

Smile Hotel Nihombashi Mitsukoshimae

Limited-service

Economy

164

Tokyo

19.8

2,108

2,047

2,850

4.5%

3,060

4.2%

0.7%

152,951

137,312118,315

6.5%

17

Toyoko Inn Hakata-guchi Ekimae

Limited-service

Economy257

Fukuoka

15.3

1,652

1,477

2,490

5.1%

2,680

4.7%

0.6%

141,039

128,052

106,661

7.8%

18

Hotel Keihan Universal City

ResortMid-price

330

Osaka

15.5

6,000

5,983

13,6005.5%

14,6005.2%

2.1%

914,058

835,099

750,72113.9%

19

Chisun Inn Kamata

Limited-service

Economy

70

Tokyo

13.7

823

800

1,270

4.7%

1,410

4.5%

0.3%

79,09071,501

59,8488.7%

20

Hotel Vista Kamata Tokyo

Limited-service

Economy

105

Tokyo

24.9

1,512

1,468

1,870

4.7%

1,990

4.5%

0.5%

115,215

100,40277,465

6.6%

21

Hotel Sunroute Shinbashi

Limited-service

Mid-price

220

Tokyo

8.8

4,800

4,854

7,420

4.2%

8,730

3.9%

1.7%

403,274

346,792

325,667

7.2%

22

Hilton Tokyo Bay

ResortLuxury

823

Chiba

28.5

26,05026,18034,4004.5%

36,000

4.3%

9.1%

1,959,866

1,660,728

1,493,243

6.4%

23

ibis Tokyo Shinjuku

Limited-service

Mid-price

206

Tokyo

36.4

7,243

7,778

8,830

4.4%

9,290

4.2%

2.5%

722,167

532,085456,602

7.3%

24

ibis Styles Kyoto Station

Limited-service

Mid-price

215

Kyoto

7.8

6,600

6,731

8,590

4.6%

10,9004.3%

2.3%

587,035

502,140

468,122

7.6%

38

1. Property List (2/2)(As of end of December 2016)
Appraisal ValueNo.

Property Name

Hotel Type
(*1)

Grade
(*2)

No. of
Guest
Rooms

LocationAge(*3)

Acquisition Book Value
Price(JPY M)(*5)(JPY M)(*4)

16th Period(as of 12.31.2015)
Appraisal
Value(JPY M)(*6)

CAP Rate

17th Period(as of 12.31.2016)
Appraisal
Value(JPY M)CAP Rate

Investment
Ratio
(*7)

Revenue from
Real Estate
Operation(JPY1000)(*8)

NOI(JPY1000)(*8)

P/L from Real
Estate Operation(JPY1000)(*8)

NOI Yield(Actual)(*9)

25

ibis Styles Sapporo

Limited-service

Mid-price278

Hokkaido

6.4

6,797

6,754

7,940

5.3%

10,2004.8%

2.4%

635,792

511,369

438,7947.5%

26

Mercure Sapporo

Limited-service

Mid-price285

Hokkaido

7.7

6,000

5,964

7,840

5.1%

10,3004.8%

2.1%745,017

491,733

413,750

8.2%

27

Mercure Okinawa Naha

Limited-service

Mid-price

260

Okinawa

7.4

3,000

2,933

5,730

5.1%

7,620

4.8%

1.0%

475,303

384,519334,31612.8%

28

the b akasaka-mitsuke

Limited-service

Mid-price

122

Tokyo

14.1

6,250

6,305

6,730

4.2%

6,740

4.1%

2.2%

285,436

270,544249,765

4.3%

29

the b ikebukuro

Limited-service

Mid-price

175

Tokyo

34.5

6,520

6,586

7,040

4.6%

7,590

4.4%

2.3%

369,739

350,723

321,1095.4%

30

the b ochanomizu

Limited-service

Mid-price

72

Tokyo

17.4

2,320

2,349

2,540

4.4%

2,590

4.2%

0.8%

115,112

107,620

98,1064.6%

31

the b hachioji

Limited-service

Mid-price

196

Tokyo

30.4

2,610

2,687

2,920

5.5%

3,070

5.2%

0.9%

221,312199,214

174,515

7.6%

32

the b hakata

Limited-service

Mid-price

175

Fukuoka

19.3

2,300

2,354

2,700

4.9%

3,960

4.5%

0.8%

230,433

218,530

199,1819.5%

33

Hotel Francs

Full-service

Mid-price

222

Chiba

25.4

3,105

3,145

3,900

4.9%

4,090

4.7%

1.1%

300,000

250,823

202,684

8.1%

34

Mercure Yokosuka

Full-service

Mid-price

160

Kanagawa

23.2

1,650

1,658

1,760

4.8%

2,040

4.7%

0.6%

271,678

174,702

144,712

10.6%

35

Okinawa Marriott Resort & Spa

ResortUpper-middle

361

Okinawa

11.8

14,95014,971

16,7005.2%

17,2005.0%

5.2%

1,066,669

992,311

770,978

6.6%

36

ACTIVE-INTER CITY HIROSHIMA

Full-service

Luxury238

Hiroshima

6.4

17,32017,795

17,9004.8%

18,7004.6%

6.0%

1,378,205

979,232

797,604

5.7%

37

CANDEO HOTELS UENO-KOEN

Limited-service

Mid-price

268

Tokyo

7.0

6,705

6,761

6,820

4.0%

7,630

4.0%

2.3%

309,721305,749

269,815

5.0%

599,351

391,388

213,623

7.2%

Full-service

Mid-price

194

Holiday Inn Osaka Namba (*10)

Limited-service

Mid-price

314

HOTEL ASCENT FUKUOKA

Limited-service

Economy263

Full-service

Luxury460--

10,14038

Hotel Centraza Hakata

39
40
41

Hilton Nagoya

Total or Average

Fukuoka

（注12）

31.5

7,197

7,581

7,240

4.8%

7,690

4.7%

2.5%

Osaka

8.4

27,00027,20328,5004.5%

28,800

4.4%

9.4%

539,345537,478

491,814

4.7%

Fukuoka

17.7

4,925

5,211

5,220

4.9%

5,340

4.8%

1.7%

158,704

121,181

106,719

6.7%

Nagoya27.9

15,25015,534

15,9004.2%

15,8004.2%

5.3%

430,893245,728

203,507

4.8%

-

18.1

286,801

284,965

365,790

22,107,470 18,829,678

15,517,561

6.6%

-

398,770-

100.0%(*1) Under the category of Hotel Type, “Full-service” is full-service hotel, “Resort” is resort hotel, and “Limited-service” is limited-service hotel.
(*2) Mainly based on ADR, etc., JHR has classified the hotels into four categories as “luxury,” “upper-middle,” “mid-price,” and “economy.”(*3) Average age: The sum of (acquisition price of each property x property age ) ÷Total acquisition price.
(*4) The acquisition price in the Purchase & Sale Agreement for the Beneficial Interest in Trust or Real Estate Purchase & Sale Agreement is indicated. (Consumption tax, amount equivalent to consumption tax, brokerage fee, and other purchase-related costs are excluded.)(*5) Book value as of the end of December 2016.
(*6) Value for No. 37-41 are appraisal value at the time of acquisition.
(*7) Percentage of the acquisition price of the each asset to the total acquisition price. Numbers beyond one decimal place is rounded off.
(*8) Actual for one year from January through December 2016. Since the lessees did not agree to disclose numbers in units of JPY1000 for Nos. 11 and 12, amounts are rounded down to the nearest JPY 1M.
(*9) Since No. 37-41 were acquired in FY12/2016, NOI yield is the sum of (NOI of each property ÷ operating days x 365) ÷ acquisition price.
(*10) HOTEL VISTA GRANDE OSAKA was rebranded to Holiday Inn Osaka Namba on November 1, 2016.

39

2. Summary of Lease Contracts (1/2)(As of the end of December 2016)

No．

Property Name

Lease Type

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Oriental Hotel Hiroshima

5

Hotel Nikko Alivila

6

The Beach Tower Okinawa

Fixed-lease

7

Hakone Setsugetsuka

8

Dormy Inn Kumamoto

910

Rent Structure(*1)

Hotel Operator/Hotel
Remaining
Lease /
Consulting andContractMC
TermManagement
Term
(*2)
Company

LesseeContractual Rent(*3)

Rent Summary

In principle, the same rent will be applied
until expiration of the contract.

83(Fixed rent)
JPY3,221M/year(Variable rent)
When the total GOP of the five
HMJ hotels exceeds GOP baseamount (JPY3,351M), the excess x
85% is paid.

Fixed

20

10

JPY42M/month

Fixed-lease

Fixed

20

10

JPY24M/month

Fixed-lease

Fixed

12

6

Dormy Inn EXPRESS Asakusa

Lease

Fixed

20

Hakata Nakasu Washington Hotel Plaza

Lease

Fixed

3

Hotel Management Japan Co., Ltd.
Fixed-lease

Fixed+Variable

11

Nara Washington Hotel Plaza

Lease

Fixed

12

R&B Hotel Ueno Hirokoji

Lease

Fixed

13

R&B Hotel Higashi Nihonbashi

14

Comfort Hotel Tokyo Higashi Nihombashi

Jan. 2016

Structure ismodified.

－－

The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.

－

－

－

－

－

－

－

－

JPY16M/month

Rent can be modified through mutual
agreement every three years.

－

－

To be
discussed(April)－0

JPY5M/month

Rent can be modified through mutual
agreement every three years.

Apr. 2012

Same

To be
expired(March)－1

JPY20M/month

Apr. 2015

Contract isrenewed. (same)－

To be expired(March)

－

－

－

－

Okura Nikko HotelManagement Co., Ltd.

Lease

Fixed

Fixed-lease

Fixed

15

Smile Hotel Nihombashi Mitsukoshimae

Lease

16

Toyoko Inn Hakata-guchi Ekimae

Lease

17

Hotel Keihan Universal City

Lease

18

Chisun Inn Kamata

19

20

Fixed+Revenue
sharing

Kyoritsu Maintenance Co., Ltd.

Washington Hotel K.K.

Greens Co., Ltd.

20

3

JPY11M/month20

5

JPY8M/month20

1

JPY10M/month20

11

JPY21M/month

Rent can be modified through mutual
agreement.
Rent can be modified through mutual
agreement.
Rent can be modified through mutual
agreement.
Rent can be modified through mutual
agreement.
Rent can be modified through mutual
agreement every five years.

The Kamogawa Grand Hotel, Ltd.

20

0

JPY11M/month +Revenue sharing

Rent can be modified through mutual
agreement.

Toyoko Inn Co., Ltd.

30

15

JPY11M/month

No rule has been stipulated.

K.K. Hotel Keihan

20

4Nondisclosure (*6)

Nondisclosure

50Hotel GOP x 85% (If it is below
zero, it will be JPY0.-)

Fixed
Fixed+Revenue
sharing

Solare Hotels &Resorts Co., Ltd.

SHR Hotels,
Co., Ltd.

Fixed-lease

Variable

Hotel Vista Kamata Tokyo

Lease

Fixed+Revenue
sharing

Vista Hotel Management Co., Ltd.

42

JPY7M/month +Revenue sharing

In principle, the same rent will be applied
until expiration of the contract.

Hotel Sunroute Shinbashi

Fixed-lease

Fixed+Revenue
sharing

Sunroute Co., Ltd.

15

6

JPY18M/month +Revenue sharing

No rule has been stipulated.

Fixed+Revenue
sharing

4

2

JPY157M/month +Revenue sharing

Rent can be modified through mutual
agreement.

12

8Amount equivalent to hotel GOP

5

2

5

21

Hilton Tokyo Bay

Fixed-lease22

ibis Tokyo Shinjuku-

23

ibis Styles Kyoto Station-

24

ibis Styles Sapporo-

25

Mercure Sapporo-

26

Mercure Okinawa Naha-Management
contract
Management
contract
Management
contract
Management
contract
Management
contract

THE DAI-ICHI
BUILDING CO.,LTD.

－

Hilton International
Company

AAPC Japan K.K.

Rent Modification Summary
Rent Modification Schedule(Acquisition to End of（2017～2018）
December 2016)
Condition
Timing
2017
2018
(*4)

-

Apr. 2011 Increased (+3.0%)－－
To be expired(March)To be discussed(January)

Apr. 2013

Same－

Jan. 2013

Same

－

To be
Structure is
expiredApr. 2014
modified.
(March)－Oct. 2007 Increased (+9.4%)
Structure is－Jul. 2014
modified.
To be
Structure is
expiredJul. 2012
modified.
(June)
Contract isrenewed (Modify－
Jul. 2015 the calculation
method ofrevenue sharing.)

－
－
－
－

To be expired(December)－－Jul. 2015

Contract isrenewed.

-Jul. 2012

Structure ismodified.

－－

Amount equivalent to hotel GOP

-

－

－

－

3

Amount equivalent to hotel GOP-

Dec. 2014

Structure ismodified.

To be expired(December)

－

－

15

13

Amount equivalent to hotel GOP

-

－

－

－

－

10

7

Amount equivalent to hotel GOP

-

－

－

－

－

40

－

－

－

To be expired(December)

2. Summary of Lease Contracts (2/2)(As of the end of December 2016)

No．

27
28

Property Name

Mercure Yokosuka
the b akasaka-mitsuke

Lease Type

Rent Structure(*1)

Fixed-lease

Variable

Fixed-lease

Fixed+Variable

Hotel Operator/Hotel
Remaining
Consulting andLease / Contract
Management
MC Term Term
Company(*2)

LesseeAAPC Japan K.K.
Ishin Akasaka Operations, K.K.

5

3

7

29

the b ikebukuro

Fixed-lease

Fixed+Variable

Ishin Ikebukuro Operations K.K.

7

5

the b ochanomizu

Fixed-lease

Fixed+Variable

Ishin Ochanomizu Operations K.K.

7

5

31

the b hachioji

Fixed-lease

Fixed+Variable

Ishin Hachioji Operations, Y.K.

7

5

32

the b hakata

Fixed-lease

Fixed+Variable

Ishin Hakata Operations K.K.

7

5

33

the b suidobashi

Fixed-lease

Fixed+Variable

Ishin Suidobashi Operations K.K.

5

3

34

Hotel Francs

Fixed-lease

Fixed

K.K. Bridal Produce

19

8

35

Okinawa Marriott Resort & Spa

Fixed-lease

Fixed+Variable

36

ACTIVE-INTER CITY HIROSHIMA

Fixed-lease

Fixed+Variable

37

CANDEO HOTELS UENO-KOEN

Fixed-lease

Fixed

38

Hotel Centraza Hakata

Fixed-lease

Fixed+Variable

39

Holiday Inn Osaka Namba

40

HOTEL ASCENT FUKUOKA

41

Hilton Nagoya

（*5）

5

4

11

10

Candeo Hospitality
Management, Inc.

20

13

Hotel Centraza Co., Ltd.

4

2

Lagoon resort Nago Co., Ltd.

K.K. A.I.C
Hiroshima
Management

STARWOOD ASIA
PACIFIC HOTELS &RESORTS PTE. LTD.

Linked to hotel GOP
JPY102M/year +Linked to hotel GOP
JPY163M/year +Linked to hotel GOP
JPY69M/year +Linked to hotel GOP
JPY98M/year +Linked to hotel GOP
JPY82M/year +Linked to hotel GOP
JPY85M/year +Linked to hotel GOP

530

Contractual Rent(*3)

JPY25M/month

Rent Summary
The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.

(Fixed rent)
JPY550M/year(Variable rent)
In principle, the same rent will be applied
When the total GOP exceeds GOP until expiration of the contract.
base amount (JPY700M), the excess
x 90% is paid.
(Fixed rent)
JPY348M/year(Variable rent)
In principle, the same rent will be applied
When the total GOP exceeds GOP until expiration of the contract.
base amount (JPY468M), the excess
x 82.5% is paid.
Rent can be modified through mutual
Nondisclosure (*6)
agreement every three years.
(Fixed rent)
JPY400M/year(Variable rent)
In principle, the same rent will be applied
When the total GOP exceeds GOP until expiration of the contract.
base amount (JPY425M), the excess
x 90% is paid.

Fixed-lease

Fixed+Variable

OW Hotel Operations KK

15

14(Fixed rent)
JPY576M/year(Variable rent)
In principle, the same rent will be applied
When the total GOP exceeds GOP until expiration of the contract.
base amount (JPY650M), the excess
X 92.5% is paid.

Lease

Fixed

NIKOH SANGYO co.,Ltd.

20

2

Nondisclosure (*6)

Variable

Nagoya Hilton Co., Hilton International
Ltd.
Company

41

13

Nondisclosure (*6)

Lease(*1) Rent structure is as follows:
Fixed: Fixed rent
Variable: Variable rentManagement contract: Management contract
Fixed + Variable: Property paying both fixed and variable rent
Fixed + Revenue sharing: When the sales of the hotel (lessee) exceed pre-determined amount, additional rent is paid.
(*2) Remaining contract term as of the end of December 2016(*3) Amount including car park and CAM without tax.

(*4)

(*5)
(*6)

Rent can be modified through mutual
agreement every three years.
Rent can be modified through mutual
agreement.

Rent Modification Summary
Rent Modification Schedule(Acquisition to End of（2017～2018）
December 2016)
Condition
Timing
2017
2018
(*4)
－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

Jul. 2015

Rebranded

－

－

－

－

－

－

－

－

－

－

－

－

－

－

2016

Renewed (*6)

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

Details of “Modified Structure” is as follows.
No. 1 to No. 5: Variable rent was modified from 81.5% to 85%.
No. 15, 17: Revenue sharing structure has been applied in addition to fixed rent.
No. 18: Fixed rent has been replaced with the variable rent due to the replacement of the lessee.
No. 22, 24: JHR has commenced direct management contract structures.
HOTEL VISTA GRANDE OSAKA was rebranded to Holiday Inn Osaka Namba on November 1, 2016.
Information is undisclosed since the lessees did not agree to disclose the rent.

41－

3. Major CAPEX III by Hotel
Unit: JPY M * (Numbers in parentheses are CAPEX amounts)

Former JHR

FY2006

FY2007

FY2008FY2009FY2010FY2011FY2012FY2012（New）

CY2013

CY2014

CY2015

CY2016

CY2017

ActualActualActualActualActualActualActualActualActualActualActualActualForecast

1st period

2nd period

3rd period

4th period

5th period

6th period

7th period(IPO-8/2006)(9/2006-8/2007) (9/2007-8/2008) (9/2008-8/2009) (9/2009-8/2010) (9/2010-8/2011) (9/2011-3/2012)ndFormer NHF

-

2

rd

th

th

(10/20079/2008)(IPO-9/2007)

Namba Oriental
Hotel

Hotel Nikko
AlivilaOriental Hotel
Hiroshima• Guest rooms on • Guest rooms on •9th and 10th
7th and 8th floors
floors (145)(171)• Banquet room
• Restaurant (58) •(59)• Guest rooms on
7th and 8th floors • Restaurant (40)(93)

• Suite (32)
• Restaurant (155)-

ibis Tokyo
Shinjuku-

Okinawa
Marriott Resort
& Spa

-

-

(Acquired in
Oct. 2007)--

Guest rooms on
5th and 6th floors(210)
Lobby (60)-

(10/20089/2009)(10/20099/2010)

-

-

-

-

-

-

-

-

• Chapel (77)• Guest rooms,
etc. on 12th floor
(135)

-

• Restaurant (79)-• Restaurant (45)--

• Guest rooms on
4th floor (101)-• Guest rooms on
4th floor andcorridors on 4th,
5th, and 6th
floors (20)

-

-

-

• Corner rooms
on 5th to 8th
floors (10)--• Guest rooms on
9th floor (91)-

• Guest rooms on
3rd to 8th floorsof Northbuilding and 3rd
to 5th floors ofcentral building
(333)

-

• Guest rooms on
9th floor (55)• Restaurant (30)--

• Banquet rooms
on 23rd floor(10)-• Guest rooms on
7th to 10th floors(43)• Banquet room on
4th floor (38)-

• Guest rooms on• Guest rooms on
1st to 6th floorsrdth
3 to 8 floorsof South and(479)
West wings(361)• Guest rooms on
7th to 18th floors • Banquet rooms(347)
on 3rd and 4th• Tenant floor (23)floors (138)--

13th period
14th period
15th period
16th period
17th period
18th period
4/2012-12/2012 1/2013-12/2013 1/2014-12/2014 1/2015-12/2015 1/2016-12/2016 1/2017-12/2017

10th to 11th
period(10/20109/2011)

th

th

th

to 3 period 4 to 5 period 6 to 7 period 8 to 9 period

rooms on • Guest rooms on • Bride’s room
Kobe Meriken • Guest
12th and 13th
10th and 11th
(68)
Park Oriental• Banquet room
floors (189)floors (222)
Hotel• Restaurant (51) • Pier (98)(46)

Oriental Hoteltokyo bay

th

-

-

-

-

-

• Renovation of
banquet room
on 3rd floor.
Renovation of
corner double
room to twin
room (21)

-

-

th

12 period(10/20113/2012)

-

-

-

-

-

-

• Lobby andrestaurant on
2nd floor, andguest rooms on
3rd, 5th, 6th, and9th floors (170）

-

42

-

-

• Chapel (30)

• Guest rooms on
7th floor (50)
• Bridal salon (95)• Balconies on eachfloor (62)• Bar (85)• Guest rooms onrdth
3 to 10 floor
(192)
-

-

-

-

-

-

-

-

• Guest rooms on
7F (77)• Guest rooms onrdth
3 to 10 floor
(249)

-

4. Portfolio Map
Total
AssetsJPY

No. ofHotels286.8Billion

Limited-service hotel

No. of Guest
Rooms

41 Hotels
3

2

1

5

4

6

10,140 Rooms
7

8

9

Full-service hotel
Resort hotel
25

26

Kobe Meriken Park
Oriental Hotel

10

11

Namba Oriental
Hotel

Oriental Hotel
Hiroshima

Hotel Nikko
Alivila

13

14

15

12

Dormy Inn
Nara Washington R&B Hotel
Hakata Nakasu
Ueno Hirokoji
EXPRESS Asakusa Washington Hotel Hotel Plaza
Plaza

24
31
3

Oriental Hoteltokyo bay

18 39

The Beach Tower
Okinawa

Hakone Setsugetsuka

Dormy Inn
Kumamoto

16

17

18

R&B Hotel Higashi Comfort Hotel Smile HotelTokyo Higashi Nihombashi
Nihonbashi
Nihombashi
Mitsukoshimae

20

21

22

23

24

Hotel Vista
Kamata Tokyo

Hotel Sunroute
Shinbashi

Hilton Tokyo Bay

ibis Tokyo
Shinjuku

ibis Styles
Kyoto Station

25
東京東日本橋Toyoko Inn
Hakata-guchi
Ekimae26

the b suidobashi

19

Hotel Keihan
Universal City

27

Chisun Inn
Kamata

28

2 33
7
22

34

11 17
32 38 40
41

8

1

12

the b akasaka-mitsuke

29

30

31

32

33

34

35

36

the b ikebukuro

the b ochanomizu

the b hachioji

the b hakata

Hotel Francs

Mercure Yokosuka

Okinawa Marriott
Resort & Spa

ACTIVE-INTER CITYHIROSHIMA(Sheraton Grand
Hiroshima Hotel)

30
13 37

29

10

9

23
5

Mercure Sapporo Mercure
Okinawa Naha

Tokyo 23 wards

4 36

35

ibis Styles Sapporo

16

21

14 15

37

38

39

40

41

CANDEO HOTELS
UENO-KOEN

Hotel Centraza Hakata

Holiday Inn Osaka
Namba

HOTEL ASCENTFUKUOKA

Hilton Nagoya

28

6
19

27
20

43

Appendix 3
Investors Composition and Investment Unit Price1. Major Unitholders and Unitholders of Investment Units
Top Ten Major Unitholders
As of the End of June 2016

As of the End of December 2016

Name

Ranking

No. of Units

Percentage(*)

Ranking

1
2

Name

No. of Units

Percentage(*)

626,276
398,094

16.64
10.58

328,4258.73

165,981
145,006

4.41
3.85

515,357
391,418

15.51
11.78

318,754

9.59

3

4
5
6

Japan Trustee Service Bank, Ltd. (Trust)
The Master Trust Bank of Japan, Ltd. (Trust)
Trust and Custody Services Bank, Ltd. (Securities Investment
Trust)
Nomura Bank (Luxembourg) S.A.
The Nomura Trust and Banking Co., Ltd. (Investment Trust)State Street Bank & Trust Company 505001

179,316
137,273
60,121

5.39
4.13
1.80

4
5

Japan Trustee Service Bank, Ltd. (Trust)
The Master Trust Bank of Japan, Ltd. (Trust)
Trust and Custody Services Bank, Ltd. (Securities Investment
Trust)
Nomura Bank (Luxembourg) S.A.
The Nomura Trust and Banking Co., Ltd. (Investment Trust)

6

The Bank of New York, Non-Treaty JASDEC Account65,440

1.73

7

Shikoku Railway Company

58,311

1.75

7

Shikoku Railway Company

58,311

1.55

53,7891.61

8State Street Bank & Trust Company 505012

57,881

1.53

NORTHERN TRUST CO. (AVFC) RE IEDU UCITS CLIENTS NONLENDING 15 PCT TREATY ACCOUNTState Street Bank & Trust Company

54,701

1.45

54,6851.45

1,954,800

51.96

1
2
3

8
9

NORTHERN TRUST CO. (AVFC) RE IEDU UCITS CLIENTS NONLENDING 15 PCT TREATY ACCOUNT
Goldman Sachs International

10 Nomura PB Nominees TK1 Limited

Total

47,0201.41

938,2691.15

101,799,628

54.17

Total

(*) The total units held by each investor to the total units issued by JHR as of the end of June 2016 and the end of December 2016. (Rounded off to two decimal places.)

Owners of the Investment Units
As of the End of June 2016
OwnersNo. ofNo. of Units
Investors

Individuals and Others
Financial Institutions(including Securities Firms)

Other Domestic Firms
Foreign Firms andIndividuals

Total

Individuals andOthers26,642

No. of Investors
0.4%

No. of Units

As of the End of December 2016

1.3%
11.1%

1.1%

371,109

Owners

35.4%

126
368

1,646,530
126,662306

1,177,606

27,442

3,321,907

49.5%
97.0%

Financial Institutions(including Securities Firms)

3.8%

Individuals and Others

30,491

429,225

Financial Institutions(including Securities Firms)

149

1,824,980

Other Domestic Firms
Foreign Firms andIndividuals

Total

Other Domestic
Firms

No. ofNo. of Units
Investors

406

131,234

325

1,376,468

No. of Investors
0.4%

No. of Units

1.2%

11.4%

1.0%
36.5%
48.5%
97.1%
3.4%

31,371 3,761,907

Foreign Firms andIndividuals(*) Percentage of investors is percentage of owners in each segment to the total number of investors in JHR, and percentage of investment units is percentage of investment units owned by each segment to the total investment units issued. (Both rounded off to one decimal place.)45

2. Changes in Investment Unit Price and Market Capitalization
Changes in the investment
unit price and market capitalization(Based on the closing price)

Price of the investment
unit: JPY79,300.-

90,00080,000(Based on the closing price of January 31, 2017)

70,00060,000(*2) Includes OA.

1/20167/2016

PO (*2) JPY14.6B

PO (*2) JPY34.7B(JPY M)(JPY)

100,000

Total market
capitalization: JPY298.3B(*1) Price of the real estate investment securities may
fall depending on the fluctuations of price of thereal estate under management or profitability,
etc., and investors may suffer losses. Investors
may also suffer losses through the bankruptcy
or deteriorated financial condition of the issuer.
With reference to the risk of investment in JHR
units, see Securities Registration Statement of
JHR dated July 7, 2016.

6/2015
PO (*2) JPY10.7B

Market Capitalization
Investment Unit Price of JHR

9/2012
PO (*2) JPY5B

350,000

1/2015
PO (*2) JPY15.6B

4/20139/2014

PO JPY20.5B

PO JPY10.1B

300,000

250,000

200,000

50,000150,000

40,00030,000100,000

20,00050,00010,0000Comparison withREIT Index and TOPIX of
600
Tokyo Stock Exchange
(TSE)
500
(*) 100 is the closing price of JHR unit, REIT
index and TOPIX at TSE dated April 2,
2012. REIT Index of TSE is an index of aweighted average of the market
capitalization of all REITs listed on TSE.

0

Investment Unit Price of JHR

TSE REIT Index

400

300

200

100

0

46

TOPIX

Appendix 4
Summary of the Asset Management Company

1. Summary of the Asset Management Company
Company

Japan Hotel REIT Advisors Co., Ltd.

Location

Ebisu Neonato 4F, 4-1-18 Ebisu, Shibuya-ku, Tokyo 150-0013

Establishment

August 10, 2004

Capital

JPY300M as of December 31, 2016

Shareholders

Rockrise Sdn Bhd, Kyoritsu Maintenance Co., Ltd., ORIX Corporation

Representative Director

Hisashi Furukawa

Registration and Licenses

Building Lots and Buildings Transaction Business Operator, Governor of Tokyo (3) No. 83613
Discretionary Transaction Agent by Minister of Land, Infrastructure, Transport and Tourism No. 38
Financial Instruments Trading Company, Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trusts Association, Japan

Organization Chart

Shareholders’ Meeting
AuditorBoard of Directors’ Meeting

Investment (and Operation)
Committee

Compliance Committee
Representative Director
Compliance Office

Investment Division

Asset Management

Acquisitions

Operations Division

Finance & Planning Division

Finance & Planning48

Accounting &ReportingGeneral Affairs

Investor
Relations2. Features of the Asset Management Company
 Japan Hotel REIT Advisors Co., Ltd. is an asset manager of Japan Hotel REIT Investment Corporation, a real estate investment trust in Japan (J-REIT),
specializing in hotel assets.
 JHRA holds up a mission statement which is to continue its challenge and creation, and provide investors with attractive hotel investment opportunities.
It manages JHR’s assets with high degree of professionalism and determined independence.

Advanced Expertise Know-how and track record of planning and executing unprecedented measures of asset management based on in-depth understanding of hotel
operation.
 Extensive experience and track record of renovation and rebranding through collaboration with many hotel lessees and hotel operators.
 Strong and long-term relationships with a large number of hotel lessees and hotel operators.
 Highly analytical skills and accurate judgement based on rich information and data obtained through a broad network.

Ensured Independence
 JHRA secures high independence from its main sponsor and clarifies its strong commitment to profit and growth of JHR.
• No full-time director and employee of the asset management company is a seconded employee of the main sponsor, SC CAPITAL PARTNERS,
except for part-time directors.
• Non-sponsor-related directors account for half of JHRA’s board of directors.
• With regard to transactions with sponsor-related parties and JHR, JHRA has set strict decision-making rules. In principle, in addition to obtaining
approval by Compliance Committee which includes an outside specialist, who is authorized to dismiss proposals, JHRA is required to obtainapproval from JHR’s board of directors’ meetings (directors consist of third-party members who do not have any relationship with the sponsorrelated parties).

49

Disclaimer
This material is prepared and provided solely for the purpose of providing information and not to offer, solicit, or do business, etc. with specific products including
purchase of investment units, investment unit subscription rights, or investment corporation bonds of Japan Hotel REIT Investment Corporation (“JHR”) or any otherparticular products. If any discrepancy is identified between this translation and the Japanese original, the Japanese original shall prevail.
This material is neither a disclosure document nor an investment report required under or prepared pursuant to the Financial Instruments and Exchange Act, Act on
Investment Trusts and Investment Corporations and related government ordinances, Cabinet Office regulations, listing rules by Tokyo Stock Exchange, Regulations of
The Investment Trusts Association, Japan, or other related rules and regulations.
This material contains forward-looking statements about financial conditions, operational results, and businesses of JHR, as well as plans and intentions of JHR and its
asset management company, Japan Hotel REIT Advisors Co., Ltd (“JHRA”). Such forward-looking statements involve known and unknown risks, uncertainties, and otherfactors that may cause actual results or performance of JHR to materially differ from those expressed or implied forecasts. Those forecasts are made based on JHR’spresent and future business strategies and assumptions relating to the political and economic circumstances surrounding JHR in the future.
Every effort has been made to ensure the accuracy of the information contained in this material. However, there can be no assurance that the information is accurate,complete, appropriate or fair. The information may be revised or retracted without prior notice.
Regarding the offering and trading of investment units, investment unit subscription rights or investment corporation bonds, financial institutions may charge you predetermined handling fees and other charges aside from the price of the investment units, investment unit subscription rights or investment corporation bonds. Since
neither JHR nor JHRA handles the offering and trading of investment units, investment unit subscription rights or investment corporation bonds, please ask financial
institutions for the amount, upper limit, and calculation methods of such fees and other charges.
JHR mainly invests in real estate-related assets, primarily hotels which are subject to change in values. Therefore, unitholders, holders of investment unit subscription
rights and investment corporation bonds may suffer losses due to economic conditions of the real estate market or securities market, economic situations includinginterest rate environment, the nature of investment units, investment unit subscription rights, and investment corporation bonds, dependency on mechanisms andrelated persons of investment corporations, changes in legal systems related to real estate (such as tax regulations and building regulations), damage caused to the realestate-related assets by natural disasters, fluctuation in prices or profitability of the real estate-related assets, nature of the trust beneficiary rights under management,delisting of the investment units, or worsening financial position or insolvency of JHR. For details, please refer to the Articles of Incorporation, Securities Registration
Statement, Annual Securities Report and Extraordinary Report, etc. of JHR.
The contents of this material may not be copied or reproduced without our prior permission.
Japan Hotel REIT Advisors Co., Ltd.
Financial Instruments Trading Company
Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trust Association, Japan

50