This English translation is provided for information purposes only. If any discrepancy is identified between thistranslation and the Japanese original, the Japanese original shall prevail.
February 22, 2018

Financial Report for the Fiscal Year Ended December 31, 2017
(January 1, 2017 – December 31, 2017)
Japan Hotel REIT Investment Corporation
Listing:
Securities code:
URL:
Representative:

Tokyo Stock Exchange8985
http://www.jhrth.co.jp/en/
Kaname Masuda, Executive Director

Asset Management Company:
Representative:
Contact:

Japan Hotel REIT Advisors Co., Ltd.
Hisashi Furukawa, Representative Director and President
Noboru Itabashi
Director and Senior General Manager of Operations Division
Phone: +81-3-6422-0530

Scheduled date to file Securities Report: March 20, 2018
Scheduled date to start dividend payment: March 20, 2018
Preparation of supplementary material on financial report:
Schedule for presentation of financial results:

Yes
Yes (Analysts and institutional investors only)(Amounts are rounded down to the nearest million yen)

1. Status summary of operation and assets for the fiscal year ended December 31, 2017
(January 1, 2017 – December 31, 2017)(1) Operating results(Percentages show changes from the previous year)

Operating revenue
Fiscal year ended
December 31, 2017
December 31, 2016

JPY1M
25,475
22,107

%
15.2
27.5

Net income per unit
Fiscal year ended
December 31, 2017
December 31, 2016
(Note)

Operating income
JPY1M
15,757
13,885

Ordinary income
%
13.5
26.4

JPY1M
14,006
12,220Ordinary income tototal assets

Return on equity (ROE)

JPY
3,606
3,462

Net income
%
14.6
31.5

%
7.3
7.8

JPY1M
14,005
12,123

%
15.5
30.4

Ordinary income tooperating revenue
%
4.2
4.4

%
55.0
55.3

Net income per unit is calculated based on the period-average number of investment units issued.

(2) Cash distributions

Fiscal year ended
December 31, 2017
December 31, 2016

Dividend per unit
(Excess of earnings
exclusive)

Total dividends(Excess of earnings
exclusive)

Dividend per unit
resulting fromexcess of earnings

Total dividends
fromexcess of earnings

JPY

JPY1M

JPY

JPY1M

%

%

3,683
3,420

14,771
12,865

0
0

0
0

105.5
106.1

7.5
7.6

Dividend to
net assets

Payout ratio(Note 1) The source of dividends for the fiscal year ended December 31, 2017 is calculated by adding appropriation for dividends (¥769 million) tounappropriated retained earnings. For details of the appropriation for dividends, please refer to “<Reference Materials 3> Dividend per unit andappropriation for dividends” on page 20.
(Note 2) The source of dividends for the fiscal year ended December 31, 2016 is calculated by adding appropriation for dividends (¥740 million) tounappropriated retained earnings. For details of the appropriation for dividends, please refer to “<Reference Materials 3> Dividend per unit andappropriation for dividends” on page 20.
(Note 3) Payout ratio is calculated using the following formula, rounded off to one decimal place.
Total dividends (total dividends from excess of earnings exclusive) ÷ Net income × 100－

1 －(3) Financial position
Total assets
JPY1M
352,183
317,878

Fiscal year ended
December 31, 2017
December 31, 2016

Net assets

Equity ratio

JPY1M
201,963
181,989

Net assets per unit
JPY
50,354
48,376

%
57.3
57.3

(Note) Net assets per unit are calculated based on the total number of investment units issued and outstanding at the end of the fiscal year.

(4) Cash flows

Fiscal year ended
December 31, 2017
December 31, 2016

Cash flows fromoperating activities
JPY1M
17,763
13,689Cash flows frominvesting activities
JPY1M(36,083)(64,075)

Cash flows from
Cash and cash equivalents
financing activities
at end of year
JPY1M
JPY1M
19,86627,92063,061
26,373

2. Operating forecast for the fiscal year ending December 31, 2018
(January 1, 2018 – December 31, 2018)(Percentages show changes from the previous year)
Operating revenue
JPY1M

Midterm
Full year

12,177
26,567%8.0
4.3

Operating income
JPY1M

7,098
16,094%
5.3
2.1

Ordinary income
JPY1M

6,242
14,295%
4.9
2.1

Dividend per unit
(Excess of earnings
exclusive)

Net income
JPY1M

6,242
14,294%4.9
2.1

Dividend per unit
resulting fromexcess of earnings

JPY
3,705

JPY
0

(Reference) Estimated net income per unit for the fiscal year ending December 31, 2018 (full year) ¥3,564(Calculated based on the estimate of period-average number of investment units of 4,010,847.)(Note) Reserve for temporary difference adjustment in the amount of ¥565 million is planned to be the source of dividend payment.

* Other(1) Changes in accounting policies, changes in accounting estimates, and restatement of financial statements for prior period after
error corrections(a) Changes in accounting policies due to revisions to accounting standards and other regulations: No change(b) Changes in accounting policies due to other reasons than above (a): No change(c) Changes in accounting estimates: No change(d) Restatement of financial statements for prior period after error corrections: No change(2) Total number of investment units issued and outstanding(a) Total number of investment units issued and outstanding at the end of the fiscal year(including investment units owned by Japan Hotel REIT Investment Corporation (hereinafter referred to as “JHR”))
As of December 31, 2017
4,010,847 units
As of December 31, 2016(b) Number of JHR’s own investment units held at the end of the fiscal year
As of December 31, 2017
As of December 31, 2016

3,761,907 units
0 units
0 units(Note) For the number of investment units serving as the basis of computation of net income per unit, please refer to “Notes on per unit information” on page 40.

* Status of audit procedures
At the time of disclosure of this financial report, audit procedures for the financial statements pursuant to the Financial Instruments
and Exchange Act of Japan are incomplete.

* Appropriate use of forecasts of results and other special items
Forward-looking statements presented in this financial report including operating forecasts are based on information currently
available to us and on certain assumptions we deem to be reasonable. As such, actual operating and other results may differ
materially from these forecasts due to a number of factors. Furthermore, we do not intend to guarantee any dividend amount by
this forecast. For the assumptions of the operating forecast and notes for the use of operating forecast, please refer to “2.
Investment policies and operating results; (2) Operating results; (B) Outlook for the next fiscal period” on page 6 and“Assumptions of the operating forecast for the midterm and full year of the fiscal year ending December 31, 2018 (19th period)”on page 10.

－

2 －1. Related parties of the investment corporation(1) Structure of the investment corporation
The following is the structure of JHR as of the date of this report.

(1) Asset management agreement(2) Administrative agreement(3) Fiscal agency agreement (investment corporation bonds) / Investment corporation bonds trustee agreement(4) Administrative agreement related to tax payment, etc.
(5) Asset custodian agreement / Unitholders’ register administrative agency agreement / Special accounts administrative
agreement(6) Information provision agreements regarding acquisition of real estate, etc.
(7) Basic agreement regarding information provision including brokerage, etc. of profit-earning real estate(8) Information provision agreement(9) Technical advisory agreement(10) Back-up operation letter of intent(Note) Specified related parties (specified related parties as prescribed in Article 12, paragraph 3 of the Cabinet Office Ordinance on Disclosure ofInformation, etc. on Specified Securities) of the investment corporation are Rockrise Sdn Bhd (the parent company, holding 87.6% of the sharesissued and outstanding, of the asset management company), SC J-Holdings Pte. Ltd. (a corporation holding 100% equity interest in Rockrise Sdn
Bhd), Hotel Management Japan Co., Ltd. (a stock company, 100% of the shares issued and outstanding of which is indirectly held by SC JHoldings Pte. Ltd.) (hereinafter referred to as “HMJ”). Rockrise Sdn Bhd, SC J-Holdings Pte. Ltd. and HMJ are corporations belonging to the SC
Capital Partners Group (former RECAP Group).

－

3 －(2) Operational role, name and overview of related business operations of the investment corporation and theinvestment corporation’s related parties
Disclosure is omitted because there is no significant change from the most recent Securities Report(submitted on March 22, 2017).

2. Investment policies and operating results(1) Investment policies
Disclosure is omitted because there is no significant change from “Investment policies,” “Investment targets”
and “Distribution policy” in the most recent Securities Report (submitted on March 22, 2017)and the
Securities Registration Statement (submitted on June 19, 2017).
(2) Operating results(A) Overview of the fiscal year under review(a) Brief history and principal activities
Japan Hotel REIT Investment Corporation (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 importance as social infrastructure and profitability as investment real estate of
hotels, JHR primarily invests in real estate which are wholly or partially used as hotels or real estate equivalents of such
real estate or related assets that are backed by such real estate or real estate equivalents (hereinafter referred to as “RealEstate for Hotels, etc.”).
JHR, the former Nippon Hotel Fund Investment Corporation (hereinafter referred to as the “former NHF”), merged withthe former Japan Hotel and Resort, Inc. (hereinafter referred to as the “former JHR”) with an effective date of April 1, 2012
(hereinafter referred to as the “Merger”) and changed its name to Japan Hotel REIT Investment Corporation. Since theMerger, JHR has carried out eight public offerings for capital increase and continuously acquired “highly-competitive
hotels” in mainly “strategic investment areas” where domestic and inbound leisure demand can be expected over the
medium to long term.
By implementing the aforementioned growth strategy, JHR has expanded its asset size while improving the quality of its
portfolio through new property acquisitions of 24 properties amounting to ¥210,022 million (acquisition price basis) intotal in the nearly six years since the Merger. As a result, JHR had a portfolio of 44 properties with a combined acquisition
price of ¥319,474 million and a total number of investment units issued and outstanding of 4,010,847 units at the end of the
fiscal year under review (December 31, 2017).
(b) Investment performance for fiscal year under review
During the fiscal year under review (12-month period from January 1, 2017 through December 31, 2017), the Japanese
economy continued to show a moderate recovery trend backed by moderate pickup in personal consumption andimprovement in corporate earnings, while the employment and income environment continued to improve. As to theenvironment surrounding the tourism market, as the Japanese government promotes measures for making Japan a tourism
nation, the number of foreign visitors to Japan (“inbound”) in 2017 continued to grow rapidly to reach 28.69 million (up19.3% from the previous year). Accordingly, demand for accommodation by inbound tourists remained high while suchdemand by domestic tourists remained stable, creating a favorable environment overall.
The hotel investment market continued to be in a brisk state with continual expectations for growth of Japan’s tourism
industry and hotel industry. JHR has been pursuing expansion of asset size through continuous property acquisitions byleveraging such strengths as high recognition as Japan’s largest REIT specializing in hotel properties and the ability topropose diverse acquisition schemes and execute transactions. During the fiscal year under review, JHR conducted public
offering for capital increase in July 2017, the eighth since the Merger, and acquired Hilton Tokyo Narita Airport(acquisition price: ¥13,175 million) and International Garden Hotel Narita (acquisition price: ¥9,125 million) in the Narita
area, and Hotel Nikko Nara (acquisition price: ¥10,373 million) in Nara. In terms of portfolio, JHR has worked to improve
the quality of the portfolio through such measures as promoting geographical diversification of the portfolio, diversifying
parties entrusted with operation (“operator(s)”) and expanding international brands.
－

4 －The hotels owned by JHR saw some signs of impact of new hotel supply and minpaku (rentals of private homes asaccommodation for a fee) in some areas including Tokyo and Osaka. However, many of the hotels in major regional cities
achieved strong operating performance, mainly in the rooms department, as a result of JHR implementing active asset
management, which is the aggressive and proactive pursuit of greater profitability and asset value of owned hotels. With
regard to status of operations during the fiscal year under review of the five hotels that JHR leases to Hotel Management
Japan Co., Ltd. (hereinafter referred to as “HMJ”) under variable rent contracts (hereinafter referred to as the “five HMJ
hotels”) (Note 1) and the hotels which JHR leases to HMJ Group companies under variable rent contracts (namely,
Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel (main facility of ACTIVE-INTER CITY HIROSHIMA),
Hotel Centraza Hakata and Holiday Inn Osaka Namba, and hereinafter collectively referred to together with the five HMJ
hotels as the “nine HMJ hotels”) (Note 1), these hotels overall have posted increase over the previous year both in sales and
GOP (gross operating profit), led by the rooms department. The rooms department aimed to generate greater earnings
through such means as flexible pricing in line with each hotel’s accommodation market condition in order to maximize
RevPAR (Revenue Per Available Room). For further details of sales, GOP and other management indicators for the Twelve
HMJ hotels (Note 1), please refer to “<Reference Materials 2> <1> Sales and GOP of the Twelve HMJ Hotels” on page 16
and “D. Overview of the hotel business; (2) Major indicators of the hotel business; (a) The Twelve HMJ Hotels” on page 64.
Moreover, at the six hotels (Note 2) for which AAPC Japan K.K. (hereinafter referred to as “Accor”), a Japanese subsidiaryof Accor Hotels headquartered in Paris, France, serves as the operator (hereinafter referred to as the “Six Accor hotels”),
successfully attracting leisure demand mainly from inbound tourists, the Six Accor hotels as a whole posted an increase
from the previous year both in sales and GOP despite being affected by suspension of sales due to renovation at some
hotels. For further details of sales, GOP and other management indicators for the Six Accor hotels, please refer to“<Reference Materials 2> <2> Sales and GOP of the Six Accor Hotels” on page 18 and “D. Overview of the hotel business:(2) Major indicators of the hotel business (b) The Six Accor Hotels” on page 66.
On the other hand, at the Six the b hotels (Note 3), which are leased to subsidiaries of the Ishin Hotels Group with avariable rent structure, despite efforts made to address changes in the circumstances, such as inbound tourism shifting fromgroup tours to independent travel and a corresponding increase in the percentage of online bookings, such factors as theimpact of new hotel supply and minpaku in the Tokyo area led to the hotels in Tokyo posting decrease from the previous
year both in sales and GOP and, consequently, the Six the b hotels overall also posting decrease over the previous year bothin sales and GOP. For further details of sales, GOP and other management indicators for the Six the b hotels, please refer to“<Reference Materials 2> <3> Sales and GOP of the Six the b Hotels” on page 19 and “D. Overview of the hotel business;(2) Major indicators of the hotel business; (c) The Six the b Hotels” on page 66.
In addition to efforts to increase revenue by increasing variable rent linked with improved performance of these hotels, JHR
has worked to increase dividend by reducing the costs of each item under real estate operating costs, general andadministrative expenses and borrowing costs through persistent talks with relevant parties and other measures.
(Note 1)

The five HMJ hotels represent the five hotels, namely, Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental
Hotel, Hotel Nikko Alivila and Oriental Hotel Hiroshima. The nine HMJ hotels represent the nine hotels comprising the five HMJ hotels
plus Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel, which is the major facility of ACTIVE-INTER CITYHIROSHIMA, Hotel Centraza Hakata and Holiday Inn Osaka Namba. The Twelve HMJ hotels represent the 12 hotels comprising thenine HMJ hotels plus Hilton Tokyo Narita Airport, International Garden Hotel Narita, and Hotel Nikko Nara. The same shall apply
hereinafter.

(Note 2)

Represents the six hotels, namely, ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure
Okinawa Naha and Mercure Yokosuka. The same shall apply hereinafter.

(Note 3)

Represents the six hotels, namely, the b suidobashi, the b akasaka-mitsuke, the b ikebukuro, the b ochanomizu, the b hachioji and the bhakata. The same shall apply hereinafter.

(c) Funding status
JHR procured ¥4,000 million in short-term loans and ¥11,000 million in long-term loans, in addition to ¥18,686 million by
way of capital increase through public offering in July 2017 and third-party allotment in August 2017, and acquired threeproperties, Hilton Tokyo Narita Airport, International Garden Hotel Narita and Hotel Nikko Nara, in July and August 2017.
Upon taking out loans, JHR newly added The Nishi-Nippon City Bank, Ltd. to lending banks to further diversify lenders.
－

5 －Furthermore, JHR refinanced existing loans of ¥10,750 million in February, September and November 2017, which were
due for repayment. In addition, JHR issued investment corporation bonds of ¥1,000 million for institutional investors inNovember 2017 for the purpose of the partial repayment of existing short-term loans.
Consequently, as of the end of the fiscal year under review, balance of interest-bearing debt totaled ¥140,399 million,
including short-term loans payable of ¥3,000 million, current portion of long-term loans payable of ¥15,022 million, longterm loans payable of ¥98,777 million and investment corporation bonds of ¥23,600 million, and the ratio of interestbearing debt to total assets at end of year (Note 4) stood at 39.9%.
JHR reduced borrowing costs and extended maturity dates through the aforementioned series of fund procurement. Alongwith such, JHR concluded loans with fixed interest rates as well as interest rate swap contracts to hedge against risks ofinterest rates rising in the future. These actions brought the fixed interest rate ratio (including the interest rate cap purchaseportion) on total interest-bearing debt at end of year to around 94.0%.
(Note 4)

Ratio of interest-bearing debt to total assets at end of year = Balance of interest-bearing debt at end of year ÷ Total assets at end of year
× 100

As of December 31, 2017, JHR’s issuer ratings were as follows.
Rating agency

RatingJapan Credit Rating Agency, Ltd.

A+

(Stable)Rating and Investment Information, Inc.

A

(Stable)(d) Financial results
As a result of the abovementioned asset management, operating revenue, operating income and ordinary income were¥25,475 million, ¥15,757 million and ¥14,006 million, respectively, for the fiscal year under review (12-month period fromJanuary 1, 2017 to December 31, 2017). Net income was ¥14,005 million.
With regard to dividends, it was decided that ¥14,774 million, which was calculated by adding a reversal of reserve fortemporary difference adjustment (appropriation for dividends) of ¥769 million to unappropriated retained earnings of¥14,005 million, would all be distributed except for fractions of less than one yen of dividend per unit. Consequently,¥14,771 million will be distributed and the dividend per unit came to ¥3,683.
For details of the appropriation for dividends for the fiscal year under review, please refer to “<Reference Materials 3>
Dividend per unit and appropriation for dividends” on page 20.
(B) Outlook for the next fiscal period(a) Investment policies and issues to be addressed
In 2018, the Japanese economy is expected to be on a moderate recovery, due in part to the effects of various government
policies, while the employment and income environment continues to improve. On the other hand, attention must be paid to
the trends of U.S. government policies, the economic outlook for China and other emerging Asian economies as well as
impacts of uncertainties of said policies, the impact of fluctuations in the financial and capital markets, geopolitical risks
and other factors.
In the environment surrounding the tourism industry, development of national tourism policies continues to be anticipatedas introduction of the departure tax (tax levied upon leaving Japan) is being discussed to allocate the revenue for tourismrelated policies, etc. Moreover, needs for overseas travels especially among the middle-income group and the wealthygroup in the fast-growing Asian region have expanded and the number of tourists to Japan has continued to rise. Japan
being favorably chosen as a travel destination is not a temporary phenomenon, but is likely to be mostly attributable tofactors such as progress in information and communications technology (ICT) allowing tourists to enjoy travelling in Japan
without language barriers, and travelers communicating charms of Japan with abundant tourism resources through SNS to
the world. The further increase in the number of inbound tourists and the solid domestic leisure demand due to such
structural shifts are expected to work favorably for JHR. On the other hand, however, close attention should be paid to thechanges in supply-demand balance going forward, including an increase in supply from new development of hotels－

6 －following trends of increase in inbound tourists, and the impact of the private house lodging business law (new minpakulaw) to be enforced in June 2018. Under such circumstances, JHR intends to work with the Asset Management Company tomanage assets based on the approach described below aiming to enhance the attractiveness of investing in JHR.
Internal growth
JHR will work to boost sales and GOP of hotels operated under variable rent contracts or management contracts, which are
the Twelve HMJ Hotels and the Six the b hotels, etc. that are operated under variable rent contract, and the Six Accor hotels
that are mainly operated under the management contract structure, with an aim to maximize variable rent and income frommanagement contracts receivable by JHR. To achieve this goal, JHR will focus efforts on seeking the cooperation of
relevant parties in shifting from competition based on price to competition based on value with an aim to become
prominent in the market in terms of both facilities and services. This will involve requesting each hotel lessee, its
operations support company and its operator to implement active asset management including marketing initiatives toattract a wider range of demand, measures to maintain and increase room rates, etc., and also implementing strategic capital
expenditures.
For hotels with only fixed rent contracts, JHR will increase its efforts to monitor operating conditions and pay carefulattention to each tenant’s ability to bear the rent costs. For the hotels at which the ability to bear rent costs has beenenhanced through better performances, JHR will conduct negotiations to revise rents upward and introduce revenue sharing
in order to increase JHR’s revenue.
In addition, JHR will carry out an ongoing program of facilities and equipment maintenance and improvement to ensureeach hotel becomes prominent in the market and to maintain and enhance asset value.
External growth
In terms of external growth strategy, JHR will keep its focus on acquiring highly-competitive hotels in areas which can
expect “domestic and inbound leisure demand” over the medium to long term as JHR has done to date. As to hotel types,
the policy is that limited-service hotels, full-service hotels and resort hotels are all investment targets, but JHR will only
acquire properties with competitive advantages in terms of both buildings, facilities, etc. (infrastructure) and thecapabilities of the hotel lessee and operator (services).
In the hotel investment market, harsh competition over acquisitions is ongoing due in part to the listing of new J-REITs
specializing in hotels and formation of private funds. JHR will aim for expansion of asset size that accompanies animprovement in the quality of its portfolio by acquiring highly competitive properties while leveraging its strength andadvantages and also utilizing the HMJ platform in some cases.
Finance strategy
JHR presses ahead with diversification of the means of financing while maintaining and enhancing the relationships of trustwith financial institutions with which it does business, under the basic policy of carrying out conservative financial strategy
which places importance on securement of financial stability and strength. It aims to conduct financial operations bykeeping the ratio of interest-bearing debt to total assets at no larger than 50% as in the past. In addition, when seeking new
funding for property acquisitions or refinancing existing debt, JHR will work to reinforce its existing relationships withmultiple lenders and further diversify funding methods, including issuance of investment corporation bonds, whileconsidering the balance between the dispersion of the maturity dates of its debt and borrowing costs.
Furthermore, while monitoring the conditions of the interest rate market, JHR aims to further improve its financial
foundation by extending maturity dates and managing risk of interest rates market by fixing rates, etc.
Policy on the handling of negative goodwill
Starting from the fiscal year under review (the fiscal year ended December 31, 2017 (18th period)), JHR started paying out
dividends through reversal of reserve for temporary difference adjustment in connection with partial amendments to 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.
Specifically, JHR reverses ¥262 million (hereinafter called the “50-year amortization amount of negative goodwill”), which－

7 －is an amount equivalent to 2% (1/50) of the remaining balance of the reserve for temporary difference adjustment (¥13,127
million), to pay out as dividends, with the remaining balance of the reserve for temporary difference adjustment set as the
maximum amount, for every year from the fiscal year under review.
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, loss on retirement of noncurrent
assets, and suspension of sales and such due to large-scale renovations with significant impact on revenues, JHR plans to
pay extra amount in addition to the 50-year amortization amount of negative goodwill (¥262 million) and reverse thenegative goodwill.
As for the year ending December 31, 2018 (19th period), JHR expects ¥565 million, which is the total of the 50-year
amortization amount (¥262 million), loss on retirement of noncurrent assets (¥38 million) and the correspondence to thelarge-scale renovation at Hotel Centraza Hakata (¥265 million) as additional amounts to dividends by reversing thenegative goodwill.
(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, and amounts to be reversed, etc., in the future.

Initiatives for Sutainability
In recent years, there has been growing importance of the risks and opportunities of ESG (Environmant, Social andGovernance) in the investment management industry from the standpoint of long-term sustainability. JHR recognizes that
conducting real estate investment management based on consideration for ESG is important to enhance unitholder value
and to further raise the attractiveness of JHR. In addition, JHR believes that it is indispensable to establish favorable
relationships with its statkeholders including unitholders, hotel users (guests), lessees, operators, business partners
including property managers, local communities, officers and employees of the Asset Management Company and others
and to fulfill our social responsibilities expected from them.
In order to put such ideas into practice, JHR, along with the Asset Management Company, established a “Sustainability
Policy” in December 2017 as a guide to ESG initiatives. We have promoted efforts to reduce environmental impact at our
portfolio properties based on this policy, and received the Building-Housing Energy-efficiency Labeling System (BELS)
evaluation for Hotel Nikko Alivila and Mercure Okinawa Naha on February 15, 2018 as first such cases for J-REIT’s hotel
properties (Note). Furthermore, recognizing its social responsibility towards local communities as a J-REIT specializing inhotels, JHR will proactively carry out social contribution activities capitalizing on the characteristics of the hotel sector andeach hotel.
(Note)

Investigated by the Asset Management Company based on disclosed information.

(b) Significant subsequent events
Issuance of investment corporation bonds
JHR issued investment corporation bonds under the following terms and conditions.
Classification

Tenth unsecured investment corporation bonds

Total amount of issuance¥10 billion

Issue price¥100 for face value of ¥100

Interest rate

0.840%/year

Issuance dateFebruary 21, 2018

Maturity dateFebruary 21, 2028

Security

UnsecuredThe proceeds will be allocated to prepay the existing loans by the end of
February, 2018. The residual funds will be allocated to part of funds for

Purpose of use

future acquisition of specified assets, part of funds for repayment of loans orrepair cost and capital expenditure to maintain or improve competitiveness ofthe existing properties.
－

8 －(c) Operating forecast
The following is JHR’s operating forecast for the midterm of the fiscal year ending December 31, 2018 (19th period) andthe full year of the fiscal year ending December 31, 2018 (19th period). For the assumptions of the operating forecast,please refer to “Assumptions of the operating forecast for the midterm and full year of the fiscal year ending December 31,
2018 (19th period)” on page 10.
Midterm of the fiscal year ending December 31, 2018 (19th period)
Operating revenue
Operating income¥12,177 million¥7,098 million

Ordinary income
Midterm net income¥6,242 million¥6,242 million

Full year of the fiscal year ending December 31, 2018 (19th period)
Operating revenue
Operating income¥26,567 million¥16,094 million

Ordinary income
Net income¥14,295 million¥14,294 million

Dividend per unit
Dividend per unit resulting from excess of earnings¥3,705¥0(Note) The forecast figures above are the current forecasts calculated based on certain assumptions. As such, actual operating revenue,
operating income, ordinary income, net income (midterm/full year), dividend per unit and dividend per unit resulting from excessof earnings may vary due to changes in the circumstances. Furthermore, the forecasts are not intended to guarantee any dividend
amount.

－9 －Assumptions of the operating forecast for the midterm and full year of the fiscal year ending December 31, 2018 (19th period)
Item
Calculation
periodAssets undermanagement

Assumptions
・Midterm (19th Period) : January 1, 2018 through June 30, 2018 (181 days)
・Full year (19th Period) : January 1, 2018 through December 31, 2018 (365 days)
・The 44 properties owned by JHR as of today are assumed, and it is also assumed that there will be no change in assets(acquisitions or dispositions, etc.) through the end of the fiscal year ending December 2018 (19th period). However, theactual results may fluctuate depending on the changes in assets under management that may take place.

・Operating revenue is calculated based on leases and other contracts effective as of today and in consideration ofcompetitiveness of hotels, market environment and other factors. If there are lease contracts with regards tofacilities other than hotels, such as retail facilities and offices, etc., operating revenue calculated based on the said
lease contracts is included.
・Rents, etc. of the main hotels are calculated based on the following assumptions.
(1) The Twelve HMJ Hotels
The assumptions of the fixed rent and variable rent for the Twelve HMJ hotels are as follows.
Total rent = Fixed rent + Variable rent
Variable rent = [Total GOP of the hotels – GOP base amount] × Variable rent ratio (%)
The fiscal year ending December 31,2018 (19th Period)

revenue

Total GOP of

GOP base

Variablerent ratio

the hotel(s)amountMidterm

3,142

1,675

Full year

8,078

3,351

Okinawa Marriott
Resort & Spa

Midterm

439

350

Full year

1,471

700

Sheraton Grand
Hiroshima Hotel (*1)

Midterm428

234

Full year

948

468

The Five HMJ Hotels

Operating(Unit: millions of yen)

Hotel Centraza
Hakata (*2)

Midterm

448

212

Full year

586

425

Holiday Inn
Osaka Namba

Midterm

607

325

Full year

1,269

650

Hilton Tokyo Narita
AirportMidterm

429

275

Full year

921

550

International Garden
Hotel Narita

Midterm266

180

Full year

552

360

Midterm

416

235

Full year

864

470

Midterm

6,178-

Full year

14,693-

Hotel Nikko Nara
Total

85.0%
90.0%
82.5%
90.0%
92.5%
86.5%
98.0%
91.5%
-

Variable

Fixed

Total

rent

rent

rent

1,247

1,610

2,857

4,018

3,221

7,239

80

274

355

694

550

1,244

160

174

334

396

348

744

145

199

345

145

400

545

261

288

549

572

576

1,148

133

222

355

321

444

765

84

168

252

188

336

524

165

210

375

361

420

781

2,278

3,147

5,426

6,698

6,295

12,993(*1)Stating the rent for Sheraton Grand Hiroshima Hotel, the major facility of ACTIVE-INTER CITYHIROSHIMA. Rent from the office building and the retail zone for the fiscal year ended December 2017 (18thperiod) is expected to be ¥212 million for the midterm and ¥446 million for the full year. These figures include
variable rent pursuant to a revenue-linked rent agreement with some retail tenants (¥6 million for the midtermand ¥13 million for the full year).
(*2) Due to the impact of the major renovation work scheduled in the 2nd half of the fiscal year ending December
2018, the variable rent for the full year as a maximum amount is recognized as the estimated variable rent forthe midterm.
(*3) Please refer to “<Reference Materials 2> <1> Sales and GOP of the Twelve HMJ Hotels” below for sales and
GOP of the Twelve HMJ Hotels.
－

10 －

Item

Assumptions(2) The Six Accor Hotels
Income from management contracts and variable rent of the Six Accor hotels(Unit: millions of yen)ibis Tokyo
Shinjuku

ibis Styles
Kyoto Station

ibis Styles
SapporoMercureSapporoMercureOkinawa Naha

MercureYokosuka

Total

Midterm

240

249

280

268

238

138

1,415

Full year

482

527

668

667

488

262

3,096

(*1) Please refer to “<Reference Materials 2> <2> Sales and GOP of the Six Accor Hotels” below for sales and
GOP of the Six Accor hotels.
(*2) For income from management contracts, it is assumed that each hotel’s GOP amount is recognized as income
from management contracts and the management contract fees to be paid by JHR are recognized as an
operating expense. In cases where certain revenue from non-hotel tenant(s), etc. is included in the hotel’s
GOP, such tenant revenue is subtracted from GOP to calculate income from management contracts. Suchtenant revenue is recognized as parking area rent.
(*3) Mercure Sapporo includes variable rent which is linked to the sales of tenant(s) other than the hotel.

Operatingrevenue(3)The Six the b Hotels
The fiscal year ending December 31,2018 (19th Period)
Variable Rent
Midterm12
the b suidobashi
Full year
27
Midterm49
the b akasaka-mitsuke
Full year
99
Midterm65
the b ikebukuro
Full year
137
Midterm16
the b ochanomizu
Full year
36
Midterm30
the b hachioji
Full year
63
Midterm74
the b hakata
Full year
160
Midterm
250
Total
Full year
524

Fixed Rent
42
84
68
136
109
219
34
69
61
122
44
89
361
722

(Unit: millions of yen)
Total Rent
54
112
118
236
175
357
51
105
92
185
119
249
611
1,246

(*1) Fixed rent includes rent from non-hotel tenant(s).
(*2) Please refer to “<Reference Materials 2> <3> Sales and GOP of the Six the b Hotels” below for sales and
GOP of the Six the b hotels.
(4) Other hotels subject to variable rent
Variable rent from other hotels subject to variable rent

Smile Hotel Nihombashi Mitsukoshimae
Hotel Vista Kamata Tokyo
Chisun Inn Kamata(Unit: millions of yen)
Midterm

Full year

18
－

18
16

37

79

Hotel Keihan Universal City

Undisclosed (*)

Undisclosed (*)

Hotel Sunroute Shinbashi

97

97

Hilton Tokyo Bay

Undisclosed (*)

Undisclosed (*)

Hilton Nagoya

Undisclosed (*)

Undisclosed (*)

816

1,356

Total

(*) Undisclosed since tenants that concluded lease agreements did not agree to disclose rent revenue, etc.

－

11 －

Item

Assumptions
・The following is the breakdown of variable rent and income from management contracts (*1).
<Breakdown of variable rent for the fiscal year ending December 2018 (19th period)>(Unit: millions of yen)
Midterm

Full year

The Six Accor Hotels

2,285
1,415

6,712
3,096

The Six the b Hotels

250

524

The Twelve HMJ Hotels (*2)
Operatingrevenue

Other hotels with variable rent (7 hotels)

816

1,356

Total (31 hotels)

4,767

11,689(*1) For details of variable rent and income from management contract, please refer to “D. Overview of the hotelbusiness (1) Rent structures of hotels with variable rent, management contract or revenue sharing”on page63.
(*2) These figures include ¥6 million for the midterm and ¥13 million for the full year as variable rent pursuant toa revenue-linked rent agreement with some retail tenants in ACTIVE-INTER CITY HIROSHIMA.

Operatingexpenses

・With respect to real estate leasing expenses, which constitute a major part of the operating expenses, expenses
other than depreciation are calculated based on historical data, and variable factors are reflected in thecalculation.
・It is assumed that ¥1,693 million will be recognized as expenses for fixed asset tax, city planning tax and othertaxes and public dues.
・In general, fixed asset tax and city planning tax and other taxes and public dues on acquired assets are settled withthe previous owners at the time of acquisition, calculated on a pro rata basis of the holding period. For JHR, such
settlement amount is included in the acquisition price, and it will not be recognized as expenses for the
calculation period. Also, the fixed asset tax and city planning tax and other taxes and public dues to be recorded
as expenses for the fiscal year ending December 2018 (19th period) for the three properties (Hilton Tokyo Narita
Airport, International Garden Hotel Narita, and Hotel Nikko Nara) acquired in the fiscal year ended December
2017 (18th period) are assumed to be ¥124 million, which is equivalent to nine months (¥166 million, which isequivalent to 12 months).
・Depreciation is calculated using the straight-line method, and is estimated to be ¥4,083 million, including theplanned capital expenditures ¥3,186 million (capital expenditures I ¥1,898 million, capital expenditures II ¥897
million, and capital expenditures III ¥391 million (*)) for the fiscal year ending December 2018 (19th period).
(*) JHR classifies capital expenditures into the following three categories. (I) Capital investment related torenewal of buildings, facilities, and equipment which is required to maintain proper values of properties, (II)capital investment for fixtures and furniture that are not directly related to building structure or facilities but
necessary for operating hotels, and (III) strategic capital investment such as renovating guest rooms, etc. formaintaining/improving the competitiveness of the hotels.
・Repair expenses for buildings are recognized as expenses in the estimated amount necessary for each operating
period. Please note that the repair expenses of each operating period may differ materially from the forecast
amount for various reasons, such as; (1) Emergency repair expenses may be necessary due to damage to buildings
from unexpected causes; (2) The amount of repair expenses generally tends to increase in difference over time;and (3) Repair expenses are not required on a regular basis.

Nonoperating
expenses・ ¥1,806 million is expected for all non-operating expenses, including interest expense, arrangement fee,amortization for the following (1) handling fees and (2) derivative instruments (interest rate caps).
・Expenses for issuance of new investment units and secondary offering are amortized over a period of three years
by the straight-line method.
・The balance of interest-bearing debt (sum of loans and investment corporation bonds) was ¥140,399 million asof December 31, 2017, and it is assumed that the balance of interest-bearing debt will be ¥141,453 million as ofInterestbearing debt

December 31, 2018.
・The investment corporation bonds in the amount of ¥10,000 million were issued on February 21, 2018 and a partof the existing loans (¥8,921 millions) will be repayed by the end of February.
・Besides the partial repayment of the existing loans above, it is assumed that the loans whose expiration date isduring the fiscal year ending December 2018 (19th period) in the amount of ¥9,076 million will be allrefinanced.
－

12 －

Item

Assumptions

Interestbearing debt

・It is assumed that the contractual repayment other than above in the fiscal year ending December 2018 (19thIssuance of・The number of investment units issued as of today (4,010,847 units) is assumed.

investment
units

・It is assumed that there will be no additional issuance of investment units through to the end of the fiscal year

period) in the amount of ¥25 million will be paid by cash on hand.

ending December 2018 (19th period).
・Dividend per unit for the fiscal year ending December 2018 (19th period) is calculated based on the following
assumptions.
Net income¥14,294 million

Use of reserve for temporary difference adjustment (negative goodwill)

Negative goodwill – 50-year amortization amount (*1)¥262 million

Loss on retirement of noncurrent assets (*2)

¥38 million

Correspondance to major renovation works (*3)¥265 million

Distributable amount¥14,860 million

Total number of investment units issued

4,010,847 units

Dividend per unit(*1)

Dividend(*2)¥3,705¥262 million (hereinafter called “50-year amortization amount of negative goodwill”) is paid out as
dividends, with the remaining balance of the reserve for temporary difference adjustment set as the
maximum amount, for every year from the fiscal year ended December 2017 (18th period).
The amount recognized as a loss on retirement of noncurrent assets will be appropriated by reserve fortemporary difference adjustment (negative goodwill) and is expected to have no impact on dividend perunit.

per unit(*3)

Hotel Centraza Hakata will close its hotel operation for major renovation works (hereinafter the“Renovation”) from October 2018 to the end of March 2019. Taking into consideration the effect of theRenovation on dividend, ¥265 million, which is equivalent to the difference between NOI after
depreciation of Hotel Centraza Hakata for the fiscal year ended December 2017 (18th period) and NOI
after depreciation for the fiscal year ending December 2018 (19th period), will be appropriated byreserve for temporary difference adjustment (negative goodwill). In case the period of the Renovation ischanged, the amount to be reversed from reserve for temporary difference adjustment may be reviewed.

・Dividend per unit may fluctuate due to various causes, such as fluctuation of rent revenue resulting from transfer
of assets under management, change of tenants, etc. at hotels, change in the business environment sorrounding
tenants, etc. of hotels, unexpected repairs, and actual number of new units issued, etc.
・The remaining balance of the reserve for temporary difference adjustment (negative goodwill) after theappropriation of the reserve for temporary difference adjustment (negative goodwill) for dividends for the fiscal
year ending December 2018 (19th period) is expected to be ¥11,792 million.
Dividend
per unit
resultingfrom excessof earnings

・It is assumed that the excess of earnings (dividend per unit resulting from excess of earnings) will not be
distributed.

・It is assumed that revision in law, tax system, accounting standard, regulations of the listing, regulations of The
Other

Investment Trusts Association, Japan that may impact the forecast above will not be made.
・It is assumed that unexpected major incident will not occur in the general economy, real estate market and hotelbusiness environment, etc.
・The numerical values are rounded down to the nearest millions of yen in the assumptions above.

－

13 －

<Reference Materials 1> Highlights of the operating forecast and forecast of dividend(1) The following table provides comparison and major causes of variance between actual results of fiscal year ended December
2016 (17th period) and actual results of fiscal year ended December 2017 (18th period).
(Unit: millions of yen)
17th Period

18th Period

Actual(A)

Actual(B)

Three
Comparison with
Previous Period Properties

Five
Properties
Existing
Acquired in Acquired in
Properties
18th Period 17th Period
(*1)
(*2)
Variance(B)-(A)
Properties

No. of properties

41

44

3

7.3%

Acquisition price286,801

319,474

32,673

11.4%

Operating revenue

22,10725,475

3,368

15.2%

931

2,218

217

Real estate
operating revenue

22,10725,475

3,368

15.2%

931

2,218

217

Fixed rent, etc.

ProfitandComposition

57.5%

Composition

12,714 55.8%

14,221

1,506

11.9%

536

1,069

Receipt of termination charge due to replacement of tenantsin 17th period: JPY(126)M
Increase in rent due to replacement of tenants in 18th
(99)
period: JPY10M
and others

9,392 44.2%

11,253

1,861

19.8%

395

1,148

The seven HMJ hotels(*3) -- increase in variable rent:
JPY397M
The six Accor hotels -- increase in income from management316
contracts, etc.: JPY115M
The six the b hotels-- decrease in variable rent: JPY(58)M
Decrease in revenue sharing, etc.: JPY(137)MNOI (*4)

18,82921,424

2,594

13.8%

922

1,533

139

NOI yield
NOI after depreciation
(*4)

6.6%

6.7%

0.1%

15,517

17,563

2,046

13.2%

739

1,273

33

Variable rent, etc. 42.5%

Loss

NOI yield after
depreciation

5.4%

5.5%

0.1%

Operating income

13,88515,757

1,872

13.5%

Ordinary income

12,22014,006

1,786

14.6%

Net income

12,12314,005

1,881

15.5%

740

769

29

4.0%

Total dividends

12,865

14,771

1,906

14.8%

No. of units issued

3,761,907

4,010,847

248,940

6.6%

3,420

3,683

263

7.7%

Use of negative goodwill
Dividend

Factors Causing the Variance(Existing Properties)

Dividend per unit (JPY)(*1)

Stating the impact on the income statement by Hilton Tokyo Narita Airport, International Garden Hotel Narita, and Hotel Nikko Nara,
which were acquired in the fiscal year ended December 2017 (18th period).
(*2) Stating the impact on the income statement by CANDEO HOTELS UENO-KOEN, Hotel Centraza Hakata, Holiday Inn Osaka Namba,
HOTEL ASCENT FUKUOKA, and Hilton Nagoya, which were acquired in the fiscal year ended December 2016 (17th period).
(*3) The seven hotels that exclude Hotel Centraza Hakata and Holiday Inn Osaka Namba from the nine HMJ hotels.
(*4) Each is calculated using the following formula. The same shall apply hereafter.
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

－

14 －

(2) The following is a comparison and major causes of variance between the actual results for the fiscal year ended December 31,
2017 (18th period) and the forecast for the fiscal year ending December 31, 2018 (19th period)(Unit: millions of yen)
18th Period

19th Period
Previous Period

(*1)

（*1）
Properties

Comparison with

Forecast

Actual(B)(B)-(A)

Variance
Ratio

Three Properties
acquired in 18th

Existing

Factors Causing the VarianceperiodProperties(Existing Properties)（*2）

No. of properties

44

44

-

-

Acquisition price319,474

319,474--

Operating revenue

25,47526,567

1,092

4.3%

1,139

(46)

25,47526,567

1,092

4.3%

1,139

(46)

656

4.6%

663

(7)

Real estate
operatingrevenue
Fixed rent

ProfitVariable rent

Composition

Composition

55.8% 14,221

56.0% 14,878

44.2% 11,253

44.0% 11,689

NOI (*4)

21,424

NOI yield

6.7%

435

3.9%

475

22,186

761

3.6%

991

(230)

6.9%

0.2%

17,56318,062

498

2.8%

752

(254)

and
Loss

NOI after
depreciation (*4)
NOI yield after
depreciation

5.5%

5.7%

0.2%

Operating income

15,757

16,094336

2.1%

Ordinary income

14,006

14,295289

2.1%

Net income

14,005

14,294

289

2.1%

769

565

(203)
88

Use of negative
goodwill
Dividend

Total dividends
No. of units issued
Dividend per unit
(JPY)

(*1)
(*2)
(*3)
(*4)

(*5)

①The eight HMJ hotels (*3) -- increase invariable rent: JPY210M②Decrease in variable rent due to renovationof Hotel Centraza Hakata : JPY(320)M③The six Accor hotels -- increase in income(39) from management contracts, etc.: JPY167M④The six the b hotels -- decrease in variable
rent: JPY(35)M⑤Decrease in revenue sharing, etc.: JPY(61)M

14,771

14,8604,010,847

4,010,847

-

3,683

3,705

22

Use of negative goodwill (*5)
18th period: 50 year amortization JPY262M, loss on retirement of noncurrent
0.6% asset, JPY132M and correspondence to dilution JPY374M
19th period: 50 year amortization JPY262M, loss on retirement of noncurrent
asset JPY38M and correspondence to major renovation works JPY265M
(0)

0.6%

For the assumptions of the forecast for the fiscal year ending December 2018 (19th Period), please see “<Reference Information>
Assumptions of the operating forecast for the full year of the fiscal year ending December 2018 (19th Period) above.
Stating the impact on the income statement by Hilton Tokyo Narita Airport, International Garden Hotel Narita, and Hotel Nikko
Nara,which were acquired in the fiscal year ended December 2017 (18th period).
The eight HMJ hotels that exclude Hotel Centraza Hakata from the nine HMJ hotels.
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 priceFor detail of 50-year amortization amount of negative goodwill, please see“Assumptions of the operating forecast for the midterm andthe full year of the fiscal year ending December 2018 (19th period)” above.

－

15 －

<Reference Materials 2>
Of the hotels that have adopted variable rent, the following presents sales and GOP of the Twelve HMJ hotels, the Six Accor hotels
and the Six the b hotels. The numerical figures are based on figures obtained from hotel lessees, etc. Please note that these numbers
have not been audited or gone through other procedures. No guarantee is made as to the accuracy or completeness of the numbers andinformation. Sales and GOP are rounded off to the nearest millions of yen. Comparison with the previous period is rounded off to one
decimal place.
<1> Sales and GOP of the Twelve HMJ Hotels(1) Hotel sales (by hotel)

Sales of the Twelve HMJ Hotels

FY 2016(Fiscal year ended
December 2016)
ActualKobe Meriken Park
Oriental HotelFirst half of the year
Second half of the year
Full year

Oriental Hoteltokyo bay

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

Namba Oriental Hotel

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

Hotel Nikko Alivila

Second half of the year
Full year

Oriental Hotel
Hiroshima

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

Total of the FiveHMJ Hotels

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

Okinawa Marriott
Resort & Spa

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

Sheraton Grand
Hiroshima HotelFirst half of the year
Second half of the year
Full year
First half of the year

Hotel Centraza Hakata

Second half of the year
Full year

Holiday Inn
Osaka Namba

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

Total of the Nine HMJ
Group Hotels

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

Comparison
with theprevious period

FY 2017(Fiscal year ended
December 2017)
Actual(Unit: millions of yen)
FY 2018(Fiscal year ending
December 2018)

Comparison
with theprevious period

Forecast
this time

Comparison
with theprevious period

2,465
2,896
5,361
3,454
3,817
7,271
1,386
1,491
2,877
2,421
3,734
6,155
1,025
1,216
2,240
10,751

1.7%
2.4%
2.1%
1.7%
(2.8)%(0.7)%
16.6%
11.1%
13.7%
1.8%
4.6%
3.5%
3.4%
6.4%
5.0%
3.6%

2,431
2,950
5,381
3,319
3,518
6,838
1,394
1,492
2,887
2,568
3,821
6,389
993
1,159
2,153
10,706(1.4)%
1.9%
0.4%(3.9)%(7.8)%(6.0)%
0.6%
0.1%
0.3%
6.1%
2.3%
3.8%
(3.0)%(4.7)%(3.9)%(0.4)%

2,510
2,861
5,371
3,276
3,611
6,887
1,421
1,531
2,952
2,682
4,011
6,693
966
1,206
2,172
10,856

3.3%(3.0)%(0.2)%(1.3)%
2.6%
0.7%
1.9%
2.6%
2.3%
4.4%
5.0%
4.8%
(2.7)%
4.0%
0.9%
1.4%

13,15423,905

2.7%
3.1%

12,941
23,647(1.6)%(1.1)%

13,22024,076

2.2%
1.8%

1,607
2,326
3,933
1,369
1,627
2,996
1,155
1,265
2,421
1,104
1,103
2,206

(0.4)%(3.2)%(2.1)%
1.7%
8.3%
5.2%
2.8%
5.0%
3.9%
32.7%
(2.7)%
12.3%

1,692
2,459
4,151
1,601
1,747
3,348
1,266
1,198
2,464
1,011
1,063
2,074

5.3%
5.7%
5.6%
17.0%
7.4%
11.8%
9.5%
(5.3)%
1.8%(8.4)%(3.6)%(6.0)%

1,759
2,537
4,296
1,536
1,721
3,257
1,195
641
1,837
1,025
1,090
2,115

3.9%
3.2%
3.5%
(4.1)%(1.5)%(2.7)%(5.5)%(46.5)%(25.4)%
1.3%
2.6%
2.0%

15,985
19,47635,461

4.5%
2.2%
3.3%

16,276
19,40835,6841.8%(0.3)%
0.6%

16,37019,21035,5800.6%(1.0)%(0.3)%－

16 －FY 2016(Fiscal year ended
December 2016)

Sales of the Twelve HMJ Hotels

ActualFirst half of the year
Second half of the year
Full year
First
half
of the year
International
Garden Hotel
Second half of the year
NaritaFull year
First half of the year
Hotel Nikko Nara Second half of the year
Full year
First half of the year
Total of the Twelve
Second half of the year
HMJ Hotels
Full year(Reference)First half of the year
Total of the Eleven
Second half of the year
HMJ Hotels (*3)
Full year
Hilton Tokyo
Narita Airport

FY 2017(Fiscal year ended December
2017)

Comparison
with theprevious period

Comparison
with theprevious period

Actual(Unit: millions of yen)
FY 2018(Fiscal year ending
December 2018)
Forecast
this time

Comparison
with theprevious period

1,420
1,566
2,986
734
718
1,453
1,483
1,521
3,003
19,622
23,28142,903(0.8)%
2.8%
1.1%
11.9%
8.5%
10.2%
(1.4)%(2.4)%(1.9)%
3.9%
2.1%
2.9%

1,542
1,696
3,238
705
733
1,438
1,458
1,512
2,970
19,98023,34943,329

8.6%
8.3%
8.4%
(4.1)%
2.1%(1.0)%(1.7)%(0.6)%(1.1)%
1.8%
0.3%
1.0%

1,575
1,678
3,253
692
728
1,420
1,501
1,578
3,079
20,13923,19443,3332.2%(1.1)%
0.5%(1.8)%(0.7)%(1.2)%
3.0%
4.4%
3.7%
0.8%
(0.7)%
0.0%

18,4674.0%

18,715

1.3%

18,943

1.2%

22,0152.0%

22,151

0.6%

22,553

1.8%

40,483

2.9%

40,8650.9%

41,496

1.5%(*1) Hotel Centraza Hakata and Holiday Inn Osaka Namba were acquired on April 1, 2016 and August 1, 2016, respectively. The figures for the fiscal
year ended December 2016 are for the entire year including prior to the acquisition.
(*2) For the properties acquired during the fiscal year ended December 2017 (Hilton Tokyo Narita Airport, International Garden Hotel Narita, andHotel Nikko Nara), the figures for the fiscal year ended December 2016 and the fiscal year ended December 2017 are the numbers for the entire
year including period prior to the acquisition.
(*3) The figures are the total amount of the Eleven HMJ Hotels excluding Hotel Centraza Hakata in order to exclude the impact of the majorrenovation of Hotel Centraza Hakata which is planning to suspend the hotel operation from October 2018 to the end of March 2019.

(2) Hotel GOP

GOP and Ratio of GOPof the Twelve HMJ Hotels (*1)

FY 2016(Fiscal year ended
December 2016)
ActualComparison
with theprevious
periodFY 2017(Fiscal year ended
December 2017)
Actual(Unit: millions of yen)
FY 2018(Fiscal year ending
December 2018)

Comparison
with theprevious
periodForecast
this time

Comparison
with theprevious
periodGOP

12,01010.1%

12,4573.7%

12,355(0.8)%

Ratio of GOP

33.9%

2.1%

34.9%

1.0%

34.7%

(0.2)%

GOP

14,12410.4%

14,666

3.8%

14,693

0.2%

Ratio of GOP

32.9%

2.2%

33.8%

0.9%

33.9%

0.1%

GOP

13,29910.1%

13,724

3.2%

14,107

2.8%

Ratio of GOP

32.9%

2.2%

33.6%

0.7%

34.0%

0.4%

Total of the Nine HMJ Hotels

Total of the Twelve HMJ Hotels(Reference)
Total of the Eleven HMJ Hotels(*1) Ratio of GOP refers to the ratio of GOP to sales. The same shall apply hereinafter.
(*2) Hotel Centraza Hakata and Holiday Inn Osaka Namba were acquired on April 1, 2016 and August 1, 2016, respectively. The figures for the fiscal
year ended December 2016 are for the entire year including prior to the acquisition.
(*3) For the properties acquired during the fiscal year ended December 2017 (Hilton Tokyo Narita Airport, International Garden Hotel Narita, andHotel Nikko Nara), the figures for the fiscal year ended December 2016 and the fiscal year ended December 2017 are numbers for the entire year
including period prior to the acquisition..

－

17 －

<2> Sales and GOP of the Six Accor Hotels(1) Hotel sales (by hotel)
FY 2016(Fiscal year ended
December 2016)

Sales of the Six Accor Hotels

Comparison withthe previous
periodActualibis Tokyo
Shinjuku

MercureSapporoActualComparison with
Comparison with
Forecast thisthe previous
the previous
time
periodperiodFirst half of the year406

(10.3)%

365(10.1)%

479

31.2%

Second half of the year

426

1.3%

408

(4.1)%

486

18.9%

Full year832(4.7)%

773(7.1)%

965

24.7%

First half of the year

464

30.0%

482

3.7%

460

(4.4)%

513

12.3%

496

(3.4)%

496

0.1%

977

20.1%

977

0.0%

957

(2.1)%

ibis Styles
Kyoto Station Second half of the year
Full year
ibis Styles
Sapporo(Unit: millions of yen)
FY 2018(Fiscal year ending
December 2018)

FY 2017(Fiscal year ended
December 2017)

First half of the year

490

14.3%

548

11.9%

576

5.0%

Second half of the year

633

7.1%

671

6.1%

703

4.7%

Full year

1,122

10.1%

1,219

8.6%

1,278

4.9%

First half of the year

546

9.3%

596

9.3%

623

4.4%

Second half of the year

708

5.3%

755

6.6%

789

4.5%

Full year

1,254

7.0%

1,351

7.8%

1,412

4.5%

First half of the year

489

20.2%

532

8.7%

553

4.0%

MercureOkinawa
Naha

Second half of the year

560

8.6%

564

0.8%

575

1.9%

Full year

1,049

13.7%

1,096

4.5%

1,128

2.9%

MercureYokosukaFirst half of the year

569

3.5%

551

(3.2)%

549(0.4)%

Second half of the year502(2.0)%

486(3.1)%

535

10.2%

Full year

1,071

0.8%

1,037

(3.2)%

1,084

4.5%

2,965

10.0%

3,074

3.7%

3,240

5.4%

3,341

5.5%

3,380

1.2%

3,584

6.0%

6,306

7.6%

6,454

2.4%

6,824

5.7%

First half of the year
Total of the Six
Second half of the year
Accor Hotels
Full year(2) Hotel GOP

GOP and ratio of GOP of
the Six Accor Hotels

FY 2016(Fiscal year ended
December 2016)
Actual

FY 2017(Fiscal year ended
December 2017)

Comparison
with theprevious period

ActualComparison
with theprevious period(Unit: millions of yen)
FY 2018(Fiscal year ending
December 2018)
Forecast
this time

Comparison
with theprevious period

Total of the Six Accor Hotels

2,885

14.9%

3,004

4.1%

3,158

5.1%

Ratio of GOP to sales

45.8%

2.9%

46.5%

0.8%

46.3%

(0.3)%－

18 －<3> Sales and GOP of the Six the b Hotels(1) Hotel sales (by hotel)
FY 2016(Fiscal year ended
December 2016)
Sales of the Six the b Hotels

Comparison
with theprevious period

Actualthe b akasaka-mitsuke

the b ikebukuro

the b ochanomizu

the b hachioji

the b hakata

the b suidobashi

Total of the
Six the b Hotels(Unit: millions of yen)
FY 2018(Fiscal year ending
December 2018)

FY 2017(Fiscal year ended
December 2017)
Comparison
with theprevious period

ActualForecast
this time

Comparison
with theprevious period

First half of the year

242

9.4%

215

(11.2)%

208(3.3)%

Second half of the year

226(6.7)%

218(3.4)%

210(3.6)%

Full year

468

1.0%

433

(7.5)%

418(3.5)%First half of the year

323

7.3%

306

(5.3)%

306(0.0)%

Second half of the year312(3.7)%

311(0.4)%

316

1.5%

Full year

635

1.6%

617

(2.9)%

621

0.7%First half of the year131(0.8)%

130(0.9)%

130

0.0%

Second half of the year

135

3.5%

133

(1.1)%

133(0.1)%

Full year

266

1.3%

263

(1.0)%

263(0.0)%First half of the year

291

9.0%

266

(8.5)%

271

2.0%

Second half of the year273(6.1)%

282

3.2%

275

(2.5)%

Full year

564

1.1%

548

(2.8)%

547(0.3)%First half of the year

230

20.6%

244

5.9%

251

3.2%

Second half of the year

249

15.5%

266

6.9%

271

2.0%

Full year

478

17.9%

509

6.4%

522

2.6%

First half of the year

177

－

173

(2.1)%

173(0.2)%

Second half of the year

174

－

177

1.9%

179

1.1%

Full year

351

－

351

(0.2)%

352

0.4%First half of the year

1,394

－

1,333

(4.3)%

1,339

0.4%

Second half of the year

1,369

－

1,388

1.4%

1,385

(0.2)%

Full year

2,763

－

2,721

(1.5)%

2,724

0.1%

(*) The b suidobashi was rebranded from Dormy Inn Suidobashi on July 1, 2015. Therefore, no figures are indicated in the b suidobashi and Total of
the Six the b Hotels for comparison with the previous period for the fiscal year ended December 2016.

(2) Hotel GOP

GOP and the ratio of GOP

FY 2016(Fiscal year ended December
2016)of the Six the b Hotels
Actual

FY 2017(Fiscal year ended December
2017)

Comparison withthe previous
periodActualComparison withthe previous
period(Unit: millions of yen)
FY 2018(Fiscal year ending December
2018)
Forecast
this time

Comparison withthe previous
periodTotal of the Six the b Hotels

1,370

－

1,304

(4.8)%

1,265(3.0)%

Ratio of GOP to sales

49.6%

－

47.9%

(1.7)%

46.5%(1.5)%(*) The b suidobashi was rebranded from Dormy Inn Suidobashi on July 1, 2015. Therefore, no figures are indicated in the comparison with theprevious period for the fiscal year ended December 2016.

－

19 －

<Reference Materials 3> Dividend per unit and appropriation for dividends
Dividend per unit for the fiscal year ended December 31, 2016 and the fiscal year ended December 31, 2017 are calculated based on
the following assumptions.

Unappropriated retained earnings

Fiscal year ended
December 31, 2016

Fiscal year ended
December 31, 2017

(JPY1M)(JPY1M)12,126

14,005740

769

Negative goodwill – 50-year amortization amount (*1) (*2)-

262

Loss on retirement of noncurrent assets

16

132

Amortization of fixed-term leasehold of land and asset
retirement obligations (*2)

112-

Adjustment for dilution (*3)

611

374

12,865

14,771

3,761,907 units

4,010,847 units

Total of reserve for temporary difference adjustment(*1)(negative goodwill) used

Total dividends
Total number of investment units issued

Dividend per unit
¥3,420¥3,683(*1) Starting from the fiscal year ending December 31,2017 (18thperiod), JHR commenced paying out dividends throughreversal of reserve for temporary difference adjustment in connection with partial amendments to 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. Specifically, JHR transferred the remaining balance of dividend
reserve (¥13,127 million) attributable to the gain on negative goodwill in the cash dividends statements for the fiscal year
ended December 31, 2016 (17th period) to “reserve for temporary difference adjustment,” and reverse ¥262 million(hereinafter called the “50-year amortization amount ofnegative goodwill”), which is an amount equivalent to 2% (1/50) of
the remaining balance of the reservefor temporary difference adjustment, to payout as dividends, with the remaining balanceof the reserve for temporary difference adjustment set as the maximum amount, for every year from the fiscal year ending
December 31, 2017 (18th period).
(*2) The amount recognized as amortization, etc. related to fixed-term leasehold of land and asset retirement obligations ofHotel Centraza Hakata and HOTEL ASCENT FUKUOKA were added to the dividends through appropriation of thedividends reserve (negative goodwill) for the fiscal year ended December 2016 and are included in the negative goodwill –50-year amortization amount for the fiscal year ending December 2017.
(*3) Adjustment for dilution of dividend per unit due to issuance of new investment units.

－

20 －

3. Financial statements(1) Balance sheets(thousands of yen)
As ofDecember 31, 2016
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Income taxes receivable
Other current assets
Total current assets
Noncurrent assets
Property and equipment, at cost
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Construction in progress
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Net property and equipment
Intangible assets
SoftwareLeasehold rights in trust
Fixed-term leasehold rights in trust
Other intangible assets
Total intangible assets
Investments and other assets
Security deposits
Leasehold and security deposits in trust
Long-term prepaid expenses
Derivative assets
Reserve for repairs and maintenanceTotal investments and other assets
Total noncurrent assets
Deferred assets
Investment unit issuance costs
Investment corporation bond issuance costs
Total deferred assets
Total assets

*1

－

21 －

As of
December 31, 201715,141,393
11,232,472
2,071,152
586,700
294
18,33929,050,353

16,179,716
11,740,634
2,411,837
573,439
32
14,20530,919,866

220,174(92,636)
127,538
1,983,010(873,534)
1,109,476
3,240
104,284,116(12,060,126)
92,223,989
2,100,930(238,341)
1,862,588
534,100(75,467)
458,632
137,266(77,824)
59,442
154,841,633
4,085
250,690,627

278,899(119,213)
159,686
2,438,070(1,132,473)
1,305,597*1 122,414,147(15,153,003)
107,261,144
2,493,765(304,817)
2,188,948
580,867(99,228)
481,638
137,266(87,308)
49,957
171,618,110
1,512
283,066,595

168,345
28,648,457
5,451,770
9,796
34,278,369

200,001
28,648,457
5,313,494
9,116
34,171,069

12,520158,323
3,090,505
146,585
64,1303,472,065
288,441,062

12,520158,323
3,008,327
123,334
319,058
3,621,564
320,859,228

243,615
143,589
387,204
317,878,620

272,107132,059
404,166
352,183,262

(thousands of yen)
As ofDecember 31, 2016
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Dividends payable
Deposits received
Derivative liabilities
Other current liabilities
Total current liabilities
Long-term liabilities
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Derivative liabilities
Deferred tax liabilities
Asset retirement obligations
Total long-term liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
SurplusCapital surplus
Voluntary reserve
Dividend reserve
Reserve for temporary difference adjustment
Total voluntary reserve
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains (losses) on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets－

666,3151,800,000
9,679,250
610,3441,210
496,373
899,290
15,101
117,949
24,37954,50314,364,717

909,9713,000,000
15,022,750
650,568
1,210
560,170
900,259
16,40022,09823,471
54,903
21,161,802

22,600,000
92,099,750
1,041,032
4,619,744
676,488
46,233
441,542
121,524,790
135,889,508

23,600,000
98,777,000
1,041,016
4,653,410
504,179
38,954
443,577
129,058,138
150,219,940

134,829,448

153,516,129

21,746,398

21,746,398

13,867,228
13,867,228
12,126,057
47,739,684
182,569,132

*3

22 －

As of
December 31, 2017

(580,019)(580,019)
181,989,112
317,878,620*2

13,127,153
13,127,153
14,005,489
48,879,041
202,395,170(431,849)(431,849)*3 201,963,321
352,183,262

(2) Statements of income(thousands of yen)
As ofDecember 31, 2016
Operating revenue
Real estate operating revenue
Other real estate operating revenue
Total operating revenue
Operating expenses
Real estate operating costs
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
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 loss
Loss on disaster
Total extraordinary loss
Income before income taxes
Income taxes – current
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)－*1

21,165,085
942,384
22,107,470*1

6,589,908
1,307,381
112,811
14,400
197,443
8,221,945
13,885,524*1, *2*1*1, *2*1

24,318,307
1,157,246
25,475,553
7,911,653
1,501,391
111,425
14,150179,110
9,717,731
15,757,821

1,924
2,296
472
610
1,872
7,176

212
3,624
648
391
22,381
27,258862,943
128,071
561,927
19,04381,361
16,4452,673
1,672,466
12,220,234

904,000
169,584
522,774
20,748141,962
13,306
6,414
1,778,791
14,006,288

95,86095,86012,124,373
1,210
1,210
12,123,163
2,894
12,126,057

14,006,288
1,210
1,210
14,005,078
411
14,005,489

*3

23 －

As of
December 31, 2017

(3) Statements of changes in net assets
For the year ended December 31, 2016
(thousands of yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance, January 1, 2016

85,470,541

Voluntary reserve
Capitalsurplus21,746,398

Dividend
reserve

Total
voluntary
reserve

13,928,075

13,928,075

Unappropriatedretainedearnings(undisposed
loss)
9,296,121

Total
unitholders’equityTotal
surplus44,970,596

130,441,137

Changes of items during the year:
Issuance of new investment units

49,358,906

49,358,906
60,847－－

Dividends paid

(9,354,075)(9,354,075)(9,354,075)

Net income

12,123,163

12,123,163

12,123,163

Reversal of dividend reserve

Net changes of items
other than unitholders’ equity
Total changes of items
during the year
Balance, December 31, 2016

(60,847)

49,358,906－(60,847)(60,847)

2,829,936

2,769,088

52,127,994*1

21,746,398

13,867,228

13,867,228

12,126,057

47,739,684

182,569,132

134,829,448(thousands of yen)
Valuation and translation
adjustments
Total
Total
Deferred
net assets
valuation andgains (losses)
translation
on hedges
adjustments
Balance, January 1, 2016

(526,660)(526,660)

129,914,477

Changes of items during the year:
Issuance of new investment units

49,358,906－

Reversal of dividend reserve
Dividends paid

(9,354,075)

Net income

12,123,163

Net changes of items
other than unitholders’ equity
Total changes of items
during the year
Balance, December 31, 2016

(60,847)(53,359)(53,359)(53,359)(53,359)(53,359)

52,074,635(580,019)(580,019)

181,989,112

－

24 －

For the year ended December 31, 2017
(thousands of yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance, January 1, 2017
Changes of items during theyear:
Issuance of new investment
units

134,829,448

Voluntary reserve
Capitalsurplus

Unappropriatedretained
Reserve for
earnings
temporary Total voluntary(undisposed
difference
reserveloss)
adjustment

Dividend
reserve

21,746,398－

13,867,228

13,867,228

12,126,057

Total
surplus47,739,684

18,686,681

Total
unitholders’equity182,569,132

18,686,681

Reversal of dividend
reserve(13,867,228)

13,867,228－－

13,127,153(13,127,153)－－

Dividends paid

(12,865,721) (12,865,721)(12,865,721)

Net income

14,005,078

14,005,078

14,005,078(13,867,228)

Reserve for temporary
difference adjustment

Net changes of items
other than unitholders’equityTotal changes of items
during the year
Balance, December 31, 201713,127,153

18,686,681*1

153,516,129－(13,867,228)

13,127,153(740,075)

1,879,431

1,139,356

19,826,037

21,746,398－

13,127,153

13,127,153

14,005,489

48,879,041

202,395,170(thousands of yen)
Valuation and translation
adjustments
Total
Total
Deferred
net assets
valuation andgains (losses)
translation
on hedges
adjustments
Balance, January 1, 2017

(580,019)(580,019)

Changes of items during theyear:
Issuance of new investment
units
Reversal of dividend
reserve
Reserve for temporary
difference adjustment

181,989,112

18,686,681－－

Dividends paid

(12,865,721)

Net income

14,005,078

Net changes of items
other than unitholders’equityTotal changes of items
during the year
Balance, December 31, 2017

148,170

148,170

148,170

148,170

148,170

19,974,208(431,849)(431,849)

201,963,321

－

25 －

(4) Statements of cash dividends
Classification

For the year ended
December 31, 2016

I. Unappropriated retained earnings

For the year ended
December 31, 2017¥12,126,057,948¥14,005,489,588¥13,867,228,256―

II. Reversal of voluntary reserve
Reversal of dividend reserve
Reversal of reserve for temporary―

difference adjustment
III. Dividends[Dividend per unit]
IV. Voluntary reserve*1

Reserve for temporary difference adjustment¥769,508,609¥12,865,721,940¥14,771,949,501[¥3,420][¥3,683]¥13,127,153,216―¥411,048¥3,048,696

V. Retained earnings carried forward
Method of calculating the amount of dividends*1

In accordance with the monetary

In accordance with the monetary

distribution policy stipulated in Article
34, paragraph 1 of JHR’s Articles of

distribution policy stipulated in Article
34, paragraph 1 of JHR’s Articles ofIncorporation, amount of dividend
must exceed 90% of JHR’s

Incorporation, amount of dividend
must exceed 90% of JHR’s

distributable profit that is defined by
Article 67-15 of the Act on Special

distributable profit that is defined by
Article 67-15 of the Act on Special

Measures Concerning Taxation. It was
decided that ¥12,866,132,988, which

Measures Concerning Taxation. It was
decided that ¥14,774,998,197, which

was calculated by adding a reversal of
dividend reserve of ¥740,075,040 towas calculated by adding a reversal ofreserve for temporary difference

unappropriated retained earnings of¥12,126,057,948, would all be

adjustment of ¥769,508,609 tounappropriated retained earnings of

distributed except for fractions of lessthan one yen of dividend per unit.

¥14,005,489,588, would all be
distributed except for fractions of lessConsequently, the dividend per unit
came to ¥3,420. The monetarythan one yen of dividend per unit.
Consequently, the dividend per unit

distribution in excess of earnings
stipulated in Article 34, paragraph 1

came to ¥3,683. The monetary
distribution in excess of earnings(4) of JHR’s Articles of Incorporation
will not be made.

stipulated in Article 34, paragraph 1(4) of JHR’s Articles of Incorporation
will not be made.

－

26 －

(5) Statements of cash flows(thousands of yen)
For the year ended
December 31, 2016
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Loss on retirement of noncurrent assets
Loss on derivative instruments
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 consumption taxes 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 – net
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 in trust
Purchase of property and equipment
Purchase of intangible assets
Payments of reserve for repairs and maintenance
Proceeds from tenant leasehold and security deposits in trust
Reimbursements of tenant leasehold and security deposits in trust
Proceeds from tenant leasehold and security deposits
Reimbursements of tenant leasehold and security deposits
Net cash used in investing activities
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 investment corporation bonds
Redemption of investment corporation bonds
Proceeds from issuance of investment units
Payments for investment corporation bond issuance costs
Dividends paid
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

－

27 －

For the year ended
December 31, 201712,124,373
3,294,081
16,662
14,572
19,04381,361(1,924)
991,014(610)(801,580)
245,509(176,458)(2,095,775)
102,258
112,854496,373
206,495
46,506
4,862
14,679,620
1,862(994,383)
610
1,553
13,689,262

14,006,288
3,725,775
132,908(9,074)
20,748141,962(212)
1,073,584(391)(340,685)(49,582,657)(659,879)(14,535,928)(14,911)
1,756,161(43,325)
7,000(1,001,800)(64,075,340)(35,256,102)(557,756)(46,379)(258,870)
70,297(35,130)

8,800,000(16,000,000)
31,400,000(11,393,603)
13,100,000(2,500,000)
49,100,858(94,251)(9,351,356)
63,061,647
12,675,569
13,698,296*1
26,373,866

4,000,000(2,800,000)
21,700,000(9,679,250)
1,000,000－

13,261
82,178(6,949)43,44963,796969(95,850)(11,075)
18,840,684
166(1,076,810)
391
(947)
17,763,484－(16)(36,083,958)－

18,516,225(9,218)(12,860,798)
19,866,959
1,546,484
26,373,866*1
27,920,350

(6) Notes on going concern assumption
Not applicable.

(7) Notes on matters concerning significant accounting policies
1.

Method ofdepreciation andamortization of
noncurrent assets(1) Property and equipment (including trust accounts)
Depreciation of property and equipment is calculated using the straight-line method. The useful
lives of major property and equipment components are as follows:
Machinery and equipment
Tools, furniture and fixtures

2 to 17 years
2 to 20 years

Buildings in trust
Structures in trust

2 to 62 years
2 to 62 years

Machinery and equipment in trust
Tools, furniture and fixtures in trust

4 to 32 years
2 to 27 years(2) Intangible assets
Intangible assets are amortized using the straight-line method. The amortization period of major
intangible assets is as follows.
Software (for internal use)

5 years as internally usable years

Fixed-term leasehold rights in trust is amortized using the straight-line method based on remaining
period (41 years and 49 years) of the contract.
(3) Long-term prepaid expenses
Long-term prepaid expenses are amortized using the straight-line method.
2.

Accounting fordeferred assets(1) Investment unit issuance costs
Investment unit issuance costs are amortized using the straight-line method over three years.
The issuance of new investment units through public offerings on July 5, 2017 was consummatedunder underwriting agreements in which underwriting securities companies committed to purchaseall of the investment units being offered at an issue value and selling them at an offering pricedifferent from such issue value to general investors (the “spread method”).
No underwriting fees were paid by JHR under the spread method since the underwriters werecompensated by the underwriting spread, which amounted to ¥1,571,900 thousand for the year
ended December 31, 2016 and ¥578,908 thousand for the year ended December 31, 2017,
representing the difference between the issue price and the issue value.
(2) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the interest method over therespective term of the bond.

3.

Standards forrecognition ofTreatment of property taxes and other taxes
For taxes imposed on properties under management such as property taxes, city planning taxes, andrevenues andexpensesdepreciable asset taxes, the imposed amounts are allocated to the respective period and expensed as“Real estate operating costs.”
Cash paid for property taxes and city planning taxes to the transferor 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.
The amount of such taxes capitalized in the acquisition cost of real properties was ¥101,229 thousand forthe year ended December 31, 2016 and ¥75,557 thousand for the year ended December 31, 2017.

－

28 －

4.

Method of(1) Method of hedge accounting

hedge accounting

Deferred hedge accounting is applied(2) Hedging instruments and hedged items
Hedging instruments
Interest rate swaps
Interest rate caps
Hedged items
Interest rates on loans payable(3) Hedging policy
JHR enters into certain derivative transactions in accordance with its financial policy in order tomanage risks, which is provided in the Articles of Incorporation.
(4) Method for assessing hedge effectiveness
JHR evaluates hedge effectiveness by comparing the cumulative changes in cash flow of hedging
instruments and the hedged items and assessing the ratio between the changes.

5.

Scope of funds(cash and cash

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 aequivalents) in
the statements ofmaturity of three months or less when purchased, which can easily be converted to cash and subject tominimal risk of change in value.

cash flows
6.

Other

(1) Accounting treatment of beneficial interests in trust with real estate, etc. as their assets

significant mattersserving as the basis

For trust beneficial interests in real estate, etc., all assets and liabilities held in trust accounts as well
as all income generated and expenses incurred from assets in trust are presented in thefor preparing
financial statements

accompanying balance sheet and income statement accounts accordingly.
The following material items of the trust accounts recorded in the relevant accounts are presented
separately on the balance sheets.
(a) Cash and deposits in trust(b) Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools, furniture andfixtures in trust; Land in trust; Construction in progress in trust(c) Leasehold rights in trust; Fixed-term leasehold rights in trust; Leasehold and security deposits
in trust(d) Tenant leasehold and security deposits in trust(2) Accounting treatment of consumption taxes
Consumption taxes are excluded from the transaction amounts.

－

29 －

(8) Note on change in the indication method“Asset custody fee” and “Administrative service fee” categorized as the “Operating expenses” will be combined to “Assetcustody and administrative service fee” from this fiscal year under review due to the integration of the fee calculation. In orderto reflect the change in the indication method, the financial statements for the calculation period 2016 is also rearranged.
As a result, ¥21,029 thousand of “Asset custody fee” and ¥91,782 thousand of “Administrative service fee” in “Operating
expenses” in the Statement of Income for the calculation period 2016 are rearranged to ¥112,811 thousand of “Asset custody
and administrative service fee.”(9) Notes to financial statements
Disclosure of notes on “securities,” “share of (profit) loss of entities accounted for using equity method,” “related-party
transactions” and “retirement benefits” is omitted because there is thought to be not important and thus not necessary fordisclosure in the financial report.

[Notes to balance sheets]*1. Accumulated advanced depreciation of property and equipment deducted from acquisition costs due to government
subsidies received, etc.
As ofDecember 31, 2016
Buildings in trust

As ofDecember 31, 2017¥24,921 thousand¥24,921 thousand*2. Matters concerning provision and reversal of reserve for temporary difference adjustment
As of December 31, 2016
Not applicable.
As of December 31, 2017
(thousands of yen)Amount ofinitialaccrualBalance at
beginning of
periodAmount ofprovision
during period

Amount ofreversalduringperiodBalance at
end ofperiodGrounds for provision and reversal
Application of the transitional

Dividend
reserve

13,127,153-

13,127,153-

13,127,153(Note)

measures of Paragraph 3 of the
Supplementary Provisions of the“Ordinance on Accountings ofInvestment Corporations” (Cabinet
Office Ordinance No.27 of 2015)(Note) The remaining balance of the amount subdivided into gain on negative goodwill which was recorded as a dividend reserveprior to the previous period is reserved for temporary difference adjustment during the fiscal year, and is scheduled forreversal every fiscal year, starting from the fiscal year following the fiscal year in which the reserve was made, in an
amount that shall be no less than that in equal amounts every fiscal year over a period of no more than 50 years.
*3. Minimum net assets as required by Article 67, paragraph 4 of the Investment Trusts Act
As ofDecember 31, 2016
¥50,000 thousand

－

30 －

As of
December 31, 2017
¥50,000 thousand

[Notes to statements of income]*1. Components of real estate operating revenue and real estate operating costs(thousands of yen)
For the year ended
December 31, 2016
A.

Real estate operating revenue
Real estate operating revenue
Fixed rent

11,772,386

13,064,351

Variable rent
Income from management contracts

6,808,433
2,584,265

8,572,121
2,681,834

Other real estate operating revenue
Parking lots

158,750

179,054

Other incidental revenue
Utilities

40,775545,754

62,597
781,934

Other

197,104

Total real estate operating revenueB.

21,165,085

942,384

133,660

22,107,470

24,318,307

1,157,246
25,475,553

Real estate operating costs
Real estate operating costs
Land lease and other rent expenses

710,456

922,891

Property taxes
Outsourcing expenses (Note)

1,216,710
609,823

1,476,156
703,933

Nonlife insurance
Depreciation and amortization

41,944
3,294,081

47,0303,725,775

Loss on retirement of noncurrent assets
Repairs

16,662
68,632

132,908
49,747

Utilities
Trust fees

541,127
41,764

790,728
43,655

Other

48,706

Total real estate operating costs
C.

For the year ended
December 31, 2017

6,589,908

18,825

7,911,653

6,589,908

7,911,653

15,517,561

17,563,899

Net real estate operating income(A − B)(Note) Outsourcing expenses include management contract fees of ¥318,587 thousand for the year ended December 31, 2016 and ¥343,712 thousand for the year
ended December 31, 2017.

*2. Depreciation was expensed as follows:
For the year ended
December 31, 2016
Property and equipment

For the year ended
December 31, 2017

¥3,150,543 thousand¥3,538,117 thousand¥143,537 thousand¥187,658 thousand

Intangible assets*3. Loss on disasterFor the year ended December 31, 2016

Restoration costs for assets damaged by the Kumamoto Earthquake were recorded as loss on disaster.
For the year ended December 31, 2017
Not applicable.

－

31 －

[Notes to statements of changes in net assets]
For the year ended
December 31, 2016

For the year ended
December 31, 2017

*1 Total number of investment units
authorized, and issued and outstanding
Total number of investment units authorized

20,000,000 units

20,000,000 units

Total number of investment units issued and outstanding

3,761,907 units

4,010,847 units[Notes to statements of cash dividends]*1. Reserve for temporary difference adjustment
For the year ended December 31, 2016
By application of the transitional measures of Paragraph 3 of the Supplementary Provisions of the “Ordinance on
Accountings of Investment Corporations” (Cabinet Office Ordinance No. 27 of 2015), ¥13,127,153,216 in dividend reservethat is the remaining balance of the amount subdivided into gain on negative goodwill recorded in prior fiscal years is set
aside as reserve for temporary difference adjustment on the statements of cash dividends. Starting from the fiscal year
following the fiscal year in which the reserve was made, reversal of the concerned reserve amount is scheduled to takeplace every fiscal year in an amount that shall be no less than the 50-year even amortizion amount, but limited to thebalance of the reserve for temporary difference adjustment as maximum.
For the year ended December 31, 2017
By application of the transitional measures of Paragraph 3 of the Supplementary Provisions of the “Ordinance on
Accountings of Investment Corporations” (Cabinet Office Ordinance No. 27 of 2015), ¥13,127,153,216 in dividend reservethat is the remaining balance of the amount subdivided into gain on negative goodwill recorded in prior fiscal years is set
aside as reserve for temporary difference adjustment on the statements of cash dividends for the year ended December 31,
2016. Starting from the fiscal year following the fiscal year in which the reserve was made, reversal of the concerned
reserve amount in an amount that shall be no less than the 50-year even amortization amount ( ¥262,543,065) of theremaining balance of the amount when the reserve was made, is required. In this fiscal year under review, reversal of¥769,508,609 has been decided, which is the amount calculated by adding ¥374,000,000 for adjustment to dilution ofdividend per unit due to capital increase through public offering and ¥132,908,609 equivalent to loss on retirement of fixed
assets to ¥262,600,000 of the reversal.

[Notes to statements of cash flows]*1. Relation of balance of cash and cash equivalents at end of year and the amount in balance sheet accounts
For the year ended
December 31, 2016

For the year ended
December 31, 2017

Cash and deposits¥15,141,393 thousand¥16,179,716 thousand

Cash and deposits in trust¥11,232,472 thousand¥11,740,634 thousand

Cash and cash equivalents¥26,373,866 thousand¥27,920,350 thousand

2. Content of significant non-cash transactions
For the year ended December 31, 2016
JHR recognizes asset retirement obligations as it is obliged to restore the land of Hotel Centraza Hakata, acquired on April 1,
2016, and HOTEL ASCENT FUKUOKA, acquired on August 19, 2016, to the original state in accordance with the fixedterm leasehold agreements. This increases buildings in trust of property and equipment and asset retirement obligations by¥440,168 thousand.
For the year ended December 31, 2017
Not applicable

－

32 －

[Notes on lease transactions]Operating leases (as lessor)
Minimum rental revenue under non-cancellable operating leases
As ofDecember 31, 2016

As ofDecember 31, 2017

Due within one year

¥1,709,333 thousand¥1,520,073 thousand

Due after one year

¥5,889,179 thousand¥4,685,123 thousand

Total¥7,598,512 thousand¥6,205,197 thousand[Notes on financial instruments]
1. Matters concerning status of financial instruments(1) Policy for financial instruments
JHR is an investment corporation set forth in Article 2, paragraph 12 of the Investment Trusts Act, managing investments
mainly in specified assets as prescribed in the Investment Trusts Act. As a policy, JHR procures funds through issuance ofinvestment units, etc. and loans from financial institutions in order to make investments in specified assets. JHR does not
utilize surplus funds to invest in financial instruments except for short-term deposits and other equivalent short-term
financial instruments. JHR may enter into derivative transactions in order to hedge against interest rate risk, but not for
speculative trading purposes.
(2) Details of financial instruments, their risks, and risk management system
Operating accounts receivable is operating receivables and is exposed to credit risks of clients. As for the risks, JHR is
managing payment dates and balances by each client with an aim to grasp concerns in collecting due to deterioration in
their financial status and other factors in early stage and reduce the risks.
The floating rate loans payable are exposed to risks of interest rate fluctuations. In order to mitigate interest rate risk, JHR
may enter into derivative transactions, if necessary to fix the interest expense.
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 section in charge of finance at theAsset Management Company by using financial institutions with high credit ratings through approval and resolution byauthorized personnel and a meeting committee structure set forth in its decision-making standards and resolution of JHR’sboard of directors.
Loans payable are exposed to liquidity risks. The section in charge of finance at the Asset Management Company preparesand updates projections and actual cash flows on a monthly basis to manage liquidity risks and monitor compliance withrestrictive covenants set forth in the loan agreements. JHR manages liquidity risks by managing the ratio of short-termand long-term loans payable considering the current financial environment through approval and resolution by authorized
personnel and meeting committee structure in the Asset Management Company and resolution of JHR’s board of directors.
(3) Supplementary explanation on matters concerning fair value, etc. of financial instruments
Regarding the contract amount, etc. of derivative transactions in “2. Matters concerning fair value of financial
instruments,” the amount itself does not indicate certain scale of market risk exposure related to derivative transactions.

－

33 －

2. Matters concerning fair value of financial instruments
Carrying amounts of financial instruments on the balance sheets, their fair values, and the differences as of December 31,
2016 were as follows. Financial instruments whose fair values are considered extremely difficult to measure are not includedin the table. See Note 2 below.
Carrying amount
Fair value
Difference(JPY 1,000)(JPY 1,000)(JPY 1,000)(1) Cash and deposits

15,141,393

15,141,393―(2) Cash and deposits in trust

11,232,472

11,232,472―(3) Operating accounts receivable (*1)

2,071,152

2,071,152―

Total assets

28,445,019

28,445,019―(4) Short-term loans payable

1,800,000

1,800,000―(5) Current portion of long-term loans payable

9,679,250

9,679,250―(6) Investment corporation bonds

22,600,000

22,629,640

29,640(7) Long-term loans payable

92,099,750

92,099,750―

Total liabilities

126,179,000

126,208,640

29,640(554,282)(554,282)―(8) Derivative transactions (*2)

Carrying amounts of financial instruments on the balance sheets, their fair values, and the differences as of December 31,
2017 were as follows. Financial instruments whose fair values are considered extremely difficult to measure are not includedin the table. See Note 2 below.
Carrying amount
Fair value
Difference(JPY 1,000)(JPY 1,000)(JPY 1,000)(1) Cash and deposits

16,179,716

16,179,716―(2) Cash and deposits in trust

11,740,634

11,740,634―(3) Operating accounts receivable (*1)

2,411,837

2,411,837―

Total assets

30,332,188

30,332,188―(4) Short-term loans payable

3,000,000

3,000,000―(5) Current portion of long-term loans payable

15,022,750

15,022,750―(6) Investment corporation bonds

23,600,000

23,621,270

21,270(7) Long-term loans payable

98,777,000

98,777,000―

Total liabilities

140,399,750

140,421,020

21,270―(8) Derivative transactions (*2)(404,316)(404,316)(*1) “Operating accounts receivable”, which was omitted to be stated in the previous period, is stated in the year ended December 31,
2017 as the amount has become more important.
(*2) Receivables and payables arising from derivative transactions are presented on a net basis and amounts in parenthesis denote net
payables.
(Note 1) Methods to measure fair value of financial instruments(1) Cash and deposits; (2) Cash and deposits in trust; (3) Operating accounts receivable; (4) Short-term loans payable
The carrying value is deemed to approximate the fair value since the instruments are scheduled to be settled in a short periodof time.
(5) Current portion of long-term loans payable; (7) Long-term loans payable
The carrying value is deemed to approximate the fair value since the interest rate on long-term loans payable are floatinginterest rates which are revised periodically to reflect market interest rates.
(6) Investment corporation bonds
The fair value of these instruments is measured based on the market price.
(8) Derivative transactions
The information on the fair value of derivative transactions is presented in “Notes on derivative transactions” below.

－

34 －

(Note 2) Carrying amount of financial instruments whose fair values are considered extremely difficult to measure(thousands of yen)
As ofDecember 31, 2016

Classification

As ofDecember 31, 2017

Tenant leasehold and security deposits

1,041,032

1,041,016

Tenant leasehold and security deposits in trust

4,619,744

4,653,410

Total

5,660,776

5,694,426

Tenant leasehold and security deposits / Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits (in trust) are not subject to fair value disclosure because they have no market priceand their actual deposit periods from a tenant’s move-in to move-out are not estimable, thus making a reasonable estimate of
future cash flows is difficult.
3. Redemption schedule for monetary claims subsequent to the account closing date
As of December 31, 2016
Due after
Due after
Due after
Due within
one to two
two to three
three to four
one year
years
years
years
(JPY1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

Cash and deposits

15,141,393

―

―

―

―

―

Cash and deposits in trust

11,232,472

―

―

―

―

―

Operating accounts receivable

2,071,152

Total

28,445,019

―

―

―

―

―

Due within
one year(JPY 1,000)

Due after
one to two
years(JPY 1,000)

Due after
two to threeyears(JPY 1,000)

Due after
three to four
years
(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

Cash and deposits

16,179,716

―

―

―

―

―

Cash and deposits in trust

11,740,634

―

―

―

―

―

Operating accounts receivable

2,411,837

Total

30,332,188

―

―

―

―

―

As of December 31, 2017

4. Schedule for repayment of loans payable and redemption of investment corporation bonds subsequent to the account closing
date
As of December 31, 2016
Due within
one year(JPY 1,000)

Due after
one to two
years(JPY 1,000)

Due after
two to threeyears(JPY 1,000)

Due after
three to four
years
(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

1,800,000

―

―

―

―

―

9,679,250

―

―

―

―

―

Investment corporation bonds――

2,000,000―

1,500,000

19,100,000

Long-term loans payable―

13,322,750

11,217,000

13,544,000

10,800,000

43,216,000

11,479,250

13,322,750

13,217,000

13,544,000

12,300,000

62,316,000

Short-term loans payable
Current portion of
long-term loans payable

Total

－

35 －

As of December 31, 2017
Due within
one year(JPY 1,000)

Due after
one to two
years(JPY 1,000)

Due after
two to threeyears(JPY 1,000)

Due after
three to four
years
(JPY 1,000)

Due after
four to five
years
(JPY 1,000)

Due after
five years(JPY 1,000)

3,000,000

―

―

―

―

―

15,022,750

―

―

―

―

―

Investment corporation bonds―

2,000,000―

1,500,000

6,000,000

14,100,000

Long-term loans payable―

11,217,000

13,544,000

10,800,000

11,200,000

52,016,000

18,022,750

13,217,000

13,544,000

12,300,000

17,200,000

66,116,000

Short-term loans payable
Current portion of
long-term loans payable

Total[Notes on derivative transactions]
1. Derivative transactions to which hedge accounting is not applied
For derivative transactions which hedge accounting is not applied, the contract amount or the amount equivalent to theprincipal provided in the contract, etc. as of the account closing date was as follows:
As of December 31, 2016
(thousands of yen)Classification

Transactions
other thanmarkettransactions

Type, etc. of
derivative transaction

Contract amount, etc.
Of which, due
after one year

Interest rate swaps(fixed rate payment,
floating rate receipt)

6,794,000

6,794,000

Interest rate caps

848,250－

Fair value

Method to measure the fair value(38,033) The fair value is measured at thequoted price, etc. obtained from thecounterparty financial institutions.
－

As of December 31, 2017
(thousands of yen)Classification

Type, etc. of
derivative transaction

Transactions
other thanmarkettransactions

Interest rate swaps(fixed rate payment,
floating rate receipt)

Contract amount, etc.
Of which, due
after one year
6,794,000

1,794,000

Fair value

Method to measure the fair value

The fair value is measured at the(15,651) quoted price, etc. obtained from thecounterparty financial institutions.

2. Derivative transactions to which hedge accounting is applied
For derivative transactions which hedge accounting is applied, the contract amount or the amount equivalent to the principal
provided in the contract, etc. as of the account closing date for each method of hedge accounting was as follows:
As of December 31, 2016
(thousands of yen)
Method ofhedge
accounting

DeferralmethodContract amount, etc.

Type, etc. of
derivative transactionMainhedged item

Interest rate swaps(fixed rate payment,
floating rate receipt)

Long-termloans payable

92,428,750

82,808,750

Interest rate caps

Long-termloans payable

4,286,250

4,286,250

Of which, due
after one year

－

36 －

Fair value

Method to measure
the fair value

The fair value is(516,439) measured at thequoted price, etc.
obtained from the
190 counterparty
financial institutions.

As of December 31, 2017
(thousands of yen)
Method ofhedge
accounting

DeferralmethodContract amount, etc.

Type, etc. of
derivative transactionMainhedged item

Interest rate swaps(fixed rate payment,
floating rate receipt)

Long-termloans payable

100,058,750

91,048,000Interest rate caps

Long-termloans payable

4,286,250－

Of which, due
after one year

Fair value

Method to measure
the fair value

The fair value is(388,665) measured at thequoted price, etc.
obtained from the－ counterparty
financial institutions.

[Notes on tax-effect accounting]1.

Significant components of deferred tax assets and liabilities by cause(thousands of yen)
As ofDecember 31, 2016

As ofDecember 31, 2017

Deferred tax assets:
Valuation difference on assets accepted through merger

1,775,942

1,756,833

Amortization of fixed-term leasehold of land

32,58976,475

Asset retirement obligations

3,087

7,603

Deferred gains (losses) on hedges

221,352

165,776

Total gross deferred tax assets

2,032,972

2,006,688(2,032,972)(2,006,688)――

46,233

38,954

46,233

38,954

Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Deferred gains (losses) on hedges
Total gross deferred tax liabilities
2.

Details of major causes of material differences between the statutory tax rate and the tax rate under effective tax accounting
As ofDecember 31, 2016

Statutory tax rate

As ofDecember 31, 201732.31%

31.74%

Deduction for dividends paid

(32.37%)(31.92%)

Change in valuation allowance(0.21%)

0.18%

Other – net

0.28%

0.01%

Actual effective tax rate

0.01%

0.01%

[Adjustments]

－

37 －

[Notes on asset retirement obligations]
Asset retirement obligations recognized on the balance sheet
1. Outline of the subject asset retirement obligations
JHR recognizes asset retirement obligations as it is obliged to restore the land of Hotel Centraza Hakata, acquired on April 1,
2016, and HOTEL ASCENT FUKUOKA, acquired on August 19, 2016, to the original state in accordance with the fixedterm leasehold agreement.
2. Calculation method of the subject asset retirement obligations
Calculated the amount of asset retirement obligations estimating that the expected useful life is 34 years and 48 years,
respectively, due to their remaining use period and using the discount rate of 0.484% and 0.394%, respectively.
3. Increase and decrease of the subject asset retirement obligations(thousands of yen)
For the year ended
December 31, 2016
Balance at beginning of period
Increase due to acquisition of property and equipment
Adjustment due to passage of time
Balance at end of period

For the year ended
December 31, 2017―

441,542

440,168

―

1,373

2,035

441,542443,577[Notes on segment and related information]
1. Segment information
The segment information has been omitted because JHR has only one segment, which is the investment and management ofhotel real estate.
2. Related information
For the year ended December 31, 2016(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in asingle product/service category accounted for more than 90% of total operating revenue on the statements of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Name of related segment

Hotel Management Japan Co., Ltd.

6,825,199

Investment and management of hotel real estate

AAPC Japan K.K.

2,980,712

Investment and management of hotel real estate

－

38 －

For the year ended December 31, 2017(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in asingle product/service category accounted for more than 90% of total operating revenue on the statements of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Name of related segment

Hotel Management Japan Co., Ltd.

6,973,259

Investment and management of hotel real estate

AAPC Japan K.K.

3,098,069

Investment and management of hotel real estate[Notes on rental properties, etc.]
JHR 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)
For the year ended
December 31, 2016

Use

For the year ended
December 31, 2017

Carrying amount

Hotel

Balance at beginning of period

222,362,750

284,965,547

Net increase (decrease) during period

62,602,797

32,263,660

Balance at end of period

284,965,547

317,229,208

398,770,000

439,390,000

Fair value at end of period(Note 1)
(Note 2)

(Note 3)For a summary of the applicable rental properties, please refer to “5. Reference information; (2) Assets under management; (C) Other major assets
under management; A. Summary of real estate properties (in trust) under management” on page 48.
With regards to net increase (decrease) during period, increase during the year ended December 31, 2016 principally represents the acquisition of
CANDEO HOTELS UENO-KOEN for ¥6,784 million, Hotel Centraza Hakata for ¥7,614 million, Holiday Inn Osaka Namba (HOTEL VISTAGRANDE OSAKA) for ¥27,245 million, HOTEL ASCENT FUKUOKA for ¥5,222 million and Hilton Nagoya for ¥15,488 million. Increase during
the year ended December 31, 2017 principally represents the acquisition of Hilton Tokyo Narita Airport for ¥13,376 million, International Garden
Hotel Narita for ¥9,237 million and Hotel Nikko Nara for ¥10,589 million.
Fair value at end of period is the appraisal value determined by licensed real estate appraisers.

－

39 －

Real estate operating revenue and costs related to the rental properties were as follows:(thousands of yen)
For the year ended
December 31, 2016

Use

For the year ended
December 31, 2017

Amount on the statements of income
Real estate operating revenue

22,107,470

25,475,553

Real estate operating costs

6,589,908

7,911,653

Net real estate operating income

15,517,561

17,563,899

Hotel(Note)“Real estate operating revenue” and “Real estate operating costs” are income from real estate operation (including other income from real estate
operation) and corresponding expenses (such as depreciation, property tax, etc., trust fees, repair expenses and others), and are included in “Operating
revenue” and “Real estate operating costs,” respectively.

[Notes on per unit information]
As ofDecember 31, 2016

As ofDecember 31, 2017

Net assets per unit

¥48,376¥50,354

Net income per unit

¥3,462¥3,606(Note 1)

Net income per unit is computed by dividing net income by the average number of investment units during the period.
Net income per unit after the adjustment of potentially dilutive units is not presented since there are no potentially dilutive units.
The basis of computation of net income per unit is as follows:(Note 2)For the year ended
December 31, 2016
Net income (JPY 1,000)

For the year ended
December 31, 201712,123,163

14,005,078――

Net income for attributable to common investment units (JPY 1,000)

12,123,163

14,005,078

Average number of investment units during period (units)

3,501,175

3,883,679

Amount not attributable to common unitholders (JPY 1,000)[Notes on significant subsequent events]
Issuance of investment corporation bonds
JHR issued investment corporation bonds under the following terms and conditions.
Classification

Tenth unsecured investment corporation bonds

Total amount of issuance¥10 billion

Issue price¥100 for face value of ¥100

Interest rate

0.840%/year

Issuance dateFebruary 21, 2018

Maturity dateFebruary 21, 2028

Security

Unsecured

Purpose of use

The proceeds will be allocated to prepay the existing loans by the end of February, 2018.
The residual funds will be allocated to part of the fund for future acquisition of specified
assets, part of funds for repayment of loans or repair cost and capital expenditure to
maintain or improve competitiveness of the existing properties.

－

40 －

(10) Changes in total number of investment units issued and outstanding
Issuance of new investment units through public offering (236,000 units) on July 5, 2017 and issuance of new investment units
through third-party allotment (12,940 units) on August 2, 2017 resulted in procurement of ¥18,686 million. The following is thestatus of increase (decrease) in the total number of investment units issued and outstanding and unitholders’ capital for past five
years through to the end of the fiscal year under review.

Date

April 17, 2013
September 9, 2014
January 27, 2015
February 18, 2015
June 22, 2015
July 23, 2015
January 20, 2016
February 17, 2016
July 27, 2016
August 23, 2016
July 5, 2017
August 2, 2017

Total number ofinvestment units
issued and outstanding(Units)Increase
Balance(Decrease)

Capital transaction

Capital increase throughpublic offering of investment units
Capital increase throughpublic offering of investment units
Capital increase throughpublic offering of investment units
Capital increase throughthird-party allotment of investment units
Capital increase throughpublic offering of investment units
Capital increase throughthird-party allotment of investment units
Capital increase throughpublic offering of investment units
Capital increase throughthird-party allotment of investment units
Capital increase throughpublic offering of investment units
Capital increase throughthird-party allotment of investment units
Capital increase throughpublic offering of investment units
Capital increase throughthird-party allotment of investment units

Unitholders’ capital(JPY1M)
Increase(Decrease)

BalanceNote

510,000

2,621,281

20,585

48,845(Note 1)

170,000

2,791,281

10,17959,024(Note 2)200,000

2,991,281

14,97473,999(Note 3)9,041

3,000,322

676

74,676(Note 4)140,000

3,140,322

10,50085,177(Note 5)

3,905

3,144,227

292

85,470(Note 6)

170,000

3,314,227

13,98699,456(Note 7)7,680

3,321,907

631

100,088(Note 8)428,260

3,750,167

33,813

133,902(Note 9)11,7403,761,907

926

134,829(Note 10)

236,000

3,997,907

17,715

152,544(Note 11)

12,9404,010,847

971

153,516(Note 12)(Note 1)

New investment units were issued through public offering with an issue price per unit of ¥41,778 (issue value of ¥40,363) in order to procure funds
for the acquisition of new properties, etc.
(Note 2) New investment units were issued through public offering with an issue price per unit of ¥61,912 (issue value of ¥59,880) in order to procure funds
for the acquisition of new properties, etc.
(Note 3) New investment units were issued through public offering with an issue price per unit of ¥77,415 (issue value of ¥74,874) in order to procure funds
for the acquisition of new properties, etc.
(Note 4) New investment units were issued through third-party allotment with an issue value per unit of ¥74,874 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of other loans, or capital expenditures to maintain or improve competitiveness of existing
properties.
(Note 5) New investment units were issued through public offering with an issue price per unit of ¥77,512 (issue value of ¥75,007) in order to procure funds
for the acquisition of new properties, etc.
(Note 6) New investment units were issued through third-party allotment with an issue value per unit of ¥75,007 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of other loans, or capital expenditures to maintain or improve competitiveness of existing
properties.
(Note 7) New investment units were issued through public offering with an issue price per unit of ¥85,020 (issue value of ¥82,273) in order to procure funds
for the allocation to acquisition of new properties, etc.
(Note 8) New investment units were issued through third-party allotment with an issue value per unit of ¥82,273 in order to procure funds for allocation toacquisition of new properties, etc.
(Note 9) New investment units were issued through public offering with an issue price per unit of ¥81,536 (issue value of ¥78,956) in order to procure funds
for the allocation to acquisition of new properties, etc.
(Note 10) New investment units were issued through third-party allotment with an issue price per unit of ¥78,956 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of other loans, or capital expenditures to maintain or improve competitiveness of existing
properties.
(Note 11) New investment units were issued through public offering with an issue price per unit of ¥77,518 (issue value of ¥75,065) in order to procure funds
for the allocation to acquisition of new properties, etc.
(Note 12) New investment units were issued through third-party allotment with an issue value per unit of ¥75,065 in order to procure funds for allocation to partof future acquisitions of specified assets, part of repayment of other loans, or capital expenditures to maintain or improve competitiveness of existing
properties.

－

41 －

4. Status of directors(1) Directors of JHR
The following are the directors of JHR as of the date of this report.
Title

Executive
Director

Name

KanameMasudaSupervisory

TetsuyaDirector

Mishiku

Major career
Apr. 1990

Registered as a lawyer (Daiichi Tokyo Bar Association)

Oct. 1998

Joined Nishimura & Asahi (formerly, Nishimura & Partners)
Joined Merrill Lynch Japan Securities Co., Ltd.

Nov. 2000
Mar. 2001

General Counsel
Executive Director (Concurrent position)

Aug. 2002
May 2003

Enrolled in Columbia Law School, Columbia University, U.S.
Graduated from Columbia Law School, Columbia University, U.S.

Sep. 2006(LL.M.)
Registered as a lawyer, State of New YorkFeb. 2008

Established Masuda & Partners Law Office asManaging Partner (current)

Jun. 2008

Joined Jibun Bank Corporation as Outside Corporate Auditor(current)

Sep. 2010
Feb. 2012

Joined Japan Hotel and Resort, Inc. as Executive Director
Joined Commons Asset Management, Inc. as Outside Corporate

Oct. 2014

Auditor (current)
Joined CROSSWARP Inc. as Outside Corporate Auditor (current)

Nov. 2015

Joined Japan Hotel REIT Investment Corporation as Executive
Director (current)

Mar. 2016

Joined GMO Internet, Inc. as Director (Independent Director) /Audit and Supervisory Committee Member (current)

Apr. 1993

Registered as a lawyer (Daiichi Tokyo Bar Association)
Joined Iinuma & Partner

Dec. 2000
Sep. 2002

PartnerPart-time lecturer at Chuo University

Nov. 2003

Changed registration to Shizuoka Bar Association
Joined Aoba Law Office as Partner

Nov. 2005

Joined Japan Hotel REIT Investment Corporation (formerly, Nippon
Hotel Fund Investment Corporation) as Supervisory Director

Dec. 2005(current)
Joined A-too Co., Ltd. as Part-time Corporate Auditor

Mar. 2007

Joined Healing Entertainment Co., Ltd. as Part-time Corporate
Auditor (current)

Aug. 2010

Joined Mishiku & Nagamachi Law Office (formerly, Aoi Tower Law
Office) as Representative (current)

Sep. 2010

Joined Koike Roof and Siding KK as Outside Corporate Auditor(current)

Aug. 2011
Nov. 2016

Outside Director of A-too Co., Ltd. (current)
Outside Corporate Auditor of Kabushiki kaisha Tem Realtor(current)－

42 －Number ofinvestment
units held

00

TitleName

Supervisory

HirotoDirector

Kashii

Major career
Apr. 1971

Joined Development Bank of Japan, Inc. (formerly, Japan

Apr. 1997

Development Bank) responsible for lending and investment
General Manager, Retail Department at Head Office

Apr. 1998

Joined K.K. Hotel Odakyu as Managing Director and General
Manager of Accounting Department

Apr. 2002

Joined K.K. Hotel Odakyu (formerly, K.K. Odakyu Hotels andResorts which merged with K.K. Hotel Odakyu later) as Managing

Jun. 2003

Director responsible for marketing
Joined New Kansai International Airport Co., Ltd. (formerly, KansaiInternational Airport Co., Ltd.) as Executive Officer responsible forterminal sales promotion, subsidiaries management and hotel

Jun. 2009businesses
Joined Kyowa Co., Ltd. as Representative Director

Jun. 2012
Mar. 2013

Joined Japan Carbon Finance, Ltd. as Managing Director
Representative Director

Jun. 2013
Nov. 2015

Joined DBJ Asset Management Co., Ltd. as Corporate Auditor
Joined Japan Hotel REIT Investment Corporation as Supervisory

Number ofinvestment
units held

0

Director (current)(Note 1)
(Note 2)

Following the resolutions made at the 8th General Meeting of Unitholders held on November 22, 2017, Hiroshi Matsuzawa resigned from office ofSupervisory Director as of the date.
In case the number of Executive Director does not meet the requirement stipulated by laws and regulations, Hisashi Furukawa, Representative
Director of the Asset Management Company, was elected as Substitute Executive Director, based on the resolution made by the 8th General Meetingof Unitholders of JHR held on November 22, 2017.

－

43 －

(2) Directors of the Asset Management Company
The following are the directors of the Asset Management Company as of the date of this report.
Title

Name

Major career
Apr. 1982
Jan. 1984
Jul. 1990

Representative
Director andPresident

Hisashi
Furukawa

Apr. 2000

May 2004
Aug. 2013
Jun. 2014
Apr. 1986
Dec. 1998
Mar. 2001

Director

Shuya
MatsubaraJun. 2009
Apr. 2012
May 2013
Apr. 2014
Mar. 2015
Apr. 1999
Jul. 2002
Aug. 2003

Director

ToshitakaSep. 2006

IshidoApr. 2007
Apr. 2012

Mar. 2013

Joined Sumitomo Realty & Development Co., Ltd.
Building Business Department
Seconded to its subsidiary in the U.S.
Joined Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
(formerly, Morgan Stanley Japan Limited) and served as Executive
Director of the Real Estate Group in the Investment Banking
Division
Joined UBS Securities Co., Ltd. (formerly, Warburg Dillon Read
(Japan) Limited) and served as Co-head and Executive Director of
the Real Estate Sector Team in the Corporate Finance Division
Joined Rockpoint Group, L.L.C. as Representative of Japan Officeand Principal
Established River Flows, Inc. as Representative Director
Joined Japan Hotel REIT Advisors Co., Ltd. as Representative
Director and President (current)
Joined The Hyakujushi Bank, Ltd. and served as Deputy Manager of
the International Affairs Department
Joined Deloitte Tohmatsu Consulting LLC as Manager of the
Financial Division
Joined Goldman Sachs Realty Japan, Ltd. and served as Director andJoint Group Leader of the Strategic Management Group in the
Acquisition Division
Joined Japan Hotel & Resort K.K. as Director
Joined Japan Hotel REIT Advisors Co., Ltd. as Director (current)
and Senior General Manager of the Finance & Planning Department
Senior General Manager of the Finance & Accounting Division
Senior General Manager of the Finance & Accounting Division andGeneral Manager of the Finance Department
Senior General Manager of the Finance & Planning Division andGeneral Manager of the Finance & Planning Department (current)
Joined Value Management Institute, Inc.
Joined Hospitality Advisory Group of KPMG Business Advisory
LLC (Tokyo Branch)
Manager of the Hospitality Group of KPMG FAS Co., Ltd. (Tokyo
Branch of KPMG Business Advisory LLC was merged with KPMGFAS Co., Ltd.) as manager
Joined Japan Hotel & Resort K.K. and served as Senior Manager ofAcquisitons Department
Director and Senior General Manager of Asset Management
Department
Joined Japan Hotel REIT Advisors Co., Ltd. as Senior General
Manager of Investment Division (current) and General Manager ofAcquisitions Department
Director (current)

－

44 －

Number ofshares held

0

0

0

TitleDirector

Director

Name

NoboruItabashi

Hiroyuki
Aoki

Major career
Apr. 1995

Joined Asahi Sangyo Kaisha, Ltd., Fabricated Metals Department

Jan. 1998

Joined British American Tobacco Japan, Ltd. (formerly, Rothmans
Japan), Finance Department

Aug. 1999
Sep. 2006

Joined Sun Microsystems K.K., Field Finance Division
Joined Japan Hotel & Resort K.K. and served as Senior Manager ofApr. 2007

the Finance and Accounting Division
Senior General Manager of Operations Division

Apr. 2012

Joined Japan Hotel REIT Advisors Co., Ltd. as General Manager ofthe Accounting Department

Mar. 2015

Director, Senior General Manager of Operations Division & General
Manager of Accounting and Reporting Department (current)

Sep. 1994

Joined Deloitte & Touche LLP, New York Office, Accounting &Jun. 1997

Audit Department
Joined Ingersoll-Rand Headquarters, Internal Audit Department

Nov. 2001
Jul. 2002

Joined KPMG Tax Corporation (formerly, Arthur Andersen LLP)
Joined Ripplewood Holdings LLC, Hotel Investment Group as Vice

Aug. 2005

President
Joined Creative Renovation Group Japan, Inc. as Vice President ofJan. 2008

Finance
Joined Tokyo Venture Gear Co. Ltd. as Director

Nov. 2011

Appointed as Representative Director of SC Capital Partners Japan
Co. Ltd. (formerly, RE Capital Services Japan Co., Ltd.) (current)

Dec. 2011(Note)
Appointed as Statutory Auditor (part-time) of Japan Hotel & Resort

Apr. 2012

K.K.
Appointed as Director (part-time) of Japan Hotel REIT Advisors

Number ofshares held00Co., Ltd. (current)

Director

Suchad(Chairman)

Chiaranussati

Oct. 1987

Joined the Central Bank of Thailand, Foreign Exchange ReserveOct. 1991

Management Division
Joined Temasek Holdings (in Singapore) and served as Manager ofNov. 1992

Direct Investment
Joined JP Morgan (in Singapore) and served as Vice President in theNov. 1998

Real Estate Investment and Investment Banking Division
Appointed as Advisor at the Central Bank of Thailand

Apr. 1999

Joined Westbrook in Singapore as Principal and Managing Director
responsible for Asian investment activities

Nov. 2004
Oct. 2007

Established Real Estate Capital Asia Partners, L.P.
Appointed as Director of SC Management Limited (current) (Note)

May 2010
Aug. 2010

Appointed as Director of Rockrise Sdn Bhd (current) (Note)
Appointed as Director (part-time) of Japan Hotel REIT Advisors

Aug. 2015

Co., Ltd. (current)
Appointed as Director of SC J-Holdings Pte. Ltd. (current) (Note)

Oct. 2015

Appointed Chairman (part-time) of Japan Hotel REIT Advisors Co.,
Ltd. (current)

－

45 －

0

TitleDirector

Name

Major career
May 1989

Joined Starwood Hotels & Resort Worldwide, Inc. (formerly, Westin
Hotel Company)

Ian George
WinstonJan. 2003

Participated in the establishment of Octagon Capital Partners Pte.
Ltd. (Co-founder)

Lien

Oct. 2007
Aug. 2010

Number ofshares held

0

Joined SC Management Ltd. as Director (Note)
Appointed as Director (part-time) of Japan Hotel REIT Advisors
Co., Ltd. (current)

Director

Chua Keng
Kim

Mar. 1988

Joined Government of Singapore Investment Corporation (GIC)

Apr. 1995

Joined Rodamco PACIFIC B.V. / Rodamco Asia N.V. as Managing
Director and Head of Investment Management

Jun. 2007

Appointed as independent Non-Executive Director and member ofthe Audit Committee of Travelsky Technology Ltd

Nov. 2007

Participated in the establishment of Stonegate China Properties
Limited (Founder and CEO)

Sep. 2008
Aug. 2010

Joined SC Management Ltd. as Managing Director (Note)
Appointed as Director (part-time) of Japan Hotel REIT Advisors

Aug. 2013

Co., Ltd. (current)
Appointed as Director of SC J-Holdings Pte. Ltd. (formerly, SC

0Core Manager Pte. Ltd.) (current) (Note)
Apr. 1974
Oct. 1979

Joined Daiwa Securities Co. Ltd.
Joined Mizuho Securities Co., Ltd. (formerly, Wako Securities Co.,

Mar. 1998

Ltd.)
Seconded to Wako International (Europe) Ltd. as President

Apr. 2000

Corporate

ShigeoAuditorSekita(Note)

Manager of the IPO Department at Mizuho Securities Co., Ltd.
(formerly, Shinko Securities Co., Ltd. The corporation’s name

Jan. 2002changed due to merger)
Joined WestLB Securities Inc. as Director of the Investment

Aug. 2005

Banking Group
Joined Credit Suisse Securities (Japan) Ltd. as Director of theSep. 2010

Structured Investment Department
Joined Japan Hotel REIT Advisors Co., Ltd. as Advisor

Dec. 2010
Apr. 2012

Representative Director
Corporate Auditor (part-time) (current)

Oct. 2013

Joined Alpha Japan Asset Advisors Ltd. as Compliance Manager(current)

0

SC Capital Partners Japan Co. Ltd., SC Management Limited, Rockrise Sdn Bhd and SC J-Holdings Pte. Ltd. are corporations belonging to SC
CAPITAL PARTNERS Group (formerly, RECAP Group).

－

46 －

5. Reference information(1) Investment status
The following outlines the investment status of JHR as of the end of the fiscal year under review.
Assetcategory

Hotel type
(Note 1)

Prefectural
location

Tokyo

Limited-service
hotel
Osaka
Hokkaido

Fukuoka
Kyoto
Okinawa
KumamotoNaraRealestate
in
trust

Chiba

Full-service hotelNameibis Tokyo Shinjuku
CANDEO HOTELS UENO-KOEN
the b ikebukuro
the b akasaka-mitsuke
Hotel Sunroute Shinbashi
Comfort Hotel Tokyo Higashi Nihombashi
the b hachioji
the b ochanomizu
Smile Hotel Nihombashi Mitsukoshimae
R&B Hotel Ueno Hirokoji
R&B Hotel Higashi Nihonbashi
Hotel Vista Kamata Tokyo
the b suidobashi
Dormy Inn EXPRESS Asakusa
Chisun Inn Kamata
Holiday Inn Osaka Namba
Namba Oriental Hotelibis Styles Sapporo
Mercure Sapporo
HOTEL ASCENT FUKUOKA
the b hakata
Hakata Nakasu Washington Hotel Plaza
Toyoko Inn Hakata-guchi Ekimae
ibis Styles Kyoto Station
Mercure Okinawa Naha
Dormy Inn Kumamoto
Nara Washington Hotel Plaza
Subtotal
Oriental Hotel tokyo bay
Hilton Tokyo Narita Airport
International Garden Hotel Narita
Hotel Francs
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel) (Note 4)
Oriental Hotel Hiroshima
Hilton Nagoya
Hotel Nikko Nara
Kobe Meriken Park Oriental Hotel
Hotel Centraza Hakata
Mercure Yokosuka
Subtotal

5.6

17,6205.0

4,071
15,530
9,947
7,506
1,643
77,891

1.3
4.9
3.1
2.4
0.5
24.5

4,091
15,588
10,525
9,893
7,341
1,636
110,397

1.2
4.4
3.0
2.8
2.1
0.5
31.3

Hotel Nikko Alivila

18,2675.7

18,128

5.1

Okinawa Marriott Resort & Spa
The Beach Tower Okinawa
Chiba
Hilton Tokyo Bay
Osaka
Hotel Keihan Universal City
Kanagawa
Hakone Setsugetsuka
Subtotal
Real estate in trust – Total

14,861
6,831
26,1805,982
3,747
75,871
283,546

4.7
2.1
8.2
1.9
1.2
23.9
89.2

14,722
6,749
26,192
5,984
3,798
75,576
315,561

4.2
1.9
7.4
1.7
1.1
21.5
89.6

Deposits and other assets (Note 5)

34,332

10.8

36,621

10.4

Total assets

317,878100.0

352,183

100.0

Okinawa

Ratio toRatio toAmounttotal assets
total assets(JPY1M)(%)(%)
Total liabilities
135,88942.7
150,219
42.7
Total net assets
181,98957.3
201,963
57.3
Hotels are categorized as limited-service hotels, full-service hotels or resort hotels according to the manner of operation.
For real estate in trust, “Total amount held” shows the amount calculated by deducting accumulated depreciation from acquisition price (including
expenses incidental to acquisition).
“Ratio to total assets” shows the ratio of total amount of each asset held to total assets, rounded off to one decimal place.
ACTIVE-INTER CITY HIROSHIMA is classified in accordance with the business category of Sheraton Grand Hiroshima Hotel, its main facility.
Includes machinery and equipment, tools, furniture and fixtures, construction in progress, construction in progress in trust, and intangible assets(excluding leasehold rights in trust and fixed-term leasehold of land in trust).
Amount(JPY1M)(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)

As ofDecember 31, 2017
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
7,984
2.3
6,719
1.9
6,573
1.9
6,290
1.8
4,840
1.4
3,593
1.0
2,680
0.8
2,350
0.7
2,041
0.6
1,751
0.5
1,495
0.4
1,464
0.4
1,204
0.3
961
0.3
789
0.2
27,083
7.7
14,595
4.1
6,659
1.9
5,895
1.7
5,187
1.5
2,335
0.7
2,040
0.6
1,456
0.4
6,682
1.9
2,889
0.8
2,185
0.6
1,835
0.5
129,58836.8
18,002
5.1
13,318
3.8
9,222
2.6
3,155
0.9

17,778Hiroshima
Aichi
Nara
Hyogo
Fukuoka
Kanagawa

Resort hotel

As ofDecember 31, 2016
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
7,671
2.4
6,751
2.1
6,578
2.1
6,286
2.0
4,854
1.5
3,625
1.1
2,673
0.8
2,344
0.7
2,047
0.6
1,764
0.6
1,512
0.5
1,467
0.5
1,205
0.4
951
0.3
797
0.3
27,163
8.5
14,656
4.6
6,724
2.1
5,945
1.9
5,211
1.6
2,330
0.7
2,054
0.6
1,477
0.5
6,701
2.1
2,916
0.9
2,199
0.7
1,871
0.6
129,783
40.8
18,267
5.7
3,145
1.0

－

47 －

(2) Assets under management(A) Major issues of investment securities
Not applicable(B) Real estate properties under management
Not applicable(C) Other major assets under management
A. Summary of real estate properties (in trust) under management
The following summarizes the real estate properties (in trust) under management by JHR as of the end of the fiscal year underreview.
Details of assets under management 1 (location, form of ownership, area, structural size, etc.)
Form of ownership(Note 1)
Property
No.

Name

1

Kobe Meriken Park
Oriental Hotel

2

Oriental Hoteltokyo bay3

Namba
Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel
Hiroshima

6

ibis Tokyo Shinjuku

8

The Beach Tower
Okinawa

9

HakoneSetsugetsuka

10

Dormy Inn
Kumamoto

12

the b suidobashi

13

Dormy Inn
EXPRESS Asakusa

14

15

Hakata Nakasu
Washington Hotel
Plaza
Nara
Washington Hotel
Plaza

16

R&B Hotel
Ueno Hirokoji

17

R&B Hotel
Higashi Nihonbashi

18

Comfort HotelTokyo Higashi
Nihombashi

LocationLand

Building

Building
completion(Note 5)

Total
numberof guest
rooms(rooms)(Note 6)

Area
Acreage(m2)(Note 2)

Structures andstories
Total floor area
(Note 4)(m2)
(Note 3)Chuo-ku,
Kobe-shi,
Hyogo
Urayasu-shi,
Chiba
Chuo-ku,
Osaka-shi,
Osaka

Leaseholdright(Note 7)Compartmentalized
ownership

22,660.09(Note 7)

48,701.82(Note 7)S
14F

July 1995

319(Note 7)

Ownership

Ownership

9,914.00

44,833.11

SRC/S/RC
B2/12FMay 1995

503

Ownership

Ownership

4,505.23

19,364.33

S/SRC
B1/9F

March 1996

258

Yomitan-son,
Nakagami-gun,
Okinawa

Ownership/
Leaseholdright(Note 8)

Ownership

65,850.05(Note 8)38,024.98(Note 8)SRC
B1/10F

April 1994

396

Ownership

Ownership

1,792.84

13,752.22

SRC
B2/23F

September 1993
Extended in
September 2006

227

Ownership

Ownership

937.67

7,398.19

SRC/RC/S
B1/11F

September 1980

206

March 2004
Extended inJune 2005
Extended in
May 2006

280

Naka-ku,
Hiroshima-shi,
Hiroshima
Nishi-Shinjuku,
Shinjuku-ku,
Tokyo
Chatan-cho,
Nakagami-gun,
Okinawa
Hakone-machi,
Ashigarashimogun, Kanagawa
Chuo-ku,
Kumamoto-shi,
Kumamoto
Hongo,
Bunkyo-ku,
Tokyo
Hanakawado,
Taito-ku,Tokyo
Hakata-ku,
Fukuoka-shi,
FukuokaNara-shi,
Nara
Ueno,
Taito-ku,Tokyo
HigashiNihonbashi,
Chuo-ku,Tokyo
Nihonbashibakurocho,
Chuo-ku,Tokyo

Ownership

Ownership

10,242.00

20,140.01

SRC
24F

Ownership

Ownership

10,478.89

10,655.03

RC
B1/5F

October 2006

158

Ownership

Ownership

1,295.85

7,701.19

SRC
13F

January 2008291

Ownership

Ownership

723.86

3,097.25

SRC/RC
B1/8F

August 1986
Extended in
September 198999

Ownership

Ownership

287.66

2,006.51

SRC/RC
10F

March 199777

Ownership

Ownership

1,128.46

5,692.24

S
12F

March 1995

247

Ownership

Ownership

2,322.28

5,385.82

S
7F

March 2000

204

Ownership

Ownership

446.293,060.21

S
13F

April 2002

187

Ownership/
Leaseholdright

Ownership

507.83(Note 9)3,715.26

S
10F

March 1998

202

Ownership

Ownership

823.67

5,765.26

S
11F

January 2008

259

－

48 －

Form of ownership(Note 1)
PropertyNo.

Name

LocationLand

Building

Building
completion(Note 5)

Total
numberof guest
rooms(rooms)(Note 6)

March 1997

164

Area
Acreage(m2)(Note 2)

Structures andstories
Total floor area
(Note 4)(m2)
(Note 3)22

Smile Hotel
Nihombashi
Mitsukoshimae

NihonbashiHoncho,
Chuo-ku,Tokyo

Ownership

Ownership24

Toyoko Inn
Hakata-guchi
EkimaeHakata-ku,
Fukuoka-shi,
Fukuoka

Ownership

Ownership

25

Hotel Vista
Kamata Tokyo

Ownership

Ownership

743.46

3,831.80

SRC/S
B1/9F

January 1992

105

26

Chisun Inn Kamata

Ownership

Ownership

240.35

1,499.87

SRC
12F

April 2003

70

29

Hotel Keihan
Universal City

3,350.14(Note 10)

17,252.71(Note 10)

S/SRC
21F

June 2001

330

30

Hotel Sunroute
Shinbashi

31

Hilton Tokyo Bay

32

ibis Styles
Kyoto Station

33

ibis Styles Sapporo

34

Mercure Sapporo

35

MercureOkinawa Naha

36

the b
akasaka-mitsuke

37

the b ikebukuro38

the b ochanomizu

39

the b hachioji

40

the b hakata

41

Hotel Francs

42

Mercure Yokosuka

Yokosuka-shi,
Kanagawa

43

Okinawa Marriott
Resort & Spa

Nago-shi,
Okinawa

44

45
46
47

Nishikamata,Ota-ku,Tokyo
Kamata,Ota-ku,Tokyo
Konohana-ku,
Osaka-shi,
Osaka
Shinbashi,
Minato-ku,
Tokyo
Urayasu-shi,
Chiba
Minami-ku,
Kyoto-shi,
Kyoto
Chuo-ku,
Sapporo-shi,
Hokkaido
Chuo-ku,
Sapporo-shi,
Hokkaido
Naha-shi,
Okinawa
Akasaka,Minato-ku,
Tokyo
Higashiikebukuro,
Toshima-ku,
Tokyo
Kandaawajicho,
Chiyoda-ku,
TokyoHachioji-shi,Tokyo
Hakata-ku,
Fukuoka-shi,
FukuokaMihama-ku,
Chiba-shi,
Chiba

Ownership/Compartmentalized
Leaseholdownershipright(Note 10)(Note 10)512.583,097.85

SRC/RC
B1/10F

Main building: Main building: Main building:Main building
565.983,566.46
SRC 14F
and annex bothAnnex:
Annex:
Annex:
September 2001
152.37856.68
SRC 9F

257

Ownership

Ownership

761.01

5,476.39

S/SRC
16F

March 2008

220

Ownership(Note 11)

Ownership(Note 11)

36,121.00(Note 11)

72,146.60(Note 11)

SRC
B1/11F

June 1988

828

Ownership

Ownership

1,107.77

5,003.99

RC
10F

March 2009215

Ownership

Ownership

2,515.22

14,992.49

RC
B1/16F

July 2010278

Ownership

Ownership

2,016.27

16,145.79

S
B1/15F

April 2009285

Ownership/
Leaseholdright

Ownership

2,860.69(Note 12)

10,884.25

RC
14F

August 2009260

Ownership

Ownership

625.46

2,867.04

S
8F

November 2002

122

Ownership

Ownership

718.715,650.01

SRC/S
B2/10F

June 1982

175

Ownership

Ownership

357.47

1,742.23

SRC
9F

August 199972

Ownership

Ownership

1,227.29

7,847.65

SRC
B2/12F

August 1986196

Ownership

Ownership

719.46

3,986.09

SRC
8F

September 1997

175

Ownership

Ownership

4,828.00

19,213.39

SRC
B1/13F

August 1991

222

Right of site Compartmentalized
ownership(co-ownership)(Note 13)
(Note 13)

1,887.86(Note 13)

16,881.82(Note 13)

SRC/S
B3/21F

November 1993160

Ownership

52,988.00

36,430.15

SRC
14F

February 2005
Extended in
December 2006

361

6,379.02(Note 14)39,540.75(Note 14)

S/RC/SRC
B1/21F

August 2010

1,559.03

7,030.10

S
12F

December 2009268

2,163.42

18,105.42

SRC
B3/12F

July 1985

194

2,428.47

11,501.10

S
12F

August 2008314

Ownership

ACTIVE-INTER
Higashi-ku,
Right of site Compartmentalized
CITY HIROSHIMA
ownership
Hiroshima-shi, (co-ownership)(Sheraton Grand(Note 14)
Hiroshima(Note 14)
Hiroshima Hotel)
CANDEO HOTELS Negishi, Taito-ku,
Ownership
Ownership
UENO-KOEN
Tokyo
Hakata-ku,
Fixed-term
Hotel Centraza
Fukuoka-shi, leasehold right Ownership
HakataFukuoka(Note 16)
Holiday Inn Osaka
Chuo-ku, OsakaOwnership
Ownership
Nambashi, Osaka

－

49 －

238
(Note 15)

Form of ownership(Note 1)
Property
No.

Name

48

HOTEL ASCENTFUKUOKA

49

Hilton Nagoya

50
51
52
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)(Note 10)(Note 11)

(Note 12)(Note 13)

Location
Land
Ownership/
Fixed-termleaseholdright(Note 17)
Ownership
Naka-ku, Nagoyaand
shi, Aichi
superficies(Note 18)
Chuo-ku,
Fukuoka-shi,
Fukuoka

Building
completion(Note 5)

Total
numberof guest
rooms(rooms)(Note 6)

Area
Acreage(m2)(Note 2)

Building

Structures andstories
Total floor area
(Note 4)(m2)
(Note 3)

Ownership

1,482.13

8,600.22(Note 17)

S/RC/SRC
B2/13F

April 1999

263

Compartmentalized
ownership

6,723.59(Note 18)

46,368.99(Note 18)

S/RC/SRC
B3/29F

February 1989

460

32,552.84

56,817.28(Note 19)

August 1993

548

11,858.79

21,814.93

SRC/S
B2/13F
SRC
B1/29FMay 1996

463

3,049.23(Note 20)

21,011.31(Note 20)

February 1998

330

(Note 18)

Hilton Tokyo Narita
Narita-shi, Chiba Ownership
Ownership
AirportInternational Garden
Narita-shi, Chiba Ownership
Ownership
Hotel Narita
Right of site Compartmentalized
ownership
Hotel Nikko Nara
Nara-shi, Nara (co-ownership)(Note 20)
(Note 20)

SRC/RC/S
B2/11F“Form of ownership” is the type of right held by the owner of the real estate that is the asset held (the trustee in the case of a real estate in trust).
“Acreage” is the area of the entire site based on the registration or registration record. The registration or registration record entry may not coincidewith the present state of the land.
“Total floor area” is the area of the building based on the registration or registration record. The area of the accessory building, if any, is included
unless otherwise stated. The registration or registration record entry may not coincide with the present state of the building.
Under “Structures and stories,” “S” means steel-framed building, “RC” means reinforced concrete building and “SRC” means steel reinforced
concrete building. The structure of the main building is shown, but there may be cases where there is a parking lot or storage space as an accessory to
the building in a separate building.
“Building completion” is based on the registration or registration record.
“Total number of guest rooms” is the respective number of guest rooms available for sale (excluding rooms occupied by the hotel for a long term) at
the end of the fiscal year under review.
The land of Kobe Meriken Park Oriental Hotel is land leased by JHR from the City of Kobe and land with permission for use from the City of Kobe
under the City of Kobe’s ordinance for harbor facilities, etc. The acreage above is based on the number on the construction confirmation application
form. In addition, the building of Kobe Meriken Park Oriental Hotel is a building under compartmentalized ownership by two compartmentalized
owners (JHR and the City of Kobe). The figure above is the total floor area of the entire building under compartmentalized ownership (including anaccessory building of 764.83 square meters), where the portion owned exclusively by JHR (excluding an accessory building of 764.83 square meters)
is 31,899.07 square meters, the portion owned exclusively by the City of Kobe is 13,960.11 square meters, and the portion that is the common area of
JHR and the City of Kobe is 2,077.81 square meters (JHR has 72.18% interest and the City of Kobe has 27.82% interest of the common area).
The land of Hotel Nikko Alivila is land owned by JHR or land leased or subleased by JHR from Kabushiki Kaisha Okinawa Umi No Sono
(hereinafter referred to as the “Umi No Sono”). The acreage above is the sum total of the area on the certified copy of the real estate registry of eachland. Furthermore, the land leased or land subleased includes those where only a portion of a parcel of land is leased or subleased and, thus, theacreage above includes some area that is not leased or subleased by JHR from Umi No Sono. In addition, subdivision of part of the subleased land
resulted in the acreage above changing from 67,038.05 square meters to 65,850.05 square meters on June 12, 2012. The sum total of the acreage ofthe land owned by JHR and the land leased or subleased calculated based on the certified copy of the real estate registry, lease contract with Umi No
Sono, etc. is 57,406.26 square meters. The total floor area above includes an accessory building of 120.10 square meters and excludes a building
leased from Umi No Sono of 493.50 square meters.
Of the acreage of R&B Hotel Higashi Nihonbashi, the area of the land leased is 77.38 square meters.
The land of Hotel Keihan Universal City comprises land under co-ownership with other right holders (8,785.43 square meters) and land leased underquasi-co-ownership with other right holders from the City of Osaka (8,788.67 square meters). The acreage above is the sum total of JHR’s coownership interest of the land under co-ownership of 1,674.76 square meters (approximately 19.06% of co-ownership interest) and JHR’s quasi-coownership interest in the land leasehold right of the land leased from the City of Osaka of 1,675.38 square meters (approximately 19.06% of quasico-ownership interest). In addition, the building of Hotel Keihan Universal City is a building under compartmentalized ownership for Universal
CityWalk Osaka, which comprises two hotel buildings, business facilities, commercial facilities and others, as a single building (86,888.64 square
meters). The portion owned exclusively by JHR (including the common area by bylaws) is 15,749.32 square meters, and JHR’s co-ownership interestof the common area (15,648.98 square meters) is 3,466.56 square meters (approximately 22.15% of co-ownership interest). “Total floor area” in thetable above is the total floor area based on the completion drawing of new construction of Hotel Keihan.
The land of Hilton Tokyo Bay is land under co-ownership with other right holders. The acreage is the total area of the land under co-ownership. Of
the acreage, JHR’s co-ownership interest is 32,508.90 square meters (9/10 of co-ownership interest). In addition, the building of Hilton Tokyo Bay is
a building under co-ownership with other right holders. The total floor area is the total area of the building under co-ownership (including anaccessory building of 37.38 square meters). Of the total floor area, JHR’s co-ownership interest is 64,931.94 square meters (9/10 of co-ownershipinterest).
The acreage of Mercure Okinawa Naha includes land leased of 125.67 square meters.
The land of Mercure Yokosuka comprises the entire joint ownership of right of site. The acreage is the area equivalent to JHR’s co-ownership interestof the right to use the site (181,372/1,000,000 or approximately 18.14%) of the entire area of the subject land (10,408.79 square meters), which is
1,887.86 square meters. In addition, the building is a building under compartmentalized ownership for Bay Square Yokosuka Ichibankan, which
comprises a hotel, a theater, stores, residential complex, office spaces and parking lots, as a single building (67,019.04 square meters). Total floor areais the area of the portion owned exclusively by the hotel on the certified copy of the real estate registry.

－

50 －

(Note 14) The land of ACTIVE-INTER CITY HIROSHIMA comprises the entire joint ownership of right of site. The acreage is the area equivalent to JHR’s
co-ownership interest of the right to use the site (9,862,454/10,000,000 or approximately 98.62%) of the entire area of the subject land (6,468.28
square meters), which is 6,379.02 square meters. In addition, the building is a building under compartmentalized ownership for ACTIVE-INTER
CITY HIROSHIMA, which comprises Sheraton Grand Hiroshima Hotel, office spaces, retail zone, parking lots and bicycle parking lots, etc., as asingle building (6,379.02 square meters). Total floor area is the area of the exclusive area for the hotel, office spaces, stores and parking lots on thecertified copy of the real estate registry.
(Note 15) The total number of guest rooms of ACTIVE-INTER CITY HIROSHIMA is the total number of guest rooms of the main facility Sheraton Grand
Hiroshima Hotel.
(Note 16) Remaining term of the fixed-term leasehold of land of Hotel Centraza Hakata is until March 30, 2057.
(Note 17) Of the acreage of HOTEL ASCENT FUKUOKA, the area of the land leased is 113.52 square meters, and its remaining term of the fixed-termleasehold is until July 2, 2065. The acreage does not include the accessory building of 44.05 square meters.
(Note 18) Land of Hilton Nagoya is comprised of the owned land and land with superficies, and Acreage indicates total of owned land (918.39 square meters)
and land with superficies (5,805.20 square meters). Building of Hilton Nagoya is a compartmentalized ownership of Ammnat Square (Total floor
space: 91,948.34 square meters), which consists of hotel building (including retail space), office building and car parking space, etc. Total floor area
is a total of exclusive area of hotel and retail space (44,552.79 square meters), exclusive area of office in 9th floor (1,075.90 square meters) multiplied
by JHR’s co-ownership interest ratio (74,030/107,590; approximately 68.8%) (740.30 square meters) and exclusive area of office in 10th floor(1,075.90 square meters).
(Note 19) The acreage of Hilton Tokyo Narita Airport does not include the accessory building of 170.40 square meters.
(Note 20) The land of Hotel Nikko Nara is comprised of the entire joint ownership of right of site. The acreage indicates JHR’s joint ownership ratio in
registered right of site, which is 3,049.23m2, 1,185,918,257,889/2,101,131,000,000 (approximately 56.44%) of the total land (5,402.42 m2). In
addition, building of Hotel Nikko Nara is a compartmentalized ownership of Redeveloped Building 1 in front of JR Nara Station (Total floor area:
39,843.43m2), 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%). Total floor area indicates a total of the exclusive areas of the hotel and the floor space of attached buildings taken from thecertified copy of real estate registry.
(Note 21) The omitted property numbers are the property numbers of assets that have been transferred.

－

51 －

Details of assets under management 2 (acquisition price, etc.)
Property
No.

Name

Grade
(Note 1)

Acquisition
price(JPY1M)(Note 2)Carrying
amountat end ofperiod(JPY1M)(Note 3)

Appraisalvalue
at end ofperiod(JPY1M)(Note 4)

Investment
ratio
Appraisal(Acquisition
agencyprice)(Note 5)(%)(Note 6)

Collateral(Note 7)

1

Kobe Meriken Park Oriental Hotel

Upper-middle

10,90010,065

15,100J

3.4

Unsecured

2

Oriental Hotel tokyo bay

Mid-price

19,90018,172

34,100J

6.2

Unsecured

3

Namba Oriental Hotel

Mid-price

15,00014,73732,700J

4.7

Unsecured

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

6

Luxury18,90018,36331,500J

5.9

Unsecured

Upper-middle

4,100

4,160

4,280

J

1.3

Unsecuredibis Tokyo Shinjuku

Mid-price

7,243

8,136

9,650

J

2.3

Unsecured

8

The Beach Tower Okinawa

Mid-price

7,610

6,754

9,820

J

2.4

Unsecured

9

Hakone Setsugetsuka

Mid-price

4,070

3,806

5,220

J

1.3

Unsecured

10

Dormy Inn Kumamoto

Mid-price

2,334

2,185

2,960

M

0.7

Unsecured

12

the b suidobashi

Mid-price

1,120

1,234

1,940

J

0.4

Unsecured

13

Dormy Inn EXPRESS Asakusa

Economy

999

961

1,300

M

0.3

Unsecured

14

Hakata Nakasu Washington Hotel Plaza

Mid-price

2,130

2,041

4,330

J

0.7

Unsecured

15

Nara Washington Hotel Plaza

Mid-price

2,050

1,838

2,430

J

0.6

Unsecured16

R&B Hotel Ueno Hirokoji

Economy

1,720

1,751

1,920

M

0.5

Unsecured17

R&B Hotel Higashi Nihonbashi

Economy

1,534

1,495

2,050

M

0.5

Unsecured

18

Comfort Hotel Tokyo Higashi Nihombashi

Economy

3,746

3,593

5,330

M

1.2

Unsecured

22

Smile Hotel Nihombashi Mitsukoshimae

Economy

2,108

2,041

3,060

M

0.7

Unsecured24

Toyoko Inn Hakata-guchi Ekimae

Economy

1,652

1,456

2,670

T

0.5

Unsecured

25

Hotel Vista Kamata Tokyo

Economy

1,512

1,465

2,000

T

0.5

Unsecured

26

Chisun Inn Kamata

Economy

823

792

1,430

T

0.3

Unsecured

29

Hotel Keihan Universal City

Mid-price

6,000

5,985

13,600R

1.9

Unsecured

30

Hotel Sunroute Shinbashi

Mid-price

4,800

4,840

8,740

D

1.5

Unsecured

31

Hilton Tokyo Bay

Luxury26,05026,192

36,100D

8.2

Unsecured32

ibis Styles Kyoto Station

Mid-price

6,600

6,712

11,300D

2.1

Unsecured33

ibis Styles Sapporo

Mid-price

6,797

6,686

10,500J

2.1

Unsecured34

Mercure Sapporo

Mid-price

6,000

5,931

10,500J

1.9

Unsecured35

Mercure Okinawa Naha

Mid-price

3,000

2,916

7,760

J

0.9

Unsecured36

the b akasaka-mitsuke

Mid-price

6,250

6,306

6,010

J

2.0

Unsecured37

the b ikebukuro

Mid-price

6,520

6,585

7,330

J

2.0

Unsecured38

the b ochanomizu

Mid-price

2,320

2,357

2,360

J

0.7

Unsecured39

the b hachioji

Mid-price

2,610

2,693

2,780

J

0.8

Unsecured40

the b hakata

Mid-price

2,300

2,354

4,160

J

0.7

Unsecured

41

Hotel Francs

Mid-price

3,105

3,155

4,050

D

1.0

Unsecured42

Mercure Yokosuka

43

Okinawa Marriott Resort & Spa

Mid-price

1,650

1,669

2,800

D

0.5

Unsecured

Upper-middle

14,95014,85318,500J

4.7

Unsecured

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Luxury17,32017,69420,500D

5.4

Unsecured

45

CANDEO HOTELS UENO-KOEN

Mid-price

6,705

6,728

7,630

D

2.1

Unsecured

46

Hotel Centraza Hakata

Mid-price

7,197

7,413

8,490

D

2.3

Unsecured

47

Holiday Inn Osaka Namba

Mid-price

27,00027,122

27,200J

8.5

Unsecured

48

HOTEL ASCENT FUKUOKA

Economy

4,925

5,187

5,560

D

1.5

Unsecured

49

Hilton Nagoya

Luxury15,25015,58815,700D

4.8

Unsecured

50

Hilton Tokyo Narita Airport

Upper-middle

13,175

13,383

13,400J

4.1

Unsecured

51

International Garden Hotel Narita

Mid-price

9,125

9,258

9,430

J

2.9

Unsecured

52

Hotel Nikko Nara

Upper-middle

10,373

10,558

11,200D

3.2

Unsecured319,474

317,229439,390

Total(Note 1)
(Note 2)100.0

JHR categorizes hotels into the four grade classes “Luxury,” “Upper-middle,” “Mid-price” and “Economy” mainly from the perspective of average
daily rate, etc.
“Acquisition price” is the acquisition price stated on the purchase and sale agreement for beneficial interest in trust etc. (consumption tax, local
consumption tax and the acquisition expense such as broker’s fee are not included). The acceptance prices are indicated for the properties that havebeen accepted through the merger from the former JHR.

－

52 －

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)“Carrying amount at end of period” is the book value at the end of the fiscal year under review, and includes not only the amounts for real estate intrust, but also machinery and equipment, tools, furniture and fixtures, construction in progress in trust, and intangible assets.
“Appraisal value at end of period” is the appraisal value at the end of the fiscal year under review as the date of appraisal, in accordance with theasset valuation methods and standards provided in JHR’s Articles of Incorporation and the regulations set forth by The Investment Trusts Association,
Japan.
Under “Appraisal agency,” the letters indicate the appraisers for the properties as follows:
J:
Japan Real Estate InstituteM:
Morii Appraisal & Investment Consulting, Inc.
T:
The Tanizawa Sōgō Appraisal Co., Ltd.
R:
Rich Appraisal Institute Co., Ltd.
D:DAIWA REAL ESTATE APPRAISAL CO., LTD.
“Investment ratio” is the ratio of acquisition price of the respective asset held at the end of the fiscal year under review to the total amount ofacquisition price of all assets held at the end of the fiscal year under review, rounded off to one decimal place.
“Collateral” is whether or not a pledge has been established for the beneficial interest in trust.
The omitted property numbers are the property numbers of assets that have been transferred.

Details of assets under management 3 (change in portfolio tenants)
The following is the change in total number of tenants, total leasable area, total leased area, and occupancy rate of real estate
properties (in trust) under management for the past five years.

Total number oftenants(Note 1)
Total leasable area
(Note 2)
Total leased area
(Note 3)
Occupancy rate
(Note 4)(Note 1)

(Note 2)

(Note 3)(Note 4)13th period
December 2012

14th period
December 2013

15th period
December 2014

16th period
December 2015

17th period
December 2016

18th period
December 2017

37

38

57

113

128

131

288,875.32 m2

349,162.63 m2

386,826.71 m2

493,758.78 m2

587,481.02m2

687,124.54 m2

288,875.32 m2

349,162.63 m2

386,447.08 m2

493,138.06 m2

587,050.94m2

686,694.46 m2

100.0%

100.0%

99.9%

99.9%

99.9%

99.9%

Total 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 contracts under the pass-through scheme areconcluded in which trustee receives the same amount of rents, etc. from end tenants as is in principle, the total number of end tenants (excluding
tenants of parking lots, etc.) is indicated.
In principle, total 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 intsubo units, the figure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo). In this report, the same shallapply hereinafter.
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 in the lease
contract is indicated in tsubo units, the figure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo).
However, for properties for which master lease contracts under the pass-through scheme are concluded in which trustee receives the same amount ofrents, etc. with rents, etc. from end tenants as is in principle, the total area for which lease contracts have been concluded with end tenants and which
are actually leased is indicated. In this report, the same shall apply hereinafter.
Occupancy rate indicates the percentage of leased area to leasable area of respective real estate properties in trust as of the end of each fiscal period.
In this report, the same shall apply hereinafter.

Details of property assets 4 (information on major real estate)
There is no major real estate of which total annual rent accounts for 10% or more of the total annual rent of the entire portfolio. Totalannual rent of the entire portfolio is the total annual rent calculated based on Note 2 of “C. Status of portfolio diversification” on page
61.

－

53 －

Details of assets under management 5 (NOI, etc.)

1

Kobe Meriken Park Oriental Hotel

Variable/Fixed

Real estate
operating revenue(JPY 1,000)
1,195,053

2

Oriental Hotel tokyo bay

Variable/Fixed

1,729,459

1,608,209

1,185,716

3

Namba Oriental Hotel

Variable/Fixed

1,600,053

1,499,846

1,325,638

4

Hotel Nikko Alivila

Variable/Fixed

1,951,987

1,801,396

1,476,566

5

Oriental Hotel Hiroshima

Variable/Fixed

498,124

453,440

380,032

6

ibis Tokyo Shinjuku

Management contract539,330

365,195

210,898

8

The Beach Tower Okinawa

Fixed

511,017

468,095

340,735

9

Hakone Setsugetsuka

Fixed294,946

268,777

180,599

10

Dormy Inn Kumamoto

Fixed

194,460

171,456

131,36712

the b suidobashi

Variable/Fixed

114,268

102,195

77,166

13

Dormy Inn EXPRESS Asakusa

Fixed

63,99555,341

42,51414

Hakata Nakasu Washington Hotel Plaza (Note 4)

Fixed

240,000

225,000

200,000

15

Nara Washington Hotel Plaza (Note 4)

Fixed

151,000

134,000

93,000

16

R&B Hotel Ueno Hirokoji

Fixed97,294

82,162

68,58817

R&B Hotel Higashi Nihonbashi

Fixed122,207

105,436

86,42218

Comfort Hotel Tokyo Higashi Nihombashi

270,859

240,630

204,537

22

Smile Hotel Nihombashi Mitsukoshimae

152,882

137,802118,327

24

Toyoko Inn Hakata-guchi Ekimae

141,039

128,078

106,687

25

Hotel Vista Kamata Tokyo

109,959

95,13771,64426

Chisun Inn Kamata78,16470,921

59,51529

Hotel Keihan Universal City

811,595

733,698

646,15030

Hotel Sunroute Shinbashi

412,327355,295

334,26431

Hilton Tokyo Bay

1,929,388

1,631,807

1,454,530

32

ibis Styles Kyoto Station

Fixed
Variable/Fixed(Note 5)
Fixed
Variable/Fixed(Note 5)
Variable
Variable/Fixed(Note 5)
Variable/Fixed(Note 5)
Variable/Fixed(Note 5)
Management contract

597,320509,380

474,318

33

ibis Styles Sapporo

Management contract

707,094572,177

496,076

34

Mercure Sapporo

Management contract

818,109537,104

460,135

35

Mercure Okinawa NahaManagement contract

491,464

402,333

351,59436

the b akasaka-mitsuke

Variable/Fixed

249,719

231,296

209,41037

the b ikebukuro

Variable/Fixed

360,195

334,768

304,60638

the b ochanomizu

Variable/Fixed

108,640

100,252

90,14839

the b hachioji

Variable/Fixed

202,307

176,051

149,258

40

the b hakata

Variable/Fixed

252,182

240,061

219,561

41

Hotel Francs

Fixed

300,000

235,793

187,28242

Mercure Yokosuka

Variable

291,202179,336

147,888

43

Variable/Fixed

1,215,761

1,127,058

895,750

Variable/Fixed

1,482,412

1,060,219

873,824

45

Okinawa Marriott Resort & Spa
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)
CANDEO HOTELS UENO-KOEN

Fixed

350,191

329,982

290,543

46

Hotel Centraza Hakata

Variable/Fixed

865,634

623,730

373,76347

Holiday Inn Osaka Namba

Variable/Fixed

1,215,339

1,180,161

1,065,193

48

HOTEL ASCENT FUKUOKA

Fixed

436,888285,802250,728

49

Hilton Nagoya

Variable

1,388,411

714,991

578,67950

Hilton Tokyo Narita Airport (Note 6)

Variable/Fixed

398,168

394,150

322,143

51

International Garden Hotel Narita (Note 7)

Variable/Fixed

261,663259,270

200,01352

Hotel Nikko Nara (Note 8)

Variable/Fixed

Property
No.

44

Name

Rent type(Note 1)

Total
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)

NOI
(Note 2)(JPY 1,000)
926,481

NOI after depreciation(Note 3)
(JPY 1,000)
609,294

272,120

269,117

217,523

25,475,553

21,424,619

17,563,899

Under “Rent type,” “Fixed” is a property under a fixed rent structure, “Variable” is a property under a variable rent structure, “Management contract”
is a property under a management contract structure, and “Variable/Fixed” is a property under a combination of fixed and variable rent structures.
NOI = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement
obligations expenses
NOI after depreciation (net real estate operating income) = Real estate operating revenue − Real estate operating costs
For Hakata Nakasu Washington Hotel Plaza and Nara Washington Hotel Plaza, consent on disclosure of rent in units of thousand yen has not beenobtained from the lessees and is thus rounded down to the nearest million yen.
For Smile Hotel Nihombashi Mitsukoshimae, Hotel Vista Kamata Tokyo, Hotel Keihan Universal City, Hotel Sunroute Shinbashi and Hilton Tokyo
Bay, the rent structure is one that has set not only fixed rent, but also partly rent based on revenue sharing.
Hilton Tokyo Narita Airport was acquired on July 12, 2017.

－

54 －

(Note 7)(Note 8)(Note 9)International Garden Hotel Narita was acquired on July 12, 2017.
Hotel Nikko Nara was acquired on August 1, 2017.
The property numbers of assets that were transferred before the end of the previous fiscal year are intentionally omitted.

－

55 －

Details of assets under management 6 (status of rent settings of major tenants)

Tenant name(Note 1)

Property name

HMJ
(HotelManagement
Japan
Co., Ltd.)(Note 5)(Note 6)

Kobe
Meriken Park
Oriental Hotel
Oriental Hoteltokyo bay
Namba
Oriental Hotel
Hotel Nikko
AlivilaOriental Hotel
Hiroshima(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

Business
type

Hotel

Contract
commencement date
Contract
expiration date

Total leased area
(By hotel)

Total leased area
(By tenant)Ratio tototal
(Note 2)

April 1, 2012
December 31, 2019

32,663.90 m2

4.8%

April 1, 2012
December 31, 2019
April 1, 2012
December 31, 2019
April 1, 2012
December 31, 2019
April 1, 2012
December 31, 201944,833.11 m2

6.5%

19,364.33 m2

2.8%

38,024.98 m2

5.5%

13,752.22 m2

2.0%

2

Ratio tototal
(Note 2)

Annual rent
(By hotel)(Note 3)
(JPY1M)
Fixed rent
(Note 4)
Variable rent

Total annual rent
(By tenant)(Note 3)
(JPY1M)
Fixed rent
(Note 4)
Variable rent

645
(Note 7)

148,638.54 m2

21.6%

21.6% 148,638.54 m2

21.6%

Total for major tenants

148,638.54 m

Total for entire portfolio

686,694.46 m2 100.0% 686,694.46 m2 100.0%

631(Note 7)797
(Note 7)804
(Note 7)341
(Note 7)
3,221
13,747-3,221(Note 7)

3,221
13,747-The information on major tenants, which are those accounting for at least 10% of total leased area of the entire portfolio.
Ratio to total is rounded off to one decimal place.
The ratio of annual rent by hotel or by tenant may vary depending on the amount of variable rent and income from management contracts and is thus
not shown.
Fixed rent is the amount arrived at when the monthly fixed rent income based on lease contracts valid as of December 31, 2017 between JHR and the
major tenant (rent of the building itself only, excluding common area maintenance charges and signage and parking usage fees; not factoring in any
change in rent during the fiscal year) is multiplied by 12, excluding variable rents and income from management contracts.
HMJ falls under the category of interested party, etc. under the Investment Trusts Act and sponsor-related party as stipulated in the Asset Management
Company’s company rule for transactions with sponsor-related parties.
HMJ has acquired all shares of following lessees, and thus the following lessees fall under the category of interested party, etc. under the Investment
Trusts Act and sponsor-related party as stipulated in the Asset Management Company’s company rule for transactions with sponsor-related parties.
The leasing terms and conditions are as follows and the total figure of total leased area, ratio of total leased area and total annual fixed rent of themincluding HMJ are 336,209.06 square meters, 49.0% and ¥6,283 million, respectively.
Contract
Annual fixed rent
Business commencement date Total leased area
Ratio of
Annual variable
Tenant name
Property name2
type
Contract(m )total leased area
rent
expiration date
(JPY1M)
Lagoon resort Nago
July 10, 2015
550
Okinawa Marriott Resort & Spa
Hotel36,430.15
5.3%
Co., Ltd.
December 31, 2020(*)
K.K. A.I.C
ACTIVE-INTER CITY
December 18, 2015
348
Hiroshima
HIROSHIMA
Hotel
21,890.33
3.2%
December 31, 2026(*)
Management(Sheraton Grand Hiroshima Hotel)
Hotel Centraza
April 1, 2016
400
Hotel Centraza Hakata
Hotel18,105.42
2.6%
Co., Ltd.
December 31, 2019(*)
OW HotelAugust 1, 2016
576
Holiday Inn Osaka Namba
Hotel
11,501.10
1.7%
Operations KK
October 31, 2031(*)
KK NaritaKosuge
July 12, 2017
444
Hilton Tokyo Narita Airport
Hotel56,817.28
8.3%
Operations
June 30, 2037(*)
KK
July 12, 2017
336
NaritaYoshikura
International Garden Hotel Narita
Hotel21,814.93
3.2%
June 30, 2027(*)
Operations
Hotel Management
August 1, 2017
408
Hotel Nikko Nara
Hotel21,011.31
3.1%
Co., Ltd.
December 31, 2020(*)(*) For details of the variable rent arrangements for Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel (ACTIVE-INTER CITYHIROSHIMA), Hotel Centraza Hakata, Holiday Inn Osaka Namba, Hilton Tokyo Narita Airport, International Garden Hotel Narita and Hotel
Nikko Nara, please refer to “D. Overview of the hotel business; (1) Rent structures of hotels with variable rent, management contract or revenue
sharing” on page 63.
For details of the variable rent arrangements for HMJ, please refer to “D. Overview of the hotel business; (1) Rent structures of hotels with variable
rent, management contract or revenue sharing” on page 63.

－

56 －

B. Income statements for individual real estate properties (in trust) under management
The following are the individual income statements for real estate properties (in trust) under management for the fiscal year
under review (from January 1, 2017 to December 31, 2017). Figures are rounded down to the nearest thousand yen in principle,
but are otherwise noted if circumstances do not allow for the figures to be stated in units of thousand yen. Income statement
items that are not directly attributable to the property are not included. In addition, the income statement amounts shown are onan accrual basis in principle, but are otherwise noted if circumstances require the amounts to be shown on a cash basis.
Property No.

-

Property name

Portfolio total(Note 1)

1
Kobe
Meriken Park
Oriental Hotel

2

3

4

5

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Hotel Nikko
AlivilaOriental Hotel
Hiroshima

Number of operating days

-

365

365

365

365

365

(A) Real estate operating revenue subtotal

25,475,553

1,195,053

1,729,459

1,600,053

1,951,987

498,124

Fixed rent

13,064,351

645,900

631,600

797,900

804,100

341,504

Variable rent

11,253,955

548,184

1,097,859

802,153

1,147,887

156,170

Other revenue

1,157,246

969

-

-

-

450

(B) Real estate operating costs subtotal

7,911,653

585,759543,743

274,415

475,421118,092

Land lease and other rent expenses

922,891

207,024--

84,149-Property taxes

1,476,156

55,704

115,362

96,76859,39041,599Outsourcing expenses

703,933

960

960

960

1,920

960

Nonlife insurance

47,030

3,409

3,269

1,465

2,456

1,111

Depreciation and amortization

3,725,775

297,031392,778

157,213

316,398

73,394

Loss on retirement of noncurrent assets

132,908

20,15429,715

16,995

8,431

13

Other costs

902,956

1,473

1,658

1,013

2,675

1,013

(C) Net real estate operating income = (A) − (B)17,563,899

609,294

1,185,716

1,325,638

1,476,566

380,032(Reference) Occupancy rate

99.9%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

131

1

1

1

1

1

Property No.

6

8

9

ibis
The Beach Tower
Tokyo Shinjuku
Okinawa(Note 1)

Property name10

HakoneSetsugetsuka

Dormy Inn
Kumamoto

12

13

the b
suidobashi

Dormy Inn
EXPRESSAsakusa

Number of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

539,330

511,017294,946

194,460

114,268

63,995

Fixed rent

103,640

511,008

294,340

194,460

84,99963,395

Variable rent

379,154---

29,268-Other revenue

56,534

9

606

-

-

600

(B) Real estate operating costs subtotal

328,431

170,281

114,346

63,092

37,101

21,481

Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

33,82239,001

23,333

19,288

8,098

5,977

Outsourcing expenses

77,308

-

-

-

1,200

1,200

Nonlife insurance

592

1,177

651

455

199

116

Depreciation and amortization

97,177

127,359

88,17840,08825,02912,827

Loss on retirement of noncurrent assets

57,118

-

-

-

-

-

Other costs

62,411

2,741

2,183

3,260

2,575

1,360

(C) Net real estate operating income = (A) − (B)210,898

340,735

180,599

131,367

77,16642,514(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

4

1

1

1

1

1

－

57 －

Property No.

14

15

Hakata Nakasu
Nara
Washington Hotel Washington Hotel
Property name
Plaza
Plaza
(Note 2)
(Note 2)
Number of operating days
365
365

16

17

18

22

R&B Hotel
Ueno
Hirokoji

R&B Hotel
HigashiNihonbashi

Comfort HotelTokyo Higashi
Nihombashi

Smile Hotel
Nihombashi
Mitsukoshimae

365

365

365

365

(A) Real estate operating revenue subtotal

240,000

151,000

97,294

122,207

270,859

152,882

Fixed rent

240,000

146,000

96,504

122,207259,653

134,400

Variable rent

-

-

-

-

-

18,482Other revenue

0

4,000

789

-

11,205-(B) Real estate operating costs subtotal

39,00058,00028,70635,78566,321

34,554

Land lease and other rent expenses

-

-

-

5,400

-

-

Property taxes

12,00012,00011,872

8,567

26,22012,170Outsourcing expenses

1,000

3,000

840

1,200

1,614

1,200

Nonlife insurance

0

0

173

200

444

200

Depreciation and amortization

24,00041,00013,57419,01436,092

19,475

Loss on retirement of noncurrent assets

-

0

-

-

-

-

Other costs

1,000

1,000

2,246

1,402

1,949

1,508

(C) Net real estate operating income = (A) − (B)200,000

93,00068,58886,422

204,537

118,327(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

2

1

1

2

1

Property No.

24

25

26

29

30

31

Property nameToyoko Inn
Hakata-guchi
EkimaeHotel Vista
Kamata Tokyo

Chisun Inn
KamataHotel Keihan
Universal City

Hotel Sunroute
Shinbashi

HiltonTokyo Bay

Number of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

141,039

109,959

78,164

811,595

412,327

1,929,388

Fixed rent

141,039

93,534-

Variable rent-

16,35578,164

Other revenue

-

70

-

Undisclosed(Note 3)
Undisclosed(Note 3)
Undisclosed

282,266

96,84533,215(Note 3)

Undisclosed(Note 3)
Undisclosed(Note 3)
Undisclosed(Note 3)(B) Real estate operating costs subtotal

34,351

38,315

18,649165,445

78,063474,858

Land lease and other rent expenses

-

-

-

21,110-132,257

Property taxes

10,37812,0294,631

45,126

24,913

137,899

Outsourcing expenses

1,080

1,200

1,080

5,449

4,710

22,787

Nonlife insurance

255

231

99

1,403

334

3,394

Depreciation and amortization

21,39023,493

11,40687,547

21,031

177,277

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

1,246

1,361

1,432

4,808

27,073

1,241(C) Net real estate operating income = (A) − (B)106,687

71,64459,515646,150

334,264

1,454,530(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

1

1

1

4

1

－

58 －

Property No.

32

33

34

35

36

37

Property name

ibis Styles
Kyoto Station(Note 1)

ibis Styles
Sapporo(Note 1)

MercureSapporo(Note 1)

MercureOkinawa Naha
(Note 1)the bakasaka-mitsuke

the bikebukuro

Number of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

597,320707,094

818,109491,464

249,719

360,195

Fixed rent

42,33426,266

66,051-

136,383

218,489

Variable rent

551,385

639,254

631,409

480,632

113,336

140,427

Other revenue

3,600

41,573

120,648

10,832-

1,278(B) Real estate operating costs subtotal

123,001

211,018

357,973

139,869

40,30855,588Land lease and other rent expenses

-

-

40

303

-

-

Property taxes

18,06936,47548,302

22,871

15,02919,883

Outsourcing expenses

66,504

57,666

140,719

58,778

1,200

3,007

Nonlife insurance

433

854

840

852

236

426

Depreciation and amortization

35,061

76,101

76,96850,73821,88530,161

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

2,932

39,92091,102

6,324

1,957

2,109

(C) Net real estate operating income = (A) − (B)474,318

496,076

460,135

351,594

209,410

304,606(Reference) Occupancy rate

100.0%

99.4%

98.1%

100.0%

100.0%

100.0%(Reference) Number of tenants

2

5

14

1

2

4

Property No.

38

39

40

41

42

43

Property namethe bochanomizu

the bhachioji

the bhakataHotel Francs

MercureYokosuka

Okinawa
MarriottResort & Spa

Number of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

108,640

202,307

252,182

300,000

291,202

1,215,761

Fixed rent

69,000

121,441

89,522300,000-

550,000

Variable rent

39,64074,451

162,660-

247,787

665,761

Other revenue

-

6,414

-

-

43,415-(B) Real estate operating costs subtotal

18,49253,04932,620112,717

143,314

320,011Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

6,175

21,552

9,340

60,18236,47883,034

Outsourcing expenses

1,200

1,587

1,200

1,800

17,4952,400

Nonlife insurance

125

466

257

969

2,174

2,407

Depreciation and amortization

10,104

26,79320,50048,511

31,447

231,308

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

887

2,650

1,322

1,254

55,717860(C) Net real estate operating income = (A) − (B)90,148149,258

219,561

187,282

147,888895,750(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

13

2

1

1

1

－

59 －

Property No.

44

45

46

47

48

49

Property name

ACTIVE-INTERCITY
HIROSHIMACANDEOHOTELS
UENO-KOEN

Hotel Centraza
HakataHoliday Inn
Osaka Namba

HOTEL
ASCENTFUKUOKA

Hilton Nagoya

Number of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

1,482,412

350,191

865,634

1,215,339

436,888

1,388,411

Fixed rent

775,759

400,000

576,000

309,508

Variable rent

428,218

465,634

639,339-

Undisclosed(Note 3)-

Undisclosed(Note 3)
Undisclosed(Note 3)

Undisclosed
Other revenue

278,434(B) Real estate operating costs subtotal

608,587

Land lease and other rent expenses

Undisclosed--

127,380

59,648491,871

150,145

186,160

809,732--

222,206-

27,998222,401

Property taxes

116,189

17,274

14,61931,51023,20879,515

Outsourcing expenses

90,389

1,200

3,000

1,560

15,760102,960

Nonlife insurance

3,449

496

1,217

1,258

496

4,365

Depreciation and amortization

186,395

39,439248,375

114,967

34,629136,312

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

212,163

1,237

2,452

848

84,066

264,176(C) Net real estate operating income = (A) − (B)873,824

290,543

373,763

1,065,193

250,728

578,679(Reference) Occupancy rate

99.8%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

37

1

1

1

6

4

(Note 3)

Property No.

50

51

52

Property name

Hilton Tokyo
Narita Airport(*4)

International
Garden Hotel
Narita (*4)

Hotel Nikko Nara(*5)

Number of operating days

173

173

153

(A) Real estate operating revenue subtotal

398,168

261,663

272,120

Fixed rent

208,433

157,733

170,000

Variable rent

189,735

103,930

102,120

Other revenue

-

-

-

(B) Real estate operating costs subtotal

76,02561,65054,597

Land lease and other rent expenses

-

-

-

Property taxes

-

-

-

Outsourcing expenses

1,395

1,262

1,250

Nonlife insurance

1,515

688

1,179

Depreciation and amortization

72,00759,25751,593

Loss on retirement of noncurrent assets

-

-

-

Other costs

1,107

442

574

(C) Net real estate operating income = (A) − (B)322,143

200,013217,523(Reference) Occupancy rate

100.0%

100.0%

100.0%(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 3)

(Reference) Number of tenants111Variable rent includes income from management contracts. For details of the management contract, please refer to “D. Overview of the hotelbusiness; (1) Rent structures of hotels with variable rent, management contract or revenue sharing” on page 63.
Consent on disclosure of rent in units of thousand yen has not been obtained from the lessee and is thus rounded down to the nearest million yen.
Rent income, etc. is not disclosed as consent on disclosure has not been obtained from the tenant with whom a lease contract has been concluded andthus considered to be a case where disclosure cannot be made due to unavoidable circumstances.
Hilton Tokyo Narita Airport and International Garden Hotel Narita were acquired on July 12, 2017.
Hotel Nikko Nara was acquired on August 1, 2017.
The property numbers of assets that were transferred before the end of the previous fiscal year are intentionally omitted.

－

60 －

C. Status of portfolio diversification
a. Diversification by hotel type
The total annual rent, the total of acquisition price and the investment ratio by the hotel type of the assets held at the endof the fiscal year under review were as follows:
Hotel type
Total annual rent
Acquisition priceInvestment ratio(Note 1)
(Note 2) (JPY 1M)(Note 3) (JPY 1M)(Note 4) (%)
Limited-service hotel

9,682

129,798

40.6

Full-service hotel

9,015

112,095

35.1

Resort hotel

6,661

77,580

24.3

Total

25,359319,474

100.0

b. Diversification by geographical area
The total annual rent, the total of acquisition price and the investment ratio by the geographical area of the assets held at
the end of the fiscal year under review were as follows:
Geographical area
Total annual rent
Acquisition priceInvestment ratio(Note 5)(Note 2) (JPY 1M)(Note 3) (JPY 1M)(Note 4) (%)
Hokkaido

1,362

12,797

4.0

Tokyo

3,137

50,010

15.7

Kanto (excluding Tokyo)

5,799

77,075

24.1

Chubu

1,027

15,250

4.8

Kansai

6,151

77,923

24.4

Chugoku

1,709

21,420

6.7

Kyushu (excluding Okinawa)

2,011

20,538

6.4

Okinawa

4,159

44,460

13.9

Total

25,359319,474

100.0

c. Diversification by hotel grade
The total annual rent, the total of acquisition price and the investment ratio by the hotel grade of the assets held at the endof the fiscal year under review were as follows:
Total annual rent
Hotel grade(Note 2) (JPY 1M)

Acquisition price(Note 3) (JPY 1M)

Investment ratio(Note 4) (%)

Luxury6,10877,52024.3

Upper-middle

4,309

53,49816.7

Mid-price

13,600169,43653.0

Economy

1,341

19,0196.0

Total

25,359319,474

100.0

d. Diversification by building age
The total annual rent, the total of acquisition price and the investment ratio by the building age of the assets held at theend of the fiscal year under review were as follows. The building age is the period from the date stated as the date of new
construction on the registration or registration record to the last day of December 2017:
Total annual rent
Acquisition priceInvestment ratio
Building age(Note 2) (JPY 1M)(Note 3) (JPY 1M)(Note 4)(%)
More than 5 years,
6,061
84,30226.4
less than 10 years (inclusive)
More than 10 years,
4,683
64,27720.1
less than 20 years (inclusive)
More than 20 years

14,614

170,895

53.5

Total

25,359319,474

100.0

－

61 －

e. Diversification by remaining contract term
The total annual rent and the ratio of the total annual rent of the concerned properties to the total annual rent of all assets
held at the end of the fiscal year under review by the remaining contract term of the assets held at the end of the fiscal
year under review were as follows, where the remaining contract term is the period from the last day of December 2017 to
the lease contract expiration date:
Remaining contract termLess than 5 years (inclusive)
More than 5 years,
less than 10 years (inclusive)
More than 10 years,
less than 20 years (inclusive)
Total

Total annual rent
(Note 2)(JPY 1M)
17,019Ratio of total annual rent
to total
(%)
67.1

3,968

15.7

4,370

17.2

25,359100.0

f. Diversification by rent type
The total annual rent and the ratio of the total annual rent of the concerned properties to the total annual rent of all assets
held at the end of the fiscal year under review by the rent type of the assets held at the end of the fiscal year under review
were as follows, where fixed rent refers to fixed rent contracts and variable rent, etc. refers to variable rent contracts andmanagement contracts:
Total annual rent
Ratio of total annual rent
Rent type(Note 2)to total(JPY 1M)(%)
Fixed rent
13,747
54.2
Variable rent, etc.
11,61145.8
Total
25,359100.0(Note 1)
(Note 2)

Hotels are categorized as limited-service hotels, full-service hotels or resort hotels according to the manner of operation.
“Total annual rent” is the amount of (i) the amount arrived at when monthly fixed rent (rent of the building itself only, excludingcommon area maintenance charges and signage and parking usage fees; not factoring in any change in rent during the fiscal year) inlease contracts at the end of the fiscal year under review is multiplied by 12, plus (ii) revenue sharing, variable rent or income frommanagement contracts.
In addition, the assumptions of the total annual rent of the hotels with revenue sharing, with variable rent or operated under amanagement contract structure are as follows:
The amount of (i) the variable rent actually generated from January 1, 2017 to December 31, 2017
The Nine HMJ Hotels
and (ii) the amount arrived at when the monthly fixed rent at the end of the fiscal year underreview is multiplied by 12.
The amount of the total amount of income from management contracts or variable rent actually
The Six Accor Hotels
generated from January 1, 2017 to December 31, 2017.
The amount of (i) the variable rent actually generated from January 1, 2017 to December 31, 2017
The Six the b Hotels
and (ii) the amount arrived at when the monthly fixed rent at the end of the fiscal year underreview is multiplied by 12.
Hilton Tokyo Narita Airport
The amount of (i) variable rent calculated based on actual GOP or sales from January 1, 2017 toInternational Garden Hotel Narita December 31, 2017, plus (ii) the amount arrived at when the monthly fixed rent at the end of theHotel Nikko Narafiscal year under review is multiplied by 12.
Chisun Inn Kamata
The amount of variable rent actually generated from January 1, 2017 to December 31, 2017
Smile Hotel Nihombashi
Mitsukoshimae
Hotel Vista Kamata Tokyo
The amount of (i) the variable rent actually generated from January 1, 2017 to December 31, 2017
Hotel Keihan Universal Cityand (ii) the amount arrived at when the monthly fixed rent at the end of the fiscal year underHotel Sunroute Shinbashi
review is multiplied by 12.
Hilton Tokyo Bay
Hilton Nagoya
For details of the contracts of the hotels with revenue sharing, with variable rent or operated under a management contract structure,please refer to “D. Overview of the hotel business; (1) Rent structures of hotels with variable rent, management contract or revenue
sharing” on page 63.
(Note 3) “Acquisition price” is the acquisition price stated on the purchase and sale agreement for beneficial interest in trust etc. (consumption
tax, local consumption tax and the acquisition expense such as broker’s fee are not included). The acceptance prices are indicated forthe properties that have been accepted through merger.
(Note 4) “Investment ratio” is the ratio of total acquisition price of the assets held at the end of the fiscal year under review that are of therespective type to the total of acquisition price of all assets held at the end of the fiscal year under review, rounded off to one decimal
place.
(Note 5) Tokyo means Tokyo metropolitan area. Kanto (excluding Tokyo) means Kanagawa, Chiba, Saitama, Ibaraki, Gunma, Tochigi and
Yamanashi prefectures. Chubu means Aichi, Mie, Shizuoka, Nagano, Gifu, Niigata, Toyama, Ishikawa and Fukui Prefectures. Kansai
means Kyoto, Osaka, Shiga, Hyogo, Nara and Wakayama prefectures. Chugoku means Hiroshima, Okayama, Tottori, Yamaguchi and
Shimane prefectures. Kyushu (excluding Okinawa) means Fukuoka, Nagasaki, Miyazaki, Kumamoto, Saga, Oita and Kagoshima
prefectures. Okinawa means Okinawa prefecture.

－

62 －

D. Overview of the hotel business(1) Rent structures of hotels with variable rent, management contract or revenue sharing
PropertyNo.

The
TwelveHMJ
HotelsThe Six
Accor
HotelsThe Six
the b
HotelsOther
hotelswithvariablerentorrevenuesharing

Name

Rent type

Method of calculating variable rent and income from management contracts

Variable/Fixed

When total GOP of the five HMJ hotels exceeds GOP base amount(set at ¥3,351 million / year), the amount arrived at when the amountexceeding GOP base amount is multiplied by 85.0%.
GOP base amount is set individually for each hotel for such purposes as
payment of variable rent from each hotel. The breakdown of GOP baseamount is presented below (Note 1).

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

43

Okinawa Marriott Resort & Spa

Variable/Fixed44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Variable/Fixed(Note 2)46

Hotel Centraza Hakata

Variable/Fixed

47

Holiday Inn Osaka Namba

Variable/Fixed

50

Hilton Tokyo Narita Airport

Variable/Fixed

51

International Garden Hotel Narita

Variable/Fixed

52

Hotel Nikko Nara

Variable/Fixed

6

ibis Tokyo Shinjuku

32

ibis Styles Kyoto Station

33

ibis Styles Sapporo

34

Mercure Sapporo

35

Mercure Okinawa Naha

42

Mercure Yokosuka

12

the b suidobashi

36

the b akasaka-mitsuke

37

the b ikebukuro38

the b ochanomizu

39

the b hachioji

40

the b hakata

22

When hotel GOP exceeds GOP base amount (set at ¥700 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 90.0%
When hotel GOP exceeds GOP base amount (set at ¥468 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 82.5%
When hotel GOP exceeds GOP base amount (set at ¥425 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 90.0%
When hotel GOP exceeds GOP base amount (set at ¥650 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 92.5%
When hotel GOP exceeds GOP base amount (set at ¥550 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 86.5%
When hotel GOP exceeds GOP base amount (set at ¥360 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 98.0%
When hotel GOP exceeds GOP base amount (set at ¥470 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 91.5% (Note 3)
Amount equivalent to GOP
Amount equivalent to GOP

Management
contract(Note 4)

Amount equivalent to GOP
Amount equivalent to GOP
Amount equivalent to GOP

VariableAmount linked to GOP

Variable/Fixed

Amount linked to GOP (Note 5)

Smile Hotel Nihombashi Mitsukoshimae

Fixed +
Revenue sharing

25

Hotel Vista Kamata Tokyo

Fixed +
Revenue sharing

26

Chisun Inn Kamata

29

Hotel Keihan Universal City

30

Hotel Sunroute Shinbashi

31

Hilton Tokyo Bay

Amount that is a certain percentage of sales exceeding the threshold(Note 5)
When hotel total sales from January 1 to December 31 of every year
exceeds ¥270 million, the amount arrived at when the amount exceeding¥270 million is multiplied by 32.5%
Amount that is the monthly GOP multiplied by 85.0%(¥0 if the amount is below ¥0).
Amount that is a certain percentage of sales exceeding the threshold(Note 5)
Amount that is a certain percentage of sales exceeding the threshold(Note 5)
Amount that is a certain percentage of sales exceeding the threshold(Note 5)49

Hilton Nagoya

Variable
Fixed +
Revenue sharing
Fixed +
Revenue sharing
Fixed +
Revenue sharing
Variable－

Variable rents linked to hotel sales, etc. (Note 5)63 －(Note 1)

Breakdown of the GOP base amount set individually for the five HMJ hotels

Hotel name

Kobe Meriken

Oriental Hotel tokyo
bay

Namba Oriental
Hotel

Hotel Nikko Alivila

Oriental Hotel
Hiroshima

Total¥599,900¥693,200¥832,200¥995,700¥230,000¥3,351,000

thousandthousandthousandthousandthousandthousandPark Oriental Hotel
Annual GOP baseamount(Note 2)
(Note 3)(Note 4)(Note 5)The indicated structures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
The variable rent from August 1, 2017 to December 31, 2017 is the amount arrived by multiplying the amount exceeding GOP base amount (setat ¥204,200 thousand) by 83.0%, when such occurs.
The management contract structure is a structure for hotel real estate owned by JHR in which JHR entrusts an operator to operate the hotel andtakes in the outcome of that business as real estate operating revenue. Specifically, JHR, the owner of the hotel real estate, concludes amanagement contract with an operator and entrusts the operator with the tasks necessary to run the hotel business. JHR receives the hotelrevenue achieved from the hotel business (operation) by the operator and, at the same time, pays a management fee to the operator. This hotelrevenue achieved is recognized as “real estate operating revenue through management contract” and is equivalent to the rent that is the realestate operating revenue under the leasing structure.
The detailed content of the contract is not disclosed as consent on disclosure has not been obtained from the lessee.

(2) Major indicators of the hotel business
The following tables indicate the figures related to the hotel business of the Twelve HMJ hotels, the Six Accor hotels and theSix the b hotels for the operating period from January 1, 2017 through December 31 2017, based on the data provided by thehotel lessees etc. Furthermore, while these indicators 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 therespective hotels, as the room rates and profit margins, etc. of the respective rooms available for sale are not uniform, among
other reasons. As such, the indicators are no more than the reference figures.
(a) The Twelve HMJ Hotels
Kobe
Meriken Park
Oriental Hotel
Ratio tototal sales(%)

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Ratio tototal sales(%)

Hotel Nikko Alivila

Ratio tototal sales(%)

Oriental Hotel
Hiroshima

Ratio tototal sales(%)

Ratio tototal sales(%)

The Five HMJ
HotelsTotal/Average
Ratio tototal sales(%)

Occupancy rate

84.1%

－

98.7%

－

95.7%

－

87.0%

－

85.0%

－

91.0%

－

ADR
(Note 1)

17,005－

19,456－

19,852－

28,314

－

9,749

－

19,856－

RevPAR(Note 2)

14,296－

19,200－18,998－24,636

－

8,287

－

18,060－Total sales

5,381

100.0

6,838

100.0

2,887

100.0

6,389

100.0

2,153

100.0

23,647

100.0

Rooms department

1,836

34.1

3,889

56.9

1,970

68.2

3,958

61.9

756

35.1

12,40952.5

Food & beveragedepartment

3,256

60.5

2,459

36.0

124

4.3

1,919

30.0

1,332

61.9

9,090

38.4

Tenant department

63

1.2

237

3.5

754

26.1

2

0.0

23

1.0

1,079

4.6

Other departments(Note 3)

226

4.2

252

3.7

38

1.3

510

8.0

42

1.9

1,068

4.5

1,245

23.1

1,985

29.0

1,776

61.5

2,346

36.7

414

19.2

7,765

32.8

GOP

－

64 －

Okinawa Marriott
Resort & Spa

Sheraton Grand
Hiroshima Hotel(Note 4)

Ratio tototal sales(%)

Ratio tototal sales(%)(Note 6)(Note 7)(Note 8)(Note 9)Ratio tototal sales(%)

Ratio tototal sales
(%)

85.8%

－

89.7%

－

94.6%

－

96.5%

－

85.5%

－

82.9%

－

21,348－

17,698－

11,707－18,362－

10,208

－

7,221

－

RevPAR(Note 2)

18,314－

15,874－

11,071－

17,725

－

8,725

－

5,985

－

Total sales

4,151

100.0

3,348

100.0

2,464

100.0

2,074

100.0

3,238

100.0

1,438

100.0

Rooms department

2,663

64.1

1,543

46.1

866

35.1

2,033

98.0

1,947

60.1

1,112

77.4

Food & beveragedepartment

1,044

25.2

1,704

50.9

1,357

55.1

－

－

1,192

36.8

314

21.9

Tenant department

63

1.5

－

－

225

9.1

30

1.5

52

1.6

6

0.4

Other departments(Note 3)

382

9.2

101

3.0

16

0.6

11

0.5

46

1.4

5

0.3

1,440

34.7

968

28.9

942

38.3

1,341

64.7

929

28.7

567

39.5

Ratio to
total
sales
(%)

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

Ratio tototal sales(%)

International
Garden Hotel
Narita(Note 6)
Ratio tototal sales(%)

ADR(Note 1)

Hotel Nikko Nara
(Note 7)(Note 2)

Holiday Inn Osaka Hilton Tokyo Narita
Namba
Airport(Note 5)

Occupancy rate

GOP

(Note 1)

Hotel Centraza
HakataThe Twelve HMJ
HotelsTotal/Average(Note 8)
Ratio to
total
sales
(%)

Occupancy rate

79.6%

－

88.5%

－

ADR
(Note 1)

12,510－

16,251－

RevPAR(Note 2)

9,963－

14,382－

Total sales

2,970

100.0

43,329100.0

Rooms department

1,327

44.7

23,90055.2

Food & beveragedepartment

1,592

53.6

16,294

37.6

Tenant department

34

1.2

1,491

3.4

Other departments(Note 3)

16

0.5

1,644

3.8

GOP

713

24.0

14,666

33.8

ADR: Represents average daily rate, which is calculated by dividing total rooms revenue for a certain period (excluding service charges) by the
total number of rooms sold during the period. Holiday Inn Osaka Namba, the Six Accor hotels and the Six the b hotels do not request service
charges. The same shall apply hereinafter.
RevPAR: Represents revenue per available room, which is calculated by dividing total rooms revenue for a certain period (excluding service
charges) by the total number of rooms available for sale during the period. Revenue per available room equals the product of ADR andoccupancy rate. The same shall apply hereinafter.
Figures for the other departments include sales of the department for sale of goods.
The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
For Hilton Tokyo Narita Airport which JHR acquired on July 12, 2017, the annual figures are for throughout the year including those prior to
the acquisition.
For International Garden Hotel Narita which JHR acquired on July 12, 2017, the annual figures are for throughout the year including thoseprior to the acquisition.
For Hotel Nikko Nara which JHR acquired on August 1, 2017, the annual figures are for throughout the year including those prior to theacquisition.
For Total/Average of the Twelve HMJ hotels, figures are calculated by JHR as reference since no figures have been provided by the hotel
operators or hotel lessees.
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.
The same shall apply hereinafter.

－

65 －

(b) The Six Accor Hotels
ibisTokyo Shinjuku

ibis Styles
Kyoto Station

Ratio to
total
sales
(%)

ibis Styles
SapporoRatio to
total
sales
(%)

MercureSapporoRatio to
total
sales
(%)

MercureOkinawa Naha

Ratio to
total
sales
(%)

Mercure Yokosuka

Ratio to
total
sales
(%)

Total/Average(Note)

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

Occupancy rate

74.1%

－

94.6%

－

89.5%

－

84.6%

－

82.9%

－

84.6%

－

85.3%

－

ADR

12,636－

11,697－

10,882－

13,127－

11,412－

12,230－11,944－

RevPAR

9,369－

11,066

－

9,741

－

11,110

－

9,464

－

10,345－

10,185－

Total sales

773

100.0

977

100.0

1,219

100.0

1,351

100.0

1,096

100.0

1,037

100.0

6,454

100.0

Rooms
department

704

91.1

868

88.8

988

81.1

1,156

85.5

898

81.9

604

58.3

5,219

80.9

Food &
beveragedepartment

55

7.2

100

10.3

206

16.9

184

13.6

169

15.4

418

40.3

1,133

17.6

Other
departments

14

1.8

9

0.9

24

2.0

12

0.9

29

2.6

15

1.4

102

1.6

379

49.0

551

56.4

639

52.4

631

46.7

491

44.8

311

30.0

3,004

46.5

GOP
(Note)For Total/Average, figures are calculated by JHR since no figures have been provided by the hotel operators or hotel lessees.

(c) The Six the b Hotels
the bsuidobashi

the bakasaka-mitsuke

Ratio to
total
sales
(%)

the b
ikebukuro

Ratio to
total
sales
(%)

the b
ochanomizu

Ratio to
total
sales
(%)

the b
hachioji

Ratio to
total
sales
(%)

the b
hakataRatio to
total
sales
(%)

Total/Average(Note)

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

Occupancy rate

89.1%

－

87.4%

－

90.1%

－

92.9%

－

90.4%

－

92.3%

－

90.4%

－

ADR

10,851－

11,051－

10,623－

10,739

－

7,044

－

8,565

－

9,445

－

RevPAR

9,667

－

9,654

－

9,573

－

9,977

－

6,369

－

7,908

－

8,535

－

Total sales

351

100.0

433

100.0

617

100.0

263

100.0

548

100.0

509

100.0

2,721

100.0

Rooms
department

349

99.6

430

99.2

611

99.2

262

99.6

456

83.1

505

99.2

2,614

96.0

Food &
beveragedepartment

－

－

－

－

－

－

－

－

88

16.0

－

－

88

3.2

Other
departments

2

0.4

3

0.8

5

0.8

1

0.4

5

0.9

4

0.8

20

0.7

164

46.7

235

54.2

331

53.6

119

45.1

189

34.4

268

52.6

1,304

47.9

GOP
(Note)For Total/Average, figures are calculated by JHR since no figures have been provided by the hotel lessees.

－

66 －

E. Status of capital expenditures
a. Planned capital expenditures (Note 1)
The following table shows major estimated capital expenditures items for renovation work planned as of the end of the fiscal
year under review for real estate properties (in trust) under management by JHR. Expenditures are expected to total ¥3,250
million, which consists of capital expenditures of ¥3,186 million (Note 2) and repair expenses of ¥63 million, for the next
fiscal year.
Estimated
Name of property, etc.
PurposeScheduled period
construction costs(Location)(JPY1M)
Kobe Meriken Park Oriental Hotel
From April 2018
Renewal of telephone switchboard
50(Kobe-shi, Hyogo)
to May 2018
Oriental Hotel tokyo bay (Urayasu- Splitting of suite guestroom andFrom October 2018120
shi, Chiba)
relocation of Mama Salon
to November 2018
Namba Oriental Hotel (Osaka-shi,
From January 2018
Renewal of guest rooms on the 6th floor
78
Osaka)
to February 2018
Okinawa Marriott Resort & Spa
Replacement of air-conditioning facilities
From September 2018
260
(Nago-shi, Okinawa)for guestrooms
to December 2018
Holiday Inn Osaka Namba
Renewal of guest rooms on the 6th andFrom January 2018
58
(Osaka-shi, Osaka)
7th floors
to February 2018
Holiday Inn Osaka Namba
From June 2018
Renewal of guest rooms on the 12th floor
30(Osaka-shi, Osaka)
to June 2018
Hilton Nagoya
Renewal of drainage for sewage and gray
From June 2017
55
(Nagoya-shi, Aichi)
watercheckto January 2018
Hotel Centraza Hakata
From October 2018
Major renovation works
3,100(Fukuoka-shi, Fukuoka)
to March 2019
Total

3,753

(Note 1) New construction and renewal work 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.
(Note 2) Expected construction cost for the major renovation works of Hotel Centraza Hakata is not included in total for next year since its constraction work
will be completed in March 2019.

b. Capital expenditures during the year (Note)
For real estate properties (in trust) under management by JHR, major construction work conducted during the fiscal year
under review that represents capital expenditures is as below. Capital expenditures for the fiscal year under review totaled¥2,898 million, and repair expenses that were accounted for as expense in the fiscal year under review totaled ¥49 million.
In aggregate, ¥2,948 million of construction work was carried out.
Estimated
Name of property, etc.
Purpose
Periodconstruction costs(Location)(JPY1M)
Kobe Meriken Park Oriental Hotel Renewal of disaster prevention
From May 201745
(Kobe-shi, Hyogo)switchboard
to December 2017
Kobe Meriken Park Oriental Hotel
From April 2017
Relocation of bridal salon
76(Kobe-shi, Hyogo)
to December 2017
Oriental Hotel tokyo bay
From January 2017
Renewal of automatic fire alarm equipment
50(Urayasu-shi, Chiba)
to July 2017
Namba Oriental Hotel
From February 2017
Renewal of guest rooms on the 7th floor
77(Osaka-shi, Osaka)
to March 2017
ibis Tokyo Shinjuku
From May 2017
Replacement of piping
136(Shinjuku-ku, Tokyo)
to August 2017
Replacement of interior fittings andibis Tokyo Shinjuku
From May 2017
furniture in guest rooms on the 3rd through312(Shinjuku-ku, Tokyo)
to August 2017
10th floors
Hakone Setsugetsuka
Replacement of air-conditioning facilities
From June 201799
(Ashigarashimogun, Kanagawa)within the building
to June 2017
Hilton Tokyo Bay (Urayasu-shi,
From May 2017
Renewal of disaster prevention facilities
69
Chiba)to July 2017
Total
867
(Note 1) New construction and renewal work will include those for buildings, attached facilities, etc. as well as items classified as furniture and fixtures.

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67 －