Japan Hotel REIT Investment Corporation
Midterm Financial Results Briefing 18th Period (FY12/2017)

August 23, 2017

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

Table of Contents
Ⅰ．Midterm Settlement of Accounts for FY12/2017 – Highlights
１． Highlights of Midterm - June 2017

Appendix １ JHR’s Characteristics
3

Ⅱ．Summary of Midterm Settlement of Accounts &Revenue Forecast for the Full Fiscal Year
１． Midterm Results for the Fiscal Year Ending Dec. 20175

２． Revenue Forecast for the Full Fiscal Year Ending Dec. 2017

6

３． Balance Sheet

7

Ⅲ．External Growth

１．Simultaneous Pursuit of Stability and Upside Potential

27

２．Key Points to Promote Growth Cycle

28

３．External Growth Strategy

29

４．Internal Growth Strategy

30

５．Financial Strategy

31

６．Benefits Program for Unitholders

32

Appendix ２ Information on Properties

１． Properties Acquired in 20179

１．Property List

34

２． Continuous Property Acquisitions

10

２．Summary of Lease Contracts

36

３． Portfolio

11

３．Portfolio Map

38

４． Portfolio Diversification

12

４．The Five HMJ Hotels – Highlights

39

Appendix ３ Investors Composition and Investment Unit Price

Ⅳ．Internal Growth
１． Rent Structures

14

１．Major Unitholders and Unitholders of Investment Units

41

２．Changes in Investment Unit Price and Market Capitalization

42

２． Performance of Major Hotels Adopting
Variable Rent Scheme

15

Appendix ４ Summary of the Asset Management Company

３． Active Asset Management

17

１．Summary of the Asset Management Company

44

４． Capital Expenditure and Depreciation18

２．Features and Governance of the Asset Management Company

45

Ⅴ．Financial Status
１． Financial Status

20

Ⅵ．Market Environment
１． Market Environment

24

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

1Ⅰ．Midterm Settlement of Accounts for FY12/2017 – Highlights

１．Highlights of Midterm - June 2017
2. Internal Growth (*2, 3, 4, 5)

billion (*2)

End of FY12/2016

41 properties / JPY286.8 billion◆Public offering in Jun.

Acquired 3 properties / JPY32.6 billion◆Launch of the second global offering

2017◆Lender formation reinforcement(new bank participation)
International Garden
Hotel Narita

JPY13.1 billion

JPY9.1 billion

Average Life of Debt

Actual Results (2017)

Cost for Interest-Bearing
Debt

Hotel Nikko Narita

JPY32.6B

JPY18.6B

JPY10.3 billion
End of Aug. 2017

44 properties / JPY319.4 billion (Anticipated）

2,155

2,000

LTV (*6)(net basis:

18.9%up）

2,877

1,500
FY12/2014 FY12/2015 FY12/2016 FY12/2017
15th Period 16th Period 17th Period 18th Period(Forecast)

Changes in Market Capitalization
and Investment Unit Price（JPY M）（JPY）

450,000

Market Capitalization
Investment Unit Price of JHR

400,000

100,000
350,000

40.0%
4.5 years

80,0001.2%

60,000(*1) Includes JPY17.3 billion of ACTIVE-INTER CITY HIROSHIMA acquired in December 2015.
(*2) Includes JPY 7.1 billion of Hotel Centraza Hakata acquired in April 2016.
(*3) The Seven HMJ Hotels are the Five HMJ Hotels (Kobe Meriken Park Oriental Hotel,(*3) Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila and Oriental(*3) Hotel Hiroshima) plus Okinawa Marriott Resort & Spa and Sheraton Grand Hiroshima(*3) Hotel (the major facility of ACTIVE-INTER CITY HIROSHIMA). The Nine HMJ Hotels are(*3) the Seven HMJ Hotels plus Hotel Centraza Hakata and Holiday Inn Osaka Namba.
(*4) The Six Accor Hotels are ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles(*3) Sapporo, Mercure Sapporo, Mercure Okinawa Naha and Mercure Yokosuka.
(*5) The Six the b Hotels are the b akasaka-mitsuke, the b ikebukuro, the b ochanomizu,(*3) the b hachioji, the b hakata and the b suidobashi.
(*6) LTV as of the end of June 2017 is 40.5%.
(*7) Net basis means dividend without reflecting gain on sales of properties.

3

15.0%up（net basis）

120,000

Post-acquisition of
3 new properties

Hilton Tokyo
Narita Airport

Total Funds
Total Acquisition
Raised throughPrice
Public Offering

2,500

3. Strengthening of Financial Base
Focus on maintaining sound financial
stability98

300,000
250,000
200,000

40,000150,000
100,000

20,00050,000006/2017

JPY49.3B（net basis:

33.5%up）

6/2016

JPY78.3B

38.1%up

3,000

5.0%up2,975

12/2016

Total Funds
Total Acquisition
Raised through(*1,2)
Price
Public Offerings

6 Accor Hotels

6/2015

JPY54.3

9 HMJ Hotels

12/2015

Acquired 4 properties /14,845
15,315
3.2%
9,206
9,652
4.8%
6 the b Hotels
8,720
8,433
-3.3%
Total
12,261
12,5992.8%
Forecast of Year-on-Year Increase in
Variable Rent, etc. for Full Year 2017
7 HMJ Hotels+JPY388M 6 the b Hotels-JPY74M
Revenue Sharing
JPY122M
6 Accor Hotels+JPY164M and others

Actual Results (2016)

3,590

3,420

3,500

6/2014◆Public offering in Jul.

Variance

12/2014

JPY24.0 billion (*1)

First Half of2017

Impact of Selling properties

6/20132016

Acquired 2 properties /First Half of
2016

(JPY）

4,000

12/2013◆Public offering in Jan.

RevPAR（JPY）

12/201236 properties / JPY225.7 billion

End of FY12/2015

RevPAR growth continues inregional cities

6/2012

Ongoing Acquisitions of High-Quality Properties

Steady Growth of Dividends (*7)

4/2012

1. External Growth

Ⅱ．Summary of Midterm Settlement of Accounts &Revenue Forecast for the Full Fiscal Year

１．Midterm Results for the Fiscal Year Ending Dec. 2017
(Unit: JPY M)
FY12/2016

FY12/2017
Midterm Forecast
Previous Time(A)

Midterm
ActualProperties

Major Causes of Variance

Variance
Ratio(B) - (A)No. of Properties

38

41

41

ー

ー

Acquisition Price

239,626

286,801

286,801

ーー

Operating Revenue

9,390

11,056

11,272215

1.9%Real Estate
Operating Revenue

9,390

11,056

11,272215

1.9%

Fixed Rent

6,052

6,842

6,814

-28

-0.4%

Variable Rent

3,338

4,213

4,457

244

5.8%

－

－

－

－

－

1,375

2,009

1,907

-102

-5.1%

NOI (*2)

8,014

9,046

9,364

318

3.5%

Depreciation

1,603

1,829

1,756

-73

-4.0%

0

1

1

0

－

5

56

18

-37

－

－

－

－

－

6,405

7,159

7,588

429

6.0%

722

879

847

-31

-3.5%

Gain on Sale ofReal Estate
Properties
Operating Expenses on
Real Estate Properties

ProfitandLossComparison with
Previous Forecast

Midterm
Actual(B)

Asset Retirement
Obligations Expenses
Loss on Retirement ofNoncurrent Assets, etc
Loss on Sales of Real
EstateNOI after
Depreciation (*2)
Other Operating
Expenses
Operational Revenue

5,682

6,280

6,740

460

7.3%

Non-operating
Expenses

814

832

789

-43

-5.2%

Ordinary Income

4,868

5,447

5,951

503

9.2%

90

－

－

－

－

4,778

5,447

5,951

503

9.2%

Extraordinary Losses
Net Income(Midterm)

5(1) Operating revenue – Variable rent
• Increase/Decrease in variable rent and income frommanagement contracts
The nine HMJ Hotels
JPY267M
The six Accor Hotels
JPY026M
The six the b Hotels-JPY049M(2) Operating revenue – Fixed rent, etc.
• Increase in fixed rent
JPY002M• Decrease in utilities income, etc.
-JPY030M* Regarding the utilities income, about the same amount is posted as
expenses for utilities. Therefore, there is little impact on net income by adecrease in utilities income.
(*1) For detail, please refer to Midterm Financial Report for the Fiscal Year(*1) Ending December 31, 2017 (January 1, 2017-June 30, 2017) dated(*1) August 22, 2017.
(*2) Each is calculated using the following formula:(*1) NOI (Net Operating Income) =Real estate operating revenue − Real estate operating costs+ Depreciation + Loss on retirement of noncurrent assets+ Asset retirement obligations expenses(*1) NOI after depreciation =Real estate operating revenue − Real estate operating costs

２．Revenue Forecast for the Full Fiscal Year Ending Dec. 2017
(Unit: JPY M)
FY12/2016

FY12/2017
Previous Forecast

ActualProperties

Profit
and
Loss

(A)

Forecast this time

Comparison with
Previous Forecast(B)(B) - (A)Annualized

Variance
Ratio

No. of Properties

41

44

44

44

ー

ー

Acquisition Price

286,801

319,474

319,474

319,474

ーー

Operating Revenue
22,107
Real Estate
Ratio 22,107 Ratio
Operating Revenue
Fixed Rent
57.5％ 12,714 55.9％

25,51425,573

26,64258

0.2%

25,514 Ratio

25,573 Ratio

26,64258

0.2%

14,255 55.7％

14,240 55.9％

14,904-14-0.1%

Variable Rent
42.5％
Gain on Sale ofReal Estate
Properties
NOI (*2,3)
NOI Yield
Depreciation
Loss on Retirement ofNoncurrent Assets, etc.
NOI after
Depreciation (*2,3)
NOI Yield after
Depreciation
Other Operating
Expenses
Operating Income
Non-operating
Expenses, etc.
Ordinary Income
Extraordinary Losses
Net Income

11,259 44.3％

11,332 44.1％

11,73772

0.6%

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

9,392 44.1％
ー

ー

ー

ー

ー

ー

18,8296.6%
3,294

21,2886.7%
3,849

21,3496.7%
3,814

22,188
6.9%
4,049

60
0.0%
-34

0.3%

18

72

72

72

ー

15,517

17,366

17,461

18,066

95

5.4%

5.4%

5.5%

5.7%

0.0%

1,632

1,960

1,938

1,999

-22

ー

13,885

15,405

15,523

16,067

117

0.8%

1,665

1,912

1,829

1,838

-82

12,22097
12,123

13,493ー

13,693ー

14,228
ー

200
ー

1.5%

13,492

13,692

14,227

200

1.5%

740

706

706

332

ー

ー

12,865

14,19814,39814,559200

1.4%

3,761,907

4,010,847

4,010,847

4,010,847

ー

ー

3,420

3,540

3,590

3,630

50

1.4%

+5.0%

+1.4%

6

0.6%

Major Causes of Variance(1) Operating revenue – Variable rent
• Increase/Decrease in variable rent, income frommanagement contracts, and rent from revenue sharing
The nine HMJ Hotels
JPY160M
The six Accor Hotels
JPY054M
The six the b Hotels-JPY082M
Others including rent fromrevenue sharing, etc.
-JPY059M(2) Operating revenue – Fixed rent, etc.
• Increase in fixed rent
JPY013M• Decrease in utilities income, etc.
-JPY027M* Regarding the utilities income, about the same amount is posted as
expenses for utilities. Therefore, there is little impact on net income by adecrease in utilities income.
(*1) For detail, please refer to Midterm Financial Report for the Fiscal Year(*1) Ending December 31, 2016 (January 1, 2016-June 30, 2016) dated(*1) August 22, 2017.
(*2) Each is calculated using the following formula:(*1) 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３．Balance Sheet(Unit: JPY M)（As of）

FY12/2016
End of Fiscal Year

FY12/2017
End of Midterm

12.31.2016

6.30.2017

Variance（As of）

ASSETS

FY12/2016
End of Fiscal Year

FY12/2017
End of Midterm

12.31.2016

6.30.2017（注3）

Variance

LIABILITIES AND NET ASSETS

Current Assets

29,05022,300-6,75026,373

20,200-6,173

2,071

1,521

-549

605

577

-27

Property and Equipment, at Cost

288,441

287,369-1,071Net Property and Equipment

250,690249,891-798

94,60893,806-802

154,841

154,8410Cash and Deposits(*1)

Operating Accounts
Receivables
OthersBuildings in Trust(*2)

Land in Trust

Current Liabilities

14,364

21,035

6,671

Operating Accounts Payable

666

567

-98

Short-Term Loans Payable

1,800

100

-1,700

0

0

0

9,679

18,458

8,778

Accounts Payable

1,107

886

-221

Advances Received

899

902

3

Others

211

120

-91
-7,705Current Portion of Investment
Corporation Bonds
Current Portion of Long-Term
Loans Payable

Others (*3)

1,240

1,243

3

121,524

113,818

Intangible Assets

34,27834,203-74

Investment Corporation Bonds

22,60022,6000

Other Assets

3,472

3,274

-197

Long-Term Loans Payable

92,09984,466-7,633

170

170

0

Tenant Leasehold and Security
Deposits

5,660

5,673

12

3,301

3,103

-197

Derivative Liabilities

676

594

-82

387

318

-68

Others

487

484

-3

135,889

134,854-1,034

Unitholders' Capital

134,829

134,8290

Capital Surplus

21,746

21,7460

Dividend Reserve

13,867

0-13,867

0

13,127

13,127

12,126

5,951-6,174

Leasehold and Security
Deposits
OthersDeferred Assets

Long-Term Liabilities

TOTAL LIABILITIESNET ASSETS

Reserve for Temporary Difference
Adjustment
Unappropriated Retained
Earnings for the Period

OthersTOTAL NET ASSETSTOTAL ASSETS

317,878

309,988-7,890TOTAL LIABILITIES AND NET ASSETS(*1) Cash and deposits in trust is included.
(*2) The sum of buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture and fixtures in trust, and construction in progress in trust.
(*3) The sum of machinery and equipment, tools, furniture and fixtures, and construction in progress.

7

-580

-520

59

181,989

175,133-6,855

317,878

309,988-7,890

Ⅲ．External Growth１．Properties Acquired in 2017
Hilton Tokyo Narita Airport

International Garden Hotel Narita

Hotel Nikko Nara

AcquisitionPrice

JPY13,175M

JPY9,125M

JPY10,373M# of Rooms

548

463

330

Rent Period

20 years

10 years

3 years

5.5%

5.8%

6.0%

Brand /
Operator

Hilton / HMJ Group

Domestic Brand / HMJ GroupNikko / Okura Nikko Hotel Management

Rent
Structure

Fixed + Variable

Fixed + Variable

Fixed + Variable

NOI Yield(*1)

FeatureInvestment
Strategy•

Full-service hotel associated with theinternational brand name “Hilton” andachieved the highest ADR in the area•••

Pursue efficient management by leveraging HMJ platform
Approach broad range of guests by hotels with different grade in the same area
Seek synergies through operating multiple hotels in the same area•

Full-service hotel within the middle-pricerange that benefits from demand in thevolume zone of the market(*1) NOI yield is calculated as hypothetical annualized NOI forecast for FY12/2017 divided by anticipated acquisition price.

9•

Full-service hotel with the “Hotel Nikko”
brand name and the largest number ofrooms in Nara city•

Pursue efficient management by leveraging
HMJ platform

２．Continuous Property Acquisitions
 Realize portfolio quality enhancement and continuous external growth by leveraging JHR’s strength as an independent J-REIT
specializing in hotel assets
 Acquired 24 properties and approximately JPY210 billion worth of hotel assets since the merger

2014

2015

2016

2017

Acquired 3 assets (JPY15.7B)

Acquired 9 assets (JPY57.0B）

Acquired 5 assets (JPY61.0B）

Acquired 3 assets (JPY32.6B)

Okinawa Marriott
Resort & Spa
JPY14,950M

Holiday Inn
Osaka Namba
JPY27,000M

Hilton Tokyo
Hotel Nikko Nara
Narita Airport
JPY10,373M
JPY13,175M+ International Garden Hotel Narita
JPY9,125M

ibis Styles Sapporo
JPY6,797M

Mercure Sapporo
JPY6,000M+1 other asset

Sheraton Grand
Hotel Hiroshima
JPY17,320M+7 other assets

Hilton Nagoya
JPY15,250M+3 other assets

Aggregate Acquisition Price (JPY: Millions)+30.2%+9.1%+21.4%+7.0%
122,285

130,883

158,902173,429

April 2012
（Effective Dateof Merger）

FY12/2012(13th Period)

FY12/2013(14th Period)

FY12/2014(15th Period)

286,801

225,723

FY12/2015(16th Period)

FY12/2016(17th Period)

No. of Properties

28

28

28

30

36

NOI Yield(%) (*1)

-

6.2%

6.2%

6.3%

6.6%

-

4.5%

4.8%

5.0%

5.3%

-

33,74838,013

48,42766,360NOI Yield (After
Depreciation) (*1)
NAV Per Unit (JPY)+11.4%+27.1%

41
6.6%

319,474

FY12/2017（18th Period)
Forecast
44
6.7%(annualized 7.1%)(annualized 6.9%)(annualized 5.9%)(annualized 5.7%)

78,62979,393

5.4%

5.5%(*1) NOI yield (after depreciation) is calculated as NOI (after depreciated) divided by the aggregate acquisition price.
(*1) NOI yield for FY12/2012 is hypothetical annualized based on actual NOI after merger of Former NHF with Former JHR on April 1, 2012. NOI yield for FY12/2017 is the forecast NOI yield for FY12/2017 of our portfolio(*1) of 44 properties based on the relevant assumptions used in operating forecasts.

10

Aim forFurther
Growth

３．Portfolio Portfolio consisting of competitive hotels in areas with strong leisure lodging demand Selectively invest in locations with high growth potential of leisure demand such as Strategic Investment Areas
Portfolio Summary

Strategic Investment Areas and Locations of Properties

Total Assets

Newly acquired properties
Existing properties

JPY319.4B

Strategic Investment Areas

No. of Hotels

Okinawa Area

Hokkaido
Area

44 Hotels（35 in Strategic Investment Areas)

No. of Guest Rooms

11,486 Rooms

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

23 wards in Tokyo

11

４．Portfolio Diversification
 Well-balanced rent structure and geographic diversification
 47% of Portfolio carry major international hotel brands, which attract inbound visitors
By Area and Rent (*1) (*2)
(F)
1.0%

(F)
1.8%
(V)
2.0%
(F)
5.3%
(V)
2.2%
（F)
5.6%

(V)
4.7%

(V)
3.4%

(F)
8.4%

Others
17%

(F)
14.8%

Ibis / Mercure(Accor)10%

Kanto(excl. Tokyo)
22.8%

Hotel Nikko
9%

Hilton17%

Holiday Inn
(IHG)
8%

Sheraton
5%
Marriott5%

International Brand: 47%
(V)
8.0%

Kansai
23.4%

Oriental Hotels
16%

The b
7%

Comfort Hotel(Choice Hotels)
1%

Okinawa
15.6%

(V)
8.5%

Dormy Inn, etc.
(Kyoritsu
Maintenance)
5%

(V)
3.8%

Hokkaido
5.7%
Chubu
Tokyo
5.3%
12.2%
Chugoku
7.2%

Kyushu(excl. Okinawa)
7.8%

By Hotel Brand (*2)

By Grade / Hotel Type (*2)
Economy
6%

(F)
7.0%
(V)
11.4%

(F)
12.0%

Luxury24%
Mid-price
53%

Fixed Rent (F)Variable Rent (V)

55.9%

44.1%

(*1) Based on forecasts of annualized rent revenues for FY12/2017.
(*2) Based on total acquisition price after the acquisitions of three properties.

12

Uppermiddle
17%

Resort24%

FullService
35%

LimitedService
41%

Ⅳ．Internal Growth１．Rent Structures
Stability

Upside(FY12/2017(Anticipated)）

Rent structure (*1)

Fixed rent

Fixed rent + Revenue sharing

Fixed rent + Variable Rent

Variable rentManagement contract

Type of contract

Lease contract

Lease contract

Lease contract

Lease contract

Management contract--

GOP of hotel

-

Total

○

○

○

-

A certain percentage of sales
exceeding the threshold

A certain percentage of
hotel GOP

A certain percentage of
hotel GOP

Operating revenue

JPY3,175M（11.9%）

JPY3,424M（12.9%）

JPY15,061M（56.5%）

JPY1,803M（6.8%）

JPY3,178M（11.9%）

JPY26,642M（100.0%）

Fixed rent,
etc. (*2)

JPY3,175 M（11.9%）

JPY2,990M（11.2%）

JPY7,733M（29.0%）

JPY530M（2.0%）JPY474M（1.8%）

JPY14,904M（55.9%）

Variable rent-

JPY434M（1.6%）

JPY7,328M（27.5%）

JPY1,272M（4.8%）

JPY2,703M（10.1%）

JPY11,737M（44.1%）

Involvement in hotel
operation

Low

Low

High

High

High

-

CAPEX paid by JHR

1) Renewal of building
and facilities

1) Renewal of building
and facilities< 3) Strategic investment>

No. of properties

13

51) Renewal of building
and facilities
2) Fixtures and equipment
3) Strategic investment
181) Renewal of building
and facilities
2) Fixtures and equipment
3) Strategic investment
31) Renewal of building
and facilities
2) Fixtures and equipment
3) Strategic investment
544

Acquisition price

JPY42,580M(13.3%)

JPY40,470M(12.7%)

JPY189,060M(59.2%)

JPY17,723M(5.5%)

JPY29,640M(9.3%)

JPY319,474M(100.0%)

The Beach Tower Okinawa

Hilton Tokyo Bay

The Nine HMJ Hotels

Hilton Nagoya, etc.

The Five Accor Hotels (*3)

CANDEO HOTELS UENOKOEN, etc.

Hotel Keihan Universal City,
etc.

The Six the b Hotels, etc.

Type of
rent

Fixed

Variable

Hotels<Three new properties>
Hilton Tokyo Narita Airport
International Garden
Hotel Narita
Hotel Nikko Nara(*1) Rent structure is categorized according to the rent contract for hotels of each acquired asset.
(*2) Fixed rent include rent based on rent contract from non-hotel portion of acquired asset (offices, signage, car parks, retail shops, etc.).
(*3) The Five Accor Hotels are five hotels excluding Mercure Yokosuka from The six Accor Hotels.

14-

19,026
FY2016
Second Half
Actual19,314FY2017
Second Half
Forecast

16,947FY2016

17,331FY2017

Full
ActualFull
Forecast

２．Performance of Major Hotels Adopting Variable Rent Scheme
Occupancy Rate (RHS)

ADR (LHS)

RevPAR (LHS)

The Nine HMJ Hotels（JPY）

25,00020,00015,00010,0005,000
017,260-2.0%

16,915

14,845
86.0%

+3.2%

15,315FY2016First Half
Actual20,818+1.5%

21,136

19,026+1.5%

19,314

19,103-0.3%

19,052

16,947+2.3%

17,331

90.5%

91.4%

91.4%

88.7%

91.0%

FY2017First Half
Actual

FY2016
Second Half
Actual

FY2017
Second Half
Forecast

FY2016
Full Year
Actual

FY2017Full Year
Forecast

100.0%
80.0%
60.0%
40.0%
20.0%
0.0%

The Six Accor Hotels（JPY）

15,00010,833+5.1%

11,383

11,827 +4.8%

12,391

9,206
85.0%

+4.8%

9,652

10,522 +5.2%

11,070

84.8%

89.0%

89.3%

87.0%

87.1%

FY2017First Half
Actual

FY2016
Second Half
Actual

FY2017
Second Half
Forecast

FY2016
Full Year
Actual

FY2017Full Year
Forecast

10,0005,000
0FY2016First Half
Actual11,344+4.9%

11,904

9,868

+5.0%

10,366100.0%
80.0%
60.0%
40.0%
20.0%
0.0%

The Six the b Hotels（JPY）

12,000
8,000
4,000

0

9,646

-2.0%

9,450

9,704

-1.2%

9,583

9,674

-1.6%

9,517

8,720

-3.3%

8,433

8,520

+1.1%

8,613

8,619

-1.1%

8,524

90.4%

89.2%

87.8%

89.9%

89.1%

89.6%

FY2016First Half
Actual

FY2017First Half
Actual

FY2016
Second Half
Actual

FY2017
Second Half
Forecast

FY2016
Full Year
Actual

FY2017Full Year
Forecast15

100.0%
80.0%
60.0%
40.0%
20.0%
0.0%

19,314
FY2017
Second Half
Forecast

19,026FY2016
Second Half
Actual

16,947FY2016

17,331FY2017

Full
ActualFull
Forecast

２．Performance of Major Hotels Adopting Variable Rent Scheme (Cont.)
Occupancy Rate (RHS)

ADR (LHS)

RevPAR (LHS)

Total of Three Hotel Groups（JPY）
18,00016,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

14,182

12,261

+0.1%

+2.8%

16,554+1.7%

16,836

14,919+2.2%

15,24814,19912,59915,39912,00010,00013,597

4,000
2,000
0

+2.5%

13,934

60.0%

20.0%
86.5%

88.7%

90.1%

90.6%

88.3%

89.7%

FY2016First Half
Actual

FY2017First Half
Actual

FY2016
Second Half
Actual

FY2017
Second Half
Forecast

FY2016
Full Year
Actual

FY2017Full Year
Forecast

16,265Total
The Nine HMJ
Hotels12,01016,760+3.0%
12,431
+3.5%

8,000
6,000

100.0%

40.0%

GOP（JPY M）
18,00014,00015,54280.0%

Forecast of GOP

16,000+0.9%

The Six Accor
Hotels

2,885

The Six the b
1,370
Hotels

+5.4%
-6.1%

Full FY2016
Actual3,042
1,286
Full FY2017
Forecast

16

0.0%

３．Active Asset Management

Three Hotel Groups

Hotels Implement Active Asset Management at both hotel and REIT sides
 Maximize internal growth through both revenue enhancement and cost control
FY12/2017 Forecasts (annualized） (JPY M)

Active Asset Management

52,360 Strategic capital expenditure (e.g., renovations for RevPAR increase) Rebranding according to each hotel’s characteristics
 Sharing guest by hotels located nearby in the same group Renewal of a hotel booking system

Hotel Operating Costs

33,332

 Integration of back-office operations
 Optimization of staffing Joint purchasing in the same group
 Reduction of utility costs

GOP

19,027

Hotel Sales

Real Estate
Operating
Revenue

REIT

Rents
Three Hotel Groups

18,557

Other Hotels

8,085

Real Estate Operating Costs

4,453

NOI

22,188

 Revision of rent scheme to capitalize on hotel GOP growth• The Five HMJ Hotels, CANDEO HOTELS UENO-KOEN, etc.

 Optimization of PM/BM/Trust fees, and reduction of ground rent

Maximize DPU

17

４．Capital Expenditure and Depreciation
 Strengthen competitiveness and maintain/improve asset value by continuing investment in CAPEX(JPY M)
4,000

(*1)

CAPEX ICAPEX IICAPEX III

Depreciation

3,814

3,500

3,294

3,000

2,772

2,500

2,072
1,869

2,000

2,212

2,242

2,322

2,214

2,297

1,000

500

668
793
49
156

0
(*2) (*3) FY2006

1,079

1,236
786

600

591
283

518

378

322

90
177

FY2007

FY2008FY2009

118

555

783

593

1,811
36

1,306
1,096

2,619

2,400

1,842

1,500

999

3,144

233
36
322
FY2010

198

854
58
167

622

629

CY2012

CY2013

258
516
21
213
281
FY2011

640

511

343

1,996

203
760

CY20141,134

CY20151,324

CY2016

CY2017(Forecast)(*1) CAPEX I is capital investment related to renewal of buildings, facilities, and equipment which is required to maintain proper values of buildings. CAPEX II is capital investment for fixtures and furnishings that are not directly related to building structures or(*1) facilities but necessary for operating hotels. CAPEX III is strategic capital investment for renewing guest rooms, banquet rooms and restaurant for maintaining/improving the competitiveness of the hotels.
(*2) The actual for FY2006 is the actual of the former JHR for the period from IPO to August 2006 (6.5 months). The actual for FY2007 is the sum of the actual of the former JHR from September 2006 through August 2007 and that of the former NHF from IPO to September(*1) 2007 (15.5 months). The actual for FY2008 is the sum of the actual of former JHR from September 2007 through August 2008 and that of former NHF from October 2007 through September 2008 (the same method applies for FY2009 to FY2011). The actual of CY2012 is(*1) the actual from January 2012 through December 2012 (depreciation is the annualized number for the 13th period), and the actual for CY2013 through CY2016 is actual number for the period from January through December each year. The plan for CY2017 for the(*1) period from January 2017 through December 2017 is based on the operating forecast in the Midterm Financial Report dated August 22, 2017.
(*3) The former NHF spent JPY31M (from October 2011 through December 2011) and former JHR spent JPY90M (from September 2011 through December 2011), respectively, in addition to the amount indicated above.

18

Ⅴ．Financial Status

１．Financial Status
Changes in Costs for Interest-Bearing Debt (*1) and
Average Life of Debt (*2)
Average Life of Debt
1.8%

Costs for Interest-Bearing Debt
5.0 years
4.5 years

1.6%
1.5%

3.7 years
1.5%

1.3%

Loan

1.2%

Term of Interest-Bearing Debt

2.0

End of FY12/2016

1.0

1.1%
1.0%

Short-termLong-term(payable within 1 year)
Long-term

0.0

End of Midterm of
FY12/2017(*1) Weighted-average costs for interest-bearing debt (including up-front fee, etc.) as of the end of (18th Period)

End of FY12/2016(17th Period)

Changes in LTV (Total Asset Base)
43.1%

40.5%

(End of June 2017)17,20015,022

15,00013,217 13,544

2,000

9,225
15,022

5,000

35.0%

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

85.2%

90.9%

（JPY M）

10,000End of FY12/2015(16th Period)

0.1%
14.7%

7.7%

20,00039.7%

End of FY12/2014(15th Period)

End of Midterm of 12/2017

Repayment Schedule of Interest-Bearing Debt

42.8%

40.0%

1.4%

(*) Long-term loan: Loans with original
maturity over one year.
Short-term loan: Loans with original
maturity within one year.

each year/midterm. Rounded off to one decimal place.
(*2) Average life of debt as of the end of each year/midterm.

45.0%

82.0%

3.0
1.2%

End of FY12/2015(16th Period)

18.0%

82.1%

1.2%

End of FY12/2014(15th Period)

End of Midterm of 12/2017

17.9%

Investment
corporation bond

5.0
4.0

3.3 years

1.4%

End of FY12/2016(Years)
6.0

1.7%

1.7%

Breakdown of Interest-Bearing Debt

End of FY12/2016(17th Period)

End of Midterm of
FY12/2017(18th Period)

11,2179,225

12,3006,000
10,216

1,500
13,544

13,10012,3009,500

13,10012,30010,800 11,200 10,216

9,500

2021

2025

0
2017

20

2018

2019

2020

2022

2023

2024

2026

１．Financial Status (Cont.)
Lender List for Interest-Bearing Debt

Status of Credit Rating(Unit: JPY M)

Lenders

Balance As of the End ofPrevious Period(As of the End of Dec. 2016)

Balance As of the End ofThis Midterm Period(As of the End of June. 2017)

Variance

Balance

Balance

Percentage

Balance

Percentage

Sumitomo Mitsui Banking Corporation

25,556

20.3%

25,532

20.3%-24

Shinsei Bank, Limited

14,21011.3%

14,201

11.3%-9Mizuho Bank, Ltd.

13,98011.1%

13,980

11.1%-

Sumitomo Mitsui Trust Bank, Limited

10,163

8.1%

9,672

7.7%

-491

Resona Bank, Limited

9,593

7.6%

9,583

7.6%

-10

The Tokyo Star Bank, Limited

8,570

6.8%

8,564

6.8%

-6

The Nomura Trust and Banking Co, Ltd.

4,868

3.9%

4,863

3.9%

-5

Mitsubishi UFJ Trust and Banking Corp.

3,435

2.7%

3,435

2.7%

-

Development Bank of Japan Inc.

2,980

2.4%

2,980

2.4%

-

The Bank of Fukuoka, Ltd.

2,610

2.1%

2,610

2.1%

-

The Hiroshima Bank, Ltd.

2,427

1.9%

2,427

1.9%

-

The Chiba Bank, Ltd.

2,213

1.8%

2,209

1.8%

-4

Aozora Bank, Ltd.

1,935

1.5%

1,935

1.5%

-

Sompo Japan Nipponkoa Insurance Inc.

937

0.7%

933

0.7%

-4

The Higo Bank, Ltd.

100

0.1%

100

0.1%

-

103,579

82.1%

103,024

82.0%

-554

2,000

1.6%

2,000

1.6%

0

1,500

1.2%

1,500

1.2%

0

6,000

4.8%

6,000

4.8%

0

3,000

2.4%

3,000

2.4%

0

9,000

7.1%

9,000

7.2%

0

1,100

0.9%

1,100

0.9%

0

22,60017.9%

22,60018.0%

0126,179

100.0%

125,624100.0%-554

Borrowing (Sub-Total)
3rd Investment Corporation Bond
without collateral
4th Investment Corporation Bond
without collateral
5th Investment Corporation Bond
without collateral
6th Investment Corporation Bond
without collateral
7th Investment Corporation Bond
without collateral
8th Investment Corporation Bond
without collateral
Investment Corporation Bond (SubTotal)
Total Interest-Bearing Debt

Japan Credit Rating Agency,
Ltd. (JCR)

A+ (stable）

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

A(stable）

Fixed Interest Rate Ratio

As of end of Dec. 2016

98.0％

21

As of end of Jun. 201797.8％

１．Financial Status (Cont.)
Negative Goodwill

Changes in Unrealized Gains＜Policy for Use of Negative Goodwill＞
1. Add JPY262M (50-year amortization amount of negative goodwill)（JPY100M）

to dividends every period.

4,000Book Value
Unrealized Gains

3,987

3,996

1,138

1,155

2,849

2,840

39.9%

40.7%

2. In addition to above, dividends will be increased in response to the following.
・Cope with losses caused by property dispositions
・Cope with loss on retirement of noncurrent assets

3,021

・Cope with dilution of dividend per unit
・Cope with inconsistency between tax and accounting treatments*(*Amortization of fixed-term leasehold of land, amortization of asset

787

retirement obligations, etc.)＜Amount to be Used in FY12/2017＞
JPY262M

Cope with dilution of negative goodwill：：

Cope with loss on retirement of noncurrent assets：

JPY070M

Total amount of negative goodwill to be used in
FY12/2017： JPY706M

50-year amortization amount of negative goodwill

Balance of negative goodwill
as of Dec 31, 2017 (Forecast)

2,054
2,000

JPY374M

1,312
22
1,289

JPY12.4B(*) The “50-year amortization amount of negative goodwill” includes amortization,etc. of fixed-term leasehold of land, asset retirement obligations, etc. of Hotel
Centraza Hakata and HOTEL ASCENT FUKUOKA, which were purchased in theyear ended December 2016 (17th Period).

1,662
98

348

2,233
1,563

1,705

0
Rate of
UnrealizedGains

JHR expects the amount of amortizations, etc. to be JPY152M for the fiscal year
ending December 2017 (18th Period).

1.7%

6.3%

35.2%

FY12/2012 FY12/2013 FY12/2014 FY12/2015 FY12/2016 FY12/2017(13 Period) (14 Period) (15th Period) (16th Period) (17th Period) Midterm(18th Period)th(*) Appraisal value this book value plus unrealized
gains.

22

20.4%

Ⅵ．Market Environment

１．Market Environment
 The number of overnight guests is solid
Both Japanese and inbound increased in the first half of 2017 The number of inbound visitors increases at a faster pace than
the government’s target: 40M by 2020, 60M by 2030

Changes in the Number of Overnight Guests in Japan

Changes in the Number of Inbound Visitors（Guest nights in millions）（Thousands）

No. of inbound overnight guests
No. of Japanese overnight guests
504
500

417
400

18

439
26

466

474

33

45

66

25,00069

24,03919,73720,000+17.3%
15,000+1.8%

399

Visitors

492

300

200

No. of Inbound

413

432

429

438

423

230

234

35

38

16,43814,01013,413
10,363

10,000

8,358
6,218

100

195

5,000

196

0

0

2011

2012

2013

2014

2015

2016

2016
Jan.Jun.

2011

2017
Jan.Jun.

Source: Statistics of Overnight Travel by Japan Tourism Agency(*) Rounded off to the nearest millions of yen.

2012

2013

2014

2015

2016

Source: Number of International Visitors to Japan by Japan National Tourism Organization (JNTO)(*) The values for 2017 Jan.-May. are provisional values, and Jun.-Jul. are estimated values.

242016 2017
Jan.-Jul. Jan.-Jul.

１．Market Environment (Cont.)
 Stable Japanese demand for domestic travels

 New supply of rooms is increasing, mainly in Tokyo and Osaka

Changes in Travel Spending among Japanese Travelers

Number of New Supply of Rooms in Hotels/Ryokans in Japan
Actual(JPY T)30

Supply Forecast＜Japan＞（No. of Rooms）

Overseas Travel

39,36840,00030,000

25

23.9
4.2

23.8
4.4

24.5
22.7
4.4

4.4

3.8

4.5

4.7

15.4

13.8

15.8

16,5174.9

16.0

Domestic Travel：
+1.0%

2015
+0.8%

2016
+1.1%

2017
+2.5%

2018
+2.7%

2019～
+2.2%

excl. Tokyo, Osaka

+0.4%

+0.6%

+1.6%

+1.8%

+1.2%

2015

2016

2017

2018

2019~

＜Tokyo＞（No. of Rooms）
10,000

11.6

5,000

1.8

1.8

0

2.4

2.5

Ratio of New Supply

4,700

6,107

7.3

5,000

0

8,815

5,845

2015年
+3.3%

2016年
+4.1%

2017年
+4.9%

2018年
+6.5%

2019年以降
+5.1%

2015

2016

2017

2018

2019~

＜Osaka＞
6,059

2015

2016

2016
2017
Jan.-Jun.Jan.-Jun.

Ratio of New Supply

6,892
4,518

1,014

1,402

4,321

2015年
+1.3%

2016年
+1.8%

2017年
+7.6%

2018年
+5.3%

2019年以降
+7.7%

2015

2016

2017

2018

2019~

1,738

0

2014

7,545

（No. of Rooms）

7.3

2013

10,4741,700

10,0002012

29,453

Ratio of New Supply

11.6

5

2011

36,171

9,915

0

4.0

10

14.9

12,406

10,000

4.5

15

14.7

20,000

4.3

20

4.9

24.2

25.0

43,045

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

Source: Travel and Tourism Consumption Trends survey by Japan Tourism Agency

25

Appendix 1
JHR’s Characteristics

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

Pursue UpsideManagement
contract structure

Fixed rent structure

Variable rent
structure

Revenue sharing
structure

Active Asset Management Strategies

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

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

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

Increase in rental income, etc. throughimprovement in hotels’ performance

Proportion of Rental Income

Proportion of Rent Structures(FY2017 (annualized))

Fixed rent only

13 properties

Variable rent(*)
Fixed rent, etc.

56%

44%

Variable rent, etc. (*)

31 properties(*) Variable rent
Revenue sharing
Income from management contracts(*) Fixed rent + variable rent structure
Fixed rent + revenue sharing structure
Variable rent structure, Management contract structure27

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

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

Highcapability inachievinginternal
growthStrong ability
in acquiringproperties
Stablefinancingcapability

High capability in achieving internal growth Management approach through active asset management
strategies that achieves a good balance between stability andupside potential
 Increase in hotel revenue through collaboration with highquality operators
 Attract inbound demand through enhanced international
brand portfolio
 Strengthen and maintain competitiveness by investing inappropriate capital expenditures

Stable financing capability
 Secure sound and stable finance Diversification of financing methods

28

３．External Growth Strategy
Recognition of External
Environment

Basic Policies

Trend of the Hotel
Investment Market

 Acquire highly competitive hotel real estate, etc. in areas that have potential to attract “demand by both domestic
and inbound leisure customers” in the medium to long-term

 Amid gradually recovering
economy, hotel assets have gained
a firm position as an investment
target due to increase in hotelrevenue resulting from stable
domestic demand and has become
intense growing inbound demandmainly from Asian countries. On
the other hand, since the yields ofother asset classes are decreasing
and investors, including new REITs
specializing in hotels, areincreasing, competition to acquire
hotel assets has become intense inhotel investment market.
 New supply of hotels is on the rise,
responding to the increasing
number of inbound visitors.
Depending on specifications,locations, capability of hotel
operators, the superiority or
inferiority in competitiveness ofhotel may be seen more clearly.

 Improve profitability, stability, and quality of the overall portfolio

Key Measures
 Emphasize the superiority of buildings and facilities (infrastructure), operations (services), and locations of hotel
real estate, etc.
• The prime investment targets are “full-service hotels” and “resort hotels” that have high barriers to entry due tooperation and management know-how, capital outlay and locations• In the case of “limited-service hotels,” the creditworthiness of the hotel lessee, the age of the building, location,
guest room composition and profitability are important• Hotels specialized in selling single rooms are carefully chosen• Especially, proactively review the purchase of hotels that have potential for internal growth by implementing
active asset management
 Strategic investment areas
・Hokkaido area, Tokyo and bay area, Osaka/Kyoto area, Fukuoka area, and Okinawa area
 Investigation and planning of the internal growth strategy upon property acquisition
・Investigate the appropriate rent level and rent structure upon renewal, etc., cost reduction possibilities, andpossibilities to improve buildings and facilities
・Particularly, if the hotel pays variable rent, etc., promote internal growth through collaboration with lessees
and/or operators

29

４．Internal Growth Strategy
Recognition of External
Environment
Hotel Market Environment
 In addition to stable domestic
leisure demand, the number of
inbound tourists, mainly from
Asian countries, is continuing torise. Amid such growth expectation
for Japan’s tourism and hotelindustries, although there is some
impact by supply of new hotels
and minpaku (private lodging for afee), demand for accommodation
is expected to continue steadily,
driven by domestic and inboundleisure demand.

Basic Policies
 Pursue both stability and upside potential by steadily implementing growth strategies

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

30

５．Financial Strategy
Recognition of External
Environment
Trend of Financing Environment
and Interest Rates
 The amount of bond issues by
J-REITs is increasing while theamount of financing by equity
offering has been comparatively
lower for the past several years.
Lending stance by financial
institutions remains well.
 Although short-term and longterm interest rates are expected to
be stable due to the Bank ofJapan’s monetary easing policy,
need to be paid close attention toa fluctuation of long-tern interest
rates provoked by international
factors.

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

Key Measures
 Maintain LTV level at a maximum of 50% (total asset base) for the time being
 Diversify financing methods such as public offerings and issuance of investment corporation bonds
 Improve financial stability by extending and diversifying repayment periods and fixing interest rates, etc.
 Optimize borrowing costs

31

６．Benefits Program for Unitholders
Benefits program to unitholders to gain a better understanding, improve their satisfaction and expand the investor base
JHR expanded the benefits program in 2017 by adding four HMJ hotels, aggregated coverage to 15 hotels
Eligible recipients of complimentary coupons
Complimentary coupons will be sent to those who hold ten or more JHR
units at the end of June every year (end of the midterm settlement)＜FY2017 (Plan)＞
Eligible Unitholders: 14,346

Details of the benefits program
Five complimentary coupons for accommodations and five complimentary
coupons for restaurants (*)
10% discount from the best-offered accommodation rates and 10% discountfor restaurants

Valid period: One year between October 2017 and September 2018(*) Complimentary coupons for restaurants are only available at selected hotels.

Hotels that offer the benefits program
The nine HMJ Hotels and the six Accor Hotels

Record of coupon redemption(Nine months from October 2016 to June 2017)＜Eligible Unitholders: 13,213＞
Accommodation
Restaurant
No. ofNo. of Coupon
No. ofNo. of Coupon
Coupons Used
Users
Coupons Used
Users
988



The Nine HMJ Hotels

Kobe Meriken Park
Oriental Hotel

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Oriental Hotel
Hiroshima

Hotel Nikko
Alivila

1,240

1,830

5,143

The Six Accor Hotels

ibis Tokyo Shinjuku

ibis Styles Kyoto Station

ibis Styles Sapporo

New

Okinawa Marriott
Resort & Spa

Sheraton Grand
Hiroshima Hotel

Hotel Centraza Hakata

Holiday Inn
Osaka Namba

Mercure Sapporo

32

Mercure Okinawa Naha

Mercure Yokosuka

Appendix 2
Information on Properties

１．Property List (1/2)(As of June 30, 2017)
Appraisal ValueNo.

Property Name

Hotel Type
(*1)

Grade
(*2)

No. of
Guest
Rooms

LocationAge(*3)

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

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

18th Period(as of 6.30.2017)
Appraisal
Value
CAP Rate(JPY M)

Investment
Ratio
(*6)

Revenue from
Real Estate
Operation(JPY1,000)(*7)

P/L from RealNOI Yield
NOI
Estate Operation (Annualized/(JPY1,000)(JPY1000)
Forecast)
(*7)
(*7)
(*8)

1

Kobe Meriken Park Oriental Hotel

Full-service

Upper-middle

319

Hyogo

22.0

10,90010,057

14,4005.2%

14,4005.2%

3.8%

439,560

305,100

157,423

8.3%

2

Oriental Hotel tokyo bay

Full-service

Mid-price

503

Chiba

22.2

19,90018,28834,1004.5%

34,100

4.5%

6.9%

778,218

717,912521,644

8.6%

3

Namba Oriental Hotel

Limited-service

Mid-price

258

Osaka

21.3

15,00014,81332,0004.3%

32,700

4.3%

5.2%

779,956

729,919635,677

9.8%

4

Oriental Hotel Hiroshima

Full-service

Upper-middle

227

Hiroshima

23.8

4,100

4,092

4,250

7.3%

4,280

7.5%

1.4%

214,568

192,226

154,878

10.9%

5

Hotel Nikko Alivila

ResortLuxury396

Okinawa

23.3

18,90018,46929,2005.0%

30,0005.0%

6.6%

578,959

504,025

341,239

9.5%

6

The Beach Tower Okinawa

ResortMid-price

280

Okinawa

13.3

7,610

6,792

9,420

4.7%

9,420

4.7%

2.7%

255,508

234,378

170,972

6.1%

7

Hakone Setsugetsuka

ResortMid-price

158

Kanagawa

10.8

4,070

3,831

5,020

5.2%

5,030

5.2%

1.4%

147,472

134,627

91,953

6.6%

8

Dormy Inn Kumamoto

Limited-service

Mid-price

291

Kumamoto

9.4

2,334

2,179

2,950

5.8%

2,960

5.8%

0.8%

97,23086,326

66,3447.4%

9

the b suidobashi

Limited-service

Mid-price

99

Tokyo

30.9

1,120

1,227

2,040

4.3%

1,940

4.3%

0.4%

55,86049,45337,215

8.9%

10

Dormy Inn EXPRESS Asakusa

Limited-service

Economy

77

Tokyo

20.3

999

945

1,300

4.1%

1,300

4.1%

0.3%

31,997

27,667

21,520

5.5%

11Hakata Nakasu Washington Hotel Plaza

Limited-service

Mid-price

247

Fukuoka

22.3

2,130

2,043

4,350

4.7%

4,340

4.7%

0.7%

120,000

112,000

100,000

10.5%

12Nara Washington Hotel Plaza

Limited-service

Mid-price

204

Nara

17.3

2,050

1,858

2,430

5.2%

2,430

5.2%

0.7%

75,00067,00047,000

6.5%

13

R&B Hotel Ueno-hirokoji

Limited-service

Economy

187

Tokyo

15.2

1,720

1,757

1,920

4.1%

1,920

4.1%

0.6%

48,64740,47333,687

4.7%

14

R&B Hotel Higashi-nihonbashi

Limited-service

Economy

202

Tokyo

19.3

1,534

1,505

2,050

4.7%

2,050

4.7%

0.5%

61,10352,76643,285

6.8%

15

Comfort Hotel Tokyo Higashi Nihombashi

Limited-service

Economy

259

Tokyo

9.4

3,746

3,609

5,320

4.5%

5,330

4.5%

1.3%

135,395

120,426

102,408

6.4%

16

Smile Hotel Nihombashi Mitsukoshimae

Limited-service

Economy

164

Tokyo

20.3

2,108

2,037

3,060

4.2%

3,060

4.2%

0.7%

85,682

78,141

68,556

6.5%

17

Toyoko Inn Hakata-guchi Ekimae

Limited-service

Economy257

Fukuoka

15.8

1,652

1,466

2,680

4.7%

2,670

4.7%

0.6%

70,51964,03253,336

7.7%

18

Hotel Keihan Universal City

ResortMid-price

330

Osaka

16.0

6,000

6,015

14,6005.2%

14,0005.2%

2.1%

522,756484,209441,11912.0%

19Chisun Inn Kamata

Limited-service

Economy

70

Tokyo

14.2

823

795

1,410

4.5%

1,430

4.5%

0.3%

37,85034,11528,4268.6%

20

Hotel Vista Kamata Tokyo

Limited-service

Economy

105

Tokyo

25.4

1,512

1,474

1,990

4.5%

2,010

4.5%

0.5%

46,79639,30027,586

6.6%

21

Hotel Sunroute Shinbashi

Limited-service

Mid-price

220

Tokyo

9.3

4,800

4,847

8,730

3.9%

8,730

3.9%

1.7%

254,418

226,613

216,122

7.4%

(*9)

22

Hilton Tokyo Bay

ResortLuxury

828

Chiba

29.0

26,05026,11336,0004.3%

36,1004.3%

9.1%

940,508

791,757

704,758

6.3%

23

ibis Tokyo Shinjuku

Limited-service

Mid-price

206

Tokyo

36.8

7,243

7,746

9,290

4.2%

9,460

4.2%

2.5%

256,792

173,764

130,591

4.9%

24

ibis Styles Kyoto Station

Limited-service

Mid-price

215

Kyoto

8.3

6,600

6,717

10,900

4.3%

10,9004.3%

2.3%

284,576

256,144

238,821

7.8%

34

１．Property List (2/2)(As of June 30, 2017)
Appraisal ValueNo.

Property Name

Hotel Type
(*1)

Grade
(*2)

No. of
Guest
Rooms

LocationAge(*3)

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

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

18th Period(as of 6.30.2017)
Appraisal
Value
CAP Rate(JPY M)

Investment
Ratio
(*6)

Revenue from
Real Estate
Operation(JPY1,000)(*7)

P/L from RealNOI Yield
NOI
Estate Operation (Annualized/(JPY1,000)(JPY1000)
Forecast)
(*7)
(*7)
(*8)

25

ibis Styles Sapporo

Limited-service

Mid-price278

Hokkaido

6.9

6,797

6,717

10,200

4.8%

10,2004.9%

2.4%

295,901

234,888

196,882

8.3%

26

Mercure Sapporo

Limited-service

Mid-price285

Hokkaido

8.2

6,000

5,937

10,3004.8%

10,4004.8%

2.1%

343,605

242,710

204,595

8.9%

27

Mercure Okinawa Naha

Limited-service

Mid-price

260

Okinawa

7.9

3,000

2,910

7,620

4.8%

7,690

4.8%

1.0%

239,378

197,014

171,705

13.4%

28

the b akasaka-mitsuke

Limited-service

Mid-price

122

Tokyo

14.6

6,250

6,301

6,740

4.1%

6,420

4.1%

2.2%

123,899

114,655

103,821

3.7%

29

the b ikebukuro

Limited-service

Mid-price

175

Tokyo

35.0

6,520

6,584

7,590

4.4%

7,470

4.4%

2.3%

176,986

165,034

150,176

5.1%

30

the b ochanomizu

Limited-service

Mid-price

72

Tokyo

17.9

2,320

2,353

2,590

4.2%

2,470

4.2%

0.8%

52,65348,43343,6024.3%

31

the b hachioji

Limited-service

Mid-price

196

Tokyo

30.9

2,610

2,688

3,070

5.2%

2,940

5.2%

0.9%

94,611

81,233

68,230

6.4%

32

the b hakata

Limited-service

Mid-price

175

Fukuoka

19.8

2,300

2,357

3,960

4.5%

4,070

4.5%

0.8%

116,324

110,469

100,351

10.0%

33

Hotel Francs

Full-service

Mid-price

222

Chiba

25.9

3,105

3,135

4,090

4.7%

4,090

4.7%

1.1%

150,000

118,264

94,042

7.5%

34

Mercure Yokosuka

Full-service

Mid-price

160

Kanagawa

23.7

1,650

1,644

2,040

4.7%

2,350

4.7%

0.6%

180,186

125,545

110,048

12.6%

35

Okinawa Marriott Resort & Spa

ResortUpper-middle

361

Okinawa

12.4

14,95014,866

17,2005.0%

17,2005.0%

5.2%

348,226

303,795

189,0097.3%

36

ACTIVE-INTER CITY HIROSHIMA

Full-service

Luxury238

Hiroshima

6.8

17,32017,716

18,7004.6%

18,7004.6%

6.0%

719,254

513,333

421,403

5.8%

37

CANDEO HOTELS UENO-KOEN

Limited-service

Mid-price

268

Tokyo

7.5

6,705

6,742

7,630

4.0%

7,650

4.0%

2.3%

175,205

168,161

148,480

4.8%

38Hotel Centraza Hakata

Full-service

Mid-price

194

Fukuoka

32.0

7,197

7,474

7,690

4.7%

7,750

4.7%

2.5%

436,973

318,436

194,205

8.1%

39

Holiday Inn Osaka Namba

Limited-service

Mid-price

314

Osaka

8.9

27,00027,17928,8004.4%

28,5004.4%

9.4%

601,538

589,159

531,974

4.4%

40

HOTEL ASCENT FUKUOKA

Limited-service

Economy263

Fukuoka

18.2

4,925

5,197

5,340

4.8%

5,340

4.8%

1.7%

214,425

144,610

127,153

5.7%

41

Hilton Nagoya

Full-service

Luxury460

Nagoya28.4

15,25015,58915,8004.2%

15,8004.2%

5.3%

682,348

365,395

298,178

4.5%

-

-

10,145-

18.6

286,801

284,085398,770

100.0%

11,272,084

9,364,708

7,588,793

6.9%

Total or Average-399,600-（注12）(*1) Under the category of Hotel Type, “Full-service” is full-service hotel, “Resort” is resort hotel, and “Limited-service” is limited-service hotel.
(*2) Mainly based on ADR, etc., JHR has classified the hotels into four categories as “luxury,” “upper-middle,” “mid-price,” and “economy.”(*3) Average age: Weighted average calculated as follows. The sum of (acquisition price of each property x property age ) ÷Total acquisition price.
(*4) The acquisition price in the Purchase & Sale Agreement for the Beneficial Interest in Trust or Real Estate Purchase & Sale Agreement is indicated. (Consumption tax, amount equivalent to consumption tax, brokerage fee, and other purchase-related costs are excluded.)(*5) Book value as of the end of June 2017.
(*6) Percentage of the acquisition price of the each asset to the total acquisition price. Numbers beyond one decimal place is rounded off.
(*7) Actual for six months from January through June 2017. Since the lessees did not agree to disclose numbers in units of JPY1,000 for No. 11 and 12, amounts are rounded down to the nearest JPY million.
(*8) Annualized NOI Yield (Forecast) is a forecast annualized forecast for FY12/2017. Also the total annualized NOI yield is calculated as follows：Annualized NOI for FY12/2017 (forecast) ÷ total acquisition price of properties held as of the end of FY12/2017 (anticipated).
(*9) The number of guest rooms of Hilton Tokyo Bay has changed from 823 to 828 since 3rd March 2017.

35

２．Summary of Lease Contracts (1/2)(As of the end of June 2017)

No.

Property Name

Lease Type

Rent Structure(*1)

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Oriental Hotel Hiroshima

5

Hotel Nikko Alivila

6

The Beach Tower Okinawa

Fixed-lease

Fixed

7

Hakone Setsugetsuka

Fixed-lease

Fixed

Fixed-lease

Fixed + Variable

Dormy Inn Kumamoto

9

Dormy Inn EXPRESS Asakusa

10

Hakata Nakasu Washington Hotel
Plaza

Lease

Fixed

11

Nara Washington Hotel Plaza

Lease

Fixed

R&B Hotel Ueno-hirokoji

Fixed-lease

Fixed

Lease

Fixed

Lease

Fixed

13

R&B Hotel Higashi-nihonbashi

Lease

Fixed

14

Comfort Hotel Tokyo Higashi
Nihombashi

Fixed-lease

Fixed

15

Smile Hotel Nihombashi
Mitsukoshimae

Lease

16

Toyoko Inn Hakata-guchi Ekimae

Lease

Fixed

Lease

Fixed+Revenue
sharing

17

Hotel Keihan Universal City

18

Chisun Inn Kamata

19
20

Hotel Management Japan Co., Ltd.

Remaining
Contract
Term(*2)

Variable

Hotel Vista Kamata Tokyo

Lease

Fixed+Revenue
sharing

Hotel Sunroute Shinbashi

Fixed-lease

Hilton Tokyo Bay

Fixed-lease22

ibis Tokyo Shinjuku-

23

ibis Styles Kyoto Station-

24

ibis Styles Sapporo-

25

Mercure Sapporo-

26

Mercure Okinawa Naha-

Washington Hotel K.K.

8

3

20

9

JPY42M/month20

9

JPY24M/month12

6

JPY16M/month3

3

JPY5M/month3

1

JPY20M/month20

3

JPY11M/month20

5

JPY8M/month

The same rent will be applied until
expiration of the contract.
The same rent will be applied until
expiration of the contract.
Rent can be modified throughmutual agreement every three years.

Jan. 2016 Structure is modified.

－

－

－

－

－

－

－

－

－

－

－

－

In discussion－

Rent can be modified throughContract is renewed.
Apr. 2017
mutual agreement every three years.
(same)
Rent can be modified throughContract is renewed.
Apr. 2015
mutual agreement.
(same)
Rent can be modified through－－mutual agreement.
Rent can be modified throughApr. 2011
Increased (+3.0%)
mutual agreement.
Rent can be modified throughApr. 2013
Samemutual agreement.

Renewed(March)－－To be expired(March)

－

－

－
－

－
To be expired(March)To bediscussed(January)

1

JPY10M/month20

11

JPY21M/month

Rent can be modified throughmutual agreement every five years.

Jan. 2013

Same

－

3

3

JPY11M/month +Revenue sharing

Rent can be modified throughmutual agreement.

Mar. 2017

Contract is renewed.
(same)

Renewed(March)－Toyoko Inn Co., Ltd.

30

14

JPY11M/month

No rule has been stipulated.

Oct. 2007

Increased (+9.4%)－－

K.K. Hotel Keihan

20

4Nondisclosure(*5)

Nondisclosure

Jul. 2014 Structure is modified.

－－Renewed(July)－－To be expired(December)

Greens Co., Ltd.

Solare Hotels &Resorts Co., Ltd.

SHR Hotels, Co.,
Ltd.

Vista Hotel Management Co., Ltd.

Fixed+Revenue
Sunroute Co., Ltd.
sharing
Fixed+Revenue
THE DAI-ICHI
Hilton International
sharing
BUILDING CO., LTD.
Company
Management
contract
Management
contract
Management
contract
Management
contract
Management
contract

Rent Summary

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

20

Fixed+Revenue
THE KAMOGAWA GRAND HOTEL, LTD.
sharing

Fixed-lease21

Kyoritsu Maintenance Co., Ltd.

Contractual Rent(*3)

(Fixed rent)
JPY3,221M/year(Variable rent)
In principle, the same rent will be
When the total GOP of the five HMJ applied until expiration of thehotels exceeds GOP base amount contract.
(JPY3,351M), the excess x 85% is
paid.

Okura Nikko HotelManagement Co.,
Ltd.

8

12

LesseeHotel Operator/
Hotel Consulting Lease /and Management MC Term
Company－

AAPC Japan K.K.

3

3

Hotel GOP x 86%(If it is below zero, it will be JPY0.-)

4

2

JPY7M/month +Revenue sharing

15

6

JPY18M/month +Revenue sharing
JPY157M/month +Revenue sharing-

Jul. 2017

In principle, the same rent will beapplied until expiration of thecontract.

Jul. 2015

No rule has been stipulated.
Rent can be modified throughmutual agreement.

－

RenewedVariable rent rate ismodified.
Contract is renewed.
(Modify thecalculation methodof revenue sharing.)－－－

Contract is renewed.

－

To be expired(December)Jul. 2012 Structure is modified.

－

－

－

To be expired(December)

－

－

4

2

12

7

Amount equivalent to hotel GOP

-

5

2

Amount equivalent to hotel GOP

-

5

2

Amount equivalent to hotel GOP

-

15

12

Amount equivalent to hotel GOP

-

－

－

－

－

10

7

Amount equivalent to hotel GOP

-

－

－

－

－

36

Jul. 2015－－

Dec. 2014 Structure is modified.

２．Summary of Lease Contracts (2/2)(As of the end of June 2017)

No.

Property Name

Lease Type27

Mercure Yokosuka

Fixed-lease28

the b akasaka-mitsuke

Fixed-lease29

the b ikebukuro

Fixed-lease30

the b ochanomizu

Fixed-lease31

the b hachioji

Fixed-lease32

the b hakata

Fixed-lease33

the b suidobashi

Fixed-lease

34

Hotel Francs

Fixed-lease35

Okinawa Marriott Resort & Spa

Fixed-lease

Rent Structure(*1)
Variable
Fixed+
Variable
Fixed+
Variable
Fixed+
Variable
Fixed+
Variable
Fixed+
Variable
Fixed+
Variable
Fixed

Fixed+
Variable

LesseeHotel Operator/
Hotel Consulting
Lease /and Management MC Term
Company

Remaining
Contract
Term(*2)

AAPC Japan K.K.

52

Ishin Akasaka Operations, K.K.

7

5

Ishin Ikebukuro Operations K.K.

7

5

Ishin Ochanomizu Operations K.K.

7

5

Ishin Hachioji Operations, Y.K.

7

5

Contractual Rent(*3)
Linked to hotel GOP
JPY102M/year +Linked to hotel GOP
JPY163M/year +Linked to hotel GOP
JPY69M/year +Linked to hotel GOP
JPY98M/year +Linked to hotel GOP
JPY82M/year +Linked to hotel GOP
JPY85M/year +Linked to hotel GOP

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－
－
－

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

－

－

－

－

(Fixed rent)
JPY550M/year
In principle, the same rent will be(Variable rent)
applied until expiration of the
When the total GOP exceeds GOP
contract.
base amount (JPY700M), the excess
x 90% is paid.

－

－

－

－

－

－

－

－

2016

Renewed (*5)

－

－

2

(Fixed rent)
JPY400M/year
In principle, the same rent will be(Variable rent)
applied until expiration of the
When the total GOP exceeds GOP
contract.
base amount (JPY425M), the excess
x 90% is paid.

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

7

JPY25M/month4(Fixed rent)
JPY348M/year
In principle, the same rent will be(Variable rent)
applied until expiration of the
When the total GOP exceeds GOP
contract.
base amount (JPY468M), the excess
x 82.5% is paid.
Rent can be modified throughNondisclosure (*5)
mutual agreement every three years.

ACTIVE-INTER CITY HIROSHIMA

Fixed-lease

Fixed+
Variable

37

CANDEO HOTELS UENO-KOEN

Fixed-lease

Fixed

Candeo Hospitality Management, Inc.

Fixed-lease

Fixed+
VariableOW Hotel Operations KK

15

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

11

10

20

13

39

Holiday Inn Osaka Namba

Fixed-lease

Fixed+
Variable40

HOTEL ASCENT FUKUOKA

Lease

Fixed

NIKOH SANGYO co., Ltd.

20

2

Nondisclosure (*5)

41

Hilton Nagoya

Lease

Variable

Nagoya Hilton Co., Hilton International
Ltd.
Company

41

13

Nondisclosure (*5)(*1) Rent structure is as follows:

－

－

－

19

4

－

－

－

K.K. Bridal Produce

Hotel Centraza Co., Ltd.

－

－

3

36

Hotel Centraza Hakata

Rent can be modified throughmutual agreement every three years.
Rent can be modified throughmutual agreement.

(*4) Details of “Modified Structure” is as follows.

Fixed: Fixed rent

No. 1 to No. 5: Variable rent was modified from 81.5% to 85%.

Variable: Variable rent

No. 17: Revenue sharing structure has been applied in addition to fixed rent.

Management contract: Management contract

No. 18: At the timing of renewal, variable rent ratio of variable rent was changed to 86% from 85%.

Fixed + Variable: Property paying both fixed and variable rent
Fixed + Revenue sharing: When the sales of the hotel (lessee) exceed pre-determined amount, additional rent is paid.

No. 22, 24: JHR has commenced direct management contract.
(*5) Information is undisclosed since the lessee did not agree to disclose detail of the rent agreement.

(*2) Remaining contract term as of the end of June, 2016.
(*3) Amount including car park and CAM without tax.

2018

Rebranded

55STARWOOD ASIA
K.K. A.I.C Hiroshima
PACIFIC HOTELS &Management
RESORTS PTE LTD.

38

2017

－

7

5

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

Rent Modification Schedule（2017～2018）

Jul. 2015

Ishin Hakata Operations K.K.
Ishin Suidobashi Operations K.K.

Lagoon resort Nago Co., Ltd.

Rent Summary

Rent Modification Summary(Acquisition to End of June 2017)
Condition
Timing(*4)

37

３．Portfolio Map
Total Assets

Limited-service hotel

JPY319.4B

Resort hotel

Full-service hotel

2

1

No. of Hotels

25

26

Kobe Meriken Park
Oriental Hotel

44 Hotels

103

Oriental Hoteltokyo bay

11

4

5

6

Namba Oriental
Hotel

Oriental Hotel
Hiroshima

Hotel Nikko
Alivila

13

14

15

12

7

8

9

The Beach Tower
Okinawa

Hakone Setsugetsuka

Dormy Inn
Kumamoto

16

17

18

the b suidobashi

19

No. of Guest Rooms

11,486 Rooms
3

24
31

18 39

32 38 40

22

41
1

12 44

Smile Hotel
Nihombashi
Mitsukoshimae

Toyoko Inn
Hakata-guchi
EkimaeHotel Keihan
Universal City

20

21

22

23

24

25

26

Hotel Vista
Kamata Tokyo

Hotel Sunroute
Shinbashi

Hilton Tokyo Bay

ibis Tokyo
Shinjuku

ibis Styles
Kyoto Station

ibis Styles Sapporo

Mercure Sapporo Mercure
Okinawa Naha

Chisun Inn
Kamata2728

the b akasaka-mitsuke

29

30

31

32

33

34

35

36

the b ikebukuro

the b ochanomizu

the b hachioji

the b hakata

Hotel Francs

Mercure Yokosuka

Okinawa Marriott
Resort & Spa

ACTIVE-INTER CITYHIROSHIMA (Sheraton
Grand Hiroshima
Hotel）

Tokyo 23 wards

4 36

30
13 37

29

10

9

23

35

R&B Hotel Higashi- Comfort Hotelnihonbashi
Tokyo Higashi
Nihombashi

42 43
34

11 17

5

Nara Washington R&B Hotel
Hotel Plaza
Ueno-hirokoji

2 33
7

8

Dormy Inn
Hakata Nakasu
EXPRESS Asakusa Washington Hotel
Plaza

16

21

14 15
28

NEW
37

38

39

40

41

42

43

44

CANDEO HOTELS
UENO-KOEN

Hotel Centraza Hakata

Holiday Inn Osaka
Namba

HOTEL ASCENTFUKUOKA

Hilton Nagoya

Hilton Tokyo Narita
AirportInternational Garden
Hotel Narita

Hotel Nikko Nara

6
19

27
20

38

４．The Five HMJ Hotels – Highlights
Changes in Total Sales and GOP
Total Sales
23,304

Total Sales

21,13920,000GOP
21,396

21,312

20,223

6,296

6,155
5,696

15,00021,994

22,29623,186
6,941

23,905
7,591

23,715(JPY: Millions)

8,000

7,852

7,500
7,000

6,302

6,500
6,000

5,645

5,500

5,158

5,136

GOP

(JPY M)

25,0005,000
10,0004,500

CY2008

CY2009CY2010CY2011CY2012

CY2013

CY2014

CY2015

86.9%

87.7%

CY2016

CY2017(Forecast)

Changes in KPI
RevPAR

ADR・RevPAR

22,00020,00077.9%

18,00016,00017,97014,00012,000

77.8%

73.8%

80.4%

Occupancy Rate
76.7%

82.7%

86.1%

19,212

18,463
17,197

13,99914,367

CY2007

CY2008

12,696
CY200915,98012,845

CY201015,846

12,160CY2011

17,297

17,551

14,886

15,245

16,20016,843

88.4%

91.1%

20,153

19,90517,807

18,13013,400CY2012

39

100%
Occupancy Rate

ADR

（JPY）

0%
CY2013

CY2014

CY2015

CY2016

CY2017(Forecast)Appendix 3
Investors Composition and Investment Unit Price

１．Major Unitholders and Unitholders of Investment Units
Top Ten Major Unitholders
As of the End of December 2016

As of the End of June 2017596,908
410,753
359,163

9.54

4

Nomura Bank (Luxembourg) S.A.

163,923

4.35

5
6
7
8
9

The Nomura Trust and Banking Co., Ltd. (Investment Trust)State Street Bank & Trust Company 505012
The Bank of New York, Non-Treaty JASDEC AccountShikoku Railway Company
Goldman Sachs International
NORTHERN TRUST CO. (AVFC) RE IEDU UCITS CLIENTS NONLENDING 15 PCT TREATY ACCOUNT

141,635
81,11559,51858,311
54,984

3.76
2.15
1.58
1.55
1.46

50,729

1.34

Total

1,977,039

52.55

626,276
398,094
328,425

8.73

3

4

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

165,981

4.41

5
6
7

The Nomura Trust and Banking Co., Ltd. (Investment Trust)
The Bank of New York, Non-Treaty JASDEC AccountShikoku Railway Company

145,006
65,44058,311

3.85
1.73
1.55

8

State Street Bank & Trust Company 505012

57,881

1.53

54,701

1.45

54,6851.45

1,954,800

51.96

1
2
3

9
10

No. of UnitsNORTHERN TRUST CO. (AVFC) RE IEDU UCITS CLIENTS NONLENDING 15 PCT TREATY ACCOUNTState Street Bank & Trust Company
Total

(*)

Japan Trustee Service Bank, Ltd. (Trust)
The Master Trust Bank of Japan, Ltd. (Trust)
Trust and Custody Services Bank, Ltd. (Securities Investment
Trust)

Percentage
(*)
15.86
10.91

Percentage
(*)
16.64
10.58

Name

Rank

Name

Rank

1
2

10

No. of Units

The total units held by each investor to the total units issued by JHR as of the end of December 2016 and the end of June 2017 respectively. (Rounded off to two decimal places.)

Owners of the Investment Units
As of the End of December 2016
No. ofInvestors
Individuals & Others
30,491

No. ofUnits
429,225

Financial Institutions(Incl. Securities Firms)

149

1,824,980

406

131,234

OwnersOther Domestic Firms
Foreign Firms &Individuals
Total
Individuals &Others(*)

325

1,376,468

31,371 3,761,907
Financial Institutions(Incl. Securities Firms)

No. of Investors
0.4%

No. of Units

As of the End of June 2017

11.4%

No. ofInvestors
Individuals & Others
30,801

No. ofUnits
404,776

Financial Institutions(Incl. Securities Firms)

137

1,801,222

378

127,515

1.2%

Owners

1.0%
36.5%
48.5%
97.1%

Other Domestic Firms
Foreign Firms &Individuals
Total

3.4%

Other Domestic Firms

340

No. of Investors

1,428,394

31,656 3,761,907

0.4%

No. of Units

1.1%

10.7%

1.0%
37.9%
47.8%
97.2%
3.3%

Foreign Firms &Individuals

Percentage of investors is percentage of owners in each segment to the total number of investors in JHR, and percentage of investment units is percentage of investment units owned by each segment to the total investment units issued as of respective date.
(Both rounded off to one decimal place.)41

２．Changes in Investment Unit Price and Market Capitalization
Changes in the investment
unit price and market capitalization

6/2015(Based on the closing price)

Price of the investment
unit: JPY79,700.Total market
capitalization: JPY318.6B(Based on the closing price of July 31, 2017)(*1)

Price of the real estate investment
securities may fall depending on thefluctuations of price of the real estate
under management or profitability, etc.,
and investors may suffer losses. Investors
may also suffer losses through thebankruptcy or deteriorated financial
condition of the issuer. With reference tothe risk of investment in JHR units, see
Securities Registration Statement of JHR
dated June 19, 2017.

(*2)

Includes OA.

(*3)

There is an additional JPY0.9B of OA in
August 2017.

PO (*2)(JPY)
120,000

100 is the closing price of JHR unit,
REIT index and TOPIX at TSE dated
April 2, 2012. REIT Index of TSE is anindex of a weighted average of themarket capitalization of all REITs listed
on TSE.

1/2016
PO (*2)

JPY14.6

7/2016
PO (*2)Market Capitalization

JPY34.7B

6/2017
PO (*3)

JPY17.7B(JPY M)

1/2015Investment Unit Price of JHR

PO (*2)450,000

JPY15.6B

400,000

100,000

80,0004/20139/2014

PO JPY20.5B

PO JPY10.1B

350,000
300,000
250,000

60,00040,0009/2012
PO (*2) JPY5B

200,000
150,000
100,000

20,00050,0000Comparison withREIT Index and TOPIX of 600
Tokyo Stock Exchange
500
(TSE)
(*)

JPY10.7B

0

Investment Unit Price of JHR

TSE REIT Index

400

300

200

100

0

42

TOPIX

Appendix 4
Summary of the Asset Management Company

１．Summary of the Asset Management Company

Company

Japan Hotel REIT Advisors Co., Ltd.

Location

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

Establishment

August 10, 2004

Capital

JPY300M as of June 30, 2017

Shareholders

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

Representative Director

Hisashi Furukawa
Building Lots and Buildings Transaction Business Operator, Governor of Tokyo (3) No. 83613
Discretionary Transaction Agent by Minister of Land, Infrastructure, Transport and Tourism No. 38

Registration and Licenses

Financial Instruments Trading Company, Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trusts Association, Japan

Organization Chart

Shareholders’ Meeting
AuditorBoard of Directors’ Meeting

Investment (and Operation)
Committee

Compliance Committee
Representative Director
Compliance Office

Investment Division

Asset Management

Acquisitions

Operations Division

Finance & Planning Division

Finance & Planning44

Accounting &ReportingGeneral Affairs

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

Advanced Expertise•

Capability of planning and executing unprecedented and appropriate measures of asset management based on in-depth understanding of hotel
operation.

•

Extensive experience and track record of renovation and rebranding through collaboration with hotel lessees and hotel operators.

•

Strong and long-term relationships with a large number of hotel lessees and hotel operators.

•

Highly analytical skills and accurate judgement based on rich information and data obtained through a broad network.

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

45

Disclaimer
This material is prepared and provided solely for the purpose of providing information and not to offer, solicit, or do business, etc. with specific products including
purchase of investment units, investment unit subscription rights, or investment corporation bonds of Japan Hotel REIT Investment Corporation (“JHR”) or any otherparticular products. If any discrepancy is identified between this translation and the Japanese original, the Japanese original shall prevail.
This material is neither a disclosure document nor an investment report required under or prepared pursuant to the Financial Instruments and Exchange Act, Act on
Investment Trusts and Investment Corporations and related government ordinances, Cabinet Office regulations, listing rules by Tokyo Stock Exchange, Regulations of
The Investment Trusts Association, Japan, or other related rules and regulations.
This material contains forward-looking statements about financial conditions, operational results, and businesses of JHR, as well as plans and intentions of JHR and its
asset management company, Japan Hotel REIT Advisors Co., Ltd (“JHRA”). Such forward-looking statements involve known and unknown risks, uncertainties, and otherfactors that may cause actual results or performance of JHR to materially differ from those expressed or implied forecasts. Those forecasts are made based on JHR’spresent and future business strategies and assumptions relating to the political and economic circumstances surrounding JHR in the future.
Every effort has been made to ensure the accuracy of the information contained in this material. However, there can be no assurance that the information is accurate,complete, appropriate or fair. The information may be revised or retracted without prior notice.
Regarding the offering and trading of investment units, investment unit subscription rights or investment corporation bonds, financial institutions may charge you predetermined handling fees and other charges aside from the price of the investment units, investment unit subscription rights or investment corporation bonds. Since
neither JHR nor JHRA handles the offering and trading of investment units, investment unit subscription rights or investment corporation bonds, please ask financial
institutions for the amount, upper limit, and calculation methods of such fees and other charges.
JHR mainly invests in real estate-related assets, primarily hotels which are subject to change in values. Therefore, unitholders, holders of investment unit subscription
rights and investment corporation bonds may suffer losses due to economic conditions of the real estate market or securities market, economic situations includinginterest rate environment, the nature of investment units, investment unit subscription rights, and investment corporation bonds, dependency on mechanisms andrelated persons of investment corporations, changes in legal systems related to real estate (include tax regulations, building regulations and others), damage caused to
the real estate-related assets by natural disasters, fluctuation in prices or profitability of the real estate-related assets, nature of the trust beneficiary rights undermanagement, delisting of the investment units, or worsening financial position or insolvency of JHR. For details, please refer to the Articles of Incorporation, Securities
Registration Statement, Annual Securities Report and Extraordinary Report, etc. of JHR.
The contents of this material may not be copied or reproduced without our prior permission.
Japan Hotel REIT Advisors Co., Ltd.
Financial Instruments Trading Company
Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trust Association, Japan46