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.
August 24, 2023

Midterm Financial Report for the Fiscal Year Ending December 31, 2023
(January 1, 2023 – June 30, 2023)

Japan Hotel REIT Investment Corporation
Listing:
Securities code:
URL:
Representative:

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

Asset Management Company:
Representative:
Contact:

Japan Hotel REIT Advisors Co., Ltd.
Hisashi Furukawa, President & CEO
Makoto Hanamura
Director of the Board, Head of Finance and Planning Division
Phone: +81-3-6422-0530

Scheduled date to file midterm Securities Report:

September 22, 2023

Scheduled date to file midterm Securities Report:
Yes
Schedule for presentation of midterm financial results: Yes (Institutional investors and analysts only)(Amounts are rounded down to the nearest millions of yen)

1. Status summary of operation and assets for the midterm of the fiscal year ending December 31, 2023
(January 1, 2023 – June 30, 2023)(1) Operating results
Midterm period ended
June 30, 2023
June 30, 2022
Fiscal year ended
December 31, 2022

(Percentages: full year—changes from the previous year, midterm period—changes from the previous midterm period)

Operating revenue
JPY1M%
11,288
107.8
5,431
18.3
14,912

9.4

Operating income
JPY1M
%
5,759
323
4,296

45.2

Ordinary income
JPY1M
%
4,897
(470)
2,672

Net income (loss)
JPY1M
%
4,896
(471)

105.9

2,671

106.0

Net income for the current
midterm period per unit
Midterm period ended
JPY
June 30, 2023
1,096
June 30, 2022
(105)
Fiscal year ended
December 31, 2022

598

(Note) Net income for the current midterm period per unit is calculated based on the period-average number of investment units issued.

(2) Financial position
Midterm period ended
June 30, 2023
June 30, 2022
Fiscal year ended
December 31, 2022

Total assets
JPY1M
396,271
391,483
396,799

Net assets
JPY1M
224,748
219,914

Equity ratio
%
56.7
56.2

Net assets per unit
JPY
50,312
49,230223,574

56.3

50,050(Note) Net assets per unit are calculated based on the total number of investment units issued and outstanding at the end of the midterm period/full year.

- 1 -(3) Cash flows

Midterm period ended
June 30, 2023
June 30, 2022

Cash flows fromoperating activities
JPY1M
9,248
1,208

Cash flows frominvesting activities
JPY1M(13,009)(3,304)

5,331(3,640)Fiscal year ended
December 31, 2022

Cash flows from
Cash and cash equivalents
financing activities
at the end of year
JPY1M
JPY1M
(3,044)22,708(1,633)26,267(2,172)29,515

2. Operating forecast for the fiscal year ending December 31, 2023
(January 1, 2023 – December 31, 2023)
Operating revenue
JPY1M

Full year

24,928%
67.2

Operating income
JPY1M

13,288%209.3

Ordinary income
JPY1M

11,417%327.2(Percentages show changes from the previous year)
Dividend per unit
Dividend per unit
Net income(Excess of earnings resulting from excess ofearnings
exclusive)

JPY1M

11,416

%
327.3

JPY
2,652

JPY
－

(Reference) Estimated net income per unit for the fiscal year ending December 31, 2023 (full year): ¥2,555 (Calculated based on the estimate of the period-average
number of investment units of 4,467,006).
(Note) The source of the dividend payment is planned to be the total net income plus the reversed amount for temporary difference adjustment (¥431 million).

* Other(1) Changes in accounting policies, changes in accounting estimates, and restatement of financial statements for prior periods 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 the 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/period(including investment units owned by Japan Hotel REIT Investment Corporation (JHR))
As of June 30, 2023 4,467,006 units As of June 30, 2022 4,467,006 units As of December 31, 2022 4,467,006 units(b) Number of JHR’s investment units held at the end of the fiscal year
As of June 30, 2023
(Note)

0 unitAs of June 30, 2022

0 unit As of December 31, 2022

0 unit

For the number of investment units serving as the basis of computation for calculating net income per unit, please refer to “Notes on perunit information” on page 34.

* Midterm financial report is not subject to interim audit procedures by accountants.
* 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 reasonable. As such, actual operating and other results may differ materiallyfrom these forecasts due to various 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 the operating forecast, please refer to “1.
Operating results; (1) Operating results; (B) Outlook for the second half of the fiscal year” on page 6 and “Assumptions of theoperating forecast for the full fiscal year ending December 2023 (24th period)” on page 11.

- 2 -○ Table of Contents
1. Operating results ............................................................................................................................................................................. 4(1) Operating results ......................................................................................................................................................................... 4
2. Semi-annual financial statements .................................................................................................................................................. 19(1) Semi-annual balance sheets ....................................................................................................................................................... 19(2) Semi-annual statements of income ............................................................................................................................................ 21(3) Semi-annual statements of changes in net assets ....................................................................................................................... 22(4) Semi-annual statements of cash flows ....................................................................................................................................... 24(5) Notes on going concern assumption .......................................................................................................................................... 25(6) Notes on matters concerning significant accounting policies .................................................................................................... 25(7) Notes to semi-annual financial statements ................................................................................................................................ 27(8) Changes in the total number of investment units issued and outstanding .................................................................................. 35
3. Reference information.................................................................................................................................................................... 36(1) Information on values of assets under management, etc. ............................................................................................................ 36(2) Status of capital expenditures ..................................................................................................................................................... 48- 3 -1. Operating results(1) Operating results(A) Overview of the midterm period 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 asset management to Japan Hotel REIT Advisors Co., Ltd. (hereinafter referred to as the “Asset Management
Company”). Focusing on the importance of social infrastructure and profitability as investment real estate of hotels, JHR
primarily invests in real estate, which is 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 “Real Estate for Hotels,etc.”).
JHR, the former Nippon Hotel Fund Investment Corporation, merged with Japan Hotel and Resort, Inc. 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 the Merger through the end of the midterm period under review (6 months period from January 1, 2023,
to June 30, 2023), JHR has carried out nine 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 growth strategy above, JHR has expanded its asset size while improving the quality of its portfolio
through new property acquisitions of 28 properties amounting to ¥285,610 million (acquisition price basis) in total in a little
over ten years since the Merger through the end of the midterm period under review. As a result, JHR had a portfolio of 43
properties with a combined acquisition price of ¥373,992 million, and the total number of investment units issued andoutstanding stood at 4,467,006 units at the end of the midterm period under review.
(b) Investment performance for the midterm period under review
During the midterm period under review (six months from January 1, 2023 to June 30, 2023), the Japanese economy
continued to recover as the impact of the COVID-19 infection gradually eased. The domestic accommodation and tourism
market has continued to see a significant recovery trend due to the continued implementation of the national travel subsidy
program, which began in October 2022, the substantial easing in restrictions for foreign visitors to Japan (hereinafter referred
to as "inbound visitors"), as well as the elimination of border measures in April 2023. In addition, behavioral restrictions are
more relaxed since Japan reclassified COVID-19's category to Class 5 infectious disease in May 2023, and domestic leisuredemand has partly recovered beyond the pre-pandemic level.
Of the total number of overnight guests at domestic accommodation facilities, the total number of Japanese overnight guests
in the first half of 2023 returned to the same level as in 2019, minus 0.7 % compared to the same period in 2019. The total
number of foreign guests recovered to minus 19.4% compared to the same period in 2019. As a result, the preliminary
estimate of the total number of overnight guests in the first half of 2023 was 272 million (plus 45.3% compared to the same
period last year and minus 4.5% compared to the same period in 2019).
In addition, the estimated number of inbound visitors in the first half of 2023 was 10.71 million (plus 2,010.2% comparedto the same period last year and minus 35.6% decrease compared to the same period in 2019), indicating that the recovery
from the COVID-19 pandemic is gaining momentum.
Under this recovery trend, JHR acquired UAN kanazawa in January 2023 and Sotetsu Fresa Inn Shimbashi-Karasumoriguchi
in March 2023 with cash on hand as the first property acquisition since the COVID-19 pandemic. Both hotels have a rent
structure in which stability is ensured by fixed rents, and an upside can be expected by variable rents linked to room sales.
We believe that acquiring highly competitive hotels in a market where future demand for accommodation is expected to
grow will enhance the quality of JHR's portfolio.
As for internal growth, JHR continued to communicate closely with the lessees and operators that operated each of the hotels
and worked to secure hotel revenues by reducing operating costs while promoting revenue enhancement measures in
preparation for a full-fledged recovery period in the hotel market. In particular, Hotel Management Japan Co., Ltd.
(hereinafter referred to as “HMJ”), which is a group company of the Asset Management Company, and its subsidiaries(hereinafter collectively referred to as the “HMJ Group”) made progress as planned in the cost reduction measures that havebeen implemented since the beginning of the COVID-19 pandemic, despite the impact of higher utilities and other costs. In
addition, the HMJ Group aggressively promoted measures to improve profitability by quick response to anticipated recovery
in demand for accommodation and improved sales through revenue management with an emphasis on ADR (Note 1).
- 4 -To deal with the impact of COVID-19, the lease contracts with The 14 HMJ Hotels (Note 2) were changed to full-variable
rent from February 2020 until the end of 2022, but from January 2023, the rent structures were returned to a combination of
fixed and variable rent, as before the COVID-19 pandemic.
In addition, in April 2023, dormy inn Kumamoto changed its rent structure due to the expiration of the lease contract. The
hotel changed from a fixed rent contract to a fixed one with the same amount and a variable rent linked to GOP (Note 3).
With this change, the hotel has introduced a rent structure that allows JHR to enjoy an upside as the hotel market recovers.
As for strategic CAPEX (Capital expenditure), guest room renovation at Kobe Meriken Park Oriental Hotel, Oriental HotelTokyo Bay and Oriental Hotel Okinawa Resort & Spa, and other measures are scheduled to be implemented in the current
fiscal period. During the current mid-term period, renovation of guest rooms on two floors of Oriental Hotel Tokyo Bay wascompleted.
Under these circumstances, during the midterm period under review, RevPAR (Note 4) of the 25 Hotels with Variable Rent
(Note 2), which are owned by JHR, increased by 108.3% year-on-year (y-o-y), and GOP increased by 348.8% y-o-y to¥8,164 million due to improved profitability from a recovery in the accommodation and tourism market, as well as successful
cost management measures at the hotels.
For further details of sales, GOP (gross operating profit) and other management indicators for the 25 Hotels with Variable
Rent, etc., please refer to “<Reference Information 2> Hotel operation indexes, sales and GOP (gross operating profit)” on
page 18.
(Note 1)

(Note 2)

ADR refers to the average guest room unit sales price (average Daily Rate), calculated by dividing the total accommodation
sector sales (service charge included) for a given period by the total number of guest rooms sold for the same period. The same
shall apply hereinafter.
The 25 Hotels with Variable Rent, etc., refers to the 25 hotels, consisting of The 16 HMJ Hotels below, plus The Accor Group
Hotels and The Ishin Group Hotels. The same shall apply hereinafter.
The Five HMJ Hotels refer to the following five hotels JHR leases to HMJ.
Kobe Meriken Park Oriental Hotel
Oriental Hotel Tokyo Bay
Namba Oriental Hotel
Hotel Nikko Alivila
Oriental Hotel Hiroshima
The 14 HMJ Hotels refer to The Five HMJ Hotels plus the following nine hotels which JHR leases to subsidiaries of HMJ.
Oriental Hotel Okinawa Resort & Spa
Sheraton Grand Hiroshima Hotel (main facility of ACTIVE-INTER CITY HIROSHIMA)
Oriental Hotel Fukuoka Hakata Station
Holiday Inn Osaka Namba
Hilton Tokyo Narita Airport
International Garden Hotel Narita
Hotel Nikko Nara
Hotel Oriental Express Osaka Shinsaibashi
Hilton Tokyo Odaiba
The 16 HMJ Hotels refer to 16 hotels, including The 14 HMJ hotels and the following two hotels.
Hotel Oriental Express Fukuoka Tenjin
Oriental Hotel Universal City

The Accor Group Hotels refer to the following five hotels: ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure
Okinawa Naha, and Mercure Yokosuka.
The Ishin Group Hotels refer to the following four hotels. the b suidobashi, the b ikebukuro, the b hachioji, and the b hakata.
(Note 3)(Note 4)

GOP stands for Gross Operating Profit, which is the amount remaining after deducting expenses related to hotel operations, suchas labor costs and general administrative costs from hotel sales. The same shall apply hereafter.
RevPAR represents Revenue Per Available Room, calculated by dividing total room revenue for a certain period (including
service charges) by the total number of rooms available for sale during the period. The same shall apply hereinafter.

(c) Funding status
In the mid-term period under review, JHR borrowed ¥800 million to partially fund the acquisition of new properties inJanuary 2023. Then, JHR repaid ¥800 million of the existing loans before the maturity date using cash on hand to maintainthe ratio of interest-bearing debt to total assets (Note).
JHR also borrowed a total of ¥25,983 million to refinance existing loans that became due in January, March and June. Of- 5 -these, some borrowings were refinanced with long-term loans with 3 to 5-year borrowing periods.
In addition, JHR further strengthened its lender formation with the invitation of new lenders such as Kansai Mirai Bank,
Limited and THE HOKURIKU BANK, LTD. in January and The Tokyo Star Bank, Limited in March.
Consequently, as of the end of the midterm period under review, the balance of interest-bearing debt totaled ¥164,231 million,
including short-term loans payable of ¥35,070 million, the current portion of long-term loans payable of ¥19,681 million,
long-term loans payable of ¥72,580 million, and investment corporation bonds of ¥36,900 million, and the ratio of interestbearing debt to total assets (Note) at the end of the midterm period under review stood at 41.4%. The ratio of fixed-rate debt
to total interest-bearing debt at the end of the midterm period under review was 74.0%.
(Note)The ratio of interest-bearing debt to total assets = Balance of interest-bearing debt at the end of the midterm period under review
÷ Total assets × 100

As of the end of the midterm period under review, JHR’s issuer ratings were as follows. The rating and rating outlook werechanged from Negative to Stable by Japan Credit Rating Agency, Ltd. (JCR) in March 2023 and by Rating and Investment
Information, Inc. (R&I) in April 2023, respectively.
Rating agency

RatingJapan Credit Rating Agency, Ltd. (JCR)A+(Stable)Rating and Investment Information, Inc. (R&I)

A(Stable)(d) Financial results
As a result of the abovementioned asset management, operating revenue, operating income, and ordinary income were¥11,288 million, ¥5,759 million, and ¥4,897 million, respectively, for the mid-term period under review (six months period
from January 1, 2023, to June 30, 2023). Net income for the mid-term period under review was ¥4,896 million. Variable rent
received from hotels under variable rent contract and recognized as operating revenue include the amount of ¥ 2,018 million
received from the hotels leased to the HMJ Group. However, this amount is calculated based on the AGOP (Note) of The 16
HMJ Hotels for the mid-term period under review. The variable rent to be ultimately received from The 16 HMJ Hotels will
be determined by the full-year AGOP (12 months period) of each hotel of The 16 HMJ Hotels.
JHR settles accounts on an annual basis and investment corporations do not have a system for interim dividends under theInvestment Trusts Act. Accordingly, no distribution of earnings can be made in the midterm period under review. Distributionof earnings will be made based on the earnings for the full year (12 months period from January 1, 2023, to December 31,2023). With regard to such distribution of earnings, earnings exceeding 90% of JHR’s distributable profit as defined by
Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957; as amended; hereinafter called “theAct on Special Measures Concerning Taxation”) will be distributed.
(Note)AGOP (Adjusted GOP) is the amount remaining after deducting certain payments of fees, etc., from GOP.

(B) Outlook for the second half of the fiscal year(a) Investment policies and issues to be addressed
The Japanese economy is expected to recover further in the future, mainly due to the progress made in easing behavioral
restrictions. The impact of trends in the financial and foreign exchange markets due to global monetary tightening, etc. andinflation due to heightened geopolitical risks, etc., will continue to require close monitoring. On the other hand, JHR believes
that the impact of the COVID-19 pandemic on the hotel market has been limited and that the market will move from a
recovery to a growth phase in the second half of the year.
With regard to domestic leisure demand, after the COVID-19 pandemic, the value of domestic travel has been reevaluatedand there has been a shift from overseas travel to domestic travel. JHR believes that demand for domestic travel will remainstrong in the future.
With regard to demand related to inbound tourism, JHR believes that further recovery in the number of inbound visitors toJapan can be expected as a result of the lifting of Japan’s entry restrictions in April 2023, followed by China's relaxation of
restrictions on group travel to Japan in August 2023.
JHR will strive to capture the demand and implement a variety of measures with lessees and operators, such as managementof operating costs by reviewing operations of each hotel, maintaining and securing necessary employment, handling cash
management, and implementing sales measures in response to new demand. In particular, the hotels with variable rent, etc.
JHR will endeavor to maximize the GOP of each hotel and thus maximize the rent JHR can receive as a result. Specifically,
with the HMJ Group, a strategic partner of JHR, in addition to maintaining accomplished consistent cost reduction,- 6 -proactively promoting measures to create and capture demand, such as creating attractive products that make the hotel itself
a tourism destination and increasing brand awareness. We are conducting initiatives from both sides to enhance profitability.
Given the large potential demand for overseas tourism globally, particularly due to the improvement in income levels in
Asian countries and the popularity of Japan as a travel destination, etc., JHR expects Japan’s accommodation demand frominbound visitors to exceed that in 2019 over the medium term and believes that the accommodation and tourism market will
expand. On the belief that the location and competitiveness of individual hotels as well as the capabilities of operators (theability to differentiate from other hotels, improve profitability including cost management and capture recovering demand,etc.) will lead to differentiation of performance among hotels, JHR will continue to implement strategies to differentiate its
hotels as it has done to date.
Under the recognition of such circumstances, JHR, together with the Asset Management Company, will continue to
implement a differentiation strategy that leverages the experience it has accumulated as a J-REIT specializing in hotels andwill manage its properties according to the following policy.
Internal growth
JHR will work to secure “stability” mainly with fixed rent contracts while at the same time aiming for “upside potential”
through the implementation of active asset management strategies that proactively pursue greater profitability and asset value
in properties by way of a variety of measures such as adopting brands that match the characteristics of the hotels andcoordination with the HMJ Group.
For properties with fixed-rent contracts, JHR will continue to focus on setting and maintaining appropriate rents based onrent levels in the market where respective hotels are located and each tenant’s creditworthiness and ability to bear the rent
costs and aiming at raising rents (including the introduction of a revenue-sharing structure) in accordance with the conditionsof the accommodation market.
For hotels under variable rent contracts and a management contract structure, JHR is working to increase variable rent byimplementing active asset management strategies.
i) Properties under variable rent contracts
JHR works to enhance the profitability of its properties under variable rent contracts through its active asset management
strategies. JHR has adopted world-leading international brands such as Hilton, Sheraton, Mercure, and Holiday Inn as wellas leading brands in Japan including Oriental Hotel which are brands of the HMJ Group and Hotel Nikko that are operated
in various areas throughout the country and, together with excellent operators, aims to increase variable rent, etc. throughimproved performance of these hotels. JHR coordinates with the operators to enhance hotel performance by requestingthem to implement marketing initiatives to attract a broader range of demand with considerations given to recovery ofleisure demand from domestic and inbound visitors, measures to maintain and increase room rates, and realization ofsynergy effects like cost reductions from operating multiple properties, among other efforts.
On the other hand, JHR will continue to work closely with the lessees and operators of respective hotels to implement
various measures aiming for recovery and improvement of hotel revenues through cost management and streamlining ofoperations. Such measures include creation of attractive products that fully utilize the characteristics of the properties it
owns, providing added value, implementation of effective marketing measures, and expansion of sales channels to capture
future domestic and overseas demand.
Moreover, JHR will strive to recover and improve hotel earnings by implementing strategic capital expenditure (CAPEX)
as necessary through accurately grasping the conditions in the domestic accommodation and tourism market and changing
customers’ needs. As mentioned above, JHR plans to continue the renovation of guest rooms, etc., scheduled for 2023
during the second half of the fiscal period.
ii) Properties under fixed rent contracts
JHR will monitor the operating conditions of these hotels appropriately, pay careful attention to each lessee’s ability to bear
the cost of rent and negotiate with hotels whose performance has recovered and rent-bearing capacity has increased.
Through the negotiation, JHR aims to increase revenues by reflecting an increase of profit at such hotels through rent
increases, introduction of revenue sharing structure, etc. In addition, JHR will continuously execute investments to maintainand renew facilities and equipment to ensure each hotel becomes prominent in the market and to maintain and enhance
asset value.

- 7 -External growth
In terms of external growth strategy, JHR will continue targeting the acquisition of highly competitive Real Estate for Hotels,
etc. (Hotel Assets) in areas which can expect “domestic and inbound leisure demand” over the medium to long term as it hasdone to date. In addition, JHR will build a portfolio that can secure stable revenues with future growth potential in mind toachieve upside gains.
Upon acquiring properties, JHR will focus on infrastructure aspects of the relevant Hotel Assets, such as buildings andfacilities, and services aspects, such as the credibility of the hotel lessee and operator (including the ability of the hotel lessee
to bear the cost of rent) as well as operation and management capabilities, and the properties’ locational superiority thatserves as the base for stability in demand and growth potential.
Specifically, JHR will aim to invest in “full-service hotels” and “resort hotels” that pose barriers to new openings due to suchfactors as operation and management know-how required for operating the hotels and limitations in terms of invested capitaland location. As for “limited-service hotels,” JHR emphasizes the credibility and operation capabilities of the hotel lessee
and operator as well as the building age, location, guestroom composition, profitability, etc., of the properties. Moreover,
JHR will take a particularly selective approach to hotels specialized for accommodation and of a budget type (low pricezone) that mainly offers single rooms and where the source of competitiveness relies only on prices.
In the hotel investment market, there are signs that domestic investors including J-REITs, in addition to foreign investors,
are actively considering hotel investments and trading may become more active against the backdrop of expectations for
growth from the market recovery and the easing of financial institutions' lending attitude toward hotels, etc. Going forward,
while closely monitoring market trends from many angles, JHR will flexibly respond to changes in the earnings structuresof hotels and the investment environment by leveraging the strengths and advantages it has cultivated as a J-REIT
specializing in hotel investment and aim to expand asset size that accompanies improvement of the portfolio quality throughacquiring highly competitive properties while utilizing the operation platform of HMJ as necessary.
Finance strategy
JHR will focus on enhancing financial stability and soundness and intends to maintain and enhance the relationship of trustwith financial institutions with which it does business through close communication and such.
Specifically, with the hotel market on the road to recovery, JHR aims to lengthen the term of loans while maintaining good
relationships with each lender and paying attention to borrowing costs when refinancing existing loans. In addition, JHR
will strengthen its financial base by inviting new lenders and controlling capital expenditures appropriately. It aims to
conduct financial operations by keeping the ratio of interest-bearing debt to total assets at no larger than 50% as in the past
but maintains roughly the current level for the time being. In addition, when seeking new borrowing for property acquisitions,
JHR will work to disperse the maturity dates of its debt as well as further reinforce its composition of lenders and further
diversify funding methods, such as issuance of investment corporation bonds (including green bonds), while considering thebalance with the funding costs.
Policy on handling of negative goodwill
From the fiscal year ended December 31, 2017 (18th period), JHR started appropriation for dividends through reversal ofreserve for temporary difference adjustment in connection with partial amendments to the “Ordinance on Accounting ofInvestment Corporations” (Cabinet Office Ordinance No. 47 of 2006, as amended; hereinafter referred to as the “Ordinanceon Accountings of Investment Corporations”) and the “Regulation for Real Estate Investment Trusts and Real Estate
Investment Corporations” of The Investment Trusts Association, Japan. JHR stipulated a policy to reverse ¥262 million(hereinafter called the “50-year amortization amount of negative goodwill”), which is an amount equivalent to 2% (1/50) of
the balance of the reserve for temporary difference adjustment for the fiscal year ended December 31, 2017, to pay out as
dividends every year, with the balance of the reserve for temporary difference adjustment remaining at the time of reversal
set as the maximum reversal amount (Note).
Furthermore, in cases of incurrence of losses caused by property dispositions, impairment loss of assets, dilution of dividend
per unit due to the issuance of new investment units through public offerings, etc., loss on retirement of noncurrent assets,
and suspension of sales and such due to large-scale renovations with significant impact on revenues, JHR stipulated a policy
to reverse additional portion of the negative goodwill on top of the 50-year amortization amount of negative goodwill (¥262
million) (Note).
(Note)The policy may change due to a resolution of the board of directors of JHR, and it does not guarantee the method of reversing
the reserve for temporary difference adjustment and amounts to be reversed, etc., in the future.

- 8 -Initiatives for sustainability
In recent years, consideration for ESG (Environment, Social, and Governance) has grown in importance in the investment
management industry from the standpoint of long-term sustainability. JHR recognizes that conducting real estate investment
management that considers ESG is essential to maximize unitholder value and to raise the attractiveness of JHR further. In
addition, JHR believes that it is indispensable to establish favorable relationships with its stakeholders, including unitholders,hotel guests, lessees, operators, business partners such as property managers, local communities, and officers and employeesof the Asset Management Company, and fulfill our social responsibilities expected from each of them.
In order to put such ideas into practice, JHR, along with the Asset Management Company, has established a “Sustainability
Policy” as guidance to ESG initiatives. We have promoted efforts to reduce environmental impact on properties in our
portfolio based on this policy and received the Building-Housing Energy-efficiency Labeling System (BELS) evaluation for
Hotel Nikko Alivila and Mercure Okinawa Naha in February 2018 as the first such cases for hotel properties owned by a JREIT (Note 1). In September 2018, JHR became the first J-REIT specializing in hotels recognized by GRESB (Note 2) for
its environmental awareness and sustainability initiatives and acquired “Green Star” in the GRESB Real Estate Assessment.
Moreover, for the third consecutive year, JHR was selected as a Sector Leader of the Asian Hotel Sector in the GRESB Real
Estate Assessment conducted in 2022. In April 2020, Hilton Tokyo Odaiba acquired CASBEE (Comprehensive Assessment
System for Built Environment Efficiency) Certification for Buildings, the first such recognition for an existing hotel property.
In May 2021, Oriental Hotel Fukuoka Hakata Station also acquired CASBEE Certification for Buildings, following Hilton
Tokyo Odaiba. In addition, in December 2021, JHR defined its materiality (key issues) in terms of ESG from the dual
standpoints of stakeholder expectations and impact on its business. Also, the Asset Management Company expressed support
for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) established by the Financial
Stability Board (FSB) and joined the TCFD Consortium, an organization made up of Japanese companies that support therecommendations. In August 2022, JHR disclosed its efforts to address the four disclosure themes recommended by the
TCFD, including the financial impact of climate change scenario analysis. JHR is also progressively clarifying its numericaltargets by establishing and disclosing a CO2 reduction target by 2050 in February 2023. Going forward, JHR, together with
the Asset Management Company, will continue to actively promote enhancement of its initiatives and disclosure on a variety
of sustainability issues.
Furthermore, JHR issued green bonds in July 2019 to allocate funds mainly to refinancing loans procured for funding
investment capital and construction costs, etc., for equipment that contributes to the environment, including reduction of
CO2 and water consumption in the renovation work at Oriental Hotel Fukuoka Hakata Station. It was the first case of a JREIT specializing in hotels issuing green bonds. Of the funds procured from the green bonds, the remaining funds, excluding
the repayment of such loans, were allocated to construction costs for reduction of CO2, etc., at four hotels, including Hilton
Nagoya as funds for renovation work at the hotels. As a result, the funds procured from the green bonds have been fully
appropriated for eligible projects and there is no unappropriated balance.
In addition, as an effort under the spread of infection by COVID-19, JHR worked to provide a total of nine hotels it owns as
facilities to accommodate patients with mild or no symptoms who do not require hospital treatment among the patients
infected with COVID-19 from 2020 until May 2023. All hotels owned by JHR have resumed normal operations since July
2023.
Recognizing its social responsibility towards local communities as a J-REIT specializing in hotels, JHR will continue toproactively carry out social contribution activities capitalizing on the characteristics of the hotel sector and each hotel.
(Note 1)
(Note 2)

Investigated by the Asset Management Company based on public information.
GRESB, which stands for Global Real Estate Sustainability Benchmark is an annual benchmarking assessment to measure ESG(Environmental, Social, and Governance) considerations of real estate companies and funds. It evaluates initiatives for thesustainability of real estate companies, REITs, and real estate funds, not of individual properties. The GRESB Rating makes
relative assessments based on total scores, with 5 Stars being the highest ranking.

(b) Significant subsequent events
Not applicable.

- 9 -(c) Operating forecast(1) Operating result for the midterm of the fiscal year ending December 2023 (24th period))
Actual result of JHR for the midterm of the fiscal year ending December 31, 2023 (24th period) and the differences withthe previous forecast (Note 1) are as follows. In the midterm of the fiscal year ending December 31, 2023 (24th period),
JHR's operating revenue increased by ¥1,660 million and net income increased by ¥1,635 million compared to the previous
forecast, mainly due to an increase in variable rents resulting from a recovery in hotel performance.
Midterm of the fiscal year ending
December 31, 2023 (24th period)

Actual Results

Previous forecast(Note 1)

Difference

Percent change

Operating revenue¥11,288 million¥9,627 million¥1,660 million

17.3%

Operating income¥5,759 million¥4,178 million¥1,581 million

37.8%

Ordinary income¥4,897 million¥3,262 million¥1,634 million

50.1%

Net income¥4,896 million¥3,261 million¥1,635 million

50.1%(2) Operating forecast for the full fiscal year ending December 2023 (24th period)
JHR estimates its operating forecast and forecast of dividends for the full year of the fiscal year ending December 2023
(24th period) as follows. Given the continuous hotel performance recovery expected for the second half of the year, JHR
estimates its operating revenues for the full year ending December 31, 2023 (24th period) are expected to increase by¥3,091 million from the previous forecast, mainly due to an increase in variable rents. In addition, JHR estimates an increaseof ¥369 million in operating expenses due to a review of various expenses related to properties and operating expenses,
etc., and a decrease of ¥60 million in non-operating expenses with a decrease in financing costs, etc. As a result, net income
is expected to increase by ¥2,787 million from the previous forecast.
For the assumptions of these forecasts, please refer to “Assumptions of the operating forecast for the full fiscal year ending
December 2023 (24th period)” on page 11.
Full year of the fiscal year ending
December 2023 (24th period)

Current forecast

Previous forecast(Note 1)

Difference

Operating revenue¥24,928 million¥21,837 million¥3,091 million

14.2%

Operating income¥13,288 million¥10,566 million¥2,721 million

25.8%

Ordinary income¥11,417 million¥8,629 million¥2,787 million

32.3%

Net income¥11,416 million¥8,628 million¥2,787 million

32.3%¥2,652¥2,005

¥647

32.3%

－

－

－

－

Dividend per unit
Dividend per unit resulting fromexcess of earnings(Note 1)
(Note 2)

Percent change

The figures were announced in the “Financial Report for the Fiscal Year Ended December 31, 2022,” dated February 22, 2023.
The same shall apply hereinafter.
The forecasted figures above are the current forecasts calculated based on certain assumptions. As such, actual operating
revenue, operating income, ordinary income, net income, dividend per unit and dividend per unit resulting from excess ofearnings may vary due to changes in the circumstances. Furthermore, the forecasts are not intended to guarantee any dividend
amount per unit.

- 10 -

Assumptions of the operating forecast for the full fiscal year ending December 2023 (24th period)
Item
Calculation
PeriodAssetsunder

Assumptions
・

Full fiscal year ending December 2023 (24th Period): January 1, 2023, through December 31, 2023 (365 days)

・・The 43 properties owned by JHR as of today are assumed.
It is assumed that there will be no change (acquisition of new property or disposition of the existing properties,etc.) in assets under management through the end of the fiscal year ending December 2023 (24th period).
However, changes in assets under management may take place.

Management

・

Operating revenue is calculated based on the conditions of the effective lease contracts, etc., considering thecompetitiveness of hotels, market environment, and other factors (including the current operating status of each
hotel and the prospect of recovery from the COVID-19 pandemic). If there are lease contracts with facilities otherthan hotels, such as commercial facilities and offices, operating revenue calculated based on the said lease
contracts is included. In particular, we expect each hotel to recover further from the COVID-19 pandemic in the
future while taking into account the current operating conditions. However, there is no guarantee that recovery
will be as expected due to the future situation of COVID-19 and other circumstances, and the actual operating
conditions of each hotel may differ significantly from the forecasted conditions.

・ Rents, etc., of the main hotels are calculated as follows:(1) The 16 HMJ Hotels
The rent of The 16 HMJ Hotels consists of fixed rent and variable rent, and the variable rent is calculated by thefollowing formula.
Variable rent = [Hotel AGOP (*1) - Base amount] × Variable rent ratio (%)
However, if the AGOP is less than the base amount, the variable rent is 0 yen.
(Unit: millions of yen)Fixed rent

Variable rent

Total rent

3,221

2,127

5,348

Oriental Hotel Universal City

316

986

1,303

Oriental Hotel Okinawa Resort & Spa

550

224

774

Sheraton Grand Hiroshima Hotel (*2)

348

315

663

Oriental Hotel Fukuoka Hakata Station

425

958

1,383

Holiday Inn Osaka Namba

576

279

855

Hotel Oriental Express Fukuoka Tenjin

135

271

406

Hilton Tokyo Narita Airport

444

45

489

International Garden Hotel Narita

336

156

492

Hotel Nikko Nara

420

55

475

Hotel Oriental Express Osaka Shinsaibashi

110

59

169

1,600

561

2,161

8,482

6,041

14,523The 5 HMJ Hotels

Operating
Revenue

Hilton Tokyo Odaiba
Total(*1) AGOP (adjusted GOP) is calculated by subtracting certain fees and other items from GOP.
GOP (gross operating profit) is the remainder after expenses incurred in hotel operation, such as personnel costs and generaland administrative expenses, etc., are deducted from total sales. The same shall apply hereinafter.
(*2) Stating the rent for Sheraton Grand Hiroshima Hotel, the major facility of ACTIVE-INTER CITY HIROSHIMA. Fixed rent
and variable rent for office and commercial tenants of ACTIVE-INTER CITY HIROSHIMA are as follows.

Full year

Fixed rent

Variable rent

(Unit: millions of yen)
Total rent

484

10

495

- 11 -

Item

Assumptions(2) Income from management contracts (*3) and variable rent from other hotels with variable rent, etc.
(Unit: millions of yen)
Full year
ibis Styles Kyoto Station (*3)

261

ibis Styles Sapporo (*3)

387

Mercure Sapporo (*3)

459

Mercure Okinawa Naha (*3)

202

Mercure Yokosuka

200

the b suidobashi

63

the b ikebukuro168

the b hachioji

90

the b hakata

118

dormy inn Kumamoto－

Comfort Hotel Tokyo Higashi Nihombashi

181

Smile Hotel Nihombashi Mitsukoshimae

4

Chisun Hotel Kamata

94

Chisun Inn Kamata

59

Hilton Tokyo Bay

Undisclosed (*4)

Hilton Nagoya

Undisclosed (*4)

UAN kanazawa

19

Sotetsu Fresa Inn Shimbashi-Karasumoriguchi

0

Total

3,056

(*3) Management contract structure is introduced. The management contract structure involves entrusting the management ofowned hotel properties to the management company and incorporating the business results into JHR as real estate operating
revenue. Each hotel’s GOP amount is recognized as management contract revenue and operating revenue.
(*4) Undisclosed since tenants that concluded lease contracts did not agree to disclose rent revenue, etc.

・ The following is the breakdown of variable rent and income from management contracts(Unit: millions of yen)
Full year
The 16 HMJ Hotels

6,041

Other hotels with variable rent, etc.

3,056

Office and commercial tenants (*6)

10

Total

9,108

(*5) Variable rent for office and commercial tenants of ACTIVE-INTER CITY HIROSHIMA is shown.
(*6) For details of variable rent, please refer to page 46, “3. Reference Information; (1) Information on values of assets undermanagement, etc. B. Assets under management; (C) Other major assets under management; (iii) Overview of the hotelbusiness; a. Rent structures of hotels with variable rent, management contract or revenue sharing.”- 12 -

Item

Assumptions
・ With respect to real estate operating costs, which constitute a major part of the operating expenses, expenses otherthan depreciation are calculated based on historical data, and variable factors are reflected in the calculation.
・ It is assumed that ¥1,976 million will be recognized as expenses for fixed asset taxes, city planning taxes, etc. In
general, fixed asset taxes and city planning taxes for the year of acquisition on acquired assets are settled with theprevious owner on a pro-rata basis over a period of time, and the amount equivalent to such settlement is includedin the acquisition cost. Therefore, the fixed asset taxes, city planning tax, etc., of UAN kanazawa and Sotetsu Fresa
Inn Shimbashi-Karasumoriguchi acquired in the fiscal period under review (fiscal year ending December 2023
(24th period)) are not posted as expenses for the relevant calculation period.

OperatingExpenses・ Capital expenditure is assumed to be ¥4,848 million (¥2,868 million for capital expenditure I, ¥807 million for
capital expenditure II and ¥1,172 million for capital expenditure III) for the fiscal year ending December 2023 (24thperiod).
(*) JHR classifies capital expenditures into the following three categories. (I) Capital investment related to the renewal of equipment andfacilities of buildings which is required to maintain proper values of properties, (II) capital investment for fixtures, furniture, andequipment that are not directly related to the building structure or facilities but necessary for operating hotels, and (III) strategic capital
investment such as renovating guest rooms, etc. for improving the competitiveness of the hotels.

・ Depreciation is calculated using the straight-line method including the planned capital expenditures above and isassumed to be ¥4,986 million.
・ Repair expenses for buildings are recognized as expenses in the assumed amount necessary for each operating
period. Please note that the repair expenses of each operating period may differ materially from the forecast amountfor 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 regularly.
Nonoperating
Expenses・ ¥1,876 million is expected as non-operating expenses for borrowing-related costs and other expenses. Borrowingrelated costs include interest expense, amortization for financing fees, and arrangement fee.
・ The balance of interest-bearing debt (sum of loans and investment corporation bonds) as of June 30, 2023, isInterestbearing Debt

¥164,231 million, assuming that there will be no change in the balance of interest-bearing liabilities until the endof the fiscal year ending December 31, 2023 (24th period).
There are ¥23,762 million of debt that will mature during the 2nd half of the fiscal year ending December 2023
(24th Period); all of these debts are assumed to be refinanced.
・ Dividend per unit for the fiscal year ending December 2023 (24th period) is calculated based on the following
assumptions.
Net income¥11,416 million

Reversal of reserve for temporary difference adjustment (negative goodwill)
50-year amortization amount of negative goodwill (*1)¥262 million

Loss on retirement of noncurrent assets (*2)¥112 million

Amortization of trademark rights (*3)

¥56 million

Distributable amount¥11,847 million

Total number of investment units issued

4,467,006 units

Dividend per unit
Dividend
per Unit¥2,652(*1) ¥262 million (hereinafter called “50-year amortization amount of negative goodwill”) is scheduled to be paid out as
dividends, with the remaining balance of the reserve for temporary difference adjustment set as the maximum amount, forevery fiscal year.
(*2) The amount recognized as a loss on retirement of noncurrent assets will be appropriated by the reserve for temporary
difference adjustment (negative goodwill) and is expected to have no impact on the dividend per unit.
(*3) The trademark rights are amortized over ten years using the straight-line method. The amortization amount to be recorded
this current fiscal year will have no impact on the dividend per unit due to the appropriation of the reserve for temporary
difference adjustment (negative goodwill).

・ Dividend per unit may fluctuate due to various causes, such as fluctuation of rent revenue resulting from the transfer
of assets under management, change of tenants, etc. at hotels, change in the business environment of hotel businessfor hotel tenants, etc., unexpected repairs, and an actual number of new investment 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 2023 (24th period) is expected to be ¥9,169 million.
- 13 -

Item

Assumptions

Dividend
per Unit
Resultingfrom Excessof Earnings

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

・ It is assumed that there will be no amendments to laws and regulations, the tax system, accounting standards, listing
rules, or the regulations of The Investment Trusts Association, Japan, etc., that will affect the above forecast figures.
Others・ It is assumed that unexpected major incidents will not occur in the general economy, real estate market, hotelbusiness environment, etc.
・ The numerical values are rounded down to the nearest millions of yen in the assumptions above.

- 14 -

<Reference Information 1>
Highlight of operating forecast and dividend estimate(1) Comparison of operational forest and estimated dividend for the full fiscal year ending December 31, 2023 (24th period) (current
forecast) with the previous forecast and main reasons for the difference（Unit：JPY million）
FY12/2023

FY12/2023

（24th

（24th

Period）

Period）

Previous

Current

forecast

forecast

Properties(A)

Profit & Loss

Factors Causing Variance% ofincrease/(B)-(A)decrease(B)

No. of Properties

42

43

1

－

Acquisition Price

365,592

373,992

8,400

2.3%

Operating Revenue

21,83724,928

3,091

14.2%

Real Estate Operating Revenue

21,83724,928

3,091

14.2%

14,547220

Fixed Rent

Dividened

Comparison with
Previous Forecast

14,327

Composition

65.6%

58.4%

Other Income

1,005

1,272

Composition

4.6%

5.1%

Variable Rent

6,504

9,108

Composition

29.8%

36.5%

NOI (*1)

17,656

20,479NOI Yield (*1)

4.8%

5.5%

NOI after Depreciation (*1)

12,624

15,379NOI Yield after Depreciation (*1)

3.5%

4.1%

Operating Income

10,566

Ordinary Income

1.5% Properties acquired in 2023 (*2) ＋204

Other ＋15266

26.6% Utilities income (*3) ＋267

2,604

40.0%

2,823

16.0%

2,754

21.8%

13,288

2,721

25.8%

8,629

11,417

2,787

32.3%

Net Income

8,628

11,416

2,787

32.3%

Use of Negative Goodwill

330

431

100

30.5%

Total Dividends

8,956

11,846

2,890

No. of Units Issued (Unit)

4,467,006

4,467,006－

Dividend per Unit (JPY)

2,005

2,652

647

The 16 HMJ Hotels ＋2,128
The Accor Group Hotels ＋122
The Ishin Group Hotels ＋120
Properties acquired in 2023 ＋4
Other ＋228

Reversal of reserve for temporary difference adjustments
Previous forecast: 262 for 50-year amortization, 11 for loss on

32.3% retirement of non-current assets, and 56 for amortization of
trademark rights－ Current forecast: 262 for 50-year amortization, 112 for loss onretirement of non-current assets, 56 for amortization of trademark

32.3% rights(*1) Each figure is calculated using the following formulas. The same shall apply hereinafter.
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(*2) Properties acquired in 2023 refer to UAN kanazawa and Sotetsu Fresa Inn Shimbashi-Karasumoriguchi, which JHR acquired on January 31, 2023 andMarch 24, 2023, respectively. The same shall apply hereinafter.
(*3) Utilities expenses are incurred as utilities income and expenses. Utilities expenses increased by ¥258 million from the previous forecast, and the net
effect on net income is an increase of ¥9 million from the previous forecast.

- 15 -

(2) Comparison of operating forecast and dividend estimate by current forecast with the result of the full fiscal year ended December
31, 2022 (23rd period) and main reasons for the difference（Unit：JPY million）
FY12/2022

FY12/2023

（23rd

（24th

Period）

Period）

ActualCurrent

results

forecast

Properties(A)

Comparison with
the Previous Period
Factors Causing Variance% ofincrease/(B)-(A)decrease(B)

No. of Properties

41

43

2

－

Acquisition Price

363,542

373,992

10,4502.9%

14,912

24,92810,01567.2%

14,912

24,92810,015

67.2%

Fixed Rent

6,279

14,547

8,268

131.7% The 16 HMJ Hotels

Composition

42.1%

58.4%

Other Income

986

1,272

Composition

6.6%

5.1%

Variable Rent

7,646

9,108

Composition

51.3%

36.5%

NOI

10,963

20,479NOI Yield

3.0%

5.5%

Profit & Loss

Operating Revenue
Real Estate Operating Revenue＋8,030Asset acquired in 2023 (*2) ＋304
Other (66)285

28.9% Utilities income (*) ＋303

1,462

19.1% The Accor Group Hotels

9,516

86.8%

9,263

151.5%

The 16 HMJ Hotels (78)＋987
The Ishin Group Hotels ＋93
Asset acquired in 2023 ＋19
Other ＋440

6,116

15,3791.7%

4.1%

Operating Income

4,296

13,2888,991

209.3%

Ordinary Income

2,672

11,4178,744

327.2%Net Income

2,671

11,4168,744

327.3%

Dividened

NOI after Depreciation
NOI Yield after Depriciation(*)

Use of Negative Goodwill

376

431

54

Total Dividends

3,046

11,8468,800

No. of Units Issued (Unit)

4,467,006

4,467,006－

Dividend per Unit (JPY)

682

2,652

1,970

14.5% Reversal of reserve for temporary difference adjustments
288.9%

2022: 262 for 50-year amortization, 57 for loss on retirement of noncurrent asets, and 56 for amortization of trademark rights－ 2023: 262 for 50-year amortization, 112 for loss on retirement of non288.9%

current asets, 56 for amortization of trademark rights

Utilities expenses are incurred as both utilities income and utilities expenses. Utilities expenses increased by ¥339 million from the previous period,
and the net effect on net income is a decrease of ¥35 million from the previous period.

- 16 -

<Reference Information 2>
Hotel operation indexes, sales, and GOP (gross operating profit)
The numeral figures are based on figures obtained from hotel lessees, etc. Please note that these figures have not been
audited nor have they gone through other procedures. No guarantee is made as to the accuracy or completeness of the
figures and information.
ADR (Note 1) and RevPAR (Note 2) are rounded off to the nearest yen. Sales and GOP are rounded off to the nearest
millions of yen. Occupancy rate and comparison with the previous period are rounded off to one decimal place.
<1> The 16 HMJ Hotels
Fiscal year ended
December 2022

Occupancyrate

ResultComparison
with 2019

Previous
Forecast

Current Forecast(Result for the firsthalf of the year)

Comparison with
Previous Forecast

Comparison
with 2019

54.6%(31.3pt)

74.9%

76.0%

1.1pt

(10.0pt)

73.4%(15.0pt)

82.3%

82.8%

0.5pt

(5.6pt)64.1%(23.0pt)

78.6%

79.4%

0.8pt

(7.7pt)12,292(28.1%)

18,10018,753

3.6%

9.8%

17,192(9.6%)

20,907

21,293

1.8%

12.0%

15,121(16.3%)

19,581

20,088

2.6%

11.2%

6,716

(54.2%)

13,554

14,243

5.1%(2.9%)

12,625(24.9%)

17,211

17,635

2.5%

4.9%

9,694

(38.5%)

15,397

15,9533.6%

1.3%

12,720(49.8%)

21,95923,122

5.3%(8.8%)

22,031(22.9%)

27,45827,7401.0%(3.0%)

Full year

34,752(35.6%)

49,41750,862

2.9%(5.7%)First half ofthe year

1,536(80.5%)

5,600

7,166

28.0%

(9.0%)

Second halfof the year

6,222

(41.4%)

8,772

9,614

9.6%

(9.4%)

Full year

7,757(58.0%)

14,372

16,78016.7%(9.2%)First half ofthe year
Second halfof the year
Full year

ADR

First half ofthe year
Second halfof the year
Full year

RevPAR

First half ofthe year
Second halfof the year
Full year

Sales(JPY1M)GOP(JPY1M)

Fiscal year ending December 2023

First half ofthe year
Second halfof the year

(Note 1) ADR: This represents the average daily rate, calculated by dividing total room revenue for a certain period (including service charges) by
the total number of rooms sold during the period. The same shall apply hereinafter.
(Note 2) RevPAR: This represents revenue per available room, calculated by dividing total room revenue for a certain period (including service
charges) by the total number of rooms available for sale during the period. The same shall apply hereinafter.

- 17 -

<2> The 25 Hotels with Variable Rent, etc.
Fiscal year ended
December 2022

Occupancyrate

ResultComparison
with 2019

Previous
Forecast

Current Forecast(Result for the firsthalf of the year)

Comparison with
Previous Forecast

Comparison
with 201955.8%(29.6pt)

75.4%

76.0%

0.6pt

(9.4pt)74.2%(13.1pt)

82.9%

82.9%

0.0pt

(4.4pt)65.1%(21.3pt)

79.1%

79.5%

0.3pt

(6.9pt)10,872(30.1%)

15,941

16,6184.2%

6.8%

15,018(12.1%)

18,337

18,771

2.4%

9.9%

13,255(18.8%)

17,206

17,750

3.2%

8.7%

6,063

(54.4%)

12,014

12,6285.1%(5.0%)

11,140(25.3%)

15,196

15,563

2.4%

4.3%

8,623

(38.9%)

13,618

14,1073.6%(0.0%)

14,364(50.6%)

24,85926,221

5.5%(9.8%)

24,735(23.6%)

31,06331,4241.2%(3.0%)

Full year

39,100(36.4%)

55,92357,6453.1%(6.2%)First half ofthe year

1,819(80.8%)

6,407

8,164

27.4%

(13.7%)

Second halfof the year

7,055

(42.3%)

9,983

10,8969.2%(10.9%)

Full year

8,874(59.1%)

16,39019,06016.3%(12.2%)First half ofthe year
Second halfof the year
Full year

ADR

First half ofthe year
Second halfof the year
Full year

RevPAR

First half ofthe year
Second halfof the year
Full year

Sales(JPY1M)GOP(JPY1M)

Fiscal year ending December 2023

First half ofthe year
Second halfof the year

- 18 -

2.

Semi-annual financial statements(1) Semi-annual balance sheets
As of
December 31, 2022

AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Income taxes receivable
Other
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
SoftwareTrademark rightLeasehold rights in trust
Fixed-term leasehold rights in trust
Other
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- 19 -(thousands of yen)
As ofJune 30, 2023

21,142,716
8,372,349
4,442,532
484,478
41
111,037
34,553,157

13,274,927
9,433,903
2,498,016
489,195－
108,980
25,805,022

804,339(373,775)
430,5635,911,833(3,835,395)
2,076,438
1,155*1 140,026,191(31,713,554)
108,312,636
2,963,947(659,914)
2,304,033
693,008(228,779)
464,228
129,718(111,540)
18,178212,263,515
118,127
325,988,877

822,393(412,012)
410,380
5,972,851(4,164,968)
1,807,882
5,605*1 142,612,372(33,575,172)
109,037,200
2,983,433(696,555)
2,286,877
731,072(245,940)
485,132
129,718(112,300)
17,418220,946,111
376,924
335,373,533

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

214,699383,275
27,324,752
4,427,981
4,900
32,355,609

12,520139,668
1,958,131
1,195,251
327,173
3,632,745
362,115,817

12,520139,668
1,933,898
231,422306,3032,623,812
370,352,955

4,165
126,802130,967
396,799,942

2,380
111,457
113,837
396,271,815

(thousands of yen)
As ofDecember 31, 2022
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
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
Reserve for temporary difference adjustment
Reserve for tax purpose reduction entry
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

1,943,815
35,113,000
15,432,000
570,397
1,210
398,802664,196
6,473
2,592
11,07921,994
54,165,561

312,458
35,070,000
19,681,000
573,305
605
376,758
719,117
4,328
4,023
11,93259,08556,812,614

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

36,900,000
72,580,000
1,040,520
3,761,741
16,64272,805339,232
114,710,942
171,523,557

187,194,209

187,194,209

21,746,398

21,746,398*2 9,976,515*2 9,600,013

2,672,927

4,899,686

35,570,702
222,764,911

37,420,959
224,615,169

809,661
809,661*3 223,574,572
396,799,942

133,089
133,089*3 224,748,258
396,271,815

1,174,860
11,151,375- 20 -

As ofJune 30, 2023

1,174,860
10,774,874

(2) Semi-annual statements of income(thousands of yen)
For the six months ended
June 30, 2022

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
Gain on derivative instruments
Other
Total non-operating income
Non-operating Expenses
Interest expense
Interest expense on investment corporation bonds
Borrowing costs
Amortization of investment corporation bond issuancecosts
Amortization of investment unit issuance costs
Net derivative financial instruments loss
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Subsidy income
Total extraordinary income
Extraordinary loss
Loss on tax purpose reduction entry of non-current assets
Total extraordinary loss
Net income (loss) before income taxes
Income taxes – current
Total income taxes
Net income (loss)
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

For the six months ended
June 30, 2023

*1 5,002,976*1 10,744,215

5,431,381

11,288,372*1 4,230,740*1 4,548,722

130
3,460
36
8,393
541
12,561

140
3,813
－
1,690
－
5,644

426,174
151,169
205,229425,566
140,421275,366

15,874

15,344

1,785
－
6,983
807,216(470,834)

1,785
4,040
5,744
868,269
4,897,303

－
－

6,570
6,570

－
－
(470,834)605
605(471,439)
1,171(470,268)*2 6,512*1 428,405

706,22159,4848,700
102,414
5,107,561
323,820- 21 -*1 544,157

815,364
58,1628,700
97,495
5,528,444
5,759,928

6,512
4,897,360
605
605
4,896,755
2,930
4,899,686

(3) Semi-annual statements of changes in net assets
For the six months ended June 30, 2022

(thousands of yen)
Unitholders’ equity
Surplus
Voluntary reserve

Unappropriatedretainedearnings(undisposed
loss)

Total surplus

Totalunitholders’equity11,486,747

1,300,724

34,533,870

221,728,079(335,371)

335,371－－

Dividends paid

(1,634,924)(1,634,924)(1,634,924)

Net income (loss)(471,439)(471,439)(471,439)

Unitholders’capitalBalance, January 1,
2022
Changes of items during
the period
Reversal of reserve
for temporary
difference adjustment

Net changes of items
other thanunitholders’ equity
Total changes of items
during the period
Balance, June 30, 2022

Balance, January 1,
2022
Changes of items during
the period
Reversal of reserve
for temporary
difference adjustment

187,194,209

CapitalsurplusReserve fortemporarydifference
adjustment

Reserve fortax purpose
reduction
entry

21,746,398

10,311,886

1,174,860(335,371)－*1

187,194,209－(335,371)－(335,371)(1,770,992)(2,106,364)(2,106,364)

21,746,398

9,976,515

1,174,860

11,151,375(470,268)

32,427,506

219,621,715

Valuation and translation
adjustments
Total
Deferredvaluation andgains (losses)
translation
on hedges
adjustments(185,733)(185,733)

Total net
assets221,542,346－

Dividends paid

(1,634,924)

Net income (loss)(471,439)

Net changes of items
other thanunitholders’ equity
Total changes of items
during the period
Balance, June 30, 2022

Total
voluntary
reserve

478,828

478,828

478,828

478,828

478,828(1,627,535)

293,095

293,095

219,914,810- 22 -

For the six months ended June 30, 2023

(thousands of yen)
Unitholders’ equity
Surplus

Unitholders’capitalBalance, January 1,
2023
Changes of items during
the period
Reversal of reserve
for temporary
difference adjustment

Reserve fortemporarydifference
adjustment

Reserve fortax purpose
reduction
entry

21,746,398

9,976,515

1,174,860

Unappropriatedretainedearnings
Total voluntary(undisposed
reserveloss)

Total surplus

Totalunitholders’equity11,151,375

2,672,927

35,570,702

222,764,911(376,501)

376,501－－

Dividends paid

(3,046,498)(3,046,498)(3,046,498)

Net income (loss)

4,896,755

4,896,755

4,896,755

Net changes of items
other thanunitholders’ equity
Total changes of items
during the period
Balance, June 30, 2023

Balance, January 1,
2023
Changes of items during
the period
Reversal of reserve
for temporary
difference adjustment

187,194,209

Voluntary reserve
Capitalsurplus(376,501)－*1

187,194,209－(376,501)－(376,501)

2,226,758

1,850,257

1,850,257

21,746,398

9,600,013

1,174,860

10,774,874

4,899,686

37,420,959

224,615,169

Valuation and translation
adjustments
Total
Deferredvaluation andgains (losses)
translation
on hedges
adjustments
809,661

809,661

Total net
assets

223,574,572－

Dividends paid

(3,046,498)

Net income (loss)

4,896,755

Net changes of items
other thanunitholders’ equity
Total changes of items
during the period
Balance, June 30, 2023

(676,571)(676,571)(676,571)(676,571)(676,571)

1,173,685

133,089

133,089

224,748,258- 23 -

(4) Semi-annual statements of cash flows(thousands of yen)
For the six months ended
June 30, 2022

Cash flows from operating activities
Income (loss) before income taxes
Depreciation and amortization
Loss on retirement of noncurrent assets
Loss (profit) on derivative instruments
Subsidy income
Loss on tax purpose reduction entry of non-current assets
Amortization of investment corporation bond issuancecosts
Amortization of investment unit issuance expenses
Interest income
Interest expense(Increase) decrease in operating accounts receivable(Increase) decrease in prepaid expenses(Increase) decrease in long-term prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accrued expenses
Increase (decrease) in consumption taxes payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Other
SubtotalInterest received
Interest paid
Income taxes - refunded (paid)
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property and equipment
Purchase of property and equipment in trust
Purchase of intangible assets
Payments of reserve for repairs and maintenance
Proceeds from tenant leasehold and security deposits intrust
Reimbursements of tenant leasehold and security
deposits in trust
Subsidies received
Payments into deposit with withdrawal restrictions
Net cash provided by (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
Repayment of long-term loans payable
Dividends paid
Net cash provided by (used in) 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 period- 24 -For the six months ended
June 30, 2023

(470,834)
2,312,304
432(8,393)－－

4,897,360
2,440,571
17,221
2,350(6,570)6,512

15,874

15,3441,785(130)577,344(190,985)
42,392
120,631(166,091)(22,711)(115,081)(303,687)(1,573)(1,238)1,790,036
130(580,412)(1,169)1,208,584

1,785
(140)
565,988
1,944,516(4,716)24,233(164,539)
5,989(22,043)
54,9201,431
37,9959,818,211
140(569,069)(1,168)9,248,114(394,726)(1,363,339)(43,613)(20,312)(397,764)(12,703,570)(36,517)(20,312)38,789197,152(21,129)(55,077)－(1,500,000)(3,304,332)

6,570－(13,009,520)

15,234,000(6,800,000)－(8,434,000)(1,633,932)(1,633,932)(3,729,680)
29,996,835*1 26,267,155

15,568,000(15,611,000)
11,215,000(11,172,000)(3,044,829)(3,044,829)(6,806,235)
29,515,066*1 22,708,830

(5) Notes on going concern assumption
Not applicable.
(6) Notes on matters concerning significant accounting policies(1) Property and equipment (including trust accounts)
1. Method of
Property and equipment are amortized using the straight-line method. The useful lives of major
depreciation andproperty and equipment components are as follows:amortization of
Machinery and equipment
2 to 17 years
noncurrent assets
Tools, furniture and fixtures
2 to 26 years
Buildings in trust
2 to 64 years
Structures in trust
2 to 64 years
Machinery and equipment in trust
3 to 32 years
Tools, furniture and fixtures in trust
2 to 27 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
Trademark right
10 years
Fixed-term leasehold rights in trust are amortized using the straight-line method based on theremaining period (41 years) of the contract.
(3) Long-term prepaid expenses
Long-term prepaid expenses are amortized using the straight-line method.
2. Accounting for(1) Investment unit issuance costs
deferred assets
Investment unit issuance costs are amortized using the straight-line method over three years.
(2) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the interest method over therespective term of the bond.
3. Accounting for(1) Revenue recognition
recognition of
The details of main performance obligations concerning revenue generated from contracts concluded
revenues andwith JHR’s customers and the ordinary time to fulfill such performance obligations (ordinary time
expenses
to recognize revenue) are as follows.
(a) Sale of real estate properties
For the proceeds from the sale of real estate properties, JHR recognizes revenue when thepurchaser who is a customer, obtains control of the relevant real estate properties, etc., as aresult of the seller fulfilling its delivery obligations stipulated in the transaction agreement of
the real estate, properties, etc.
The amount obtained by deducting “Cost of sale of properties,” which is the book value of realestate, etc. sold, and “Other selling expenses,” which are the various expenses directly requiredin the sale, from “Proceeds from sale of properties,” which are the sales proceeds of real estate,etc., is indicated as “Gain on sales of real estate properties” or “Loss on sales of real estate
properties” in the statements of income. There is no gain or loss on sales of real estate properties
in the previous and current midterm periods under review.
(b) Utilities income
For utilities income, JHR recognizes revenue in accordance with the supply of electricity, water,etc., to the lessee who is a customer based on the lease agreement of real estate, etc., andagreements incidental to it.
(2) Treatment of property taxes and other taxes
For taxes imposed on properties, etc. under management such as property taxes, city planning taxes,
and depreciable asset taxes, the imposed amounts are allocated to the midterm period and expensed
as “Real estate operating costs.”
Cash paid for property taxes and city planning taxes, etc., to the transferor of real estate properties,
etc., at acquisition is not recorded as “Real estate operating costs” but capitalized as part of theacquisition cost of the relevant property.
The amount of such taxes capitalized in the acquisition cost of real properties, etc., was none for theprevious midterm period and ¥26,204 thousand for the current midterm period under review.

- 25 -

4. Method of hedge
accounting

5. Scope of funds (cashand cash equivalents)
in the semi-annual
statements of cashflows
6. Other significant
matters serving as thebasis for preparing
semi-annual financial
statements(1) Method of hedge accounting
Deferred hedge accounting is applied(a) Hedging instruments and hedged items
Hedging instruments
Interest rate swaps
Hedged items
Interest rates on loans payable(b) 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.
(2) 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.
Cash and cash equivalents in the semi-annual statements of cash flows consist of cash on hand, cash intrust accounts, bank deposit and trust deposit, which can be withdrawn at any time, and short-term
investments with a maturity of three months or less when purchased, which can easily be converted to
cash and subject to minimal risk of change in value.
Accounting treatment of beneficial interests in trust with real estate, etc., as their assets
For trust beneficial interests in real estate, etc., under management, all assets and liabilities held in trust
accounts as well as all income generated and expenses incurred from assets in trust are presented in theaccompanying semi-annual 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 semi-annual 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- 26 -

(7) Notes to semi-annual financial statements
Disclosure of notes on “securities” and “share of (profit) loss of entities accounted for using equity method” is omitted because
there is thought to be no significant need for disclosure in the midterm financial report.

[Notes to semi-annual balance sheets]*1. Accumulated advanced depreciation of property and equipment deducted from acquisition costs due to government subsidies
received, etc.
(thousands of yen)
As ofDecember 31, 2022

Buildings in trust

As ofJune 30, 2023
24,921

16,463*2. Matters concerning provision and reversal of reserve for temporary difference adjustment
As of December 31, 2022

Dividend
reserve(Note)

Amount ofinitialaccrualBalance at
beginning of
periodAmount ofprovision
during period

Amount ofreversalduring period

Balance at
end of period

13,127,153

10,311,886－

335,371

9,976,515(thousands of yen)

Grounds for provision and reversal

Allocation for dividend(Note) Dividend reserve indicates the remaining balance of the amount subdivided into gain on negative goodwill, which wasrecorded as a dividend reserve before the fiscal year ended December 2016, and is scheduled for reversal every fiscal
year starting from the fiscal year following the fiscal year in which the reserve was made in an amount that shall be noless than that in equal amounts every fiscal year over a period of no more than 50 years.
As of June 30, 2023

Dividend
reserve(Note)(thousands of yen)Amount ofinitialaccrualBalance at
beginning of
periodAmount ofprovision
during period

Amount ofreversalduring period

Balance at
end of period

13,127,153

9,976,515－

376,5019,600,013

Grounds for provision and reversal

Allocation for dividend(Note) Dividend reserve indicates the remaining balance of the amount subdivided into gain on negative goodwill, which wasrecorded as a dividend reserve before the fiscal year ended December 2016, and is scheduled for reversal every fiscal
year starting from the fiscal year following the fiscal year in which the reserve was made in an amount that shall be noless 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, 2022
¥50,000 thousand- 27 -

As ofJune 30, 2023
¥50,000 thousand

[Notes to semi-annual statements of income]*1. Components of real estate operating revenue and real estate operating costs
For the six months ended
June 30, 2022

A. Real estate operating revenue
Real estate operating revenue
Fixed rent
Variable rent
Income from management contracts
Total
Other real estate operating revenue
Parking lots
Other incidental revenue
Utilities
Other
Total
Total real estate operating revenue
B. Real estate operating costs
Real estate operating costs
Land lease and other rent expenses
Property taxes
Outsourcing expenses (Note)
Nonlife insurance
Depreciation and amortization
Loss on retirement of noncurrent assets
Repairs
Utilities
Trust fees
Other
Total real estate operating costs
C. Net real estate operating income (A-B)(thousands of yen)
For the six months ended
June 30, 2023

3,139,560
1,858,186
5,228
5,002,976

7,250,068
3,008,922
485,224
10,744,215

63,76536,127
269,035
59,476428,405
5,431,381

61,61536,565386,351
59,625544,157
11,288,372

422,755
957,825
187,885
33,861
2,312,304
432
6,709
283,244
18,591
7,131
4,230,740

422,758
980,780203,873
37,0312,440,571
17,221
7,413
410,751
20,443
7,877
4,548,722

1,200,640

6,739,649(Note) Outsourcing expenses include management contract fees of ¥ 29,655 thousand for the six months ended June 30, 2022, and ¥39,112 thousand for the six
months ended June 30, 2023.

*2

Loss on tax purpose reduction entry of non-current assets represents the amount directly deducted from the acquisition costupon receipt of subsidies, and the breakdown is as follows.
(thousands of yen)
For the six months ended
June 30, 2022

Buildings in Trust

For the six months ended
June 30, 2023-

- 28 -

6,512

[Notes to semi-annual statements of changes in net assets]*1

Total number of investment units authorized, issued and outstanding
For the six months ended
June 30, 2022

For the six months ended
June 30, 2023

Total number of investment units authorized

20,000,000 units

20,000,000 units

Total number of investment units issued andoutstanding

4,467,006 units

4,467,006 units[Notes to semi-annual statements of cash flows]*1. Relation of the balance of cash and cash equivalents at the end of the period and the amount in semi-annual balance sheet
accounts(thousands of yen)
For the six months ended
For the six months ended
June 30, 2022
June 30, 2023

Cash and deposits

21,040,304

13,274,927

Cash and deposits in trust

7,026,851

9,433,903

Deposit with withdrawal restrictions(1,800,000)-

Cash and cash equivalents

26,267,155

22,708,830[Notes on lease transactions]Operating leases (as lessor)
Minimum rental revenue under non-cancellable operating leases
As ofDecember 31, 2022

(thousands of yen)
As ofJune 30, 2023

Due within one year

1,152,214

1,501,972

Due after one year

4,054,288

4,392,403

Total

5,206,502

5,894,375- 29 -

[Notes on financial instruments]
Matters concerning fair value, etc., of financial instruments.
Carrying amounts of financial instruments on the (semi-annual) balance sheets, their fair values, and the differences were as
follows. Furthermore, notes on “Cash and deposits,” “Cash and deposits in trust,” “Operating accounts receivable” and “Shortterm loans payable” are omitted as these are settled with cash and within a short period of time and thus the fair value
approximates the book value.
As of December 31, 2022

(thousands of yen)
Carrying amount

Fair value

Difference(1) Current portion of long-term loans payable

15,432,000

15,432,000－(2) Investment corporation bonds

36,900,000

33,223,450(3,676,550)(3) Long-term loans payable

76,786,000

76,786,000－

Total liabilities

129,118,000

125,441,450(3,676,550)

1,184,172

1,184,172－(4) Derivative transactions (*)
As of June 30, 2023

(thousands of yen)
Carrying amount

Fair value

Difference(1) Current portion of long-term loans payable

19,681,000

19,681,000－(2) Investment corporation bonds

36,900,000

34,098,420(2,801,580)(3) Long-term loans payable

72,580,000

72,580,000－

Total liabilities

129,161,000

126,359,420(2,801,580)(4) Derivative transactions (*)
202,847
202,847－(*) Receivables and payables arising from derivative transactions are presented on a net basis and amounts in parenthesis denote net
payables.
(Note)

Methods to measure fair value of financial instruments, and derivative transactions(1) Current portion of long-term loans payable; (3) Long-term loans payable
The carrying value is deemed to approximate the fair value since the interest rate on long-term loans payable is floatinginterest rates revised periodically to reflect market interest rates.
(2) Investment corporation bonds
The fair value of these instruments is measured based on the market price.
(4) Derivative transactions
The information on the fair value of derivative transactions is presented in “Notes on derivative transactions” below.

- 30 -

[Notes on derivative transactions]1.

Derivative transactions to which hedge accounting is not applied
For derivative transactions in which hedge accounting is not applied, the contract amounts or the principal amounts equivalent
to the principal provided in the contracts. etc, as of the interim and year-end account closing dates were as follows:
As of December 31, 2022

Classification

Type, etc., of derivativetransaction

Transactions
other thanmarkettransactions

Interest rate swaps(fixed rate payment,
floating rate receipt)(thousands of yen)Contract amount, etc.
Of which, due
after one year
3,494,000

1,750,000

Fair value

Method to measure the fair value

The fair value is measured at the quoted(696) price, etc., obtained from the counterparty
financial institutions.

As of June 30, 2023

Classification

Type, etc. of derivativetransaction

Transactions
other thanmarkettransactions

Interest rate swaps(fixed rate payment,
floating rate receipt)(thousands of yen)Contract amount, etc.
Of which, due
after one year
3,494,000－

Fair value

Method to measure the fair value

The fair value is measured at the quoted(3,047) price, etc., obtained from the counterparty
financial institutions.

2. Derivative transactions to which hedge accounting is applied
For derivative transactions in which hedge accounting is not applied, the contract amounts or the principal amounts equivalent
to the principal provided in the contracts. etc, as of the interim and year-end account closing dates were as follows:
As of December 31, 2022

(thousands of yen)

Method ofhedge
accounting

Type, etc. of derivative Main hedgedtransaction
item

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

Long-termloans payable

Contract amount, etc.
Of which, due
after one year
78,460,000

70,600,000

Fair value

Method to measure the fairvalue

The fair value is measured at
the quoted price, etc. obtained
1,184,868
from the counterparty
financial institutions.

As of June 30, 2023

(thousands of yen)

Method ofhedge
accounting

Type, etc. of derivative Main hedgedtransaction
item

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

Long-termloans payable

Contract amount, etc.
Of which, due
after one year
74,372,000- 31 -

61,050,000

Fair value

Method to measure the fairvalue

The fair value is measured at
the quoted price, etc. obtained
205,894
from the counterparty
financial institutions.

[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 Oriental Hotel Fukuoka Hakata Station(former name: Hotel Centraza Hakata), acquired on April 1, 2016 to the original state in accordance with the fixed-termleasehold agreement.
2. Calculation method of the subject asset retirement obligations
Calculated the amount of asset retirement obligations by estimating the expected useful period of use of 34 years based on
the remaining useful lives of the period of buildings and using the discount rate of 0.484%.
3. Increase and decrease of the subject asset retirement obligations(thousands of yen)
For the six months ended
June 30, 2023

For the year ended
December 31, 2022
Balance at beginning of period

336,783

338,413

1,630

818

338,413339,232

Adjustment due to passage of time
Balance at end of period[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, 2022

Use

For the six months ended
June 30, 2023

Carrying amount
Balance at beginning of period
Hotel

Net increase (decrease) during period
Balance at end of period
Fair value at end of period

358,819,865

358,478,812(341,052)

9,243,050

358,478,812

367,721,863

483,110,000

495,280,000(Note 1) The decrease during the year ended December 31, 2022 was principally due to depreciation. Increase during the six months ended June 30, 2023
principally due to acquisition of UAN kanazawa (¥2,082 million) and Sotetsu Fresa Inn Shimbashi-Karasumoriguchi (¥8,487 million).
(Note 2) Fair value at end of mid-term (end of fiscal period) is the appraisal value determined by licensed real estate appraisers from outside.

[Notes on revenue recognition]
For the six months ended June 30, 2022
Breakdown of information on revenue generated from contracts with customers
For the breakdown of information on revenue generated from contracts with customers, please refer to “*1. Components ofreal estate operating revenue and real estate operating costs” in [Notes to semi-annual statements of income].
“*1. Components of real estate operating revenue and real estate operating costs” include revenue based on the “AccountingStandard for Lease Transactions” (Corporate Accounting Standard No. 13). In addition, the revenue generated from contracts
with major customers is “Utilities income.”
For the six months ended June 30, 2023
Breakdown of information on revenue generated from contracts with customers
For the breakdown of information on revenue generated from contracts with customers, please refer to “*1. Components ofreal estate operating revenue and real estate operating costs” in [Notes to semi-annual statements of income].
“*1. Components of real estate operating revenue and real estate operating costs” include revenue based on the “AccountingStandard for Lease Transactions” (Corporate Accounting Standard No. 13). In addition, the revenue generated from contracts
with major customers is “Utilities income.”- 32 -

[Notes on segment and related information]
1. Segment information
The segment information has been omitted because JHR has no segments other than the investment and management of hotel
real estate.
2. Related information
For the six months ended June 30, 2022
(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in a single
product/service category accounted for more than 90% of total operating revenue on the semi-annual 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 semi-annual statements of income.
(ii) Property and equipment, at cost
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 semi-annual balance sheets.
(3) Information about major customers(thousands of yen)

Name of customer

Operating revenue

Hotel Management Japan Co., Ltd. (Note 1)

1,726,757

THE DAIICHI BUILDING CO., LTD.

Undisclosed (Note 2)

Name of related segment
Investment and management of hotel realestateInvestment and management of hotel realestate(Note 1) Operating revenue includes the operating revenue from customers belonging to the same company group as said customers.
(Note 2) Undisclosed as the consent of the lessee has not been obtained.

For the six months ended June 30, 2023
(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in a single
product/service category accounted for more than 90% of total operating revenue on the semi-annual 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 semi-annual statements of income.
(ii) Property and equipment, at cost
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 semi-annual balance sheets.
(3) Information about major customers
Name of customer
Hotel Management Japan Co., Ltd. (Note)(Note)(thousands of yen)
Operating revenue

Name of related segment

6,427,981

Investment and management of hotel realestateOperating revenue includes the operating revenue from customers belonging to the same company group as said customers.

- 33 -

[Notes on per unit information]
Net assets per unit is as follows:
As of
December 31, 2022
Net assets per unit

As ofJune 30, 2023
¥50,050¥50,312Net income (loss) per unit and the basis of computation of net income per unit are as follows:
For the six months ended
June 30, 2022
Net income (loss) per unit

For the six months ended
June 30, 2023(¥105)¥1,096(471,439)

4,896,755--(471,439)

4,896,755

4,467,006

4,467,006[Basis of computation]
Net income (loss) for midterm (JPY 1,000)
Amount not attributable to common
unitholders (JPY 1,000)
Net income (loss) for midterm attributable tocommon investment units (JPY 1,000)
Average number of investment units during
period (units)(Note)Net income (loss) per unit for midterm is computed by dividing net income (loss) for midterm by the average number of investment units during themidterm period.
Net income (loss) per unit for midterm after the adjustment of potentially dilutive units is not presented since there are no potentially dilutive units.

[Notes on significant subsequent events]
Not applicable.

- 34 -

(8) Changes in the total number of investment units issued and outstanding
The following is the status of increase (decrease) in the total number of investment units issued and outstanding and unitholders’capital for the past five years through to the end of the midterm period under review.
Total number of investment units
Unitholders’ capital (JPY1M)
issued and outstanding (Units)
Date
Capital transaction
Note
Increase
Increase
Balance
Balance(Decrease)(Decrease)
Capital increase throughJanuary 23, 2019
public offering of
447,800
4,458,647
33,104
186,620 (Note 1)
investment units
Capital increase throughFebruary 20, 2019
third-party allotment of
3,700
4,462,347
273
186,894 (Note 2)
investment units
Capital increase throughMarch 16, 2021
third-party allotment of
4,659
4,467,006
300
187,194 (Note 3)
investment units(Note 1) New investment units were issued through public offering with an issue price per unit of ¥76,342 (issue value of ¥73,927) in order to procure funds forthe acquisition of new properties, etc.
(Note 2) New investment units were issued through third-party allotment with an issue value per unit of ¥73,927 in order to procure part of the funds for theacquisition of new properties.
(Note 3) New investment units were issued through third-party allotment with an issue value per unit of ¥64,400 in order to procure part of the funds for capital
expenditures.

- 35 -

3. Reference information
For detailed information on each property and the operating result of hotels, please see the reference information below as well as the
Financial Results Briefing dated today and the website of JHR (https://www.jhrth.co.jp/en/ir/library.html).

(1) Information on values of assets under management, etc.

A. Investment status
The following outlines the investment status of JHR as of the end of the midterm period under review.

Assetcategory

Hotel type
(Note 1)

Prefectural
location

Name

Holiday Inn Osaka Namba
Namba Oriental Hotel
Hotel Oriental Express Osaka Shinsaibashi
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi
the b ikebukuro
CANDEO HOTELS Ueno Koen
Comfort Hotel Tokyo Higashi Nihombashi
the b hachioji
Tokyo
Smile Hotel Nihombashi Mitsukoshimae
R&B Hotel Ueno-hirokoji
Chisun Hotel Kamata
the b suidobashi
dormy inn EXPRESS Asakusa (Note 4)
Chisun Inn Kamata
ibis Styles Sapporo
Hokkaido
Mercure Sapporo
Hotel Oriental Express Fukuoka Tenjin
the b hakata
Fukuoka
Washington Hotel Plaza Hakata, Nakasu
Toyoko Inn Hakata-guchi Ekimae
Kyoto
ibis Styles Kyoto Station
Okinawa
Mercure Okinawa Naha
Kumamoto
dormy inn Kumamoto
Ishikawa
UAN kanazawa
Nara
Washington Hotel Plaza Nara
SubtotalTokyo
Hilton Tokyo Odaiba
Oriental Hotel Tokyo Bay
Hilton Tokyo Narita Airport
Chiba
International Garden Hotel Narita
Hotel Francs
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel) (Note 5)
Hiroshima
Oriental Hotel Hiroshima
Aichi
Hilton Nagoya
Nara
Hotel Nikko Nara
Hyogo
Kobe Meriken Park Oriental Hotel
FukuokaOriental Hotel Fukuoka Hakata Station
Kanagawa
Mercure Yokosuka
Subtotal
Hotel Nikko Alivila
Okinawa
Oriental Hotel Okinawa Resort & Spa
The Beach Tower Okinawa
Chiba
Hilton Tokyo Bay
Osaka
Oriental Hotel Universal City
Kanagawa
Hakone Setsugetsuka
Subtotal
Real estate in trust – Total
Deposits and other assets (Note 6)
Total assets
Osaka

Limited-service
hotel

Real
estateintrust

Full-service hotel

Resort hotel

As ofDecember 31, 2022
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
26,646
6.7
14,250
3.6
2,781
0.7
－
－
6,548
1.7
6,535
1.6
3,422
0.9
2,685
0.7
2,025
0.5
1,780
0.4
1,442
0.4
1,155
0.3
922
0.2
773
0.2
6,366
1.6
5,614
1.4
5,728
1.4
2,330
0.6
2,062
0.5
1,364
0.3
6,580
1.7
2,745
0.7
2,186
0.6
－
－
1,703
0.4
107,654
27.1
63,16015.9
16,724
4.2
13,038
3.3
8,983
2.3
3,142
0.8
17,016

4.3

16,927

4.3

4,032
15,56010,047
9,260
8,720
1,608
171,296
17,451
15,408
6,418
26,097
7,302
3,552
76,231
355,182
41,617396,799

1.0
3.9
2.5
2.3
2.2
0.4
43.2
4.4
3.9
1.6
6.6
1.8
0.9
19.2
89.5
10.5
100.0

4,008
15,492
10,021
9,174
8,552
1,595
170,504
17,502
15,303
6,368
26,085
7,248
3,553
76,061
364,525
31,746396,271

1.0
3.9
2.5
2.3
2.2
0.4
43.0
4.4
3.9
1.6
6.6
1.8
0.9
19.2
92.0
8.0
100.0

Ratio toRatio toAmounttotal assets
total assets(JPY1M)(%)(%)
Total liabilities
173,22543.7
171,523
43.3
Total net assets
223,57456.3
224,748
56.7
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 the acquisition price (including
expenses incidental to acquisition).
“Ratio to total assets” shows the ratio of the total amount of each asset held to total assets, rounded off to one decimal place.
dormy inn·global cabin Asakusa changed its name to dormy inn EXPRESS Asakusa as of April 1, 2023. The same shall apply hereinafter.
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 land lease right in trust).
Amount(JPY1M)(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)

As ofJune 30, 2023
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
26,601
6.7
14,201
3.6
2,775
0.7
8,480
2.1
6,561
1.7
6,516
1.6
3,407
0.9
2,671
0.7
2,015
0.5
1,805
0.5
1,450
0.4
1,144
0.3
919
0.2
773
0.2
6,331
1.6
5,593
1.4
5,704
1.4
2,321
0.6
2,076
0.5
1,355
0.3
6,569
1.7
2,723
0.7
2,159
0.5
2,066
0.5
1,733
0.4
117,959
29.8
63,044
15.9
16,637
4.2
12,962
3.3
8,943
2.3
3,143
0.8

- 36 -

B. 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(i) 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 midterm period
under review.
a. Details of assets under management (acquisition price, etc.)
Property
No.

Name

1

Kobe Meriken Park Oriental Hotel

2
3

Grade
(Note 1)

Carrying
Appraisal
Acquisition
amount at end value at end of Appraisal
priceof period
periodagency(JPY1M)(JPY1M)(JPY1M)(Note 5)(Note 2)
(Note 3)(Note 4)

Investment
ratio(Acquisition
price)(%)(Note 6)

Collateral(Note 7)Upper-middle

10,9009,366

14,100N

2.9

Unsecured

Oriental Hotel Tokyo Bay

Mid-price

19,90017,05431,700N

5.3

Unsecured

Namba Oriental Hotel

Mid-price

15,00014,261

31,000N

4.0

Unsecured

4

Hotel Nikko Alivila

Luxury18,90017,711

28,100N

5.1

Unsecured

5

Oriental Hotel Hiroshima

Upper-middle

4,100

4,058

4,150

N

1.1

Unsecured

8

The Beach Tower Okinawa

Mid-price

7,610

6,371

9,960

N

2.0

Unsecured

9

Hakone Setsugetsuka

Mid-price

4,070

3,560

5,260

N

1.1

Unsecured

10

dormy inn Kumamoto

Mid-price

2,334

2,159

3,230

N

0.6

Unsecured

12

the b suidobashi

Mid-price

1,120

1,153

2,270

N

0.3

Unsecured13

dormy inn EXPRESS Asakusa

Economy

999

919

1,290

J

0.3

Unsecured

14

Washington Hotel Plaza Hakata, Nakasu

Mid-price

2,130

2,076

4,510

N

0.6

Unsecured

15

Washington Hotel Plaza Nara

Mid-price

2,050

1,733

2,430

N

0.5

Unsecured16

R&B Hotel Ueno-hirokoji

Economy

1,720

1,805

1,800

J

0.5

Unsecured

18

Comfort Hotel Tokyo Higashi Nihombashi

Economy

3,746

3,407

5,360

J

1.0

Unsecured

22

Smile Hotel Nihombashi Mitsukoshimae

Economy

2,108

2,015

2,940

J

0.6

Unsecured24

Toyoko Inn Hakata-guchi Ekimae

Economy

1,652

1,355

2,730

T

0.4

Unsecured

25

Chisun Hotel Kamata

Economy

1,512

1,458

2,080

T

0.4

Unsecured

26

Chisun Inn Kamata

Economy

823

778

1,390

T

0.2

Unsecured

29

Oriental Hotel Universal City

Mid-price

6,753

7,599

17,800R

1.8

Unsecured

31

Hilton Tokyo Bay

Luxury26,05026,09339,900D

7.0

Unsecured32

ibis Styles Kyoto Station

Mid-price

6,600

6,581

9,990

D

1.8

Unsecured33

ibis Styles Sapporo

Mid-price

6,797

6,375

11,100N

1.8

Unsecured34

Mercure Sapporo

Mid-price

6,000

5,653

10,500N

1.6

Unsecured35

Mercure Okinawa Naha

Mid-price

3,000

2,781

6,940

N

0.8

Unsecured37

the b ikebukuro

Mid-price

6,520

6,574

7,200

N

1.7

Unsecured39

the b hachioji

Mid-price

2,610

2,684

2,570

N

0.7

Unsecured40

the b hakata

Mid-price

2,300

2,333

4,320

N

0.6

Unsecured

41

Hotel Francs

Mid-price

3,105

3,143

4,100

D

0.8

Unsecured42

Mercure Yokosuka

Mid-price

1,650

1,613

3,240

D

0.4

Unsecured

43

Oriental Hotel Okinawa Resort & Spa

Upper-middle

14,95015,611

18,100N

4.0

Unsecured

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Luxury17,32017,086

20,700D

4.6

Unsecured

45

CANDEO HOTELS Ueno Koen

46

Oriental Hotel Fukuoka Hakata Station

47

Mid-price

6,705

6,529

7,460

D

1.8

Unsecured

Upper-middle

7,197

8,685

15,000D

1.9

Unsecured

Holiday Inn Osaka Namba

Mid-price

27,00026,626

26,600N

7.2

Unsecured

48

Hotel Oriental Express Fukuoka Tenjin

Mid-price

5,248

5,783

6,520

D

1.4

Unsecured

49

Hilton Nagoya

Luxury15,25015,492

14,900D

4.1

Unsecured

50

Hilton Tokyo Narita Airport

Upper-middle

13,175

13,15812,300N

3.5

Unsecured

51

International Garden Hotel Narita

Mid-price

9,125

9,000

9,110

N

2.4

Unsecured- 37 -

Property
No.

Grade
(Note 1)Name

52

Hotel Nikko Nara

53

Hotel Oriental Express Osaka Shinsaibashi

54
55
56
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)Carrying
Appraisal
Acquisition
amount at end value at end of Appraisal
priceof period
periodagency(JPY1M)(JPY1M)(JPY1M)(Note 5)(Note 2)
(Note 3)(Note 4)

Investment
ratio(Acquisition
price)(%)(Note 6)

Collateral(Note 7)Upper-middle

10,373

10,100

9,500

D

2.8

UnsecuredMid-price

2,738

2,796

2,890

D

0.7

Unsecured

Hilton Tokyo Odaiba

Upper-middle

62,40063,23268,000N

16.7

Unsecured

UAN kanazawa

Upper-middle

2,050

2,072

2,140

N

0.5

Unsecured

Sotetsu Fresa Inn ShimbashiMid-price
8,400
8,480
10,100D
2.2 Unsecured
Karasumoriguchi
Total
373,992
367,338
495,280
100.0
JHR categorizes hotels into the four grade classes of “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.
“Carrying amount at end of period” is the book value at the end of the midterm period under review, and includes not only the amounts for real estatein trust, but also for machinery and equipment, tools, furniture and fixtures, construction in progress, construction in progress in trust and intangible
assets.
“Appraisal value at end of period” is the appraisal value at the end of the midterm period 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:
N: Nihon Fudosan Kenkyusho (Japan Real Estate Institute)
J: JLL Morii Valuation & Advisory K.K.
T: The Tanizawa Sōgō Appraisal Co., L
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 midterm period under review to the total amount ofacquisition price of all assets held at the end of the midterm period 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.

b. Details of assets under management (change in tenants of portfolio)
The following is the change in total number of tenants, total leasable area, total leased area, and occupancy rate, etc. of realestate properties (in trust) under management for the past five years.
End of19th period
December 2018

End of20th period
December 2019

End of21st period
December 2020

End of22nd period
December 2021

End of23rd period
December 2022

End of midterm
period of 24th
periodJune 2023

Total number oftenants
126
125
121
116
110
115
(Note 1)
Total leasable area
678,714.48 sqm
746,329.68 sqm
741,083.02 sqm
733,995.61 sqm
733,995.61 sqm
742,108.29 sqm(Note 2)
Total leased area
677,863.00 sqm
745,227.67 sqm
740,146.96 sqm
732,764.69 sqm
732,251.49 sqm
740,443.58 sqm(Note 3)
Occupancy rate
99.9%
99.9%
99.9%
99.8%
99.8%
99.8%
(Note 4)(Note 1) Total number of tenants indicates the total number of tenants based on the lease contracts for respective real estate in trust (excluding tenants of parking
lots, etc.) as of the end of each fiscal period or midterm period. However, for properties for which master lease contracts under the pass-through scheme
are concluded in which trustee receives the same amounts of rents, etc. from end tenants as is in principle, the total number of end tenants (excluding
tenants of parking lots, etc.) is indicated.
(Note 2) 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 in tsubo units, thefigure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo). The same shall apply hereinafter.
(Note 3) In principle, total 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 amounts of 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 isindicated. The same shall apply hereinafter.
(Note 4) Occupancy rate indicates the percentage of leased area of leasable area of respective real estate properties in trust as of the end of each fiscal period or
midterm period. The same shall apply hereinafter.

c. Details of assets under management (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.
“Total annual rent” is the total amount of the amount arrived at when monthly fixed rent (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) in lease contracts at the end of the midterm period under review is multiplied by 12, plus assumed amountsof revenue sharing, variable rent and income from management contracts for the full fiscal year.
- 38 -

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

1

Kobe Meriken Park Oriental Hotel

Variable/Fixed

Real estate
operating revenue(JPY 1,000)
243,656

2

Oriental Hotel Tokyo Bay

Variable/Fixed

725,292

665,085504,7103

Namba Oriental Hotel

Variable/Fixed

584,084

529,313471,725

4

Hotel Nikko Alivila

Variable/Fixed

345,074

271,315

128,718

5

Oriental Hotel Hiroshima

Variable/Fixed

288,142

265,848

223,266

8

The Beach Tower Okinawa

Fixed

255,504

233,863

177,167

9

Hakone Setsugetsuka

Fixed147,469

134,895

87,48810

dormy inn Kumamoto

Variable/Fixed (Note 4)

97,23086,08958,69712

the b suidobashi

Variable/Fixed

41,10235,781

21,75913

dormy inn EXPRESS Asakusa

Fixed32,53728,017

21,736

14

Washington Hotel Plaza Hakata, Nakasu (Note 5)

Fixed

120,000

112,000

99,00015

Washington Hotel Plaza Nara (Note 5)

Fixed

75,00066,00047,000

16

R&B Hotel Ueno-hirokoji

Fixed48,645

41,18332,36518

Comfort Hotel Tokyo Higashi Nihombashi

Variable/Fixed (Note 6)

317,449

301,961

283,335

22

Smile Hotel Nihombashi Mitsukoshimae

Variable/Fixed (Note 6)

71,753

63,34652,98924

Toyoko Inn Hakata-guchi Ekimae

Fixed70,51963,49654,41725

Chisun Hotel Kamata

Variable

56,582

49,04532,61426

Chisun Inn Kamata

Variable

33,12328,96322,707

29

Oriental Hotel Universal City

Variable/Fixed

649,753620,059

470,842

PropertyNo.

Name

Rent type(Note 1)

NOI
(Note 2)(JPY 1,000)
119,807

NOI after depreciation(Note 3)
(JPY 1,000)(16,392)31

Hilton Tokyo Bay

Variable/Fixed (Note 6)

990,117

848,090748,10732

ibis Styles Kyoto Station

Management contract

142,929

122,883

105,939

33

ibis Styles Sapporo

Management contract

175,479

121,645

80,42034

Mercure Sapporo

Management contract

229,027

128,236

83,59835

Mercure Okinawa NahaManagement contract

79,186

53,634

16,81037

the b ikebukuro

Variable/Fixed

160,141

146,787

133,61739

the b hachioji

Variable/Fixed

79,456

67,344

48,37340

the b hakata

Variable/Fixed

92,86586,33675,46841

Hotel Francs

Fixed

150,000

119,700

94,93342

Mercure Yokosuka

Variable

149,507

90,36972,18843

Variable/Fixed

274,999

232,70748,534

Variable/Fixed

756,094490,946

375,171

45

Oriental Hotel Okinawa Resort & Spa
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)
CANDEO HOTELS Ueno Koen

Fixed

174,985

161,775

140,973

46

Oriental Hotel Fukuoka Hakata Station

Variable/Fixed

647,109523,822

328,09747

Holiday Inn Osaka Namba

Variable/Fixed

310,052

284,865

224,897

48

Hotel Oriental Express Fukuoka Tenjin

Variable/Fixed

266,332

216,065

165,895

49

Hilton Nagoya

Variable

595,124

249,275

155,97150

Hilton Tokyo Narita Airport

Variable/Fixed

227,760

187,606

81,331

51

International Garden Hotel Narita

Variable/Fixed

239,973

218,237

135,687

52

Hotel Nikko Nara
Hotel Oriental Express Osaka Shinsaibashi(Note 7)
Hilton Tokyo Odaiba

Variable/Fixed

219,926

195,827

120,750

Variable/Fixed

80,19873,05964,791

Variable/Fixed

898,045

728,056

574,163

Variable/Fixed (Note 6)

51,48350,22440,099

44

53
54
55
56
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)

UAN kanazawa
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi(Note 8)Total

Variable/Fixed (Note 6)

77,62567,17659,814

11,272,007

9,181,896

6,751,328

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
Rent type was fixed rent only until March 31, 2023.
For Washington Hotel Plaza Hakata, Nakasu and Washington Hotel Plaza Nara, consent on disclosure of rent in units of thousands of yen has not beenobtained from the lessees and numbers are thus rounded down to the nearest millions of yen.
Comfort Hotel Tokyo Higashi Nihombashi, Smile Hotel Nihombashi Mitsukoshimae, Hilton Tokyo Bay, UAN kanazawa and Sotetsu Fresa Inn
Shimbashi-Karasumoriguchi have rent structures with fixed rents and partial revenue sharing,
UAN kanazawa was acquired on January 31, 2023.
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi was acquired on March 24, 2023.
The property numbers of assets that were sold before the end of the previous fiscal year are intentionally omitted.

- 39 -

e. Summary of analyses, etc. of earthquake risk
The following is the PML value, etc. of real estate properties (in trust) under management as of the end of the midterm
period under review.
Property
No.

Probable Maximum
Loss (PML) ratio by
earthquake risk
analyses (%) (Note 1)

Name

Existence ofearthquake insurance

Provider of
PML value(Note 2)

1

Kobe Meriken Park Oriental Hotel

11.6

None

P

2

Oriental Hotel Tokyo Bay

14.2

None

P

3

Namba Oriental Hotel

13.4

None

P

4

Hotel Nikko Alivila

7.3

None

P

5

Oriental Hotel Hiroshima

10.7

None

O

8

The Beach Tower Okinawa

2.7

None

S

9

Hakone Setsugetsuka

14.4

None

P

10

dormy inn Kumamoto

5.6

None

S

12

the b suidobashi

5.4

None

S

13

dormy inn EXPRESS Asakusa

4.9

None

S

14

Washington Hotel Plaza Hakata, Nakasu

8.2

None

P

15

Washington Hotel Plaza Nara

13.7

None

P

16

R&B Hotel Ueno-hirokoji

3.6

None

S

18

Comfort Hotel Tokyo Higashi Nihombashi

6.7

None

S

22

Smile Hotel Nihombashi Mitsukoshimae24

Toyoko Inn Hakata-guchi Ekimae

25

7.5

None

S

Total: 3.8

None

S

Chisun Hotel Kamata

9.0

None

S

26

Chisun Inn Kamata

4.2

None

S

29

Oriental Hotel Universal City

8.7

None

P

31

Hilton Tokyo Bay

3.2

None

T

32

ibis Styles Kyoto Station

10.5

None

T

33

ibis Styles Sapporo

1.0

None

T

34

Mercure Sapporo

1.0

None

T

35

Mercure Okinawa Naha

0.5

None

T

37

the b ikebukuro

5.3

None

T

39

the b hachioji

4.9

None

T

40

the b hakata

3.3

None

T

41

Hotel Francs

2.5

None

T

42

Mercure Yokosuka

7.1

None

T

43

Oriental Hotel Okinawa Resort & Spa

0.7

None

T

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

2.0

None

T

45

CANDEO HOTELS Ueno Koen

3.1

None

T

46

Oriental Hotel Fukuoka Hakata Station

2.4

None

T

47

Holiday Inn Osaka Namba

6.5

None

T

48

Hotel Oriental Express Fukuoka Tenjin

3.3

None

T

49

Hilton Nagoya

1.7

None

T

50

Hilton Tokyo Narita Airport

2.4

None

T

51

International Garden Hotel Narita

5.2

None

T

52

Hotel Nikko Nara

7.5

None

T

53

Hotel Oriental Express Osaka Shinsaibashi

7.3

None

S

54

Hilton Tokyo Odaiba

4.3

None

T

55

UAN kanazawa

10.0

None

T

56

Sotetsu Fresa Inn Shimbashi-Karasumoriguchi

7.0

None

S

- 40 -

(Note 1)(Note 2)

(Note 3)

PML (Probable Maximum Loss) represent damage caused by major earthquake that may occur once every 475 years (estimated probability of such
earthquake to occur during the 50 years is 10%.) during expected holding period (50 years = useful life of ordinary buildings.) PML is anticipatedpercentage of recovery cost against the building replacement cost. JHR will evaluate possibility to acquire earthquake insurance for the property if the
PML of the particular property exceed 15%. As of the end of the midterm fiscal period under review, there is no property with plan to be insured byearthquake insurance.
Under “Provider of PML value” the letters indicate the provider as follows.
T: Tokio Marine dR Co., Ltd.
P: Deloitte Tohmatsu Property Risk Solution Co., Ltd.
O: OBAYASHI CORPORATIO
S: SOMPO Risk Management, Inc.
The property numbers of assets sold are intentionally omitted.

- 41 -

(ii) Income statements for individual real estate properties (in trust) under management
The following table shows income and expenditures for individual investment real estate properties (trust) for the current
midterm period until June 30, 2023. Figures are rounded down to the nearest thousands of yen in principle, but are otherwise
noted if circumstances do not allow for the figures to be stated in units of thousands of yen.
Property No.

-

1

2

3

4

5

Property name

Portfolio total(Note 1)

Kobe
Meriken Park
Oriental Hotel

Oriental HotelTokyo Bay

Namba
Oriental Hotel

Hotel Nikko
AlivilaOriental Hotel
Hiroshima

Number of operating days

-

181

181

181

181

181

(A) Real estate operating revenue subtotal

11,272,007

243,656

725,292

584,084

345,074

288,142

Fixed rent

7,250,068

299,950

379,300

421,950

402,049

107,251

Variable rent

3,494,146(57,263)

345,992

162,134(56,975)

180,890

Other revenue

527,792

969

-

-

-

-

(B) Real estate operating costs subtotal

4,520,678

260,048

220,581

112,358

216,356

64,875Land lease and other rent expenses

422,758

96,351--42,074-

Property taxes

980,780

24,01356,932

52,682

27,70920,478Outsourcing expenses

203,873

480

480

480

960

480

Nonlife insurance

37,031

2,187

2,218

884

1,646

678

Depreciation and amortization

2,412,527

135,730

160,366

57,587

129,795

42,388Loss on retirement of noncurrent assets

17,221468

8-

12,800193

Other costs

446,484

816

576

724

1,369

656

(C) Net real estate operating income = (A) − (B)6,751,328(16,392)

504,710

471,725

128,718

223,266(Reference) Occupancy rate

99.8%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

115

1

1

1

1

1

Property No.

8

9

10

12

13

14

Property name

The Beach Tower
Okinawa

HakoneSetsugetsuka

dormy inn
Kumamoto

the bsuidobashi

dormy inn
EXPRESSAsakusa

Washington
Hotel Plaza
Hakata, Nakasu(Note 2)

Number of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

255,504

147,469

97,23041,10232,537

120,000

Fixed rent

255,504

147,169

97,23015,00031,697

120,000

Variable rent

-

-

-

26,102--Other revenue

-

300

-

-

840

0

(B) Real estate operating costs subtotal

78,33659,981

38,532

19,342

10,801

20,000Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

20,117

11,683

10,271

4,104

3,159

6,000

Outsourcing expenses

-

-

-

600

600

0

Nonlife insurance

1,004

485

346

128

80

0

Depreciation and amortization

56,69647,40727,391

14,022

6,281

12,000Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

519

405

522

487

680

0

(C) Net real estate operating income = (A) − (B)177,167

87,48858,69721,75921,73699,000(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

1

1

1

1

1

- 42 -

Property No.

15

16

18

22

24

25

Property name

Washington Hotel
Plaza Nara
(Note 2)

R&B Hotel
Ueno-hirokoji

Comfort HotelTokyo Higashi
Nihombashi

Smile Hotel
Nihombashi
Mitsukoshimae

Toyoko Inn
Hakata-guchi
EkimaeChisun Hotel
KamataNumber of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

75,00048,645

317,449

71,75370,51956,582

Fixed rent

73,00048,252130,160

67,20070,519-Variable rent--

181,685

4,553-

56,512Other revenue

1,000

393

5,602

-

-

70

(B) Real estate operating costs subtotal

27,00016,28034,11318,764

16,102

23,967

Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

5,000

6,404

13,891

6,876

5,777

5,999

Outsourcing expenses

1,000

420

807

600

540

600

Nonlife insurance

0

117

267

132

186

154

Depreciation and amortization

18,0008,817

18,625

10,357

9,079

16,430Loss on retirement of noncurrent assets

0

-

-

-

-

-

Other costs

0

520

521

798

518

783

(C) Net real estate operating income = (A) − (B)47,00032,365283,335

52,98954,41732,614(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

2

1

2

1

1

1

Property No.

26

29

31

32

33

34

Property name

Chisun Inn
KamataOriental Hotel
Universal City

HiltonTokyo Bay

ibis Styles
Kyoto Station(Note 1)

ibis Styles
Sapporo(Note 1)

MercureSapporo(Note 1)

Number of operating days

181

181

(A) Real estate operating revenue subtotal

33,123649,753

Fixed rent-

158,333

Variable rent

33,123475,057

Other revenue-

16,363(B) Real estate operating costs subtotal

10,416

178,911

181

181

181

181

990,117

142,929

175,479

229,027

Undisclosed(Note 3)
Undisclosed(Note 3)
Undisclosed(Note 3)

21,167

12,846

27,954

119,768

136,094

150,198

1,993

26,53750,874

242,009

36,98995,058145,429

Land lease and other rent expenses--

61,860---Property taxes

2,462

25,40570,536

11,42818,891

25,311

Outsourcing expenses

540

2,404

6,221

6,362

8,500

25,930Nonlife insurance

63

1,211

2,330

235

618

687

Depreciation and amortization

6,256

149,217

99,983

16,943

41,224

44,638Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

1,094

672

1,077

2,020

25,82348,861(C) Net real estate operating income = (A) − (B)22,707

470,842

748,107

105,939

80,42083,598(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

99.4%

99.1%

(Reference) Number of tenants

1

1

1

2

5

10

- 43 -

Property No.

35

37

39

40

41

42

Property nameMercureOkinawa Naha
(Note 1)the bikebukuro

the bhachioji

the bhakataHotel Francs

MercureYokosuka

Number of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

79,186160,141

79,45692,865150,000

149,507

Fixed rent-

70,27029,54633,261150,000-

Variable rent

79,162

89,27047,50959,604-

121,129

Other revenue

23

600

2,400

-

-

28,377(B) Real estate operating costs subtotal

62,376

26,52431,083

17,39755,06677,318Land lease and other rent expenses

169

-

-

-

-

-

Property taxes

11,722

11,70010,603

5,244

28,41016,458Outsourcing expenses

12,301

600

600

600

900

10,610Nonlife insurance

534

296

352

196

736

1,040

Depreciation and amortization

36,824

13,16918,97010,86824,76618,181

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

824

757

556

488

252

31,028(C) Net real estate operating income = (A) − (B)16,810133,617

48,37375,46894,93372,188(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

3

10

2

1

1

Property No.

43

44

45

46

47

48

Property name

Oriental Hotel
Okinawa
Resort & Spa

ACTIVE-INTERCITY
HIROSHIMACANDEOHOTELS
Ueno Koen

Oriental Hotel
Fukuoka Hakata
StationHoliday Inn
Osaka Namba

Hotel Oriental
Express Fukuoka
TenjinNumber of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

274,999

756,094

174,985

647,109

310,052

266,332

Undisclosed(Note 3)

212,499

288,000

100,013

Fixed rent

274,999

420,807

Variable rent-

172,459-434,60921,886135,038-

165

31,280

Other revenue-

162,828

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

226,465

380,923

34,012

319,01285,154100,437

Land lease and other rent expenses

-

-

-

111,103--

Property taxes

38,94362,236

11,6359,436

23,29916,969Outsourcing expenses

1,200

51,325

600

1,500

780

5,886

Nonlife insurance

1,719

2,450

340

824

686

321

Depreciation and amortization

181,214

115,775

20,802

194,905

59,96850,170Loss on retirement of noncurrent assets

2,959

-

-

-

-

-

Other costs

430

149,135

633

1,242

420

27,089(C) Net real estate operating income = (A) − (B)48,534375,171

140,973

328,097

224,897

165,895(Reference) Occupancy rate

100.0%

97.8%

100.0%

100.0%

100.0%

90.9%(Reference) Number of tenants

1

37

1

1

1

3

- 44 -

Property No.

49

50

51

52

53

54

Property name

Hilton Nagoya

Hilton Tokyo
Narita Airport

International
Garden Hotel
NaritaHotel Nikko
Nara

Hotel Oriental
Express Osaka
Shinsaibashi

Hilton Tokyo
Odaiba

181

181

181

181

181

181

595,124

227,760

239,973

219,926

80,198898,045

222,000

168,000

210,000

55,200799,800

5,760

71,973

9,926

24,99898,245

-

-

-

-

-

Number of operating days(A) Real estate operating revenue subtotal
Fixed rent
Variable rent
Other revenue

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

439,153

146,429104,285

99,175

15,407

323,881Land lease and other rent expenses

111,200

-

-

-

-

-

Property taxes

50,321

36,171

19,13620,142

5,709

166,529

Outsourcing expenses

49,140

1,260

1,140

1,200

1,080

60

Nonlife insurance

3,029

2,245

987

2,020

99

2,741

Depreciation and amortization

93,304106,275

82,54975,076

8,268

153,893

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

132,156

477

472

736

250

657

(C) Net real estate operating income = (A) − (B)155,971

81,331

135,687

120,750

64,791

574,163(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

Property No.

55

56

Sotetsu Fresa Inn
ShimbashiUAN kanazawa
Karasumoriguchi(Note 4)(Note 5)

Property Name
Number of operating days

151

99

(A) Real estate investment revenue subtotal

51,48377,625

Fixed rent

45,29069,712

Variable rent

6,193

127

Other revenue

-

7,785

(B) Real estate operating costs subtotal

11,384

17,810Land lease and other rent expenses--

Property taxes--

Outsourcing expenses

654

2,945

Nonlife insurance

121

147

Depreciation and amortization

10,125

7,361

Loss on retirement of noncurrent assets--

Other costs

484

7,355

(C) Net real estate operating income = (A) − (B)40,09959,814(Reference) Occupancy rate

100.0%

100.0%(Reference) Number of tenants

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

Variable rent includes income from management contracts. For details of the management contract, please refer to “(iii). Overview of the hotel business;
a. Rent structures of hotels with variable rent, management contract or revenue sharing” on page 46.
Figures are rounded down to the nearest millions of yen because the lessee’s consent to disclose rent in units of thousands of yen has not been obtained.
Undisclosed as consent on disclosure has not been obtained from the tenant with whom a lease contract has been concluded.
UAN kanazawa was acquired on January 31, 2023.
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi was acquired on March 24, 2023.
The property numbers of assets sold before the end of the previous fiscal year are intentionally omitted.

- 45 -

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

The 16
HMJ
Hotels

The
Accor
Group
Hotels

The
Ishin
Group
HotelsOther
hotelswithvariablerentorrevenuesharing(Note 1)
(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)

Name

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel Tokyo Bay

3

Namba Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

29

Oriental Hotel Universal City

43

Rent type

Method of calculating variable rent and income frommanagement contracts

Variable/Fixed(Total AGOP of The Five HMJ Hotels (Note 1) – baseamount (¥4,120 million/year (Note 2)) x 85.0%

Variable/Fixed(AGOP – base amount (¥370 million/year)) x 95.0%

Oriental Hotel Okinawa Resort & Spa

Variable/Fixed(AGOP – base amount (¥655 million/year)) x 95.0%

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Variable/Fixed(Note 3)

(AGOP – base amount (¥360 million/year)) x 90.0%

46

Oriental Hotel Fukuoka Hakata Station

Variable/Fixed(AGOP – base amount (¥442 million/year)) x 98.0%

47

Holiday Inn Osaka Namba

Variable/Fixed(AGOP – base amount (¥580 million/year)) x 97.0%

48

Hotel Oriental Express Fukuoka Tenjin

Variable/Fixed(AGOP – base amount (¥165 million/year)) x 97.0%

50

Hilton Tokyo Narita Airport

Variable/Fixed(AGOP – base amount (¥450 million/year)) x 93.0%

51International Garden Hotel Narita

Variable/Fixed(AGOP – base amount (¥360 million/year)) x 98.0%

52

Hotel Nikko Nara

Variable/Fixed(AGOP – base amount (¥440 million/year)) x 95.0%

53

Hotel Oriental Express Osaka Shinsaibashi

Variable/Fixed(AGOP – base amount (¥128 million/year)) x 91.0%

54

Hilton Tokyo Odaiba

Variable/Fixed(AGOP – base amount (¥1,660 million/year)) x 98.0%

32

ibis Styles Kyoto Station

33

ibis Styles Sapporo

34

Mercure Sapporo

35

Mercure Okinawa Naha

42

Mercure Yokosuka

12

the b suidobashi

37

the b ikebukuro39

the b hachioji

40

the b hakata

10

dormy inn Kumamoto

Management contract(Note 4)

VariableAmount that is a certain percentage of sales exceeding thethreshold (Note 5)

Variable/Fixed

Amount that is a certain percentage of sales exceeding thethreshold (Note 5)

Variable/Fixed (Note 6)(AGOP – base amount (¥400 million/year)) x 40.0%

Fixed +
Revenue sharing
Fixed +
Revenue sharing

18

Comfort Hotel Tokyo Higashi Nihombashi

22

Smile Hotel Nihombashi Mitsukoshimae

25

Chisun Hotel Kamata

Variable

26

Chisun Inn Kamata

Variable

31

Hilton Tokyo Bay

Fixed +
Revenue sharing

49

Hilton Nagoya

Variable55

UAN kanazawa

56

Sotetsu Fresa Inn Shimbashi-Karasumoriguchi

GOP equivalent

Fixed +
Revenue sharing
Fixed +
Revenue sharing

Amount that is a certain percentage of sales exceeding thethreshold (Note 5)
Amount that is a certain percentage of sales exceeding thethreshold (Note 5)
Amount that is the monthly GOP multiplied by 86.0%(¥0 if the amount is below ¥0)
Amount that is the monthly GOP multiplied by 86.0%(¥0 if the amount is below ¥0)
Amount that is a certain percentage of sales exceeding thethreshold (Note 5)
Variable rents linked to hotel sales, etc. (Note 5)(Room sales - base amount (¥270 million/year)) x 30.0%
Amount that is a certain percentage of sales exceeding thethreshold (Note 5)

AGOP (adjusted GOP) is calculated by subtracting certain fees and other items from GOP. The same shall apply hereinafter.
For the purpose of payments of variable rent from each hotel, etc. JHR has set individual GOP base amount for each hotel. The breakdown of the AGOP
base amount of The Five HMJ Hotels (¥4,120 million/year) is as follows.
Kobe Meriken Park Oriental Hotel ¥690 million, Oriental Hotel Tokyo Bay ¥1,060 million, Namba Oriental Hotel ¥890 million, Hotel Nikko Alivila¥1,250 million, and Oriental Hotel Hiroshima ¥230 million.
The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
The management contract structure is a structure for hotel real estate owned by JHR in which JHR entrusts an operator to operate the hotel and takes
in the outcome of that business as real estate operating revenue. Specifically, JHR, the owner of the hotel real estate, concludes a management contract
with an operator and entrusts the operator with the tasks necessary to run the hotel business. JHR receives the hotel revenue achieved from the hotelbusiness (operation) by the operator and, at the same time, pays a management fee to the operator. This hotel revenue achieved is recognized as “realestate operating revenue through management contract” and is equivalent to the rent, which is the real estate operating revenue under the leasing
structure.
The detailed content of the contract is not disclosed as consent for disclosure has not been obtained from the lessee.
The rent type was fixed rent until March 31, 2023.

- 46 -

Major indicators of the hotel business
The following tables indicate the figures related to the hotel business of The 16 HMJ Hotels for the operating period fromJanuary 1, 2023, through June 30, 2023, based on the data provided by the hotel lessees. While these indicators of the hotels
are among the indicators that show the operating status of the rooms departments, please note that they do not necessarily
represent the operating revenue and the ability to bear rent, etc., of the respective hotels, as the room rates and profit margins,etc. of the respective rooms available for sale are not uniform, among other reasons. As such, the indicators are no more than
the reference figures.

b.

Occupancy rate
ADR (Note 1)
RevPAR (Note 2)
Total sales
Rooms department
Food & beveragedepartment
Tenant department
Other departments(Note 3)GOP

Kobe
Meriken Park
Oriental Hotel
Ratio tototal sales
(%)
68.3%
－
21,441－
14,640
－
2,094
100.0
856
40.9
1,117

53.4

Namba
Oriental Hotel

82.1%
23,894
19,615
2,795
1,814

Ratio tototal sales
(%)
－
－
－
100.0
64.9

840

Hotel Nikko
Alivila86.8%
19,741
17,134
1,069
800

Ratio tototal sales
(%)
－
－
－
100.0
74.8

30.0

35

3.3

Oriental Hotel
Hiroshima

68.3%
26,492
18,083
2,167
1,299

Ratio tototal sales
(%)
－
－
－
100.0
60.0

704

32.5

The Five HMJ Hotels
Total/Average

92.3%
9,927
9,162
587
376

Ratio tototal sales
(%)
－
－
－
100.0
64.1

78.3%
21,147
16,568
8,712
5,146

Ratio tototal sales
(%)
－
－
－
100.0
59.1

25

4.2

2,721

31.2

35

1.7

92

3.3

216

20.2

1

0.1

－

－

343

3.9

86

4.1

50

1.8

18

1.7

162

7.5

186

31.7

502

5.8

278

13.3

937

33.5

636

59.5

564

26.0

328

55.8

2,742

31.5

Oriental Hotel
Universal City

Occupancy rate
ADR (Note 1)
RevPAR (Note 2)
Total sales
Rooms department
Food & beveragedepartment
Tenant department
Other departments(Note 3)
GOP

Oriental HotelTokyo Bay

Oriental Hotel
Okinawa
Resort & Spa
Ratio tototal sales
(%)
62.2%
－
20,458－12,724
－
1,390
100.0
831
59.8

Sheraton Grand
Hiroshima Hotel(Note 4)
Ratio tototal sales
(%)
78.5%
－
24,898－19,536
－
1,615
100.0
842
52.1

Oriental Hotel
Fukuoka Hakata
StationRatio tototal sales
(%)
82.6%
－
19,869－16,402
－
1,338
100.0
656
49.0

Holiday Inn
Osaka Namba

Hotel Oriental
Express
Fukuoka Tenjin
Ratio tototal sales
(%)
82.9%
－
10,281
－
8,526
－
417
100.0
406
97.4

83.5%
24,527
20,483
1,423
1,223

Ratio tototal sales
(%)
－
－
－
100.0
86.0

196

13.8

400

28.8

735

45.5

535

－

－

26

1.9

－

－

118

3

0.2

132

9.5

38

2.4

29

2.2

9

1.4

5

1.2

685

48.2

227

16.3

431

26.7

664

49.7

340

55.4

222

53.2

Hilton Tokyo
Narita Airport

International Garden
Hotel Narita

Ratio tototal sales
(%)

65.4%
15,932
10,425613
592

Ratio tototal sales
(%)
－
－
－
100.0
96.6

40.0

－

－

6

1.4

8.8

12

1.9

－

－

Hotel Oriental
Express
Osaka Shinsaibashi
Ratio toRatio tototal sales
total sales(%)(%)

Hotel Nikko Nara

Ratio tototal sales(%)

The 16 HMJ Hotels
Total/Average(Note 5)
Ratio toRatio tototal sales
total sales(%)(%)

Hilton Tokyo
OdaibaOccupancy rate

73.2%

－

77.1%

－

70.9%

－

84.4%

－

74.6%

－

76.0%

－

ADR (Note 1)

12,484

－

8,751

－

14,146

－

9,874

－

30,505－18,753－

RevPAR (Note 2)

9,133

－

6,743

－

10,030

－

8,335

－

22,765－

14,243－

Total sales

1,295

100.0

714

100.0

1,152

100.0

188

100.0

4,266

100.0

23,122

100.0

906

69.9

565

79.2

599

52.0

187

99.7

1,867

43.8

13,821

59.8

347

26.8

143

20.0

545

47.3

－

－

2,271

53.2

7,898

34.2

13

1.0

2

0.3

2

0.2

－

－

37

0.9

553

2.4

29

2.3

4

0.6

6

0.6

0

0.3

91

2.1

850

3.7

281

21.7

253

35.5

246

21.3

91

48.8

983

23.0

7,166

31.0

Rooms department
Food & beveragedepartment
Tenant department
Other departments(Note 3)
GOP
(Note 1)

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

ADR: Represents the average daily rate, which is calculated by dividing total room revenue for a certain period (including service charges) by the total
number of rooms sold during the period.
Service charges are 10% for Kobe Meriken Park Oriental Hotel, Oriental Hotel Tokyo Bay, Namba Oriental Hotel, Hotel Nikko Alivila, Oriental Hotel
Hiroshima, Oriental Hotel Okinawa Resort & Spa, ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel), International Garden
Hotel Narita, Hotel Nikko Nara and Oriental Hotel Fukuoka Hakata Station; 12% for Hilton Tokyo Narita Airport; and 13% for Hilton Tokyo Odaiba.
Oriental Hotel Universal City, Holiday Inn Osaka Namba, Hotel Oriental Express Fukuoka Tenjin and Hotel Oriental Express Osaka Shinsaibashi do
not request service charges. The same shall apply hereinafter.
RevPAR: Represents revenue per available room, which is calculated by dividing total room revenue for a certain period (including service charges)
by the total number of rooms available for sale during the period. 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 Total/Average of The 16 HMJ Hotels, figures are calculated by JHR as references since no figures have been provided by the hotel lessees.
The occupancy rate is rounded off to one decimal place, while ADR and RevPAR are rounded off to the nearest whole number. Sales and GOP arerounded off to the nearest millions of yen. For the ratio to total sales, the ratio of sales in each department to total sales is rounded off to one decimal
place.

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(2) Status of capital expenditures
a. Planned capital expenditures (Note)
The following table shows major estimated capital expenditure items for renovation work during the fiscal year planned asof the end of the midterm period under review. Total capital expenditures for the second half of the year are planned to be¥3,970 million. Together with the capital expenditures in the first half of the year, total capital expenditures for the full year
are planned to be ¥4,848 million.
Name of property, etc.
(Location)
Kobe Meriken Park Oriental Hotel(Kobe-shi, Hyogo)
Kobe Meriken Park Oriental Hotel(Kobe-shi, Hyogo)
Kobe Meriken Park Oriental Hotel(Kobe-shi, Hyogo)
Oriental Hotel Tokyo Bay(Urayasu-shi, Chiba)
Oriental Hotel Tokyo Bay(Urayasu-shi, Chiba)
Oriental Hotel Tokyo Bay(Urayasu-shi, Chiba)
Oriental Hotel Universal City
(Osaka-shi, Osaka)
Hilton Tokyo Bay(Urayasu-shi, Chiba)
Oriental Hotel Okinawa Resort & Spa(Nago-shi, Okinawa)
Oriental Hotel Okinawa Resort & Spa(Nago-shi, Okinawa)
Oriental Hotel Okinawa Resort & Spa(Nago-shi, Okinawa)
Oriental Hotel Okinawa Resort & Spa(Nago-shi, Okinawa)
Hilton Tokyo Narita Airport(Narita-shi, Chiba)
Hilton Tokyo Odaiba(Minato-ku, Tokyo)

PurposeScheduled period

From September 2023
to December 2023
Renovation of guest rooms
From May 2023
(12F-13F)
to August 2023
Renovation of prefabricated bath
From May 2023
units in guest rooms
to August 2023
From July 2023
Tenant compartment construction
to November 2023
From October 2023
Renovation of restaurant
to October 2023
Renovation of guest rooms
From May 2023
(11F-12F)
to July 2023
Renewal of disaster prevention
From June 2023
board
to December 2023
Renewal of air- conditioning
From August 2023
facilities in guest rooms
to November 2023
From September 2023
Painting of exterior walls
to December 2023
Renewal of air-conditioning
From October 2023
facilities in guest rooms
to December 2023
From September 2023
Renovation of guest rooms
to December 2023
From September 2023
Renewal of piping
to December 2023
From June 2023
Renewal of telephone switchboard
to September 2023
From November 2023
Repair of transformer substation
to November 2023
Renovation of restaurant

Total(Note)

Estimated construction costs(JPY1M)
Total
amountTotal amount
paid

110

－

203

－

55

－

50

－

63

－

300

255

90

－

79

－

60

－

88

－

465

－

60

－

60

－

120

－

1,803

255

New construction and renewal work include those 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 the renovation work will be performed may change.

b. Capital expenditures during the period (Note)
Major construction work conducted by JHR during the midterm period under review that represents capital expenditures is
as below. Capital expenditures for the midterm period under review totaled ¥878 million, and repair expenses that were
accounted for as expenses for the midterm period under review totaled ¥ 7 million. In aggregate, ¥ 885 million of construction
work was carried out.
Name of property, etc.
Construction costs
Purpose
Period(Location)(JPY1M)
Hotel Nikko Alivila
From November 2022
Renewal of elevators
149(Nakagami, Okinawa)
to March 2023
Hilton Tokyo Bay
From January 2023
Renewal of elevators
73(Urayasu-shi, Chiba)
to February 2023
Total
(Note)

222

New construction and renewal work include those for buildings, attached facilities, etc., as well as items classified as furniture and fixtures.

- 48 -