Table of Contents
Ⅰ. Settlement of Accounts — Highlights
1.

FY12/2023 Highlights

Appendix 1
3

Ⅱ. Summary of Settlement of Accounts
1.

Results for FY12/2023

52.

Operating Forecasts for FY12/2024

6

Ⅲ. Status of Hotel Operations
1.

8

2.

Hotel Performance Results for FY2023 (Sales & GOP)

93.

Hotel Performance Forecasts for FY2024

10

4.

Internal Growth by Active Asset Management

115.

Active Asset Management during the COVID-19 Pandemic

12

6.

Renovation Details and Results for FY2023

14

7.

Capital Expenditure (CAPEX) and Depreciation

15

8.

Trend of Asset Size

16

9.

Assets Acquired in FY2023

17

10. ESG Initiatives

18

Financial Conditions

JHR's Investment Targets

28

2.

Simultaneous Pursuit of Stability and Upside Potential

29

3.

External Growth Strategy

30

4.

Internal Growth Strategy

31

5.

Financial Strategy

32

20

Portfolio Map

34

2.

Portfolio List

35

3.

Portfolio Diversification

36

4.

Rent Type37

5.

Property List

38

6.

Summary of Lease Contracts

40

7.

Trend of RevPAR

43

8.

Balance Sheet

44

Investors Composition and Investment Unit Price

1.

Major Unitholders and Classifications of Unitholders

46

2.

Changes in Investment Unit Price and Market Capitalization

47

Appendix 4

Ⅴ. Market Environment

Information of Properties

1.

Appendix 3

Ⅳ. Financial Conditions
1.

1.

Appendix 2

Hotel Performance Results for FY2023(Key Performance Indicators for Rooms Dept.)

JHR's Characteristics and Strategy

Summary of the Asset Management Company

1.

Status of Domestic Accommodation Demand241.

Summary of the Asset Management Company

49

2.

Status of Inbound Visitors

25

2.

Features and Governance of the Asset Management Company

50

3.

Status of New Supply of Hotels

26

1

Ⅰ. Settlement of Accounts — Highlights

1. FY12/2023 Highlights
1. Status of Hotel Operations• In 2023, normalization from the COVID-19 pandemic
progressed, with a marked recovery in demand,
especially in the second half of the year.
RevPAR exceeded 2019 figures for the full year, while
GOP decreased by 7.1% compared to 2019 due to theimpact of the non-rooms department

2. External Growth• Acquired six new properties (total acquisition price of
JPY33.3 billon) and resumed external growth in 2023
• Three of the properties were acquired through public
offering for the first time since the COVID-19 pandemic
Acquired in January

2023

vs Previous
Yearvs 2019

12,628+108.3%(5.0%)

15,955+43.2%+7.0%

Full Year

14,305+65.9%+1.4%

Rooms Dept.

37,614+65.9%+1.5%

F&B Dept.

17,951+35.9%(12.2%)First Half

RevPAR Second Half
(JPY)

Sales

(JPY MM)

Others2,867(10.9%)(27.6%)

Total

58,432+49.4%(4.9%)GOP (JPY MM)

20,162+127.2%(7.1%)

2024 Forecast (28 Hotels with Variable Rent, etc.(*1))
2023

2024

vs PreviousYear

12,311

14,670+19.2%

15,504

17,400+12.2%

Full Year

13,92016,043+15.2%

Rooms Dept.

39,24045,346

F&B Dept.

18,124

21,248First Half

RevPAR Second Half
(JPY)

Sales

(JPY MM)

Acquired in September (PO)UAN kanazawa(Ishikawa)• For 2024, both room and F&B sales are expected to see
double-digit growth vs previous year; GOP is projected
to increase by 19.2%
2023 Result (25 Hotels with Variable Rent, etc.(*1))

Acquired in March

Sotetsu Fresa Inn
ShimbashiKarasumoriguchi(Tokyo)JPY4.00Bn(15.7%)+14.6%GOP (JPY MM)

20,84924,850+19.2%• DPU for 2024 is expected to reach JPY3,722, anincrease of 23.4% vs 2023, surpassing the figure of
2019

Changes in DPU
(JPY)
4,000

3. Financial Soundness• Fully refinanced the entire loans with long-term loans of
up to 6 years

Free Cash

2.9 years
JPY10.2Bn+342.1%

2,000
1,000

410

366

682

0
-1,000FY12/2019(-297※)(-363※)

FY12/2020

FY12/2021

FY12/2022

FY12/2023

FY12/2024(20th Period) (21st Period) (22nd Period) (23rd Period) (24th Period) (25th Period)(Forecast)※ Rough estimate in case gain on sale was excluded(*2)

Changes in NAV per Unit
(JPY)
90,00083,286

77,524(6.9%)
60,000(as of the end of December 2023)

3,722+23.4%

3,015• Newly financed JPY11,800MM for property acquisitions

Average Life of Debt

3,690

3,000

JPY4.46Bn

1.0%

2,431

Hotel Oriental
Express Fukuoka
Nakasukawabata(Fukuoka)

Hotel JAL City
Kannai Yokohama(Kanagawa)

Costs for Interestbearing Debt

69,025JPY4.44Bn

Acquired in December+17.2%

2,885

Oriental Hotel
Kyoto Rokujo(Kyoto)JPY8.40Bn

40.8%

60,249

JPY10.02Bn* The amount shown isthe acquisition price.
The same shall apply
hereinafter.

+15.6%

Total

La’gent Stay
Sapporo Odori(Hokkaido)

JPY2.05Bn

LTV(total asset base)

Others4. Changes in DPU and NAV

77,688+0.2%

77,360(0.4%)

78,661+1.7%

Refinancing
2023(result)

JPY49.7Bn

2024(scheduled) JPY40.0Bn

30,0000FY12/20192019/12期(20th Period)(第20期)

FY12/2020
2020/12期(21st Period)(第21期)

FY12/2021
2021/12期(22nd Period)(第22期)

FY12/2022
2022/12期(23rd Period)(第23期)

FY12/2023
2023/12期(24th Period)(第24期)(*1) Please refer to footnote on page 8 for the definition of the "25 Hotels with Variable Rent, etc." and footnote on page 10 for the definition of "28 Hotels with Variable Rent, etc.".
(*2) Rough estimate calculated by excluding the amount equivalent to the gain on sale of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi from the distributable profit in FY12/2020 and the amount equivalent to the gain on sale of ibis Tokyo Shinjuku fromthe distributable profit in FY12/2021, respectively.
(*3) Please refer to the footnotes on page 20 for the definition of the financial indicators.

3

Ⅱ. Summary of Settlement of Accounts

1. Results for FY12/2023[Reference]

Properties(Unit: JPY MM)

FY12/2022(23rd Period)

FY12/2023(24th Period)

Actual(A)

Actual(A)%

FY12/2019(20th Period)

Existing Acquisition
Properties in 2023

Actual(C)

Difference from
FY2019 Actual(B)–(C)

Main Factors of Difference fromthe Previous Year's Results (2023 vs 2022)%

Fixed Rent

41

47

6

–

–

6

43

4

–

Acquisition Price

363,542396,918

33,376

9.2%–

33,376

374,508

22,410

6.0%

Operating Revenue

14,912

26,574

11,661

78.2%

11,000661

28,278(1,703)(6.0%)

26,574

11,661

78.2%

11,000661

28,278(1,703)(6.0%)

14,912

6,279 55.2% 14,658

8,379

133.5%

7,977

402

56.3% 15,931(1,272)(8.0%)

1,070

83

8.5%

57

26

4.1%

1,170

(99)

(8.5%)

7,646 40.8% 10,844

3,198

41.8%

2,964

233

39.5% 11,176(332)(3.0%)

10,963

22,344

11,381103.8%

10,756625

24,087(1,742)(7.2%)

3.0%

5.6%

2.6pt

6.4%

(0.8pt)

4,787

5,083

295

209

86

4,557

525

Loss on Retirement ofNoncurrent Assets, etc.

59

153

93

93

–

248

(95)

NOI after Depreciation(*2)

6,116

17,108

10,992

10,453539

19,281NOI Yield after
Depreciation

1.7%

4.3%

2.6pt

5.1%

(0.8pt)Other Operating
Expenses

1,819

2,093

274

2,132

(38)

Operating Income

4,296

15,014

10,717249.4%

17,148(2,134) (12.4%)

Ordinary Income

2,672

13,135

10,462391.4%

15,291(2,156) (14.1%)

Net Income

2,671

13,134

10,462391.6%

15,290(2,156) (14.1%)

Use of Negative
Goodwill

376

845

468

124.5%

1,176(331) (28.1%)

Total Dividends

3,046

13,98010,934358.9%

16,466(2,485) (15.1%)

Number of Units Issued(Unit)

4,467,006

4,637,006

170,000

3.8%

4,462,347

Dividend per Unit (JPY)

682

3,015

2,333

342.1%

3,690

42.1%

Fixed Rent
Other Income

6.6%

Variable Rent

51.3%

NOI(*2)
Profit and Loss

(B)–(A)

Breakdown ofVariance

No. of Properties

Real Estate Operating
Revenue

Dividend

Difference from
Previous YearNOI Yield
Depreciation

986

4.0%

179.7%

5+JPY8,030MM• Properties acquired in 2023(*4)+JPY402MM(Three HMJ Hotels acquired in 2023(*3) +JPY93MM)• Others(JPY52MM)(Total) +JPY8,379MM

Variable Rent
• The 16 HMJ Hotels+JPY774MM• The Accor Group Hotels(*3)+JPY1,075MM• The Ishin Group Hotels(*3)+JPY160MM• Properties acquired in 2023
(Three HMJ Hotels acquired in 2023

+JPY233MM+JPY86MM)• Others+JPY953MM(Total) +JPY3,198MM※ Difference in total rents by hotel group vs previous year's
results(JPY MM)(2,172) (11.3%)

174,659• The 16 HMJ Hotels(*3)3.9%(675) (18.3%)

The 19 HMJ Hotels

Fixed
Rent

Variable
Rent

Total

+8,124+861+8,985

The 16 HMJ Hotels+8,030+774+8,805Three HMJ Hotels
acquired in 2023

+93

+86

+180

The Accor Group Hotels–+1,075+1,075The Ishin Group Hotels

–

+160

+160

Total

+8,124+2,097 +10,221(*1) For detail, please refer to Financial Report for the Fiscal Year Ended
December 31, 2023 (January 1, 2023–December 31, 2023) dated
February 21, 2024.
(*2) Each is calculated using the following formula: NOI (Net Operating
Income) = Real estate operating revenue − Real estate operating costs +Depreciation + Loss on retirement of noncurrent assets + Assetretirement obligations expenses.
NOI after depreciation = Real estate operating revenue − Real estate
operating costs
The same shall apply hereinafter.
(*3) Please refer to the footnote on page 8 for the definition of "the Accor
Group Hotels" and to the footnote on page 10 for the definition of "the 19
HMJ Hotels" and "Three HMJ Hotels acquired in 2023."(*4) The figure shown is the impact amount due to properties acquired in
2023 (including tenants). The same shall apply hereinafter.

2. Operating Forecasts for FY12/2024[Reference]

Properties(Unit: JPY MM)

FY12/2023(24th Period)

FY12/2024(25th Period)

Actual(A)

Forecast(B)%

FY12/2019(20th Period)

Existing Acquisition
Properties in 2023

Actual(C)

Difference from
FY2019 Actual(B)–(C)

Main Factors of Difference fromthe Previous Year's Results (2024 vs 2023)%

Fixed Rent

47

47

–

–

–

–

43

4

–

Acquisition Price

396,918

396,918

–

–

–

–

374,508

22,410

6.0%

Operating Revenue

26,57431,288

4,714

17.7%

3,419

1,294

28,278

3,010

10.6%

26,57431,288

4,714

17.7%

3,419

1,294

28,278

3,010

10.6%

55.2% 14,658 48.4% 15,132

473

3.2%

(1)

474

56.3% 15,931(798)(5.0%)

Fixed Rent
Other Income
Variable Rent

1,034

(36)

(3.4%)

(47)

11

4.1%

40.8% 10,844 48.3% 15,121

4,277

39.4%

3,468

808

39.5% 11,176

4.0%

1,070

3.3%

22,344

26,825

4,481

5.6%

6.8%

1.1pt

5,083

5,345

261

126

153

232

79

17,10821,248

4,140

4.3%

5.4%

Other Operating
Expenses

2,093

Operating Income

3,945• Others+JPY50MM

35.3%

79

–

248

(16)

3,067

1,072

19,281

1,967

1.0pt

5.1%

0.2pt

2,433

339

2,132

300

15,014

18,815

3,800

25.3%

17,148

1,666

9.7%

Ordinary Income

13,135

16,713

3,577

27.2%

15,291

1,421

9.3%

Net Income

13,134

16,712

3,577

27.2%

15,290

1,421

9.3%

Use of Negative
Goodwill

845549(295) (35.0%)

1,176(626) (53.3%)

Total Dividends

13,98017,258

3,278

23.4%

16,466792

4.8%

Number of Units Issued(Unit)

4,637,006

4,637,006––

4,462,347

174,659

3.9%

Dividend per Unit (JPY)

3,015

3,722

707

23.4%

3,690

32

0.9%

6

+JPY2,793MM+JPY808MM+JPY279MM)

787

NOI Yield after
Depreciation• The 16 HMJ Hotels(135) (11.6%)

4,557

24.2%

+JPY473MM+JPY101MM

135

NOI after Depreciation(Total)Variable Rent

• Properties acquired in 2023
(Three HMJ Hotels acquired in 2023

0.3pt

Loss on Retirement ofNoncurrent Assets, etc.

1,207

(JPY1MM)+JPY522MM

6.4%

Depreciation

3,273• Others+JPY474MM+JPY386MM)• The Ishin Group Hotels

2,738

NOI Yield

20.1%

1,170

• Properties acquired in 2023
(Three HMJ Hotels acquired in 2023

• The Accor Group Hotels

24,087

NOI
Profit and Loss

(B)–(A)

Breakdown ofVariance

No. of Properties

Real Estate Operating
Revenue

Dividend

Difference from
Previous Year

(Total) +JPY4,277MM

11.4%※ Difference in total rents by hotel group vs previous year's
results(JPY MM)

10.2%

The 19 HMJ Hotels

Fixed
Rent

Variable
Rent

Total

+386

+3,073+3,459The 16 HMJ Hotels–+2,793+2,793Three HMJ Hotels
acquired in 2023

+386

+279

+665

The Accor Group Hotels

–

+522

+522

The Ishin Group Hotels

–

+101

+101

+386

+3,697+4,083Total(*)

For detail, please refer to Financial Report for the Fiscal Year Ended
December 31, 2023 (January 1, 2023–December 31, 2023) dated
February 21, 2024.

Ⅲ. Status of Hotel Operations

1. Hotel Performance Results for FY2023 (Key Performance Indicators for Rooms Dept.)
 With an ADR-focused sales strategy and revenue management, ADR increased by over 10% compared to the 2019 level, while RevPAR surpassed
that of 2019

Key Performance Indicators (Rooms Department)
Occupancy (right axis)

Total of the 25 Hotels with Variable Rent, etc.(*)
First Half

(JPY)
20,00010,0005,000
0

vs 2019

16,61815,55515,000(JPY)
100%

20,00013,286

6,063

12,628

85.4%

55.8%

76.0%

2019
Result2022
Result2023
ResultOccupancy(34.7%)(11.0%)

ADR(30.1%)＋6.8%

RevPAR(54.4%)(5.0%)

50%

10,000
5,000

0%

0

vs 2019First Half

18,00012,0006,000
0

vs 2019

100%

6,716

24,00015,955

14,918
11,140
87.3%

74.2%

80.9%

2019
Result2022
Result2023
ResultOccupancy(15.0%)(7.4%)

ADR(12.1%)＋15.5%

RevPAR(25.3%)＋7.0%

Second Half
19,015

17,192

22,21550%

14,243

85.9%

54.6%

76.0%

2019
Result2022
Result2023
ResultOccupancy(36.4%)(11.6%)

ADR(28.1%)＋9.8%

RevPAR(54.2%)(2.9%)

50%

12,000
6,000

0%

0

vs 2019

20,00010,000
5,000

0%

0

vs 2019

16,33424,00018,08250%

12,625
88.4%

73.4%

81.4%

2019
Result2022
Result2023
ResultOccupancy(16.9%)(7.9%)

ADR(9.6%)＋16.8%

RevPAR(24.9%)＋7.6%

12,000
6,000

0%

0

vs 2019100%

14,305

50%

8,623
86.4%

65.1%

78.4%

2019
Result2022
Result2023
ResultOccupancy(24.7%)(9.2%)

ADR(18.8%)＋11.6%

RevPAR(38.9%)+1.4%

Full Year
18,071

18,00016,80918,234
13,255

14,109(JPY)
100%

18,00012,292
14,676100%

15,018Full Year(JPY)

19,72915,000(JPY)

18,75317,084

RevPAR (left axis)

15,00010,872(JPY)

Second Half

17,084

The 16 HMJ Hotels(*)
24,000ADR (left axis)

0%20,558100%

16,17950%

15,121

15,751
9,694
87.2%

64.1%

78.7%

2019
Result2022
Result2023
ResultOccupancy(26.4%)(9.7%)

ADR(16.3%)＋13.8%

RevPAR(38.5%)＋2.7%

0%(*) The 25 Hotels with Variable Rent, etc. are the following hotels: 5 hotels of Kobe Meriken Park Oriental Hotel, Oriental Hotel Tokyo Bay, Namba Oriental Hotel, Hotel Nikko Alivila, and Oriental Hotel Hiroshima ("The Five HMJ Hotels") which is leased byHotel Management Japan Co., Ltd. ("HMJ"), plus 11 hotels of Oriental Hotel Okinawa Resort & Spa, Sheraton Grand Hiroshima Hotel (main facility of ACTIVE-INTER CITY HIROSHIMA), Oriental Hotel Fukuoka Hakata Station, Holiday Inn Osaka Namba,
Hilton Tokyo Narita Airport, International Garden Hotel Narita, Hotel Nikko Nara, Hotel Oriental Express Osaka Shinsaibashi, Hilton Tokyo Odaiba, Hotel Oriental Express Fukuoka Tenjin and Oriental Hotel Universal City which are leased by groupcompany of HMJ (Together with HMJ, "The HMJ Group") (Together with The Five HMJ Hotels, "The 16 HMJ Hotels"), plus 4 hotels of the b suidobashi, the b ikebukuro, the b hachioji, and the b hakata ("The Ishin Group Hotels") and 5 hotels of ibis
Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure Okinawa Naha, and Mercure Yokosuka ("The Accor Group Hotels"). The same shall apply hereinafter.

8

2. Hotel Performance Results for FY2023 (Sales & GOP)
 While total sales were lower than 2019 due to F&B Dept., room sales exceeded 2019 and GOP margins improved significantly

Sales/Performance of GOP
Rooms Dept.

F&B Dept.

Total of the 25 Hotels with Variable Rent, etc.
2019
Result(JPY MM)58,432

3,958

50,00050,00020,44740,00040,0003,217

37,61437,066

20,162

35.3%
Sales

Percentage
Change inActual Resultsfor 2023

Sales

19,348

GOP

34.5%
Sales

0

GOP

vs 2019

Total Sales+49.4%(4.9%)

Rooms Dept.

+65.9%＋1.5%

F&B Dept.

+35.9%(12.2%)

Others(10.9%)(27.6%)+127.2%(7.1%)

0

3,059
12,723

18,47917,712
31,65818,970

34.3%
Sales

7,757
22.3%

GOP

Percentage
Change inActual Resultsfor 2023

Sales

GOP

34.4%
Sales

GOP

vs Previous Yearvs 2019

Total Sales+48.2%(4.5%)

Rooms Dept.

+66.9%＋2.8%

F&B Dept.

+34.7%(11.4%)

Others

(11.4%)(28.8%)+128.3%(4.2%)

GOP

9

17,13434,75230,785vs Previous Year

GOP

2,711

10,00010,00022.7%

GOP51,503

3,807

20,00020,00022,673 8,874

10,00010,00053,941

30,00030,00013,21021,697

02023
Result2022
Result17,951

39,10030,00030,000060,00060,0002,867

40,00040,00020,00020,000indicate GOP ratio (vs sales)

70,00070,00061,47150,00050,000* Figures in

2019
Result(JPY MM)70,00070,00060,00060,000GOP

The 16 HMJ Hotels

2023
Result2022
ResultOthers3. Hotel Performance Forecasts for FY2024
 Rooms Department performed well, Food & Beverage Department recovered, and GOP margins are expected to improve further along with sales growth

Sales

Result and Forecast of Key Performance Indicators (Rooms Dept.)
Occupancy (right axis)

ADR (left axis)

RevPAR (left axis)

Total of the 28 Hotels with Variable Rent, etc.(*)(JPY)
24,00020,000First Half

+19.2%

14,67012,000+8.0%+6.1pt

75.9%
0

2024
Forecast

2023
Result

80.8%

50%

84.6%

78.4%

83.3%
2024
Forecast

2023
Result0%60,2492,885
18,124(15.7%)+17.2%

Others69,0252,431
21,248* Figures in

70,00060,00050,00040,00030,00030,00045,346
39,240 +15.6%

20,00010,00010,000002024
Forecast

2023
Resultindicate GOP ratio (vs sales)(JPY MM)40,00020,000+6.3%+4.9pt2024
Forecast

2023
Result16,043

13,920+4.6%+3.7pt82.0%

50,000+15.2%

17,40070,00060,000+8.5%+12.2%

15,504100%

F&B Dept.

+14.6%(JPY MM)

19,267

17,764+7.3%

12,311

4,000

Full Year

20,57819,184+10.3%

16,0008,000

17,89916,227

Second Half

Rooms Dept.

GOP+19.2%

20,84924,850

34.6%

36.0%

2023
Result2024
Forecast

Total of the 19 HMJ Hotels(*)(JPY)

First Half

24,00020,00016,00012,00019,69818,0550

16,204

13,68575.8%

Full Year

22,999+8.0%

17,302

21,383

19,740+12.7%+18.4%

2023
Result21,286

+9.1%

8,000
4,000

Second Half

19,50760,00053,320+15.2%

50,0002,729

40,00017,307

17,865

15,508

50%

+4.4%

+6.3%

+6.5pt+3.5pt+5.0pt2024
Forecast

81.3%
2023
Result84.8%
2024
Forecast

100%

78.6%
2023
Result+14.1%

70,000

+8.3%

+8.5%

82.3%

(JPY MM)

2024
Forecast

0%+16.4%

60,85870,0002,268

60,00020,14450,00040,00030,00020,00083.5%(16.9%)(JPY MM)+18.3%

30,00038,44633,284 +15.5%

20,00010,00010,0000

02023
Result2024
Forecast

18,39921,760

34.5%

35.8%

2023
Result2024
Forecast(*) The 28 Hotels with Variable Rent, etc. refer to a total of 28 hotels comprising the 25 Hotels with Variable Rent, etc., plus three hotels (Oriental Hotel Kyoto Rokujo, Hotel Oriental Express Fukuoka Nakasukawabata, and Hotel JAL City Kannai
Yokohama) leased by HMJ Group (hereinafter called the "Three HMJ Hotels acquired in 2023"), acquired in 2023. The HMJ19 Hotels refer to the 19 hotels, comprising the 16 HMJ hotels plus the Three HMJ Hotels acquired in 2023. The same shallapply hereinafter.

10

4. Internal Growth by Active Asset Management Realize upside potential through Active Asset Management

Active Asset Management

Hotels1
Increase sales byimprovement ofhotel operation

Increase of
Hotel Sales

Reduction of
Operating Costs
of Hotels

2
Review of cost by
restructuring

Stimulate and acquire leisure demand through the creation ofunique attractiveness of each hotel and highly competitive
products
Aim to increase hotel sales through improvement of hotel
operation by measures including changes in hotel operator,
rebranding, and upgrades, etc.
Review the various costs and improve the revenue structure
Aim to maximize GOP through efficient management

 Initiatives by the HMJ Groupto improve sales
 Rebranding and Renovation

 Restructuring by the HMJ Group

Improve GOP

REIT

3
Increase ofReal Estate
Operating
Revenue
Reduction ofReal Estate
Operating Costs

Revision in rent
structure, etc.

Aim to increase the rent that JHR receives by raising the rent
burden ratio at the time of rebranding and other measures

 Changed rent structure byrebranding Introduction of variable rent at
the time of lease contract revision

Reduction of costs for property management cost, trust fee, management contract fee, ground rent, etc.

Improve NOI

Maximize DPU
11

5. Active Asset Management during the COVID-19 Pandemic: Best Practice (1)Oriental Hotel Universal City (former Hotel Keihan Universal City)
Overview of Active Asset Management
 In June 2021, due to the deterioration of business performance resulting from the COVID-19
pandemic, the previous lessee waived the right to renew the lease contract upon its expiration.
Consequently, JHR appointed the HMJ Group as the lessee and implemented rebranding of thehotel to an HMJ Group Hotel• Appointed the HMJ Group as the operator and implemented meticulous operational monitoring
by JHR• Changed the rent scheme from "Fixed Rent + Revenue-sharing rent" to "Fixed Rent + Variable
Rent." HMJ Group's rent burden ratio increased due to the adoption of the Group's hotel
contract scheme. Sought to enjoy further upside by implementing appropriate operations
 After the grand opening in December 2021, implemented guest room renovation from January toJune 2022• Aimed to significantly increase ADR when the market recovers by implementing renovation
targeting higher-priced customers

 Entrance

Before Implemented the HMJ Group's project to make breakfast more attractive• Earned the area's highest rating with high-quality breakfast offerings, which contributed to anincrease in ADR
AfterComparison between Pre-post Rebranding Lobby

Occupancy

BeforeAfter Guest room

Percentage
Change

95.7%

86.4%

(9.3pt)(JPY)

18,421

27,413+48.8%

RevPAR(JPY)

17,62023,674+34.4%

Sales(JPY MM)

2,122

3,279

+54.5%

Rent(JPY MM)

700

1,589

+126.8%(JPY MM)528

316(40.1%)

Variable Rent (JPY MM)

172

1,272

+639.3%(JPY MM)

668

1,562

+133.6%

11.1%

23.1%

+12.0pt

NOI
After

Post-rebranding(FY2023)

ADR

Fixed Rent

BeforePre-rebranding(FY2019)

NOI Yield

125. Active Asset Management during the COVID-19 Pandemic: Best Practice (2)Hotel Oriental Express Fukuoka Tenjin (former HOTEL ASCENT FUKUOKA)
Overview of Active Asset Management
 The previous lessee decided to withdraw as a lessee due to the deterioration of businessperformance resulting from the COVID-19 pandemic. Consequently, JHR selected the HMJ Groupas the lessee, and rebranded the hotel as an HMJ Group Hotel in June 2021•

Efficient operations utilizing the advantages of operating multiple hotels in Fukuoka•

Changed the rent scheme from "Fixed Rent" to "Fixed Rent + Variable Rent." Sought to enjoy
further upside by adopting the contract scheme of the HMJ Group hotels

 Rebranded opening in June 2021

 Exterior

BeforeAfter•

The hotel was previously in the economy-price range, but with HMJ's appropriate operations
and JHR's sophisticated monitoring, JHR determined that it could realize an upside•

The hotel has improved its positioning to mid-price range through effective renovation andproper operations

Comparison between Pre-post Rebranding Lobby

Occupancy

BeforeAfter Guest room

Percentage
Change

86.1%

84.7%

(1.4pt)

(JPY)

7,224

11,069+53.2%

RevPAR

(JPY)

6,219

9,370

+50.7%

Sales(JPY MM)

632

924+46.2%

Rent(JPY MM)

334

529+58.1%(JPY MM)334

192(42.4%)

Variable Rent (JPY MM)

－

336

－

(JPY MM)302

488+61.8%

6.1%

9.3%+3.2ptNOI
After

Post-rebranding(FY2023)

ADR

Fixed Rent

BeforePre-rebranding(FY2019)

NOI Yield

13

6. Renovation Details and Results for FY2023
 Implemented strategic capital expenditures (CAPEX Ⅲ) totaling JPY1,295 million for renovation, which resulted in a significant rise in unit price

Guest Room Renovation
Name

Oriental HotelTokyo Bay

Kobe Meriken
Park
Oriental Hotel

Oriental Hotel
Okinawa
Resort & Spa

Total Planning
Period (scheduled)

Overview ofRenovation in 2023

Overview of Renovation

ADR Result for Guest Rooms
subject to Renovation

FY2023–FY2025• Improved merchantability by separating
Renovation period:
the toilet, wash basin, and bathtub in
May to July
prefabricated bathroom units.
No. of rooms subject to• Added beds by effectively utilizing therenovation: 99/511 rooms
living room space, aiming to sell at a
Renovation cost: JPY382MM(*1)
higher unit price by increasing DOR

FY2023–FY2026• Established guest rooms with lounge
access along with the renovation,
aiming to sell at a higher unit priceRenovation period:
May to August
No. of rooms subject torenovation: 62/323 rooms
Renovation cost: JPY214MM• Since the rebranding, graduallyrenovated the unrefurbished rooms andcompleted renovations in all rooms

Renovation period:
September to December
No. of rooms subject torenovation: 96/361 rooms
Renovation cost: JPY470MM

FY2023–FY2024

August to December 2023: JPY34,987(+52.2% vs 2019)

September to December 2023: JPY26,549(+42.4% vs 2019)No sales in 2023 as the construction wascompleted in December 2023
*Reference: Actual ADR result in 2023 for theguest rooms on the club floor renovated from
October to December 2022: JPY35,258(+44.1% vs 2019)

Restaurant Renovation
Oriental Hotel Tokyo Bay

Kobe Meriken Park Oriental HotelGrand Reopening

Overview

November 1, 2023

Grand Reopening

Renovated into an exciting
space, featuring a new live
kitchen, with a calm andgentle color scheme in its
interior

Overview

December 9, 2023
Renovated into a high-quality
space where you can enjoy thechef's signature dishes while taking
in the spectacular view as if you
were sailing on a cruise ship

Renovation Cost

JPY63MM

Renovation Cost

JPY165MM

Per-customer
Spending after
Opening(*2)+38.6%
for November to December
2023 vs 2019

Per-customer
Spending after
Opening(*2)+30.8%for December 2023 vs 2019(*1) DOR stands for Double Occupancy Ratio. The number of guests divided by the number of available rooms indicates the average number of guests per room. The same shall apply hereinafter.
(*2) Based on per-customer spending for lunch and dinner.

147. Capital Expenditure (CAPEX) and Depreciation
 In principle, JHR's policy is to implement appropriate CAPEX within the depreciation
 In FY12/2024, JHR plans to invest over JPY3 billion in CAPEX Ⅲ to achieve strong unit price increases and sales growth
6,988(JPY MM)
7,000

6,000

Depreciation

5,000

4,091
3,056

6,766
3,619
393
3,147

476

999

4,000

3,000

781

2,000

1,000

1,798

2,226

4,804

4,761

4,557

1,690

1,665
237

1,456

3,367

5,345

4,769

4,497
Oriental Hotel
Fukuoka
Hakata Station
Cost for large-scalerenovation works

3,165

5,083

4,787

1,295

1,300

CAPEX Ⅰ

317

736

830

CAPEX Ⅱ
capital investment for fixtures,
furniture and equipment thatare not directly related tobuilding structures or facilities
but necessary for operating
hotelsCAPEX Ⅲ

100

2,536

3,197

2,738

3,506

1,328

0

Asset Size(*1)(JPY MM)

capital investment related torenewal of buildings, facilities,
and equipment which is
required to maintain proper
values of properties

309,370

374,508

370,031363,542

363,542396,918

396,918

FY12/2018

FY12/2019

FY12/2020

FY12/2021

FY12/2022

FY12/2023

FY12/2024(forecast) CAPEX Ⅲ to be implemented in FY12/2024
PurposeAmount(JPY MM)

Property Name

DetailOriental Hotel Tokyo Bay

Guest room renovation

Improve merchantability by making the wet area independent andincrease DOR by adding beds

216/511 rooms

992

May toNovember 2024

Oriental Hotel Okinawa
Resort & Spa

Guest room renovation

Improve merchantability by addressing age-related deterioration andcreating high quality spaces

192/361 rooms

968

September 2023 toApril 2024

Namba Oriental Hotel

Constructed new guest
rooms and a new lounge

Construct new guest rooms suitable for long-term stays andaccommodating large numbers of people, and enhance ancillary facilities,
such as a lounge

Front lobby, common areasand nine new guest rooms

780

August to
December 2024(*2)

Kobe Meriken Park Oriental Hotel

Guest room renovation

Improve merchantability by addressing age-related deterioration andcreating high quality spaces

79/323 rooms

380

April to August 2024

La’gent Stay Sapporo Odori

Guest room renovation

Increase DOR by adding beds

19/219 rooms

45

April to May 2024

Total

Areas to be Renovatedstrategic capital investment
for renewals of guest rooms,
banquet rooms, restaurant
and others in order tomaintain or to improve thecompetitiveness of the hotels

3,165(*1) Asset size is based on the aggregate acquisition price of the properties at the end of each fiscal period. The same shall apply hereinafter.
(*2) The entire building will be closed during the construction period as the front floor will be inaccessible.

15

Period (scheduled)–8. Trend of Asset Size
 Improvement of the quality of JHR's portfolio and successive external growth through strategic asset replacement

Resumedexternal
growthCOVID-19 pandemic
response period

Trend of JHR's Total Asset Size, etc. (JPY MM)

122,285

April 2012
(merger)

225,723

286,801

319,474309,370

374,508

370,031363,542

363,542396,918

158,902173,429

FY12/2012

FY12/2013

FY12/2014

FY12/2015

FY12/2016

FY12/2017

FY12/2018

FY12/2019

FY12/2020

FY12/2021

FY12/2022

FY12/2023

28

28

30

36

41

44

41

43

42

41

41

47

－

2
(JPY65.1Bn)

－

－ (*)
(JPY0.7Bn)－

6(JPY33.3Bn)

3(JPY12.1Bn)

－

－

－

130,883(13th Period) (14th Period) (15th Period) (16th Period) (17th Period) (18th Period) (19th Period) (20th Period) (21st Period) (22nd Period) (23rd Period) (24th Period)

No. ofProperties

28

No. ofAcquisition

－

2
3
2
3
3
2
(JPY10.8Bn) (JPY32.6Bn) (JPY15.7Bn) (JPY57.0Bn) (JPY61.0Bn) (JPY32.6Bn)

No. of
Disposition

－

2
2
1
3
(JPY0.8Bn) (JPY2.6Bn) (JPY0.7Bn) (JPY4.8Bn)

－

－

1
1
(JPY8.0Bn) (JPY11.3Bn)

Acquisitions in 2023
JanuaryMarch

UAN kanazawa

Sotetsu Fresa Inn
Shimbashi-Karasumoriguchi

Acquisition Price

JPY2.05Bn

Appraisal Value

JPY2.20Bn

Acquisition Price

JPY8.40Bn

Appraisal Value

JPY10.10Bn

September
Public Offering

La’gent Stay
Sapporo Odori

Oriental Hotel
Kyoto Rokujo

DecemberHotel Oriental Express
Fukuoka Nakasukawabata

Hotel JAL City
Kannai Yokohama

Acquisition Price

Acquisition Price

Acquisition Price

Acquisition PriceAppraisal Value

Appraisal Value

Appraisal Value

Appraisal Value

JPY10.02Bn
JPY10.80Bn(*) JHR acquired the land that is part of the site of Oriental Hotel Universal City for JPY753MM on July 30, 2021.

16

JPY4.44Bn
JPY5.94Bn

JPY4.46Bn
JPY6.09Bn

JPY4.00Bn
JPY4.34Bn

Aim for Successive GrowthMore than tripled after the merger
in about eight years

9. Assets Acquired in FY2023
 In 2023, JHR acquired six new properties for a total acquisition price of JPY33.3 billion, three of which were acquired through the public offering forthe first time since the COVID-19 pandemic
 Among the six properties, the HMJ Group is the lessee of the Oriental Hotel Kyoto Rokujo, Hotel Oriental Express Fukuoka Nakasukawabata and Hotel
JAL City Kannai Yokohama, seeking to boost revenue through the strategic active asset management using its platform
Property Acquired through Public Offering in September 2023
UAN kanazawa

Sotetsu Fresa Inn
ShimbashiKarasumoriguchi

La’gent Stay
Sapporo Odori

Oriental Hotel
Kyoto Rokujo

Hotel Oriental Express
FukuokaNakasukawabata

Hotel JAL City
Kannai Yokohama

Acquisition Date

January 31, 2023

March 24, 2023

September 27, 2023

September 27, 2023

September 27, 2023

December 22, 2023

Acquisition Price

JPY2,050MM

JPY8,400MM

JPY10,020MM

JPY4,446MM

JPY4,460MM

JPY4,000MM

Appraisal Value

JPY2,200MM

JPY10,100MM

JPY10,800MM

JPY5,940MM

JPY6,090MM

JPY4,340MM

Location

Kanazawa city, Ishikawa

Minato-ku, Tokyo

Sapporo city, Hokkaido

Kyoto city, Kyoto

Fukuoka city, Fukuoka

Yokohama city, Kanazawa

Hotel Type

Limited-service

Limited-service

Limited-service

Limited-service

Limited-service

Limited-service

Grade

Upper-middle

Mid-price

Mid-price

Mid-price

Mid-price

Mid-price

No. of Guest Rooms

47

220

219

166

183

170

Rent Structure

Fixed + Revenue sharing

Fixed + Revenue sharing

Variable

Fixed + Variable

Fixed + Variable

Fixed + Variable

Hotel Lessee

Solare Hotels and Resorts
Co., Ltd.

Sotetsu Hotel
Development Co., Ltd.

AB Accommo. Co. Ltd.

Kyoto Horikawa
Operations Co., Ltd.
(wholly owned
subsidiary of HMJ)

Fukuoka Tenyamachi
Operations Co., Ltd.
(wholly owned
subsidiary of HMJ)

K.K. Yokohama
Yamashita-cho Operations(wholly owned
subsidiary of HMJ)NOI Yield(*)

5.8%

4.6%

5.3%

6.5%

6.8%

5.1%

Name

Exterior(*) Based on the forecast for 2024 announced in the financial report dated February 21, 2024.

17

10. ESG Initiatives
 JHR formulated the policy on sustainability in December 2017. Aiming for medium to long-term growth in harmony and coexistencewith society and the environment, JHR implements initiatives to improve sustainability through appropriate responses to ESG issues

Timeline of Achievements

GRESB Real Estate Assessment(*5)

2017  Establishment of Sustainability Policy

Acquired "Green Star" for six consecutive years from 20182018  Two properties—Hotel Nikko Alivila and Mercure Okinawa Naha—acquired BELS(*1) certification▶ In 2023, JHR was selected for"Sector Leader" inAsian hotel sector

 Received an "A" rating indicating excellent
environmentally friendly management, in the
SMBC Environmental Assessment Loan(*2)
2019  Issued Hotel Green Bonds (nickname)and used the procured funds to carryout construction works to save energy

for four consecutive years▶ Acquired "4-star" in GRESB Rating
Formulation ofGreen Finance Framework

Oriental Hotel
Okinawa Marriott
Fukuoka Hakata Station
Resort & Spa

2020  Hilton Tokyo Odaiba acquired
CASBEE(*3) "B+ (good)" building
certification
2021  Oriental Hotel Fukuoka Hakata Stationacquired CASBEE "B+ (good)" building
certification
 JHRA expressed its support for the
TCFD(*4) recommendations

Hilton Tokyo Odaiba

Oriental Hotel
Fukuoka Hakata Station•

Formulated the Green Finance Framework as astructure for financing projects withenvironmental consideration in January 2024•

Acquired the highest Overall Evaluation of"Green 1 (F)" from the Japan Credit
Rating Agency, Ltd. (JCR) for the Framework•

Promote initiatives aimed at environmental
improvement utilizing funds procured under
the Framework going forward

Acquisition of
BELS Evaluation
UAN kanazawa acquired BELS
evaluation in February 2024

 Identified JHR's materialities (key issues)2022  Released initiatives for four disclosure themes recommended by
TCFD
2023  Formulated GHG reduction target(*6)(30% reduction by 2050 compared to FY2017(*7))
 Issued ESG report
2024  Formulated the Green Finance Framework: Overall Evaluation ofGreen 1 (F) UAN Kanazawa acquired BELS evaluation(*1) BELS (Building-Housing Energy-Efficiency Labeling System) is a display system of energy conservation performance of a building set
by Ministry of Land, Infrastructure, Transport and Tourism.
(*2) SMBC Environmental Assessment Loan is a loan provided by Sumitomo Mitsui Banking Corporation based on environmental
assessment conducted by the Japan Research Institute, Limited, which reviews the borrower's environmental management
comprehensively.
(*3) CASBEE (Comprehensive Assessment System for Built Environment Efficiency) is a system for evaluating and rating theenvironmental performance of buildings. In addition to environmental considerations such as energy conservation and the use ofmaterials and equipment with low environmental impact, it comprehensively evaluates the quality of buildings, including
consideration for interior comfort and landscaping.
(*4) TCFD is an abbreviation for Task Force on Climate-related Financial Disclosures.
(*5) The GRESB is an annual benchmarking program to evaluate ESG considerations of property companies and real estate funds. The
GRESB Real Estate Assessment is distinguished by its comprehensive evaluation of initiatives for sustainability of property companies,
REITs and real estate funds, not of individual properties. GRESB rating is a relative evaluation based on comprehensive scores(*6) Properties owned by JHR are managed by hotel lessees, etc. GHG emissions of JHR fall under Scope 3, Category 13, Leased Assets(Downstream).
(*7) The GHG emissions (GHG emissions intensity) for FY2017 (Baseline fiscal year, April 2017–March 2018) is 0.135 (t-CO2/m2)(*8) ESG disclosure information on JHR website: https://www.jhrth.co.jp/en/esg/index.html

18

Ⅳ. Financial Conditions

1. Financial Conditions (1)Main Financial Indicators

Repayment Schedule of Interest-bearing Debt

(as of the end of December 2023)(as of the end of December 2023)(JPY MM)175.2Bn

Total interest-bearing debt

JPY

LTV (total asset base)40.8%

40,000

Cost for interest-bearing debt(*1)

1.0%

30,000

Average life of interest-bearing debt(*2)

2.9 years

20,00010.2Bn10,000Free cash(*3)

JPY

Unrealized gain(*4)

JPY0Changes in Costs for Interest-bearing Debt(*1) and
Average Life of Interest-bearing Debt(*2)
2.0%

Costs for Interest-bearing Debt

4.3

1.5%

3.5

1.0%

1.0%

1.0%

1.0%

2.8

2.9

1.0%

1.0%

0.5%

0.0%

End of

End of

End of

End of

FY12/2019

FY12/2020

FY12/2021

FY12/2022

FY12/2023(20th Period)(21st Period)(22nd Period)(23rd Period)(24th Period)

37,0892,800
19,0002024

2025

25,28027,175

10,00027,17526,50016,387

12,1802026

24,3878,000

13,100

2027

2028

2029

(JPY MM)(year)

5.0

Repayment andBorrowing Date

Refinancing
AmountNew Borrowing
Amount

4.0

Full Year

49,745

11,800First Half

25,983

800

Second Half

23,762

11,000

3.0
2.0
1.0

End of

36,5003,000

Actual Refinancing and New Borrowing in 2023
6.0

5.2

Investment Corporation Bonds

40,08921,800133.7Bn

Average Life of Debt

Loans

50,0000.0(*1) Weighted-average costs for interest-bearing debt (including up-front fee, etc.) as of the end of each year. Rounded
off to one decimal place.
(*2) Average life of interest-bearing debt as of the end of each year.
(*3) Represent the balance of cash and deposits, excluding various reserves in trust, etc.
(*4) Unrealized gain are calculated by subtracting book value from appraisal value. The same shall apply hereinafter.

201. Financial Conditions (2)Lender List for Interest-bearing Debt

Breakdown of Interest-bearing Debt
(as of the end of December 2023)(Unit: JPY MM)
Lenders/Bond Name
Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
SBI Shinsei Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited
Development Bank of Japan Inc.
MUFG Bank, Ltd.
Fukuoka Bank, Ltd.
Aozora Bank, Ltd.
The Nomura Trust and Banking Co., Ltd.
The Chiba Bank, Ltd.
The Nishi-Nippon City Bank, Ltd.
The Tokyo Star Bank, Limited
Hiroshima Bank, Ltd.
The Minato Bank, Ltd.
Sompo Japan Insurance Inc.
Kansai Mirai Bank, Limited
The Shizuoka Bank, Ltd.
The Hokuriku Bank, Ltd.

Investment Corporation Bonds

Total of Bank Loans
Investment Corporation Bonds(for institutional investors)
6th Investment Corporation Bonds without Collateral
8th Investment Corporation Bonds without Collateral
9th Investment Corporation Bonds without Collateral
12th Investment Corporation Bonds without Collateral
13th Investment Corporation Bonds without Collateral
Total of Investment Corporation Bonds(for institutional investors)
Investment Corporation Bonds (for individual
investors)
7th Investment Corporation Bonds without Collateral
10th Investment Corporation Bonds without Collateral
11th Investment Corporation Bonds without Collateral
Total of Investment Corporation Bonds(for individual investors)
Total of Investment Corporation Bonds

Total of Interest-bearing Debt

Balance(as of the end of
December 2022)
Balance%

33,23819,81818,55814,143
9,982
6,034
2,700
4,636
3,352
4,548
2,732
2,684
–
1,854
1,000
1,464
–
588
–
127,331

Balance(as of the end of
December 2023)
Balance%

20.2%
35,03312.1%
22,846
11.3%
18,858
8.6%
15,235
6.1%
10,382
3.7%
6,355
1.6%
4,700
2.8%
4,636
2.0%
3,652
2.8%
3,200
1.7%
2,732
1.6%
2,500
–
2,260
1.1%
1,854
0.6%
1,400
0.9%
1,000
–
800
0.4%
588
–
300
77.5% 138,331

Variance

20.0%
13.0%
10.8%
8.7%
5.9%
3.6%
2.7%
2.6%
2.1%
1.8%
1.6%
1.4%
1.3%
1.1%
0.8%
0.6%
0.5%
0.3%
0.2%
78.9%

1,795
3,028
300
1,092
400
321
2,000
–
300
(1,348)
–
(184)
2,260
–
400
(464)
800
–
300
11,000

8.9%

21.1%

14.0%
78.9%

Loans
Investment
Corporation Bonds

34.1%
65.9%

77.1%

Short-termLong-term(scheduled repayment
within one year)

Long-term

Fixed Interest Rate
Variable Interest Rate(*) Long-term represents debts with original maturity over one year, and short-term represents debts
with original maturity within one year.

Changes in LTV
LTV (total asset base)
50%

40.6%

Appraised LTV

42.2%

41.8%

41.4%

40.8%

34.2%

33.9%

34.0%

33.3%

40%
30%

32.1%

3,000
1,100
1,000
2,000
2,800

1.8%
0.7%
0.6%
1.2%
1.7%

3,000
1,100
1,000
2,000
2,800

1.7%
0.6%
0.6%
1.1%
1.6%

–
–
–
–
–

9,900

6.0%

9,900

5.6%

–

9,000
10,000
8,000

5.5%
6.1%
4.9%

9,000
10,000
8,000

5.1%
5.7%
4.6%

–
–
–

Japan Credit Rating Agency, Ltd.
(JCR)

A+ (Stable)

27,00016.4%

27,00015.4%–

36,90022.5% 36,900
21.1%
164,231 100.0% 175,231 100.0%–
11,000Rating and Investment Information, Inc.
(R&I)

A

20%

End of

End of

End of

End of

End of

FY12/2019

FY12/2020

FY12/2021

FY12/2022

FY12/2023(20th Period)(21st Period)(22nd Period)(23rd Period)(24th Period)

Status of Credit Rating

21(Stable)1. Financial Conditions (3)Negative Goodwill

Changes in Appraisal Value (Unrealized Gain)<Policy for Use of Negative Goodwill>
1. Add JPY262 million (50-year amortization amount ofnegative goodwill) to dividends every fiscal year
2. In addition to above, dividends will be increased in
response to the following
•
•
•
•
•

Unrealized Gain

525.9

525.7
493.3

500

437.5

Cope with loss on sales caused by property dispositions
Cope with loss on retirement of noncurrent assets
Cope with dilution of dividend per unit
Cope with inconsistency between tax and accounting treatments(Amortization of fixed-term leasehold of land, amortization ofasset retirement obligations, etc.)
Cope with suspension of sales and such due to large-scalerenovation works with significant impact on revenues

151.5

485.4

483.1
133.7

126.5

400

127.1

125.0

130.7

300

<Amount used in FY12/2023>

50-year amortization amount on negative goodwill :JPY262MM

Cope with loss on retirement of noncurrent assets :JPY151MM

Amortization of trademark rights:

JPY56MM

Dilution:

JPY375MM

Total amount:

JPY845MM

Balance of Negative Goodwill
after the end of December 2023

200

50-year amortization amount on negative goodwill :JPY262MM

Cope with loss on retirement of noncurrent assets :JPY231MM

Amortization of trademark rights:

JPY56MM

Total amount:

JPY549MM

391.9

374.3

366.7

358.3

358.0

40.5%

34.5%

35.5%

34.9%

34.1%

306.7

JPY8,754MM<Amount planned to be used in FY12/2024>

Estimated Balance of Negative Goodwill
after the end of December 2024(*)

Book Value(JPY Bn)

100

0

Ratio of
Unrealized
Gain
No. ofProperties

JPY8,204MM(*) The amount after deducting the amount appropriated to dividend payment for FY12/2023 from the balance at the endof the period.

22

42.6%
41

43

42

41

41

47

FY12/2018(19th Period)

FY12/2019(20th Period)

FY12/2020(21st Period)

FY12/2021(22nd Period)

FY12/2022(23rd Period)

FY12/2023(24th Period)

Ⅴ. Market Environment

1. Status of Domestic Accommodation Demand Domestic accommodation demand in 2023 remained stable at roughly the 2019 level

Changes in Number of Overnight Guests in Japan (by calendar year)(Guest nights in millions)
600
500
No. of Inbound Overnight Guests

400

No. of Japanese Overnight Guests

300
200

492

510

69

80

596

538

594

116

94

332

* Ratio of Japanese overnight guests

318
4

311

313

114

434

479

423

430

444

480

2016

2017

2018

2019

2020

2021

2022

2023

85.9%

84.4%

82.5%

80.6%

93.9%

98.6%

96.3%

80.8%

100
0

20

450
17

Trend of Number of Japanese Overnight Guests in Domestic Accommodation Facilities (by month)
No. of Japanese Overnight Guests(Guest nights in millions)
60
50

83%

40

79%

82%

87%

92%

96%

86%

95%

105% 104% 109%

vs 2019104%
100% 103%

91%

97%

99%

102%

20

0

104%

101% 104%

28

Jan.

23
Feb.

120%
100%
100%
80%

66%

30

10

95%

100%

33

32

36

33

39

46

39

42

42

41

33

35

43

36

40

36

42

51

60%

40

42

41

39

40%
20%

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

2022
2023
Source: Statistics of Overnight Travel by Japan Tourism Agency(*) Rounded off to the nearest millions of overnight guests. The figures from 2016 to 2022 are final, and those for January to November 2023 are second preliminary figure, those for December 2023 are firstpreliminary figure.

240%Status of Inbound Visitors
 In 2023, the number of inbound visitors showed a remarkable recovery following the removal of entry restrictions in May, reaching about
80% of the 2019 level for the year. For December alone, there was an 8.2% increase compared to the same month of 2019
 As for China, inbound visitors remained at 25% of the 2019 level for the year but increased to 44.0% for December alone. Further recovery
is expected in the future

Changes in Number of Inbound Visitors
China(Thousands people)

South Korea

35,000U.S.

Monthly Trends in Inbound Visitors in 2023 (vs 2019)

Others31,882
31,192140%

133.3%

120%

108.2%

100%
100%
80%

28,691

30,00060%

24,04025,00020%
0%19,73720,000

Total

75.8%
55.7%

44.0%

40%

25,066

Ex. China

China

4.1%
Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Number of Inbound Visitors to Japan and Composition Per Year

(Thousands people)

15,00013,413

10,000

4,116

5,000

3,832

2014

2015

2016

2017

2018

2019

2020

2021

(Composition)vs 2019

vs 2018

2019

China

2,425

10%

(75%)

(71%)

9,594

South Korea

6,959

28%

+25%

(8%)

Taiwan

4,202

17%

(14%)

(12%)

Hong Kong

2,114

8%

(8%)

(4%)

2,291

7%

2,208

7%

Thailand

996

4%

(25%)

(12%)

1,319

4%

1,132

4%

2018

(Composition)

30%

8,380

27%

5,585

18%

7,539

24%

4,891

15%

4,757

15%

Singapore

591

2%

+20%

+35%

492

2%

437

1%

574

2%

+16%

+48%

495

2%

389

1%

UK

322

1%

(24%)

(4%)

424

1%

334

1%

U.S.

2,046

8%

+19%

+34%

1,724

5%

1,526

5%

613

2%

(1%)

+11%

622

2%

552

2%

Others2022(Composition)

Vietnam

Australia

246
0

2023

Total

2023

4,225

17%

(5%)

+7%

4,445

14%

3,937

13%

25,066

100%

(20%)

(21%)

31,882100%

31,192100%

Source: Japan National Tourism Organization (JNTO)(*) The number of inbound visitors is rounded off to the nearest thousand. The figures for 2014 through 2022 are final, the figures for January through October 2023 are provisional, and the figures for November and December 2023
are estimates.

25

3. Status of New Supply of Hotels
 New supply in 2023 decreased by over 1,000 rooms compared to the forecast one year ago

Supply of Rooms in Hotels/Ryokans in Japan
As of the end of January 2024
＜Japan＞(No. of rooms)
80,00060,00040,00032,988ActualReference: as of the end of January 2023(*2)

Supply Forecast

80,00054,051 59,079 49,115

47,56230,030 27,196

20,000＜Japan＞(No. of rooms)
60,00040,00020,596 16,879

32,988ActualSupply Forecast

54,051 59,079 49,115
29,874 27,153
21,75720,00032,781
12,06200
Ratio of New Supply

+2.1%

+3.4%

+3.6%

+2.9%

+1.7%

+1.5%

+1.1%

+0.9%

+2.6%

Ratio of New Supply

+2.1%

+3.4%

+3.6%

+2.9%

+1.7%

+1.5%

+1.2%

+0.7%

+2.4%

Excl. Tokyo, Osaka

+1.7%

+2.5%

+2.7%

+2.1%

+1.6%

+1.3%

+0.8%

+0.7%

+2.5%

Excl. Tokyo, Osaka

+1.7%

+2.5%

+2.7%

+2.1%

+1.6%

+1.3%

+0.9%

+0.4%

+2.0%

(%: change from theprevious year)

2017

2018

2019

2020

2021

2022

2023

2024

2025-

(%: change from theprevious year)

2017

2018

2019

2020

2021

2022

2023

2024

2025-

＜Tokyo＞(No. of rooms)
20,0005,866

20,0005,000

11,833 11,105 12,483

15,000

3,293

5,430

3,806

1,834

10,000

5,659

5,866

3,137

5,000

0

(including
undetermined plan)＜Tokyo＞(No. of rooms)

11,833 11,105 12,483

15,00010,000(including
undetermined plan)

5,430

4,189

3,999

981

0

Ratio of New Supply

+3.8%

+7.4%

+6.5%

+6.8%

+1.7%

+2.7%

+1.9%

+0.9%

+2.7%

Ratio of New Supply

+3.8%

+7.4%

+6.5%

+6.8%

+1.7%

+2.7%

+2.1%

+0.5%

+1.9%

(%: change from theprevious year)

2017

2018

2019

2020

2021

2022

2023

2024

2025-

(%: change from theprevious year)

2017

2018

2019

2020

2021

2022

2023

2024

2025-

4,851

4,998

4,375

＜Osaka＞(No. of rooms)
12,000
9,000
6,000

8,329

(including
undetermined plan)

10,721

12,000

6,205

5,018

＜Osaka＞(No. of rooms)

3,369

3,000

4,920

5,220

2,212

9,000

3,902

6,000

8,329

10,721
6,205

5,018

3,369

3,000

0

(including
undetermined plan)

2,254

0

Ratio of New Supply

+6.3%

+9.9%

+11.6%

+6.0%

+3.1%

+2.0%

+4.3%

+4.3%

+3.1%

Ratio of New Supply

+6.3%

+9.9%

+11.6%

+6.0%

+3.1%

+2.0%

+4.3%

+4.2%

+3.5%

(%: change from theprevious year)

2017

2018

2019

2020

2021

2022

2023

2024

2025-

(%: change from theprevious year)

2017

2018

2019

2020

2021

2022

2023

2024

2025-

(including
undetermined plan)(including
undetermined plan)

Source: Estimated by the Asset Management Company using data from "Public Health Administration Report" by Ministry of Health, Labour and Welfare (MHLW), a weekly hotel & restaurant magazine (HOTERES), and Nikkei Telecom.
(*1) Ratio of new supply is the ratio of new rooms to be supplied in a year to the stock of rooms (Hotels/Ryokans) at the beginning of the year. With regard to the above data, please note that in case the number of rooms are stated as "to be
determined" by hotels, the asset management company has used 180, the average number of new supply of hotel rooms, for calculation.
(*2) The figures were announced in the Midterm Financial Results Briefing for FY12/2023.

26

Appendix 1
JHR's Characteristics and Strategy

1. JHR's Investment Targets
Strong ability in acquiring properties

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

High capability in achieving internal growthHighcapability inachievinginternal
growthStrongability inacquiringproperties

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

Stablefinancingcapability

Stable financing capability
 Secure sound and stable finance Diversify financing methods28

2. Simultaneous Pursuit of Stability and Upside Potential
 JHR pursues both stability and upside potential by steadily implementing growth strategies

Ensure Stable Revenue

Pursue UpsideManagement
contract structure

Fixed rent structure

Variable rent
structure

Revenue-sharing
structure

Active Asset Management Strategies

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

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

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

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

Proportion of Rental Income

Proportion of Rent Structures

2019 Results(annualized)(as of February 21, 2024)

2024 Forecast(*1)
Fixed rent only

9 properties
Variable rent, etc.(*2)

38.4%

Fixed rent, etc.

Fixed rent,
etc.

51.7%

Variable rent,etc.(*2)

48.3%

Variable rent, etc.(*3)

61.6%

38 properties(*1) Based on the forecast announced in the financial report dated February 21, 2024.
(*2) Variable rent, Rent from revenue-sharing rent and Income from management contracts.
(*3) Fixed rent + variable rent structure, Fixed rent + revenue-sharing rent structure, Variable rent structure and management contract structure.

29

3. External Growth Strategy
Recognition of External
Environment
Trend of the Hotel
Investment Market
 Due to steady domestic demand andhigh inbound demand, some areas andhotels are showing recovery beyond thepre-pandemic level. Further
improvement in hotel revenues is
expected with increased visitors from
China, whose recovery has been slow.
 As for the hotel transaction market, notonly foreign funds, etc., but domestic
investors, including J-REITs, started toconsider hotel investment more actively
with expectations for the hotel market's
recovery and growth potential, as wellas an easing attitude to finance for hotel
assets by financial institutions. Given
these conditions, hotel transactions may
become more active.
 For acquisition of hotels, it is important
to differentiate each hotel since thecompetitiveness of hotels is becoming
more evident in accordance with the
hotel specifications, locations, and theabilities of hotel operators.

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

Key Measures
 Emphasize the superiority of buildings and facilities (infrastructure), operations (services), locations of hotel
real estate, etc.
• The prime investment targets are "full-service hotels" and "resort hotels" that have high barriers to entry
due to operation and management know-how, capital outlay and locations• For "limited-service hotels," the creditworthiness of the hotel lessee, the age of the building, location,
guest room composition and profitability are important• For limited-service hotels that specialize in selling single rooms, we will consider acquiring them
individually, taking into account the specifications and upside potential of the hotel• In particular, we will actively consider purchasing hotels that can be expected to grow internally throughan aggressive asset management strategy and hotels that can be expected to generate synergies withexisting properties Strategic investment areas• Hokkaido area, Tokyo and bay area(*1), Osaka/Kyoto area(*2), Fukuoka area, and Okinawa area
 Investigate and plan the internal growth strategy in property acquisition• At the time of contract renewal, etc., investigate appropriate rent levels and structures as well as thepotential for cost savings and building and facility improvement• Promote internal growth by collaborating with lessees and operators, especially when the hotel has
variable rent structure, etc.
 Respond to various investment opportunities by utilizing HMJ's efficient hotel operation platform, know-how
for operational improvement, etc.
(*1) Bay Area includes the coastal area of Tokyo Bay in Kanagawa and Chiba prefectures. The same shall apply hereinafter.
(*2) Osaka/Kyoto Area refers to Osaka and Kyoto prefectures. The same shall apply hereinafter.

30

4. Internal Growth Strategy
Recognition of External
Environment
Hotel Market Environment

Basic Policies
 Pursue both stability and upside potential by steadily implementing active asset management strategies

 Domestic leisure demand is expected toremain robust as the employment andincome environment improves further.
Japan is popular worldwide as a travel
destination, and strong inbounddemand is expected to reach record
highs. Given these, we believe that thehotel market will overcome the impactof the COVID-19 pandemic and enter astrong growth phase.
 Although there are supply-demand
imbalances depending on markets dueto the continued supply of new hotels
against the backdrop of robust hotel
demand during the pre-pandemic period,
we believe there are no changes to themedium to long-term trend of
expansion in the tourism market
accompanying economic growth in the
Asia region, Western countries, etc., in
the post-COVID-19 society.
 While the market is entering a fullfledged recovery phase, upward
pressure on costs and expenses has
occurred. We believe it is key toincrease unit prices by appropriately
passing on higher costs, conducting
renovation, providing added value,
implementing appropriate marketingstrategies, etc.

Key Measures Planning and execution of the active asset management in order to realize pursuit in upside revenue• Make strategic CAPEX which will improve profitability and strengthen competitiveness mainly at hotels
with high growth potential• Raise rent and change to rent structures that can achieve upside revenue• Reduction of management contract fee of properties under management contract• Increase hotel revenue through collaboration with high-quality operators• Attract inbound demand through rebranding to international brands• Make proactive proposals to build effective hotel operating structures which aim to maximize GOP, fromthe perspective of both hotel sales and expenses• Stimulate and capture domestic demand by creating products utilizing the characteristics of each hotel inline with the current market environment Planning and execution of strategic CAPEX which secure steady revenue, and monitoring of lessees• Analyze the creditworthiness of hotel lessees, understand income and expenditures of hotels, closely
observe and improve rent-paying capacity• Maintain and improve rent-paying capacity of tenants, etc. through capital expenditures, which lead tomaintain and improve competitiveness and asset value

31

5. Financial Strategy
Recognition of External
Environment
Trend of Financing Environment
and Interest Rates
 In 2023, J-REIT public offerings
decreased compared to the previous
year, yet the capital raised was higher.
The TSE REIT Index weakened over theyear, dropping by around 4% due to
expected increases in interest rates in
anticipation of the Bank of Japan's
expected adjustment to its monetaryeasing policy.
 With the recovery in hotel performance
becoming more pronounced and steady
growth expected in the future, financial
institutions are taking a more positive
stance.
 Certain caution remains required forchanges in interest rates due to the
Bank of Japan’s policy adjustments andoverseas factors.

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

Key Measures
 Maintain good relationship with financial institutions
 Improve financial stability by fixing interest rates, etc., as necessary, while considering diversification of
repayment dates
 Optimize financing costs
 Diversify financing methods such as public offerings and issuance of investment corporation bonds
 Maintain LTV level at a maximum of 50% (total asset base) for the time being

32

Appendix 2
Information of Properties

1. Portfolio Map
 Portfolio consisted of competitive hotels in areas with strong leisure lodging demand Selectively invest in locations with high growth potential of leisure demand such as Strategic Investment Areas(as of the end of December 2023)
Strategic Investment Areas

Hokkaido Area

Existing properties

22 ibis Styles Sapporo

Property Acquired in 2023

23 Mercure Sapporo
44 La’gent Stay Sapporo Odori

Limited-service hotel

UAN kanazawa 42

JPY525.7Bn

Osaka/Kyoto Area
ibis Styles Kyoto Station 21
Oriental Hotel Kyoto Rokujo 45
Namba Oriental HotelTokyo & Bay Area

3

Fukuoka Area

Oriental Hotel Universal City 19

Washington Hotel Plaza Hakata, Nakasu 11

Holiday Inn Osaka Namba 34

Toyoko Inn Hakata-guchi Ekimae 16

Hotel Oriental Express
40
Osaka Shinsaibashi

26 the b hachioji
28 Hotel Francs
37 Hilton Tokyo Narita Airport
38 International Garden Hotel Narita

the b hakata 27

36 Hilton Nagoya

24 Mercure Okinawa Naha
Oriental Hotel Okinawa

30 Resort & Spa

12,271 Rooms

29 Mercure Yokosuka

8

6 The Beach Tower Okinawa

No. of Guest Rooms

47 Hotel JAL City Kannai Yokohama

Hotel Oriental Express
46
Fukuoka Nakasukawabata

4 Hotel Nikko Alivila

47 Hotels

20 Hilton Tokyo Bay

Hotel Oriental Express Fukuoka Tenjin 35

Okinawa Area

No. of Hotels

2 Oriental Hotel Tokyo Bay

Oriental Hotel Fukuoka Hakata Station 33

dormy inn Kumamoto

JPY396.9Bn

Total Assets(Appraisal Value)(*)

Full-service hotel
Resort hotel

Total Assets(Acquisition Price)

7 Hakone Setsugetsuka

Tokyo 23 wards

12 Washington Hotel Plaza Nara

13 R&B Hotel Ueno-hirokoji

39 Hotel Nikko Nara

32 CANDEO HOTELS Ueno Koen

1 Kobe Meriken Park Oriental Hotel
5 Oriental Hotel Hiroshima
ACTIVE-INTER CITY HIROSHIMA
31 (Sheraton Grand Hiroshima Hotel)

the b ikebukuro 25
the b suidobashi

9

Sotetsu Fresa Inn
43
Shimbashi-Karasumoriguchi

10 dormy inn EXPRESS Asakusa
14 Comfort Hotel Tokyo Higashi Nihombashi
15 Smile Hotel Nihombashi Mitsukoshimae
41 Hilton Tokyo Odaiba

Chisun Hotel Kamata 17
Chisun Inn Kamata 18(*) Based on the appraisal value at the end of December 2023.

34

2. List of Portfolio
The 28 Hotels with Variable Rent, etc.
1

2

Kobe Meriken Park
Oriental Hotel3

Oriental HotelTokyo Bay30

19

Oriental Hotel
Universal City35

The 19 HMJ Hotels
4

33

39

(Sheraton Grand Hiroshima Hotel)

Hilton Tokyo Narita Airport

41

Hotel Oriental Express
Osaka Shinsaibashi

46

Oriental Hotel
Kyoto Rokujo

Hotel Oriental Express
Fukuoka Nakasukawabata

34

Holiday Inn
Osaka Namba

International Garden Hotel Narita

ibis Styles Kyoto Station

Hilton Tokyo Odaiba

47

Hotel JAL City Kannai Yokohama

9the b suidobashi

22

25

ibis Styles Sapporo

the b ikebukuro

23

Mercure Sapporo

Mercure Okinawa Naha

29

Mercure Yokosuka

35(as of the end of December 2023)

The Ishin Group Hotels

21

24

Acquisition in 2023
45

Oriental Hotel
Hiroshima

38

40

Hotel Nikko Nara

Oriental Hotel Fukuoka
Hakata Station

ACTIVE-INTER CITYHIROSHIMA

37

Hotel Oriental Express
Fukuoka Tenjin

Hotel Nikko Alivila

Namba
Oriental Hotel

31

Oriental Hotel
Okinawa
Resort & Spa

5

The Accor Group Hotels

26

Limited-service hotel

6

7

The Beach Tower
Okinawa

11

12

27

the b hakata

16

dormy inn
Kumamoto

R&B Hotel
Ueno-hirokoji

28

Hilton Tokyo Bay

Hotel Francs

UAN kanazawa

14

Comfort Hotel Tokyo
Higashi Nihombashi

18

Chisun Hotel
KamataChisun Inn
Kamata32

36

CANDEO HOTELS
Ueno Koen

Hilton Nagoya

Acquisition in 2023
42

dormy inn
EXPRESS Asakusa

17

Toyoko Inn
Hakata-guchi Ekimae

20

10

13

Washington Hotel
Washington Hotel
Plaza Hakata, Nakasu
Plaza Nara

Smile Hotel
Nihombashi
Mitsukoshimae

Resort hotel

8

HakoneSetsugetsuka

15

the b hachioji

Full-service hotel

43

44

Sotetsu Fresa Inn
ShimbashiKarasumoriguchi

La’gent Stay
Sapporo Odori3. Portfolio Diversification
 Widely diversified and high-quality portfolio Appeal to inbound visitors by international brands(as of the end of December 2023)

By Area

Chugoku
KyushuHokkaido
Chubu
5.7%
4.4%

By Hotel Brand
OthersTokyo

Dormy Inn, etc.

24.9%

5.4%

Oriental Hotal

13.9%

(HMJ)
24.1%

(Kyoritsu Maintenance)
3.8%(excluding Okinawa)

the b 3.2%

6.4%

ibis/Mercure

Okinawa
11.2%

Hotel Nikko/Hotel JAL City

6.1%

(Okura Nikko HotelManagement)

Kanto

Kansai(excluding Osaka)
8.7%(Accor)8.4%(excluding Tokyo)

Holiday Inn

20.4%

Osaka

HiltonSheraton

29.4%

13.0%

By Hotel Grade

4.4%

(IHG)
6.8%

By Hotel Type

Economy 3.2%
LuxuryResort

19.5%

19.7%

serviceMid-price
45.8%

Limited36.3%

Upper-

Full-service

middle

44.0%

31.5%

(*) Calculated based on acquisition price. The percentages are rounded to one decimal place.

36

4. Rent Structure Aim to secure stability through fixed rents and increase variable rents, etc. through active asset management strategies(FY12/2024 forecast)Rent Structure(*1)

Fixed rent

Fixed rent +Revenue-sharing rent

Fixed rent +Variable rent

Variable rentManagement contract

Type of Contract

Lease contract

Lease contract

Lease contract

Lease contract

Management contract

Fixed

○

○

○

–

–

–

Variable–

A certain percentage of sales
exceeding the threshold

A certain percentage of
hotel GOP

A certain percentage of hotelrevenue or hotel GOP

Hotel GOP–

JPY2,151MM(6.9%)

JPY3,365MM(10.8%)

JPY21,101MM(67.5%)

JPY2,558MM(8.2%)

JPY2,081MM(6.7%)

JPY31,258MM(100.0%)

Fixed Rent,
etc.(*3) (%)

JPY2,151MM(6.9%)

JPY2,803MM(9.0%)

JPY10,367MM(33.2%)

JPY537MM(1.7%)

JPY277MM(0.9%)

JPY16,136MM(51.6%)

Variable Rent(%)–

JPY561MM(1.8%)

JPY10,734MM(34.3%)

JPY2,021MM(6.5%)

JPY1,804MM(5.8%)

JPY15,121MM(48.4%)CAPEX
Paid by JHR(*4)

1. Renewal of building andfacilities

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

1. Renewal of building andfacilities
2. Fixtures and equipment
3. Strategic investment

1. Renewal of building andfacilities
2. Fixtures and equipment
3. Strategic investment

1. Renewal of building andfacilities
2. Fixtures and equipment
3. Strategic investment–

No. of Properties

9

5

24

5

4

47

Acquisition Price(%)

JPY30,041MM(7.6%)JPY42,354MM(10.7%)

JPY272,870MM(68.7%)

JPY29,255MM(7.4%)

JPY22,397MM(5.6%)JPY396,918MM(100.0%)

The Beach Tower Okinawa

Hilton Tokyo Bay

The 19 HMJ Hotels

Hilton Nagoya

ibis Styles Kyoto Station

Hotel Francs

Smile Hotel
Nihombashi Mitsukoshimae

The Ishin Group Hotels

Mercure Yokosuka

ibis Styles Sapporo

dormy inn Kumamoto

Chisun Hotel Kamata

Mercure Sapporo

Chisun Inn Kamata

Mercure Okinawa Naha

Type of
Rent(breakdown)

Real Estate
Operating Revenue(*2)(%)

HotelsCANDEO HOTELS
Ueno Koen
and other hotels

Comfort Hotel Tokyo
Higashi Nihombashi

Total

–

La’gent Stay Sapporo Odori

UAN kanazawa
Sotetsu Fresa Inn
Shimbashi-Karasumoriguchi(*1) Rent Structure is classified based on the type of rent under the lease contract of hotels owned by JHR as of the end of December 2023.
(*2) Based on the revenue forecast for FY12/2024, which was announced in the financial report dated February 21, 2024. Revenue from trademark rights is excluded.
(*3) The fixed amount of real estate operating revenue includes fixed rent from the hotel lessee as well as fixed rent and water utility expense income under the lease contract for the non-hotel parts (offices, signage,
car park, retail shop, etc.) of the acquired assets.
(*4) The table lists a general scope of CAPEX paid by JHR and detail is individually stipulated in the lease contract of each hotel.

37

5. Property List (1/2)(as of the end of December 2023)
Appraisal ValueNo.

Property Name

Hotel Type
(*1)

Grade
(*2)

No. of
Guest
Rooms

LocationAge(*3)

Acquisition
Price(JPY MM)(*4)

Book Value(JPY MM)(*5)

24th Period(as of June 30, 2023)
Appraisal
Value(JPY MM)CAP Rate

24th Period(as of December 31, 2023) Investment
Ratio
Appraisal
(*6)
Value
CAP Rate(JPY MM)

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

NOI
(JPY1,000)(*7)

P/L from
Real Estate
Operation(JPY1,000)(*7)

NOI Yield(actual)(*8)

1

Kobe Meriken Park Oriental Hotel

Full-service

Upper-middle

323

Hyogo

28.5

10,9009,772

14,1004.8%

14,1004.8%

2.7%

689,771441,899

85,892

4.1%

2

Oriental Hotel Tokyo Bay

Full-service

Mid-price

511

Chiba

28.7

19,90017,221

31,7004.4%

31,9004.4%

5.0%

1,874,027

1,751,861

1,319,550

8.8%

3

Namba Oriental Hotel

Limited-service

Mid-price

258

Osaka

27.8

15,00014,28031,0004.1%

31,0004.1%

3.8%

1,232,813

1,112,264

995,718

7.4%

4

Oriental Hotel Hiroshima

Full-service

Upper-middle

397

Hiroshima

29.8

18,90017,64828,1004.8%

28,2004.8%

4.8%

1,400,873

1,252,062

975,202

6.6%

5

Hotel Nikko Alivila

ResortLuxury227

Okinawa

30.3

4,100

4,051

4,150

4.9%

4,220

5.0%

1.0%

366,106

321,157

235,759

7.8%

6

The Beach Tower Okinawa

ResortMid-price

280

Okinawa

19.8

7,610

6,416

9,960

4.4%

9,940

4.4%

1.9%

511,008467,270

352,695

6.1%

7

Hakone Setsugetsuka

ResortMid-price

158

Kanagawa

17.2

4,070

3,534

5,260

4.9%

5,390

4.8%

1.0%

294,940

269,033

173,268

6.6%

8

dormy inn Kumamoto

Limited-service

Mid-price

291

Kumamoto

15.9

2,334

2,205

3,230

5.6%

3,390

5.6%

0.6%

248,243

225,668

170,7199.7%

9the b suidobashi

Limited-service

Mid-price

99

Tokyo

37.4

1,120

1,149

2,270

4.1%

2,330

4.1%

0.3%

97,48785,57557,704

7.6%

10

dormy inn EXPRESS Asakusa

Limited-service

Economy

75

Tokyo

26.8

999

917

1,290

4.0%

1,320

3.9%

0.3%

65,07555,18342,506

5.5%

11

Washington Hotel Plaza Hakata, Nakasu

Limited-service

Mid-price

247

Fukuoka

28.8

2,130

2,065

4,510

4.4%

4,520

4.4%

0.5%

240,000

224,000

199,000

10.5%

12Washington Hotel Plaza Nara

Limited-service

Mid-price

203

Nara

23.8

2,050

1,717

2,430

5.0%

2,440

5.0%

0.5%

150,000

133,000

96,000

6.5%

13

R&B Hotel Ueno-hirokoji

Limited-service

Economy

176

Tokyo

21.7

1,720

1,804

1,800

4.1%

1,830

4.0%

0.4%

97,291

82,152

62,994

4.8%

14

Comfort Hotel Tokyo
Higashi Nihombashi

Limited-service

Economy

259

Tokyo

15.9

3,746

3,395

5,360

4.4%

5,470

4.3%

0.9%

453,212421,680

383,651

11.3%

15

Smile Hotel Nihombashi Mitsukoshimae

Limited-service

Economy

164

Tokyo

26.8

2,108

2,025

2,940

4.1%

3,030

4.0%

0.5%

138,953

121,598

100,551

5.8%

16

Toyoko Inn Hakata-guchi Ekimae

Limited-service

Economy256

Fukuoka

22.3

1,652

1,346

2,730

4.5%

2,780

4.4%

0.4%

141,039

126,853

108,858

7.7%

17

Chisun Hotel Kamata

Limited-service

Economy

105

Tokyo

31.9

1,512

1,468

2,080

4.7%

2,080

4.6%

0.4%

118,281

102,768

62,346

6.8%

18

Chisun Inn Kamata

Limited-service

Economy

70

Tokyo

20.7

823

781

1,390

4.5%

1,430

4.4%

0.2%

66,46758,52644,0097.1%

19

Oriental Hotel Universal City

ResortMid-price

330

Osaka

22.5

6,753

7,468

17,8004.8%

18,5004.8%

1.7%

1,623,257

1,562,599

1,261,861

23.1%

20

Hilton Tokyo Bay

ResortLuxury

828

Chiba

35.5

26,05026,00039,9004.3%

40,2004.2%

6.6%

2,349,912

2,065,618

1,866,360

7.9%

21

ibis Styles Kyoto Station

Limited-service

Mid-price

215

Kyoto

14.8

6,600

6,566

9,990

4.3%

9,990

4.2%

1.7%

318,464

277,262

243,174

4.2%

22

ibis Styles Sapporo

Limited-service

Mid-price278

Hokkaido

13.4

6,797

6,350

11,100

4.7%

11,1004.7%

1.7%

487,015

379,406

296,050

5.6%

23

Mercure Sapporo

Limited-service

Mid-price285

Hokkaido

14.7

6,000

5,625

10,5004.7%

10,6004.6%

1.5%

632,629

401,490311,200

6.7%

24

Mercure Okinawa Naha

Limited-service

Mid-price

260

Okinawa

14.4

3,000

2,768

6,940

4.7%

7,070

4.6%

0.8%

172,694

119,581

44,7574.0%

25

the b ikebukuro

Limited-service

Mid-price

175

Tokyo

41.5

6,520

6,608

7,200

4.2%

7,200

4.2%

1.6%

316,613289,385

260,856

4.4%

26

the b hachioji

Limited-service

Mid-price

196

Tokyo

37.4

2,610

2,706

2,570

5.1%

2,610

5.1%

0.7%

169,873

145,713

105,529

5.6%

27

the b hakata

Limited-service

Mid-price

175

Fukuoka

26.3

2,300

2,328

4,320

4.3%

4,520

4.3%

0.6%

219,415

206,269

184,192

9.0%

38

5. Property List (2/2)(as of the end of December 2023)
Appraisal ValueNo.

Property Name

Hotel Type
(*1)

Grade
(*2)

No. of
Guest
Rooms

LocationAge(*3)

Acquisition
Price(JPY MM)(*4)

Book Value(JPY MM)(*5)

24th Period(as of June 30, 2023)
Appraisal
Value(JPY MM)CAP Rate

24th Period(as of December 31, 2023) Investment
Ratio
Appraisal
(*6)
Value
CAP Rate(JPY MM)

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

NOI
(JPY1,000)(*7)

P/L from
Real Estate
Operation(JPY1,000)(*7)

NOI Yield(actual)(*8)

28Hotel Francs

Full-service

Mid-price

222

Chiba

32.4

3,105

3,174

4,100

4.7%

4,130

4.6%

0.8%

300,000

239,316

187,459

7.7%

29

Mercure Yokosuka

Full-service

Mid-price

160

Kanagawa

30.2

1,650

1,672

3,240

4.6%

3,210

4.6%

0.4%

322,637

206,827

169,11712.5%

30

Oriental Hotel Okinawa Resort & Spa

ResortUpper-middle

361

Okinawa

18.9

14,950

16,115

18,1004.9%

18,3004.9%

3.8%

641,137

554,718

163,6923.7%

31

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Full-service

Luxury238

Hiroshima

13.3

17,32017,05320,700

4.6%

20,400

4.5%

4.4%

1,539,440

1,015,007

776,276

5.9%

32

CANDEO HOTELS Ueno Koen

Limited-service

Mid-price

268

Tokyo

14.0

6,705

6,537

7,460

4.0%

7,590

3.9%

1.7%

349,971322,882

278,648

4.8%

33

Oriental Hotel Fukuoka Hakata Station

Full-service

Upper-middle

221

Fukuoka

38.5

7,197

8,520

15,000

4.6%

15,0004.5%

1.8%

1,515,721

1,269,063

877,671

17.6%

34Holiday Inn Osaka Namba

Limited-service

Mid-price

314

Osaka

15.4

27,00026,601

26,6004.3%

26,600

4.4%

6.8%

895,797

844,841

724,594

3.1%

35

Hotel Oriental Express Fukuoka Tenjin

Limited-service

Mid-price

263

Fukuoka

24.7

5,248

5,765

6,520

4.7%

6,650

4.6%

1.3%

590,989

488,895

387,869

9.3%

36

Hilton Nagoya

Full-service

Luxury

460

Aichi

34.8

15,25015,527

14,9004.2%

14,9004.1%

3.8%

1,263,632

590,031400,651

3.9%

37

Hilton Tokyo Narita Airport

Full-service

Upper-middle

548

Chiba

30.4

13,175

13,261

12,300

4.6%

12,300

4.6%

3.3%

532,370

451,597

230,832

3.4%

38International Garden Hotel Narita

Full-service

Mid-price

463

Chiba

27.6

9,125

9,012

9,110

4.8%

9,270

4.8%

2.3%

477,563

433,991

265,440

4.8%

39Hotel Nikko Nara

Full-service

Upper-middle

330

Nara

25.8

10,373

10,090

9,500

4.8%

9,670

4.7%

2.6%

444,883

396,500

244,933

3.8%

40

Hotel Oriental Express
Osaka Shinsaibashi

Limited-service

Mid-price

124

Osaka

5.9

2,738

2,789

2,890

4.7%

2,890

4.6%

0.7%

179,436

165,072

148,084

6.0%

41

Hilton Tokyo Odaiba

Full-service

Upper-middle

453

Tokyo

28.0

62,40063,36568,0003.7%

68,200

3.7%

15.7%

2,349,222

2,005,645

1,695,940

3.2%

42

UAN kanazawa (*9)

Limited-service

Upper-middle

47

Ishikawa

6.3

2,050

2,062

–

–

2,200

4.6%

0.5%

118,301

115,228

94,9785.7%

43Sotetsu Fresa Inn
Shimbashi-Karasumoriguchi (*9)

Limited-service

Mid-price

220

Tokyo

15.8

8,400

8,469

–

–

10,1003.8%

2.1%

230,700

200,752

182,2792.9%

44

La’gent Stay Sapporo Odori (*9)

Limited-service

Mid-price219

Hokkaido

7.5

10,02010,422––

10,8004.3%

2.5%

132,381

131,332

107,023

4.7%

45

Oriental Hotel Kyoto Rokujo (*9)

Limited-service

Mid-price

166

Kyoto

4.3

4,446

4,608

–

–

5,940

4.3%

1.1%

94,37493,35981,606

5.3%

46

Hotel Oriental Express Fukuoka
Nakasukawabata (*9)

Limited-service

Mid-price

183

Fukuoka

2.7

4,460

4,657

–

–

6,090

4.2%

1.1%

75,25974,17665,3255.2%

47

Hotel JAL City Kannai Yokohama (*9)

Limited-service

Mid-price

170

Kanagawa

17.2

4,000

4,047

–

–

4,340

4.1%

1.0%

10,463

10,373

7,837

2.9%

Total or Average––

12,271–

24.2

396,918

391,984

483,040–

525,740-

100.0%

26,541,085 22,311,135 17,130,816

5.6%(*1) For hotel type, "Full-service" refers to a "full-service hotel," "Resort" refers to a "resort hotel," and "Limited-service" refers to a "limited-service hotel."(*2) Mainly based on ADR, etc., JHR has classified the hotels into four categories as "luxury," "upper-middle," "mid-price," and "economy."(*3) The age of each property as of the end of December 2023. Average age: Weighted average calculated as follows. The sum of (acquisition price of each property x property age)/total acquisition price.
(*4) The acquisition price in the Purchase & Sale Agreement for the Beneficial Interest in Trust or real estate. (Consumption tax, an amount equivalent to consumption tax, brokerage fee, and other purchase-related costs are excluded.)(*5) Book value as of the end of December 2023.
(*6) The investment ratio column shows the ratio of the acquisition price of each property to the total acquisition price of the properties held as of the end of December 2023, rounded to one decimal place.
(*7) Actual for 12 months from January to December 2023. Since the lessees did not agree to disclose numbers in units of JPY1,000 for No. 11 and 12, amounts are rounded down to the nearest JPY million.
(*8) NOI yield (actual) is calculated based on NOI (actual) for the full year FY12/2023. NOI yields (actual) through No. 42 and 47 are calculated by annualized NOI (actual) for FY12/2023 of each property. NOI yield (actual) of the portfolio is calculated as follows: Total NOI(actual) for FY12/2023 / total acquisition price of properties held as of the end of December 2023.
(*9) Since these properties were acquired in FY2023, the appraisal values a​ t the end of June 2023 are omitted in the table and excluded from the total figures.

39

6. Summary of Lease Contracts (1/3)(as of the end of December 2023)
Lease
Type

Rent
Structure(*1)

Fixedlease

Fixed +
Variable

No.

Property Name

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel Tokyo Bay

3

Namba Oriental Hotel

4

Oriental Hotel Hiroshima

5

Hotel Nikko Alivila

6

The Beach Tower Okinawa

Fixedlease

7

Hakone Setsugetsuka

Fixedlease

Hotel Operator/
Lease/ Expiration
Date of
Hotel Consulting andMCManagement Company Term Contract

LesseeContractual Rent(*2)

Rent Modification Summary

Rent Modification Summary(After acquisition)

Rent Modification Schedule(2024 to 2025)

TimingCondition

2024

2025

15

For The Five HMJ Hotels JPY3,221MM/year +Dec. 2034 when Hotel AGOP exceeds JPY4,120MM, theexcess x 85% is paid

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

Jan. 2023

Modified Structure

–

–

Fixed

20

Jun. 2026 JPY42MM/month

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

–

–

–

–

Fixed

20

Oct. 2026 JPY24MM/month

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

–

–

–

–

3

Mar. 2026

Rent can be modified throughmutual agreement.

Apr. 2023

Same(Introduced variable rent)––

Hotel Management Japan Co., Ltd.

Okura Nikko HotelManagement Co., Ltd.

Kyoritsu Maintenance Co., Ltd.

JPY16MM/month + when Hotel GOP exceeds
JPY400MM, the excess x 40% is paid

8

dormy inn Kumamoto

Fixedlease

Fixed +
Variable

9

dormy inn EXPRESS Asakusa

Lease

Fixed

3

Mar. 2026 JPY5MM/month

Rent can be modified throughmutual agreement every three
years.

Apr. 2023

Same

–

–

10

Washington Hotel Plaza
Hakata, Nakasu

Lease

Fixed

3

Mar. 2024 JPY20MM/month

Rent can be modified throughmutual agreement.

Apr. 2021

Same

To be expired(Mar.)–

11

Washington Hotel Plaza Nara

Lease

Fixed

3

Mar. 2026 JPY11MM/month

Rent can be modified throughmutual agreement.

Mar. 2023

Same

–

–

12

R&B Hotel Ueno-hirokoji

Lease

Fixed

20

Apr. 2025 JPY8MM/month

Rent can be modified throughmutual agreement.

Apr. 2011

Increased(+3.0%)–To be expired(Apr.)

13

Comfort Hotel Tokyo
Higashi Nihombashi

Fixedlease

Fixed +
Revenuesharing

Greens Co., Ltd.

20

Jan. 2028 JPY21MM/month + Revenue-sharing rent

Rent can be modified throughmutual agreement every five
years.

Apr. 2018

Same(Introduced
Revenue-sharing rent)

–

–

14

Smile Hotel Nihombashi
Mitsukoshimae

Lease

Fixed +
Revenuesharing

THE KAMOGAWA GRAND HOTEL, LTD.

3

Mar. 2026 JPY11MM/month + Revenue-sharing rent

Rent can be modified throughmutual agreement.

Mar. 2023

Same

–

–

15

Toyoko Inn Hakata-guchi Ekimae

Lease

Fixed

Toyoko Inn Co., Ltd.

30

Sep. 2031 JPY11MM/month

No rule has been stipulated.

Oct. 2007

Increased(+9.4%)––

16

Chisun Hotel Kamata

Fixedlease

Variable5

Dec. 2025

Hotel GOP x 86%(If the amount is below JPY0, it will be JPY0)–

Jan. 2021

Change in lessee andModified Structure–

To be expired(Dec.)

7

Dec. 2026

Hotel GOP x 86%(If the amount is below JPY0, it will be JPY0)–

Jan. 2020

Same

–

–

10.5 Dec. 2031

JPY350MM/year + when Hotel AGOP exceeds
JPY370MM, the excess x 95% is paid

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

Jul. 2021

Change in lessee andModified Structure

–

–

17

Chisun Inn Kamata

Fixedlease

Variable

18

Oriental Hotel Universal City

Fixedlease

Fixed +
Variable

Washington Hotel K.K.

Solare Hotels &Resorts Co., Ltd.

SHR Hotels, Co., Ltd.

K.K. Osaka Sakurajima Operations40

6. Summary of Lease Contracts (2/3)(as of the end of December 2023)
No.

Property Name

Hotel Operator/
Lease/ Expiration
Date of
Hotel Consulting andMCManagement Company Term Contract

Lease
Type

Rent
Structure(*1)

LesseeFixedlease

Fixed +
Revenuesharing

THE DAI-ICHI
BUILDING CO., LTD.

19

Hilton Tokyo Bay

20

ibis Styles Kyoto Station–

21

ibis Styles Sapporo–

Hilton International
Company

Contractual Rent(*2)

Rent Modification Summary

Rent Modification Summary(After acquisition)

Rent Modification Schedule(2024 to 2025)

TimingCondition

2024

2025

Rent can be modified throughmutual agreement.

Jan. 2019

Renewed(Increased)

–

–

6

Dec. 2028 JPY163MM/month + Revenue-sharing rentManagement
contract

12

Dec. 2024 Amount equivalent to Hotel GOP

–

–

–

To be expired(Dec.)–

Management
contract10Dec. 2024 Amount equivalent to Hotel GOP

–

–

–

To be expired(Dec.)–

15

Sep. 2029 Amount equivalent to Hotel GOP

–

–

–

–

–

10

Apr. 2024 Amount equivalent to Hotel GOP

–

–

–

To be expired(Apr.)––AAPC Japan K.K.

22

Mercure Sapporo–

Management
contract

23

Mercure Okinawa Naha–Management
contract

24

Mercure Yokosuka

Fixedlease

Variable

AAPC Japan K.K.

5

Aug. 2024 Linked to hotel GOP

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

Aug. 2019

Renewed(Increased)

To be expired(Aug.)–

25

the b ikebukuro

Fixedlease

Fixed +
Variable

Ishin Ikebukuro Operations K.K.

9.5

Jul. 2024 JPY80MM/year + Linked to Hotel AGOP

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

Oct. 2020

Fixed rent was changed(Reduction)

To be expired(Jul.)–

26

the b hachioji

Fixedlease

Fixed +
Variable

Ishin Hachioji Operations, Y.K.

9.5

Jul. 2024 JPY45MM/year + Linked to Hotel AGOP

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

Oct. 2020

Fixed rent was changed(Reduction)

To be expired(Jul.)–

27

the b hakata

Fixedlease

Fixed +
Variable

Ishin Hakata Operations K.K.

9.5

Jul. 2024 JPY59MM/year + Linked to Hotel AGOP

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

Oct. 2020

Fixed rent was changed To be expired(Jul.)(Reduction)–28

the b suidobashi

Fixedlease

Fixed +
Variable

Ishin Suidobashi Operations K.K.

7

Dec. 2026 JPY30MM/year + Linked to Hotel AGOP

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

Oct. 2020

Fixed rent was changed(Reduction)

–

–

29

Hotel Francs

Fixedlease

Fixed

K.K. BP19

Oct. 2024 JPY25MM/month

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

––

To be expired(Oct.)–

30

Oriental Hotel Okinawa
Resort & Spa

Fixedlease

Fixed +
Variable

Lagoon resort Nago Co., Ltd.

10

Dec. 2030

JPY550MM/year + when Hotel AGOP exceeds
JPY655MM, the excess x 95% is paid

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

Jan. 2023

Modified Structure

–

–

31

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Fixedlease

Fixed +
Variable

Starwood Asia Pacific
K.K. A.I.C Hiroshima
Hotels & Resorts Pte.
Management
Ltd.

11

Dec. 2026

JPY348MM/year + when Hotel AGOP exceeds
JPY360MM, the excess x 90% is paid

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

Jan. 2023

Modified Structure

–

–

32

CANDEO HOTELS Ueno Koen

Fixedlease

Fixed

Candeo Hospitality Management, Inc.

20

Feb. 2030 Nondisclosure(*3)

Rent can be modified throughmutual agreement every three
years.

Jul. 2016

Nondisclosure(*3)

–

–

33

Oriental Hotel Fukuoka
Hakata Station

Fixedlease

Fixed +
Variable

Hotel Centraza Co., Ltd.

15

Dec. 2034

JPY425MM/year + when Hotel AGOP exceeds
JPY442MM, the excess x 98% is paid

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

Jan. 2023

Modified Structure

–

–

34

Holiday Inn Osaka Namba

Fixedlease

Fixed +
VariableOW Hotel Operations KK

15

Oct. 2031

JPY576MM/year + when Hotel AGOP exceeds
JPY580MM, the excess x 97% is paid

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

Jan. 2023

Modified Structure

–

–

35

Hotel Oriental Express
Fukuoka Tenjin

Fixedlease

Fixed +
Variable

K.K Fukuoka Tenjin Operations

10.5 Dec. 2031

JPY150MM/year + when Hotel AGOP exceeds
JPY165MM, the excess x 97% is paid

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

Jun. 2021

Change in lessee andModified Structure

–

–

41

6. Summary of Lease Contracts (3/3)(as of the end of December 2023)
No.

Property Name

Lease
Type

Rent
Structure(*1)

LesseeNagoya Hilton Co.,Ltd.

Hotel Operator/
Lease/ Expiration
Date of
Hotel Consulting andMCManagement Company Term Contract
Hilton International
Company

Contractual Rent
(*2)
(*3)

Rent Modification Summary
Rent can be modified throughmutual agreement.

Rent Modification Summary(After acquisition)

Rent Modification Schedule(2024 to 2025)

TimingCondition

2024

2025

–

–

–

–

41

Dec. 2029 Nondisclosure

KK NaritaKosuge Operations

20

Jun. 2037

JPY444MM/year + when Hotel AGOP exceeds
JPY450MM, the excess x 93% is paid

In principle, the same rent will
be applied until expiration of the Jan. 2023
contract.

Modified Structure––

Fixed +
Variable

KK NaritaYoshikura Operations

10

Jun. 2027

JPY336MM/year + when Hotel AGOP exceeds
JPY360MM, the excess x 98% is paid

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

Jan. 2023

Modified Structure––

Fixedlease

Fixed +
Variable

Hotel Management
Okura Nikko Hotel
Co., Ltd.
Management Co., Ltd.

10

Dec. 2030

JPY420MM/year + when Hotel AGOP exceeds
JPY440MM, the excess x 95% is paid

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

Jan. 2023

Modified Structure––

Hotel Oriental Express
Osaka Shinsaibashi

Fixedlease

Fixed +
Variable

K.K. HOTEL ORIENTAL EXPRESS

10

Mar. 2028

JPY110.4MM/year + when Hotel AGOP exceeds
JPY128MM, the excess x 91% is paid

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

Jan. 2023

Modified Structure

–

–

41

Hilton Tokyo Odaiba

Fixedlease

Fixed +
Variable

Tokyo Humania Enterprise Inc.

11

Dec. 2029

JPY1,600MM/year + when Hotel AGOP exceeds
JPY1,660MM, the excess x 98% is paid

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

Jan. 2023

Modified Structure

–

–

42

UAN kanazawa

Fixedlease

Fixed +
Revenuesharing

Solare Hotels andResorts Co., Ltd.

SHR Hotels Co., Ltd.

25

Oct. 2042

JPY9MM/month + when annual room sales
exceeds JPY270MM, the excess x 30% is paid

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

–

–

–

–

43

Sotetsu Fresa Inn
Shimbashi-Karasumoriguchi

Fixedlease

Fixed +
Revenuesharing

Sotetsu Hotel
Development
Co., Ltd.

Sotetsu HotelManagement CO., LTD.

3

Mar. 2026 JPY17MM/month + Revenue-sharing rent

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

–

–

–

–

44

La’gent Stay Sapporo Odori

Fixedlease

Variable

AB Accommo. Co. Ltd.

5

May 2024 Linked to hotel GOP

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

––

To be expired
(May)

–

45

Oriental Hotel Kyoto Rokujo

Fixedlease

Fixed +
Variable

Kyoto Horikawa Operations Co., Ltd.

14.2 Dec. 2033

JPY14.25MM/month + when Hotel AGOP
exceeds JPY183MM, the excess x 93.5% is paid

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

–

–

–

–

46

Hotel Oriental Express
Fukuoka Nakasukawabata

Fixedlease

Fixed +
Variable

Fukuoka Tenyamachi Operations Co., Ltd.

12.7 Dec. 2033

JPY14.5MM/month + when Hotel AGOP
exceeds JPY189MM, the excess x 92% is paid

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

–

–

–

–

47

Hotel JAL City Kannai Yokohama

Fixedlease

Fixed +
Variable

Dec. 2033

JPY11.25MM/month + when Hotel AGOP
exceeds JPY150MM, the excess x 95% is paid

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

–

–

–

–

36

Hilton Nagoya

Lease

Variable

37

Hilton Tokyo Narita Airport

Fixedlease

Fixed +
Variable

38

International Garden Hotel Narita

Fixedlease39

Hotel Nikko Nara

40

K.K. Yokohama
Yamashita-cho
Operations

Okura Nikko HotelManagement Co., Ltd.

10(*1) Rent structure is as follows:
Fixed: Fixed rent
Variable: Variable rentManagement contract: Management contract
Fixed + Variable: Property paying both fixed and variable rent
Fixed + Revenue sharing: When the sales of the hotel exceed pre-determined amount, additional rent is paid(*2) Amount including car park and CAM without tax.
(*3) The detailed content of the contract is not disclosed as consent on disclosure has not been obtained from the lessee.

42

7. Trend of RevPAR Index and Status
Trend of RevPAR Index(*1) of the 25 Hotels with Variable Rent, etc. in Comparison with 2019/Number of New Cases of Infection by COVID-19 in Japan(*2)

2020

2021

2022

2023

Full Year: 34.7

Full Year: 32.3

Full Year: 61.1

Full Year: 101.4

First Half: 33.5

Second Half: 35.8

First Half: 23.8

Second Half: 39.6

First Half: 45.6

Second Half: 74.7

First Half: 95.0

Second Half: 107.0

100

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

(No. of Cases)
250,000

Quasi-Emergency Measures
State of
Emergency

200,000

150,000

Go To Go To Travel
TravelCampaign
Campaign including
Tokyo

0

State of
Emergency

State of
Emergency

7th Wave

8th Wave
New Go To
TravelCampaign
October 11

Number of New Cases of COVID-19 in Japan (left axis)
5th Wave

Number of Severe Cases in Japan (right axis)

100,000

50,000State of
Emergency

Quasi-Emergency
Measures

3rd Wave

1st Wave

6th Wave• Significant easing ofborder measures• Elimination of entry limit• Lifting of the ban on
personal travel

New Go To
Travel Campaign

6,000
5,000

May 8

• Reclassification of
COVID-19 as Class 5
infectious diseases
from Class 2

4th Wave

4,000
3,000
2,000

2nd Wave

1,000

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Source: Ministry of Health, Labour and Welfare(*1) The RevPAR for each period is indexed with the same period in 2019 as 100.
(*2) The data was last updated on May 8, 2023, when Japan reclassified COVID-19's category to Class 5 infectious disease.

4308. Balance Sheet(Unit: JPY MM)
FY12/2022
End ofFiscal Year(as of) December 31,
2022

ASSETS
Current Assets(*1)

Cash and Deposits

Operating Accounts Receivables

FY12/2023
End ofFiscal Year
December 31,
2023

Variance
LIABILITIES

34,55334,049(503)

29,51528,515(999)

Operating Accounts Payable

4,442

4,850

408

Short-term Loans

FY12/2022
End ofFiscal Year(as of) December 31,
2022

Current Liabilities

595

684

88

362,115395,769

33,653Current Portion of Long-term Loans Payable

Net Property and Equipment

325,988

360,081

34,092

Buildings in Trust(*2)

111,217

119,571

8,354

Land in Trust

OthersNoncurrent Assets

212,263

237,641

25,378Others(*3)

2,508

2,867

359

Intangible Assets

32,49432,271

(223)

3,632

3,416

(215)

152

152

ー

Others

3,480

3,264

(215)

Deferred Assets

130

136

5

Other Assets
Leasehold and Security Deposits

54,165

FY12/2023
End ofFiscal Year
December 31,
2023

Variance

44,585(9,580)

1,943

2,506

562

35,113

15,568(19,545)

ー

3,000

3,000

15,432

21,521

6,089

Accounts Payable

970

1,130

160

Advances Received

664

764

100

Current Portion of Investment Corporation Bond

42

94

51

119,059

140,390

21,330Investment Corporation Bonds

36,90033,900(3,000)Long-term Loans Payable

76,786

101,242

24,456

4,660

4,780

120

OthersLong-term Liabilities

Tenant Leasehold and Security Deposits

ー

1

1

713

465

(247)

173,225

184,975

11,749187,194

199,051

11,857

21,746

21,746ーReserve for Temporary Difference Adjustment

9,976

9,600

(376)

Reserve for Special Advanced Depreciation

1,174

1,174

ー

Unappropriated Retained Earnings

2,672

13,137

10,464

Derivative Liabilities
OthersTOTAL LIABILITIESNET ASSETS
Unitholders' Capital
Capital Surplus

OthersTOTAL NET ASSETSTOTAL ASSETS

396,799

429,955

33,155TOTAL LIABILITIES AND NET ASSETS(*1) Cash and deposits in trust is included.
(*2) The sum of buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture and fixtures in trust, and construction in progress in trust.
(*3) The sum of machinery and equipment, tools, furniture and fixtures, and construction in progress.

44

809

270

(539)

223,574

244,980

21,405

396,799

429,955

33,155

Appendix 3
Investors Composition and Investment Unit Price1. Major Unitholders and Classifications of Unitholders
Top 10 Major Unitholders
As of the end of December 2023

As of the end of June 2023
Name

Rank

1

No. of Units

%(*)

Rank

836,943

18.73

1

Custody Bank of Japan, Ltd. (Trust)Name

No. of Units%(*)

941,008

20.29

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

2

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

834,232

18.67

2

Custody Bank of Japan, Ltd. (Trust)

841,944

18.15

3

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

228,824

5.12

3

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

255,752

5.51

4

SSBTC CLIENT OMNIBUS ACCOUNT

97,541

2.18

4

BNYM AS AGT/CLTS 10 PERCENT

96,1152.07

5BNYM AS AGT/CLTS 10 PERCENT

88,582

1.98

5SSBTC CLIENT OMNIBUS ACCOUNT

81,205

1.75

6STATE STREET BANK CLIENT - TREATY 505234

74,597

1.66

6

STATE STREET BANK CLIENT - TREATY 505234

75,764

1.63

7

STATE STREET BANK AND TRUST COMPANY 505103

63,887

1.43

7

STATE STREET BANK AND TRUST COMPANY 505103

74,474

1.60

8

JP MORGAN CHASE BANK 385781

60,1381.34

8

JP MORGAN CHASE BANK 385781

63,0091.35

9GOLDMAN SACHS INTERNATIONAL

60,1001.34

9GOLDMAN SACHS INTERNATIONAL

62,8401.35

59,046

1.32

10 STATE STREET BANK AND TRUST COMPANY 505223

57,4731.23

2,403,890

53.81

2,549,584

54.98

10 JP MORGAN CHASE BANK 385632
Total

Total

(*) Ownership ratio shows the total units held by each investor to the total units issued as of respective date (rounded down to two decimal places).

Classifications of Unitholders
As of the end of June 2023
OwnersNo. ofInvestors

No. ofUnits

Individuals & Others

26,137335,383

Financial Institutions(Incl. Securities Firms)

77

2,121,319

Other Domestic Firms

316

107,541

Foreign Firms &Individuals
Total

502

1,902,763

27,032 4,467,006

No. of Investors

0.2%

1.1%
1.8%

As of the end of December 2023

No. of Units

7.5%

42.5%

47.4%

96.6%

No. ofInvestors

No. ofUnits

Individuals & Others

25,727357,171

Financial Institutions(Incl. Securities Firms)

87

2,326,452

Other Domestic Firms

325

113,839

Foreign Firms &Individuals

509

1,839,544

26,6484,637,006

Total

2.4%
Individuals &OthersOwnersFinancial Institutions(Incl. Securities Firms)

Other Domestic
Firms

No. of Investors

0.3%

1.2%
1.9%

No. of Units

7.7%

39.6%
50.1%
96.5%

2.4%

Foreign Firms &Individuals(*) Percentage of investors is percentage of investors in each segment to the total number of investors in JHR, and percentage of investment units is percentage of investment units owned by each segment to the total investment units issued as ofrespective date (both rounded down to one decimal place).

46

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

Market Capitalization
Investment Unit Price of JHR(JPY)

JPY75,900

120,000

JPY351.9Bn

100,000

Total market capitalization:(based on the closing price of January 31, 2024)(*1) Price of the real estate investment securities
may fall depending on the fluctuations of priceof the real estate under management or
profitability, etc., and investors may suffer
losses. Investors may also suffer losses
through the bankruptcy or deteriorated
financial condition of the issuer. For the risks
of investing in JHR 's investment securities,
please refer to JHR 's securities report dated
March 23, 2023, and the mid-term financial
report dated September 22, 2023.
(*2) Including OA

80,00060,000Sep. 2014
PO JPY10.1Bn

Jun. 2015
Jul. 2016
Jun. 2017
PO(*2) JPY10.7Bn PO(*2) JPY34.7Bn PO(*2) JPY18.6Bn

Jan. 2015
Jan. 2016
PO(*2) JPY15.6Bn PO(*2) JPY14.6Bn

Jan. 2019
PO(*2) JPY33.3Bn

Apr. 2013
PO JPY20.5Bn(*) JHR unit price, TSE REIT index and TOPIX are
indexed to the closing price on April 2, 2012,
which equals the base value of 100. REIT
Index of TSE is an index of a weighted
average of the market capitalization of all
REITs listed on TSE.

Sep. 2023
PO JPY11.8Bn(JPY MM)450,000

300,000

Sep. 2012
PO(*2) JPY5.0Bn
150,000

40,00020,00000(*3) Indicate the third-party allotment conducted
March 2021, with sponsor group as allottee.

Comparison withREIT Index and TOPIX of
Tokyo Stock Exchange(TSE)

Mar. 2021
TPA(*3) JPY0.3Bn

600

Investment Unit Price of JHR

TSE REIT Index

500

400

300

200

100

0

47

TOPIX

Appendix 4
Summary of the Asset Management Company

1. Summary of the Asset Management Company(as of February 21, 2024)
Company NameJapan Hotel REIT Advisors Co., Ltd.

Location

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

Establishment

August 10, 2004

Capital

JPY300MM

Shareholders

SCJ One (S) Pte. Ltd., Kyoritsu Maintenance Co., Ltd., ORIX Corporation

Representative Director

Hiroyuki Aoki
Building Lots and Buildings Transaction Business Operator, Governor of Tokyo (4) No. 83613
Discretionary Transaction Agent by Minister of Land, Infrastructure, Transport and Tourism No. 38

Registration and Licenses

Financial Instruments Business Operator, Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trusts Association, Japan
Member of The Japan Investment Advisers Association<Organization Chart>

Shareholders Meeting
AuditorBoard of Directors

Investment and Operation
Committee

Compliance Committee
President & CEO
Compliance Office
Personnel &Administration Group

Business Promotion OfficeFinance and Planning Division

Investment Division
Acquisitions Group

Public REIT Group

Private FundGroup 1

Private FundGroup 2

49

Planning Group

Finance GroupAccounting Group2. Features and Governance of the Asset Management Company
Mission Statement

Code of Conduct
We define "Challenge" and "Teamwork" as the code of conduct for a teammember at JHRA.
In achieving our mission, "connect hotels, people and future," it is essential
to pursue all possibilities and continue exploring to create added value.

We explore the possibility of hotels.

We will always pursue possibilities through "challenge" by each department
and each employee and continue to create added value throughcooperation and collaboration based on "teamwork."

We create new value and lead hotels to a bright future.
We will be the pivot to connect people with various perspectives
and a pioneer for the future of hotel industry.

Challenge

We connect hotels, people, and a bright future.

 Be a self-starter, take initiative and demonstrate
drive Set high goal and strive to achieve goals

Ideas behind the new mission statement•

Through offering opportunities to invest in hotels, we will deliver
attractiveness of hotels to many people.

•

Utilizing our unique asset management know-how and skills,
we will create new value and contribute to the development of
the hotel industry.

•

We will enhance sustainability of hotels and contribute torealizing a society that is friendly to people, local community andenvironment.

•

We will earn trust of a wide range of various stakeholders
involved in the hotel and become the pivot to bring thestakeholders into harmony.

•

We will challenge the status quo, consider all the possibilities fora better solution and become a bridge to the bright future for the
hotels and people.

 Respect creativity and innovation
 Promote challenge, free from fear of failure

Teamwork Respect teamwork and collaborate with team-mates Respect others. Respect values and opinions of others
 Promote "sharing" (idea, knowledge, information,goal, achievement, joy of achievement, lesson, etc.)
 Make effort for open, frank and sincere
communication502. Features and Governance of the Asset Management Company (cont.)
Advanced Expertise Ability to propose transaction schemes, execute transactions, and plan and execute unprecedented measures of asset
management based on an in-depth understanding of hotel operations and a track record of such asset management.
 Extensive experience in renovation and rebranding through collaboration with many hotel lessees and operators.
 Strong and long-term relationships with a large number of hotel lessees and hotel operators.
 High analytical skills and accurate judgment capacity based on rich information and data obtained through a broad networkand high credibility.

Ensured Independence There is no seconded employee from sponsor in JHRA.
 JHRA's Board of Directors of the Asset Management Company comprises a total of six directors: four directors (including one
part-time director) unaffiliated with the sponsor, two part-time directors affiliated with the sponsor, and one part-time
auditor unaffiliated with the sponsor. This structure ensures a highly independent management, a key characteristic of JHRA.
 We established a more rigorous decision-making process for transactions with sponsor-related parties. In principle, JHRA
undergoes deliberations and resolutions by the Investment and Operation Committee, the Compliance Committee which
includes an outside specialist authorized to dismiss proposals, and the Board of Directors Meeting of JHRA.
In addition, in cases where JHR conducts transactions with sponsor-related parties, such transactions shall be conductedupon the approval and resolution by the Board of Directors Meeting at JHR. The officers of JHR are all third parties unrelated
to the sponsor-related parties.
 Since our main sponsor, SC Capital Partners Group is also an independent asset management company, it fully understands
and respects the importance of JHRA's independency. JHRA conducts asset management business based upon its judgment.

51

Disclaimer
This material is prepared and provided solely for the purpose of providing information of Japan Hotel REIT Advisors Co., Ltd ("JHRA") and not to offer, solicit, or do
business, etc. with specific financial instruments including purchase of investment units, or investment corporation bonds of Japan Hotel REIT Investment Corporation("JHR") or any other financial instruments to invest in private funds. Investors are asked to ensure that they make decisions on investment at their own discretion. If any
discrepancy is identified between this translation and the Japanese original, the Japanese original shall prevail.
This material is neither a disclosure document nor an investment report required under or prepared pursuant to the Financial Instruments and Exchange Act, Act on
Investment Trusts and Investment Corporations, Act on Provision of Financial Services and related government ordinances, cabinet office regulations, listing rules by
Tokyo Stock Exchange, regulations of The Investment Trusts Association, Japan, regulations of the Japan Investment Advisers Association or other related rules andregulations.
The statements of JHR and private funds in this material are based on the judgment, evaluation and forecast of JHRA. This material contains forward-looking statements
about financial conditions, operational results, and businesses of JHR, private funds and JHRA, as well as plans and intentions of JHR, private funds and JHRA. Suchforward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance of JHR, private funds and
JHRA to materially differ from those expressed or implied forecasts. Those forecasts are made based on present and future business strategies and assumptions relating
to the political, economic and other circumstances surrounding JHR, private funds and JHRA in the future.
Every effort has been made to ensure the accuracy of the information contained in this material. However, there can be no assurance that the information is accurate,complete, appropriate or fair. The information may be revised or retracted without prior notice.
Regarding the offering and trading of investment units, investment corporation bonds or any form of financial instruments to invest in private funds, financial institutions
may charge you pre-determined handling fees and other charges aside from the price of the investment units, investment corporation bonds or any form of financial
product to invest in private funds. JHRA does not handle the offering and trading of investment units, investment corporation bonds or any form of financial instruments
to invest in private funds.
JHR and private funds managed or advised by JHRA mainly invests in real estate-related assets, primarily hotels which are subject to change in values. Therefore,
holders of investment units, investment corporation bonds or investors of any form of financial instruments to invest in private funds may suffer losses due to economic
conditions including real estate market, securities market, economic situations including interest rate environment, the nature of investment units investment corporation
bonds or any financial instruments to invest in private funds, dependency on mechanisms and related persons of investment corporations or investment vehicle ofprivate funds, changes in legal systems related to real estate (include tax regulations, building regulations and others), damage caused to the real estate-related assets
by natural disasters, fluctuation in prices or profitability of the real estate-related assets, nature of the financial instrument under management, delisting of theinvestment units, or worsening financial position or insolvency.
The contents of this material may not be copied or reproduced without our prior permission.
Japan Hotel REIT Advisors Co., Ltd.
Financial Instruments Trading Company
Director-General of Kanto Local Finance Bureau No. 334
Member of The Investment Trust Association, Japan
Member of The Japan Investment Advisers Association

52

Memo

53