This English translation is provided for information purposes only. If any discrepancy is identified between thistranslation and the Japanese original, the Japanese original shall prevail.
February 23, 2017

Financial Report for the Fiscal Year Ended December 31, 2016
(January 1, 2016 – December 31, 2016)
Japan Hotel REIT Investment Corporation
Listing:
Securities code:
URL:
Representative:

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

Asset Management Company:
Representative:
Contact:

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

Scheduled date to file Securities Report: March 22, 2017
Scheduled date to start dividend payment: March 22, 2017
Preparation of supplementary material on financial report:
Schedule for presentation of financial results:

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

1. Status summary of operation and assets for the fiscal year ended December 31, 2016
(January 1, 2016 – December 31, 2016)(1) Operating results(Percentages show changes from the previous year)

Operating revenue
JPY1M%
22,10727.5
17,343
35.9

Fiscal year ended
December 31, 2016
December 31, 2015

Net income per unit

Operating income
JPY1M%
13,88526.4
10,98845.6

Ordinary income tototal assets

Return on equity (ROE)

JPY
3,462
3,036

Fiscal year ended
December 31, 2016
December 31, 2015

Ordinary income
JPY1M%
12,220
31.5
9,295
60.9

%
7.8
8.1

Net income
JPY1M
12,123
9,294

%
30.4
61.0

Ordinary income tooperating revenue
%
4.4
4.3

%
55.3
53.6

(Note 1) Net income per unit is calculated based on the period-average number of investment units issued.
(Note 2) Net income for the fiscal year ended December 31, 2015 includes gain on sale of real estate properties (¥305 million).

(2) Cash distributions

Fiscal year ended
December 31, 2016
December 31, 2015

Dividend per unit
(Excess of earnings
exclusive)

Total dividends(Excess of earnings
exclusive)

Dividend per unit
resulting fromexcess of earnings

Total dividends
fromexcess of earnings

JPY
3,420
2,975

JPY1M
12,865
9,354

JPY
0
0

JPY1M
0
0

Payout ratio
%
106.1
100.6

Dividend to
net assets
%
7.1
7.7

(Note 1) The source of dividends for the fiscal year ended December 31, 2016 is calculated by adding appropriation for dividends (¥740 million) tounappropriated retained earnings. For details of the appropriation for dividends, please refer to “<Reference Materials 3> Dividend per unit andappropriation for dividends” on page 22.
(Note 2) The source of dividends for the fiscal year ended December 31, 2015 is calculated by adding appropriation for dividends (¥60 million) tounappropriated retained earnings. For details of the appropriation for dividends, please refer to “<Reference Materials 3> Dividend per unit andappropriation for dividends” on page 22.
(Note 3) Payout ratio is calculated using the following formula, rounded off to one decimal place.
Total dividends (total dividends from excess of earnings exclusive) ÷ Net income × 100－

1 －(3) Financial position
Total assets
JPY1M
317,878
240,356

Fiscal year ended
December 31, 2016
December 31, 2015

Net assets

Equity ratio

JPY1M
181,989
129,914

Net assets per unit
JPY
48,37641,318

%
57.3
54.1

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

(4) Cash flows

Fiscal year ended
December 31, 2016
December 31, 2015

Cash flows fromoperating activities
JPY1M
13,68915,862

Cash flows frominvesting activities
JPY1M(64,075)(58,598)

Cash flows from
Cash and cash equivalents
financing activities
at end of year
JPY1M
JPY1M
63,061
26,37342,00913,698

2. Operating forecast for the fiscal year ending December 31, 2017
(January 1, 2017 – December 31, 2017)(Percentages show changes from the previous year)
Operating revenue
JPY1M

Midterm
Full year

11,056
24,530

%
17.7
11.0

Operating income
JPY1M

6,280
14,719%10.5
6.0

Ordinary income
JPY1M

5,447
12,987%
11.9
6.3

Dividend per unit
(Excess of earnings
exclusive)

Net income
JPY1M

5,447
12,986%14.0
7.1

Dividend per unit
resulting fromexcess of earnings

JPY
3,540

JPY
0

(Reference) Estimated net income per unit for the fiscal year ending December 31, 2017 (full year) ¥3,452(Calculated based on the estimate of period-average number of investment units of 3,761,907.)(Note) Reserve for temporary difference adjustment in the amount of ¥332 million is planned to be the source of dividend payment.

* Other(1) Changes in accounting policies, changes in accounting estimates, and restatement of financial statements for prior period after
error corrections(a) Changes in accounting policies due to revisions to accounting standards and other regulations: No change(b) Changes in accounting policies due to other reasons than above (a): No change(c) Changes in accounting estimates: No change(d) Restatement of financial statements for prior period after error corrections: No change(2) Total number of investment units issued and outstanding(a) Total number of investment units issued and outstanding at the end of the fiscal year(including investment units owned by Japan Hotel REIT Investment Corporation (hereinafter referred to as “JHR”))
As of December 31, 2016
3,761,907 units
As of December 31, 2015(b) Number of JHR’s own investment units held at the end of the fiscal year
As of December 31, 2016
As of December 31, 2015

3,144,227 units
0 units
0 units(Note) For the number of investment units serving as the basis of computation of net income per unit, please refer to “Notes on per unit information” on page 41.

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

* Appropriate use of forecasts of results and other special items
Forward-looking statements presented in this financial report including operating forecasts are based on information currently
available to us and on certain assumptions we deem to be reasonable. As such, actual operating and other results may differ
materially from these forecasts due to a number of factors. Furthermore, we do not intend to guarantee any dividend amount by
this forecast. For the assumptions of the operating forecast and notes for the use of operating forecast, please refer to “2.
Investment policies and operating results; (2) Operating results; (B) Outlook for the next fiscal period” on page 8 and“Assumptions of the operating forecast for the midterm and full year of the fiscal year ending December 31, 2017 (18th period)”on page 11.

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

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

－

3 －(2) Operational role, name and overview of related business operations of the investment corporation and theinvestment corporation’s related parties
Please refer to the most recent Securities Report (submitted on March 23, 2016) for the operational role, name and overview ofrelated business operations of the investment corporation and the investment corporation’s related parties other than the relatedparties presented below.

Operational role

Name

Overview of related business operations
An investment corporation bonds trustee agreement and administrative agent
agreement were concluded with Resona Bank, Limited on November 1,
2016. As an administrative agent under the Act on Investment Trusts andInvestment Corporations (Act No. 198 of 1951, as amended; hereinafterreferred to as the “Investment Trusts Act”) (of Article 117, item 2, item 3 anditem 6 of the Investment Trusts Act, those matters concerning investment
corporation bonds), Resona Bank, Limited shall perform the following withrespect to the seventh unsecured investment corporation bonds (with pari

Resona Bank, Limited

passu covenants among corporation bonds) based on the abovementioned
trustee agreement: (1) Delivery of the paid-in amount received from theparties purchasing and underwriting investment corporation bonds, (2)Preparation and keeping of the investment corporation bonds registry andother business affairs related to the investment corporation bonds registry, (3)Business affairs related to payment of interest or redemption amount to theinvestment corporation bondholders, (4) Business affairs related to receipt ofrequests from the investment corporation bondholders, and (5) Business

Administrative
agent(investment

operations as a trustee of investment corporation bonds.
A fiscal, issuing and paying agency agreement was concluded with
Mitsubishi UFJ Trust and Banking Corporation on November 1, 2016. As an

corporation bonds)

administrative agent under the Investment Trusts Act (of Article 117, item 2,
item 3 and item 6 of the Investment Trusts Act, those matters concerninginvestment corporation bonds), Mitsubishi UFJ Trust and Banking
Corporation shall perform the following with respect to the eighth unsecured
Mitsubishi UFJ Trust andBanking Corporation

investment corporation bonds (with pari passu covenants among specified
corporation bonds) based on the abovementioned fiscal, issuing and paying
agency agreement: (1) Delivery of the paid-in amount received from theparties purchasing and underwriting investment corporation bonds, (2)Preparation and keeping of the investment corporation bonds registry andother business affairs related to the investment corporation bonds registry, (3)Business affairs related to payment of interest or redemption amount to theinvestment corporation bondholders, (4) Business affairs related to receipt ofrequests from the investment corporation bondholders, and (5) Businessaffairs related to fiscal agent of investment corporation bonds.

2. Investment policies and operating results(1) Investment policies
Disclosure is omitted because there is no significant change from “Investment policies,” “Investment targets” and “Distribution
policy” in the most recent Securities Report (submitted on March 23, 2016) and Securities Registration Statement (submitted
on July 7, 2016).

(2) Operating results(A) Overview of the fiscal period under review(a) Brief history and principal activities
JHR was established under the Investment Trusts Act on November 10, 2005 and was listed on the Real Estate Investment
Trust (REIT) section of the Tokyo Stock Exchange (Securities code: 8985) on June 14, 2006.

－

4 －JHR entrusts the asset management to Japan Hotel REIT Advisors Co., Ltd. (hereinafter referred to as the “AssetManagement Company”). Focusing on importance as social infrastructure and profitability as investment real estate of
hotels, JHR primarily invests in real estate which are wholly or partially used as hotels or real estate equivalents of such
real estate or related assets that are backed by such real estate or real estate equivalents (hereinafter referred to as “RealEstate for Hotels, etc.”).
JHR, the former Nippon Hotel Fund Investment Corporation (hereinafter referred to as the “former NHF”), merged withthe former Japan Hotel and Resort, Inc. (hereinafter referred to as the “former JHR”) with an effective date of April 1, 2012
(hereinafter referred to as the “Merger”) and changed its name to Japan Hotel REIT Investment Corporation. Since theMerger, JHR has carried out seven public offerings for capital increase and continuously acquired “highly-competitive
hotels” in mainly “strategic investment areas” where domestic and inbound leisure demand can be expected over the
medium to long term.
By implementing the aforementioned growth strategy, JHR has expanded its asset size while improving the quality of its
portfolio through new property acquisitions of 21 properties amounting to ¥177,349 million (acquisition price basis) intotal in the nearly five years since the Merger. As a result, JHR had a portfolio of 41 properties with a combined acquisition
price of ¥286,801 million and a total number of investment units issued and outstanding of 3,761,907 units at the end of the
fiscal period under review (December 31, 2016).
(b) Investment performance for fiscal period under review
During the fiscal period under review (12-month period from January 1, 2016 through December 31, 2016), the Japanese
economy saw improvement in corporate earnings come to a standstill due in part to a heightened sense of uncertainty overthe future with such factors in Japan as progress in appreciation of the yen since the beginning of the calendar year and the
Kumamoto Earthquake occurred in April 2016 and such factors in overseas markets as slowdown in the Chinese and otheremerging economies and the UK’s decision to leave the EU. However, backed also by progress in depreciation of the yen
against the dollar and strong U.S. economy after the U.S. presidential election, the rising expectations for the economic
outlook and other factors led to the Japanese economy continuing to show a moderate recovery trend, despite delay inimprovement seen in some areas.
Amid such, the tourism market was in an environment in which, in addition to steady domestic leisure demand, thegovernment’s promotion of policies aimed at making Japan a tourism nation and other factors also led to the increase in thenumber of overseas (inbound) tourists visiting Japan, primarily from Asian countries, continuing strong. The number of
inbound tourists, which surpassed 10 million for the first time in history in 2013, have since marked new record highs of
13.4 million (up 29.4% year-on-year) in 2014, 19.7 million (up 47.1% year-on-year) in 2015 and, although at a slower rateof increase than the previous year, 24.0 million (up 21.8% year-on-year) in 2016. Under such circumstances, the Japanese
government set a goal to increase the number of foreign tourists visiting Japan to 40 million by 2020 and 60 million by
2030, and established and promoted measures for realization of a tourism nation. With such expectations for growth ofJapan’s tourism industry and hotel industry continuing, many of the hotels owned by JHR achieved strong operating
performance, mainly in the rooms department, despite some impact of new hotel supply, and the hotel investment market
continued to be in a brisk state.
In such an environment, in January 2016, JHR implemented capital increase through public offering, the sixth since theMerger, to complement a decrease in cash on hand, a decrease equivalent to the cash on hand used to fund the acquisitionof ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel) in December 2015 for an acquisition price of¥17,320 million. JHR also used the proceeds from the public offering to newly acquire CANDEO HOTELS UENO-KOEN,
located in the Ueno area in central Tokyo, for an acquisition price of ¥6,705 million. In addition, in July 2016, JHR
implemented a global offering, the first for JHR, to complement a decrease in cash on hand, a decrease equivalent to the
cash on hand used to fund the acquisition of Hotel Centraza Hakata in April 2016 for an acquisition price of ¥7,197 million.
JHR also used the proceeds from the global offering to acquire HOTEL VISTA GRANDE OSAKA (On November 1, 2016,
completed rebranding of the hotel and changed the name to Holiday Inn Osaka Namba. The same shall apply hereinafter.)for an acquisition price of ¥27,000 million, Hilton Nagoya for an acquisition price of ¥15,250 million and HOTELASCENT FUKUOKA for an acquisition price of ¥4,925 million for a total of three properties with a combined acquisition
price of ¥47,175 million.
－

5 －JHR has been pursuing expansion of asset size through continuous property acquisitions by leveraging such strengths as
high recognition as Japan’s largest REIT specializing in hotel properties and ability to propose diverse acquisition schemes
and execute transactions. In terms of portfolio, too, JHR has been striving to improve the quality of its portfolio throughsuch measures as making international brands, which have a competitive advantage in attracting inbound tourists at a highpriced category, account for a greater share of the portfolio and further diversifying the portfolio by geographical area.
JHR has been implementing active asset management, which is the aggressive and proactive pursuit of greater profitability
and asset value of owned hotels. By implementing active asset management, such as measures to improve ADR (average
daily rate) through investing in guest room renovations and other strategic renovations, change of operators to those best
suited to the hotel characteristics or rebranding, change of the rent structure or upward revision of the rent aimed at
capturing upside potential, JHR achieved enhanced performance of hotels and other results, and thereby managed toincrease variable rent including revenue sharing and income from management contracts.
With regard to status of operations of the five hotels (hereinafter referred to as the “five HMJ hotels”) (Note 1) which JHRleases to Hotel Management Japan Co., Ltd. (hereinafter referred to as “HMJ”) under variable rent contracts, and hotels
which JHR leases to HMJ Group companies under variable rent contracts, namely, Okinawa Marriott Resort & Spa,
ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel), Hotel Centraza Hakata and Holiday Inn Osaka
Namba, many of these hotels have produced a year-on-year increase both in sales and GOP (gross operating profit), led by
the rooms department, during the fiscal period under review. The rooms department aimed to generate greater earnings withincrease in ADR to drive growth. For further details of sales, GOP and other management indicators for the HMJ Group
Hotels (Note 1), please refer to “<Reference Materials 2> <1> Sales and GOP of the HMJ Group Hotels” on page 18 and“D. Overview of the hotel business; (2) Major indicators of the hotel business; (a) The HMJ Group Hotels” on page 67.
Moreover, inbound and domestic leisure demand were successfully attracted by the six hotels (Note 2) for which AAPCJapan K.K. (hereinafter referred to as “Accor”), a Japanese subsidiary of Accor Hotels headquartered in Paris, France,
serves as the operator (hereinafter referred to as the “six Accor hotels”). Many of these hotels posted a year-on-yearincrease both in sales and GOP, mainly led by an increase in ADR. For further details of sales, GOP and other management
indicators for the six Accor hotels, please refer to “<Reference Materials 2> <2> Sales and GOP of the Six Accor Hotels”
on page 19 and “D. Overview of the hotel business; (2) Major indicators of the hotel business; (b) The Six Accor Hotels”
on page 69.
Furthermore, efforts were made to attract inbound tourists at the six the b hotels (Note 3), which are leased to thesubsidiaries of the Ishin Hotels Group with a variable rent structure, and consequently a year-on-year increase wasachieved both in sales and GOP in the case of the five the b hotels for which year-on-year comparisons can be made. For
further details of sales, GOP and other management indicators for the six the b hotels, please refer to “<Reference Materials
2> <3> Sales and GOP of the Six the b Hotels” on page 21 and “D. Overview of the hotel business; (2) Major indicators of
the hotel business; (c) The Six the b Hotels” on page 69.
In addition to such increase in income by increasing variable rent, etc., JHR has also been striving to reduce the costs ofeach item under real estate operating costs, general and administrative expenses and borrowing costs through persistenttalks with relevant parties and other measures. Furthermore, ¥95 million in repair expenses related to the Kumamoto
Earthquake were recorded in extraordinary loss in the fiscal period under review.
(Note 1)

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

(Note 2)

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

(Note 3)

Represents the six hotels, namely, the five hotels comprising the b akasaka-mitsuke, the b ikebukuro, the b ochanomizu, the b hachioji
and the b hakata (hereinafter referred to as “the five the b hotels”) plus the b suidobashi. The same shall apply hereinafter.

(c) Funding status
JHR procured a total of ¥14,618 million by way of capital increase through public offering in January 2016 and capital－

6 －increase through third-party allotment in February 2016, as well as ¥2,000 million in long-term loans, to complement a
decrease in cash on hand, which is a decrease equivalent to the cash on hand used to fund the acquisition of ACTIVEINTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel) in December 2015, and to acquire CANDEO HOTELS
UENO-KOEN. In addition, between February and March 2016, JHR refinanced ¥11,214 million in existing long-termloans with reduction in part (amount reduced by ¥114 million), and also refinanced ¥9,000 million in existing short-termloans into long-term debts by procuring ¥6,000 million in long-term loans and ¥3,000 million in investment corporation
bonds.
Furthermore, after using ¥7,000 million in short-term loans and cash on hand to acquire Hotel Centraza Hakata in April
2016, JHR procured a total of ¥34,740 million by way of capital increase through public offering in July 2016 and capitalincrease through third-party allotment in August 2016, as well as ¥14,000 million in long-term loans, to complement a
decrease in cash on hand, a decrease equivalent to the cash on hand used to fund the acquisition of Hotel Centraza Hakata,and to acquire Holiday Inn Osaka Namba, Hilton Nagoya and HOTEL ASCENT FUKUOKA.
Moreover, in November 2016, JHR issued ¥10,100 million in investment corporation bonds to complement a decrease in
cash on hand, which is a decrease equivalent to the cash on hand used to fund the repayment of ¥2,500 million in
investment corporation bonds due for redemption, and to fund the prepayment of ¥7,000 million in existing short-termloans and new acquisition of real estate, etc. in the future. In addition, in December 2016, JHR procured ¥100 million fromThe Higo Bank, Ltd., a local bank that is a new lender for JHR, to fund the repair expenses for Dormy Inn Kumamoto that
had suffered damage from the Kumamoto Earthquake.
Consequently, as of the end of the fiscal period under review, balance of interest-bearing debt totaled ¥126,179 million,
including short-term loans payable of ¥1,800 million, current portion of long-term loans payable of ¥9,679 million, longterm loans payable of ¥92,099 million and investment corporation bonds of ¥22,600 million, and the ratio of interestbearing debt to total assets at end of year (Note 4) stood at 39.7%.
Through refinancing and newly procuring funds, JHR was able to further diversify funding methods, while advancing otherefforts like lowering funding costs and extending and spreading out maturity dates. Concurrently, JHR concluded interest
rate swap contracts to fix the interest on ¥34,400 million in total on loans in March, July and August 2016 in order tobenefit from the current interest rate environment and to hedge against risks of interest rates rising in the future. These
actions brought the fixed rate ratio (including the interest rate cap purchase portion) on total interest-bearing debt at end ofyear to around 98%.
(Note 4)

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

As of December 31, 2016, JHR’s issuer ratings were as follows.
Rating and Investment Information, Inc. (hereinafter referred to as “R&I”) changed JHR’s issuer rating from “A− (Positive)”
to “A (Stable)” on October 5, 2016, and Japan Credit Rating Agency, Ltd. (hereinafter referred to as “JCR”) also changed
JHR’s long-term issuer rating from “A (Positive)” to “A+ (Stable)” on October 17, 2016.
Rating agency

RatingR&I

A(Stable)JCRA+(Stable)(d) Financial results
As a result of the abovementioned asset management, operating revenue, operating income and ordinary income were¥22,107 million, ¥13,885 million and ¥12,220 million, respectively, for the fiscal period under review (12-month period
from January 1, 2016 to December 31, 2016). Net income was ¥12,123 million.
With regard to dividends, it was decided that ¥12,866 million, which was calculated by adding a reversal of reserve fordividends (appropriation for dividends) of ¥740 million to unappropriated retained earnings of ¥12,126 million, would all
be distributed except for fractions of less than one yen of dividend per unit. Consequently, the dividend per unit came to－7 －¥3,420.
For details of the appropriation for dividends for the fiscal period under review, please refer to “<Reference Materials 3>
Dividend per unit and appropriation for dividends” on page 22.
(B) Outlook for the next fiscal period(a) Investment policies and issues to be addressed
In 2017, the Japanese economy is expected to be on a moderate recovery, due in part to the effects of various government
policies, while the employment and income environment continues to improve. However, with many uncertainties overpolicy management under the new U.S. president, the French presidential election, etc., attention must be paid to theuncertainty in overseas economies and the effects of fluctuations in the financial and capital markets. Moreover, in theenvironment surrounding the tourism industry, it is expected that JHR will benefit from a further increase in the number ofdomestic tourists and inbound tourists, thanks to increase in personal income buoyed by economic growth in the Asian
region, visa waivers and relaxation of visa issuance requirements, increase in international flight arrival and departure slots
and other infrastructure developments, among other factors, in addition to steady domestic leisure demand. On the other
hand, a close watch must be kept on the brisk hotel investment market, increase in supply from new development of hotels
following trends of increase in inbound tourists, the state of minpaku (rentals of private homes as accommodation for a fee)and other future supply-demand balance. Under such circumstances, JHR intends to manage assets based on the approachdescribed below aiming to make investing in JHR more appealing.
Internal growth
JHR will work to boost sales and GOP of hotels operated under variable rent contracts, which are the HMJ Group Hotels
and the six the b hotels, as well as of the six Accor hotels that are mainly operated under a management contract structure,with an aim to maximize variable rent and income from management contracts receivable by JHR. To achieve this goal,
JHR will focus efforts on seeking the cooperation of relevant parties in shifting from competition based on price tocompetition based on value in an aim to become prominent in the market in terms of both facilities and services. This will
involve requesting each hotel lessee, its operations support company and its operator to implement active asset
management including marketing initiatives to attract a wider range of demand, measures to maintain and increase room
rates, etc., and also implementing strategic capital expenditures.
For hotels with only fixed rent contracts, JHR will increase its efforts to monitor operating conditions and pay carefulattention to each tenant’s ability to bear the rent costs. For the hotels at which the ability to bear rent costs has beenenhanced through better performances, JHR will conduct negotiations to revise rents upward and introduce revenue sharing
in order to increase JHR’s revenue.
In addition, JHR will carry out an ongoing program of facilities and equipment maintenance and improvement to ensureeach hotel becomes prominent in the market and to maintain and enhance asset value.
External growth
In terms of external growth strategy, JHR will keep its focus on acquiring highly-competitive hotels in areas where
attracting “domestic and inbound leisure demand” can be expected over the medium to long term as JHR has done to date.
On that basis, the policy is that limited-service hotels, full-service hotels and resort hotels are all investment targets, but
JHR will only acquire properties with competitive advantages in terms of both buildings, facilities, etc. (infrastructure) andthe capabilities of the hotel lessee and operator (services) on a property-by-property basis.
In the hotel investment market, competition over acquisition will likely become increasingly fierce due to the listing of new
REITs specializing in hotels and other factors. While differentiating itself from the others by leveraging first-moveradvantages, JHR intends to keep making its position in the industry strong while acquiring properties.
Specifically, JHR will utilize its pipelines as a major player in the hotel investment market, ability to collect information on
operations of hotels in general, proposal and implementation of a variety of rent structures including the management
contract structure, and collaboration with HMJ and excellent networks with major hotel operators, among other strengths.
By doing so, JHR will acquire properties while maintaining its superiority in the hotel investment market.
－

8 －Finance strategy
JHR seeks to maintain and enhance the relationships of trust with financial institutions with which it does business, while
implementing operations with a conservative financial strategy as a basic policy putting importance on ensuring financial
stability and strength by continuously diversifying the means of financing. It aims to conduct financial operations bykeeping the ratio of interest-bearing debt to total assets at no larger than 50% as in the past. In addition, when seeking new
funding for property acquisitions or refinancing existing debt, JHR will work to reinforce its existing relationships withmultiple lenders and further diversify funding methods while seeking to spread out the maturity dates of its debt andconsidering the balance with borrowing costs.
Furthermore, while monitoring the conditions of the interest rate market, JHR aims to further improve its financial
foundation by extending maturity dates and managing risk of interest rates market by fixing rates, etc.
Policy on the handling of negative goodwill
Starting from the fiscal year ending December 31, 2017 (18th period), JHR will commence paying out dividends throughreversal of dividend reserve (reserve for temporary difference adjustment, starting from the fiscal year ending December 31,
2017 (18th period)) in association with partial amendments to the “Ordinance on Accountings of Investment Corporations”
and the “Regulation for Real Estate Investment Trusts and Real Estate Investment Corporations” of The Investment Trusts
Association, Japan.
Specifically, JHR will transfer the remaining balance of dividend reserve (¥13,127 million) attributable to the gain on
negative goodwill in the cash dividends statements for the fiscal year ended December 31, 2016 (17th period) to “reserve
for temporary difference adjustment,” and reverse ¥262 million (hereinafter called “50-year amortization amount ofnegative goodwill”), which is an amount equivalent to 2% (1/50) of the remaining balance of the dividend reserve, to pay
out as dividends, with the remaining balance of the reserve for temporary difference adjustment set as the maximum
amount, for every year from the fiscal year ending December 31, 2017 (18th period).
Also, in cases of incurrence of losses caused by property dispositions, impairment loss of assets or on retirement of fixed
assets, etc. and in case of dilution of dividend per unit due to the issuance of new investment units through public offerings,
etc., JHR plans to pay extra amount in addition to the 50-year amortization amount of negative goodwill (¥262 million) andreverse the negative goodwill.
As for amortizations, etc. of fixed-term leasehold of land and asset retirement obligations (Note 2) of Hotel Centraza
Hakata and HOTEL ASCENT FUKUOKA, which have been subject to the previous “Policy on Handling of Negative
Goodwill,” JHR plans to include the amortizations, etc. in the 50-year amortization amount of negative goodwill instead of
adding them to the 50-year amortization amount of negative goodwill to reverse the negative goodwill.
In response to the above-mentioned new policy, the amount to be added to dividends by reversing negative goodwill fromthe fiscal year ending December 31, 2017 (18th period) plans to be 50-year amortization amount of negative goodwill(¥262 million) or more, with the maximum amount set at the remaining balance of the reserve for temporary difference
adjustment.
As for the year ending December 31, 2017 (18th period), JHR expects ¥332 million, which is the 50-year amortization
amount (¥262 million) plus loss on retirement of noncurrent assets (¥70 million) as additional amounts to dividends byreversing the negative goodwill.
(Note 1)The policy may change due to a resolution of the board of directors, and it does not guarantee the method of reversing the reserve fortemporary difference adjustment, and amounts to be reversed, etc., in the future.

(Note 2)

The amount of amortizations, etc. for the fixed-term leasehold of land and asset retirement obligations of Hotel Centraza Hakata and
HOTEL ASCENT FUKUOKA acquired in the fiscal year ended December 31, 2016 (17th period) plans to be ¥152 million for the fiscal
year ending December 31, 2017 (18th period).

(b) Significant subsequent events
Not applicable.
－

9 －(c) Operating forecast
The following is JHR’s operating forecast for the midterm of the fiscal year ending December 31, 2017 (18th period) andthe full year of the fiscal year ending December 31, 2017 (18th period). For the assumptions of the operating forecast,please refer to “Assumptions of the operating forecast for the midterm and full year of the fiscal year ending December 31,
2017 (18th period)” on page 11.
Midterm of the fiscal year ending December 31, 2017 (18th period)
Operating revenue¥11,056 million
Operating income
Ordinary income¥6,280 million¥5,447 million

Midterm net income¥5,447 million

Full year of the fiscal year ending December 31, 2017 (18th period)
Operating revenue¥24,530 million
Operating income
Ordinary income¥14,719 million¥12,987 million

Net income
Dividend per unit

¥12,986 million¥3,540

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

－10 －Assumptions of the operating forecast for the midterm and full year of the fiscal year ending December 31, 2017 (18th period)
Item
Calculation
periodAssets undermanagement

Assumptions
・Midterm (18th Period) : January 1, 2017 through June 30, 2017 (181 days)
・Full year (18th Period) : January 1, 2017 through December 31, 2017 (365 days)
・The 41 properties owned by JHR as of today are assumed, and it is also assumed that there will be no change in assets(acquisitions or dispositions, etc.) through the end of the fiscal year ending December 2017 (18th period). However, theactual results may fluctuate depending on the changes in assets under management that may take place.

・Operating revenue is calculated based on leases and other contracts effective as of today and in consideration ofcompetitiveness of hotels, market environment and other factors. If there are lease contracts with regards tofacilities other than hotels, such as retail facilities and offices, etc., operating revenue calculated based on the said
lease contracts is included.
・Rents, etc. of the main hotels are calculated based on the following assumptions.
(1) The Five HMJ Hotels
The assumptions of the fixed rent and variable rent for the five HMJ hotels are as follows.
Annual rent (¥6,969 million) = Fixed rent (¥3,221 million/year) + Variable rent
Variable rent = [(a) Total GOP of the five HMJ hotels – (b) GOP base amount] × 85.0%(Unit: millions of yen)
Total GOP of
the five HMJ hotels

GOP base amount(b)

Variable rent((a) – (b)) × 85.0%(a)Midterm

2,935

1,675

1,071

Full year

7,760

3,351

3,748

(*) Please refer to “<Reference Materials 2> <1> Sales and GOP of the HMJ Group Hotels” below for sales of thefive HMJ hotels.
(2) Okinawa Marriott Resort & Spa
Operating

The fixed rent and variable rent of Okinawa Marriott Resort & Spa is calculated as follows.
Annual rent (¥1,095 million) = Fixed rent (¥550 million/year) + Variable rent

revenue

Variable rent = [(a) Hotel GOP – (b) GOP base amount] × 90.0%(Unit: millions of yen)
Hotel GOP(a)

GOP base amount(b)

Variable rent((a) – (b))×90.0%

Midterm

348

350

－

Full year

1,305

700

545

(*)

Please refer to “<Reference Materials 2> <1> Sales and GOP of the HMJ Group Hotels” below for sales of
Okinawa Marriott Hotel Resort & Spa.

(3) ACTIVE-INTER CITY HIROSHIMAACTIVE-INTER CITY HIROSHIMA is a complex facility composed of a hotel building, an office building, anda retail zone. Rent for each facility is calculated as follows.
(a) Hotel building (Sheraton Grand Hiroshima Hotel)
Annual rent (¥641 million) = Fixed rent (¥348 million/year)+ Variable rent
Variable rent = [(a) Hotel GOP – (b) GOP base amount] × 82.5%(Unit: millions of yen)
Hotel GOP(*)

GOP base amount

Variable rent

(a)

(b)

((a) – (b)) × 82.5%

Midterm

364

234

107

Full year

823

468

293

Please refer to “<Reference Materials 2> <1> Sales and GOP of the HMJ Group Hotels” below for sales ofSheraton Grand Hiroshima Hotel.
－

11 －

Item

Assumptions(b) Office building and retail zone
Rent from the office building and the retail zone is expected to be ¥219 million for the midterm and ¥439
million for the full year. These figures include ¥8 million for the midterm and ¥16 million for the full year as
variable rent pursuant to an agreement for revenue sharing with some retail tenants.
(4) Hotel Centraza Hakata
The fixed and variable rent of Hotel Centraza Hakata is calculated as follows.
Annual rent (¥758 million) = Fixed rent (¥400 million) + Variable rent
Variable rent = [ (a) Hotel GOP – (b) GOP base amount ] × 90.0%(Unit: millions of yen)
Hotel GOP(a)

GOP base amount(b)

Variable rent((a) – (b)) × 90.0%

Midterm

409

212

177

Full year

823

425

358

(*) Please refer to “<Reference Materials 2> <1> Sales and GOP of the HMJ Group Hotels” below for sales of Hotel
Centraza Hakata.

(5) Holiday Inn Osaka Namba
The fixed and variable rent of Holiday Inn Osaka Namba is calculated as follows.
Annual rent (¥1,384 million) = Fixed rent (¥576 million) + Variable rent
Variable rent = [ (a) Hotel GOP - (b) GOP Base Amount ] × 92.5%(Unit: millions of yen)

Operatingrevenue(*)

Hotel GOP(a)

GOP Base Amount(b)

Variable rent((a)－(b))× 92.5%

Midterm

727

325

372

Full year

1,523

650

808

Please refer to “<Reference Materials 2> <1> Sales and GOP of the HMJ Group Hotels” below for sales ofHoliday Inn Osaka Namba.

(6) The Six Accor Hotels
Income from management contracts and variable rent of the six Accor hotels(Unit: millions of yen)

Midtermibis
Tokyo
Shinjuku

ibis Styles
Kyoto
Stationibis Styles
Sapporo

201

264

238

MercureSapporoMercureOkinawa
Naha

MercureYokosuka

Total

239

220

154

1,319

Full year
413
572
592
604
483
257
2,924
(*1) Please refer to “<Reference Materials 2> <2> Sales and GOP of the Six Accor Hotels” below for sales and
GOP of the six Accor hotels.
(*2) For income from management contracts, it is assumed that each hotel’s GOP amount is recognized as income
from management contracts and the management contract fees to be paid by JHR are recognized as an
operating expense. In cases where certain revenue from non-hotel tenant(s), etc. is included in the hotel’s
GOP, such tenant revenue is subtracted from GOP to calculate income from management contracts. Suchtenant revenue is recognized as parking area rent.
(*3) Mercure Sapporo includes variable rent which is linked to the sales of tenant(s) other than the hotel.
(7) The Six the b Hotels
Fixed and variable rent of the six the b hotels (midterm)
the b
the b
the b
akasakasuidobashi
ikebukuro
mitsuke
68(Unit: millions of yen)the bochanomizu

the bhachioji

the bhakata

Total

108

34

60

44

359

Fixed (*1)

42

Variable

18

76

77

21

47

66

307

Total

60

144

186

56

108

111

667

－

12 －

Item

Assumptions

Fixed and variable rent of the six the b hotels (full year)
the b
the b
the b
akasakasuidobashi
ikebukuro
mitsuke(Unit: millions of yen)the bochanomizu

the bhachioji

the bhakataTotal

Fixed (*1)

84

136

217

69

121

89

719

Variable

42

144

153

45

94

144

625

Total

127

280

371

114

216

234

1,345

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

Full year

Smile Hotel Nihombashi Mitsukoshimae

19

19

Hotel Vista Kamata Tokyo－

23

Chisun Inn Kamata

38

80

Hotel Keihan Universal City
Operatingrevenue(Unit: millions of yen)

Undisclosed (*)

Hotel Sunroute Shinbashi

88

Undisclosed (*)

88

Hilton Tokyo Bay

Undisclosed (*)

Undisclosed (*)

Hilton Nagoya

Undisclosed (*)

Undisclosed (*)

Total

850

1,490

(*) Undisclosed since tenants that concluded lease agreements did not agree to disclose rent revenue, etc.
・The following is the breakdown of variable rent and income from management contracts.
<Breakdown of variable rent for the fiscal year ending December 2017 (18th period)> (Unit: millions of yen)

Operatingexpenses

Midterm

Full year

The Five HMJ Hotels

1,071

3,748

Okinawa Marriott Resort & Spa－

545

ACTIVE-INTER CITY HIROSHIMA

115

309

Hotel Centraza Hakata

177

358

Holiday Inn Osaka Namba

372

808

The Six Accor Hotels

1,319

2,924

The Six the b Hotels

307

625

Other seven hotels with variable rent

850

1,490

Total (28 hotels)

4,213

10,811(*) For details of variable rent and income from management contract, please refer to “D. Overview of the hotelbusiness (1) Rent structures of hotels with variable rent, management contract or revenue sharing”on page 66.
・With respect to real estate leasing expenses, which constitute a major part of the operating expenses, expenses otherthan depreciation are calculated based on historical data, and variable factors are reflected in the calculation.
・It is assumed that ¥1,491 million will be recognized as expenses for fixed asset tax, city planning tax and other taxes
and public dues.
・In general, fixed asset tax and city planning tax and other taxes and public dues on acquired assets are settled withthe previous owners at the time of acquisition, calculated on a pro rata basis of the holding period. For JHR, such
settlement amount is included in the acquisition price, and it will not be recognized as expenses for the calculation
period. Also, the fixed asset tax and city planning tax and other taxes and public dues to be recorded as expenses forthe fiscal year ending December 2017 (18th period) for the five properties (CANDEO HOTELS UENO-KOEN,
Hotel Centraza Hakata, Holiday Inn Osaka Namba, HOTEL ASCENT FUKUOKA, and Hilton Nagoya) acquired in
the fiscal year ended December 2016 (17th period) are assumed to be ¥175 million (equivalent to nine months).
－

13 －

Item

Assumptions
・Depreciation is calculated using the straight-line method, and is estimated to be ¥3,639 million, including the planned
capital expenditures ¥2,864 million (capital expenditures I ¥1,841 million, capital expenditures II ¥529 million, andcapital expenditures III ¥493 million (*)) for fiscal year ending December 2017 (18th period).
(*) JHR classifies capital expenditures into the following three categories. (I) Capital investment related to renewal ofOperatingexpensesbuildings, facilities, and equipment which is required to maintain proper values of properties, (II) capital
investment for fixtures and furniture that are not directly related to building structure or facilities but necessary for
operating hotels, and (III) strategic capital investment for renovating guest rooms, etc. for maintaining/improving
the competitiveness of the hotels.
・Repair expenses for buildings are recognized as expenses in the estimated amount necessary for each operating period.
Please note that the repair expenses of each operating period may differ materially from the forecast amount for various
reasons, such as; (1) Emergency repair expenses may be necessary due to damage to buildings from unexpected causes;(2) The amount of repair expenses generally tends to increase in difference over time; and (3) Repair expenses are not

Nonoperating
expensesrequired on a regular basis.
・¥1,734 million is expected for all non-operating expenses, including interest expense, arrangement fee, amortization for
the following (1) handling fees and (2) derivative instruments (interest rate caps).
・Expenses for issuance of new investment units and secondary offering are amortized over a period of three years by thestraight-line method.
・Interestbearing debt

・The balance of interest-bearing debt (sum of loans and investment corporation bonds) was ¥126,179 million as ofDecember 31, 2016, and it is assumed that the balance of interest-bearing debt will be ¥125,449 million as ofDecember 31, 2017.
It is assumed that the contractual repayment in the fiscal year ending December 2017 (18th period) in the amount of¥729 million will be paid by cash on hand.

Issuance of・The number of investment units issued as of today (3,761,907 units) is assumed.

investment
units

・It is assumed that there will be no additional issuance of investment units through to the end of the fiscal year ending
December 2017 (18th period).
・Dividend per unit for the fiscal year ending December 2017 (18th period) is calculated based on the following
assumptions.
Net income¥12,986 million

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

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

Loss on retirement of noncurrent assets (*2)

¥70 million

Distributable amount¥13,319 million

Total number of investment units issued

3,761,907 units

Dividend per unit(*1)¥3,540JHR will transfer the remaining balance of dividend reserve ((¥13,127 million) attributable to the gain on
negative goodwill to “reserve for temporary difference adjustment,” and reverse ¥262 million (hereinafter
called “50-year amortization amount of negative goodwill”), which is an amount equivalent to 2% (1/50) of the

Dividend per
unit

remaining balance of the dividend reserve, to pay out as dividends, with the remaining balance of the reserve
for temporary difference adjustment set as the maximum amount, for every year from the fiscal year ending
December 2017 (18th period).
Since the remaining balance of dividend reserve and the 50-year amortization amount are the forecast amountafter deducting the forecast amount of the reversal for the fiscal year ended December 2016 (17th period), theseamounts may fluctuate in the future.
(*2)

The amount recognized as a loss on retirement of noncurrent assets will be appropriated by reserve fortemporary difference adjustment (negative goodwill) by adding the amount to the 50-year amortization amountand is expected to have no impact on dividend per unit.

・Dividend per unit may fluctuate due to various causes, such as fluctuation of rent revenue resulting from transfer ofassets under management, change of tenants, etc. at hotels, change in the business environment for hotel business oftenants, etc., unexpected repairs, and actual number of new units issued, etc.
－

14 －

Item

Assumptions
・ The remaining balance of the reserve for temporary difference adjustment (negative goodwill) after theappropriation of the reserve for temporary difference adjustment (negative goodwill) for dividends for the fiscal year
ending December 2017 (18th period) is expected to be ¥12,794 million.

Dividend
per unit
resultingfrom excess

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

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

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

<Reference Materials 1> Highlights of the operating forecast and forecast of dividend(1) The following table provides comparison and major causes of variance between actual results of fiscal year

ended December 2015 (16th period) and actual results of fiscal year ended December 2016 (17th period).
(Unit: millions of yen)

Properties

16th Period

17th Period

Actual(A)

Actual(B)(B)-(A)

Other
Properties
(*4)

36

41

5

13.9%

Acquisition price

225,723

286,801

61,077

27.1%

Operating revenue

17,343

22,107

4,763

27.5%

2,038

2,043

(599)

1,281

Real estate
operating revenue

17,033

22,107

5,073

29.8%

2,038

2,043

(293)

1,285

2,403

23.3%

1,161

1,432

(293)

102

Fixed rent

Variable rent

60.5%

Composition

10,311 57.5%

39.5%

6,722 42.5%

Gain on sale ofreal estate properties

309

12,714

2,670

39.7%

876

610

-

-

(309)

-

-

-

(305)

(4)

1,457

(257)
(*7)

1,199

14,82918,8294,000

NOI yield

6.6%(*6)(7.2%)

6.6%(*6) (7.1%)

0.0%

12,031

15,5173,486

5.3%(*6)(5.8%)

5.4%(*6)(5.9%)

0.1%

Operating income

10,98813,885

2,896

26.4%

Ordinary income

9,295

12,220

2,924

31.5%

Extraordinary losses
or income, etc.

(1)

(97)

(95)

Net income

9,294

12,123

2,828

30.4%

NOI yield after
depreciation

-

-

-

(184)
(*7)

1,141

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

-

1,243
-

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

740

679

1116.3%

12,865

3,511

37.5%

3,144,227

3,761,907

617,680

19.6%

2,975

3,420

445

15.0%

Dividend per unit (JPY)

1,285

29.0%

60

Total dividends
No. of units issued

-

9,354

Use of negative goodwill

1,601

27.0%

Causes of Variance (Other Properties)

The five HMJ hotels -- increase in variable
rent: JPY677M
1,183 The five Accor hotels -- increase in income
from management contracts, etc.: JPY321M
Increase in revenue sharing, etc.: JPY184M

9,392

NOI (*5)

NOI after depreciation(*5)

Dividend

Property
Property
Property
Acquisition in Acquisition in Disposition in
17th
Period16th
Period16th
PeriodVariance
(*1)
(*2)
(*3)

No. of properties

Composition

Profitand
Loss

Major Factors Causing the Variance

Comparison with
Previous Period(*1) Stating the impact on the statements of income by CANDEO HOTELS UENO-KOEN, Hotel Centraza Hakata, Holiday Inn Osaka Namba, HOTELASCENT FUKUOKA, and Hilton Nagoya acquired in the fiscal year ended December 2016 (17th period).
(*2) Stating the impact on the statements of income by the five the b hotels, Hotel Francs, Mercure Yokosuka, Okinawa Marriott Resort & Spa, and ACTIVEINTER CITY HIROSHIMA acquired in the fiscal year ended December 2015 (16th period).
(*3) Stating the impact on the statements of income by three properties, Comfort Hotel Shin-Yamaguchi, Daiwa Roynet Hotel Akita, and Hotel Sunroute
Niigata, sold on October 30, 2015.
(*4) Twenty-seven properties excluding three properties sold during the fiscal year ended December 2015 from thirty properties JHR owned as of the end of

－

15 －

December 31, 2014.
(*5)

Each is calculated using the following formula.
NOI (Net Operating Income) = Real estate operating revenue – Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets +Asset retirement obligations expenses
NOI yield = NOI ÷ acquisition price
NOI after depreciation = Real estate operating revenue – Real estate operating costs
NOI yield after depreciation = NOI after depreciation ÷ acquisition price(*6)

The sum of (NOI of each property ÷ operating days x 365) ÷ acquisition price is indicated as an annualized NOI yield in parenthesis.
The sum of (NOI after depreciation of each property ÷ operating days x 365) ÷ acquisition price is indicated as an annualized NOI after depreciation inparenthesis. Please note that depreciation is calculated as the total amount of (depreciation of each property ÷ operating months x 12).

(*7)

NOI and NOI after depreciation do not include gain on sale of real estate properties, etc. The factors causing the variance on NOI and NOI after
depreciation with consideration of the effect by gain on sale are ¥(563) million and ¥(489) million, respectively.

(2) The following is a comparison and major causes of variance between the actual results for the fiscal year ended December 31,
2016 (17th period) and the forecast for the fiscal year ending December 31, 2017 (18th period)(Unit: millions of yen)
17th Period

18th Period

ActualForecast（*1）

Major Factors Causing the Variance
Comparison
with Previous
PeriodProperty
Acquisitionin 17thExisting
Properties

Causes of Variance of Existing Properties

Period (*2)(A)
Properties

(B)
41

41

-

-

Acquisition price286,801

286,801--

Operating revenue

22,107

24,530

2,422

11.0%

2,376

46

24,530

2,422

11.0%

2,376

46

13,718

1,004

7.9%

1,120

(116) tenants in 17th period: (JPY126M)①The seven HMJ group hotels (*3) -- increase invariable rent: JPY154M②The six Accor hotels -- increase in income from
163 management contracts, etc.: -- JPY110M③ The six the b hotels -- increase in variable rent:
JPY8M④ Decrease in revenue sharing, etc.: (JPY109M)

22,107
Composition

Fixed rent

Variable rent

9,392

55.9%

44.1%

Decrease in termination charge due to replacement of

15.1%

1,255

-

-

-

-

-

-

NOI (*4)

18,82920,312

1,482

7.9%

1,618

(135)

NOI yield

6.6%(*5)(7.1%)

7.1%

0.5%

15,517

16,600

1,082

7.0%

1,347

(265)

5.4%
(*5)(5.9%)

5.8%

0.4%

Operating income

13,885

14,719833

6.0%

Ordinary income

12,22012,987767

6.3%

Extraordinary losses
or income, etc.

(97)

(1)

95

-

Net income

12,123

12,986863

7.1%

Gain on sale ofreal estate
properties

42.5%

12,714

1,418

NOI yield after
depreciation(55%) The amount to be used from negative goodwill in the 18th period includes the

740

332

(407)

12,865

13,317451

3.5%

Number of units issued (unit)

3,761,907

3,761,907--

Dividend per unit (JPY)

3,420

3,540

120

3.5%

Use of negative goodwill

(*1)

57.5%

Composition

10,811

NOI after
depreciation (*4)

Dividend

Variance

No. of properties

Real estate
operating revenue

ProfitandLoss(B)-(A)

Total dividends

50-year amortization amount of negative goodwill. (*6)

For the assumptions of the forecast, please see “Assumptions of the operating forecast for the midterm and full year of the fiscal year

ending December 2017 (18th period)” above.
(*2)

Stating the impact on the statements of income by CANDEO HOTELS UENO-KOEN, Hotel Centraza Hakata, Holiday Inn Osaka Namba,
HOTEL ASCENT FUKUOKA, and Hilton Nagoya acquired in the fiscal year ended December 2016 (17th period).

(*3)
(*4)

Seven hotels refer to Okinawa Marriott Resort & Spa and Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER
CITY HIROSHIMA, in addition to the five HMJ hotels.
Each is calculated using the following formula.
NOI (Net Operating Income) = Real estate operating revenue – Real estate operating costs + Depreciation + Loss on retirement of

－

16 －

(*5)

(*6)

noncurrent assets + Asset retirement obligations expenses
NOI yield = NOI ÷ acquisition price, NOI after depreciation = Real estate operating revenue – Real estate operating costs, NOI yield
after depreciation = NOI after depreciation ÷ acquisition price
The sum of (NOI of each property ÷ operating days x 365) ÷ acquisition price is indicated as an annualized NOI yield in parenthesis.
The sum of (NOI after depreciation of each property ÷ operating days x 365) ÷ acquisition price is indicated as an annualized NOI
after depreciation in parenthesis. Please note that depreciation is calculated as the total amount of (depreciation of each property ÷
operating months x 12).
For details of the 50-year amortization amount of negative goodwill, please see “Assumptions of the operating forecast for themidterm and full year of the fiscal year ending December 2017 (18th Period)” above.

－

17 －

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

FY 2016(Fiscal year ended
December 2016)
Comparison
withActualprevious
period2,465
1.7%

Second half of the year

2,828

1.1%

2,896

2.4%

2,984

3.0%

Full year

5,252

0.6%

5,361

2.1%

5,503

2.6%

First half of the year

3,395

0.9%

3,454

1.7%

3,452

(0.1%)(2.8%)

3,935

3.1%

Sales of the HMJ Group Hotels

Kobe Meriken Park
Oriental Hotel

Oriental Hoteltokyo bay

Namba Oriental Hotel

Hotel Nikko Alivila

Oriental Hotel Hiroshima

Total of the FiveHMJ Hotels

Okinawa Marriott
Resort & Spa

Sheraton Grand
Hiroshima Hotel

Hotel Centraza Hakata

Holiday Inn
Osaka Namba

Total of HMJ Group
Hotels(Unit: millions of yen)
FY 2017(Fiscal year ending
December 2017)
Comparison
Forecast
withthis timeprevious
period2,519
2.2%

FY 2015(Fiscal year ended
December 2015)
Comparison
withActualprevious
period2,424(0.0%)First half of the year

Second half of the year

3,927

2.2%

3,817

Full year

7,322

1.6%

7,271

(0.7%)

7,387

1.6%

First half of the year

1,189

19.1%

1,386

16.6%

1,438

3.7%

11.1%

1,544

3.6%

Second half of the year

1,341

16.6%

1,491

Full year

2,530

17.8%

2,877

13.7%

2,982

3.6%

First half of the year

2,377

8.6%

2,421

1.8%

2,502

3.4%

Second half of the year

3,571

8.2%

3,734

4.6%

3,787

1.4%

3.5%

6,289

2.2%

Full year

5,948

8.3%

6,155

First half of the year

991

(5.2%)

1,025

3.4%

1,026

0.1%

Second half of the year

1,142

(3.0%)

1,216

6.4%

1,248

2.7%

Full year

2,134(4.0%)

2,240

5.0%

2,274

1.5%

First half of the year

10,376

3.5%

10,751

3.6%

10,9381.7%

2.7%

13,498

2.6%

Second half of the year

12,8104.4%

13,154

Full year

23,186

4.0%

23,905

3.1%

24,436

2.2%

First half of the year

1,614

0.9%

1,607

(0.4%)

1,629

1.4%

Second half of the year

2,402

8.7%

2,326

(3.2%)

2,445

5.1%

Full year

4,016

5.4%

3,933

(2.1%)

4,074

3.6%

First half of the year

1,346

(1.0%)

1,369

1.7%

1,391

1.6%

Second half of the year

1,502

(0.6%)

1,627

8.3%

1,568

(3.7%)

Full year(0.8%)
2.0%

2,996

5.2%

2,959

(1.2%)First half of the year

2,847
1,124

1,155

2.8%

1,178

2.0%

Second half of the year

1,205

6.6%

1,265

5.0%

1,146

(9.5%)

Full year

2,330

4.4%

2,421

3.9%

2,324

(4.0%)First half of the year

832

47.9%

1,104

32.7%

1,115

1.0%

Second half of the year

1,133

57.6%

1,103

(2.7%)

1,201

8.9%

Full year

1,965

53.4%

2,206

12.3%

2,316

5.0%

First half of the year

15,291

4.4%

15,985

4.5%

16,251

1.7%

Second half of the year

19,053

6.8%

19,4762.2%

19,8582.0%

34,343

5.7%

35,461

3.3%

36,1091.8%
Full year(*1) Okinawa Marriott Resort & Spa was acquired on July 10, 2015 and ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel) was acquiredon December 18, 2015. The figures for the fiscal year ended December 2015 are for the entire year including prior to the acquisition.
(*2) Hotel Centraza Hakata was acquired on April 1, 2016. The figures for the fiscal year ended December 2015 and the fiscal year ended December 2016 are for－18 －the entire year including prior to the acquisition.
(*3) Holiday Inn Osaka Namba was acquired on August 1, 2016. The figures for the fiscal year ended December 2015 and the fiscal year ended December 2016
are for the entire year including prior to the acquisition.
(*4) Renovation of Holiday Inn Osaka Namba was completed by the previous owner in March 2014. The number of guest rooms has increased from 304 to 314.
Therefore, the numbers of guest rooms available for sale in the first half or full year of 2015 and the first half or full year of 2014 are different.

(2) Hotel GOP

GOP and ratio of GOP of
the HMJ Group Hotels (*1)

GOP

Total of the HMJ Group Hotels

Ratio of GOP

FY 2015(Fiscal year ended
December 2015)
Comparison
withActualprevious
period10,912
15.2%
31.8%

2.6%

(Unit: millions of yen)
FY 2016
FY 2017(Fiscal year ended(Fiscal year ending
December 2016)
December 2017)
Comparison
Comparison
with
Forecast
with
Actualprevious
this timeprevious
periodperiod12,010
10.1%
12,237
1.9%
33.9%

2.1%

33.9%

0.0%

(*1) Ratio of GOP refers to the ratio of GOP to sales. The same shall apply hereafter.
(*2) Okinawa Marriott Resort & Spa was acquired on July 10, 2015 and ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima Hotel) was acquiredon December 18, 2015. The figures for the fiscal year ended in December 2015 are for the entire year including prior to the acquisition.
(*3) Hotel Centraza Hakata was acquired on April 1, 2016 and Holiday Inn Osaka Namba was acquired on August 1, 2016. The figures for the fiscal year ended
December 2015 and the fiscal year ended December 2016 are for the entire year including prior to the acquisition.

<2> Sales and GOP of the Six Accor Hotels(1) Hotel sales (by hotel)

Sales of the Six Accor Hotels

First half of the year

ibis Tokyo Shinjuku

FY 2015(Fiscal year ended
December 2015)
Comparison
withActualprevious
period
453
6.1%
421
873

(5.5%)
0.2%

426
832

1.3%
(4.7%)

430
836

0.8%
0.5%

357
457

17.1%
18.8%

464
513

30.0%
12.3%

492
540

6.1%
5.1%

814
429

18.0%
7.9%

977
490

20.1%
14.3%

1,032
505

5.6%
3.2%

591
1,019

13.1%
10.9%

633
1,122

7.1%
10.1%

650
1,156

2.8%
3.0%

499
672

17.5%
17.4%

546
708

9.3%
5.3%

585
745

7.2%
5.2%

1,172
407

17.4%
12.1%

1,254
489

7.0%
20.2%

1,330
519

6.1%
6.0%

516
923

24.5%
18.7%

560
1,049

8.6%
13.7%

578
1,096

3.2%
4.5%

Second half of the year

550
512

1.0%
4.3%

569
502

3.5%
(2.0%)

586
540

3.0%
7.7%

Full year

1,062

2.6%

1,071

0.8%

1,127

5.2%

First half of the year

2,696

9.5%

2,965

10.0%

3,094

4.4%

Second half of the year

3,168
5,863

12.0%
10.8%

3,341
6,306

5.5%
7.6%

3,482
6,577

4.2%
4.3%

Second half of the year
Full year

First half of the year

ibis Styles Kyoto Station

Second half of the year
Full year

First half of the year

ibis Styles Sapporo

Second half of the year
Full year

First half of the year

Mercure Sapporo

Second half of the year
Full year

First half of the year

Mercure Okinawa Naha

Second half of the year
Full year

First half of the year

Mercure Yokosuka

Total(Unit: millions of yen)
FY 2016
FY 2017(Fiscal year ended(Fiscal year ending
December 2016)
December 2017)
Comparison
Comparison
with
Forecast
with
Actualprevious
this timeprevious
periodperiod406(10.3%)
406
0.1%

Full year(*) Mercure Yokosuka was acquired on April 2, 2015. The figures for the fiscal year ended December 2015 are the figures for the entire year including prior to
the acquisition.

－

19 －

(2) Hotel GOP

GOP and ratio of GOP of
the Six Accor Hotels

Total of the Six Accor Hotels
Ratio of GOP

FY 2015(Fiscal year ended
December 2015)
Comparison
Actualwith previous
period
2,512
21.0%
42.8%

3.6%

(Unit: millions of yen)
FY 2016
FY 2017(Fiscal year ended(Fiscal year ending
December 2016)
December 2017)
Comparison
Comparison
Forecast thisActualwith previous
with previous
time
periodperiod
2,885
14.9%
2,987
3.5%
45.8%

2.9%

45.4%

(0.3%)(*) Mercure Yokosuka was acquired on April 2, 2015. The figures for the fiscal year ended December 2015 are the figures for the entire year including prior to
the acquisition.

－

20 －

<3> Sales and GOP of the Six the b Hotels(1) Hotel sales (by hotel)

FY 2015(Fiscal year ended
December 2015)
Comparison
withActualprevious
period221
69.4%

Sales of the Six the b Hotels

First half of the year

the b akasaka-mitsuke

242
464

13.8%
35.0%

226
468

(6.7%)
1.0%

231
473

2.0%
1.0%

301
324

7.7%
14.5%

323
312

7.3%
(3.7%)

325
324

0.7%
3.6%

625
132

11.1%
9.0%

635
131

1.6%
(0.8%)

648
134

2.1%
2.5%

130
262

4.8%
6.9%

135
266

3.5%
1.3%

138
273

2.4%
2.5%

267
291

10.4%
13.8%

291
273

9.0%
(6.1%)

296
291

1.8%
6.6%

558
191

12.2%
10.9%

564
230

1.1%
20.6%

587
240

4.1%
4.2%

215
406

12.8%
11.9%

249
478

15.5%
17.9%

255
494

2.4%
3.3%

Second half of the year

1,111
1,203

17.7%
12.8%

1,216
1,195

9.4%
(0.7%)

1,237
1,238

1.7%
3.6%

Full year

2,315

15.1%

2,412

4.2%

2,475

2.6%

First half of the year

－

－

177

－

183

3.1%

Second half of the year

－

－

－

Full year

－

－

174
351

194
377

11.5%
7.3%

First half of the year

－

－

－

Second half of the year

－

－

1,394
1,369

1,420
1,432

1.9%
4.6%

Second half of the year
Full year

First half of the year

the b ikebukuro

Second half of the year
Full year

First half of the year

the b ochanomizu

Second half of the year
Full year

First half of the year

the b hachioji

Second half of the year
Full year

First half of the year

the b hakata

Second half of the year
Full year

Total of theFive the b Hotels

the b suidobashi

Total of the
Six the b Hotels(Unit: millions of yen)
FY 2016
FY 2017(Fiscal year ended(Fiscal year ending
December 2016)
December 2017)
Comparison
Comparison
with
Forecast thiswith
Actualprevious
time
previous
periodperiod242
9.4%
242(0.0%)First half of the year

－

－

－
－
－
2,763
2,852
3.2%
Full year(*1) The five the b hotels were acquired on January 30, 2015. The figures for the fiscal year ended December 2015 are the figures for the entire year including
prior to the acquisition.
(*2) The b akasaka-mitsuke completed its renovation work by the previous owner in April 2014. The number of guest rooms has increased from 91 to 122.
Therefore, the numbers of guest rooms available for sale in the first half or full year of 2015 and the first half or full year of 2014 are different.
(*3) The b suidobashi was rebranded from Dormy Inn Suidobashi on July 1, 2015. Therefore, no figures are indicated for the fiscal year ended December 2015
and comparison with the previous period for the fiscal year ended December 2016.
(2) Hotel GOP

GOP and the ratio of GOPof the Five the b Hotels

Total of the Five the b Hotels
Ratio of GOP

FY 2015(Fiscal year ended
December 2015)
Comparison
Actualwith previous
period
1,079
26.4%
46.6%

－

4.2%

21 －

FY 2016(Fiscal year ended
December 2016)
Comparison
Actualwith previous
period
1,195
10.8%
49.6%

3.0%

(Unit: millions of yen)
FY 2017(Fiscal year ending
December 2017)
Comparison
Forecastwith previous
this time
period
1,198
0.2%
48.4%

(1.2%)

GOP and the ratio of GOPof the Six the b Hotels

FY 2015(Fiscal year ended
December 2015)
Comparison
Actualwith previous
periodFY 2016(Fiscal year ended
December 2016)
Comparison
Actualwith previous
periodFY 2017(Fiscal year ending
December 2017)
Comparison
Forecastwith previous
this time
periodTotal of the Six the b Hotels

－

－

1,370

－

1,381

0.8%

Ratio of GOP

－

－

49.6%

－

48.4%

(1.2%)(*1) The five the b hotels were acquired on January 30, 2015. The figures for the five the b hotels for the fiscal year ended December 2015 are for the entire year
including prior to the acquisition.
(*2) The b suidobashi was rebranded from Dormy Inn Suidobashi on July 1, 2015. Therefore, no figures for the six the b hotels are indicated for the fiscal year
ended December 2015 and comparison with previous period for the fiscal year ended December 2016.

<Reference Materials 3> Dividend per unit and appropriation for dividends
Dividend per unit for the fiscal year ended December 31, 2015 and the fiscal year ended December 31, 2016 are calculated based on
the following assumptions.
Fiscal year ended

Fiscal year ended

December 31, 2016
(JPY1M)

December 31, 2017
(JPY1M)

9,296

12,12660

740

Loss on retirement of noncurrent assets

25

16

Financial costs in accordance with early repayment

35

－

－

112

－

611

9,354

12,865

3,144,227 units

3,761,907 units¥2,975¥3,420

Unappropriated retained earnings
Total appropriation for dividends (use of negative goodwill)

Amortization of fixed-term leasehold of land and asset
retirement obligations (*1)
Adjustment for dilution (*2)
Total dividends
Total number of investment units issued
Dividend per unit(*1) Amount recognized as amortization, etc. related to fixed-term leasehold of land and asset retirement obligations of Hotel
Centraza Hakata and HOTEL ASCENT FUKUOKA is planned to be added to the dividends through appropriation of thedividends reserve (negative goodwill).
(*2) Adjustment for dilution of dividend per unit due to issuance of new investment units in the fiscal year ended December 2016.

－

22 －

3. Financial statements(1) Balance sheets(thousands of yen)
As ofDecember 31, 2015
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Income taxes receivable
Other current assets
Total current assets
Noncurrent assets
Property and equipment, at cost
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Construction in progress
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Net property and equipment
Intangible assets
SoftwareLeasehold rights in trust
Fixed-term leasehold rights in trust
Other intangible assets
Total intangible assets
Investments and other assets
Security deposits
Leasehold and security deposits in trust
Long-term prepaid expenses
Derivative assets
Reserve for repairs and maintenanceTotal investments and other assets
Total noncurrent assets
Deferred assets
Investment unit issuance costs
Investment corporation bond issuance costs
Total deferred assets
Total assets
－

23 －

As of
December 31, 2016

5,450,696
8,247,600
1,269,572
410,241
245,509
3,057
6,473
15,633,151

15,141,393
11,232,472
2,071,152
586,700－
294
18,33929,050,353

184,717(68,766)
115,951
1,428,232(637,865)
790,3672,676*1
88,642,547(9,276,696)
79,365,851
2,006,145(172,064)
1,834,081
456,282(52,883)
403,399
125,266(68,340)
56,926
120,918,641
606
203,488,501

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

100,333
19,774,039－
10,476
19,884,849

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

12,520158,323
993,340
1,272
49,2191,214,676
224,588,027

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

66,92868,381
135,310240,356,489

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

(thousands of yen)
As ofDecember 31, 2015
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of investment corporation bonds
Current portion of long-term loans payable
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Dividends payable
Deposits received
Derivative liabilities
Other current liabilities
Total current liabilities
Long-term liabilities
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Derivative liabilities
Deferred tax liabilities
Asset retirement obligations
Total long-term liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
SurplusCapital surplus
Voluntary reserve
Dividend reserve
Total voluntary reserve
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains (losses) on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

－

*2

24 －

As of
December 31, 2016

875,465
9,000,000
2,500,000
11,393,603
500,859
1,210－
692,794
12,381
71,442－25,45225,073,210

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

9,500,000
70,379,000
2,041,032
2,914,912
533,856－－
85,368,801
110,442,012

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

85,470,541

134,829,448

21,746,398

21,746,398

13,928,075
13,928,075
9,296,121
44,970,596
130,441,137

13,867,228
13,867,228
12,126,057
47,739,684
182,569,132(526,660)(526,660)
129,914,477
240,356,489(580,019)(580,019)
181,989,112
317,878,620*2

(2) Statements of income(thousands of yen)
For the year ended
December 31, 2015
Operating revenue
Real estate operating revenue
Other real estate operating revenue
Gain on sale of real estate properties
Gain on investment in silent partnership
Total operating revenue
Operating expenses
Real estate operating costs
Asset management fee
Asset custody fee
Administrative service fee
Directors’ compensation
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends
Gain on insurance claims
Interest on tax refunds
Gain on derivative instruments
Total non-operating income
Non-operating expenses
Interest expense
Interest expense on investment corporation bonds
Borrowing costs
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Loss on derivative instruments
Other
Total non-operating expenses
Ordinary income
Extraordinary loss
Loss on disaster
Total extraordinary loss
Income before income taxes
Income taxes – current
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)－*1

For the year ended
December 31, 2016

16,632,526
401,349*2
305,668
4,288
17,343,833*1

5,002,501
1,045,925
17,63389,541
10,800188,480
6,354,882
10,988,950*1, *3*1*1, *325 －21,165,085
942,384－－
22,107,470*1

6,589,908
1,307,381
21,02991,782
14,400
197,443
8,221,945
13,885,524

2,977
1,186
4,644
292
9,411
18,512

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

918,051
62,850632,240
12,50051,84633,99690
1,711,575
9,295,887

862,943
128,071
561,927
19,04381,361
16,4452,673
1,672,466
12,220,234－－
9,295,887
1,210
1,210
9,294,677
1,444
9,296,121

95,86095,86012,124,373
1,210
1,210
12,123,163
2,894
12,126,057*4

(3) Statements of changes in net assets
For the year ended December 31, 2015
(thousands of yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance, January 1, 2015

59,024,923

Voluntary reserve
Capitalsurplus21,746,398

Dividend
reserve

Total
voluntary
reserve

14,168,614

14,168,614

Unappropriatedretainedearnings(undisposed
loss)
5,776,116

Total
unitholders’equityTotal
surplus41,691,129

100,716,052

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

26,445,618

26,445,618
240,538－－

Dividends paid

(6,015,210)(6,015,210)(6,015,210)

Net income

9,294,677

9,294,677

9,294,677

Reversal of dividend reserve

Net changes of items
other than unitholders’ equity
Total changes of items
during the year
Balance, December 31, 2015

(240,538)

26,445,618－(240,538)(240,538)

3,520,005

3,279,466

29,725,085*1

21,746,398

13,928,075

13,928,075

9,296,121

44,970,596

130,441,137

85,470,541(thousands of yen)
Valuation and translation
adjustments
Total
Total
Deferred
net assets
valuation andgains (losses)
translation
on hedges
adjustments
Balance, January 1, 2015

(373,144)(373,144)

100,342,908

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

26,445,618－

Reversal of dividend reserve
Dividends paid

(6,015,210)

Net income

9,294,677

Net changes of items
other than unitholders’ equity
Total changes of items
during the year
Balance, December 31, 2015

(240,538)(153,516)(153,516)(153,516)(153,516)(153,516)

29,571,568(526,660)(526,660)

129,914,477

－

26 －

For the year ended December 31, 2016
(thousands of yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance, January 1, 2016

85,470,541

Voluntary reserve
Capitalsurplus21,746,398

Dividend
reserve

Total
voluntary
reserve

13,928,075

13,928,075

Unappropriatedretainedearnings(undisposed
loss)
9,296,121

Total
unitholders’equityTotal
surplus44,970,596

130,441,137

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

49,358,906

49,358,906
60,847－－

Dividends paid

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

Net income

12,123,163

12,123,163

12,123,163

Reversal of dividend reserve

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

(60,847)

49,358,906－(60,847)(60,847)

2,829,936

2,769,088

52,127,994*1

21,746,398

13,867,228

13,867,228

12,126,057

47,739,684

182,569,132

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

(526,660)(526,660)

129,914,477

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

49,358,906－

Reversal of dividend reserve
Dividends paid

(9,354,075)

Net income

12,123,163

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

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

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

181,989,112

－

27 －

(4) Statements of cash dividends
Classification

For the year ended
December 31, 2015

I. Unappropriated retained earnings

For the year ended
December 31, 2016

¥9,296,121,922¥12,126,057,948¥60,847,707¥13,867,228,256¥9,354,075,325¥12,865,721,940[¥2,975][¥3,420]

II. Reversal of voluntary reserve
Reversal of dividend reserve
III. Dividends[Dividend per unit]
IV. Voluntary reserve―

Reserve for temporary difference adjustment
V. Retained earnings carried forward
Method of calculating the amount of dividends¥2,894,304*1¥13,127,153,216¥411,048

In accordance with the monetary

In accordance with the monetary

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

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

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

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

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

Measures Concerning Taxation. It was
decided that ¥9,356,969,629, which

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

was calculated by adding a reversal of
dividend reserve of ¥60,847,707 to

was calculated by adding a reversal of
dividend reserve of ¥740,075,040 tounappropriated retained earnings of¥9,296,121,922,
would
all
be

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

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

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

Consequently, the dividend per unit
came to ¥2,975. The monetary

Consequently, the dividend per unit
came to ¥3,420. The monetary

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

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

(4) of JHR’s Articles of Incorporation
will not be made.

－

28 －

(5) Statements of cash flows(thousands of yen)
For the year ended
December 31, 2015
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Loss on retirement of noncurrent assets
Loss on derivative instruments
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Decrease in property and equipment in trust due to sale
Gain on investment in silent partnership
Interest income
Interest expense
Interest on tax refunds(Increase) decrease in operating accounts receivable(Increase) decrease in consumption taxes receivable(Increase) decrease in prepaid expenses(Increase) decrease in long-term prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accrued expenses
Increase (decrease) in consumption taxes payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Other – net
SubtotalInterest received
Interest paid
Interest received on tax refunds
Income taxes – refunded (paid)
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from redemption of investment securities
Purchase of property and equipment in trust
Purchase of property and equipment
Purchase of intangible assets
Payments of reserve for repairs and maintenance
Proceeds from tenant leasehold and security deposits in trust
Reimbursements of tenant leasehold and security deposits in trust
Proceeds from tenant leasehold and security deposits
Reimbursements of tenant leasehold and security deposits
Net cash used in investing activities
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from investment corporation bonds
Redemption of investment corporation bonds
Proceeds from issuance of investment units
Payments for investment corporation bond issuance costs
Dividends paid
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

－

29 －

For the year ended
December 31, 2016

9,295,887
2,772,440
25,79024,584
12,50051,8464,400,042(4,288)(2,977)980,901(292)(240,193)(245,509)(28,602)(189,593)
69,222
103,627(290,174)
41,14162,058
7,996
16,846,409
2,977(983,493)
292(3,838)15,862,346

12,124,373
3,294,081
16,662
14,572
19,04381,361－－(1,924)
991,014(610)(801,580)
245,509(176,458)(2,095,775)
102,258
112,854496,373
206,495
46,506
4,862
14,679,620
1,862(994,383)
610
1,553
13,689,262

607,013(59,092,222)(299,812)(81,347)(49,219)
641,553(324,585)
16－(58,598,604)－(49,582,657)(659,879)(14,535,928)(14,911)
1,756,161(43,325)
7,000(1,001,800)(64,075,340)

15,000,000(6,000,000)
22,508,000(15,825,132)
6,000,000－
26,382,471(41,959)(6,013,599)
42,009,780(726,477)
14,424,774*1
13,698,296

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

(6) Notes on going concern assumption
Not applicable.

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

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

2 to 17 years
2 to 20 years

Buildings in trust
Structures in trust

2 to 62 years
2 to 62 years

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

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

5 years as internally usable years

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

Accounting fordeferred assets(1) Investment unit issuance costs
Investment unit issuance costs are amortized using the straight-line method over three years.
The issuance of new investment units through public offerings on January 20, 2016 and July 27,
2016 was consummated under underwriting agreements in which underwriting securities companies
committed to purchase all of the investment units being offered at an issue value and selling them at
an offering price different from such issue value to general investors (the “spread method”).
No underwriting fees were paid by JHR under the spread method since the underwriters werecompensated by the underwriting spread, which amounted to ¥858,900 thousand for the year ended
December 31, 2015 and ¥1,571,900 thousand for the year ended December 31, 2016, representing
the difference between the issue price and the issue value.
(2) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the interest method over therespective term of the bond.

3.

Standards forrecognition ofTreatment of property taxes and other taxes
For taxes imposed on properties under management such as property taxes, city planning taxes, andrevenues andexpensesdepreciable asset taxes, the imposed amounts are allocated to the respective period and expensed as“Real estate operating costs.”
Cash paid for property taxes and city planning taxes to the transferor of real properties at acquisition is
not recorded as “Real estate operating costs” but capitalized as part of the acquisition cost of the relevant
property.
The amount of such taxes capitalized in the acquisition cost of real properties was ¥180,668 thousand forthe year ended December 31, 2015 and ¥101,229 thousand for the year ended December 31, 2016.

－

30 －

4.

Method of(1) Method of hedge accounting

hedge accounting

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

5.

Scope of funds(cash and cash

Cash and cash equivalents in the statements of cash flows consist of cash on hand, cash in trust accounts,
bank deposit and trust deposit, which can be withdrawn at any time, and short-term investments with aequivalents) in
the statements ofmaturity of three months or less when purchased, which can easily be converted to cash and subject tominimal risk of change in value.

cash flows
6.

Other

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

significant mattersserving as the basis

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

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

－

31 －

(8) Notes to financial statements
Disclosure of notes on “securities,” “share of (profit) loss of entities accounted for using equity method,” “related-party
transactions” and “retirement benefits” is omitted because there is thought to be no longer necessary for disclosure in thefinancial report.

[Notes to balance sheets]*1. Accumulated advanced depreciation of property and equipment deducted from acquisition costs due to government
subsidies received, etc.
As ofDecember 31, 2015
Buildings in trust

As ofDecember 31, 2016¥24,921 thousand¥24,921 thousand*2. Minimum net assets as required by Article 67, paragraph 4 of the Investment Trusts Act
As ofDecember 31, 2015

As ofDecember 31, 2016

¥50,000 thousand¥50,000 thousand[Notes to statements of income]*1. Components of real estate operating revenue and real estate operating costs(thousands of yen)
For the year ended
December 31, 2015
A.

For the year ended
December 31, 2016

Real estate operating revenue
Real estate operating revenue
Fixed rent
Variable rent

9,909,942
4,460,082

Income from management contracts

2,262,502

11,772,386
6,808,433
16,632,526

2,584,265

21,165,085

Other real estate operating revenue
Parking lots
Other incidental revenue

87,10041,191

Utilities
Other

261,412
11,644

Total real estate operating revenueB.

401,349545,754
197,104

17,033,876

942,384
22,107,470

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

463,289
940,806

710,456
1,216,710

Outsourcing expenses (Note)
Nonlife insurance

387,958
32,334

609,823
41,944

2,772,440
25,7903,294,081
16,662

Repairs
Utilities

65,240259,741

68,632541,127

Trust fees
Other

42,674
12,224

41,764
48,706

Depreciation and amortization
Loss on retirement of noncurrent assets

Total real estate operating costsC.

158,750
40,775

Net real estate operating income(A − B)

5,002,501

6,589,908

5,002,501

6,589,908

12,031,375

15,517,561(Note) Outsourcing expenses include management contract fees of ¥239,507 thousand for the year ended December 31, 2015 and ¥318,587 thousand for the year
ended December 31, 2016.

－

32 －

*2. Components of gain (loss) on sale of real estate properties(thousands of yen)
For the year ended
December 31, 2015
Comfort Hotel
Shin-Yamaguchi

Daiwa Roynet
Hotel Akita

Hotel Sunroute
Niigata―――

4,890,000

Costs of sale of properties

787,727

1,644,598

1,967,716

4,400,042

Other selling expenses

33,684

72,401

78,203

184,288―――

305,668

Proceeds from sale of properties

Gain (loss) on sale of real estate properties

Total

The sale prices for each property have not been disclosed as consent on disclosure has not been obtained from the purchaser.
For the year ended
December 31, 2016
Not applicable.
*3. Depreciation was expensed as follows:
For the year ended
December 31, 2015
Property and equipment

For the year ended
December 31, 2016

¥2,748,885 thousand¥3,150,543 thousand¥23,554 thousand¥143,537 thousand

Intangible assets*4. Loss on disaster
Restoration costs for assets damaged by the Kumamoto Earthquake were recorded as loss on disaster.

[Notes to statements of changes in net assets]
For the year ended
December 31, 2015

For the year ended
December 31, 2016

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

20,000,000 units

20,000,000 units

Total number of investment units issued and outstanding

3,144,227 units

3,761,907 units[Notes to statements of cash dividends]*1. Reserve for temporary difference adjustment
By application of the transitional measures of Paragraph 3 of the Supplementary Provisions of the “Ordinance on
Accountings of Investment Corporations” (Cabinet Office Ordinance No. 27 of 2015), ¥13,127,153,216 in dividend reservethat is the remaining balance of the amount subdivided into gain on negative goodwill recorded in prior fiscal years is set
aside as reserve for temporary difference adjustment on the statements of cash dividends. Starting from the fiscal year
following the fiscal year in which the reserve was made, reversal of the concerned reserve amount is scheduled to takeplace every fiscal year in an amount that shall be no less than the 50-year even amortizion amount, but limited to thebalance of the reserve for temporary difference adjustment as maximum.

[Notes to statements of cash flows]*1. Relation of balance of cash and cash equivalents at end of year and the amount in balance sheet accounts
For the year ended
December 31, 2015

For the year ended
December 31, 2016

Cash and deposits¥5,450,696 thousand¥15,141,393 thousand

Cash and deposits in trust¥8,247,600 thousand¥11,232,472 thousand

Cash and cash equivalents¥13,698,296 thousand¥26,373,866 thousand

－

33 －

2. Content of significant non-cash transactions
For the year ended December 31, 2015
Not applicable
For the year ended December 31, 2016
JHR recognizes asset retirement obligations as it is obliged to restore the land of Hotel Centraza Hakata, acquired on April 1,
2016, and HOTEL ASCENT FUKUOKA, acquired on August 19, 2016, to the original state in accordance with the fixedterm leasehold agreements. This increases buildings in trust of property and equipment and asset retirement obligations by¥440,168 thousand.

[Notes on lease transactions]Operating leases (as lessor)
Minimum rental revenue under non-cancellable operating leases
As ofDecember 31, 2015

As ofDecember 31, 2016

Due within one year

¥1,788,631 thousand¥1,709,333 thousand

Due after one year

¥7,565,169 thousand¥5,889,179 thousand

Total¥9,353,800 thousand¥7,598,512 thousand[Notes on financial instruments]
1. Matters concerning status of financial instruments(1) Policy for financial instruments
JHR is an investment corporation set forth in Article 2, paragraph 12 of the Investment Trusts Act, managing investments
mainly in specified assets as prescribed in the Investment Trusts Act. As a policy, JHR procures funds through issuance ofinvestment units, etc. and loans from financial institutions in order to make investments in specified assets. JHR does not
utilize surplus funds to invest in financial instruments except for short-term deposits and other equivalent short-term
financial instruments. JHR may enter into derivative transactions in order to hedge against interest rate risk, but not for
speculative trading purposes.
(2) Details of financial instruments, their risks, and risk management system
The floating rate loans payable are exposed to risks of interest rate fluctuations. In order to mitigate interest rate risk, JHR
may enter into derivative transactions, if necessary to fix the interest expense.
Derivative transactions are conducted principally in accordance with rules prescribed by JHR and risk management rules
applied by the Asset Management Company. Derivative transactions are arranged by the section in charge of finance at theAsset Management Company by using financial institutions with high credit ratings through approval and resolution byauthorized personnel and a meeting committee structure set forth in its decision-making standards and resolution of JHR’sboard of directors.
Loans payable are exposed to liquidity risks. The section in charge of finance at the Asset Management Company preparesand updates projections and actual cash flows on a monthly basis to manage liquidity risks and monitor compliance withrestrictive covenants set forth in the loan agreements. JHR manages liquidity risks by managing the ratio of short-termand long-term loans payable considering the current financial environment through approval and resolution by authorized
personnel and meeting committee structure in the Asset Management Company and resolution of JHR’s board of directors.
(3) Supplementary explanation on matters concerning fair value, etc. of financial instruments
Regarding the contract amount, etc. of derivative transactions in “2. Matters concerning fair value of financial
instruments,” the amount itself does not indicate certain scale of market risk exposure related to derivative transactions.
2. Matters concerning fair value of financial instruments
Carrying amounts of financial instruments on the balance sheets, their fair values, and the differences as of December 31,
2015 were as follows. Financial instruments whose fair values are considered extremely difficult to measure are not includedin the table. See Note 2 below.
Carrying amount
Fair value
Difference(JPY1000)(JPY1000)(JPY1000)(1) Cash and deposits

5,450,696－

34 －

5,450,696―

(2) Cash and deposits in trust

8,247,600

8,247,600―

Total assets

13,698,296

13,698,296―(3) Short-term loans payable

9,000,000

9,000,000―(4) Current portion of investment corporation bonds

2,500,000

2,507,000

7,000(5) Current portion of long-term loans payable

11,393,603

11,393,603―(6) Investment corporation bonds

9,500,000

9,544,450

44,450(7) Long-term loans payable

70,379,000

70,379,000―

Total liabilities

102,772,603

102,824,053

51,450(532,584)(532,584)―(8) Derivative transactions (*)

Carrying amounts of financial instruments on the balance sheets, their fair values, and the differences as of December 31,
2016 were as follows. Financial instruments whose fair values are considered extremely difficult to measure are not includedin the table. See Note 2 below.
Carrying amount(JPY1000)Fair value(JPY1000)

Difference(JPY1000)(1) Cash and deposits

15,141,393

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

11,232,472

11,232,472―

Total assets

26,373,866

26,373,866―(3) Short-term loans payable(4) Current portion of investment corporation bonds

1,800,000―

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

9,679,250

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

22,600,000

22,629,640

29,640(7) Long-term loans payable

92,099,750

92,099,750―

Total liabilities

126,179,000

126,208,640

29,640(8) Derivative transactions (*)(554,282)(554,282)―(*) Receivables and payables arising from derivative transactions are presented on a net basis and amounts in parenthesis denote net
payables.
(Note 1) Methods to measure fair value of financial instruments(1) Cash and deposits; (2) Cash and deposits in trust; (3) Short-term loans payable
The carrying value is deemed to approximate the fair value since the instruments are scheduled to be settled in a short periodof time.
(4) Current portion of investment corporation bonds; (6) Investment corporation bonds
The fair value of these instruments is measured based on the market price.
(5) Current portion of long-term loans payable; (7) Long-term loans payable
The carrying value is deemed to approximate the fair value since the interest rate on long-term loans payable are floatinginterest rates which are revised periodically to reflect market interest rates.
(8) Derivative transactions
The information on the fair value of derivative transactions is presented in “Notes on derivative transactions” below.
(Note 2) Carrying amount of financial instruments whose fair values are considered extremely difficult to measure(thousands of yen)
As ofDecember 31, 2015

Classification

As ofDecember 31, 2016

Tenant leasehold and security deposits

2,041,032

1,041,032

Tenant leasehold and security deposits in trust

2,914,912

4,619,744

Total

4,955,944

5,660,776－

35 －Tenant leasehold and security deposits / Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits (in trust) are not subject to fair value disclosure because they have no market priceand their actual deposit periods from a tenant’s move-in to move-out are not estimable, thus making a reasonable estimate of
future cash flows is difficult.
3. Redemption schedule for monetary claims subsequent to the account closing date
As of December 31, 2015
Due within
one year(JPY1000)

Due after
one to two
years(JPY1000)

Due after
two to threeyears(JPY1000)

Due after
three to fouryears
(JPY1000)

Due after
four to fiveyears
(JPY1000)

Due after
five years(JPY1000)

Cash and deposits

5,450,696

―

―

―

―

―

Cash and deposits in trust

8,247,600

―

―

―

―

―

Total

13,698,296

―

―

―

―

―

Due within
one year(JPY1000)

Due after
one to two
years(JPY1000)

Due after
two to threeyears(JPY1000)

Due after
three to fouryears
(JPY1000)

Due after
four to fiveyears
(JPY1000)

Due after
five years(JPY1000)

Cash and deposits

15,141,393

―

―

―

―

―

Cash and deposits in trust

11,232,472

―

―

―

―

―

Total

26,373,866

―

―

―

―

―

As of December 31, 2016

4. Schedule for repayment of loans payable and redemption of investment corporation bonds subsequent to the account closing
date
As of December 31, 2015
Due within
one year(JPY1000)

Due after
one to two
years(JPY1000)

Due after
two to threeyears(JPY1000)

Due after
three to fouryears
(JPY1000)

Due after
four to fiveyears
(JPY1000)

Due after
five years(JPY1000)

Short-term loans payable

9,000,000

―

―

―

―

―

Current portion of
investment corporation bonds

2,500,000

―

―

―

―

―

Current portion of
long-term loans payable

11,393,603

―

―

―

―

―

Investment corporation bonds

―

―

―

2,000,000―

7,500,000

Long-term loans payable―

9,679,250

13,322,750

6,317,000

13,544,000

27,516,000

22,893,603

9,679,250

13,322,750

8,317,000

13,544,000

35,016,000

Due within
one year(JPY1000)

Due after
one to two
years(JPY1000)

Due after
two to threeyears(JPY1000)

Due after
three to fouryears
(JPY1000)

Due after
four to fiveyears
(JPY1000)

Due after
five years(JPY1000)

1,800,000

―

―

―

―

―

―

―

―

―

―

―

9,679,250

―

―

―

―

―

Investment corporation bonds――

2,000,000―

1,500,000

19,100,000

Long-term loans payable―

13,322,750

11,217,000

13,544,000

10,800,000

43,216,000

11,479,250

13,322,750

13,217,000

13,544,000

12,300,000

62,316,000

Total
As of December 31, 2016

Short-term loans payable
Current portion of
investment corporation bonds
Current portion of
long-term loans payable

Total

－

36 －

[Notes on derivative transactions]
1. Derivative transactions to which hedge accounting is not applied
For derivative transactions which hedge accounting is not applied, the contract amount or the amount equivalent to theprincipal provided in the contract, etc. as of the account closing date was as follows:
As of December 31, 2015
(thousands of yen)Classification

Transactions
other thanmarkettransactions

Type, etc. of
derivative transaction

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

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

6,794,000

6,794,000

Interest rate caps

848,250

848,250

Fair value

Method to measure the fair value(38,598) The fair value is measured at thequoted price, etc. obtained from thecounterparty financial institutions.
34

As of December 31, 2016
(thousands of yen)Classification

Transactions
other thanmarkettransactions

Type, etc. of
derivative transaction

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

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

6,794,000

6,794,000

Interest rate caps

848,250－

Fair value

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

2. Derivative transactions to which hedge accounting is applied
For derivative transactions which hedge accounting is applied, the contract amount or the amount equivalent to the principal
provided in the contract, etc. as of the account closing date for each method of hedge accounting was as follows:
As of December 31, 2015
(thousands of yen)
Method ofhedge
accounting

DeferralmethodContract amount, etc.

Type, etc. of
derivative transactionMainhedged item

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

Long-termloans payable

63,581,950

58,028,750

Interest rate caps

Long-termloans payable

8,565,250

4,286,250

Of which, due
after one year

Fair value

Method to measure
the fair value

The fair value is(495,258) measured at thequoted price, etc.
obtained from the
1,238 counterparty
financial institutions.

As of December 31, 2016
(thousands of yen)
Method ofhedge
accounting

DeferralmethodContract amount, etc.

Type, etc. of
derivative transactionMainhedged item

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

Long-termloans payable

92,428,750

82,808,750

Interest rate caps

Long-termloans payable

4,286,250

4,286,250

Of which, due
after one year

－

37 －

Fair value

Method to measure
the fair value

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

[Notes on tax-effect accounting]1.

Significant components of deferred tax assets and liabilities by cause(thousands of yen)
As ofDecember 31, 2015

As ofDecember 31, 2016

Deferred tax assets:
Valuation difference on assets accepted through merger

1,833,861

1,775,942

Amortization of fixed-term leasehold of land―

32,589Asset retirement obligations

―

3,087

Deferred gains (losses) on hedges

179,626

221,352

Total gross deferred tax assets

2,013,488

2,032,972(2,013,488)(2,032,972)

―

―

―

46,233―

46,233

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

Details of major causes of material differences between the statutory tax rate and the tax rate under effective tax accounting
As ofDecember 31, 2015

Statutory tax rate

As ofDecember 31, 201634.15%

32.31%

Deduction for dividends paid

(32.59%)(32.37%)

Change in valuation allowance(2.72%)(0.21%)

Other – net

1.17%

0.28%

Actual effective tax rate

0.01%

0.01%

[Adjustments][Notes on asset retirement obligations]
Asset retirement obligations recognized on the balance sheet
1. Outline of the subject asset retirement obligations
JHR recognizes asset retirement obligations as it is obliged to restore the land of Hotel Centraza Hakata, acquired on April 1,
2016, and HOTEL ASCENT FUKUOKA, acquired on August 19, 2016, to the original state in accordance with the fixedterm leasehold agreement.
2. Calculation method of the subject asset retirement obligations
Calculated the amount of asset retirement obligations estimating that the expected useful life is 34 years and 48 years,
respectively, due to their remaining use period and using the discount rate of 0.484% and 0.394%, respectively.
3. Increase and decrease of the subject asset retirement obligations(thousands of yen)
For the year ended
December 31, 2015

For the year ended
December 31, 2016

Balance at beginning of period－－

Increase due to acquisition of property and equipment－

440,168

Adjustment due to passage of time

－

1,373

Balance at end of period－

441,542－

38 －[Notes on segment and related information]
1. Segment information
The segment information has been omitted because JHR has only one segment, which is the investment and management ofhotel real estate.
2. Related information
For the year ended December 31, 2015(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in asingle product/service category accounted for more than 90% of total operating revenue on the statements of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Name of related segment

Hotel Management Japan Co., Ltd.

6,147,639

Investment and management of hotel real estate

AAPC Japan K.K.

2,546,023

Investment and management of hotel real estate

THE DAI-ICHI BUILDING CO., LTD.

(Note)

Investment and management of hotel real estate(Note) The operating revenue is not disclosed as consent on disclosure has not been obtained from the hotel lessee.

For the year ended December 31, 2016(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in asingle product/service category accounted for more than 90% of total operating revenue on the statements of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Name of related segment

Hotel Management Japan Co., Ltd.

6,825,199

Investment and management of hotel real estate

AAPC Japan K.K.

2,980,712

Investment and management of hotel real estate

－

39 －

[Notes on rental properties, etc.]
JHR owns rental properties for hotels to earn lease income and income from management contracts. The carrying amounts,changes in such balances, and fair values of such properties were as follows:(thousands of yen)
For the year ended
December 31, 2015

Use

For the year ended
December 31, 2016

Carrying amount

Hotel

Balance at beginning of period

169,847,788

222,362,750

Net increase (decrease) during period

52,514,962

62,602,797

Balance at end of period

222,362,750

284,965,547

302,110,000

398,770,000

Fair value at end of period

For a summary of the applicable rental properties, please refer to “5. Reference information; (2) Assets under management; (C) Other major assets
under management; A. Summary of real estate properties (in trust) under management” on page 51.
With regards to net increase (decrease) during period, increase during the year ended December 31, 2015 principally represents the acquisition of thefive the b hotels for ¥20,230 million, Hotel Francs for ¥3,181 million, Mercure Yokosuka for ¥1,649 million, Okinawa Marriott Resort & Spa for¥15,094 million and ACTIVE-INTER CITY HIROSHIMA for ¥17,949 million. Decrease during the year ended December 31, 2015 principally
represents the sale of Comfort Hotel Shin-Yamaguchi for ¥787 million, Daiwa Roynet Hotel Akita for ¥1,644 million and Hotel Sunroute Niigata for¥1,967 million. Increase during the year ended December 31, 2016 principally represents the acquisition of CANDEO HOTELS UENO-KOEN for¥6,784 million, Hotel Centraza Hakata for ¥7,614 million, Holiday Inn Osaka Namba (HOTEL VISTA GRANDE OSAKA) for ¥27,245 million,
HOTEL ASCENT FUKUOKA for ¥5,222 million and Hilton Nagoya for ¥15,488 million.
Fair value at end of period is the appraisal value determined by licensed real estate appraisers.

(Note 1)
(Note 2)

(Note 3)

Real estate operating revenue and costs related to the rental properties were as follows:(thousands of yen)
For the year ended
December 31, 2015

Use

For the year ended
December 31, 2016

Amount on the statements of income
Real estate operating revenue

17,033,876

22,107,470

Real estate operating costs

5,002,501

6,589,908

Net real estate operating income

12,031,375

15,517,561

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

－

40 －

[Notes on per unit information]
As ofDecember 31, 2015

As ofDecember 31, 2016

Net assets per unit

¥41,318¥48,376

Net income per unit

¥3,036¥3,462(Note 1)
(Note 2)

Net income per unit is computed by dividing net income by the average number of investment units during the period.
Net income per unit after the adjustment of potentially dilutive units is not presented since there are no potentially dilutive units.
The basis of computation of net income per unit is as follows:

For the year ended
December 31, 2015
Net income (JPY1000)

For the year ended
December 31, 2016

9,294,677

12,123,163――

Net income for attributable to common investment units (JPY1000)

9,294,677

12,123,163

Average number of investment units during period (units)

3,060,647

3,501,175

Amount not attributable to common unitholders (JPY1000)[Notes on significant subsequent events]
Not applicable.

－

41 －

(9) Changes in total number of investment units issued and outstanding
Issuance of new investment units through public offering (170,000 units) on January 20, 2016, issuance of new investment units
through third-party allotment (7,680 units) on February 17, 2016, issuance of new investment units through public offering(428,260 units) on July 27, 2016 and issuance of new investment units through third-party allotment (11,740 units) on August 23,
2016 resulted in procurement of ¥49,358 million. The following is the status of increase (decrease) in the total number ofinvestment units issued and outstanding and unitholders’ capital through to the end of the fiscal period under review.
Total number ofinvestment units
Unitholders’ capitalissued and outstanding(JPY1M)
Date
Capital transaction
Note(Units)Increase
Increase
Balance
Balance(Decrease)(Decrease)
November 10, 2005 Incorporation through private placement
400
400
200
200 (Note 1)
Capital increase throughJune 13, 2006
41,80042,20019,361
19,561 (Note 2)
public offering of investment units
Capital increase throughApril 6, 201115,831
58,031
3,599
23,161 (Note 3)
third-party allotment of investment units
April 1, 2012
Investment unit split
638,341
696,372
23,161 (Note 4)
April 1, 2012
Merger1,162,909
1,859,281
23,161 (Note 5)
Capital increase throughSeptember 12, 2012
240,000
2,099,281
4,855
28,017 (Note 6)
public offering of investment units
Capital increase throughOctober 11, 2012
12,0002,111,281
242
28,260 (Note 7)
third-party allotment of investment units
Capital increase throughApril 17, 2013
510,000
2,621,281
20,585
48,845 (Note 8)
public offering of investment units
Capital increase throughSeptember 9, 2014
170,000
2,791,281
10,17959,024 (Note 9)
public offering of investment units
Capital increase throughJanuary 27, 2015
200,000
2,991,281
14,97473,999 (Note 10)
public offering of investment units
Capital increase throughFebruary 18, 2015
9,041
3,000,322
676
74,676 (Note 11)
third-party allotment of investment units
Capital increase throughJune 22, 2015
140,000
3,140,322
10,50085,177 (Note 12)
public offering of investment units
Capital increase throughJuly 23, 2015
3,905
3,144,227
292
85,470 (Note 13)
third-party allotment of investment units
Capital increase throughJanuary 20, 2016
170,000
3,314,227
13,98699,456 (Note 14)
public offering of investment units
Capital increase throughFebruary 17, 2016
7,680
3,321,907
631
100,088 (Note 15)
third-party allotment of investment units
Capital increase throughJuly 27, 2016
428,260
3,750,167
33,813
133,902 (Note 16)
public offering of investment units
Capital increase throughAugust 23, 2016
11,7403,761,907
926
134,829 (Note 17)
third-party allotment of investment units(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)(Note 10)(Note 11)

(Note 12)(Note 13)

At the time of incorporation, investment units were issued with an issue price per unit of ¥500,000.
New investment units were issued through public offering with an issue price per unit of ¥480,000 (issue value of ¥463,200) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥227,400 in order to procure funds for the acquisitionof new properties.
Conducted a 12-for-1 split of investment units.
JHR (the former NHF) merged with Japan Hotel & Resort, Inc. (the former JHR). The merger was an absorption-type merger pursuant to Article 147of the Investment Trusts Act where JHR is the surviving corporation and the former JHR is the absorbed corporation. Following this merger, 11
investment units of JHR after the split of investment units were delivered by allotment for each investment unit of the former JHR.
New investment units were issued through public offering with an issue price per unit of ¥20,990 (issue value of ¥20,232) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥20,232 in order to repay loans payable, etc.
New investment units were issued through public offering with an issue price per unit of ¥41,778 (issue value of ¥40,363) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through public offering with an issue price per unit of ¥61,912 (issue value of ¥59,880) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through public offering with an issue price per unit of ¥77,415 (issue value of ¥74,874) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥74,874 in order to procure funds for allocation to partof future acquisitions of specified assets, part of other repayment of loans, or capital expenditures to maintain or improve competitiveness of existing
properties.
New investment units were issued through public offering with an issue price per unit of ¥77,512 (issue value of ¥75,007) in order to procure funds
for the acquisition of new properties, etc.
New investment units were issued through third-party allotment with an issue value per unit of ¥75,007 in order to procure funds for allocation to partof future acquisitions of specified assets, part of other repayment of loans, or capital expenditures to maintain or improve competitiveness of existing

－

42 －

properties.
(Note 14) New investment units were issued through public offering with an issue price per unit of ¥85,020 (issue value of ¥82,273) in order to procure funds
for the allocation to acquisition of new properties, etc.
(Note 15) New investment units were issued through third-party allotment with an issue value per unit of ¥82,273 in order to procure funds for allocation toacquisition of new properties, etc.
(Note 16) New investment units were issued through public offering with an issue price per unit of ¥81,536 (issue value of ¥78,956) in order to procure funds
for the allocation to acquisition of new properties, etc.
(Note 17) New investment units were issued through third-party allotment with an issue price per unit of ¥78,956 in order to procure funds for allocation to partof future acquisitions of specified assets, part of other repayment of loans, or capital expenditures to maintain or improve competitiveness of existing
properties.

－

43 －

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

Name

Executive

KanameDirector

MasudaMajor career
Apr. 1990

Registered as a lawyer (Daiichi Tokyo Bar Association)

Oct. 1998

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

Nov. 2000
Mar. 2001

General Counsel
Executive Director (Concurrent position)

Aug. 2002
May 2003

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

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

Established Masuda & Partners Law Office asManaging Partner (current)

Jun. 2008

Joined Jibun Bank Corporation as Outside Corporate Auditor(current)

Sep. 2010
Feb. 2012

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

Jun. 2014

Auditor (current)
Joined Kando Co., Ltd. as Outside Director (current)

Oct. 2014
Nov. 2015

Joined CROSSWARP Inc. as Outside Corporate Auditor (current)
Joined Japan Hotel REIT Investment Corporation as Executive

Mar. 2016

Director (current)
Joined GMO Internet, Inc. as Director (Independent Director) /Number ofinvestment
units held

0

Audit and Supervisory Committee Member (current)
Apr. 1966

Joined Sumitomo Mitsui Trust Bank, Limited (formerly, The Mitsui

May 1988

Trust and Banking Co., Ltd.)
Branch Manager, Yokosuka Branch

Dec. 1989
May 1991

Branch Manager, Umeda Branch
General Manager, Investment Advisory Department
General Manager, Pension Fund Management Department
Joined JDC Corporation and served as Managing Director
Joined Sumitomo Mitsui Trust Asset Management Co., Ltd.
(formerly, Chuo Mitsui Asset Management Co., Ltd.) as Managing

Supervisory

HiroshiJan. 1993
Jun. 1995

Director

Matsuzawa

Jul. 1999

Sep. 2001

Director
Representative Director and President

May 2004
Apr. 2012

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

－

44 －

0

TitleName

Supervisory

TetsuyaDirector

Mishiku

Major career
Apr. 1993

Registered as a lawyer (Daiichi Tokyo Bar Association)

Dec. 2000

Joined Iinuma Law OfficePartner

Sep. 2002
Nov. 2003

Part-time lecturer at Chuo University
Changed registration to Shizuoka Bar Association

Nov. 2005

Joined Aoba Law Office as Partner
Joined Japan Hotel REIT Investment Corporation (formerly, Nippon

Number ofinvestment
units held

Hotel Fund Investment Corporation) as Supervisory Director(current)
Dec. 2005
Mar. 2007

Joined A-too Co., Ltd. as Part-time Corporate Auditor
Joined Healing Entertainment Co., Ltd. as Part-time Corporate

Aug. 2010

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

Sep. 2010

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

Aug. 2011(current)
Outside Director of A-too Co., Ltd. (current)

Nov. 2016

Outside Corporate Auditor of Kabushiki kaisha Tem Realtor(current)

Apr. 1971

Joined Development Bank of Japan, Inc. (formerly, Japan
Development Bank) responsible for lending and investment

Apr. 1997
Apr. 1998

General Manager, Retail Department at Head Office
Joined K.K. Hotel Odakyu as Managing Director and General

Apr. 2002

Manager of Accounting Department
Joined K.K. Hotel Odakyu (formerly, K.K. Odakyu Hotels and0

Resorts which merged with K.K. Hotel Odakyu later) as Managing
Director responsible for marketing
Supervisory
Director

HirotoKashiiJun. 2003

Joined New Kansai International Airport Co., Ltd. (formerly, KansaiInternational Airport Co., Ltd.) as Executive Officer responsible for0

terminal sales promotion, subsidiaries management and hotelbusinesses(Note)

Jun. 2009
Jun. 2012

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

Mar. 2013
Jun. 2013

Representative Director
Joined DBJ Asset Management Co., Ltd. as Corporate Auditor

Nov. 2015

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

In case the number of Executive Director does not meet the requirement stipulated by laws and regulations, Hisashi Furukawa, Representative
Director of the Asset Management Company, was elected as Substitute Executive Director, based on the resolution made by the 7th General Meetingof Unitholders of JHR held on November 26, 2015.

－

45 －

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

Name

Major career
Apr. 1982
Jan. 1984
Jul. 1990

Representative
Director andPresident

Hisashi
Furukawa

Apr. 2000

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

Director

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

Director

ToshitakaIshidoSep. 2006
Apr. 2007
Apr. 2012

Mar. 2013

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

－

46 －

Number ofshares held

0

0

0

TitleDirector

Director

Director(Chairman)

Name

NoboruItabashi

Hiroyuki
Aoki

SuchadChiaranussati

Major career
Apr. 1995

Joined Asahi Sangyo Kaisha, Ltd., Fabricated Metals Department

Jan. 1998

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

Aug. 1999
Sep. 2006

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

the Finance and Accounting Division
Senior General Manager of Operations Division

Apr. 2012

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

Mar. 2015

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

Sep. 1994

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

Audit Department
Joined Ingersoll-Rand Headquarters, Internal Audit Department

Nov. 2001
Jul. 2002

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

Aug. 2005

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

Finance
Joined Tokyo Venture Gear Co. Ltd. as Director

Nov. 2011

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

Dec. 2011

Appointed Statutory Auditor (part-time) of Japan Hotel & Resort
K.K.

Apr. 2012

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

Oct. 1987

Joined the Central Bank of Thailand, Foreign Exchange Reserve
Management Division

Oct. 1991

Joined Temasek Holdings (in Singapore) and served as Manager of
Direct Investment

Nov. 1992

Joined JP Morgan (in Singapore) and served as Vice President in theReal Estate Investment and Investment Banking DivisionNov. 1998
Apr. 1999

Appointed Advisor at the Central Bank of Thailand
Joined Westbrook in Singapore as Principal and Managing Director

Nov. 2004

responsible for Asian investment activities
Established Real Estate Capital Asia Partners, L.P.

Oct. 2007
May 2010

Appointed Director of SC Management Limited (current) (Note)
Appointed Director of Rockrise Sdn Bhd as Director (current) (Note)

Aug. 2010

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

Aug. 2015
Oct. 2015

Appointed Director of SC J-Holdings Pte. Ltd. (current) (Note)
Appointed Chairman (part-time) of Japan Hotel REIT Advisors Co.,
Ltd. (current)

－

47 －

Number ofshares held

0

0

0

TitleDirector

Name

Major career
May 1989

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

Ian George
WinstonJan. 2003

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

Lien

Oct. 2007
Aug. 2010

Number ofshares held

0

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

Director

Chua Keng
Kim

Mar. 1988

Joined Government of Singapore Investment Corporation (GIC)

Apr. 1995

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

Jun. 2007

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

Nov. 2007

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

Sep. 2008
Aug. 2010

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

Aug. 2013

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

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

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

Mar. 1998

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

Apr. 2000

Corporate

ShigeoAuditorSekita(Note)

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

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

Aug. 2005

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

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

Dec. 2010
Apr. 2012

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

Oct. 2013

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

0

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

－

48 －

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

Hotel type
(Note 1)

Prefectural
location

Tokyo

Limited-service
hotel
Osaka
Hokkaido

FukuokaRealestate
in
trust

Kyoto
Okinawa
KumamotoNaraibis Tokyo Shinjuku
CANDEO HOTELS UENO-KOEN
the b ikebukuro
the b akasaka-mitsuke
Hotel Sunroute Shinbashi
Comfort Hotel Tokyo Higashi Nihombashi
the b hachioji
the b ochanomizu
Smile Hotel Nihombashi Mitsukoshimae
R&B Hotel Ueno Hirokoji
R&B Hotel Higashi Nihonbashi
Hotel Vista Kamata Tokyo
the b suidobashi
Dormy Inn EXPRESS Asakusa
Chisun Inn Kamata
Namba Oriental Hotel
Holiday Inn Osaka Namba (Note 4)
ibis Styles Sapporo
Mercure Sapporo
the b hakata
Hakata Nakasu Washington Hotel Plaza
Toyoko Inn Hakata-guchi Ekimae
HOTEL ASCENT FUKUOKA
ibis Styles Kyoto Station
Mercure Okinawa Naha
Dormy Inn Kumamoto
Nara Washington Hotel Plaza
Subtotal
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel) (Note 5)
Oriental Hotel Hiroshima
Oriental Hotel tokyo bay
Hotel Francs
Hilton Nagoya
Kobe Meriken Park Oriental Hotel
Hotel Centraza Hakata
Mercure Yokosuka
Subtotal

7.5

17,7785.6

4,043
18,512
3,165
－
9,963
－
1,659
55,277

1.7
7.7
1.3
－
4.1
－
0.7
23.0

4,071
18,267
3,145
15,530
9,947
7,506
1,643
77,891

1.3
5.7
1.0
4.9
3.1
2.4
0.5
24.5

Hotel Nikko Alivila

18,325

7.6

18,267

5.7

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

15,025
6,882
26,1096,019
3,788
76,150222,352

6.3
2.9
10.9
2.5
1.6
31.7
92.5

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

4.7
2.1
8.2
1.9
1.2
23.9
89.2

Deposits and other assets (Note 6)

18,003

7.5

34,332

10.8

Total assets

240,356100.0

317,878

100.0

Chiba
Aichi
Hyogo
Fukuoka
Kanagawa

Okinawa

Resort hotel

Amount(JPY1M)
Total liabilities
Total net assets(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)

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

17,934Hiroshima
Full-service
hotel

Name

As of
December 31, 2015
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
7,487
3.1
－
－
6,591
2.7
6,295
2.6
4,873
2.0
3,655
1.5
2,670
1.1
2,350
1.0
2,056
0.9
1,761
0.7
1,528
0.6
1,473
0.6
1,204
0.5
963
0.4
802
0.3
14,689
6.1
－
－
6,788
2.8
6,010
2.5
2,323
1.0
2,075
0.9
1,498
0.6
－
－
6,725
2.8
2,953
1.2
2,232
0.9
1,910
0.8
90,92437.8

110,442
129,914

Ratio tototal assets
(%)
45.9
54.1

Amount(JPY1M)
135,889
181,989

Ratio tototal assets
(%)
42.7
57.3

Hotels are categorized as limited-service hotels, full-service hotels or resort hotels according to the manner of operation.
For real estate in trust, “Total amount held” shows the amount calculated by deducting accumulated depreciation from acquisition price (including
expenses incidental to acquisition).
“Ratio to total assets” shows the ratio of total amount of each asset held to total assets, rounded off to one decimal place.
HOTEL VISTA GRANDE OSAKA changed its name to Holiday Inn Osaka Namba on November 1, 2016. In this report, the same shall apply
hereinafter.
ACTIVE-INTER CITY HIROSHIMA is classified in accordance with the business category of Sheraton Grand Hiroshima Hotel, its main facility.

－

49 －

(Note 6)

ACTIVE-INTER CITY HIROSHIMA (Sheraton Hotel Hiroshima) changed its name to ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand
Hiroshima Hotel) on June 10, 2016. In this report, the same shall apply hereafter.
Includes machinery and equipment, tools, furniture and fixtures, construction in progress, construction in progress in trust, and intangible assets(excluding leasehold rights in trust and fixed-term leasehold of land in trust).

－

50 －

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

Name

1

Kobe Meriken Park
Oriental Hotel

2

Oriental Hoteltokyo bay3

Namba
Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel
Hiroshima

6

ibis Tokyo Shinjuku

8

The Beach Tower
Okinawa

9

HakoneSetsugetsuka

10

Dormy Inn
Kumamoto

12

the b suidobashi

13

Dormy Inn
EXPRESS Asakusa

14

15

Hakata Nakasu
Washington Hotel
Plaza
Nara
Washington Hotel
Plaza

16

R&B Hotel
Ueno Hirokoji

17

R&B Hotel
Higashi Nihonbashi

18

Comfort HotelTokyo Higashi
Nihombashi

LocationLand

Building

Structures andstories(Note 4)

Building
completion(Note 5)

Total
numberof guest
rooms(rooms)(Note 6)

Area
Acreage(m2)(Note 2)

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

Leaseholdright(Note 7)Compartmentalized
ownership

22,660.09(Note 7)

48,701.82(Note 7)S
14F

July 1995

319(Note 7)

Ownership

Ownership

9,914.00

44,833.11

SRC/S/RC
B2/12FMay 1995

503

Ownership

Ownership

4,505.23

19,364.33

S/SRC
B1/9F

March 1996

258

Yomitan-son,
Nakagami-gun,
Okinawa

Ownership/
Leaseholdright(Note 8)

Ownership

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

April 1994

396

Ownership

Ownership

1,792.84

13,752.22

SRC
B2/23F

September 1993
Extended in
September 2006

227

Ownership

Ownership

937.67

7,398.19

SRC/RC/S
B1/11F

September 1980

206

280

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

Ownership

Ownership

10,242.00

20,140.01

SRC
24F

March 2004
Extended inJune 2005
Extended in
May 2006

Ownership

Ownership

10,478.89

10,655.03

RC
B1/5F

October 2006

158

Ownership

Ownership

1,295.85

7,701.19

SRC
13F

January 2008291

Ownership

Ownership

723.86

3,097.25

SRC/RC
B1/8F

August 1986
Extended in
September 198999

Ownership

Ownership

287.66

2,006.51

SRC/RC
10F

March 199777

Ownership

Ownership

1,128.46

5,692.24

S
12F

March 1995

247

Ownership

Ownership

2,322.28

5,385.82

S
7F

March 2000

204

Ownership

Ownership

446.293,060.21

S
13F

April 2002

187

Ownership/
Leaseholdright

Ownership

507.83(Note 9)3,715.26

S
10F

March 1998

202

Ownership

Ownership

823.67

5,765.26

S
11F

January 2008

259

－

51 －

Form of ownership(Note 1)
PropertyNo.

Name

LocationLand

Building

Building
completion(Note 5)

Total
numberof guest
rooms(rooms)(Note 6)

March 1997

164

Area
Acreage(m2)(Note 2)

Structures andstories
Total floor area
2
(Note 4)(m )(Note 3)22

Smile Hotel
Nihombashi
Mitsukoshimae

NihonbashiHoncho,
Chuo-ku,Tokyo

Ownership

Ownership24

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

Ownership

Ownership

25

Hotel Vista
Kamata Tokyo

Ownership

Ownership

743.46

3,831.80

SRC/S
B1/9F

January 1992

105

26

Chisun Inn Kamata

Ownership

Ownership

240.35

1,499.87

SRC
12F

April 2003

70

29

Hotel Keihan
Universal City

3,350.14(Note 10)

17,252.71(Note 10)

S/SRC
21F

June 2001

330

30

Hotel Sunroute
Shinbashi

31

Hilton Tokyo Bay

32

ibis Styles
Kyoto Station

33

ibis Styles Sapporo

34

Mercure Sapporo

35

MercureOkinawa Naha

36

the b
akasaka-mitsuke

37

the b ikebukuro38

the b ochanomizu

39

the b hachioji

40

the b hakata

41

Hotel Francs

42

Mercure Yokosuka

Yokosuka-shi,
Kanagawa

43

Okinawa Marriott
Resort & Spa

Nago-shi,
Okinawa

44

45
46
47

48

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

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

SRC/RC
B1/10F

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

257

Ownership

Ownership

761.01

5,476.39

S/SRC
16F

March 2008

220

Ownership(Note 11)

Ownership(Note 11)

36,121.00(Note 11)

72,146.60(Note 11)

SRC
B1/11F

June 1988

823

Ownership

Ownership

1,107.77

5,003.99

RC
10F

March 2009215

Ownership

Ownership

2,515.22

14,992.49

RC
B1/16F

July 2010278

Ownership

Ownership

2,016.27

16,145.79

S
B1/15F

April 2009285

Ownership/
Leaseholdright

Ownership

2,860.69(Note 12)

10,884.25

RC
14F

August 2009260

Ownership

Ownership

625.46

2,867.04

S
8F

November 2002

122

Ownership

Ownership

718.715,650.01

SRC/S
B2/10F

June 1982

175

Ownership

Ownership

357.47

1,742.23

SRC
9F

August 199972

Ownership

Ownership

1,227.29

7,847.65

SRC
B2/12F

August 1986196

Ownership

Ownership

719.46

3,986.09

SRC
8F

September 1997

175

Ownership

Ownership

4,828.00

19,213.39

SRC
B1/13F

August 1991

222

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

1,887.86(Note 13)

16,881.82(Note 13)

SRC/S
B3/21F

November 1993160

Ownership

52,988.00

36,430.15

SRC
14F

February 2005
Extended in
December 2006

361

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

S/RC/SRC
B1/21F

August 2010

1,559.03

7,030.10

S
12F

December 2009268

2,163.42

18,105.42

SRC
B3/12F

July 1985

194

2,428.47

11,501.10

S
12F

August 2008

314

1,482.13

8,600.22

S/RC/SRC
B2/13F

April 1999

263

Ownership

ACTIVE-INTER
Higashi-ku,
Right of site Compartmentalized
CITY HIROSHIMA
ownership
Hiroshima-shi, (co-ownership)(Sheraton Grand(Note 14)
Hiroshima(Note 14)
Hiroshima Hotel)
CANDEO HOTELS Negishi, Taito-ku,
Ownership
Ownership
UENO-KOEN
Tokyo
Hakata-ku,
Fixed-term
Hotel Centraza
Fukuoka-shi, leasehold right Ownership
HakataFukuoka(Note 16)
Holiday Inn Osaka
Chuo-ku, OsakaOwnership
Ownership
Nambashi, Osaka
Ownership/
Chuo-ku,
Fixed-term
HOTEL ASCENT
Fukuoka-shi,leaseholdOwnership
FUKUOKA
Fukuokaright(Note 17)

－

52 －

238
(Note 15)

49
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)(Note 10)(Note 11)

(Note 12)(Note 13)

(Note 14)

(Note 15)
(Note 16)

Hilton Nagoya

Ownership
Naka-ku, Nagoyaand
shi, Aichi
superficies(Note 18)

Compartmentalized
ownership(Note 18)

6,723.59(Note 18)

46,368.99(Note 18)

S/RC/SRC
B3/29F

February 1989

460

“Form of ownership” is the type of right held by the owner of the real estate that is the asset held (the trustee in the case of a real estate in trust).
“Acreage” is the area of the entire site based on the registration or registration record. The registration or registration record entry may not coincidewith the present state of the land.
“Total floor area” is the area of the building based on the registration or registration record. The area of the accessory building, if any, is included
unless otherwise stated. The registration or registration record entry may not coincide with the present state of the building.
Under “Structures and stories,” “S” means steel-framed building, “RC” means reinforced concrete building and “SRC” means steel reinforced
concrete building. The structure of the main building is shown, but there may be cases where there is a parking lot or storage space as an accessory to
the building in a separate building.
“Building completion” is based on the registration or registration record.
“Total number of guest rooms” is the respective number of guest rooms available for sale (excluding rooms occupied by the hotel for a long term) at
the end of the fiscal period under review.
The land of Kobe Meriken Park Oriental Hotel is land leased by JHR from the City of Kobe and land with permission for use from the City of Kobe
under the City of Kobe’s ordinance for harbor facilities, etc. The acreage above is based on the number on the construction confirmation application
form. The acreage for which permission for use has been obtained is 1,328.44 square meters (part of the building for which the permission for use
was obtained was returned on August 31, 2014, resulting in total floor area changing from 2,804.18 square meters to 1,328.44 square meters), of
which 1,188.32 square meters is included in the acreage above. In addition, the building of Kobe Meriken Park Oriental Hotel is a building undercompartmentalized ownership by two compartmentalized owners (JHR and the City of Kobe). The figure above is the total floor area of the entire
building under compartmentalized ownership (including an accessory building of 764.83 square meters), where the portion owned exclusively by
JHR (excluding an accessory building of 764.83 square meters) is 31,899.07 square meters, the portion owned exclusively by the City of Kobe is
13,960.11 square meters, and the portion that is the common area of JHR and the City of Kobe is 2,077.81 square meters (JHR has 72.18% interestand the City of Kobe has 27.82% interest of the common area). Furthermore, regarding the portion of the building owned exclusively by the City ofKobe, the building for which JHR has obtained the permission for use is 694.00 square meters and is included in the total floor area above of
48,701.82 square meters.
The land of Hotel Nikko Alivila is land owned by JHR or land leased or subleased by JHR from Kabushiki Kaisha Okinawa Umi No Sono
(hereinafter referred to as the “Umi No Sono”). The acreage above is the sum total of the area on the certified copy of the real estate registry of eachland. Furthermore, the land leased or land subleased includes those where only a portion of a parcel of land is leased or subleased and, thus, theacreage above includes some area that is not leased or subleased by JHR from Umi No Sono. In addition, subdivision of part of the subleased land
resulted in the acreage above changing from 67,038.05 square meters to 65,850.05 square meters on June 12, 2012. The sum total of the acreage ofthe land owned by JHR and the land leased or subleased calculated based on the certified copy of the real estate registry, lease contract with Umi No
Sono, etc. is 57,406.26 square meters. The total floor area above includes an accessory building of 120.10 square meters and excludes a building
leased from Umi No Sono of 493.50 square meters.
Of the acreage of R&B Hotel Higashi Nihonbashi, the area of the land leased is 77.38 square meters.
The land of Hotel Keihan Universal City comprises land under co-ownership with other right holders (8,785.43 square meters) and land leased underquasi-co-ownership with other right holders from the City of Osaka (8,788.67 square meters). The acreage above is the sum total of JHR’s coownership interest of the land under co-ownership of 1,674.76 square meters (approximately 19.06% of co-ownership interest) and JHR’s quasi-coownership interest in the land leasehold right of the land leased from the City of Osaka of 1,675.38 square meters (approximately 19.06% of quasico-ownership interest). In addition, the building of Hotel Keihan Universal City is a building under compartmentalized ownership for Universal
CityWalk Osaka, which comprises two hotel buildings, business facilities, commercial facilities and others, as a single building (86,888.64 square
meters). The portion owned exclusively by JHR (including the common area by bylaws) is 15,749.32 square meters, and JHR’s co-ownership interestof the common area (15,648.98 square meters) is 3,466.56 square meters (approximately 22.15% of co-ownership interest). “Total floor area” in thetable above is the total floor area based on the completion drawing of new construction of Hotel Keihan.
The land of Hilton Tokyo Bay is land under co-ownership with other right holders. The acreage is the total area of the land under co-ownership. Of
the acreage, JHR’s co-ownership interest is 32,508.90 square meters (9/10 of co-ownership interest). In addition, the building of Hilton Tokyo Bay is
a building under co-ownership with other right holders. The total floor area is the total area of the building under co-ownership (including anaccessory building of 37.38 square meters). Of the total floor area, JHR’s co-ownership interest is 64,931.94 square meters (9/10 of co-ownershipinterest).
The acreage of Mercure Okinawa Naha includes land leased of 125.67 square meters.
The land of Mercure Yokosuka comprises the entire joint ownership of right of site. The acreage is the area equivalent to JHR’s co-ownership interestof the right to use the site (181,372/1,000,000 or approximately 18.14%) of the entire area of the subject land (10,408.79 square meters), which is
1,887.86 square meters. In addition, the building is a building under compartmentalized ownership for Bay Square Yokosuka Ichibankan, which
comprises a hotel, a theater, stores, residential complex, office spaces and parking lots, as a single building (67,019.04 square meters). Total floor areais the area of the portion owned exclusively by the hotel on the certified copy of the real estate registry.
The land of ACTIVE-INTER CITY HIROSHIMA comprises the entire joint ownership of right of site. The acreage is the area equivalent to JHR’s
co-ownership interest of the right to use the site (9,862,454/10,000,000 or approximately 98.62%) of the entire area of the subject land (6,468.28
square meters), which is 6,379.02 square meters. In addition, the building is a building under compartmentalized ownership for ACTIVE-INTER
CITY HIROSHIMA, which comprises Sheraton Grand Hiroshima Hotel, office spaces, retail zone, parking lots and bicycle parking lots, etc., as asingle building (6,379.02 square meters). Total floor area is the area of the exclusive area for the hotel, office spaces, stores and parking lots on thecertified copy of the real estate registry.
The total number of guest rooms of ACTIVE-INTER CITY HIROSHIMA is the total number of guest rooms of the main facility Sheraton Grand
Hiroshima Hotel.
Remaining term of the fixed-term leasehold of land of Hotel Centraza Hakata is until March 30, 2057.

－

53 －

(Note 17) Of the acreage of HOTEL ASCENT FUKUOKA, the area of the land leased is 113.52 square meters, and its remaining term of the fixed-termleasehold is until July 2, 2065.
(Note 18) Land of Hilton Nagoya is comprised of the owned land and land with superficies, and Acreage indicates total of owned land (918.39 square meters)
and land with superficies (5,805.20 square meters). Building of Hilton Nagoya is a compartmentalized ownership of Ammnat Square (Total floor
space: 91,948.34 square meters), which consists of hotel building (including retail space), office building and car parking space, etc. Total floor area
is a total of exclusive area of hotel and retail space (44,552.79 square meters), exclusive area of office in 9th floor (1,075.90 square meters) multiplied
by JHR’s share of co-ownership interest ratio (74,030/107,590; approximately 68.8%) (740.30 square meters) and exclusive area of office in 10th
floor (1,075.90 square meters).
(Note 19) The omitted property numbers are the property numbers of assets that have been transferred before the end of the previous fiscal year.

－

54 －

Details of assets under management 2 (acquisition price, etc.)
PropertyNo.

Name

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

Appraisalvalue
at end ofperiod(JPY1M)(Note 4)Upper-middle

10,900

10,137

14,400J

3.8

Unsecured

Grade(Note 1)

Investment
ratio
Appraisal(Acquisition Collateralagencyprice)(Note 7)(Note 5)(%)(Note 6)

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

Mid-price

19,90018,46034,100J

6.9

Unsecured

3

Namba Oriental Hotel

Mid-price

15,00014,76532,000J

5.2

Unsecured

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

6

Luxury18,90018,54529,200J

6.6

Unsecured

Upper-middle

4,100

4,123

4,250

J

1.4

Unsecuredibis Tokyo Shinjuku

Mid-price

7,243

7,778

9,290

J

2.5

Unsecured

8

The Beach Tower Okinawa

Mid-price

7,610

6,837

9,420

J

2.7

Unsecured

9

Hakone Setsugetsuka

Mid-price

4,070

3,756

5,020

J

1.4

Unsecured

10

Dormy Inn Kumamoto

Mid-price

2,334

2,199

2,950

M

0.8

Unsecured

12

the b suidobashi

Mid-price

1,120

1,231

2,040

J

0.4

Unsecured

13

Dormy Inn EXPRESS Asakusa

Economy

999

951

1,300

M

0.3

Unsecured

14

Hakata Nakasu Washington Hotel Plaza

Mid-price

2,130

2,054

4,350

J

0.7

Unsecured

15

Nara Washington Hotel Plaza

Mid-price

2,050

1,876

2,430

J

0.7

Unsecured16

R&B Hotel Ueno Hirokoji

Economy

1,720

1,764

1,920

M

0.6

Unsecured17

R&B Hotel Higashi Nihonbashi

Economy

1,534

1,512

2,050

M

0.5

Unsecured

18

Comfort Hotel Tokyo Higashi Nihombashi

Economy

3,746

3,625

5,320

M

1.3

Unsecured

22

Smile Hotel Nihombashi Mitsukoshimae

Economy

2,108

2,047

3,060

M

0.7

Unsecured24

Toyoko Inn Hakata-guchi Ekimae

Economy

1,652

1,477

2,680

T

0.6

Unsecured

25

Hotel Vista Kamata Tokyo

Economy

1,512

1,468

1,990

T

0.5

Unsecured

26

Chisun Inn Kamata

Economy

823

800

1,410

T

0.3

Unsecured

29

Hotel Keihan Universal City

Mid-price

6,000

5,983

14,600R

2.1

Unsecured

30

Hotel Sunroute Shinbashi

Mid-price

4,800

4,854

8,730

D

1.7

Unsecured

31

Hilton Tokyo Bay

Luxury26,05026,18036,000D

9.1

Unsecured32

ibis Styles Kyoto Station

Mid-price

6,600

6,731

10,900D

2.3

Unsecured33

ibis Styles Sapporo

Mid-price

6,797

6,754

10,200J

2.4

Unsecured34

Mercure Sapporo

Mid-price

6,000

5,964

10,300J

2.1

Unsecured35

Mercure Okinawa Naha

Mid-price

3,000

2,933

7,620

J

1.0

Unsecured36

the b akasaka-mitsuke

Mid-price

6,250

6,305

6,740

J

2.2

Unsecured37

the b ikebukuro

Mid-price

6,520

6,586

7,590

J

2.3

Unsecured38

the b ochanomizu

Mid-price

2,320

2,349

2,590

J

0.8

Unsecured39

the b hachioji

Mid-price

2,610

2,687

3,070

J

0.9

Unsecured40

the b hakata

Mid-price

2,300

2,354

3,960

J

0.8

Unsecured

41

Hotel Francs

Mid-price

3,105

3,145

4,090

D

1.1

Unsecured42

Mercure Yokosuka

Mid-price

1,650

1,658

2,040

D

0.6

Unsecured

43

Okinawa Marriott Resort & Spa

Upper-middle

14,95014,971

17,200J

5.2

Unsecured

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Luxury17,32017,79518,700D

6.0

Unsecured

45

CANDEO HOTELS UENO-KOEN

Mid-price

6,705

6,761

7,630

D

2.3

Unsecured

46

Hotel Centraza Hakata

Mid-price

7,197

7,581

7,690

D

2.5

Unsecured

47

Holiday Inn Osaka Namba

Mid-price

27,00027,20328,800J

9.4

Unsecured

48

HOTEL ASCENT FUKUOKA

Economy

4,925

5,211

5,340

D

1.7

Unsecured

49

Hilton Nagoya

Luxury15,25015,53415,800D

5.3

Unsecured

286,801

284,965

398,770

Total

－

55 －

100.0

(Note 1)(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)JHR categorizes hotels into the four grade classes “Luxury,” “Upper-middle,” “Mid-price” and “Economy” mainly from the perspective of average
daily rate, etc.
“Acquisition price” is the acquisition price stated on the purchase and sale agreement for beneficial interest in trust etc. (consumption tax, local
consumption tax and the acquisition expense such as broker’s fee are not included). The acceptance prices are indicated for the properties that havebeen accepted from the former JHR.
“Carrying amount at end of period” is the book value at the end of the fiscal period under review, and includes not only the amounts for real estate intrust, but also machinery and equipment, tools, furniture and fixtures, construction in progress, construction in progress in trust, and intangible assets.
“Appraisal value at end of period” is the appraisal value at the end of the fiscal period under review as the date of appraisal, in accordance with theasset valuation methods and standards provided in JHR’s Articles of Incorporation and the regulations set forth by The Investment Trusts Association,
Japan.
Under “Appraisal agency,” the letters indicate the appraisers for the properties as follows:
J:
Japan Real Estate InstituteM:
Morii Appraisal & Investment Consulting, Inc.
T:
The Tanizawa Sōgō Appraisal Co., Ltd.
R:
Rich Appraisal Institute Co., Ltd.
D:DAIWA REAL ESTATE APPRAISAL CO., LTD.
“Investment ratio” is the ratio of acquisition price of the respective asset held at the end of the fiscal period under review to the total amount ofacquisition price of all assets held at the end of the fiscal period under review, rounded off to one decimal place.
“Collateral” is whether or not a pledge has been established for the beneficial interest in trust.
The omitted property numbers are the property numbers of assets that have been transferred.

Details of assets under management 3 (change in portfolio tenants)
The following is the change in total number of tenants, occupancy rate, etc. of real estate properties (in trust) under management forthe past five years.
12th period
March 2012
Number of tenants(Note 1)
Total leasable area
(Note 2)
Total leased area
(Note 3)
Occupancy rate
(Note 4)(Note 1)

(Note 2)

(Note 3)(Note 4)24

13th period
December 2012

14th period
December 2013

15th period
December 2014

16th period
December 2015

17th period
December 2016

37

38

57

113

128

2

101,028.49 m

2

288,875.32 m

2

349,162.63 m

2

386,826.71 m

2493,758.78 m

587,481.02m2

101,028.49 m2

288,875.32 m2

349,162.63 m2

386,447.08 m2

493,138.06 m2

587,050.94m2

100.0%

100.0%

100.0%

99.9%

99.9%

99.9%

Number of tenants indicates the total number of tenants based on the lease contracts for respective real estate in trust (excluding tenants of parking
lots, etc.) as of the end of each fiscal period. However, for properties for which master lease contracts under the pass-through scheme are concluded
in which trustee receives the same amount of rents, etc. from end tenants as is in principle, the total number of end tenants (excluding tenants ofparking lots, etc.) is indicated.
In principle, leasable area represents leasable area of the building, which does not include leasable area of land (including parking lots on ground),based on a lease contract or plan for each real estate in trust. For properties in which the leased area is not described in the lease contract, leasablearea represents the area described in the registration of the building. Furthermore, when the leasable area in the lease contract is indicated in tsubo
units, the figure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo). In this report, the same shall apply
hereinafter.
In principle, leased area represents the leased area described in the lease contract of the building. For properties in which the leased area is notdescribed in the lease contract, leased area shows the area described in the registration of the building. Furthermore, when the leased area in the lease
contract is indicated in tsubo units, the figure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo).
However, for properties for which master lease contracts under the pass-through scheme are concluded in which trustee receives the same amount ofrents, etc. with rents, etc. from end tenants as is in principle, the total area for which lease contracts have been concluded with end tenants and which
are actually leased is indicated. In this report, the same shall apply hereinafter.
Occupancy rate indicates the percentage of leased area to leasable area of respective real estate properties in trust as of the end of each fiscal period or
fiscal period. In this report, the same shall apply hereinafter.

Details of property assets 4 (information on major real estate)
There is no major real estate of which total annual rent accounts for 10% or more of the total annual rent of the entire portfolio. Totalannual rent of the entire portfolio is the total annual rent calculated based on Note 2 of “C. Status of portfolio diversification” on page
64.

－

56 －

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

1

Kobe Meriken Park Oriental Hotel

Variable/Fixed

Real estate
operating revenue(JPY1000)
1,103,646

2

Oriental Hotel tokyo bay

Variable/Fixed

1,879,183

1,758,566

1,315,833

3

Namba Oriental Hotel

Variable/Fixed

1,574,336

1,474,633

1,309,019

4

Hotel Nikko Alivila

Variable/Fixed

1,804,507

1,654,475

1,336,126

5

Oriental Hotel Hiroshima

Variable/Fixed

469,494

423,958

340,279

6

ibis Tokyo Shinjuku

Management contract

722,167

532,085456,602

8

The Beach Tower Okinawa

Fixed

511,023

467,562

342,456

9

Hakone Setsugetsuka

Fixed294,946

270,378

187,135

10

Dormy Inn Kumamoto

Fixed

194,460

153,486

113,62712

the b suidobashi

Variable/Fixed

121,929

110,542

86,732

13

Dormy Inn EXPRESS Asakusa

Fixed

63,99555,27542,947

14

Hakata Nakasu Washington Hotel Plaza (Note 4)

Fixed

240,000

225,000

199,000

15

Nara Washington Hotel Plaza (Note 4)

Fixed

151,000

134,000

93,000

16

R&B Hotel Ueno Hirokoji

Fixed98,342

83,23870,071

17

R&B Hotel Higashi Nihonbashi

Fixed122,207105,397

86,50518

Comfort Hotel Tokyo Higashi Nihombashi

270,114240,514204,679

22

Smile Hotel Nihombashi Mitsukoshimae

152,951

137,312118,315

24

Toyoko Inn Hakata-guchi Ekimae

141,039

128,052

106,66125

Hotel Vista Kamata Tokyo

115,215

100,40277,46526

Chisun Inn Kamata

79,09071,501

59,84829

Hotel Keihan Universal City

914,058

835,099

750,72130

Hotel Sunroute Shinbashi

403,274

346,792

325,667

31

Hilton Tokyo Bay

1,959,866

1,660,728

1,493,243

32

ibis Styles Kyoto Station

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

587,035

502,140

468,122

33

ibis Styles Sapporo

Management contract

635,792

511,369

438,79434

Mercure Sapporo

Management contract

745,017

491,733

413,750

35

Mercure Okinawa NahaManagement contract475,303

384,519334,31636

the b akasaka-mitsuke

Variable/Fixed

285,436

270,544249,76537

the b ikebukuro

Variable/Fixed

369,739

350,723

321,10938

the b ochanomizu

Variable/Fixed

115,112

107,620

98,10639

the b hachioji

Variable/Fixed

221,312199,214

174,51540

the b hakata

Variable/Fixed

230,433

218,530

199,18141

Hotel Francs

Fixed

300,000

250,823

202,684

42

Mercure Yokosuka

Variable

271,678

174,702

144,71243

Okinawa Marriott Resort & Spa

Variable/Fixed

1,066,669

992,311

770,97844

ACTIVE-INTER CITY HIROSHIMA

Variable/Fixed

1,378,205

979,232

797,60445

CANDEO HOTELS UENO-KOEN (Note 6)

Fixed309,721305,749

269,815

46

Hotel Centraza Hakata (Note 7)

Variable/Fixed

599,351

391,388

213,623

47

Holiday Inn Osaka Namba (Note 8)

Variable/Fixed

539,345537,478

491,81448

HOTEL ASCENT FUKUOKA (Note 9)

Fixed

158,704

121,181

106,719

49

Hilton Nagoya (Note 10)

Variable

430,893245,728

203,507

22,107,470

18,829,678

15,517,561

PropertyNo.

Name

Rent type(Note 1)

Total
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

NOI
(Note 2)
(JPY1000)
825,464

NOI after depreciation(Note 3)
(JPY1000)
502,205

Under “Rent type,” “Fixed” is a property under a fixed rent structure, “Variable” is a property under a variable rent structure, “Management contract”
is a property under a management contract structure, and “Variable/Fixed” is a property under a combination of fixed and variable rent structures.
NOI = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement
obligations expenses
NOI after depreciation (net real estate operating income) = Real estate operating revenue − Real estate operating costs
For Hakata Nakasu Washington Hotel Plaza and Nara Washington Hotel Plaza, consent on disclosure of rent in units of thousand yen has not beenobtained from the lessees and is thus rounded down to the nearest million yen.
For Smile Hotel Nihombashi Mitsukoshimae, Hotel Vista Kamata Tokyo, Hotel Keihan Universal City, Hotel Sunroute Shinbashi and Hilton Tokyo
Bay, the rent structure is one that has set not only fixed rent, but also partly rent based on revenue sharing.
CANDEO HOTELS UENO-KOEN was acquired on February 1, 2016.
Hotel Centraza Hakata was acquired on April 1, 2016.

－

57 －

(Note 8)(Note 9)(Note 10)(Note 11)

Holiday Inn Osaka Namba was acquired on August 1, 2016
HOTEL ASCENT FUKUOKA was acquired on August 19, 2016.
Hilton Nagoya was acquired on September 1, 2016.
The property numbers of assets that were transferred before the end of the previous fiscal year are intentionally omitted.

－

58 －

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

Tenant name(Note 1)

(Note 6)(Note 7)

Ratio tototal
(Note 2)

Ratio tototal
(Note 2)

5.6%

April 1, 2012
December 31, 2019
April 1, 2012
December 31, 2019
April 1, 2012
December 31, 2019
April 1, 2012
December 31, 2019
July 1, 2012
June 30, 2024
October 31, 2013
December 31, 2018
December 27, 2014
December 27, 2019
September 30, 2014
September 30, 2029
September 30, 2014
April 26, 2024
April 2, 2015
August 30, 201944,833.11 m2

7.6%

19,364.33 m2

3.3%

38,024.98 m2

6.5%

2

2.3%

5,789.26 m2

1.0%

2

0.8%

14,076.45 m2

2.4%

2

2.2%

10,884.25 m2

1.9%

2

2.9%

64,931.94 m2

11.1%

Total for major tenants

278,718.94 m2

Total for entire portfolio

587,050.94 m2 100.0% 587,050.94 m2 100.0%

THE DAIICHIBUILDING
CO., LTD.

(Note 5)Contract
commencement date
Contract
expiration date

32,663.90 m2

Accor(AAPC Japan
K.K.)(Note 4)

Kobe
Meriken Park
Oriental Hotel
Oriental Hoteltokyo bay
Namba
Oriental Hotel
Hotel Nikko
AlivilaOriental Hotel
Hiroshima
ibis
Tokyo Shinjuku
ibis Styles
Kyoto Station
ibis Styles
SapporoMercureSapporoMercureOkinawa Naha
MercureYokosukaBusiness
type

Total leased area
(By tenant)April 1, 2012
December 31, 2019

HMJ
(HotelManagement
Japan
Co., Ltd.)(Note 5)(Note 6)(Note 1)
(Note 2)
(Note 3)

Property name

Total leased area
(By hotel)

HiltonTokyo BayHotel

Ryokan/HotelReal estateleasing andmanagement

July 1, 2015
December 31, 201813,752.22 m

4,628.32 m

12,888.36 m

16,881.82 m

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

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

645
(Note 7)

148,638.54 m2

25.3%

65,148.46 m2

11.1%

64,931.94 m2

11.1%

47.5% 278,718.94 m2

47.5%

631
(Note 7)797
(Note 7)804
(Note 7)341
(Note 7)(Note 8)(Note 8)(Note 8)(Note 8)(Note 8)(Note 8)3,221
(Note 7)(Note 8)1,872
(Note 9)1,872
(Note 9)5,093
12,520-

5,093
12,520-The information on major tenants, which are those accounting for at least 10% of total leased area of the entire portfolio.
Ratio to total is rounded off to one decimal place.
The ratio of annual rent by hotel or by tenant may vary depending on the amount of variable rent and income from management contracts and is thus
not shown.
Fixed rent is the amount arrived at when the monthly fixed rent income based on lease contracts valid as of December 31, 2016 between JHR and the
major tenant (rent of the building itself only, excluding common area maintenance charges and signage and parking usage fees; not factoring in any
change in rent during the fiscal period) is multiplied by 12, excluding variable rents and income from management contracts.
HMJ falls under the category of interested party, etc. under the Investment Trusts Act and sponsor-related party as stipulated in the Asset Management
Company’s company rule for transactions with sponsor-related parties.
HMJ has acquired all shares of Lagoon resort Nago Co., Ltd., which is the lessee and hotel operator of Okinawa Marriott Resort & Spa, K.K. A.I.C
Hiroshima Management, which is the lessee and hotel operator of Sheraton Grand Hiroshima Hotel (the main facility of ACTIVE-INTER CITYHIROSHIMA), Hotel Centraza Co., Ltd., which is the lessee and hotel operator of Hotel Centraza Hakata, and OW Hotel Operations KK, which is
the lessee and hotel operator of Holiday Inn Osaka Namba. Accordingly, Lagoon resort Nago Co., Ltd., K.K. A.I.C Hiroshima Management, Hotel
Centraza Co., Ltd. and OW Hotel Operations KK fall under the category of interested party, etc. under the Investment Trusts Act and sponsor-related
party as stipulated in the Asset Management Company’s company rule for transactions with sponsor-related parties. The following are the leasing
terms and conditions of Okinawa Marriott Resort & Spa, Sheraton Grand Hiroshima Hotel (the main facility of ACTIVE-INTER CITYHIROSHIMA), Hotel Centraza Hakata and Holiday Inn Osaka Namba. The leased area, ratio of leased area and total annual fixed rent of HMJ and its
wholly-owned subsidiaries Lagoon resort Nago Co., Ltd., K.K. A.I.C Hiroshima Management, Hotel Centraza Co., Ltd. and OW Hotel Operations
KK are 236,565.54 square meters, 40.3% and ¥5,095 million, respectively.
Contract
Annual fixed rent
Business commencement date Total leased area
Ratio of
Annual variable
Tenant name
Property name2
type
Contract(m )total leased area
rent
expiration date
(JPY1M)
Lagoon resort Nago
July 10, 2015
550
Okinawa Marriott Resort & Spa
Hotel36,430.15
6.2%
Co., Ltd.
December 31, 2020(*)
K.K. A.I.C
ACTIVE-INTER CITY
December 18, 2015
348
Hiroshima
HIROSHIMA
Hotel
21,890.33
3.7%
December 31, 2026(*)
Management(Sheraton Grand Hiroshima Hotel)
Hotel Centraza
April 1, 2016
400
Hotel Centraza Hakata
Hotel18,105.42
3.1%
Co., Ltd.
December 31, 2019(*)
OW HotelAugust 1, 2016
576
Holiday Inn Osaka Namba
Hotel
11,501.10
2.0%
Operations KK
October 31, 2031(*)(*) For details of the variable rent arrangements for Okinawa Marriott Resort & Spa, ACTIVE-INTER CITY HIROSHIMA, Hotel Centraza Hakata,and Holiday Inn Osaka Namba, please refer to “D. Overview of the hotel business; (1) Rent structures of hotels with variable rent, management
contract or revenue sharing” on page 66.
For details of the variable rent arrangements for HMJ, please refer to “D. Overview of the hotel business; (1) Rent structures of hotels with variable
rent, management contract or revenue sharing” on page 66.

－

59 －

(Note 8)(Note 9)Variable rent for Accor (AAPC Japan K.K.) means income from management contracts and variable rent. For details of the arrangements of income
from management contract and variable rent, please refer to “D. Overview of the hotel business; (1) Rent structures of hotels with variable rent,
management contract or revenue sharing” on page 66.
The variable rent for THE DAI-ICHI BUILDING CO., LTD. is not disclosed as consent on disclosure has not been obtained from the tenant and thus
considered to be a case where disclosure cannot be made due to unavoidable circumstances. There is thus also no entry of the total for major tenants.

B. Income statements for individual real estate properties (in trust) under management
The following are the individual income statements for real estate properties (in trust) under management for the fiscal period
under review (from January 1, 2016 to December 31, 2016). Figures are rounded down to the nearest thousand yen in principle,
but are otherwise noted if circumstances do not allow for the figures to be stated in units of thousand yen. Income statement
items that are not directly attributable to the property are not included. In addition, the income statement amounts shown are onan accrual basis in principle, but are otherwise noted if circumstances require the amounts to be shown on a cash basis.
Property No.

-

Property name1
Kobe
Meriken Park
Oriental Hotel

Portfolio total

2

3

4

5

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Hotel Nikko
AlivilaOriental Hotel
Hiroshima

Number of operating days

-

366

366

366

366

366

(A) Real estate operating revenue subtotal

22,107,470

1,103,646

1,879,183

1,574,336

1,804,507

469,494

Fixed rent

11,772,386

645,900

631,600

797,900

804,100

341,504

Variable rent

9,392,699

451,407

1,247,583

776,436

1,000,407

127,990

Other revenue

942,384

6,339

-

-

-

-

(B) Real estate operating costs subtotal

6,589,908

601,441

563,350

265,317468,380

129,214

Land lease and other rent expenses

710,456

216,099--

84,149-Property taxes

1,216,710

55,595

115,369

96,29959,362

41,511

Outsourcing expenses

609,823

960

960

960

1,920

960

Nonlife insurance

41,944

3,505

3,274

1,420

2,418

1,137

Depreciation and amortization

3,294,081

323,259

441,104

163,790314,059

74,830Loss on retirement of noncurrent assets

16,662

-

1,628

1,823

4,290

8,848

Other costs

700,230

2,021

1,013

1,023

2,181

1,926

(C) Net real estate operating income = (A) − (B)15,517,561

502,205

1,315,833

1,309,019

1,336,126

340,279(Reference) Occupancy rate

99.9%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

128

1

1

1

1

1

Property No.

6

8

9

ibis
The Beach Tower
Tokyo Shinjuku
Okinawa(Note 1)

Property name10

HakoneSetsugetsuka

Dormy Inn
Kumamoto

12

13

the b
suidobashi

Dormy Inn
EXPRESSAsakusa

Number of operating days

366

366

366

366

366

366

(A) Real estate operating revenue subtotal

722,167

511,023

294,946

194,460

121,929

63,995

Fixed rent

97,572511,008

294,340

194,460

84,99963,395

Variable rent

445,381---

36,929-Other revenue

179,214

15

606

-

-

600

(B) Real estate operating costs subtotal

265,565

168,567

107,81080,83235,19721,048Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

33,46539,022

22,985

19,368

8,055

5,985

Outsourcing expenses

90,740

-

-

-

1,200

1,200

Nonlife insurance

637

1,256

654

474

205

124

Depreciation and amortization

75,483

125,105

83,24339,85923,80912,327

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

65,2393,182

927

21,130

1,927

1,410

(C) Net real estate operating income = (A) − (B)456,602342,456

187,135

113,627

86,732

42,947(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

4

1

1

1

1

1

－

60 －

Property No.

14

15

Hakata Nakasu
Nara
Washington Hotel Washington Hotel
Plaza
Plaza
(Note 2)
(Note 2)
Number of operating days
366
366

Property name

16

17

18

22

R&B Hotel
Ueno
Hirokoji

R&B Hotel
HigashiNihonbashi

Comfort HotelTokyo Higashi
Nihombashi

Smile Hotel
Nihombashi
Mitsukoshimae

366

366

366

366

(A) Real estate operating revenue subtotal

240,000

151,000

98,342

122,207

270,114

152,951

Fixed rent

240,000

146,000

96,504

122,207258,909

134,400

Variable rent

-

-

-

-

-

18,551Other revenue

0

4,000

1,837

-

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

41,00057,00028,27135,70265,43534,635Land lease and other rent expenses

-

-

-

5,400

-

-

Property taxes

12,00012,00011,8808,577

26,286

12,174

Outsourcing expenses

1,000

3,000

840

1,200

1,614

1,200

Nonlife insurance

0

0

177

214

455

214

Depreciation and amortization

25,00041,00013,166

18,89235,83518,996

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

1,000

1,000

2,206

1,417

1,244

2,051

(C) Net real estate operating income = (A) − (B)199,000

93,00070,071

86,505

204,679

118,315(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

2

1

1

2

1

Property No.

24

25

26

29

30

31

Property nameToyoko Inn
Hakata-guchi
EkimaeHotel Vista
Kamata Tokyo

Chisun Inn
KamataHotel Keihan
Universal City

Hotel Sunroute
Shinbashi

HiltonTokyo Bay

Number of operating days

366

366

366

366

366

366

(A) Real estate operating revenue subtotal

141,039

115,215

79,090914,058

403,274

1,959,866

Fixed rent

141,039

93,534-

Variable rent

Other revenue-

21,611-

70

79,090-

Undisclosed(Note 3)
Undisclosed(Note 3)
Undisclosed

282,266

87,80533,202(Note 3)

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

34,37737,74919,241

163,336

77,606466,622

Land lease and other rent expenses

-

-

-

21,110-132,257

Property taxes

10,385

11,978

4,643

45,14424,932

137,442

Outsourcing expenses

1,080

1,200

1,080

5,912

4,710

23,787

Nonlife insurance

273

244

104

1,470

355

3,629

Depreciation and amortization

21,39022,936

11,652

84,377

21,125

167,484

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

1,246

1,389

1,761

5,321

26,4832,020(C) Net real estate operating income = (A) − (B)106,661

77,46559,848750,721

325,667

1,493,243(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

1

1

1

4

1

－

61 －

Property No.

32

33

34

35

36

37

Property name

ibis Styles
Kyoto Station(Note 1)

ibis Styles
Sapporo(Note 1)

MercureSapporo(Note 1)

MercureOkinawa Naha
(Note 1)the bakasaka-mitsuke

the bikebukuro

Number of operating days

366

366

366

366

366

366

(A) Real estate operating revenue subtotal

587,035

635,792

745,017475,303

285,436

369,739

Fixed rent

42,33426,26664,054-

136,383

217,973

Variable rent

541,100

571,057

562,606

464,359

149,052

151,765

Other revenue

3,600

38,469118,357

10,944--(B) Real estate operating costs subtotal

118,913

196,998

331,267

140,986

35,671

48,629Land lease and other rent expenses

-

-

42

297

-

-

Property taxes

18,02736,491

48,34323,017

11,281

14,925

Outsourcing expenses

63,83049,904

116,705

57,676

1,200

1,200

Nonlife insurance

438

896

1,072

686

254

451

Depreciation and amortization

34,017

72,574

77,98350,202

20,77929,614

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

2,599

37,13087,120

9,106

2,155

2,438

(C) Net real estate operating income = (A) − (B)468,122438,794

413,750

334,316

249,765

321,109(Reference) Occupancy rate

100.0%

99.4%

98.1%

100.0%

100.0%

100.0%(Reference) Number of tenants

2

5

14

1

2

4

Property No.

38

39

40

41

42

43

Property namethe bochanomizu

the bhachioji

the bhakataHotel Francs

MercureYokosuka

Okinawa
MarriottResort & Spa

Number of operating days

366

366

366

366

366

366

(A) Real estate operating revenue subtotal

115,112221,312230,433

300,000

271,678

1,066,669

Fixed rent

69,000123,733

88,268300,000-

550,000

Variable rent

46,11291,851

142,165-

229,751

516,669

Other revenue

-

5,727

-

-

41,927-(B) Real estate operating costs subtotal

17,006

46,796

31,252

97,315

126,965

295,690

Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

4,648

16,1507,044

45,07827,371

62,394

Outsourcing expenses

1,200

1,200

1,826

1,800

17,5672,400

Nonlife insurance

134

492

259

1,035

2,317

2,584

Depreciation and amortization

9,514

24,69819,27848,13829,990221,333

Loss on retirement of noncurrent assets

-

-

70

-

-

-

Other costs

1,508

4,254

2,772

1,263

49,7196,978(C) Net real estate operating income = (A) − (B)98,106

174,515

199,181202,684

144,712770,978(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

13

2

1

1

1

－

62 －

Property No.

44

45

46

47

48

49

Property name

ACTIVE-INTERCITY
HIROSHIMACANDEOHOTELS
UENO-KOEN(Note 4)

Hotel Centraza
Hakata(Note 5)

Holiday Inn
Osaka Namba(Note 6)

HOTEL
ASCENTFUKUOKA(Note 7)

Hilton Nagoya(Note 8)

Number of operating days

366

335

275

153

135

(A) Real estate operating revenue subtotal

1,378,205

309,721599,351

539,345

158,704

Fixed rent

Variable rent

773,187

Undisclosed(Note 3)

328,400-

300,000

294,152

240,000

299,345

112,485-122
430,893
Undisclosed(Note 3)
Undisclosed(Note 3)

Undisclosed
5,199

-

46,21939,906

385,728

47,53051,984

227,386--

166,654-

10,311

74,133

Property taxes

87,179

-

-

-

-

-

Outsourcing expenses

105,299

1,200

2,500

780

5,052

31,991

Nonlife insurance

3,677

481

973

573

191

2,451

Depreciation and amortization

181,628

35,934

176,575

45,663

14,27642,221

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

202,8172,290

39,023513

22,15376,587(C) Net real estate operating income = (A) − (B)797,604

269,815

213,623

491,814106,719

203,507(Reference) Occupancy rate

99.8%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

37

1

1

1

6

4

(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)Other revenue

276,617(B) Real estate operating costs subtotal

580,601Land lease and other rent expenses

Undisclosed(Note 3)(Note 3)

Variable rent includes income from management contracts. For details of the management contract, please refer to “D. Overview of the hotelbusiness; (1) Rent structures of hotels with variable rent, management contract or revenue sharing” on page 66.
Consent on disclosure of rent in units of thousand yen has not been obtained from the lessee and is thus rounded down to the nearest million yen.
Rent income, etc. is not disclosed as consent on disclosure has not been obtained from the tenant with whom a lease contract has been concluded andthus considered to be a case where disclosure cannot be made due to unavoidable circumstances.
CANDEO HOTELS UENO-KOEN was acquired on February 1, 2016.
Hotel Centraza Hakata was acquired on April 1, 2016.
Holiday Inn Osaka Namba was acquired on August 1, 2016.
HOTEL ASCENT FUKUOKA was acquired on August 19, 2016.
Hilton Nagoya was acquired on September 1, 2016.
The property numbers of assets that were transferred before the end of the previous fiscal year are intentionally omitted.

－

63 －

C. Status of portfolio diversification
a. Diversification by hotel type
The total annual rent, the total of acquisition price and the investment ratio by the hotel type of the assets held at the endof the fiscal period under review were as follows:
Total annual rent
Acquisition priceInvestment ratio
Hotel type
(Note 2)
(Note 3)(Note 4)(Note 1)
(JPY1M)(JPY1M)(%)
Limited-service hotel

9,709

129,798

45.3

Full-service hotel

6,765

79,422

27.7

Resort hotel

6,504

77,580

27.1

Total

22,980286,801

100.0

b. Diversification by geographical area
The total annual rent, the total of acquisition price and the investment ratio by the geographical area of the assets held at
the end of the fiscal period under review were as follows:
Total annual rent
Acquisition priceInvestment ratio
Geographical area
(Note 2)
(Note 3)(Note 4)(Note 5)
(JPY1M)(JPY1M)(%)
Hokkaido

1,225

12,797

4.5

Tokyo

3,263

50,010

17.4

Kanto (excluding Tokyo)

4,650

54,775

19.1

Chubu

928

15,250

5.3

Kansai

5,621

67,55023.6

Chugoku

1,571

21,420

7.5

Kyushu (excluding Okinawa)

1,873

20,538

7.2

Okinawa

3,846

44,460

15.5

Total

22,980286,801

100.0

c. Diversification by hotel grade
The total annual rent, the total of acquisition price and the investment ratio by the hotel grade of the assets held at the endof the fiscal period under review were as follows:
Total annual rent
Acquisition priceInvestment ratio
Hotel grade(Note 2)
(Note 3)(Note 4)
(JPY1M)(JPY1M)(%)
Luxury5,781

77,52027.0Upper-middle

2,633

29,95010.4

Mid-price

13,230160,311

55.9

Economy

1,334

19,0196.6

Total

22,980286,801

100.0

d. Diversification by building age
The total annual rent, the total of acquisition price and the investment ratio by the building age of the assets held at theend of the fiscal period under review were as follows. The building age is the period from the date stated as the date of
new construction on the registration or registration record to the last day of December 2016:
Total annual rent
Acquisition price
Building age(Note 2)
(Note 3)
(JPY1M)(JPY1M)

Investment ratio(Note 4)(%)

More than 5 years,
less than 10 years (inclusive)

5,887

84,30229.4

More than 10 years,
less than 20 years (inclusive)

4,492

59,311

20.7

More than 20 years

12,600143,188

49.9

Total

22,980286,801

100.0

－

64 －

e. Diversification by remaining contract term
The total annual rent and the ratio of the total annual rent of the concerned properties to the total annual rent of all assets
held at the end of the fiscal period under review by the remaining contract term of the assets held at the end of the fiscal
period under review were as follows, where the remaining contract term is the period from the last day of December 2016
to the lease contract expiration date:
Remaining contract termLess than 5 years (inclusive)
More than 5 years,
less than 10 years (inclusive)
More than 10 years,
less than 20 years (inclusive)
Total

Total annual rent
(Note 2)
(JPY1M)
14,863

Ratio of total annual rent
to total
(%)
64.7

3,887

16.9

4,230

18.4

22,980100.0

f. Diversification by rent type
The total annual rent and the ratio of the total annual rent of the concerned properties to the total annual rent of all assets
held at the end of the fiscal period under review by the rent type of the assets held at the end of the fiscal period underreview were as follows, where fixed rent refers to fixed rent contracts and variable rent, etc. refers to variable rent
contracts and management contracts:
Total annual rent
Ratio of total annual rent
Rent type(Note 2)to total(JPY1M)(%)
Fixed rent
12,520
54.5
Variable rent, etc.
10,45945.5
Total
22,980100.0(Note 1)
(Note 2)

Hotels are categorized as limited-service hotels, full-service hotels or resort hotels according to the manner of operation.
“Total annual rent” is the amount arrived at when the monthly rent income, etc. (rent of the building itself only, excluding signage andparking usage fees; not factoring in any change in rent during the fiscal period under review) of the assets under management at the endof the fiscal period under review is multiplied by 12.
However, the assumptions of the total annual rent of the hotels with revenue sharing, with variable rent or operated under amanagement contract structure are as follows:
The Five HMJ Hotels
The amount of (i) the variable rent actually generated from January 1, 2016 to December 31, 2016
Okinawa Marriott Resort & Spa
and (ii) the amount arrived at when the monthly fixed rent at the end of the fiscal period under
Sheraton Grand Hiroshima Hotelreview is multiplied by 12.
The Six Accor Hotels
The Six the b Hotels

The amount of the total amount of income from management contracts or variable rent actually
generated from January 1, 2016 to December 31, 2016.
The amount of (i) the variable rent actually generated from January 1, 2016 to December 31, 2016
and (ii) the amount arrived at when the monthly fixed rent at the end of the fiscal period underreview is multiplied by 12.
The amount of (i) variable rent calculated based on actual GOP or sales from January 1, 2016 to
December 31, 2016, plus (ii) the amount arrived at when the monthly fixed rent at the end of the
fiscal period under review is multiplied by 12.
The amount of variable rent actually generated from January 1, 2016 to December 31, 2016

Hotel Centraza Hakata
Holiday Inn Osaka Namba
Hilton Nagoya
Chisun Inn Kamata
Smile Hotel Nihombashi
Mitsukoshimae
The amount of (i) the variable rent actually generated from January 1, 2016 to December 31, 2016
Hotel Vista Kamata Tokyoand (ii) the amount arrived at when the monthly fixed rent at the end of the fiscal period underHotel Keihan Universal City
review is multiplied by 12.
Hotel Sunroute Shinbashi
Hilton Tokyo Bay
For details of the contracts of the hotels with revenue sharing, with variable rent or operated under a management contract structure,please refer to “D. Overview of the hotel business; (1) Rent structures of hotels with variable rent, management contract or revenue
sharing” on page 66.
(Note 3) “Acquisition price” is the acquisition price stated on the purchase and sale agreement for beneficial interest in trust etc. (consumption
tax, local consumption tax and the acquisition expense such as broker’s fee are not included). The acceptance prices are indicated forthe properties that have been accepted from the former JHR.
(Note 4) “Investment ratio” is the ratio of total acquisition price of the assets held at the end of the fiscal period under review that are of therespective type to the total of acquisition price of all assets held at the end of the fiscal period under review, rounded off to one decimal
place.
(Note 5) Tokyo means Tokyo metropolitan area. Kanto (excluding Tokyo) means Kanagawa, Chiba, Saitama, Ibaraki, Gunma, Tochigi and
Yamanashi prefectures. Chubu means Aichi, Sihzuoka, Nagao, Gifu, Niigata, Toyama, Ishikawa and Fukui Prefectures. Kansai means
Kyoto, Osaka, Shiga, Hyogo, Nara and Wakayama prefectures. Chugoku means Hiroshima, Okayama, Tottori, Yamaguchi and Shimane
prefectures. Kyushu (excluding Okinawa) means Fukuoka, Nagasaki, Miyazaki, Kumamoto, Saga, Oita and Kagoshima prefectures.
Okinawa means Okinawa prefecture.

－

65 －

D. Overview of the hotel business(1) Rent structures of hotels with variable rent, management contract or revenue sharing
Property
No.

The
HMJ
Group
HotelsThe Six
Accor
HotelsThe Six
the b
HotelsOther
hotelswithvariablerentorrevenuesharing

Name

Rent type

Method of calculating variable rent and income from management contracts

Variable/Fixed

When total GOP of the five HMJ hotels exceeds GOP base amount(set at ¥3,351 million / year), the amount arrived at when the amountexceeding GOP base amount is multiplied by 85.0% (Note 1).
GOP base amount is set individually for each hotel for such purposes as
payment of variable rent from each hotel. The breakdown of GOP baseamount is presented below (Note 2).

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

43

Okinawa Marriott Resort & Spa

Variable/Fixed44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Variable/Fixed(Note 3)46

Hotel Centraza Hakata

Variable/Fixed

47

Holiday Inn Osaka Namba

Variable/Fixed

6

ibis Tokyo Shinjuku

32

ibis Styles Kyoto Station

33

ibis Styles Sapporo

34

Mercure Sapporo

35

Mercure Okinawa Naha

42

Mercure Yokosuka

12

the b suidobashi

36

the b akasaka-mitsuke

37

the b ikebukuro38

the b ochanomizu

39

the b hachioji

40

the b hakata

22

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

Management
contract(Note 4)

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

VariableAmount linked to GOP

Variable/Fixed

Amount linked to GOP (Note 5)

Smile Hotel Nihombashi Mitsukoshimae

Fixed +
Revenue sharing

25

Hotel Vista Kamata Tokyo

Fixed +
Revenue sharing

26

Chisun Inn Kamata

29

Hotel Keihan Universal City

30

Hotel Sunroute Shinbashi

31

Hilton Tokyo Bay

Amount that is a certain percentage of sales exceeding the threshold(Note 5)
When hotel total sales from January 1 to December 31 of every year
exceeds ¥270 million, the amount arrived at when the amount exceeding¥270 million is multiplied by 32.5%
Amount that is the monthly GOP multiplied by 85.0%(¥0 if the amount is below ¥0).
Amount that is a certain percentage of sales exceeding the threshold(Note 5)
Amount that is a certain percentage of sales exceeding the threshold(Note 5)
Amount that is a certain percentage of sales exceeding the threshold(Note 5)49
(Note 1)
(Note 2)

Hilton Nagoya

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

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

Concerning a fixed-term lease agreement on the five HMJ hotels, the variable rent ratio was changed from 81.5% to 85.0% effective as ofJanuary 1, 2016.
Breakdown of the GOP base amount set individually for the five HMJ hotels
Hotel name

Annual GOP base amount

Kobe Meriken Park Oriental Hotel¥599,900 thousand

Oriental Hotel tokyo bay¥693,200 thousand

Namba Oriental Hotel¥832,200 thousand

Hotel Nikko Alivila¥995,700 thousand

Oriental Hotel Hiroshima
Total(Note 3)(Note 4)

Variable¥230,000 thousand¥3,351,000 thousand

The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
The management contract structure is a structure for hotel real estate owned by JHR in which JHR entrusts an operator to operate the hotel andtakes in the outcome of that business as real estate operating revenue. Specifically, JHR, the owner of the hotel real estate, concludes amanagement contract with an operator and entrusts the operator with the tasks necessary to run the hotel business. JHR receives the hotel

－

66 －

(Note 5)revenue achieved from the hotel business (operation) by the operator and, at the same time, pays a management fee to the operator. This hotelrevenue achieved is recognized as “real estate operating revenue through management contract” and is equivalent to the rent that is the realestate operating revenue under the leasing structure.
The detailed content of the contract is not disclosed as consent on disclosure has not been obtained from the lessee.

(2) Major indicators of the hotel business
The following tables indicate the figures related to the hotel business of the HMJ Group Hotels, the six Accor hotels and thesix the b hotels for the operating period from January 1, 2016 through December 31 2016, based on the data provided by thehotel lessees etc. Furthermore, while these indicators of the hotels are among the indicators that show the operating status of
the rooms departments, they do not necessarily represent the operating revenue and the ability to bear rent, etc. of therespective hotels, as the daily rates and profit margins, etc. of the respective rooms available for sale are not uniform, among
other reasons. As such, the indicators are no more than the reference figures.
(a) The HMJ Group Hotels
Kobe
Oriental Hotel
Namba
Meriken Park
tokyo bay
Oriental Hotel
Oriental Hotel
Ratio toRatio toRatio to
total
total
total
sales
sales
sales
(%)
(%)
(%)
79.1%

－

96.8%

－

94.1%

－

85.3%

－

81.5%

－

88.4%

－

17,691－

20,449－19,918－27,513

－

9,599

－

20,153－

RevPAR(Note 2)

13,987－

19,799－18,736－23,471

－

7,826

－

17,807－

Total sales

5,361

100.0

7,271

100.0

2,877

100.0

6,155

100.0

2,240

100.0

23,905100.0

Rooms department

1,799

33.6

4,018

55.3

1,949

67.7

3,750

60.9

715

31.9

12,231

51.2

Food & beveragedepartment

3,260

60.8

2,785

38.3

137

4.8

1,903

30.9

1,461

65.2

9,548

39.9

Tenant department

60

1.1

245

3.4

752

26.1

2

0.0

22

1.0

1,081

4.5

Other departments(Note 3)

242

4.5

223

3.1

39

1.4

499

8.1

41

1.8

1,045

4.4

1,131

21.1

2,161

29.7

1,746

60.7

2,173

35.3

381

17.0

7,591

31.8

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

The HMJ Group
HotelsTotal/Average(Note 7)
Ratio toRatio to
total
total
sales
sales
(%)
(%)

Holiday Inn
Osaka Namba(Note 6)

Ratio to
total
sales
(%)

Occupancy rate

85.6%

－

85.2%

－

90.6%

－

ADR
(Note 1)

19,708－17,237－

10,164

RevPAR(Note 2)

16,875－

14,690－9,212

Total sales

88.7%

－

－ 19,711－ 19,103－－ 18,856－ 16,947

－

95.7%

－

3,933

100.0

2,996

100.0

2,421

100.0

2,206

100.0 35,461

100.0

Rooms department

2,459

62.5

1,413

47.2

721

29.8

2,170

98.3 18,993

53.6

Food & beveragedepartment

1,059

26.9

1,503

50.2

1,447

59.8

－

－ 13,558

38.2

Tenant department

60

1.5

－

－

232

9.6

28

1.3

1,401

4.0

Other departments(Note 3)

355

9.0

80

2.7

21

0.9

9

0.4

1,509

4.3

1,274

32.4

845

28.2

825

34.1

1,474

66.8 12,010

33.9

GOP

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

Ratio to
total
sales
(%)

ADR
(Note 1)

Okinawa
Sheraton Grand Hotel Centraza
Marriott Resort Hiroshima Hotel
Hakata& Spa(Note 4)(Note 5)(Note 2)The Five HMJ
HotelsTotal/Average
Ratio toRatio to
total
total
sales
sales
(%)
(%)

Oriental Hotel
Hiroshima

Occupancy rate

GOP

(Note 1)

Hotel Nikko
Alivila

ADR: Represents average daily rate, which is calculated by dividing total rooms revenue for a certain period (excluding service charges) by the
total number of rooms sold during the period. The same shall apply hereinafter.
RevPAR: Represents revenue per available room, which is calculated by dividing total rooms revenue for a certain period (excluding service
charges) by the total number of rooms available for sale during the period. Revenue per available room equals the product of ADR andoccupancy rate. The same shall apply hereinafter.
Figures for the other departments include sales of the department for sale of goods.
The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
For Hotel Centraza Hakata, which JHR acquired on April 1, 2016, the annual figures are for throughout the year including those prior to the

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67 －

(Note 6)(Note 7)(Note 8)acquisition.
For Holiday Inn Osaka Namba which JHR acquired on August 1, 2016, the annual figures are for throughout the year including those prior to
the acquisition.
For Total/Average of the HMJ Group Hotels, figures are calculated by JHR as reference since no figures have been provided by the hotel
operators or hotel lessees.
The occupancy rate is rounded off to one decimal place, while ADR and RevPAR are rounded off to single units. Sales and GOP are rounded
off to the nearest million yen. For the ratio to total sales, the ratio of sales in each department to total sales is rounded off to one decimal place.
The same shall apply hereinafter.

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68 －

(b) The Six Accor Hotels
ibisTokyo Shinjuku

ibis Styles
Kyoto Station

Ratio to
total
sales
(%)

ibis Styles
SapporoRatio to
total
sales
(%)

MercureSapporoRatio to
total
sales
(%)

MercureOkinawa Naha

Ratio to
total
sales
(%)

Mercure Yokosuka

Ratio to
total
sales
(%)

Total/Average(Note 1)

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

Occupancy rate

80.2%

－

97.0%

－

89.3%

－

85.1%

－

83.6%

－

87.1%

－

87.0%

－

ADR

12,431－

11,473

－

9,858

－

11,830－11,083－

12,071－

11,344－

RevPAR

9,973－

11,124

－

8,805

－

10,069

－

9,268

－

10,509

－

9,868

－

Total sales

832

100.0

977

100.0

1,122

100.0

1,254

100.0

1,049

100.0

1,071

100.0

6,306

100.0

Rooms
department

752

90.3

875

89.6

896

79.8

1,050

83.8

882

84.1

615

57.5

5,070

80.4

Food &
beveragedepartment

66

7.9

96

9.8

201

17.9

192

15.3

140

13.4

436

40.7

1,131

17.9

Other
departments

15

1.8

6

0.6

25

2.3

12

0.9

27

2.6

20

1.9

105

1.7

445

53.5

541

55.4

571

50.9

562

44.9

475

45.3

290

27.1

2,885

45.8

GOP
(Note 1)

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

(c) The Six the b Hotels
the bsuidobashi

the bakasaka-mitsuke

Ratio to
total
sales
(%)

the b
ikebukuro

Ratio to
total
sales
(%)

the b
ochanomizu

Ratio to
total
sales
(%)

the b
hachioji

Ratio to
total
sales
(%)

the b
hakataRatio to
total
sales
(%)

Total/Average(Note 1)

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

Occupancy rate

85.4%

－

86.9%

－

88.6%

－

90.7%

－

87.9%

－

93.8%

－

89.1%

－

ADR

11,290－11,965－

11,086－

11,075

－

7,362

－

7,898

－

9,674

－

RevPAR

9,646－

10,403

－

9,825

－

10,044

－

6,472

－

7,409

－

8,619

－

Total sales

351

100.0

468

100.0

635

100.0

266

100.0

564

100.0

478

100.0

2,763

100.0

Rooms
department

350

99.5

465

99.2

629

99.1

265

99.5

464

82.3

475

99.2

2,647

95.8

Food &
beveragedepartment

－

－

－

－

－

－

－

－

96

17.0

－

－

96

3.5

Other
departments

2

0.5

4

0.8

6

0.9

1

0.5

4

0.7

4

0.8

20

0.7

175

49.7

273

58.4

343

54.0

126

47.3

208

36.8

245

51.3

1,370

49.6

GOP
(Note 3)

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

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69 －

E. Status of capital expenditures
a. Planned capital expenditures (Note)
The following table shows major estimated capital expenditures items for renovation work planned as of the end of the fiscal
period under review for real estate properties (in trust) under management by JHR. Expenditures are expected to total ¥2,928
million, which consists of capital expenditures of ¥2,864 million and repair expenses of ¥63 million, for the following fiscal
period.
Estimated
Name of property, etc.
PurposeScheduled period
construction costs(Location)(JPY1M)
Kobe Meriken Park Oriental Hotel

Renewal of disaster prevention(Kobe-shi, Hyogo)switchboard

Kobe Meriken Park Oriental Hotel(Kobe-shi, Hyogo)

Relocation of bridal salon

Oriental Hotel tokyo bay (Urayasushi, Chiba)

Renewal of automatic fire alarm
equipment

Namba Oriental Hotel (Osaka-shi,
Osaka)
ibis Tokyo Shinjuku (Shinjuku-ku,
Tokyo)
ibis Tokyo Shinjuku (Shinjuku-ku,
Tokyo)
Setsugetsuka(Ashigarashimogun, Kanagawa)
Hilton Tokyo Bay (Urayasu-shi,
Chiba)

Renewal of guest rooms on the 7th floor

From May 2017
to December 2017
From April 2017
to December 2017
From January 2017
to June 2017
From February 2017
to March 2017

Replacement of piping

From May 2017
to August 2017

Replacement of interior fittings andfurniture in guest rooms on the 4th throughFrom May 2017

10th floors
Replacement of air-conditioning facilities
within the building

From June 2017

Renewal of disaster prevention facilities

to August 2017

to June 2017
From May 2017
to July 2017

Total
(Note )

50
95
50
77
65

249

99
72
758

For new construction and renewal work, include those for buildings, attached facilities, etc. as well as items classified as furniture and fixtures. The
scheduled period of the above planned renovation work and whether or not the renovation work will be performed may change.

b. Capital expenditures during the period (Note 1)
For real estate properties (in trust) under management by JHR, major construction work conducted during the fiscal period
under review that represents capital expenditures is as below. Capital expenditures for the fiscal period under review totaled¥2,619 million, and repair expenses that were accounted for as expense in the fiscal period under review totaled ¥68 million(Note 2). In aggregate, ¥2,688 million of construction work was carried out.
Name of property, etc.
Purpose(Location)
Kobe Meriken Park
Oriental Hotel

Renewal of guest rooms on the 7th floor(Kobe-shi, Hyogo)
Kobe Meriken Park
Oriental Hotel(Kobe-shi, Hyogo)
Kobe Meriken Park
Oriental Hotel(Kobe-shi, Hyogo)
Oriental Hotel tokyo bay(Urayasu-shi, Chiba)

Renovation of guest room balconies

Renewal of sky lounge “Kou’s” and renovation of elevator
halls and pathways on the 14th floor

PeriodFrom January 2016
to March 2016
From January 2016
to April 2016
From June 2016
to December 2016

Construction costs(JPY1M)
50

62

85

Renewal of guest rooms on the 4th floor

From January 2016
to March 2016

101

Renewal of guest rooms on the 9th floor

From January 2016
to February 201691

(Yomitan-son, Nakagamigun, Okinawa)

Renewal of guest rooms on the 9th floor

From May 2016
to July 2016

55

ibis Tokyo Shinjuku

Replacement of piping

From May 2016

62

Namba Oriental Hotel(Osaka-shi, Osaka)
Hotel Nikko Alivila

－

70 －

(Shinjuku-ku, Tokyo)
ibis Tokyo Shinjuku(Shinjuku-ku, Tokyo)

to July 2016
Replacement of interior fittings and furniture andprefabricated bathrooms in guest rooms on the 3rd

From May 2016
to July 2016

192

Replacement of emergency power generator

From February 2016
to April 201660

Renewal of disaster prevention facilities

From January 2016
to August 201692

From November 2015
to May 201655

through 10th floors
Hilton Tokyo Bay(Urayasu-shi, Chiba)
Hilton Tokyo Bay(Urayasu-shi, Chiba)

Okinawa Marriott Resort &Spa
Renewal of hotel operation systems(Nago-shi, Okinawa)
Total

908

(Note 1) New construction and renewal work will include those for buildings, attached facilities, etc. as well as items classified as furniture and fixtures.
(Note 2) Repair expenses in the amount of ¥95 million related to the Kumamoto earthquakes which were recorded in extraordinary loss in the fiscal period
under review are not included.

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71 －