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

Midterm Financial Report for the Fiscal Year Ending December 31, 2018
(January 1, 2018 – June 30, 2018)
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 midterm Securities Report:

September 20, 2018

Preparation of supplementary material on midterm financial report:
Schedule for presentation of midterm financial results:

Yes
Yes (Institutional investors and analysts only)(Amounts are rounded down to the nearest million yen)

1. Status summary of operation and assets for the midterm of the fiscal year ending December 31, 2018
(January 1, 2018 – June 30, 2018)(1) Operating results(Percentages: full year—changes from the previous year, midterm period—changes from the previous midterm period)

Midterm period ended
June 30, 2018
June 30, 2017
Fiscal year ended
December 31, 2017

Midterm period ended
June 30, 2018
June 30, 2017
Fiscal year ended
December 31, 2017

Operating revenue
JPY1M%
12,321
9.3
11,27220.0
25,475

15.2

Operating income
JPY1M
%
7,319
8.6
6,740
18.6
15,757

13.5

Ordinary income
JPY1M
%
6,387
7.3
5,951
22.2
14,006

14.6

Net income
JPY1M
6,387
5,951

%
7.3
24.6

14,00515.5

Net income per unit
JPY
1,592
1,581
3,606

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

(2) Financial position
Midterm period ended
June 30, 2018
June 30, 2017
Fiscal year ended
December 31, 2017

Total assets
JPY1M
343,603309,988

Net assets

352,183

JPY1M
193,731
175,133

Equity ratio
%
56.4
56.5

Net assets per unit
JPY
48,301
46,554201,96357.3

50,354(Note) Net assets per unit are calculated based on the total number of investment units issued and outstanding at the end of the midterm period / full year.

－

1 －(3) Cash flows

Midterm period ended
June 30, 2018
June 30, 2017
Fiscal year ended
December 31, 2017

Cash flows fromoperating activities
JPY1M
9,103
8,117

Cash flows frominvesting activities
JPY1M(1,435)(875)

17,763(36,083)

Cash flows from
Cash and cash equivalents
financing activities
at end of period/year
JPY1M
JPY1M
(14,164)
21,422(13,414)
20,20019,86627,920

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

Full year

28,485%
11.8

Operating income
JPY1M

18,122%
15.0

Ordinary income
JPY1M

16,294%
16.3

Dividend per unit
(Excess of earnings
exclusive)

Net income
JPY1M

16,293%
16.3

Dividend per unit
resulting fromexcess of earnings

JPY
3,890

JPY
0

(Reference) Estimated net income per unit for the fiscal year ending December 31, 2018 (full year) ¥4,062(Calculated based on the estimate of period-average number of investment units of 4,010,847.)(Note)The source of the dividend payment is planned to be an amount that deducts the reserve for special advanced depreciation (¥1,235 million), from thetotal amount of net income and the reversed amount of the reserve for temporary difference adjustment in the amount of ¥544 million.

* 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 midterm period / full year(including investment units owned by Japan Hotel REIT Investment Corporation (hereinafter referred to as “JHR”))
As of June 30, 2018
4,010,847 units
As of June 30, 2017

3,761,907 units

As of December 31, 2017(b) Number of JHR’s own investment units held at the end of the midterm period / full year
As of June 30, 2018

4,010,847 units
0 units

As of June 30, 2017

0 units

As of December 31, 2017

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 37.

* Status of midterm audit procedures
At the time of disclosure of this midterm financial report, audit procedures for the semi-annual 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 midterm 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 amountby 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 second half of the fiscal year” on page 8 and“Assumptions of the operating forecast for the full year of the fiscal year ending December 31, 2018 (19th period)” on page 13.

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2 －○Table of Contents
1. Related parties of the investment corporation ...................................................................................................................................... 4
2. Investment policies and operating results ............................................................................................................................................. 4(1) Investment policies ....................................................................................................................................................................... 4(2) Operating results ........................................................................................................................................................................... 4
3. Semi-annual financial statements ....................................................................................................................................................... 22(1) Semi-annual balance sheets ........................................................................................................................................................ 22(2) Semi-annual statements of income ............................................................................................................................................. 24(3) Semi-annual statements of changes in net assets ........................................................................................................................ 25(4) Semi-annual statements of cash flows ........................................................................................................................................ 27(5) Notes on going concern assumption ........................................................................................................................................... 28(6) Notes on matters concerning significant accounting policies ..................................................................................................... 28(7) Notes to semi-annual financial statements .................................................................................................................................. 30(8) Changes in total number of investment units issued and outstanding ......................................................................................... 39
4. Changes in directors ........................................................................................................................................................................... 40(1) Change in directors of JHR ......................................................................................................................................................... 40(2) Change in directors of the Asset Management Company ........................................................................................................... 40
5. Reference information ........................................................................................................................................................................ 41(1) Investment status ........................................................................................................................................................................ 41(2) Assets under management........................................................................................................................................................... 43－

3 －1. Related parties of the investment corporation
Disclosure is omitted because there is no significant change from “Structure of the investment corporation” in the most recent
Securities Report (submitted on March 20, 2018).

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 20, 2018).

(2) Operating results(A) Overview of the midterm period under review(a) Brief history and principal activities
Japan Hotel REIT Investment Corporation (JHR) was established under the Act on Investment Trusts and Investment
Corporations (Act No. 198 of 1951, as amended; hereinafter referred to as the “Investment Trusts Act”) on November 10,2005 and was listed on the Real Estate Investment Trust (REIT) section of the Tokyo Stock Exchange (Securities code:8985) on June 14, 2006.
JHR entrusts 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, merged with Japan Hotel and Resort, Inc. with an effective
date of April 1, 2012 (hereinafter referred to as the “Merger”) and changed its name to Japan Hotel REIT Investment
Corporation. Since the Merger, JHR has carried out eight public offerings for capital increase and continuously acquired“highly-competitive hotels” in mainly “strategic investment areas” where domestic and inbound leisure demand can be
expected over the medium to long term.
By implementing the aforementioned growth strategy, JHR has expanded its asset size while improving the quality of its
portfolio through new property acquisitions of 24 properties amounting to ¥210,022 million (acquisition price basis) intotal in the little more than six years since the Merger to the end of the midterm period under review (June 30, 2018). As aresult, the total acquisition price of the 44 portfolio properties as of the end of the midterm period under review stood at¥319,474 million. Subsequent to the end of the midterm period under review, sale of 3 properties (R&B Hotel Higashinihonbashi, the b akasaka-mitsuke, and the b ochanomizu (hereinafter referred to as the “Sold Assets”, and the sale of theSold Assets referred to as the “Sale”)) was conducted on August 10, 2018 to result in a portfolio of 41 properties with a
combined acquisition price of ¥309,370 million as of the date of this report.
At the end of the midterm period under review, the total number of investment units issued and outstanding stands at
4,010,847 units.
(b) Investment performance for midterm period under review
During the midterm period under review (six-month period from January 1, 2018 to June 30, 2018), the Japanese economy
continued to show a moderate recovery trend backed by steady improvement in the employment and income environment
while corporate earnings improved. As to the environment surrounding the tourism market, as the Japanese government
promotes measures for making Japan an advanced tourism nation, the number of foreign visitors to Japan (hereinafterreferred to as “inbound”) continued to grow while demand for accommodation by domestic tourists remained stable,
creating a favorable environment overall.
The hotels owned by JHR saw some signs from the impact of new hotel supply and minpaku (rentals of private homes asaccommodation for a fee) in some areas including Tokyo and Osaka. However, many of the hotels in major regional cities
achieved strong operating performance, mainly in the rooms department, as a result of JHR implementing active asset
management, which is the aggressive and proactive pursuit of greater profitability and asset value of owned hotels.
Furthermore, the hotel investment market continued to be in a brisk state.
－ 4 －With regard to status of operations during the midterm period under review of the “Twelve HMJ Hotels” (Note 1), which
are the five hotels that JHR leases to Hotel Management Japan Co., Ltd. (hereinafter referred to as “HMJ”) under variable
rent contracts (hereinafter referred to as the “Five HMJ Hotels”) (Note 1) and the seven hotels which JHR leases to HMJ
Group companies under variable rent contracts, these hotels overall have posted increase over the same period of theprevious year both in sales and GOP (gross operating profit), led by the rooms department. The rooms department
implemented flexible pricing in line with each hotel’s accommodation market condition with an aim to generate greater
earnings through improved RevPAR (Revenue Per Available Room). For further details of sales, GOP and othermanagement indicators for the Eleven HMJ hotels (Note 2), please refer to “<Reference Materials 3>Hotel operationindexes, sales and GOP of the hotels on page 18 and “C. Overview of the hotel business; (2) Major indicators of the hotelbusiness on page 52.
Moreover, at the six hotels for which AAPC Japan 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”) (Note 3),
successfully attracting inbound and domestic leisure demand, these hotels, too, posted increase over the same period of theprevious year both in sales and GOP. For further details of sales, GOP and other management indicators for the Six Accor
Hotels, please refer to “<Reference Materials 3> Hotel operation indexes, sales and GOP of the hotels on page 19 and “C.
Overview of the hotel business; (2) Major indicators of the hotel business on page 52.
On the other hand, at the Six the b hotels (Note 4), which are leased to subsidiaries of the Ishin Hotels Group with avariable rent structure, despite efforts made to address changes in the circumstances, such as inbound tourism shifting fromgroup tours to independent travel and a corresponding increase in the percentage of online bookings, such factors as theimpact of increase in new hotel supply and minpaku led to the hotels in Tokyo metropolitan area to post a year-on-year
decrease both in sales and GOP. Hotels in other areas saw a year-on-year increase in both sales and GOP; and althoughsales of the Six the b hotels overall increased year-on-year, GOP decreased year-on-year. For further details of sales, GOP
and other management indicators for the Four the b hotels (Note 5), please refer to “<Reference Materials 3> Hotel
operation indexes, sales and GOP of the hotels on page 19 and “C. Overview of the hotel business; (2) Major indicators of
the hotel business on page 52.
In addition to efforts to increase revenue by increasing variable rent linked with improved performance of these hotels, JHR
has worked to reduce the costs of each item under real estate operating costs, general and administrative expenses andborrowing costs through negotiations with relevant parties and other measures.
Subsequent to the end of the midterm period under review, JHR sold the three Sold Assets on August 10, 2018. JHR aims
to further improve the quality of its portfolio by reshuffling, etc. its assets as one of growth strategies. JHR decided on thesale after comprehensively taking into account their positioning (hotel type, area, etc.) in JHR’s portfolio, medium- to longterm competitiveness, expected upsides and stability, etc.
Among the gain on sales of real estate properties for Sold Asset, ¥1,235 million from part of the gain on sale by R&B Hotel
Higashi-nihonbashi, which JHR owned for over 10 years, will be internally reserved as reserve for special advanced
depreciation (Note 6) to be utilized for future property acquisition, etc.
(Note 1)The Five HMJ Hotels represents the five hotels, namely, Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental
Hotel, Hotel Nikko Alivila, Oriental Hotel Hiroshima. The Twelve HMJ Hotels represents the 12 hotels, namely, Okinawa Marriott
Resort & Spa, Sheraton Grand Hiroshima Hotel, which is the major facility of ACTIVE-INTER CITY HIROSHIMA, Hotel Centraza
Hakata, Holiday Inn Osaka Namba, Hilton Tokyo Narita Airport, International Garden Hotel Narita, Hotel Nikko Nara and the FiveHMJ Hotels. The same shall apply hereinafter.

(Note 2)

Represents the eleven hotels which exclude Hotel Centraza Hakata form the Twelve HMJ Hotels since the hotel is planning forrenovation in the second half of fiscal period 2018. The same shall apply hereinafter.

(Note 3)

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 4)

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

(Note 5)

Represents the four hotels which exclude the b akasaka-mitsuke and the b ochanomizu, since the hotels were sold on August 10, 2018.
The same shall apply hereinafter.

－

5 －(Note 6)

By applying “Special provisions for taxation where a special account has been set up accompanied with transfer of specified assets”(Article 65-8 of the Act on Special Measures Concerning Taxation) (Act No. 26 of 1957; as amended), the amount will be internallyreserved as reserve for special advanced depreciation which does not fall under reserve for advanced depreciation on property
replacement under the Ordinance on Accountings of Investment Corporations (Cabinet Office Ordinance No. 47 of 2006; as amended;.
hereinafter called “the Ordinance on Accountings of Investment Corporations”).

(c) Funding status
During the midterm period under review (six-month period from January 1, 2018 to June 30, 2018), JHR issued investment
corporation bonds of ¥10,000 million for individual investors for the third time in February 2018, mainly to allocate thefund to the prepayment of existing loans. In addition, JHR took out the SMBC Environmental Assessment Loans for the
first time in March 2018 in order to refinance long-term loans of ¥1,700 million which were due for repayment. In April
2018, JHR took out loans of ¥8,350 million to refinance existing loans and to make partial prepayments.
Consequently, as of the end of the midterm period under review, balance of interest-bearing debt totaled ¥141,060 million,
including short-term loans payable of ¥5,000 million, current portion of long-term loans payable of ¥8,589 million, longterm loans payable of ¥93,871 million, current portion of investment corporation bonds payable of ¥2,000 million andinvestment corporation bonds of ¥31,600 million, and the ratio of interest-bearing debt to total assets at end of the midterm
period (Note 1) stood at 41.1%.
Subsequent to the end of the midterm period under review, JHR conducted prepayment of existing short-term loans of¥5,000 million with part of funds gained through the Sale in August, 2018. As a result, ratio of interest-bearing debt to total
assets (Note 2) is expected to come to 40.0%.
(Note 1) Ratio of interest-bearing debt to total assets at end of the midterm period = Balance of interest-bearing debt at end of the midterm period
÷ Total assets at end of the midterm period × 100(Note 2) Ratio of interest-bearing debt to total assets = (Balance of interest-bearing debt at end of the midterm period – prepaid amount) ÷ (Total
assets at end of the midterm period + sale price of the three Sold Assets – assumed book value of the three Sold Assets – assumed
expenses related to the Sale – prepaid amount ) × 100

As of the end of the midterm period under review, JHR’s issuer ratings were as follows.
Rating agency

RatingOutlookJapan Credit Rating Agency, Ltd.

A+

StableRating and Investment Information, Inc.

A

Stable(d) Financial results
As a result of the abovementioned asset management, operating revenue, operating income and ordinary income were¥12,321 million, ¥7,319 million and ¥6,387 million, respectively, for the midterm period under review (six-month period
from January 1, 2018 to June 30, 2018). Net income for the midterm period under review was ¥6,387 million.
Variable rent from the hotels with variable rent leased to the Twelve HMJ Hotels in the amount of ¥2,361 million is
included in operating revenue, but this amount is calculated based on the GOP of the Twelve HMJ Hotels for the midterm
period under review. The variable rent to be ultimately received from the Twelve HMJ Hotels will be determined by thefull-year GOP (12-month period) of the Twelve HMJ Hotels.
JHR settles accounts on an annual basis and investment corporations do not have a system for interim dividends under theInvestment Trusts Act. Accordingly, no distribution of earnings can be made in the midterm period under review.
Distribution of earnings is made based on the earnings for the full year (12-month period from January 1, 2018 to
December 31, 2018). With regard to such distribution of earnings, in accordance with the policy for earnings dividend to
exceed 90% of JHR’s distributable profit that is defined by Article 67-15 of the Act on Special Measures Concerning
Taxation. The plan is, for the period ending December 31, 2018, that the amount calculated by adding a reversal of reserve
for temporary difference adjustment (amount of use of negative goodwill, such as for the amount equivalent to 50-year
amortization amount of negative goodwill (Note), loss on retirement of fixed assets incurred by the replacement of facilities
and correspondence to major renovation work of Hotel Centraza Hakata, etc.) to the balance of unappropriated retained－

6 －earnings after deducting ¥1,235 million (expected amount) of reserve for special account reduction entry, would all be
distributed except for fractions of less than one yen of dividend per unit.
(Note)For 50-year amortization amount of negative goodwill, please refer to Dividend per Unit (Note 2) of“Assumptions of the operating forecast for the full year of the fiscal year ending December 2018 (19th period)”on page 13.

－

7 －(B) Outlook for the second half of the fiscal year(a) Investment policies and issues to be addressed
The environment surrounding the tourism industry is expected to remain favorable with local governments also taking
unique initiatives to attract tourists amid ongoing national tourism policies such as continual easing of visa requirements.
The number of inbound tourists increased in the first half of 2018 to again mark a new record high, and while the number
rose due to expansion of needs for overseas travels especially among the middle-income group and the wealthy group in
China and other fast-growing Asian regions, more regions such as the Philippines, Vietnam and Russia have also begun toshow high increase rates. Japan being favorably chosen as a travel destination is not a temporary phenomenon, but is likely
to be mostly attributable to factors such as progress in information and communications technology (ICT) allowing tourists
to enjoy traveling in Japan without language barriers, inbound travelers communicating charms of Japan with abundant
tourism resources through SNS (Social Networking Service) to the world, and other factors. The further increase in thenumber of inbound tourists due to such structural shifts and the solid domestic leisure demand are expected to work
favorably for JHR. On the other hand, however, close attention should be paid to the changes in supply-demand balancegoing forward, including an increase in new supply of hotels following trends of increase in inbound tourists, and theimpact of the Private Lodging Business Act (new minpaku law) enforced in June 2018.
Under such circumstances, the Asset Management Company has changed its organization in order to launch discretionary
investment business and investment advisory business regarding the hotel transactions which were not considered as
investment target of JHR, to respond to growing investor needs of various hotel investments and provide new investment
opportunities. New know-how acquired through new business is believed to lead to enhancement of the asset management
capability of the Asset Management Company and also to be utilized in asset management of JHR.
JHR intends to work with the Asset Management Company to manage assets based on the approach described below
aiming to enhance the attractiveness of investing in JHR.
Internal growth
JHR will work to boost sales and GOP of hotels operated under variable rent contracts or management contracts, which are
the Twelve HMJ Hotels and the Four the b Hotels, etc. that are operated under variable rent contract, and the Six Accor
Hotels that are mainly operated under the management contract structure, with an aim to maximize variable rent andincome from management contracts receivable by JHR. To achieve this goal, JHR will focus efforts on seeking thecooperation with relevant parties in shifting from competition based on price to competition based on value with an aim tobecome prominent in the market in terms of both facilities and services. Through the active asset management which
requesting each hotel lessee, its operations support company and its operator to implement marketing initiatives to attract awider range of demand, measures to maintain and increase room rates, etc., as well as to implement 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,etc. in order to increase JHR’s revenue.
In addition, JHR will execute investment for the purpose of an ongoing program of facilities and equipment maintenanceand improvement to ensure each hotel becomes prominent in the market and to maintain and enhance asset value.
External growth
In terms of external growth strategy, JHR will aim to acquire highly-competitive hotels in areas which can expect“domestic and inbound leisure demand” over the medium to long term as JHR has done to date. As to hotel types, thepolicy is that limited-service hotels, full-service hotels and resort hotels are all investment targets, but JHR will only
acquire properties with competitive advantages in terms of both buildings, facilities, etc. (infrastructure) and thecapabilities of the hotel lessee and operator (services).
In the hotel investment market, harsh competition over acquisitions is ongoing due in part to the increase of Real Estate
Investment Trust in Japan (J-REITs) investing in hotels and formation of private REITs and other factors. JHR will aim for
expansion of asset size that accompanies an improvement in the quality of its portfolio by acquiring highly competitive－

8 －properties while leveraging its strength and advantages and also utilizing the HMJ platform in some cases.
Finance strategy
JHR has set a basic policy of carrying out a conservative financial strategy which places importance on securement offinancial stability and strength. JHR presses ahead with diversification of the means of financing while maintaining andenhancing the relationships of trust with financial institutions with which it does business. It aims to conduct financial
operations by keeping the ratio of interest-bearing debt to total assets at no larger than 50% as in the past. In addition, whenseeking new funding for property acquisitions or refinancing existing debt, JHR will work to reinforce its existing
relationships with multiple lenders and further diversify funding methods, including issuance of investment corporation
bonds, after considering the balance between the dispersion and extension of maturity dates for its debt and borrowing
costs.
Furthermore, while monitoring the conditions of the interest rate market, JHR aims to further improve its financial
foundation by extending maturity dates and managing risk of interest rates by fixing rates, etc.
Policy on the handling of negative goodwill
Starting from the fiscal year ended December 31, 2017 (18th period), JHR started paying out dividends through reversal ofreserve for temporary difference adjustment in connection with partial amendments to the Ordinance on Accountings ofInvestment Corporations and the Regulation for Real Estate Investment Trusts and Real Estate Investment Corporations of
The Investment Trusts Association, Japan (hereinafter called “JITA”).
In the fiscal year ending December 31, 2018 and onward also, JHR will reverse ¥262 million (hereinafter called the “50year amortization amount of negative goodwill”) for each period, which is an amount equivalent to 2% (1/50) of theremaining balance of the reserve for temporary difference adjustment for the fiscal period ended December 31, 2017, to
pay out as dividends, with the remaining balance of the reserve for temporary difference adjustment set as the maximum
amount.
In cases of incurrence of losses caused by property dispositions, impairment loss of assets, dilution of dividend per unit due
to the issuance of new investment units through public offerings, loss on retirement of noncurrent assets, and suspension ofsales and such due to large-scale renovations with significant impact on revenues, JHR plans to pay extra amount inaddition to the 50-year amortization amount of negative goodwill (¥262 million) and reverse the negative goodwill.
As for the year ending December 31, 2018 (19th period), JHR expects ¥544 million, which is the total of the 50-year
amortization amount (¥262 million), loss on retirement of noncurrent assets (¥17 million) and the correspondence to thelarge-scale renovation at Hotel Centraza Hakata (¥265 million) as additional amounts to dividends by reversing thenegative goodwill.
(Note) The policy may change due to a resolution of the board of directors, and it does not guarantee specific amounts, etc., for the future.

Initiatives for Sustainability
In recent years, there has been growing importance of the risks and opportunities of ESG (Environment, Social andGovernance) in the investment management industry from the standpoint of long-term sustainability. JHR recognizes that
conducting real estate investment management based on consideration for ESG is important to enhance unitholder value
and to further raise the attractiveness of JHR. In addition, JHR believes that it is indispensable to establish favorable
relationships with its stakeholders including unitholders, hotel users (guests), lessees, operators, business partners including
property managers, local communities, officers and employees of the Asset Management Company and others and to fulfill
our social responsibilities expected from them.
In order to put such ideas into practice, JHR, along with the Asset Management Company, has established a “Sustainability
Policy” as a guide to ESG initiatives. We have promoted efforts to reduce environmental impact at our portfolio properties
based on this policy, and received the Building-Housing Energy-efficiency Labeling System (BELS) evaluation for Hotel
Nikko Alivila and Mercure Okinawa Naha in February 2018 as first such cases for J-REIT’s hotel properties. In addition,
JHR took out the SMBC Environmental Assessment Loans for the first time in March 2018 in order to refinance short-termloans which were due for repayment. “SMBC Environmental Assessment Loan” assesses status of corporate initiatives forenvironmental considerations, on loan execution and establishment of lending conditions, based on environmental－

9 －assessment criteria developed independently by Sumitomo Mitsui Banking Corporation and the Japan Research Institute,
Limited. JHR has received an “A” grade in the environmental assessment due to excellent environmental consideration put
into practice in managing assets. Recognizing its social responsibility towards local communities as a J-REIT specializing
in hotels (Note), JHR will proactively carry out social contribution activities capitalizing on the characteristics of the hotel
sector and each hotel going forward.
(Note) Investigated by the Asset Management Company based on public information.

－

10 －

(b) Significant subsequent events
1. Sale of assets
On August 10, 2018, JHR sold three properties as below.
Name of property sold

R&B Hotel Higashi-nihonbashi

Category of asset soldReal estate beneficial interest in trust

Asset type

Hotel

Address

Chuo-ku, Tokyo

Sale price (Note 1)¥3,050 million

Book value (Note 2)¥1,483 million

Expected gain on sales of realestate properties (Note 3)¥1,543 million

Sales dateAugust 10, 2018

Buyer

Tiger 2 GK

(Note 1) The sale price does not include expenses for sale, settlement amount of property taxes and city planning taxes, consumption taxes andlocal consumption taxes.
(Note 2) The assumed book value as of the end of July 2018 is indicated.
(Note 3) The amount obtained by subtracting the assumed book value as of the end of July 2018 and assumed expenses for sale from sale price isindicated.

Name of property soldthe b akasaka-mitsuke

Category of asset soldReal estate beneficial interest in trust and movable asset attached to the hotel

Asset type

Hotel

Address

Minato-ku, Tokyo

Sale price (Note 1)¥6,600 million

Book value (Note 2)¥6,293 million

Expected gain on sales of realestate properties (Note 3)¥265 million

Sales dateAugust 10, 2018

Buyer

Tiger 2 GK

(Note 1) The sale price does not include expenses for sale, settlement amount of property taxes and city planning taxes, consumption taxes andlocal consumption taxes.
(Note 2) The assumed book value as of the end of July 2018 is indicated.
(Note 3) The amount obtained by subtracting the assumed book value as of the end of July 2018 and assumed expenses for sale from sale price isindicated.

Name of property soldthe b ochanomizu

Category of asset soldReal estate beneficial interest in trust and movable asset attached to the hotel

Asset type

Hotel

Address

Chiyoda-ku, Tokyo

Sale price (Note 1)¥2,500 million

Book value (Note 2)¥2,353 million

Expected gain on sales of realestate properties (Note 3)¥128 million

Sales dateAugust 10, 2018

Buyer

Tiger 2 GK

(Note 1) The sale price does not include expenses for sale, settlement amount of property taxes and city planning taxes, consumption taxes andlocal consumption taxes.
(Note 2) The assumed book value as of the end of July 2018 is indicated.
(Note 3) The amount obtained by subtracting the assumed book value as of the end of July 2018 and assumed expenses for sale from sale price isindicated.

－

11 －

2. Prepayment of a loan
JHR made prepayment of a loan using part of the proceeds from sale of properties described in the above 1. Sale of assets.
Term Loan 48
Lenders

Sumitomo Mitsui Banking Corporation

Loan balance before repayment¥5,000 million

Repayment amount¥5,000 million

Date of borrowing

April 26, 2018

Maturity date

December 28, 2018

Interest rate

Base interest rate (JBA Japanese Yen TIBOR for one month) + 0.275%

Repayment dateAugust 10, 2018

Loan balance after repayment¥0(c) Operating forecast
The following is JHR’s operating forecast for the full year of the fiscal year ending December 31, 2018 (19th period). For
the assumptions of the operating forecast, please refer to “Assumptions of the operating forecast for the midterm and fullyear of the fiscal year ending December 31, 2018 (19th period)” on page 13.
In addition, the dividend per unit based on the annualized effect of the sale of R&B Hotel Higashi-nihonbashi, the bakasaka-mitsuke and the b ochanomizu, which were sold on August 10, 2018, is assumed to be ¥3,658. For the annualized
effect of the Sale, please refer to “<Reference Materials 1> Highlights of the operating forecast and forecast of dividend”
on page 17. For the assumptions of the forecast of the annualized effect, please refer to “<Reference Materials 2>
Assumptions of annualized effect (full year effect) in this forecast” on page 18.

Full year of the fiscal year ending December 31, 2018 (19th period)

Forecast
this time

Previous forecast(Note 1)

Increase(Decrease)

Operating revenue¥28,485 million¥28,321 million¥164 million

Operating income¥18,122 million¥17,884 million¥238 million

Ordinary income¥16,294 million¥16,092 million¥202 million

Net income¥16,293 million¥16,091 million¥202 million¥3,890¥3,844

¥46

¥0

¥0

¥0

Dividend per unit
Dividend per unit resulting from excess of earnings(Note 1)
(Note 2)

These are the figures announced in the “Notice Concerning Revision of Operating Forecast and Forecast of Dividend for Fiscal YearEnding December 2018 (19th Period)” dated August 7, 2018.
The forecast figures above are the current forecasts calculated based on certain assumptions. As such, actual operating revenue,
operating income, ordinary income, net income, dividend per unit and dividend per unit resulting from excess of earnings may vary due
to changes in the circumstances. Furthermore, the forecasts are not intended to guarantee any dividend amount.

－

12 －

Assumptions of the operating forecast for the full year of the fiscal year ending December 2018 (19th period)

Item
Calculation
PeriodAssumptions
・Full year of the fiscal year ending December 2018 (19th Period): January 1, 2018 through December 31,
2018 (365 days).
・As three properties were sold on August 10, 2018, the 41 properties owned by JHR as of today are
assumed.
Disposition date
Name of asset
August 10, 2018
R&B Hotel Higashi-nihonbashi
Assets under
August 10, 2018
the b akasaka-mitsuke
Management
August 10, 2018
the b ochanomizu
・It is assumed that there will be no change (acquisition or disposition, etc.) in assets under management
other than the above through the end of the fiscal year ending December 2018 (19th period). However,
the actual results may fluctuate depending on the changes in assets under management that may takeplace.
・It is expected that ¥1,937 million is recognized as gain on sale of real estate properties due to the Sale.
・Operating revenue is calculated based on the lease and other contracts effective as of today and inconsideration of competitiveness of hotels, market environment and other factors. If there are lease
contracts with regard to facilities other than hotels, such as retail facilities and offices, etc., operating
revenue calculated on the said lease contracts is included.
・Rents, etc. of the main hotels are calculated based on the following assumptions.
(1) The Twelve HMJ Hotels
The assumptions of the fixed rent and variable rent for the Twelve HMJ Hotels are as follows.
Total rent = Fixed rent + Variable rent
Variable rent = (Total GOP of the hotels – GOP base amount) × Variable rent ratio (%)(Unit: millions of yen)
Total GOP of
the hotel(s)Variablerent ratio

Variable
rent

Fixed
rent

Total
rent

Midterm
3,155
1,675
1,258
1,610
2,868
85.0%
Full year
8,123
3,351
4,056
3,221
7,277
Midterm
419
350
62
274
337
Okinawa Marriott
90.0%
Resort & Spa
Full year
1,416
700
644
550
1,194
Midterm
486
234
207
174
381
Sheraton Grand
82.5%
Hiroshima Hotel (*1)
Full year
1,030
468
464
348
812
Midterm
494
212
159
199
359
Hotel Centraza Hakata
90.0%
(*2)
Full year
602
425
159
400
559
Midterm
632
325
284
288
572
Holiday Inn
92.5%
Osaka Namba
Full year
1,273
650
576
576
1,152
Midterm
477
275
175
222
397
Hilton Tokyo Narita
86.5%
Airport (*2)
Full year
967
550
361
444
805
Midterm
319
180
136
168
304
International Garden
98.0%
Hotel Narita
Full year
616
360
250
336
586
Midterm
318
235
76
210
286
Hotel Nikko Nara
91.5%
Full year
739
470
246
420
666
Midterm
6,303
2,361
3,147
5,508
Total
Full year
14,7706,761
6,295
13,056(*1) Stating the rent for Sheraton Grand Hiroshima Hotel, the major facility of ACTIVE-INTER CITYHIROSHIMA. Separately, rent from the office building and the retail zone for the fiscal year ending December
2018 (19th period) is expected to be ¥210 million for the midterm and ¥442 million for the full year. The figure
includes ¥6 million for the midterm and ¥12 million for the full year as variable rent pursuant to a revenuelinked rent agreement with some retail tenants.
(*2) Due to the impact of the major renovation work scheduled in the 2nd half of the fiscal year ending December
2018, total GOP for the first half will exceed total GOP for the full year. Therefore, the estimated variable rent
for the full year as a maximum amount is recognized as the variable rent for the midterm.
The Five HMJ Hotels

Operating
Revenue

GOP baseamount

－

13 －

Item

Assumptions(2) The Six Accor Hotels

Income from management contracts (*1) and variable rent of the Six Accor Hotels(Unit: millions of yen)ibis Styles
Mercureibis Tokyo
ibis Styles
MercureMercureKyoto
Okinawa
Total
Shinjuku
SapporoSapporoYokosuka
StationNaha
Midterm
238
247
272
282
214
160
1,415
Full year
483
542
666
689
469
286
3,138
(*1) 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. Such tenant revenue isrecognized as parking revenue.
(*2) Mercure Sapporo includes variable rent which is linked to the sales of tenant(s) other than the hotel.
(3) The Six the b Hotels

Operating
Revenue

Income from fixed rent and variable rent of the Six the b hotels(Unit: millions of yen)
Variable Rent
Fixed Rent (*1)
Total Rent
Midterm
12
42
54
the b suidobashi
Full year26
84
111
Midterm
51
68
119
the b akasaka-mitsuke (*2)
Full year
62
82
145
Midterm64
109
174
the b ikebukuro
Full year
133
220
354
Midterm
14
34
48
the b ochanomizu (*2)
Full year
17
41
59
Midterm
34
62
96
the b hachioji
Full year
70
122
193
Midterm76
44
121
the b hakata
Full year
162
89
252
Midterm
253
362
615
Total
Full year
473
642
1,115
(*1) Fixed rent includes rent from non-hotel tenant(s).
(*2) As the b akasaka-mitsuke and the b ochanomizu were sold on August 10, 2018, the fixed rent and the variable
rent for the full year represent the expected amount of rent during January 1, 2018 and the day before thedisposition date.

(4) Other hotels subject to variable rent
Variable rent from other hotels subject to variable rent
(Unit: millions of yen)
Midterm
Full year
Smile Hotel Nihombashi Mitsukoshimae
19
19
20
Hotel Vista Kamata Tokyo－
Chisun Inn Kamata
38
78
Hotel Keihan Universal City
Undisclosed (*) Undisclosed (*)
Hotel Sunroute Shinbashi
97
97
Hilton Tokyo Bay
Undisclosed (*) Undisclosed (*)
Hilton Nagoya
Undisclosed (*) Undisclosed (*)
Total
854
1,399
(*) Undisclosed since tenants that concluded lease agreements did not agree to disclose rent revenue, etc.

－

14 －

Item

Operating
Revenue

Assumptions
・The following is the breakdown of variable rent and income from management contracts (*1).
<Breakdown of variable rent, etc. for the fiscal year ending December 2018 (19th period)>(Unit: millions of yen)
Midterm
Full year
The Twelve HMJ Hotels (*2)
2,367
6,774
The Six Accor Hotels
1,415
3,138
The Six the b Hotels
253
473
Other hotels with variable rent (7 hotels)
854
1,399
Total (31 hotels)
4,891
11,784(*1) For details of agreements for variable rent and income from management, please refer to page 52, “5. Reference
Information (2) Assets under management (C) Other major assets under management C. Overview of the hotelbusiness (1) Rent structures of hotels with variable rent, management contract or revenue sharing” of the“Midterm Financial Report for the Fiscal Year Ending December 31, 2018 (January 1, 2018–June 30, 2018)”
dated August 22, 2018.
(*2) These figures include ¥6 million for the midterm and ¥12 million for the full year as variable rent pursuant to arevenue-linked rent agreement with some retail tenants at ACTIVE-INTER CITY HIROSHIA.

OperatingExpenses

・With respect to real estate leasing expenses, which constitute a major part of the operating expenses,
expenses other than depreciation are calculated based on historical data, and variable factors are reflectedin the calculation.
・It is assumed that the ¥1,630 million will be recognized as expenses for property taxes, city planningtaxes, etc.
・In general, fixed asset tax and city planning tax and other taxes and public dues on acquired assets aresettled with the 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 berecognized as expenses for the calculation period. Also, the fixed asset tax and city planning tax andother taxes and public dues to be recorded as expenses for the fiscal year ending December 2018 (19thperiod) for the three properties (Hilton Tokyo Narita Airport, International Garden Hotel Narita, andHotel Nikko Nara) acquired in the fiscal year ended December 2017 (18th period) are assumed to be¥118 million, which is equivalent to nine months (¥160 million, for 12 months).
・Depreciation is calculated using the straight-line method, and is estimated to be ¥4,049 million,
including the planned capital expenditures (¥3,186 million) (¥1,898 million for capital expenditure I,¥897 million for capital expenditure II, and ¥391 million for capital expenditure III (*)) for the fiscal
year ending December 2018 (19th period).
(*) JHR classifies capital expenditures into the following three categories. (I) Capital investment related to renewalof equipment and facilities of buildings which is required to maintain proper values of properties, (II) capital
investment for fixtures, furniture and equipment that are not directly related to building structure or facilities but
necessary for operating hotels, and (III) strategic capital investment such as renovating guest rooms, etc. for
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 materiallyfrom the forecast amount for various reasons, such as; (1) Emergency repair expenses may be necessary
due to damage to buildings from unexpected causes; (2) The amount of repair expenses generally tends
to increase in difference over time; and (3) Repair expenses are not required on a regular basis.
・¥1,856 million is expected for borrowing-related costs, including interest expense, amortization for
Non-operating
financing fee, arrangement fee and amortization for derivative instruments (interest rate caps).
Expenses・Expenses for issuance of new investment units and secondary offering are amortized over a period of
three years by the straight-line method.
・The balance of interest-bearing debt (sum of loans and investment corporation bonds) is ¥141,060
million as of the end of June, 2018. It is assumed that the balance of interest-bearing debt will be¥136,060 million after the Sale and as of December 31, 2018.
Interest・¥5,000 million was repaid in accordance with the Sale.
bearing Debt
・It is assumed that ¥4,489 million loans, which are due within the fiscal year ending December 2018
(19th period), will be fully refinanced.
・It is assumed that the scheduled repayment of the loans above is repaid by cash on hand.
Issuance of ・The number of investment units issued as of today (4,010,847 units) is assumed.
Investment ・It is assumed that there will be no additional issuance of investment units through to the end of the fiscal
Units
year ending December 2018 (19th period).

－

15 －

Item

Assumptions
・Dividend per unit for the fiscal year ending December 2018 (198th period) is calculated based on thefollowing assumptions.
Net income¥16,293 million

Reserve for special advanced depreciation (*1)(¥1,235 million)

Reversal of reserve for temporary difference adjustment (negative goodwill)
50-year amortization amount of negative goodwill (*2)
Loss on retirement of noncurrent assets (*3)

¥17 million

Correspondence to major renovation work (*4)¥265 million

Retained earnings brought forward

Dividend per
Unit¥262 million¥3 million

Distributable amount¥15,606 million

Total number of investment units issued

4,010,847 units

Dividend per unit
¥3,890(*1) It is assumed that ¥1,235 million of expected gain on sale by the Sale is planned to be retained as reserve foradvanced depreciation within the limit to maintain conduit status stipulated by Article 67-15 of Act on Special
Measures Concerning Taxation by applying “Special provisions for taxation in the case where a special accountis set up accompanied with transfer of specified assets” (Article 65-8 in the Act on Special Measures Concerning
Taxation).
(*2) ¥262 million (hereinafter called “50-year amortization amount of negative goodwill”) will be paid out as
dividends, with the remaining balance of the reserve for temporary difference adjustment set as the maximum
amount, for every year from the fiscal year ended December 2017 (18th period).
(*3) Amount recognized as a loss on retirement of noncurrent assets will be appropriated by reserve for temporary
difference adjustment (negative goodwill) and is expected to have no impact on dividend per unit.
(*4) Major renovation (hereinafter the “Renovation”) is planned to be implemented at Hotel Centraza Hakata and theRenovation will suspend the hotel operation from October 2018 to the end of March 2019. Taking into
consideration the effect of the Renovation on dividend, ¥265 million, which is equivalent to the difference
between NOI after depreciation of Hotel Centraza Hakata for the fiscal year ended December 2017 (18th period)and NOI after depreciation for the fiscal year ending December 2018 (19th period), will be appropriated byreserve for temporary difference adjustment (negative goodwill). In case the period of the Renovation is changed
or by other reason, the amount to be reversed from reserve for temporary difference adjustment may bereviewed.

・Dividend per unit may fluctuate due to various causes, such as fluctuation of rent revenue resulting fromtransfer of assets under management, change of tenants, etc. at hotels and change in the businessenvironment of hotel business for hotel tenants, etc., as well as unexpected repairs and actual number of
new investment units issued, etc.
・The remaining balance of the reserve for temporary difference adjustment (negative goodwill) after theappropriation of the reserve for temporary difference adjustment (negative goodwill) for dividends forthe fiscal year ending December 2018 (19th period) is expected to be ¥11,813 million.
Dividend per
Unit
・It is assumed that the excess of earnings (dividend per unit resulting from excess of earnings) will not be
Resulting
distributed.
from Excessof Earnings
・It is assumed that revision in law, tax system, accounting standard, regulations of the listing, regulationsof The Investment Trusts Association, Japan that may impact the forecast above will not be made.
Other
・It is assumed that unexpected major incident will not occur in the general economy, real estate market
and hotel business environment, etc.
・The numerical values are rounded down to the nearest millions of yen in the assumptions above.

－

16 －

<Reference Materials 1>Highlights of the operating forecast and forecast of dividend
Comparison between the operating forecast and forecast of dividend for the fiscal year ending December 2018 (19thPeriod) in the press release dated August 7, 2018, “Revision of Operating Forecast and Forecast of Dividend for Fiscal
Year Ending December 2018 (19th Period)” and the operating forecast this time are as follows.
(Unit: JPY M)
19th Period
Previous Forecast
(*1)
(A)

Comparison with
Previous Forecast

Forecast this time

Factors Causing Variance(B)

Annualized (*2)

(B)-(A)%

No. of Properties

41

41

41

-

-

Acquisition Price

309,370309,370309,370--

Operating Revenue

28,321

28,48526,269164

0.6%

Real Estate Operating
Revenue

26,38426,54826,269164

0.6%

14,56414

0.1%

11,704149

1. The Twelve HMJ Hotels: increase in variable rentby JPY62M
2. The Six Accor Hotels: increase in income from
1.3% management contract and variable rent by JPY41M
3. The Four the b Hotels (*4): increase in variable
rent by JPY4M
4. Increase in revenue sharing, etc. by JPY42M

-

0.9%

Fixed Rent, etc.

Variable Rent

Composition

Composition

Composition

55.9%

55.6%

55.4%

44.1%

14,749

11,63444.4%

14,763

11,784

44.6%

Gain on Sale ofReal Estate
Properties

1,937

1,937

-

NOI (*3)

22,02122,221

21,927199

NOI Yield

7.1%

7.2%

7.1%

0.1%

NOI after Depreciation(*3)

17,915

18,152

17,893236

1.3%

NOI Yield after
Depreciation
Operating Income

5.8%

5.9%

5.8%

0.1%

17,884

18,122

15,948238

1.3%

Ordinary Income

16,092

16,294

14,130202

1.3%

Net Income

16,091

16,293

14,129202

1.3%

Reserve for temporary
difference adjustments(negative goodwill)

565

544

544

(20)

Amount to be reserved from reserve for temporary(3.7%) difference adjustments (*5)
19th Period：

Reserve for Special
Advanced Depreciation(1,235)(1,235)--

Total Dividends

15,417

15,602

14,671184

No. of Units Issued (unit)

4,010,847

4,010,847

4,010,847-

Dividend per Unit (JPY)

3,844

3,890

3,658

46

(*1)

(*2)
(*3)

(*4)
(*5)

50-year amortization amount of negative goodwill:
JPY262M
Correspondence to loss on retirement of noncurrent
1.2%
assets:JPY17M
Correspondence to major renovation works:
1.2% JPY265M-

The operating forecast and forecast of dividend for the fiscal year ending December 2018 (19th period) announced in the press
release “Notice Concerning Revision of Operating Forecast and Forecast of Dividend for Fiscal Year Ending December 2018
(19th Period) dated August 7, 2018.
For the assumptions for the annualized effect, please refer to “<Reference Materials 1> Assumptions of annualized effect (fullyear effect) in this forecast” below.
Each is calculated using the following formula. The same shall apply hereinafter.
NOI (Net Operating Income) = Real estate operating revenue – Real estate operating costs + Depreciation + Loss on retirementof 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 Four the b Hotels are four hotels that excludes the b akasaka-mitsuke and the b ochanomizu which are sold on August 10,
2018 from the Six the b Hotels. The same shall apply hereinafter.
For the details of the amount to be reversed from reserve for temporary difference adjustments (negative goodwill), please refer
to “Assumptions of the operating forecast for the full year of the fiscal year ending December 2018 (19th period)” below.
－

17 －<Reference Materials 2> Assumptions of annualized effect (full year effect) in this forecast(1) It is assumed that the existing properties (41 properties) after excluding the sold properties are held throughout thefull year. Moreover, gain on sale of real estate properties and reserve for special advanced depreciation are notassumed.
(2) There is no change in operating revenue and operating expenses of the existing properties (41 properties) after
excluding the sold properties , except property taxes and city planning taxes, from the “Assumptions of theoperating forecast for the full year of the fiscal year ending December 2018 (19th period).”(3) The fixed asset tax and city planning tax and other taxes for three properties (Hilton Tokyo Narita Airport,
International Garden Hotel Narita, and Hotel Nikko Nara) acquired in the fiscal year ended December 2017 (18thperiod) are assumed to be ¥166 million, which is equivalent to twelve months.
<Reference Materials 3> Hotel operation indexes, sales and GOP
Hotel operation indexes, sales and GOP of the Eleven HMJ Hotels (*1), the Six Accor Hotels and the Four the b Hotels(*2) are stated below.
(*1) The figures are the total amount of eleven hotels which exclude Hotel Centraza Hakata from the Twelve HMJ in order to
exclude the impact of renovation work which cause suspension of sales. The same shall apply hereinafter.
(*2) The figures are the total amount of four hotels which exclude the b akasaka-mitsuke and the b ochanomizu from the Six the bHotels in order to exclude the impact of the Sale.
(*3) The numeral figures are based on figures obtained from hotel lessees, etc. Please note that these figures have not been
audited or gone through other procedures. No guarantee is made as to the accuracy or completeness of the figures andinformation.
(*4) ADR and RevPAR are rounded off to the nearest the nearest yen. Sales and GOP are rounded off to the nearest millions ofyen. Comparison with the previous period is rounded off to one decimal place.

<1> Operation indexes, sales and GOP of the each hotel groups(1) The Eleven HMJ Hotels
Fiscal year
ended
December
2017

Occupancy
Rate

ADR

RevPARSales(JPY1M)GOP(JPY1M)

Fiscal year ended December 2018

ActualPrevious
forecast

Forecast thistime (first half:
actual)Comparison
with previous
periodComparison
with previous
forecast

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

87.4%
89.0%
88.2%
14,91218,013
16,49013,027
16,037
14,544
18,715
22,15140,865

87.1%
89.2%
88.2%
15,214
18,263
16,76913,25916,297
14,79018,94322,55341,496

87.3%
89.2%
88.3%
15,246
18,237
16,77013,306
16,26914,80018,754
22,34041,094(0.1)pt
0.2pt
0.0pt
2.2%
1.2%
1.7%
2.1%
1.5%
1.8%
0.2%
0.9%
0.6%

0.1pt
(0.0)pt
0.1pt
0.2%(0.1)%
0.0%
0.4%(0.2)%
0.1%(1.0)%(0.9)%(0.1)%First half of the year

5,683

5,730

5,809

2.2%

1.4%

Second half of the year

8,041

8,377

8,358

3.9%

(0.2)%

Full year

13,724

14,107

14,1683.2%

0.4%(*) The figures for the fiscal year ending December 2017 of the acquired assets (Hilton Tokyo Narita Airport, International
Garden Hotel Narita and Hotel Nikko Nara), which were acquired in the fiscal year ending December 2017, are for the entire
year including figures prior to the acquisition. The same shall apply hereinafter.

－

18 －

(2) The Six Accor Hotels

Fiscal year ended
December 2017
ActualOccupancy
Rate

ADR

RevPARSales(JPY1M)GOP(JPY1M)

Fiscal year ended December 2018
Previous
forecast

Forecast thistime (first
half: actual)Comparison
withprevious
periodComparison
withprevious
forecast

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

84.8%
85.7%
85.3%
11,383
12,49011,944
9,652
10,70910,185
3,074
3,380
6,454

87.9%
90.3%
89.1%
11,585
12,55512,080
10,18911,33910,769
3,240
3,584
6,824

85.8%
91.3%
88.6%
11,733
12,51912,141
10,071
11,432
10,757
3,198
3,600
6,799

1.0pt
5.6pt
3.3pt
3.1%
0.2%
1.6%
4.3%
6.8%
5.6%
4.0%
6.5%
5.3%

(2.1)pt
1.0pt(0.5)pt
1.3%(0.3)%
0.5%(1.2)%
0.8%(0.1)%(1.3)%
0.4%(0.4)%First half of the year

1,380

1,448

1,448

4.9%

0.0%

Second half of the year

1,623

1,711

1,750

7.8%

2.3%

Full year

3,004

3,158

3,198

6.5%

1.3%

(3) The Four the b Hotels

Fiscal year ended
December 2017
ActualOccupancy
Rate

ADR

RevPARSales(JPY1M)GOP(JPY1M)

Fiscal year ended December 2018
Previous
forecast

Forecast thistime(first half:
actual)Comparison
with theprevious
periodComparison
with theprevious
forecast

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

89.4%
91.9%
90.7%
8,986
9,021
9,004
8,033
8,289
8,162
989
1,036
2,025

90.8%
91.5%
91.1%
8,956
9,112
9,035
8,128
8,338
8,234
1,001
1,041
2,042

90.5%
91.6%
91.1%
9,009
9,125
9,068
8,152
8,360
8,257
1,006
1,045
2,051

1.1pt
(0.3)pt
0.4pt
0.2%
1.2%
0.7%
1.5%
0.9%
1.2%
1.8%
0.9%
1.3%

(0.3)pt0.1pt(0.1)pt
0.6%
0.1%
0.4%
0.3%
0.3%
0.3%
0.5%
0.4%
0.4%

First half of the year

454

453

457

0.7%

1.0%

Second half of the year

497

477

478

(3.8)%

0.1%

Full year

951

930

935

(1.7)%

0.5%

－

19 －

<2> Hotel Sales (by hotel)
The Eleven HMJ Hotels(Unit: millions of yen)

Sales of the Evelen HMJ Hotels

First half of the year
Kobe Meriken Park
Second half of the year
Oriental Hotel
Full year
First half of the year
Oriental Hotel
Second half of the year
tokyo bay
Full year
First half of the year
Namba Oriental
Second half of the year
Hotel
Full year
First half of the year
Hotel Nikko Alivila Second half of the year
Full year
First half of the year
Oriental Hotel
Second half of the year
Hiroshima
Full year
First half of the year
Total of the Five
Second half of the year
HMJ Hotels
Full year
First half of the year
Okinawa Marriott
Second half of the year
Resort & Spa
Full year
ACTIVE-INTER
First half of the year
CITY
Second half of the year
HIROSHIMA
Full year
First half of the year
Holiday Inn
Second half of the year
Osaka Namba
Full year
First half of the year
Hilton Tokyo Narita
Second half of the year
Airport
Full year
International
First half of the year
Garden Hotel
Second half of the year
NaritaFull year
First half of the year
Hotel Nikko Nara Second half of the year
Full year
First half of the year
Total of The Eleven
Second half of the year
HMJ Hotels
Full year

Fiscal year ended
December 2017
Comparison
withActualprevious
period
2,431(1.4%)
2,950
1.9%
5,381
0.4%
3,319
(3.9%)
3,518(7.8%)
6,838(6.0%)
1,394
0.6%
1,492
0.1%
2,887
0.3%
2,568
6.1%
3,821
2.3%
6,389
3.8%
993
(3.0%)
1,159(4.7%)
2,153(3.9%)
10,706(0.4%)
12,941(1.6%)
23,647(1.1%)
1,692
5.3%
2,459
5.7%
4,151
5.6%
1,601
17.0%
1,747
7.4%
3,348
11.8%
1,011
(8.4%)
1,063(3.6%)
2,074(6.0%)
1,542
8.6%
1,696
8.3%
3,238
8.4%
705
(4.1%)
733
2.1%
1,438
(1.0%)
1,458(1.7%)
1,512(0.6%)
2,970(1.1%)
18,715
1.3%
22,151
0.6%
40,865
0.9%

－

20 －

Fiscal year ended December 2018

Previous
forecast
2,510
2,861
5,371
3,276
3,611
6,887
1,421
1,531
2,952
2,682
4,011
6,693
966
1,206
2,172
10,856
13,22024,076
1,759
2,537
4,296
1,536
1,721
3,257
1,025
1,090
2,115
1,575
1,678
3,253
692
728
1,420
1,501
1,578
3,079
18,94322,55341,496

Forecast Comparison Comparison
this timewithwith(fitst half:
previous
previous
actual)periodforecast
2,556
5.1%
1.8%
2,906
(1.5%)
1.6%
5,462
1.5%
1.7%
3,263
(1.7%)(0.4%)
3,578
1.7%(0.9%)
6,840
0.0%(0.7%)
1,418
1.7%(0.2%)
1,544
3.5%
0.9%
2,962
2.6%
0.3%
2,569
0.1%
(4.2%)
3,994
4.5%(0.4%)
6,563
2.7%(1.9%)
879(11.5%)(9.0%)
1,065(8.1%)(11.7%)
1,944(9.7%)(10.5%)
10,685(0.2%)(1.6%)
13,0861.1%(1.0%)
23,7710.5%(1.3%)
1,663(1.7%)(5.5%)
2,468
0.4%(2.7%)
4,131(0.5%)(3.8%)
1,610
0.5%
4.8%
1,778
1.8%
3.3%
3,388
1.2%
4.0%
1,014
0.2%
(1.1%)
1,068
0.5%(2.0%)
2,082
0.4%(1.6%)
1,625
5.4%
3.2%
1,671
(1.5%)(0.4%)
3,296
1.8%
1.3%
762
8.2%
10.1%
751
2.5%
3.1%
1,513
5.3%
6.5%
1,395
(4.3%)(7.1%)
1,517
0.4%(3.8%)
2,913(1.9%)(5.4%)
18,7540.2%(1.0%)
22,3400.9%(0.9%)
41,0940.6%(1.0%)

The Six Accor Hotels(Unit: millions of yen)

Sales of the Six Accor Hotels

First half of the year
ibis Tokyo Shinjuku Second half of the year
Full year
First half of the year
ibis Styles Kyoto
Second half of the year
StationFull 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
Second half of the year
Naha
Full year
First half of the year
Mercure Yokosuka Second half of the year
Full year
First half of the year
Total of The Six
Second half of the year
Accor Hotels
Full year

Fiscal year ended
December 2017
Comparison
withActualprevious
period365(10.1%)
408(4.1%)
773(7.1%)
482
3.7%
496(3.4%)
977
0.0%
548
11.9%
671
6.1%
1,219
8.6%
596
9.3%
755
6.6%
1,351
7.8%
532
8.7%
564
0.8%
1,096
4.5%
551
(3.2%)
486(3.1%)
1,037(3.2%)
3,074
3.7%
3,380
1.2%
6,454
2.4%

Fiscal year ended December 2018

Previous
forecast
479
486
965
460
496
957
576
703
1,278
623
789
1,412
553
575
1,128
549
535
1,084
3,240
3,584
6,824

Forecast Comparison Comparison
this timewithwith(fitst half:
previous
previous
actual)periodforecast464
27.1%(3.2%)
483
18.3%(0.5%)
947
22.4%(1.8%)
451(6.2%)(1.9%)
504
1.5%
1.4%
955
(2.3%)(0.2%)
553
1.0%(3.9%)
704
4.9%
0.1%
1,257
3.1%
(1.7%)
636
6.7%
2.1%
800
6.0%
1.4%
1,436
6.3%
1.7%
524
(1.5%)(5.3%)
580
2.8%
0.8%
1,104
0.7%
(2.2%)
570
3.4%
3.8%
530
9.1%
(1.0%)
1,100
6.1%
1.4%
3,198
4.0%
(1.3%)
3,600
6.5%
0.4%
6,799
5.3%
(0.4%)The Four the b Hotels(Unit: millions of yen)

Sales of the Four the b Hotels

First half of the year
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 hachioji
Second half of the year
Full year
First half of the year
the b hakata
Second half of the year
Full year
First half of the year
Total of The
Second half of the year
Four the b Hotels
Full year
the b suidobashi

Fiscal year ended
December 2017
Comparison
withActualprevious
period173(2.1%)
177
1.9%
351(0.2%)
306(5.3%)
311(0.4%)
617(2.9%)
266(8.5%)
282
3.2%
548(2.8%)
244
5.9%
266
6.9%
509
6.4%
989
(3.1%)
1,036
2.8%
2,025
(0.2%)－

21 －Fiscal year ended December 2018
Previous
forecast
173
179
352
306
316
621
271
275
547
251
271
522
1,001
1,041
2,042

Forecast Comparison Comparison
this timewithwith(fitst half:
previous
previous
actual)periodforecast
174
0.3%
0.5%
178
0.2%
(0.8%)
352
0.3%(0.2%)
301(1.5%)(1.4%)
314
1.0%(0.5%)
615(0.2%)(1.0%)
281
5.5%
3.4%
283
0.3%
2.8%
564
2.8%
3.1%
250
2.8%
(0.5%)
270
1.8%(0.2%)
521
2.2%(0.3%)
1,006
1.8%
0.5%
1,045
0.9%
0.4%
2,051
1.3%
0.4%

3. Semi-annual financial statements(1) Semi-annual balance sheets(thousands of yen)
As ofDecember 31, 2017
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Income taxes receivable
Derivative assets
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
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Net property and equipment
Intangible assets
SoftwareLeasehold rights in trust
Fixed-term leasehold rights in trust
Other intangible assets
Total intangible assets
Investments and other assets
Security deposits
Leasehold and security deposits in trust
Long-term prepaid expenses
Derivative assets
Reserve for repairs and maintenanceTotal investments and other assets
Total noncurrent assets
Deferred assets
Investment unit issuance costs
Investment corporation bond issuance costs
Total deferred assets
Total assets

*1

－

22 －

As of
June 30, 2018

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

11,011,580
10,411,285
1,742,883
483,044
6,040
21,69823,676,532

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

326,059(133,511)
192,548
2,605,296(1,293,133)
1,312,163
123,075,488(16,846,453)
106,229,034
2,507,493(337,253)
2,170,239
589,607(113,150)
476,457
137,266(91,866)
45,400171,618,110
52,954
282,096,908*1

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

188,600
28,648,457
5,244,355
8,776
34,090,190

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

12,520158,323
2,779,913
123,231
283,442
3,357,431
319,544,529

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

195,637
186,818
382,456
343,603,519

(thousands of yen)
As ofDecember 31, 2017
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
Deferred tax 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
Reserve for temporary difference adjustment
Total voluntary reserve
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains (losses) on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

－

*2

*3

23 －

As of
June 30, 2018

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

346,447
5,000,000
2,000,000
8,589,750
526,709605
383,342905,668
27,224
8,163
4,418
1,571
56,78817,850,690

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

31,600,000
93,871,000
1,041,016
4,631,510
394,259
38,928444,600
132,021,315
149,872,006

153,516,129

153,516,129

21,746,398

21,746,398

13,127,153
13,127,153
14,005,489
48,879,041
202,395,170(431,849)(431,849)
201,963,321
352,183,262*2*3

12,357,644
12,357,644
6,390,211
40,494,253
194,010,383(278,870)(278,870)
193,731,512
343,603,519

(2) Semi-annual statements of income(thousands of yen)
For the six months ended
June 30, 2017
Operating revenue
Real estate operating revenue
Other real estate operating revenue
Total operating revenue
Operating expenses
Real estate operating costs
Asset management fee
Asset custody and administrative service fee
Directors’ compensation
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends
Gain on insurance claims
Refunded fixed asset tax
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
Income before income taxes
Income taxes – current
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)－*1

For the six months ended
June 30, 2018

10,716,102
555,982
11,272,084*1

3,683,291
694,51954,126
7,200
92,0344,531,172
6,740,912*1, *2*1*1, *224 －

11,749,691
571,413
12,321,105*14,071,061
762,553
57,6576,500
103,955
5,001,728
7,319,377

113
3,624
339
10,571
14,648

119
3,583
2,106
10,354
118
11,87528,158437,620
84,036
203,770
10,24558,4076,598
3,207
803,886
5,951,674
5,951,674
605
605
5,951,069
411
5,951,480

419,253
116,618
299,397
13,32376,47031,4903,214
959,768
6,387,767
6,387,767
605
605
6,387,162
3,048
6,390,211

(3) Semi-annual statements of changes in net assets
For the six months ended June 30, 2017
(thousands of yen)
Unitholders’ equity
Surplus
Voluntary reserve

Unitholders’capitalBalance, January 1, 2017

134,829,448

Capitalsurplus21,746,398

Total
unitholders’equityDividend
reserve

Reserve fortemporarydifference
adjustment

Total
voluntary
reserve

Unappropriatedretainedearnings(undisposed
loss)

13,867,228-

13,867,228

12,126,057

47,739,684

182,569,132(13,867,228)

13,867,228--

13,127,153(13,127,153)

-

-

Total
surplus

Changes of items during the period:
Reversal of dividend reserve(13,867,228)

Reserve for temporary difference
adjustment

13,127,153

Dividends paid

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

Net income
Net changes of items
other than unitholders’ equity
Total changes of items
during the period
Balance, June 30, 2017

*1

134,829,448- (13,867,228) 13,127,153
21,746,398-

13,127,153(thousands of yen)
Valuation and translation
adjustments
Total
Total
Deferred
net assets
valuation andgains (losses)
translation
on hedges
adjustments
Balance, January 1, 2017

(580,019)(580,019)

181,989,112

Changes of items during the period:
Reversal of dividend reserve-

Reserve for temporary difference
adjustment-

Dividends paid

(12,865,721)

Net income
Net changes of items
other than unitholders’ equity
Total changes of items
during the period
Balance, June 30, 2017

5,951,069
59,10859,10859,10859,10859,108(6,855,543)(520,911)(520,911)

175,133,569

－

25 －

5,951,069

5,951,069

5,951,069(740,075)(6,174,577)(6,914,652)(6,914,652)

13,127,153

5,951,480

40,825,032

175,654,480

For the six months ended June 30, 2018
(thousands of yen)
Unitholders’ equity
Surplus
Voluntary reserve

Unitholders’capitalBalance, January 1, 2018

Capitalsurplus153,516,129

Reserve fortemporarydifference
adjustment

21,746,398

Total voluntary
reserve

Unappropriatedretainedearnings(undisposed
loss)

Total
unitholders’equityTotal
surplus13,127,153

13,127,153

14,005,489

48,879,041

202,395,170(769,508)(769,508)

769,508--

Changes of items during the period:
Reversal of reserve for temporary
difference adjustment
Dividends paid

(14,771,949) (14,771,949) (14,771,949)

Net income
Net changes of items
other than unitholders’ equity
Total changes of items
during the period
Balance, June 30, 2018-

(769,508)(769,508)(7,615,278)(8,384,787)(8,384,787)

21,746,398

12,357,644

12,357,644

6,390,211

40,494,253

194,010,383

153,516,129(431,849)(431,849)

Total
net assets

201,963,321

Changes of items during the period:
Reversal of reserve for temporary
difference adjustment(14,771,949)

Dividends paid
Net income

Balance, June 30, 2018

6,387,162-(thousands of yen)

Net changes of items
other than unitholders’ equity
Total changes of items
during the period

6,387,162*1

Valuation and translation
adjustments
Total
Deferredvaluation andgains (losses)
translation
on hedges
adjustments
Balance, January 1, 2018

6,387,162

6,387,162
152,978

152,978

152,978

152,978

152,978(8,231,808)(278,870)(278,870)

193,731,512

－

26 －

(4) Semi-annual statements of cash flows(thousands of yen)
For the six months ended
June 30, 2017
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Loss on retirement of noncurrent assets
Loss (gain) on derivative instruments
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Interest income
Interest expense
Interest on tax refunds(Increase) decrease in operating accounts receivable(Increase) decrease in prepaid expenses(Increase) decrease in long-term prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accrued expenses
Increase (decrease) in consumption taxes payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Other – net
SubtotalInterest received
Interest paid
Interest received on tax refunds
Income taxes – refunded (paid)
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property and equipment in trust
Purchase of property and equipment
Purchase of intangible assets
Payments of reserve for repairs and maintenance
Proceeds from tenant leasehold and security deposits in trust
Reimbursements of tenant leasehold and security deposits in trust
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
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 period
Cash and cash equivalents at end of period

－

27 －

For the six months ended
June 30, 2018

5,951,674
1,756,345
18,551(3,973)
10,24558,407(113)
521,656
549,190
78,607
187,198(115,764)(56,625)(164,433)
2,999(105,235)(46,453)
8,642,280
144(524,399)(915)
8,117,109

6,387,767
2,031,821
11,701
19,614
13,32376,470(119)535,872(118)
668,954
90,394228,413(109,333)(137,356)(176,827)
5,409(13,934)(5,704)
9,626,348
150(522,374)
118(1,177)
9,103,065(679,578)(183,391)(21,994)(4,348)23,412(9,680)(16)(875,597)(1,080,305)(255,151)(60,514)(21,491)
52,373(70,836)(1,435,927)(1,700,000)
1,700,000(554,250)(12,860,311)(13,414,561)(6,173,049)
26,373,866*1 20,200,816

5,000,000(3,000,000)
5,050,000(16,389,000)
10,000,000(68,082)(14,757,541)(14,164,623)(6,497,484)
27,920,350*1 21,422,866

(5) Notes on going concern assumption
Not applicable.

(6) 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.
(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, etc. under management such as property taxes, city planning taxes, andrevenues andexpensesdepreciable asset taxes, the imposed amounts are allocated to the midterm period and expensed as “Realestate operating costs.”
Cash paid for property taxes and city planning taxes, etc. to the transferor of real properties, etc. atacquisition is not recorded as “Real estate operating costs” but capitalized as part of the acquisition costof the relevant property.
There were no such taxes capitalized in the acquisition cost of real properties, etc. for the previous
midterm period or for the midterm period under review.

－

28 －

4.

Method of(1) Method of hedge accounting

hedge accounting

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

5.

Scope of funds(cash and cash

Cash and cash equivalents in the semi-annual statements of cash flows consist of cash on hand, cash intrust accounts, bank deposit and trust deposit, which can be withdrawn at any time, and short-term

equivalents) in
the semi-annual

investments with a maturity of three months or less when purchased, which can easily be converted to
cash and subject to minimal risk of change in value.

statements ofcash flows
6.

Other
significant matters(1) Accounting treatment of beneficial interests in trust with real estate, etc. as their assets
For trust beneficial interests in real estate, etc., all assets and liabilities held in trust accounts as wellserving as the basis
for preparing

as all income generated and expenses incurred from assets in trust are presented in theaccompanying semi-annual balance sheet and income statement accounts accordingly.

semi-annual
financial statements

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

－

29 －

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

[Notes to semi-annual balance sheets]*1. Accumulated advanced depreciation of property and equipment deducted from acquisition costs due to government
subsidies received, etc.
As ofDecember 31, 2017
Buildings in trust

As ofJune 30, 2018¥24,921 thousand¥24,921 thousand*2. Matters concerning provision and reversal of reserve for temporary difference adjustment
As of December 31, 2017
(thousands of yen)Amount ofinitialBalance at
beginning ofAmount ofprovision

Amount ofreversal

Balance at
end ofaccrualperiodduring period

during period

periodGrounds forprovision and reversal
Application of the transitional
measures of Paragraph 3 of the

Dividend
reserve

13,127,153-

13,127,153-

13,127,153

Supplementary Provisions of
the “Ordinance on Accountingsof Investment Corporations”(Cabinet Office Ordinance No.

(Note)

27 of 2015)(Note) The remaining balance of the amount subdivided into gain on negative goodwill which was recorded as a dividend reserve prior to the previous period isreserved for temporary difference adjustment during the fiscal year, and is scheduled for reversal every fiscal year, starting from the fiscal year following
the fiscal year in which the reserve was made, in an amount that shall be no less than that in equal amounts every fiscal year over a period of no more than
50 years.

As of June 30, 2018
(thousands of yen)Amount ofinitialBalance at
beginning ofAmount ofprovision

Amount ofreversal

Balance at
end ofaccrualperiodduring period

during period

period13,127,153

13,127,153－

769,508

Grounds forprovision and reversal

Dividend
reserve(Note)

12,357,644

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

*3. Minimum net assets as required by Article 67, paragraph 4 of the Investment Trusts Act
As ofDecember 31, 2017
¥50,000 thousand

－

30 －

As of
June 30, 2018
¥50,000 thousand

[Notes to semi-annual statements of income]*1. Components of real estate operating revenue and real estate operating costs(thousands of yen)
For the six months ended
June 30, 2017
A.

Real estate operating revenue
Real estate operating revenue
Fixed rent

6,258,229

6,858,614

Variable rent
Income from management contracts

3,271,841
1,186,031

3,636,962
1,254,114

10,716,102

11,749,691

Other real estate operating revenue
Parking lots

83,39481,659Other incidental revenue
Utilities

31,282
373,573

31,676387,112

Other

67,73270,964

Total

Total

555,982

571,413

11,272,084

12,321,105

Land lease and other rent expenses
Property taxes

461,618
710,238

455,425
802,682

Outsourcing expenses (Note)
Nonlife insurance

285,51122,998

303,715
23,846

1,756,345
18,5512,031,821
11,701

Repairs
Utilities

18,462
381,884

23,654
391,397

Trust fees
Other

21,716
5,964

21,836
4,981

3,683,291

4,071,061

7,588,793

8,250,043

Total real estate operating revenue
B.

Real estate operating costs
Real estate operating costs

Depreciation and amortization
Loss on retirement of noncurrent assets

Total real estate operating costs
C.

For the six months ended
June 30, 2018

Net real estate operating income(A − B)(Note) Outsourcing expenses include management contract fees of ¥108,479 thousand for the six months ended June 30, 2017 and ¥116,346 thousand for the six
months ended June 30, 2018.

*2. Depreciation was expensed as follows:
For the six months ended
June 30, 2017
Property and equipment

For the six months ended
June 30, 2018

¥1,662,754 thousand¥1,932,969 thousand¥93,591 thousand¥98,852 thousand

Intangible assets[Notes to semi-annual statements of changes in net assets]
For the six months ended
June 30, 2017

For the six months ended
June 30, 2018

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

20,000,000 units

20,000,000 units

Total number of investment units issued and outstanding

3,761,907 units

4,010,847 units

－

31 －

[Notes to semi-annual statements of cash flows]*1. Relation of balance of cash and cash equivalents at end of period and the amount in semi-annual balance sheet accounts
For the six months ended
June 30, 2017

For the six months ended
June 30, 2018

Cash and deposits¥10,340,286 thousand¥11,011,580 thousand

Cash and deposits in trust¥9,860,530 thousand¥10,411,285 thousand

Cash and cash equivalents¥20,200,816 thousand¥21,422,866 thousand[Notes on lease transactions]Operating leases (as lessor)
Minimum rental revenue under non-cancellable operating leases
As ofDecember 31, 2017

As ofJune 30, 2018

Due within one year

¥1,520,073 thousand¥1,786,196 thousand

Due after one year

¥4,685,123 thousand¥4,607,674 thousand

Total¥6,205,197 thousand¥6,393,871 thousand[Notes on financial instruments]
Matters concerning fair value of financial instruments
Carrying amounts of financial instruments on the (semi-annual) balance sheets, their fair values, and the differences were as
follows. Financial instruments whose fair values are considered extremely difficult to measure are not included in the table.
See Note 2 below.
As of December 31, 2017
Carrying amount(JPY 1,000)

Fair value(JPY 1,000)

Difference(JPY 1,000)(1) Cash and deposits

16,179,716

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

11,740,634

11,740,634－(3) Operating accounts receivable

2,411,837

2,411,837－

Total assets

30,332,188

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

3,000,000

3,000,000

－

－

－

－

(6) Current portion of long-term loans payable

15,022,750

15,022,750－(7) Investment corporation bonds

23,600,000

23,621,270

21,270(8) Long-term loans payable

98,777,000

98,777,000－

Total liabilities

140,399,750

140,421,020

21,270(404,316)(404,316)－(5) Current portion of investment corporation bonds
payable(9) Derivative transactions (*)

－

32 －

As of June 30, 2018
Carrying amount(JPY 1,000)

Fair value(JPY 1,000)

Difference(JPY 1,000)(1) Cash and deposits

11,011,580

11,011,580－(2) Cash and deposits in trust

10,411,285

10,411,285－(3) Operating accounts receivable

1,742,883

1,742,883－

Total assets

23,165,749

23,165,749－(4) Short-term loans payable

5,000,000

5,000,000－(5) Current portion of investment corporation bonds
payable2,000,000

2,007,000

7,000(6) Current portion of long-term loans payable

8,589,750

8,589,750－(7) Investment corporation bonds

31,600,000

31,672,800

72,800(8) Long-term loans payable

93,871,000

93,871,000－

Total liabilities

141,060,750

141,140,550

79,800－(9) Derivative transactions (*)(269,406)(269,406)(*) 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, and derivative transactions(1) Cash and deposits; (2) Cash and deposits in trust; (3) Operating accounts receivable; (4) Short-term loans payable
The carrying value is deemed to approximate the fair value since the instruments are scheduled to be settled in a short periodof time.
(5) Current portion of investment corporation bonds payable; (7) Investment corporation bonds
The fair value of these instruments is measured based on the market price.
(6) Current portion of long-term loans payable; (8) 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.
(9) 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, 2017Classification

As ofJune 30, 2018

Tenant leasehold and security deposits

1,041,016

1,041,016

Tenant leasehold and security deposits in trust

4,653,410

4,631,510

Total

5,694,426
5,672,526
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.

－

33 －

[Notes on derivative transactions]
1. Derivative transactions to which hedge accounting is not applied
As of December 31, 2017
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:(thousands of yen)Classification

Type, etc. of
derivative transaction

Transactions
other thanmarkettransactions

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

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

1,794,000

Fair value

Method to measure the fair value

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

As of June 30, 2018
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:(thousands of yen)Classification

Type, etc. of
derivative transaction

Transactions
other thanmarkettransactions

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

Contract amount, etc.
Of which, due
after one year
6,088,000

5,288,000

Fair value

Method to measure the fair value

The fair value is measured at the(31,036) quoted price, etc. obtained from thecounterparty financial institutions.

2. Derivative transactions to which hedge accounting is applied
As of December 31, 2017
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:(thousands of yen)
Method ofhedge
accounting

DeferralmethodContract amount, etc.

Type, etc. of
derivative transactionMainhedged item

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

Long-termloans payable

100,058,750

91,048,000Interest rate caps

Long-termloans payable

4,286,250－

Of which, due
after one year

Fair value

Method to measure
the fair value

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

As of June 30, 2018
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:(thousands of yen)
Method ofhedge
accounting

DeferralmethodType, etc. of
derivative transaction

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

Contract amount, etc.

Mainhedged item

Of which, due
after one year

Long-termloans payable

92,443,750

－

34 －

82,654,000

Fair value

Method to measure
the fair value

The fair value ismeasured at thequoted price, etc.
(238,369)
obtained from thecounterparty
financial institutions.

[Notes on asset retirement obligations]
Asset retirement obligations recognized on the (semi-annual) balance sheets
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, 2017
Balance at beginning of period
Increase due to acquisition of property and equipment
Adjustment due to passage of time
Balance at end of period

For the six months ended
June 30, 2018
441,542443,577

－

－

2,035

1,022

443,577444,600[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, 2017

Use

For the six months ended
June 30, 2018

Carrying amount

Hotel

Balance at beginning of period

284,965,547

317,229,208

Net increase (decrease) during period

32,263,660(1,049,557)

Balance at end of period

317,229,208

316,179,650

439,390,000

443,890,000

Fair value at end of period(Note 1) Increase during the previous year ended December 31, 2017 principally represents the acquisition of Hilton Tokyo Narita Airport for ¥13,376 million,
International Garden Hotel Narita for ¥9,237 million and Hotel Nikko Nara for ¥10,589 million. Decrease during the six months ended June 30, 2018
principally represents depreciation and amortization.
(Note 2) Fair value at June 30, 2018 is the appraisal value determined by licensed real estate appraisers from outside. Fair value at June 30, 2018 of R&B Hotel
Higashi-nihonbashi, the b akasaka-mitsuke and the b ochanomizu, which were sold on August 10, 2018 is the sale price.

[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 six months ended June 30, 2017(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in asingle product/service category accounted for more than 90% of total operating revenue on the semi-annual statements
of income.
(2) Information about geographical areas－

35 －(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the semi-annual statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the semi-annual balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Name of related segment

Hotel Management Japan Co., Ltd.

2,790,777

Investment and management of hotel real estate

AAPC Japan K.K.

1,427,403

Investment and management of hotel real estate

For the six months ended June 30, 2018(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 semi-annual statements
of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the semi-annual statements of income.
(ii) Property and equipment
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the semi-annual balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Name of related segment

Hotel Management Japan Co., Ltd.

2,868,869

Investment and management of hotel real estate

AAPC Japan K.K.

1,498,974

Investment and management of hotel real estate

－

36 －

[Notes on per unit information]
Net assets per unit is as follows:
As of
December 31, 2017
Net assets per unit

As ofJune 30, 2018¥50,354¥48,301

Net income per unit and the basis of computation of net income per unit are as follows:
For the six months ended
June 30, 2017

For the six months ended
June 30, 2018

Net income per unit

¥1,581¥1,592

5,951,069

6,387,162－－

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

5,951,069

6,387,162

Average number of investment units during period (units)

3,761,907

4,010,847[Basis of computation]
Net income for midterm (JPY 1,000)
Amount not attributable to common unitholders (JPY 1,000)(Note) Net income per unit for midterm is computed by dividing net income for midterm by the average number of investment units during the midterm period.
Net income per unit for midterm after the adjustment of potentially dilutive units is not presented since there are no potentially dilutive units.

[Notes on significant subsequent events]
1. Sale of assets
On August 10, 2018, JHR sold three properties as described below.
Name of property sold

R&B Hotel Higashi-nihonbashi

Category of asset soldReal estate beneficial interest in trust

Asset type

Hotel

Address

Chuo-ku, Tokyo

Sale price (Note 1)¥3,050 million

Book value (Note 2)¥1,483 million

Expected gain on sales of realestate properties (Note 3)¥1,543 million

Sales dateAugust 10, 2018

Buyer

Tiger 2 GK

(Note 1) The sale price does not include expenses for sale, settlement of property taxes and city planning taxes, consumption taxes and local
consumption taxes.
(Note 2) The assumed book value as of the end of July 2018 is indicated.
(Note 3) The amount obtained by subtracting the assumed book value as of the end of July 2018 and assumed expenses for sale from sale price isindicated.

Name of property soldthe b akasaka-mitsuke

Category of asset soldReal estate beneficial interest in trust and movable asset attached to the hotel

Asset type

Hotel

Address

Minato-ku, Tokyo

Sale price (Note 1)¥6,600 million

Book value (Note 2)¥6,293 million

Expected gain on sales of realestate properties (Note 3)¥265 million

Sales dateAugust 10, 2018

Buyer

Tiger 2 GK

(Note 1) The sale price does not include expenses for sale, settlement of property taxes and city planning taxes, consumption taxes and local

－

37 －

consumption taxes.
(Note 2) The assumed book value as of the end of July 2018 is indicated.
(Note 3) The amount obtained by subtracting the assumed book value as of the end of July 2018 and assumed expenses for sale from sale price isindicated.

Name of property soldthe b ochanomizu

Category of asset soldReal estate beneficial interest in trust and movable asset attached to the hotel

Asset type

Hotel

Address

Chiyoda-ku, Tokyo

Sale price (Note 1)¥2,500 million

Book value (Note 2)¥2,353 million

Expected gain on sales of realestate properties (Note 3)¥128 million

Sales dateAugust 10, 2018

Buyer

Tiger 2 GK

(Note 1) The sale price does not include expenses for sale, settlement of property taxes and city planning taxes, consumption taxes and local
consumption taxes.
(Note 2) The assumed book value as of the end of July 2018 is indicated.
(Note 3) The amount obtained by subtracting the assumed book value as of the end of July 2018 and assumed expenses for sale from sale price isindicated.

2. Prepayment of a loan
JHR made prepayment of a loan using part of the proceeds from sale of properties described in the above 1. Sale of assets.
Term Loan 48
Lenders

Sumitomo Mitsui Banking Corporation

Loan balance before repayment¥5,000 million

Repayment amount¥5,000 million

Date of borrowing

April 26, 2018

Maturity date

December 28, 2018

Interest rate

Base interest rate (JBA Japanese Yen TIBOR for one month) + 0.275%

Repayment dateAugust 10, 2018

Loan balance after repayment

¥0

－

38 －

(8) Changes in total number of investment units issued and outstanding
The following is the status of increase (decrease) in the total number of investment units issued and outstanding andunitholders’ capital for past five years through to the end of the midterm period under review.

Date

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

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

Capital transaction

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

Unitholders’ capital(JPY1M)
Increase(Decrease)

BalanceNote

170,000

2,791,281

10,17959,024(Note 1)200,000

2,991,281

14,97473,999(Note 2)9,041

3,000,322

676

74,676(Note 3)140,000

3,140,322

10,50085,177(Note 4)

3,905

3,144,227

292

85,470(Note 5)170,000

3,314,227

13,98699,456(Note 6)

7,680

3,321,907

631

100,088(Note 7)428,260

3,750,167

33,813

133,902(Note 8)

11,7403,761,907

926

134,829(Note 9)236,000

3,997,907

17,715

152,544(Note 10)

12,9404,010,847

971

153,516(Note 11)

(Note 1)

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

－

39 －

4. Changes in directors(1) Change in directors of JHR
Not applicable.

(2) Change in directors of the Asset Management Company
Not applicable.

－

40 －

5. Reference information
For the detail information of the each properties and operating result of hotels, please see reference information below as well as
Financial Results Briefing dated today and home page of JHR (http://www.jhrth.co.jp/ja/ir/library.html).

(1) Investment status
The following outlines the investment status of JHR as of the end of the midterm period under review.
Assetcategory

Hotel type
(Note 1)

Prefectural
location

Tokyo

Limited-service
hotel
Osaka
Hokkaido

Fukuoka
Kyoto
Okinawa
KumamotoNaraRealestate
in
trust

Chiba

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

5.0

17,5445.1

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

1.2
4.4
3.0
2.8
2.1
0.5
31.3

4,109
15,621
10,486
9,804
7,270
1,653
109,917

1.2
4.5
3.1
2.9
2.1
0.5
32.0

Hotel Nikko Alivila

18,128

5.1

18,030

5.2

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

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

4.2
1.9
7.4
1.7
1.1
21.5
89.6

14,636
6,709
26,114
5,971
3,755
75,217314,432

4.3
2.0
7.6
1.7
1.1
21.9
91.5

Deposits and other assets (Note 6)

36,621

10.4

29,171

8.5

Total assets

352,183

100.0

343,603

100.0

Okinawa

Amount(JPY1M)
Total liabilities
Total net assets(Note 1)
(Note 2)
(Note 3)(Note 4)As ofJune 30, 2018
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
7,965
2.3
6,700
1.9
6,590
1.9
6,283
1.8
4,832
1.4
3,575
1.0
2,684
0.8
2,348
0.7
2,040
0.6
1,744
0.5
1,486
0.4
1,455
0.4
1,204
0.4
954
0.3
784
0.2
27,0597.9
14,585
4.2
6,625
1.9
5,860
1.7
5,173
1.5
2,327
0.7
2,043
0.6
1,446
0.4
6,669
1.9
2,866
0.8
2,167
0.6
1,818
0.5
129,296
37.6
17,866
5.2
13,251
3.9
9,174
2.7
3,136
0.9

17,620Hiroshima
Aichi
Nara
Hyogo
Fukuoka
Kanagawa

Resort hotel

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

150,219
201,963

Ratio tototal assets
(%)
42.7
57.3

Amount(JPY1M)
149,872
193,731

Ratio tototal assets
(%)
43.6
56.4

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.
R&B Hotel Higashi-nihonbashi, the b akasaka-mitsuke and the b ochanomizu were sold on August 10, 2018.

－

41 －

(Note 5)(Note 6)ACTIVE-INTER CITY HIROSHIMA is classified in accordance with the business category of Sheraton Grand Hiroshima Hotel, its main facility.
Includes machinery and equipment, tools, furniture and fixtures, construction in progress in trust, and intangible assets (excluding leasehold rights intrust and fixed-term leasehold of land in trust).

－

42 －

(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 midterm period underreview.
a. Details of assets under management (acquisition price, etc.)
PropertyNo.

Name

Acquisition
price(JPY1M)(Note 2)

Grade
(Note 1)

Carrying
amountat end ofperiod(JPY1M)(Note 3)

Appraisalvalue
at end ofperiod(JPY1M)(Note 4)

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

Collateral(Note 7)

1

Kobe Meriken Park Oriental Hotel

Upper-middle

10,9009,962

15,800N

3.4

Unsecured

2

Oriental Hotel tokyo bay

Mid-price

19,90018,026

34,100N

6.2

Unsecured

3

Namba Oriental Hotel

Mid-price

15,00014,74932,900N

4.7

Unsecured

4

Hotel Nikko Alivila

Luxury18,90018,281

31,500N

5.9

Unsecured

5

Oriental Hotel Hiroshima

Upper-middle

4,100

4,183

4,350

N

1.3

Unsecured6

ibis Tokyo Shinjuku

Mid-price

7,243

8,101

9,650

N

2.3

Unsecured

8

The Beach Tower Okinawa

Mid-price

7,610

6,713

9,810

N

2.4

Unsecured

9

Hakone Setsugetsuka

Mid-price

4,070

3,763

5,240

N

1.3

Unsecured

10

Dormy Inn Kumamoto

Mid-price

2,334

2,167

3,000

J

0.7

Unsecured

12

the b suidobashi

Mid-price

1,120

1,230

1,940

N

0.4

Unsecured

13

Dormy Inn EXPRESS Asakusa

Economy

999

954

1,330

J

0.3

Unsecured

14

Hakata Nakasu Washington Hotel Plaza

Mid-price

2,130

2,044

4,340

N

0.7

Unsecured

15

Nara Washington Hotel Plaza

Mid-price

2,050

1,821

2,430

N

0.6

Unsecured16

R&B Hotel Ueno Hirokoji

Economy

1,720

1,744

1,950

J

0.5

Unsecured17

R&B Hotel Higashi-nihonbashi (Note 8)

Economy

1,534

1,486

3,050

-

0.5

Unsecured

18

Comfort Hotel Tokyo Higashi Nihombashi

Economy

3,746

3,575

5,680

J

1.2

Unsecured

22

Smile Hotel Nihombashi Mitsukoshimae

Economy

2,108

2,040

3,110

J

0.7

Unsecured24

Toyoko Inn Hakata-guchi Ekimae

Economy

1,652

1,446

2,720

T

0.5

Unsecured

25

Hotel Vista Kamata Tokyo

Economy

1,512

1,456

2,010

T

0.5

Unsecured

26

Chisun Inn Kamata

Economy

823

787

1,430

T

0.3

Unsecured

29

Hotel Keihan Universal City

Mid-price

6,000

5,972

13,900R

1.9

Unsecured

30

Hotel Sunroute Shinbashi

Mid-price

4,800

4,833

8,780

D

1.5

Unsecured

31

Hilton Tokyo Bay

Luxury26,05026,114

36,100D

8.2

Unsecured32

ibis Styles Kyoto Station

Mid-price

6,600

6,695

11,200D

2.1

Unsecured33

ibis Styles Sapporo

Mid-price

6,797

6,647

10,800N

2.1

Unsecured34

Mercure Sapporo

Mid-price

6,000

5,892

10,700N

1.9

Unsecured35

Mercure Okinawa Naha

Mid-price

3,000

2,890

7,760

N

0.9

Unsecured36

the b akasaka-mitsuke (Note 8)

Mid-price

6,250

6,297

6,600

-

2.0

Unsecured37

the b ikebukuro

Mid-price

6,520

6,618

7,330

N

2.0

Unsecured38

the b ochanomizu (Note 8)

Mid-price

2,320

2,355

2,500

-

0.7

Unsecured39

the b hachioji

Mid-price

2,610

2,695

2,780

N

0.8

Unsecured40

the b hakata

Mid-price

2,300

2,343

4,390

N

0.7

Unsecured

41

Hotel Francs

Mid-price

3,105

3,136

4,080

D

1.0

Unsecured42

Mercure Yokosuka

Mid-price

1,650

1,683

2,830

D

0.5

Unsecured

43

Okinawa Marriott Resort & Spa

Upper-middle

14,95014,752

18,600N

4.7

Unsecured

44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Luxury17,32017,622

20,600D

5.4

Unsecured

45

CANDEO HOTELS UENO-KOEN

Mid-price

6,705

6,708

7,620

D

2.1

Unsecured

46

Hotel Centraza Hakata

Mid-price

7,197

7,385

8,490

D

2.3

Unsecured

47

Holiday Inn Osaka Namba

Mid-price

27,00027,13927,200N

8.5

Unsecured

48

HOTEL ASCENT FUKUOKA

Economy

4,925

5,173

5,560

D

1.5

Unsecured－

43 －Property
No.

Grade
(Note 1)

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

Appraisalvalue
at end ofperiod(JPY1M)(Note 4)Luxury15,25015,621

15,700D

4.8

Unsecured

Upper-middle

13,175

13,324

13,400N

4.1

Unsecured

Name

49

Hilton Nagoya

50

Hilton Tokyo Narita Airport

51

International Garden Hotel Narita

52

Hotel Nikko Nara

(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)Collateral(Note 7)

Mid-price

9,125

9,215

9,430

N

2.9

Unsecured

Upper-middle

10,373

10,520

11,200D

3.2

Unsecured319,474

316,179

443,890

Total(Note 1)

Investment
ratio
Appraisal(Acquisition
agencyprice)(Note 5)(%)(Note 6)100.0

JHR categorizes hotels into the four grade classes “Luxury,” “Upper-middle,” “Mid-price” and “Economy” mainly from the perspective of average
daily rate, etc.
“Acquisition price” is the acquisition price stated on the purchase and sale agreement for beneficial interest in trust, etc. (consumption tax, local
consumption tax and the acquisition expense such as broker’s fee are not included). The acceptance prices are indicated for the properties that havebeen accepted through the Merger.
“Carrying amount at end of period” is the book value at the end of the midterm period under review, and includes not only the amounts for real estatein trust, but also machinery and equipment, tools, furniture and fixtures, construction in progress in trust, and intangible assets.
“Appraisal value at end of period” is the appraisal value at the end of the midterm period under review as the date of appraisal, in accordance with theasset valuation methods and standards provided in JHR’s Articles of Incorporation and the regulations set forth by JITA.
Under “Appraisal agency,” the letters indicate the appraisers for the properties as follows:N:
Nihon Fudosan Kenkyusho (Japan Real Estate Institute)J:
JLL Morii Valuation & Advisory K.K.
T:
The Tanizawa Sōgō Appraisal Co., 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 midterm period under review to the total amount ofacquisition price of all assets held at the end of the midterm period under review, rounded off to one decimal place.
“Collateral” is whether or not a pledge has been established for the beneficial interest in trust.
R&B Hotel Higashi-nihonbashi, the b akasaka-mitsuke and the b ochanomizu were sold on August 10, 2018. Appraisal value at end of period is thesale price.
The omitted property numbers are the property numbers of assets that have been transferred.

b. Details of assets under management (change in tenants of portfolio)
The following is the change in total number of tenants, total leasable area, total leased area and occupancy rate, etc. of realestate properties (in trust) under management for the past five years.
End of14th period
December 2013

End of15th period
December 2014

End of16th period
December 2015

End of17th period
December 2016

End of18th period
December 2017

End ofmidterm period of
19th period
June 2018

38

57

113

128

131

130

349,162.63 m2

386,826.71

493,758.78 m2

587,481.02 m2

687,124.54 m2

687,124.62 m2

Total leased area
(Note 3)

349,162.63 m2

386,447.08 m2

493,138.06 m2

587,050.94 m2

686,694.46 m2

686,273.14 m2

Occupancy rate
(Note 4)100.0%

99.9%

99.9%

99.9%

99.9%

99.9%

Total number oftenants(Note 1)
Total leasable area
(Note 2)

(Note 1)

(Note 2)

(Note 3)(Note 4)

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

－

44 －

c. Details of assets under management (information on major real estate)
There is no major real estate of which total annual rent accounts for 10% or more of the total annual rent of the entire portfolio.
“Total annual rent” is the amount of (i) the amount arrived at when monthly fixed rent (rent of the building itself only,
excluding common area maintenance charges and signage and parking usage fees; not factoring in any change in rent during
the fiscal year) in lease contracts at the end of the midterm period under review is multiplied by 12, plus (ii) assumed amountsof revenue sharing, variable rent or income from management contracts for full year.
d. Details of assets under management (NOI, etc.)

1

Kobe Meriken Park Oriental Hotel

Variable/Fixed

Real estate
operating revenue(JPY 1,000)
492,707

2

Oriental Hotel tokyo bay

Variable/Fixed

814,633

755,019558,281

3

Namba Oriental Hotel

Variable/Fixed

787,740

736,567

639,284

4

Hotel Nikko Alivila

Variable/Fixed

586,879

512,448355,201

5

Oriental Hotel Hiroshima

Variable/Fixed

187,392

165,142

123,481

6

ibis Tokyo Shinjuku

Management contract

318,028

227,396

171,965

8

The Beach Tower Okinawa

Fixed

255,508

233,412

168,763

9

Hakone Setsugetsuka

Fixed147,472

135,395

89,693

10

Dormy Inn Kumamoto

Fixed

97,23084,32563,64612the b suidobashi

Variable/Fixed

54,664

49,10835,702

13

Dormy Inn EXPRESS Asakusa

Fixed

31,99727,65020,996

14

Hakata Nakasu Washington Hotel Plaza (Note 4)

Fixed

120,000

110,000

98,00015

Nara Washington Hotel Plaza (Note 4)

Fixed

75,00067,00046,000

16

R&B Hotel Ueno Hirokoji

Fixed48,64741,597

34,797

17

R&B Hotel Higashi Nihonbashi (Note 5)

61,10352,58443,06318

Comfort Hotel Tokyo Higashi-nihonbashi

135,463

120,564

102,48122

Smile Hotel Nihombashi Mitsukoshimae

86,26578,751

68,77024

Toyoko Inn Hakata-guchi Ekimae

70,51964,00354,43325

Hotel Vista Kamata Tokyo

46,802

39,22627,37326

Chisun Inn Kamata

38,69335,10029,35029

Hotel Keihan Universal City

533,511495,849

450,89930

Hotel Sunroute Shinbashi

260,091

226,632

215,96231

Hilton Tokyo Bay

940,482

790,700

698,903

32

ibis Styles Kyoto Station

Fixed
Variable/Fixed(Note 6)
Variable/Fixed(Note 6)
Fixed
Variable/Fixed(Note 6)
Variable
Variable/Fixed(Note 6)
Variable/Fixed(Note 6)
Variable/Fixed(Note 6)
Management contract

270,246

242,705

224,472

33

ibis Styles Sapporo

Management contract

306,916

243,182

204,91134

Mercure Sapporo

Management contract

373,477

267,102226,730

35

Mercure Okinawa NahaManagement contract

219,900

178,922

152,49536

the b akasaka-mitsuke (Note 5)

Variable/Fixed

119,708

110,197

99,02737

the b ikebukuro

Variable/Fixed

175,407160,215

143,49738

the b ochanomizu (Note 5)

Variable/Fixed

48,591

44,29539,00039

the b hachioji

Variable/Fixed

99,68886,59872,41940

the b hakata

Variable/Fixed

121,413

115,192

104,718

41

Hotel Francs

Fixed

150,000

118,699

95,76442

Mercure Yokosuka

Variable

180,904

124,906

106,763

43

Variable/Fixed

337,816

294,615

176,271

Variable/Fixed

729,831522,545424,20945

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

Fixed

174,985

162,192

142,366

46

Hotel Centraza Hakata

Variable/Fixed

359,739

236,695

109,89047

Holiday Inn Osaka Namba

Variable/Fixed

572,576

549,536

483,796

48

HOTEL ASCENT FUKUOKA

Fixed

217,174

144,691

126,928

49

Hilton Nagoya

Variable

683,347

337,495

264,15650

Hilton Tokyo Narita Airport

Variable/Fixed

397,072

374,229

300,415

51

International Garden Hotel Narita

Variable/Fixed

304,494292,293

231,427

52

Hotel Nikko Nara

Variable/Fixed

286,166

272,907210,287

12,321,105

10,294,589

8,250,043

Property
No.

44

Name

Rent type(Note 1)

Total

－

45 －

NOI
(Note 2)(JPY 1,000)
365,634

NOI after depreciation(Note 3)
(JPY 1,000)
212,452

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

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 numbers are thus rounded down to the nearest million yen.
R&B Hotel Higashi-nihonbashi, the b akasaka-mitsuke and the b ochanomizu were sold on August 10, 2018.
For Comfort Hotel Tokyo Higashi-nihombashi 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 include rent calculated based onrevenue sharing. For Comfort Hotel Tokyo Higashi-nihombashi the rent structure was changed from “Fixed” to “Variable/Fixed”, as the rent structure
was changed after a memorandum of amendment concerning the fixed-term lease agreement for Comfort Hotel Tokyo Higashi-nihonbashi wasconcluded on April 27, 2018.
The property numbers of assets that were transferred before the end of the previous fiscal year are intentionally omitted.

－

46 －

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 midterm
period under review (from January 1, 2018 to June 30, 2018). 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.
Property No.

-

Property name

Portfolio total(Note 1)

1
Kobe
Meriken Park
Oriental Hotel

2

3

4

5

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Hotel Nikko
AlivilaOriental Hotel
Hiroshima

Number of operating days

-

181

181

181

181

181

(A) Real estate operating revenue subtotal

12,321,105

492,707814,633

787,740

586,879

187,392

Fixed rent

6,858,614

322,950

315,799

398,950

402,049

170,752

Variable rent

4,891,077

169,272

498,833

388,790

184,829

16,640

Other revenue

571,413

484

-

-

-

-

(B) Real estate operating costs subtotal

4,071,061

280,255

256,351

148,456

231,678

63,910Land lease and other rent expenses

455,425

97,509--42,074-

Property taxes

802,682

26,941

57,022

49,46329,155

20,737

Outsourcing expenses

303,715

480

480

480

960

480

Nonlife insurance

23,846

1,599

1,605

723

1,226

526

Depreciation and amortization

2,031,821

152,646

196,686

87,681

157,108

40,286

Loss on retirement of noncurrent assets

11,701

535

51

9,601

139

1,373

Other costs

441,869

543

506

506

1,015

506

(C) Net real estate operating income = (A) − (B)8,250,043

212,452

558,281639,284

355,201

123,481(Reference) Occupancy rate

99.9%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

130

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

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

318,028

255,508

147,472

97,23054,664

31,997

Fixed rent

51,889255,504

147,169

97,23042,49931,697

Variable rent

238,401---

12,164-

Other revenue

27,737

4

303

-

-

300

(B) Real estate operating costs subtotal

146,062

86,74557,77933,583

18,962

11,000Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

17,465

19,546

11,348

9,614

4,073

3,013

Outsourcing expenses

43,593

-

-

-

600

600

Nonlife insurance

278

553

322

213

93

54

Depreciation and amortization

55,43064,64945,702

20,67813,406

6,653

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

29,294

1,994

405

3,075

788

679

(C) Net real estate operating income = (A) − (B)171,965

168,763

89,69363,64635,702

20,996(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

－

47 －

Property No.

14

15

Hakata Nakasu
Washington Hotel
Property name
Plaza
(Note 2)
Number of operating days
181

16

Nara
Washington
Hotel Plaza(Note 2)
181

17

R&B Hotel
Ueno
Hirokoji
181

18

22

R&B Hotel
Comfort Hotel
Smile Hotel
HigashiTokyo Higashi
Nihombashi
nihonbashi
Nihombashi
Mitsukoshimae(Note 3)
181
181
181

(A) Real estate operating revenue subtotal

120,000

75,00048,647

61,103

135,463

86,265

Fixed rent

120,000

73,00048,252

61,103

129,860

67,200

Variable rent

-

-

-

-

-

19,065

Other revenue

0

1,000

394

-

5,602

-

(B) Real estate operating costs subtotal

22,00028,00013,84918,04032,982

17,495Land lease and other rent expenses

-

-

-

2,700

-

-

Property taxes

6,000

5,000

6,026

4,296

13,2616,201

Outsourcing expenses

0

1,000

420

600

807

600

Nonlife insurance

0

0

84

94

209

94

Depreciation and amortization

12,00020,000

6,799

9,520

18,083

9,980

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

2,000

0

518

828

621

618

(C) Net real estate operating income = (A) − (B)98,00046,00034,79743,063

102,481

68,770(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

181

181

533,511260,091

Number of operating days

181

181

181

(A) Real estate operating revenue subtotal

70,51946,802

38,693

Undisclosed
Fixed rent

70,51946,767-(Note 4)--

38,693(Note 4)940,482
Undisclosed

144,852

Undisclosed
Variable rent

181

(Note 4)
Undisclosed

97,762

Undisclosed(Note 4)
Undisclosed

Other revenue

-

35

-

(B) Real estate operating costs subtotal

16,085

19,428

9,342

82,611

44,129241,579

Land lease and other rent expenses

-

-

-

10,555-

66,128Property taxes

5,232

5,972

2,331

22,567

12,661

68,874

Outsourcing expenses

540

600

540

2,121

5,460

12,383Nonlife insurance

120

108

47

659

158

1,590

Depreciation and amortization

9,569

11,852

5,749

44,94910,67091,797

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

623

894

674

1,758

15,177806(C) Net real estate operating income = (A) − (B)54,43327,37329,350450,899

215,962

698,903(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

－

48 －

(Note 4)

17,475(Note 4)

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(Note 3)the bikebukuro

Number of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

270,246

306,916

373,477

219,900

119,708

175,407

Fixed rent

21,167

10,89933,025-68,191

109,914

Variable rent

247,278

272,284

282,627

214,524

51,51664,425

Other revenue

1,800

23,731

57,823

5,376

-

1,068

(B) Real estate operating costs subtotal

45,774

102,004

146,747

67,404

20,681

31,910Land lease and other rent expenses

-

-

-

153

-

-

Property taxes

9,289

18,281

24,192

11,4507,657

10,111

Outsourcing expenses

16,40825,01133,317

26,968600

3,641

Nonlife insurance

207

402

331

466

108

199

Depreciation and amortization

18,23338,27040,372

26,426

11,17016,718Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

1,634

20,03848,533

1,936

1,145

1,240

(C) Net real estate operating income = (A) − (B)224,472

204,911226,730

152,495

99,027

143,497(Reference) Occupancy rate

100.0%

98.3%

98.1%

100.0%

100.0%

100.0%(Reference) Number of tenants

2

4

14

1

2

4

Property No.

38

39

40

41

42

43

Property namethe bochanomizu(Note 3)the bhachioji

the bhakataHotel Francs

MercureYokosuka

Okinawa
MarriottResort & Spa

Number of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

48,591

99,688

121,413150,000

180,904

337,816

Fixed rent

34,50062,142

44,761150,000-

274,999

Variable rent

14,091

34,16376,652-

160,594

62,816

Other revenue

-

3,382

-

-

20,310-(B) Real estate operating costs subtotal

9,591

27,268

16,69554,23574,141

161,545

Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

3,123

10,734

4,692

29,693

17,91940,436

Outsourcing expenses

600

600

600

900

9,409

1,200

Nonlife insurance

57

218

125

455

854

1,135

Depreciation and amortization

5,294

14,178

10,47422,935

18,143

118,344

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

514

1,537

803

251

27,815429(C) Net real estate operating income = (A) − (B)39,00072,419104,718

95,764

106,763

176,271(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

12

2

1

1

1

－

49 －

Property No.

44

45

46

47

48

49

Property name

ACTIVE-INTERCITY
HIROSHIMACANDEOHOTELS
UENO-KOEN

Hotel Centraza
HakataHoliday Inn
Osaka Namba

HOTEL
ASCENTFUKUOKA

Hilton Nagoya

Number of operating days

181

181

181

181

181

181

(A) Real estate operating revenue subtotal

729,831

174,985359,739

572,576

217,174

683,347

Fixed rent

378,652

199,999

288,000

156,623

Variable rent

214,201

159,739

284,576-

Undisclosed(Note 4)-

Undisclosed(Note 4)
Undisclosed(Note 4)

Undisclosed
Other revenue

136,977(B) Real estate operating costs subtotal

305,622

Land lease and other rent expenses

Undisclosed--

60,55032,619249,849

88,77990,245419,191--

111,103-

13,999111,200

Property taxes

58,287

11,5299,438

21,26015,63451,641

Outsourcing expenses

44,379

600

1,500

780

6,768

52,421

Nonlife insurance

1,643

235

577

577

238

1,631

Depreciation and amortization

98,336

19,826

126,005

65,73917,53973,338Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

102,975

428

1,224

421

36,065

128,956(C) Net real estate operating income = (A) − (B)424,209142,366

109,890

483,796

126,928

264,156(Reference) Occupancy rate

99.8%

100.0%

100.0%

100.0%

96.8%

100.0%(Reference) Number of tenants

39

1

1

1

5

4

(Note 4)

Property No.

50

51

52

Property name

Hilton Tokyo
Narita Airport

International
Garden Hotel
NaritaHotel Nikko Nara

Number of operating days

181

181

181

(A) Real estate operating revenue subtotal

397,072

304,494

286,166

Fixed rent

222,000

168,000

210,000

Variable rent

175,072

136,494

76,166

Other revenue

-

-

-

(B) Real estate operating costs subtotal

96,65773,06675,879Land lease and other rent expenses

-

-

-

Property taxes

19,528

9,868

10,136

Outsourcing expenses

1,260

1,140

1,380

Nonlife insurance

1,581

718

1,398

Depreciation and amortization

73,81460,86562,620Loss on retirement of noncurrent assets

-

-

-

Other costs

473

474

343

(C) Net real estate operating income = (A) − (B)300,415

231,427

210,287(Reference) Occupancy rate

100.0%

100.0%

100.0%(Reference) Number of tenants

1

1

1

(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 4)

Variable rent includes income from management contracts. For details of the management contract, please refer to “C. Overview of the hotelbusiness; (1) Rent structures of hotels with variable rent, management contract or revenue sharing” on page52.
Consent on disclosure of rent in units of thousand yen has not been obtained from the lessee and numbers are thus rounded down to the nearest
million yen.
R&B Hotel Higashi-nihonbashi, the b akasaka-mitsuke and the b ochanomizu were sold on August 10, 2018.
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.

－

50 －

(Note 5)

The property numbers of assets that were transferred before the end of the previous fiscal year are intentionally omitted.

－

51 －

C. Overview of the hotel business(1) Rent structures of hotels with variable rent, management contract or revenue sharing
Property
Name
No.
1
Kobe Meriken Park Oriental Hotel
2
Oriental Hotel tokyo bay
3Namba Oriental Hotel
4
Hotel Nikko Alivila

The
TwelveHMJ
HotelsThe Six
Accor
HotelsThe Six
the b
HotelsOther
hotelswithvariablerentorrevenuesharing

Rent type

Method of calculating variable rent and income from management contracts

Variable/Fixed

5

Oriental Hotel Hiroshima

43

Okinawa Marriott Resort & Spa

Variable/Fixed44

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

Variable/Fixed(Note 2)46

Hotel Centraza Hakata

Variable/Fixed

47

Holiday Inn Osaka Namba

Variable/Fixed

50

Hilton Tokyo Narita Airport

Variable/Fixed

51

International Garden Hotel Narita

Variable/Fixed

52

Hotel Nikko Nara

Variable/Fixed

6
32
33
34
35
42
12
36
37
38
39
40

ibis Tokyo Shinjuku
ibis Styles Kyoto Station
ibis Styles Sapporo
Mercure Sapporo
Mercure Okinawa Naha
Mercure Yokosuka
the b suidobashi
the b akasaka-mitsuke (Note 4)
the b ikebukuro
the b ochanomizu (Note 4)
the b hachioji
the b hakata

18

Comfort Hotel Tokyo Higashi Nihombashi

22

Smile Hotel Nihombashi Mitsukoshimae

25

Hotel Vista Kamata Tokyo

26

Chisun Inn Kamata

29

Hotel Keihan Universal City

30

Hotel Sunroute Shinbashi

31

Hilton Tokyo Bay

49(Note 1)

Hilton Nagoya

Management
contract(Note 3)
Variable

When total GOP of the Five HMJ hotels exceeds GOP base amount(set at ¥3,351 million / year), the amount arrived at when the amountexceeding GOP base amount is multiplied by 85.0%.
GOP base amount is set individually for each hotel for such purposes as
payment of variable rent from each hotel. The breakdown of GOP baseamount is presented below (Note 1).
When hotel GOP exceeds GOP base amount (set at ¥700 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 90.0%
When hotel GOP exceeds GOP base amount (set at ¥468 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 82.5%
When hotel GOP exceeds GOP base amount (set at ¥425 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 90.0%
When hotel GOP exceeds GOP base amount (set at ¥650 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 92.5%
When hotel GOP exceeds GOP base amount (set at ¥550 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 86.5%
When hotel GOP exceeds GOP base amount (set at ¥360 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 98.0%
When hotel GOP exceeds GOP base amount (set at ¥470 million / year),
the amount arrived at when the amount exceeding GOP base amount ismultiplied by 91.5%
Amount equivalent to GOP
Amount equivalent to GOP
Amount equivalent to GOP
Amount equivalent to GOP
Amount equivalent to GOP
Amount linked to GOP

Variable/Fixed

Amount linked to GOP (Note 5)

Fixed +
Revenue sharing
Fixed +
Revenue sharing

Amount that is a certain percentage of sales exceeding the threshold(Note 5) (Note 6)
Amount that is a certain percentage of sales exceeding the threshold(Note 5)
When total sales of the hotel from January 1 to December 31 of every
year exceeds ¥270 million, the amount arrived at when the amountexceeding ¥270 million is multiplied by 32.5%
Amount that is the monthly GOP multiplied by 86.0%(¥0 if the amount is below ¥0).
Amount that is a certain percentage of sales exceeding 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)
Variable rents linked to hotel sales, etc. (Note 5)

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

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¥230,000 thousand

Total¥3,351,000 thousand(Note 2)
(Note 3)The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
The management contract structure is a structure for hotel real estate owned by JHR in which JHR entrusts an operator to operate the hotel and takes in
the outcome of that business as real estate operating revenue. Specifically, JHR, the owner of the hotel real estate, concludes a management contract with
an operator and entrusts the operator with the tasks necessary to run the hotel business. JHR receives the hotel revenue achieved from the hotel business(operation) by the operator and, at the same time, pays a management fee to the operator. This hotel revenue achieved is recognized as “real estate
operating revenue through management contract” and is equivalent to the rent that is the real estate operating revenue under the leasing structure.

(Note 4)(Note 5)(Note 6)the b akasaka-mitsuke and the b ochanomizu were sold on August 10, 2018.
The detailed content of the contract is not disclosed as consent on disclosure has not been obtained from the lessee.
Concerning the fixed-term lease agreement for Comfort Hotel Tokyo Higashi Nihombashi, a memorandum of amendment was concluded on April 27,

－

52 －

2018 to amend the rent structure to one that sets not only fixed rent, but also include rent based on revenue sharing.

(2) Major indicators of the hotel business
The following tables indicate the figures related to the hotel business of the Twelve HMJ Hotels, the Six Accor hotels andthe Six the b hotels for the operating period from January 1, 2018 through June 30, 2018 based on the data provided by thehotel lessees etc. Furthermore, while these indicators of the hotels are among the indicators that show the operating status of
the rooms departments, they do not necessarily represent the operating revenue and the ability to bear rent, etc. of therespective hotels, as the room rates and profit margins, etc. of the respective rooms available for sale are not uniform, among
other reasons. As such, the indicators are no more than the reference figures.
(a) The Twelve HMJ Hotels
Kobe
Meriken Park
Oriental Hotel
Ratio tototal sales(%)

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Ratio tototal sales(%)

Hotel Nikko Alivila

Ratio tototal sales(%)

Oriental Hotel
Hiroshima

Ratio tototal sales(%)

Ratio tototal sales(%)

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

Occupancy rate

82.7%

－

97.5%

－

93.5%

－

83.8%

－

83.8%

－

89.1%

－

ADR
(Note 1)

16,397－

18,664－

19,742－

22,250

－

9,092

－

18,026－

RevPAR(Note 2)

13,566－18,196－

18,454－

18,649

－

7,615

－

16,063－

Total sales

2,556

100.0

3,263

100.0

1,418

100.0

2,569

100.0

879

100.0

10,685100.0

Rooms department

864

33.8

1,828

56.0

949

67.0

1,477

57.5

344

39.1

5,463

51.1

Food & beveragedepartment

1,559

61.0

1,218

37.3

64

4.5

859

33.4

506

57.5

4,205

39.4

Tenant department

34

1.3

116

3.6

384

27.1

1

0.0

11

1.3

546

5.1

Other departments(Note 3)

99

3.9

100

3.1

21

1.5

232

9.0

18

2.1

471

4.4

499

19.5

933

28.6

874

61.6

715

27.8

135

15.3

3,156

29.5

GOP

Sheraton Grand
Hiroshima Hotel(Note 4)
Ratio toRatio tototal sales
total sales(%)(%)

Okinawa Marriott
Resort & Spa

Hotel Centraza
HakataHoliday Inn Osaka
Hilton Tokyo Narita
Namba
AirportRatio tototal sales(%)

Ratio tototal sales(%)

Ratio tototal sales(%)

International
Garden Hotel
NaritaRatio tototal sales(%)

Occupancy rate

83.0%

－

90.6%

－

94.7%

－

95.5%

－

86.8%

－

86.4%

－

ADR
(Note 1)

16,571－

17,574－

12,067－

18,218－

10,661

－

7,395

－

RevPAR(Note 2)

13,754－

15,923－

11,431－

17,406

－

9,253

－

6,392

－

Total sales

1,663

100.0

1,610

100.0

1,199

100.0

1,014

100.0

1,625

100.0

762

100.0

Rooms department

992

59.7

755

46.9

443

37.0

991

97.7

1,027

63.2

589

77.3

Food & beveragedepartment

472

28.4

807

50.1

641

53.5

－

－

551

33.9

168

22.0

Tenant department

27

1.6

－

－

108

9.0

18

1.8

25

1.5

3

0.4

Other departments(Note 3)

172

10.4

49

3.0

6

0.5

5

0.5

22

1.3

2

0.3

420

25.2

486

30.2

494

41.2

633

62.4

477

29.4

319

41.9

GOP

－

53 －

Hotel Nikko Nara
Ratio to
total
sales
(%)

The Twelve HMJ
HotelsTotal/Average(Note 5)
Ratio to
total
sales
(%)

Occupancy rate

74.2%

－

87.6%

－

ADR
(Note 1)

12,443－15,085－

RevPAR(Note 2)

9,229－

13,218－

Total sales

1,395

100.0

19,953

100.0

Rooms department

606

43.5

10,866

54.5

Food & beveragedepartment

763

54.7

7,607

38.1

Tenant department

16

1.1

743

3.7

Other departments(Note 3)

10

0.7

737

3.7

GOP

318

22.8

6,304

31.6

(Note 1) ADR: Represents average daily rate, which is calculated by dividing total rooms revenue for a certain period (excluding service charges) by the total number ofrooms sold during the period. Holiday Inn Osaka Namba, the Six Accor Hotels and the Six the b Hotels do not request service charges. The same shall apply
hereinafter.
(Note 2)

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 and occupancy rate. The same shall apply
hereinafter.

(Note 3)Figures for the other departments include sales of the department for sale of goods.

(Note 4)The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.

(Note 5)

For Total/Average of the Twelve HMJ Hotels, figures are calculated by JHR as reference since no figures have been provided by the hotel operators or hotel
lessees.

(Note 6)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.

－

54 －

(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
(%)

MercureYokosuka

Ratio to
total
sales
(%)

Total/Average(Note)

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

Occupancy rate

90.8%

-

92.9%

-

83.7%

-

81.8%

-

80.0%

-

90.3%

-

85.8%

-

ADR

12,394-

10,978-

10,682-

12,910-11,034-

12,717-

11,733-

RevPAR

11,259-10,193

-

8,944

-

10,563

-

8,823

-

11,487-

10,071-

Total sales

464

100.0

451

100.0

553

100.0

636

100.0

524

100.0

570

100.0

3,198

100.0

Rooms
department

420

90.5

397

87.9

450

81.3

545

85.7

415

79.3

333

58.4

2,559

80.0

Food &
beveragedepartment

37

7.9

51

11.3

93

16.8

87

13.6

97

18.6

228

40.0

593

18.5

Other
departments

7

1.5

4

0.9

10

1.8

5

0.7

11

2.1

9

1.6

46

1.4

238

51.4

247

54.8

272

49.2

282

44.3

219

41.8

190

33.3

1,448

45.3

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

(c) The Six the b Hotels
the bakasaka-mitsuke(Note 1)
Ratio toRatio to
total
total
sales
sales
(%)
(%)

the b
suidobashi

the b
ikebukuro
Ratio to
total
sales
(%)

the b
ochanomizu(Note 1)
Ratio to
total
sales
(%)

the b
hachioji

the bhakataRatio to
total
sales
(%)

Total/Average(Note 2)

Ratio to
total
sales
(%)

Ratio to
total
sales
(%)

Occupancy rate

88.9%

-

89.3%

-

90.2%

-

93.9%

-

91.3%

-

90.8%

-

90.6%

-

ADR

10,880-10,698-

10,494-

10,415

-

7,112

-

8,634

-

9,376

-

RevPAR

9,670

-

9,552

-

9,463

-

9,775

-

6,495

-

7,838

-

8,495

-

Total sales

174

100.0

212

100.0

301

100.0

128

100.0

281

100.0

250

100.0

1,346

100.0

Rooms
department

173

99.6

211

99.3

300

99.5

127

99.7

230

82.1

248

99.2

1,290

95.8

Food &
beveragedepartment

-

-

-

-

-

-

-

-

48

17.3

-

-

48

3.6

Other
departments

1

0.4

2

0.7

1

0.5

0

0.3

2

0.6

2

0.8

8

0.6

78

45.1

112

52.6

159

52.8

53

41.6

91

32.5

129

51.4

622

46.2

GOP
(Note 1)
(Note 2)the b akasaka-mitsuke and the b ochanomizu were sold on August 10, 2018.
For Total/Average, figures are calculated by JHR since no figures have been provided by the hotel lessees.

－

55 －

D. Status of capital expenditures
a. Planned capital expenditures (Note 1)
The following table shows major estimated capital expenditures items for renovation work during the fiscal year planned asof the end of the midterm period under review for real estate properties (in trust) under management by JHR. Capital
expenditures are expected to total ¥2,244 million for the second half and, in aggregate with the capital expenditures for the
first half, capital expenditures are expected to total ¥3,186 million (Note 2) for the full year.
Estimated construction costs(JPY 1M)
Name of property, etc.
PurposeScheduled period
Payment Total(Location)
Total
for the amountamountfirst half paid
Kobe Meriken Park Oriental Hotel(Kobe-shi, Hyogo)

Renewal of telephone switchboard

From May 2018
to July 2018

42

－

－

Oriental Hotel tokyo bay(Urayasu-shi, Chiba)
Okinawa Marriott Resort & Spa

Splitting of suite guestroom andrelocation of Mama Salon

From October 2018
to November 2018

144

－

－

Replacement of air-conditioning

From September 2018

(Nago-shi, Okinawa)

facilities for guestrooms

260

－

－

Holiday Inn Osaka Namba(Osaka-shi, Osaka)Renewal of guest rooms on the 4th andFrom September 2018

12th floor

to September 2018
From October 2018
to March 2019

57

－

－

3,100

46

46

3,603

46

46

Hotel Centraza Hakata(Fukuoka-shi, Fukuoka)

to December 2018

Major renovation works
Total(Note 1) New construction and renewal work include those for buildings, attached facilities, etc. as well as items classified as furniture and fixtures. The
scheduled period of the above planned renovation work and whether the renovation work will be performed may change.
(Note 2) Expected construction cost for the major renovation works of Hotel Centraza Hakata will not be included in total for the fiscal period ending
December 31, 2018 since its construction work will be completed in March 2019.

b. Capital expenditures during the period (Note)
For real estate properties (in trust) under management by JHR, major construction work conducted during the midterm
period under review that represents capital expenditures is as below. Capital expenditures for the midterm period underreview totaled ¥942 million, and repair expenses that were accounted for as expense in the period totaled ¥23 million. In
aggregate, ¥966 million of construction work was carried out.
Name of property, etc.
Purpose(Location)

PeriodNamba Oriental Hotel(Osaka-shi, Osaka)Renewal of guest rooms on the 6th floor

From January 2018
to February 2018

Holiday Inn Osaka Namba

Renewal of guest rooms on the 6th andFrom January 2018

(Osaka-shi, Osaka)

7th floors

to February 2018

Hilton Nagoya(Nagoya-shi, Aichi)

Renewal of drainage for sewage andgray water

From June 2017
to January 2018

Construction costs(JPY 1M)

Total

78
58
55
192

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

－56 －