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

February 23, 2018
(TSE: 8985)
http://www.jhrth.co.jp/en/

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

Appendix 1 JHR’s Characteristics
3

Ⅱ．Summary of Settlement of Accounts

1．Simultaneous Pursuit of Stability and Upside Potential

28

2．Key Points to Promote Growth Cycle

29

1．Operational Performance

5

3．External Growth Strategy

30

2． Revenue Forecast

6

4．Internal Growth Strategy

31

3． Balance Sheet

7

5．Financial Strategy

32

6．Initiatives for Sustainability

33

7．Benefits Program for Unitholders

34

Ⅲ．External Growth
1．Continuous Property Acquisitions

9

Appendix 2 Information on Properties

Ⅳ．Portfolio
1．Portfolio

11

2．Portfolio Diversification

12

Ⅴ．Internal Growth
1．Rent Structures

14

2．Performance of Major Hotels Adopting Variable Rent
Scheme, etc.

15

3．Active Asset Management

16

4．Capital Expenditure and Depreciation

19

Ⅵ．Financial Status
1．Financial Status36

2．Summary of Lease Contracts

38

3．Major CAPEX III by Hotel

41

4．The Five HMJ Hotels – Highlights

42

5．Portfolio Map

43

Appendix 3 Investors Composition and Investment Unit Price
1．Major Unitholders and Classification of Unitholders

45

2．Changes in Investment Unit Price and Market Capitalization

46

Appendix 4 Summary of the Asset Management Company

21

Ⅶ．Market Environment
1．Market Environment

1．Property List

25

1

1．Summary of the Asset Management Company

48

2．Features and Governance of the Asset Management Company

49

I. Settlement of Accounts for FY12/2017 - Highlights

１．FY12/2017 Highlights
1. External Growth

2. Internal Growth (*3, 4, 5)Continuous Acquisitions of High-Quality Properties

Improvement in hotel performance andincrease in variable rent, etc. through active
asset management

36 properties / JPY225.7 billion

End of FY12/2015◆Public offering in Jan.

2016

Acquired 2 properties /JPY24.0 billion (*1)

◆Public offering in Jul.

Acquired 4 properties /2016

Actual Results (2016)
Total Funds
Total Acquisition
Raised through(*1,2)
Price
Public Offerings
JPY78.3B

JPY49.3B

JPY54.3 billion (*2)

RevPARGOP

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

Acquired 3 properties / JPY32.6 billion

16,947
9,868
8,619
13,597

17,388
10,185
8,535
13,9162.6%
3.2%(1.0)%
2.3%(Unit: JPY M)

Total of 3 Hotel Groups

16,265

16,765

3,683
3,420

3,500

98
2,500

Revenue Sharing, etc.

3. Strengthening of Financial Base

Hilton Tokyo
Narita Airport

International Garden
Hotel Narita

JPY13.1 billion

JPY9.1 billion
Actual Results (2017)
Total Funds
Total Acquisition
Raised throughPrice
Public Offering

Hotel Nikko Narita

JPY32.6B

JPY18.6B

44 properties / JPY319.4 billion

1.1%

4.7 years◆Launch of the second global offering◆Diversified funding methods by issuance ofinvestment corporation bonds◆Status of Credit Rating
JCR

R&I

A+(stable)

A (stable)(*1) Includes JPY17.3 billion of ACTIVE-INTER CITY HIROSHIMA acquired in December 2015.
(*2) Includes JPY 7.1 billion of Hotel Centraza Hakata acquired in April 2016.
(*3) The Seven HMJ Hotels are Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay,
Namba Oriental Hotel, Hotel Nikko Alivila, Oriental Hotel Hiroshima, Okinawa
Marriott Resort & Spa and Sheraton Grand Hiroshima Hotel (the major facility of
ACTIVE-INTER CITY HIROSHIMA). The Nine HMJ Hotels are the Seven HMJ Hotels plus
Hotel Centraza Hakata and Holiday Inn Osaka Namba.
(*4) The Six Accor Hotels are ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles(*3) Sapporo, Mercure Sapporo, Mercure Okinawa Naha and Mercure Yokosuka.
(*5) The Six the b Hotels are the b akasaka-mitsuke, the b ikebukuro, the b ochanomizu,(*3) the b hachioji, the b hakata and the b suidobashi.
(*6) Net basis means dividend without the effect by gain on sales of properties.
(*7) The formula of NAV calculation has been changed from this material. The total amountof dividend is excluded from net asset for this calculation.

3

15.0%up(net basis:

38.1%up（net basis）

2,877

1,500

FY12/2014 FY12/2015 FY12/2016 FY12/2017 FY12/2018
15th Period 16th Period 17th Period 18th Period 19th Period(forecast)

Reduce financial costs while carrying out
conservative financial management（End of FY12/2017）
Costs for InterestAverage Life of Debt
Bearing Debt

0.6%up

18.9%up）

2,155

2,000

JPY(137)M

3,705

7.7%up

2,975

3,000

3.1%

Year-on-Year Change in Variable Rent, etc. for Full Year 2017
7 HMJ Hotels+JPY397M 6 the b Hotels
JPY(58)M+JPY454M+JPY115M Total of 3 Hotel
6 Accor Hotels

39.9％
2017

Variance

Impact of Selling properties

4,000(Unit: JPY)

9 HMJ Hotels
6 Accor Hotels
6 the b Hotels
Total of 3 Hotel Groups

LTV

End of FY12/2017(JPY）

GroupsEnd of FY12/2016

JPY10.3 billion

2017

Growth of Dividends (*6)

Increase in NAV Per Unit (*7)（JPY）
80,00075,20977,1292.6%up70,00063,385

18.7%up

60,00037.0%up
50,00040,00046,272
36,074 28.3%up

30,000FY12/2013 FY12/2014 FY12/2015 FY12/2016 FY12/2017
14th Period 15th Period 16th Period 17th Period 18th Period

Ⅱ． Summary of Settlement of Accounts

１．Operational Performance
FY12/2016(17th Period)

FY12/2017(18th Period)

Actual(A)

Variance

Actual(B)

Three
Properties
acquired in2017(*1)％(B)-(A)(Unit: JPY M)

Major Factors Causing the Variance
Five
Properties
acquired in2016(*2)

Existing
Properties

Properties

No. of Properties

41

44

3

-

Acquisition Price

286,801

319,474

32,673

11.4%

Operating Revenue

22,10725,475

3,368

15.2%

931

2,218

217

22,10725,475

3,368

15.2%

931

2,218

217

1,506

11.9%

536

1,069

(99)

Real Estate Operating
Revenue
Fixed Rent, etc.
Variable Rent
NOI

(*3)

Composition

CompositionNOI Yield

JPY(126)M

57.5%

12,71455.8%

14,221

42.5%

9,392

44.2%

11,253

1,861

19.8%

395

1,148

316

21,42
4

2,594

13.8%

922

1,533

139

182

259

(10)

18,829
6.6%

6.7%

0.1%

3,294

3,725

431

-

1

2

0

-

0

16

132

116

-

116

15,517

17,563

2,046

13.2%

5.4%

5.5%

0.1%

1,632

1,806

174

-

Operating Income

13,88515,757

1,872

13.5%

Non-Operating Expenses,
etc.

1,665

1,751

86

5.2%

Ordinary Income

12,22014,006

1,786

14.6%

(97)

(1)

95

-

12,12314,005

1,881

15.5%

740

769

29

4.0%

Depreciation
Profit and Loss

Asset Retirement
Obligations Expenses
Loss on Retirement ofNoncurrent Assets
NOI after Depreciation (*3)
NOI Yield after
Depreciation
Other Operating
Expenses

Extraordinary Income
or Loss, etc.
Net Income

Use of Negative Goodwill
Dividend

Total Dividends

12,865

14,771

1,906

14.8%

Number of Units Issued(Unit)

3,761,907

4,010,847

248,940

6.6%

Dividend per Unit (JPY)

3,420

3,683

263

7.7%

Major Causes of Variance
Fixed rent, etc. of the existing properties• FY12/2016:
Reception of the penalty for cancellation of lease
contract when replacing the tenants

1,273

739

33

•

JPY10M
Variable rent of the existing properties• The seven HMJ hotels:
Increase in variable rent
JPY397M• The six Accor Hotels:
Increase in income from management
contracts, etc.
JPY115M• The six the b Hotels:
Decrease in variable rent
JPY(58)M(sub total) JPY454M• Decrease in rent from revenue sharing, etc.
JPY(137)M(total) JPY316M
(*1)
(*2)

(*3)

5

FY12/2017:
Increase in rent when replacing the tenants, etc.

Stating the impact on the statements of income by properties acquired
during fiscal year ended December 2017 (18th period), namely Hilton Tokyo
Narita Airport, International Garden Hotel Narita and Hotel Nikko Nara.
Stating the impact on the statements of income by properties acquired
during fiscal year ended December 2016 (17th period), namely CANDEO
HOTELS UENO-KOEN, Hotel Centraza Hakata, Holiday Inn Osaka Namba,
HOTEL ASCENT FUKUOKA, and Hilton Nagoya.
Each is calculated using the following formula:
NOI (Net Operating Income) = Real estate operating revenue − Real estate
operating costs + Depreciation + Loss on retirement of noncurrent assets
Asset retirement obligations expenses
NOI yield = NOI ÷ Acquisition price
NOI after depreciation = Real estate operating revenue − Real estate
operating costs
NOI yield after depreciation = NOI after depreciation ÷ Acquisition price２．Revenue Forecast
FY12/2017(18th Period)

FY12/2018(19th Period)

Actual(A)

Forecast(B)

Major Factors Causing
the Variance

Variance（*1）

Property
Acquisitionin 17thPeriod (*2)％

(B)-(A)

Properties

No. of Properties

44

44

-

-

Acquisition Price

319,474

319,474--

Operating Revenue
Real Estate Operating
Revenue
Fixed Rent, etc.

Existing
Properties

25,47526,567

1,092

4.3%

1,139

(46)

25,47526,567

1,092

4.3%

1,139

(46)

656

4.6%

663

(7)

Composition

Composition

55.8%

14,22156.0%

14,87844.2%

11,25344.0%

11,689

435

3.9%

475

(39)

21,424

22,186

761

3.6%

991

(230)

6.7%

6.9%

0.2%

3,725

4,083

357

-

239

118

Loss on Retirement ofNoncurrent Assets

132

38

(94)

-

NOI after Depreciation

17,56318,062498

2.8%

NOI Yield after Depreciation

5.5%

5.7%

0.2%

Other Operating Expenses

1,806

1,968

162

-

Operating Income

15,757

16,094336

2.1%

Non-Operating Expenses, etc.

1,751

1,798

46

2.7%

Non-Operating Income

27

8

(18)

-

Non-Operating Expenses

1,778

1,806

27

-

14,006

14,295

289

2.1%

(1)

(1)

0

-

14,005

14,294

289

2.1%

769

565

(203)

(26.5)%

Variable Rent
NOINOI Yield
Profit and Loss

Depreciation

Ordinary Income
Extraordinary Income or
Loss, etc.
Net Income

Use of Negative Goodwill (*4)
Dividend

Total Dividends

(94)
752

(254)

(Unit: JPY M)
Major Causes of Variance
Variable rent of the existing properties• The eight HMJ hotels (*3) :•increase in variable rent
JPY210M
The six Accor hotels: increase in income from•management contracts, etc.
JPY167M
The six the b hotels: decrease in variable rent JPY(35)M(sub total) JPY342M•

Decrease in revenue sharing, etc.

•

Decrease in variable rent due tothe renovation of Hotel Centraza Hakata

14,771

14,86088

0.6%

4,010,847

4,010,847--

Dividend per Unit (JPY)

3,683

3,705

22

0.6%

JPY(320)M(total) JPY(39)M
Use of Negative Goodwill(*4)
FY12/2016：50-year amortization amount

JPY262M

Loss on retirement of noncurrent assets

JPY132M

Cope with dilution

JPY374M

FY12/2017：(*1)

Number of Units Issued(Unit)

JPY(61)M(sub total) JPY281M

(*2)
(*3)
(*4)

6

50-year amortization amount

JPY262M

Loss on retirement of noncurrent assets

JPY38M

Cope with major renovation works

JPY265M

For details, please refer to the “Financial Report for the Fiscal Year Ended
December 31, 2017 (January 1, 2017 – December 31, 2017)” dated February 22,
2018.
Stating the impact on the statements of income by properties acquired during
fiscal year ended December 2017 (18th period), namely Hilton Tokyo Narita
Airport, International Garden Hotel Narita and Hotel Nikko Nara.
The eight HMJ hotels are the nine HMJ hotels excluding Hotel Centraza Hakata.
Please refer to P23 for the use of negative goodwill.

３． Balance Sheet(Unit: JPY M)(As of)

FY12/2016
End of Fiscal Year

FY12/2017
End of Fiscal Year2016.12.31

2017.12.31

Variance(As of)ASSETS

FY12/2016
End of Fiscal Year

FY12/2017
End of Fiscal Year2016.12.31

2017.12.31（注3）

Variance

LIABILITIESCurrent Assets
Cash and Deposits (*1)
Operating Accounts
Receivables
Others

29,05030,919

1,869

Current Liabilities

14,364

21,161

6,797

26,37327,920

1,546

Operating Accounts Payable

666

909

243

1,800

3,000

1,200

9,679

15,022

5,343

288,441

320,859

32,418

Short-Term Loans Payable
Current Portion of Long-Term
Loans Payable
Accounts Payable

1,107

1,211

104

Net Property and Equipment

250,690

283,066

32,375

Advances Received

899

900

0

Buildings in Trust (*2)

94,608109,983

15,374

Others

211

116

(95)

Land in Trust

154,841

171,618

16,776

121,524

129,058

7,533

Noncurrent assets

2,071

2,411

340

605

587

( 17)

Long-Term Liabilities

Others (*3)

1,240

1,465

225

Investment Corporation Bonds

22,60023,6001,000

Intangible Assets

34,27834,171( 107)

92,09998,777

6,677

Other Assets

3,472

3,621

149

5,660

5,694

33

170

170

0

Long-Term Loans Payable
Tenant Leasehold and Security
Deposits
Derivative Liabilities

676

504

(172)

3,301

3,450

149

487

482

(5)

387

404

16

135,889

150,219

14,330Unitholders' Capital

134,829

153,516

18,686

Capital Surplus

21,746

21,7460

Dividend Reserve
Reserve for Temporary Difference
Adjustment
Unappropriated Retained
Earnings (midterm/year)

13,867

0(13,867)

0

13,127

13,127

12,126

14,005

1,879

(580)

(431)

148

181,989

201,963

19,974

317,878

352,183

34,304

Leasehold and Security
Deposits
OthersDeferred Assets

OthersTOTAL LIABILITIESNET ASSETS

OthersTOTAL ASSETS

317,878

352,183

TOTAL NET ASSETS

34,304TOTAL LIABILITIES AND NET ASSETS(*1) Cash and deposits in trust is included.
(*2) The sum of buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture and fixtures in trust, and construction in progress in trust.
(*3) The sum of machinery and equipment, tools, furniture and fixtures, and construction in progress.

7

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

2014

2015

2016

2017

Acquired 3 assets (JPY15.7B)

Acquired 9 assets (JPY57.0B）

Acquired 5 assets (JPY61.0B）

Acquired 3 assets (JPY32.6B)

Okinawa Marriott
Resort & Spa
JPY14,950M

Holiday Inn
Osaka Namba
JPY27,000M

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

ibis Styles Sapporo
JPY6,797M

Mercure Sapporo
JPY6,000M+1 other asset

Sheraton Grand
Hotel Hiroshima
JPY17,320M+7 other assets+3 other assets

Growth of Aggregate Acquisition Price (*1)(JPY: Millions)No. of PropertiesNOI Yield(%) (*2)
NOI Yield (After
Depreciation) (*2)
NAV Per Unit (JPY) (*3)

+11.4%+27.1%+30.2%+9.1%+21.4%+7.0%

Hilton Nagoya
JPY15,250M

122,285

130,883

158,902173,429

April 2012
（Effective Dateof Merger）

FY12/2012(13th Period)

FY12/2013(14th Period)

FY12/2014(15th Period)

225,723

FY12/2015(16th Period)

286,801

FY12/2016(17th Period)

319,474

FY12/2017（18th Period)

28
-

28
6.2%

28
6.2%

30
6.3%

36
6.6%

41
6.6%

44
6.7%

-

4.5%

4.8%

5.0%

5.3%

5.4%

5.5%

-

32,321

36,074

46,272

63,38575,20977,129Aim forFurther
Growth(*1) Total Assets refers to the total acquisition price.
(*2) ) NOI yield for FY12/2012 is hypothetical yield calculated based on annualized actual NOI after merger.
(*3) The formula for NAV calculation has been changed from this material. The total amount of dividend is excluded from net asset for this calculation. NAV per unit on the basis of the former calculation is JPY33,748, JPY38,013, JPY48,427,
JPY66,360, JPY78,629, JPY80,812 from FY12/2012 to FY12/2017 respectively.

9

Ⅳ．Portfolio

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

Strategic Investment Areas and Locations of Properties

Total Assets

Existing properties
Newly acquired properties in 2017

JPY319.4B

Strategic Investment Areas

No. of Hotels

Okinawa Area

Hokkaido
Area

44 Hotels（35 in Strategic Investment Areas)

No. of Guest Rooms

11,486 Rooms

Tokyo & the Bay Area(*1)
Fukuoka Area
Osaka / Kyoto Area(*2)
23 wards in Tokyo(*1) Bay Area includes the coastal area of Tokyo Bay in Kanagawa and Chiba prefectures.
(*2) Osaka / Kyoto Area refers to Osaka and Kyoto prefectures.

11

２．Diversification of Portfolio
 Widely diversified and high-quality portfolio Appeal to inbound visitors by international brands
By Area and Rent (*1)
(F)
1.7%

(F)
0.9%

(V)
2.1%

(F)
5.7%

(V)
5.0%

(V)
3.5%

(F)
8.5%

Hokkaido
6.0%
Chubu
5.2%
Tokyo
12.5%
Chugoku

(F)
5.2%
(V)
1.1%

By Hotel Brand (based on the acquisition price)

7.4%
Kyushu(excl.Okinawa)
6.8%(Kyoritu

18%

Maintenance)
5%

(F)
14.8%

16%
Hotel Nikko
9%

The b

Ibis/ Mercure(Accor)10%

Holiday Inn
（IHG）
8%

ヒルトン
Hilton17%
17%

Marriott5%

Sheraton
5%International Brand: 47%
(V)
7.4%

Osaka
13.2%

By Grade / Hotel Type (based on the acquisition price)
Economy
6%

(F)
7.3%
(F)
4.8%

Oriental Hotels

7%

(F)
7.1%
(V)
5.5%

OthersKanto(excl.Tokyo)
22.2%

Okinawa
16.4% Kansai(excl.Osaka)
10.2%

(V)
9.3%

(V)
4.0%

Dormy Inn, etc.

(V)
5.9%

Luxury24%
Mid-price
53%

Fixed Rent (F)Variable Rent (V)

56.0%

44.0%

(*1) Based on the estimated rent for revenues forecast of FY12/2018

12

Uppermiddle
17%

Resort24%

FullService
35%

LimitedService
41%

Ⅴ．Internal Growth１．Rent Structures
Stability

Upside(FY12/2017）

Rent Structure (*1)

Fixed rent

Fixed rent + Revenue sharing

Fixed rent + Variable Rent

Variable rentManagement contract

Type of Contract

Lease contract

Lease contract

Lease contract

Lease contract

Management contract--

Hotel GOP

-

Total

○

○

○

-

A certain percentage of sales
exceeding the threshold

A certain percentage of
hotel GOP

Hotel revenue and/or a certain
percentage of hotel GOP

JPY3,175M（12.5%）

JPY3,416M（13.4%）

JPY13,973M（54.8%）

JPY1,757M（6.9%）

JPY3,153M（12.4%）

JPY25,475M（100.0%）JPY3,175 M（12.5%）

JPY2,996M（11.8%）

JPY7,066M（27.7%）

JPY511M（2.0%）JPY471M（1.9%）

JPY14,221M（55.8%）

Variable rent(%)-

JPY419M（1.6%）

JPY6,906M（27.1%）

JPY1,245M（4.9%）

JPY2,681M（10.5%）

JPY11,253M（44.2%）

Involvement in Hotel
Operation

Low

Low

High

High

High

-

CAPEX paid by JHR

1) Renewal of building
and facilities

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

No. of Properties

13

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

Acquisition Price(%)

JPY42,580M(13.3%)

JPY40,470M(12.7%)

JPY189,060M(59.2%)

JPY17,723M(5.5%)

JPY29,640M(9.3%)

JPY319,474M(100.0%)

The Beach Tower Okinawa

Hilton Tokyo Bay

The Twelve HMJ Hotels (*3)

Hilton Nagoya

The Five Accor Hotels (*4)

Hotel Francs

Hotel Keihan Universal CityThe Six the b Hotels

Mercure Yokosuka

CANDEO HOTELS UENO-KOEN

Hotel Sunroute Shinbashi

and other hotels

Smile Hotel Nihombashi
Mitsukoshimae

Type of
Rent

Fixed
Variable

Real Estate
Operating Revenue(%) (FY12/2017)
Fixed rent,
etc. (*2)(%)

Hotels-

Chisun Inn Kamata-

Hotel Vista Kamata Tokyo(*1) Rent structure is categorized according to the rent contract for hotels of each acquired asset.
(*2) Fixed rent includes rent based on rent contract from non-hotel portion and utility income of acquired asset (offices, signage, car parks, retail shops, etc.).
(*3) The Twelve HMJ Hotels are the Nine HMJ Hotels plus Hilton Tokyo Narita Airport, International Garden Hotel Narita and Hotel Nikko Nara.
(*4) The Five Accor Hotels are five hotels excluding Mercure Yokosuka from The Six Accor Hotels.

14

２． Performance of Major Hotels Adopting Variable Rent Scheme
Indicators of Rooms Department
ADR (left axis)

Occupancy rate (right axis)

RevPAR (left axis)

The Eleven HMJ Hotels (*1)
(JPY)

16,76916,49016,357

15,00010,000100%

14,79014,544

14,207

15,00011,344

5,000

5,000
0

86.9%

88.2%

88.2%

2016

2017

2018
(Forecast)

12,08011,94410,000

+1.7%

+2.4%

The Six the b Hotels

The Six Accor Hotels
(JPY)

0%

0

87.0%

85.3%

89.1%

2016

2017

2018
(Forecast)0%

15,00010,00012,468

14,674

14,51014,300+2.2%

12,744

+2.3%

100%

20,00010,0005,000
0(JPY M)

5,000
87.8%

88.8%

2016

2017

2018
(Forecast)

8,619 ▲1.0% 8,535

0

The Eleven HMJ Hotels

9,362

+0.1%

8,540

89.1%

90.4%

91.2%

2016

2017

2018
(Forecast)

0%0

The Six Accor Hotels

+2.8%

+2.7%

13,29913,724

14,107

2,885
1,370

3,004
1,304

3,158
1,265

2016

2017

2018
(Forecast)(*1) The Eleven HMJ Hotels exclude Hotel Centraza Hakata from the Twelve HMJ Hotels.
(*2) For properties acquired in 2016 and 2017, numbers prior to acquisition which were obtained from the previous owners, etc. are used for the calculation.

15

The Six the b Hotels

18,531

18,032

17,55415,00013,034

87.2%

9,445

Change in GOP

Total of Three Hotel Groups
(JPY)

100%
9,674

5,000

+5.7%

+3.2%

(JPY)

10,00010,76910,185

9,868

100%
15,0000%

３．Active Asset Management
 Implement Active Asset Management at both hotel and REIT sides
 Maximize internal growth through both revenue enhancement and cost control

Three Hotel Groups (*1)

Hotels

FY12/2018 Forecasts (JPY M)

Examples of Active Asset Management

52,881

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

Hotel Operating Costs

33,764

 Integration of back-office operations
 Optimization of staffing
 Cost reduction by joint purchasing in the same group
 Reduction of utility costs

GOP

19,116

Hotel Sales

Real Estate
Operating
Revenue

REIT

Variable rent contract
Three Hotel Groups
Other Hotels

18,566
8,001

Real Estate Operating Costs

4,381

NOI

22,186

 Rent increase by revision of rent scheme, etc.
• The Five HMJ Hotels, CANDEO HOTELS UENO-KOEN, Chisun Inn
Kamata, and rent from non-hotel tenant, etc.
 Optimization of PM/BM/Trust fees, and reduction of ground rent,
etc.

Maximize DPU（*1）The figures of the Three Hotel Groups are the total amount of the Twelve HMJ Hotels, the Six Accor Hotels and the Six the b Hotels.

16

３．Active Asset Management (Cont.)Examples of active asset management (1)Major renovation works at Hotel Centraza Hakata●Concept of the renovation【Current Appearance】 ＜Outside＞
Renewal of the hotel located in a favorable area in the Hakata market
that has continuously been growing⇒Aim to improve GOP through an increase of ADR and operation optimization, etc.

＜Lobby＞●Schedule for the renovation works
October 2018 to March 2019 (plan)●Main methods to maximize the revenue
・Increase the number of rooms(plan to increase to 221 rooms from 194 rooms)⇒ Convert meeting rooms and an office room on the 5th floor into
guest rooms/ divide suite rooms
・Improve ADR⇒ Add the number of beds
Add value through construction of new facilities (gym and laundry)・ Change the restaurant operator from the hotel to a tenant【Map】
Hotel Nikko Fukuoka●Main measures to optimize the hotel operation
・Consolidate a back office into one floor
・Optimize operations by consolidating a café and bar into the same area
・Consolidate kitchens of banquet
・Newly install baggage lockers

Hotel Forza Hakata

Royal Park Hotel THE fukuoka

Hotel Centraza Hakata

Hakata Miyako Hotel (temporary name)●Improve environmental performance by resolving deterioration
due to aging and taking some measures for energy conservation
・ Supply new pipes for water supply and drainage
・ Renew heater source equipment (cold water generator, boiler)
・ Renew ventilation equipment (improve air environment through renewal ofoutdoor ventilation equipment, etc.)
・ Switch all indoor lighting to LED

ANA Crowne Plaza Fukuoka
the b Hakata●Eliminate an impact on dividend caused by suspension of hotel operationby using negative goodwill

Major Hotel that is planning to open17

３． Active Asset Management (Cont.)Examples of active asset management (2)Relocation of a Bridal Salon at Kobe Meriken Park Oriental Hotel
Relocated a bridal salon, which had been located at a section nearby a passenger terminal (2F) operated by Kobe city, into the floor (6F) wherewedding-related facilities in the hotels are all located● Efficient sales operation of wedding
Implemented a renovation work, which changed interior layout
inside the hotel⇒ Efficient wedding sales operation by gathering all wedding-related
facilities into the same floor (bridal salon, wedding dress store,
photo studio, beauty salon, brides room)

2F：Section owned by Kobe city

●Reduced rent payment by returning a section used for the bridal salon
Returned the bridal salon section to Kobe city
⇒Reduced total of rent payment and common area maintenance charges
by approximately JPY21M/year

Passenger terminal

Former bridal salon⇒returned to Kobe city

【 Bridal salon after renovation 】
6F：Wedding-related Facilities
atrium＋fashion
store⇒Bridal salon+wedding office18

Photo studio⇒wedding dress
store

４．Capital Expenditures and Depreciation
 Strengthen competitiveness and improve asset value by continuing investment in CAPEX
4,500(JPY M)(*1)

CAPEX ICAPEX IICAPEX III

4,000

3,725
3,294

3,500
3,000
2,500

2,772
2,214

2,297

2,400
1,811
36

1,500

1,306

1,079

2,619

258
198

203

622

629

760

130,883

158,902173,429

225,723

FY12/2012 (*2)

FY12/2013

FY12/2014

FY12/2015

1,134

391

469
475

897

511

343

854
58
167

500
0
Aggregateacquisition
price (JPY M)

640

3,186
2,898

783

2,000

1,000

4,083

Depreciation

1,954

1,898

286,801

319,474

319,474

FY12/2016

FY12/2017

FY12/2018(forecast)

1,324(*1) CAPEX I is capital investment related to renewal of buildings, facilities, and equipment which is required to maintain proper values of properties. CAPEX II is capital investment for fixtures and furnishings that are not directly related to building structures or
facilities but necessary for operating hotels. CAPEX III is strategic capital investment for renewals including guest rooms, banquet rooms and restaurant and others in order to maintain or to improve the competitiveness of the hotels.
(*2) Since FY12/2012 is irregular nine months period, the numbers for capital expenditure in FY12/2012 are the accumulated actual numbers from January to December, 2012. On the other hand, the number for depreciation is the annualized number.

19

Ⅵ． Financial Status

１．Financial Status
Changes in LTV (Total Asset Base)
45.0%

Term of Interest-Bearing Debt
As of the End of FY12/2016

43.1%

Short term

42.8%

39.7%

40.0%

1.4%
7.7%

Long-term(scheduled repayment
within one year)
Long-term

39.9%(*) Long-term loan: Loans with original
maturity over one year
Short-term loan: Loans with original
maturity within one year

35.0%
End of FY12/2014(15th Period)

End of FY12/2015(16th Period)

End of FY12/2016(18th Period)

As of the End of FY12/2017
2.6%

90.9%

12.9%

84.6%

Fixed Interest Rate Ratio

End of FY12/2017(19th Period)(*) LTV as of the end of each period/year.

As of the end of Dec..2016

Changes in Costs for Interest-Bearing Debt(*1) and AverageLife of Debt(*2)

1.8%

Average Life of Debt
Costs for Interest-Bearing Debt

1.5%

6.0
5.0 years

1.6%

4.7 years

3.7 years
1.5%

1.3%

5.0
(JPY M)
20,00018,0223.0
1.2%

15,0001.1%

10,0000.0

1.0%
End of FY12/2015(16th Period)

End of FY12/2016(17th Period)

1,000
12,3006,000

12,4661,500

18,022
11,2175,000

End of FY12/2017(18th Period)(*1) Weighted-average costs for interest-bearing debt (including up-front fee, etc.) as of the end of each period/year. Rounded
off to one decimal place.
(*2) Average life of debt as of the end of each period/year.

13,5442,000

1.0(As of the End of FY12/2017)
19,00017,35017,30017,20013,217

2.0
1.1%

1.2%

End of FY12/2014(15th Period)

94.0％

Repayment Schedule of Interest-Bearing Debt

4.0

3.3 years

1.4%

98.0％

(Years)

1.7%

1.7%

As of the end of Dec. 2017

13,54416,30010,800

11,20019,00013,10012,466
4,250

0
2018

21

2019

2020

2021

2022

2023

2024

2025

2026

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

Lenders/ Bond Name
Sumitomo Mitsui Banking Corporation
Shinsei Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Limited
The Tokyo Star Bank, Limited
The Nomura Trust and Banking Co,Ltd.
Mitsubishi UFJ Trust and Banking
Corporation
Development Bank of Japan Inc.
Fukuoka Bank, Ltd.
Hiroshima Bank, Ltd.
The Chiba Bank, Ltd.
Aozora Bank, Ltd.
Sompo Japan Nipponkoa Insurance Inc.
The Nishi-Nippon City Bank, Ltd.
The Higo Bank, Ltd.
Borrowing (Sub-Total)
3rd Investment Corporation Bonds
without Collateral
4th Investment Corporation Bonds
without Collateral
5th Investment Corporation Bonds
without Collateral
6th Investment Corporation Bonds
without Collateral
7th Investment Corporation Bonds
without Collateral
8th Investment Corporation Bonds
without Collateral
9th Investment Corporation Bonds
without Collateral
Investment Corporation Bonds(Sub-Total)
Total Interest-Bearing Debt

Balance(As of the end of
Dec.2016)
Balance Percentage
25,55620.3%
14,21011.3%
13,98011.1%
10,163
8.1%
9,593
7.6%
8,570
6.8%
4,868
3.9%

Breakdown of Interest-Bearing Debt

(JPY M)
Balance(As of the end of
Variance
Dec.2017)
Balance Percentage
29,632
21.1%
4,076
16,49211.7%
2,282
16,48011.7%
2,500
11,4958.2%
1,331
10,073
7.2%
480
7,097
5.1%
(1,473)
4,858
3.5%
(10)

3,435

2.7%

4,135

2.9%

700

2,980
2,610
2,427
2,213
1,935
937
100
103,579

2.4%
2.1%
1.9%
1.8%
1.5%
0.7%
0.1%
82.1%

3,780
3,260
2,427
2,705
2,435
929
1,000
116,799

2.7%
2.3%
1.7%
1.9%
1.7%
0.7%
0.7%
83.2%

800
650
492
500
(8)
1,000
(100)
13,220

2,000

1.6%

2,000

1.4%

0

1,500

1.2%

1,500

1.1%

0

6,000

4.8%

6,000

4.3%

0

3,000

2.4%

3,000

2.1%

0

9,000

7.1%

9,000

6.4%

0

1,100

0.9%

1,100

0.8%

0

-

-

1,000

0.7%

1,000

22,60017.9%

23,600

16.8%

1,000

126,179

100.0%

140,399

100.0%

14,22022

As of the End of FY12/2016

As of the End of FY12/2017

17.9%

16.8%

Loans
Investment
Corporation Bonds

83.2%

82.1%

Status of Credit Rating

Japan Credit Rating Agency,
Ltd. (JCR)

A+ (stable)

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

A(stable)1. Financial Status (Cont.)
Negative Goodwill

Changes in Appraisal Value (Unrealized Gains)＜Policy for Use of Negative Goodwill＞

1．Add JPY262M (50-year amortization amount of negative goodwill)
to dividends every period.

(JPY100M)
4,500

2．In addition to above, dividends will be increased in response to thefollowing.

Book Value

1,221
3,021

3,000

JPY262M

Cope with dilution：

JPY374M

Cope with loss on retirement of noncurrent assets：

JPY132M：

JPY769M

Total amount
Balance of Negative Goodwill as of the End of
December 2017

2,054

1,500

JPY12,357M

negative goodwill:

JPY262M

Cope with loss on retirement of noncurrent assets:

JPY38M

Cope with major renovation works:

JPY265M

Total amount:

JPY565M

Balance of Negative Goodwill as of the Endof December 2018 (Forecast)

1,312
22
1,289

＜Amount to be Used in FY12/2018＞50-year amortization amount o

1,662
98

348
2,849

3,172

2,233
1,563

1,705

6.3%

20.4%

0
Rate of
Unrealized
Gains

JPY11,792M(*) The “50-year amortization amount of negative goodwill” includes amortization, etc. of fixed-term leasehold of land, asset retirement
obligations, etc. of Hotel Centraza Hakata and HOTEL ASCENT FUKUOKA, which were purchased in the year ended December 2016
(17th Period). The amount of such amortizations, etc. was JPY152M for the fiscal year ended December 2017 (18th Period).

1,138

787

＜Amount Used in FY12/2017＞
：

4,393
3,987

・Cope with losses caused by property dispositions
・Cope with loss on retirement of noncurrent assets
・Cope with dilution of dividend per unit
・Cope with inconsistency between tax and accounting treatments(Amortization of fixed-term leasehold of land, amortization of asset
retirement obligations, etc.)
・Cope with suspension of sales and such due to major renovation works
with significant impact on revenues
50-year amortization amount on negative goodwill

Unrealized Gains

1.7%

35.2%

38.5%

FY12/2012 FY12/2013 FY12/2014 FY12/2015 FY12/2016 FY12/2017
(13th
(14th
(15th
(16th
(17th
(18th
Period)Period)Period)Period)Period)Period)(*) Unrealized gains are calculated by subtracting book value from appraisal value

23

39.9%

Ⅶ． Market Environment

1. Market Environment Inbound visitors drew the lodging demand
The number of overnight guests has been solid◆The number of inbound visitors increased at a faster pace than thegovernment’s target: 40 million in 2020, 60 million in 2030

Changes in the Number of Overnight Guests in Japan

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

30,000No. of Japanese overnight guests

500

504

No. of inbound overnight guests

439
+6.0%

417

474
466
+6.5%
+1.6%

499

492
-2.3%

No. of Inbound Visitors+1.4%+19.3%

Tourists
25,000+21.8%

28,69024,039+5.3%

400

19,73720,000+47.1%
300

200

438
399

432

413

429

421

+27.3%+42.9%+33.8%+46.4%

18

26

33

45

2011

2012

2013

2014

15,000+29.4%+5.8%

13,413+24.0% 10,363

CAGR (Compound Average Growth Rate)of Japanese overnight guests
+1.1%

100

0

423

10,000+34.4% 8,358
6,218+12.7%

5,000

66

69

78

2015

2016

2017

0

2011

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

2012

2013

2014

2015

2016

Source: Number of International Visitors to Japan by Japan National Tourism Organization (JNTO)(*) The numbers for 2017 Jan.-Oct. are provisional numbers, and Nov.-Dec. are estimated numbers.

25

2017

1. Market Environment (Cont.)
 Japanese demand for domestic travels has been stable New supply of rooms is increasing, mainly in Tokyo and Osaka

Changes in Travel Spending among Japanese Travelers

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

25

Domestic Day Trip

60,000

Domestic Overnight Travel

40,000

23.9
4.2

20
4.9

23.8
4.4

4.4

24.5

25.0

24.2
22.7

4.4

4.0

3.8
4.3

4.9

4.5

4.7
4.5

15

20,000

Domestic Travel：+0.8%

19.0

19.2

3.1

3.2

3.6

excl.Tokyo/Osaka

14.9

15.4

13.8

20,00015,00010,0005,000
0Ratio of New Supply

3.8

16.0

15.8

12.1

5

16,517

0
2011

2012

2013

2014

2015

2016

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

2016
Jan. Sep.

Ratio of New Supply

722

+2.4%
+1.5%

+1.3%
+0.9%

2016

2017

2018

2019

2020~

<Tokyo>16,090
6,107

9,862

5,628

4,929
1,620

+4.1%

+3.7%

+10.1%

+5.6%

+2.7%

2016

2017

2018

2019

2020~

<Osaka>
8,311

8,206
5,161

4,505
1,402

1,080

0

2017
Jan. Sep.

7,168

+4.2%
+3.1%

10,0005,000

22,322

+2.0%
+1.5%

(Room)

12.1

39,11430,564

+1.1%
+0.6%

(Room)

10
14.7

66,0840
Ratio of New Supply

Supply Forecast<Japan>(Room)

Overseas Travel

30

Postponed supply which had been plannedto open in 2017

+1.8%

+5.6%

+9.8%

+8.8%

+5.1%

2016

2017

2018

2019

2020~

Source: Estimated by the Asset Management Company using data from “Public Health Administration Report” by Ministry of Health,Labour and Welfare (MHLW), a weekly hotel & restaurant magazine (HOTERES), and Nikkei Telecom.
(*) Ratio of new supply is the number of new rooms to be supplied in a year to the stock of rooms at the beginning of the year. With
regard to the above data, please note that in case the number of rooms are stated as “to be determined” by hotels, the asset
management company has used 180, the average number of new supply of hotel rooms, for calculation.

26

Appendix 1
JHR’s Characteristics

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

Pursue UpsideManagement
contract structure

Fixed rent structure

Variable rent
structure

Revenue sharing
structure

Active Asset Management Strategies

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

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

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

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

Proportion of Rental Income

Proportion of Rent Structures(FY12/2017)(As of the end of December,2017)

Fixed rent only

13 properties

Variable rent(*)
Fixed rent, etc.

56%

44%

Variable rent, etc. (*)

31 properties(*) Variable rent
Rent from revenue sharing
Income from management contracts(*) Fixed rent + variable rent structure
Fixed rent + revenue sharing structure
Variable rent structure, Management contract structure28

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

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

Highcapability inachievinginternal
growthStrong ability
in acquiringproperties
Stablefinancingcapability

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

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

29

３．External Growth Strategy
Recognition of External
Environment
Trend of the Hotel
Investment Market
 Amid gradually recovering
economy, hotel assets have gained
a firm position as an investment
target due to increase in hotelrevenue resulting from stable
domestic demand and strong
growth of inbound demand mainly
from Asian countries. On the other
hand, since the yields of otherasset classes are decreasing andinvestors in hotel investment,
including private funds, areincreasing. Therefore, competition
to acquire hotel assets has become
intense in hotel investment market.
 New supply of hotels is on the rise,
responding to the increasing
number of inbound visitors.
Depending on specifications,locations, capability of hotel
operators, the superiority or
inferiority in competitiveness ofhotel may be seen more clearly.

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

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

30

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

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

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

31

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

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

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

32

６．Initiatives for Sustainability
Aiming for long-term growth to coexist with society and environment and working on to enhancesustainability based on suitable actions for ESG issues
Sustainability Policy
JHR and JHRA have established “Sustainability Policy”, which includes
important issues and initiatives.



Sustainability Policy•Monitoring and improvement of environmental performance in our
portfolio•

Promotion of comfortable, healthy, secure and safe hotels•

Promotion of ESG in value chains•

Consideration for and contribution to local communities•

Initiatives for our officers and employees•

Compliance as corporate citizens•

Improvement of transparency and engagement with our stakeholders

Hotel Nikko Alivila

Addition of Green Lease Provisions
Added “Green Lease Provisions” on the lease agreement with the Twelve
HMJ Hotels, JHR and JHRA are working on to improve environmental andenergy conservation in collaboration with HMJ Group.

Kobe Meriken Park
Oriental Hotel

Oriental Hoteltokyo bay

Namba Oriental
Hotel

Sheraton Grand Hotel Hotel Centraza Hakata Holiday Inn Osaka
Hiroshima
Namba

Oriental Hotel
Hiroshima

Hilton Tokyo Narita
AirportHotel Nikko
AlivilaAcquisition of BELS certification (*1)
JHR has acquired a BELS certification for our two properties, Hotel Nikko
Alivila and Mercure Okinawa Naha, for the first among J-REIT owned
properties (*2)

Mercure Okinawa Naha

Okinawa Marriott Resort& Spa

International Garden
Hotel Narita

Hotel Nikko Nara(*1) BELS (Building-Housing Energy-Efficiency Labeling System) is a display system of energy conservation performance of a building(*2) Investigated by the Asset Management Company based on public information

33

７．Benefits Program for Unitholders
JHR implemented benefits program for unitholders to obtain a better understanding, improve their satisfaction and expand the investor base.
JHR also expanded the benefits program in 2017 by adding four HMJ hotels, aggregated coverage to 15 hotels.


Eligible recipients of complimentary coupons
Complimentary coupons will be sent to those who hold ten or more JHR
units at the end of June every year (end of the midterm settlement)＜FY2017＞

Eligible Unitholders: 14,346(*) Complimentary coupons for restaurants are only available at selected hotels.

Valid period: One year between October 2017 and September 2018
Details of the benefits program
Five complimentary coupons for accommodations and five complimentary
coupons for restaurants (*)
10% discount from the best rate for accommodation by each hotel and 10%
discount for restaurants

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

Record of coupon redemption(One year from October 2016 to September 2017)＜Eligible Unitholders: 13,213＞
Accommodation
Restaurant
No. of Coupons No. of Coupon No. of Coupons No. of Coupon
Used
Users
Used
Users
1,451



The Nine HMJ Hotels

Kobe Meriken Park
Oriental Hotel

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Oriental Hotel
Hiroshima

Hotel Nikko
Alivila

1,977

2,900

8,167

The Six Accor Hotels

ibis Tokyo Shinjuku

ibis Styles Kyoto Station

ibis Styles Sapporo

New

Okinawa Marriott
Resort & Spa

Sheraton Grand
Hiroshima Hotel

Hotel Centraza Hakata

Holiday Inn
Osaka Namba

Mercure Sapporo

33

Mercure Okinawa Naha

Mercure Yokosuka

Appendix 2
Information on Properties

１．Property List (1/2)(As of December 31, 2017)
Appraisal ValueNo.

Property Name

1

Kobe Meriken Park Oriental Hotel

2
3

Hotel Type
(*1)

Grade
(*2)

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

No. of
Guest
Rooms

Location

Hyogo

22.5

10,900Age(*3)

10,06517th Period(as of 12.31.2016)
Appraisal
Value(JPY M)(*6)
14,40018th Period(as of 12.31.2017)

CAP Rate

Appraisal
Value(JPY M)CAP Rate

5.2%

15,1005.2%

Investment
Ratio(*7)

Revenue from
Real Estate
Operation(JPY1,000)(*8)

Full-service

Upper-middle

319

Oriental Hotel tokyo bay

Full-service

Mid-price

503

Chiba

22.7

19,90018,172

34,1004.5%

34,100Namba Oriental Hotel

Limited-service

Mid-price

258

Osaka

21.8

15,00014,73732,0004.3%

32,7004

Oriental Hotel Hiroshima

Full-service

Upper-middle

227

Hiroshima

24.3

4,100

4,160

4,250

7.3%

4,280

7.5%

1.3%

498,124

5

Hotel Nikko Alivila

ResortLuxury396

Okinawa

23.8

18,90018,363

29,2005.0%

31,5004.9%

5.9%

1,951,987

6

The Beach Tower Okinawa

ResortMid-price

280

Okinawa

13.8

7,610

6,754

9,420

4.7%

9,820

4.5%

2.4%

511,017

7

Hakone Setsugetsuka

ResortMid-price

158

Kanagawa

11.3

4,070

3,806

5,020

5.2%

5,220

5.0%

1.3%

294,946

8

Dormy Inn Kumamoto

Limited-service

Mid-price

291

Kumamoto

9.9

2,334

2,185

2,950

5.8%

2,960

5.8%

0.7%

9

the b suidobashi

Limited-service

Mid-price

99

Tokyo

31.4

1,120

1,234

2,040

4.3%

1,940

4.3%

0.4%

10

Dormy Inn EXPRESS Asakusa

Limited-service

Economy

77

Tokyo

20.8

999

961

1,300

4.1%

1,300

4.1%

11

Hakata Nakasu Washington Hotel Plaza

Limited-service

Mid-price

247

Fukuoka

22.9

2,130

2,041

4,350

4.7%

4,330

12

Nara Washington Hotel Plaza

Limited-service

Mid-price

204

Nara

17.8

2,050

1,838

2,430

5.2%

2,430

P/L from RealNOI
Estate Operation(JPY1,000)(JPY1000)
(*8)
(*8)

NOI Yield(Actual)
(*9)

3.4%

1,195,053

926,481609,294

8.5%

4.5%

6.2%

1,729,459

1,608,209

1,185,716

8.1%

4.3%

4.7%

1,600,053

1,499,846

1,325,638

10.0%

453,440

380,03211.1%

1,801,396

1,476,566

9.5%

468,095

340,735

6.2%

268,777

180,599

6.6%

194,460

171,456

131,367

7.3%

114,268

102,195

77,1669.1%

0.3%

63,99555,341

42,514

5.5%

4.7%

0.7%

240,000

225,000

200,000

10.6%

5.2%

0.6%

151,000

134,000

93,000

6.5%

13

R&B Hotel Ueno-hirokoji

Limited-service

Economy

187

Tokyo

15.8

1,720

1,751

1,920

4.1%

1,920

4.1%

0.5%

97,294

82,162

68,5884.8%

14

R&B Hotel Higashi-nihonbashi

Limited-service

Economy

202

Tokyo

19.8

1,534

1,495

2,050

4.7%

2,050

4.7%

0.5%

122,207

105,436

86,422

6.9%

15

Comfort Hotel Tokyo Higashi Nihombashi

Limited-service

Economy

259

Tokyo

9.9

3,746

3,593

5,320

4.5%

5,330

4.5%

1.2%

270,859

240,630

204,537

6.4%

16

Smile Hotel Nihombashi Mitsukoshimae

Limited-service

Economy

164

Tokyo

20.8

2,108

2,041

3,060

4.2%

3,060

4.2%

0.7%

152,882

137,802118,327

6.5%

17

Toyoko Inn Hakata-guchi Ekimae

Limited-service

Economy257

Fukuoka

16.3

1,652

1,456

2,680

4.7%

2,670

4.7%

0.5%

141,039

128,078

106,687

7.8%

18

Hotel Keihan Universal City

ResortMid-price

330

Osaka

16.5

6,000

5,985

14,6005.2%

13,6005.1%

1.9%

811,595

733,698

646,150

12.2%

19

Chisun Inn Kamata

Limited-service

Economy

70

Tokyo

14.7

823

792

1,410

4.5%

1,430

4.5%

0.3%

78,16470,921

59,515

8.6%

20

Hotel Vista Kamata Tokyo

Limited-service

Economy

105

Tokyo

25.9

1,512

1,465

1,990

4.5%

2,000

4.5%

0.5%

109,959

95,13771,644

6.3%

21

Hotel Sunroute Shinbashi

Limited-service

Mid-price

220

Tokyo

9.8

4,800

4,840

8,730

3.9%

8,740

4.0%

1.5%

412,327355,295

334,264

7.4%

22

Hilton Tokyo Bay

ResortLuxury

828

Chiba

29.5

26,05026,19236,0004.3%

36,100

4.3%

8.2%

1,929,388

1,631,807

1,454,530

6.3%

23

ibis Tokyo Shinjuku

Limited-service

Mid-price

206

Tokyo

37.4

7,243

8,136

9,290

4.2%

9,650

4.2%

2.3%

539,330

365,195

210,898

5.0%

24

ibis Styles Kyoto Station

Limited-service

Mid-price

215

Kyoto

8.8

6,600

6,712

10,900

4.3%

11,3004.3%

2.1%

597,320509,380

474,318

7.7%

36

１．Property List (2/2)(As of December 31, 2017)
Appraisal Value

No.

25

Property Nameibis Styles Sapporo

Hotel Type(*1)

Limited-service

Grade
(*2)

Mid-price

No. of
Guest
Rooms

Location

278

Hokkaido

Age(*3)

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

7.4

6,797

17th Period(as of 12.31.2016)
Appraisal
Value(JPY M)
(*6)

6,686

10,20018th Period(as of 12.31.2017)

CAP Rate

Appraisal
Value(JPY M)CAP Rate

4.9%

10,5004.9%

Investment
Ratio(*7)

Revenue from
Real Estate
Operation(JPY1,000)
(*8)

2.1%

707,094

P/L from RealNOI
Estate Operation(JPY1,000)(JPY1000)
(*8)
(*8)

572,177

496,076

NOI Yield(Actual)
(*9)

8.4%

26

Mercure Sapporo

Limited-service

Mid-price285

Hokkaido

8.7

6,000

5,931

10,3004.8%

10,5004.8%

1.9%

818,109537,104

460,135

9.0%

27

Mercure Okinawa Naha

Limited-service

Mid-price

260

Okinawa

8.4

3,000

2,916

7,620

4.8%

7,760

4.8%

0.9%

491,464

402,333

351,594

13.4%

28

the b akasaka-mitsuke

Limited-service

Mid-price

122

Tokyo

15.1

6,250

6,306

6,740

4.1%

6,010

4.1%

2.0%

249,719

231,296

209,4103.7%

29

the b ikebukuro

Limited-service

Mid-price

175

Tokyo

35.5

6,520

6,585

7,590

4.4%

7,330

4.4%

2.0%

360,195

334,768

304,606

5.1%

30

the b ochanomizu

Limited-service

Mid-price

72

Tokyo

18.4

2,320

2,357

2,590

4.2%

2,360

4.2%

0.7%

108,640

100,252

90,1484.3%

31

the b hachioji

Limited-service

Mid-price

196

Tokyo

31.4

2,610

2,693

3,070

5.2%

2,780

5.2%

0.8%

202,307

176,051

149,258

6.7%

32

the b hakata

Limited-service

Mid-price

175

Fukuoka

20.3

2,300

2,354

3,960

4.5%

4,160

4.5%

0.7%

252,182

240,061

219,561

10.4%

33

Hotel Francs

Full-service

Mid-price

222

Chiba

26.4

3,105

3,155

4,090

4.7%

4,050

4.7%

1.0%

300,000

235,793

187,282

7.6%

34

Mercure Yokosuka

Full-service

Mid-price

160

Kanagawa

24.2

1,650

1,669

2,040

4.7%

2,800

4.7%

0.5%

291,202179,336

147,888

10.9%

35

Okinawa Marriott Resort & Spa

ResortUpper-middle

361

Okinawa

12.9

14,95014,853

17,2005.0%

18,5005.0%

4.7%

1,215,761

1,127,058

895,7507.5%

36

ACTIVE-INTER CITY HIROSHIMA

Full-service

Luxury238

Hiroshima

7.3

17,32017,69418,700

4.6%

20,5004.6%

5.4%

1,482,412

1,060,219

873,824

6.1%

Limited-service

Mid-price

268

Tokyo

8.0

6,705

6,728

7,630

4.0%

7,630

4.0%

2.1%

350,191

329,982

290,543

4.9%

Full-service

Mid-price

194

Fukuoka

32.5

7,197

7,413

7,690

4.7%

8,490

4.7%

2.3%

865,634

623,730

373,763

8.7%

37

CANDEO HOTELS UENO-KOEN

38

Hotel Centraza Hakata

39

Holiday Inn Osaka Namba

Limited-service

Mid-price

314

Osaka

9.4

27,00027,12228,800

4.4%

27,2004.4%

8.5%

1,215,339

1,180,161

1,065,193

4.4%

40

HOTEL ASCENT FUKUOKA

Limited-service

Economy263

Fukuoka

18.7

4,925

5,187

5,340

4.8%

5,560

4.8%

1.5%

436,888285,802250,728

5.8%

（注12）

41

Hilton Nagoya

Full-service

Luxury

460

Aichi

28.9

15,25015,58815,8004.2%

15,7004.2%

4.8%

1,388,411

714,991

578,679

4.7%

42

Hilton Tokyo Narita Airport

Full-service

Upper-middle

548

Chiba

24.4

13,175

13,383

13,4004.7%

13,400

4.7%

4.1%

398,168

394,150

322,143-

43

International Garden Hotel Narita

Full-service

Mid-price

463

Chiba

21.6

9,125

9,258

9,430

4.9%

9,430

4.9%

2.9%

261,663259,270

200,013-44

Hotel Nikko Nara

Full-service

Upper-middle

330

Nara

19.9

10,373

10,558

11,200

4.9%

11,200

4.9%

3.2%

272,120

269,117

217,523---

11,486-19.5

319,474

317,229

398,770-439,390-

100.0%

25,475,553

21,424,619

17,563,899

6.7%

Total or Average(*1) Under the category of Hotel Type, “Full-service” is full-service hotel, “Resort” is resort hotel, and “Limited-service” is limited-service hotel.
(*2) Mainly based on ADR, etc., JHR has classified the hotels into four categories as “luxury,” “upper-middle,” “mid-price,” and “economy.”(*3) Average age: Weighted average calculated as follows. The sum of (acquisition price of each property x property age ) ÷Total acquisition price.
(*4) The acquisition price in the Purchase & Sale Agreement for the Beneficial Interest in Trust, etc. is indicated. (Consumption tax, amount equivalent to consumption tax, brokerage fee, and other purchase-related costs are excluded.)(*5) Book value as of the end of December 2017.
(*6) No.42 to No.44 state the appraisal value when they were acquired.
(*7) Percentage of the acquisition price of the each asset to the total acquisition price. Numbers beyond one decimal place is rounded off.
(*8) Actual for one year from January through December 2017. Since the lessees did not agree to disclose numbers in units of JPY1,000 for No. 11 and 12, amounts are rounded down to the nearest JPY million.
As No. 42 to 44 were acquired during the period, No.42 to 44 state the numbers after they were acquired.
(*9) As No. 42 to 44 were acquired during the period, NOI yield (actual) is not calculated. Also the NOI yield for the portfolio is calculated as follows：Total NOI for FY12/2017 (actual) ÷ total acquisition price of properties held as of the end of FY12/2017.

37

２．Summary of Lease Contracts （1/3）(As of the end of December 2017)

No.

Property Name

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Oriental Hotel Hiroshima

5

Hotel Nikko Alivila

6

The Beach Tower Okinawa

7

Hakone Setsugetsuka

8

Dormy Inn Kumamoto

9
10

Lease Type

Fixed-lease

Rent Structure(*1)

Fixed + Variable

LesseeHotel Operator/
Hotel Consulting
and Management
Company

Hotel Management Japan Co., Ltd.

Remaining
Contract
Term (*2)

Contractual Rent(*3)

Rent Modification Summary

82(Fixed rent)
JPY3,221M/year＋(Variable rent)
When the total GOP of the five
HMJ hotels exceeds GOP baseamount (JPY3,351M), the excess x
85% is paid.

20

8

JPY42M/month

Lease /MC Term

Okura Nikko HotelManagement Co.,Ltd.
Fixed-lease
Fixed-lease

Fixed
Fixed
Kyoritsu Maintenance Co., Ltd.

20

8

JPY24M/month12

5

JPY16M/month

Rent Modification Schedule（2018 to 2019）

TimingCondition (*4)

2018

2019

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

Jan. 2016

Structure wasmodified.

－

To be expired(Dec.)The same rent will be applied until
expiration of the contract.

－

－

－

－

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

－

－

－

－

Apr. 2017

Same

－

－

Apr. 2017

Contract was
renewed. (same)－－

Apr. 2015

Contract was
renewed. (same)

To be expired(Mar.)－－－

Fixed-lease

Fixed

Dormy Inn EXPRESS Asakusa

Lease

Fixed

20

2

JPY5M/month

Hakata Nakasu Washington Hotel
Plaza

Lease

Fixed

3

0

JPY20M/month

Lease

Fixed

20

2

JPY11M/month

Rent can be modified throughmutual agreement.

－

－

20

4

JPY8M/month

Rent can be modified throughmutual agreement.

Apr. 2011

Increased(＋3.0%)－－

JPY10M/month

Rent can be modified throughmutual agreement.

Same

To be expired(Mar.)－

Jan. 2013

Same

Under discussion(Jan.)－

11 Nara Washington Hotel Plaza

Washington Hotel K.K.
12 R&B Hotel Ueno-hirokoji
13 R&B Hotel Higashi-nihonbashi

Lease
Lease

Comfort Hotel Tokyo Higashi
14
Nihombashi

Fixed-lease

Smile Hotel Nihombashi
Mitsukoshimae

Lease

15

Rent Modification Summary(Acquisition to End of Dec. 201716 Toyoko Inn Hakata-guchi Ekimae

Fixed
Fixed
Fixed

20
Greens Co., Ltd.

Fixed+Revenue
THE KAMOGAWA GRAND HOTEL, LTD.
sharing0

Apr. 2013

20

10

JPY21M/month

Rent can be modified throughmutual agreement every five years.

20

2

JPY11M/month +Revenue sharing

Rent can be modified throughmutual agreement.

Apr. 2017

Contract was－
renewed. (same)
Increased (＋－9.4%)
Structure was－modified.
Contract was
renewed.
(the calculation－
method ofvariable rent was
modified.)
Contract was
renewed. (thecalculation
To be expired
method of(Dec.)
revenue sharing
was modified.)

－
－

Lease

Fixed

Toyoko Inn Co., Ltd.

30

13

JPY11M/month

No rule has been stipulated.

Oct. 2007

Lease

Fixed+Revenue
sharing

K.K. Hotel Keihan

20

3Nondisclosure(*5)

Nondisclosure(*5)

Jul. 2014

Fixed-lease

VariableSHR Hotels, Co.,
Ltd.

2

2

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

Jul. 201719 Hotel Vista Kamata Tokyo

Lease

Fixed+Revenue
sharing

Vista Hotel Management Co., Ltd.

41

JPY7M/month +Revenue sharing

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

Jul. 2015

20 Hotel Sunroute Shinbashi

Fixed-lease15

5

JPY18M/month +Revenue sharing

No rule has been stipulated.

－

－

－

－

21 Hilton Tokyo Bay

Fixed-lease

4

1

JPY157M/month +Revenue sharing

Rent can be modified throughmutual agreement.

Jul. 2015

Contract was
renewed.

To be expired(Dec.)－

17 Hotel Keihan Universal City

18 Chisun Inn Kamata

Solare Hotels &Resorts Co., Ltd.

Fixed+Revenue
Sotetsu Hotel Management Co., Ltd.
sharing
HiltonTHE DAI-ICHI
Fixed+Revenue
International
sharing
BUILDING CO., LTD.
Company38－

To be expired(Dec.)－

２．Summary of Lease Contracts （2/3）(As of the end of December 2017)
Hotel Operator/
Hotel Consulting
and Management
Company

Lease /MC Term

Remaining
Contract
Term (*2)

Contractual Rent(*3)

Rent Modification Summary

Management
contract

12

6

Amount equivalent to hotel GOP-

Management
contract

5

1

24 ibis Styles Sapporo-

Management
contract

5

25 Mercure Sapporo-

Management
contract

26 Mercure Okinawa Naha-Management
contract

27 Mercure Yokosuka

Fixed-lease

Variable

28 the b akasaka-mitsuke

Fixed-lease

29 the b ikebukuro
30 the b ochanomizu

Lease Type

Rent Structure(*1)

22 ibis Tokyo Shinjuku-

23 ibis Styles Kyoto Station

No.

Property Name

LesseeRent Modification Summary(Acquisition to End of Dec. 2017

Rent Modification Schedule（2018 to 2019）

TimingCondition (*4)

2018

2019

-

Jul. 2012

Structure wasmodified.

－－

Amount equivalent to hotel GOP

-

－

－

To be expired(Dec.)－

1

Amount equivalent to hotel GOP-

Dec. 2014

Structure wasmodified.

－

To be expired(Jan.)

15

11

Amount equivalent to hotel GOP

-

－

－

－

－

10

6

Amount equivalent to hotel GOP

-

－

－

－

－

AAPC Japan K.K.

5

1

Linked to hotel GOP

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

－

－

－

To be expired(Aug.)

Fixed+
Variable

Ishin Akasaka Operations, K.K.

7

4

JPY102M/year +Linked to hotel GOP

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

－

－

－

－

Fixed-lease

Fixed+
Variable

Ishin Ikebukuro Operations K.K.

7

4

JPY163M/year +Linked to hotel GOP

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

－

－

－

－

Fixed-lease

Fixed+
Variable

Ishin Ochanomizu Operations K.K.

7

4

JPY69M/year +Linked to hotel GOP

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

－

－

－

－

Fixed-lease

Fixed+
Variable

4

JPY98M/year +Linked to hotel GOP

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

－

－

－

－

32 the b hakata

Fixed-lease

Fixed+
Variable

Ishin Hakata Operations K.K.

7

4

JPY82M/year +Linked to hotel GOP

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

－

－

－

－

33 the b suidobashi

Fixed-lease

Fixed+
Variable

Ishin Suidobashi Operations K.K.

5

2

JPY85M/year +Linked to hotel GOP

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

Jul. 2015

Rebranded－－

34 Hotel Francs

Fixed-lease

Fixed

K.K. Bridal Produce

19

6

JPY25M/month

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

－

－

－

－

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

－

－

－

－

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

－

－

－

－

Rent can be modified throughmutual agreement every three
years.

Jul. 2016

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

－－－

To be expired(Dec.)

31 the b hachioji

35 Okinawa Marriott Resort & Spa

Fixed-lease

Fixed+
Variable

36 ACTIVE-INTER CITY HIROSHIMA

Fixed-lease

Fixed+
Variable

37 CANDEO HOTELS UENO-KOEN

Fixed-lease

Fixed

Fixed-lease

Fixed+
Variable

38 Hotel Centraza Hakata－

AAPC Japan K.K.

Ishin Hachioji Operations, Y.K.

Lagoon resort Nago Co., Ltd.

7

(Fixed rent)
JPY550M/year +(Variable rent)
When the total GOP exceeds GOPbase amount (JPY700M), theexcess x 90% is paid.
(Fixed rent)
JPY348M/year +(Variable rent)
When the total GOP exceeds GOPbase amount (JPY468M), theexcess x 82.5% is paid.

5

3STARWOOD ASIA
PACIFIC HOTELS &RESORTS PTE LTD.
(*6)

11

9

Candeo Hospitality Management, Inc.

20

12

Nondisclosure (*5)

2(Fixed rent)
JPY400M/year +(Variable rent)
When the total GOP exceeds GOPbase amount (JPY425M), theexcess x 90% is paid.

K.K. A.I.C
Hiroshima
Management

Hotel Centraza Co., Ltd.

439

２．Summary of Lease Contracts （3/3）(As of the end of December 2017)

No.

Property Name

Lease Type

Rent Structure(*1)

LesseeHotel Operator/
Hotel Consulting
and Management
Company

Lease /MC Term

Remaining
Contract
Term (*2)

Contractual Rent(*3)

Rent Modification Summary

Rent Modification Summary(Acquisition to End of Dec. 2017

Rent Modification Schedule（2018 to 2019）

TimingCondition (*4)

2018

2019

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

－

－

－

－

39 Holiday Inn Osaka Namba

Fixed-lease

Fixed+
VariableOW Hotel Operations KK

15

13(Fixed rent)
JPY576M/year(Variable rent) +when the total GOP exceeds GOPbase amount (JPY650M), theexcess x 92.5% is paid.

40 HOTEL ASCENT FUKUOKA

Lease

Fixed

NIKOH SANGYO co., Ltd.

20

1

Nondisclosure (*5)

Rent can be modified throughmutual agreement every three
years.

－－－To be expired(Apr.)

41 Hilton Nagoya

Lease

Variable

41

12

Nondisclosure (*5)

Rent can be modified throughmutual agreement.

－

－

－

－

19

(Fixed rent)
JPY444M/year(Variable rent) +When the total GOP exceeds GOPbase amount (JPY550M), theexcess x 86.5% is paid.

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

－

－

－

－

9

(Fixed rent)
JPY336M/year +(Variable rent)
When the total GOP exceeds GOPbase amount (JPY360M), theexcess x 98% is paid.

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

－

－

－

－

3

(Fixed rent)
JPY420M/year +(Variable rent)
When the total GOP exceeds GOPbase amount (JPY470M), theexcess x 91.5% is paid.

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

－

－

－

－

Hilton Tokyo Narita
42
Airport43 International Garden Hotel Narita

44 Hotel Nikko Nara

Fixed-leas

Fixed+
Variable

Nagoya Hilton Co.,Ltd.

HiltonInternational
Company

KK NaritaKosuge Operations

Fixed-lease

Fixed + Variable

KK NaritaYoshikura Operations

Fixed-lease

Okura Nikko Hotel
Hotel Management
Fixed + Variable
Management Co.,
Co., Ltd.
Ltd.

20

10

3

(*1) Rent structure is as follows:(*4) Details of “Modified Structure” are as follows.

Fixed: Fixed rent

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

Variable: Variable rent

No.17：Revenue sharing structure has been applied in addition to fixed rent.
No.22、24： JHR has commenced direct management contract.

Management contract: Management contract
Fixed + Variable: Property paying both fixed and variable rent(*5) Information is undisclosed as the lessee did not agree to disclose detail of the rent agreement.

Fixed + Revenue sharing: When the sales of the hotel (lessee) exceed pre-determined amount, additional rent is paid.

(*6) The hotel operator was changed to Luxury Hotels International of Hong Kong Limited in Jan. 1, 2018.

(*2) Remaining contract term as of the end of December, 2017.
(*3) Amount including car park and CAM without tax.

40

３． Major CAPEX III by Hotel* (Numbers in parentheses are CAPEX, amounts : JPY M)

FY12/2012

FY12/2013

FY12/2014

FY12/2015

FY12/2016

FY12/2017

FY12/2018 Plan

Kobe Meriken Park
Oriental Hotel

-

-

-

Chapel (36)

Guest rooms on 7F(50)Balconies on each floor (62)Bar (85)

Bridal salon (76)

Private rooms at restaurant
and balcony, etc. on 3F (16)Oriental Hotel Tokyo Bay-

Restaurant(45)--Guest rooms on 4F (101)-

Guest rooms on 11F to 12F(120)

Namba Oriental Hotel-

Corner rooms on 5F to
8F (10)--

Guest rooms on 9F (91)

Guest rooms on 7F (77)

Guest rooms on 6F (78)-

Guest rooms on 9F (55)Restaurant (31)-Guest rooms on 1F, etc. (16)Hotel Nikko Alivila--

Guest rooms on 3F to 8F
of North building and 3F
to 5F of central
building(333)

Oriental Hotel Hiroshima--

Banquet room on 23F(10)-

Guest rooms on 7F to 10F(43)Banquet room on 4F (38)-

Chapel (10)Ibis Tokyo Shinjuku

Lobby and restaurant on
2F, and guest rooms on
3,5,7,9F
(170)

-

-

-

Guest rooms on 3F to 10F(192)

Guest rooms on 3F to
10F (312)-

Holiday Inn Osaka
Namba

-

-

-

-

-

-

Guest rooms on 6,7,12F(90)

Mercure Hotel Sapporo

-

-

-

-

-

-

Banquet room (29)The b Ikebukuro

-

-

-

-

-

-

Guest rooms on 3F to 10F,
etc. (23)41

4．The Five HMJ Hotels – Highlights
Changes in Total Sales and GOP
25,00023,304
21,139Total Sales(JPY M)

GOP

21,39620,00020,223

21,994

21,312

6,941

6,296

23,905

7,591

23,647

7,765

24,076
8,079

8,000
7,500
6,500

5,645

6,000

5,158

5,136

8,500

7,000

6,302

6,155
5,696

15,00022,29623,186

GOP

Total Sales

5,500
5,000
4,500

10,000
CY2008

CY2009CY2010CY2011CY2012

CY2013

CY2014

CY2015

CY2016

CY2017

CY2018(Forecast)

88.4%

91.0%

90.7%

20,153

19,856

20,206

17,80718,06018,328Changes in KPI

ADR・RevPAR

22,00020,00077.9%

18,00016,00017,97014,00012,00077.8%

RevPAR
73.8%

80.4%

Occupancy Rate
76.7%

82.7%

86.1%

17,197

13,999
CY2007

CY200887.7%

19,212

18,46314,36786.9%

12,696
CY200915,98012,845

CY201015,846
12,160CY2011

17,297

17,551

14,886

15,245

16,20016,843

13,400CY201242

100%

Occupancy Rate

ADR

(JPY)

0%
CY2013

CY2014

CY2015

CY2016

CY2017

CY2018(Forecast)5．Portfolio Map
Total Assets

Limited-service hotel

JPY319.4B

Resort hotel

Full-service hotel

No. of Hotels

25

26

Kobe Meriken Park
Oriental Hotel

44 Hotels

10

3

2

1

Oriental Hoteltokyo bay

11

5

4

6

Namba Oriental
Hotel

Oriental Hotel
Hiroshima

Hotel Nikko
Alivila

13

14

15

12

7

8

9

The Beach Tower
Okinawa

Hakone Setsugetsuka

Dormy Inn
Kumamoto

16

17

18

the b suidobashi

19

No. of Guest Rooms

11,486 Rooms
3

24
31

18 39

32 38 40

22

41
1

12 44

20

21

22

23

24

25

26

Hotel Vista
Kamata Tokyo

Hotel Sunroute
Shinbashi

Hilton Tokyo Bay

ibis Tokyo
Shinjuku

ibis Styles
Kyoto Station

ibis Styles Sapporo

Mercure Sapporo Mercure
Okinawa Naha

Smile Hotel
Nihombashi
Mitsukoshimae

Toyoko Inn
Hakata-guchi
EkimaeHotel Keihan
Universal City

Chisun Inn
Kamata2728

the b akasaka-mitsuke

29

30

31

32

33

34

35

36

the b ikebukuro

the b ochanomizu

the b hachioji

the b hakata

Hotel Francs

Mercure Yokosuka

Okinawa Marriott
Resort & Spa

ACTIVE-INTER CITYHIROSHIMA (Sheraton
Grand Hiroshima
Hotel）

Tokyo 23 wards

4 36

30
13 37

29

10

9

23
35

R&B Hotel Higashi- Comfort Hotelnihonbashi
Tokyo Higashi
Nihombashi

42 43
34

11 17

5

Nara Washington R&B Hotel
Hotel Plaza
Ueno-hirokoji

2 33
7

8

Dormy Inn
Hakata Nakasu
EXPRESS Asakusa Washington Hotel
Plaza

16

21

14 15
28

Acquired in 2017
37

38

39

40

41

42

43

44

CANDEO HOTELS
UENO-KOEN

Hotel Centraza Hakata

Holiday Inn Osaka
Namba

HOTEL ASCENTFUKUOKA

Hilton Nagoya

Hilton Tokyo Narita
AirportInternational Garden
Hotel Narita

Hotel Nikko Nara

6
19

27
20

43

Appendix 3
Investors Composition and Investment Unit Price

１．Major Unitholders and Classifications of Unitholders
Top Ten Major Unitholders
As of the End of June 2017
Name

Rank

1
2
3

As of the End of December 2017596,908
410,753

Percentage
(*)
15.86
10.91

359,163

9.54

3
4
5
6
7
8

No. of UnitsJapan Trustee Service Bank, Ltd. (Trust)
The Master Trust Bank of Japan, Ltd. (Trust)
Trust and Custody Services Bank, Ltd. (Securities Investment
Trust)

4

Nomura Bank (Luxembourg) S.A.

163,923

4.35

5
6
7
8
9

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

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

3.76
2.15
1.58
1.55
1.46

50,729

1.34

Total

1,977,039

52.55

10

(*)

Name

Rank

1
2

9
10

No. of Units

The Master Trust Bank of Japan, Ltd. (Trust)Japan Trustee Service Bank, Ltd. (Trust)
Trust and Custody Services Bank, Ltd. (Securities Investment
Trust)The Nomura Trust and Banking Co., Ltd. (Investment Trust)
The Bank of New York, Non-Treaty JASDEC AccountState Street Bank & Trust Company 505012
Shikoku Railway Company
State Street Bank & Trust Company 505223
CBNY DFA INTERNATIONAL REAL ESTATE SECURITIESPORTFOLIO
STATE STREET BANK WEST CLIENT TREATY 505234
Total

609,417563,882

Percentage
(*)
15.19
14.05

186,334

4.64

183,404
83,266
71,91658,31155,442

4.57
2.07
1.79
1.45
1.38

53,933

1.34

47,9241.19

1,913,829

47.71

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

Owners of the Investment Units
As of the End of June 2017
No. ofInvestors
Individuals & Others 30,801

No. ofUnits
404,776

Financial Institutions(Incl. Securities Firms)

137

1,801,222

378

127,515340

1,428,394

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

No. of Investors
1.1%
0.4%

10.7%

1.0%
37.9%

3.3%

Other Domestic
Firms

No. ofOwnersInvestors
Individuals & Others
34,113

No. ofUnits
471,932

Financial Institutions(Incl. Securities Firms)

152

1,869,983

414

131,309367

1,537,623

35,046

4,010,847

Other Domestic Firms
Foreign Firms &Individuals

47.8%

97.2%

31,656 3,761,907
Financial Institutions(Incl. Securities Firms)

As of the End of December 2017

No. of Units

Total

No. of Investors

No. of Units

1.1%
0.4%

11.7%

1.0%
38.3%
46.6%

97.3%
3.2%

Foreign Firms &Individuals

Percentage of investors is percentage of owners in each segment to the total number of investors in JHR, and percentage of investment units is percentage of investment units owned by each segment to the total investment units issued as of respective date.
(Both rounded off to one decimal place.)45

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

Price of the investment unit:
JPY80,900
Total market capitalization:
JPY324.5B(Based on the closing price of January 31, 2018)(JPY)
120,000

Market Capitalization
Investment Unit Price of JHR

6/20151/2016

PO (*2) JPY10.7B

PO (*2) JPY14.6B

7/2016
PO (*2) JPY34.7B

6/2017
PO (*2)

JPY18.6B(JPY M)

1/2015450,000

PO (*2) JPY15.6B

400,000

100,000

80,0004/20139/2014350,000

PO JPY20.5B

PO JPY10.1B

300,000
250,000

(*1)

(*2)

Price of the real estate investment
securities may fall depending on thefluctuations of price of the real estate
under management or profitability, etc.,
and investors may suffer losses. Investors
may also suffer losses through thebankruptcy or deteriorated financial
condition of the issuer. With reference tothe risk of investment in JHR units, see
Securities Registration Statement of JHR
dated June 19, 2017 and Semi-annual
Financial Report dated September 20,
2017.

60,0009/2012
PO (*2) JPY5B

200,000

40,000150,000
100,000

20,00050,00000Includes OA.

Comparison with
600
REIT Index and TOPIX of
500
Tokyo Stock Exchange(TSE)

Investment Unit Price of JHR

TSE REIT Index

400(*) 100 is the closing price of JHR unit, REIT
index and TOPIX at TSE dated April 2,
2012. REIT Index of TSE is an index of aweighted average of the market
capitalization of all REITs listed on TSE.

300

200

100

0

46

TOPIX

Appendix 4
Summary of the Asset Management Company

１．Summary of the Asset Management Company
Company

Japan Hotel REIT Advisors Co., Ltd.

Location

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

Establishment

August 10, 2004

Capital

JPY300M as of December 31, 2017

Shareholders

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

Representative Director

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

Registration and Licenses

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

Organization Chart

Shareholders’ Meeting
AuditorBoard of Directors’ Meeting

Investment (and Operation)
Committee

Compliance Committee
Representative Director
Compliance Office

Investment Division

Asset Management

Acquisitions

Operations Division

Finance & Planning Division

Finance & Planning48

Accounting &ReportingGeneral Affairs

Investor
Relations２．Features and Governance of the Asset Management Company
 Japan Hotel REIT Advisors Co., Ltd. (JHRA) is an asset management company of Japan Hotel REIT Investment Corporation, a real estate investment trustin Japan (J-REIT), specializing in hotel assets.
 JHRA holds up a mission statement, which is “Provide attractive hotel investment opportunities to investors as a professional of investment andmanagement of hotel assets. Gain a creditability from our stakeholders and contribute to local communities and society through investment andmanagement in hotel assets.” It manages JHR’s assets with high degree of professionalism and determined independence.

Advanced Expertise•

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

•

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

•

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

•

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

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

49

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

50