STATEMENT ON PRINCIPAL ADVERSE IMPACTS OF INVESTMENT DECISIONSON SUSTAINABILITY FACTORSThe following is the adverse sustainability impact statement of Japan Hotel REIT Investment Corporation(“JHR”) pursuant to Regulation (EU) 2019/2088 (“SFDR”). We have no employees in accordance with theprohibition on having employees under the Act on Investment Trusts and Investment Corporations of Japan, andrely on Japan Hotel REIT Advisors (the “Asset Manager”) to manage and operate the properties in our portfolio.
JHR and the Asset Manager are hereinafter referred to collectively as “we”, “us” or “our”.
1. Summary
Pursuant to Article 4 of the Delegated Regulation C(2022)1931 supplementing SFDR (the “SFDR DelegatedRegulation”), JHR is required to publish on its website the information referred to therein covering the periodof one calendar year. JHR is a Japanese real estate investment trust, commonly known as J-REIT, and has noemployees, relying on the Asset Manager for the management and operation of its properties. The Asset Manager
collects and compiles the ESG performance data based on 12-month period ending in March of every year. A
recalculation and translation of the data into the reference period of one calendar year would most likely leadto inaccuracies and would therefore provide a potentially less accurate overview of the required information
than using the approved and validated data for the period from April 1, 2023 to March 31, 2024. This reference
period is sufficiently compatible with, and shows results that do not materially differ from, those that would be
produced using the calendar year-based reference period noted in the SFDR Delegated Regulation.
We consider principal adverse impacts of our investment decisions on sustainability factors. The present
statement is our consolidated statement of the principal adverse impacts on sustainability factors (“PAI”). The
statement covers the reference period from April 1, 2023 to March 31, 2024 (unless otherwise stated). The
statement will be reviewed at least once during every 12 months.
We and the Asset Manager are making efforts to enhance the sustainability of our business through considerationof ESG (Environment, Social & Governance) issues, on the belief that sound management, which enables us toco-exist in harmony with society and our environment, will improve unitholder value over the medium to longterm. The Asset Manager established a Sustainability Policy in December 2017 and is pursuing a series of ESG
measures, including reduction of our environmental impact in consideration of all of our stakeholders. InDecember 2021, in order to further enhance our ESG initiatives, we identified the issues that we consider to be
most material and are promoting measures to address those issues.
We use the definition of PAI as described in Recital 20 of SFDR being “those impacts of investment decisionsand advice that result in negative effects on sustainability factors,” with sustainability factors referring toenvironmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters
as defined in Article 2 (24) of SFDR.
We believe that investment decisions that negatively affect climate or other environment-related resources, orhave negative implications for society, can have a significant impact to risk and value creation for our unitholders.
To this end, we consider PAI of our investment decisions throughout all major steps of the investment decisionand property management process throughout the lifecycle of the properties in our portfolio.
Please note that SFDR requirements, including the scope of their application to issuers outside the European
Economic Area, continue to evolve. We are therefore taking a principles-based approach to compliance with theSFDR disclosure standards, which are subject to change.
2. Description of principal adverse sustainability impacts
Nearly all types of economic activity have the potential to impact various PAI indicators, both positively andadversely. We aim to manage the risk connected to PAI from our investment decisions in several ways, including

general screening criteria, due diligence and our ESG initiatives. Some of the PAI indicators listed below are
currently already being monitored and reported. As the availability of data improves, it is our intention that moreindicators will be added.

Table 1
Description of the principal adverse impacts on sustainability factors
Indicators applicable to investments in real estate assets
Adversesustainability
indicator

MetricImpact in
2023

Impact in
2022

Impact in
2021

Explanation

Actionstaken, andactions
planned andtargets set
for the nextreference
periodFossilfuels

17.
Exposure
to fossil
fuels
throughrealestateassetsShare ofinvestments
in realestateassetsinvolved intheextraction,storage,transport ormanufactur
e of fossil
fuels

N/A

N/A

N/A

We do notinvest in realestate assets
involved in theextraction,storage,transport ormanufactureof fossil fuels.

N/A

Energyefficienc
y18.
Exposure
toenergyinefficien
t realestateassetsShare ofinvestments
in energyinefficient
real estate
assets

As ofDecember
31, 2023,
83.5% ofourproperties
were not“EligibleGreenProjects”(as definedto theright)
based ongross floor
area.

As of
December31, 2022,
82.8% ofourproperties
were not“EligibleGreenProjects”(as definedto the right)
based ongross floor
area.

As of
December31, 2021,
82.8% ofourproperties
were not“EligibleGreenProjects”(as definedto theright)
based ongross floorarea.

To track theenvironmental
performanceof ourproperties, werely on
certifications
issued bythird-party
organizations,such as theComprehensiv
e Assessment
System for
Built
EnvironmentEfficiency(“CASBEE”)
for Buildings
and BuildingHousingWe
implement as
appropriate
measures toreduce theenvironmenta
l impact ofour properties
followingacquisition,including by
obtaining
environmenta
lcertifications
such asCASBEE orBELS.

Energyefficiency
Labeling
System(“BELS”)
Evaluation,and otherequivalentcertifications.
We call our
property thatreceives any
suchcertifications a“GreenCertifiedAsset”. With
respect to
CASBEE, weconsider aproperty tohave sufficientenvironmental
certification if
it received B+Rank or higher
out of theCASBEE
rankingsystemfeaturing RankS (excellent),
Rank A (verygood), Rank
B+ (good),
Rank B(slightlyinferior) andRank C(inferior).
With respectto BELS
certifications,
we consider aproperty tohave sufficientenvironmental
certification if
it received 2stars or higher
out of BELS’
five-starrankingsystem.

Table 2
Additional climate and other environment-related indicators
CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS
Adversesustainability
impactAdverse impact on sustainability factors (qualitative orquantitative)

MetricIndicators applicable to investments in real estate assets
Greenhouse gasemissions

18. GHG emissions
Total GHG emissions generated by properties owned were 91,286 tCO2 (in FY2017 (base year)), 62,253 t-CO2 (in FY2020), 68,633 tCO2 (in FY2021), 74,933 t-CO2 (in FY2022) and 81,856 t-CO2 (inFY2023).
We aim to reduce GHG emissions by 30% per floor area in ourportfolio (GHG emissions intensity) compared to FY2017 until 2050
as a long term target.
Note 1: The above amounts are calculated over the period from April
1 to March 31 of the following year.
Note 2: Amount of GHG emissions are calculated based on"Institution of calculation, reporting and disclosure of amount ofemissions by greenhouse effect gas" established by Ministry of theEnvironment.

Scope 1 GHG
emissions generated
by real estate assets
Scope 2 GHG
emissions generated
by real estate assets
From 1 January 2023,
Scope 3 GHG
emissions generated
by real estate assets
Total GHG emissions
generated by realestate assets

Table 3
Additional indicators for social and employee, respect for human rights, anti-corruption and antibribery matters
SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION AND ANTIBRIBERY MATTERS
Adversesustainabilityimpact

Adverse impact on sustainability factors (qualitative orquantitative)

MetricIndicators applicable to investments to the Asset Manager or tenantsSocial andemployeematters

5. Lack of grievance/complaints handling mechanism related toemployee matters

Share of investments ininvestee companies
without any
grievance/complaints

All of the Asset Manager’s officers and employees are provided
whistleblower protection.

handling mechanism
related to employeematters

The Asset Manager has established whistleblower rules and awhistleblowing hotline that allows its officers and employees(including contract and temporary employees) to report orconsult about potential harassment, fraud or other inappropriate
acts. In accordance with the Whistleblower Protection Act ofJapan, the rules protect whistleblowers by prohibiting
mistreatment upon whistleblowing, allowing anonymous reports
and keeping whistleblowers’ reports confidential, and stipulate
procedures to find and correct reported acts, including
investigation methods and disciplinary actions for those who arefound to have engaged in inappropriate behavior. In addition toan in-house contact, a whistleblower may consult an outside
attorney who has no business relationship with the AssetManager.
Anti-corruption
and anti-bribery

15. Lack of anti-corruption and anti-bribery policies
The Asset Manager has compliance policies addressing anticorruption and anti-bribery that apply to all of its officers andemployees.
The Asset Manager stipulates in its Code of Compliance andCompliance Manual that all of its officers and employees areprohibited from providing favors or benefits to civil servants ofJapan or other countries or persons deemed as such, inaccordance with Japanese and international laws. Furthermore,
provision or acceptance of favors or benefits that exceed thescope of courtesy that would be ordinary course based on sociallyaccepted conventions is prohibited whether any business-relatedtransaction takes place as a result.

Share of investments inentities without policies
on anti-corruption andanti- bribery consistent
with the United Nations
Convention against
Corruption

Based on internal audits and other reviews that it has conductedto date, the Asset Manager has not found any favors or gifts that
contravene relevant laws. Moreover, there have been noviolations of corruption-related laws or administrative sanctions.
17. Number of convictions and amount of fines for violation ofanti-corruption and anti-bribery laws
None of the tenants of our hotel properties have, to the best ofour knowledge, been convicted of or fined for violations of anticorruption and anti-bribery laws.
Please see the item 15 above for the Asset Manager.
For tenants of our hotel properties, we conduct due diligence
review when entering into lease agreements and reject thosefound to have been fined for violations of anti-corruption andanti-bribery laws.

Numbers of convictions
and amount of fines forviolations of anticorruption and antibribery laws by investee
companies

For descriptions of actions which JHR takes and will take with respect to the PAI indicators, please refer to ourESG website: https://www.jhrth.co.jp/en/esg/index.html.

3. Description of policies to identify and prioritize principal adverse sustainability impacts
Subject to data availability, we monitor the selected PAI indicators for the existing properties in our portfolio.
Prior to our investment in a property, we conduct due diligence review of the property, including ESG due
diligence, which includes selected PAI indicators. The due diligence findings related to selected PAI indicators
are reported and reviewed prior to the investment decision.
The Asset Manager tracks and monitors the property-level environmental performance indicators of ourproperties leased to HMJ Group (59.9% of our portfolio based on gross floor area) including the Green-certifiedAssets, to assess the environmental performance of our portfolio. The Asset Manager’s ESG Promotion
Committee, which generally meets at least once every quarter, uses the data to assess progress made against
targets, and deliberates on necessary action plans in order to implement initiatives continuously andsystematically based on our Sustainability Policy. The ESG Promotion Committee consists of the AssetManager’s management and officers and employees chosen from various groups involved in promoting ESG,
with the President & CEO acting as the chair and the Director & Head of Finance and Planning acting as theoperating officer.
For further information, please refer to our ESG website: https://www.jhrth.co.jp/en/esg/index.html.
4. Engagement policies
Due diligence and screening
Prior to our investment in a property, the Asset Manager conducts due diligence review of the property, including
the assessment of compliance with applicable environmental laws and ordinances, environmental performanceand environmental and disaster risks, as well as investigation into hazardous substances and soil contamination.
We do not consider investing in properties that do not meet the standards for soil contamination and otherenvironmental contamination in accordance with the Air Pollution Control Act and the Soil Contamination
Countermeasures Act of Japan and other environmental laws and ordinances. However, from time to time weacquire properties not meeting the standards as long as they are deemed fixable promptly after acquisition.
Engagement
We implement, in collaboration with tenants and property managers, various environmental measures, including
energy conservation at some of our properties. We have included in our leases with HMJ Group hotels Green
Lease provisions that require our tenants to collect energy consumption data and provide them to us (19properties, equal to 59.9% of our portfolio based on gross floor area, as of December 31, 2023). We analyze thedata provided by our tenants and consider renovation options to improve environmental performance andoptimize facilities management.
Hotel Nikko Alivila participates in Churaumi clean-up activities every year in Yomitan, hosted by Yomitan
Village in Okinawa. Nirai Beach is located in front of Hotel Nikko Alivila, which is famous for having one of
the most beautiful ocean waterfronts on Okinawa’s main island. The hotel staff cleans the beach every morningand conducts beach preservation activities, and as a result, visitors are able to observe sea turtles laying eggs andeggs hatching on the beach. Hotel Nikko Alivila is a member of the Sea Turtle Association of Japan.

5. References to international standards
The Task Force on Climate-related Financial Disclosures (“TCFD”) was established by the Financial Stability
Board (FSB) to develop recommendations for more effective climate-related disclosures. In November 2021,
the Asset Manager expressed support for the TCFD recommendations, which are designed to help companies
provide better information to support informed capital allocation, and joined the TCFD Consortium, anorganization comprised of Japanese companies that support the recommendations and discuss initiatives aimed
at effective information disclosure by companies and linking of disclosed information to appropriate investment
decisions by financial institutions.
6. Historical comparison
See Table 1, Table 2 and Table 3 above.