[Provisional Translation Only] This English translation of the original Japanese document is provided solely for information purposes. Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail. June 26, 2017 Issuer Ichigo Hotel REIT Investment Corporation (3463) 1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo Representative: Osamu Miyashita, Executive Director www.ichigo-hotel.co.jp/english Asset Management Company Ichigo Investment Advisors Co., Ltd. Representative: Wataru Orii, President Inquiries: Hiroto Tajitsu, Head of Administration Tel: +81-3-3502-4892
Ichigo Hotel REIT Operating Results – May 2017
Portfolio Revenue, RevPAR, Occupancy, and ADR Total (19 Hotels – excludes Grandpark-Inn Yokohama)
Variable Rent Hotels (12 Hotels)
Revenue, RevPAR, Occupancy, and ADR by Hotel
The above data are as provided by the hotel operators or as calculated by Ichigo 1. Investment Advisors based on information provided by the hotel operators. The data have not been audited and thus its accuracy cannot be guaranteed and may not match data disclosed in future Financial Reports. Revenue is revenue from accommodations and related services only. Rent from retail 2. tenants at Hotel Vista Premio Kyoto, Chisun Inn Osaka Hommachi, and Smile Hotel Tokyo Asagaya is not included. 3. RevPAR (Revenue Per Available Room) is calculated with the following formula: RevPAR = Total Revenue from accommodations (excluding restaurant charges and other service fees) / number of available guest rooms. 4. Occupancy is calculated with the following formula: Occupancy = Total number of guest rooms occupied during the period / (total number of guest rooms * number of days hotel was in operation during the period) Occupancy may exceed 100% in the following cases: 1) a guest had pre-paid for a guest room but checked out early, allowing the guest room to be occupied by a different guest; or 2) a guest room is occupied for less than one day by different guests. 5. ADR (Average Daily Rate) is calculated with the following formula: ADR = Total revenue from accommodations (excluding restaurant charges and other service fees) / number of guest rooms occupied during the period. Data for two hotels, Hotel Suave Kobe Asuta and Hotel Livemax Nihombashi- 6. Hakozaki, are consolidated under Other, because the hotel operators did not provide consent to disclose hotel-specific data. 7. While Hotel Suave Kobe Asuta's lease contract includes a variable rent clause, it has never been triggered. Because Ichigo Hotel REIT does not anticipate receiving variable rent at this hotel, it has been classified as a fixed rent hotel. 8. Grandpark-Inn Yokohama acquired in March 2017 is excluded from the above data, because the hotel operator did not give consent to disclose hotel-specific data that would allow for year-on-year comparisons.
Explanation of Changes
Revenue, RevPAR, Occupancy, and ADR increased year-on-year across all of variable rent hotels, fixed rent hotels, and the total portfolio. At variable rent hotels, which are a more significant contributor to Ichigo Hotel REIT's earnings, revenue and RevPAR increased at nine of the twelve hotels. Although the unavailability of some guest rooms at Nest Hotel Naha because of renovation work this May negatively affected results, this was more than offset by strong year-on-year increases at Nest Hotel Osaka Shinsaibashi and Smile Hotel Tokyo Asagaya, both which had fewer available rooms last May because of renovations, and at Valie Hotel Tenjin which had experienced a decline in tourist demand after last year's Kumamoto earthquake.
Value-Add Actions
Ichigo Hotel REIT is renovating Smile Hotel Tokyo Asagaya in June and July to convert 28 guest rooms on the fifth floor to accommodate diverse traveler needs (forecast ROI 34.2%). Currently, 70% of Smile Hotel Tokyo Asagaya's rooms are singles, making it difficult for it to cater to two or more guests traveling together. The renovation will increase guest capacity of the 28 guest rooms by 70% to allow the hotel to better capture growing leisure travel demand. Ichigo Hotel REIT will continue to work closely with its hotel operator partners in carrying out value-add capex that increases guest satisfaction and drives higher earnings.