Invincible Investment Corporation
December 2023 Fiscal Period Results
(July 1, 2023 to December 31, 2023)
TSE Code : 8963
February 26, 2024
Table of Contents
Ⅰ . Executive Summary | 2~3 | |
Ⅱ. Summary of December 2023 FP Results and 2024 Forecasts | ||
Ⅱ-1. Financial Highlights for December 2023 FP | 4 | |
Ⅱ-2. | Operating Revenue Composition | 5 |
Ⅱ-3. Summary of June 2024 FP Forecast | 6 | |
Ⅱ-4. Summary of December 2024 FP Forecast | 7 | |
Ⅱ-5. Impact from the 2024 Noto Peninsula Earthquake | 8 | |
Ⅱ-6. | Domestic Hotel KPIs (Past performance and Forecasts for 2024) | 9 |
Ⅱ-7. | Cayman Hotel KPIs (Past performance and Forecasts for 2024) | 10 |
Ⅱ-8. | Capital Expenditures and Depreciation | 11 |
Ⅲ. Summary of Properties Acquired in August 2023
Ⅲ-1. | Summary of Properties Acquired | 12 |
Ⅲ-2. | Change in Hotel Portfolio | 13 |
Ⅲ-3. | Actual KPI of the Properties Acquired in August 2023:Fusaki Beach Resort | 14 |
Hotel & Villas
Ⅳ. Status of Hotel Operations and Market
Ⅳ-1. | Situation in Japan and Changes in INV's Hotel Occupancy Rate | 15 |
Ⅳ-2. | Recovery Trends in KPIs for INV's 75 Domestic Hotels | 16 |
Ⅳ-3. | Initiatives by MHM | 17 |
Ⅳ-4. | Change in GOP for 73 Hotels Managed by MHM | 18 |
Ⅳ-5. | MHM: Future Outlook and Strategy | 19 |
Ⅳ-6. | Initiatives by Sheraton Grande Tokyo Bay Hotel (SGTB) | 20 |
Ⅳ-7. | Update of the Status of the Cayman Islands | 21 |
Ⅳ-8. | Airlines Serving the Cayman Islands and Moves to Alleviate the Pilot | |
Shortage in the U.S. | 22 | |
Ⅳ-9. | Status of New Hotel Development in Japan | 23 |
Ⅳ-10. | Status of Hotel Stock in Japan | 24 |
Ⅳ-11. | Trial Calculation: Business vs. Leisure Demand | 25 |
Ⅳ-12. | Status of Overseas Travel | 26 |
Ⅳ-13. | Inbound Market | 27~29 |
Ⅳ-14. | Domestic Hotel Portfolio Map | 30 |
Ⅴ. Status of Residential Operations
V-1. Performance of Residential Properties
V-2. Changes of Residential Rents
Ⅵ. Financial Condition
Ⅶ. ESG Initiatives
Ⅶ-1. ESG Initiatives by INV
Ⅶ-2. ESG Initiatives by MHM
Appendix (1)
- Unitholder Benefit Program for Invincible Unitholders
- Inbound Market: Inbound Visitors to Japan by Country
- Domestic Portfolio Map
- Track Record of External Growth
- Sponsor Pipeline
- Summary of Appraisal Value and NAV per Unit
Appendix (2) - Financial and Operational Data
- Key Operational Data for Variable Rent Hotels
- Financial Metrics
- Income Statement
- Balance Sheet
- Cash Flow Statement and Dividend Distribution
- Property Income
- Appraisal Value
- Portfolio Properties
- Borrowings and Investment Corporation Bonds
- Overview of Unitholders
- Unit Price Information
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1
Ⅰ . Executive Summary (1)
◼ | Sales and profits increased significantly this period due to a recovery in hotel performance and external growth. Operating revenue | ||
increased by 18.2% compared to the previous fiscal period ("previous period"), and exceeded the level achieved during the same period | |||
in 2019 by 13.3%, excluding gain on sales of properties | |||
Results of | ◼ | Net income increased by 23.8% compared to the previous period to JPY 11,032 million. Distribution per unit ("DPU") improved to JPY | |
December 2023 | |||
1,640, or 95.1% of the same period in 2019 | |||
Fiscal Period | |||
(FP) | ◼ | DPU increased by JPY 199 or 13.8% compared to the forecast announced at the time of the public offering on July 19, 2023 | |
◼ | The total appraisal value of the 127 properties held at the beginning of the December 2023 FP was JPY 570,791 million, an increase of JPY | ||
9,828 million (or a 1.8% increase) from the end of the June 2023 appraisal | |||
◼ | In the 2023 GRESB Real Estate Assessment, INV received a "3-Star" GRESB Rating | ||
◼ | Acquired six domestic hotels for a total acquisition price of JPY 57.2 billion at a simulated 6.0% NOI yield | ||
Summary of | ◼ | Expanded investments centered on resort-type hotels in Japan, further growing the largest hotel portfolio among J-REITs to JPY 507.8 | |
Properties | billion | ||
Acquired in | ◼ | Aiming to capture domestic and overseas resort demand that is expected to increase as the Covid-19 pandemic diminishes | |
August 2023 | |||
◼ | Potential sponsor pipeline has more than 60 hotels with 6,800 rooms operated by MyStays Hotel Management ("MHM"), which are | ||
owned by sponsor-related entities | |||
◼ | Comparing the KPIs of the 75 domestic hotels owned by INV between this period and the same period in 2019, ADR was 19.2% higher | ||
than in the same period in 2019. Although the Occupancy rate is still 5.7 points lower, RevPAR achieved JPY 10,462, which is 11.5% | |||
higher than in the December 2019 FP | |||
◼ | GOP of 75 domestic hotels this period increased by 34.7% from the previous period or by 9.0% from the same period in 2019 as a result of | ||
Domestic | the steady recovery of non-room revenues such as weddings and banquets to 2019 levels despite various cost increases | ||
Portfolio | ◼ | The strategy to maximize GOPPAR (GOP per the number of rooms available for sale) by the major tenant, MHM, has continued to be | |
successful. The GOP margin of the 73 domestic properties managed by MHM ("73 MHM properties") increased from 37.4% the previous | |||
period to 40.7% this period | |||
◼ | NOI of 41 residential properties for this period was JPY 1,120 million, up 0.2% from the same period in 2022. The initiative to increase | ||
rent, taking advantage of the population returning to urban centers, was successful | 2 | ||
Ⅰ . Executive Summary (2)
◼ | RevPAR for the two Cayman hotels for this period was USD 273, 15.3% higher than USD 237 in the same period in 2019 due to a | |
significant increase in ADR | ||
Cayman Hotel | ◼ | USD based Management Contract Revenue this period increased by 10.8% compared to the same period in 2022, and increased by 10.0% |
over the same period in 20191 | ||
Portfolio | ||
◼ | Average Occupancy rate for this period was 64.8%, 7.5 points lower than the same period in 2019. Going forward, a further recovery in | |
air traffic to the Cayman Islands, which was reduced due to the Covid-19 pandemic, is expected to increase Occupancy to 2019 levels, | ||
leading to an increase in revenues | ||
◼ | Executed bank loans (including refinancing) of JPY 141.5 billion in total this period and JPY 33.7 billion in January 2024 | |
◼ | Diversified financing sources through INV's first issuance of JPY 3.5 billion in total of green bonds in September and December 2023, and | |
Financial | JPY 6.0 billion of investment corporation bonds for retail investors in February 2024 | |
◼ | Increased average duration of outstanding interest-bearing debt from 0.9 years (as of June 30, 2023) to 2.9 years (as of February 26, 2024) | |
Condition | ||
and diversified maturity dates | ||
◼ | Executed interest rate swap transactions to hedge the risk of rising interest rates, resulting in an increase in the fixed interest rate ratio | |
from 21% (as of June 30, 2023) to 50% (as of February 26, 2024) | ||
◼ | Forecasts remain unchanged from those announced on December 19, 2023, with DPU expected to be JPY 1,767 for the June 2024 FP and | |
Forecasts for | JPY 1,739 for the December 2024 FP. Forecasted annual DPU of JPY 3,506 for 2024 is 3.7% higher than that of JPY 3,381 for 2019 | |
June 2024 Fiscal | ||
◼ | ||
Period (FP) and | The forecast factors in a rebound in domestic demand following the end of the "National Travel Discount Campaign" program. Overall | |
December 2024 | inbound demand continues to steadily recover despite a slow recovery in Chinese travelers | |
Fiscal Period | ||
◼ | The portfolio of 41 residential properties and one commercial property is expected to maintain stable returns | |
(FP) | ||
◼ | The impact of the 2024 Noto Peninsula Earthquake is negligible | |
3
(Note 1) The ownership structure of the two Cayman hotels was changed from a Tokumei Kumiai structure to a direct ownership structure in the middle of June 2019 FP. Therefore, Management Contract Revenue in June 2019 FP is a hypothetical number, assuming INV has held two Cayman hotels in the current direct ownership structure from the beginning of 2019
Ⅱ. Summary of December 2023 FP Results and 2024 Forecasts Ⅱ-1. Financial Highlights for December 2023 FP
- Increase in revenues and income due to the contribution from the six hotels acquired on August 1, 2023 and the recovery in hotel business performance of the existing hotels this period, despite the decrease in the management contract revenue of the two Cayman from the previous period due to seasonal factors Operating revenue increased by 18% to JPY 18,819 million and DPU was 12% higher than the previous period reaching JPY 1,640
- Compared to the forecast for this fiscal period announced on December 19, 2023, operating revenue showed a slight increase and DPU increased by 3%
Major Causes for Variance | (JPY million) | ||||||||||||
June 2023 FP | December 2023 FP | Variance | |||||||||||
Operating revenue | |||||||||||||
Amount | (%) | ||||||||||||
✓ | |||||||||||||
Operating revenue | 15,914 | 18,819 | 2,904 | 18.2% | Increase in revenue from six hotels newly acquired: +2,104 | ||||||||
✓ | |||||||||||||
Real estate rental revenues | 12,000 | 16,696 | 4,695 | 39.1% | Increase/decrease in revenue from existing portfolio: +2,590 | ||||||||
(of which, hotel: +2,609 / residential: -18) | |||||||||||||
Hotel Rents (Variable rent) | 4,615 | 7,441 | 2,826 | 61.2% | ✓ | ||||||||
Decrease in management contract revenue: -1,790 | |||||||||||||
Hotel Rents (Fixed rent) | 5,498 | 7,469 | 1,971 | 35.9% | |||||||||
→50% decrease in USD basis and 45.8% decrease in JPY basis (FX | |||||||||||||
Residential Rents | 1,392 | 1,388 | -3 | -0.2% | |||||||||
rate in Dec 2023 FP was USD 1 = JPY 145.4, an 8.4% | |||||||||||||
Management contract revenue | 3,914 | 2,123 | -1,790 | -45.8% | depreciation of the yen from the previous period) | ||||||||
TMK Dividend amount | - | - | - | - | Operating expenses | ||||||||
Gain on sale of properties | - | - | - | - | ✓ | Increase in expenses for six hotels newly acquired: +457 | |||||||
Operating expenses | 5,558 | 6,230 | 671 | 12.1% | (of which, increase in depreciation expenses: +447) | ||||||||
Real estate rental expenses | 4,488 | 5,096 | 608 | 13.6% | ✓ | Increase in expenses for existing portfolio: +150 | |||||||
(of which, increase in depreciation expenses: +18) | |||||||||||||
Taxes and other public charges | 596 | 754 | 158 | 26.5% | ✓ | ||||||||
Increase in management contract expenses (overseas hotels): +85 | |||||||||||||
Depreciation expenses | 3,311 | 3,776 | 465 | 14.1% | |||||||||
Management contract expenses | 649 | 734 | 85 | 13.2% | Non-operating income | ||||||||
✓ | Decrease in foreign exchange gain: -178 | ||||||||||||
Depreciation expenses | 435 | 441 | 6 | 1.4% | |||||||||
NOI | 14,523 | 17,205 | 2,681 | 18.5% | Non-operating expenses | ||||||||
NOI after depreciation | 10,777 | 12,987 | 2,210 | 20.5% | ✓ Increase in loan-related costs: +81 | ||||||||
Operating income | 10,356 | 12,588 | 2,232 | 21.6% | ✓ Increase in interest expenses: +95 | ||||||||
Non-operating income | 182 | 0 | -181 | -99.8% | ✓ Increase in interest expenses on investment corporation bonds: +29 | ||||||||
Non-operating expenses | 1,624 | 1,556 | -68 | -4.2% | ✓ Increase in foreign exchange losses: +76 | ||||||||
Ordinary income | 8,914 | 11,033 | 2,118 | 23.8% | ✓ Decrease in derivative losses: -507 | ||||||||
Net income | 8,913 | 11,032 | 2,118 | 23.8% | ✓ Increase in investment unit issuance costs: +152 | ||||||||
Distribution per Unit (JPY) | 1,464 | 1,640 | 176 | 12.0% | Distribution per Unit (JPY) | ||||||||
Operating Days | 181 | 184 | - | - | |||||||||
✓ | Increase from the previous period: +176 | ||||||||||||
4
Ⅱ-2. Operating Revenue Composition
- Operating revenue increased by 18.2% from the previous period due to a significant increase in both variable and fixed rents for domestic variable-rent hotels driven by the recovery of the performance and external growth
- In addition, operating revenue increased 13.3% from the December 2019 FP exceeding the pre-pandemic period level, despite a decrease in revenue from the disposition of residential and commercial properties
Portfolio Composition by Operating Revenue1
JPY 15, 914 mm | JPY 18,819 mm | ||||||||||||||||
Management | JPY 16,221 mm | JPY 16,616 mm | +13.3% | 11.3% | |||||||||||||
Contract Revenue | 8.4% | ||||||||||||||||
(Cayman hotels) | |||||||||||||||||
20.0% | 4.1% | ||||||||||||||||
TMK Dividend | 24.6% | ||||||||||||||||
38.3% | |||||||||||||||||
Amount (SGTB) | 5.1% | JPY 11,929 mm | |||||||||||||||
Variable Rent Hotel | 32.1% | ||||||||||||||||
14.6% | |||||||||||||||||
(variables) | 26.6% | ||||||||||||||||
Variable Rent Hotel | JPY 7,363 mm | 26.5% | 32.6% | ||||||||||||||
(fixed) | JPY 5,837 mm | JPY 6,212 mm | |||||||||||||||
12.1% | JPY 5,738 mm | ||||||||||||||||
JPY 3,806 mm | |||||||||||||||||
23.6% | 37.0% | 8.6% | 16.3% | ||||||||||||||
Fixed Rent Hotel | 19.4% | 2.1% | 23.1% | 40.3% | |||||||||||||
17.0% | |||||||||||||||||
33.3% | 41.9% | 30.2% | |||||||||||||||
2.4% | 2.3% | 22.9% | 31.7% | 31.9% 9.8% | 37.0% | ||||||||||||
Residential | 20.4% | 5.2% | 6.6% | 17.9% | % | 2.1% | 1.5% | ||||||||||
14.3% | 30.0% | 37.1% | 48.4% | 6.4% | 6.0% | 3.2 | 1.2% | ||||||||||
30.9% | 2.5% | 2.3% | 9.5% | 0.9% | 8.0% | 0.8% | |||||||||||
Commercial | 1.9% | 1.9% | 4.1% | 5.2% | 24.2% | 12.5% | |||||||||||
properties | 7.9% | December FP | June FP | December FP | June FP | December FP | |||||||||||
June FP | December FP | June FP | December FP | June FP | |||||||||||||
CY2019 | CY2020 | CY2021 | CY2022 | CY2023 |
(JPY million)
CY2019 | CY2020 | CY2021 | CY2022 | CY2023 | |||||||||||||||||
June FP | December FP | June FP | December FP | June FP | December FP | June FP | December FP | June FP | December FP | ||||||||||||
Management | |||||||||||||||||||||
Contract Revenue2 | 3,240 | 20.0% | 1,397 | 8.4% | 890 | 12.1% | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | 1,013 | 16.3% | 1,746 | 14.6% | 3,914 | 24.6% | 2,123 | 11.3% | |
(Cayman hotels) | |||||||||||||||||||||
TMK Dividend | |||||||||||||||||||||
Amount | 827 | 5.1% | 673 | 4.1% | 634 | 8.6% | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | 0 | 0.0% | |
(SGTB) | |||||||||||||||||||||
Variable Rent | |||||||||||||||||||||
Hotel | 4,307 | 26.6% | 5,332 | 32.1% | 1,255 | 17.0% | 1,113 | 19.4% | 79 | 2.1% | 1,350 | 23.1% | 2,068 | 33.3% | 3,167 | 26.5% | 5,194 | 32.6% | 7,198 | 38.3% | |
Hotel | (variables) | ||||||||||||||||||||
Variable Rent | |||||||||||||||||||||
Hotel | 3,834 | 23.6% | 6,144 | 37.0% | 1,689 | 22.9% | 1,818 | 31.7% | 1,212 | 31.9% | 2,162 | 37.0% | 1,112 | 17.9% | 4,997 | 41.9% | 4,807 | 30.2% | 7,576 | 40.3% | |
(fixed) | |||||||||||||||||||||
Fixed Rent Hotel | 388 | 2.4% | 386 | 2.3% | 381 | 5.2% | 376 | 6.6% | 374 | 9.8% | 371 | 6.4% | 373 | 6.0% | 384 | 3.2% | 341 | 2.1% | 281 | 1.5% | |
Residential | 3,316 | 20.4% | 2,374 | 14.3% | 2,211 | 30.0% | 2,130 | 37.1% | 1,840 | 48.4% | 1,805 | 30.9% | 1,502 | 24.2% | 1,491 | 12.5% | 1,516 | 9.5% | 1,497 | 8.0% | |
Commercial | 306 | 1.9% | 307 | 1.9% | 301 | 4.1% | 300 | 5.2% | 299 | 7.9% | 147 | 2.5% | 141 | 2.3% | 141 | 1.2% | 141 | 0.9% | 141 | 0.8% | |
properties | |||||||||||||||||||||
Total | 16,221 | 100.0% | 16,616 | 100.0% | 7,363 | 100.0% | 5,738 | 100.0% | 3,806 | 100.0% | 5,837 | 100.0% | 6,212 | 100.0% | 11,929 | 100.0% | 15,914 | 100.0% | 18,819 | 100.0% |
5
(Note 1) Based on the properties owned by INV during each fiscal period respectively. The gain on sale is excluded
(Note 2) The figure for June 2019 FP includes the amount of TK dividends INV received for the fiscal period before INV owned Cayman hotels directly
Ⅱ-3. Summary of June 2024 FP Forecast
- For the June 2024 FP, operating revenue is expected to increase by 26.9% to JPY 20,199 million and DPU is expected to increase by 20.7% to JPY 1,767 from the same period last year, reflecting a further recovery of hotel earnings driven by inbound tourism and the impact of Covid-19 being completely removed
- Further upside is expected depending on the recovery of demand created by the increase in Chinese tourists visiting Japan during and after Chinese New Year when the timetables of airline flights switch to the summer schedule
- TMK dividend amount (Sheraton), which will be recorded for the first time in eight fiscal periods, is expected to be JPY 404 million higher than in the same period in 2019 due to the inclusion of special factors
June 2023 FP | June 2024 FP | Variance | ||||||
Amount | (%) | |||||||
Operating revenue | 15,914 | 20,199 | 4,284 | 26.9% | ||||
Real estate rental revenues | 12,000 | 14,603 | 2,602 | 21.7% | ||||
Hotel Rents (Variable rent) | 4,615 | 6,982 | 2,367 | 51.3% | ||||
Hotel Rents (Fixed rent) | 5,498 | 5,853 | 355 | 6.5% | ||||
Residential Rents | 1,392 | 1,409 | 17 | 1.2% | ||||
Management contract revenue | 3,914 | 4,363 | 449 | 11.5% | ||||
TMK Dividend amount | - | 1,231 | 1,231 | - | ||||
Gain on sale of properties | - | - | - | - | ||||
Operating expenses | 5,558 | 6,481 | 923 | 16.6% | ||||
Real estate rental expenses | 4,488 | 5,082 | 594 | 13.2% | ||||
Taxes and other public charges | 596 | 649 | 53 | 8.9% | ||||
Depreciation expenses | 3,311 | 3,856 | 545 | 16.5% | ||||
Management contract expenses | 649 | 731 | 82 | 12.6% | ||||
Depreciation expenses | 435 | 459 | 24 | 5.6% | ||||
NOI | 14,523 | 18,701 | 4,177 | 28.8% | ||||
NOI after depreciation | 10,777 | 14,385 | 3,607 | 33.5% | ||||
Operating income | 10,356 | 13,717 | 3,360 | 32.5% | ||||
Non-operating income | 182 | - | -182 | -100.0% | ||||
Non-operating expenses | 1,624 | 1,830 | 205 | 12.7% | ||||
Ordinary income | 8,914 | 11,887 | 2,972 | 33.3% | ||||
Net income | 8,913 | 11,886 | 2,972 | 33.4% | ||||
Distribution per Unit (JPY) | 1,464 | 1,767 | 303 | 20.7% | ||||
Operating Days | 181 | 182 | - | - | ||||
Major Causes for Variance (June 2024 FP vs June 2023 FP)
(JPY million)
Operating revenue
- Increase in existing hotel rents (variable rent and fixed rent): +1,334
- Increase in rents from six hotels newly acquired (variable rent and fixed rent in total): +1,388
- Increase in residential rents: +17
-
Increase in management contract revenue: +449
→10.8% increase in USD basis and 11.5% increase in JPY basis (estimated with FX rate for June 2024 FP of USD 1= JPY 135.0, a 0.7% depreciation of the yen from the same period last year)
Operating expenses/Non-operating expenses
- Increase in real estate rental expenses : +594
- of which, increase from six hotels newly acquired : +583
- Increase in management contract expenses : +82
- Increase in insurance premiums, etc : +58, depreciation expenses: +24
- Increase in non-operating expenses : +205
- Increase in interest expenses : +546, Interest expenses on investment corporation bonds: +70, loan-related costs: +26, decrease in derivative losses: -444
Non-operating income
-
Decrease in non-operating income: -182
→Decrease in foreign exchange gain: -178
6
Ⅱ-4. Summary of December 2024 FP Forecast
- For the December 2024 FP, operating revenue is expected to increase by 7.6% to JPY 20,255 million and DPU is expected to increase by 6.0% to JPY 1,739 from the same period last year, reflecting the rent increase from the existing hotels and the full-period contribution from newly acquired hotels on August 1, 2023, as well as rent increase from the residential portfolio
- TMK dividend amount (Sheraton) is expected to reach JPY 679 million, its approximate stabilized level, which is about 1% (JPY 6 million) higher than the same period in 2019
December 2023 FP | December 2024 FP | Variance | |||||
Amount | (%) | ||||||
Operating revenue | 18,819 | 20,255 | 1,436 | 7.6% | |||
Real estate rental revenues | 16,696 | 17,617 | 921 | 5.5% | |||
Hotel Rents (Variable rent) | 7,441 | 8,241 | 800 | 10.8% | |||
Hotel Rents (Fixed rent) | 7,469 | 7,623 | 153 | 2.1% | |||
Residential Rents | 1,388 | 1,413 | 24 | 1.7% | |||
Management contract revenue | 2,123 | 1,958 | -164 | -7.8% | |||
TMK Dividend amount | - | 679 | 679 | - | |||
Gain on sale of properties | - | - | - | - | |||
Operating expenses | 6,230 | 6,745 | 515 | 8.3% | |||
Real estate rental expenses | 5,096 | 5,292 | 195 | 3.8% | |||
Taxes and other public charges | 754 | 841 | 87 | 11.6% | |||
Depreciation expenses | 3,776 | 3,891 | 115 | 3.1% | |||
Management contract expenses | 734 | 788 | 53 | 7.3% | |||
Depreciation expenses | 441 | 481 | 39 | 9.0% | |||
NOI | 17,205 | 18,547 | 1,341 | 7.8% | |||
NOI after depreciation | 12,987 | 14,174 | 1,186 | 9.1% | |||
Operating income | 12,588 | 13,509 | 921 | 7.3% | |||
Non-operating income | 0 | - | 0 | -100.0% | |||
Non-operating expenses | 1,556 | 1,810 | 254 | 16.3% | |||
Ordinary income | 11,033 | 11,699 | 666 | 6.0% | |||
Net income | 11,032 | 11,698 | 666 | 6.0% | |||
Distribution per Unit (JPY) | 1,640 | 1,739 | 99 | 6.0% | |||
Operating Days | 184 | 184 | - | - | |||
Major Causes for Variance (December 2024 FP vs December 2023 FP)
(JPY million)
Operating revenue
- Increase in existing hotel rents (variable rent and fixed rent in total) : +558
- Increase in rents (variable rent and fixed rent in total) from full-period contribution from six hotels newly acquired on August 1, 2023: +395
- Increase in residential rents: +24
- Decrease in management contract revenue due to the large-scale renovation at Sunshine Suites, etc.: -164
- 0.6% decrease in USD basis and 7.8% decrease in JPY basis (estimated with FX rate for December 2024 FP of USD 1 = JPY 135.0, a 7.2% appreciation of the yen from the same period last year)
- Increase in TMK dividend amount: +679
Operating expenses/Non-operating expenses
- Increase in real estate rental expenses : +195
- of which, increase from six hotels newly acquired : +147
- Increase in management contract expenses : +53
- Increase in insurance premiums, etc.: +13, depreciation expenses: +39
- Increase in non-operating expenses : +254
- Increase in interest expenses : +462, interest expenses on investment
corporation bonds: +51, decrease in loan-related costs: -44, foreign
exchange losses: -76, increase in derivative losses: +9, decrease in
investment unit issuance costs: -152
- Increase in interest expenses : +462, interest expenses on investment
7
Ⅱ-5. Impact from the 2024 Noto Peninsula Earthquake
Overall impact of the earthquake throughout 2024 is expected to be negligible
- No material damage occurred at INV's six hotels located in the affected areas, though the earthquake caused some damage to facilities and equipment
- Cancellations from general travelers were observed just after the earthquake but demand from disaster recovery work has been generated by media, communication companies, insurers and other construction related workers. Slow down of demand for the banquet business was observed in addition to the cancellations caused by the earthquake
- Recovery of tourism demand is expected from the "Hokuriku Support Discount" program and the extension of the Hokuriku Shinkansen Line
Impact from the earthquake | |||
• | Temporary decrease in demand caused by the | ||
Accommodation | |||
cancellations from general travelers | |||
• | Increase in demand from media, communication | ||
companies, insurers and other construction related | |||
workers | |||
Banquet
- Temporary decrease in demand due to the voluntary restraint from organizing new events/parties in addition
to the cancellations caused by the earthquake
Facilities
- Some increase in maintenance cost, CAPEX and
depreciation expenses due to damage to the facilities and equipment is expected
Hotel MyStays
Premier Kanazawa
Art Hotel Niigata
Station
Hotel MyStays
Kanazawa
Castle
Art Hotel
Joetsu
- Expect almost no impact from the earthquake on the operation of INV's hotels
located in the affected areas
Comfort
Comfort Hotel Tsubame-Sanjo
- Expect recovery in tourism demand from the "Hokuriku Support Discount" program which subsidizes up to 50% of travel costs and extension of the Hokuriku Shinkansen Line
Hotel Toyama
Limited Service Hotel
Full Service Hotel
8
Ⅱ-6. Domestic Hotel KPIs (Past Performance and Forecasts for 2024)
- Comparing the KPIs of the 75 domestic hotels owned by INV between this period and the same period in 2019, ADR was 19.2% higher than in the same period in 2019. Although the Occupancy rate is still below the December 2019 FP, RevPAR achieved JPY 10,462, 11.5% higher than the December 2019 FP while GOP increased 1.09 times compared to the same period in 2019
- 2023 full year Occupancy is still 5.9 points lower than that of 2019, however all other KPIs all exceeded the 2019 full year level
- No impact from Covid-19 is expected in 2024, and annual GOP is expected to increase by approximately 8% in 2024 compared to 2023
Domestic 75 hotels1 (excluding those described as "Domestic 81 hotels")
June FP | December FP | Full Year | ||||||||||||||||
Domestic | ADR | Domestic | Domestic | |||||||||||||||
81 hotels | 81 hotels | 81 hotels | ||||||||||||||||
(JPY) | +19.2% | |||||||||||||||||
12,692 | 13,670 | 12,953 | ||||||||||||||||
14,000 | 12,054 | 13,810 | ||||||||||||||||
12,649 | ||||||||||||||||||
11,423 | 10,615 | 12,071 | 12,629 | |||||||||||||||
11,545 | 11,777 | |||||||||||||||||
12,000 | 10,868 | |||||||||||||||||
10,109 | 10,199 | 10,366 | ||||||||||||||||
10,000 | 9,004 | |||||||||||||||||
7,504 | ||||||||||||||||||
8,000 | ||||||||||||||||||
6,000 | ||||||||||||||||||
4,000 | ||||||||||||||||||
2,000 | ||||||||||||||||||
0 | ||||||||||||||||||
2019 | 2022 | 2023 | 2024 | 2023 | 2024 | 2019 | 2022 | 2023 | 2024 | 2023 | 2024 | 2019 | 2022 | 2023 | 2024 | 2023 | 2024 | |
Domestic | Domestic | Domestic | ||||||||||||||||
Occ | 81 hotels | |||||||||||||||||
81 hotels | 81 hotels | |||||||||||||||||
100% | 86.8% | 85.0% | 84.6% | 88.4% | 87.8% | 87.6% | 87.6% | 86.4% | 86.1% | |||||||||
81.7% | 81.5% | |||||||||||||||||
80.7% | 80.5% | 82.7% | 82.5% | |||||||||||||||
80% | 75.9% | 68.8% | ||||||||||||||||
61.5% | ||||||||||||||||||
60% | ||||||||||||||||||
40% | ||||||||||||||||||
20% | ||||||||||||||||||
0% | ||||||||||||||||||
2019 | 2022 | 2023 | 2024 | 2023 | 2024 | 2019 | 2022 | 2023 | 2024 | 2023 | 2024 | 2019 | 2022 | 2023 | 2024 | 2023 | 2024 |
June FP | December FP | Full Year | |||||||||||||||||
Domestic | RevPAR | Domestic | Domestic | ||||||||||||||||
81 hotels | 81 hotels | 81 hotels | |||||||||||||||||
(JPY) | |||||||||||||||||||
12,000 | +11.5% | 11,143 | 12,102 | 10,428 | 11,153 | ||||||||||||||
10,193 | 11,279 | ||||||||||||||||||
9,705 | 10,462 | 10,295 | |||||||||||||||||
9,295 | 9,380 | 9,624 | |||||||||||||||||
10,000 | 9,078 | ||||||||||||||||||
8,772 | 8,772 | ||||||||||||||||||
8,000 | 7,744 | ||||||||||||||||||
6,192 | |||||||||||||||||||
6,000 | 4,614 | ||||||||||||||||||
4,000 | |||||||||||||||||||
2,000 | |||||||||||||||||||
0 | |||||||||||||||||||
2019 | 2022 | 2023 | 2024 | 2023 | 2024 | 2019 | 2022 | 2023 | 2024 | 2023 | 2024 | 2019 | 2022 | 2023 | 2024 | 2023 | 2024 | ||
(JPY million) | Domestic | GOP | 2 | Domestic | Domestic | ||||||||||||||
81 hotels | 81 hotels | 81 hotels | |||||||||||||||||
40,000 | +8.1% | ||||||||||||||||||
26,439 | 30,260 | ||||||||||||||||||
30,000 | 24,456 | 24,465 | 27,960 | ||||||||||||||||
16,846 | |||||||||||||||||||
1.09 times 14,399 | |||||||||||||||||||
20,000 | 12,039 | 13,413 | 16,245 | ||||||||||||||||
12,884 | 14,041 | ||||||||||||||||||
11,572 | 11,715 | 12,026 | |||||||||||||||||
10,424 | |||||||||||||||||||
8,855 | |||||||||||||||||||
10,000 | |||||||||||||||||||
3,171 | |||||||||||||||||||
0 | |||||||||||||||||||
2019 | 2022 | 2023 | 2024 | 2023 | 2024 | 2019 | 2022 | 2023 | 2024 | 2023 | 2024 | 2019 | 2022 | 2023 | 2024 | 2023 | 2024 |
(Note 1)Simulated KPI based on 75 hotels; of the 84 domestic hotels (including Sheraton Grande Tokyo Bay Hotel, the underlying asset of preferred equity interest held by INV) owned at the beginning of the December 2023 FP, nine hotels with fixed-rent lease agreements are excluded, assuming all properties were owned since the beginning of 2019. The performance for the | |
pre-acquisition period, which is based on actual results provided by sellers with certain adjustments assuming INV owned them, are subject to change caused by the adjustments based on differences in accounting treatments, since it is difficult to adjust them due to the timing even if the figures are based on actual performance. In calculating the GOP, added the 49% of | |
GOP for Sheraton Grande Tokyo Bay Hotel, which means INV's pro rata portion of the amount of JV TMK's preferred equity owned by INV. The rent paid for APA Hotel Yokohama‐Kannai, is regarded as GOP of the hotel. Furthermore, among the nine hotels excluded, the contract with the major tenant TOKYU HOTELS CO., LTD. for "Takamatsu Tokyu REI Hotel" | 9 |
has been modified to "fixed-rent plus variable rent" since April 25, 2023. However, from the viewpoint of the continuity of data, it is treated as a hotel with fixed rent and continues to be excluded. The same shall apply hereinafter. Domestic 81 hotels; the above 75 hotels plus the six hotels acquired in August 2023. |
(Note 2)The GOP for the period from June 2020 FP to December 2022 FP includes the employment adjustment subsidies received by the operator, and there is a slight discrepancy with the previous disclosure since the amount was not finalized. There is no change in the variable rent for each fiscal period due to the confirmation of the amount received
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Invincible Investment Corporation published this content on 01 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2024 11:12:41 UTC.