(REIT) Financial Report for Fiscal Period Ended October 2021
December 15, 2021 | |||
REIT Securities Issuer | Hoshino Resorts REIT, Inc. | Stock Exchange Listing: Tokyo Stock Exchange | |
Securities Code: | 3287 | URL: | https://www.hoshinoresorts- |
reit.com/en/ |
Representative:
Asset Management
Company:
Representative:
Contact:
Kenji Akimoto, Executive Director
Hoshino Resort Asset Management Co., Ltd.
Kenji Akimoto, President & CEO
Takahiro Kabuki, Director & CFO
TEL: +81-3-5159-6338
Scheduled date of submission of securities report: Scheduled date of commencement of distributions payment:
Preparation of supplementary financial results briefing materials:
Holding of financial results briefing session:
January 27, 2022
January 25, 2022
Yes
Yes (for institutional investors and analysts)
(Amounts are rounded down to the nearest million yen)
1. Status of Management and Assets for Fiscal Period Ended October 2021 (from May 1, 2021 to October 31, 2021)
(1) Management Status | (% figures are the rate of period-on-period increase (decrease)) | ||||||||||||||
Fiscal period | Operating revenue | Operating profit | Ordinary profit | Profit | |||||||||||
million yen | % | million yen | % | million yen | % | million yen | % | ||||||||
Ended Oct. 2021 | 4,840 | 5.4 | 1,845 | 1.6 | 1,412 | (0.7) | 1,410 | (3.8) | |||||||
Ended Apr. 2021 | 4,591 | (23.8) | 1,816 | (43.9) | 1,422 | (50.2) | 1,466 | (48.6) | |||||||
Fiscal period | Profit per unit | Ratio of profit | Ratio of ordinary profit | Ratio of ordinary profit | |||||||||||
to net assets | to total assets | to operating revenue | |||||||||||||
yen | % | % | % | ||||||||||||
Ended Oct. 2021 | 6,284 | 1.3 | 0.8 | 29.2 | |||||||||||
Ended Apr. 2021 | 6,608 | 1.4 | 0.8 | 31.0 | |||||||||||
(2) Distributions Status | |||||||||||||||
Distributions per | Total | Distributions in | Total | Ratio of | |||||||||||
excess of | distributions in | Distributions | |||||||||||||
Fiscal period | unit | distributions | distributions to | ||||||||||||
earnings | excess of | payout ratio | |||||||||||||
(excluding distributions | (excluding distributions | net assets | |||||||||||||
in excess of earnings) | in excess of earnings) | per unit | earnings | ||||||||||||
yen | million yen | yen | million yen | % | % | ||||||||||
Ended Oct. 2021 | 6,344 | 1,427 | - | - | 101.2 | 1.3 | |||||||||
Ended Apr. 2021 | 6,406 | 1,421 | - | - | 96.9 | 1.4 |
(Note 1) Total distributions in the fiscal period ended October 2021 is an amount after adding reversal of reserve for tax purpose reduction entry of 16 million yen to unappropriated retained earnings.
(Note 2) Total distributions in the fiscal period ended April 2021 is an amount after deducting reserve for tax purpose reduction entry of 44 million yen from unappropriated retained earnings.
(3) Financial Position
Fiscal period | Total assets | Net assets | Ratio of net assets | Net assets per unit |
to total assets | ||||
million yen | million yen | % | yen | |
Ended Oct. 2021 | 179,715 | 106,157 | 59.1 | 471,885 |
Ended Apr. 2021 | 176,787 | 104,204 | 58.9 | 469,679 |
(4) Status of Cash Flows
Fiscal period | Cash flows from | Cash flows from | Cash flows from | Cash and cash |
equivalents at end of | ||||
operating activities | investing activities | financing activities | ||
period | ||||
million yen | million yen | million yen | million yen | |
Ended Oct. 2021 | 2,587 | (3,603) | 1,304 | 8,907 |
Ended Apr. 2021 | 2,384 | (1,927) | (3,009) | 8,619 |
2. Management Status Forecast for Fiscal Period Ending April 2022 (from November 1, 2021 to April 30, 2022) and Management Status Forecast for Fiscal Period Ending October 2022 (from May 1, 2022 to October 31, 2022)
(% figures are the rate of period-on-period increase (decrease))
Distributions per unit | Distributions | ||||||||||
Fiscal period | Operating revenue | Operating profit | Ordinary profit | Profit | in excess of | ||||||
(excluding distributions | |||||||||||
earnings | |||||||||||
in excess of earnings) | |||||||||||
per unit | |||||||||||
million yen | % | million yen | % | million yen | % | million yen | % | yen | yen | ||
Ending Apr. 2022 | 5,431 | 12.2 | 2,203 | 19.4 | 1,755 | 24.3 | 1,754 | 24.4 | 7,153 | - | |
Ending Oct. 2022 | 5,521 | 1.7 | 2,246 | 2.0 | 1,850 | 5.4 | 1,849 | 5.4 | 7,542 | - |
(Reference) | Forecast profit per unit (fiscal period ending April 2022) | 7,152 yen |
Forecast profit per unit (fiscal period ending October 2022) | 7,540 yen | |
Forecast profit per unit is calculated by the following formula: | ||
Forecast profit per unit = Forecast profit / Forecast total number of investment units issued and outstanding at end of period | ||
(Note) | The forecasts for the distributions per unit for the fiscal period ending April 2022 and the fiscal period ending October 2022 are assuming that | |
these distributions will be made after performing a reversal of part of the reserve for tax purpose reduction entry included in retained earnings. |
- Others
- Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatement ① Changes in accounting policies accompanying amendments to accounting standards, etc.: Yes
② Changes in accoun ng policies other than ①: | No |
③ Changes in accounting estimates: | No |
④ Retrospective restatement: | No |
(Note) For details, please refer to "Notes to Changes in Accounting Policies" on page 24. |
- Total Number of Investment Units Issued and Outstanding
① Total number of investment units issued and outstanding (including own investment units) at end of period
Fiscal period ended October 2021 | 224,965 | units | Fiscal period ended April 2021 | 221,862 | units |
② Number of own investment units at end of period | |||||
Fiscal period ended October 2021 | - | units | Fiscal period ended April 2021 | - | units |
(Note) For the number of investment units serving as the basis for calculation of profit per unit, please refer to "Notes on Per Unit Information" on page 34.
- Financial reports are exempt from audit conducted by certified public accountants or an audit corporation.
-
Special Note
The management status outlook and other forward-looking statements contained in this document are based on information that are currently available and certain assumptions that are deemed reasonable. Accordingly, the actual management status, etc. may differ materially due to various factors. In addition, the forecast is not a guarantee of the amount of distributions. For the assumptions underlying the management status forecast, please refer to "Assumptions Underlying Management Status Outlook for Fiscal Period Ending April 2022 and Fiscal Period Ending October 2022" on page 10.
Index
1. | Management Status ..................................................................................................................................................... | 2 | ||
(1) | Management Status............................................................................................................................................. | 2 | ||
① | Overview of the Fiscal Period under Review ................................................................................................... | 2 | ||
(a) | Brief History of the Investment Corporation................................................................................................... | 2 | ||
(b) | Investment Environment and Management Performance.............................................................................. | 2 | ||
(c) | Overview of Fund Procurement ...................................................................................................................... | 2 | ||
(d) | Overview of Business Performance and Distributions .................................................................................... | 3 | ||
② | Outlook for the Next Fiscal Period................................................................................................................... | 3 | ||
(a) | Management Environment for the Next Fiscal Period .................................................................................... | 3 | ||
(b) | Future Management Policy and Challenges to Address .................................................................................. | 4 | ||
(c) | Sustainability Initiatives................................................................................................................................... | 6 | ||
(d) | Management Status Outlook........................................................................................................................... | 7 | ||
③ | Significant Subsequent Events......................................................................................................................... | 7 | ||
(a) | Issuance of New Investment Units .................................................................................................................. | 7 | ||
(b) | Acquisition of Assets........................................................................................................................................ | 8 | ||
a. Real Estate ........................................................................................................................................................ | 8 | |||
b. Mezzanine Loan Receivables ............................................................................................................................ | 8 | |||
c. Equity Interest in a Silent Partnership .............................................................................................................. | 9 | |||
(2) | Investment Risks ................................................................................................................................................ | 14 | ||
2. | Financial Statements .................................................................................................................................................. | 15 | ||
(1) | Balance Sheet .................................................................................................................................................... | 15 | ||
(2) | Statement of Income ......................................................................................................................................... | 17 | ||
(3) | Statement of Unitholders' Equity ...................................................................................................................... | 18 | ||
(4) | Statement of Cash Distributions........................................................................................................................ | 19 | ||
(5) | Statement of Cash Flows ................................................................................................................................... | 20 | ||
(6) | Notes on the Going Concern Assumption.......................................................................................................... | 22 | ||
(7) | Notes on Matters Concerning Significant Accounting Policies .......................................................................... | 22 | ||
(8) | Notes to Changes in Accounting Policies ........................................................................................................... | 24 | ||
(9) | Notes to the Financial Statements..................................................................................................................... | 25 | ||
(10) | Changes in Total Number of Investment Units Issued and Outstanding........................................................... | 37 | ||
3. | Reference Information ............................................................................................................................................... | 38 | ||
(1) | Information on Values of Assets Under Management, Etc. .............................................................................. | 38 | ||
① | Investment Status.......................................................................................................................................... | 38 | ||
② | Investment Assets.......................................................................................................................................... | 41 | ||
(a) | Major Issues of Investment Securities........................................................................................................... | 41 | ||
(b) | Investment Real Estate Properties ................................................................................................................ | 42 | ||
a. | Acquisition Price, Book Value, Appraisal Value, Share of Investment, Etc................................................ | 42 | ||
b. | Location, Area, Size, Etc............................................................................................................................. | 44 | ||
c. | Summary of Real Estate Appraisal Report, Etc.......................................................................................... | 50 | ||
d. | Status of Leasing to Major Tenants ........................................................................................................... | 54 | ||
e. | Portfolio Overview..................................................................................................................................... | 55 | ||
f. | Individual Investment Real Estate, Etc. Property Income Statements ...................................................... | 56 | ||
(2) | Status of Capital Expenditures........................................................................................................................... | 61 | ||
① | Schedule of Capital Expenditures .................................................................................................................. | 61 | ||
② | Capital Expenditures during the Period......................................................................................................... | 61 |
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1. Management Status
-
Management Status
①Overview of the Fiscal Period under Review
(a) Brief History of the Investment Corporation
Hoshino Resorts REIT, Inc. (hereinafter, "HRR") invests in hotels, ryokans (Japanese-style inns) and ancillary facilities that serve at the core of the tourism industry and for which stable use is expected for the medium to long term.
HRR was established under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951, as amended; hereinafter, the "Investment Trusts Act") with Hoshino Resort Asset Management Co., Ltd. (hereinafter, the "Asset Management Company") as the organizer and investments in capital of 150 million yen (300 units) on March 6, 2013. An issuance of new investment units through public offering (19,000 units) was implemented with July 11, 2013 as the payment due date, and the investment securities were listed on the Real Estate Investment Trust Securities Market of Tokyo Stock Exchange, Inc. (hereinafter the "Tokyo Stock Exchange") (securities code: 3287) on July 12, 2013. HRR has steadily expanded its asset size since, bringing the assets held by HRR as of the end of the fiscal period under review to 63 properties (sum total of acquisition price: 165,608 million yen).
- Investment Environment and Management Performance
The Japanese economy continued to see challenging circumstances due to the impact of the spread of COVID- 19 in Japan and overseas. Although there were signs of the recovery trend continuing, repeated states of emergency were declared from January 2021, and actions to restrict socioeconomic activity continued.
Meanwhile, in the tourism market, tourism-related industries have seen a serious decline due to the impact of COVID-19 despite a variety of measures, such as the campaign to encourage consumption for the service industry (hereinafter the "Go To Travel campaign") that was carried out in order to encourage travel demand while taking thorough measures to prevent the spread of COVID-19. According to the "Statistical Survey of Lodging and Travel" from the Ministry of Land, Infrastructure, Transport and Tourism, tourism demand regressed significantly due to the COVID-19 pandemic, with the total number of guest nights of an average of
40.8 million guest nights per month prior to the spread of COVID-19 (May 2019 to January 2020) decreasing significantly to an average of 11.6 million guest nights per month during the first state of emergency (April to June 2020), and despite the temporary rise because of the Go To Travel campaign, averaging 20.5 million guest nights per month during the period from January to June 2021. However, HRR believes that recent demand is a trend of recovery as the number of guest nights is approaching levels during the term of the Go To Travel campaign in 2020 (average of 30.1 million guest nights per month), with the number of guest nights from July to September 2021 increasing from an average of 20.5 million guest nights per month from January to June 2021 to 27.2 million guest nights per month due to the rise in the vaccination rate (the percentage of people who have completed COVID-19 vaccinations vs. the total population) as a result of COVID-19 vaccinations beginning in Japan as a measure against COVID-19 after entering 2021.
In the environment described above, the hotels/ryokans held by HRR were managed with a view to securing stable earnings. While properties held by HRR were impacted by the disease to a certain extent, hotels, ryokans and ancillary facilities operated by the Hoshino Resorts Group (collectively refers to Hoshino Resorts Inc. (hereinafter "Hoshino Resorts") and its parent company and subsidiaries; the same shall apply hereinafter) (hereinafter the "properties operated by the Hoshino Resorts Group") have been capturing a higher level of demand relative to its industry peers even under the state of emergency, largely due to microtourism and proposals for stays that enable guests to avoid the "Three Cs" (Crowded places, Close-contact setting, Confined and enclosed spaces). - Overview of Fund Procurement
In the fiscal period under review, HRR procured 1,964 million yen from the issuance of new investment units by a third party on May 31, 2021, and 1,000 million yen of long-term borrowings on June 1, 2021. This was allocated to 2,750 million yen, which is the amount of funds for the acquisition of KAI Nagato, and a portion of related expenses as well as a total remaining principal amount of 149 million yen for funds for early repayment of short-term borrowings that was procured on June 30, 2020 (however, the amount procured due to the issuance of new investment units by a third party has not been appropriated for these funds for early repayment). - 2 -
HRR issued the Second Series Unsecured Investment Corporation Bond (with special pari passu conditions among specified investment corporation bonds) (The aforementioned Investment Corporation Bonds are green bonds named Hoshino Resorts REIT Initiative Green "Owl Bonds.") at an amount of 1,300 million yen on August 26, 2021 for allocation to a portion of funds for early repayment of existing long-term borrowings pertaining to the acquisition of BEB5 Karuizawa.
In addition, HRR procured 5,200 million yen of long-term borrowings on October 29, 2021 to repay a total of 5,200 million yen of principal of existing borrowings due for repayment, including the remaining principal amount of 3,500 million yen of long-term borrowings procured on November 2, 2015, the remaining principal amount of 600 million yen of long-term borrowings procured on April 27, 2018, and the remaining principal amount of 1,100 million yen of short-term borrowings procured on October 30, 2020.
Furthermore, contractual repayments of borrowings, etc. were made, resulting in balance of interest-bearing liabilities of 68,482 million yen and ratio of interest-bearing liabilities to total assets (LTV) of 38.1% as of October 31, 2021.
(Status of credit rating)
The credit rating HRR has obtained as of the end of the fiscal period under review is as follows.
Credit rating agency | Rating | Outlook |
Japan Credit Rating Agency, Ltd. (JCR) | Long-term issuer rating: A | Stable |
Bond credit rating (Note): A | - | |
(Note) | The bond rating applies to the First Series Unsecured Investment Corporation Bond (with special pari passu conditions among specified |
investment corporate bonds) and the Second Series Unsecured Investment Corporation Bond (with special pari passu conditions | |
among specified investment corporate bonds) (green bonds). |
- Overview of Business Performance and Distributions
As a result of the management described above, business performance in the fiscal period under review was operating revenue of 4,840 million yen, operating profit of 1,845 million yen, ordinary profit of 1,412 million yen and profit of 1,410 million yen. Concerning distributions, after adding the amount of reversal of reserve for tax purpose reduction entry to unappropriated retained earnings pursuant with Article 42 of the Corporation Tax Act, the decision was made to distribute the entire aggregate amount to ensure application of special provisions for taxation on investment corporations (Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended; hereinafter, the "Act on Special Measures Concerning Taxation")), and distributions per investment unit was thus declared to be 6,344 yen.
- Outlook for the Next Fiscal Period
-
Management Environment for the Next Fiscal Period
Despite the Japanese economy being expected to pick up due to the effects of various policy measures and improvement in overseas economies amid measures to prevent the spread of COVID-19 and the continuous promotion of vaccinations, it will be necessary to keep a close eye on the ramifications of pandemic developments in Japan and abroad, further increase in downside risks due to negative effects through the supply chains and fluctuations in financial and capital markets.
In the tourism market, opportunities to lift restrictions on activities have increased due to the rise of the vaccination rate. HRR believes that expectations regarding the recovery of tourism demand in the future is increasing as, according to "Trends of Japanese Travelers During COVID-19 (#12) (released on August 31, 2021)" from the Japan Travel Bureau Foundation, over 70% of respondents indicated their desire to travel in a survey of the desire to travel after the COVID-19 pandemic subsides. For overseas visitors to Japan, it will be necessary to continue to keep a close eye on various countries' regulations concerning entering and leaving and market trends in addition to trends concerning the global status of infection as there are signs of various countries easing regulations despite continued restrictions on international travel for the purpose of tourism.
Under these circumstances, HRR will properly manage its assets underpinned by its aims of securing consistent rent revenue, achieving steady growth in asset size, and appropriately building its financial base, from a medium- to long-term perspective on the basis of the management policy set forth below.
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Hoshino Resorts REIT Inc. published this content on 15 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 December 2021 06:48:12 UTC.