Ichigo Hotel REIT Investment : Change in Hotel Operator

Make The World

More Sustainable

[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.

December 15, 2021

Issuer

Ichigo Hotel REIT Investment Corporation ("Ichigo Hotel," 3463)

1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo

Representative: Osamu Miyashita, Executive Director

www.ichigo-hotel.co.jp/en

Asset Management Company

Ichigo Investment Advisors Co., Ltd.

Representative: Hiroshi Iwai, President

Inquiries: Hidehito Iwasaka, Head of Ichigo Hotel

Tel: [phone]

Change in Hotel Operator

Ichigo Investment Advisors ("IIA"), the asset management company of Ichigo Hotel, today decided to appoint a new hotel operator for the Court Hotel Kurashiki.

1. Operator Change Overview

As part of the operator change, the Court Hotel Kurashiki is expected to be rebranded and renamed as The OneFive Garden Kurashiki.

				After Change		Before Change
	Operator		Hakata Hotels Inc.			The COURT Co., Ltd.
		("Hakata Hotels")			("The Court")
	Lease Contract		Fixed Rent (minimum guaranteed		Fixed Rent (minimum guaranteed
		rent) + Variable rent			rent) + Variable rent
			Minimum guaranteed rent:		Minimum guaranteed rent: 50%
			Forecast GOP - [ (2% of Forecast		of Forecast GOP
			GOR) + (10% of Forecast GOP) ]
			x Rate*				Variable rent:
			*Rate				Actual GOP - Minimum
			Feb 2022 - Jan 2023:	10%		guaranteed rent - (10% of Actual
	Rent		Feb 2023 - Jan 2024:	30%		GOP)
			Feb 2024 & onwards:	50%
			Variable rent:
			Actual GOP - Minimum
			guaranteed rent - [ (2% of Actual
			GOR) + (10% of Actual GOP) ]
	Tenant Leasehold and		None				None
	Security Deposits
GOP: Gross operating profit	GOR: Gross operating revenue
				1

2. Reason for Change

IIA is changing the hotel operator because of the upcoming expiration of the current lease contract with The Court. The new hotel operator will be Hakata Hotels, a consolidated subsidiary of Ichigo, IIA's parent company. Hakata Hotels currently operates 12 hotels, including the HOTEL EMIT SHIBUYA, The OneFive Okayama, The OneFive Fukuoka Tenjin, and The OneFive Osaka Sakaisuji which are owned by Ichigo Hotel.

Hakata Hotels was chosen from among several candidate operators based on its competitive price offering. Under the new contract, the Court Hotel Kurashiki's fixed rent will increase significantly, while the revision of the variable rent component will increase the potential for upside earnings growth. Hakata Hotels will deploy PROPERA, an AI-based revenue management system that Ichigo developed based on its expertise in increasing hotel revenue, to maximize earnings and increase guest satisfaction.

3. New Hotel Operator Profile

Name	Hakata Hotels Inc.
Address	3-13-1 Haruyoshi, Chuo-ku, Fukuoka
Representatives	Minoru Ishihara, Representative Director & Chairman
Takanobu Kitazaki, Representative Director & President
Capital	JPY 100 million
Establishment Date	March 11, 2019
	1. Development, operation, lease, and management of
	retail buildings, hotels and restaurants
	2. Lease and management of real estate
Principal Business	3. Design and construction of buildings and interior
	designs
	4. Consulting services related to retail buildings, retail
	facilities, and restaurants
	・The hotel operator is an operator of the HOTEL EMIT
	SHIBUYA, The OneFive Okayama, The OneFive
	Fukuoka Tenjin, and The OneFive Osaka Sakaisuji
	which are owned by Ichigo Hotel.
Relationship with Ichigo	・The hotel operator is a related party as defined in the
Hotel or IIA	Enforcement Ordinance of the Investment Trust and
	Investment Corporation Law, and is a related party as
	defined in IIA's internal rules, given that the hotel
	operator is a consolidated subsidiary of Ichigo, IIA's
	parent company.

4. Date of Operator Change February 1, 2022 (expected)

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5. Related-Party Transaction

Hakata Hotels is a consolidated subsidiary of Ichigo, IIA's parent company. Because Hakata Hotels is a related party as defined in the Ordinance of the Investment Trust and Investment Corporation Law and IIA's internal rules, Ichigo Hotel obtained prior approval for a lease contract as a related-party transaction from IIA's Board of Directors.

6. Earnings Outlook

The impact of the operator change on Ichigo Hotel's January 2022 and July 2022 fiscal period earnings has already been reflected in the forecasts presented in the September 14, 2021 release "July 2021 Fiscal Period Earnings."

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