Japan Hotel REIT Investment : Financial Results Briefing for FY12/2021 (22nd Period)

Japan Hotel REIT Investment Corporation (TSE: 8985)

Financial Results

FY12/2021 (22nd Period)

Japan Hotel REIT Investment Corporation

Japan Hotel REIT Advisors Co., Ltd.

https://www.jhrth.co.jp/en/

February 25, 2022

Table of Contents

Ⅰ . Settlement of Accounts for FY12/2021 ̶ Highlights

1.	FY12/2021 Highlights	3
Ⅱ. Summary of Settlement of Accounts
1.	Results for FY12/2021	5
Ⅲ. Status of Hotel Operations
1.	Monthly Performance of The 24 Hotels with Variable Rent, etc.	7
2.	Performance of The 24 Hotels with Variable Rent, etc.	8
3.	Acquisition and Sale of Properties	9
4.	Response to Lessees/Operators	10
5.	Change in Lessees/Rebranding	11
6.	Active Asset Management for Post COVID-19	14
7.	Capital Expenditure and Depreciation	15
8.	Sustainability Initiatives	16
Ⅳ. Financial Conditions
1.	Financial Conditions	19
Ⅴ. Market Environment
1.	Market Environment	23
Ⅵ. Takeaways
1.	Takeaways	27

Appendix 1 JHR's Characteristics and Strategy
1.	JHR's Investment Targets	29
2.	Simultaneous Pursuit of Stability and Upside Potential	30
3.	External Growth Strategy	31
4.	Internal Growth Strategy	32
5.	Financial Strategy	33
6.	Benefits Program for Unitholders	34
Appendix 2 Information on Properties
1.	Portfolio	36
2.	Portfolio Diversification	37
3.	Rent Structures	38
4.	Property List	39
5.	Summary of Lease Contracts	41
6.	Major CAPEX Ⅲ by Hotels	44
7.	The Five HMJ Hotels ̶ Highlights	45
8.	Portfolio Map	46
9.	Balance Sheet	47
Appendix 3 Investors Composition and Investment Unit Price
1.	Major Unitholders and Classifications of Unitholders	49
2.	Changes in Investment Unit Price and Market Capitalization	50
Appendix 4 Summary of the Asset Management Company
1.	Summary of the Asset Management Company	52
2.	Features and Governance of the Asset Management Company	53

1

Ⅰ . Settlement of Accounts for FY12/2021 ̶ Highlights

1. FY12/2021 Highlights

• 1. Status of Hotel Operations

• Performance of The 24 Hotels with Variable Rent, etc.(*1)

• Although the results in 2021 worsened slightly from the previous year, the second half of the fiscal year showed a recovery trend through December
• Strengthened cost management of operators with a focus on HMJ

	Results	2019	2020	2021
	(vs 2019)	(vs 2019)
	RevPAR	14,178	4,993	4,724
	(JPY)	[(64.8%)]	[(66.7%)]
	First Half	13,348	4,536	3,320
	[(66.0%)]	[(75.1%)]
	Second Half	14,993	5,445	6,112
	[(63.7%)]	[(59.2%)]
	GOP	20,871	1,654	2,437
	(JPY MM)	[(92.1%)]	[(88.3%)]

2. Acquisition and Sale of Properties

• Acquired part of the site of Oriental Hotel Universal City (July 2021)
• Sold ibis Tokyo Shinjuku (December 2021)

	Disposition Price	JPY11.3Bn	Gain on sale
	Appraisal Value	JPY9.9Bn	JPY3.2Bn
	Book Value	JPY7.8Bn
End of	41 properties/JPY363.5Bn(*2)
FY12/2021

3. Changes in DPU and NAV

• Changes in DPU

• The market environment is unclear due to the impact of COVID-19. Forecasts for 2022 are undecided

(JPY) 3,690 4,000

3,000			(88.9%)
2,000			(10.7%)
1,000
		410	366		(TBD)
0
		(297)※	(363)※
-1,000
	FY12/2019	FY12/2020	FY12/2021	FY12/2022
		(20th Period)	(21st Period)	(22nd Period)	(23rd Period
							(Forecast))

• • Rough estimate in case gain on sale was excluded(*3)
• Changes in NAV per Unit

• Almost no change in the appraisal value and NAV per unit remained at the same level

(JPY)	83,286
90,000	77,525	77,688
60,000		(6.9%)	+0.2%

30,000

0

FY12/2019	FY12/2020	FY12/2021
(20th Period)	(21st Period)	(22nd Period)

• 4. Financial Soundness

• Conservative Financial Management

• Continue to maintain good relationships with lenders
• Secure cash on hand and maintain a solid financial base
• All matured loans are fully refinanced. Matured investment corporation bonds are redeemed by loans from major lenders

		(as of the end of December 2021)
	LTV	41.8％		Refinancing
	(total asset base)
	Costs for Interest-	1.0％		(result)	JPY24.1Bn
	bearing Debt		2021
	Average Life of	3.5 years
	Debt		2022	JPY38.4Bn
	Free Cash(*4)	JPY21.6Bn
		(forecast)

• 5. Sustainability Initiatives

• Acquisition of GRESB Real Estate Assessment

• Received "4-star" and selected for "Sector Leader" of Asian Hotel Sector in 2021 for two consecutive years

• Definition of materiality

• Further promotion of ESG-related initiatives

• Expressed support for the TCFD recommendations

(*1) The 24 Hotels with Variable Rent, etc. refers to 24 hotels: 14 hotels, which are 5 hotels of Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila, Oriental Hotel Hiroshima ("The Five HMJ Hotels"), plus Oriental Hotel Okinawa Resort & Spa, Sheraton Grand Hiroshima Hotel (main facility of ACTIVE-INTER CITY HIROSHIMA), Oriental Hotel Fukuoka Hakata Station, Holiday Inn Osaka Namba, Hilton Tokyo Narita Airport, International Garden Hotel Narita, Hotel Nikko Nara, Hotel Oriental Express Osaka Shinsaibashi, and Hilton Tokyo Odaiba ("The HMJ Group Hotels"), plus 4 hotels of the b ikebukuro, the b hachioji, the b hakata, and the b suidobashi ("The Ishin Group Hotels") and 6 hotels of ibis Tokyo Shinjuku, ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure Okinawa Naha, Mercure Yokosuka ("The Accor Group Hotels"). The same shall apply hereinafter.

(*2) Stating total amount of the acquisition price.

(*3) Rough estimate calculated by excluding the amount equivalent to the gain on sale of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi from the distributable profit in FY12/2020 and the amount equivalent to the gain on sale of ibis Tokyo Shinjuku from the distributable profit in FY12/2021 respectively.

(*4) The figures represent balance of cash and deposits after exclusion of various reserves in trust, etc.

3

Ⅱ. Summary of Settlement of Accounts