Japan Hotel REIT Investment : Midterm Financial Results Briefing for the Fiscal Year Ending December 31, 2022 (January 1, 2022-December 31, 2022)

Japan Hotel REIT Investment Corporation (TSE: 8985)

Midterm Financial Results

FY12/2022 (23rd Period)

Japan Hotel REIT Investment Corporation

Japan Hotel REIT Advisors Co., Ltd.

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

August 24, 2022

Table of Contents

Ⅰ . Highlights
1.	Highlights	3
Ⅱ. Operating Forecast for the Full Fiscal Year and
Summary of Midterm Settlement of Accounts
1.	Operating Forecast for the Full Year Ending
	December 2022	5
2.	Midterm Results for the Fiscal Year Ending
	December 2022	6
Ⅲ. Status of Hotel Operations
1.	Trend of RevPAR Index and
	Status of Infection by COVID-19 in Japan	8
2.	Performance of The 25 Hotels with Variable Rent, etc.	9
3.	Correspondence to HMJ Group	10
4.	Initiatives by the HMJ Group for the Recovery Period	11
5.	Rebranding and Other Measures	12
6.	Active Asset Management for Post COVID-19	13
7.	Capital Expenditure and Depreciation	14
8.	ESG Initiatives	15
Ⅳ. Financial Conditions
1.	Financial Conditions	18
Ⅴ. Market Environment
１．Status of Domestic Accommodation Demand	22
２．Status of Inbound Visitors	23
３．Status of New Supply of Hotels	24
Ⅵ. Takeaways
1.	Takeaways	26

Appendix 1 JHR's Characteristics and Strategy
1.	JHR's Investment Targets	28
2.	Simultaneous Pursuit of Stability and Upside Potential	29
3.	External Growth Strategy	30
4.	Internal Growth Strategy	31
5.	Financial Strategy	32
6.	Benefits Program for Unitholders	33
Appendix 2 Information of Properties
1.	Portfolio	35
2.	Portfolio Diversification	36
3.	Trend of Asset Size	37
4.	Rent Structures	38
5.	Property List	39
6.	Summary of Lease Contracts	41
7.	The Five HMJ Hotels ̶ Highlights	44
8.	Portfolio Map	45
9.	Balance Sheet	46
Appendix 3 Investors Composition and Investment Unit Price
1.	Major Unitholders and Classifications of Unitholders	48
2.	Changes in Investment Unit Price and Market Capitalization	49
Appendix ４ Summary of the Asset Management Company
1.	Summary of the Asset Management Company	51
2.	Features and Governance of the Asset Management Company	52

1

Ⅰ . Highlights

1. Highlights

Summary of Full Year Forecast for FY2022

						(Unit: JPY MM)
				FY2022	vs FY2021	vs FY2019
				(forecast)
	Operating Revenue	13,337	(2.2%)	(52.8%)
		Real Estate Operating	13,337	28.6%	(52.8%)
		Revenue
			Fixed Rent	7,192	(1.3%)	(57.9%)
			Variable Rent	6,145	99.0%	(45.0%)
		Gain on Sale of	ー	(100.0%)	ー
		Properties
	Net Income	1,158	(10.7%)	(92.4%)
	Use of Negative Goodwill	332	(0.8%)	(71.7%)
	Dividend per Unit (JPY)	333	(9.0%)	(91.0%)

Main Initiatives

Correspondence to Lessees/Operators

• Lease Contract with HMJ Group(*2) was changed to full variable rent until the end of 2022
• In addition to measures to reduce hotel operating costs in cooperation with HMJ Group, we implement measures to increase revenues for the hotel market recovery period

Rebranding

• Rebranded 3 properties to Oriental Hotels of HMJ Group (in 2021)
• Improved hotel brand value through renovation, optimization of operations, quality enhancement of breakfast menu, etc.

		Changes in DPU and NAV
	Changes in DPU			Changes in NAV per Unit

Finance

• Ensure healthy and stable finance

(JPY)	3,690									(JPY)
4,000		(88.9%)								90,000
3,000
2,000										60,000
	(10.7%)
		(9.0%)		30,000
1,000		410	366		333
0
	(297)※	(363)※				0
-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 sales of properties was excluded(*1)

83,286 77,525 77,688 78,056

(6.9%) +0.2% +0.5%

FY12/2019	FY12/2020	FY12/2021	End of June
(20th Period)	(21st Period)	(22nd Period)	2022
			(Midterm of
			23rd Period)

• Maintain good relationship with lender and will refinance the

full amount of the loan

ESG

• Selected as GRESB Asia Hotel Sector Leader for second consecutive year
• Promote TCFD action and conduct Climate Change scenario analysis

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

(*2) HMJ Group refers to Hotel Management Japan Co., Ltd. (hereinafter called "HMJ") or subsidiaries of HMJ. The same shall apply hereinafter.

3

Ⅱ. Operating Forecast for the Full Fiscal Year and

Summary of Midterm Settlement of Accounts